<PAGE> 1
Pursuant to Rule 424b5
Registration No. 333-50611
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JUNE 1, 1998
[FORD LOGO]
$2,000,000,000
FORD MOTOR CREDIT COMPANY
5 3/4% Notes due February 23, 2004
The Notes will mature on February 23, 2004. Interest on the Notes will
accrue from February 23, 1999. The 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>
PER NOTE TOTAL
-------- -----
<S> <C> <C>
Initial public offering price........................... 99.974% $1,999,480,000
Underwriting discounts and commissions.................. 0.325% $ 6,500,000
Proceeds, before expenses, to Ford Credit............... 99.649% $1,992,980,000
</TABLE>
------------------
The initial public offering price set forth above does not include accrued
interest. Interest on the Notes will accrue from February 23, 1999 and must be
paid by the purchaser if the Notes are delivered to the Underwriters after
February 23, 1999.
The Notes are being offered for sale in the United States, Europe and Asia.
Ford Credit has applied to have the Notes listed and traded in accordance with
the rules of the Luxembourg Stock Exchange.
Ford Credit expects that delivery of the Notes will be made to investors on
or about February 23, 1999.
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JOINT BOOK MANAGERS
BEAR, STEARNS & CO. INC. MORGAN STANLEY DEAN WITTER
DEUTSCHE BANK DRESDNER KLEINWORT BENSON
GOLDMAN, SACHS & CO. LEHMAN BROTHERS
PARIBAS SALOMON SMITH BARNEY
WARBURG DILLON READ LLC
Prospectus Supplement dated February 18, 1999.
<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-17
Selected Financial Data and Other Data...................... S-19
Financial Review............................................ S-20
Industry Data and Market Share.............................. S-22
Ratio of Earnings to Fixed Charges.......................... S-22
Underwriting................................................ S-23
General Information......................................... S-24
PROSPECTUS
Available Information....................................... 2
Incorporation of Certain Documents by Reference............. 2
Information Concerning Ford Credit.......................... 3
Information Concerning Ford................................. 3
Use of Proceeds............................................. 4
Description of Debt Securities.............................. 4
Plan of Distribution........................................ 9
Legal Opinions.............................................. 9
Experts..................................................... 10
</TABLE>
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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
Ford Motor Credit Company ("Ford Credit") files annual, quarterly and
special reports and other information with the Securities and Exchange
Commission (the "SEC"). You may read and copy any document Ford Credit files 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. Ford Credit's SEC filings are also available to
the public from the SEC's web site at http://www.sec.gov.
The SEC allows Ford Credit to "incorporate by reference" the information
Ford Credit files with it, which means that Ford Credit can disclose important
information to you by referring you to those documents that are considered part
of this Prospectus Supplement. Later information that Ford Credit files with the
SEC will automatically update and supersede this information. Ford Credit
incorporates 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 the 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 1998 8-K Report"), February 11, 1998, March 30, 1998, April 16,
1998, April 27, 1998, June 15, 1998, August 26, 1998, October 23, 1998,
January 11, 1999 and February 2, 1999 (the "February 1999 8-K Report").
These reports include information about Ford Motor Company ("Ford"), as
well as information about Ford Credit.
You may request a copy of these filings at no cost, by writing or
telephoning Ford Credit 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, the
February 1998 8-K Report and the February 1999 8-K Report have been audited by
PricewaterhouseCoopers LLP ("PWC") or its predecessor, 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
those firms, given on their authority as experts in accounting and auditing.
Each of PWC and Coopers & Lybrand 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 the February 1998 8-K Report on Ford Credit's audited
financial statements for the financial year ended December 31, 1997 and their
report dated January 20, 1999 from the February 1999 8-K Report on Ford Credit's
audited financial statements for the financial year ended December 31, 1998.
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
T.D. Chenault,
Director and
Executive 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
P.F. Nussbaum
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
A.J. Wagner,
Vice President
J.M. Walsh,
Vice President
G.E. Watts,
Vice President
All of the above-named persons are full-time employees of Ford or Ford Credit.
USE OF PROCEEDS
Ford Credit will add the net proceeds from the sale of the Notes to its
general funds. The proceeds will be used to purchase receivables, make loans and
pay maturing debt. Initially the proceeds may be used to reduce short-term
borrowings, or Ford Credit may temporarily invest them in short-term securities.
Net proceeds to be paid to Ford Credit will be U.S. $1,992,980,000.
S-4
<PAGE> 5
CAPITALIZATION OF FORD MOTOR CREDIT COMPANY
AND SUBSIDIARIES
The capitalization of Ford Credit and its subsidiaries at December 31, 1998
and as adjusted for the Notes offered hereby is as follows (in millions of U.S.
dollars):
<TABLE>
<CAPTION>
OUTSTANDING LONG-TERM
DECEMBER 31, INDEBTEDNESS
1998 AS ADJUSTED
------------ ------------
<S> <C> <C>
SENIOR INDEBTEDNESS, UNSECURED
Short-term
Commercial paper.................................. $ 46,188.2
Other short-term debt............................. 7,445.0
----------
Total short-term debt........................ 53,633.2
Long-term debt payable within one year................. 9,689.2
Long-term notes and debentures......................... 51,644.9
Notes offered hereby................................... -- $ 2,000
----------
Total debt................................... 114,967.3
----------
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)......... 4,343.4
Note receivable from affiliated company................ (1,517.0)
Accumulated other comprehensive income/(loss).......... (118.1)
Retained earnings...................................... 7,911.4
----------
Total stockholder's equity................... 10,644.7
----------
TOTAL CAPITALIZATION........................................ $125,612.0
==========
</TABLE>
Except as set forth herein, there has been no material change in the
capitalization of Ford Credit from December 31, 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 $5,551,000,000 have already been sold.
GENERAL
The Notes will initially be limited to a total principal amount of
$2,000,000,000, will be unsecured senior debt of Ford Credit and will mature on
February 23, 2004.
The Notes will bear interest from February 23, 1999 at the rate per annum
shown on the cover of this Prospectus Supplement. Interest will be payable on
February 23 and August 23 of each year (each an "Interest Payment Date"),
beginning on August 23, 1999. Ford Credit will arrange payment to the person in
whose name each Note is registered at the close of business on the 15th day
preceding (but not including) 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 Notes, issue
additional notes having the same ranking and the same interest rate, maturity
and other terms as the Notes. Any additional notes, together with the Notes,
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
Notes.
BOOK-ENTRY, DELIVERY AND FORM
The 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 (the
"DTC Participants"). Investors may elect to hold their interests in the Global
Notes through either the Depository (in the United States) or (in Europe)
through Cedelbank ("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 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, as a whole but not in
part, only to another nominee of the Depository or to a successor of the
Depository or its nominee.
Cedel advises that it is incorporated under the laws of Luxembourg as a
professional depositary. Cedel holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Cedel provides to
Cedel Participants, among other
S-6
<PAGE> 7
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 Notes held beneficially through Cedel will be
credited to cash accounts of Cedel Participants in accordance with its rules and
procedures, to the extent received by the U.S. Depositary for Cedel.
Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euro-clear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the Underwriters.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear Participants in accordance
with the Terms and Conditions, to the extent received by the U.S. Depositary for
Euroclear. In the event definitive Notes are issued, Ford Credit will appoint a
paying agent and transfer agent in Luxembourg.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Initial settlement for the Notes will be made in immediately available
funds. Secondary market trading between DTC Participants will occur in the
ordinary way in accordance with Depository rules and will be settled in
immediately available funds using the Depository's Same-Day Funds Settlement
System. Secondary market trading between Cedel Participants and/or Euroclear
Participants will occur in the ordinary way in accordance with the applicable
rules and operating
S-7
<PAGE> 8
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 the Notes, such additional amounts as are
necessary in order that the net payment by Ford Credit or a paying agent of the
principal of and interest on the Notes to a holder who is a non-United States
person (as defined below), after deduction for any present or future tax,
assessment or governmental charge of the United States or a political
subdivision or taxing authority thereof or therein, imposed by withholding with
respect to the payment, will not be less than the amount provided in the Notes
to be then due and payable; provided, however, that the foregoing obligation to
pay additional amounts shall not apply:
(1) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the holder, or a fiduciary, settlor,
beneficiary, member or shareholder of the holder if the holder is an
estate, trust, partnership or corporation, or a person holding a power over
an estate or trust administered by a fiduciary holder, being considered as:
(a) being or having been present or engaged in trade or business in
the United States or having or having had a permanent establishment in
the United States;
(b) having a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;
(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled foreign
corporation with respect to the United States or a corporation that has
accumulated earnings to avoid United States federal income tax; or
S-8
<PAGE> 9
(d) being or having been a "10-percent shareholder" of Ford Credit
as defined in section 871(h)(3) of the United States Internal Revenue
Code or any successor provision;
(2) to any holder that is not the sole beneficial owner of the Note,
or a portion thereof, or that is a fiduciary or partnership, but only to
the extent that a beneficiary or settlor with respect to the fiduciary, a
beneficial owner or member of the partnership would not have been entitled
to the payment of an additional amount had the beneficiary, settlor,
beneficial owner or member received directly its beneficial or distributive
share of the payment;
(3) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the failure of the holder or any other person
to comply with certification, identification or information reporting
requirements concerning the nationality, residence, identity or connection
with the United States of the holder or beneficial owner of such Note, if
compliance is required by statute, by regulation of the United States
Treasury Department or by an applicable income tax treaty to which the
United States is a party as a precondition to exemption from such tax,
assessment or other governmental charge;
(4) to a tax, assessment or governmental charge that is imposed
otherwise than by withholding by Ford Credit or a paying agent from the
payment;
(5) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of a change in law, regulation, or administrative
or judicial interpretation that becomes effective more than 15 days after
the payment becomes due or is duly provided for, whichever occurs later;
(6) to an estate, inheritance, gift, sales, excise, transfer, wealth
or personal property tax or a similar tax, assessment or governmental
charge;
(7) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of or interest
on any Note, if such payment can be made without such withholding by any
other paying agent; or
(8) in the case of any combination of items (1), (2), (3), (4), (5),
(6) and (7).
The Notes are subject in all cases to any tax, fiscal or other law or regulation
or administrative or judicial interpretation applicable thereto. Except as
specifically provided under this heading "Payment of Additional Amounts" and
under the heading "Description of Notes -- Redemption", Ford Credit shall not be
required to make any payment with respect to any tax, assessment or governmental
charge imposed by any government or a political subdivision or taxing authority
thereof or therein.
As used under this heading "Payment of Additional Amounts" and under the
headings "Description of Notes -- Redemption", "Certain United States Tax
Documentation Requirements" and "United States Taxation of Non-United States
Persons" the term "United States" means the United States of America (including
the States and the District of Columbia) and its territories, its possessions
and other areas subject to its jurisdiction, "United States person" means any
individual who is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any estate or trust the income of which is subject to United
States federal income taxation regardless of its source and "non-United States
person" means a person who is not a United States person.
REDEMPTION
If (a) as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein), or any change in,
or amendments to, official position regarding the application or interpretation
of such laws, regulations or rulings, which change or amendment is announced or
becomes effective on or after the date of this Prospectus Supplement, Ford
Credit becomes or will
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<PAGE> 10
become obligated to pay additional amounts as described herein under the heading
"Payment of Additional Amounts" or (b) any act is taken by a taxing authority of
the United States on or after the date of this Prospectus Supplement, whether or
not such act is taken with respect to Ford Credit or any affiliate, that results
in a substantial probability that Ford Credit will or may be required to pay
such additional amounts, then Ford Credit may, at its option, redeem, as a
whole, but not in part, the Notes on not less than 30 nor more than 60 days'
prior notice, at a redemption price equal to 100% of their principal amount,
together with interest accrued thereon to the date fixed for redemption;
provided that Ford Credit determines, in its business judgment, that the
obligation to pay such additional amounts cannot be avoided by the use of
reasonable measures available to it, not including substitution of the obligor
under the Notes. No redemption pursuant to (b) above may be made unless Ford
Credit shall have received an opinion of independent counsel to the effect that
an act taken by a taxing authority of the United States results in a substantial
probability that it will or may be required to pay the additional amounts
described herein under the heading "Payment of Additional Amounts" and Ford
Credit shall have delivered to the Trustee a certificate, signed by a duly
authorized officer, stating that based on such opinion Ford Credit is entitled
to redeem the Notes pursuant to their terms.
NOTICES
Notices to holders of the Notes will be published in Authorized Newspapers
in The City of New York, in London, and, so long as the Notes are listed on the
Luxembourg Stock Exchange, in Luxembourg. 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 corporation or bank with a United States
branch, that conducts a trade or business in the United States with which
interest income on a Note is effectively connected, can obtain an exemption from
the withholding tax by providing a properly completed IRS Form 4224 (Exemption
from Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
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<PAGE> 11
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.
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<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 income 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.
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<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 and is an indirect
wholly-owned subsidiary of Ford. References to Ford Credit in this Prospectus
Supplement include Ford Credit's 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 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,
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<PAGE> 14
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.
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<PAGE> 15
FORD MOTOR CREDIT COMPANY AND CONSOLIDATED SUBSIDIARIES
SELECTED FINANCIAL DATA
(DOLLAR AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED OR AT DECEMBER 31
--------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
INCOME STATEMENT DATA
Total revenue..................................... $ 19,302.5 $ 17,345.1 $ 16,705.5
Interest expense.................................. 6,910.4 6,268.2 6,259.7
Provision for credit losses....................... 1,179.5 1,338.2 993.3
Income before income
taxes.......................................... 1,812.2 1,806.0 2,240.2
Net income........................................ 1,084.2 1,030.8 1,440.6
Cash dividends.................................... (500.2) (595.5) (949.0)
Memo:
Net credit losses amount.......................... $ 1,039.4 $ 1,007.1 $ 830.0
As percentage of average net finance receivables
outstanding*................................... 0.86% 0.89% 0.78%
BALANCE SHEET DATA
Net investment, operating leases.................. $ 34,566.5 $ 34,746.0 $ 30,645.2
========== ========== ==========
Finance receivables, net.......................... $ 95,941.6 $ 81,312.6 $ 80,848.0
========== ========== ==========
Capital
Short-term debt................................ $ 53,633.2 $ 46,207.8 $ 43,017.0
Long-term debt (including current portion)..... 61,334.1 54,517.2 55,007.3
Stockholder's equity........................... 10,644.7 9,584.5 9,203.7
---------- ---------- ----------
Total capital................................ $125,612.0 $110,309.5 $107,228.0
========== ========== ==========
</TABLE>
- ---------------
* Includes net investment in operating leases.
1998 RESULTS OF OPERATIONS
Ford Credit's consolidated net income in 1998 was $1,084 million, up $53
million or 5% from 1997. Compared with 1997, the increase in full-year earnings
primarily reflects improved credit loss performance, higher gains on receivable
sales, lower effective tax rates, and higher financing volumes, offset partially
by lower net financing margins and higher operating costs.
Credit losses as a percent of average net finance receivables including net
investment in operating leases decreased to 0.86% in 1998 compared with 0.89% in
1997 reflecting an improvement in portfolio quality.
The effective income tax rate was 37.6% for the year ended December 31,
1998 compared with 40.3% for the year ended December 31, 1997. The decrease in
the effective tax rate resulted from reduced tax on foreign income.
The deterioration in net financing margins reflect higher depreciation on
operating leases. Higher depreciation resulted from higher residual losses on
off-lease vehicles and higher residual reserves.
Total net finance receivables and net investment in operating leases at
December 31, 1998 were $130.5 billion, up $14.4 billion or 12% from a year
earlier. The increase primarily reflects Ford-sponsored special financing
programs that are available exclusively through Ford Credit.
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<PAGE> 16
During 1998, Ford Credit financed 42% of all new cars and trucks sold by
Ford dealers in the U.S. compared with 38% in 1997. In Europe during 1998, Ford
Credit financed 33% of all new vehicles sold by Ford dealers compared with 29%
in 1997. In 1998, Ford Credit provided retail financing for 2.8 and 0.8 million
new and used vehicles in the United States and Europe respectively. In 1998,
Ford Credit provided wholesale financing for 83% of Ford factory sales in the
U.S. and 95% of Ford factory sales in Europe compared with 80% for the U.S. and
95% for Europe in 1997.
In the fourth quarter of 1998, Ford Credit's consolidated net income was
$234 million, up $16 million or 7% from 1997 earnings of $218 million. The
increase primarily reflects improved credit loss performance, lower effective
tax rates and higher financing volumes, offset partially by lower net financing
margins and higher operating costs.
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 dealers in the U.S., unchanged from 1996. In Europe, Ford Credit financed
29% of all new vehicles sold by Ford, 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 factory sales in the U.S. and 95% of Ford
factory sales in Europe compared with 80% for the U.S. and 91% for Europe in
1996.
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.
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
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<PAGE> 17
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.
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, the Third Quarter 10-Q Report and the February 1999 8-K Report. 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 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's two principal business segments are Automotive and Financial
Services. The activities of the Automotive segment consist of the design,
manufacture and sale of cars and trucks and
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<PAGE> 18
automotive components and systems. Substantially all of the cars and trucks Ford
produces are sold through retail dealerships, most of which are privately owned
and financed.
The activities of the Financial Services segment are conducted primarily
through our subsidiaries: Ford Credit and The Hertz Corporation. Ford Credit and
its subsidiaries lease and finance the purchase of cars and trucks made by Ford
and other companies. They also provide inventory and capital financing to retail
car and truck dealerships. Hertz and its subsidiaries rent cars and trucks and
industrial and construction equipment. Both Ford Credit and Hertz also have
insurance operations related to their businesses.
The mailing address of Ford's executive offices is The American Road,
Dearborn, Michigan 48121. The telephone number of such offices is (313)
322-3000.
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SELECTED FINANCIAL DATA AND OTHER DATA
The following table sets forth selected financial data and other data
concerning Ford:
<TABLE>
<CAPTION>
YEARS ENDED OR AT DECEMBER 31
--------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(IN MILLIONS EXCEPT PER SHARE AND UNIT SALES AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME INFORMATION
Automotive
Sales......................................... $119,083 $122,935 $118,023 $110,496 $107,137
Operating income.............................. 6,685 6,946 2,516 3,281 5,826
Net income.................................... 4,752 4,714 1,655 2,056 3,913
Financial Services Revenues..................... 25,333 30,692 28,968 26,641 21,302
Income before gain on spin-off of The
Associates and income taxes................. 2,483 -- -- -- --
Gain on spin-off of The Associates............ 15,955 -- -- -- --
Income before income taxes.................... 18,438 3,857 4,222 3,539 2,792
Net income.................................... 17,319 2,206 2,791 2,083 1,395
Total Ford
Net income.................................... 22,071 6,920 4,446 4,139 5,308
Amounts Per Share of Common Stock and Class B
Stock After Preferred Stock Dividends*
Basic earnings per share...................... 18.17 5.75 3.73 3.58 4.97
Diluted earnings per share.................... 17.76 5.62 3.64 3.33 4.44
Cash dividends................................ 1.72 1.645 1.47 1.23 0.91
CONSOLIDATED BALANCE SHEET INFORMATION
Automotive
Total assets.................................. 88,744 85,079 79,658 72,772 68,639
Debt payable within one year.................. 1,121 1,129 1,661 1,832 155
Long-term debt -- noncurrent portion.......... 8,713 7,047 6,495 5,475 7,103
Financial Services
Total assets.................................. 148,801 194,018 183,209 170,511 150,983
Debt.......................................... 122,324 160,071 150,205 141,317 123,713
Total Ford
Total assets.................................. 237,545 279,097 262,867 243,283 219,622
Debt.......................................... 132,158 168,247 158,361 148,624 130,971
Stockholders' equity.......................... 23,409 30,734 26,762 24,547 21,659
Cash dividends................................ 5,348 2,020 1,800 1,559 1,205
OTHER DATA
Total Ford
Capital expenditures.......................... 8,617 8,717 8,651 8,997 8,546
Depreciation and amortization of special
tools....................................... 14,329 13,583 12,791 11,719 9,336
Worldwide vehicle unit sales of cars and
trucks (in thousands)....................... 6,823 6,947 6,653 6,606 6,853
</TABLE>
- ------------
* Share data have been restated to reflect the 2-for-1 stock split that became
effective June 6, 1994.
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<PAGE> 20
FINANCIAL REVIEW
1998 RESULTS OF OPERATIONS
Ford earned $5,939 million in 1998, or $4.72 per diluted common and Class B
share, excluding earnings from The Associates First Capital Corporation and the
gain that resulted from Ford's spin-off of that company in the second quarter of
1998. Excluding these and other one-time factors, Ford's operating earnings were
$6,570 million, up $582 million, or 10 percent on a comparable basis; earnings
per share were $5.30 per share, up $0.44 per share.
Ford's 1998 operating earnings of $6,570 million exclude previously
announced one-time charges for employee separation programs and asset
write-downs totaling $631 million ($0.51 per share), earnings from The
Associates of $177 million ($0.14 per share), the one-time gain resulting from
The Associates spin-off of $15,955 million ($12.90 per share) and a one-time
earnings per share reduction ($0.07) for the premium paid to repurchase Ford's
Series B preferred stock.
Ford's reported 1997 earnings were $6,920 million ($5.62 per share).
Comparable 1997 operating results were $5,988 million ($4.86 per share). This
excludes Ford's share of earnings of The Associates, which were $832 million
($0.68 per share), and a net gain of $100 million ($0.08 per share) for one-time
actions.
FOURTH QUARTER 1998
Ford reported earnings of $1,043 million ($0.84 per share) in the fourth
quarter of 1998. Excluding one-time charges, Ford earned $1,674 million ($1.35
per share) -- Ford's eleventh consecutive quarter of year-over-year operating
improvement. Net income for the fourth quarter of 1997, excluding The
Associates, was $1,572 million ($1.27 per share).
AUTOMOTIVE OPERATIONS
Reported full-year 1998 earnings from automotive operations were $4,752
million. Excluding one-time charges, earnings were $5,377 million, up $494
million. Ford's reported automotive after-tax return on sales (ROS) was 4
percent in 1998. Excluding one-time charges, ROS was 4.6 percent, up 0.6 points.
For the full-year, total costs were down $2.2 billion at constant volume
and mix. This exceeded Ford's full-year milestone, which was to lower total
costs by $1 billion.
Reported net income from automotive operations in the fourth quarter of
1998 was $820 million. Excluding one-time charges, earnings were $1,445 million,
up $104 million. Reported ROS was 2.6 percent in the fourth quarter of 1998.
Excluding one-time charges, ROS was 4.5 percent, up 0.3 points.
North America: Reported full-year 1998 automotive earnings in North America
were $4,612 million. Excluding one-time charges of $363 million, earnings were
$4,975 million, up $416 million. Reported full-year ROS was 5.3 percent. Ford's
full-year 1998 milestone was to earn a 5 percent ROS in North America. Excluding
charges, ROS was 5.8 percent, up 0.6 points.
The earnings improvement for the full year was driven by improved quality,
lower costs and favorable product mix, offset partially by higher marketing
costs and the fourth quarter charges.
Reported fourth quarter 1998 automotive earnings in North America were
$1,047 million. Excluding one-time charges, earnings were $1,410 million, up $57
million. Reported ROS in North America was 4.5 percent. Excluding charges, ROS
was 6.0 percent, up 0.1 points.
In 1998, Ford posted its best retail sales in the United States in 20
years. In 1999, Ford expects industry volumes in the United States will range
between 15 million and 15.5 million units, the sixth year in a row of U.S.
industry volumes greater than 15 million units.
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<PAGE> 21
Europe: Reported full-year earnings for Europe in 1998 were $193 million.
Excluding charges of $137 million, earnings were $330 million, up $13 million.
Ford's 1998 full-year milestone was to be profitable. Ford's 1999 full-year
milestone for Europe is to grow earnings.
Ford reported a loss of $74 million in the fourth quarter of 1998.
Excluding charges, Ford earned $63 million, down $95 million from a year ago.
The decline in fourth quarter earnings reflects lower volumes, lower export
sales and launch costs for the Ford Focus, offset partially by cost reductions.
South America: Reported full-year 1998 results in South America were a loss
of $226 million. Excluding charges of $81 million, full-year automotive results
were a loss of $145 million, down $185 million. Ford disclosed in the third
quarter that it did not expect to achieve its milestone of breaking even in
South America in 1998 as a result of significantly lower volumes. In Brazil,
Ford's largest market in the region, industry volumes in 1998 were down about 20
percent from 1997.
In the fourth quarter of 1998, Ford reported a loss of $151 million in
South America. Excluding charges, Ford lost $70 million, up $1 million from the
prior year. Economic and market conditions in Brazil continue to be difficult.
For 1999, Ford has established a milestone of improving operating results in
South America, but Ford does not expect to be profitable there.
Visteon: The earnings of Visteon Automotive Systems, Ford's automotive
components enterprise, are included in Ford's automotive results. In 1998,
Visteon reported earnings of $712 million, up $194 million, or 37 percent, from
1997. In the fourth quarter of 1998, Visteon earned $132 million, compared with
$48 million a year ago. Visteon's milestone for 1999 is to grow its earnings and
obtain $2 billion in new business.
FORD CREDIT
For a discussion of Ford Credit's operations in 1998, see "Ford Motor
Credit Company and Consolidated Subsidiaries -- Selected Financial Data -- 1998
Results of Operations," above.
HERTZ
Hertz reported its fifth consecutive year of record earnings and seventh
consecutive year of increased earnings. Net income was $277 million in 1998, up
37 percent, compared with earnings of $202 million in 1997. Ford's share of
Hertz' 1998 earnings was $224 million.
In the fourth quarter of 1998, Hertz earned a record $48 million, up 37
percent, compared with earnings of $35 million in the same period a year ago.
Ford's share of Hertz' fourth quarter 1998 earnings was $39 million. The Hertz
1999 full-year milestone is for Hertz to have record earnings.
RECENT DEVELOPMENTS
Volvo: On January 28, 1999 Ford announced that it had reached an agreement
with AB Volvo to buy Volvo's worldwide passenger car business for a price of
$6.45 billion. The transaction is subject to regulatory and Volvo shareholder
approval.
Rouge Complex: On February 1, 1999, an explosion occurred at the powerhouse
of the Rouge Complex in Dearborn, Michigan, completely halting production at the
powerhouse. Twenty-seven people were injured and four people died. The
powerhouse supplied energy and steam to the entire Rouge Complex. Ford owns part
of the powerhouse and has manufacturing plants and an assembly plant located
within the Complex. Those plants supply products to various Ford manufacturing
and assembly plants worldwide. Through alternative sources of power Ford has
resumed normal production at all of its manufacturing and assembly plants in the
Rouge Complex. A significant supplier of steel to Ford is also located in the
Rouge Complex. Ford does not know when that supplier will be able to fully
resume its production. In the interim, contingency plans for alternative sources
of steel are being implemented. Ford has insurance, including business
interruption coverage, which should limit the financial impact from the
accident.
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<PAGE> 22
INDUSTRY DATA AND MARKET SHARE
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)
--------------------------------------------
YEARS ENDED DECEMBER 31
--------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cars.................................................... 8.2 8.3 8.6 8.6 9.0
Trucks.................................................. 7.8 7.2 6.9 6.5 6.4
</TABLE>
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
--------------------------------------------
YEARS ENDED DECEMBER 31
--------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cars.................................................. 19.2% 19.7% 20.6% 20.9% 21.7%
Trucks................................................ 30.2 31.1 31.1 31.9 30.1
</TABLE>
For additional information regarding Ford, see the 1997 10-K Report, the
First Quarter 10-Q Report, the Second Quarter 10-Q Report, the Third Quarter
10-Q Report and the February 1999 8-K 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
--------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ford Motor Credit Company............................... 1.3 1.3 1.3 1.3 1.5
Ford Motor Company...................................... 3.8* 2.0 1.6 1.6 2.0
</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 2.0.
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-22
<PAGE> 23
UNDERWRITING
Ford Credit is selling the Notes to the Underwriters named below under an
Underwriting Agreement dated February 18, 1999 and a Pricing Agreement dated
February 18, 1999. 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 NOTES
------------ ----------------
<S> <C>
Bear, Stearns & Co. Inc. ................................... $ 850,000,000
Morgan Stanley & Co. International Limited ................. 850,001,000
Paribas..................................................... 42,857,000
Deutsche Bank AG London..................................... 42,857,000
Dresdner Bank AG London Branch.............................. 42,857,000
Goldman, Sachs & Co. ....................................... 42,857,000
Lehman Brothers Inc. ....................................... 42,857,000
Salomon Smith Barney Inc. .................................. 42,857,000
Warburg Dillon Read LLC..................................... 42,857,000
--------------
Total........................................... $2,000,000,000
==============
</TABLE>
Under the terms and conditions of the Pricing Agreement and the
Underwriting Agreement, if the Underwriters take any of the Notes, then they are
obligated to take and pay for all of the Notes.
The Notes are a new issue 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 the
Notes.
The Underwriters initially propose to offer part of the Notes directly to
the public at the public offering price set forth on the cover page and part to
certain dealers at a price that represents a concession not in excess of 0.1625%
of the principal amount of the Notes. Any Underwriter may allow, and any such
dealer may reallow, a concession not in excess of 0.15% of the principal amount
of the 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.
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 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
S-23
<PAGE> 24
(Investment Advertisements) (Exemptions) Order 1996, as amended, or is a person
to whom the document may otherwise lawfully be issued or passed on.
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 Debentures 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.
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 price of the
Notes. Specifically, the Underwriters may overallot in connection with the
offering of the Notes, creating a short position in the 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 the 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 the 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 $600,000 for
printing, registration fees, rating agency and other expenses related to this
offering. Ford Credit has agreed to reimburse the Underwriters for certain
expenses incurred by the Underwriters 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 February 23, 1999, which is the third business day
following the date hereof (such settlement cycle being herein referred to as
"T+3").
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.
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.
S-24
<PAGE> 25
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 December 31, 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 Notes have been assigned Euroclear and Cedel Common Code No. 9511750,
International Security Identification Number (ISIN) US345397SH76 and CUSIP No.
345397SH7.
S-25
<PAGE> 26
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> 27
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> 28
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.
------------------------
3
<PAGE> 29
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
4
<PAGE> 30
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,
5
<PAGE> 31
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
</TABLE>
To the Underwriters
as to United States Law
SHEARMAN & STERLING
599 Lexington Avenue
New York, New York 10022
AUDITORS TO
FORD MOTOR
CREDIT COMPANY
PRICEWATERHOUSECOOPERS LLP
400 Renaissance Center
Detroit, Michigan 48243
