Ford Credit Earns $355 Million Net Income In The Third Quarter Of 2012

DEARBORN, Mich. — Ford Motor Credit Company reported net income of $355 million in the third quarter of 2012, compared with $350 million a year earlier. On a pre-tax basis, Ford Credit earned $393 million in the third quarter, compared with $581 million a year earlier.

Net income in the third quarter of 2012 includes a favorable, one-time, non-cash item from the release of a valuation allowance against certain deferred tax assets in South America. The decrease in pre-tax earnings is more than explained by fewer lease terminations, which resulted in fewer vehicles sold at a gain, lower financing margin, and the non-recurrence of credit loss reserve reductions.

“We remain on track for solid full-year results, and credit-loss performance continues to be in line with historical lows,” Chairman and CEO Mike Bannister said. “We are pleased to continue our consistent and profitable support of Ford Motor Company sales.”

On September 30, 2012, Ford Credit’s net receivables totaled $85 billion, compared with $83 billion at year-end 2011. Managed receivables were $87 billion on September 30, 2012, up from $85 billion on December 31, 2011.

On September 30, 2012, managed leverage was 8.0 to 1, compared with 8.3 to 1 at December 31, 2011. Ford Credit distributed $300 million to its parent in the third quarter and $600 million in the first nine months of 2012.

Ford Credit now expects full year pre-tax profit of about $1.6 billion and total distributions to its parent of about $600 million. Ford Credit continues to project managed receivables at year end to be in the range of $85 billion to $90 billion.

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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 an indirect, wholly owned subsidiary of Ford. For more information, visit www.fordcredit.com or www.lincolnafs.com.

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* The financial results discussed herein are presented on a preliminary basis; final data will be included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.

Cautionary Statement Regarding Forward Looking Statements

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:

Automotive Related:

• 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 new or existing Ford 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 fuel prices, 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;
• 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 Ford’s costs, affect Ford’s 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, information technology issues, production constraints or difficulties, or other factors);
• Single-source supply of components or materials;
• Restriction on use of tax attributes from tax law “ownership change”;
• The discovery of defects in Ford vehicles resulting in delays in new model launches, recall campaigns, reputational damage or increased warranty costs;
• Increased safety, emissions, fuel economy or other regulation 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 Ford products, perceived environmental impacts, or otherwise;
• A change in Ford’s requirements for parts where it has entered into long-term supply arrangements that commit it 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 Ford’s results from a decrease in or cessation or clawback of government incentives related to capital investments;

Ford Credit Related:

• Inability 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;
• Increased competition from banks or other financial institutions seeking to increase their share of financing Ford vehicles;
• Higher-than-expected credit losses, lower-than-anticipated residual values or higher-than-expected return volumes for leased vehicles;
• Cybersecurity risks to operational systems, security systems, or infrastructure owned by us or a third-party vendor, or at a supplier facility;
• New or increased credit, consumer or data protection or other laws and regulations resulting in higher costs and/or additional financing restrictions;
• Changes in Ford’s operations or changes in Ford’s marketing programs could result in a decline in our financing volumes;

General:

• Fluctuations in foreign currency exchange rates and interest rates;
• Adverse effects on Ford’s or our operations resulting from economic, geopolitical, or other events;
• Failure of financial institutions to fulfill commitments under committed credit and liquidity facilities;
• Labor or other constraints on Ford’s or our ability to maintain competitive cost structure;
• Substantial pension and postretirement healthcare and life insurance liabilities impairing Ford’s or our liquidity or financial condition;
• Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates or investment returns); and
• Inherent limitations of internal controls impacting financial statements and safeguarding of assets.

We cannot be certain that any expectations, forecasts, or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections 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 statements, whether as a result of new information, future events, or otherwise. For additional discussion of these risk factors, see Item 1A of Part I of our 2011 10-K Report and Item 1A of Part I of Ford’s 2011 10-K Report.

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES PRELIMINARY   CONSOLIDATED STATEMENT OF OPERATIONS For the Periods Ended September 30, 2012 and 2011 (in millions)
	Third Quarter				First Nine Months
	2012		2011		2012		2011
	(unaudited)				(unaudited)
Financing revenue
Operating leases	$               672		$               591		$             1,909		$             1,861
Retail	468		513		1,426		1,563
Interest supplements and other support costs earned from affiliated companies	589		692		1,800		2,129
Wholesale	214		245		696		710
Other	17		12		43		40
Total financing revenue	1,960		2,053		5,874		6,303
Depreciation on vehicles subject to operating leases	(640)		(464)		(1,808)		(1,236)
Interest expense	(741)		(888)		(2,318)		(2,676)
Net financing margin	579		701		1,748		2,391
Other revenue
Insurance premiums earned	24		31		75		77
Other income, net	85		122		207		206
Total financing margin and other revenue	688		854		2,030		2,674
Expenses
Operating expenses	240		264		731		806
Provision for credit losses	42		(20)		(33)		(109)
Insurance expenses	13		29		49		79
Total expenses	295		273		747		776
Income/(Loss) before income taxes	393		581		1,283		1,898
Provision for income taxes	38		231		337		714
Net income/(loss)	$               355		$               350		$                946		$             1,184
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the Periods Ended September 30, 2012 and 2011 (in millions)
	Third Quarter				First Nine Months
	2012		2011		2012		2011
	(unaudited)				(unaudited)
Net income/(loss)	$               355		$               350		$                946		$             1,184
Other comprehensive income/(loss), net of tax:
Foreign currency translation	185		(514)		141		(82)
Total other comprehensive income/(loss), net of tax	185		(514)		141		(82)
Comprehensive income/(loss)	$               540		$             (164)		$             1,087		$             1,102
FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES PRELIMINARY   CONSOLIDATED BALANCE SHEET (in millions)
					September 30,		December 31,
					2012		2011
					(unaudited)
ASSETS
Cash and cash equivalents					$             7,059		$             8,713
Marketable securities					4,111		3,835
Finance receivables, net					71,517		71,907
Net investment in operating leases					13,949		11,098
Notes and accounts receivable from affiliated companies					959		1,152
Derivative financial instruments					1,475		1,365
Other assets					2,257		2,172
Total assets					$         101,327		$         100,242
LIABILITIES
Accounts payable
Customer deposits, dealer reserves and other					$                975		$                901
Affiliated companies					738		773
Total accounts payable					1,713		1,674
Debt					84,714		84,659
Deferred income taxes					1,491		1,134
Derivative financial instruments					400		286
Other liabilities and deferred income					3,626		3,593
Total liabilities					91,944		91,346
SHAREHOLDER’S INTEREST
Shareholder’s interest					5,274		5,274
Accumulated other comprehensive income					741		600
Retained earnings					3,368		3,022
Total shareholder’s interest					9,383		8,896
Total liabilities and shareholder’s interest					$         101,327		$         100,242
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.
					September 30,		December 31,
					2012		2011
					(unaudited)
ASSETS
Cash and cash equivalents					$             2,774		$             3,356
Finance receivables, net					43,991		49,329
Net investment in operating leases					5,079		6,354
Derivative financial instruments					3		157
LIABILITIES
Debt					$           37,563		$           41,421
Derivative financial instruments					139		97
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					September 30,		December 31,
					2012		2011
Receivables (a)					(in billions)
Finance Receivables – North America Segment
Consumer
Retail installment and direct financing leases					$               39.3		$               38.4
Non-Consumer
Wholesale					15.6		15.5
Dealer loan and other					2.2		2.1
Total North America Segment – finance receivables					57.1		56.0
Finance Receivables – International Segment
Consumer
Retail installment and direct financing leases					8.9		9.1
Non-Consumer
Wholesale					7.0		8.5
Dealer loan and other					0.4		0.4
Total International Segment – finance receivables					16.3		18.0
Unearned interest supplements					(1.5)		(1.6)
Allowance for credit losses					(0.4)		(0.5)
Finance receivables, net					71.5		71.9
Net investment in operating leases					14.0		11.1
Total receivables					$               85.5		$               83.0
Memo:  Total managed receivables (b)					$               87.0		$               84.6
Managed Leverage Calculation					September 30,		December 31,
					2012		2011
					(in billions)
Total debt (c)					$               84.7		$               84.7
Adjustments for cash, cash equivalents, and marketable securities (d)					(10.7)		(12.1)
Adjustments for derivative accounting (e)					(0.9)		(0.7)
Total adjusted debt					$               73.1		$               71.9
Equity (f)					$                 9.4		$                 8.9
Adjustments for derivative accounting (e)					(0.3)		(0.2)
Total adjusted equity					$                 9.1		$                 8.7
Managed leverage (to 1) = Total adjusted debt / Total adjusted equity					8.0		8.3
Memo:  Financial statement leverage (to 1) = Total debt / Equity					9.0		9.5

SOURCE Ford Motor Credit Company