<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 16, 1996
------------------
FORD MOTOR CREDIT COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-6368 38-1612444
- ------------------------ ------------------------ ---------------------
(State or other juris- (Commission File Number (IRS Employer
diction of incorporation) Number) Identfication No.)
The American Road, Dearborn, Michigan 48121
- ---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 313-322-3000
<PAGE> 2
ITEM 5. Other Events.
FORD MOTOR CREDIT COMPANY FINANCIAL STATEMENTS FOR THE PERIOD ENDED
SEPTEMBER 30, 1996
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Financial Statements - The interim financial data presented herein
are unaudited, but in the opinion of management reflect all adjustments
necessary for a fair presentation of such information. Results for interim
periods should not be considered indicative of results for a full year.
Reference should be made to the financial statements contained in the
registrant's Annual Report on Form 10-K for the year ended December 31,
1995 (the "10-K Report"). Information relating to earnings a share is not
presented because the registrant, Ford Motor Credit Company ("Ford
Credit"), is an indirect wholly owned subsidiary of Ford Motor Company
("Ford").
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Condensed Consolidated Statement of Income
and of Earnings Retained for Use in the Business
For the Periods Ended September 30, 1996 and 1995
(in millions)
<TABLE>
<CAPTION>
Third Quarter Nine Months
1996 1995 1996 1995
--------- ---------- ---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Financing Revenue
Operating leases $ 1,983.1 $ 1,809.0 $ 5,831.1 $ 5,188.1
Retail 1,049.4 935.7 2,977.4 2,657.5
Wholesale 249.9 318.4 855.1 1,061.3
Diversified 7.1 39.2 81.4 109.0
Other 90.4 82.6 273.3 247.9
---------- ---------- ---------- ----------
Total financing revenue 3,379.9 3,184.9 10,018.3 9,263.8
Insurance premium earned 74.7 0 157.6 0
Investment and other income 181.4 145.7 531.7 379.9
---------- ---------- ---------- ----------
Total revenue 3,636.0 3,330.6 10,707.6 9,643.7
Expenses
Depreciation on operating leases 1,311.9 1,303.8 3,930.6 3,744.2
Interest expense 1,261.0 1,222.2 3,827.1 3,623.9
Operating expenses 264.0 242.1 818.8 712.4
Provision for credit losses 267.8 132.9 628.2 289.4
Loss and loss adjustment expense 50.9 0 108.6 0
Amortization of policy acquisition cost 18.3 0 36.8 0
---------- ---------- ---------- ----------
Total expenses 3,173.9 2,901.0 9,350.1 8,369.9
---------- ---------- ---------- ----------
Equity in net income of affiliated
companies 0.9 67.7 50.7 174.7
Income before income taxes 463.0 497.3 1,408.2 1,448.5
Provision for income taxes 158.0 136.2 467.6 451.5
---------- ---------- ---------- ----------
Income before minority interest 305.0 361.1 940.6 997.0
Minority interest in net income of
subsidiaries 5.7 3.7 16.3 10.5
---------- ---------- ---------- ----------
Net income 299.3 357.4 924.3 986.5
Earnings retained for use in
the business
Beginning of period 6,944.8 6,478.3 6,643.8 5,849.2
Dividends (250.0) (350.0) (574.0) (350.0)
---------- ---------- ---------- ----------
End of period $ 6,994.1 $ 6,485.7 $ 6,994.1 $ 6,485.7
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 3
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(in millions)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1996 1995 1995
----------- ----------- -----------
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash and cash equivalents $ 3,361.4 $ 1,355.9 $ 564.3
Investments in securities 1,305.2 1,914.1 1,761.1
Finance receivables, net (Note 1) 63,179.5 61,043.8 59,280.2
Net investment, operating leases 28,669.6 24,810.8 23,890.4
Accounts and notes receivable from
affiliated companies (Note 3) 621.3 420.7 302.6
Equity in net assets of affiliated
companies (Note 3) 96.3 1,728.0 1,617.0
Other assets 2,703.5 3,293.4 2,635.7
----------- ----------- -----------
Total assets $ 99,936.8 $ 94,566.7 $ 90,051.3
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Trade, customer deposits, and
dealer reserves $ 1,998.5 $ 1,579.4 $ 1,447.3
Affiliated companies 602.2 608.7 431.5
----------- ----------- -----------
Total accounts payable 2,600.7 2,188.1 1,878.8
Debt (Note 2) 82,155.9 79,167.1 75,512.3
Deferred income taxes 3,899.1 3,027.0 2,920.8
Other liabilities and deferred income 2,089.1 1,913.6 1,681.1
Unearned insurance premiums 373.3 0 0
----------- ----------- -----------
Total liabilities 91,118.1 86,295.8 81,993.0
Minority interest in net assets of
subsidiaries 948.4 717.2 654.8
Stockholder's Equity
Capital stock, par value $100 a share,
250,000 shares authorized, issued and
outstanding 25.0 25.0 25.0
Paid-in surplus (contributions by
stockholder) (Note 3) 2,777.3 917.3 917.3
Note receivable from affiliated company
(Note 3) (1,917.0) 0 0
Unrealized gain on marketable
securities, net of taxes 48.3 30.9 23.0
Foreign-currency translation adjustments (57.4) (63.3) (47.5)
Earnings retained for use in the business 6,994.1 6,643.8 6,485.7
----------- ----------- -----------
Total stockholder's equity 7,870.3 7,553.7 7,403.5
----------- ----------- -----------
Total liabilities and stockholder's
equity $ 99,936.8 $ 94,566.7 $ 90,051.3
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 4
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the Periods Ended September 30, 1996 and 1995
(in millions)
<TABLE>
<CAPTION>
Nine Months
1996 1995
---------- ----------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net income $ 924.3 $ 986.5
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for credit losses 628.2 289.4
Depreciation and amortization 4,160.8 3,909.8
Gain on sales of finance receivables (22.9) (12.8)
Equity in net income of affiliates (50.7) (174.7)
Deferred income taxes 836.3 513.4
Changes in the following items
Other assets 1,788.8 9.8
Other liabilities 326.4 229.2
Other (197.9) 17.0
---------- ----------
Net cash provided by operating activities 8,393.3 5,767.6
---------- ----------
Cash flows from investing activities
Purchase of finance receivables (other than wholesale) (25,584.6) (21,303.6)
Collection of finance receivables (other than wholesale) 18,130.3 16,756.7
Purchase of operating lease vehicles (15,389.3) (12,608.0)
Liquidation of operating lease vehicles 7,564.1 4,377.1
Purchase of investment securities (4,106.8) 0
Proceeds from sale of investment securities 6,522.8 0
Proceeds from sales of receivables 1,010.2 2,728.3
Cash received from donation of TARIC 181.8 0
Net change in wholesale receivables 2,329.2 11.9
Other (170.5) (192.8)
---------- ----------
Net cash used in investing activities (9,512.8) (10,230.4)
---------- ----------
Cash flows from financing activities
Proceeds from issuance of long-term debt 9,972.5 7,858.3
Principal payments on long-term debt (5,304.5) (3,993.9)
Change in short-term debt, net (1,550.0) 943.4
Cash dividends paid (250.0) (350.0)
Other 256.4 274.1
---------- ----------
Net cash provided by financing activities 3,124.4 4,731.9
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents 0.6 3.2
---------- ----------
Net change in cash and cash equivalents 2,005.5 272.3
Cash and cash equivalents, beginning of period 1,355.9 292.0
---------- ----------
Cash and cash equivalents, end of period $ 3,361.4 $ 564.3
========== ==========
Supplementary cash flow information
Interest paid $ 3,789.9 $ 3,531.3
Taxes (refunded)/paid (282.2) 52.8
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 5
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements
Note 1. Finance Receivables, Net (in millions)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1996 1995 1995
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Retail $ 43,639.0 $ 38,350.0 $ 38,868.1
Wholesale 14,198.1 16,506.9 14,389.0
Diversified 1,916.7 2,225.4 2,267.5
Other 4,252.5 4,630.6 4,401.2
----------- ----------- -----------
Total finance receivables 64,006.3 61,712.9 59,925.8
Less allowance for credit losses (826.8) (669.1) (645.6)
----------- ----------- -----------
Finance receivables, net $ 63,179.5 $ 61,043.8 $ 59,280.2
=========== =========== ===========
</TABLE>
<PAGE> 6
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements (continued)
Note 2. Debt (in millions)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1996 1995 1995
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
PAYABLE WITHIN ONE YEAR:
Commercial paper $ 32,776.3 $ 34,978.3 $ 34,024.6
Other short-term debt* 1,712.3 1,523.1 1,412.7
----------- ----------- -----------
Total short-term debt 34,488.6 36,501.4 35,437.3
Senior notes payable
within one year** 6,197.1 6,626.9 6,493.5
----------- ----------- -----------
Total payable within
one year 40,685.7 43,128.3 41,930.8
----------- ----------- -----------
<CAPTION>
September 30, 1996
----------------------------
Weighted Average
Interest Rates*** Maturities
---------------- ----------
<S> <C> <C> <C> <C> <C>
PAYABLE AFTER ONE YEAR:
Unsecured senior notes
Notes**** 6.79% 1997-2048 41,403.8 36,003.6 33,572.4
Debentures 2.82% 2001-2005 71.8 29.1 0
Unamortized
(discount)/premium (5.4) 6.1 9.1
----------- ----------- -----------
Total payable
after one year 41,470.2 36,038.8 33,581.5
----------- ----------- -----------
Total debt $ 82,155.9 $ 79,167.1 $ 75,512.3
=========== =========== ===========
</TABLE>
* Includes $50.3 million, $35.9 million, and $0 million with affiliated
companies at September 30, 1996, December 31, 1995, and September 30,
1995, respectively.
** Includes $493 million, $0 million, and $0 million with affiliated
companies at September 30, 1996, December 31, 1995, and September 30,
1995, respectively.
*** Rates were variable on 22.4% of the debt payable after one year including
the effects of interest rate swap agreements.
**** Includes $3,894.4 million, $1,174.4 million, and $1,149 million with an
affiliated company at September 30, 1996, December 31, 1995, and September
30, 1995, respectively.
<PAGE> 7
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements
Note 3. Equity Investment in Ford Holdings
On February 28, 1996, Ford Holdings, Inc. (FHI) purchased substantially all
of Ford Credit's common stock interest in FHI. The final valuation was
determined as $2,949.0 million. FHI issued a promissory note to Ford
Credit for the purchase amount. On April 2, 1996, Ford Credit received a
cash payment on the note of $1,032.0 million. The excess of the market
value of the FHI investment over the book value ($1,296.2 million) is
included in paid in surplus. The unpaid portion of the promissory note
($1,917.0 million) is reflected as a reduction to stockholder's equity.
Additionally, The American Road Insurance Company ("TARIC") was contributed
to Ford Credit on March 29, 1996. The transaction was recorded by Ford
Credit at Taric's book value and is included in paid in surplus. A
reconciliation of paid in surplus is as follows:
<TABLE>
<CAPTION>
Paid in Surplus
---------------
(in millions)
<S> <C>
Balance at December 31, 1995 $ 917.3
Add:
Excess of market value over
book value of FHI common stock 1,296.2
Contribution of TARIC 563.8
----------
Balance at September 30, 1996 $ 2,777.3
==========
</TABLE>
Note 4. Transactions with Affiliated Companies
On June 28, 1996, Ford Credit transferred Budget Rent a Car Corporation
("BRAC") preferred stock to Ford FSG, Inc. ("FFSGI") as a dividend. Also,
Ford Credit wrote down a portion of the BRAC receivables and received
payment from FFSGI on July 11, 1996, the guarantor of the receivables.
<PAGE> 8
DISCUSSION OF RESULTS FOR THE PERIOD
FORD CREDIT THIRD QUARTER 1996 RESULTS OF OPERATIONS
Ford Credit's consolidated net income for the third quarter of 1996 was $299
million, down $58 million or 16% compared with $357 million in the third
quarter of 1995. Compared with record results from a year ago, the decrease in
net income primarily reflects an increase in credit losses, and lower income
resulting from the repurchase in the first quarter in 1996 by Ford Holdings of
substantially all of the shares of Ford Holdings' common stock owned by Ford
Credit. Higher portfolio net interest margins and a higher level of earning
assets were a partial offset.
The deterioration in credit losses reflects an increase in repossession rates
and an increase in losses per repossession reflecting a weaker used vehicle
market. Credit losses as a percent of average net finance receivables
including net investment in operating leases were 0.89% in the third quarter of
1996 compared with 0.48% in the third quarter of 1995. Ford Credit expects
that the upward trend in increased credit losses will continue through the
remainder of 1996.
The higher net interest margins reflect higher portfolio yields on finance
receivables and operating leases and a decrease in U.S. portfolio borrowing
rates from 6.5% to 6.2%. The increase in earning assets reflects a higher
level of operating leases and retail installment sale receivables. Total net
finance receivables and net investment in operating leases at September 30,
1996 were $91.8 billion, up $8.6 billion or 10% from a year earlier.
During the third quarter of 1996, Ford Credit financed 35.5% of all new cars
and trucks sold by Ford Motor Company dealers in the United States, compared
with 38.0% in the third quarter of 1995. The decrease reflected lower levels
of retail installment sale financing partially offset by higher levels of
operating lease financing and higher levels of lease financing extended to
leasing companies and daily rental companies. Ford Credit provided retail
financing for 631,000 new and used vehicles in the United States, down 4% from
a year ago. Ford Credit also provided wholesale financing for 78.5% of Ford
Motor Company factory sales to U.S. car and truck dealers during the quarter,
compared with 79.8% in the same period a year ago.
As part of Ford's sale of USL Capital's assets, a portion of Ford Credit's
diversified assets, managed by USL Capital, were sold. The sale of the
diversified assets did not have a material impact on Ford Credit's third
quarter results.
FORD CREDIT FIRST NINE MONTHS 1996 RESULTS OF OPERATIONS
For the first nine months of 1996, Ford Credit's consolidated net income was
$924 million, down $62 million from $986 million in 1995. The factors
affecting profits during the first nine months of 1996 were the same as those
affecting the third quarter results discussed above.
During the first nine months of 1996, Ford Credit provided retail financing for
38.3% of all new cars and trucks sold by Ford Motor Company dealers in the
United States, compared with 36.8% in the same period a year ago. The increase
resulted from higher levels of retail installment sale financing partially
offset by lower levels of lease financing extended to leasing companies and
daily rental companies. Ford Credit provided U.S. retail financing for
2,095,000 new and used vehicles compared with 1,892,000 vehicles in the first
nine months of 1995. Ford Credit also provided wholesale financing for 78.9%
of Ford Motor Company factory sales to U.S. car and truck dealers during the
first nine months of 1996, compared with 79.7% in the same period last year.
<PAGE> 9
Ford Credit Liquidity and Capital Resources
Ford Credit's outstanding debt at September 30, 1996 and at the end of each
of the last five years was as follows:
<TABLE>
<CAPTION>
December 31
Sept 30, -------------------------------------------
1996 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- -------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Commercial paper & STBA's(a) $32,776 $35,038 $33,300 $24,506 $21,210 $18,232
Other short-term debt (b) 2,205 1,463 1,065 1,001 1,785 1,642
Long-term debt (including
current portion)(c) 47,175 42,666 36,075 33,292 26,961 28,455
------- ------- ------- ------- ------- -------
Total debt $82,156 $79,167 $70,440 $58,799 $49,956 $48,329
======= ======= ======= ======= ======= =======
1996 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- -------
Memo:
Total support facilities $27.2 $27.4 $22.3 $16.9 $13.9 $13.8
(billions -- as of
October 1, 1996 and
December 31, 1995-1991,
respectively)
</TABLE>
- - - - - -
(a) Short-term borrowing agreements with bank trust departments.
(b) Includes $50 million, $36 million, $150 million, and $800 million with
affiliated companies at September 30, 1996, December 31, 1995, December 31,
1993, and December 31, 1992, respectively.
(c) Includes $4,387 million and $1,174 million with affiliated companies at
September 30, 1996 and December 31, 1995, respectively.
Support facilities represent additional sources of funds, if required. At
October 1, 1996, Ford Credit had approximately $27.2 billion of
contractually committed facilities (which included $7.6 billion of Ford
Motor Company bank lines that may be used by Ford Credit at Ford's option).
These facilities have various maturity dates through June 30, 2001. Up to
$19.6 billion ($27.2 billion with Ford's approval) may be used, at Ford
Credit's option, by any of its direct or indirect majority-owned
subsidiaries. Any such borrowing will be guaranteed by Ford Credit.
<PAGE> 10
INFORMATION CONCERNING FORD - NEWS RELEASE DATED OCTOBER 16, 1996
Global News Public Affairs
Ford Motor Company
The American Road
Room 904
Dearborn, MI 48121
Telephone:(313)322-9600
Fax:(313)845-0570
IMMEDIATE RELEASE
Contact: Media Inquiries Broadcast Media Stockholder Inquiries
Christian Vinyard David Caplan (313) 845-8540
(313) 322-9600 (313) 322-9600
Ford Earns $686 Million in Third Quarter;
U.S. Automotive Profit Improvement Continues
DEARBORN, Mich., Oct. 16 -- Ford Motor Company earned $686 million in the
third quarter of 1996, up $329 million from the same period last year,
reflecting continued improvement in U.S. automotive operations, along with
another quarterly record from financial services. Fully diluted earnings were 56
cents per share of common and Class B stock, compared with 27 cents for the
third quarter of 1995.
The total results include the net favorable effect of two one-time actions
of $37 million, or three cents a share.
"Improvements in our U.S. automotive operations continue," said Alex
Trotman, chairman and chief executive officer. "Outside the U.S., results
continue to reflect challenges in several key regions, particularly Europe and
South America."
U.S. AUTOMOTIVE OPERATIONS GAIN
For the third quarter, worldwide automotive operations earned $15 million,
compared with a loss of $201 million last year. Improved automotive results in
the U.S. were offset partially by increased losses in other markets.
U.S. automotive operations earned a third-quarter record of $634 million,
up $447 million from 1995. Unit volume was up slightly from last year.
<PAGE> 11
-2-
Higher earnings reflect the strong acceptance of new products like the Ford
F-Series and Expedition that improved the mix of products sold and the
continuing focus on cost reductions, particularly material costs. The results
also include a one-time charge of $39 million for early retirements for U.S.
salaried employees.
Outside the U.S., losses from automotive operations were $619 million,
compared with a loss of $388 million last year.
In Europe, Ford lost $472 million, compared with a loss of $320 million
last year, reflecting costs associated with launching new products, adverse
vehicle mix and volume, and continued high marketing costs. In Europe,
high-volume launches are largely completed. Ford continues to focus on cost
reductions, and new products are coming to market that will strengthen the
line-up. Among these is the Ka, a new small car that will compete in a growing
segment.
The innovative Ka was developed with high investment efficiency in about 24
months and is produced in Valencia, Spain. Within the next month, Ka will go on
sale in Europe's major markets. Response from both dealers and automotive news
media has been strongly favorable.
In South America, Ford lost $226 million in the third quarter, compared
with a loss of $102 million in 1995. Most of the losses stem from Brazil. On
Sept. 9, Ford indicated that losses in Brazil in the second half of 1996 would
be larger than those of the first half due to lower market share and a longer
and more costly launch process following the dissolution of Autolatina. In 1997,
Ford plans to introduce the Ranger pickup and the Ka to the Brazilian market
which, along with the new Fiesta and Escort, will strengthen the product line.
FINANCIAL SERVICES POSTS ANOTHER RECORD
The Financial Services Group posted record earnings for the third quarter
of $671 million, up from $558 million earned in the third quarter of 1995. The
quarterly results include a one-time gain of $76 million from the sale of assets
of USL Capital. Without the one-time gain, profits from Financial Services still
set a third-quarter record.
Ford Credit earned $299 million, compared with $357 million in last year's
third quarter. The decline reflects an increase in credit losses, consistent
with the consumer finance industry.
<PAGE> 12
-3-
The Associates reported third-quarter earnings of $230 million, a record
for any quarter. As the majority shareholder, Ford's share was $186 million. The
Associates third-quarter earnings improved 17 percent from the $197 million
earned in last year's third quarter.
The USL Capital asset sale and the initial public offering of about 20
percent of Associates First Capital Corporation this year raised more than $3
billion in cash to further strengthen the Financial Services Group's balance
sheet.
BRIGHTER PROSPECTS AHEAD
"As more efficiencies are realized, automotive results for the fourth
quarter should be stronger than last year, despite expected additional charges
of $300-400 million for early retirement programs," Trotman said. "We expect
sales volumes will be higher and margins will continue to improve."
"There's still much to do," Trotman said. "We've made solid progress, and
we're becoming a leaner, faster company. As we continue to reduce costs, and as
more high-quality products are launched, automotive profitability should grow,
increasing value for both customers and shareholders," he added.
"With the recently announced streamlining of our components business and
product development, our senior management can further accelerate the actions
that will build on the momentum to achieve our goals for quality, cost and
speed," Trotman noted.
Ford expects U.S. industry volumes for the full year to be about 15.5
million cars and trucks, up from last year's 15.1 million. In Western Europe,
industry sales for 1996 are expected to be about 14.2 million units, compared
with 13.4 million in 1995.
Looking forward, Ford expects moderate economic growth to continue in its
major markets which will allow for stable industry sales volumes.
Oct. 16, 1996
<PAGE> 13
-4-
SUMMARY OF THIRD-QUARTER 1996 COMPARED WITH THIRD-QUARTER
1995
Overview
- --------
- - Total earnings were $686 million, compared with $357 million in the third
quarter of 1995.
- - Fully diluted earnings were 56 cents per share, compared with 27 cents per
share.
- - Worldwide sales and revenues were $34 billion, compared with $31.4 billion.
- - Stockholders' equity was $26.2 billion, compared with $25 billion.
Automotive
- ----------
- - Worldwide automotive operations earned $15 million, compared with a loss of
$201 million.
- - Net income from U.S. automotive operations was a third-quarter record $634
million, compared with $187 million.
- - Automotive operations outside the U.S. lost $619 million, compared with a
loss of $388 million last year. In Europe, Ford posted a loss of $472
million, compared with a loss of $320 million last year.
- - Worldwide vehicle unit sales were 1,452,000, compared with 1,435,000 units.
- - Combined car and truck share in the U.S. was 24.5 percent, compared with
24.8 percent.
- - Combined car and truck share in Europe was 11.8 percent, compared with 12.8
percent.
Financial Services Group
- ------------------------
- - Financial Services Group earned a record $671 million, including a one-time
net gain of $76 million related to the sale of assets of USL Capital.
Without the one-time gain, earnings were a record $595 million.
Third-quarter results for 1995 were $558 million.
- - Ford Credit earned $299 million, compared with $357 million.
- - The Associates earned an all-time record of $230 million, compared with $197
million.
Automotive Balance Sheet
- - Net cash was $5.7 billion, compared with $5.4 billion.
- - Cash and marketable securities were $13 billion, compared with $12.2
billion.
- - Debt was $7.3 billion, compared with $6.8 billion.
- - Capital spending was $2.4 billion, compared with $2.3 billion a year ago.
<PAGE> 14
Ford Motor Company and Subsidiaries
HIGHLIGHTS
----------
<TABLE>
<CAPTION>
Third Quarter Nine Months
-------------------------- --------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Worldwide vehicle unit sales of
cars and trucks (in thousands)
- - United States 884 869 2,891 3,038
- - Outside United States 568 566 2,009 1,978
------- ------- -------- --------
Total 1,452 1,435 4,900 5,016
======= ======= ======== ========
Sales and revenues (in millions)
- - Automotive $26,459 $24,437 $ 86,518 $ 82,899
- - Financial Services 7,501 6,981 21,640 19,691
------- ------- -------- --------
Total $33,960 $31,418 $108,158 $102,590
======= ======= ======== ========
Net income/(loss) (in millions)
- - Automotive $ 15 $ (201) $ 1,265 $ 2,040
- - Financial Services 671* 558 1,977* 1,439
------- ------- -------- --------
Total $ 686 $ 357 $ 3,242 $ 3,479
======= ======= ======== ========
Capital expenditures (in millions)
- - Automotive $ 2,358 $ 2,254 $ 5,926 $ 6,204
- - Financial Services 149 76 349 223
------- ------- -------- --------
Total $ 2,507 $ 2,330 $ 6,275 $ 6,427
======= ======= ======== ========
Stockholders' equity at September 30
- - Total (in millions) $26,152 $24,955 $ 26,152 $ 24,955
- - After-tax return on Common and
Class B stockholders' equity 10.5% 5.4% 17.4% 20.9%
Automotive cash and marketable
securities at September 30 (in millions) $12,960 $12,241 $ 12,960 $ 12,241
Automotive debt at September 30
(in millions) $ 7,296 $ 6,829 $ 7,296 $ 6,829
Automotive after-tax return on sales 0.1% ** 1.5% 2.5%
Shares of Common and Class B Stock
(in millions)
- - Average number outstanding 1,183 1,083 1,177 1,049
- - Number outstanding at September 30 1,185 1,090 1,185 1,090
AMOUNTS PER SHARE OF COMMON AND
CLASS B STOCK AFTER PREFERRED
STOCK DIVIDENDS
Income/(loss) assuming full dilution
- - Automotive $ 0.00 $ (0.19) $ 1.02 $ 1.65
- - Financial Services 0.56 0.46 1.64 1.20
------- ------- -------- --------
Total $ 0.56 $ 0.27 $ 2.66 $ 2.85
======= ======= ======== ========
Cash dividends $ 0.385 $ 0.31 $ 1.085 $ 0.88
</TABLE>
- - - - - -
* Results in third quarter 1996 and nine months 1996 included a gain on
disposition of substantially all of USL Capital's assets ($76 million and $95
million, respectively); results in nine months 1996 included a write-down
relating to Ford's investment in Budget Rent a Car Corporation ($437 million)
**Results in this period were a loss
FS-1
<PAGE> 15
Ford Motor Company and Subsidiaries
VEHICLE UNIT SALES
------------------
For the Periods Ended September 30, 1996 and 1995
(in thousands)
<TABLE>
<CAPTION>
Third Quarter Nine Months
---------------------------- --------------------------
1996 1995 1996 1995
---------- ---------- ---------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
North America
United States
Cars 387 377 1,228 1,333
Trucks 497 492 1,663 1,705
----- ----- ----- -----
Total United States 884 869 2,891 3,038
Canada 52 46 174 178
Mexico 13 3 39 21
----- ----- ----- -----
Total North America 949 918 3,104 3,237
Europe
Britain 100 105 376 371
Germany 84 93 330 325
France 42 40 147 124
Italy 30 31 129 139
Spain 27 33 114 129
Other countries 67 58 236 212
----- ----- ----- -----
Total Europe 350 360 1,332 1,300
Other international
Brazil 49 45 142 153
Australia 40 41 107 107
Taiwan 20 27 72 90
Japan 13 14 41 44
Argentina 12 13 43 34
Other countries 19 17 59 51
----- ----- ----- -----
Total other international 153 157 464 479
----- ----- ----- -----
Total worldwide vehicle unit sales 1,452 1,435 4,900 5,016
===== ===== ===== =====
</TABLE>
Vehicle unit sales are reported worldwide on a "where sold" basis and include
sales of all Ford-badged units, as well as units manufactured by Ford and sold
to other manufacturers.
FS-2
<PAGE> 16
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Periods Ended September 30, 1996 and 1995
(in millions)
<TABLE>
<CAPTION>
Third Quarter Nine Months
-------------------------- --------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
AUTOMOTIVE
Sales $26,459 $24,437 $86,518 $82,899
Costs and expenses (Note 2)
Costs of sales 24,926 23,271 79,941 75,154
Selling, administrative and other expenses 1,514 1,370 4,619 4,393
------- ------- ------- -------
Total costs and expenses 26,440 24,641 84,560 79,547
Operating income/(loss) 19 (204) 1,958 3,352
Interest income 188 171 589 594
Interest expense 155 151 537 491
------- ------- ------- -------
Net interest income 33 20 52 103
Equity in net loss of affiliated companies (68) (190) (43) (151)
Net expense from transactions with
Financial Services (25) (42) (62) (101)
------- ------- ------- -------
(Loss)/income before income taxes - Automotive (41) (416) 1,905 3,203
FINANCIAL SERVICES
Revenues 7,501 6,981 21,640 19,691
Costs and expenses
Interest expense 2,458 2,437 7,318 6,948
Depreciation 1,768 1,715 5,134 4,836
Operating and other expenses 1,559 1,421 4,522 4,049
Provision for credit and insurance losses 708 472 1,894 1,337
Asset write-downs and dispositions (Note 3) (235) - 437 -
------- ------- ------- -------
Total costs and expenses 6,258 6,045 19,305 17,170
Net revenue from transactions with Automotive 25 42 62 101
Gain on sale of The Associates'
common stock (Note 4) - - 650 -
------- ------- ------- -------
Income before income taxes - Financial Services 1,268 978 3,047 2,622
------- ------- ------- -------
TOTAL COMPANY
Income before income taxes 1,227 562 4,952 5,825
Provision for income taxes 474 157 1,581 2,198
------- ------- ------- -------
Income before minority interests 753 405 3,371 3,627
Minority interests in net income of subsidiaries 67 48 129 148
------- ------- ------- -------
Net income $ 686 $ 357 $ 3,242 $ 3,479
======= ======= ======= =======
Income attributable to Common and Class B Stock
after preferred stock dividends $ 670 $ 302 $ 3,191 $ 3,283
Average number of shares of Common and Class B
Stock outstanding 1,183 1,083 1,177 1,049
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
Income $ 0.57 $ 0.28 $ 2.71 $ 3.13
Income assuming full dilution $ 0.56 $ 0.27 $ 2.66 $ 2.85
Cash dividends $ 0.385 $ 0.31 $ 1.085 $ 0.88
</TABLE>
The accompanying notes are part of the financial statements.
FS-3
<PAGE> 17
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Automotive
Cash and cash equivalents $ 3,461 $ 5,750
Marketable securities 9,499 6,656
-------- --------
Total cash and marketable securities 12,960 12,406
Receivables 3,525 3,321
Inventories (Note 5) 7,671 7,162
Deferred income taxes 3,287 2,709
Other current assets 3,526 1,483
Net current receivable from Financial Services 109 200
-------- --------
Total current assets 31,078 27,281
Equity in net assets of affiliated companies 2,484 2,248
Net property 32,605 31,273
Deferred income taxes 4,703 4,802
Other assets 7,196 7,168
-------- --------
Total Automotive assets 78,066 72,772
Financial Services
Cash and cash equivalents 5,295 2,690
Investments in securities 3,594 4,553
Net receivables and lease investments 158,386 149,694
Other assets 13,160 13,574
-------- --------
Total Financial Services assets 180,435 170,511
-------- --------
Total assets $258,501 $243,283
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables $ 11,729 $ 11,260
Other payables 1,876 1,976
Accrued liabilities 17,058 13,392
Income taxes payable 600 316
Debt payable within one year 2,125 1,832
-------- --------
Total current liabilities 33,388 28,776
Long-term debt 5,171 5,475
Other liabilities 26,497 25,677
Deferred income taxes 1,468 1,186
-------- --------
Total Automotive liabilities 66,524 61,114
Financial Services
Payables 3,927 5,476
Debt 148,320 141,317
Deferred income taxes 4,206 3,831
Other liabilities and deferred income 8,583 6,116
Net payable to Automotive 109 200
-------- --------
Total Financial Services liabilities 165,145 156,940
Company-obligated mandatorily redeemable preferred securities of
a subsidiary trust holding solely junior subordinated debentures
of the Company (Note 6) 680 682
Stockholders' equity
Capital stock
Preferred Stock, par value $1.00 per share (aggregate
liquidation preference of $724 million and $1,042 million) * *
Common Stock, par value $1.00 per share (1,115 and 1,089 million shares issued) 1,115 1,089
Class B Stock, par value $1.00 per share (71 million shares issued) 71 71
Capital in excess of par value of stock 5,202 5,105
Foreign currency translation adjustments and other 163 594
Earnings retained for use in business 19,601 17,688
-------- --------
Total stockholders' equity 26,152 24,547
-------- --------
Total liabilities and stockholders' equity $258,501 $243,283
======== ========
</TABLE>
- - - - - -
*Less than $1 million
The accompanying notes are part of the financial statements.
FS-4
<PAGE> 18
Ford Motor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
For the Periods Ended September 30, 1996 and 1995
(in millions)
<TABLE>
<CAPTION>
Nine Months 1996 Nine Months 1995
---------------------- ----------------------
Financial Financial
Automotive Services Automotive Services
---------- --------- ---------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Cash and cash equivalents at January 1 $ 5,750 $ 2,690 $ 4,481 $ 1,739
Cash flows from operating activities before securities trading 8,462 10,839 6,796 9,171
Net (purchases)/sales of trading securities (2,844) (1,230) 1,982 256
------- -------- ------- --------
Net cash flows from operating activities 5,618 9,609 8,778 9,427
Cash flows from investing activities
Capital expenditures (5,926) (349) (6,204) (223)
Acquisitions of receivables and lease investments - (82,293) - (71,557)
Collections of receivables and lease investments - 62,469 - 51,210
Net acquisitions of daily rental vehicles - (1,995) - (1,529)
Proceeds from USL Capital asset sales (Note 3) - 1,157 - -
Purchases of securities (6) (8,362) (47) (4,748)
Sales and maturities of securities 7 10,266 50 3,748
Proceeds from sales of receivables and lease investments - 1,011 - 2,728
Net investing activity with Financial Services (254) - (237) -
Other (523) (204) (400) (171)
------- -------- ------- --------
Net cash used in investing activities (6,702) (18,300) (6,838) (20,542)
Cash flows from financing activities
Cash dividends (1,328) - (1,120) -
Issuance of Common Stock 124 - 326 -
Issuance of Common Stock of a subsidiary (Note 4) - 1,897 - -
Changes in short-term debt 395 1,465 665 2,481
Proceeds from other debt 300 18,650 0 16,532
Principal payments on other debt (671) (10,407) (207) (7,931)
Net financing activity with Automotive - 254 - 237
Other (43) (266) 6 415
------- -------- ------- -------
Net cash (used in)/provided by financing activities (1,223) 11,593 (330) 11,734
Effect of exchange rate changes on cash (73) (206) 136 (21)
Net transactions with Automotive/Financial Services 91 (91) 394 (394)
------- -------- ------- --------
Net (decrease)/increase in cash and cash equivalents (2,289) 2,605 2,140 204
------- -------- ------- --------
Cash and cash equivalents at September 30 $ 3,461 $ 5,295 $ 6,621 $ 1,943
======= ======== ======= ========
</TABLE>
The accompanying notes are part of the financial statements.
FS-5
<PAGE> 19
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(unaudited)
1. Financial Statements - The financial data presented herein are unaudited,
but in the opinion of management reflect those adjustments necessary for a
fair presentation of such information. Results for interim periods should
not be considered indicative of results for a full year. Reference should
be made to the financial statements contained in the registrant's Annual
Report on Form 10-K (the "10-K Report") for the year ended December 31,
1995. For purposes hereof, "Ford" or the "Company" means Ford Motor Company
and its majority owned subsidiaries unless the context requires otherwise.
Certain amounts for prior periods have been reclassified.
2. Selected Automotive costs and expenses are summarized as follows
(in millions):
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------- -------------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Depreciation $687 $622 $1,966 $1,816
Amortization 828 731 2,278 2,072
</TABLE>
3. Asset Write-downs and Dispositions
During third quarter 1996, USL Capital concluded a series of transactions
for the sale of substantially all of its assets, as well as certain assets
owned by Ford Credit and managed by USL Capital. Proceeds from the sale
were used to pay down related liabilities and debt.
The Company recorded a pre-tax charge in second quarter 1996 to recognize
the estimated value of its outstanding notes receivable from, and preferred
stock investment in, Budget Rent a Car Corporation ("BRAC"). The write-down
resulted from conclusions reached in a study of Ford's rental car business
strategy. In accordance with SFAS 114, the notes receivable write-down
reflected primarily the unsecured portion of financing provided to BRAC by
Ford. The preferred stock write-down reflected recognition of the fair
value of Ford's investment. Subject to governmental review, the Company
also intends to acquire all of the outstanding common stock of BRAC at a
future date.
The effect of the USL Capital disposition and BRAC write-down on the
Company's results from operations are summarized below (in millions):
<TABLE>
<CAPTION>
Third Quarter 1996 Nine Months 1996
------------------------ -----------------------------
Income Net Income/(loss) Net
Before Taxes Income Before Taxes Income/(loss)
------------ ------ ------------ -------------
<S> <C> <C> <C> <C>
USL Capital disposition $235 $76 $ 263 $ 95
Budget Rent a Car Corporation write-down - - (700) (437)
---- --- ----- -----
Total $235 $76 $(437) $(342)
==== === ===== =====
</TABLE>
FS-6
<PAGE> 20
Ford Motor Company and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(unaudited)
4. Sale of The Associates' Common Stock - During May 1996, The Associates
completed an initial public offering of its common stock representing a
19.3% economic interest in The Associates (the "IPO"). The Company recorded
in second quarter 1996 a non-operating gain of $650 million resulting from
the IPO, to recognize the excess of the net proceeds from the IPO over the
proportionate share of the Company's investment in The Associates. The gain
was not subject to income taxes.
5. Automotive inventories are summarized as follows (in millions):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Raw materials, work in process and supplies $3,758 $3,717
Finished products 3,913 3,445
------ ------
Total inventories $7,671 $7,162
====== ======
U.S. inventories $2,929 $2,662
</TABLE>
6. Company-Obligated Mandatorily Redeemable Preferred Securities of a
Subsidiary Trust - The sole asset of Ford Motor Company Capital Trust I
(the "Trust"), which is the obligor on the Preferred Securities of such
Trust, is $632 million principal amount of 9% Junior Subordinated
Debentures due 2025 of Ford Motor Company.
FS-7
<PAGE> 21
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
EXHIBITS
Designation Description Method of Filing
- ----------- ----------- ----------------
Exhibit 27 Financial Data Schedule Filed with this Report
<PAGE> 22
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the date indicated.
FORD MOTOR CREDIT COMPANY
(Registrant)
Date: October 22, 1996 By: /s/R.P. Conrad
---------------
R.P. Conrad
Assistant Secretary
<PAGE> 23
EXHIBIT INDEX
Designation Description
- ----------- -----------
Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FORD CREDIT'S CONDENSED CONSOLIDATED BALANCE SHEET IS UNCLASSIFIED. THEREFORE,
THE FOLLOWING TAGS LISTED BELOW ARE NOT APPLICABLE TO FORD CREDIT: CURRENT
ASSETS AND CURRENT LIABILITIES. INFORMATION RELATING TO EARNINGS A SHARE IS NOT
PRESENTED BECAUSE FORD CREDIT IS AN INDIRECT WHOLLY OWNED SUBSIDIARY OF FORD
MOTOR COMPANY.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,361
<SECURITIES> 1,305
<RECEIVABLES> 63,179
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 99,937
<CURRENT-LIABILITIES> 0
<BONDS> 82,156
0
0
<COMMON> 25
<OTHER-SE> 7,845
<TOTAL-LIABILITY-AND-EQUITY> 99,937
<SALES> 0
<TOTAL-REVENUES> 10,708
<CGS> 0
<TOTAL-COSTS> 9,350
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 628
<INTEREST-EXPENSE> 3,827
<INCOME-PRETAX> 1,408
<INCOME-TAX> 468
<INCOME-CONTINUING> 924
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 924
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
