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Ford Motor Credit Reports Q2 2008 Preliminary Results

DEARBORN, Mich., July 24 /PRNewswire-FirstCall/ -- Ford Motor Credit Company reported a net loss of $1,427 million in the second quarter of 2008, down $1,489 million from net income of $62 million a year earlier. On a pre-tax basis, Ford Motor Credit reported a loss of $2,380 million, compared with earnings of $112 million in the previous year. Excluding a $2.1 billion impairment charge for operating leases, Ford Motor Credit incurred a pre-tax loss of $294 million in the second quarter of 2008.

The decrease in pre-tax earnings primarily reflected the impairment charge for operating leases, higher depreciation expense for leased vehicles, and higher provision for credit losses. These were offset partially by the non-recurrence of net losses related to market valuation adjustments from derivatives, higher financing margin, a gain related to the sale of approximately half of our ownership interest in our Nordic operations, and lower operating costs.

During the second quarter of 2008, higher fuel prices and the weak economic climate in North America resulted in a pronounced shift in consumer preferences from full-size trucks and traditional sport utility vehicles to smaller, more fuel-efficient vehicles. This shift in consumer preferences combined with a weak economic climate caused a significant reduction in auction values for used full-size trucks and traditional sport utility vehicles. In addition, Ford Motor Credit completed its quarterly North America operating lease review and projected that lease-end residual values would be significantly lower than previously expected for full-size trucks and traditional sport utility vehicles. As a result of these market factors and Ford Motor Credit's portfolio review, Ford Motor Credit determined a pre-tax impairment charge of $2.1 billion was required.

"Dramatic, rapid marketplace changes are driving increased weakness in the vehicle auction markets, in turn affecting the entire industry, including Ford Motor Credit," said Mike Bannister, chairman and CEO of Ford Motor Credit. "We regularly review and adjust lease residual values to align with market conditions. In addition, the core of our business remains strong, because it is built upon lending practices, risk management and collections activities that are consistent and prudent."

On June 30, 2008, Ford Motor Credit's on-balance sheet net receivables totaled $136 billion, compared with $141 billion at year-end 2007. Managed receivables were $140 billion on June 30, 2008, down from $147 billion on December 31, 2007. The lower receivables were more than explained by lower North America receivables, the impact of divestitures, and the impairment charge for operating leases, offset partially by changes in currency exchange rates.

    On June 30, 2008, managed leverage was 10 to 1.

    Ford Motor Credit Company LLC is one of the world's largest automotive
    finance companies and has supported the sale of Ford Motor Company
    products since 1959.  Ford Motor Credit is an indirect, wholly owned
    subsidiary of Ford.  It provides automotive financing for Ford, Lincoln,
    Mercury, Jaguar, Land Rover, Mazda and Volvo dealers and customers.  More
    information can be found at 
www.fordcredit.com and at Ford Motor
    Credit's investor center, 
www.fordcredit.com/investorcenter/ 
    - - - - -
    *  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 June 30, 2008.



                FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
                                 PRELIMINARY
                       CONSOLIDATED STATEMENT OF INCOME
                 For the Periods Ended June 30, 2008 and 2007
                                (in millions)



                                           Second Quarter    First Half
                                          --------------- ---------------
                                            2008    2007    2008   2007
                                          ------- ------- ------- -------
                                             (Unaudited)    (Unaudited)
    Financing revenue
      Operating leases                    $ 1,695 $ 1,554 $ 3,402 $ 3,049
      Retail                                  779     837   1,638   1,696
      Interest supplements and other
       support costs earned from
       affiliated companies                 1,247   1,125   2,493   2,192
      Wholesale                               438     552     915   1,092
      Other                                    36      43      71      90
                                          ------- ------- ------- -------
         Total financing revenue            4,195   4,111   8,519   8,119
    Depreciation on vehicles subject to
     operating leases                      (4,090) (1,450) (5,904) (2,925)
    Interest expense                       (1,901) (2,166) (3,893) (4,315)
                                          ------- ------- ------- -------
      Net financing margin                 (1,796)    495  (1,278)    879
    Other revenue
      Investment and other income
       related to sales of receivables         48     102     117     211
      Insurance premiums earned, net           42      43      82      87
      Other income, net                       303      42     421     418
                                          ------- ------- ------- -------
          Total financing margin and
           other revenue                   (1,403)    682    (658)  1,595
    Expenses
      Operating expenses                      379     450     746   1,006
      Provision for credit losses             545      82     872     128
      Insurance expenses                       53      38      72      55
                                          ------- ------- ------- -------
          Total expenses                      977     570   1,690   1,189
                                          ------- ------- ------- -------
    Income/(Loss) before income taxes      (2,380)    112  (2,348)    406
    Provision for/(Benefit from) income
     taxes                                   (945)     50    (936)    151
                                          ------- ------- ------- -------
      Income/(Loss) before minority
       interests                           (1,435)     62  (1,412)    255
    Minority interests in net income of
     subsidiaries                               0       0       0       0
                                          ------- ------- ------- -------
      Income/(Loss) from continuing
       operations                          (1,435)     62  (1,412)    255
    Gain on disposal of discontinued
     operations                                 8       -       9       -
                                          ------- ------- ------- -------
      Net income/(loss)                   $(1,427)$    62 $(1,403)$   255
                                          ======= ======= ======= =======



                FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
                                 PRELIMINARY
                          CONSOLIDATED BALANCE SHEET
                                (in millions)

                                                     June 30,     December 31,
                                                       2008           2007
                                                   ------------  -------------
                                                    (Unaudited)
    ASSETS
     Cash and cash equivalents                       $ 12,673       $ 14,137
     Marketable securities                              7,425          3,155
     Finance receivables, net                         109,088        111,468
     Net investment in operating leases                26,553         29,663
     Retained interest in securitized assets              380            653
     Notes and accounts receivable from affiliated
      companies                                           875            906
     Derivative financial instruments                   2,148          2,811
     Other assets                                       5,259          6,230
                                                     --------       --------
          Total assets                               $164,401       $169,023
                                                     ========       ========

    LIABILITIES AND SHAREHOLDER'S INTEREST
    Liabilities
      Accounts payable
        Customer deposits, dealer reserves and other $  1,866       $  1,837
        Affiliated companies                            1,919          2,308
                                                     --------       --------
          Total accounts payable                        3,785          4,145
      Debt                                            137,519        139,411
      Deferred income taxes                             3,685          5,380
      Derivative financial instruments                  1,297          1,376
      Other liabilities and deferred income             5,810          5,314
                                                     --------       --------
          Total liabilities                           152,096        155,626

    Minority interests in net assets of subsidiaries        0              3

    Shareholder's interest
      Shareholder's interest                            5,149          5,149
      Accumulated other comprehensive income            2,038          1,730
      Retained earnings                                 5,118          6,515
                                                     --------       --------
          Total shareholder's interest                 12,305         13,394
                                                     --------       --------
          Total liabilities and shareholder's
           interest                                  $164,401       $169,023
                                                     ========       ========



                FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
                             OPERATING HIGHLIGHTS


                                         Second Quarter        First Half
                                        ----------------    ----------------
                                         2008      2007      2008      2007
                                        ------    ------    ------    ------
    Financing Shares
    United States
       Financing share - Ford, Lincoln
        and Mercury
          Retail installment and lease     39%       38%       38%       37%
          Wholesale                        77        78        77        78

    Europe
       Financing share - Ford
          Retail installment and lease     28%       27%       27%       26%
          Wholesale                        98        97        97        97

    Contract Volume - New and used
     retail/lease (in thousands)
    North America segment
       United States                      312       354       587       659
       Canada                              48        59        79        94
                                        -----     -----     -----     -----
          Total North America segment     360       413       666       753

    International segment
       Europe                             177       186       355       371
       Other international                 29        47        78       106
                                        -----     -----     -----     -----
          Total International segment     206       233       433       477
                                        -----     -----     -----     -----
             Total contract volume        566       646     1,099     1,230
                                        =====     =====     =====     =====

    Borrowing Cost Rate*                  5.4%      6.1%      5.5%      6.0%

    Charge-offs (in millions)
      On-Balance Sheet Receivables
        Retail installment and lease     $232      $116      $458      $218
        Wholesale                          12         8        13        12
        Other                               2         1         4         2
                                        -----     -----     -----     -----
          Total charge-offs -
           on-balance sheet receivables  $246      $125      $475      $232
                                        =====     =====     =====     =====

      Total loss-to-receivables ratio    0.70%     0.36%     0.67%     0.34%

      Managed Receivables**
        Retail installment and lease     $240      $130      $480      $250
        Wholesale                          12         8        13        12
        Other                               2         1         4         2
                                        -----     -----     -----     -----
          Total charge-offs -
           managed receivables           $254      $139      $497      $264
                                        =====     =====     =====     =====

      Total loss-to-receivables ratio    0.70%     0.38%     0.68%     0.36%

    - - - - -
    *  On-balance sheet debt includes the effects of derivatives and facility
       fees.
    ** See appendix for additional information.



                FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
                                   APPENDIX

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.

Web site: http://www.fordcredit.com/
http://www.fordcredit.com/investorcenter//