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Ford Credit Earns $2 Billion In 2010*


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Fourth Quarter 2010 Earnings of $367 Million Reported

DEARBORN, Mich. - Ford Motor Credit Company reported net income of $2 billion in 2010, an improvement of $0.7 billion from earnings of $1.3 billion a year earlier. On a pre-tax basis, Ford Credit earned $3.1 billion in 2010, compared with $2 billion in the previous year. The full year increase in pre-tax earnings is primarily explained by a lower provision for credit losses and lower depreciation expense for leased vehicles related to higher auction values, offset partially by lower volume and the non-recurrence of net gains related to unhedged currency exposure primarily from cross-border intercompany lending.

In the fourth quarter of 2010, Ford Credit’s net income was $367 million, a decrease of $85 million from a year earlier. On a pre-tax basis, Ford Credit earned $572 million in the fourth quarter of 2010, compared with $714 million in the previous year. The decrease in pre-tax earnings primarily reflected lower volume and the non-recurrence of lower lease depreciation expense related to lower gains as fewer leases terminated and the vehicles were sold.

“We are pleased with our 2010 performance, which enabled us to increase our planned distributions,” Ford Credit Chairman and CEO Mike Bannister said. “We expect results to be solid though more moderate in 2011 as we continue to provide strong support for Ford, our dealers and customers.”

On December 31, 2010, Ford Credit’s on-balance sheet net receivables totaled $81 billion, compared with $93 billion at year-end 2009. Managed receivables were $83 billion on December 31, 2010, down from $95 billion at year-end 2009. The lower receivables primarily reflected the discontinuation of Jaguar, Land Rover, Mazda, and Volvo financing and lower industry volumes in recent years.

On December 31, 2010, managed leverage was 6.7 to 1. Ford Credit distributed $1 billion to its parent in the fourth quarter of 2010 for a total of $2.5 billion of distributions in 2010.

For full-year 2011, Ford Credit expects to be solidly profitable but at a lower level than in 2010, reflecting primarily the non-recurrence of lease depreciation expenses and credit loss reserve reductions of the same magnitude as 2010. At year-end 2011, managed receivables are anticipated to be in the range of $80 billion to $85 billion. Ford Credit expects to pay distributions to its parent of about $2 billion in 2011.

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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

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* The financial results discussed herein are presented on a preliminary basis; final data will be included in our Annual Report on Form 10-K for the year ended December 31, 2010.

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, geo-political events or other factors;
* Decline in or failure to grow Ford’s market share;
* Lower-than-anticipated market acceptance of new or existing Ford products;
* An increase in or acceleration of market shift beyond Ford’s current planning assumptions from sales of trucks, medium- and large-sized utilities, or other more profitable vehicles, particularly in the United States;
* Continued volatility of fuel prices or reduced availability of fuel;
* Continued or increased price competition resulting from industry overcapacity, currency fluctuations or other factors;
* Adverse effects from the bankruptcy, insolvency, or government-funded restructuring of, change in ownership or control of, or alliances entered into by a major competitor;
* Economic distress of suppliers 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 interruptions of production;
* 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 or materials where it has entered into long-term supply arrangements that commit it to purchase minimum or fixed quantities of certain parts or materials, 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;
* Adverse effects on Ford’s operations resulting from certain geo-political or other events;
* Substantial levels of indebtedness adversely affecting Ford’s financial condition or preventing Ford from fulfilling its debt obligations;

Ford Credit Related:

* A prolonged disruption of the debt and securitization markets;
* 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;
* Higher-than-expected credit losses;
* Adverse effects from the government-supported restructuring of, change in ownership or control of, or alliances entered into by a major competitor;
* Increased competition from banks or other financial institutions seeking to increase their share of retail installment financing Ford vehicles;
* Collection and servicing problems related to our finance receivables and net investment in operating leases;
* Lower-than-anticipated residual values or higher-than-expected return volumes for leased vehicles;
* New or increased credit, consumer or data protection or other laws and regulations resulting in higher costs and/or additional financing restrictions;
* The Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules and regulations promulgated pursuant to it, could impose significant costs on us and adversely affect our ability to fund or conduct our business;
* Changes in Ford’s operations or changes in Ford’s marketing programs could result in a decline in our financing volumes;
* Inability to obtain competitive funding;


* Fluctuations in foreign currency exchange rates and interest rates;
* 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; and
* Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates or investment returns).

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 2009 10-K Report and Item 1A of Part I of Ford’s 2009 10-K Report.


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