Ford Motor Credit Company reported a pre-tax profit of $499
million in the first quarter of 2014, compared with $507 million a
year earlier. The change in pre-tax profit was driven by higher
volume, reflecting increases in nearly all products globally,
largely offset by unfavorable lease residual performance in North
America. Ford Credit’s net income was $312 million in the first
quarter of 2014, compared with $364 million in the previous
year.
“We continue to deliver on the core elements of our Ford support
strategy – outstanding products and services, a strong and growing
balance sheet and consistent profitability,” said Bernard
Silverstone, chairman and chief executive officer.
On March 31, 2014, Ford Credit’s total net receivables were
$103 billion, compared with $100 billion at year-end 2013. Managed
receivables were $106 billion on March 31, 2014, up from $103
billion on Dec. 31, 2013. On March 31, 2014, managed leverage
was 8.6:1, compared with 8.5:1 on Dec. 31, 2013.
Ford Credit now expects full-year pre-tax profit to be about
equal to or higher than 2013, reflecting improved financing margin
performance. Ford Credit continues to expect managed receivables at
year-end of about $110 billion, managed leverage to continue in the
range of 8:1 to 9:1, and distributions to its parent of about
$250 million.
# # #
About Ford Motor Credit Company
Ford Motor Credit Company LLC has provided dealer and customer
financing to support the sale of Ford Motor Company products since
1959. Ford Credit is a wholly owned subsidiary of Ford. For more
information, visit www.fordcredit.com
or www.lincolnafs.com.
— — — — —
* The financial results discussed herein are presented on a
preliminary basis; final data will be included in Ford Credit’s
Quarterly Report on Form 10-Q for the quarter ended March 31,
2014.
Risk Factors
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:
- Decline in industry sales volume,
particularly in the United States or Europe, due to financial
crisis, recession, geopolitical events, or other factors;
- Decline in Ford’s market share or
failure to achieve growth;
- Lower-than-anticipated market
acceptance of Ford’s new or existing products;
- Market shift away from sales of larger,
more profitable vehicles beyond Ford’s current planning assumption,
particularly in the United States;
- An increase in or continued volatility
of fuel prices, or reduced availability of fuel;
- Continued or increased price
competition resulting from industry excess capacity, currency
fluctuations, or other factors;
- Fluctuations in foreign currency
exchange rates, commodity prices, and interest rates;
- Adverse effects resulting from
economic, geopolitical, or other events;
- Economic distress of suppliers that may
require Ford to provide substantial financial support or take other
measures to ensure supplies of components or materials and could
increase costs, affect liquidity, or cause production constraints
or disruptions;
- Work stoppages at Ford or supplier
facilities or other limitations on production (whether as a result
of labor disputes, natural or man-made disasters, tight credit
markets or other financial distress, production constraints or
difficulties, or other factors);
- Single-source supply of components or
materials;
- Labor or other constraints on Ford’s
ability to maintain competitive cost structure;
- Substantial pension and postretirement
health care and life insurance liabilities impairing our liquidity
or financial condition;
- Worse-than-assumed economic and
demographic experience for postretirement benefit plans
(e.g., discount rates or investment returns);
- Restriction on use of tax attributes
from tax law “ownership change;”
- The discovery of defects in vehicles
resulting in delays in new model launches, recall campaigns, or
increased warranty costs;
- Increased safety, emissions, fuel
economy, or other regulations resulting in higher costs, cash
expenditures, and/or sales restrictions;
- Unusual or significant litigation,
governmental investigations, or adverse publicity arising out of
alleged defects in products, perceived environmental impacts, or
otherwise;
- A change in requirements under
long-term supply arrangements committing Ford to purchase minimum
or fixed quantities of certain parts, or to pay a minimum amount to
the seller (“take-or-pay” contracts);
- Adverse effects on results from a
decrease in or cessation or clawback of government incentives
related to investments;
- Inherent limitations of internal
controls impacting financial statements and safeguarding of
assets;
- Cybersecurity risks to operational
systems, security systems, or infrastructure owned by Ford, Ford
Credit, or a third-party vendor or supplier;
- Failure of financial institutions to
fulfill commitments under committed credit and liquidity
facilities;
- Inability of Ford Credit 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, regulatory
requirements, or other factors;
- Higher-than-expected credit losses,
lower-than-anticipated residual values, or higher-than-expected
return volumes for leased vehicles;
- Increased competition from banks or
other financial institutions seeking to increase their share of
financing Ford vehicles; and
- New or increased credit, consumer, or
data protection or other regulations resulting in higher costs
and/or additional financing restrictions.
We cannot be certain that any expectation, forecast, or
assumption made in preparing forward-looking statements will prove
accurate, or that any projection 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
statement, whether as a result of new information, future events,
or otherwise. For additional discussion, see “Item 1A, Risk
Factors” in our Annual Report on Form 10-K for the year ended
December 31, 2013, as updated by our subsequent Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K.
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
PRELIMINARY CONSOLIDATED INCOME STATEMENT
For the Periods Ended March 31, 2013 and 2014 (in
millions) First
Quarter 2013 2014 (unaudited) Financing
revenue Operating leases $ 754 $
966 Retail Financing 697 696 Dealer Financing 378 393 Other 25
21 Total financing revenue 1,854 2,076 Depreciation
on vehicles subject to operating leases (481 ) (705 ) Interest
expense (683 ) (666 ) Net financing margin 690 705
Other
revenue Insurance premiums earned 29 32 Other income, net 77
51 Total financing margin and other revenue 796 788
Expenses Operating expenses 250 250 Provision for credit
losses 29 31 Insurance expenses 10 8 Total expenses
289 289
Income before income taxes 507 499
Provision for income taxes 143 187
Net income
$ 364 $ 312 __________
Certain prior period amounts in our Consolidated Income Statement
were reclassified to conform to the presentation in our 2013 10-K
Report.
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME For the Periods Ended March 31, 2013 and 2014
(in millions) First Quarter 2013 2014
(unaudited) Net income $ 364 $ 312 Other
comprehensive income/(loss), net of tax Foreign currency
translation (187 ) (82 )
Total other comprehensive
income/(loss), net of tax (187 ) (82 )
Comprehensive
income $ 177
$ 230
FORD MOTOR
CREDIT COMPANY LLC AND SUBSIDIARIES PRELIMINARY
CONSOLIDATED BALANCE SHEET (in millions) December
31, 2013 March 31, 2014 (unaudited)
ASSETS Cash and cash equivalents $ 9,424 $ 8,441 Marketable
securities 1,943 2,817 Finance receivables, net 81,636 84,046 Net
investment in operating leases 18,277 18,832 Notes and accounts
receivable from affiliated companies 1,077 665 Derivative financial
instruments 585 668 Other assets 2,666 2,895
Total
assets $ 115,608 $ 118,364
LIABILITIES Accounts payable Customer
deposits, dealer reserves, and other $ 1,445 $ 1,561 Affiliated
companies 211 575 Total accounts payable 1,656 2,136
Debt 98,693 100,990 Deferred income taxes 1,627 1,759 Derivative
financial instruments 506 470 Other liabilities and deferred income
2,522 2,203
Total liabilities 105,004 107,558
SHAREHOLDER’S INTEREST Shareholder’s interest 5,217
5,217 Accumulated other comprehensive income 717 635 Retained
earnings 4,670 4,954
Total shareholder’s
interest 10,604 10,806
Total liabilities and
shareholder’s interest $ 115,608 $
118,364 The following table includes
assets to be used to settle the liabilities of the consolidated
variable interest entities (“VIEs”). These assets and liabilities
are included in the consolidated balance sheet above.
December 31, 2013 March 31, 2014
(unaudited) ASSETS Cash and cash equivalents $ 4,198
$ 2,768 Finance receivables, net 45,796 44,443 Net investment in
operating leases 8,116 9,592 Derivative financial instruments 5 1
LIABILITIES Debt $ 40,728 $ 38,983 Derivative
financial instruments 88 73
FORD MOTOR CREDIT COMPANY LLC
AND SUBSIDIARIES APPENDIX In evaluating Ford
Credit’s financial performance, Ford Credit management uses
financial measures based on Generally Accepted Accounting
Principles (“GAAP”), as well as financial measures that include
adjustments from GAAP.
RECONCILIATION OF
NON-GAAP MEASURES TO GAAP:
Net Finance Receivables and Operating Leases
December 31, 2013 March 31, 2014
Receivables
(a)
(in billions) Net Receivables Finance Receivables – North
America Segment
Consumer
Retail financing $ 40.9 $ 40.7
Non-Consumer
Dealer financing (b) 22.1 23.2 Other 1.0 1.0 Total
finance receivables -- North America Segment 64.0 64.9 Finance
Receivables – International Segment
Consumer
Retail financing 10.8 11.3
Non-Consumer
Dealer financing (b) 8.3 9.3 Other 0.4 0.4 Total
finance receivables -- International Segment 19.5 21.0 Unearned
interest supplements (1.5 ) (1.5 ) Allowance for credit losses (0.4
) (0.3 ) Finance receivables, net 81.6 84.1 Net investment in
operating leases 18.3 18.8 Total net receivables $
99.9 $ 102.9
Managed receivables Total net receivables $ 99.9 $ 102.9 Unearned
interest supplements and residual support 3.1 3.1 Allowance for
credit losses 0.4 0.4 Other, primarily accumulated supplemental
depreciation — 0.1 Total managed receivables $ 103.4
$ 106.5
Managed Leverage Calculation December 31, 2013
March 31, 2014 (in billions) Total debt (c) $
98.7 $ 101.0 Adjustments for cash, cash equivalents, and marketable
securities (d) (10.8 ) (10.7 ) Adjustments for derivative
accounting (e) (0.2 ) (0.2 ) Total adjusted debt $ 87.7 $
90.1 Equity (f) $ 10.6 $
10.8 Adjustments for derivative accounting (e) (0.3 ) (0.3 ) Total
adjusted equity $ 10.3 $ 10.5
Managed leverage (to 1) = Total adjusted debt / Total
adjusted equity 8.5 8.6 Memo: Financial statement leverage (to 1) =
Total debt / Equity 9.3 9.3
__________
(a) Includes finance receivables (retail and wholesale) sold
for legal purposes and net investment in operating leases included
in securitization transactions that do not satisfy the requirements
for accounting sale treatment. These receivables and operating
leases are reported on Ford Credit’s balance sheet and are
available only for payment of the debt issued by, and other
obligations of, the securitization entities that are parties to
those securitization transactions; they are not available to pay
the other obligations of Ford Credit or the claims of Ford Credit’s
other creditors. (b) Dealer financing primarily includes wholesale
loans to dealers to finance the purchase of vehicle inventory. (c)
Includes debt reported on Ford Credit’s balance sheet that is
issued in securitization transactions and payable only out of
collections on the underlying securitized assets and related
enhancements. Ford Credit holds the right to receive the excess
cash flows not needed to pay the debt issued by, and other
obligations of, the securitization entities that are parties to
those securitization transactions. (d) Excludes marketable
securities related to insurance activities. (e) Primarily related
to market valuation adjustments to derivatives due to movements in
interest rates. Adjustments to debt are related to designated fair
value hedges and adjustments to equity are related to retained
earnings. (f) Shareholder’s interest reported on Ford Credit’s
balance sheet.
Margaret MellottFord
CreditCommunications313.322.5393mmellott@ford.comSteve
DahleFixed IncomeInvestment
Community313.621.0881fixedinc@ford.com
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