In evaluating Ford Motor Credit's financial performance, Ford Motor Credit management uses financial statements and other financial measures in accordance with Generally Accepted Accounting Principles ("GAAP"). Included below are brief definitions of key terms, information about the impact of on-balance sheet securitization and a reconciliation of non-GAAP measures to GAAP:
-- Managed receivables: receivables reported on Ford Motor Credit's
balance sheet, excluding unearned interest supplements related to
finance receivables, and receivables Ford Motor Credit sold in
off-balance sheet securitizations and continues to service
-- Charge-offs on managed receivables: charge-offs associated with
receivables reported on Ford Motor Credit's balance sheet and
charge-offs associated with receivables that Ford Motor Credit sold in
off-balance sheet securitizations and continues to service
-- Equity: shareholder's interest reported on Ford Motor Credit's balance
sheet
IMPACT OF ON-BALANCE SHEET SECURITIZATION: Finance receivables (retail
and wholesale) and net investment in operating leases reported on Ford
Motor Credit's balance sheet include assets included in securitizations
that do not qualify for accounting sale treatment. These assets are
available only for repayment of the debt or other obligations issued or
arising in the securitization transactions; they are not available to
pay the other obligations of Ford Motor Credit or the claims of Ford
Motor Credit's other creditors. Debt reported on Ford Motor Credit's
balance sheet includes obligations issued or arising in securitizations
that are payable only out of collections on the underlying securitized
assets and related enhancements.
RECONCILIATION OF NON-GAAP MEASURES TO GAAP:
Managed Leverage Calculation June 30, December 31,
2008 2007
---------- ------------
(in billions)
Total debt $137.5 $139.4
Securitized off-balance sheet receivables
outstanding 3.0 6.0
Retained interest in securitized
off-balance sheet receivables (0.4) (0.7)
Adjustments for cash, cash equivalents
and marketable securities* (19.6) (16.7)
Adjustments for hedge accounting** (0.1) 0.0
------ ------
Total adjusted debt $120.4 $128.0
====== ======
Total equity (including minority interest) $ 12.3 $ 13.4
Adjustments for hedge accounting** (0.2) (0.3)
------ ------
Total adjusted equity $ 12.1 $ 13.1
====== ======
Managed leverage (to 1) = Total adjusted
debt / Total adjusted equity 10.0 9.8
Memo: Financial statement leverage (to 1)
= Total debt / Total equity 11.2 10.4
Net Finance Receivables and Operating
Leases June 30, December 31,
2008 2007
---------- ------------
On-Balance Sheet Receivables (in billions)
Retail installment $ 70.9 $ 73.3
Wholesale 35.9 34.7
Other finance receivables 3.3 3.4
Unearned interest supplements (1.0) -
------ ------
Finance receivables, net 109.1 111.4
Net investment in operating leases 26.6 29.7
------ ------
Total net finance receivables and
operating leases $135.7 $141.1
====== ======
Off-Balance Sheet Receivables - Retail $ 3.0 $ 6.0
Managed Receivables
Retail installment $ 73.9 $ 79.3
Wholesale 35.9 34.7
Other finance receivables 3.3 3.4
Unearned interest supplements - -
------ ------
Finance receivables, net 113.1 117.4
Net investment in operating leases 26.6 29.7
------ ------
Total net finance receivables and
operating leases $139.7 $147.1
====== ======
- - - - -
* Excludes marketable securities related to insurance activities.
** Primarily related to market valuation adjustments from derivatives due
to movements in interest rates.
