Ford Motor Credit Company reported a pre-tax profit of $498
million in the third quarter of 2014, compared with $427 million a
year earlier. The higher pre-tax profit was more than explained by
higher volume, reflecting increases in nearly all financing
products, including non-consumer and consumer finance receivables
globally, as well as leasing in North America. Ford Credit’s net
income was $718 million in the third quarter of 2014, compared with
$272 million in the previous year. The increase was primarily
driven by favorable tax items recorded in the third quarter.
“We continue to provide solid profits and strong support for
Ford Motor Company’s growth plans,” Chairman and CEO Bernard
Silverstone said. “The foundation of our profitability and growth
is the consistency and quality in our business fundamentals,
including risk standards, portfolio performance and delivery of
world-class customer and dealer service.”
On Sept. 30, 2014, Ford Credit’s total net receivables were $106
billion, compared with $100 billion at year-end 2013. Managed
receivables were $110 billion on Sept. 30, 2014, up from $103
billion on Dec. 31, 2013. On Sept. 30, 2014, managed leverage was
8.5:1, equal to year-end 2013.
Ford Credit continues to expect full-year pre-tax profit of $1.8
billion to $1.9 billion. Ford Credit’s guidance for year-end
managed receivables and managed leverage also is unchanged. Ford
Credit now expects distributions to its parent of about $400
million, up from prior guidance of about $250 million, primarily
driven by the favorable tax items. For 2015, Ford Credit expects
full-year pre-tax profit about equal to or higher than 2014.
# # #
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 Sept.
30, 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 September 30, 2013 and 2014 (in millions)
Third Quarter First Nine Months
2013 2014 2013 2014
(unaudited) Financing revenue Operating leases $
888 $
1,062 $ 2,460 $
3,029 Retail Financing 702 708 2,079 2,095 Dealer Financing 360 424
1,123 1,241 Other 24 20 73 62 Total
financing revenue 1,974 2,214 5,735 6,427 Depreciation on vehicles
subject to operating leases (629 ) (801 ) (1,663 ) (2,248 )
Interest expense (691 ) (663 ) (2,056 ) (2,002 ) Net financing
margin 654 750 2,016 2,177
Other revenue Insurance premiums
earned 28 31 87 94 Other income, net 81 67 204
184 Total financing margin and other revenue 763 848 2,307
2,455
Expenses Operating expenses 289 276 779 807 Provision
for credit losses 32 57 81 115 Insurance expenses 15 17
59 102 Total expenses 336 350
919 1,024
Income before income taxes 427 498
1,388 1,431 Provision for/(Benefit from) income taxes 155
(220 ) 477 137
Net income $
272
$ 718
$ 911 $
1,294 __________ Certain prior period amounts in our
Consolidated Income Statement were reclassified to conform to the
presentation in our 2013 Form 10-K Report.
CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME For the Periods Ended
September 30, 2013 and 2014 (in millions)
Third Quarter First Nine Months 2013
2014 2013 2014 (unaudited) Net
income $ 272 $ 718 $ 911 $ 1,294 Other comprehensive
income/(loss), net of tax Foreign currency translation 176
(335 ) (62 ) (332 )
Total other comprehensive income/(loss), net
of tax 176 (335 ) (62 ) (332 )
Comprehensive
income $
448 $
383 $ 849 $
962
FORD MOTOR CREDIT
COMPANY LLC AND SUBSIDIARIES PRELIMINARY CONSOLIDATED
BALANCE SHEET (in millions)
December 31, 2013
September 30,2014
(unaudited) ASSETS Cash and cash equivalents $ 9,424
$ 7,329 Marketable securities 1,943 3,767 Finance receivables, net
81,636 85,197 Net investment in operating leases 18,277 20,916
Notes and accounts receivable from affiliated companies 1,077 828
Derivative financial instruments 585 751 Other assets 2,666
2,428
Total assets $ 115,608 $
121,216
LIABILITIES Accounts payable Customer deposits, dealer
reserves, and other $ 1,445 $ 1,252 Affiliated companies 211
468 Total accounts payable 1,656 1,720 Debt 98,693 103,951
Deferred income taxes 1,627 1,618 Derivative financial instruments
506 291 Other liabilities and deferred income 2,522 2,314
Total liabilities 105,004 109,894
SHAREHOLDER’S INTEREST Shareholder’s interest 5,217 5,217
Accumulated other comprehensive income 717 385 Retained earnings
4,670 5,720
Total shareholder’s interest
10,604 11,322
Total liabilities and shareholder’s
interest $ 115,608 $
121,216 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
September 30,2014
(unaudited) ASSETS Cash and cash equivalents $ 4,198
$ 2,022 Finance receivables, net 45,796 37,590 Net investment in
operating leases 8,116 9,927 Derivative financial instruments 5 13
LIABILITIES Debt $ 40,728 $ 35,869 Derivative
financial instruments 88 18
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:
December 31, 2013
September 30,2014
Net Finance Receivables and Operating
Leases
Receivables
(a)
(in billions) Net Receivables Finance receivables – North
America Segment Consumer retail financing $ 40.9 $ 43.5
Non-Consumer Dealer financing (b) 22.1 21.5 Other 1.0 0.9
Total finance receivables – North America Segment 64.0 65.9
Finance receivables – International Segment Consumer retail
financing 10.8 11.8 Non-Consumer Dealer financing (b) 8.3 9.3 Other
0.4 0.3 Total finance receivables – International
Segment 19.5 21.4 Unearned interest supplements (1.5 ) (1.7 )
Allowance for credit losses (0.4 ) (0.4 ) Finance receivables, net
81.6 85.2 Net investment in operating leases 18.3 20.9
Total net receivables $ 99.9 $
106.1 Managed receivables Total
net receivables $ 99.9 $ 106.1 Unearned interest supplements and
residual support 3.1 3.8 Allowance for credit losses 0.4 0.4 Other,
primarily accumulated supplemental depreciation — 0.1
Total managed receivables $ 103.4 $
110.4
December 31, 2013
September 30, 2014
Managed Leverage Calculation
(in billions) Total debt (c) $ 98.7 $ 104.0 Adjustments for
cash, cash equivalents, and marketable securities (d) (10.8 ) (10.6
) Adjustments for derivative accounting (e) (0.2 ) (0.3 ) Total
adjusted debt $ 87.7 $
93.1 Equity (f) $ 10.6 $ 11.3 Adjustments for
derivative accounting (e) (0.3 ) (0.3 ) Total adjusted equity $
10.3 $ 11.0
Managed leverage (to 1) = Total adjusted debt / Total
adjusted equity 8.5 8.5 Memo: Financial statement leverage (to 1) =
Total debt / Equity 9.3 9.2
__________
(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.comStephen
DahleFixed IncomeInvestment
Community313.621.0881fixedinc@ford.com
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