Ford Confidential
Draft 7.4
07/31/2003
Ford Motor Credit Company
QUARTERLY REPORT
ON FORM 10-Q
for the quarter ended
June 30, 2003
Filed pursuant to Section 13
of the Securities Exchange Act of 1934
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| (Mark One) | ||||
| x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2003
OR
| o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file numbers 1-6368
FORD MOTOR CREDIT COMPANY
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(Exact name of registrant as specified in its charter)
| Delaware | 38-1612444 | |
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| (State of Incorporation) | (I.R.S. employer identification no.) | |
| One American Road, Dearborn, Michigan | 48126 | |
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| (Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code (313) 322-3000
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. Yes x No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x.
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 250,000 shares of common stock as of August 1, 2003. No voting stock of the registrant is held by non-affiliates of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
This Report incorporates by reference Part I, Item 1 and Item 5 of Part II, Exhibit 12 and Exhibit 15 of Ford Motor Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003.
The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form in reduced disclosure format.
EXHIBIT INDEX APPEARS AT PAGE 31
ITEM 1. FINANCIAL STATEMENTS
The interim financial data presented herein are unaudited, but in our opinion present in all material respects the results of our operations and financial condition for the periods and at the dates presented. Results for interim periods should not be considered indicative of results for a full year. We refer you to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2002 (the “10-K Report”). We are not presenting information relating to earnings per share because we are an indirect wholly-owned subsidiary of Ford Motor Company (“Ford”). Certain amounts in prior period’s financial statements have been reclassified to conform to current period presentations.
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Consolidated Statement of Income
and of Earnings Retained for Use in the Business
For the Periods Ended June 30, 2003 and 2002
(in millions)
| Second Quarter | First Half | |||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||
Financing revenue |
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Operating leases |
$ | 2,292.5 | $ | 2,695.4 | $ | 4,774.9 | $ | 5,495.4 | ||||||||||
Retail |
1,522.3 | 1,902.3 | 3,005.5 | 3,847.9 | ||||||||||||||
Wholesale |
292.1 | 215.2 | 559.8 | 451.4 | ||||||||||||||
Other |
90.0 | 87.7 | 195.0 | 180.1 | ||||||||||||||
Total financing revenue |
4,196.9 | 4,900.6 | 8,535.2 | 9,974.8 | ||||||||||||||
Depreciation on operating leases |
(1,843.9 | ) | (2,111.0 | ) | (3,985.6 | ) | (4,262.5 | ) | ||||||||||
Interest expense |
(1,478.2 | ) | (1,741.3 | ) | (2,997.5 | ) | (3,615.7 | ) | ||||||||||
Net financing margin |
874.8 | 1,048.3 | 1,552.1 | 2,096.6 | ||||||||||||||
Other revenue |
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Investment and other income related to sales of receivables |
672.1 | 519.1 | 1,563.1 | 1,157.4 | ||||||||||||||
Insurance premiums earned |
61.6 | 66.7 | 125.4 | 128.1 | ||||||||||||||
Other income |
251.3 | 243.4 | 507.6 | 411.9 | ||||||||||||||
Total financing margin and revenue |
1,859.8 | 1,877.5 | 3,748.2 | 3,794.0 | ||||||||||||||
Expenses |
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Operating expenses |
560.5 | 619.4 | 1,158.4 | 1,201.9 | ||||||||||||||
Provision for credit losses |
542.8 | 660.1 | 1,063.4 | 1,551.0 | ||||||||||||||
Other insurance expenses |
95.2 | 79.0 | 138.4 | 125.6 | ||||||||||||||
Total expenses |
1,198.5 | 1,358.5 | 2,360.2 | 2,878.5 | ||||||||||||||
Income before income taxes |
661.3 | 519.0 | 1,388.0 | 915.5 | ||||||||||||||
Provision for income taxes |
258.6 | 192.7 | 542.7 | 340.1 | ||||||||||||||
Income before minority interests |
402.7 | 326.3 | 845.3 | 575.4 | ||||||||||||||
Minority interests in net income of subsidiaries |
2.3 | 0.2 | 2.8 | 0.5 | ||||||||||||||
Income from continuing operations |
400.4 | 326.1 | 842.5 | 574.9 | ||||||||||||||
Income from discontinued operations |
— | 4.0 | — | 11.0 | ||||||||||||||
Net income |
400.4 | 330.1 | 842.5 | 585.9 | ||||||||||||||
Earnings retained for use in the business |
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Beginning of period |
8,236.9 | 8,966.6 | 8,794.8 | 8,710.8 | ||||||||||||||
Dividends |
(900.0 | ) | — | (1,900.0 | ) | — | ||||||||||||
End of period |
$ | 7,737.3 | $ | 9,296.7 | $ | 7,737.3 | $ | 9,296.7 | ||||||||||
The accompanying notes are an integral part of the financial statements.
2
ITEM 1. FINANCIAL STATEMENTS — Continued
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Consolidated Balance Sheet
(in millions)
| June 30, | December 31, | June 30, | ||||||||||||||
| 2003 | 2002 | 2002 | ||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
Assets |
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Cash and cash equivalents |
$ | 9,672.5 | $ | 6,800.1 | $ | 4,234.0 | ||||||||||
Investments in securities |
597.2 | 655.1 | 577.8 | |||||||||||||
Finance receivables, net |
106,873.7 | 94,636.0 | 106,109.4 | |||||||||||||
Net investment in operating leases |
26,919.3 | 31,631.2 | 35,476.8 | |||||||||||||
Retained interest in securitized assets |
14,530.4 | 17,618.0 | 11,514.7 | |||||||||||||
Notes and accounts receivable from affiliated companies |
1,492.0 | 1,671.9 | 1,771.6 | |||||||||||||
Derivative financial instruments |
9,840.0 | 8,364.9 | 4,643.8 | |||||||||||||
Assets of discontinued and held-for-sale operations |
— | 2,398.8 | 2,514.2 | |||||||||||||
Other assets |
5,074.4 | 6,393.1 | 5,724.9 | |||||||||||||
Total assets |
$ | 174,999.5 | $ | 170,169.1 | $ | 172,567.2 | ||||||||||
Liabilities and Stockholder’s Equity |
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Liabilities |
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Accounts payable |
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Trade, customer deposits, and dealer reserves |
$ | 1,922.3 | $ | 1,435.8 | $ | 2,033.9 | ||||||||||
Affiliated companies |
1,253.4 | 782.7 | 1,366.3 | |||||||||||||
Total accounts payable |
3,175.7 | 2,218.5 | 3,400.2 | |||||||||||||
Debt |
146,194.0 | 140,262.8 | 142,084.3 | |||||||||||||
Deferred income taxes |
5,818.9 | 5,409.7 | 5,021.9 | |||||||||||||
Derivative financial instruments |
901.1 | 772.4 | 1,495.6 | |||||||||||||
Liabilities of discontinued and held-for-sale operations |
— | 820.9 | 882.4 | |||||||||||||
Other liabilities and deferred income |
6,002.8 | 7,115.9 | 5,964.1 | |||||||||||||
Total liabilities |
162,092.5 | 156,600.2 | 158,848.5 | |||||||||||||
Minority interests in net assets of subsidiaries |
19.6 | 18.9 | 18.3 | |||||||||||||
Stockholder’s Equity |
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Capital stock, par value $100 a share, 250,000 shares
authorized, issued and outstanding |
25.0 | 25.0 | 25.0 | |||||||||||||
Paid-in surplus (contributions by stockholder) |
5,117.0 | 5,116.8 | 5,156.8 | |||||||||||||
Accumulated other comprehensive gain/(loss) |
8.1 | (386.6 | ) | (778.1 | ) | |||||||||||
Retained earnings |
7,737.3 | 8,794.8 | 9,296.7 | |||||||||||||
Total stockholder’s equity |
12,887.4 | 13,550.0 | 13,700.4 | |||||||||||||
Total liabilities and stockholder’s equity |
$ | 174,999.5 | $ | 170,169.1 | $ | 172,567.2 | ||||||||||
The accompanying notes are an integral part of the financial statements.
3
ITEM 1. FINANCIAL STATEMENTS — Continued
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the Periods Ended June 30, 2003 and 2002
(in millions)
| First Half | ||||||||||||||||
| 2003 | 2002 | |||||||||||||||
| (Unaudited) | ||||||||||||||||
Cash flows from operating activities |
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Income from continuing operations |
$ | 842.5 | $ | 574.9 | ||||||||||||
Adjustments to reconcile income from continuing operations to net
cash provided by operating activities |
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Provision for credit losses |
1,063.4 | 1,551.0 | ||||||||||||||
Depreciation and amortization |
4,185.2 | 4,473.7 | ||||||||||||||
Gain on sales of finance receivables |
(283.8 | ) | (231.0 | ) | ||||||||||||
Increase in deferred income taxes |
329.2 | 337.7 | ||||||||||||||
Decrease/(increase) in other assets |
1,204.3 | (111.4 | ) | |||||||||||||
Increase in other liabilities |
260.4 | 1,195.4 | ||||||||||||||
All other operating activities |
41.4 | (195.9 | ) | |||||||||||||
Net cash provided by operating activities |
7,642.6 | 7,594.4 | ||||||||||||||
Cash flows from investing activities |
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Purchase of finance receivables (other than wholesale) |
(20,735.4 | ) | (26,378.9 | ) | ||||||||||||
Collection of finance receivables (other than wholesale) |
11,989.5 | 18,803.7 | ||||||||||||||
Purchase of operating lease vehicles |
(5,370.5 | ) | (10,356.8 | ) | ||||||||||||
Liquidation of operating lease vehicles |
6,405.1 | 8,113.1 | ||||||||||||||
Increase in wholesale receivables |
(3,209.7 | ) | (5,924.7 | ) | ||||||||||||
Net change in retained interests |
407.8 | (1,592.1 | ) | |||||||||||||
Decrease in notes receivable with affiliates |
360.0 | 92.0 | ||||||||||||||
Proceeds from sales of receivables |
13,573.2 | 19,430.4 | ||||||||||||||
Purchase of investment securities |
(314.1 | ) | (317.9 | ) | ||||||||||||
Proceeds from sale/maturity of investment securities |
372.0 | 266.0 | ||||||||||||||
All other investing activities |
100.1 | 196.8 | ||||||||||||||
Net cash provided by investing activities |
3,578.0 | 2,331.6 | ||||||||||||||
Cash flows from financing activities |
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Proceeds from issuance of long-term debt |
7,265.5 | 10,718.1 | ||||||||||||||
Principal payments on long-term debt |
(18,167.0 | ) | (12,583.1 | ) | ||||||||||||
Increase/(decrease) in short-term debt |
2,827.4 | (7,682.3 | ) | |||||||||||||
Cash dividends paid |
(1,900.0 | ) | — | |||||||||||||
Proceeds from debt repayments related to discontinued operations |
1,420.9 | — | ||||||||||||||
All other financing activities |
0.2 | 699.1 | ||||||||||||||
Net cash used by financing activities |
(8,553.0 | ) | (8,848.2 | ) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
204.8 | 216.9 | ||||||||||||||
Net change in cash and cash equivalents |
2,872.4 | 1,294.7 | ||||||||||||||
Cash and cash equivalents, beginning of period |
6,800.1 | 2,939.3 | ||||||||||||||
Cash and cash equivalents, end of period |
$ | 9,672.5 | $ | 4,234.0 | ||||||||||||
Supplementary cash flow information |
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Interest paid |
$ | 3,319.5 | $ | 3,454.7 | ||||||||||||
Taxes paid |
75.7 | 155.5 | ||||||||||||||
The accompanying notes are an integral part of the financial statements.
4
ITEM 1. FINANCIAL STATEMENTS — Continued
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Notes To Financial Statements
Note 1. Finance Receivables, Net (in millions)
| June 30, | December 31, | June 30, | |||||||||||
| 2003 | 2002 | 2002 | |||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||
Retail (a) |
$ | 79,191.4 | $ | 70,836.5 | $ | 81,210.1 | |||||||
Wholesale |
20,904.3 | 16,571.4 | 16,708.3 | ||||||||||
Other |
9,521.4 | 9,840.1 | 10,794.8 | ||||||||||
| &n | |||||||||||||