<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 6, 1996
FORD MOTOR CREDIT COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-6368 38-1612444
- ------------------------- ----------------------- -------------------
(State or other juris- (Commission File Number (IRS Employer
diction of incorporation Number) Identification No.)
The American Road, Dearborn, Michigan 48121
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 313-322-3000
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
A reorganization of Ford Motor Company's ("Ford") Financial Services
Group is being undertaken to align more closely under a single subsidiary
legal ownership of the Financial Services affiliates with management
responsibility of such affiliates.
As a part of such reorganization, Ford Holdings, Inc. ("FHI") formed
Ford FSG, Inc. ("FFSGI"), as a wholly-owned Delaware corporation. FFSGI is
the company intended to have legal ownership of the Financial Services
affiliates. The common stock of FHI is owned 45% by Ford Motor Credit
Company ("Ford Credit") and 55% by Ford.
After the formation of FFSGI, FHI contributed its interest in Associates
First Capital Corporation to FFSGI in exchange for 100% of the common stock
of FFSGI and the assumption by FFSGI of certain debt of FHI. Thereafter,
Ford contributed to FFSGI all of its interest in Ford Credit Europe plc
("FCE"), a public limited company incorporated under the laws of England. In
exchange for Ford's contribution of its interest in FCE to FFSGI, Ford
received a class of common stock in FFSGI that has controlling voting power
of FFSGI but otherwise is equal to all other common stock of FFSGI as to the
payment of dividends, etc. The percentages of economic interests of FFSGI
held by Ford and FHI are based on the relative values of the entities
contributed to FFSGI by Ford and FHI. It is anticipated that other Financial
Services affiliates will be transferred to FFSGI in the future.
Also as a part of the reorganization, it is expected that all or
substantially all of Ford Credit's common stock interest in FHI will be
redeemed by FHI. The unaudited pro forma financial data of Ford Credit for the
year ended December 31, 1995, which are filed as Exhibit 20.1 to this Current
Report on Form 8-K and incorporated herein by reference, retroactively reflect
FHI's redemption of substantially all of Ford Credit's common stock interest in
FHI as if such purchase occurred at January 1, 1995 with respect to the
unaudited pro forma income statement data and at December 31, 1995 with respect
to the unaudited pro forma balance sheet data. The unaudited pro forma
financial data do not purport to represent what Ford Credit's financial
position or results of operations would have been had the transaction in fact
occurred on those dates, nor are they necessarily indicative of future
operating results or financial position.
The fair value of Ford Credit's common stock interest in FHI is
estimated to be approximately $3 billion. It is expected that FHI will redeem
substantially all of Ford Credit's common stock interest in FHI by transferring
to Ford Credit all of FHI's interest ($556 million) in The American Road
Insurance Company, a wholly-owned subsidiary, paying cash ($1,084 million),
and issuing a promissory note ($1,260 million) in favor of Ford Credit. The
note will bear interest at the 3-month LIBOR plus 1/8%.
<PAGE> 3
ITEM 5. OTHER EVENTS
FORD MOTOR CREDIT COMPANY 1995 RESULTS OF OPERATIONS
Ford Credit's consolidated net income in 1995 was $1,395 million, up $82
million or 6% from 1994. Net income from financing operations in 1995 was
$1,140 million, up $60 million or 6% from 1994. The increase in financing
profits was more than accounted for by higher financing volumes, lower 1995
taxes, higher gains from sales of receivables, and improved operating cost
performance. Lower net interest margins, higher credit losses, and the non-
recurrence of a one-time gain from the sale of Ford Credit's investment in
Manheim Auctions were a partial offset.
Total gross finance receivables and net investment in operating leases
at December 31, 1995 were $92.4 billion, up $9.6 billion or 12% from a year
earlier. The higher financing volume reflects primarily an increase in
operating leases and retail installment sale receivables. Depreciation
expense in 1995 was $5,041 million, up $1,131 million or 29% from 1994. The
increase reflected the higher levels of operating leases and was more than
offset by higher revenue earned on the lease contracts.
For 1995, Ford Credit financed 36.9% of all new cars and trucks sold by
Ford Motor Company dealers in the U.S. compared with 36.6% in 1994. The
increase primarily resulted from higher levels of operating lease financing.
Ford Credit provided retail customers with financing for 2,499,000 new and
used vehicles in the United States. Ford Credit provided wholesale financing
for 79.7% of Ford Motor Company U.S. factory sales in 1995 compared with
81.5% in 1994.
The decline in net interest margins reflects an increase in net U.S.
portfolio borrowing rates from 5.4% in 1994 to 6.5% in 1995, partially offset
by higher portfolio yields on finance receivables and net investment in
operating leases. Credit losses increased in 1995, reversing a general trend
of improvement that began in 1989. Credit losses as a percent of average
finance receivables including net investment in operating leases were 0.44%
in 1995 ($394 million) compared with 0.30% in 1994 ($229 million). The
increased credit losses reflected higher losses per repossessed unit and an
increase in repossession rates.
For 1995, equity in net income of affiliated companies (primarily FHI)
was $255 million compared with $233 million in 1994. The increase reflected
higher FHI net income available to common shareholders. At December 31,
1995, Ford Credit owned about 45% of Ford Holdings common stock.
- - - - - - - - - - -
Consolidated Financial Statements of Ford Motor Credit Company and
Subsidiaries for the year ended December 31, 1995 together with
the Report of Independent Accountants of Coopers & Lybrand L.L.P.,
independent certified public accountants, filed as Exhibit 99.1 to this
Current Report on Form 8-K, are incorporated by reference herein.
<PAGE> 4
The news release dated January 31, 1996 of Ford Motor Company and
subsidiaries for the year ended December 31, 1995 is filed as Exhibit 99.2 to
this Current Report on Form 8-K and is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
EXHIBITS
Designation Description Method of Filing
- ----------- ----------- ----------------
Exhibit 20.1 Pro Forma Financial Information Filed with this
of Ford Motor Credit Company. Report.
Exhibit 23 Consent of Coopers & Lybrand L.L.P. Filed with this
Report.
Exhibit 27 Financial Data Schedule Filed with this
Report.
Exhibit 99.1 1995 Audit of Consolidated Financial Filed with this
Statements of Ford Motor Credit Report.
Company and Subsidiaries together
with the Report of Independent
Accountants of Coopers & Lybrand
L.L.P., independent certified
public accountants.
Exhibit 99.2 News release dated January 31, 1996 Filed with this
of Ford Motor Company and Subsidiaries Report.
for the year ended December 31, 1995
with attachments.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the date indicated.
FORD MOTOR CREDIT COMPANY
(Registrant)
Date: February 6, 1996 By: /s/R. P. Conrad
----------------------
R. P. Conrad
Assistant Secretary
<PAGE> 5
EXHIBIT INDEX
Designation Description
- ----------- -----------
Exhibit 20.1 Pro Forma Financial Information
of Ford Motor Credit Company.
Exhibit 23 Consent of Coopers & Lybrand L.L.P.
Exhibit 27 Financial Data Schedule
Exhibit 99.1 1995 Audit of Consolidated Financial
Statements of Ford Motor Credit
Company and Subsidiaries together
with the Report of Independent
Accountants of Coopers & Lybrand
L.L.P., independent certified
public accountants.
Exhibit 99.2 News release dated January 31, 1996
of Ford Motor Company and Subsidiaries
for the year ended December 31, 1995
with attachments.
<PAGE> 1
EXHIBIT 20.1
SELECTED PRO FORMA FINANCIAL DATA OF FORD CREDIT
(UNAUDITED)
<TABLE>
<CAPTION>
For the year ended
Consolidated Statement of Income Information December 31, 1995
-----------------
(in millions)
<S> <C>
Total revenue $ 13,784.0
Depreciation on operating leases 5,040.9
Interest expense 4,893.2
Operating expenses including minority
interest in net income 1,555.7
Provision for credit losses 437.9
Equity in net income of affiliated companies 3.2
Provision for income taxes 600.5
Net income 1,259.0
Consolidated Balance Sheet Information (at December 31, 1995)
Cash and cash equivalents $ 1,570.6
Finance receivables net 61,073.6
Net investment in operating leases 24,810.8
Equity in net assets of affiliated companies 88.0
Other assets 6,430.3
Total assets 93,973.3
Debt 78,083.0
Other liabilities 8,336.6
Stockholder's equity 7,553.7
</TABLE>
<PAGE> 2
FORD CREDIT
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRO FORMA FORD
FORD TARIC ADJUSTMENTS CREDIT
CREDIT (SEE NOTE 1) (SEE NOTE 1) PRO FORMA
------------- -------------- --------------- ------------
(in millions)
<S> <C> <C> <C> <C>
Revenue
- -------
Financing revenue $12,516.4 $ - $ - $12,516.4
Insurance premiums - 310.4 - 310.4
Investment and other income 593.7 284.9 78.6 (2a) 957.2
--------- ------- ------- ---------
Total revenue 13,110.1 595.3 78.6 13,784.0
Expenses
- --------
Depreciation on operating
leases 5,040.9 - - 5,040.9
Interest expense 4,957.2 - (64.0) (2b) 4,893.2
Operating expense 984.2 548.1 - 1,532.3
Provision for credit losses 437.9 - - 437.9
--------- ------- ------- ---------
Total expenses 11,420.2 548.1 (64.0) 11,904.3
Equity in net income of
affiliated companies 255.4 - (252.2) (2c) 3.2
--------- ------- ------- ---------
Income before income taxes 1,945.3 47.2 (109.6) 1,882.9
Provision for income taxes 535.9 10.4 54.2 (2d) 600.5
--------- ------- ------- ---------
Income before minority interests 1,409.4 36.8 (163.8) 1,282.4
Minority interest in net income
of subsidiaries 14.2 9.2 - 23.4
--------- ------- ------- ---------
Net income $ 1,395.2 $ 27.6 $(163.8) $ 1,259.0
========= ======= ======= =========
</TABLE>
<PAGE> 3
FORD CREDIT
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRO FORMA FORD
FORD TARIC ADJUSTMENTS CREDIT
CREDIT (SEE NOTE 1) (SEE NOTE 1) PRO FORMA
------------- -------------- --------------- ------------
(in millions)
<S> <C> <C> <C> <C>
Assets
- ------
Cash and cash equivalents $ 1,355.9 $ 214.7 $ 1,084.1 (3a) $ 1,570.6
(1,084.1) (3b)
Finance receivables, net 61,043.8 29.8 - 61,073.6
Net investment, operating
leases 24,810.8 - - 24,810.8
Equity in net assets of
affiliated companies 1,728.0 - (1,640.0) (3a) 88.0
Other assets 5,628.2 802.1 1,260.0 (3a) 6,430.3
(1,260.0) (3d)
555.9 (3a)
(555.9) (3c)
--------- -------- --------- ---------
Total assets $94,566.7 $1,046.6 $(1,640.0) $93,973.3
========= ======== ========== =========
Liabilities and Minority Interests
- ----------------------------------
Debt $79,167.1 $ - $(1,084.1) (3b) $78,083.0
Other liabilities 7,128.7 490.7 - 7,619.4
--------- -------- --------- ---------
Total liabilities 86,295.8 490.7 (1,084.1) 85,702.4
Minority interests in net assets
of subsidiaries 717.2 - - 717.2
Stockholder's Equity
- --------------------
Capital stock 25.0 3.0 (3.0) 25.0
(35.9)
Paid-in surplus 917.3 65.0 1,260.0 (3a) 946.4
(1,260.0) (3d)
Unrealized gain on investments
in securities available for
sale, net of taxes 30.9 0.9 (31.5) 0.3
Foreign currency translation
adjustments (63.3) (3.3) 4.8 (61.8)
Earnings retained for use in
the business 6,643.8 490.3 (490.3) 6,643.8
--------- -------- --------- ---------
Total stockholder's equity 7,553.7 555.9 (555.9) (3c) 7,553.7
--------- -------- --------- ---------
Total liabilities and
stockholder's equity $94,566.7 $1,046.6 $(1,640.0) $93,973.3
========= ======== ========== =========
</TABLE>
<PAGE> 4
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The unaudited selected pro forma financial data and financial statements
of Ford Credit for the year ended December 31, 1995 retroactively reflect
Ford Holdings, Inc.'s (FHI) redemption of substantially all of Ford
Credit's common stock interest in FHI as if such redemption occurred at
January 1, 1995 with respect to the unaudited pro forma income statement
and at December 31, 1995 with respect to the unaudited pro forma balance
sheet.
The fair value of Ford Credit's common stock interest in FHI is estimated
to be approximately $3 billion. It is expected that FHI will redeem
substantially all of Ford Credit's common stock interest in FHI by
transferring certain consideration to Ford Credit. The pro forma
financial statements reflect the transfer of all of FHI's interest in The
American Road Insurance Company ("TARIC") at historic cost ($556 million),
a promissory note ($1,260 million) issued in favor of Ford Credit, and
cash ($1,084 million). TARIC is a wholly owned subsidiary of FHI. The
note will bear interest at the three-month LIBOR plus 1/8%.
The pro forma financial statements reflect TARIC on a fully consolidated
basis at historic cost. The cash received in the transaction is assumed
to have been used to pay down short-term debt. The note received
represents the value received in excess of the book value of Ford Credit's
investment in FHI. This note receivable has been reclassified to equity
so the transaction will have no effect on equity at December 31, 1995.
While there is no material effect on the pro forma balance sheet, pro
forma net income decreases $136.2 million. The unaudited pro forma
financial statements do not purport to represent what Ford Credit's
financial position or results of operations would have been had the
transaction in fact occurred on those dates, nor are they necessarily
indicative of future operating results or financial position.
Pro Forma Income Statement Adjustments
2a. Record interest income on the note issued by FHI in favor of Ford Credit.
The note earns interest at the three-month LIBOR plus 1/8% ($1,260.0
million X 6.238% or $78.6 million).
2b. Record reduction in interest expense resulting from the use of cash
proceeds to pay down short-term debt. The debt liquidated is assumed to
be commercial paper which bears interest at 5.9% per annum ($1,084.1
million X 5.9% or $64 million).
2c. Eliminate Ford Credit's equity interest in the 1995 net income of FHI
($252.2 million).
2d. Record federal and state income tax provision associated with entries 2a
and 2b. The tax rate assumes a combined rate of 38% (35% federal; 3%
state).
<PAGE> 5
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Pro Forma Balance Sheet Adjustments
3a. Record FHI redemption of Ford Credit's common stock interest in FHI as
follows:
<TABLE>
<CAPTION>
Debit/(Credit)
----------------
(in millions)
<S> <C>
Cash $ 1,084.1
Investment in TARIC (at historic cost) 555.9
Note for excess of fair value of FHI investment over cost 1,260.0
Reduce investment in FHI (1,640.0)
Increase equity for excess of fair value over book value of
FHI investment (1,260.0)
</TABLE>
3b. Record use of cash ($1,084.1 million) to pay down short-term commercial
paper.
3c. Eliminate Ford Credit's investment in TARIC at December 31, 1995 ($555.9
million).
3d. Reclassify note receivable ($1,260.0 million) for excess of fair value
over book as a reduction of equity.
<PAGE> 1
EXHIBIT 23
CONSENT OF COOPERS & LYBRAND L.L.P.
Re: Ford Motor Credit Company Registration Statement
No. 33-30875 on Form S-8 and Registration Statement Nos. 33-24928,
33-55237, 33-55945, 33-64263 and 33-64237 on Form S-3.
We consent to the incorporation by reference in the above Ford Motor Credit
Company Registration Statements of our report dated January 26, 1996 on our
audits of the consolidated financial statements of Ford Motor Credit Company
and Subsidiaries at December 31, 1995 and 1994 and for each of the three years
in the period ended December 31, 1995 included in Ford Motor Credit Company's
Current Report on Form 8-K dated February 6, 1996.
COOPERS & LYBRAND L.L.P.
/s/ Coopers & Lybrand L.L.P.
Detroit, Michigan
February 6, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1356
<SECURITIES> 1914
<RECEIVABLES> 61044
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 94567
<CURRENT-LIABILITIES> 0
<BONDS> 79167
0
0
<COMMON> 25
<OTHER-SE> 7529
<TOTAL-LIABILITY-AND-EQUITY> 94567
<SALES> 0
<TOTAL-REVENUES> 13110
<CGS> 0
<TOTAL-COSTS> 11420
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 438
<INTEREST-EXPENSE> 4957
<INCOME-PRETAX> 1945
<INCOME-TAX> 536
<INCOME-CONTINUING> 1395
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1395
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
FORD MOTOR CREDIT COMPANY
AND SUBSIDIARIES
1995 AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS
<PAGE> 2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Ford Motor Credit Company:
We have audited the consolidated balance sheets of Ford Motor Credit Company
and Subsidiaries at December 31, 1995 and 1994, and the related consolidated
statements of income and of earnings retained for use in the business and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Ford Motor Credit
Company and Subsidiaries at December 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995 in conformity with generally accepted
accounting principles.
Detroit, Michigan
January 26, 1996
1
<PAGE> 3
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME AND OF EARNINGS
RETAINED FOR USE IN THE BUSINESS
(in millions)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
---------------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Financing revenue
Operating leases $ 7,018.4 $ 5,343.2 $3,602.6
Retail 3,605.6 3,231.5 3,305.2
Wholesale 1,407.7 964.8 679.6
Diversified 152.2 119.8 143.9
Other 332.5 267.6 221.1
--------- --------- --------
Total financing revenue 12,516.4 9,926.9 7,952.4
Investment and other income 593.7 462.4 386.0
--------- --------- --------
Total revenue 13,110.1 10,389.3 8,338.4
Expenses
Depreciation on operating leases 5,040.9 3,910.0 2,675.7
Interest expense 4,957.2 3,540.8 2,919.3
Operating expenses 984.2 925.4 796.5
Provision for credit losses 437.9 246.5 270.2
--------- --------- --------
Total expenses 11,420.2 8,622.7 6,661.7
--------- --------- --------
Equity in net income of affiliated companies 255.4 232.5 198.3
--------- --------- --------
Income before income taxes 1,945.3 1,999.1 1,875.0
Provision for income taxes 535.9 675.7 673.3
--------- --------- --------
Income before minority interest 1,409.4 1,323.4 1,201.7
Minority interest in net income of subsidiaries 14.2 10.7 7.9
--------- --------- --------
Net income 1,395.2 1,312.7 1,193.8
Earnings retained for use in the business
Beginning of year 5,848.6 4,899.9 3,956.1
Cash dividends (600.0) (364.0) (250.0)
--------- --------- --------
End of year $ 6,643.8 $ 5,848.6 $4,899.9
========= ========= ========
</TABLE>
The accompanying notes are part of the financial statements.
2
<PAGE> 4
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------
ASSETS 1995 1994
------------- -------------
<S> <C> <C>
Cash and cash equivalents $ 1,355.9 $ 292.0
Investments in securities 1,914.1 1,596.3
Finance receivables, net 61,043.8 56,946.5
Net investment, operating leases 24,810.8 19,993.9
Notes and accounts receivable from affiliated
companies 420.7 250.3
Equity in net assets of affiliated companies 1,728.0 1,346.5
Other assets 3,293.4 2,799.0
--------- ---------
Total assets $94,566.7 $83,224.5
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Accounts payable
Trade, customer deposits, and
dealer reserves $ 1,579.4 $ 1,326.5
Affiliated companies 608.7 496.0
--------- ---------
Total accounts payable 2,188.1 1,822.5
Debt 79,167.1 70,440.4
Deferred income taxes 3,027.0 2,405.9
Other liabilities and deferred income 1,913.6 1,495.6
--------- ---------
Total liabilities 86,295.8 76,164.4
Minority interest in net assets of subsidiaries 717.2 397.5
STOCKHOLDER'S EQUITY
Capital stock, par value $100 a share, 250,000
shares authorized, issued and outstanding 25.0 25.0
Paid-in surplus (contributions by stockholder) 917.3 917.3
Unrealized gain/(loss) on investments in
securities available for sale, net of taxes 30.9 (70.0)
Foreign currency translation adjustments (63.3) (58.3)
Earnings retained for use in the business 6,643.8 5,848.6
--------- ---------
Total stockholder's equity 7,553.7 6,662.6
--------- ---------
Total liabilities and stockholder's equity $94,566.7 $83,224.5
========= =========
</TABLE>
The accompanying notes are part of the financial statements.
3
<PAGE> 5
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
------------------------------------------------
1995 1994 1993
------------- ------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 1,395.2 $ 1,312.7 $ 1,193.8
Adjustments to reconcile net income to
net cash provided by operating
activities
Provision for credit losses 437.9 246.5 270.2
Depreciation and amortization 5,087.7 3,969.4 2,745.8
Gain on sales of finance receivables (69.2) (11.4) (92.5)
Equity in net income of affiliates (255.4) (232.5) (198.3)
Deferred income taxes 613.9 349.3 565.3
Changes in the following items
Other assets (582.3) (186.6) (327.0)
Other liabilities 594.9 625.4 229.1
Other 211.8 (23.4) 27.4
----------- ---------- ----------
Net cash provided by
operating activities 7,434.5 6,049.4 4,413.8
----------- ---------- ----------
Cash flows from investing activities
Purchase of finance receivables
(other than wholesale) (29,694.3) (29,666.3) (27,191.3)
Collection of finance receivables
(other than wholesale) 23,608.1 24,797.4 21,341.6
Net change in wholesale receivables (2,254.9) (4,550.4) (1,641.6)
Proceeds from sales of finance receivables
and operating leases 4,360.3 3,105.1 2,521.3
Purchase of operating lease vehicles (17,136.6) (14,842.5) (9,908.0)
Liquidation of operating lease vehicles 6,704.5 3,448.9 2,317.8
Other (347.7) (484.6) 53.9
----------- ---------- ----------
Net cash used in
investing activities (14,760.6) (18,192.4) (12,506.3)
----------- ---------- ----------
Cash flows from financing activities
Proceeds from issuance of long-term debt 11,805.7 10,721.1 12,934.9
Principal payments on long-term debt (5,185.7) (8,035.7) (6,326.2)
Change in short-term debt, net 2,028.5 8,898.0 2,568.4
Cash dividends paid (600.0) (364.0) (250.0)
Other 338.8 225.4 (132.8)
----------- ---------- ----------
Net cash provided by
financing activities 8,387.3 11,444.8 8,794.3
Effect of exchange rate changes on
cash and cash equivalents 2.7 (2.1) (4.5)
----------- ---------- ----------
Net change in cash and cash equivalents 1,063.9 (700.3) 697.3
Cash and cash equivalents, beginning of year 292.0 992.3 295.0
----------- ---------- ----------
Cash and cash equivalents, end of year $ 1,355.9 $ 292.0 $ 992.3
=========== ========== ==========
Supplementary cash flow information
Interest paid $ 4,676.0 $ 3,494.2 $ 2,871.6
Taxes paid 66.0 341.2 101.2
</TABLE>
The accompanying notes are part of the financial statements.
4
<PAGE> 6
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Ford Motor Credit
Company ("Ford Credit") and its majority owned domestic and foreign
subsidiaries and joint ventures. Use of estimates as determined by management
is required in the preparation of consolidated financial statements in
conformity with generally accepted accounting principles. Affiliates that are
20-50 percent owned, principally Ford Holdings, Inc. ("Ford Holdings"), are
included in the consolidated financial statements on an equity basis. Ford
Credit is a wholly owned subsidiary of Ford Motor Company ("Ford").
Nature of Operations
Ford Credit, its subsidiaries and affiliates operate in two industry segments
- -- financing and insurance. Financing operations primarily consist of: the
purchase from franchised Ford vehicle dealers of retail installment sale
contracts and retail leases; wholesale financing and capital loans to
franchised Ford vehicle dealers and other franchises associated with such
dealers; loans to vehicle leasing companies; and diversified financing. In
addition, wholly owned subsidiaries of Ford Credit provide these financing
services in the United States and Canada to other vehicle dealers. Insurance
operations conducted through Ford Credit's equity investment in Ford Holdings
consist of: single premium deferred annuities; property and casualty insurance
relating to extended service plan contracts for new and used vehicles
manufactured by affiliated and nonaffiliated companies, primarily originating
from Ford dealers; credit life and credit disability insurance for retail
purchasers of vehicles and equipment; and physical damage insurance covering
vehicles and equipment financed at wholesale by Ford Credit and its
subsidiaries. See also Note 3 for information regarding Ford Credit's
ownership changes of Ford Holdings.
Ford Credit, through certain of its subsidiaries and joint ventures, operates
in several foreign countries, the most significant of which are Canada,
Australia, and Mexico.
Continued
5
<PAGE> 7
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 1. ACCOUNTING POLICIES (continued)
Revenue Recognition
Revenue from finance receivables is recognized using the interest (actuarial)
method. Certain loan origination costs are deferred and amortized to financing
revenue over the life of the related loans using the interest method. Rental
revenue on operating leases is recognized on a straight-line basis over the
term of the lease. The recognition of revenue on loans is discontinued at the
time a loan is determined to be impaired. Any amounts collected are recognized
first as a reduction of principal. Subsequent amounts collected are treated as
a recovery.
Agreements with Ford and other affiliates provide for interest supplements and
other support payments to Ford Credit on certain financing and leasing
transactions. These payments are recognized as income over the period that the
related finance receivables and leases are outstanding.
Sale of Receivables
Ford Credit periodically sells finance receivables through special purpose
subsidiaries, retains the servicing rights, and is paid a servicing fee. The
estimated fair value of the excess servicing fee is recorded as an asset at the
date of sale and is accounted for as an adjustment to the sales price of the
sold receivables.
Estimated gains or losses from the sale of finance receivables are recognized
in the period in which the sale occurs. In determining the gain or loss on
each qualifying sale of finance receivables, the investment in the sold
receivable pool is allocated between the portion sold and the portion retained
based on their relative fair values at the date of sale (see Note 7).
Normal servicing fees are earned as collected over the remaining term of the
related sold finance receivables. The excess servicing asset is amortized over
the term of the sold receivables using the interest method.
Depreciation
Depreciation expense on operating leases is provided on a straight-line basis
over the term of the lease in an amount necessary to reduce the leased vehicle
to its estimated residual value at the end of the lease term. Gains or losses
upon disposal and adjustments to reflect impairment of the vehicle's residual
value are also included in depreciation expense.
Continued
6
<PAGE> 8
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 1. ACCOUNTING POLICIES (continued)
Allowance for Credit Losses
An allowance for estimated credit losses is established for impaired loans
based on the provisions of Statement of Financial Accounting Standards No. 114
("SFAS 114"). Additional amounts are provided as required based on historical
experience and other factors that affect collectibility. Finance receivables
and lease investments are charged to the allowance for credit losses when an
account is deemed to be uncollectible, taking into consideration the financial
condition of the borrower or lessee, the value of the collateral, recourse to
guarantors and other factors. Collateral held for resale included in other
assets is carried at its estimated fair value at the date of repossession net
of estimated disposal costs. Any difference between the estimated fair value
of the investment in the receivable or lease and the actual sales price of the
underlying collateral is charged to the allowance for credit losses.
Recoveries on finance receivables and lease investments previously charged off
as uncollectible are credited to the allowance for credit losses.
Derivative Financial Instruments
Ford Credit has entered into agreements to manage exposures to fluctuations in
interest rates and foreign exchange. These agreements are used to hedge
exposure created by the difference in maturities of funding sources versus the
average maturities of finance receivables and operating leases and to hedge
debt denominated in foreign currencies. All such instruments are classified as
"held for purposes other than trading"; company policy specifically prohibits
the use of derivatives for speculative purposes.
Interest rate swap agreements are used to manage the effects of interest rate
fluctuations. The differential paid or received on interest rate swap
agreements is recognized on an accrual basis as an adjustment to interest
expense. Gains and losses on terminated interest rate swaps are amortized and
reflected in interest expense over the remaining term of the original
agreement.
Foreign currency swap agreements are used to manage foreign exchange exposure.
The differential paid or received on currency swaps is recognized on an accrual
basis as an adjustment to interest expense. Gains and losses on the foreign
currency swap agreements are recognized during the period of the related
transactions.
Continued
7
<PAGE> 9
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 1. ACCOUNTING POLICIES (continued)
Foreign Currency Translation
Revenues, costs and expenses of foreign subsidiaries are translated to U.S.
dollars at average-period exchange rates. Assets and liabilities of foreign
subsidiaries are translated to U.S. dollars at year-end exchange rates with the
effects of these translation adjustments being reported in a separate component
of stockholder's equity. The change in this account results from translation
adjustments recorded during the year.
Cash Equivalents
Ford Credit considers investments purchased with a maturity of three months or
less to be cash equivalents.
Financial Statement Reclassifications
Certain amounts in prior years financial statements have been reclassified to
conform with current year presentation.
Impairment of Long-Lived Assets and Certain Identifiable Intangibles
Statement of Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," was issued in March 1995. The standard is required to be adopted
effective January 1, 1996. The effect of adopting SFAS 121 is not expected to
be material.
Continued
8
<PAGE> 10
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 2. MARKETABLE AND OTHER SECURITIES
Available-for-sale securities are recorded at fair value with unrealized gains
and losses excluded from income and reported, net of tax, in a separate
component of stockholder's equity. At December 31, 1995 and 1994, the amount
reported in stockholder's equity includes Ford Credit's equity interest in Ford
Holdings' investment portfolio. Held-to-maturity securities are recorded at
amortized cost. Equity securities which do not have readily determinable fair
values are recorded at cost. The basis of cost used in determining realized
gains and losses is specific identification.
The fair value of substantially all securities was estimated based on quoted
market prices for those securities. For securities for which there were no
quoted market prices, the estimate of fair value was based on similar types of
securities that are traded in the market. Investments in securities at
December 31, 1995 were as follows:
<TABLE>
<CAPTION>
GROSS ESTIMATED MEMO:
AMORTIZED UNREALIZED FAIR BOOK
COST GAINS VALUE VALUE
------------ ---------- ------------- ------------
(in millions)
<S> <C> <C> <C> <C>
Available-for-sale securities
- -----------------------------
Debt securities issued by the
U.S. government and agencies $ 9.1 $ 0.1 $ 9.2 $ 9.2
Held-to-maturity securities
- ---------------------------
Municipal securities 1,041.6 57.6 1,099.2 1,041.6
Corporate debt securities 47.9 1.8 49.7 47.9
------------ ------------- ------------- ------------
Total held-to-maturity
securities 1,089.5 59.4 1,148.9 1,089.5
------------ ------------- ------------- ------------
Total investments in
securities with readily
determinable fair values 1,098.6 59.5 1,158.1 1,098.7
Other non-marketable equity
securities 815.4 - 815.4 815.4
------------ ------------- ------------- ------------
Total investments in
securities $ 1,914.0 $ 59.5 $ 1,973.5 $ 1,914.1
============ ============= ============= ============
</TABLE>
Continued
9
<PAGE> 11
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 2. MARKETABLE AND OTHER SECURITIES (continued)
Investments in securities at December 31, 1994 were as follows:
<TABLE>
<CAPTION>
GROSS ESTIMATED MEMO:
AMORTIZED UNREALIZED FAIR BOOK
COST LOSSES VALUE VALUE
------------ ------------- ------------- ------------
(in millions)
<S> <C> <C> <C> <C>
Available-for-sale securities
- -----------------------------
Debt securities issued by the
U.S. government and agencies $ 4.8 $ - $ 4.8 $ 4.8
Held-to-maturity securities
- ---------------------------
Municipal securities 687.5 5.7 681.8 687.5
Corporate debt securities 52.1 0.4 51.7 52.1
Redeemable preferred stock 40.0 0.1 39.9 40.0
------------ ------------- ------------- ------------
Total held-to-maturity
securities 779.6 6.2 773.4 779.6
------------ ------------- ------------- ------------
Total investments in
securities with readily
determinable fair values 784.4 6.2 778.2 784.4
Other non-marketable equity
securities 811.9 - 811.9 811.9
------------ ------------- ------------- ------------
Total investments
in securities $ 1,596.3 $ 6.2 $ 1,590.1 $ 1,596.3
============ ============= ============= ============
</TABLE>
Continued
10
<PAGE> 12
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 2. MARKETABLE AND OTHER SECURITIES (continued)
The amortized cost and fair value of investments in available-for-sale
securities and held-to-maturity securities at December 31, 1995, by contractual
maturity, were as follows:
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
--------------------------------------------- -----------------------------------------
ESTIMATED MEMO: ESTIMATED MEMO:
AMORTIZED FAIR BOOK AMORTIZED FAIR BOOK
COST VALUE VALUE COST VALUE VALUE
------------- ------------- ------------- ------------- ------------- ------------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Due in one
year or less $ - $ - $ - $ 39.9 $ 39.9 $ 39.9
Due after one
year through
five years 7.4 7.5 7.5 164.9 164.9 164.9
Due after five
years through
ten years 1.7 1.7 1.7 884.7 944.1 884.7
------------- ------------- ------------- ------------- ------------- ------------
$ 9.1 $ 9.2 $ 9.2 $ 1,089.5 $ 1,148.9 $ 1,089.5
============= ============= ============= ============= ============= =============
</TABLE>
Proceeds from sales of available-for-sale securities were $76.4 million and
$74.2 million in 1995 and 1994, respectively. Gross realized gains and losses
for the years 1995 and 1994 were not material.
Continued
11
<PAGE> 13
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 3. EQUITY INVESTMENT IN FORD HOLDINGS
Ford Holdings is a holding company owned by Ford Credit and Ford, the primary
activities of which consist of consumer and commercial financing operations,
insurance underwriting, and equipment leasing. These activities are conducted
through Ford Holdings' wholly owned subsidiaries, The American Road Insurance
Company ("TARIC") and USL Capital Corporation ("USL Capital"), and through the
subsidiaries of Ford FSG, Inc. ("FFSGI"), a holding company owned by Ford and
Ford Holdings, the primary subsidiaries of which are Associates First Capital
Corporation and Ford Credit Europe.
During 1995, TARIC agreed to sell its annuity business to SunAmerica, Inc. for
$172.5 million. The sale is expected to be completed in early 1996. TARIC
recognized a one-time charge to earnings in the fourth quarter related to the
sale. The charge was not material to Ford Holdings' 1995 financial results.
In addition, Ford Motor Company previously announced that it is reviewing
possible strategic actions with respect to its Financial Services Group which
could include the partial or complete sale of USL Capital. Any such sale could
include all or a portion of Ford Credit's diversified assets, which total about
$3.3 billion, managed by USL Capital.
At December 31, 1995 and 1994, Ford Credit owned 45% of Ford Holdings' common
stock. This represented 45% of the voting power in Ford Holdings at December
31, 1995 and 33.8% of the voting power at December 31, 1994. Ford owns the
remaining common stock in Ford Holdings, representing 55% and 41.2% of the
voting power at December 31, 1995 and December 31, 1994, respectively. The
increase in voting power in 1995 resulted from a merger between Ford Holdings
and Ford Holdings Capital Corporation, effective December 31, 1995, which
resulted in the cash out of all of the outstanding voting preferred stock of
Ford Holdings.
Continued
12
<PAGE> 14
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 3. EQUITY INVESTMENT IN FORD HOLDINGS (continued)
Condensed financial information of Ford Holdings as of December 31 was as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------- -------------
(in millions)
<S> <C> <C> <C>
INCOME STATEMENT
Revenue $ 7,047.4 $ 5,880.5 $ 5,291.8
Income before income taxes 1,107.1 940.5 830.6
Net income 690.0 609.3 511.4
Preferred stock dividend requirements 129.8 97.5 74.9
Income available for common stockholders 560.2 511.8 436.5
BALANCE SHEET
Assets
Cash and investments in securities $ 2,508.2 $ 5,947.0 $ 5,100.7
Finance receivables, net 1,478.3 29,361.7 24,376.6
Investment in Ford FSG, Inc. 3,390.0 - -
Accounts receivable (including affiliated
companies) and other assets 7,743.0 9,064.5 9,121.5
------------ ------------- -------------
Total assets $ 15,119.5 $ 44,373.2 $ 38,598.8
============ ============= =============
Liabilities
Accounts payable (including affiliated
companies) and other liabilities $ 3,756.1 $ 5,537.8 $ 4,738.3
Debt payable within one year 2,248.0 16,054.9 13,802.1
Long-term debt 4,486.8 17,765.1 15,767.7
------------ ------------- -------------
Total liabilities 10,490.9 39,357.8 34,308.1
Stockholders' equity 4,628.6 5,015.4 4,290.7
------------ ------------- -------------
Total liabilities and stockholders'
equity $ 15,119.5 $ 44,373.2 $ 38,598.8
============ ============= =============
</TABLE>
Ford Credit's equity in the net assets of Ford Holdings at December 31, 1995
and 1994 was $1,697 million and $1,342 million, respectively.
Continued
13
<PAGE> 15
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 3. EQUITY INVESTMENT IN FORD HOLDINGS (continued)
Reorganization
In the Fourth Quarter of 1995, as part of a reorganization of Ford's Financial
Services Group, a merger between Ford Holdings and Ford Holdings Capital
Corporation resulted in the cash out of all of the outstanding voting preferred
stock of Ford Holdings (totaling about $2 billion). Ford Holdings funded the
cash out of the voting preferred stock primarily with bank loans. As a result,
the common stock of Ford Holdings, which is owned by Ford and Ford Credit, is
the only class of voting stock outstanding at December 31, 1995. In the Fourth
Quarter 1995, Ford Holdings also contributed its ownership interest in
Associates First Capital Corporation to FFSGI in exchange for 100% of the
common stock of FFSGI and the assumption by FFSGI of certain debt of FHI.
Thereafter, Ford contributed to FFSGI all of its interest in Ford Credit Europe
plc ("FCE"), a public limited company incorporated under the laws of
England. In exchange for Ford's contribution of its interest in FCE to FFSGI,
Ford received a class of common stock in FFSGI that has controlling voting
power of FFSGI but otherwise is equal to all other common stock of FFSGI as to
the payment of dividends, etc.
In 1996, it is expected that all or substantially all of Ford Credit's interest
in Ford Holdings will be redeemed for ownership of TARIC, cash, and notes
estimated to be approximately $3 billion. The actual amounts will be based on
a valuation of Ford Holdings at the redemption date.
Assuming the redemption had taken place on January 1, 1995, unaudited pro forma
net income would have been lower by approximately $136 million in 1995. The
pro forma effect of this transaction on Ford Credit's balance sheet would not
have been material. The pro forma results are not necessarily indicative of
future operating results or the results that might have occurred had the
transaction taken place on January 1, 1995.
Continued
14
<PAGE> 16
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 4. FINANCE RECEIVABLES
Finance receivables at December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
(in millions)
<S> <C> <C>
Retail $ 43,773.2 $ 40,566.6
Wholesale 16,506.9 15,252.9
Diversified 2,736.8 2,738.2
Other 4,630.6 4,263.8
------------ ------------
Total finance receivables 67,647.5 62,821.5
Add: Loan origination costs, net 220.5 155.6
Less: Unearned income (6,155.1) (5,371.0)
Allowance for credit losses (669.1) (659.6)
------------ ------------
Finance receivables, net $ 61,043.8 $ 56,946.5
============ ============
</TABLE>
Included in finance receivables is a total of $1.3 billion owed by three
customers with the largest receivable balances. During 1995 and 1994, Ford
Credit issued irrevocable standby letters of credit in the amount of $267
million and $295 million, respectively, on behalf of one of these customers. A
major portion of these amounts are guaranteed by Ford.
Ford Credit periodically sells finance receivables under agreements which
contain recourse provisions. Reserves for estimated losses under the recourse
provisions are provided at the time of the sales based principally on
historical loss experience. Ford Credit continues to service the sold
receivables for a fee. Ford Credit's servicing portfolio relating to these
finance receivables sales amounted to $9.2 billion and $8.1 billion at December
31, 1995 and 1994, respectively.
The maturities of finance receivables outstanding at December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
DUE IN YEAR
ENDING DECEMBER 31 DUE
------------------------------------------ AFTER
1996 1997 1998 1998 TOTAL
------------- ------------ ------------ ------------- ------------
(in millions)
<S> <C> <C> <C> <C> <C>
Retail $ 16,771.8 $ 11,844.2 $ 8,639.0 $ 6,518.2 $ 43,773.2
Wholesale 15,968.5 275.9 218.4 44.1 16,506.9
Diversified 155.0 142.4 118.3 2,321.1 2,736.8
Other 2,913.2 147.7 146.6 1,423.1 4,630.6
------------- ------------- ----------- ------------ -------------
Total $ 35,808.5 $ 12,410.2 $ 9,122.3 $ 10,306.5 $ 67,647.5
============= ============= ============ ============ =============
</TABLE>
It is Ford Credit's experience that a substantial portion of finance
receivables are repaid before contractual maturity dates. The above table,
therefore, is not to be regarded as a forecast of future cash collections.
Continued
15
<PAGE> 17
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 4. FINANCE RECEIVABLES (continued)
Installments, including interest, past-due 60 days or more and the aggregate
receivable balances related to such past-due installments were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------------- ---------------------------
INSTALLMENTS BALANCES INSTALLMENTS BALANCES
------------ -------- ------------ --------
(in millions)
<S> <C> <C> <C> <C>
Retail $ 65.4 $ 282.7 $ 26.7 $ 183.0
Diversified - 0.2 5.4 8.0
Other 10.3 38.4 1.0 6.9
-------- -------- -------- --------
Total $ 75.7 $ 321.3 $ 33.1 $ 197.9
======== ======== ======== ========
</TABLE>
Included in retail and diversified receivables are investments in direct
financing and leveraged leases related to the leasing of motor vehicles and
various types of transportation and other equipment:
<TABLE>
<CAPTION>
1995 1994
----------- ------------
(in millions)
<S> <C> <C>
Investment in direct financing leases
Minimum lease rentals $ 1,735.5 $ 1,843.7
Estimated residual values 1,315.0 1,420.3
Lease origination costs 13.1 7.1
Less: Unearned income (456.7) (467.6)
Allowance for credit losses (43.1) (43.5)
----------- ------------
Net investment in direct
financing leases $ 2,563.8 $ 2,760.0
=========== ============
</TABLE>
Minimum direct financing lease rentals (including executory costs of $26.4
million) for each of the five succeeding years are as follows (in millions):
1996 - $704.8; 1997 - $526.5; 1998 - $319.9; 1999 - $174.9; 2000 - $6.7;
thereafter - $29.1.
Continued
16
<PAGE> 18
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 4. FINANCE RECEIVABLES (continued)
<TABLE>
<CAPTION>
1995 1994
------------- ------------
(in millions)
<S> <C> <C>
Investment in leveraged leases
Rentals receivable (net of principal
and interest on nonrecourse debt) $ 1,540.0 $ 1,491.9
Estimated residual values 564.6 543.1
Lease origination costs 3.0 3.5
Less: Unearned income (445.9) (427.7)
Allowance for credit losses (19.2) (22.8)
------------ ------------
Investment in leveraged leases 1,642.5 1,588.0
Less deferred income taxes arising
from leveraged leases (1,490.1) (1,427.8)
------------ ------------
Net investment in leveraged leases $ 152.4 $ 160.2
============ ============
</TABLE>
NOTE 5. NET INVESTMENT, OPERATING LEASES
Operating leases at December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
(in millions)
<S> <C> <C>
Investment in operating leases
Vehicles and other equipment, at cost $ 30,448.4 $ 24,817.8
Lease origination costs 44.4 34.9
Less: Accumulated depreciation (5,423.8) (4,602.9)
Allowance for credit losses (258.2) (255.9)
------------ ------------
Net investment in operating leases $ 24,810.8 $ 19,993.9
============ ============
</TABLE>
Future minimum rentals on operating leases are as follows (in millions): 1996
- - $5,574.3; 1997 - $2,188.3; 1998 - $162.2; 1999 - $1.0.
Continued
17
<PAGE> 19
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 6. ALLOWANCE FOR CREDIT LOSSES
Following is an analysis of the allowance for credit losses relating to finance
receivables and operating leases for the past three years:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- -----------
(in millions)
<S> <C> <C> <C>
Balance, beginning of year $ 915.5 $ 915.5 $ 915.5
Additions 437.9 246.5 270.2
Deductions
Losses 557.0 377.8 391.8
Recoveries (163.1) (149.1) (163.4)
----------- ---------- -----------
Net losses 393.9 228.7 228.4
Other changes, principally amounts relating
to finance receivables and
operating leases sold 32.2 17.8 41.8
----------- ---------- -----------
Net deductions 426.1 246.5 270.2
----------- ---------- -----------
Balance, end of year $ 927.3 $ 915.5 $ 915.5
=========== ========== ===========
</TABLE>
Statement of Financial Accounting Standards No. 114, "Accounting by Creditors
for Impairment of a Loan," was issued in May 1993 and amended in October 1994
by Statement of Financial Accounting Standards No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures." The
Standards apply to loans individually evaluated and do not apply to small
dollar homogeneous loans, such as retail finance receivables, which are
evaluated collectively based on historical experience. The Standards require
that impaired loans be measured based on the present value of expected future
cash flows discounted at the loan's effective interest rate. The company
adopted these standards as of January 1, 1995 and the effect was not material.
The amount of impaired loans outstanding at December 31, 1995 and the average
recorded investment in impaired loans during the year was immaterial.
Additionally, the amount included in the allowance for credit losses at
December 31, 1995 pertaining to impaired loans is not material.
Continued
18
<PAGE> 20
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 7. OTHER ASSETS
Other assets consist of:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1995 1994
------------ ------------
(in millions)
<S> <C>
Investment in used vehicles held for
resale, at estimated fair value $ 1,199.3 $ 1,269.0
Retained interest in sold receivables 1,062.7 895.2
Deferred charges and other assets 602.3 254.0
Collateral held for resale 340.7 297.3
Property and equipment, net of
accumulated depreciation of $55.7
in 1995 and $49.9 in 1994 88.4 83.5
------------ ------------
Total $ 3,293.4 $ 2,799.0
============ ============
</TABLE>
Continued
19
<PAGE> 21
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 8. DEBT
Debt at December 31 was as follows:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE(A)
INTEREST RATES BOOK VALUE
------------------------- -----------------------------
1995 1994 1995 1994
----------- ---------- ------------ ------------
(in millions)
<S> <C> <C> <C> <C>
PAYABLE WITHIN ONE YEAR
Commercial paper(B) $ 34,978.3 $ 33,228.9
Other short-term debt(C) 1,523.1 1,136.0
------------ ------------
Total short-term debt 5.87% 5.90% 36,501.4 34,364.9
Senior notes payable
within one year 7.69% 7.79% 6,626.9 4,712.7
------------ ------------
Total payable within
one year 6.15% 6.13% 43,128.3 39,077.6
------------ ------------
PAYABLE AFTER ONE YEAR
Unsecured senior indebtedness
Notes(D) 6.90% 7.02% 36,003.6 31,411.2
Debentures 2.04% - 29.1 -
Unamortized premium/
(discount) 6.1 (48.4)
------------ ------------
Total payable after one year(B) 36,038.8 31,362.8
------------ ------------
Total debt 6.49% 6.53% $ 79,167.1 $ 70,440.4
============ ============
</TABLE>
(A) Excludes the effect of interest rate swap agreements.
(B) The average remaining maturities of commercial paper was 29 days at
December 31, 1995 and 27 days at December 31, 1994. Unsecured senior
notes and debentures mature at various dates through 2048. Maturities
for the next five years are as follows (in millions): 1996 - $6,626,9;
1997 - $6,939.2; 1998 - $8,477.7; 1999 - $6,876.6; 2000 - $6,544.4;
thereafter - $7,194.8.
(C) Includes $35.9 million and $0 with an affiliated company at December 31,
1995 and 1994.
(D) Includes $1,174.4 million and $0 with affiliated companies at December
31, 1995 and 1994.
Continued
20
<PAGE> 22
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 8. DEBT (continued)
Debt payable after one year at December 31, 1995 and 1994 included obligations
of $24,620.3 million and $21,158.4 million, respectively, with fixed interest
rates and $11,418.5 million and $10,204.4 million, respectively, with variable
interest rates (generally based on LIBOR or other short-term rates).
Ford Credit and certain of its subsidiaries have entered into interest rate
swap agreements to manage exposures to fluctuations in interest rates. The
agreements had no material effect on the overall weighted-average interest rate
on total debt as of December 31, 1995 and decreased the overall
weighted-average interest rate on total debt to 6.17% from 6.53% as of December
31, 1994. The agreements decreased the long-term obligations subject to
variable interest rates as of December 31, 1995 and 1994 to $8,607.7 and
$6,857.4 million, respectively. In addition, the agreements decreased the
Company's overall weighted-average effective interest rates for full year 1995
from 6.68% to 6.55% and full year 1994 from 5.82% to 5.51%. The effect of
these agreements is to reduce the effect of interest rate changes on
profitability. Approximately 27% of Ford Credit's interest rate swaps mature
in 1996 and approximately 89% mature by 2000.
Continued
21
<PAGE> 23
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 8. DEBT (continued)
Debt at December 31 included obligations payable in foreign currencies and
translated to U.S. dollars as follows:
<TABLE>
<CAPTION>
December 31
----------------------------
1995 1994
------------ ------------
(in millions)
<S> <C> <C>
Canadian dollar $4,099.8 $ 3,451.4
Australian dollar 1,416.8 1,192.8
Japanese yen 1,726.4 655.1
German deutsche mark 139.7 257.9
Luxembourg franc 68.0 125.5
Italian lira 31.5 123.0
European currency unit 160.2 153.3
Swiss franc 108.7 95.3
Netherlands guilder 124.8 -
Indonesia rupiah 32.3 -
Mexican peso 116.8 -
</TABLE>
Certain of these obligations are denominated in currencies other than the
currency of the country of the issuer. Foreign currency swap agreements are
used to hedge exposure to changes in exchange rates of such obligations. These
obligations are translated to U.S. dollars in the financial statements at the
year-end rates of exchange.
NOTE 9. SUPPORT FACILITIES
Support facilities represent additional sources of funds, if required. At
December 31, 1995, Ford Credit had approximately $27.4 billion of contractually
committed facilities for use which included $7.6 billion of Ford bank lines
that may be used by Ford Credit at Ford's option. These facilities have
various maturity dates through June 2000. The entire $27.4 billion may be
used, at Ford Credit's option, by its subsidiaries in Canada, Australia,
Mexico, Japan, and Puerto Rico. Any such borrowing will be guaranteed by Ford
Credit.
Continued
22
<PAGE> 24
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 10. INCOME TAXES
Ford Credit and certain of its domestic subsidiaries join Ford in filing
consolidated United States federal and state income tax returns. Pursuant to
an arrangement with Ford, United States income tax liabilities or credits are
allocated to Ford Credit in accordance with the contribution of Ford Credit and
its subsidiaries to Ford's consolidated tax position.
The provision for income taxes was estimated as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ---------
(in millions)
<S> <C> <C> <C>
Currently (refundable)/payable
U.S. federal $ (45.0) $ 286.4 $ 30.8
Foreign 22.3 41.9 33.0
State and local (29.7) 1.5 39.7
---------- ---------- ---------
Total currently (refundable)/payable (52.4) 329.8 103.5
Deferred tax liability/(benefit)
U.S. federal 490.0 327.9 518.0
Foreign 5.5 (6.6) (6.5)
State and local 92.8 24.6 58.3
---------- ---------- ---------
Total deferred 588.3 345.9 569.8
---------- ---------- ---------
Total provision $ 535.9 $ 675.7 $ 673.3
========== ========== =========
</TABLE>
A reconciliation of the provision for income taxes as a percentage of income
before income taxes, excluding equity in net income of affiliated companies and
minority interest in net income of subsidiaries, with the United States
statutory tax rate for the last three years is shown below:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
U.S. statutory tax rate 35.0% 35.0% 35.0%
Effect of (in percentage points)
State and local income taxes 2.4 2.4 3.6
U.S. taxes attributable to foreign
source income (2.4) 1.9 0.1
Investment income not subject to tax or
subject to tax at reduced rates (1.6) (0.9) (1.0)
Rate adjustments on deferred taxes - (1.7) 1.9
Other (1.4) 1.8 0.7
----- ----- -----
Effective tax rate 32.0% 38.5% 40.3%
===== ===== =====
</TABLE>
Continued
23
<PAGE> 25
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 10. INCOME TAXES (continued)
Deferred income taxes reflect the estimated tax effect of temporary differences
between assets and liabilities for financial reporting purposes and those
amounts as measured by tax laws and regulations. The components of deferred
income tax assets and liabilities as of December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994
------------ -------------
(in millions)
<S> <C> <C>
DEFERRED TAX LIABILITIES
------------------------
Leasing transactions $ 3,392.1 $ 2,851.8
Purchased tax benefits 298.9 296.9
Loan origination costs 96.7 69.1
Sales of receivables 81.8 55.9
Interest supplements 9.0 (40.5)
Other 105.5 57.6
------------ -------------
Total deferred tax liabilities 3,984.0 3,290.8
DEFERRED TAX ASSETS
-------------------
Provision for credit losses 460.8 481.4
Alternative minimum tax 289.9 227.3
Employee benefit plans 109.1 98.4
Retail contract earnings method 49.4 49.4
Other 47.8 28.4
------------ -------------
Total deferred tax assets 957.0 884.9
------------ -------------
Net deferred tax liabilities $ 3,027.0 $ 2,405.9
============ =============
</TABLE>
NOTE 11. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
Ford Credit and certain of its subsidiaries provide selected health care and
life insurance benefits for retired employees under unfunded plans sponsored by
Ford and certain of its subsidiaries. Ford Credit's U.S. and Canadian
employees may become eligible for those benefits if they retire while working
for Ford Credit; however, benefits and eligibility rules may be modified from
time to time. The estimated cost for postretirement health care benefits is
accrued on an actuarially determined basis.
Continued
24
<PAGE> 26
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 11. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS (continued)
Net postretirement benefit expense included the following:
<TABLE>
<CAPTION>
1995 1994
----------- ----------
(in millions)
<S> <C> <C>
Benefits attributed to employees' service $ 7.3 $ 9.3
Interest on accumulated benefit obligation 13.1 14.7
----------- ----------
Net postretirement benefit expense $ 20.4 $ 24.0
=========== ==========
Retiree benefit payments $ 3.4 $ 3.3
</TABLE>
The status of these plans, reconciled with the amounts recognized in Ford
Credit's balance sheet at December 31, was as follows:
<TABLE>
<CAPTION>
1995 1994
----------- ----------
(in millions)
<S> <C> <C>
Accumulated Postretirement Benefit Obligation
- ---------------------------------------------
Retirees $ 57.0 $ 45.8
Active employees eligible to retire 26.7 20.8
Other active employees 137.8 100.4
---------- ----------
Total accumulated obligation 221.5 167.0
Unamortized amendments 2.0 2.2
Unamortized net gain 3.9 39.5
---------- ----------
Accrued liability $ 227.4 $ 208.7
========== ==========
Assumptions:
Discount rate at year-end 7.25% 8.75%
Present health care cost trend rate 9.5% 9.2%
Ultimate trend rate in ten years 5.5% 5.5%
Weighted-average trend rate 6.6% 6.6%
</TABLE>
Changing the assumed health care cost trend rates by one percentage point would
change the aggregate service and interest cost components of net periodic
postretirement benefit cost for 1995 by $4 million and the accumulated
postretirement benefit obligation at December 31, 1995 by $34 million.
Continued
25
<PAGE> 27
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 12. TRANSACTIONS WITH AFFILIATED COMPANIES
An agreement with Ford provides for payments by Ford to Ford Credit that would
maintain Ford Credit's consolidated income before income taxes and net income
at specified minimum levels. No payments were required under the agreement
during 1995, 1994, or 1993.
Ford Credit and its subsidiaries, from time to time, purchase accounts
receivable of certain divisions and subsidiaries of Ford. The amount of such
receivables outstanding was $1,288.6 million at December 31, 1995 and $1,218.5
million at December 31, 1994. Ford has provided Ford Credit with certain
guarantees related to the purchase of these receivables. Agreements with Ford
and other affiliates also provide for payments to Ford Credit for interest
supplements and other support costs on certain financing and leasing
transactions. Amounts included in the income statement for these and other
transactions with Ford were as follows (in millions): 1995 - $856.3; 1994 -
$570.2; 1993 - $583.0. Ford Credit and its subsidiaries purchase from Ford and
affiliates certain vehicles which were previously acquired by Ford principally
from its fleet and rental car customers. The cost of these vehicles held for
resale and included in other assets at December 31 was as follows (in
millions): 1995 - $532.9; 1994 - 556.8. Ford Credit also has entered into a
sale/leaseback agreement with Ford for vehicles leased to employees of Ford and
its subsidiaries. The net investment in these vehicles included in operating
leases at December 31 was as follows (in millions): 1995 - $704.6; 1994 -
$592.4.
Investments in securities include preferred stock of a nonaffiliate ($324.0
million) and of an affiliate ($485.9 million) which were acquired from Ford.
Investments in these securities are recorded at cost. Ford has provided Ford
Credit with certain guarantees related to Ford Credit's investment and return
on investment in this preferred stock, and for certain related finance
receivables. Amounts related to these transactions included in investment and
other income were as follows (in millions): 1995 - $69.1; 1994 - $54.5; 1993 -
$52.7.
Ford Credit and its subsidiaries receive technical and administrative advice
and services from Ford and its subsidiaries, occupy office space furnished by
Ford and its subsidiaries and utilize data processing facilities maintained by
Ford. Payments to Ford and its subsidiaries for such advice and services are
charged to operating expenses and were as follows (in millions): 1995 - $60.6;
1994 - $61.9; 1993 - $57.1.
Continued
26
<PAGE> 28
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 12. TRANSACTIONS WITH AFFILIATED COMPANIES (continued)
Retirement benefits are provided under defined benefit plans for employees of
Ford Credit and its subsidiaries in the United States by the Ford General
Retirement Plan and for employees of the foreign subsidiaries in Australia and
Canada by the respective Ford retirement plans. Employee retirement plan costs
allocated to Ford Credit and its subsidiaries from Ford and charged to
operating expenses were as follows (in millions): 1995 - $14.5; 1994 - $14.8;
1993 - $5.8.
At December 31, 1995 and 1994, Ford Credit had guaranteed $196.2 million and
$155.2 million of debt outstanding of other subsidiaries of Ford.
See other notes for additional information regarding transactions with
affiliated companies.
NOTE 13. LITIGATION AND CLAIMS
Various legal actions, governmental proceedings and other claims are pending or
may be instituted or asserted in the future against Ford Credit and its
subsidiaries. Certain of the pending legal actions are, or purport to be,
class actions. Some of these matters involve or may involve compensatory,
punitive or antitrust or other treble damage claims in very significant amounts
or other relief which, if granted, would require very significant expenditures.
Litigation is subject to many uncertainties, the outcome of individual
litigated matters is not predictable with assurance and it is reasonably
possible that some of the foregoing matters could be decided unfavorably to
Ford Credit or the subsidiary involved. Although the amount of liability at
December 31, 1995 with respect to these matters cannot be ascertained, Ford
Credit believes that any resulting liability should not materially affect the
consolidated financial position or results of operations of Ford Credit and its
subsidiaries.
Continued
27
<PAGE> 29
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 14. FINANCIAL INSTRUMENTS
Book and Estimated Fair Value of Financial Instruments
The estimated fair value of financial instruments held by Ford Credit and its
subsidiaries at December 31, and the valuation techniques used to estimate the
fair value, were as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------------- ------------------------------
ESTIMATED ESTIMATED
BOOK FAIR BOOK FAIR
VALUE VALUE VALUE VALUE
--------------- --------------- -------------- --------------
(in millions) (in millions)
<S> <C> <C> <C> <C>
Assets
- ------
Cash and cash equivalents $ 1,355.9 $ 1,355.9 $ 292.0 $ 292.0
Investments in securities 1,914.1 1,973.5 1,596.3 1,590.1
Finance receivables 56,886.2 56,341.4 52,015.0 51,470.3
Other assets 1,062.7 1,062.7 895.2 895.2
Liabilities
- -----------
Debt payable within one year $ 43,128.3 $ 43,128.3 $ 39,077.6 $ 39,077.6
Debt payable after one year 36,038.8 37,274.4 31,362.8 30,282.6
Derivative Contracts:
Foreign exchange
instruments
Contracts with unrealized
gains (25.4) 136.2 (28.3) 187.2
Contracts with unrealized
losses (14.0) (83.6) (0.5) (17.7)
Interest rate instruments
Contracts with unrealized
gains 29.4 514.4 17.9 409.9
Contracts with unrealized
losses (33.0) (230.9) 27.1 (576.4)
</TABLE>
CASH AND CASH EQUIVALENTS. The book value approximates fair value because of
the short maturity of these instruments.
INVESTMENTS IN SECURITIES. The estimated fair value of investments in
marketable equity and debt securities are estimated based on market prices.
Book value of investments in non-marketable equity securities approximate fair
value (See Note 2.).
Continued
28
<PAGE> 30
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 14. FINANCIAL INSTRUMENTS (continued)
FINANCE RECEIVABLES. The fair value of substantially all receivables is
estimated by discounting future cash flows using an estimated discount rate
which reflects the current credit, interest rate and prepayment risks
associated with similar types of instruments. For receivables with short
maturities, the book values approximate fair values. Finance receivables
excluded from fair market valuation include direct financing and leveraged
lease investments.
OTHER ASSETS. Included in other assets is the retained interest in sold
receivables and related amounts. These amounts are recorded at the present
value of estimated future cash flows discounted at rates commensurate with this
type of instrument, which approximates fair value.
DEBT PAYABLE WITHIN ONE YEAR. The book value approximates fair value because
of the short maturity of these instruments.
DEBT PAYABLE AFTER ONE YEAR. The fair value is estimated based on quoted
market prices or current rates for similar debt with the same remaining
maturities.
Financial Instruments with Off-Balance-Sheet Risk
The following sections describe the various off-balance-sheet financial
instruments that Ford Credit and its subsidiaries held as of December 31, 1995
and 1994. Also included is a brief discussion of the estimated fair value of
those contracts and certain risks associated with holding those contracts
through maturity.
FOREIGN EXCHANGE INSTRUMENTS. Ford Credit and certain of its subsidiaries have
entered into foreign currency swap agreements to manage exposure to foreign
exchange rate fluctuations. At December 31, 1995 and 1994, the total notional
amount of Ford Credit's foreign currency swaps outstanding was $2.2 billion and
$1.5 billion, respectively. These exchange agreements hedge principal and
interest payments on debt that are denominated in foreign currencies. The book
value of the foreign currency swap agreements represents the amount payable to
the counterparty since the last settlement date. The fair value of these
foreign exchange agreements was estimated using current market rates.
In the unlikely event that a counterparty fails to meet the terms of the
contract, Ford Credit's market risk is the fair value of the agreements.
Continued
29
<PAGE> 31
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 14. FINANCIAL INSTRUMENTS (continued)
INTEREST RATE INSTRUMENTS. Ford Credit and certain of its subsidiaries have
entered into interest rate swap agreements to manage exposure to fluctuations
in interest rates. The underlying notional amount on which Ford Credit has
interest rate swaps outstanding aggregated $54.6 billion at December 31, 1995
and $46.3 billion at December 31, 1994.
Interest rate swap agreements involve the exchange of interest obligations on
fixed and floating interest rate debt without the exchange of the underlying
principal amounts. The differential paid or received on interest rate swap
agreements is recognized as an adjustment to interest expense over the term of
the underlying debt agreement. The book value of the interest rate swap
agreements represents the differential receivable or payable with a swap
counterparty since the last settlement date.
The fair value of interest rate instruments is the estimated amount Ford Credit
would receive or pay to terminate the agreement or contract. The fair value is
calculated using current market rates and the remaining terms of the agreements
or contracts. Unrealized gains and losses are netted for individual
counterparties. In the unlikely event that a counterparty fails to meet the
terms of an interest rate instrument, Ford Credit's exposure is the fair value
of the contracts.
Concentrations of Credit Risk
Ford Credit controls its credit risk through credit standards, limits on
exposure and by monitoring the financial condition of other parties. The
majority of Ford Credit's finance receivables are geographically diversified
throughout the United States. Foreign finance receivables are concentrated in
Canada, Australia, and Mexico.
Continued
30
<PAGE> 32
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 15. SEGMENTS INFORMATION
Total revenue and income before income taxes and assets identifiable with
United States and foreign operations were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- ------------
(in millions)
<S> <C> <C> <C>
Total revenue
United States operations $ 12,056.2 $ 9,624.1 $ 7,694.8
Foreign operations 1,053.9 765.2 643.6
------------- ------------ ------------
Total revenue $ 13,110.1 $ 10,389.3 $ 8,338.4
============= ============ ============
Income before income taxes
United States operations $ 1,634.0 $ 1, 689.1 $ 1,610.3
Foreign operations 55.9 77.5 66.4
Equity in net income of affiliated
companies 255.4 232.5 198.3
------------- ------------ ------------
Total income before income taxes $ 1,945.3 $ 1,999.1 $ 1,875.0
============= ============= ============
Assets at December 31
United States operations $ 85,698.1 $ 76,310.5 $ 64,081.8
Foreign operations 7,140.6 5,567.5 4,371.1
Equity in net assets of affiliated
companies 1,728.0 1,346.5 1,201.9
------------- ------------ ------------
Total assets $ 94,566.7 $ 83,224.5 $ 69,654.8
============= ============ ============
</TABLE>
Continued
31
<PAGE> 33
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 16. SELECTED QUARTERLY FINANCIAL DATA
(UNAUDITED)
Selected financial data by calendar quarter for the past two years were as
follows:
<TABLE>
<CAPTION>
TOTAL DEPRECIATION ON INTEREST PROVISION FOR NET
REVENUE OPERATING LEASES EXPENSE CREDIT LOSSES INCOME
------------- ------------------------ ----------- ------------------ -----------
(in millions)
<S> <C> <C> <C> <C> <C>
1995
First Quarter $ 3,058.9 $ 1,184.5 $ 1,156.6 $ 77.3 $ 287.9
Second Quarter 3,254.2 1,255.9 1,245.1 79.2 341.2
Third Quarter 3,330.6 1,303.8 1,222.2 132.9 357.4
Fourth Quarter 3,466.4 1,296.7 1,333.3 148.5 408.7
------------- ------------ ----------- --------- -----------
Full Year $ 13,110.1 $ 5,040.9 $ 4,957.2 $ 437.9 $ 1,395.2
============= ============ =========== ========= ===========
1994
First Quarter $ 2,257.2 $ 809.5 $ 760.2 $ 71.1 $ 298.8
Second Quarter 2,593.4 934.9 845.4 61.2 368.6
Third Quarter 2,649.9 1,039.3 905.0 39.3 314.8
Fourth Quarter 2,888.8 1,126.3 1,030.2 74.9 330.5
------------- ------------ ----------- --------- -----------
Full Year $ 10,389.3 $ 3,910.0 $ 3,540.8 $ 246.5 $ 1,312.7
============= ============ =========== ========= ===========
</TABLE>
32
<PAGE> 1
EXHIBIT 99.2
[FORD LOGO]
IMMEDIATE RELEASE
Contact: Media Inquiries: Broadcast Media: Stockholder Inquiries:
Christian Vinyard Lin Cummins (313) 845-8540
(313) 322-9600 (313) 322-9600
FORD REPORTS 1995 EARNINGS OF $4.1 BILLION
DEARBORN, Mich., Jan. 31 -- A strong first half performance in
automotive operations, combined with record results in financial
services, contributed to making 1995 the fourth best year on record
for Ford Motor Company.
Full-year earnings for Ford were $4.1 billion after tax, or
$3.58 per share ($3.33 fully diluted) of common and Class B stock
in 1995, compared with a record $5.3 billion and $4.97 per share in
1994 ($4.44 fully diluted).
"We had a good first half in 1995," said Alex Trotman,
chairman and chief executive officer. "Second half automotive
results were impacted by lower U.S. production volume and an
unprecedented number of major product launches, including the all-
new Ford Taurus, Mercury Sable, Ford F-Series pickup and the new
Ford Fiesta and Ford Galaxy minivan in Europe."
"Truck sales are hot, but the retail car market is tough,"
Trotman continued. "For the first time in history, our dealers sold
more trucks than cars in the U.S. in 1995."
Trotman added, "The new Ford Taurus and Mercury Sable and the
Ford Fiesta in Europe are outstanding products, and we're pleased
they're receiving favorable customer responses in highly
competitive car markets."
<PAGE> 2
-2-
SUMMARY OF 1995 AND COMPARISON WITH 1994
OVERVIEW
- --------
- - Total earnings were $4.1 billion, down 22 percent from
1994's record $5.3 billion.
- - Earnings per share were $3.58 ($3.33 fully diluted),
compared with $4.97 per share ($4.44 fully diluted).
- - Worldwide sales and revenues were $137.1 billion, compared
with $128.4 billion.
AUTOMOTIVE
- ----------
- - Net income from worldwide automotive operations was $2
billion, down from $3.9 billion in 1994. After-tax return
on sales was 1.9 percent, compared with 3.7 percent.
- - Net income from U.S. automotive operations was $1.8
billion, compared with $3 billion. After-tax return on
sales was 2.5 percent, compared with 4.1 percent.
- - Automotive operations outside the U.S. earned $213
million, compared with $911 million in 1994. After-tax
return on sales in 1995 was 0.7 percent, compared with 2.8
percent.
- - Worldwide vehicle unit sales were 6,606,000, compared with
6,853,000 in 1994.
- - Combined car and truck share in the U.S. was 25.6 percent,
compared with 25.2 percent.
- - Combined car and truck share in Europe was 12.3 percent,
compared with 12.2 percent.
FINANCIAL SERVICES GROUP
- ------------------------
- - The Financial Services Group earned $2.1 billion net
income, compared with $1.4 billion in 1994, which included
a $440 million charge for the sale of First Nationwide
Bank.
- - Ford Credit earned $1.4 billion, compared with $1.3
billion.
- - The Associates earned $708 million, compared with $604
million.
- - USL Capital earned $135 million, compared with $109
million.
BALANCE SHEET
- -------------
- - Stockholders' equity at year-end was $24.5 billion,
compared with $21.7 billion.
- - Automotive cash and marketable securities was $12.4
billion, compared with $12.1 billion.
- - Automotive debt was $7.3 billion, equal to a year ago.
- - Capital spending was $9 billion, compared with $8.5
billion.
<PAGE> 3
-3-
"Once again, our world-class Financial Services Group turned
in record results, and we expect further growth in 1996," Trotman
noted.
FORD OUTLOOK FOR 1996
"We're building the strength of our company year by year,"
Trotman said. "We look for gradual improvement in profitability
during 1996, providing that our major markets show the moderate
economic growth throughout the year that we expect."
Trotman added, "Our highest-volume product launches will be
largely behind us in the second half. And we should begin to see
meaningful results from our concentrated efforts to reduce costs
and improve efficiency throughout our automotive business."
AUTOMOTIVE OPERATIONS
Ford's full-year net income from worldwide automotive
operations was $2 billion, a decline of $1.9 billion from 1994,
which was the second highest year on record.
In the U.S., Ford's automotive operations earned $1.8 billion
for the full year, declining $1.2 billion compared with 1994.
Outside the U.S., automotive operations earned $213 million,
including a one-time gain of $230 million from the dissolution of
Autolatina, compared with $911 million in 1994. Ford's European
automotive operations earned $116 million, compared with $128
million for 1994.
"Ford is in the middle of an historic transition," Trotman
said. "We are introducing new models that cover about 35 percent
of our sales volume in North America and Europe. We knew these
product changeovers would reduce near-term earnings. But once
fully launched, these new cars and trucks will strengthen an
already successful product line."
Trotman noted that the ability to carry out an ambitious
launch program in both North America and Europe demonstrates the
strength of Ford as a company.
"We are able to bring these excellent new products to market
while adding to cash reserves, strengthening our balance sheet, and
maintaining the most attractive dividend yield in the industry," he
said. "The best time to make major changes is during periods of
strength. Ford is a strong company and is also well along to
becoming an even stronger global competitor in the coming years."
<PAGE> 4
-4-
Trotman also said that Ford increased its overall market shares in both
North America and Europe in 1995.
"We're very pleased our market shares are up," he said.
"Customers determine our market share one purchase at a time, and
more and more of them recognize the value that our cars and trucks
represent. Since the early 1980's, Ford has gained more market
share in the U.S. than any other manufacturer."
FINANCIAL SERVICES
Ford's Financial Services Group earned a record $2.1 billion
in 1995, up from the $1.4 billion earned in 1994, which included a
one-time charge of $440 million for the sale of First Nationwide
Bank.
Each of the major businesses in the Group set a full-year
earnings record.
Ford Credit earned $1.4 billion in 1995, up 6 percent from the
$1.3 billion earned a year earlier.
The Associates Corporation of North America earned $708
million in 1995, up 17 percent from the $604 million profit in
1994.
USL Capital earned $135 million in 1995, up $26 million, or 24
percent, from 1994.
OTHER 1995 HIGHLIGHTS
- - Overall market shares were up in major markets around the
world.
- - In the U.S., Ford's total vehicle market share grew to
25.6 percent, up four-tenths of a point, the biggest gain
in the industry. Truck share reached 31.9 percent.
- - In North America, Ford ended 1995 with three of the top
four best-selling cars and trucks -- F-Series, Explorer
and Taurus -- and five of the top ten, including Ranger
and Escort.
- - F-Series was the top selling vehicle for the 14th
consecutive year. Taurus was the top selling car in the
U.S. for the fourth consecutive year.
- - Hertz earned a record $105 million, up 14 percent from
last year.
- - In Europe, Ford's 1995 market share grew to 12.3 percent,
the highest in 11 years. Truck share -- 14.8 percent --
was a record. Ford was the only manufacturer with three
of the top ten best-sellers in Europe in 1995 -- Escort,
Fiesta and Mondeo.
<PAGE> 5
-5-
- - In Germany, Ford's car market share rose to 11.4 percent,
up 1.2 percent and the highest since 1984.
FOURTH-QUARTER RESULTS
Ford earned $660 million or $0.49 per share ($0.48 fully
diluted) of common and Class B stock in the fourth quarter of 1995.
This compares with $1.6 billion or $1.47 per share ($1.31 fully
diluted) in the fourth quarter of 1994.
U.S. automotive operations earned $168 million, compared with
$745 million in 1994. Outside the U.S., automotive operations
incurred a loss of $152 million, compared with a profit of $374
million in 1994. The decline in automotive operations from 1994
stemmed mainly from a decrease in North American volumes, costs
associated with new products launched in North America and Europe,
adverse operating results in Brazil and Mexico, and the effects of
currency exchange rates.
For the Financial Services Group, fourth-quarter earnings were
a record $644 million, compared with $450 million earned in the
fourth quarter of 1994, partially reflecting a lower tax rate in
1995. Ford Credit's earnings were $409 million, an increase from
the $331 million profit in the prior period. The Associates'
earnings grew to $181 million from the $159 million earned in the
prior period. USL's earnings of $48 million were up from the $34
million earned in the prior period.
# # #
Jan. 31, 1996
<PAGE> 6
<TABLE>
<CAPTION>
Ford Motor Company and Subsidiaries
HIGHLIGHTS
----------
Fourth Quarter Full Year
----------------------- ----------------------
1995 1994 1995 1994
------ ------ --- ---
<S> <C> <C> <C> <C>
Worldwide vehicle unit sales of
cars and trucks (in thousands)
- - United States 955 1,051 3,993 4,218
- - Outside United States 635 656 2,613 2,635
----- ----- ----- -----
Total 1,590 1,707 6,606 6,853
===== ===== ===== =====
Sales and revenues (in millions)
- - Automotive $27,597 $27,766 $110,496 $107,137
- - Financial Services 6,950 5,877 26,641 21,302
------- ------- -------- -------
Total $34,547 $33,643 $137,137 $128,439
======= ======= ======== ========
Net income (in millions)
- - Automotive $ 16 $ 1,119 $2,056 $ 3,913
- - Financial Services 644 450 2,083 1,395*
------- ------- ------ --------
Total $ 660 $ 1,569 $4,139 $ 5,308
======= ======= ====== ========
Capital expenditures (in millions)
- - Automotive $ 2,472 $ 2,404 $8,676 $ 8,310
- - Financial Services 98 65 321 236
------- ------- ------ --------
Total $ 2,570 $ 2,469 $8,997 $ 8,546
======= ======= ====== ========
Stockholders' equity at December 31
- - Total (in millions) $24,547 $21,659 $24,547 $ 21,659
- - After-tax return on Common and
Class B stockholders' equity 10.9% 34.5% 18.2% 33.6%
Automotive cash, cash equivalents,
and marketable securities at
December 31 (in millions) $12,406 $12,083 $12,406 $ 12,083
Automotive debt at December 31
(in millions) $ 7,307 $ 7,258 $7,307 $ 7,258
Automotive after-tax returns on sales 0.1% 4.1% 1.9% 3.7%
Shares of Common and Class B Stock
(in millions)
- - Average number outstanding 1,136 1,020 1,071 1,010
- - Number outstanding at December 31 1,159 1,023 1,159 1,023
AMOUNTS PER SHARE OF COMMON AND
CLASS B STOCK AFTER PREFERRED
STOCK DIVIDENDS
Income $ 0.49 $ 1.47 $ 3.58 $ 4.97
Income/(Loss) assuming full dilution
- - Automotive $ (0.06) $ 0.93 $ 1.59 $ 3.25
- - Financial Services 0.54 0.38 1.74 1.19
------- ------- ------ --------
Total $ 0.48 $ 1.31 $ 3.33 $ 4.44
======= ======= ====== ========
Cash dividends $ 0.35 $ 0.26 $ 1.23 $ 0.91
</TABLE>
- - - - - -
*Includes a loss of $440 million related to the disposition of
Granite Savings Bank (formerly First Nationwide Bank)
Segment results for 1994 have been adjusted to reflect
reclassification of certain tax amounts to conform with
the 1995 presentation.
FS-1
<PAGE> 7
Ford Motor Company and Subsidiaries
VEHICLE UNIT SALES
------------------
For the Periods Ended December 31, 1995 and 1994
(in thousands)
<TABLE>
<CAPTION>
Fourth Quarter Full Year
-------------------- ------------------
1995 1994 1995 1994
----- ----- ----- -----
<S> <C> <C> <C> <C>
NORTH AMERICA
United States
Cars 434 530 1,767 2,036
Trucks 521 521 2,226 2,182
----- ----- ----- -----
Total United States 955 1,051 3,993 4,218
Canada 76 75 254 281
Mexico 11 27 32 92
----- ----- ----- -----
Total North America 1,042 1,153 4,279 4,591
EUROPE
Britain 125 109 496 520
Germany 84 104 409 386
Italy 54 39 193 179
France 41 45 165 180
Spain 31 41 160 163
Other countries 74 71 286 281
----- ----- ----- -----
Total Europe 409 409 1,709 1,709
OTHER INTERNATIONAL
Brazil 48 43 201 164
Australia 32 38 139 125
Taiwan 16 21 106 97
Japan 13 13 57 50
Argentina 14 13 48 54
Other countries 16 17 67 63
----- ----- ----- -----
Total other international 139 145 618 553
----- ----- ----- -----
TOTAL WORLDWIDE VEHICLE
UNIT SALES 1,590 1,707 6,606 6,853
===== ===== ===== =====
</TABLE>
Vehicle unit sales are reported worldwide on a "where sold" basis and include
sales of all Ford-badged units, as well as units manufactured by Ford and
sold to other manufacturers.
Fourth Quarter and Full Year 1994 unit sales have been restated to reflect the
country where sold and to include sales of all Ford-badged units. Previously,
factory unit sales were reported in North America on a "where sold" basis and
overseas on a "where produced" basis. Also, Ford-badged unit sales of certain
unconsolidated subsidiaries (primarily Autolatina -- Brazil and Argentina) were
not previously reported.
FS-2
<PAGE> 8
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Years Ended December 31, 1995, 1994, and 1993
(in millions, except amounts per share)
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- -------
<S> <C> <C> <C>
AUTOMOTIVE
Sales $110,496 $107,137 $91,568
COSTS AND EXPENSES
Costs of sales 101,171 95,887 85,280
Selling, administrative, and other expenses 6,044 5,424 4,856
-------- -------- -------
Total costs and expenses 107,215 101,311 90,136
OPERATING INCOME 3,281 5,826 1,432
Interest income 800 665 563
Interest expense 622 721 807
-------- -------- -------
Net interest income/(expense) 178 (56) (244)
Equity in net (loss)/income of affiliated companies (154) 271 127
Net expense from transactions with Financial Services (139) (44) (24)
-------- -------- -------
INCOME BEFORE INCOME TAXES - AUTOMOTIVE 3,166 5,997 1,291
FINANCIAL SERVICES
REVENUES 26,641 21,302 16,953
COSTS AND EXPENSES
Interest expense 9,424 7,023 6,482
Depreciation 6,500 4,910 3,064
Operating and other expenses 5,499 4,607 3,196
Provision for credit and insurance losses 1,818 1,539 1,523
Loss on disposition of Granite Savings Bank (formerly
First Nationwide Bank) - 475 -
------- -------- --------
Total costs and expenses 23,241 18,554 14,265
Net revenue from transactions with Automotive 139 44 24
------- -------- --------
INCOME BEFORE INCOME TAXES - FINANCIAL SERVICES 3,539 2,792 2,712
------- -------- --------
TOTAL COMPANY
INCOME BEFORE INCOME TAXES 6,705 8,789 4,003
Provision for income taxes 2,379 3,329 1,350
------- -------- --------
INCOME BEFORE MINORITY INTERESTS 4,326 5,460 2,653
Minority interests in net income of subsidiaries 187 152 124
-------- -------- --------
NET INCOME $ 4,139 $ 5,308 $ 2,529
======== ======== ========
Income attributable to Common and Class B Stock
after preferred stock dividends $ 3,839 $ 5,021 $ 2,241
Average number of shares of Common and Class B Stock
outstanding 1,071 1,010 986
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
INCOME $ 3.58 $ 4.97 $ 2.27
INCOME ASSUMING FULL DILUTION $ 3.33 $ 4.44 $ 2.10
CASH DIVIDENDS $ 1.23 $ 0.91 $ 0.80
</TABLE>
FS-3
<PAGE> 9
Ford Motor Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(in millions)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1994
------------- -------------
<S> <C> <C>
ASSETS
AUTOMOTIVE
Cash and cash equivalents $ 5,750 $ 4,481
Marketable securities 6,656 7,602
-------- --------
Total cash, cash equivalents, and marketable securities 12,406 12,083
Receivables 3,321 2,548
Inventories 7,162 6,487
Deferred income taxes 2,709 3,062
Other current assets 1,483 2,006
Net current receivable from Financial Services 200 677
-------- --------
Total current assets 27,281 26,863
Equity in net assets of affiliated companies 2,248 3,554
Net property 31,273 27,048
Deferred income taxes 4,802 4,414
Other assets 7,168 6,760
-------- --------
Total Automotive assets 72,772 68,639
FINANCIAL SERVICES
Cash and cash equivalents 2,690 1,739
Investments in securities 4,553 6,105
Net receivables and lease investments 149,694 130,356
Other assets 13,574 12,783
-------- --------
Total Financial Services assets 170,511 150,983
-------- --------
TOTAL ASSETS $243,283 $219,622
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
AUTOMOTIVE
Trade payables $ 11,260 $ 10,777
Other payables 1,976 2,280
Accrued liabilities 13,392 11,943
Income taxes payable 316 316
Debt payable within one year 1,832 155
-------- --------
Total current liabilities 28,776 25,471
Long-term debt 5,475 7,103
Other liabilities 25,677 24,920
Deferred income taxes 1,186 1,216
-------- --------
Total Automotive liabilities 61,114 58,710
FINANCIAL SERVICES
Payables 5,476 2,361
Debt 141,317 123,713
Deferred income taxes 3,831 2,958
Other liabilities and deferred income 6,116 7,669
Net payable to Automotive 200 677
-------- --------
Total Financial Services liabilities 156,940 137,378
Company-obligated mandatorily redeemable preferred
securities of a subsidiary trust (aggregate principal
amount of $632 million) 682 -
Preferred stockholders' equity in a subsidiary company - 1,875
STOCKHOLDERS' EQUITY
Capital stock
Preferred Stock, par value $1.00 per share (aggregate
liquidation preference of $1 billion and $3.4 billion) * *
Common Stock, par value $1.00 per share (1,089 and 952
million shares issued) 1,089 952
Class B Stock, par value $1.00 per share (71 million shares
issued) 71 71
Capital in excess of par value of stock 5,105 5,273
Foreign currency translation adjustments and other 594 189
Earnings retained for use in business 17,688 15,174
--------- --------
Total stockholders' equity 24,547 21,659
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $243,283 $219,622
========= ========
- - - - - -
*Less than $1 million
</TABLE>
FS-4
<PAGE> 10
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
For the Years Ended December 31, 1995, 1994, and 1993
(in millions)
<TABLE>
<CAPTION>
1995 1994 1993
------------------------ ------------------------ -------------------------
Financial Financial Financial
Automotive Services Automotive Services Automotive Services
---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
CASH AND CASH EQUIVALENTS AT
JANUARY 1 $ 4,481 $ 1,739 $ 5,667 $ 2,555 $ 3,504 $ 3,182
Cash flows from operating activities 8,849 12,322 7,542 9,087 6,862 7,145
Cash flows from investing activities
Capital expenditures (8,676) (321) (8,310) (236) (6,714) (100)
Proceeds from sale and leaseback of
fixed assets 0 - 0 - 884 -
Acquisitions of other companies - - 0 (485) 0 (336)
Proceeds from sales of subsidiaries - - 0 715 173 0
Acquisitions of receivables and lease
investments - (99,967) - (90,824) - (76,566)
Collections of receivables and
lease investments - 71,149 - 61,111 - 55,552
Net acquisitions of daily rental vehicles - (1,459) - (924) - -
Purchases of securities (51) (6,274) (412) (10,688) (100,493) (13,741)
Sales and maturities of securities 325 5,052 511 9,649 101,927 12,426
Proceeds from sales of receivables - 4,360 - 3,622 - 4,794
Loans originated net of principal payments - (9) - (207) - (1,466)
Net investing activity with Financial
Services (19) - 355 - (117) -
Other 558 (175) (331) (312) (69) 389
------- -------- ------- -------- -------- --------
Net cash used in investing activities (7,863) (27,644) (8,187) (28,579) (4,409) (19,048)
Cash flows from financing activities
Cash dividends (1,559) - (1,205) - (1,086) -
Issuance of Common Stock 601 - 715 - 394 -
Changes in short-term debt 413 5,884 (795) 10,314 (66) 6,065
Proceeds from issuance of other debt 300 23,854 158 21,885 424 22,128
Principal payments on other debt (177) (11,489) (75) (14,088) (376) (13,791)
Net financing activity with Automotive - 19 - (355) - 117
Changes in customers' deposits, excluding
interest credited - - - (422) - (3,861)
Receipts from annuity contracts - 283 - 1,124 - 821
Net (redemption)/issuance of subsidiary
company preferred stock - (1,875) - 417 - 375
Other 121 102 31 (132) (124) (76)
------- -------- ------- -------- -------- --------
Net cash (used in)/provided by financing
activities (301) 16,778 (1,171) 18,743 (834) 11,778
Effect of exchange rate changes on cash 107 (28) 397 166 17 25
Net transactions with Automotive/
Financial Services 477 (477) 233 (233) 527 (527)
------- -------- ------- -------- -------- --------
Net increase/(decrease) in cash and
cash equivalents 1,269 951 (1,186) (816) 2,163 (627)
------- -------- ------- -------- -------- --------
CASH AND CASH EQUIVALENTS AT DECEMBER 31 $ 5,750 $ 2,690 $ 4,481 $ 1,739 $ 5,667 $ 2,555
======= ======== ======== ======== ======== ========
</TABLE>
FS-5
<PAGE> 11
Ford Motor Company and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
----------------------------------------------
For the Years Ended December 31, 1995, 1994, and 1993
(in millions)
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -----
<S> <C> <C> <C>
CAPITAL STOCK
Common Stock
- ------------
Balance at beginning of year $ 952 $ 464 $454
Issued for Series A Preferred Stock conversion,
employee benefit plans and other 137 19 10
Stock split in form of a 100% stock dividend - 469 -
------- ------- -----
Balance at end of year 1,089 952 464
Class B Stock
- -------------
Balance at beginning of year $ 71 35 35
Stock split in form of a 100% stock dividend - 36 -
------- ------- -----
Balance at end of year 71 71 35
Series A Preferred Stock * * *
Series B Preferred Stock * * *
CAPITAL IN EXCESS OF PAR VALUE OF STOCK
Balance at beginning of year 5,273 5,082 4,698
Exchange of Series B Preferred Stock (632) - -
Issued for Series A Preferred Stock conversion,
employee benefit plans and other 464 696 384
Stock split in form of a 100% stock dividend - (505) -
------- ------- -----
Balance at end of year 5,105 5,273 5,082
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
AND OTHER
Balance at beginning of year 189 (1,078) (62)
Translation adjustments during year 250 800 (508)
Minimum pension liability adjustment (108) 400 (400)
Other 263 67 (108)
------- ------- -------
Balance at end of year 594 189 (1,078)
EARNINGS RETAINED FOR USE IN THE BUSINESS
Balance at beginning of year 15,174 11,071 9,628
Net income 4,139 5,308 2,529
Cash dividends (1,559) (1,205) (1,086)
Fair value adjustment from exchange
of Series B Preferred Stock (66) - -
------- ------- -------
Balance at end of year 17,688 15,174 11,071
------- ------- -------
Total stockholders' equity $24,547 $21,659 $15,574
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
SERIES A SERIES B
COMMON CLASS B PREFERRED PREFERRED
STOCK STOCK STOCK STOCK
------ ------- --------- ---------
<S> <C> <C> <C> <C>
SHARES OF CAPITAL STOCK
Issued at December 31, 1992 454 35 0.046 0.023
Additions
1993 10 0 0 0
1994 - Stock split in form of a
100% stock dividend 469 36 - -
- Employee benefit plans and other 19 - - -
1995 - Conversion of Series A Preferred
Stock 115 - (0.035) -
- Employee benefit plans and other 22 - - -
- Exchange of Series B Preferred Stock - - - (0.013)
----- ---- ------ ------
Net additions 635 36 (0.035) (0.013)
----- ---- ------ ------
Issued at December 31, 1995 1,089 71 0.011 0.010
===== ==== ====== ======
Authorized at December 31, 1995 3,000 265 -- In total: 30 --
</TABLE>
- - - - - -
*The balances at the beginning and end of each period were less
than $1 million
FS-6
