FORD CREDIT EARNS $1.3 BILLION IN 2009
Fourth Quarter 2009 Earnings of $440 Million Reported
DEARBORN, Mich., January 28, 2010 – Ford Motor Credit Company reported net income of $1.3 billion in 2009, an improvement of $2.8 billion from a net loss of $1.5 billion a year earlier. On a pre-tax basis, Ford Credit earned $2 billion in 2009, compared with a loss of $2.6 billion in the previous year. Excluding the $2.1 billion impairment charge for North America operating leases in the second quarter of 2008, Ford Credit incurred a pre-tax loss of $473 million in 2008. The improvement in full year pre-tax earnings primarily reflected the non-recurrence of the impairment charge, lower depreciation expense for leased vehicles due to higher auction values, and a lower provision for credit losses, offset partially by lower volume. Ford Credit also significantly reduced its operating costs in 2009 compared with the previous year.
In the fourth quarter of 2009, Ford Credit’s net income was $440 million, an improvement of $668 million from a year earlier. On a pre-tax basis, Ford Credit earned $696 million in the fourth quarter of 2009, compared with a loss of $372 million in the previous year. The improvement in pre-tax earnings primarily reflected lower depreciation expense for leased vehicles due to higher auction values and a lower provision for credit losses, offset partially by lower volume.
“Our profit and consistent, solid support of Ford Motor Company dealers and customers in a very challenging economy demonstrate our unique value as Ford’s financial services company,” Ford Credit Chairman and CEO Mike Bannister said. “We remain well-positioned to help put people behind the wheels of Ford products as the economy improves.”
On December 31, 2009, Ford Credit’s on-balance sheet net receivables totaled $93 billion, compared with $116 billion at year-end 2008. Managed receivables were $95 billion on December 31, 2009, down from $118 billion on December 31, 2008. The lower receivables primarily reflected lower industry volumes, lower dealer stocks, and the transition of Jaguar, Land Rover and Mazda financing to other finance providers.
On December 31, 2009, managed leverage was 7.3 to 1. In 2009, Ford Credit distributed $1.5 billion to its immediate parent, Ford Holdings LLC.
Ford Credit expects to be profitable in 2010, but lower than 2009 based on lower average receivables and non-recurrence of certain favorable 2009 factors.
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Ford Motor Credit Company LLC is one of the world’s largest automotive finance companies and has provided dealer and customer financing to support the sale of Ford Motor Company products since 1959. Ford Credit is an indirect, wholly owned subsidiary of Ford. For more information, visit www.fordcredit.com.
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* The financial results discussed herein are presented on a preliminary basis; final data will be included in our Annual Report on Form 10-K for the year ended December 31, 2009.
Cautionary Statement Regarding Forward Looking Statements
Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:
- Further declines in industry sales volume, particularly in the United States or Europe, due to financial crisis, deepening recessions, geo-political events or otherwise;
- Decline in Ford’s market share;
- Continued or increased price competition for Ford vehicles resulting from industry overcapacity, currency fluctuations or other factors;
- A further increase in or acceleration of the market shift away from sales of trucks, sport utility vehicles, or other more profitable vehicles, particularly in the United States;
- Continued or increased high prices for, or reduced availability of, fuel;
- Lower-than-anticipated market acceptance of new or existing Ford products;
- Adverse effects from the bankruptcy of, government-funded restructuring of, change in ownership or control of, or alliances entered into by a major competitor;
- Economic distress of suppliers may require Ford to provide financial support or take other measures to ensure supplies of components or materials and could increase Ford’s costs, affect Ford’s liquidity, or cause production disruptions;
- Work stoppages at Ford or supplier facilities or other interruptions of supplies;
- Single-source supply of components or materials;
- The discovery of defects in Ford vehicles resulting in delays in new model launches, recall campaigns or increased warranty costs;
- Increased safety, emissions, fuel economy or other regulation resulting in higher costs, cash expenditures and/or sales restrictions;
- Unusual or significant litigation or governmental investigations arising out of alleged defects in Ford products or otherwise;
- A change in Ford’s requirements for parts or materials where it has entered into long-term supply arrangements that commit it to purchase minimum or fixed quantities of certain parts or materials, or to pay a minimum amount to the seller (“take-or-pay contracts”);
- Adverse effects on our results from a decrease in or cessation of government incentives;
- Adverse effects on Ford’s operations resulting from certain geo-political or other events;
- Substantial levels of indebtedness adversely affecting Ford’s financial condition or preventing Ford from fulfilling its debt obligations (which may grow because Ford is able to incur substantially more debt, including additional secured debt);
- Inability of Ford to implement its One Ford plan;
Ford Credit Related:
- A prolonged disruption of the debt and securitization markets;
- Inability to access debt, securitization or derivative markets around the world at competitive rates or in sufficient amounts due to credit rating downgrades, market volatility, market disruption or otherwise;
- Inability to obtain competitive funding;
- Higher-than-expected credit losses;
- Adverse effects from the government-supported restructuring of, change in ownership or control of, or alliances entered into by a major competitor;
- Increased competition from banks or other financial institutions seeking to increase their share of retail installment financing Ford vehicles;
- Collection and servicing problems related to our finance receivables and net investment in operating leases;
- Lower-than-anticipated residual values or higher-than-expected return volumes for leased vehicles;
- New or increased credit, consumer or data protection or other regulations resulting in higher costs and/or additional financing restrictions;
- Changes in Ford’s operations or changes in Ford’s marketing programs could result in a decline in our financing volumes;
- Fluctuations in foreign currency exchange rates and interest rates;
- Failure of financial institutions to fulfill commitments under committed credit and liquidity facilities;
- Labor or other constraints on Ford’s or our ability to restructure its or our business;
- Substantial pension and postretirement healthcare and life insurance liabilities impairing Ford’s or our liquidity or financial condition; and
- Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates, investment returns, and health care cost trends).
We cannot be certain that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. For additional discussion of these risk factors, see Item 1A of Part I of our 2008 10-K Report and Item 1A of Part I of Ford’s 2008 10-K Report, as updated by Ford’s and Ford Credit’s subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.