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Ford Motor Credit Company

 

QUARTERLY REPORT
ON FORM 10-Q

 

for the quarter ended
June 30, 2002

 

Filed pursuant to Section 13
of the Securities Exchange Act of 1934

 


TABLE OF CONTENTS

Part I
Item 1 Financial Statements
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Financial Condition
Credit Ratings
Funding and Liquidity
Sales of Receivables and Securitization
Outlook
Cautionary Statement Regarding Forward Looking Statements
Changes in Accounting Standards
Other Financial Information
Additional Information
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Part II
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
Report of Independent Accountants
Exhibit Index
Calculation of Ratio of Earnings to Fixed Charges
Letter from PricewaterhouseCoopers LLP
Exhibit 99.1
Certification of CFO
Certification of CEO


Table of Contents

TABLE OF CONTENTS

                     
    Item           Page  
   
         
 
 
Part I   1     Financial Statements     2  
                     
    2     Management’s Discussion and Analysis of Financial Condition and Results of Operations     9  
                     
          Results of Operations     9  
                     
          Financial Condition     11  
                     
          Credit Ratings     15  
                     
          Funding and Liquidity     16  
                     
          Sales of Receivables and Securitization     18  
                     
          Outlook     21  
                     
          Cautionary Statement Regarding Forward Looking Statements     21  
                     
          Changes in Accounting Standards     22  
                     
          Other Financial Information     22  
                     
          Additional Information     22  
                     
    3     Quantitative and Qualitative Disclosures about Market Risk     23  
                     
Part II   1     Legal Proceedings     23  
                     
    5     Other Information     23  
                     
    6     Exhibit and Reports on Form 8-K     24  
                     
        Signatures     25  
                     
        Report of Independent Accountants     26  
                     
        Exhibit Index     E-1  
                     
          Exhibit 12 — Calculation of Ratios of Earnings to Fixed Charges     12-1  
                     
          Exhibit 15 — PricewaterhouseCoopers LLP Letter     15-1  
                     
          Exhibit 99.1 — Other Information: Sections of Ford Motor Company Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002     99.1-1  
                     
          Exhibit 99.2 — Certification of Chief Financial Officer     99.2-1  
                     
          Exhibit 99.3 — Certification of President & Chief Operating Officer     99.3-1  

 


Table of Contents

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, 2002

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


(Exact name of registrant as specified in its charter)
     
Delaware   38-1612444

 
(State of Incorporation)   (I.R.S. employer identification no.)
     
One American Road, Dearborn, Michigan   48126

 
(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 [  ]

     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 12, 2002. 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, sections of Item 1 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, 2002.

     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 E-1

 


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ITEM 1. FINANCIAL STATEMENTS — The interim financial data presented herein are unaudited, but in our opinion reflect all adjustments consisting only of normal recurring adjustments, necessary for a fair statement of such information. 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, 2001 (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 with 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, 2002 and 2001
(in millions)

                                     
        Second Quarter     First Half  
       
   
 
        2002     2001     2002     2001  
       
   
   
   
 
        (Unaudited)     (Unaudited)  
Financing revenue
                               
 
Operating leases
  $ 2,863.2     $ 2,938.3     $ 5,832.0     $ 5,845.1  
 
Retail
    1,902.3       2,133.1       3,847.9       4,180.2  
 
Wholesale
    215.2       738.3       451.4       1,531.9  
 
Other
    87.7       117.0       180.1       247.6  
 
 
   
   
   
 
   
Total financing revenue
    5,068.4       5,926.7       10,311.4       11,804.8  
 
Depreciation on operating leases
    (2,216.6 )     (2,250.0 )     (4,472.8 )     (4,371.4 )
Interest expense
    (1,748.5 )     (2,347.7 )     (3,630.3 )     (4,773.7 )
 
 
   
   
   
 
   
Net financing margin
    1,103.3       1,329.0       2,208.3       2,659.7  
 
Other revenue
                               
 
Investment and other income related to securitizations
    519.1       231.9       1,157.4       548.8  
 
Insurance premiums earned
    66.7       60.0       128.1       119.8  
 
Other income
    239.9       155.0       405.3       370.6  
 
 
   
   
   
 
   
Total financing margin and revenue
    1,929.0       1,775.9       3,899.1       3,698.9  
 
Expenses
                               
 
Operating expenses
    665.2       632.0       1,289.5       1,266.8  
 
Provision for credit losses
    659.7       485.4       1,551.7       1,103.3  
 
Other insurance expenses
    79.0       74.2       125.6       118.8  
 
 
   
   
   
 
   
Total expenses
    1,403.9       1,191.6       2,966.8       2,488.9  
 
 
   
   
   
 
 
Income before income taxes and minority interests
    525.1       584.3       932.3       1,210.0  
Provision for income taxes
    194.8       216.8       345.9       448.9  
 
 
   
   
   
 
 
Income before minority interests
    330.3       367.5       586.4       761.1  
Minority interests in net income of subsidiaries
    0.2       0.8       0.5       0.9  
 
 
   
   
   
 
   
Net income
    330.1       366.7       585.9       760.2  
 
Earnings retained for use in the business
                               
 
Beginning of period
    8,966.6       8,415.8       8,710.8       8,272.3  
 
Dividends
                      (250.0 )
 
 
   
   
   
 
   
End of period
  $ 9,296.7     $ 8,782.5     $ 9,296.7     $ 8,782.5  
 
 
   
   
   
 

The accompanying notes are an integral part of the financial statements.

2


Table of Contents

ITEM 1. FINANCIAL STATEMENTS

FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Consolidated Balance Sheet
(in millions)

                             
        June 30,     December 31,     June 30,  
        2002     2001     2001  
       
   
   
 
        (Unaudited)             (Unaudited)  
Assets
                       
 
Cash and cash equivalents
  $ 4,306.5     $ 2,945.3     $ 1,524.1  
 
Investments in securities
    577.8       525.9       561.2  
 
Finance receivables, net
    106,297.4       108,133.1       124,588.2  
 
Net investment, operating leases
    37,635.6       39,334.9       39,627.1  
 
Retained interest in securitized assets
    11,514.7       12,548.4       6,961.4  
 
Notes and accounts receivable from affiliated companies
    1,770.9       2,529.0       2,569.6  
 
Derivative financial instruments
    4,643.8       1,568.3       936.2  
 
Other assets
    5,820.5       5,511.5       5,277.0  
 
 
   
   
 
   
Total assets
  $ 172,567.2     $ 173,096.4     $ 182,044.8  
 
 
   
   
 
Liabilities and Stockholder’s Equity
                       
Liabilities
                       
 
Accounts payable
                       
   
Trade, customer deposits, and dealer reserves
  $ 2,149.9     $ 1,174.0     $ 3,107.0  
   
Affiliated companies
    1,346.5       1,005.6       910.7  
 
 
   
   
 
   
Total accounts payable
    3,496.4       2,179.6       4,017.7  
 
 
Debt
    142,666.9       146,343.7       153,856.1  
 
Deferred income taxes
    5,041.6       4,591.5       4,657.0  
 
Derivative financial instruments
    1,495.6       2,058.4       2,125.9  
 
Other liabilities and deferred income
    6,148.0       5,921.6       5,389.8  
 
 
   
   
 
   
Total liabilities
    158,848.5       161,094.8       170,046.5  
 
 
Minority interests in net assets of subsidiaries
    18.3       17.8       16.8  
 
Stockholder’s Equity
                       
 
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)
    5,156.8       4,457.7       4,265.8  
 
Accumulated other comprehensive loss
    (778.1 )     (1,209.7 )     (1,091.8 )
 
Retained earnings
    9,296.7       8,710.8       8,782.5  
 
 
   
   
 
   
Total stockholder’s equity
    13,700.4       11,983.8       11,981.5  
 
 
   
   
 
   
Total liabilities and stockholder’s equity
  $ 172,567.2     $ 173,096.4     $ 182,044.8  
 
 
   
   
 

The accompanying notes are an integral part of the financial statements.

3


Table of Contents

ITEM 1. FINANCIAL STATEMENTS

FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the Periods Ended June 30, 2002 and 2001
(in millions)

                         
            First Half  
           
 
            2002     2001  
           
   
 
            (Unaudited)  
Cash flows from operating activities
               
 
Net income
  $ 585.9     $ 760.2  
   
Adjustments to reconcile net income to net cash provided by operating activities
               
   
Provision for credit losses
    1,551.7       1,103.3  
   
Depreciation and amortization
    4,684.0       4,624.8  
   
Gain on sales of finance receivables
    (231.0 )     (219.4 )
   
Increase in deferred income taxes
    337.4       437.5  
   
Decrease/(increase) in other assets
    261.2       (314.7 )
   
Increase/(decrease) in other liabilities
    1,122.5       (1,467.0 )
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