<PAGE> 1
Rule 424b(b)5
Registration Statement No. 33-64263
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED SEPTEMBER 18, 1996
$1,000,000,000
FORD MOTOR CREDIT COMPANY
7% NOTES DUE SEPTEMBER 25, 2001
------------------------
The Notes are offered for sale in the United States, Europe and Asia. See
"Underwriting".
Interest on the Notes is payable semiannually on March 25 and September 25
of each year, commencing March 25, 1997. The Notes will mature on September 25,
2001 and may not be redeemed by Ford Credit prior to maturity unless certain
events occur involving United States taxation. See "Description of Notes --
Redemption".
The Notes will be represented by one or more Global Notes registered in the
name of the Depository's nominee. Beneficial interests in the Global Notes will
be shown on, and transfers thereof will be effected only through, records
maintained by the Depository and its participants, including the U.S.
Depositaries for Cedel and Euroclear. Except as described herein, Notes in
definitive form will not be issued. The Notes will trade in the Depository's
Same-Day Funds Settlement System until maturity, and secondary market trading
activity for the Notes will, therefore, settle in immediately available funds.
All payments of principal and interest will be made by Ford Credit in
immediately available funds. See "Description of Notes -- Global Clearance and
Settlement Procedures".
Application has been made to the Luxembourg Stock Exchange, to The Stock
Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") and to the Stock
Exchange of Singapore Limited (the "Singapore Stock Exchange" and together the
"Exchanges") for permission to deal in, and for listing of, the Notes on such
Exchanges.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING FORD
OFFERING PRICE(1) DISCOUNT(2) CREDIT(1)(3)
------------------------------------------------------------
<S> <C> <C> <C>
Per Note.................................... 99.602% .350% 99.252%
Total....................................... $996,020,000 $3,500,000 $992,520,000
</TABLE>
- -------------------------
(1) Plus accrued interest, if any, from September 25, 1996 to date of delivery.
(2) Ford Credit has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, and to
pay to the Representatives up to $50,000 as reimbursement for all or a
portion of their expenses.
(3) Before deducting expenses payable by Ford Credit estimated to be $200,000.
------------------------
The Notes are offered severally by the Underwriters as specified herein,
subject to receipt and acceptance by them and subject to their right to reject
any order in whole or in part. It is expected that delivery of the Global Notes
will be made through the facilities of the Depository, Cedel and Euroclear on or
about September 25, 1996.
GOLDMAN, SACHS & CO.
CS FIRST BOSTON DEUTSCHE MORGAN GRENFELL
LEHMAN BROTHERS MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES LTD. NOMURA SECURITIES
ABN AMRO HOARE GOVETT BARCLAYS DE ZOETE WEDD LIMITED
BEAR, STEARNS & CO. INC. CITIC INDUSTRIAL BANK
DAIWA EUROPE LIMITED FUJI INTERNATIONAL FINANCE PLC
HSBC MARKETS LIMITED IBJ INTERNATIONAL PLC
MORGAN STANLEY & CO. PARIBAS CAPITAL MARKETS
INTERNATIONAL
SALOMON BROTHERS INC TOKYO-MITSUBISHI INTERNATIONAL PLC
UBS SECURITIES
------------------------
The date of this Prospectus Supplement is September 18, 1996.
<PAGE> 2
THE HONG KONG STOCK EXCHANGE TAKES NO RESPONSIBILITY FOR THE CONTENTS OF
THIS DOCUMENT, MAKES NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS AND
EXPRESSLY DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING FROM
OR IN RELIANCE UPON THE WHOLE OR ANY PART OF THE CONTENTS OF THIS DOCUMENT.
THE SINGAPORE STOCK EXCHANGE ASSUMES NO RESPONSIBILITY FOR THE CORRECTNESS
OF ANY OF THE STATEMENTS OR OPINIONS MADE OR REPORTS CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS. ADMISSION TO THE OFFICIAL
LIST IS NOT TO BE TAKEN AS AN INDICATION OF THE MERITS OF THE ISSUER OR OF THE
NOTES.
THIS PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS INCLUDE PARTICULARS
GIVEN IN COMPLIANCE WITH THE RULES GOVERNING THE LISTING OF SECURITIES ON THE
HONG KONG STOCK EXCHANGE, THE SECURITIES (STOCK EXCHANGE LISTING) RULES 1989
(CAP. 333 SUB.LEG.C) OF HONG KONG AND REQUIREMENTS OF THE SINGAPORE STOCK
EXCHANGE FOR THE PURPOSE OF GIVING INFORMATION WITH REGARD TO FORD MOTOR CREDIT
COMPANY ("FORD CREDIT"). FORD CREDIT ACCEPTS FULL RESPONSIBILITY FOR THE
ACCURACY OF THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND
ACCOMPANYING PROSPECTUS AND CONFIRMS, HAVING MADE ALL REASONABLE ENQUIRIES, THAT
TO THE BEST OF ITS KNOWLEDGE AND BELIEF THERE ARE NO OTHER FACTS THE OMISSION OF
WHICH WOULD MAKE ANY STATEMENT HEREIN MISLEADING IN ANY MATERIAL RESPECT.
OFFERS AND SALES OF THE NOTES ARE SUBJECT TO RESTRICTIONS IN RELATION TO
THE UNITED KINGDOM, HONG KONG AND SINGAPORE, DETAILS OF WHICH ARE SET OUT IN
"UNDERWRITING" BELOW. THE DISTRIBUTION OF THIS PROSPECTUS SUPPLEMENT AND
ACCOMPANYING PROSPECTUS AND THE OFFERING OF THE NOTES IN CERTAIN OTHER
JURISDICTIONS MAY ALSO BE RESTRICTED BY LAW.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY, TO THE EXTENT
PERMITTED BY, AND IN ACCORDANCE WITH, APPLICABLE LAWS, OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE EXCHANGES OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
In this Prospectus Supplement and accompanying Prospectus, unless otherwise
specified or the context otherwise requires, references to "dollars", "$" and
"U.S.$" are to United States dollars.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Ford Credit's Annual Report on Form 10-K for the year ended December 31,
1995 (the "1995 10-K Report"), Ford Credit's Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1996 (the "First Quarter 10-Q Report") and June 30,
1996 (the "Second Quarter 10-Q Report") and Ford Credit's Current Reports on
Form 8-K dated January 5, 1996, January 24, 1996, February 6, 1996, April 17,
1996 and September 10, 1996 are incorporated in this Prospectus Supplement by
reference. All documents filed by Ford Credit pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
Prospectus Supplement and prior to the termination of the offering of the Notes
shall be deemed to be incorporated by reference into this Prospectus Supplement
and to be a part hereof from the date of filing such documents. Such reports
include, and such documents may include, information concerning Ford, as well as
Ford Credit.
This Prospectus Supplement and accompanying Prospectus, together with the
documents incorporated by reference herein, will be available free of charge at
the office of Banque Internationale a Luxembourg S.A., 69, route d'Esch L-1470,
Luxembourg.
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<PAGE> 3
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF FORD CREDIT
J.D. Bringard,
Vice President-General Counsel
J.P. Burkhard,
Vice President-Treasurer
J.G. Clissold,
Director and
Executive Vice President
K.J. Coates,
Director and
Executive Vice President
D.C. Flanigan,
Vice President
E.B. Ford II,
Director and
President
R.A. Kniebes,
Vice President
T.F. Marrs,
Vice President
D.N. McCammon,
Director
J.T. Noone,
Vice President
W.E. Odom,
Director and
Chairman of the Board
M.R. O'Rear,
Vice President
W.D. Roberts,
Vice President
D.E. Ross,
Vice President
A.J. Salmon,
Vice President
G.C. Smith,
Director and
Executive Vice President
R.C. VanLeeuwen,
Vice President
J.M. Walsh,
Vice President
G.E. Watts,
Vice President
D.J. Wennerberg,
Director and
Executive Vice President
K. Whipple,
Director
All of the above-named persons are full-time employees of Ford Motor Company
("Ford") or Ford Credit.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be added to the general
funds of Ford Credit and will be available for the purchase of receivables, for
loans and for the payment of maturing debt. Such proceeds initially may be used
to reduce short-term borrowings or may be invested temporarily in short-term
securities. Net proceeds to be paid to Ford Credit will be U.S. $992,520,000.
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<PAGE> 4
CAPITALIZATION OF FORD MOTOR CREDIT COMPANY
AND SUBSIDIARIES
The capitalization of Ford Credit and its subsidiaries at June 30, 1996 and
the additional long-term indebtedness represented by (i) estimated additional
long-term indebtedness placed from July 1, 1996 through August 31, 1996 and (ii)
the Notes offered hereby, are as follows (in millions of U.S. dollars):
<TABLE>
<CAPTION>
OUTSTANDING ADDITIONAL
JUNE 30, LONG-TERM
1996 INDEBTEDNESS
----------- ------------
<S> <C> <C>
SENIOR INDEBTEDNESS, UNSECURED
Short-term
Commercial paper......................................... $35,491.7
Other short-term debt.................................... 1,609.7
---------
Net short-term senior indebtedness.................. 37,101.4
Long-term debt payable within one year........................ 6,422.1
Long-term notes and debentures................................ 38,707.9
Estimated additional long-term indebtedness placed from July 1,
1996 through August 31, 1996(1).................................. -- $3,274.2
Notes offered hereby............................................... -- 1,000
---------
Total senior indebtedness, unsecured................ 82,231.4
---------
STOCKHOLDER'S EQUITY
Capital stock, par value $100 a share (250,000 shares
authorized, issued, and outstanding)......................... 25.0
Paid-in surplus (contributions by stockholder)................ 2,777.3
Note receivable from affiliated company....................... (1,917.0)
Unrealized gain on marketable equity securities, net of
taxes........................................................ 44.2
Foreign currency translation adjustments...................... (58.9)
Earnings retained for use in the business..................... 6,944.8
---------
Total stockholder's equity.......................... 7,815.4
---------
TOTAL CAPITALIZATION............................................... $90,046.8
=========
</TABLE>
- ---------------
(1) Additional long-term indebtedness placed from July 1, 1996 through August
31, 1996 includes U.S. $3.2 billion (estimated) of debt of USL Capital
Corporation for which Ford Credit has become a co-obligor and U.S. $74.2
million (estimated) of other debt of Ford Credit and its consolidated
subsidiaries.
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<PAGE> 5
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth in
the Prospectus. The Notes are part of the Debt Securities registered by Ford
Credit in January 1996 to be issued on terms to be determined at the time of
sale.
GENERAL
The Notes will be limited to $1,000,000,000 aggregate principal amount. The
Notes will be unsecured obligations of Ford Credit and will mature on September
25, 2001. The Notes will rank prior to all subordinated indebtedness of Ford
Motor Credit Company (parent company only) and pari passu with all other
unsecured and unsubordinated indebtedness of Ford Motor Credit Company (parent
company only).
The Notes will bear interest from September 25, 1996 at the rate per annum
set forth on the cover page of this Prospectus Supplement, payable on March 25
and September 25 of each year, commencing March 25, 1997, to the person in whose
name the Note was registered at the close of business on the 15th day preceding
the respective Interest Payment Date, subject to certain exceptions. The Notes
are not subject to redemption prior to maturity unless certain events occur
involving United States taxation. In such event, the Notes will be redeemed at a
redemption price of 100% of their principal amount plus accrued and unpaid
interest to the date of redemption. See "Description of Notes -- Redemption". If
any day on which a payment is due with respect to a Note is not a Business Day,
then the holder thereof shall not be entitled to payment of the amount due until
the next following Business Day nor to any additional principal, interest or
other payment as a result of such delay except as otherwise provided under
"Payment of Additional Amounts." "Business Day" shall mean any day which is not
a Saturday or Sunday or a day on which banks in New York City and Philadelphia
and any other place of payment are authorized or obligated by law or regulation
to close.
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be issued in the form of one or more fully registered Global
Notes (the "Global Notes") which will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York (the "Depository") and registered
in the name of Cede & Co., the Depository's nominee. Beneficial interests in the
Global Notes will be represented through book-entry accounts of financial
institutions acting on behalf of beneficial owners as direct and indirect
participants in the Depository. Investors may elect to hold interests in the
Global Notes through either the Depository (in the United States) or Cedel Bank,
societe anonyme ("Cedel") or Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System ("Euroclear") (in Europe) if they
are participants of such systems, or indirectly through organizations which are
participants in such systems. Cedel and Euroclear will hold interests on behalf
of their participants through customers' securities accounts in Cedel's and
Euroclear's names on the books of their respective depositaries, which in turn
will hold such interests in customers' securities accounts in the depositaries'
names on the books of the Depository. Citibank, N.A. will act as depositary for
Cedel and Morgan Guaranty Trust Company of New York will act as depositary for
Euroclear (in such capacities, the "U.S. Depositaries"). Except as set forth
below, the Global Notes may be transferred, in whole and not in part, only to
another nominee of the Depository or to a successor of the Depository or its
nominee.
Cedel advises that it is incorporated under the laws of Luxembourg as a
professional depositary. Cedel holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Cedel provides to
Cedel Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded
S-5
<PAGE> 6
securities and securities lending and borrowing. Cedel interfaces with domestic
markets in several countries. As a professional depositary, Cedel is subject to
regulation by the Luxembourg Monetary Institute. Cedel Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the Underwriters. Indirect
access to Cedel is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Cedel Participant either directly or indirectly.
Distributions with respect to the Notes held beneficially through Cedel
will be credited to cash accounts of Cedel Participants in accordance with its
rules and procedures, to the extent received by the U.S. Depositary for Cedel.
Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euro-clear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the Underwriters.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear Participants in accordance
with the Terms and Conditions, to the extent received by the U.S. Depositary for
Euroclear. In the event definitive Notes are issued, Ford Credit will appoint a
paying agent and transfer agent in Luxembourg, Hong Kong and Singapore.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Initial settlement for the Notes will be made in immediately available
funds. Secondary market trading between DTC Participants will occur in the
ordinary way in accordance with Depository rules and will be settled in
immediately available funds using the Depository's Same-Day Funds Settlement
System. Secondary market trading between Cedel Participants and/or Euroclear
Participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of
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<PAGE> 7
Cedel and Euroclear and will be settled using the procedures applicable to
conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through the Depository on the one hand, and directly or indirectly through Cedel
or Euroclear Participants, on the other, will be effected in the Depository in
accordance with the Depository rules on behalf of the relevant European
international clearing system by its U.S. Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its U.S.
Depositary to take action to effect final settlement on its behalf by delivering
or receiving Notes in the Depository, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
the Depository. Cedel Participants and Euroclear Participants may not deliver
instructions directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of Notes received in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during subsequent securities settlement processing and dated the business day
following the Depository settlement date. Such credits or any transactions in
such Notes settled during such processing will be reported to the relevant
Euroclear or Cedel Participants on such business day. Cash received in Cedel or
Euroclear as a result of sales of Notes by or through a Cedel Participant or a
Euroclear Participant to a DTC Participant will be received with value on the
Depository settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in the
Depository.
Although the Depository, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Notes among participants of the
Depository, Cedel and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
PAYMENT OF ADDITIONAL AMOUNTS
Ford Credit will, subject to the exceptions and limitations set forth
below, pay as additional interest on the Notes, such additional amounts as are
necessary in order that the net payment by Ford Credit or a paying agent of the
principal of and interest on the Notes to a holder who is a non-United States
person (as defined below), after deduction for any present or future tax,
assessment or governmental charge of the United States or a political
subdivision or taxing authority thereof or therein, imposed by withholding with
respect to the payment, will not be less than the amount provided in the Notes
to be then due and payable; provided, however, that the foregoing obligation to
pay additional amounts shall not apply:
(1) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the holder, or a fiduciary, settlor,
beneficiary, member or shareholder of the holder if the holder is an
estate, trust, partnership or corporation, or a person holding a power over
an estate or trust administered by a fiduciary holder, being considered as:
(a) being or having been present or engaged in trade or business in
the United States or having or having had a permanent establishment in
the United States;
(b) having a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;
(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled foreign
corporation with respect to the United States or a corporation that has
accumulated earnings to avoid United States federal income tax; or
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<PAGE> 8
(d) being or having been a "10-percent shareholder" of Ford Credit
as defined in section 871(h)(3) of the United States Internal Revenue
Code or any successor provision;
(2) to any holder that is not the sole beneficial owner of the Note,
or a portion thereof, or that is a fiduciary or partnership, but only to
the extent that a beneficiary or settlor with respect to the fiduciary, a
beneficial owner or member of the partnership would not have been entitled
to the payment of an additional amount had the beneficiary, settlor,
beneficial owner or member received directly its beneficial or distributive
share of the payment;
(3) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the failure of the holder or any other person
to comply with certification, identification or information reporting
requirements concerning the nationality, residence, identity or connection
with the United States of the holder or beneficial owner of such Note, if
compliance is required by statute, by regulation of the United States
Treasury Department or by an applicable income tax treaty to which the
United States is a party as a precondition to exemption from such tax,
assessment or other governmental charge;
(4) to a tax, assessment or governmental charge that is imposed
otherwise than by withholding by Ford Credit or a paying agent from the
payment;
(5) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of a change in law, regulation, or administrative
or judicial interpretation that becomes effective more than 15 days after
the payment becomes due or is duly provided for, whichever occurs later;
(6) to an estate, inheritance, gift, sales, excise, transfer, wealth
or personal property tax or a similar tax, assessment or governmental
charge;
(7) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of or interest
on any Note, if such payment can be made without such withholding by any
other paying agent; or
(8) in the case of any combination of items (1), (2), (3), (4), (5),
(6) and (7).
The Notes are subject in all cases to any tax, fiscal or other law or regulation
or administrative or judicial interpretation applicable thereto. Except as
specifically provided under this heading "Payment of Additional Amounts" and
under the heading "Description of Notes -- Redemption", Ford Credit shall not be
required to make any payment with respect to any tax, assessment or governmental
charge imposed by any government or a political subdivision or taxing authority
thereof or therein.
As used under this heading "Payment of Additional Amounts" and under the
headings "Description of Notes -- Redemption", "Certain United States Tax
Documentation Requirements" and "United States Taxation of Non-United States
Persons" the term "United States" means the United States of America (including
the States and the District of Columbia) and its territories, its possessions
and other areas subject to its jurisdiction, "United States person" means any
individual who is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any estate or trust the income of which is subject to United
States federal income taxation regardless of its source and "non-United States
person" means a person who is not a United States person.
REDEMPTION
If (a) as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein), or any change in,
or amendments to, official position regarding the application or interpretation
of such laws, regulations or rulings, which change or amendment is announced or
becomes effective on or after the date of this Prospectus Supplement, Ford
Credit becomes or will
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<PAGE> 9
become obligated to pay additional amounts as described herein under the heading
"Payment of Additional Amounts" or (b) any act is taken by a taxing authority of
the United States on or after the date of this Prospectus Supplement, whether or
not such act is taken with respect to Ford Credit or any affiliate, that results
in a substantial probability that Ford Credit will or may be required to pay
such additional amounts, then Ford Credit may, at its option, redeem, as a
whole, but not in part, the Notes on not less than 30 nor more than 60 days'
prior notice, at a redemption price equal to 100% of their principal amount,
together with interest accrued thereon to the date fixed for redemption;
provided that Ford Credit determines, in its business judgment, that the
obligation to pay such additional amounts cannot be avoided by the use of
reasonable measures available to it, not including substitution of the obligor
under the Notes. No redemption pursuant to (b) above may be made unless Ford
Credit shall have received an opinion of independent counsel to the effect that
an act taken by a taxing authority of the United States results in a substantial
probability that it will or may be required to pay the additional amounts
described herein under the heading "Payment of Additional Amounts" and Ford
Credit shall have delivered to the Trustee a certificate, signed by a duly
authorized officer, stating that based on such opinion Ford Credit is entitled
to redeem the Notes pursuant to their terms.
NOTICES
Notices to holders of the Notes will be published in Authorized Newspapers
in The City of New York, in London, and, so long as the Notes are listed on the
Luxembourg Stock Exchange, in Luxembourg, on the Hong Kong Stock Exchange, in
Hong Kong, and on the Singapore Stock Exchange, in Singapore. It is expected
that publication will be made in The City of New York in The Wall Street
Journal, in London in the Financial Times, in Luxembourg in the Luxemburger
Wort, in Hong Kong in the South China Morning Post, and in Singapore in the
Business Times. Any such notice shall be deemed to have been given on the date
of such publication or, if published more than once, on the date of the first
such publication.
APPLICABLE LAW AND SERVICE OF PROCESS
The Notes and the Indenture will be governed by and construed in accordance
with the laws of the State of New York. Ford Credit has designated CT
Corporation System in New York City as the authorized agent to receive service
of process in the State of New York.
CERTAIN UNITED STATES TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of a Note will generally be subject to the 30% United
States federal withholding tax that generally applies to payments of interest on
a registered form debt obligation issued by a United States person, unless one
of the following steps is taken to obtain an exemption from or reduction of the
tax:
Exemption for Non-United States persons (IRS Form W-8). A beneficial owner
of a Note that is a non-United States person (other than certain persons that
are related to Ford Credit through stock ownership as described in clauses
(x)(a) and (b) of Paragraph (i) under "United States Taxation of Non-United
States Persons -- Income and Withholding Tax") can obtain an exemption from the
withholding tax by providing a properly completed IRS Form W-8 (Certificate of
Foreign Status).
Exemption for Non-United States persons with effectively connected income
(IRS Form 4224). A beneficial owner of a Note that is a non-United States
person, including a non-United States corporation or bank with a United States
branch, that conducts a trade or business in the United States with which
interest income on a Note is effectively connected, can obtain an exemption from
the withholding tax by providing a properly completed IRS Form 4224 (Exemption
from Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
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<PAGE> 10
Exemption or reduced rate for Non-United States persons entitled to the
benefits of a treaty (IRS Form 1001). A beneficial owner of a Note that is a
non-United States person entitled to the benefits of an income tax treaty to
which the United States is a party can obtain an exemption from or reduction of
the withholding tax (depending on the terms of the treaty) by providing a
properly completed IRS Form 1001 (Ownership, Exemption or Reduced Rate
Certificate).
Exemption for United States Persons (IRS Form W-9). A beneficial owner of a
Note that is a United States person can obtain a complete exemption from the
withholding tax by providing a properly completed IRS Form W-9 (Request for
Taxpayer Identification Number and Certification).
United States federal income tax reporting procedure. A beneficial owner of
a Note, or, in the case of IRS Forms 1001 and 4224, its agent, is required to
submit the appropriate IRS Form under applicable procedures to the person
through which the owner directly holds the Note. For example, if the beneficial
owner is listed directly on the books of Euroclear or Cedel as the holder of the
Note, the IRS Form must be provided to Euroclear or Cedel, as the case may be.
Each other person through which a Note is held must submit, on behalf of the
beneficial owner, the IRS Form (or in certain cases a copy thereof) under
applicable procedures to the person through which it holds the Note, until the
IRS Form is received by the United States person who would otherwise be required
to withhold United States federal income tax from interest on the Note. For
example, in the case of Notes held through Euroclear or Cedel, the IRS Form (or
a copy thereof) must be received by the U.S. Depositary of such clearing agency.
Applicable procedures include additional certification requirements, described
in clause (x)(c)(B) of Paragraph (i) under "United States Taxation of Non-United
States Persons -- Income and Withholding Tax", if a beneficial owner of the Note
provides an IRS Form W-8 to a securities clearing organization, bank or other
financial institution that holds the Note on its behalf.
EACH HOLDER OF A NOTE SHOULD BE AWARE THAT IF IT DOES NOT PROPERLY PROVIDE
THE REQUIRED IRS FORM, OR IF THE IRS FORM (OR, IF PERMISSIBLE, A COPY OF SUCH
FORM) IS NOT PROPERLY TRANSMITTED TO AND RECEIVED BY THE UNITED STATES PERSON
OTHERWISE REQUIRED TO WITHHOLD UNITED STATES FEDERAL INCOME TAX, INTEREST ON THE
NOTE MAY BE SUBJECT TO UNITED STATES WITHHOLDING TAX AT A 30% RATE AND THE
HOLDER (INCLUDING THE BENEFICIAL OWNER) WILL NOT BE ENTITLED TO ANY ADDITIONAL
AMOUNTS FROM FORD CREDIT DESCRIBED UNDER THE HEADING "DESCRIPTION OF NOTES --
PAYMENT OF ADDITIONAL AMOUNTS" WITH RESPECT TO SUCH TAX. SUCH TAX, HOWEVER, MAY
IN CERTAIN CIRCUMSTANCES BE ALLOWED AS A REFUND OR AS A CREDIT AGAINST SUCH
HOLDER'S UNITED STATES FEDERAL INCOME TAX. THE FOREGOING DOES NOT DEAL WITH ALL
ASPECTS OF FEDERAL INCOME TAX WITHHOLDING THAT MAY BE RELEVANT TO FOREIGN
HOLDERS OF THE NOTES. INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
FOR SPECIFIC ADVICE CONCERNING THE OWNERSHIP AND DISPOSITION OF NOTES.
UNITED STATES TAXATION OF NON-UNITED STATES PERSONS
INCOME AND WITHHOLDING TAX
In the opinion of Sullivan & Cromwell, special tax counsel to the Company,
and Shearman & Sterling, counsel for the Underwriters, under United States
federal tax law as of the date of this Prospectus Supplement, and subject to the
discussion of backup withholding below:
(i) payments of principal and interest on a Note that is beneficially
owned by a non-United States person will not be subject to United States
federal withholding tax; provided, that in the case of interest, (x) (a)
the beneficial owner does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of Ford Credit
entitled to vote, (b) the beneficial owner is not a controlled foreign
corporation that is related to Ford Credit through stock ownership, and (c)
either (A) the beneficial owner of the Note certifies to the person
otherwise required to withhold United States federal income tax from such
interest,
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<PAGE> 11
under penalties of perjury, that it is not a United States person and
provides its name and address or (B) a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "financial institution") and
holds the Note certifies to the person otherwise required to withhold
United States federal income tax from such interest, under penalties of
perjury, that such statement has been received from the beneficial owner by
it or by a financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof; (y) the beneficial owner is
entitled to the benefits of an income tax treaty under which the interest
is exempt from United States federal withholding tax and the beneficial
owner of the Note or such owner's agent provides an IRS Form 1001 claiming
the exemption; or (z) the beneficial owner conducts a trade or business in
the United States to which the interest is effectively connected and the
beneficial owner of the Note or such owner's agent provides an IRS Form
4224; provided that in each such case, the relevant certification or IRS
Form is delivered pursuant to applicable procedures and is properly
transmitted to the person otherwise required to withhold United States
federal income tax, and none of the persons receiving the relevant
certification or IRS Form has actual knowledge that the certification or
any statement on the IRS Form is false;
(ii) a non-United States person will not be subject to United States
federal withholding tax on any gain realized on the sale, exchange or
redemption of a Note unless the gain is effectively connected with the
beneficial owner's trade or business in the United States or, in the case
of an individual, the holder is present in the United States for 183 days
or more in the taxable year in which the sale, exchange or redemption
occurs and certain other conditions are met; and
(iii) a Note owned by an individual who at the time of death is not a
citizen or resident of the United States will not be subject to United
States federal estate tax as a result of such individual's death if the
individual does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of Ford Credit entitled to
vote and the income on the Note would not have been effectively connected
with a U.S. trade or business of the individual.
Interest on a Note that is effectively connected with the conduct of a
trade or business in the United States by a holder of a Note who is a non-United
States person, although exempt from United States withholding tax, may be
subject to United States income tax as if such interest was earned by a United
States person.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments of
principal and interest made on a Note and the proceeds of the sale of a Note
within the United States to non-corporate holders of the Notes, and "backup
withholding" at a rate of 31% will apply to such payments if the holder fails to
provide an accurate taxpayer identification number in the manner required or to
report all interest and dividends required to be shown on its federal income tax
returns.
Information reporting on IRS Form 1099 and backup withholding will not
apply to payments made by Ford Credit or a paying agent to a non-United States
person on a Note if, in the case of interest, the IRS Form described in clause
(y) or (z) in Paragraph (i) under "Income and Withholding Tax" has been provided
under applicable procedures, or, in the case of interest or principal, the
certification described in clause (x)(c) in Paragraph (i) under "Income and
Withholding Tax" and a certification that the beneficial owner satisfies certain
other conditions have been supplied under applicable procedures, provided that
the payor does not have actual knowledge that the certifications are incorrect.
Payments of the proceeds from the sale of a Note made to or through a
foreign office of a broker will not be subject to information reporting or
backup withholding, except that if the broker is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50% or more of whose gross income is effectively connected with a United
States trade or
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<PAGE> 12
business for a specified three-year period, information reporting may apply to
such payments. Payments of the proceeds from the sale of a Note to or through
the United States office of a broker are subject to information reporting and
backup withholding unless the holder or beneficial owner certifies that it is a
non-United States person and that it satisfies certain other conditions or
otherwise establishes an exemption from information reporting and backup
withholding.
Backup withholding is not a separate tax, but is allowed as a refund or
credit against the holder's United States federal income tax, provided the
necessary information is furnished to the Internal Revenue Service.
Interest on a Note that is beneficially owned by a non-United States person
will be reported annually on IRS Form 1042S, which must be filed with the
Internal Revenue Service and furnished to such beneficial owner.
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<PAGE> 13
FORD MOTOR CREDIT COMPANY AND CONSOLIDATED SUBSIDIARIES
SELECTED FINANCIAL DATA
(DOLLAR AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
OR AT JUNE 30 YEARS ENDED OR AT DECEMBER 31
---------------------- -----------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Total revenue................. $ 7,071.6 $ 6,313.1 $13,110.1 $10,389.3 $ 8,338.4
Interest expense.............. 2,566.1 2,401.7 4,957.2 3,540.8 2,919.3
Provision for credit losses... 360.4 156.5 437.9 246.5 270.2
Income before income taxes.... 945.2 951.2 1,945.3 1,999.1 1,875.0
Net income.................... 625.0 629.1 1,395.2 1,312.7 1,193.8
Cash dividends................ (324.0) 0.0 (600.0) (364.0) (250.0)
Memo:
Net credit losses amount...... $ 280.2 $ 148.6 $ 393.9 $ 228.7 $ 228.4
As percentage of average net
finance receivables
outstanding
(annualized)*.............. 0.60% 0.37% 0.48% 0.32% 0.39%
BALANCE SHEET DATA
Net investment, operating
leases..................... $27,514.1 $22,637.5 $24,810.8 $19,993.9 $12,600.9
========= ========= ========= ========= =========
Finance receivables, net...... $65,501.7 $61,193.2 $61,043.8 $56,946.5 $50,759.2
========= ========= ========= ========= =========
Capital
Short-term debt............ $37,101.4 $36,679.3 $36,501.4 $34,364.9 $25,507.1
Long-term debt (including
current portion)......... 45,130.0 39,535.7 42,665.7 36,075.5 33,291.6
Stockholder's equity....... 7,815.4 7,393.5 7,553.7 6,662.6 5,774.7
--------- --------- --------- --------- ---------
Total capital............ $90,046.8 $83,608.5 $86,720.8 $77,103.0 $64,573.4
========= ========= ========= ========= =========
</TABLE>
- ---------------
* Includes net investment in operating leases.
SECOND QUARTER 1996 RESULTS OF OPERATIONS
Ford Credit's consolidated net income for the second quarter of 1996 was
$332 million, down $9 million or 3% compared with $341 million in the second
quarter of 1995. Compared with results from a year ago, the decrease in net
income reflects primarily an increase in credit losses, and lower income
resulting from the repurchase in the first quarter by Ford Holdings, Inc. ("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 0.60% in the second quarter of
1996 compared with 0.37% in the second quarter of 1995.
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 6.7% to 6.4%. The increase in earning assets reflects a higher level
of operating leases and retail installment sale receivables, offset partially by
a lower level of wholesale receivables, primarily resulting from lower dealer
stock levels. Total net finance receivables and net investment in operating
leases at June 30, 1996 were $93.0 billion, up $9.2 billion or 11% from a year
earlier. Depreciation expense on operating leases in the second quarter of 1996
was $1,315 million, up $59 million or 5% compared with the second
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<PAGE> 14
quarter of 1995. The increase in depreciation expense reflects the higher levels
of operating leases and is more than offset by higher revenue earned from the
increased volume of lease contracts.
During the second quarter of 1996, Ford Credit financed 40.8% of all new
cars and trucks sold by Ford Motor Company dealers in the United States,
compared with 36.1% in the second quarter of 1995. The increase resulted from
higher levels of retail installment sale financing and operating lease
financing, partially offset by lower levels of lease financing extended to
leasing companies and daily rental companies. Ford Credit provided retail
financing for 786,000 new and used vehicles in the United States, up 19% from a
year ago. Ford Credit also provided wholesale financing for 81.0% of Ford Motor
Company factory sales to U.S. car and truck dealers during the quarter, compared
with 80.6% in the same period a year ago.
FIRST HALF 1996 RESULTS OF OPERATIONS
For the first half of 1996, Ford Credit's consolidated net income was $625
million, down $4 million or 1% from $629 million in the first half of 1995. The
factors affecting financing profits during the first half of 1996 were the same
as those affecting second quarter results discussed above.
During the first half of 1996, Ford Credit provided retail financing for
39.7% of all new cars and trucks sold by Ford Motor Company dealers in the
United States, compared with 36.3% 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 1,464,000
new and used vehicles compared with 1,235,000 vehicles in the first half of
1995. Ford Credit also provided wholesale financing for 79.2% of Ford Motor
Company factory sales to U.S. car and truck dealers during the first half of
1996, equal to the share during the same period last year.
NEW ACCOUNTING STANDARD
In June 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125, Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities, effective for transfers
and servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996. Ford Credit will adopt this accounting standard on
January 1, 1997. The impact of the adoption of this accounting standard on Ford
Credit's results has not been determined.
LIQUIDITY AND CAPITAL RESOURCES
Ford Credit relies heavily on its ability to raise substantial amounts of
funds. These funds are obtained primarily by sales of commercial paper and
issuance of term debt. Funds also are provided by retained earnings and sales of
receivables. The level of funds can be affected by certain transactions with
Ford or Ford FSG, Inc., such as capital contributions, interest supplements and
other support costs from Ford for vehicles financed and leased by Ford Credit
under Ford sponsored special financing and leasing programs, and dividend
payments, and the timing of payments for the financing of dealers' wholesale
inventories and for income taxes. Ford Credit's ability to obtain funds is
affected by its debt ratings, which are closely related to the outlook for, and
financial condition of, Ford, and the nature and availability of support
facilities, such as revolving credit and receivables sales agreements. In
addition, Ford Credit from time to time sells its receivables in public
offerings or private placements. For additional information regarding liquidity
and capital resources, see Item 1--Business--"Business of Ford
Credit--Borrowings and Other Sources of Funds" in the 1995 10-K Report, and see
the First Quarter 10-Q Report and the Second Quarter 10-Q Report. For additional
information regarding Ford Credit's association with Ford, see Item
1-- Business-- "Certain Transactions with Ford and Affiliates" in the 1995 10-K
Report.
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<PAGE> 15
SELECTED FINANCIAL DATA AND OTHER DATA OF FORD
The following table sets forth selected financial data and other data
concerning Ford:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
OR AT JUNE 30 YEARS ENDED OR AT DECEMBER 31
---------------------- ------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- --------- -------- ---------
(IN MILLIONS EXCEPT PER SHARE AND UNIT SALES AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME
INFORMATION
Automotive
Sales................................ $ 60,059 $ 58,462 $110,496 $107,137 $ 91,568 $ 84,407 $ 72,051
Operating income/(loss).............. 1,939 3,556 3,281 5,826 1,432 (1,775) (3,769)
Income/(loss) before cumulative
effects of changes in accounting
principles......................... 1,250 2,241 2,056 3,913 1,008 (1,534) (3,186)
Financial Services
Revenues............................. 14,139 12,710 26,641 21,302 16,953 15,725 16,235
Income before income taxes and
cumulative effects of changes in
accounting principles.............. 1,779 1,644 3,539 2,792 2,712 1,825 1,465
Income before cumulative effects of
changes in accounting principles... 1,306 881 2,083 1,395 1,521 1,032 928
Total Ford
Income/(loss) before cumulative
effects of changes in accounting
principles......................... 2,556 3,122 4,139 5,308 2,529 (502) (2,258)
Cumulative effects of changes in
accounting principles.............. -- -- -- -- -- (6,883) --
Net income/(loss).................... 2,556 3,122 4,139 5,308 2,529 (7,385) (2,258)
Amounts Per Share of Common Stock and
Class B Stock After Preferred Stock
Dividends*
Income/(loss) before cumulative
effects of changes in accounting
principles......................... 2.15 2.89 3.58 4.97 2.27 (0.73) (2.40)
Cumulative effects of changes in
accounting principles.............. -- -- -- -- -- (7.08) --
-------- -------- -------- -------- --------- -------- ---------
Income/(loss) assuming no dilution... 2.15 2.89 3.58 4.97 2.27 (7.81) (2.40)
Income/(loss) assuming full
dilution........................... 2.10 2.59 3.33 4.44 2.10 (7.81) (2.40)
Cash dividends....................... 0.70 0.57 1.23 0.91 0.80 0.80 0.98
CONSOLIDATED BALANCE SHEET INFORMATION
Automotive
Total assets......................... 77,866 72,982 72,772 68,639 61,737 57,170 52,397
Debt payable within one year......... 1,913 796 1,832 155 932 1,249 2,579
Long-term debt -- noncurrent
portion............................ 4,915 6,070 5,475 7,103 7,084 7,068 6,539
Financial Services
Total assets......................... 182,700 166,826 170,511 150,983 137,201 123,375 122,032
Debt................................. 151,866 136,496 141,317 123,713 103,960 90,188 88,295
Deposit accounts**................... -- -- -- -- 10,549 14,030 16,882
Total Ford
Total assets......................... 260,566 239,808 243,283 219,622 198,938 180,545 174,429
Debt (incl. deposit accounts)........ 158,694 143,362 148,624 130,971 122,525 112,535 114,295
Stockholders' equity***.............. 25,840 25,240 24,547 21,659 15,574 14,753 22,690
Cash dividends....................... 857 729 1,559 1,205 1,086 977 927
OTHER DATA
Total Ford
Capital expenditures................. 3,768 4,097 8,997 8,546 6,814 5,790 5,847
Depreciation and amortization of
special tools...................... 6,095 5,656 11,719 9,336 7,468 6,755 5,778
Worldwide vehicle unit sales
of cars, trucks and tractors
(in thousands)..................... 3,448 3,581 6,606 6,853 6,184 5,940 5,636
</TABLE>
- ------------
* Share data have been restated to reflect the 2-for-1 stock split that became
effective June 6, 1994.
** Deposit accounts relate to First Nationwide (for 1991-1993).
*** The cumulative effects of changes in accounting principles reduced equity by
$6,883 million in 1992.
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<PAGE> 16
FINANCIAL REVIEW OF FORD
SECOND QUARTER 1996 RESULTS OF OPERATIONS
Overview
Ford earned $1,903 million, or $1.56 per share of Common and Class B Stock
(fully diluted), in second quarter 1996. This compares with $1,572 million, or
$1.30 per share (fully diluted), in second quarter 1995. Results in second
quarter 1996 included a one-time net gain of $213 million, or $0.18 per share,
relating to gain on sale of Associates First Capital Corporation ("The
Associates") common stock and write-down of Ford's investment in Budget Rent a
Car Corporation ("BRAC") (discussed below). Ford's worldwide sales and revenues
were $37.9 billion, up $1.5 billion from a year ago. Vehicle unit sales of cars
and trucks were 1,810,000, down 1,000 units. Stockholders' equity was $25.8
billion at June 30, 1996, compared with $24.5 billion at December 31, 1995.
Automotive Operations
Ford's worldwide Automotive operations earned $1,108 million in second
quarter 1996 on sales of $30.7 billion, compared with $1,100 million in second
quarter 1995 on sales of $29.9 billion. After-tax return on sales was 3.7% in
second quarter 1996, equal to a year ago.
In the U.S., Automotive operations earned $697 million in second quarter
1996 on sales of $19.5 billion, compared with $663 million a year ago on sales
of $19.6 billion. Despite a small decline in unit sales, the increase in
earnings was explained by higher margins (reflecting improved sales mix) and
increased operating cost efficiencies; higher product costs were a partial
offset.
In second quarter 1996, the seasonally-adjusted annual selling rate for the
U.S. car and truck industry was 15.5 million units, compared with 14.7 million
units in second quarter 1995. Ford's combined car and truck market share was
24.8% in second quarter 1996, down 1.4 points from a year ago, and down 8/10 of
a point from full year 1995, reflecting primarily planned lower sales to daily
rental companies.
Outside the U.S., Automotive operations earned $411 million in second
quarter 1996 on sales of $11.2 billion, compared with $437 million a year ago on
sales of $10.5 billion. The decline reflected primarily lower results in Europe
and a loss in Brazil, offset partially by increased earnings at most other
activities.
European Automotive operations earned $196 million in second quarter 1996,
compared with $319 million in second quarter 1995. The decline reflected
primarily a leaner product line mix and higher product costs.
In second quarter 1996, the seasonally-adjusted annual selling rate for the
European car and truck industry was 14.3 million units, compared with 13.7
million units in second quarter 1995. Ford's combined car and truck market share
was 12% in second quarter 1996, down 2/10 of a point from a year ago, and down
3/10 of a point from full year 1995.
In the Asia Pacific region, Ford earned $174 million in second quarter
1996, compared with $78 million a year ago. The improvement reflected primarily
Ford's equity in net income of Mazda. In South America, Ford had a loss of $69
million in second quarter 1996, compared with a profit of $19 million a year
ago. The lower results reflected primarily a loss for operations in Brazil,
which continued to be affected by the lack of a domestically produced small car.
Ford has reestablished manufacturing capacity in Brazil for small cars and,
during May 1996, began producing a version of the Ford Fiesta. However, because
of continuing market changes, including lower market share, and a longer and
more costly launch process in Brazil following the separation of Ford Brazil
from the Autolatina joint venture with Volkswagen AG late last year, Ford
expects that its performance in Brazil in the second half of 1996 will be
substantially worse than its performance in the first half of 1996.
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<PAGE> 17
Financial Services Operations
Ford's Financial Services operations earned $795 million in second quarter
1996, compared with $472 million in second quarter 1995. Results in second
quarter 1996 included a one-time net gain of $213 million relating to gain on
sale of The Associates' common stock and write-down of Ford's investment in BRAC
(discussed below). Excluding the one-time net gain, Financial Services
operations earned a record $582 million. The improvement also reflected record
earnings at The Associates, USL Capital Corporation ("USL Capital") and The
Hertz Corporation ("Hertz"), offset partially by lower results at Ford Credit.
For a discussion of Ford Credit's operations in second quarter 1996, see
"Ford Motor Credit Company and Consolidated Subsidiaries -- Second Quarter 1996
Results of Operations." In addition, International operations managed by Ford
Credit, but not included in its consolidated results, earned $61 million in
second quarter 1996, compared with $66 million a year ago.
The Associates earned a record $200 million in second quarter 1996 (Ford's
share was $177 million), compared with $162 million a year ago. The increase
reflected higher levels of earning assets, improved operating cost performance
and improved net interest margins, offset partially by higher credit losses.
USL Capital earned a record $41 million in the second quarter 1996,
compared with $30 million a year ago. The increase reflected higher levels of
earning assets, higher gains on asset sales and improved net interest margins.
Hertz earned a record $40 million in second quarter 1996, compared with $20
million a year ago. The increase reflected rate increases in car rental
operations, higher volume in car rental and construction equipment rental and
sales operations, and lower interest costs.
One-Time Actions
Ford recorded a pre-tax charge in second quarter 1996 totaling $700 million
($437 million after taxes) to recognize the estimated value of its outstanding
notes receivable from, and preferred stock investment in, BRAC. The write-down
resulted from conclusions reached in a recent 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, Ford also intends to acquire all of
the outstanding common stock of BRAC at a future date.
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"). Ford 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.
On July 1, 1996, USL Capital sold its vehicle fleet leasing business to The
Associates for $901 million and, on July 31, 1996, sold its rail services
business to First Union Rail Corp. for $957 million (subject to post-closing
adjustments). In addition, during July 1996, USL Capital sold assets in its
municipal and corporate financing business valued at about $1.2 billion, and
assets valued at about $1 billion were sold from Ford Credit's portfolio of
municipal and corporate securities that had been managed by USL Capital. Also,
Ford and BankAmerica Corporation recently announced that an agreement had been
reached (1) for the sale of all the assets of USL Capital's transportation and
industrial financing business to BankAmerica Leasing and Capital Corporation for
approximately $1.8 billion and (2) for affiliates of Ford Credit, USL Capital
and BankAmerica to enter into a partnership to which will be contributed
approximately $1.7 billion of nonautomotive financing assets currently owned by
Ford Credit and managed by USL Capital. During second half 1996, USL Capital
intends to sell its remaining businesses. The effect of these
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<PAGE> 18
transactions, including the sale of USL Capital's remaining businesses, on the
Company's consolidated financial statements is not expected to be material.
Ford recently announced plans to offer special early retirement and
voluntary separation packages to selected U.S. salaried employees over the next
several months. These programs are voluntary -- no layoffs of salaried employees
are planned. There will be a charge to earnings in second half 1996 for these
programs; the amount will depend on the number and timing of acceptances but is
presently estimated to range from $200 million to $300 million after taxes.
Outlook
Results for second quarter 1996 are higher compared with the year ago
period for the first time in four quarters. Results were dampened in second half
1995 and first half 1996 primarily by costs associated with high-volume product
launches and the effect of dealer inventory rebalancing. At this point, the peak
in launch costs has passed, ongoing cost reductions are taking effect, and
dealer inventories are in line with industry demand. It is expected that the
economy will continue to be healthy, with a sustainable rate of growth and
moderate inflation. Ford expects U.S. car and truck industry sales to total 15.5
million units in the full year, compared with 15.1 million units in 1995. In
Europe, car and truck industry sales are expected to total 14 million units,
compared with 13.4 million units in 1995. Stable external factors, in
combination with the continued success of a strong product line-up and ongoing
efforts to improve profitability, are expected to result in earnings for the
second half and full year that are higher than the year ago period.
Factors that could affect these projections unfavorably include an
unexpected decline in the U.S. economy (or other major markets) resulting in
lower industry volumes, a significant increase in interest rates, significant
changes in currency exchange rates, or work stoppages resulting from the failure
to negotiate new labor agreements with the United Automobile Workers or the
Canadian Automobile Workers.
FIRST HALF 1996 RESULTS OF OPERATIONS
Overview
Ford earned $2,556 million, or $2.10 per share of Common and Class B Stock
(fully diluted), in first half 1996. This compares with $3,122 million, or $2.59
per share (fully diluted), in first half 1995. Results in first half 1996
included a one-time net gain of $213 million relating to gain on sale of The
Associates' common stock and write-down of Ford's investment in BRAC (discussed
above). Ford's worldwide sales and revenues were $74.2 billion, up $3 billion
from a year ago. Vehicle unit sales of cars and trucks were 3,448,000, down
133,000 units or 4%.
Automotive Operations
Ford's worldwide Automotive operations earned $1,250 million in first half
1996 on sales of $60.1 billion, compared with $2,241 million in first half 1995
on sales of $58.5 billion. After-tax return on sales was 2.1% in first half
1996, down 1.8 points from a year ago.
In the U.S., Automotive operations earned $745 million in first half 1996
on sales of $38.3 billion, compared with $1,488 million a year ago on sales of
$38.9 billion. The decline in earnings was explained by lower unit volume
(reflecting dealer inventory rebalancing) and costs associated with introducing
high-volume new products; increased operating cost efficiencies were a partial
offset.
In first half 1996, the seasonally-adjusted annual selling rate for the
U.S. car and truck industry was 15.6 million units, compared with 14.9 million
units a year ago. Ford's combined car and truck market share was 25.3% in first
half 1996, down 1.2 points from a year ago, and down 3/10 of a point from full
year 1995, reflecting primarily planned lower sales to daily rental companies.
S-18
<PAGE> 19
Outside the U.S., Automotive operations earned $505 million in first half
1996 on sales of $21.8 billion, compared with $753 million a year ago on sales
of $19.6 billion. The decline reflected primarily lower results in Europe and a
loss in Brazil.
European Automotive operations earned $269 million in first half 1996,
compared with $484 million in first half 1995. The decline reflected primarily a
leaner product line mix and costs associated with introducing high-volume new
products.
In first half 1996, the seasonally-adjusted annual selling rate for the
European car and truck industry was 14.2 million units, compared with 13.6
million units a year ago. Ford's combined car and truck market share was 12.1%
in first half 1996, down 2/10 of a point from a year ago and full year 1995.
Outside the U.S. and Europe, Automotive operations earned $236 million in
first half 1996, compared with $269 million a year ago. The decrease reflected
primarily a loss for operations in Brazil, as described in the discussion of
second quarter results of operations.
Financial Services Operations
Ford's Financial Services operations earned $1,306 million in first half
1996, compared with $881 million in first half 1995. Results in first half 1996
included a one-time net gain of $213 million relating to gain on sale of The
Associates' common stock and write-down of Ford's investment in BRAC (discussed
above). The improvement also reflected record earnings at The Associates and USL
Capital, and higher earnings at Hertz, offset partially by lower results at Ford
Credit.
For a discussion of Ford Credit's operations in first half 1996, see "Ford
Motor Credit Company and Consolidated Subsidiaries -- First Half 1996 Results of
Operations." In addition, International operations managed by Ford Credit, but
not included in its consolidated results, earned $129 million in first half
1996, compared with $131 million a year ago.
The Associates earned a record $392 million in first half 1996 (Ford's
share was $369 million), compared with $330 million a year ago. USL Capital
earned a record $81 million in first half 1996, compared with $56 million a year
ago. Hertz earned $48 million in first half 1996, compared with $19 million a
year ago. These changes reflected primarily the same factors as those described
in the discussion of second quarter results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Operations
Automotive cash and marketable securities were $15.2 billion at June 30,
1996, up $2.8 billion from December 31, 1995. The amount of cash and marketable
securities is expected to decline during third quarter 1996 because of planned
lower production volume, reflecting normal seasonal factors. Ford paid $857
million in cash dividends on its Common Stock, Class B Stock and Preferred Stock
during first half 1996.
Automotive capital expenditures were $3.6 billion in first half 1996, down
$382 million from the same period a year ago. For full year 1996, Ford's
spending for product change is projected to be about the same compared with
1995; however, as a percent of sales, such spending is expected to be at lower
levels.
Automotive debt at June 30, 1996 totaled $6.8 billion, which was 20% of
total capitalization (stockholders' equity and Automotive debt), compared with
$7.3 billion, or 22% of total capitalization, at December 31, 1995.
At July 1, 1996, Ford had long-term contractually committed global credit
agreements under which $8.3 billion is available from various banks through June
30, 2001. The entire $8.3 billion may be used, at Ford's option, by any
affiliate of Ford; however, any borrowing by an affiliate will be
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<PAGE> 20
guaranteed by Ford. In addition, Ford has the ability to transfer on a
nonguaranteed basis the entire $8.3 billion in varying portions to Ford Credit
and Ford Credit Europe. These facilities were unused at July 1, 1996.
Financial Services Operations
Financial Services cash and investments in securities totaled $6.3 billion
at June 30, 1996, down $987 million from December 31, 1995.
Net receivables and lease investments were $162.5 billion at June 30, 1996,
up $12.8 billion from December 31, 1995. The increase reflected continued growth
in earning assets at Ford Credit and The Associates.
Total debt was $151.9 billion at June 30, 1996, up $10.5 billion from
December 31, 1995. The increase resulted from higher debt levels required to
finance growth in earning assets at Ford Credit, The Associates and Hertz, and
to fund the payment to holders of Ford Holdings' voting preferred stock; the
preferred stock was canceled in December 1995.
At July 1, 1996, Financial Services had a total of $49.8 billion of
contractually committed support facilities. Of these facilities, $23.6 billion
(excluding the $8.3 billion of Ford's credit facilities) are contractually
committed global credit agreements under which $19.3 billion and $4.3 billion
are available to Ford Credit and Ford Credit Europe, respectively, from various
banks; 62% and 76%, respectively, of such facilities are available through June
30, 2001. The entire $19.3 billion may be used, at Ford Credit's option, by any
subsidiary of Ford Credit, and the entire $4.3 billion may be used, at Ford
Credit Europe's option, by any subsidiary of Ford Credit Europe. Any borrowings
by such subsidiaries will be guaranteed by Ford Credit or Ford Credit Europe, as
the case may be. At July 1, 1996, none of the Ford Credit global facilities were
in use; $669 million of the Ford Credit Europe global facilities were in use.
Other than the global credit agreements, the remaining portion of the Financial
Services support facilities at July 1, 1996 consisted of $23.6 billion of
contractually committed support facilities available to various affiliates in
the U.S. and $2.6 billion of contractually committed support facilities
available to various affiliates outside the U.S.; at July 1, 1996, approximately
$1.8 billion of these facilities were in use.
S-20
<PAGE> 21
INDUSTRY DATA AND MARKET SHARE OF FORD
The following table shows the U.S. industry retail deliveries of cars and
trucks for the periods indicated:
<TABLE>
<CAPTION>
U.S. INDUSTRY RETAIL DELIVERIES
(MILLIONS OF UNITS)
--------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30* YEARS ENDED DECEMBER 31
----------------- ----------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Cars................................... 8.7 8.5 8.6 9.0 8.5 8.2 8.2
Trucks................................. 6.9 6.4 6.5 6.4 5.7 4.9 4.3
</TABLE>
- ------------
* Seasonally adjusted annual rates.
The following table shows Ford's U.S. car and truck market shares for the
periods indicated:
<TABLE>
<CAPTION>
FORD U.S. CAR AND TRUCK MARKET SHARES
--------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30 YEARS ENDED DECEMBER 31
----------------- ----------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Cars................................. 20.5% 21.8% 20.9% 21.8% 22.3% 21.8% 20.1%
Trucks............................... 31.3 32.5 31.9 30.1 30.5 29.7 28.9
</TABLE>
For additional information regarding Ford, see the 1995 10-K Report, the
First Quarter 10-Q Report and the Second Quarter 10-Q Report.
S-21
<PAGE> 22
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated September 18, 1996 and the Pricing Agreement dated September 18, 1996
relating to the Notes, Ford Credit has agreed to sell to each of the
underwriters named below (the "Underwriters") and each of the Underwriters, for
whom Goldman, Sachs & Co. are acting as representatives (the "Representatives"),
has severally agreed to purchase the principal amount of Notes set forth
opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
--------------------------------------------------- -----------------
<S> <C>
Goldman, Sachs & Co. .............................. US$720,000,000
CS First Boston Limited............................ 25,000,000
Deutsche Bank AG London............................ 25,000,000
Lehman Brothers Inc. .............................. 25,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................... 25,000,000
J.P. Morgan Securities Ltd. ....................... 25,000,000
Nomura International plc........................... 25,000,000
ABN AMRO Bank N.V. ................................ 10,000,000
Banque Paribas..................................... 10,000,000
Barclays de Zoete Wedd Limited..................... 10,000,000
Bear, Stearns & Co. Inc. .......................... 10,000,000
CITIC Industrial Bank.............................. 10,000,000
Daiwa Europe Limited............................... 10,000,000
Fuji International Finance PLC..................... 10,000,000
Midland Bank plc................................... 10,000,000
IBJ International plc.............................. 10,000,000
Morgan Stanley & Co. International Limited......... 10,000,000
Salomon Brothers Inc .............................. 10,000,000
Tokyo-Mitsubishi International plc................. 10,000,000
UBS Securities LLC................................. 10,000,000
-----------------
Total......................................... US$1,000,000,000
================
</TABLE>
In the event of default by one or more Underwriters, the Underwriting
Agreement provides that in certain circumstances other Underwriters may be
substituted or the commitment of each non-defaulting Underwriter may be
increased up to 10%. However, if the default involves more than one-eleventh of
the aggregate principal amount of the Notes, the Pricing Agreement relating to
the Notes may be terminated by Ford Credit or by 50% or more in interest of
non-defaulting Underwriters, or, if not so terminated, less than all the Notes
may be sold.
The Underwriters have advised Ford Credit that they propose to offer all or
part of the Notes directly to retail purchasers at the initial public offering
price set forth on the cover page of this Prospectus Supplement, and to certain
securities dealers at such price less a concession of 0.200% of the principal
amount of the Notes. After the Notes are released for sale to the public, the
offering price and other selling terms may from time to time be varied by the
Underwriters.
The Notes are offered for sale in the United States, Europe and Asia.
Each of the Underwriters has agreed that it will not offer, sell or deliver
any of the Notes, directly or indirectly, or distribute this Prospectus
Supplement or the accompanying Prospectus or any other offering material
relating to the Notes, in or from any jurisdiction except under circumstances
that will to the best knowledge and belief of such Underwriter result in
compliance with the applicable laws and regulations thereof and which will not
impose any obligations on Ford Credit except as set forth in the Underwriting
Agreement and the Pricing Agreement.
S-22
<PAGE> 23
Each Underwriter has represented and agreed that (i) it has not offered or
sold, and will not offer or sell, in Hong Kong the Notes by means of any
document except to a person whose ordinary business is to buy or sell shares or
debentures, whether as principal or agent, or in circumstances which do not
constitute an offer to the public within the meaning of the Companies Ordinance
(Cap. 32 of the Laws of Hong Kong), and (ii) it has not issued, and will not
issue, any invitation or advertisement relating to the Notes in Hong Kong
(except if permitted to do so under the securities laws of Hong Kong) other than
with respect to Notes which are intended to be disposed of to persons outside
Hong Kong or only to persons whose business involves the acquisition, disposal
or holding of securities whether as principal or agent.
Each Underwriter acknowledges that this Prospectus Supplement and
accompanying Prospectus has not been registered with the Registrar of Companies
in Singapore and that the Notes are offered in Singapore pursuant to an
exemption invoked under section 106C of the Companies Act, Chapter 50 of
Singapore (the "Singapore Companies Act"). Accordingly, each Underwriter has
represented and agreed that the Notes may not be offered or sold, nor may this
Prospectus Supplement and accompanying Prospectus or any other offering document
or material relating to the Notes be circulated or distributed, directly or
indirectly, to the public or any member of the public in Singapore other than
(1) to an institutional investor or other body or person specified in section
106C of the Singapore Companies Act, or (2) to a sophisticated investor
specified in section 106D of the Singapore Companies Act, or (3) otherwise
pursuant to, and in accordance with the conditions of section 106E(2) of the
Singapore Companies Act or any other applicable exemption invoked under Division
5A of Part IV of the Singapore Companies Act.
Each of the Underwriters has agreed that it has not offered or sold, and it
will not offer or sell, directly or indirectly, any of the Notes in or to
residents of Japan or to any persons for reoffering or resale, directly or
indirectly, in Japan or to any resident of Japan except pursuant to an exemption
from the registration requirements of the Securities and Exchange Law available
thereunder and in compliance with the other relevant laws of Japan.
Each Underwriter has represented and agreed that (a) it has not offered or
sold, and, prior to the expiration of the period of six months from the closing
date for the issue of the Notes, will not offer or sell any Notes to persons in
the United Kingdom, except to those persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as principal
or agent) for the purpose of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations
1995, (b) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986, with respect to anything done by it in relation to
the Notes in, from or otherwise involving the United Kingdom, and (c) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issue of the Notes to a
person who is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom
the document may otherwise lawfully be issued or passed on.
Purchasers of the Notes may be required to pay stamp taxes and other
charges in accordance with the laws and practices of the country of purchase in
addition to the issue price set forth on the cover page hereof.
Ford Credit has been advised by the Underwriters that they intend to make a
market in the Notes, but they are not obligated to do so and may discontinue
such market-making at any time without notice. No assurance can be given as to
the liquidity of the trading market for the Notes.
All secondary trading in the Notes will settle in immediately available
funds. See "Description of Notes--Global Clearance and Settlement Procedures".
It is expected that delivery of the Notes will be made against payment
therefor on or about September 25, 1996, which is the fifth business day
following the date hereof (such settlement cycle
S-23
<PAGE> 24
being herein referred to as "T+5"). Purchasers of Notes should note that the
ability to settle secondary market trades of the Notes effected on the date of
pricing and the next succeeding business day may be affected by the T+5
settlement.
Ford Credit has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
GENERAL INFORMATION
Application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Certificate of
Incorporation and the By-Laws of Ford Credit and a legal notice relating to the
issuance of the Notes have been deposited prior to listing with Greffier en Chef
du Tribunal d'Arrondissement de et a Luxembourg, where copies thereof may be
obtained upon request. Copies of the above documents together with this
Prospectus Supplement, the accompanying Prospectus, the Indenture and Ford
Credit's current Annual and Quarterly Reports, as well as all future Annual
Reports and Quarterly Reports, so long as any of the Notes are outstanding, will
be made available for inspection at the main office of Banque Internationale a
Luxembourg S.A., in Luxembourg. Banque Internationale a Luxembourg S.A. will act
as a contact between the Luxembourg Stock Exchange and Ford Credit or the
holders of the Notes. In addition, copies of the Annual Reports and Quarterly
Reports of Ford Credit may be obtained free of charge at such office.
Application has also been made to list the Notes on the Hong Kong Stock
Exchange and the Singapore Stock Exchange. So long as any of the Notes remain
outstanding, copies of the Indenture, this Prospectus Supplement, the
accompanying Prospectus, and the Certificate of Incorporation and By-Laws of
Ford Credit will be available for inspection at the offices of The Chase
Manhattan Bank, N.A., World Trade Centre, 280 Gloucester Road, Causeway Bay,
Hong Kong and the offices of The Chase Manhattan Bank, N.A., Shell Tower, 50
Raffles Place, Singapore 048623. In addition, copies of all documents
incorporated in this document and the First Supplement by reference and copies
of all future annual reports and quarterly reports of Ford Credit may be
obtained, free of charge, at the offices of The Chase Manhattan Bank, N.A. in
Hong Kong and the offices of The Chase Manhattan Bank, N.A. in Singapore.
Other than as disclosed or contemplated herein or in the documents
incorporated herein by reference, there has been no material adverse change in
the financial position of Ford Credit since June 30, 1996.
Neither Ford Credit nor any of its subsidiaries is involved in litigation,
arbitration, or administrative proceedings relating to claims or amounts that
are material in the context of the issue of the Notes and Ford Credit is not
aware of any such litigation, arbitration, or administrative proceedings pending
or threatened.
Ford Credit accepts responsibility for the information contained in this
Prospectus Supplement and accompanying Prospectus.
Resolutions relating to the issue and sale of the Notes were adopted by the
Board of Directors of Ford Credit on February 26, 1986, March 2, 1988, March 10,
1993 and September 29, 1993.
The Notes have been assigned Euroclear and Cedel Common Code No. 6982875,
International Security Identification Number (ISIN) US345397NR04 and CUSIP No.
345397NR0.
------------------------
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<PAGE> 25
FORD MOTOR CREDIT COMPANY
DEBT SECURITIES
Ford Credit, in January 1996, registered with the Securities and Exchange
Commission $5,000,000,000 aggregate principal amount of its Debt Securities
consisting of notes and/or debentures denominated in United States dollars or
any other currency or currencies, to be offered from time to time in one or more
series, on terms to be determined at or prior to the time of sale. The
Prospectus Supplement accompanying this Prospectus sets forth, with respect to
the particular series of Debt Securities for which this Prospectus and the
Prospectus Supplement are being delivered, the specific title, the aggregate
principal amount, the authorized denominations, the currencies of issue and
payment, the initial public offering price, the maturity, the interest rate or
rates (which may be either fixed or variable), if any, and/or method of
determination thereof, the time of payment of any interest, any redemption,
extension or early repayment terms, any provision for sinking fund payments, the
net proceeds to Ford Credit, the form of Debt Securities and other specific
terms relating to such series of Debt Securities.
Ford Credit may sell the Debt Securities to or through underwriters, and
also may sell the Debt Securities directly to other purchasers or through
agents. See "Plan of Distribution". In addition, the Debt Securities may be sold
to dealers at the applicable price to the public set forth in the Prospectus
Supplement relating to a particular series of Debt Securities who later resell
to investors. Such dealers may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"). If any agents
of Ford Credit, or any underwriters, are involved in the sale of any Debt
Securities, the names of such agents or underwriters and any applicable
commissions or discounts are set forth in the accompanying Prospectus
Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 18, 1996
<PAGE> 26
AVAILABLE INFORMATION
FORD MOTOR CREDIT COMPANY ("FORD CREDIT") AND FORD MOTOR COMPANY ARE
SUBJECT TO THE INFORMATIONAL REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934
AND IN ACCORDANCE THEREWITH FILE REPORTS AND OTHER INFORMATION WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"). AS USED HEREIN OR IN THE
PROSPECTUS SUPPLEMENT, "FORD" REFERS TO FORD MOTOR COMPANY AND ITS SUBSIDIARIES
UNLESS THE CONTEXT OTHERWISE REQUIRES. SUCH REPORTS AND OTHER INFORMATION CAN BE
INSPECTED AND COPIED AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE
COMMISSION AT 450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549 AND AT THE
FOLLOWING REGIONAL OFFICES OF THE COMMISSION: 7 WORLD TRADE CENTER, 13TH FLOOR,
NEW YORK, NEW YORK 10048 AND NORTHWEST ATRIUM CENTER, 500 WEST MADISON STREET,
SUITE 1400, CHICAGO, ILLINOIS 60661. COPIES OF SUCH MATERIAL CAN BE OBTAINED
FROM THE PUBLIC REFERENCE SECTION OF THE COMMISSION AT 450 FIFTH STREET, N.W.,
WASHINGTON, D.C. 20549 AT PRESCRIBED RATES. SUCH REPORTS AND OTHER INFORMATION
CONCERNING FORD CREDIT AND FORD CAN ALSO BE INSPECTED AT THE OFFICES OF THE NEW
YORK STOCK EXCHANGE, INC., 20 BROAD STREET, NEW YORK, NEW YORK 10005, AND THE
AMERICAN STOCK EXCHANGE, INC., 86 TRINITY PLACE, NEW YORK, NEW YORK 10006, ON
WHICH CERTAIN OF FORD CREDIT'S DEBT SECURITIES ARE LISTED.
Ford Credit has filed with the Commission a Registration Statement under
the Securities Act with respect to the Debt Securities offered hereby. This
Prospectus and the Prospectus Supplement do not contain all the information set
forth in the Registration Statement and the exhibits and schedules thereto,
certain portions of which have been omitted pursuant to the rules and
regulations of the Commission. The information so omitted may be obtained from
the Commission's principal office in Washington, D.C. upon payment of the fees
prescribed by the Commission.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Ford Credit's Annual Report on Form 10-K for the year ended December 31,
1995 (the "1995 10-K Report"), Ford Credit's Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1996 (the "First Quarter 10-Q Report") and June 30,
1996 (the "Second Quarter 10-Q Report") and Ford Credit's Current Reports on
Form 8-K dated January 5, 1996, January 24, 1996, February 6, 1996, April 17,
1996 and September 10, 1996 are incorporated in this Prospectus by reference.
All documents filed by Ford Credit pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 after the date of this Prospectus and
prior to the termination of the offering of the Debt Securities shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the date of filing such documents. Such reports include, and such documents
may include, information concerning Ford, as well as Ford Credit.
FORD CREDIT UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A
COPY OF THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT HAVE BEEN DELIVERED, ON
THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE
DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE
IN THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT, OTHER THAN EXHIBITS TO SUCH
DOCUMENTS. WRITTEN OR TELEPHONIC REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED
TO FORD MOTOR CREDIT COMPANY, THE AMERICAN ROAD, DEARBORN, MICHIGAN 48121,
ATTENTION: PUBLIC AFFAIRS DEPARTMENT (TELEPHONE 313-594-1096).
------------------------
2
<PAGE> 27
INFORMATION CONCERNING FORD CREDIT
Ford Credit was incorporated in Delaware in 1959 and is a wholly-owned
indirect subsidiary of Ford. As used herein "Ford Credit" refers to Ford Motor
Credit Company and its subsidiaries unless the context otherwise requires.
Ford Credit provides wholesale financing and capital loans to franchised
Ford Motor Company vehicle dealers and other dealers associated with such
franchisees and purchases retail installment sale contracts and retail leases
from them. Ford Credit also makes loans to vehicle leasing companies, the
majority of which are affiliated with such dealers. In addition, a wholly-owned
subsidiary of Ford Credit provides these financing services in the U.S. and
Canada to other vehicle dealers. More than 84% of all new vehicles financed by
Ford Credit are manufactured by Ford or its affiliates. In addition to vehicle
financing, Ford Credit makes loans to affiliates of Ford and finances certain
receivables of Ford and its subsidiaries. Ford Credit's insurance operations,
conducted through its wholly-owned subsidiary, The American Road Insurance
Company and its subsidiaries, consist primarily of underwriting floor plan
insurance related to substantially all new vehicle inventories of dealers
financed at wholesale by Ford Credit in the United States and Canada, credit
life and disability insurance in connection with retail vehicle financing, and
insurance related to retail contracts sold by automobile dealers to cover
repairs.
The mailing address of Ford Credit's executive offices is The American
Road, Dearborn, Michigan 48121, United States of America. The telephone number
of such offices is (313) 322-3000.
INFORMATION CONCERNING FORD
Ford is the second-largest producer of cars and trucks in the world, and
ranks among the largest providers of financial services in the United States.
Ford's two principal business segments are Automotive and Financial
Services. The activities of the Automotive segment consist of the design,
manufacture, assembly and sale of cars and trucks and related parts and
accessories. The Financial Services segment is comprised of the following
subsidiaries, the activities of which include financing operations, vehicle and
equipment leasing and insurance operations: Ford FSG, Inc. ("FFSGI"), Ford
Holdings, Inc. ("Ford Holdings"), The Hertz Corporation and Granite Management
Corporation. FFSGI is a holding company that owns primarily Ford Credit, a
majority of Ford Credit Europe plc and a majority of Associates First Capital
Corporation. Ford Holdings is a holding company that owns primarily a portion of
FFSGI and all of USL Capital Corporation.
------------------------
THIS PROSPECTUS CONTAINS BRIEF SUMMARIES OF CERTAIN MORE DETAILED
INFORMATION CONTAINED IN DOCUMENTS INCORPORATED HEREIN BY REFERENCE. SUCH
SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY THE DETAILED INFORMATION CONTAINED
IN THE INCORPORATED DOCUMENTS.
------------------------
3
<PAGE> 28
USE OF PROCEEDS
Except as otherwise provided in the Prospectus Supplement, the net proceeds
from the sale of the Debt Securities will be added to the general funds of Ford
Credit and will be available for the purchase of receivables, for loans and for
use in connection with the retirement of debt. Such proceeds initially may be
used to reduce short-term borrowings (commercial paper, borrowings under bank
lines of credit and borrowings under agreements with bank trust departments) or
may be invested temporarily in short-term securities.
Ford Credit expects to issue additional long-term and short-term debt from
time to time. The nature and amount of Ford Credit's long-term and short-term
debt and the proportionate amount of each can be expected to vary from time to
time, as a result of business requirements, market conditions and other factors.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued in one or more series under an
Indenture dated as of August 1, 1994, as supplemented from time to time (the
"Indenture"), between Ford Credit and First Union National Bank as successor to
First Fidelity Bank, National Association ("First Union"), Trustee. The term
"Trustee", as used herein, shall mean First Union and, if at any time there is
more than one Trustee acting under the Indenture, the term "Trustee" as used
herein with respect to Indenture Securities (as defined below) of any particular
series shall mean the Trustee with respect to the Indenture Securities of such
series. The following statements with respect to the Debt Securities are subject
to the detailed provisions of the Indenture, the form of which is filed as an
exhibit to the Registration Statement. Parenthetical references below are to the
Indenture or the Form of Security contained therein and, whenever any particular
provision of the Indenture or any term used therein is referred to, such
provision or term is incorporated by reference as a part of the statement in
connection with which such reference is made, and the statement in connection
with which such reference is made is qualified in its entirety by such
reference.
The particular terms of each series of Debt Securities, as well as any
modification or addition to the general terms of the Debt Securities as herein
described, which may be applicable to a particular series of Debt Securities,
are described in the Prospectus Supplement relating to such series of Debt
Securities and will be set forth in a filing with the Commission. Accordingly,
for a description of the terms of a particular series of Debt Securities,
reference must be made to the Prospectus Supplement relating to such series and
to the description of Debt Securities set forth in this Prospectus.
GENERAL
The Debt Securities offered hereby will be limited to $5,000,000,000
aggregate principal amount or the equivalent thereof in any currency, although
the Indenture provides that additional debt securities may be issued thereunder
up to the aggregate principal amount, which is not limited by the Indenture,
authorized from time to time by Ford Credit's Board of Directors. So long as a
single Trustee is acting for the benefit of the holders of all the Debt
Securities offered hereby and any such additional debt securities issued under
the Indenture, the Debt Securities and any such additional debt securities are
herein collectively referred to as the "Indenture Securities". The Indenture
also provides that there may be more than one Trustee under the Indenture, each
with respect to one or more different series of Indenture Securities. See also
"Trustee" herein. At any time when two or more Trustees are acting, each with
respect to only certain series, the term "Indenture Securities" as used herein
shall mean the one or more series with respect to which each respective Trustee
is acting and the powers and trust obligations of each such Trustee as described
herein shall extend only to the one or more series of Indenture Securities for
which it is acting as Trustee. The effect of the provisions contemplating that
there might be more than one Trustee acting for different series of Indenture
Securities is that, in that event, those Indenture Securities (whether of one or
more than
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<PAGE> 29
one series) for which each Trustee is acting would be treated as if issued under
a separate indenture.
The Prospectus Supplement which accompanies this Prospectus sets forth a
description of the particular series of Debt Securities being offered thereby,
including (as applicable): (1) the designation or title of such Debt Securities;
(2) the aggregate principal amount of such Debt Securities; (3) the percentage
of their principal amount at which such Debt Securities will be offered; (4) the
date or dates on which the principal of such Debt Securities will be payable;
(5) the rate or rates (which may be either fixed or variable) and/or the method
of determination of such rate or rates at which such Debt Securities shall bear
interest, if any; (6) the date or dates from which any such interest shall
accrue, or the method of determination of such date or dates, and the date or
dates on which any such interest shall be payable; (7) the terms for redemption,
extension or early repayment of such Debt Securities, if any; (8) the
denominations in which such Debt Securities are authorized to be issued; (9) the
currencies or currency units in which such Debt Securities are issued or
payable; (10) the provisions for a sinking fund, if any; (11) any additional
restrictive covenants included for the benefit of the holders of such Debt
Securities; (12) any additional Event of Default with respect to such Debt
Securities; (13) whether such Debt Securities are issuable as a Global Security;
and (14) any other term or provision relating to such Debt Securities which is
not inconsistent with the provisions of the Indenture.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Federal income tax
consequences and special considerations applicable thereto will be described in
the Prospectus Supplement relating to any such series of Debt Securities.
The Debt Securities will be unsecured obligations of Ford Credit and will
rank prior to all subordinated indebtedness of Ford Motor Credit Company (parent
company only) and pari passu with all other unsecured and unsubordinated
indebtedness of Ford Motor Credit Company (parent company only).
Except as otherwise provided in the Prospectus Supplement, principal,
premium, if any, and interest, if any, will be payable at an office or agency to
be maintained by Ford Credit in New York City, except that at the option of Ford
Credit interest may be paid by check mailed to the person entitled thereto.
(Form of Security and Sections 10.01 and 10.02).
Except as otherwise provided in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form without coupons and may
be presented for registration of transfer or exchange at the corporate trust
office of the Trustee. No service charge will be made for any transfer or
exchange of the Debt Securities, but Ford Credit may require payment of a sum to
cover any tax or other governmental charge payable in connection therewith.
(Section 3.05).
BOOK-ENTRY, DELIVERY AND FORM
Unless otherwise specified in the applicable Prospectus Supplement, each
series of Debt Securities will be issued in the form of one or more fully
registered Global Notes (the "Global Notes") which will be deposited with, or on
behalf of, The Depository Trust Company, New York, New York (the "Depository")
and registered in the name of Cede & Co., the Depository's nominee. Except as
set forth below, the Global Notes may be transferred, in whole and not in part,
only to another nominee of the Depository or to a successor of the Depository or
its nominee.
The Depository has advised as follows: It is a limited-purpose trust
company which holds securities for its participating organizations (the
"Participants") and facilitates the settlement among Participants of securities
transactions in such securities through electronic book-entry changes in its
Participants' accounts. Participants include securities brokers and dealers
(including certain of the underwriters or agents), banks and trust companies,
clearing corporations and certain other organizations. Access to the
Depository's system is also available to others such as banks,
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<PAGE> 30
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("indirect
participants"). Persons who are not Participants may beneficially own securities
held by the Depository only through Participants or indirect participants.
The Depository advises that its established procedures provide that (i)
upon issuance of the Debt Securities by Ford Credit the Depository will credit
the accounts of Participants designated by the underwriters or agents with the
principal amounts of the Debt Securities purchased by the underwriters or
through the agents, and (ii) ownership of interests in the Global Notes will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depository, the Participants and the indirect
participants. The laws of some states require that certain persons take physical
delivery in definitive form of securities which they own. Consequently, the
ability to transfer beneficial interests in the Global Notes is limited to such
extent.
So long as a nominee of the Depository is the registered owner of the
Global Notes, such nominee for all purposes will be considered the sole owner or
holder of such Debt Securities under the Indenture. Except as provided below or
in the Prospectus Supplement, owners of beneficial interests in the Global Notes
will not be entitled to have Debt Securities registered in their names, will not
receive or be entitled to receive physical delivery of Debt Securities in
definitive form, and will not be considered the owners or holders thereof under
the Indenture.
Neither Ford Credit, the Trustee, any Paying Agent nor the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Notes, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Principal and interest payments on the Debt Securities registered in the
name of the Depository's nominee will be made by the Trustee to the Depository.
Under the terms of the Indenture, Ford Credit and the Trustee will treat the
persons in whose names the Debt Securities are registered as the owners of such
Debt Securities for the purpose of receiving payment of principal and interest
on the Debt Securities and for all other purposes whatsoever. Therefore, neither
Ford Credit, the Trustee nor any Paying Agent has any direct responsibility or
liability for the payment of principal or interest on the Debt Securities to
owners of beneficial interests in the Global Notes. The Depository has advised
Ford Credit and the Trustee that its present practice is to credit the accounts
of the Participants on the appropriate payment date in accordance with their
respective holdings in principal amount of beneficial interests in the Global
Notes as shown on the records of the Depository, unless the Depository has
reason to believe that it will not receive payment on such payment date.
Payments by Participants and indirect participants to owners of beneficial
interests in the Global Notes will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of the Participants or indirect participants.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by Ford Credit within 90
days, Ford Credit will issue Debt Securities in definitive form in exchange for
the Global Notes. In addition, Ford Credit may at any time determine not to have
a series of Debt Securities represented by Global Notes and, in such event, will
issue Debt Securities of such series in definitive form in exchange for the
Global Notes. In either instance, an owner of a beneficial interest in the
Global Notes will be entitled to have Debt Securities of such series equal in
principal amount to such beneficial interest registered in its name and will be
entitled to physical delivery of such Debt Securities in definitive form. Unless
otherwise specified in the Prospectus Supplement, Debt Securities so issued in
definitive form will be issued in denominations of $1,000 and integral multiples
thereof and will be issued in registered form only, without coupons.
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<PAGE> 31
SUBSIDIARIES
The term "subsidiary of the Company" is defined in the Indenture as a
corporation a majority of the outstanding voting stock of which is owned,
directly or indirectly, by Ford Credit or by one or more subsidiaries of Ford
Credit, or by Ford Credit and one or more subsidiaries of Ford Credit. The term
"Restricted Subsidiary" is defined in the Indenture as a subsidiary of the
Company, incorporated in or conducting the major part of its business in the
United States, any of the activities of which includes insurance underwriting or
which had, at the end of its last quarterly accounting period preceding the date
of computation, assets with a value in excess of $1 million representing
accounts or notes receivable resulting from the financing of new cars, trucks,
tractors and farm and industrial equipment manufactured or sold by Ford or from
the financing of used cars, trucks, tractors and farm and industrial equipment
of the same types, whether manufactured by Ford or others. (Section 1.01).
LIMITATION ON LIENS
If Ford Credit or any Restricted Subsidiary shall pledge or otherwise
subject to any lien (such a pledge or lien is defined in the Indenture as a
"Mortgage") any of its property or assets, Ford Credit will secure or cause such
Restricted Subsidiary to secure the Indenture Securities equally and ratably
with (or prior to) the indebtedness secured by such Mortgage. This restriction
does not apply to Mortgages securing such indebtedness which shall not exceed $5
million in the aggregate at any one time outstanding and does not apply to (a)
certain Mortgages created or incurred to secure financing of the export or
marketing of goods outside the United States, (b) Mortgages on accounts
receivable payable in foreign currencies securing indebtedness incurred and
payable outside the United States, (c) Mortgages in favor of Ford Credit or any
Restricted Subsidiary, (d) Mortgages in favor of governmental bodies to secure
progress, advance or other payments, or deposits with any governmental body
required in connection with the business of Ford Credit or a Restricted
Subsidiary, (e) deposits made in connection with pending litigation, (f)
Mortgages existing at the time of acquisition of the assets secured thereby
(including acquisition through merger or consolidation) and certain purchase
money Mortgages, and (g) any extension, renewal or replacement of any Mortgage
or Mortgages referred to in the foregoing clauses (a) through (f), inclusive.
(Section 10.04).
MERGER AND CONSOLIDATION
The Indenture provides that no consolidation or merger of Ford Credit with
or into any other corporation shall be permitted, and no sale or conveyance of
its property as an entirety, or substantially as an entirety, may be made to
another corporation, if, as a result thereof, any asset of Ford Credit or a
Restricted Subsidiary would become subject to a Mortgage, unless the Indenture
Securities shall be equally and ratably secured with (or prior to) the
indebtedness secured by such Mortgage, or unless such Mortgage could be created
pursuant to Section 10.04 (see "Limitation on Liens" above) without equally and
ratably securing the Indenture Securities. (Section 8.03).
EVENTS OF DEFAULT AND NOTICE THEREOF
Except as may otherwise be provided in an indenture supplemental to the
Indenture, the following events in respect of a particular series of Indenture
Securities are defined in the Indenture as "Events of Default": (a) failure to
pay interest for 30 days after becoming due; (b) failure to pay the principal or
premium, if any, for five business days after becoming due at maturity, on
redemption or otherwise; (c) failure to make a sinking fund payment for five
days after becoming due; (d) failure to perform any other covenants for 90 days
after notice; and (e) certain events of bankruptcy, insolvency or
reorganization. (Section 5.01).
If an Event of Default in respect of a particular series of Indenture
Securities outstanding occurs and is continuing, either the Trustee or the
holders of at least 25% in aggregate principal amount of
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<PAGE> 32
the Indenture Securities outstanding of such series may declare the principal
amount (or, if the Indenture Securities of such series are Original Issue
Discount Securities (as defined in the indenture), such portion of the principal
amount as may be specified in the terms of such series) of all of the Indenture
Securities of such series to be due and payable immediately. At any time after
such a declaration of acceleration in respect of a particular series of
Indenture Securities has been made, but before a judgment or decree for the
payment of money due upon acceleration has been obtained by the Trustee, the
holders of a majority in aggregate principal amount of the Indenture Securities
outstanding of such series may, under certain circumstances, waive all defaults
and rescind and annul such declaration and its consequences if all Events of
Default in respect of the Indenture Securities of such series, other than the
non-payment of principal due solely by such declaration of acceleration, have
been cured or waived as provided in the Indenture. (Section 5.02).
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default in respect of a particular series of Indenture
Securities, give the holders of such series notice of all uncured defaults known
to it (the term "default" to include the events specified above without grace
periods); provided that, except in the case of default in the payment of the
principal of, or premium, if any, on, or interest on any of the Indenture
Securities of such series, the Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interests of the holders of such series. (Section 6.01).
Pursuant to the terms of the Indenture, Ford Credit is required to furnish
to the Trustee annually a statement of certain officers of Ford Credit stating
whether or not to the best of their knowledge Ford Credit is in default in
respect of any series of Indenture Securities in the performance and observance
of the terms of the Indenture and, if Ford Credit is in default, specifying such
default and the nature thereof.
The Indenture provides that the holders of a majority in aggregate
principal amount of all Indenture Securities of a particular series then
outstanding will have the right to waive certain defaults in respect of such
series and, subject to certain limitations, to direct the time, method and place
of conducting any proceedings for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. (Sections 5.12 and
5.13). No provision of the Indenture requires the Trustee to expend or risk its
own funds or otherwise incur any personal financial liability in the performance
of any of its duties thereunder, or in the exercise of any of its rights or
powers, if there are reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to the Trustee.
MODIFICATION OF THE INDENTURE
With certain exceptions, the Indenture, the rights and obligations of Ford
Credit and the rights of the holders of a particular series may be modified by
Ford Credit with the consent of the holders of not less than 66 2/3% in
aggregate principal amount of the Indenture Securities of such series then
outstanding; but no such modification may be made which would (i) extend the
fixed maturity of any Indenture Security of such series, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon, without the consent of the holder of each Indenture Security of such
series so affected; or (ii) reduce the above-stated percentage of Indenture
Securities of such series, the consent of the holders of which is required to
modify or alter the Indenture, without the consent of the holders of all
Indenture Securities of such series then outstanding. (Section 9.02).
TRUSTEE
The Trustee may resign or be removed with respect to one or more series of
Indenture Securities and a successor Trustee may be appointed to act with
respect to such one or more series. (Section 6.08). In the event that there
shall be two or more persons acting as Trustee with respect to different series
of Indenture Securities, each such Trustee shall be a trustee of a trust or
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<PAGE> 33
trusts under the Indenture separate and apart from the trust or trusts
administered by any other such Trustee, and any action described herein to be
taken by the "Trustee" may then be taken by each such Trustee with respect to,
and only with respect to, the one or more series of Indenture Securities for
which it is acting as Trustee. (Section 6.09).
CONCERNING FIRST UNION
First Union, Trustee under the Indenture, is a depositary of Ford Credit,
has a committed credit facility available to Ford Credit and its subsidiaries
and has performed other services for Ford Credit in the normal course of its
business.
REPORTS
Ford Credit publishes annual reports, containing certified financial
statements, and quarterly reports, containing interim unaudited financial
statements. Copies of such reports will be available upon request.
PLAN OF DISTRIBUTION
Ford Credit may sell the Debt Securities to or through underwriters, and
also may sell the Debt Securities directly to one or more other purchasers or
through agents.
The Prospectus Supplement sets forth the terms of the offering of the
particular series of Debt Securities to which such Prospectus Supplement
relates, including (i) the name or names of any underwriters or agents with whom
Ford Credit has entered into arrangements with respect to the sale of such
series of Debt Securities, (ii) the initial public offering or purchase price of
such series of Debt Securities, (iii) any underwriting discounts, commissions
and other items constituting underwriters' compensation from Ford Credit and any
other discounts, concessions or commissions allowed or reallowed or paid by any
underwriters to other dealers, (iv) any commissions paid to any agents, (v) the
net proceeds to Ford Credit, and (vi) the securities exchanges, if any, on which
such series of Debt Securities will be listed.
Unless otherwise set forth in the Prospectus Supplement relating to a
particular series of Debt Securities, the obligations of the underwriters to
purchase such series of Debt Securities will be subject to certain conditions
precedent and each of the underwriters with respect to such series of Debt
Securities will be obligated to purchase all of the Debt Securities of such
series allocated to it if any such Debt Securities are purchased. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The Debt Securities may be offered and sold by Ford Credit directly or
through agents designated by Ford Credit from time to time. Unless otherwise
indicated in the Prospectus Supplement, any such agent or agents will be acting
on a best efforts basis for the period of its or their appointment. Any agent
participating in the distribution of the Debt Securities may be deemed to be an
"underwriter", as that term is defined in the Securities Act, of the Debt
Securities so offered and sold. The Debt Securities also may be sold to dealers
at the applicable price to the public set forth in the Prospectus Supplement
relating to a particular series of Debt Securities who later resell to
investors. Such dealers may be deemed to be "underwriters" within the meaning of
the Securities Act.
If so indicated in the Prospectus Supplement relating to a particular
series of Debt Securities, Ford Credit will authorize underwriters or agents to
solicit offers by certain institutions to purchase Debt Securities of such
series from Ford Credit pursuant to delayed delivery contracts providing for
payment and delivery at a future date. Such contracts will be subject only to
those conditions set forth in the Prospectus Supplement and the Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts.
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<PAGE> 34
Underwriters and agents may be entitled, under agreements entered into with
Ford Credit, to indemnification by Ford Credit against certain civil
liabilities, including liabilities under the Securities Act.
LEGAL OPINIONS
The legality of the Debt Securities offered hereby will be passed on for
Ford Credit by J. D. Bringard, Esq., Vice President--General Counsel of Ford
Credit, or other counsel satisfactory to any underwriters or agents, and for any
underwriters or agents by Shearman & Sterling, 599 Lexington Avenue, New York,
N.Y. Mr. Bringard is a full-time employee of Ford Credit and owns and holds
options to purchase shares of Common Stock of Ford. Shearman & Sterling have in
the past provided, and may continue to provide, legal services to Ford and its
subsidiaries, including Ford Credit.
EXPERTS
The financial statements which are incorporated in this Prospectus by
reference to the 1995 10-K Report and Ford Credit's Current Report on Form 8-K
dated February 6, 1996 have been audited by Coopers & Lybrand L.L.P. ("Coopers
and Lybrand"), 400 Renaissance Center, Detroit, Michigan 48243, independent
certified public accountants, to the extent indicated in their report therein,
and have been so incorporated in reliance upon the report of that firm, given on
their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information of Ford Credit
for the periods ended March 31, 1996 and 1995 and June 30, 1996 and 1995,
included in the First Quarter 10-Q Report and the Second Quarter 10-Q Report,
respectively, incorporated by reference in this Prospectus, Coopers & Lybrand
have reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their reports
included in the First Quarter 10-Q Report and the Second Quarter 10-Q Report
state that they did not audit and they do not express an opinion on that interim
financial information. The accountants are not subject to the liability
provisions of Section 11 of the Securities Act for their reports on the
unaudited interim financial information because each such report is not a
"report" or a "part" of the registration statement prepared or certified by the
accountants within the meaning of Sections 7 and 11 of such Act.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Documents By
Reference............................. S-2
Directors and Principal Executive
Officers of Ford Credit............... S-3
Use of Proceeds......................... S-3
Capitalization of Ford Motor Credit
Company and Subsidiaries.............. S-4
Description of Notes.................... S-5
Certain United States Tax Documentation
Requirements.......................... S-9
United States Taxation of Non-United
States Persons........................ S-10
Ford Motor Credit Company and
Consolidated Subsidiaries -- Selected
Financial Data........................ S-13
Selected Financial Data and Other Data
of Ford............................... S-15
Financial Review of Ford................ S-16
Industry Data and Market Share of
Ford.................................. S-21
Underwriting............................ S-22
General Information..................... S-24
PROSPECTUS
Available Information................... 2
Incorporation of Certain Documents by
Reference............................. 2
Information Concerning Ford Credit...... 3
Information Concerning Ford............. 3
Use of Proceeds......................... 4
Description of Debt Securities.......... 4
Plan of Distribution.................... 9
Legal Opinions.......................... 10
Experts................................. 10
</TABLE>
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$1,000,000,000
FORD MOTOR
CREDIT COMPANY
7% NOTES
DUE SEPTEMBER 25, 2001
------------------------
[FORD LOGO]
------------------------
GOLDMAN, SACHS & CO.
CS FIRST BOSTON
DEUTSCHE MORGAN GRENFELL
LEHMAN BROTHERS
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES LTD.
NOMURA SECURITIES
ABN AMRO HOARE GOVETT
BARCLAYS DE ZOETE WEDD LIMITED
BEAR, STEARNS & CO. INC.
CITIC INDUSTRIAL BANK
DAIWA EUROPE LIMITED
FUJI INTERNATIONAL FINANCE PLC
HSBC MARKETS LIMITED
IBJ INTERNATIONAL PLC
MORGAN STANLEY & CO.
INTERNATIONAL
PARIBAS CAPITAL MARKETS
SALOMON BROTHERS INC
TOKYO-MITSUBISHI INTERNATIONAL PLC
UBS SECURITIES
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