<PAGE> 1
Pursuant to Rule 424 b5
Registration No. 333-50611
PROSPECTUS SUPPLEMENT
(To Prospectus dated June 1, 1998)
(FORD LOGO)
FORD MOTOR CREDIT COMPANY
$750,000,000
5 1/8% Notes due October 15, 2001
ISSUE PRICE: 99.722%
$150,000,000
5 3/8% Notes due October 15, 2002
ISSUE PRICE: 99.914%
Interest payable April 15 and October 15
The 5 1/8% Notes will mature on October 15, 2001. The 5 3/8% Notes will mature
on October 15, 2002. Interest on both series of Notes will accrue from October
26, 1998. Each series of Notes will be issued in minimum denominations of $1,000
increased in multiples of $1,000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus Supplement and the accompanying
Prospectus. Any representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS FORD CREDIT*
-------- ------------- ------------
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2001 Note 99.722% .250% 99.472%
- ---------------------------------------------------------------------------------------------------------
Total $747,915,000 $1,875,000 $746,040,000
- ---------------------------------------------------------------------------------------------------------
Per 2002 Note 99.914% .300% 99.614%
- ---------------------------------------------------------------------------------------------------------
Total $149,871,000 $450,000 $149,421,000
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Plus accrued interest, if any, from October 26, 1998.
Both series of Notes are being offered for sale in the United States, Europe and
Asia. Ford Credit has applied to have both series of Notes listed and traded on
the Luxembourg Stock Exchange.
Ford Credit expects that delivery of both series of Notes will be made to
investors on or about October 26, 1998.
J.P. MORGAN & CO. MORGAN STANLEY DEAN WITTER
GOLDMAN, SACHS & CO. LEHMAN BROTHERS
MERRILL LYNCH & CO. SALOMON SMITH BARNEY
October 16, 1998
<PAGE> 2
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Documents by Reference............. S-3
Directors and Principal Executive Officers of Ford Credit... S-4
Use of Proceeds............................................. S-4
Capitalization of Ford Motor Credit Company and
Subsidiaries.............................................. S-5
Description of Notes........................................ S-6
Certain United States Tax Documentation Requirements........ S-10
United States Taxation of Non-United States Persons......... S-12
Information Concerning Ford Credit.......................... S-13
Ford Motor Credit Company and Consolidated Subsidiaries --
Selected Financial Data................................... S-15
Information Concerning Ford................................. S-18
Selected Financial Data and Other Data of Ford.............. S-19
Financial Review of Ford.................................... S-20
Industry Data and Market Share of Ford...................... S-24
Ratio of Earnings to Fixed Charges.......................... S-24
Underwriting................................................ S-25
General Information......................................... S-27
PROSPECTUS
Available Information....................................... 2
Incorporation of Certain Documents by Reference............. 2
Information Concerning Ford Credit.......................... 3
Information Concerning Ford................................. 3
Use of Proceeds............................................. 4
Description of Debt Securities.............................. 4
Plan of Distribution........................................ 9
Legal Opinions.............................................. 9
Experts..................................................... 10
</TABLE>
------------------------
THE LUXEMBOURG STOCK EXCHANGE TAKES NO RESPONSIBILITY FOR THE CONTENTS OF
THIS DOCUMENT, MAKES NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS AND
EXPRESSLY DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING FROM
OR IN RELIANCE UPON THE WHOLE OR ANY PART OF THE CONTENTS OF THIS DOCUMENT AND
THE PROSPECTUS.
No person is authorized to give any information or to represent anything
not contained in this Prospectus Supplement or the accompanying Prospectus. You
must not rely on any unauthorized information or representations. This
Prospectus Supplement and the Prospectus are an offer to sell or to buy only the
Notes offered hereby, but only under circumstances and in jurisdictions where it
is lawful to do so. The information contained in this Prospectus Supplement or
the Prospectus is current only as of the date of the information.
OFFERS AND SALES OF THE NOTES ARE SUBJECT TO RESTRICTIONS IN RELATION TO
THE UNITED KINGDOM AND JAPAN, DETAILS OF WHICH ARE SET OUT IN "UNDERWRITING"
BELOW. THE DISTRIBUTION OF THIS PROSPECTUS SUPPLEMENT AND ACCOMPANYING
PROSPECTUS AND THE OFFERING OF THE NOTES IN CERTAIN OTHER JURISDICTIONS MAY ALSO
BE RESTRICTED BY LAW.
In this Prospectus Supplement and accompanying Prospectus, unless otherwise
specified or the context otherwise requires, references to "dollars", "$" and
"U.S.$" are to United States dollars.
S-2
<PAGE> 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We file annual, quarterly and special reports and other information with
the Securities and Exchange Commission (the "SEC"). You may read and copy any
document we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents that are considered part of this Prospectus
Supplement. Later information that we file with the SEC will automatically
update and supersede this information. We incorporate by reference the documents
listed below and any future filings made with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until our offering of
these Notes has been completed.
- Annual Report on Form 10-K for the year ended December 31, 1997 (the
"1997 10-K Report")
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 (the
"First Quarter 10-Q Report"), June 30, 1998 (the "Second Quarter 10-Q
Report") and September 30, 1998 (the "Third Quarter 10-Q Report").
- Current Reports on Form 8-K dated January 12, 1998, February 3, 1998 (the
"February 8-K Report"), February 11, 1998, March 30, 1998, April 16,
1998, April 27, 1998, June 15, 1998 and August 26, 1998.
These reports include information about Ford, as well as information about
Ford Credit.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Ford Motor Credit Company
The American Road
Dearborn, MI 48121
Attn: Corporate Secretary
(313) 594-9876
The financial statements which are incorporated in this Prospectus
Supplement and accompanying Prospectus by reference to the 1997 10-K Report and
the February 8-K Report have been audited by Coopers & Lybrand L.L.P. ("Coopers
& Lybrand"), 400 Renaissance Center, Detroit, Michigan 48243, independent
certified public accountants, to the extent indicated in their reports therein,
and have been so incorporated in reliance upon the report of that firm, given on
their authority as experts in accounting and auditing.
Coopers & Lybrand and its successor, PricewaterhouseCoopers LLP, have given
and not withdrawn their written consent to the issue of this Prospectus
Supplement and the accompanying Prospectus incorporating by reference their
report dated January 26, 1998 from the 1997 10-K Report and in the February 8-K
Report on Ford Credit's audited financial statements for the financial years
ended December 31, 1997.
This Prospectus Supplement and accompanying Prospectus, together with the
documents incorporated in them by reference, will be available free of charge at
the office of Banque Internationale a Luxembourg S.A., 69 route d'Esch L-1470,
Luxembourg.
S-3
<PAGE> 4
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF FORD CREDIT
E.S. Acton,
Vice President
M.E. Bannister,
Vice President
K.J. Coates,
Director and
Executive Vice President
D.P. Cosper,
Vice President-Treasurer
J.M. Devine,
Director
D.C. Flanigan,
Director and
Executive Vice President
R.A. Kniebes,
Vice President
M.S. Macdonald,
Director
J.T. Noone,
Vice President
Philippe Paillart,
Director and
Chairman of the Board
N.M. Pryor,
Vice President
W.D. Roberts,
Vice President
D.E. Ross,
Vice President
A.J. Salmon,
Vice President
G.C. Smith,
Director and
Executive Vice President
R.C. VanLeeuwen,
Vice President
J.M. Walsh,
Vice President
G.E. Watts,
Vice President
All of the above-named persons are full-time employees of Ford Motor Company
("Ford") or Ford Credit.
USE OF PROCEEDS
We will add the net proceeds from the sale of the Notes to the general
funds of Ford Credit. The proceeds will be used to purchase receivables, make
loans and pay maturing debt. Initially we may use the proceeds to reduce
short-term borrowings, or we may temporarily invest them in short-term
securities. Net proceeds to be paid to Ford Credit will be U.S. $895,461,000.
S-4
<PAGE> 5
CAPITALIZATION OF FORD MOTOR CREDIT COMPANY
AND SUBSIDIARIES
The capitalization of Ford Credit and its subsidiaries at September 30,
1998 is as follows (in millions of U.S. dollars):
<TABLE>
<CAPTION>
OUTSTANDING ADDITIONAL
SEPTEMBER 30, LONG-TERM
1998 INDEBTEDNESS
------------- ------------
(UNAUDITED)
<S> <C> <C>
SENIOR INDEBTEDNESS, UNSECURED
Short-term
Commercial paper.................................. $ 37,893.1
Other short-term debt............................. 6,023.0
----------
Total short-term debt........................ 43,916.1
Long-term debt payable within one year................. 9,601.0
Long-term notes and debentures......................... 51,147.3
Notes offered hereby................................... -- $900.0
----------
Total debt................................... 104,664.4
----------
STOCKHOLDER'S EQUITY
Capital stock, par value $100 a share (250,000 common
shares authorized, issued, and outstanding)........... 25.0
Paid-in surplus (contributions by stockholder)......... 4,229.0
Note receivable from affiliated company................ (1,517.0)
Accumulated other comprehensive income/(loss).......... (138.4)
Earnings retained for use in the business.............. 8,097.4
----------
Total stockholder's equity................... 10,696.0
----------
TOTAL CAPITALIZATION........................................ $115,360.4
==========
</TABLE>
Except as set forth herein, there has been no material change in the
capitalization of Ford Credit since September 30, 1998 to the date of this
Prospectus Supplement.
S-5
<PAGE> 6
DESCRIPTION OF NOTES
This description of the terms of the Notes adds information to the
description of the general terms and provisions of Debt Securities in the
Prospectus. If this summary differs in any way from the summary in the
Prospectus, you should rely on this Summary. The Notes are part of the Debt
Securities registered by Ford Credit in May 1998 to be issued on terms to be
determined at the time of sale. In addition to the Notes offered here, Debt
Securities in the amount of $1,826,000,000 have already been sold.
GENERAL
The 5 1/8% Notes due October 15, 2001 (the "2001 Notes") will initially be
limited to a total principal amount of $750,000,000. The 5 3/8% Notes due
October 15, 2002 (the "2002 Notes" and, together with the 2001 Notes, the
"Notes") will initially be limited to a total principal amount of $150,000,000.
The Notes will be unsecured senior debt of Ford Credit. The 2001 Notes will
mature on October 15, 2001 and the 2002 Notes will mature on October 15, 2002
(each a "Maturity Date").
The Notes will bear interest from October 26, 1998 at the respective rates
per annum shown on the cover of this Prospectus Supplement. Interest will be
payable on April 15 and October 15 of each year (each an "Interest Payment
Date"), beginning on April 15, 1999. Ford Credit will arrange payment to the
person in whose name each Note was registered at the close of business on the
15th day preceding the Interest Payment Date, subject to certain exceptions. The
Notes are not subject to redemption before maturity unless certain events occur
involving United States taxation. If any of these special tax events do occur,
the Notes will be redeemed at a redemption price of 100% of their principal
amount plus accrued and unpaid interest to the date of redemption. This is
discussed in greater detail below under the heading "Description of Notes --
Redemption".
Ford Credit may, without the consent of the holders of the 2001 Notes or
the 2002 Notes, as the case may be, issue additional notes having the same
ranking and the same interest rate, maturity and other terms as either or both
of the 2001 Notes and the 2002 Notes. Any additional notes, together with the
2001 Notes or the 2002 Notes, as the case may be, will constitute a single
series of Notes under the Indenture. No additional notes may be issued if an
Event of Default has occurred with respect to the relevant series of Notes.
BOOK-ENTRY, DELIVERY AND FORM
Each series of Notes will be issued as fully registered Global Notes (the
"Global Notes") which will be deposited with, or on behalf of, The Depository
Trust Company, New York, New York (the "Depository") and registered, at the
request of the Depositary, in the name of Cede & Co. Beneficial interests in the
Global Notes will be represented through book-entry accounts of financial
institutions acting on behalf of beneficial owners as participants in the
Depository. Investors may elect to hold their interests in the Global Notes
through either the Depository (in the United States) or (in Europe) through
Cedel Bank, societe anonyme ("Cedel") or through Morgan Guaranty Trust Company
of New York, Brussels Office, as operator of the Euroclear System ("Euroclear").
Investors may hold their interests in the Notes directly if they are
participants of such systems, or indirectly through organizations which are
participants in such systems. Cedel and Euroclear will hold interests on behalf
of their participants through customers' securities accounts in Cedel's and
Euroclear's names on the books of their respective depositaries, which in turn
will hold such interests in customers' securities accounts in the depositaries'
names on the books of the Depository. Citibank, N.A. will act as depositary for
Cedel and The Chase Manhattan Bank, N.A. will act as depositary for Euroclear
(in such capacities, the "U.S. Depositaries"). Beneficial interests in the
Global Notes will be held in denominations of $1,000 and integral multiples
thereof. Except as set forth below, the Global Notes may be transferred, in
whole and not in part, only to another nominee of the Depository or to a
successor of the Depository or its nominee.
S-6
<PAGE> 7
Cedel advises that it is incorporated under the laws of Luxembourg as a
professional depositary. Cedel holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Cedel provides to
Cedel Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedel interfaces with domestic markets in
several countries. As a professional depositary, Cedel is subject to regulation
by the Luxembourg Monetary Institute. Cedel Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the Underwriters. Indirect access to Cedel
is also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Cedel Participant
either directly or indirectly.
Distributions with respect to each series of Notes held beneficially
through Cedel will be credited to cash accounts of Cedel Participants in
accordance with its rules and procedures, to the extent received by the U.S.
Depositary for Cedel.
Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euro-clear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the Underwriters.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to each series of Notes held beneficially
through Euroclear will be credited to the cash accounts of Euroclear
Participants in accordance with the Terms and Conditions, to the extent received
by the U.S. Depositary for Euroclear. In the event definitive Notes are issued,
Ford Credit will appoint a paying agent and transfer agent in Luxembourg.
S-7
<PAGE> 8
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Initial settlement for each series of Notes will be made in immediately
available funds. Secondary market trading between DTC Participants will occur in
the ordinary way in accordance with Depository rules and will be settled in
immediately available funds using the Depository's Same-Day Funds Settlement
System. Secondary market trading between Cedel Participants and/or Euroclear
Participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of Cedel and Euroclear and will be settled using
the procedures applicable to conventional eurobonds in immediately available
funds.
Cross-market transfers between persons holding directly or indirectly
through the Depository on the one hand, and directly or indirectly through Cedel
or Euroclear Participants, on the other, will be effected in the Depository in
accordance with the Depository rules on behalf of the relevant European
international clearing system by its U.S. Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its U.S.
Depositary to take action to effect final settlement on its behalf by delivering
or receiving Notes in the Depository, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
the Depository. Cedel Participants and Euroclear Participants may not deliver
instructions directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of Notes received in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during subsequent securities settlement processing and dated the business day
following the Depository settlement date. Such credits or any transactions in
such Notes settled during such processing will be reported to the relevant
Euroclear or Cedel Participants on such business day. Cash received in Cedel or
Euroclear as a result of sales of Notes by or through a Cedel Participant or a
Euroclear Participant to a DTC Participant will be received with value on the
Depository settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in the
Depository.
Although the Depository, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Notes among participants of the
Depository, Cedel and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
PAYMENT OF ADDITIONAL AMOUNTS
Ford Credit will, subject to the exceptions and limitations set forth
below, pay as additional interest on each series of Notes, such additional
amounts as are necessary in order that the net payment by Ford Credit or a
paying agent of the principal of and interest on the Notes to a holder who is a
non-United States person (as defined below), after deduction for any present or
future tax, assessment or governmental charge of the United States or a
political subdivision or taxing authority thereof or therein, imposed by
withholding with respect to the payment, will not be less than the amount
provided in the Notes to be then due and payable; provided, however, that the
foregoing obligation to pay additional amounts shall not apply:
(1) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the holder, or a fiduciary, settlor,
beneficiary, member or shareholder of the holder if the holder is an
estate, trust, partnership or corporation, or a person holding a power over
an estate or trust administered by a fiduciary holder, being considered as:
(a) being or having been present or engaged in trade or business in
the United States or having or having had a permanent establishment in
the United States;
S-8
<PAGE> 9
(b) having a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;
(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled foreign
corporation with respect to the United States or a corporation that has
accumulated earnings to avoid United States federal income tax; or
(d) being or having been a "10-percent shareholder" of Ford Credit
as defined in section 871(h)(3) of the United States Internal Revenue
Code or any successor provision;
(2) to any holder that is not the sole beneficial owner of the Note,
or a portion thereof, or that is a fiduciary or partnership, but only to
the extent that a beneficiary or settlor with respect to the fiduciary, a
beneficial owner or member of the partnership would not have been entitled
to the payment of an additional amount had the beneficiary, settlor,
beneficial owner or member received directly its beneficial or distributive
share of the payment;
(3) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the failure of the holder or any other person
to comply with certification, identification or information reporting
requirements concerning the nationality, residence, identity or connection
with the United States of the holder or beneficial owner of such Note, if
compliance is required by statute, by regulation of the United States
Treasury Department or by an applicable income tax treaty to which the
United States is a party as a precondition to exemption from such tax,
assessment or other governmental charge;
(4) to a tax, assessment or governmental charge that is imposed
otherwise than by withholding by Ford Credit or a paying agent from the
payment;
(5) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of a change in law, regulation, or administrative
or judicial interpretation that becomes effective more than 15 days after
the payment becomes due or is duly provided for, whichever occurs later;
(6) to an estate, inheritance, gift, sales, excise, transfer, wealth
or personal property tax or a similar tax, assessment or governmental
charge;
(7) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of or interest
on any Note, if such payment can be made without such withholding by any
other paying agent; or
(8) in the case of any combination of items (1), (2), (3), (4), (5),
(6) and (7).
The Notes are subject in all cases to any tax, fiscal or other law or regulation
or administrative or judicial interpretation applicable thereto. Except as
specifically provided under this heading "Payment of Additional Amounts" and
under the heading "Description of Notes -- Redemption", Ford Credit shall not be
required to make any payment with respect to any tax, assessment or governmental
charge imposed by any government or a political subdivision or taxing authority
thereof or therein.
As used under this heading "Payment of Additional Amounts" and under the
headings "Description of Notes -- Redemption", "Certain United States Tax
Documentation Requirements" and "United States Taxation of Non-United States
Persons" the term "United States" means the United States of America (including
the States and the District of Columbia) and its territories, its possessions
and other areas subject to its jurisdiction, "United States person" means any
individual who is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any estate or trust the income of which is subject to United
States federal income taxation regardless of its source and "non-United States
person" means a person who is not a United States person.
S-9
<PAGE> 10
REDEMPTION
If (a) as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein), or any change in,
or amendments to, official position regarding the application or interpretation
of such laws, regulations or rulings, which change or amendment is announced or
becomes effective on or after the date of this Prospectus Supplement, Ford
Credit becomes or will become obligated to pay additional amounts as described
herein under the heading "Payment of Additional Amounts" or (b) any act is taken
by a taxing authority of the United States on or after the date of this
Prospectus Supplement, whether or not such act is taken with respect to Ford
Credit or any affiliate, that results in a substantial probability that Ford
Credit will or may be required to pay such additional amounts, then Ford Credit
may, at its option, redeem, as a whole, but not in part, either or both series
of Notes on not less than 30 nor more than 60 days' prior notice, at a
redemption price equal to 100% of their principal amount, together with interest
accrued thereon to the date fixed for redemption; provided that Ford Credit
determines, in its business judgment, that the obligation to pay such additional
amounts cannot be avoided by the use of reasonable measures available to it, not
including substitution of the obligor under the Notes. No redemption pursuant to
(b) above may be made unless Ford Credit shall have received an opinion of
independent counsel to the effect that an act taken by a taxing authority of the
United States results in a substantial probability that it will or may be
required to pay the additional amounts described herein under the heading
"Payment of Additional Amounts" and Ford Credit shall have delivered to the
Trustee a certificate, signed by a duly authorized officer, stating that based
on such opinion Ford Credit is entitled to redeem the Notes pursuant to their
terms.
NOTICES
Notices to holders of the Notes will be published in Authorized Newspapers
in The City of New York, in London, and, so long as either series of Notes is
listed on the Luxembourg Stock Exchange, in Luxembourg. It is expected that
publication will be made in The City of New York in The Wall Street Journal, in
London in the Financial Times and in Luxembourg in the Luxemburger Wort. Any
such notice shall be deemed to have been given on the date of such publication
or, if published more than once, on the date of the first such publication.
APPLICABLE LAW AND SERVICE OF PROCESS
The Notes and the Indenture will be governed by and construed in accordance
with the laws of the State of New York. Ford Credit has designated CT
Corporation System in New York City as the authorized agent to receive service
of process in the State of New York.
CERTAIN UNITED STATES TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of a Note will generally be subject to the 30% United
States federal withholding tax that generally applies to payments of interest on
a registered form debt obligation issued by a United States person, unless one
of the following steps is taken to obtain an exemption from or reduction of the
tax:
Exemption for Non-United States persons (IRS Form W-8). A beneficial owner
of a Note that is a non-United States person (other than certain persons that
are related to Ford Credit through stock ownership as described in clauses
(x)(a) and (b) of Paragraph (i) under "United States Taxation of Non-United
States Persons -- Income and Withholding Tax") can obtain an exemption from the
withholding tax by providing a properly completed IRS Form W-8 (Certificate of
Foreign Status). Copies of IRS Form W-8 may be obtained from the Luxembourg
listing agent.
Exemption for Non-United States persons with effectively connected income
(IRS Form 4224). A beneficial owner of a Note that is a non-United States
person, including a non-United States
S-10
<PAGE> 11
corporation or bank with a United States branch, that conducts a trade or
business in the United States with which interest income on a Note is
effectively connected, can obtain an exemption from the withholding tax by
providing a properly completed IRS Form 4224 (Exemption from Withholding of Tax
on Income Effectively Connected with the Conduct of a Trade or Business in the
United States).
Exemption or reduced rate for Non-United States persons entitled to the
benefits of a treaty (IRS Form 1001). A beneficial owner of a Note that is a
non-United States person entitled to the benefits of an income tax treaty to
which the United States is a party can obtain an exemption from or reduction of
the withholding tax (depending on the terms of the treaty) by providing a
properly completed IRS Form 1001 (Ownership, Exemption or Reduced Rate
Certificate).
Exemption for United States Persons (IRS Form W-9). A beneficial owner of a
Note that is a United States person can obtain a complete exemption from the
withholding tax by providing a properly completed IRS Form W-9 (Request for
Taxpayer Identification Number and Certification).
United States federal income tax reporting procedure. A beneficial owner of
a Note, or, in the case of IRS Forms 1001 and 4224, its agent, is required to
submit the appropriate IRS Form under applicable procedures to the person
through which the owner directly holds the Note. For example, if the beneficial
owner is listed directly on the books of Euroclear or Cedel as the holder of the
Note, the IRS Form must be provided to Euroclear or Cedel, as the case may be.
Each other person through which a Note is held must submit, on behalf of the
beneficial owner, the IRS Form (or in certain cases a copy thereof) under
applicable procedures to the person through which it holds the Note, until the
IRS Form is received by the United States person who would otherwise be required
to withhold United States federal income tax from interest on the Note. For
example, in the case of Notes held through Euroclear or Cedel, the IRS Form (or
a copy thereof) must be received by the U.S. Depositary of such clearing agency.
Applicable procedures include additional certification requirements, described
in clause (x)(c)(B) of Paragraph (i) under "United States Taxation of Non-United
States Persons -- Income and Withholding Tax", if a beneficial owner of the Note
provides an IRS Form W-8 to a securities clearing organization, bank or other
financial institution that holds the Note on its behalf.
Regulations recently issued by the IRS, which will be effective for
payments made after December 31, 1999, make certain modifications to the
certification procedures applicable to non-United States persons. Prospective
investors should consult their tax advisors regarding the certification
requirements for non-United States persons.
EACH HOLDER OF A NOTE SHOULD BE AWARE THAT IF IT DOES NOT PROPERLY PROVIDE
THE REQUIRED IRS FORM, OR IF THE IRS FORM (OR, IF PERMISSIBLE, A COPY OF SUCH
FORM) IS NOT PROPERLY TRANSMITTED TO AND RECEIVED BY THE UNITED STATES PERSON
OTHERWISE REQUIRED TO WITHHOLD UNITED STATES FEDERAL INCOME TAX, INTEREST ON THE
NOTE MAY BE SUBJECT TO UNITED STATES WITHHOLDING TAX AT A 30% RATE AND THE
HOLDER (INCLUDING THE BENEFICIAL OWNER) WILL NOT BE ENTITLED TO ANY ADDITIONAL
AMOUNTS FROM FORD CREDIT DESCRIBED UNDER THE HEADING "DESCRIPTION OF NOTES --
PAYMENT OF ADDITIONAL AMOUNTS" WITH RESPECT TO SUCH TAX. SUCH TAX, HOWEVER, MAY
IN CERTAIN CIRCUMSTANCES BE ALLOWED AS A REFUND OR AS A CREDIT AGAINST SUCH
HOLDER'S UNITED STATES FEDERAL INCOME TAX. THE FOREGOING DOES NOT DEAL WITH ALL
ASPECTS OF FEDERAL INCOME TAX WITHHOLDING THAT MAY BE RELEVANT TO FOREIGN
HOLDERS OF THE NOTES. INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
FOR SPECIFIC ADVICE CONCERNING THE OWNERSHIP AND DISPOSITION OF NOTES.
S-11
<PAGE> 12
UNITED STATES TAXATION OF NON-UNITED STATES PERSONS
INCOME AND WITHHOLDING TAX
In the opinion of Sullivan & Cromwell, special tax counsel to the Company,
and Shearman & Sterling, counsel for the Underwriters, under United States
federal tax law as of the date of this Prospectus Supplement, and subject to the
discussion of backup withholding below:
(i) payments of principal and interest on a Note that is beneficially
owned by a non-United States person will not be subject to United States
federal withholding tax; provided, that in the case of interest, (x) (a)
the beneficial owner does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of Ford Credit
entitled to vote, (b) the beneficial owner is not a controlled foreign
corporation that is related to Ford Credit through stock ownership, and (c)
either (A) the beneficial owner of the Note certifies to the person
otherwise required to withhold United States federal income tax from such
interest, under penalties of perjury, that it is not a United States person
and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and holds the Note certifies to the person otherwise required
to withhold United States federal income tax from such interest, under
penalties of perjury, that such statement has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof; (y) the
beneficial owner is entitled to the benefits of an income tax treaty under
which the interest is exempt from United States federal withholding tax and
the beneficial owner of the Note or such owner's agent provides an IRS Form
1001 claiming the exemption; or (z) the beneficial owner conducts a trade
or business in the United States to which the interest is effectively
connected and the beneficial owner of the Note or such owner's agent
provides an IRS Form 4224; provided that in each such case, the relevant
certification or IRS Form is delivered pursuant to applicable procedures
and is properly transmitted to the person otherwise required to withhold
United States federal income tax, and none of the persons receiving the
relevant certification or IRS Form has actual knowledge that the
certification or any statement on the IRS Form is false;
(ii) a non-United States person will not be subject to United States
federal withholding tax on any gain realized on the sale, exchange or
redemption of a Note unless the gain is effectively connected with the
beneficial owner's trade or business in the United States or, in the case
of an individual, the holder is present in the United States for 183 days
or more in the taxable year in which the sale, exchange or redemption
occurs and certain other conditions are met; and
(iii) a Note owned by an individual who at the time of death is not a
citizen or resident of the United States will not be subject to United
States federal estate tax as a result of such individual's death if the
individual does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of Ford Credit entitled to
vote and the income on the Note would not have been effectively connected
with a U.S. trade or business of the individual.
Interest on a Note that is effectively connected with the conduct of a
trade or business in the United States by a holder of a Note who is a non-United
States person, although exempt from United States withholding tax, may be
subject to United States income tax as if such interest was earned by a United
States person.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments of
principal and interest made on a Note and the proceeds of the sale of a Note
within the United States to non-corporate holders of the Notes, and "backup
withholding" at a rate of 31% will apply to such payments if the holder fails to
provide an accurate taxpayer identification number in the manner required or to
report all interest and dividends required to be shown on its federal income tax
returns.
S-12
<PAGE> 13
Information reporting on IRS Form 1099 and backup withholding will not
apply to payments made by Ford Credit or a paying agent to a non-United States
person on a Note if, in the case of interest, the IRS Form described in clause
(y) or (z) in Paragraph (i) under "Income and Withholding Tax" has been provided
under applicable procedures, or, in the case of interest or principal, the
certification described in clause (x)(c) in Paragraph (i) under "Income and
Withholding Tax" and a certification that the beneficial owner satisfies certain
other conditions have been supplied under applicable procedures, provided that
the payor does not have actual knowledge that the certifications are incorrect.
Payments of the proceeds from the sale of a Note made to or through a
foreign office of a broker will not be subject to information reporting or
backup withholding, except that if the broker is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50% or more of whose gross income is effectively connected with a United
States trade or business for a specified three-year period, information
reporting may apply to such payments. Payments of the proceeds from the sale of
a Note to or through the United States office of a broker are subject to
information reporting and backup withholding unless the holder or beneficial
owner certifies that it is a non-United States person and that it satisfies
certain other conditions or otherwise establishes an exemption from information
reporting and backup withholding.
Regulations recently issued by the IRS, which will be effective for
payments made after December 31, 1999, make certain modifications to the
certification procedures applicable to non-United States persons. Prospective
investors should consult their tax advisors regarding the certification
requirements for non-United States persons.
Backup withholding is not a separate tax, but is allowed as a refund or
credit against the holder's United States federal income tax, provided the
necessary information is furnished to the Internal Revenue Service.
Interest on a Note that is beneficially owned by a non-United States person
will be reported annually on IRS Form 1042S, which must be filed with the
Internal Revenue Service and furnished to such beneficial owner.
------------------------------
INFORMATION CONCERNING FORD CREDIT
Ford Credit was incorporated in Delaware in 1959. We are an indirect
wholly-owned subsidiary of Ford. When we refer to Ford Credit in this Prospectus
Supplement, we are referring to Ford Credit and its subsidiaries.
Ford Credit lends money to Ford's dealers throughout the world to finance
their wholesale inventories and permit them to make capital improvements. Ford
Credit also purchases retail installment sale contracts and retail leases from
these dealers. We offer comparable services to dealers in vehicles other than
those made by Ford, if they are associated with Ford dealers. We also lend to
vehicle leasing companies, most of which are associated with Ford dealers. Most
Ford dealers are privately owned and financed.
In addition, subsidiaries of Ford Credit provide these financing services
in the United States, Europe, Canada and Australia to non-Ford dealerships. A
substantial majority of all new vehicles financed by Ford Credit are
manufactured by Ford and its affiliates. Ford Credit also provides retail
financing for used vehicles built by Ford and other manufacturers. In addition
to vehicle financing, Ford Credit makes loans to affiliates of Ford and finances
certain receivables of Ford and its subsidiaries.
Ford Credit's insurance operations are conducted by The American Road
Insurance Company ("American Road") and its subsidiaries in the United States
and Canada. These operations consist of extended service plan contracts for new
and used vehicles manufactured by affiliated and nonaffiliated companies,
primarily originating from Ford dealers, physical damage insurance
S-13
<PAGE> 14
covering vehicles and equipment financed at wholesale by Ford Credit, and the
reinsurance of credit life and credit disability insurance for retail purchasers
of vehicles and equipment.
The mailing address of Ford Credit's executive offices is The American
Road, Dearborn, Michigan 48121, United States of America. The telephone number
of such offices is (313) 322-3000.
S-14
<PAGE> 15
FORD MOTOR CREDIT COMPANY AND CONSOLIDATED SUBSIDIARIES
SELECTED FINANCIAL DATA
(DOLLAR AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OR AT SEPTEMBER 30 YEARS ENDED OR AT DECEMBER 31
------------------------ --------------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Total revenue............. $ 14,083.0 $ 12,905.6 $ 17,344.1 $ 16,650.2 $ 14,997.2
Interest expense.......... 4,963.5 4,676.6 6,268.2 6,259.7 5,998.3
Provision for credit
losses................. 882.2 1,022.2 1,338.2 993.3 480.4
Income before income
taxes.................. 1,460.9 1,381.4 1,806.0 2,240.2 2,327.8
Net income................ 850.0 812.6 1,030.8 1,440.6 1,579.4
Cash dividends............ (80.0) (14.5) (595.5) (949.0) (816.3)
Memo:
Net credit losses
amount................. $ 730.3 $ 695.0 $ 1,007.1 $ 830.0 $ 485.9
As percentage of average
net finance receivables
outstanding*
(unannualized)......... 0.79% 0.85% 0.89% 0.78% 0.51%
BALANCE SHEET DATA
Net investment, operating
leases................. $ 35,434.7 $ 34,928.1 $ 34,746.0 $ 30,645.2 $ 25,680.2
========== ========== ========== ========== ==========
Finance receivables,
net.................... $ 84,700.6 $ 78,746.6 $ 81,312.6 $ 80,848.0 $ 76,376.7
========== ========== ========== ========== ==========
Capital
Short-term debt........ $ 43,916.1 $ 42,716.8 $ 46,207.8 $ 43,017.0 $ 42,200.1
Long-term debt
(including current
portion)............. 60,748.3 57,274.6 54,517.2 55,007.3 49,980.2
Stockholder's equity... 10,696.0 9,820.5 9,584.5 9,203.7 8,670.7
---------- ---------- ---------- ---------- ----------
Total capital........ $115,360.4 $109,811.9 $110,309.5 $107,228.0 $100,851.0
========== ========== ========== ========== ==========
</TABLE>
- ---------------
* Includes net investment in operating leases.
THIRD QUARTER 1998 RESULTS OF OPERATIONS
Ford Credit's consolidated net income in the third quarter of 1998 was $272
million, up $14 million or 5% percent from 1997. Compared with results from a
year ago, the increase primarily reflects lower credit losses and loss reserve
requirements, higher gains on receivables sales, higher financing volumes, and
lower operating costs. Lower financing margins and a higher effective tax rate
are a partial offset.
Total net finance receivables and net investment in operating leases at
September 30, 1998 were $120.1 billion, up $6.4 billion or 6% from a year
earlier.
Credit losses as a percent of average net finance receivables including net
investment in operating leases decreased to 0.79% in third quarter 1998 from
0.85% in third quarter 1997 reflecting a decrease in repossession rates offset
partially by higher losses per repossession. The increase in losses per
repossession reflects a weaker used vehicle market resulting in Ford Credit
realizing lower prices for repossessed units sold at auction.
S-15
<PAGE> 16
Net financing margins decreased compared with the same period a year ago
primarily reflecting increased depreciation expense for leased vehicles.
Increased depreciation expense for leased vehicles primarily reflects lower than
anticipated residual values on those vehicles. These factors are expected to
continue to adversely affect Ford Credit's earnings for the remainder of 1998.
During the third quarter of 1998, Ford Credit financed 50% of all new cars
and trucks sold by Ford dealers in the U.S., compared with 39% in the same
period of 1997. In Europe, Ford Credit financed 36% of all new vehicles sold by
Ford dealers in the third quarter of 1998 compared with 31% in the third quarter
of 1997. Ford Credit provided retail customers with financing for 774,000 new
and used vehicles in the United States and 209,000 in Europe. In the third
quarter of 1998, Ford Credit provided wholesale financing for 85% of Ford U.S.
factory sales and 94% of Ford factory sales in Europe compared with 79% for the
U.S. and 94% for Europe in the third quarter 1997.
FIRST NINE MONTHS OF 1998 COMPARED WITH 1997
For the first nine months of 1998, Ford Credit's consolidated net income
was $850 million, up $37 million or 5% from the first nine months of 1997. The
factors affecting financing profits during the first nine months of 1998 were
the same as those affecting third quarter results discussed above.
During the first nine months of 1998, Ford Credit provided retail financing
for 42% of all new cars and trucks sold by Ford dealers in the United States,
compared with 38% in the same period a year ago. In Europe, Ford Credit financed
32% of all new vehicles sold by Ford in the first nine months of 1998, compared
to 28% in the first nine months of last year. Ford Credit provided retail
financing for 2,143,000 new and used vehicles in the United States and 599,000
in Europe. In the first nine months of 1998, Ford Credit provided wholesale
financing for 80% of Ford U.S. factory sales and 95% of Ford factory sales in
Europe compared with 79% for the U.S. and 95% for Europe in the first nine
months of 1997.
1997 RESULTS OF OPERATIONS
Ford Credit's consolidated net income in 1997 was $1,031 million, down $410
million or 28% from 1996. Compared with results from a year ago, the decrease
primarily reflects lower net margins, higher credit losses and loss reserve
requirements and higher taxes. Lower operating costs and higher levels of
earning assets were a partial offset.
The deterioration in net financing margins reflects higher depreciation on
operating leases. Higher depreciation resulted from higher residual losses on
off-lease vehicles and higher residual reserves.
Credit losses as a percent of average net finance receivables including net
investment in operating leases increased to 0.89% in 1997 compared with 0.78% 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
December 31, 1997 were $116.1 billion, up $4.6 billion or 4% from a year
earlier.
During 1997, Ford Credit financed 38% of all new cars and trucks sold by
Ford Motor Company dealers in the U.S., unchanged from 1996. In Europe, Ford
Credit financed 29% of all new vehicles sold by Ford Motor Company, also
unchanged from 1996. Ford Credit provided retail customers with financing for
2.5 million new and used vehicles in the United States and 0.7 million in
Europe. In 1997, Ford Credit provided wholesale financing for 80% of Ford Motor
Company factory sales in the U.S. and 95% of Ford Motor Company factory sales in
Europe compared with 80% for the U.S. and 91% for Europe in 1996.
S-16
<PAGE> 17
For the Fourth Quarter of 1997, Ford Credit's consolidated net income was
$218 million, down $167 million from 1996. The deterioration primarily reflects
lower net margins and higher taxes, partially offset by lower operating costs.
Credit losses did not materially increase in the fourth quarter of 1997 compared
to the same period in 1996.
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", is effective for fiscal years beginning after December
15, 1997. This statement requires all items that are required to be recognized
under accounting standards as components of comprehensive income be reported in
a financial statement that is displayed with the same prominence as other
financial statements. This new accounting standard is not expected to have a
material impact on Ford Credit's financial statements. Ford Credit adopted this
standard on January 1, 1998 as required.
Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information," is effective for periods
beginning after December 15, 1997. This statement establishes standards for
reporting information about operating segments in annual financial statements
and requires that enterprises report selected information about operating
segments in interim financial reports. This new accounting standard is not
expected to have a material impact on Ford Credit's financial statements. Ford
Credit adopted this standard on January 1, 1998 as required.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Ford Credit is exposed to a variety of market risks, including the effects
of changes in foreign currency exchange rates and interest rates. To ensure
funding over business and economic cycles and to minimize overall borrowing
costs, Ford Credit issues debt and other payables with various maturity and
interest rate structures. The maturity and interest rate structures frequently
differ from the invested assets. Exposures to fluctuations in interest rates are
created by the differences in maturities of liabilities versus the maturities of
assets.
These financial exposures are monitored and managed by Ford Credit as an
integral part of the overall risk management program, which recognizes the
unpredictability of financial markets and seeks to reduce the potentially
adverse effects on Ford Credit's operating results. The effect of changes in
exchange rates and interest rates on Ford Credit's results generally has been
small relative to other factors.
The following quantifies Ford Credit's interest rate risk and foreign
currency exchange rate risk.
Interest Rate Risk
Interest rate swaps (including those with a currency swap component) are
used by Ford Credit to mitigate the effects of interest rate fluctuations on
earnings by changing the characteristics of its debt to match the
characteristics of its assets. Ford Credit uses a model to assess the
sensitivity of its earnings to changes in market interest rates. The model
recalculates earnings by adjusting the rates associated with variable rate
instruments on the repricing date and adjusting the rates on fixed rate
instruments scheduled to mature in the subsequent twelve months, effective on
their scheduled maturity date. Interest income and interest expense are then
recalculated based on the revised rates. Assuming an instantaneous decrease of
one percentage point in interest rates applied to all financial instruments and
leased assets, Ford Credit's after-tax earnings would have declined by $30
million over the ensuing twelve month period.
S-17
<PAGE> 18
Foreign Currency Risk
Ford Credit's foreign currency risk is substantially reduced by the natural
hedging process of both borrowing and lending in the local currencies of the
home countries. Additionally, Ford Credit uses foreign currency agreements to
hedge specific debt instruments and intercompany loans. Ford Credit's earnings
in the ensuing twelve month period would not be materially affected by an
instantaneous 10% change in foreign currency exchange rates.
LIQUIDITY AND CAPITAL RESOURCES
Ford Credit relies heavily on its ability to raise substantial amounts of
funds. These funds are obtained primarily by sales of commercial paper, the
issuance of term debt and, in the case of FCE Bank plc, certificates of deposit.
Funds also are provided by retained earnings and sales of receivables. The level
of funds can be affected by certain transactions with Ford, such as capital
contributions, interest supplements and other support costs from Ford for
vehicles financed and leased by Ford Credit under Ford-sponsored special
financing and leasing programs, and dividend payments, and the timing of
payments for the financing of dealers' wholesale inventories and for income
taxes. Ford Credit's ability to obtain funds is affected by its debt ratings,
which are closely related to the outlook for, and financial condition of, Ford,
and the nature and availability of support facilities. For additional
information regarding liquidity and capital resources, see Item 1 -- Business --
"Business of Ford Credit -- Borrowings and Other Sources of Funds" in the 1997
10-K Report and see the First Quarter 10-Q Report, the Second Quarter 10-Q
Report and the Third Quarter 10-Q. For additional information regarding Ford
Credit's association with Ford, see Item 1 -- Business -- "Certain Transactions
with Ford and Affiliates" in the 1997 10-K Report.
INFORMATION CONCERNING FORD
Ford was incorporated in Delaware in 1919 and acquired the business of a
Michigan company, also known as Ford Motor Company, incorporated in 1903 to
produce automobiles designed and engineered by Henry Ford. Ford is the world's
largest producer of trucks and the second largest producer of cars and trucks
combined. Ford and its subsidiaries also engage in automotive-related
businesses, such as, financing and renting vehicles and manufacturing automotive
components and systems.
Ford's two principal business segments are Automotive and Financial
Services. The activities of the Automotive segment consist of the design,
manufacture, assembly and sale of cars and trucks and related parts and
accessories. Substantially all of Ford's automotive products are marketed
through retail dealerships, most of which are privately owned and financed.
The primary activities of the Financial Services segment consist of
financing operations, vehicle and equipment leasing and rental operations, and
insurance operations. These activities primarily are conducted through Ford's
subsidiaries, Ford Credit and The Hertz Corporation ("Hertz").
S-18
<PAGE> 19
SELECTED FINANCIAL DATA AND OTHER DATA OF FORD
The following table sets forth selected financial data and other data
concerning Ford:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OR AT SEPTEMBER 30 YEARS ENDED OR AT DECEMBER 31
--------------------- ----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(UNAUDITED)
(IN MILLIONS EXCEPT PER SHARE AND UNIT SALES AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME
INFORMATION
Automotive
Sales............................... $ 86,879 $ 91,038 $122,935 $118,023 $110,496 $107,137 $ 91,568
Operating income.................... 5,505 4,994 6,946 2,516 3,281 5,826 1,432
Net income.......................... 3,932 3,373 4,714 1,655 2,056 3,913 1,008
Financial Services
Revenues............................ 19,634 22,637 30,692 28,968 26,641 21,302 16,953
Income before gain on spin-off of
The Associates and income taxes... 2,093 2,941 -- -- -- -- --
Gain on spin-off of The
Associates........................ 15,955 -- -- -- -- -- --
Income before income taxes.......... 18,048 2,941 3,857 4,222 3,539 2,792 2,712
Net income.......................... 17,096 1,751 2,206 2,791 2,083 1,395 1,521
Total Ford
Net income.......................... 21,028 5,124 6,920 4,446 4,139 5,308 2,529
Amounts Per Share of Common Stock and
Class B Stock After Preferred Stock
Dividends*
Basic earnings per share............ 17.29 4.26 5.75 3.73 3.58 4.97 2.27
Diluted earnings per share.......... 16.90 4.17 5.62 3.64 3.33 4.44 2.10
Cash dividends...................... 1.26 1.225 1.645 1.47 1.23 0.91 0.80
CONSOLIDATED BALANCE SHEET INFORMATION
Automotive
Total assets........................ 88,242 85,440 85,079 79,658 72,772 68,639 61,737
Debt payable within one year........ 1,168 1,587 1,129 1,661 1,832 155 932
Long-term debt -- noncurrent
portion........................... 8,654 6,620 7,047 6,495 5,475 7,103 7,084
Financial Services
Total assets........................ 140,272 188,783 194,018 183,209 170,511 150,983 137,201
Debt................................ 113,633 155,407 160,071 150,205 141,317 123,713 103,960
Deposit accounts**.................. -- -- -- -- -- -- 10,549
Total Ford
Total assets........................ 228,514 274,223 279,097 262,867 243,283 219,622 198,938
Debt................................ 123,455 1,636,151 168,247 158,361 148,624 130,971 122,525
Stockholders' equity................ 23,718 29,677 30,734 26,762 24,547 21,659 15,574
Cash dividends...................... 1,545 1,503 2,020 1,800 1,559 1,205 1,086
OTHER DATA
Total Ford
Capital expenditures................ 6,066 6,166 8,717 8,651 8,997 8,546 6,814
Depreciation and amortization of
special tools..................... 5,005 5,239 13,583 12,791 11,719 9,336 7,468
Worldwide vehicle unit sales of
cars, trucks and tractors (in
thousands)........................ 5,009 5,126 6,943 6,653 6,606 6,853 6,184
</TABLE>
- ------------
* Share data have been restated to reflect the 2-for-1 stock split that became
effective June 6, 1994.
** Deposit accounts relate to First Nationwide Financial Corporation (for
1993).
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<PAGE> 20
FINANCIAL REVIEW OF FORD
THIRD QUARTER 1998 RESULTS OF OPERATIONS
Overview
Ford's worldwide net income was $1,001 million in third quarter 1998, or
$0.80 per diluted share of Common and Class B Stock, compared with $1,125
million, or $0.91 per diluted share in third quarter 1997. Excluding an earnings
contribution of $219 million from Associates First Capital Corporation ("The
Associates"), Ford's third quarter 1997 operating earnings were $906 million, or
$0.73 per diluted share. Ford's worldwide sales and revenues were $32.6 billion
in third quarter 1998, down $3,456 million from a year ago. Vehicle unit sales
of cars and trucks were 1,489,000, down 107,000 units. Stockholders' equity was
$23.7 billion at September 30, 1998, down $7 billion compared with December 31,
1997, reflecting primarily the spin-off of The Associates.
RESULTS OF OPERATIONS
Ford's worldwide net income for the Automotive sector in third quarter 1998
and 1997 and first nine months 1998 and 1997 was as follows (in millions):
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
----------------------- -------------------------
1998 1998
O/(U) O/(U)
1998 1997 1997 1998 1997 1997
---- ----- ---- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C>
North American Automotive.................. $ 900 $ 620 $ 280 $3,565 $3,081 $ 484
Automotive Outside North America
Europe................................... (273) (147) (126) 267 115 152
South America............................ (44) 133 (177) (75) 111 (186)
Other.................................... 63 28 35 175 66 109
----- ----- ----- ------ ------ -----
Total Automotive Outside North America..... (254) 14 (268) 367 292 75
----- ----- ----- ------ ------ -----
Total Automotive Sector............... $ 646 $ 634 $ 12 $3,932 $3,373 $ 559
===== ===== ===== ====== ====== =====
</TABLE>
The Automotive sector includes Automotive operations and Visteon Automotive
Systems, the company's automotive systems enterprise.
Ford's worldwide net income for Financial Services group in third quarter
1998 and 1997 and first nine months 1998 and 1997 was as follows (in millions):
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
---------------------- ----------------------------
1998 1998
O/(U) O/(U)
1998 1997 1997 1998 1997 1997
---- ----- ---- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Ford Credit............................... $272 $258 $ 14 $ 850 $ 813 $ 37
Hertz..................................... 119 93 26 229 167 62
Gain on Hertz IPO......................... -- -- -- -- 269 (269)
Minority interests, Eliminations, and
Other................................... (36) (79) 43 (115) (106) (9)
---- ---- ----- ------- ------ -------
Financial Services (excluding The
Associates).......................... 355 272 83 964 1,143 (179)
The Associates............................ -- 219 (219) 177* 608 (431)
Gain on spin-off of The Associates........ -- -- -- 15,955 -- 15,955
---- ---- ----- ------- ------ -------
Total Financial Services........... $355 $491 $(136) $17,096 $1,751 $15,345
==== ==== ===== ======= ====== =======
Memo: Ford's share of earnings in Hertz... $ 96 $ 75 $ 21 $ 185 $ 140 $ 45
</TABLE>
- ------------
* Through March 12, 1998
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<PAGE> 21
THIRD QUARTER 1998 COMPARED WITH THIRD QUARTER 1997
Automotive Sector
Worldwide earnings for Ford's Automotive sector were $646 million in third
quarter 1998 on sales of $26.5 billion, compared with $634 million in third
quarter 1997 on sales of $28.2 billion. Increased earnings reflect primarily
continued cost reductions, offset partially by lower volume. Adjusted for
constant volume and mix, total automotive costs were down $600 million compared
with third quarter a year ago.
Automotive sector earnings in North America were $900 million in third
quarter 1998, up $280 million compared with a year ago. The increase reflects
primarily favorable cost performance, offset partially by lower volumes. The
after-tax return on sales was 4.5% in third quarter 1998, up 1.4 points from a
year ago.
The seasonally-adjusted annual selling rate for the U.S. car and truck
industry was 15.3 million units in third quarter 1998, down from 15.8 million
units in third quarter 1997. The company expects car and truck industry sales
for full-year 1998 to be slightly higher than the 15.5 million units in 1997.
Ford's combined U.S. car and truck share was 25.9% in third quarter 1998, up 1.3
points from a year ago, which was more than explained by stronger truck share.
Automotive sector losses in Europe were $273 million, $126 million worse
than third quarter a year ago. The deterioration reflected costs associated with
the Focus launch and lower export sales, offset partially by cost reductions.
The seasonally-adjusted annual selling rate for the European car and truck
industry was 16.8 million units in third quarter 1998, up from 15.6 million
units in third quarter 1997. European car and truck industry sales for full-year
1998 are expected to be about 15.6 million units. Ford's combined European car
and truck market share was 10.1% in third quarter 1998, down 1.2 points from a
year ago. The reduction was primarily due to the Focus launch.
Automotive sector losses in South America were $44 million in third quarter
1998, compared with a profit of $133 million in the third quarter a year ago,
reflecting lower volume and higher marketing costs. Ford is reducing production
in Brazil and Argentina in the fourth quarter, and is considering other actions
because of anticipated weak demand through 1999.
In third quarter 1998, the seasonally-adjusted annual selling rate for the
Brazilian car and truck industry totaled 1.6 million units, compared with 2.1
million units in third quarter a year ago. For full-year 1998, the company
expects car and truck industry sales in Brazil to be about 1.5 million units.
Ford's combined car and truck share in Brazil was 13% in third quarter 1998,
down 2.7 points from third quarter 1997 reflecting an increasingly competitive
environment.
Visteon earned $150 million on revenues of $4,097 million in third quarter
1998, compared with $114 million on revenues of $3,937 million in third quarter
a year ago. The improvement in earnings reflects primarily cost reductions and
increased revenue. The after-tax return on sales was 3.7%, up 8/10 of a point
compared to the prior year.
Voluntary employee separation programs in North America and Europe have
been announced. Costs for these programs will be determined and reported in
fourth quarter 1998. In addition, in early October 1998, Ford and others
submitted bids for Kia Motor Corporation. Ford could incur a pre-tax charge of
up to $150 million in fourth quarter 1998 with respect to its financial exposure
to Kia Motor Corporation based on the outcome of the bidding. Ford also expects
to incur in fourth quarter 1998 a pre-tax charge of about $100 million in
connection with the transfer of its Batavia, Ohio transmission plant to the
recently announced joint venture between Ford and ZF Friedrichshafen AG for the
production of vehicle transmissions.
S-21
<PAGE> 22
Financial Services Group
With the completion of The Associates spin-off, Financial Services group
earnings now reflect primarily the results of Ford Credit and Ford's share of
the earnings of Hertz.
For a discussion of Ford Credit's operations in third quarter 1998, see
"Ford Motor Credit Company and Consolidated Subsidiaries -- Selected Financial
Data -- Third Quarter 1998 Results of Operations," above.
Earnings at Hertz in third quarter 1998 were $119 million (of which $96
million was Ford's share), up $26 million from the same period a year ago. The
increase reflects primarily higher revenues and improved profit margins in
worldwide car rental operations.
FIRST NINE MONTHS 1998 COMPARED WITH FIRST NINE MONTHS 1997
Ford's operating earnings were $4,896 million, or $3.94 per diluted share
of Common and Class B Stock, in the first nine months 1998, compared with $4,516
million, or $3.67 per diluted share, in first nine months 1997 excluding The
Associates.
Operating results in first nine months 1998 exclude a one-time gain of
$15,955 million, or $12.89 per diluted share, resulting from the spin-off of The
Associates, and a one-time earnings per share reduction of $0.07 per share
resulting from the premium paid to repurchase Ford's Series B Cumulative
Preferred Stock. Results in first nine months 1997 include a one-time gain of
$269 million on the initial public offering of the common stock of Hertz, offset
partially by a one-time charge of $169 million for restructuring actions.
Including one-time factors, Ford's reported earnings in first nine months 1998
were $21,028 million, or $16.90 per diluted share, compared with $5,124 million,
or $4.17 per diluted share, in first nine months 1997. Ford's results in first
nine months 1998 include Ford's share of The Associates' earnings through March
12, the record date for the spin-off of The Associates.
Ford's worldwide sales and revenues in first nine months 1998 were $106.5
billion, down $7.2 billion from a year ago. Vehicle unit sales of cars and
trucks were 5,009,000, down 147,000 units.
Automotive Sector
Worldwide earnings for Ford's Automotive sector were $3,932 million in
first nine months 1998 on sales of $86.9 billion, compared with $3,373 million
in first nine months 1997 on sales of $91 billion. The increase was explained
primarily by lower costs offset partially by increased marketing costs and lower
volume.
Earnings for the Automotive sector in North America were $3,565 million in
first nine months 1998, up $484 million from first nine months 1997. The
increase reflects lower costs, offset partially by increased marketing costs and
lower volume. The North American Automotive after-tax return on sales was 5.7%
in first nine months 1998, up 9/10 of a point from a year ago.
The seasonally-adjusted annual selling rate for the U.S. car and truck
industry was 15.7 million units in first nine months 1998, compared with 15.5
million units in first nine months 1997. Ford's combined U.S. car and truck
market share was 24.7%, down 4/10 of a point compared with a year ago.
Automotive sector earnings in Europe in first nine months 1998 were $267
million, up $152 million from first nine months a year ago, reflecting continued
cost reductions and higher volume, offset partially by Focus launch costs and
higher marketing costs.
The seasonally-adjusted annual selling rate for the European car and truck
industry was 15.9 million units in first nine months 1998, up from 14.8 million
units in first nine months 1997.
S-22
<PAGE> 23
Ford's combined European car and truck market share was 10.6% in first nine
months 1998, down 9/10 of a point from a year ago.
Automotive sector losses in South America were $75 million in first nine
months 1998, compared with a profit of $111 million in first nine months a year
ago, reflecting primarily the same factors as those described in the discussion
of third quarter results of operations.
In first nine months 1998, the seasonally-adjusted annual selling rate for
the Brazilian car and truck industry totaled 1.6 million units, compared with 2
million units in first nine months 1997. Ford's combined car and truck share in
Brazil was 13.5% in first nine months 1998, down 1/10 of a point from first nine
months 1997.
Visteon earned $580 million on revenues of $13,200 million in first nine
months 1998, compared with $470 million on revenues of $12,810 million in first
nine months a year ago. The improvement in earnings reflects primarily cost
reductions, increased revenue, and volume and mix. The after-tax return on sales
was 4.4% in first nine months 1998, up 7/10 of a point from a year ago.
Financial Services Group
Lower earnings for Financial Services group for first nine months 1998
reflect primarily the non-reoccurrence of the Hertz IPO. Higher earnings at Ford
Credit and Hertz in first nine months 1998, compared with first nine months
1997, reflected primarily the same factors as those described in the discussion
of third quarter results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Automotive Sector
Automotive cash and marketable securities were $22.9 billion at September
30, 1998, up $2.1 billion from December 31, 1997. Ford paid $1.5 billion in
quarterly cash dividends on its Common Stock, Class B Stock and Preferred Stock
during first nine months 1998, and an additional $3.2 billion in cash dividends
related to The Associates spin-off.
Automotive capital expenditures were $5.7 billion in first nine months
1998, down $85 million from the same period a year ago. Capital expenditures
were 6.5% of sales in first nine months 1998, up 2/10 of a point from first nine
months a year ago.
Automotive debt at September 30, 1998 totaled $9.8 billion, which was 29%
of total capitalization (stockholders' equity and Automotive debt), compared
with 21% of total capitalization at year-end 1997. The Automotive sector issued
$2.2 billion in new debt during the third quarter. Approximately $1 billion of
debt was transferred in the third quarter to Financial Services group, at
prevailing market interest rates.
For a discussion of support facilities available to the company's
Automotive sector and Financial Services group, see the "Liquidity and Capital
Resources" section in the "Management's Discussion and Analysis of Financial
Condition -- Ford" and "Results of Operations" in Second Quarter 10-Q.
Financial Services Group
The Associates spin-off primarily explains the declines discussed below.
Financial Services cash and investments in securities totaled $2.9 billion
at September 30, 1998, down $900 million from December 31, 1997.
Net receivables and lease investments were $124.5 billion at September 30,
1998, down $50 million from December 31, 1997.
Total debt was $113.6 billion at September 30, 1998, down $37.9 billion
from December 31, 1997.
Outstanding commercial paper at September 30, 1998 totaled $37.9 billion at
Ford Credit and $2 billion at Hertz, with an average remaining maturity of 29
days and 31 days, respectively.
S-23
<PAGE> 24
INDUSTRY DATA AND MARKET SHARE OF FORD
The following table shows the U.S. industry retail deliveries of cars and
trucks for the periods indicated:
<TABLE>
<CAPTION>
U.S. INDUSTRY RETAIL DELIVERIES
(MILLIONS OF UNITS)
----------------------------------------------------------------
NINE MONTHS
ENDED
SEPTEMBER 30* YEARS ENDED DECEMBER 31
-------------- --------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Cars..................................... 8.0 8.4 8.3 8.6 8.6 9.0 8.5
Trucks................................... 7.7 7.1 7.2 6.9 6.5 6.4 5.7
</TABLE>
- ---------------
* Seasonally adjusted annual rates
The following table shows Ford's U.S. car and truck market shares for the
periods indicated:
<TABLE>
<CAPTION>
FORD U.S. CAR AND TRUCK MARKET SHARES
----------------------------------------------------------------
NINE MONTHS
ENDED
SEPTEMBER 30 YEARS ENDED DECEMBER 31
-------------- --------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Cars................................... 19.6% 19.7% 19.5% 20.6% 20.9% 21.8% 22.3%
Trucks................................. 30.3 31.5 31.2 31.1 31.9 30.1 30.5
</TABLE>
For additional information regarding Ford, see the 1997 10-K Report, the
First Quarter 10-Q Report, the Second Quarter 10-Q Report and the Third Quarter
10-Q Report.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of "earnings" to "fixed charges" for Ford Credit and Ford were as
follows for each of the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------------------------------------
NINE MONTHS
ENDED
SEPTEMBER 30, 1998 1997 1996 1995 1994 1993
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ford Motor Credit Company............ 1.3 1.3 1.3 1.3 1.5 1.5
Ford Motor Company................... 4.4* 2.0 1.6 1.6 2.0 1.5
</TABLE>
- ---------------
* Earnings used in calculation of this ratio include the $15,955 million gain on
spin-off of The Associates. Excluding this gain, the ratio is 2.1.
For purposes of the Ford Credit ratio, "earnings" consist of income before
income taxes and fixed charges. Income before income taxes 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, amortization of debt discount, premium, and issuance expense and
one-third of all rental expense (the proportion deemed representative of the
interest factor).
For purposes of the Ford ratio, "earnings" include the income before income
taxes of Ford and its majority-owned subsidiaries and trusts, whether or not
consolidated, its proportionate share of any fifty-percent-owned companies, and
any income received from less-than-fifty-percent-owned companies and fixed
charges. "Fixed charges" consist of interest on borrowed funds, preferred stock
dividend requirements of majority-owned subsidiaries and trusts, amortization of
debt discount, premium, and issuance expense, and one-third of all rental
expense (the proportion deemed representative of the interest factor).
S-24
<PAGE> 25
UNDERWRITING
Ford Credit is selling the Notes to the Underwriters named below under an
Underwriting Agreement dated October 16, 1998 and a Pricing Agreement dated
October 16, 1998. The Underwriters, and the amount of the Notes each of them has
agreed to purchase from Ford Credit, are as follows:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITERS OF 2001 NOTES
- ------------ ----------------
<S> <C>
J.P. Morgan Securities Inc. ................................ $324,750,000
Morgan Stanley & Co. Incorporated........................... 324,750,000
Goldman, Sachs & Co. ....................................... 25,125,000
Lehman Brothers Inc......................................... 25,125,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 25,125,000
Salomon Brothers Inc ....................................... 25,125,000
------------
Total........................................... $750,000,000
============
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITERS OF 2002 NOTES
- ------------ ----------------
<S> <C>
J.P. Morgan Securities Inc. ................................ $ 64,950,000
Morgan Stanley & Co. Incorporated........................... 64,950,000
Goldman, Sachs & Co. ....................................... 5,025,000
Lehman Brothers Inc......................................... 5,025,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 5,025,000
Salomon Brothers Inc ....................................... 5,025,000
------------
Total........................................... $150,000,000
============
</TABLE>
Under the terms and conditions of the Pricing Agreement, if the
Underwriters take any of the 2001 or 2002 Notes, then they are obligated to take
and pay for all of the respective series of Notes.
The Notes are new issues of securities with no established trading market.
Ford Credit has applied for listing of the Notes on the Luxembourg Stock
Exchange. The Underwriters have advised Ford Credit that they intend to make a
market for the Notes, but they have no obligation to do so. They also may
discontinue market making at any time without providing any notice. Ford Credit
cannot give any assurance as to the liquidity of any trading market for either
series of Notes.
The Underwriters initially propose to offer part of the Notes directly to
the public at the public offering prices set forth on the cover page and part to
certain dealers at a price that represents a concession not in excess of .175%
of the principal amount of the 2001 Notes and .200% of the principal amount of
the 2002 Notes. Any Underwriter may allow, and any such dealer may reallow, a
concession not in excess of .100% of the principal amount of the 2001 Notes and
.100% of the principal amount of the 2002 Notes to certain other dealers. After
the initial offering of the Notes, the Underwriters may, from time to time, vary
the offering price and other selling terms.
The Notes are offered for sale in the United States, Europe and Asia.
Each of the Underwriters has agreed that it will not offer, sell or deliver
any of the Notes, directly or indirectly, or distribute this Prospectus
Supplement or the accompanying Prospectus or any other offering material
relating to the Notes, in or from any jurisdiction except under circumstances
that will to the best knowledge and belief of such Underwriter result in
compliance with the applicable laws and regulations thereof and which will not
impose any obligations on Ford Credit except as set forth in the Underwriting
Agreement and the Pricing Agreement.
S-25
<PAGE> 26
Each of the Underwriters has agreed that it has not offered or sold, and it
will not offer or sell, directly or indirectly, any of the Notes in or to
residents of Japan or to any persons for reoffering or resale, directly or
indirectly, in Japan or to any resident of Japan except pursuant to an exemption
from the registration requirements of the Securities and Exchange Law available
thereunder and in compliance with the other relevant laws of Japan.
Each Underwriter has represented and agreed that (a) it has not offered or
sold, and, prior to the expiration of the period of six months from the closing
date for the issue of the Notes, will not offer or sell any Notes to persons in
the United Kingdom, except to those persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as principal
or agent) for the purpose of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations
1995, (b) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986, with respect to anything done by it in relation to
the Notes in, from or otherwise involving the United Kingdom, and (c) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issue of the Notes to a
person who is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1996, as amended, or is a
person to whom the document may otherwise lawfully be issued or passed on.
Purchasers of the Notes may be required to pay stamp taxes and other
charges in accordance with the laws and practices of the country of purchase in
addition to the issue price set forth on the cover page hereof.
Ford Credit has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute payments which the Underwriters may be required to make in
respect of such liabilities.
In connection with the offering of the Notes, the Underwriters may engage
in transactions that stabilize, maintain or otherwise affect the prices of the
Notes. Specifically, the Underwriters may overallot in connection with the
offering of the 2001 Notes and/or the 2002 Notes, creating a short position in
either or both series of Notes for their own account. In addition, the
Underwriters may bid for, and purchase, Notes in the open market to cover short
positions or to stabilize the price of either or both series of Notes. Finally,
the Underwriters may reclaim selling concessions allowed for distributing the
Notes in the offering, if the Underwriters repurchase previously distributed
Notes in transactions to cover short positions, in stabilization transactions or
otherwise. Any of these activities may stabilize or maintain the market prices
of either or both series of Notes above independent market levels. The
Underwriters are not required to engage in any of these activities and may end
any of these activities at any time.
Ford Credit estimates that it will spend approximately $200,000 for
printing, registration fees, rating agency and other expenses related to this
offering. The Underwriters have agreed to reimburse Ford Credit for certain
expenses incurred by Ford Credit in connection with the offering of the Notes.
It is expected that delivery of the Notes will be made against payment
therefor on or about October 26, 1998, which is the sixth business day following
the date hereof (such settlement cycle being herein referred to as "T+6").
Purchasers of Notes should note that the ability to settle secondary market
trades of the Notes effected on the date of pricing and the next succeeding
business day may be affected by the T+6 settlement.
In the ordinary course of their respective businesses, the Underwriters and
their affiliates have engaged, and may in the future engage, in commercial
banking and/or investment banking transactions with Ford Credit and its
affiliates.
S-26
<PAGE> 27
GENERAL INFORMATION
Application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Certificate of
Incorporation and the By-Laws of Ford Credit and a legal notice relating to the
issuance of the Notes have been deposited prior to listing with Greffier en Chef
du Tribunal d'Arrondissement de et a Luxembourg, where copies thereof may be
obtained upon request. Copies of the above documents together with this
Prospectus Supplement, the accompanying Prospectus, the Indenture and Ford
Credit's current Annual and Quarterly Reports, as well as all future Annual
Reports and Quarterly Reports, so long as any of the Notes are outstanding, will
be made available for inspection at the main office of Banque Internationale a
Luxembourg S.A. in Luxembourg. Banque Internationale a Luxembourg S.A. will act
as intermediary between the Luxembourg Stock Exchange and Ford Credit and the
holders of the Notes. In addition, copies of the Annual Reports and Quarterly
Reports of Ford Credit may be obtained free of charge at such office.
Other than as disclosed or contemplated herein or in the documents
incorporated herein by reference, there has been no material adverse change in
the financial position of Ford Credit since September 30, 1998.
Neither Ford Credit nor any of its subsidiaries is involved in litigation,
arbitration, or administrative proceedings relating to claims or amounts that
are material in the context of the issue of the Notes and Ford Credit is not
aware of any such litigation, arbitration, or administrative proceedings pending
or threatened.
Ford Credit accepts responsibility for the information contained in this
Prospectus Supplement and accompanying Prospectus.
Resolutions relating to the issue and sale of the Notes were adopted by the
Board of Directors of Ford Credit on March 14, 1997.
The 2001 Notes have been assigned Euroclear and Cedel Common Code No.
9182594, International Security Identification Number (ISIN) US345397SD62 and
CUSIP No. 345397SD6.
The 2002 Notes have been assigned Euroclear and Cedel Common Code No.
9186743, International Security Identification Number (ISIN) US345397SE46 and
CUSIP No. 345397SE4.
------------------------
S-27
<PAGE> 28
FORD MOTOR CREDIT COMPANY
DEBT SECURITIES
Ford Credit, in May 1998 and December 1997, respectively, registered with
the Securities and Exchange Commission $10,000,000,000 and $5,000,000,000
aggregate principal amount of its Debt Securities consisting of notes and/or
debentures denominated in United States dollars or any other currency or
currencies, to be offered from time to time in one or more series, on terms to
be determined at or prior to the time of sale. In addition to the
$10,000,000,000 principal amount of Debt Securities registered in May 1998
pursuant to the Registration Statement of which this Prospectus is a part, the
principal amount of Debt Securities covered by this Prospectus includes
$400,000,000 principal amount of Debt Securities registered in December 1997.
The Prospectus Supplement accompanying this Prospectus sets forth, with respect
to the particular series of Debt Securities for which this Prospectus and the
Prospectus Supplement are being delivered, the specific title, the aggregate
principal amount, the authorized denominations, the currencies of issue and
payment, the initial public offering price, the maturity, the interest rate or
rates (which may be either fixed or variable), if any and/or method of
determination thereof, the time of payment of any interest, any redemption,
extension or early repayment terms, any provision for sinking fund payments, the
net proceeds to Ford Credit, the form of Debt Securities and other specific
terms relating to such series of Debt Securities.
Ford Credit may sell the Debt Securities to or through underwriters, and
also may sell the Debt Securities directly to other purchasers or through
agents. See "Plan of Distribution". In addition, the Debt Securities may be sold
to dealers at the applicable price to the public set forth in the Prospectus
Supplement relating to a particular series of Debt Securities who later resell
to investors. Such dealers may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"). If any agents
of Ford Credit, or any underwriters, are involved in the sale of any Debt
Securities, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in the accompanying Prospectus
Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COM-
MISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPEC-
TUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June 1, 1998.
<PAGE> 29
AVAILABLE INFORMATION
FORD MOTOR CREDIT COMPANY ("FORD CREDIT") AND FORD MOTOR COMPANY ARE
SUBJECT TO THE INFORMATIONAL REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934
AND IN ACCORDANCE THEREWITH FILE REPORTS AND OTHER INFORMATION WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"). AS USED HEREIN OR IN THE
PROSPECTUS SUPPLEMENT, "FORD" REFERS TO FORD MOTOR COMPANY AND ITS SUBSIDIARIES
UNLESS THE CONTEXT OTHERWISE REQUIRES. SUCH REPORTS AND OTHER INFORMATION CAN BE
INSPECTED AND COPIED AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE
COMMISSION AT 450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549 AND AT THE
FOLLOWING REGIONAL OFFICES OF THE COMMISSION: 7 WORLD TRADE CENTER, 13TH FLOOR,
NEW YORK, NEW YORK 10048 AND CITICORP CENTER, 500 WEST MADISON STREET, SUITE
1400, CHICAGO, ILLINOIS 60661. COPIES OF SUCH MATERIAL CAN BE OBTAINED FROM THE
PUBLIC REFERENCE SECTION OF THE COMMISSION AT 450 FIFTH STREET, N.W.,
WASHINGTON, D.C. 20549 AT PRESCRIBED RATES. THE COMMISSION MAINTAINS A WEB SITE
THAT CONTAINS REPORTS, PROXY AND INFORMATION STATEMENTS AND OTHER INFORMATION
REGARDING FORD AND FORD CREDIT (HTTP://WWW.SEC.GOV). SUCH REPORTS AND OTHER
INFORMATION CONCERNING FORD CREDIT AND FORD CAN ALSO BE INSPECTED AT THE OFFICES
OF THE NEW YORK STOCK EXCHANGE, INC., 20 BROAD STREET, NEW YORK, NEW YORK 10005,
AND, WITH RESPECT TO FORD CREDIT, ALSO AT THE OFFICES OF THE AMERICAN STOCK
EXCHANGE, INC., 86 TRINITY PLACE, NEW YORK, NEW YORK 10006, ON WHICH CERTAIN OF
FORD CREDIT'S DEBT SECURITIES ARE LISTED.
Ford Credit has filed with the Commission a Registration Statement under
the Securities Act with respect to the Debt Securities offered hereby. This
Prospectus, the Prospectus Supplement and any Pricing Supplement do not contain
all the information set forth in the Registration Statement and the exhibits and
schedules thereto, certain portions of which have been omitted pursuant to the
rules and regulations of the Commission. The information so omitted may be
obtained from the Commission's principal office in Washington, D.C. upon payment
of the fees prescribed by the Commission.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Ford Credit's Annual Report on Form 10-K for the year ended December 31,
1997 (the "1997 10-K Report"), Ford Credit's Quarterly Report on Form 10-Q for
the period ended March 31, 1998 (the "First Quarter 10-Q Report") and Ford
Credit's Current Reports on Form 8-K dated January 12, 1998, February 3, 1998
(the "February 8-K Report"), February 11, 1998, March 30, 1998, April 16, 1998
and April 27, 1998 are incorporated in this Prospectus by reference. All
documents filed by Ford Credit pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 after the date of this Prospectus and prior
to the termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing such documents. Such reports include, and such documents may
include, information concerning Ford, as well as Ford Credit.
2
<PAGE> 30
INFORMATION CONCERNING FORD CREDIT
Ford Credit was incorporated in Delaware in 1959 and is an indirect
wholly-owned subsidiary of Ford. As used herein "Ford Credit" refers to Ford
Motor Credit Company and its subsidiaries unless the context otherwise requires.
Ford Credit and its subsidiaries provide wholesale financing and capital
loans to Ford Motor Company retail dealerships and associated non-Ford
dealerships throughout the world, most of which are privately owned and
financed, and purchase retail installment sale contracts and retail leases from
them. Ford Credit also makes loans to vehicle leasing companies, the majority of
which are affiliated with such dealerships. In addition, subsidiaries of Ford
Credit provide these financing services in the United States, Europe, Canada and
Australia to non-Ford dealerships. A substantial majority of all new vehicles
financed by Ford Credit are manufactured by Ford and its affiliates. Ford Credit
also provides retail financing for used vehicles built by Ford and other
manufacturers. In addition to vehicle financing, Ford Credit makes loans to
affiliates of Ford and finances certain receivables of Ford and its
subsidiaries.
Ford Credit also conducts insurance operations through The American Road
Insurance Company ("American Road") and its subsidiaries in the United States
and Canada. American Road's business consists of extended service plan contracts
for new and used vehicles manufactured by affiliated and nonaffiliated
companies, primarily originating from Ford dealers, physical damage insurance
covering vehicles and equipment financed at wholesale by Ford Credit, and the
reinsurance of credit life and credit disability insurance for retail purchasers
of vehicles and equipment.
The mailing address of Ford Credit's executive offices is The American
Road, Dearborn, Michigan 48121, United States of America. The telephone number
of such offices is (313) 322-3000.
------------------------
INFORMATION CONCERNING FORD
Ford was incorporated in Delaware in 1919 and acquired the business of a
Michigan company, also known as Ford Motor Company, incorporated in 1903 to
produce automobiles designed and engineered by Henry Ford. Ford is the world's
largest producer of trucks and the second largest producer of cars and trucks
combined. Ford and its subsidiaries also engage in automotive-related
businesses, such as, financing and renting vehicles and manufacturing automotive
components and systems.
Ford's two principal business segments are Automotive and Financial
Services. The activities of the Automotive segment consist of the design,
manufacture, assembly and sale of cars and trucks and related parts and
accessories. Substantially all of Ford's automotive products are marketed
through retail dealerships, most of which are privately owned and financed.
The primary activities of the Financial Services segment consist of
financing operations, vehicle and equipment leasing and rental operations, and
insurance operations. These activities primarily are conducted through Ford's
subsidiaries, Ford Credit and The Hertz Corporation.
------------------------
THIS PROSPECTUS CONTAINS BRIEF SUMMARIES OF CERTAIN MORE DETAILED
INFORMATION CONTAINED IN DOCUMENTS INCORPORATED HEREIN BY REFERENCE. SUCH
SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY THE DETAILED INFORMATION CONTAINED
IN THE INCORPORATED DOCUMENTS.
------------------------
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<PAGE> 31
USE OF PROCEEDS
Except as otherwise provided in the Prospectus Supplement, the net proceeds
from the sale of the Debt Securities will be added to the general funds of Ford
Credit and will be available for the purchase of receivables, for loans and for
use in connection with the retirement of debt. Such proceeds initially may be
used to reduce short-term borrowings (commercial paper, borrowings under bank
lines of credit and borrowings under agreements with bank trust departments) or
may be invested temporarily in short-term securities.
Ford Credit expects to issue additional long-term and short-term debt from
time to time. The nature and amount of Ford Credit's long-term and short-term
debt and the proportionate amount of each can be expected to vary from time to
time, as a result of business requirements, market conditions and other factors.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued in one or more series under an
Indenture dated as of February 1, 1985, as supplemented from time to time (the
"Indenture"), between Ford Credit and The Chase Manhattan Bank ("Chase"),
Trustee. The term "Trustee", as used herein, shall mean Chase and, if at any
time there is more than one Trustee acting under the Indenture, the term
"Trustee" as used herein with respect to Indenture Securities (as defined below)
of any particular series shall mean the Trustee with respect to the Indenture
Securities of such series. The following statements with respect to the Debt
Securities are subject to the detailed provisions of the Indenture, the form of
which is filed as an exhibit to the Registration Statement. Parenthetical
references below are to the Indenture or the respective Forms of Security
contained therein and, whenever any particular provision of the Indenture or any
term used therein is referred to, such provision or term is incorporated by
reference as a part of the statement in connection with which such reference is
made, and the statement in connection with which such reference is made is
qualified in its entirety by such reference.
The particular terms of each series of Debt Securities, as well as any
modification or addition to the general terms of the Debt Securities as herein
described, which may be applicable to a particular series of Debt Securities,
are described in the Prospectus Supplement relating to such series of Debt
Securities and will be set forth in a filing with the Commission. Accordingly,
for a description of the terms of a particular series of Debt Securities,
reference must be made to the Prospectus Supplement relating to such series and
to the description of Debt Securities set forth in this Prospectus.
GENERAL
The Debt Securities offered hereby will be limited to $10,400,000,000
aggregate principal amount or the equivalent thereof in any currency, although
the Indenture provides that additional debt securities may be issued thereunder
up to the aggregate principal amount, which is not limited by the Indenture,
authorized from time to time by Ford Credit's Board of Directors. So long as a
single Trustee is acting for the benefit of the holders of all the Debt
Securities offered hereby and any such additional debt securities issued under
the Indenture, the Debt Securities and any such additional debt securities are
herein collectively referred to as the "Indenture Securities". The Indenture
also provides that there may be more than one Trustee under the Indenture, each
with respect to one or more different series of Indenture Securities. See also
"Trustee" herein. At any time when two or more Trustees are acting, each with
respect to only certain series, the term "Indenture Securities" as used herein
shall mean the one or more series with respect to which each respective Trustee
is acting and the powers and trust obligations of each such Trustee as described
herein shall extend only to the one or more series of Indenture Securities for
which it is acting as Trustee. The effect of the provisions contemplating that
there might be more than one Trustee acting for different series of Indenture
Securities is that, in that event, those Indenture Securities (whether
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<PAGE> 32
of one or more than one series) for which each Trustee is acting would be
treated as if issued under a separate indenture.
The Prospectus Supplement which accompanies this Prospectus sets forth a
description of the particular series of Debt Securities being offered thereby,
including: (1) the designation or title of such Debt Securities; (2) the
aggregate principal amount of such Debt Securities; (3) the percentage of their
principal amount at which such Debt Securities will be offered; (4) the date or
dates on which the principal of such Debt Securities will be payable; (5) the
rate or rates (which may be either fixed or variable) and/or the method of
determination of such rate or rates at which such Debt Securities shall bear
interest, if any; (6) the date or dates from which any such interest shall
accrue, or the method of determination of such date or dates, and the date or
dates on which any such interest shall be payable; (7) the terms for redemption,
extension or early repayment of such Debt Securities, if any; (8) the
denominations in which such Debt Securities are authorized to be issued; (9) the
currencies in which such Debt Securities are issued or payable; (10) the
provisions for a sinking fund, if any; (11) any additional restrictive covenants
included for the benefit of the holders of such Debt Securities; (12) any
additional Event of Default with respect to such Debt Securities; (13) whether
such Debt Securities are issuable as a Global Security; and (14) any other term
or provision relating to such Debt Securities which is not inconsistent with the
provisions of the Indenture.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Federal income tax
consequences and special considerations applicable thereto will be described in
the Prospectus Supplement relating to any such Debt Securities.
The Debt Securities will be unsecured obligations of Ford Credit and will
rank prior to all subordinated indebtedness of Ford Motor Credit Company (parent
company only) and pari passu with all other unsecured and unsubordinated
indebtedness of Ford Motor Credit Company (parent company only).
Except as otherwise provided in the Prospectus Supplement, principal,
premium, if any, and interest, if any, will be payable at an office or agency to
be maintained by Ford Credit in New York City, except that at the option of Ford
Credit interest may be paid by check mailed to the person entitled thereto.
(Form of Security and Sections 10.01 and 10.02).
Except as otherwise provided in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form without coupons and may
be presented for registration of transfer or exchange at the corporate trust
office of the Trustee. No service charge will be made for any transfer or
exchange of the Debt Securities, but Ford Credit may require payment of a sum to
cover any tax or other governmental charge payable in connection therewith.
(Section 3.05).
BOOK-ENTRY, DELIVERY AND FORM
Unless otherwise specified in the applicable Prospectus Supplement, each
series of Debt Securities will be issued in the form of one or more fully
registered Global Notes (the "Global Notes") which will be deposited with, or on
behalf of, The Depository Trust Company, New York, New York (the "Depository")
and registered in the name of Cede & Co., the Depository's nominee. Except as
set forth below, the Global Notes may be transferred, in whole and not in part,
only to another nominee of the Depository or to a successor of the Depository or
its nominee.
The Depository has advised as follows: It is a limited-purpose trust
company which holds securities for its participating organizations (the
"Participants") and facilitates the settlement among Participants of securities
transactions in such securities through electronic book-entry changes in its
Participants' accounts. Participants include securities brokers and dealers
(including certain of the underwriters or agents), banks and trust companies,
clearing corporations and certain other organizations. Access to the
Depository's system is also available to others such as banks,
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<PAGE> 33
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("indirect
participants"). Persons who are not Participants may beneficially own securities
held by the Depository only through Participants or indirect participants.
The Depository advises that its established procedures provide that (i)
upon issuance of the Debt Securities by Ford Credit the Depository will credit
the accounts of Participants designated by the underwriters or agents with the
principal amounts of the Debt Securities purchased by the underwriters or
through the agents, and (ii) ownership of interests in the Global Notes will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depository, the Participants and the indirect
participants. The laws of some states may require that certain persons take
physical delivery in definitive form of securities which they own. Consequently,
the ability to transfer beneficial interests in the Global Notes is limited to
such extent.
So long as a nominee of the Depository is the registered owner of the
Global Notes, such nominee for all purposes will be considered the sole owner or
holder of such Debt Securities under the Indenture. Except as provided below or
in the Prospectus Supplement, owners of beneficial interests in the Global Notes
will not be entitled to have Debt Securities registered in their names, will not
receive or be entitled to receive physical delivery of Debt Securities in
definitive form, and will not be considered the owners or holders thereof under
the Indenture.
Neither Ford Credit, the Trustee, any Paying Agent nor the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Notes, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Principal and interest payments on the Debt Securities registered in the
name of the Depository's nominee will be made by the Trustee to the Depository.
Under the terms of the Indenture, Ford Credit and the Trustee will treat the
persons in whose names the Debt Securities are registered as the owners of such
Debt Securities for the purpose of receiving payment of principal and interest
on the Debt Securities and for all other purposes whatsoever. Therefore, neither
Ford Credit, the Trustee nor any Paying Agent has any direct responsibility or
liability for the payment of principal or interest on the Debt Securities to
owners of beneficial interests in the Global Notes. The Depository has advised
Ford Credit and the Trustee that its present practice is to credit the accounts
of the Participants on the appropriate payment date in accordance with their
respective holdings in principal amount of beneficial interests in the Global
Notes as shown on the records of the Depository, unless the Depository has
reason to believe that it will not receive payment on such payment date.
Payments by Participants and indirect participants to owners of beneficial
interests in the Global Notes will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of the Participants or indirect participants.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by Ford Credit within 90
days, Ford Credit will issue Debt Securities in definitive form in exchange for
the Global Notes. In addition, Ford Credit may at any time determine not to have
a series of Debt Securities represented by Global Notes and, in such event, will
issue Debt Securities of such series in definitive form in exchange for the
Global Notes. In either instance, an owner of a beneficial interest in the
Global Notes will be entitled to have Debt Securities of such series equal in
principal amount to such beneficial interest registered in its name and will be
entitled to physical delivery of such Debt Securities in definitive form. Unless
otherwise specified in the Prospectus Supplement, Debt Securities so issued in
definitive form will be issued in denominations of $1,000 and integral multiples
thereof and will be issued in registered form only, without coupons.
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SUBSIDIARIES
The term "subsidiary of the Company" is defined in the Indenture as a
corporation a majority of the outstanding voting stock of which is owned,
directly or indirectly, by Ford Credit or by one or more subsidiaries of Ford
Credit, or by Ford Credit and one or more subsidiaries of Ford Credit. The term
"Restricted Subsidiary" is defined in the Indenture as a subsidiary of the
Company, incorporated in or conducting the major part of its business in the
United States, any of the activities of which includes insurance underwriting or
which had, at the end of its last quarterly accounting period preceding the date
of computation, assets with a value in excess of $1 million representing
accounts or notes receivable resulting from the financing of new cars, trucks,
tractors and farm and industrial equipment manufactured or sold by Ford or from
the financing of used cars, trucks, tractors and farm and industrial equipment
of the same types, whether manufactured by Ford or others. (Section 1.01).
LIMITATION ON LIENS
If Ford Credit or any Restricted Subsidiary shall pledge or otherwise
subject to any lien (such a pledge or lien is defined in the Indenture as a
"Mortgage") any of its property or assets, Ford Credit will secure or cause such
Restricted Subsidiary to secure the Indenture Securities equally and ratably
with (or prior to) the indebtedness secured by such Mortgage. This restriction
does not apply to Mortgages securing such indebtedness which shall not exceed $5
million in the aggregate at any one time outstanding and does not apply to (a)
certain Mortgages created or incurred to secure financing of the export or
marketing of goods outside the United States, (b) Mortgages on accounts
receivable payable in foreign currencies securing indebtedness incurred and
payable outside the United States, (c) Mortgages in favor of Ford Credit or any
Restricted Subsidiary, (d) Mortgages in favor of governmental bodies to secure
progress, advance or other payments, or deposits with any governmental body
required in connection with the business of Ford Credit or a Restricted
Subsidiary, (e) deposits made in connection with pending litigation, (f)
Mortgages existing at the time of acquisition of the assets secured thereby
(including acquisition through merger or consolidation) and certain purchase
money Mortgages, and (g) any extension, renewal or replacement of any Mortgage
or Mortgages referred to in the foregoing clauses (a) through (f), inclusive.
(Section 10.04).
MERGER AND CONSOLIDATION
The Indenture provides that no consolidation or merger of Ford Credit with
or into any other corporation shall be permitted, and no sale or conveyance of
its property as an entirety, or substantially as an entirety, may be made to
another corporation, if, as a result thereof, any asset of Ford Credit or a
Restricted Subsidiary would become subject to a Mortgage, unless the Indenture
Securities shall be equally and ratably secured with (or prior to) the
indebtedness secured by such Mortgage, or unless such Mortgage could be created
pursuant to Section 10.04 (see "Limitation on Liens" above) without equally and
ratably securing the Indenture Securities. (Section 8.03).
EVENTS OF DEFAULT AND NOTICE THEREOF
Except as may otherwise be provided in an indenture supplemental to the
Indenture, the following events in respect of a particular series of Indenture
Securities are defined in the Indenture as "Events of Default": (a) failure to
pay interest for 30 days after becoming due; (b) failure to pay the principal or
premium, if any, for five business days after becoming due at maturity, on
redemption or otherwise; (c) failure to make a sinking fund payment for five
days after becoming due; (d) failure to perform any other covenants for 90 days
after notice; and (e) certain events of bankruptcy, insolvency or
reorganization. (Section 5.01).
If an Event of Default in respect of a particular series of Indenture
Securities outstanding occurs and is continuing, either the Trustee or the
holders of at least 25% in aggregate principal amount of
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the Indenture Securities outstanding of such series may declare the principal
amount (or, if the Indenture Securities of such series are Original Issue
Discount Securities (as defined in the indenture), such portion of the principal
amount as may be specified in the terms of such series) of all of the Indenture
Securities of such series to be due and payable immediately. At any time after
such a declaration of acceleration in respect of a particular series of
Indenture Securities has been made, but before a judgment or decree for the
payment of money due upon acceleration has been obtained by the Trustee, the
holders of a majority in aggregate principal amount of the Indenture Securities
outstanding of such series may, under certain circumstances, waive all defaults
and rescind and annul such declaration and its consequences if all Events of
Default in respect of the Indenture Securities of such series, other than the
non-payment of principal due solely by such declaration of acceleration, have
been cured or waived as provided in the Indenture. (Section 5.02).
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default in respect of a particular series of Indenture
Securities, give the holders of such series notice of all uncured defaults known
to it (the term "default" to include the events specified above without grace
periods); provided that, except in the case of default in the payment of the
principal of, or premium, if any, on, or interest on any of the Indenture
Securities of such series, the Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interests of the holders of such series. (Section 6.01).
Pursuant to the terms of the Indenture, Ford Credit is required to furnish
to the Trustee annually a statement of certain officers of Ford Credit stating
whether or not to the best of their knowledge Ford Credit is in default in
respect of any series of Indenture Securities in the performance and observance
of the terms of the Indenture and, if Ford Credit is in default, specifying such
default and the nature thereof. (Section 10.05).
The Indenture provides that the holders of a majority in aggregate
principal amount of all Indenture Securities of a particular series then
outstanding will have the right to waive certain defaults in respect of such
series and, subject to certain limitations, to direct the time, method and place
of conducting any proceedings for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. (Sections 5.12 and
5.13).
MODIFICATION OF THE INDENTURE
With certain exceptions, the Indenture, the rights and obligations of Ford
Credit and the rights of the holders of a particular series may be modified by
Ford Credit with the consent of the holders of not less than 66 2/3% in
aggregate principal amount of the Indenture Securities of such series then
outstanding; but no such modification may be made which would (i) extend the
fixed maturity of any Indenture Security of such series, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon, without the consent of the holder of each Indenture Security of such
series so affected; or (ii) reduce the above-stated percentage of Indenture
Securities of such series, the consent of the holders of which is required to
modify or alter the Indenture, without the consent of the holders of all
Indenture Securities of such series then outstanding. (Section 9.02).
TRUSTEE
The Trustee may resign or be removed with respect to one or more series of
Indenture Securities and a successor Trustee may be appointed to act with
respect to such one or more series. (Section 6.08). In the event that there
shall be two or more persons acting as Trustee with respect to different series
of Indenture Securities, each such Trustee shall be a trustee of a trust or
trusts under the Indenture separate and apart from the trust or trusts
administered by any other such Trustee, and any action described herein to be
taken by the "Trustee" may then be taken by each such Trustee with respect to,
and only with respect to, the one or more series of Indenture Securities for
which it is acting as Trustee. (Section 6.09).
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CONCERNING CHASE
The Chase Manhattan Bank, Trustee under the Indenture, is also the trustee
under indentures covering a number of outstanding issues of notes and debentures
of Ford Credit, is a depositary of Ford Credit and Ford, has from time to time
made loans to Ford Credit, Ford and its subsidiaries and has performed other
services for such companies in the normal course of its business.
PLAN OF DISTRIBUTION
Ford Credit may sell the Debt Securities to or through underwriters, and
also may sell the Debt Securities directly to one or more other purchasers or
through agents.
The Prospectus Supplement sets forth the terms of the offering of the
particular series of Debt Securities to which such Prospectus Supplement
relates, including (i) the name or names of any underwriters or agents with whom
Ford Credit has entered into arrangements with respect to the sale of such
series of Debt Securities, (ii) the initial public offering or purchase price of
such series of Debt Securities, (iii) any underwriting discounts, commissions
and other items constituting underwriters' compensation from Ford Credit and any
other discounts, concessions or commissions allowed or reallowed or paid by any
underwriters to other dealers, (iv) any commissions paid to any agents, (v) the
net proceeds to Ford Credit, and (vi) the securities exchanges, if any, on which
such series of Debt Securities will be listed.
Unless otherwise set forth in the Prospectus Supplement relating to a
particular series of Debt Securities, the obligations of the underwriters to
purchase such series of Debt Securities will be subject to certain conditions
precedent and each of the underwriters with respect to such series of Debt
Securities will be obligated to purchase all of the Debt Securities of such
series allocated to it if any such Debt Securities are purchased. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The Debt Securities may be offered and sold by Ford Credit directly or
through agents designated by Ford Credit from time to time. Unless otherwise
indicated in the Prospectus Supplement, any such agent or agents will be acting
on a best efforts basis for the period of its or their appointment. Any agent
participating in the distribution of the Debt Securities may be deemed to be an
"underwriter", as that term is defined in the Securities Act, of the Debt
Securities so offered and sold. The Debt Securities also may be sold to dealers
at the applicable price to the public set forth in the Prospectus Supplement
relating to a particular series of Debt Securities who later resell to
investors. Such dealers may be deemed to be "underwriters" within the meaning of
the Securities Act.
If so indicated in the Prospectus Supplement relating to a particular
series of Debt Securities, Ford Credit will authorize underwriters or agents to
solicit offers by certain institutions to purchase Debt Securities of such
series from Ford Credit pursuant to delayed delivery contracts providing for
payment and delivery at a future date. Such contracts will be subject only to
those conditions set forth in the Prospectus Supplement and the Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts.
Underwriters and agents may be entitled, under agreements entered into with
Ford Credit, to indemnification by Ford Credit against certain civil
liabilities, including liabilities under the Securities Act.
LEGAL OPINIONS
The legality of the Debt Securities offered hereby will be passed on for
Ford Credit by H. D. Smith, Esq., Secretary and Corporate Counsel of Ford
Credit, or other counsel satisfactory to any underwriters or agents, and for any
underwriters or agents by Shearman & Sterling, 599 Lexington Avenue, New York,
N.Y. Mr. Smith is a full-time employee of Ford Credit and owns
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and holds options to purchase shares of Common Stock of Ford. Shearman &
Sterling have in the past provided, and may continue to provide, legal services
to Ford and its subsidiaries, including Ford Credit.
EXPERTS
The consolidated financial statements which are incorporated in this
Prospectus by reference to the 1997 10-K Report and the February 8-K Report have
been audited by Coopers & Lybrand L.L.P., 400 Renaissance Center, Detroit,
Michigan 48243, independent certified public accountants, to the extent
indicated in their reports therein, and have been so incorporated in reliance
upon the report of that firm, given on their authority as experts in accounting
and auditing.
With respect to the unaudited interim financial information of Ford Credit
for the periods ended March 31, 1998 and 1997, included in the First Quarter
10-Q Report, incorporated by reference in this Prospectus, Coopers & Lybrand
have reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their report
included in the First Quarter 10-Q Report states that they did not audit and
they do not express an opinion on that interim financial information. The
accountants are not subject to the liability provisions of Section 11 of the
Securities Act for their report on the unaudited interim financial information
because such report is not a "report" or a "part" of the registration statement
prepared or certified by the accountants within the meaning of Sections 7 and 11
of such Act.
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PRINCIPAL OFFICES OF
FORD MOTOR CREDIT COMPANY
The American Road
Dearborn, Michigan 48121
TRUSTEE
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
LUXEMBOURG STOCK EXCHANGE LISTING AGENT
Banque Internationale a Luxembourg S.A.
69 route d'Esch
L-1470 Luxembourg
LEGAL ADVISERS
<TABLE>
<S> <C>
To Ford Motor Credit Company as to Special United States Tax Counsel to
United States Law Ford Motor Credit Company
H.D. SMITH SULLIVAN & CROMWELL
Secretary and Corporate Counsel 125 Broad Street
Ford Motor Credit Company New York, New York 10004
The American Road
Dearborn, Michigan 48121
To the Underwriters
as to United States Law
SHEARMAN & STERLING
599 Lexington Avenue
New York, New York 10022
</TABLE>
AUDITORS TO
FORD MOTOR
CREDIT COMPANY
PRICEWATERHOUSECOOPERS LLP
400 Renaissance Center
Detroit, Michigan 48243
