SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------- ----------------
Commission file numbers 1-6368
FORD MOTOR CREDIT COMPANY
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 38-1612444
- -------------------- -----------------------------------
(State of Incorporation) (I.R.S. employer 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
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number
of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date: 250,000 shares
of common stock as of October 31, 1997.
The registrant meets the conditions set forth in General
Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing
this Form in reduced disclosure format.
PAGE 1 OF 24
EXHIBIT INDEX APPEARS AT PAGE 20. <PAGE>
<PAGE 2>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements - The interim financial data presented herein are
unaudited, but in the opinion of management reflect all adjustments necessary
for a fair presentation of such information. Results for interim periods should
not be considered indicative of results for a full year. Reference should be
made to the financial statements contained in the registrant's Annual Report on
Form 10-K for the year ended December 31, 1996 (the "10-K Report"). Information
relating to earnings a share is not presented because the registrant, Ford Motor
Credit Company ("Ford Credit"), is an indirect wholly owned subsidiary of Ford
Motor Company ("Ford").
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Condensed Consolidated Statement of Income
and of Earnings Retained for Use in the Business
For the Periods Ended September 30, 1997 and 1996
(in millions)
<TABLE>
<CAPTION>
Third Quarter Nine Months
1997 1996 1997 1996
--------- ---------- ---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Financing Revenue
Operating leases $ 2,347.3 $ 2,096.8 $ 6,658.0 $ 6,086.9
Retail 1,341.3 1,293.9 3,868.6 3,690.9
Wholesale 359.4 361.2 1,211.0 1,207.5
Other 101.0 104.3 296.8 376.6
---------- ---------- ---------- ----------
Total financing revenue 4,149.0 3,856.2 12,034.4 11,361.9
Interest expense (1,639.6) (1,540.1) (4,876.0) (4,669.0)
Depreciation on operating leases (1,624.1) (1,403.5) (4,537.4) (4,118.5)
---------- ---------- ---------- ----------
Net financing margin 885.3 912.6 2,621.0 2,574.4
Other Revenue
Insurance premium earned 75.1 74.7 215.2 157.6
Investment and other income 274.0 263.6 855.4 762.5
---------- ---------- ---------- ----------
Total financing margin 1,234.4 1,250.9 3,691.6 3,494.5
and revenue
Expenses
Operating expenses 379.4 330.1 1,088.1 1,012.2
Provision for credit losses 370.1 300.4 1,022.2 700.8
Other insurance expenses 66.8 69.2 200.6 145.4
---------- ---------- ---------- ----------
Total expenses 816.3 699.7 2,310.9 1,858.4
---------- ---------- ---------- ----------
Equity in net income of affiliated
companies 1.2 .9 0.7 50.7
Income before income taxes 419.3 552.1 1,381.4 1,686.8
Provision for income taxes 149.4 193.9 528.6 577.9
---------- ---------- ---------- ----------
Income before minority interest 269.9 358.2 852.8 1,108.9
Minority interest in net income of
subsidiaries 12.2 17.3 40.2 53.0
---------- ---------- ---------- ----------
Net income 257.7 340.9 812.6 1,055.9
<PAGE>
Earnings retained for use in
the business
Beginning of period 7,432.5 7,115.0 6,892.1 6,724.5
Dividends - (250.0) (14.5) (574.5)
---------- ---------- ---------- ----------
End of period $ 7,690.2 $ 7,205.9 $ 7,690.2 $ 7,205.9
========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
-2-
<PAGE>
<PAGE 3>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(in millions)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1997 1996 1996
----------- ----------- -----------
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash and cash equivalents $ 1,355.2 $ 2,716.0 $ 3,751.9
Investments in securities 829.3 1,324.8 1,305.4
Finance receivables, net (Note 2) 78,746.6 80,848.0 78,244.8
Net investment, operating leases 34,928.1 30,645.2 29,627.1
Accounts and notes receivable from
affiliated companies 710.7 1,133.0 859.3
Equity in net assets of affiliated
companies 46.9 44.4 24.8
Other assets 4,382.0 4,985.0 2,911.4
----------- ----------- -----------
Total assets $ 120,998.8 $ 121,696.4 $ 116,724.7
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable
Trade, customer deposits, and
dealer reserves $ 2,697.7 $ 3,362.6 $ 2,246.1
Affiliated companies 1,040.2 2,315.2 2,030.2
----------- ----------- -----------
Total accounts payable 3,737.9 5,677.8 4,276.3
Debt (Note 3) 99,991.4 98,024.3 94,831.6
Deferred income taxes 3,997.9 4,260.4 3,994.0
Other liabilities and deferred income 2,811.7 2,929.9 3,005.3
----------- ----------- -----------
Total liabilities 110,538.9 110,892.4 106,107.2
Minority interest in net assets of
subsidiaries 352.9 1,313.8 1,247.3
Preferred stockholder's equity in a 286.5 286.5 284.5
susidiary company
Stockholder's Equity
Capital stock, par value $100 a share,
250,000 shares authorized, issued and
outstanding 25.0 25.0 25.0
Paid-in surplus (contributions by
stockholder) 3,719.5 3,747.6 3,764.6
Note receivable from affiliated
company (1,517.0) (1,517.0) (1,917.0)
Unrealized gain on investments in
securities available for sale, net of taxes 70.0 56.9 48.3
Foreign-currency translation adjustments (167.2) (0.9) (41.1)
Earnings retained for use in the business 7,690.2 6,892.1 7,205.9
----------- ----------- -----------
Total stockholder's equity 9,820.5 9,203.7 9,085.7
----------- ----------- -----------
Total liabilities and stockholder's
equity $ 120,998.8 $ 121,696.4 $ 116,724.7
=========== =========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
-3-
<PAGE 4>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the Periods Ended September 30, 1997 and 1996
(in millions)
<TABLE>
<CAPTION>
Nine Months
1997 1996
---------- ----------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net income $ 812.6 $ 1,055.9
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for credit losses 1,022.2 700.8
Depreciation and amortization 4,963.1 4,358.5
Gain on sales of finance receivables (18.4) (22.9)
Equity in net income of affiliates (0.7) (50.7)
Deferred income taxes (299.2) 852.7
Changes in the following items
Other assets (1,114.5) 1,784.7
Other liabilities (716.7) 580.9
Other (36.0) (162.0)
---------- ----------
Net cash provided by operating activities 4,612.4 9,097.9
---------- ----------
Cash flows from investing activities
Purchase of finance receivables (other than wholesale) (28,657.8) (30,126.5)
Collection of finance/intracompany receivables
(other than wholesale) 23,642.9 22,298.3
Purchase of operating lease vehicles (17,391.5) (16,609.6)
Liquidation of operating lease vehicles 8,792.6 8,506.3
Net change in wholesale receivables 1,588.5 2,620.6
Proceeds from sale of receivables 1,541.1 1,010.2
Purchase of investment securities (2,136.0) (4,106.8)
Proceeds from sales of investment securities 2,632.1 6,522.8
Other (54.8) (2.7)
---------- ----------
Net cash used in investing activities (10,042.9) (9,887.4)
---------- ----------
Cash flows from financing activities
Proceeds from issuance of long-term debt 9,546.5 11,634.7
Principal payments on long-term debt (6,218.8) (6,240.6)
Change in short-term debt, net 728.1 (2,324.3)
Cash dividends paid (14.5) (250.5)
Other 63.4 256.3
---------- ----------
Net cash provided by financing activities 4,104.7 3,075.6
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents (35.0) (12.3)
---------- ----------
Net change in cash and cash equivalents (1,360.8) 2,273.8
Cash and cash equivalents, beginning of period 2,716.0 1,478.1
---------- ----------
Cash and cash equivalents, end of period $ 1,355.2 $ 3,751.9
========== ==========
Supplementary cash flow information
Interest paid $ 4,644.5 $ 4,527.1
Taxes paid/(received) 475.4 (187.4)
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<PAGE 5>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements
Note 1. Financial Statements Restatement
During the fourth quarter 1996, Ford FSG, Inc. contributed ownership of Ford
Credit Europe (approximately 78% ownership) to Ford Credit. Prior years'
quarterly financial statements were restated to include Ford Credit Europe.
Note 2. Finance Receivables, Net (in millions)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1997 1996 1996
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Retail $ 55,423.4 $ 53,099.1 $ 53,459.5
Wholesale 18,930.8 22,706.3 19,043.4
Other 5,543.0 5,942.7 6,689.7
----------- ----------- -----------
Total finance receivables net of
unearned income 79,897.2 81,748.1 79,192.6
Less allowance for credit losses (1,150.6) (900.1) (947.8)
----------- ----------- -----------
Finance receivables, net $ 78,746.6 $ 80,848.0 $ 78,244.8
=========== =========== ===========
</TABLE>
-5-
<PAGE>
<PAGE 6>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements (continued)
Note 3. Debt (in millions)
<TABLE>
<CAPTION>
September 30, December 31,September 30,
1997 1996 1996
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
PAYABLE WITHIN ONE YEAR:
Commercial paper $ 35,232.7 $ 38,228.3 $ 37,008.0
Other short-term debt* 7,484.1 4,788.7 2,234.0
----------- ----------- -----------
Total short-term debt 42,716.8 43,017.0 39,242.0
Long-term indebtedness payable
within one year** 11,291.1 9,178.0 6,981.6
----------- ----------- -----------
Total payable within
one year 54,007.9 52,195.0 46,223.6
----------- ----------- -----------
September 30, 1997
----------------------------
Weighted Average
Interest Rates*** Maturities
---------------- ----------
<C> <C>
PAYABLE AFTER ONE YEAR:
Secured indebtedness 16.82% 2000 16.1 9.9 -
Unsecured senior indebtedness
Notes**** 6.60% 1998-2048 44,812.5 44,273.6 47,345.3
Debentures 4.53% 2001-2006 1,048.9 1,228.3 1,268.1
Unamortized
(discount)/premimum 1.8 (7.5) (5.4)
----------- ----------- -----------
Total secured and unsecured
senior indebtedness 45,879.3 45,504.3 48,608.0
Unsecured long-term 8.29% 2005 104.2 325.0 -
subordinated notes
----------- ----------- -----------
Total payable after one year 45,983.5 45,829.3 48,608.0
----------- ----------- -----------
Total debt $ 99,991.4 $ 98,024.3 $ 94,831.6
=========== =========== ===========
<FN>
* Includes $4,205.8 million, $2,477.7 million, and $82.1 million with
affiliated companies at September 30, 1997, December 31, 1996, and
September 30, 1996, respectively.
** Includes $1,918.0 million, $653 million, and $493.0 million with affiliated
companies at September 30,1997, December 31, 1996, and September 30, 1996,
respectively.
*** Rates were variable on about 19.5% of the debt payable after one year
including the effects of interest rate swap agreements.
**** Includes $1,945.8 million, $3,584.4 million, and $4,219.4 million with
affiliated companies at September 30, 1997, December 31, 1996, and
September 30, 1996, respectively.
</TABLE>
-6-
<PAGE>
<PAGE 7>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
THIRD QUARTER 1997 COMPARED WITH THIRD QUARTER 1996 RESULTS OF OPERATIONS
Ford Credit's consolidated net income in the third quarter of 1997 was $258
million, down $83 million or 24% from 1996. Ford Credit's 1997 financial results
include a majority ownership (78%) of Ford Credit Europe and results for 1996
have been restated to reflect this ownership change. Compared with results from
a year ago, the decrease primarily reflects lower net margins, higher credit
losses and loss reserve requirements, and higher operating costs. Higher levels
of earning assets were a partial offset.
The deterioration in net financing margins reflects higher depreciation on
operating leases and higher borrowing costs (6.49% net borrowing rate in 1997
compared with 6.41% in 1996). Higher depreciation resulted from higher residual
losses on off-lease vehicles and higher residual reserves. Higher depreciation
costs are expected to continue to depress Ford Credit's earnings for the
remainder of 1997.
Credit losses as a percent of average net finance receivables including net
investment in operating leases increased to 0.85% in 1997 compared with 0.82% in
1996 reflecting higher losses per repossession partially offset by a decrease in
repossession rates. The increase in loss per repossession reflects a weaker
used vehicle market resulting in Ford Credit realizing lower prices for
repossessed units sold at auction.
Total net finance receivables and net investment in operating leases at
September 30, 1997 were $113.7 billion, up $5.8 billion or 5% from a year
earlier.
During the third quarter of 1997, Ford Credit financed 39% of all new cars and
trucks sold by Ford Motor Company dealers in the U.S., compared with 35% in the
same period of 1996. In Europe, Ford Credit financed 31% of all new vehicles
sold by Ford Motor Company in the third quarter of 1997 compared with 32% in the
third quarter of 1996. Ford Credit provided retail customers with financing for
652,000 new and used vehicles in the United States and 192,000 in Europe. In the
third quarter of 1997, Ford Credit provided wholesale financing for 79% of Ford
Motor Company U.S. factory sales and 94% of Ford Motor Company Europe factory
sales compared with 79% for the U.S. and 91% for Europe in third quarter 1996.
FIRST NINE MONTHS 1997 COMPARED WITH 1996
For the first nine months of 1997, Ford Credit's consolidated net income was
$813 million, down $243 million or 23% from the first nine months of 1996.
Compared with results from a year ago, the decrease primarily reflects higher
credit losses and loss reserve requirements, lower net margins, and higher
taxes. Higher levels of earning assets were a partial offset.
Credit losses as a percent of average net finance receivables including net
investment in operating leases increased to 0.83% in the first nine months of
1997 compared with 0.69% in the same period of 1996 reflecting an increase in
repossession rates and higher losses per repossession. The increased
repossession ratio reflects an increased mix of used vehicle financing and
expanded purchase policies to generate financing volume. The increase in loss
per repossession reflects a weaker used vehicle market resulting in Ford Credit
realizing lower prices for repossessed units sold at auction.
The deterioration in net financing margins reflects higher depreciation on
operating leases which resulted from higher residual losses on off-lease
vehicles and higher residual reserves. Improved yields and lower borrowing costs
(6.58% net borrowing rate in 1997 compared with 6.63% in 1996) were a partial
offset.
During the first nine months of 1997, Ford Credit provided retail financing for
38% of all new cars and trucks sold by Ford Motor Company dealers in the United
-7- <PAGE>
<PAGE 8>
States, equal to the same period a year ago. In Europe, Ford Credit financed 28%
of all new vehicles sold by Ford Motor Company in the first nine months of 1997,
also equal to last year. Ford Credit provided retail financing for 1,961,000 new
and used vehicles in the United States and 550,000 in Europe. In the first nine
months of 1997, Ford Credit provided wholesale financing for 79% of Ford Motor
Company U.S. factory sales, equal to last year, and 95% of Ford Motor Company
Europe factory sales compared with 91% for the first nine months of 1996.
FORD CREDIT LIQUIDITY AND CAPITAL RESOURCES
Ford Credit's outstanding debt at September 30, 1997 and at the end of each of
the last three years was as follows:
<TABLE>
<CAPTION> December 31
Sept. 30, --------------------------------
1997 1996 1995 1994
-------- ------- -------- ------
<S> <C> <C> <C> <C>
Commercial paper & STBAs(a) $ 36,392 $38,774 $40,419 $38,128
Other short-term debt (b) 6,325 4,243 1,781 1,357
Long-term debt (including
current portion)(c) 57,274 55,007 49,980 41,503
--------- -------- -------- --------
Total debt $ 99,991 $98,024 $92,180 $80,988
========= ======== ======== ========
United States $ 78,270 $76,635 $73,178 $65,715
Europe 13,184 14,028 13,013 10,548
Other international 8,537 7,361 5,989 4,725
--------- -------- -------- --------
Total debt $ 99,991 $98,024 $92,180 $80,988
========= ======== ======== ========
Memo:
Total support facilities
(billions) as of September 30, 1997
and December 31, 1996-1994,
respectively:
Ford Credit $ 26.6 $ 27.2 $ 27.4 $ 22.3
Ford Credit Europe 5.2 5.7 4.7 6.6
<FN>
- - - - - -
(a) Short-term borrowing agreements with bank trust departments.
(b) Includes $4,206 million, $2,478 million, $176 million, and $25 million with
affiliated companies at September 30, 1997, December 31, 1996, December 31,
1995, and December 31, 1994, respectively.
(c) Includes $3,864 million, and $4,237 million, $1,174 million, and $75 million
with affiliated companies at September 30, 1997 and December 31, 1996,
December 31, 1995, and December 31, 1994 respectively.
</TABLE>
-8-<PAGE>
<PAGE 9>
Support facilities represent additional sources of funds, if required. At
September 30, 1997, Ford Credit had approximately $19.2 billion of contractually
committed facilities. In addition, $7.4 billion of Ford Motor lines of credit
may be used by Ford Credit at Ford's option. The lines have various maturity
dates through June 30, 2002 and may be used, at Ford Credit's option, by any of
its direct or indirect majority-owned subsidiaries. Any such borrowing will be
guaranteed by Ford Credit. Banks also provide $1.6 billion of contractually
committed liquidity facilities to support Ford Credit's asset backed commercial
paper program.
Additionally, at September 30, 1997, there were approximately $4.6 billion of
contractually committed facilities available for Ford Credit Europe's use. In
addition, $615 million of Ford lines of credit may be used by Ford Credit Europe
at Ford's option. The lines have various maturity dates through June 30, 2002
and may be used, at Ford Credit Europe's option, by any of its direct or
indirect majority-owned subsidiaries. Any such borrowing will be guaranteed by
Ford Credit Europe.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None to report.
Item 2. Changes in securities
Not required.
Item 3. Defaults upon Senior Securities
Not required.
Item 4. Submission of Matters to a Vote of Secuirty Holders
Not required.
Item 5. Other Information
-9-<PAGE>
<PAGE 10>
INFORMATION CONCERNING FORD
Following is a condensed consolidated statement of income (unaudited) of Ford
for the periods ended September 30, 1997 and 1996 (in millions except amounts
per share):
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------- -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales and revenues $36,096 $33,960 $112,563 $108,158
Total costs and expenses 34,353 32,698 104,696 103,215
Operating income 1,743 1,262 7,867 4,943
Automotive net interest income 61 33 210 52
Automotive equity in net/(loss)income
of affiliated companies 0 (68) (65) (43)
Income before income taxes 1,804 1,227 8,012 4,952
Provision for income taxes 595 474 2,675 1,581
Minority interests in net income
of subsidiaries 84 67 213 129
Net income 1,125 686 5,124 3,242
Amounts Per Share of Common Stock
and Class B Stock after Preferred
Stock Dividends
Income per share $ 0.93 $ 0.57 $ 4.26 $ 2.71
Income per share
assuming full dilution $ 0.90 $ 0.56 $ 4.15 $ 2.66
Cash Dividends per share of Common
and Class B Stock $ 0.420 $ 0.385 $ 1.225 $ 1.085
</TABLE>
-10-<PAGE>
<Page 11>
THIRD QUARTER 1997 RESULTS OF OPERATIONS - FORD
Overview
- --------
Ford's worldwide net income was a record $1,125 million in third quarter
1997, or $0.90 per share of Common and Class B Stock (fully diluted), compared
with $686 million, or $0.56 per share (fully diluted) in third quarter 1996.
Ford's worldwide sales and revenues were $36.1 billion, up $2.1 billion from
a year ago. Vehicle unit sales of cars and trucks were 1,596,000, up 144,000
units. Stockholders' equity was $29.7 billion at September 30, 1997, up $2.9
billion compared with December 31, 1996.
RESULTS OF OPERATIONS
Ford's net income for worldwide Automotive operations in third quarter
1997 and 1996 and first nine months 1997 and 1996 was as follows (in millions):
<TABLE>
<CAPTION>
Third Quarter Nine Months
---------------- ----------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
U.S. Automotive $ 485 $ 634 $2,513 $1,379
Automotive Outside U.S.
- Europe (147) (472) 115 (203)
- South America 133 (226) 111 (355)
- Other 163 79 634 444
----- ----- ------ ------
Total Automotive Outside U.S. 149 (619) 860 (114)
----- ----- ------ ------
Total Automotive $ 634 $ 15 $3,373 $1,265
===== ===== ====== ======
</TABLE>
Ford's net income for worldwide Financial Services operations in third
quarter 1997 and 1996 and first nine months 1997 and 1996 was as follows
(in millions):
<TABLE>
<CAPTION>
Third Quarter Nine Months
----------------- -------------------
1997 1996 1997 1996
------- ------ ------ ------
<S> <C> <C> <C> <C>
Ford Credit $ 258 $ 341 $ 813 $1,056
The Associates 271 230 754 623
USL Capital - 117 - 198
Hertz 93 74 167 123
One-Time Actions
- Gain on sale of Common Stock
of The Associates and Hertz - - 269 650
- Budget Rent a Car write-down
and sale of USL Capital - 76 - (342)
Minority Interests, Eliminations,
and Other (131) (167) (252) (331)
----- ----- ------ ------
Total Financial Services $ 491 $ 671 $1,751 $1,977
===== ===== ====== ======
Memo: Ford's share of earnings in
----------------------------------
The Associates $219 $186 $ 608 $ 555
Hertz 75 74 140 123
</TABLE>
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<Page 12>
THIRD QUARTER 1997 COMPARED WITH THIRD QUARTER 1996 - FORD
Automotive Operations
Ford's worldwide Automotive operations earned $634 million in third quarter 1997
on sales of $28.2 billion, compared with $15 million in third quarter 1996 on
sales of $26.5 billion. Overall, the increase was more than explained by
improved results in South America and Europe.
Earnings for Automotive operations in the U.S. were down $149 million in third
quarter 1997 compared with a year ago. The decrease reflected primarily a lower
1996 effective tax rate and higher marketing costs, offset partially by improved
volumes and vehicle mix. The U.S. Automotive after-tax return on sales was 2.6%
in third quarter 1997, down 1.1 points from a year ago.
The seasonally-adjusted annual selling rate for the U.S. car and truck industry
was 15.8 million units in third quarter 1997, up from 15.4 million units in
third quarter 1996. The company expects car and truck industry sales for
full-year 1997 to be about equal to 1996. Ford's combined U.S. car and truck
share was 24.6% in third quarter 1997, up 1/10 of a point from a year ago.
Lower losses for Automotive operations in Europe reflected primarily lower
operating costs (at constant volume and mix). The European automotive industry
continues to be extremely competitive as a result of excess industry capacity;
this trend is expected to continue in fourth quarter 1997 and beyond.
The seasonally-adjusted annual selling rate for the European car and truck
industry was 15.7 million units in third quarter 1997, up from 14.6 million
units in third quarter 1996. The company expects car and truck industry sales
for full-year 1997 to be slightly above 1996. Ford's combined European car and
truck market share was 11.4% in third quarter 1997, down 6/10 of a point from a
year ago. The lower European market share resulted primarily from aggressive
marketing efforts by competitors in Germany.
Automotive operations in South America earned a profit in third quarter 1997,
compared with a loss a year ago. The improvement reflected primarily lower costs
(at constant volume and mix), higher volumes, and a favorable tax rate.
Financial Services Operations
Financial Services operations earned $491 million in third quarter 1997, down
$180 million compared with a year ago. Excluding a $76-million gain on sale of
USL Capital assets in third quarter 1996, earnings were down $104 million. The
net reduction reflects a decline in earnings at Ford Credit and the absence of
earnings from USL Capital.
For a discussion of Ford Credit's operations in third quarter 1997, see Item 2.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Third Quarter 1997 Compared with Third Quarter
1996 Results of Operations."
Earnings at the Associates First Capital Corporation ("The Associates") in
third quarter 1997 were an all-time record for any quarter. Compared with
third quarter 1996, the improved earnings reflected primarily higher levels
of earning assets and improved net interest margins, offset partially by
higher credit losses. Credit losses as a percent of average net finance
receivables were 2.45% in third quarter 1997, compared with 2.14% in third
quarter 1996, reflecting primarily losses in unsecured portfolios. Unsecured
losses have been driven by increases in consumer bankruptcy filings.
The Associates believes the higher levels of credit losses may continue.
-12-<PAGE>
<Page 13>
Earnings at The Hertz Corporation ("Hertz") in third quarter 1997 also
were an all-time record for any quarter. Compared with third quarter 1996,
improved earnings reflected continued strong performance in the U.S. car
rental market both in terms of increased transaction volume and more
favorable pricing.
FIRST NINE MONTHS 1997 COMPARED WITH FIRST NINE MONTHS 1996 - FORD
Ford earned a record $5,124 million, or $4.15 per share of Common and Class B
Stock (fully diluted), in first nine months 1997, compared with $3,242 million,
or $2.66 per share (fully diluted), in first nine months 1996. One-time actions
at Financial Services operations in first nine months 1997 and 1996 are included
in the table above. Results for Automotive operations for first nine months 1997
included a $169 million charge for manufacturing restructuring actions.
Automotive results for first nine months 1996 included a $100 million charge for
employee separation programs.
Ford's worldwide sales and revenues in first nine months 1997 were $112.6
billion, up $4.4 billion from a year ago. Vehicle unit sales of cars and trucks
were 5,152,000, up 252,000 units.
Automotive Operations
Ford's worldwide Automotive operations earned $3,373 million in first nine
months 1997 on sales of $89.9 billion, compared with $1,265 million in first
nine months 1996 on sales of $86.5 billion. The increase was explained primarily
by improved earnings in all major regions.
Earnings on Automotive operations in the U.S. were up $1,134 million in first
nine months 1997 compared with a year ago. The increase reflected primarily
higher margins from on-going cost and quality improvements, and vehicle mix
improvements. The U.S. Automotive after-tax return on sales was 4.3% in first
nine months 1997, up 1.8 points from a year ago.
The seasonally-adjusted annual selling rate for the U.S. car and truck industry
was 15.5 million units in first nine months 1997, compared with 15.6 million
units in first nine months 1996. Ford's combined U.S. car and truck market share
was 25.1%, up 1/10 of a point compared with a year ago, and down 1/10 of a point
from full year 1996.
Earnings on Automotive operations in Europe in first nine months 1997 were up
$318 million from a year ago, reflecting primarily lower operating costs (at
constant volume and mix), offset partially by lower volumes.
The seasonally-adjusted annual selling rate for the European car and truck
industry was 14.8 million units in first nine months 1997, up from 14.3 million
units in first nine months 1996. Ford's combined European car and truck market
share was 11.5% in first nine months 1997, down half of a point from a year ago,
and down 3/10 of a point from full year 1996.
Automotive operations in South America earned a profit in first nine months
1997, compared with a loss a year ago. The improvement reflected primarily
improved volume and mix, lower material costs (at constant volume and mix), and
a favorable tax rate.
Financial Services Operations
Earnings for Financial Services operations were $1,751 million in first nine
months 1997, down $226 million compared with a year ago. Results in first nine
months 1997 and first nine months 1996 included the one-time actions shown in
the table above; excluding these items, earnings were down $187 million.
For a discussion of Ford Credit's operations in the first nine months of 1997,
see Item 2. "Management's Discussion and Analysis of Financial Condition and
Results of Operations - First Nine Months 1997 Compared with First
Nine Months 1996 Results of Operations."
-13-<PAGE>
<Page 14>
Higher earnings at The Associates and at Hertz in first nine months 1997,
compared with first nine months 1996, reflected primarily the same factors as
those described in the discussion of third quarter results of operations.
LIQUIDITY AND CAPITAL RESOURCES - FORD
Automotive Operations
Automotive cash and marketable securities were $19.3 billion at September 30,
1997, up $3.9 billion from December 31, 1996. The company paid $1,503 million in
cash dividends on its Common Stock, Class B Stock and Preferred Stock during
first nine months 1997.
Automotive capital expenditures were $5.8 billion in first nine months 1997,
down $43 million from the same period a year ago. For full year 1997, Ford's
capital spending is expected to be about the same as it was in 1996; however, as
a percentage of sales, spending is expected to be lower.
Automotive debt at September 30, 1997 totaled $8.2 billion, which was 22% of
total capitalization (stockholders' equity and Automotive debt), compared with
23% of total capitalization at year-end 1996.
At September 30, 1997, Ford had long-term contractually committed global credit
agreements under which $8.3 billion is available from various banks at least
through June 30, 2002. The entire $8.3 billion may be used, at Ford's option, by
any affiliate of Ford; however, any borrowing by an affiliate will be guaranteed
by Ford. Ford also has the ability to transfer on a nonguaranteed basis $8
billion of such credit lines in varying portions to Ford Credit and Ford Credit
Europe. In addition, at September 30, 1997, $465 million of contractually
committed credit facilities were available to various Automotive affiliates
outside the U.S. Approximately $71 million of these facilities were in use at
September 30, 1997.
Financial Services Operations
Financial Services cash and investments in securities totaled $4.3 billion at
September 30, 1997, down $1.7 billion from December 31, 1996.
Net receivables and lease investments were $169.9 billion at September 30, 1997,
up $8 billion from December 31, 1996.
Total debt was $155.4 billion at September 30, 1997, up $5.2 billion from
December 31, 1996.
Outstanding commercial paper at September 30, 1997 totaled $35.2 billion at Ford
Credit, $19.5 billion at The Associates, and $1.4 billion at Hertz, with an
average remaining maturity of 31 days, 24 days, and 27 days, respectively.
At September 30, 1997, Financial Services had a total of $42 billion of
contractually committed support facilities (excluding the $8 billion available
under Ford's global credit agreements). Of these facilities, $23.8 billion are
contractually committed global credit agreements under which $19.2 billion and
$4.6 billion are available to Ford Credit and Ford Credit Europe, respectively,
from various banks; 61% and 77%, respectively, of such facilities are available
through June 30, 2002. The entire $19.2 billion may be used, at Ford Credit's
option, by any subsidiary of Ford Credit, and the entire $4.6 billion may be
used, at Ford Credit Europe's option, by any subsidiary of Ford Credit Europe.
Any borrowings by such subsidiaries will be guaranteed by Ford Credit or Ford
Credit Europe, as the case may be. At September 30, 1997, $100 million of the
Ford Credit global facilities were in use and $363 million of the Ford Credit
Europe global facilities were in use. Other than the global credit agreements,
the remaining portion of the Financial Services support facilities at September
30, 1997 consisted of $16.1 billion of contractually committed support
-14-<PAGE>
<Page 15>
facilities available to various affiliates in the U.S, and $2.1 billion of
contractually committed support facilities available to various affiliates
outside the U.S.; at September 30, 1997, approximately $1.3 billion of these
facilities were in use. Furthermore, banks provide $1.6 billion of liquidity
facilities to support the asset-backed commercial paper program of a Ford Credit
sponsored special purpose entity.
DEBT RATING REVISION
On October 8, 1997, Standard & Poor's Rating Group ("S&P") announced that it had
lowered certain debt ratings of Ford and certain of its subsidiaries as a result
of Ford's announced plan to spin off The Associates (discussed below). Among
others, Ford's, Ford Credit's and Ford Credit Europe's senior long-term debt
ratings were lowered from A+ to A, and Hertz' senior long-term debt and
commercial paper ratings were lowered from A- and A-1 to BBB+ and A-2,
respectively. The debt ratings of The Associates and its subsidiaries were
affirmed by S&P.
Also on October 8, 1997, Moody's Investor Service confirmed all of the debt
ratings of Ford and its subsidiaries, including the senior long-term debt
ratings of A1 for Ford, Ford Credit, and Ford Credit Europe and A3 for Hertz,
and the commercial paper rating of Prime-1 for Ford Credit, Ford Credit Europe
and Hertz.
DISTRIBUTION OF INTEREST IN ASSOCIATES FIRST CAPITAL CORPORATION
On October 8, 1997, Ford announced its plan to "spin off" or distribute its
80.7% interest in The Associates to Ford Common and Class B stockholders. The
spin-off is subject to the receipt of a ruling from the U.S. Internal Revenue
Service that the transaction will be tax-free to Ford and its stockholders. The
ruling process is expected to take several months. Upon receipt of a favorable
ruling, Ford plans to distribute its 279.5 million shares of The Associates to
Ford stockholders in proportion to their ownership of Common and Class B stock.
In 1996 and in first nine months 1997, The Associates contributed 16.8% and
11.9%, respectively, to Ford's consolidated earnings. Generally, the earnings of
The Associates have been retained by The Associates to fund its growth.
ACCOUNTING CHANGES
Brazil has been considered a highly inflationary economy since the
implementation of Statement of Financial Accounting Standards No. 52, "Foreign
Currency Translation". The instability of the local currency in a
hyperinflationary economy precludes its use as the functional currency for the
measurement of business operations. Ford has used the U.S. dollar as the
functional currency for its Brazilian operations during this hyperinflationary
period.
Beginning January 1, 1998, Brazil will no longer be considered a highly
inflationary economy. The U.S. dollar will continue to be the designated
functional currency for Ford's Brazilian operations in 1998 based on the primary
economic environment in which the operations are conducted. Therefore, the
change to a non-highly inflationary designation will have no effect on Ford's
consolidated financial statements in 1998.
The designated functional currency for Ford Brazil will be reviewed
periodically.
-15-
<PAGE>
<Page 16>
LEGAL PROCEEDINGS - FORD
Environmental Matters
Bridgend Plant. Britain's Environment Agency recently began prosecuting Ford's
British subsidiary, Ford Motor Company Limited ("Ford Britain"), for an alleged
discharge into the River Ewenny in September 1995 of pollutive matter from Ford
Britain's plant in Bridgend. Fines in excess of the equivalent of $100,000 could
be imposed and Ford Britain may be required to pay for the cost of restocking
the river with fish.
Other Matters
Lemelson Patent Case. (Previously discussed in the first paragraph on page 20
of the 10-K Report and the fourth paragraph on page 16 of Ford Credit's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 (the "Second
Quarter 10-Q Report").) In August 1997, the Court of Appeals for the Federal
Circuit in Washington, D.C. denied Ford's request to hear an appeal at this time
of the District Court's decision to dismiss Ford's defense that Lemelson engaged
in undue delay in prosecuting the patent applications. Lemelson has requested
that the case be scheduled for an immediate trial, but Ford has moved to have
the case sent back to the magistrate judge for consideration of Ford's eleven
pending motions for summary judgment. A hearing to resolve these issues is
expected to be scheduled soon. In October 1997, Mr. Lemelson died; Ford
anticipates that the partnership which owns Mr. Lemelson's patents will be
substituted as a party to the lawsuit.
Paint Class Actions. (Previously discussed in the second paragraph on page 20 of
the 10-K Report and the fifth paragraph on page 16 of the Second Quarter 10-Q
Report.) The federal court in Louisiana granted in part and denied in part
Ford's most recent motion to dismiss one of the purported nationwide class
actions (Landry) relating to alleged defects in paint processes. The court
permitted certain plaintiffs to amend their complaint, and Ford will be filing
another motion to dismiss some of the claims in the amended complaint.
Plaintiffs in that case also have moved for class certification; Ford will
oppose that motion.
Bronco II Class Actions. (Previously discussed in the third paragraph on page
20 of the 10-K Report.) Two of the purported Bronco II class actions
consolidated before the Louisiana federal court have been dismissed. The first
(Kloster) was voluntarily dismissed by the plaintiffs in August 1997; the second
(Washington) was dismissed by the court in September 1997. Ford has motions for
summary judgment pending in the five remaining federal cases. With respect to
the case pending in Alabama state court (Rice), the court recently denied Ford's
motion to vacate the conditional class certification order and certified a class
of Alabama-only owners of Bronco II vehicles. Ford will seek Alabama Supreme
Court review of this ruling. The Alabama court also denied Ford's motion for
summary judgment. Because the court believed such motion involved a controlling
question of law on which there was substantial grounds for difference of
opinion, it asked the Alabama Supreme Court to review the ruling. Class action
proceedings at the trial level were stayed pending this review. The other
purported class action remains pending in Texas state court. Also continuing is
the purported class action in West Virginia relating to alleged concealment of
Bronco II documents (previously discussed in the fifth paragraph on page 14 of
Ford Credit's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997
(the "First Quarter 10-Q Report")).
Ignition Switch Class Actions. (Previously discussed in the last paragraph on
page 20 of the 10-K Report and the last paragraph on page 16 of the Second
Quarter 10-Q Report.) In August 1997, the federal court in New Jersey denied the
plaintiffs' motion for class certification in all fourteen cases relating to
allegedly defective ignition switches. The court held that whether an ignition
switch is defective depends on facts particular to each vehicle and other
claimant-specific issues. The court also held that the National Highway Traffic
-16-<PAGE>
<Page 17>
Safety Administration ("NHTSA") is the appropriate forum for addressing whether
a defect exists. Also, in September 1997, the court dismissed all of plaintiffs'
non-incident claims except the breach of contract, voiding of sale, and strict
liability claims of the Louisiana plaintiffs. Plaintiffs have filed a motion to
remand the cases to the courts from which they originated. Plaintiffs also have
moved to overturn the court's denial of class certification on the basis that
the court lacked subject matter jurisdiction once the federal law claims were
dismissed. Ford will move for summary judgment in each of the individual
actions. The court's denial of class certification in these actions moots the
petition of State Farm Insurance Company to intervene and assert subrogation
rights relating to payments made to members of one of the purported classes.
TFI Module Class Actions. (Previously discussed in the second full paragraph on
page 21 of the 10-K Report.) The California court certified a class of
plaintiffs consisting of California residents who are owners (original or
current) or lessees of 1983 through 1995 model year vehicles equipped with
distributor-mounted thick film ignition (TFI) modules. The court's ruling is
conditional, and evidence developed during discovery may later indicate that
class certification is inappropriate. Ford will appeal the decision and, if
necessary, move the court to decertify the class before the trial date has been
set. In related developments, Ford has urged NHTSA to review allegations by
plaintiffs and NHTSA's former chief investigator that Ford improperly withheld
information and documents during prior NHTSA investigations into this matter. In
September 1997, NHTSA issued a Special Order requiring Ford to respond to those
allegations under oath, and Ford has done so.
Airbag Class Actions. (Previously discussed on page 15 of the
First Quarter 10-Q Report and the first paragraph on page 17 of the Second
Quarter 10-Q Report.) The purported airbag class actions in Louisiana and Texas
were removed to federal court and consolidated for pretrial proceedings in the
Eastern District of Louisiana pursuant to the multidistrict litigation rules.
The other class action remains pending in Alabama state court. In a related
development, NHTSA is expected to issue a rule that will increase the
availability of airbag deactivation. Ford understands that the rule is being
reviewed by the federal Office of Management and Budget. An important unresolved
issue is whether vehicle owners can self-certify that they meet certain criteria
to have "on-off" switches installed in their vehicles. Presently, each vehicle
owner must ask NHTSA for an exemption to have such switches installed.
Ford Citibank Visa Class Actions. (Previously discussed in the second
paragraph on page 17 of the Second Quarter 10-Q Report.) Three additional
purported nationwide class actions were filed in state courts in Alabama,
New York and Oregon on behalf of cardholders challenging the termination
of the Ford Citibank Visa credit card rebate program. These cases,
along with the previously pending cases in Illinois and Washington,
were removed to federal courts. Ford has requested the Judicial
Panel on Multidistrict Litigation to consolidate and transfer the cases to a
single federal court in Washington for pretrial proceedings. In the Alabama
action, the court has conditionally certified a class consisting of Alabama
residents.
Flat Glass Class Actions. Since July 1997, eight purported nationwide class
actions have been brought on behalf of purchasers of flat glass alleging that
Ford and other manufacturers fixed prices and allocated markets in violation of
federal antitrust laws. The cases are pending in federal courts in California,
Illinois, Minnesota and Pennsylvania. The other defendants include Pilkington
plc; Libbey-Owens-Ford Co., Inc.; AFG Industries; PPG Industries, Inc.; Asahi
Glass Co., Ltd.; and Guardian Industries Corp. There are sixteen similar cases
pending in various courts in which Ford is not named as a defendant. Motions are
pending to consolidate all of the federal cases in a single federal court for
pretrial proceedings under the multidistrict litigation rules. Plaintiffs in the
actions involving Ford are seeking economic and treble damages.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Please refer to the Exhibit Index on page 20.
(b) Reports on Form 8-K during the quarter ended September 30, 1997:
-17-<PAGE>
<Page 18>
FINANCIAL
DATE OF REPORT ITEM STATEMENTS FILED
- -------------- --------------------- ----------------
July 16, 1997 Item 5 - Other Events News release dated July
16, 1997 of Ford Motor
Credit Company with
attachments and News
release dated July 16,
1997 of Ford Motor
Company with attachments.
September 8, 1997 Item 5 - Other Events None
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.
FORD MOTOR CREDIT COMPANY
(Registrant)
November 6, 1997
/s/ J. B. Smith III
--------------------------
J. B. Smith III
Vice President - Finance
(Chief Financial Officer)
-18-
<PAGE>
<Page 19>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder
of Ford Motor Credit Company:
We have reviewed the condensed consolidated balance sheet of Ford Motor
Credit Company and Subsidiaries at September 30, 1997 and 1996, and the
related condensed consolidated statements of income and of earnings
retained for use in the business and cash flows for the periods set forth
in this Form 10-Q for the quarter ended September 30, 1997. These financial
statements are the responsibility of the company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet at December 31, 1996 and the
related consolidated statements of income and of earnings retained for use
in the business and cash flows for the year then ended (not presented
herein); and in our report dated January 27, 1997, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed
consolidated balance sheet at December 31, 1996 is fairly stated in all
material respects in relation to the consolidated balance sheet from which
it has been derived.
/s/ Coopers & Lybrand
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
October 13, 1997
-19-
<PAGE>
<PAGE 20>
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
EXHIBIT INDEX
Sequential
Designation Description Method of Filing
- ----------- ------------ -----------------
12-A Calculation of ratio of Filed with this
earnings to fixed charges Report.
of Ford Credit
12-B Calculation of ratio of Filed with this
earnings to fixed charges Report.
of Ford.
15 Letter from Coopers & Filed with this
Lybrand L.L.P. dated Report.
November 6, 1997,
regarding unaudited
interim financial infor-
mation.
27 Financial Data Schedule Filed with this
Report.
-20-
<Page 21> Exhibit 12-A
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
CALCULATION OF RATIO OF EARNINGS
TO FIXED CHARGES
(dollar amounts in millions)
<TABLE>
<CAPTION>
Nine Months For the Years Ended December 31
-------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges
Interest expense $ 4,876.0 $ 4,647.2 $ 6,235.7 $ 5,987.8 $ 4,226.3 $ 3,699.9 $ 4,184.3
Rents 17.3 15.1 22.2 19.5 16.9 13.0 10.8
--------- --------- --------- --------- --------- --------- ---------
Total fixed
charges 4,893.3 4,662.3 6,257.9 6,007.3 4,243.2 3,712.9 4,195.1
Earnings
Income before income
taxes and cumulative
effects of changes in
accounting principles 1,381.4 1,686.8 2,240.2 2,327.8 2,335.5 2,147.5 1,585.8
Less equity in net income
of affiliated companies 0.7 50.7 55.3 255.4 232.5 198.0 155.0
Less minority interest
in net income of
subsidiaries 40.2 53.0 68.0 65.5 59.3 44.6 42.3
--------- --------- --------- --------- --------- --------- ---------
Earnings before fixed
charges $ 6,233.8 $ 6,245.4 $ 8,374.8 $ 8,014.2 $ 6,286.9 $ 5,617.8 $ 5,583.6
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to
fixed charges 1.3 1.3 1.3 1.3 1.5 1.5 1.3
========= ========= ========= ========= ========= ========= =========
</TABLE>
[FN]
For purposes of the Ford Credit ratio, earnings consist of income before taxes
and cumulative effects of changes in accounting principles and fixed charges.
Income before income taxes and cumulative effects of changes in accounting
principles of Ford Credit includes the equity in net income of all
unconsolidated affiliates and minority interest in net income of subsidiaries.
Fixed charges consist of interest on borrowed funds,(there are no cumulative
dividend requirements on subsidiary preferred stock) amortization of debt
discount, premium, and insurance expense, and one-third of all rental expense
(the proportion deemed representative of the interest factor).
-21-
<Page 22>
<TABLE>
<CAPTION>
Exhibit 12-B
Ford Motor Company and Subsidiaries
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
----------------------------------------------------------------------------------------
(in millions)
Nine For the Years Ended December 31
Months ------------------------------------------------------------
1997 1996 1995 1994 1993 1992
-------- --------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Earnings
- --------
Income/(loss) before income taxes
and cumulative effects of changes
in accounting principles $ 8,012 $ 6,793 $ 6,705 $ 8,789 $ 4,003 $ (127)
Equity in net (income)/loss of
affiliates plus dividends from
affiliates 98 36 179 (182) (98) 26
Adjusted fixed charges a/ 8,101 10,801 10,556 8,122 7,648 8,113
------- ------- ------- ------- ------- ------
Earnings $16,211 $17,630 $17,440 $16,729 $11,553 $8,012
======= ======= ======= ======= ======= ======
Combined Fixed Charges and
Preferred Stock Dividends
- --------------------------
Interest expense b/ $ 7,850 $10,464 $10,121 $ 7,787 $ 7,351 $7,987
Interest portion of rental expense c/ 225 300 396 265 266 185
Preferred stock dividend requirements of
majority owned subsidiaries and trusts d/ 41 55 199 160 115 77
------- ------- ------- ------- ------- ------
Fixed charges 8,116 10,819 10,716 8,212 7,732 8,249
Ford preferred stock dividend
requirements e/ 61 95 459 472 442 317
------- ------- ------- ------- ------- ------
Total combined fixed charges
and preferred stock dividends $ 8,177 $10,914 $11,175 $ 8,684 $ 8,174 $8,566
======= ======= ======= ======= ======= ======
Ratios
- ------
Ratio of earnings to fixed charges 2.0 1.6 1.6 2.0 1.5 f/
Ratio of earnings to combined fixed
charges and preferred stock dividends 2.0 1.6 1.6 1.9 1.4 g/
</TABLE>
- - - - - -
a/ Fixed charges, as shown below, adjusted to exclude the amount of interest
capitalized during the period and preferred stock dividend requirements of
majority owned subsidiaries.
b/ Includes interest, whether expensed or capitalized, and amortization of
debt expense and discount or premium relating to any indebtedness.
c/ One-third of all rental expense is deemed to be interest.
d/ Preferred stock dividend requirements of Ford Holdings, Inc. (applicable for
1992 through 1995) increased to an amount representing the pre-tax earnings
which would be required to cover such dividend requirements based on Ford's
effective income tax rates for all periods except 1992. The U.S. statutory
rate of 34% was used for 1992. Beginning in Fourth Quarter 1995, includes
requirements related to Company-obligated mandatorily redeemable preferred
securities of a subsidiary trust.
e/ Preferred stock dividend requirements of Ford Motor Company, increased to an
amount representing the pre-tax earnings which would be required to cover
such dividend requirements based on Ford's effective income tax rates for
all periods except 1992. The U.S. statutory rate of 34% was used for 1992.
f/ Earnings inadequate to cover fixed charges by $237 million.
g/ Earnings inadequate to cover combined fixed charges and preferred stock
dividends by $554 million.
-22-
<Page 23>
EXHIBIT 15
Ford Motor Credit Company
The American Road
Dearborn, Michigan
Re: Ford Motor Credit Company Registration Statement Nos. 33-62973,
33-24928, 33-64237 and 33-64263 on Form S-3
We are aware that our report dated October 13, 1997 accompanying the
unaudited interim financial information of Ford Motor Credit Company and
subsidiaries for the periods ended September 30, 1997 and 1996 and included
in the Ford Motor Credit Company Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 will be incorporated by reference in the
above Registration Statements. Pursuant to Rule 436(c) under the Securities
Act of 1933, this report should not be considered a part of the Registration
Statements prepared or certified by us within the meaning of Sections 7
and 11 of the Act.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
November 6, 1997
-23-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FORD CREDIT'S CONDENSED CONSOLIDATED BALANCE SHEET IS UNCLASSIFIED. THEREFORE,
THE FOLLOWING TAGES LISTED BELOW ARE NOT APPLICABLE TO FORD CREDIT: CURRENT
ASSETS AND CURRENT LIABILITIES. INFORMATION RELATING TO EARNINGS A SHARE IS NOT
PRESENTED BECAUSE FORD CREDIT IS AN INDIRECT WHOLLY OWNED SUBSIDIARY OF FORD
MOTOR COMPANY.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,355
<SECURITIES> 829
<RECEIVABLES> 78,747
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 120,999
<CURRENT-LIABILITIES> 0
<BONDS> 99,991
0
0
<COMMON> 25
<OTHER-SE> 9,795
<TOTAL-LIABILITY-AND-EQUITY> 120,999
<SALES> 0
<TOTAL-REVENUES> 13,105
<CGS> 0
<TOTAL-COSTS> 11,724
<OTHER-EXPENSES> 5,826
<LOSS-PROVISION> 1,022
<INTEREST-EXPENSE> 4,876
<INCOME-PRETAX> 1,381
<INCOME-TAX> 529
<INCOME-CONTINUING> 813
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 813
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
