FORD MOTOR CREDIT CO - 10-K Annual Report

(Exact name of registrant as specified in its charter)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

As of February 28, 2001, the registrant had outstanding 250,000 shares of Common Stock. No voting stock of the registrant is held by non-affiliates of the registrant.

The registrant meets the condition set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format.

The registrant, Ford Motor Credit Company, was incorporated in Delaware in 1959 and is an indirect wholly-owned subsidiary of Ford Motor Company (“Ford”). As used herein “Ford Credit” refers to Ford Motor Credit Company and its subsidiaries unless the context otherwise requires.

Ford Credit provides 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 purchases 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, Ford Credit directly and through its subsidiaries provides these financing services worldwide 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.

In 2000 and 1999, United States operations, conducted in all 50 states and the District of Columbia, accounted for 78% and 75%, respectively, of Ford Credit’s total revenue. European operations, conducted by FCE Bank plc (formerly Ford Credit Europe plc) (“Ford Credit Europe”), accounted for 11% and 12%, respectively, of Ford Credit’s total revenue in these periods. The balance was in Canada, Mexico, Brazil, Australia, Puerto Rico, Argentina, Japan, Taiwan, New Zealand, Thailand, the Philippines, India, Indonesia and Chile. In addition, Ford Credit manages the vehicle financing operations of Ford in other foreign countries which are conducted through other subsidiaries of Ford.

Outside the United States, Ford Credit Europe is Ford Credit’s largest operation. Ford Credit Europe is an indirect wholly-owned subsidiary of Ford Credit. Ford Credit Europe’s primary business is to support the sale of Ford vehicles in Europe through the Ford dealer network. A variety of retail, leasing and wholesale finance plans is provided in most countries in which it operates. Retail financing is provided by means of a number of title retention plans and personal loans. Operating and finance leases are provided to individual, corporate and other institutional customers, covering individual vehicles and large and small fleets. Wholesale financing is provided to Ford dealers for the stocking of new and used vehicles. In addition, Ford Credit Europe provides loans to dealers for working capital and property acquisitions and for a variety of finance plans.

Ford Credit also conducts insurance operations through The American Road Insurance Company (“TARIC”) and its subsidiaries in the United States and Canada. TARIC’s business primarily 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 business of Ford Credit is substantially dependent upon Ford Motor Company. See “Vehicle Financing” and “Borrowings and Other Sources of Funds” under the caption “Business of Ford Credit”. Also see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”. Any protracted reduction or suspension of Ford’s production or sale of vehicles, resulting from a decline in demand, work stoppage, governmental action, adverse publicity, or other event, could have a substantial adverse effect on Ford Credit. For additional information concerning Ford’s results of operations, see Ford Motor Company’s Annual Report on Form 10-K for the year ended December 31, 2000 filed with the Securities and Exchange Commission.

The mailing address of Ford Credit’s executive offices is One American Road, Dearborn, Michigan 48121. The telephone number of such offices is (313) 322-3000.

Segment information called for by Item 1 is set forth in Note 17 of Notes to Financial Statements and is incorporated herein by reference.

Ford Credit accounts for its financing business in three categories — retail (which consists of vehicle installment sale financing and vehicle lease financing), wholesale and other. Total net finance receivables and net investment in operating leases outstanding in these three categories and geographic regions were as follows at the end of the years indicated:

Compared with 1999, the increase in total net finance receivables and net investment in operating leases results primarily from Ford Motor Company-sponsored special financing and leasing programs that are available exclusively through Ford Credit, a higher volume of wholesale receivables, and inclusion of Volvo financing receivables. The percentage increase in installment sale receivables was less than the percentage increase in net investment in operating leases or wholesale receivables, because sales of installment sale receivables more than doubled from 1999 levels.

Retail. Retail financing consists primarily of installment sale financing and retail lease financing of new and used vehicles and loans to vehicle leasing companies, most of which are affiliated with franchised Ford Motor Company dealerships. The number of installment sale and lease vehicles financed by Ford Credit in the categories and geographic regions shown below was as follows during the years indicated:

Compared with 1999, the increase in installment sale and lease vehicles financed by Ford Credit reflects primarily Ford Motor Company-sponsored special financing and leasing programs that are available exclusively through Ford Credit and inclusion of installment sale and lease vehicles financed by Volvo.

The levels of Ford Credit’s retail financing volumes and outstanding finance receivables and net investment in operating leases are dependent on several factors, including new and used vehicle sales and leases, Ford Credit’s share of those vehicle sales and leases and the average cost of vehicles financed. See “Competition in Vehicle Financing”. In addition, receivables levels may vary depending on sales of receivables.

Installment sale and retail lease financing consist principally of purchasing and servicing installment sale contracts and leases related to the sale or lease of new and used vehicles by vehicle dealers to retail customers. The amount paid by Ford Credit to the dealer for an installment sale contract or lease generally represents a negotiated amount agreed to between the dealer and the customer, less any trade-in or downpayment. In addition, a portion of the finance charge may be retained by the dealer. Ford Credit requires a retail purchaser or lessee to carry fire, theft and collision insurance on the vehicle. Retail lessees also are required to carry liability insurance.

Installment sales contract terms range up to 72 months. In the United States, the average repayment obligation for new vehicles covered by installment sale contracts purchased by Ford Credit in 2000 was $21,205. The corresponding average monthly payment was $495 and the average original term was 53 months.

For retail leases, the monthly lease payment equals the amount paid to the dealer for the vehicle and lease (the “acquisition cost”) less the residual value of the vehicle established by Ford Credit, amortized over the lease term, plus the lease charge. The acquisition cost to Ford Credit of the vehicle, less the residual value, is depreciated on a straight line basis over the life of the lease. Residual value, the estimated value of the vehicle at lease end, is generally determined by Ford Credit after analyzing published residual values and Ford Credit’s own econometric model that uses historical experience and forward-looking information available to Ford Credit. This information includes new product plans, marketing programs and quality metrics. At lease termination, Ford Credit either sells the vehicle to the dealer for the established residual value or sells the vehicle at auction for the market price.

Retail lease terms range from 12 to 48 months. In the United States, the average monthly payment of retail lease contracts purchased by Ford Credit in 2000 was $394 and the average original term was 32 months.

Ford Credit extends financing to leasing companies and daily rental companies. Financing charges in connection with such lease financing either are fixed or floating based on short-term interest rates in effect at the time financing is extended. These rates may be supplemented by payments from Ford whenever the rate payable is less than the specified minimum rate agreed between Ford Credit and Ford.

Wholesale. Wholesale financing consists of loans, under approved lines of credit, to dealers to assist them in carrying inventories of new and used vehicles. Ford Credit generally finances 100% of the wholesale price. Vehicles are insured against fire, theft and other risks under policies issued to Ford Credit. Ford Credit’s United States car and truck wholesale receivables that liquidated were outstanding an average of about 60 days and 58 days in 2000 and 1999, respectively.

The levels of Ford Credit’s wholesale financing volume and outstanding wholesale receivables are dependent on several factors, including sales by Ford to dealers, the level of dealer inventories, Ford Credit’s share of Ford’s sales to dealers, vehicle prices and sales of wholesale receivables.

Competition In Vehicle Financing. The vehicle financing business is highly competitive. Ford Credit’s principal competitors are banks, credit unions and leasing companies.

Ford Credit financed the following percentages of new Ford cars and trucks sold or leased at retail and sold at wholesale in the United States and Europe during each of the years indicated:

The increase in the percentage of Ford Credit retail financing in the United States in 2000 compared with 1999 primarily reflects an increased level of Ford-sponsored special installment sale financing and vehicle leasing programs available exclusively through Ford Credit.

Ford Credit makes capital loans to vehicle dealers for facilities expansion and working capital and to enable them to purchase dealership real estate. Such loans totaled $3,642.1 million at December 31, 2000. From time to time, Ford Credit purchases accounts receivable of certain divisions and affiliates of Ford. At December 31, 2000, such receivables totaled $3,518.9 million.

The following table sets forth information concerning Ford Credit’s credit loss experience with respect to the various categories and geographic regions of financing during the years indicated:

Credit losses as a percent of average net finance receivables including net investment in operating leases increased to 0.84% in 2000 compared with 0.74% in 1999. This increase is due primarily to the launch of collection activities at the regional service centers in the United States and Canada, as centers transitioned new staff and launched new collection tools. Higher losses also reflect growth in sub-prime financing at Ford Credit subsidiaries.

Allowances for estimated credit losses are established as required based on historical experience. Other factors that affect collectibility also are evaluated and additional allowances may be provided. The provision for credit losses generally varies with changes in the amount of loss exposure and the absolute level of financing. Ford Credit’s retail loss experience is dependent upon the number of repossessions, the unpaid balance outstanding at the time of repossession, and the net resale value of repossessed vehicles. Wholesale losses generally reflect the financial condition of dealers. For additional information regarding credit losses, see Notes 1 and 6 of Notes to Financial Statements and see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Ford Credit generally either holds security interests in or is the title owner of the vehicles that it finances or leases and generally is able to repossess a vehicle in the event of a default. The right to repossess under a security interest securing wholesale obligations generally is ineffectual, as a matter of law, against a retail buyer of a vehicle from a dealer. Obligations arising from lease financing extended to leasing companies are collateralized to the extent practicable by assignments of rentals under the related leases and, in almost all instances, by perfected liens on the vehicles.

Ford Credit relies heavily on its ability to raise substantial amounts of funds. These funds are obtained primarily by the issuance of term debt, the sale of commercial paper and, in the case of Ford Credit Europe, the issuance of 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. The long-term senior debt of Ford, Ford Credit and Ford Credit Europe are rated “A2” and “A” and the commercial paper of Ford Credit and Ford Credit Europe are rated “Prime-1”, “A-1”, and “F1” by Moody’s Investors Service, Standard & Poor’s Ratings Group and Fitch, Inc., respectively. For additional information regarding Ford Credit’s association with Ford, see “Certain Transactions with Ford and Affiliates.”

Ford Credit’s outstanding debt at the end of each of the years indicated was as follows:


(c)	Includes $571 million, $718 million, $989 million, $831 million and $2,478 million with affiliated companies at December 31, 2000, December 31, 1999, December 31, 1998, December 31, 1997 and December 31, 1996, respectively.

(d)	Includes $2,576 million, $3,457 million, $2,878 million, $3,547 million and $4,237 million with affiliated companies at December 31, 2000, December 31, 1999, December 31, 1998, December 31, 1997 and December 31, 1996, respectively.

(e)	Excludes support of Ford Credit’s asset-backed commercial paper program.

Outstanding commercial paper totaled $42.3 billion at December 31, 2000, down approximately $800 million from a year earlier. In 2000, long-term debt placements were $33.8 billion compared with maturities and early redemptions of $21.9 billion. Long-term debt placements in 1999 were $34.1 billion. In 2000, Ford Credit also received $19.5 billion from sales of receivables compared with $9.9 billion in 1999.

Support facilities represent additional sources of funds, if required. At December 31, 2000, Ford Credit had approximately $19.3 billion of contractually committed facilities. In addition, approximately $7.5 billion of Ford lines of credit may be used by Ford Credit at Ford’s option. These credit lines have various maturity dates through June 30, 2005 and may be used, at Ford Credit’s option, by any of its direct or indirect majority-owned subsidiaries. Any such borrowings will be guaranteed by Ford Credit. Banks also provide $1.4 billion of contractually committed liquidity facilities to support Ford Credit’s asset backed commercial paper program.

Additionally, at December 31, 2000, there was approximately $4.6 billion of contractually committed facilities available for Ford Credit Europe’s use. In addition, $598 million of Ford lines of credit may be used by Ford Credit Europe at Ford’s option. The lines have various maturity dates through June 30, 2005 and may be used, at Ford Credit Europe’s option, by any of its direct or indirect majority-owned subsidiaries. Any such borrowings will be guaranteed by Ford Credit Europe.

At December 31, 2000, Ford Credit had 18,704 employees. All such employees are salaried, and none is represented by a union. Ford Credit considers its employee relations to be satisfactory.

Certain aspects of Ford Credit’s United States financing operations are regulated in the various jurisdictions in which it operates. Many jurisdictions require licenses to conduct financing of retail sale and lease transactions. Interest rates, particularly those with respect to consumer financing, generally are limited by law. In periods of high interest rates, these rate limitations can have a substantial adverse effect on operations in certain jurisdictions if Ford Credit is unable to pass on its increased costs of funds to customers.

Legislative, judicial and administrative authorities continue to evidence a concern for the protection of consumers in connection with consumer financing transactions. As a result, Ford Credit and others in the financing industry have made some changes to the way in which they conduct their financing transactions. Still other proposals have been made which if adopted would require further changes. None of these changes to date has had a material adverse effect on the operations of Ford Credit.

For information concerning transactions between Ford Credit and Ford or affiliates, see Note 13 of Notes to Financial Statements, “Business of Ford Credit — Other Financial Activities”, “Business of Ford Credit — Borrowings and Other Sources of Funds” and Item 6 — “Selected Financial Data — Selected Income Statement Data.” The profit maintenance agreement referred to in the first paragraph of Note 13 of Notes to Financial Statements, under which Ford has agreed to maintain the income of Ford Credit at certain minimum levels, expires at the end of 2001. In addition, Ford Credit has agreed to maintain a minimum control interest in Ford Credit Europe and has agreed to maintain Ford Credit Europe’s net worth above a minimum level.

Ford Motor Company was incorporated in Delaware in 1919. Ford acquired the business of a Michigan company, also known as Ford Motor Company, incorporated in 1903 to produce and sell automobiles designed and engineered by Henry Ford. Ford is the world’s second-largest producer of cars and trucks combined. Ford and its subsidiaries also engage in other businesses, including financing and renting vehicles and equipment.

Ford’s business is divided into two business sectors: the Automotive sector and the Financial Services sector. Ford manages these sectors as three primary operating segments as described below.

Ford sells cars and trucks throughout the world. In 2000, Ford sold 7.4 million vehicles throughout the world. Ford’s automotive vehicle brands include Ford, Mercury, Lincoln, Volvo, Jaguar, Land Rover, Aston Martin and TH!NK. In addition, Ford owns 33.4% of Mazda Motor Corporation (“Mazda”). Ford completed the purchase of the Land Rover worldwide sport utility vehicle business (“Land Rover”) from the BMW Group on June 30, 2000. As a result, Ford’s 2000 results and financial condition include Land Rover’s results and financial condition since the date of the acquisition. In addition, on June 28, 2000, Ford distributed 130 million shares of Visteon Corporation (Ford’s former automotive systems and components division), which represented Ford’s 100% ownership interest, by means of a tax-free spin-off in the form of a dividend on Ford Common and Class B Stock. For the first half of 2000, Visteon is included in Ford’s results as a discontinued operation. Beginning with the third quarter of 2000, Visteon is excluded completely from Ford’s results and financial condition.

The worldwide automotive industry, Ford included, is affected significantly by a number of factors over which Ford has little control, including general economic conditions. In the United States, the automotive industry is a highly-competitive, cyclical business that has a wide variety of product offerings. The number of cars and trucks sold to retail buyers (commonly referred to as “industry demand”) can vary substantially from year to year. In any year, industry demand depends largely on general economic conditions, the cost of purchasing and operating cars and trucks, and the availability and cost of credit and fuel. Industry demand also reflects the fact that cars and trucks are durable items that people can wait to replace.

The automotive industry outside of the United States consists of many producers, with no single dominant producer. Certain manufacturers, however, account for the major percentage of total sales within particular countries, especially their countries of origin. Most of the factors that affect the United States automotive industry and its sales volumes and profitability are equally relevant outside the United States.

The worldwide automotive industry also is affected significantly by a substantial amount of costly governmental regulation. In the United States and Europe, for example, governmental regulation has arisen

primarily out of concern for the environment, for greater vehicle safety, and for improved fuel economy. Many governments also regulate local content and/or impose import requirements as a means of creating jobs, protecting domestic producers, or influencing their balance of payments.

Ford’s unit sales vary with the level of total industry demand and Ford’s share of that industry demand. Ford’s share is influenced by how its products compare with those offered by other manufacturers based on many factors, including design, driveability, price, quality, reliability, safety, and utility. Ford’s share also is affected by its timing of new model introductions and manufacturing capacity limitations. Ford’s ability to satisfy changing consumer preferences with respect to type or size of vehicle and its design and performance characteristics can impact Ford’s sales and earnings significantly.

The profitability of vehicle sales is affected by many factors, including the following:


	•	unit sales volume

	•	the mix of vehicles and options sold

	•	the margin of profit on each vehicle sold

	•	the level of “incentives” (price discounts) and other marketing costs

	•	the costs for customer warranty claims and other customer satisfaction actions

	•	the costs for government-mandated safety, emission and fuel economy technology and equipment

	•	the ability to manage costs

	•	the ability to recover cost increases through higher prices

Further, because the automotive industry is capital intensive, it operates with a relatively high percentage of fixed costs (including relatively fixed labor costs), which can result in large changes in earnings from relatively small changes in unit volume.

Following is a discussion of the automotive industry in the principal markets where Ford competes, as well as a discussion of Ford’s Automotive Consumer Services Group and Ford’s ConsumerConnect e-commerce initiatives and strategy:

Sales Data. The following table shows U.S. industry sales of cars and trucks for the years indicated:


			2000		1999		1998		1997		1996


			(in millions)
Retail




	Installment sale/finance lease		$	79,631.6	$	75,188.1	$	66,567.8	$	54,545.3	$	52,352.1




	Operating lease			38,457.0		32,838.2		34,566.5		34,746.0		30,645.2




Wholesale				33,997.3		26,341.9		22,561.2		21,519.7		22,621.9




Other				9,109.5		7,223.8		6,812.6		5,247.6		5,874.0

		Total	$	161,195.4	$	141,592.0	$	130,508.1	$	116,058.6	$	111,493.2

United States			$	123,602.2	$	106,087.3	$	94,945.4	$	87,721.2	$	82,225.0




Europe				20,583.2		20,099.0		21,588.7		17,148.1		18,100.0




Other international				17,010.0		15,405.7		13,974.0		11,189.3		11,168.2

		Total	$	161,195.4	$	141,592.0	$	130,508.1	$	116,058.6	$	111,493.2


		2000		1999		1998		1997		1996


		(in thousands)




Installment sale/finance lease			3,777		3,428		3,030		2,389		2,436




Operating lease			1,228		1,065		1,138		1,206		1,160

	Total retail		5,005		4,493		4,168		3,595		3,596





United States			3,525		3,139		2,794		2,549		2,652




Europe			795		829		800		727		717




Other international			685		525		574		319		227

	Total retail		5,005		4,493		4,168		3,595		3,596


		2000			1999			1998			1997			1996

United States




	Retail*		50.9	%		47.2	%		42.3	%		37.5	%		37.6	%




	Wholesale		83.5			83.5			82.5			79.8			79.5
Europe




	Retail*		31.7			32.8			32.5			29.1			29.3




	Wholesale		95.9			96.4			95.4			95.0			90.8


			2000		1999		1998			1997			1996


			(dollar amounts in millions)
Net credit losses/(recoveries)




	Retail*		$	1,283.4	$	994.8	$	1,030.8		$	1,004.4		$	803.6




	Wholesale			13.5		3.3		9.3			(1.1	)		18.6




	Other			0.3		1.6		(0.7	)		3.8			7.8

		Total	$	1,297.2	$	999.7	$	1,039.4		$	1,007.1		$	830.0

	United States		$	1,205.3	$	884.4	$	916.2		$	900.4		$	707.0




	Europe			61.7		65.7		57.1			66.5			95.5




	Other international			30.2		49.6		66.1			40.2			27.5

		Total	$	1,297.2	$	999.7	$	1,039.4		$	1,007.1		$	830.0


Net losses as a percent of average net receivables*




	Retail		1.14	%		0.95	%		1.08	%		1.17	%		1.03	%




	Total finance receivables		0.84			0.74			0.86			0.89			0.78




Provision for credit losses		$	1,670.8		$	1,166.4		$	1,179.5		$	1,338.2		$	993.3




Allowance for credit losses			1,644.9			1,475.6			1,548.2			1,471.4			1,217.6




	As percent of net receivables*		1.02	%		1.04	%		1.19	%		1.27	%		1.09	%


		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


*	As a percentage of total sales and leases, including cash sales


Memo:




Total support facilities (billions) as of December 31:




	Ford Credit(e)	$	26.8	$	26.0	$	26.9	$	26.6	$	27.2




	Ford Credit Europe		5.2		5.2		5.3		5.2		5.7


(a)	Includes commercial paper of $1,031 million with an affiliated company at December 31, 1999.


Business Sectors	Operating Segments	Description

Automotive:	Automotive	design, manufacture, sale, and service of cars and trucks




Financial Services:	Ford Motor Credit Company	vehicle-related financing, leasing, and insurance
	The Hertz Corporation	renting and leasing of cars and trucks and renting industrial and construction equipment, and other activities


		2000		1999		1998		1997		1996


		(in millions)




Commercial paper(a) and STBAs(b)		$	42,255	$	43,078	$	48,636	$	42,311	$	38,774




Other short-term debt(c)			7,875		6,770		4,997		3,897		4,243




Long-term debt (including current portion)(d)			96,165		83,226		61,334		54,517		55,007

	Total debt	$	146,295	$	133,074	$	114,967	$	100,725	$	98,024

United States		$	116,427	$	104,186	$	85,394	$	78,443	$	76,635




Europe			14,866		14,510		16,653		12,491		14,028




Other international			15,002		14,378		12,920		9,791		7,361

	Total debt	$	146,295	$	133,074	$	114,967	$	100,725	$	98,024