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FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

(MARK ONE)

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended December 31, 1993

OR

___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _________________ to __________________

Commission file number 1-6368


FORD MOTOR CREDIT COMPANY
(Exact name of registrant as specified in its charter)

Delaware 38-1612444
(State of Incorporation) (I.R.S. employer identification no.)

The American Road, Dearborn, Michigan 48121
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code (313) 322-3000

Securities registered pursuant to Section 12(b) of the Act:
(See following page)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

As of February 28, 1994, the registrant had outstanding 250,000 shares of
Common Stock.

THE REGISTRANT MEETS THE CONDITION SET FORTH IN GENERAL INSTRUCTION J(1)(A)
AND (B) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.

[Cover page 1 of 2 pages]
2


Securities registered pursuant to Section 12(b) of the Act as of December 31,
1993

Name of each exchange
Title of each class on which registered
------------------- ----------------------

4 1/2% Convertible Subordinated Debentures New York Stock Exchange
due November 15, 1996





[Cover page 2 of 2 pages]





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PART I

ITEM 1. BUSINESS

The registrant, Ford Motor Credit Company, was incorporated in
Delaware in 1959 and is a wholly owned subsidiary of Ford Motor Company (the
"Company" or "Ford"). As used herein "Ford Credit" refers to Ford Motor Credit
Company and its subsidiaries unless the context otherwise requires.

Ford Credit provides wholesale financing and capital loans to
franchised Ford Motor Company vehicle dealers and other dealers associated with
such dealers and purchases retail installment sale contracts and retail leases
from them. Ford Credit also makes loans to vehicle leasing companies, the
majority of which are affiliated with such dealers. In addition, a wholly
owned subsidiary of Ford Credit provides these financing services in the U.S.
to other vehicle dealers. Vehicle financing accounted for 97.5% of the dollar
volume of financing done by Ford Credit in 1993 and 97.3% in 1992.
More than 85% of all new vehicles financed by Ford Credit are manufactured
by Ford or its affiliates. Ford Credit also provides retail financing for used
vehicles built by Ford and other manufacturers, which accounted for 19% of the
dollar volume of retail vehicle financing done by Ford Credit in both 1993 and
1992. In addition to vehicle financing, Ford Credit makes loans to affiliates
of Ford, finances certain receivables of Ford and its subsidiaries, and offers
diversified financing services which are managed by USL Capital Corporation
(formerly United States Leasing International, Inc.) ("USL Capital"), a wholly
owned subsidiary of Ford Holdings, Inc. ("Ford Holdings").

In 1993 and 1992, United States operations, conducted in all 50
states, the District of Columbia and Puerto Rico, accounted for 93.8% and
93.2%, respectively, of the dollar volume of Ford Credit's financing business;
Canadian operations accounted for 4.6% and 5.0%, respectively, of such volume
in these periods. The balance was in Australia. In addition, Ford Credit
manages the vehicle financing operations of Ford in other foreign countries
which are conducted through other subsidiaries of Ford.

Ford Credit manages the insurance business of The American Road
Insurance Company ("American Road"), a wholly owned subsidiary of Ford
Holdings. Ford Credit is a significant equity participant in Ford Holdings
whose primary activities consist of consumer and commercial financing
operations, insurance underwriting and equipment leasing.

The business of Ford Credit is substantially dependent upon Ford Motor
Company. See "Vehicle Financing" and "Borrowings and Other Sources of Funds"
under the caption "Business of Ford Credit". Also see Item 7 -- "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
Any protracted reduction or suspension of Ford's production or sale of
vehicles, resulting from a decline in demand, a work stoppage, governmental
action, adverse publicity, or other event, could have a substantial adverse
effect on Ford Credit. For additional information concerning Ford's results
of operations, see Ford Motor Company's Annual Report on Form 10-K for the
year ended December 31, 1993 filed with the Securities and Exchange Commission
and for additional information concerning the business of Ford Holdings, see
Ford Holdings' Annual Report on Form 10-K for the year ended December 31, 1993
filed with the Securities and Exchange Commission.




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The mailing address of Ford Credit's executive offices is The American
Road, Dearborn, Michigan 48121. The telephone number of such offices is (313)
322-3000.

SEGMENT INFORMATION

Segment information called for by Item 1 is set forth in Note 11 of
Notes to Financial Statements and is incorporated herein by reference.


BUSINESS OF FORD CREDIT

Ford Credit accounts for its financing business in four categories --
retail (which consists of vehicle installment sale financing and vehicle lease
financing), wholesale, diversified and other. Total gross finance receivables
and net investment in operating leases outstanding in these four categories
were as follows at the end of the years indicated:




1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(in millions)

Retail*.......... $51,210.2 $43,347.9 $37,647.5 $38,660.8 $38,217.0
Wholesale........ 11,698.5 10,056.9 11,465.7 12,721.9 11,058.3
Diversified...... 3,084.0 3,550.2 4,335.0 4,814.9 4,592.0
Other............ 3,626.5 3,279.0 3,138.6 6,095.8 5,708.9
------- -------- -------- ------- -------

Total.......... $69,619.2 $60,234.0 $56,586.8 $62,293.4 $59,576.2
- - - - - - ----------- -------- -------- -------- -------- --------
-------- -------- -------- -------- --------

*Includes net investment in operating leases.

Dollar volume of financing by Ford Credit was as follows during the years
indicated:





1993 1992 1991 1990 1989
-------- -------- -------- -------- -------
(in millions)


Retail*............ $ 40,265.9 $32,302.0 $26,271.7 $25,813.1 $25,967.0
Wholesale......... 86,776.8 65,772.9 65,146.6 52,553.2 51,417.7
Diversified....... 73.5 63.0 206.0 614.8 1,390.5
Other............. 1,578.3 1,457.1 1,137.8 3,134.9 3,344.0
-------- -------- -------- -------- --------
Total........... $128,694.5 $99,595.0 $92,762.1 $82,116.0 $82,119.2
- - - - - - -------- ---------- --------- --------- --------- ---------
---------- --------- --------- --------- ---------

* Includes operating lease volume.




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VEHICLE FINANCING

RETAIL. Retail financing consists primarily of installment sale
financing and retail lease financing of vehicles and loans to vehicle leasing
companies, most of which are affiliated with franchised Ford Motor Company
dealers. The number of installment sale and lease vehicles financed by Ford
Credit was as follows during the years indicated:



1993 1992 1991 1990 1989
---- ---- ---- ---- ----
(in thousands)

New......... 1,799 1,525 1,271 1,302 1,342
Used........ 625 524 441 365 394
----- ----- ----- ----- -----

Total....... 2,424 2,049 1,712 1,667 1,736
----- ----- ----- ----- -----
----- ----- ----- ----- -----



The levels of Ford Credit's retail financing volume and outstanding
receivables and lease investments are dependent on several factors, including
new and used vehicle sales and leases, Ford Credit's share of those vehicle
sales and leases and the average cost of vehicles financed. See "Competition
in Vehicle Financing". In addition, receivables levels will vary depending on
sales of receivables.

Installment sale financing consists principally of purchasing and
servicing installment sale contracts covering sales of new and used vehicles by
vehicle dealers to retail customers. The purchase price paid by Ford Credit to
the dealer for an installment sale contract generally is the amount financed.
In addition, a portion of the finance charge is paid or credited to the dealer.
Ford Credit requires a retail customer to carry fire, theft and collision
insurance on the vehicle. For 1993 in the U.S., the average repayment
obligation for new vehicles covered by installment sale contracts purchased by
Ford Credit was $17,471. The corresponding average monthly payment was $331
and the average original term was 54 months.

Retail lease financing consists principally of purchasing and servicing
lease contracts covering new and used vehicles leased to retail customers by
vehicle dealers. In recent years, vehicle leasing has increased in popularity
by offering the retail customer a lower initial cash outlay for the vehicle and
lower monthly payments when compared with conventional installment sale
financing. Since 1990, retail lease financing has become a larger percentage of
Ford Credit's total retail financing dollar volume, increasing from 15% in 1990
to 26% in 1993. The number of new and used vehicles for which Ford Credit
provided retail lease financing increased from approximately 186,000 units in
1990 to approximately 521,000 units in 1993.

The amount paid by Ford Credit to the dealer for the vehicle and lease
(the "acquisition cost") represents a negotiated amount agreed to between the
dealer and the customer, less any trade-in or downpayment. The monthly lease
payment equals the acquisition cost of the vehicle less the residual value of
the vehicle established by Ford Credit, amortized over the lease term, plus the
lease charge. A retail lessee is required to carry fire, theft, collision and
liability insurance. The acquisition cost to Ford Credit of the vehicle, less
the residual value, is depreciated on a straight line basis over the life of
the lease. Residual values are determined by Ford Credit after analyzing
residual values published by the Automotive Lease Guide and Ford Credit's own
historical experience in the used car market. In addition, joint marketing




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programs with Ford's vehicle divisions can affect established residual values.
At lease termination, Ford Credit either sells the vehicle to the dealer for
the established residual value or sells the vehicle at auction for the market
price.

Retail lease terms range from 12 to 60 months with 24 month and 36
month terms being by far the most popular. The average monthly payment and the
average original term of U.S. retail lease contracts purchased by Ford Credit
in 1993 were $370 and 29 months compared with $337 and 30 months in 1992.

The average original term of the lease financing extended to leasing
companies and daily rental companies by Ford Credit in 1993 was 35 months and
15 months, respectively. Financing charges in connection with such lease
financing generally are based on short-term interest rates in effect at the
time the financing is extended. These rates may be supplemented by payments
from Ford whenever the rate payable is less than the specified minimum rate
agreed upon between Ford Credit and Ford. At December 31, 1993, 8 leasing
companies each accounted for more than $10 million of such lease financing,
three of which accounted for $402.1 million, $287.7 million and $82.6 million
of such lease financing, respectively.

WHOLESALE. Wholesale financing consists principally of loans, under
approved lines of credit, to dealers to assist them in carrying inventories of
new vehicles. Ford Credit generally finances 100% of the wholesale price.
Vehicles are insured against fire, theft and other risks under policies issued
to Ford Credit by American Road. Ford Credit's United States car and truck
wholesale receivables that liquidated were outstanding an average of about 68
days in 1993 and 74 days in 1992.

The levels of Ford Credit's wholesale financing volume and outstanding
wholesale receivables are dependent on several factors, including sales by Ford
to dealers, the level of dealer inventories, Ford Credit's share of Ford's
sales to dealers, vehicle prices and sales of wholesale receivables.

COMPETITION IN VEHICLE FINANCING. The vehicle financing field is
highly competitive, particularly in the case of retail financing. Ford
Credit's principal competitors for retail installment sale financing have been
banks and credit unions. Banks and other leasing companies are Ford Credit's
principal competitors for wholesale financing and lease financing.

Ford Credit financed the following percentages of new Ford and
Lincoln-Mercury cars and trucks sold or leased at retail and sold at wholesale
in the United States during each of the years indicated:



1993 1992 1991 1990 1989
------ ------ ------ ------ ------

Retail*................ 38.5% 37.7% 35.2% 31.4% 29.7%
Wholesale.............. 81.4 77.6 74.9 71.0 69.8


* As a percentage of total sales and leases, including cash sales

DIVERSIFIED FINANCING

Diversified finance receivables consist primarily of leases and loans
secured by transportation equipment and facilities, some of which represent
tax-exempt financing for state and local governments, energy related equipment
and other equipment, real estate loans collateralized by first and second
mortgages on




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improved property and privately negotiated investments in preferred stock.
Most diversified finance receivables represent transactions in an original
amount in excess of $1 million each. Because of the relatively large size of
individual diversified financing transactions, any individual loss arising out
of such transactions could be substantial. Diversified finance receivables
generally are intermediate-term; at December 31, 1993 approximately 28.4% of
the outstanding receivables were scheduled to mature within five years.

In 1988, management responsibility for coordinating diversified
financing activities was transferred to USL Capital. No transfer of assets was
involved. In August 1990, USL Capital began funding for its own account
certain diversified receivables that previously were funded by Ford Credit. As
a result, the dollar volume of diversified financing has decreased since 1990.
At December 31, 1993 diversified finance receivables outstanding represented
4.4% of Ford Credit's total gross finance receivables and net investment in
operating leases.

OTHER FINANCING ACTIVITIES

Ford Credit makes capital loans to vehicle dealers for facilities
expansion and working capital and to enable them to purchase dealership real
estate. Such loans totaled $1,769.3 million at December 31, 1993. From time
to time, Ford Credit purchases accounts receivable of certain divisions and
affiliates of Ford. The amount of such receivables as of the end of each month
during 1993 fluctuated between $905.8 million and $1,076.9 million. At
December 31, 1993, such receivables totaled $1,076.9 million, all of which
represent accounts receivable purchased by Ford Credit from Ford pursuant to
agreements under which Ford Credit may purchase such receivables. In addition
to the foregoing receivables, Ford Credit held $780.3 million of other finance
receivables at December 31, 1993.




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CREDIT LOSS EXPERIENCE

The following table sets forth information concerning Ford Credit's
credit loss experience with respect to the various categories of financing
during the years indicated:



1993 1992 1991 1990 1989
------ ------ ------ ------ ------
(dollar amounts in millions)

Net losses/(recoveries)
Retail* ....................... $212.8 $298.2 $442.4 $495.2 $687.0
Wholesale...................... (3.5) 14.5 40.2 29.7 27.4
Diversified.................... 14.1 23.4 24.4 14.3 15.9
Other.......................... 5.0 6.5 21.9 33.2 13.4
----- ----- ------ ------ ------
$228.4 $342.6 $528.9 $572.4 $743.7
------ ------ ------ ------ ------
------ ------ ------ ------ ------

- - - - - - -----------

*Includes net losses on operating
leases



Net losses as a percent of average
receivables
Retail*..................... 0.46% 0.75% 1.18% 1.26% 1.56%
Total finance receivables*.. 0.35 0.60 0.92 0.94 1.16
Provision for credit losses....... $270.2 $418.0 $577.9 $655.9 $907.6
Allowance for credit losses....... 915.5 915.5 825.4 894.9 863.1
As percent of net receivables* 1.42% 1.66% 1.60% 1.59% 1.62%

- - - - - - -----------
*Includes net investment in operating
leases


Allowances for estimated credit losses are established as required based on
historical experience. Other factors that affect collectibility also are
evaluated and additional allowances may be provided. The provision for credit
losses generally varies with changes in the amount of loss exposure and the
absolute level of financing. Ford Credit's retail loss experience is dependent
upon the number of repossessions, the unpaid balance outstanding at the time of
repossession, and the resale value of repossessed vehicles. Wholesale losses
generally reflect the financial condition of dealers. For additional
information regarding credit losses, see Notes 1 and 6 of Notes to Financial
Statements.

SECURITY

Ford Credit generally either holds security interests in or is the
title owner of the vehicles which it finances or leases and generally is
able to repossess a vehicle in the event of a default. The right to repossess
under a security interest securing wholesale obligations generally is
ineffectual, as a matter of law, against a retail buyer of a vehicle from a
dealer. Under the wholesale installment sale plan, dealers are permitted to
delay payment of up to 10% of a vehicle's financed balance for up to 60 days
after the dealer sells the vehicle. A portion of such delayed payments may,
under certain circumstances, be unsecured. Obligations arising from lease
financing extended to leasing companies are collateralized to the extent
practicable by assignments of rentals under the related leases and, in almost
all instances, by liens on the vehicles (which liens are not perfected against
third parties in some cases). Diversified finance receivables generally
consist of leases and financings of personal property or real estate in which
Ford Credit has ownership or security interests.






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BORROWINGS AND OTHER SOURCES OF FUNDS

Ford Credit relies heavily on its ability to raise substantial amounts
of funds. These funds are obtained primarily by sales of commercial paper and
issuance of term debt. Funds also are provided by retained earnings and sales
of receivables. The level of funds can be affected by certain transactions
with Ford, such as capital contributions, interest supplements and other support
costs from Ford for vehicles financed and leased by Ford Credit under Ford
sponsored special financing and leasing programs, and dividend payments, and
the timing of payments for the financing of dealers' wholesale inventories and
for income taxes. Ford Credit's ability to obtain funds is affected by its
debt ratings, which are closely related to the outlook for, and financial
condition of, Ford, and the nature and availability of support facilities, such
as revolving credit and receivables sales agreements. In addition, Ford Credit
from time to time sells its receivables in public offerings or private
placements. For additional information regarding Ford Credit's association
with Ford, see "Certain Transactions with Ford and Affiliates".

Ford Credit's outstanding debt at the end of each of the last five
years was as follows:



1993 1992 1991 1990 1989
------ ------ ------ ------ ------
(in millions)

Commercial paper
and STBAs(a)............. $24,506 $21,210 $18,232 $23,371 $18,864
Other short-term debt(b)... 1,001 1,785 1,642 1,411 1,467
Long-term debt
(including current
portion).................. 33,363 26,914 28,160 25,903 26,393
------ ------ ------ ------ ------
Total debt.............. $58,870 $49,909 $48,034 $50,685 $46,724
------ ------ ------ ------ ------
------ ------ ------ ------ ------


Memo:



1994 1993 1992 1991 1990
------ ------ ------ ------ ------

Total support facilities
(billions) as of January 1,
1994-1990, respectively.... $16.9 $13.9 $13.8 $12.7 $12.7
- - - - - - ---------


(a) Short-term borrowing agreements with bank trust departments
(b) Includes $150 million and $800 million with an affiliated company at
December 31, 1993 and December 31, 1992, respectively


Outstanding commercial paper totaled $24.5 billion at December 31, 1993,
up $3.3 billion from a year earlier. In 1993, long-term debt placements were
$12.9 billion compared with maturities and early redemptions of $6.3 billion.
Long-term debt placements in 1992 were $6.5 billion. In 1993, Ford Credit also
received $2.5 billion from sales of receivables compared with $3.3 billion in
1992.




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Support facilities represent additional sources of funds, if required. At
January 1, 1994, Ford Credit had $15,716 million of contractually committed
facilities for use in the United States, 83% of which are available through
June 1998. These facilities included $12,841 million of revolving credit
agreements with banks (which included $4,835 million of Ford bank lines that
may be used either by Ford or Ford Credit at Ford's option) and $2,875 million
of agreements to sell retail receivables. At January 1, 1994, all of these
U.S. facilities were unused.

Outside of the United States, an additional $1,185 million of facilities
support borrowing operations in Canada, Australia and Puerto Rico, of which 82%
are contractually committed and available through June 1998. Canadian
facilities of $759 million included $210 million of Ford Motor Company of
Canada Limited and Ford Ensite International Inc. lines which are available to
Ford Credit Canada Limited at the option of these two companies. Australian
facilities of $401 million include $155 million of Ford Motor Company of
Australia Limited lines which are available to Ford Credit Australia Limited at
the option of Ford Motor Company of Australia Limited. Ford Motor Credit
Company of Puerto Rico, Inc. had $25 million in support facilities at January
1, 1994. Substantially all of these facilities were unused at January 1, 1994.




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FORD HOLDINGS


Ford Holdings was incorporated on September 1, 1989 for the principal
purpose of acquiring, owning and managing certain assets of Ford. Ford Credit
owns 45% of the common stock of Ford Holdings representing 33.8% of the voting
power and Ford owns the remaining common stock representing 41.2% of the voting
power. The balance of the capital stock, consisting of shares of Flexible Rate
Auction Preferred Stock (Exchange), Series A Cumulative Preferred Stock, Series
B Cumulative Preferred Stock and Series C Cumulative Preferred Stock, is held
by persons other than Ford and accounts for the remaining 25% of the total
voting power. Ford Holdings' primary activities consist of consumer and
commercial financing operations, insurance underwriting and equipment leasing
through its wholly owned subsidiaries, Associates First Capital Corporation
("The Associates"), American Road and USL Capital. Ford Credit accounts for
its investment in Ford Holdings common stock using the equity method of
accounting. For further information regarding Ford Holdings, see Notes 1, 2
and 12 of Notes to Financial Statements. See "Financial Review of Ford Motor
Company Results - 1993 Results of Operations - Financial Services Operations"
and "Liquidity and Capital Resources - Financial Services Operations" for a
discussion of 1993 results of operations and liquidity and capital resources,
respectively, of The Associates, American Road and USL Capital.

ASSOCIATES FIRST CAPITAL CORPORATION

The Associates conducts its operations primarily through its principal
operating subsidiary, Associates Corporation of North America. The Associates'
primary business activities are consumer finance, commercial finance and
insurance underwriting. The consumer finance operation is engaged in making
and investing in residential real estate-secured loans to individuals, making
secured and unsecured installment loans to individuals, purchasing consumer
retail installment obligations, investing in credit card receivables, financing
manufactured housing purchases and providing other consumer financial services.
The commercial finance operation is principally engaged in financing sales of
transportation and industrial equipment and leasing, and providing other
financial services, including automobile club, mortgage banking, and relocation
services. The insurance operation is engaged in underwriting credit life,
credit accident and health, property, casualty and accidental death and
dismemberment insurance, principally for customers of the finance operations of
The Associates.


The Associates' finance receivables were as follows at the dates
indicated (in millions):


December 31,
-------------------------
1993 1992
-------------------------

Consumer finance
Residential real estate-secured receivables $10,626 $ 9,820
Direct installment and credit card receivables 6,060 5,277
Manufactured housing and other
installment receivables 3,810 2,846
------ ------
Total consumer finance receivables 20,496 17,943
Commercial finance
Heavy-duty truck receivables 4,334 3,500
Other industrial equipment receivables 4,743 4,172
------ ------
Total commercial finance receivable 9,077 7,672
------ ------
Gross receivables 29,573 25,615
Unearned financing income (3,208) (2,781)
------ ------
Net finance receivables $26,365 $22,834
------- -------
------- -------

Allowance for losses on finance receivables $ 809 $ 699
------- -------
------- -------





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Credit loss experience, net of recoveries, of The Associates' finance
business was as follows for the years indicated (dollar amounts in millions):




Years Ended or at December 31,
-------------------------------
1993 1992 1991
------ ----- ------

NET CREDIT LOSSES
Consumer finance
Amount $ 372 $ 383 $ 354
% of average net receivables 2.19% 2.64% 2.84%
% of receivables liquidated 3.41 4.57 5.65
Commercial finance
Amount $ 22 $ 42 $ 35
% of average net receivables .30% .64% .60%
% of receivables liquidated .26 .61 .61
Total net credit losses
Amount $ 394 $ 425 $ 389
% of average net receivables 1.61% 2.02% 2.13%
% of receivables liquidated 2.03 2.80 3.24
ALLOWANCE FOR LOSSES
Balance at end of period $ 809 $ 699 $ 591
% of net receivables 3.07% 3.06% 2.93%


The following table shows total balances delinquent sixty days and
more by type of business at the dates indicated (dollar amounts in millions):



Consumer Finance Commercial Finance Total
-------------------- -------------------- ------------------
Balances Delinquent Balances Delinquent Balances Delinquent
60 Days and More 60 Days and More 60 Days and More
------------------ ------------------- ------------------
Gross % of Gross % of Gross % of
Amount Outstandings Amount Outstandings Amount Outstandings
------ ------------ -------------------- ------ ------------

At December 31,
1993 $380 1.85% $48 .53% $428 1.45%
1992 359 2.00 63 .82 422 1.65


An analysis of The Associates' allowance for losses on finance
receivables is as follows for the years indicated (in millions):



1993 1992 1991
------- ------ ------

Beginning balance $699 $591 $450
Additions 477 513 434
Recoveries 88 72 54
Losses (482) (497) (443)
Other adjustments, primarily
reserves of acquired businesses 27 20 96
---- ---- ----
Ending balance $809 $699 $591
---- ---- ----
---- ---- ----





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THE AMERICAN ROAD INSURANCE COMPANY

American Road was incorporated as a wholly owned subsidiary of Ford
Credit in 1959 and was transferred to Ford Holdings in 1989. The operations of
American Road consist primarily of underwriting floor plan insurance related to
substantially all new vehicle inventories of dealers financed at wholesale by
Ford Credit in the United States and Canada, credit life and disability
insurance in connection with retail vehicle financing, and insurance related to
retail contracts sold by automobile dealers to cover vehicle repairs. In
addition, Ford Life Insurance Company ("Ford Life"), a wholly owned subsidiary
of American Road, offers single premium deferred annuities which are sold
primarily through banks and brokerage firms. The obligations of Ford Life,
including annuities, are guaranteed by American Road.

In the second quarter of 1992, Ford Credit discontinued purchasing
collateral protection insurance ("CPI") from American Road for vehicles
financed at retail by Ford Credit. As a result, total premiums written by
American Road in 1992 were down 38% from 1991. The discontinuance of Ford
Credit's purchase of CPI was a significant factor in American Road's 1992
profit decline from 1991 and had a negative but smaller impact on 1993
earnings. American Road exited the CPI market for vehicles and homes financed
by other institutions by the end of 1993.

USL CAPITAL CORPORATION

USL Capital, a diversified commercial leasing and financing
organization, originally incorporated in 1956, was acquired by Ford in 1987 and
was transferred to Ford Holdings in 1989. In November 1993, the corporation's
name was changed from United States Leasing International, Inc. to USL Capital
Corporation. The primary operations of USL Capital include the leasing,
financing, and management of office, manufacturing and other general-purpose
business equipment; commercial fleets of automobiles, vans, and trucks;
large-balance transportation equipment (principally commercial aircraft, rail,
and marine equipment); industrial and energy facilities; and essential-use
equipment for state and local governments. It also provides intermediate-term,
first-mortgage loans on commercial properties and invests in corporate
preferred stock and debt instruments. Certain of these financing transactions
are carried on the books of Ford affiliates.




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The following table sets forth certain information regarding USL
Capital's earning assets, credit losses, and delinquent accounts at the dates
indicated (dollar amounts in millions):



December 31,
----------------------------------
1993 1992 1991
------ ------ ------

Total earning assets
Investments in finance leases - net $2,364 $2,075 $1,463
Investments in operating leases - net 695 558 492
Investments in leveraged leases - net 191 4 -
Notes receivable 721 502 416
Investment in securities 563 329 236
Inventory held for sale or lease 55 97 100
Investments in associated companies 18 20 20
------ ------ ------
Total $4,607 $3,585 $2,727
------ ------ ------
------ ------ ------
Allowance for doubtful accounts
Beginning balance $ 40 $ 30 $ 25
Additions 25 19 11
Deductions (10) (9) (6)
------ ---- ----
Ending balance $ 55 $ 40 $ 30
------ ----- -----
------ ----- -----
Allowance for doubtful accounts
as a percent of earning assets 1.2% 1.1% 1.1%

Total balance over 90 days past due
at year end $ 44 $ 49 $ 23
Percent of earning assets 1.0% 1.4% 0.8%



FORD CREDIT EMPLOYEE RELATIONS


At December 31, 1993, Ford Credit and its subsidiaries had 8,972
employees. All such employees are salaried, and none is represented by a
union. Ford Credit considers its employee relations to be satisfactory.


FORD CREDIT GOVERNMENTAL REGULATIONS

Various aspects of Ford Credit's financing operations are regulated
under both Federal and state law. Various states require licenses to conduct
retail financing. Interest rates, particularly those with respect to consumer
financing, generally are limited by state law and, in periods of high interest
rates, these limitations can have a substantial adverse effect on operations in
certain states if Ford Credit is unable to pass on its increased interest costs
to its customers.

During the past several years, legislative, judicial, and
administrative authorities have evidenced a growing concern for the protection
of the interest of consumers, especially in connection with consumer financing
transactions. As a result, significant changes have been made in the methods
by




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which Ford Credit and the financing industry conduct business, and many
proposals have been made which would require further changes. None of the
changes to date has had a substantial adverse effect on the operations of Ford
Credit.


CERTAIN TRANSACTIONS WITH FORD AND AFFILIATES

For information concerning transactions between Ford Credit and Ford
or affiliates, see Note 12 of Notes to Financial Statements, "Business of Ford
Credit - Other Financing Activities", "Business of Ford Credit - Borrowings and
Other Sources of Funds" and Item 6 - "Selected Financial Data--Selected Income
Statement Data." The profit maintenance agreement referred to in the first
paragraph of Note 12 of Notes to Financial Statements, under which Ford has
agreed to maintain the income of Ford Credit at certain minimum levels, has
been amended and restated and expires at the end of 1998.

BUSINESS OF FORD

Ford was incorporated in Delaware in 1919 and acquired the business of
a Michigan company, also known as Ford Motor Company, incorporated in 1903 to
produce automobiles designed and engineered by Henry Ford. Ford is the second-
largest producer of cars and trucks in the world, and ranks among the largest
providers of financial services in the United States.

GENERAL

The Company's two principal business segments are Automotive and
Financial Services. The activities of the Automotive segment consist of the
manufacture, assembly and sale of cars and trucks and related parts and
accessories. Substantially all of Ford's automotive products are marketed
through retail dealerships, most of which are privately owned and financed.

The Financial Services segment is comprised of the following
subsidiaries: Ford Credit, Ford Credit Europe plc ("Ford Credit Europe"),
First Nationwide Financial Corporation ("First Nationwide"), The Hertz
Corporation ("Hertz"), Ford Holdings, The Associates, American Road and
USL Capital. The activities of these subsidiaries include financing
operations, insurance operations, savings and loan operations and vehicle
and equipment leasing.

AUTOMOTIVE OPERATIONS

The worldwide automotive industry is affected significantly by a
number of factors over which the industry has little control, including general
economic conditions.

In the United States, the automotive industry is a highly-competitive,
cyclical business characterized by a wide variety of product offerings. The
level of industry demand (retail deliveries of cars and trucks) can vary
substantially from year to year and, in any year, is dependent to a large
extent on general economic conditions, the cost of purchasing and operating
cars and trucks and the availability and cost of credit and of fuel, and
reflects the fact that cars and trucks are durable items, the replacement of
which can be postponed.




13
16
The automotive industry outside of the United States consists of many
producers, with no single dominant producer. Certain manufacturers, however,
account for the major percentage of total sales within particular countries,
especially their respective countries of origin. Most of the factors that
affect the U.S. automotive industry and its sales volumes and profitability are
equally relevant outside the United States.

The worldwide automotive industry also is affected significantly by a
substantial amount of government regulation. In the United States and Europe,
for example, government regulation has arisen primarily out of concern for the
environment, for greater vehicle safety and for improved fuel economy. Many
governments also regulate local content and/or impose import requirements as a
means of creating jobs, protecting domestic producers or influencing their
balance of payments.

Unit sales of Ford vehicles vary with the level of total industry
demand and Ford's share of industry sales. Ford's share is influenced by the
quality, price, design, driveability, safety, reliability, economy and utility
of its products compared with those offered by other manufacturers. Ford's
ability to satisfy changing consumer preferences with respect to type or size
of vehicle and its design and performance characteristics can affect Ford's
sales and earnings significantly.

The profitability of vehicle sales is affected by many factors,
including unit sales volume, the mix of vehicles and options sold, the level of
"incentives" (price discounts) and other marketing costs, the costs for
customer warranty claims and other customer satisfaction actions, the costs for
government-mandated safety, emission and fuel economy technology and equipment,
the ability to control costs and the ability to recover cost increases through
higher prices. Further, because the automotive industry is capital intensive,
it operates with a relatively high percentage of fixed costs which can result
in large changes in earnings with relatively small changes in unit volume.

In recent years, due to competitive pressures, vehicle manufacturers
have both expanded the coverages and extended the terms of warranties on
vehicles sold in the U.S. Ford presently provides warranty coverage on most
vehicles sold by it in the U.S. that extends for 36 months or 36,000 miles
(whichever occurs first) and covers nearly all components of the vehicle.
Different warranty coverages are provided on vehicles sold outside the U.S. In
addition, as discussed below under "Governmental Standards - Mobile Source
Emissions Control", amendments to the Federal Clean Air Act extend the required
useful life for emissions equipment on vehicles sold in the U.S. to 10 years or
100,000 miles (whichever occurs first). As a result of these coverages and the
increased concern for customer satisfaction, costs for warranty repairs,
emissions equipment repairs and customer satisfaction actions ("warranty
costs") can be substantial. Estimated warranty costs for each vehicle sold by
Ford are accrued at the time of sale. Such accruals, however, are subject to
adjustment from time to time depending on actual experience.


UNITED STATES

Sales Data. The following table shows U.S. industry demand for the
years indicated:



U.S. Industry Retail Deliveries
(millions of units)
-------------------------
Years Ended December 31
--------------------------
1993 1992 1991 1990 1989
---- ---- ----- ---- ----

Cars......................................... 8.5 8.2 8.2 9.3 9.8
Trucks...................................... 5.7 4.9 4.3 4.8 5.1
---- ---- ---- ---- ----
Total....................................... 14.2 13.1 12.5 14.1 14.9
---- ---- ---- ---- ----
---- ---- ---- ---- ----


Ford classifies cars by small, middle, large and luxury segments and
trucks by compact pickup, compact van/utility, full-size pickup, full-size
van/utility and medium/heavy segments. The large and luxury car segments and
the compact van/utility, full-size pickup and full- size van/utility truck
segments include the industry's most profitable vehicle lines. The following
tables show the proportion of retail car and truck sales by segment for the
industry (including Japanese and other foreign-based manufacturers) and Ford
for the years indicated:




14
17


U.S. Industry Car Sales by Segment
Years Ended December 31
----------------------------------------------
1993 1992 1991 1990 1989
------ ------ ------ ------ ------

Small........................... 28.9% 29.3% 29.0% 28.9% 31.4%
Middle.......................... 52.5 51.7 51.4 51.8 50.4
Large........................... 8.5 9.2 9.6 9.1 9.2
Luxury.......................... 10.1 9.8 10.0 10.2 9.0
----- ---- ----- ----- ----
Total U.S. Industry Car Sales... 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----




Ford Car Sales by Segment in U.S.*
Years Ended December 31
----------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----

Small........................... 28.8% 26.6% 31.2% 31.1% 34.7%
Middle.......................... 51.4 53.4 47.3 44.8 45.6
Large........................... 9.9 10.5 10.1 11.2 10.1
Luxury.......................... 9.9 9.5 11.4 12.9 9.6
----- ----- ----- ----- -----
Total Ford U.S. Car Sales....... 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----

* Includes Jaguar sales since 1990.

As shown in the first table above, the percentages of industry sales
in the various car segments have remained relatively stable since 1989. As
shown in the second table above, Ford's proportion of sales in 1992 and 1993
has increased in the middle segment and decreased in the small and luxury
segments, reflecting higher sales of Thunderbird, Cougar, Taurus, Sable, Tempo
and Topaz models and lower sales of Escort, Festiva, Mark and Continental
models.



U.S. Industry Truck Sales by Segment
Years Ended December 31
---------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----

Compact pickup.................. 18.9% 20.8% 22.4% 22.9% 23.7%
Compact van/utility............. 41.1 40.1 38.8 34.7 31.2
Full-Size pickup................ 24.8 24.2 25.1 26.0 26.4
Full-Size van/utility........... 10.6 10.6 9.4 11.4 13.2
Medium/Heavy.................... 4.6 4.3 4.3 5.0 5.5
----- ----- ----- ----- -----
Total U.S. Industry Truck Sales. 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----




Ford Truck Sales by Segment in U.S.
Years Ended December 31
----------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----

Compact pickup.................. 19.7% 17.0% 18.5% 19.8% 19.5%
Compact van/utility............. 32.6 33.5 31.5 25.3 20.4
Full-Size pickup................ 32.6 33.6 35.8 36.8 38.9
Full-Size van/utility........... 12.4 13.1 11.7 14.9 17.4
Medium/Heavy.................... 2.7 2.8 2.5 3.2 3.8
----- ----- ----- ----- -----
Total Ford U.S. Truck Sales..... 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----


As shown in the tables above, for both the industry and Ford, the
compact van/utility segment has grown significantly since 1989, while the
full-size segments (pickups and van/utility) have declined as a percentage of
total truck sales.

15
18
Market Share Data. The following tables show changes in car and truck market
shares of United States and foreign-based manufacturers for the years
indicated:



U.S. Car Market Shares*
Years Ended December 31
--------------------------------------------
1993 1992 1991 1990 1989
- - - - - - -------------------------------- ---- ---- ---- ---- ----
U.S. Manufacturers (Including Imports)

Ford**............................ 22.3% 21.8% 20.1% 21.1% 22.3%
General Motors.................... 34.1 34.6 35.6 35.6 35.1
Chrysler.......................... 9.8 8.3 8.6 9.2 10.4
----- ----- ----- ----- -----
Total U.S. Manufacturers........ 66.2 64.7 64.3 65.9 67.8
Foreign-Based Manufacturers***
Japanese.......................... 29.1 30.1 30.2 27.9 25.4
All Other......................... 4.7 5.2 5.5 6.2 6.8
----- ----- ----- ----- -----
Total Foreign-Based Manufacturers. 33.8 35.3 35.7 34.1 32.2
----- ----- ----- ----- -----
Total U.S. Car Retail Deliveries.. 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----





U.S. Truck Market Shares*
--------------------------------------
Years Ended December 31
--------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----

U.S. Manufacturers (Including Imports)
Ford................................. 30.5% 29.7% 28.9% 29.3% 28.8%
General Motors....................... 31.4 32.2 32.9 34.3 33.7
Chrysler............................. 21.4 21.1 18.5 17.3 19.4
Navistar International............... 1.3 1.3 1.4 1.5 1.5
All Other............................ 1.7 1.4 1.3 1.4 1.7
---- ---- ---- ---- ----
Total U.S. Manufacturers........... 86.3 85.7 83.0 83.8 85.1

Foreign-Based Manufacturers***
Japanese............................. 13.2 13.8 16.5 15.6 14.3
All Other............................ 0.5 0.5 0.5 0.6 0.6
----- ----- ----- ----- -----
Total Foreign-Based Manufacturers.. 13.7 14.3 17.0 16.2 14.9
----- ----- ----- ----- -----
Total U.S. Truck Retail Deliveries 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- ------
----- ----- ----- ----- ------


____________________
* All U.S. retail sales data are based on publicly available information
from the American Automobile Manufacturers Association, the media and
trade publications.

** Includes Jaguar sales since 1990.

*** Share data include cars and trucks assembled and sold in the U.S. by
Japanese-based manufacturers selling through their own dealers as well
as vehicles imported by them into the U.S. "All Other" includes
primarily companies based in various European countries and in Korea and
Taiwan.




16
19


U.S. Combined Car and Truck Market Shares*
------------------------------------------
Years Ended December 31
---------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----

U.S. Manufacturers (Including Imports)
Ford**............................... 25.5% 24.7% 23.2% 23.9% 24.5%
General Motors....................... 33.1 33.7 34.6 35.2 34.7
Chrysler............................. 14.4 13.1 12.0 12.0 13.5
Navistar International............... 0.5 0.5 0.5 0.5 0.5
---- ---- ---- ---- ----
Total U.S. Manufacturers........... 73.5 72.0 70.3 71.6 73.2

Foreign-Based Manufacturers***
Japanese............................. 22.8 24.0 25.5 23.7 21.6
All Other............................ 3.7 4.0 4.2 4.7 5.2
----- ----- ----- ----- -----
Total Foreign-Based Manufacturers.. 26.5 28.0 29.7 28.4 26.8
----- ----- ----- ----- -----
Total U.S. Car and Truck Retail
Deliveries......................... 100.0% 100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------ ------
------ ------ ------ ------ ------


___________________
* All U.S. retail sales data are based on publicly available
information from the American Automobile Manufacturers Association,
the media and trade publications.

** Includes Jaguar sales since 1990.

*** Share data include cars and trucks assembled and sold in the U.S. by
Japanese-based manufacturers selling through their own dealers as well
as vehicles imported by them into the U.S. "All Other" includes
primarily companies based in various European countries and in Korea
and Taiwan.


Japanese Competition. The market share of Ford and other domestic
manufacturers in the U.S. is affected by sales from Japanese manufacturers. As
shown in the table above, the share of the U.S. combined car and truck industry
held by the Japanese manufacturers increased from 21.6% in 1989 to 25.5% in
1991, but declined to 22.8% in 1993, reflecting in part the effects of the
strengthening of the Japanese yen on the prices of vehicles produced by the
Japanese manufacturers.

In the 1980s and continuing in the 1990s, Japanese manufacturers added
assembly capacity in North America (frequently referred to as "transplants") in
response to a variety of factors, including export restraints, the significant
growth of Japanese car sales in the U.S. and international trade
considerations. Production in the U.S. by Japanese transplants reached 1.6
million units in 1993 and is expected to reach about 2.5 million units a year
when additional Japanese transplant capacity becomes fully operational.

Excess Capacity In North America. In 1993, automotive capacity in North
America, including Japanese transplants, exceeded industry sales by over 5.2
million units. This excess capacity (which includes overtime capacity)
reflected the effect of productivity gains made by manufacturers, added
capacity of Japanese transplants and lower-than-normal industry-wide sales
resulting from modest economic growth.




17
20
Marketing Incentives and Fleet Sales. As a result of intense competition from
new product offerings (from both domestic and foreign manufacturers), excess
industry capacity as discussed above and the desire to maintain economic
production levels, automotive manufacturers that sell vehicles in the U.S. have
provided marketing incentives (price discounts) to retail and fleet customers
(i.e., daily rental companies, commercial fleets, leasing companies and
governments).

Ford's U.S. marketing costs as a percentage of net sales revenue for each of
1993, 1992 and 1991 were: 10.9%, 12% and 16%, respectively. During the
1983-1988 period, such costs as a percentage of sales revenue were in the 4% to
7% range. "Marketing costs" include (i) marketing incentives such as retail
rebates and special financing rates, (ii) reserves for residual guaranties on
retail vehicle leases; (iii) reserves for costs and/or losses associated with
obligatory repurchases of certain vehicles sold to daily rental companies and
(iv) costs for advertising and sales promotions.

Sales by Ford to fleet customers were as follows for the years indicated:



Ford Fleet Sales
-----------------------------------
Years Ended December 31
-----------------------------------
1993 1992 1991 1990
---- ---- ---- ----

Units Sold..................... 881,000 882,000 782,000 821,000
Percent of Ford's
Total Car and Truck Sales.... 25% 28% 27% 24%


Fleet sales generally are less profitable than retail sales. Within total
fleet sales, the mix between sales to daily rental companies and sales to other
fleet purchasers improved in 1992 and 1993; sales to daily rental companies
declined, while other fleet sales (which tend to be more profitable) increased.

EUROPE


Europe is the largest market for the sale of Ford cars and trucks
outside the United States. The automotive industry in Europe is intensely
competitive; for the past 12 years, the top six manufacturers have each
achieved a car market share in about the 10% to 16% range. (Manufacturers'
shares, however, vary considerably by country.) This competitive environment
is expected to intensify further as




18
21
Japanese manufacturers, which together had a European car market share of 11.6%
for 1993, increase their production capacity in Europe and import restrictions
on Japanese built-up vehicles gradually are removed.

In 1993, European car industry sales were 10.8 million cars, down 16%
from 1992 levels. Truck sales were 1.7 million units, down 17% from 1992
levels. Ford's European car share for 1993 was 11.8%, compared with 11.5% for
1992, and its European truck share for 1993 was 12.6%, compared with 11.7% for
1992.

For Ford, Great Britain and Germany are the most important markets
within Europe, although the Southern European countries are becoming
increasingly significant. Great Britain traditionally has been Ford's major
source of European automotive profits, and any adverse change in this market
has a strong effect on total automotive profits. For 1993 compared with 1992,
total industry sales were up 10% in Great Britain and down 19% in Germany.

OTHER FOREIGN MARKETS

Mexico and Canada. Mexico and Canada also are important markets for
Ford. Generally, industry conditions in Canada closely follow conditions in
the U.S. market; however, Canada continues to be in a recessionary period. In
1993, industry sales of cars and trucks in Canada were down 3% from 1992
levels, while the U.S. experienced an 8% increase in industry sales. Mexico
has been a growing market; however, in 1993, industry sales were down 15% to
603,000 units.

The North American Free Trade Agreement ("NAFTA") became effective
January 1, 1994. NAFTA unites Canada, Mexico and the United States into the
world's largest trading region by phasing out regulations which restricted
trade between Mexico and the U.S. and Canada. The Company believes that NAFTA
will benefit the economies of the three countries and the North American
automobile industry in particular.

Latin America. Brazil, Argentina and Venezuela are the principal
markets for Ford in South America. The economic environment in those countries
has been volatile in recent years, leading to large variations in
profitability. Results also have been influenced by government actions to
reduce inflation and public deficits, and improve the balance of payments. In
1993, Ford's profitability in the region improved significantly compared with
1992, primarily reflecting strong results in Brazil. Autolatina (Ford's joint
venture with Volkswagen in Brazil and Argentina) remained the market leader in
Brazil. In Brazil, a new economic plan aimed at stabilizing the Brazilian
economy and reducing inflation was unveiled in late 1993. It is presently
unclear to what extent the new plan will affect overall economic conditions.
In addition, duties on vehicles imported into Brazil have declined
progressively from 85% in 1990 to 35% in October 1993. As a result, imports are
expected to gain a progressively larger share of the car market in Brazil.
Autolatina's future results largely will be dependent on the political and
economic environments in Brazil and Argentina, which historically have been
unpredictable.

Asia-Pacific. In the Asia-Pacific region, Australia and Taiwan are
the principal markets for Ford products. In both markets, Ford is the car
market share leader. In Taiwan (where sales of built-up vehicles manufactured
in Japan are prohibited), Ford has total vehicle sales leadership. Ford's
principal competition in the Asia-Pacific region has been the Japanese
manufacturers. It




19
22
is anticipated that the continuing relaxation of import restrictions (including
duty reductions) in Australia and Taiwan will intensify competition in those
markets.

Ford believes that the Asia-Pacific region offers many important
opportunities for the future. Ford is investigating automotive component
manufacturing and vehicle assembly opportunities in China and is expanding the
number of right-hand-drive vehicles it will offer in Japan. A key element of
Ford's presence in the Asia-Pacific region is its long-standing relationship
with Mazda Motor Corporation, in which it has held a 25% ownership interest
since 1979. Recent management appointments by Mazda of Ford personnel have
been made to improve coordination of business and product plans in the
Asia-Pacific region.


FINANCIAL SERVICES OPERATIONS

For information regarding the businesses of Ford Credit, Ford
Holdings, The Associates, American Road and USL Capital, see "Business of Ford
Credit" and "Ford Holdings".

Ford Credit Europe plc. In 1993, most of the European credit operations of
Ford, which generally had been organized as subsidiaries of the respective
automotive affiliates of Ford throughout Europe, were consolidated into a
single company, Ford Credit Europe. Ford Credit Europe, which was originally
incorporated in 1963 in England as a private limited company, is wholly owned
by Ford and certain of its subsidiaries. Ford Credit Europe's primary business
is to support the sale of Ford vehicles in Europe through the Ford dealer
network. A variety of retail, leasing and wholesale finance plans is provided
in most countries in which it operates. The business of Ford Credit Europe is
substantially dependent upon Ford's automotive operations in Europe. Ford
Credit Europe issues commercial paper, certificates of deposits and term debt
to fund its credit operations. One of the purposes of the consolidation
described above is to facilitate Ford Credit Europe's access to public debt
markets. Ford Credit Europe's ability to obtain funds in these markets is
affected by its credit ratings, which are closely related to the financial
condition of and outlook for Ford.

First Nationwide Financial Corporation. First Nationwide, a savings and loan
holding company organized in Delaware in 1959, was acquired by Ford in December
1985. It is a wholly owned subsidiary of Ford.

The principal asset of First Nationwide is the capital stock of First
Nationwide Bank, A Federal Savings Bank ("First Nationwide Bank" or the
"Bank"). The Bank is a federally chartered, capital stock savings bank which,
with its predecessor institutions, has been in the savings and loan business
since 1885. The principal business of the Bank consists of attracting savings
deposits from the public and making loans collateralized by liens on
residential and other real estate. Income is derived from interest charges on
real estate loans and, to a lesser extent, from fees received in connection
with such loans and interest on securities investments. The major expense of
the Bank is the interest it pays on savings accounts and on borrowings.




20
23
First Nationwide's loans receivable (including those of the Bank) were
as follows at the dates indicated (in millions):



December 31,
--------------------------
1993 1992*
-------- ---------

Real estate loans $11,712 $13,097
Consumer and other loans 485 536
------- -------
Total 12,197 13,633
Unearned fees and discounts, net (109) (120)
Allowance for loan losses (396) (405)
---- -------
Total loans receivable, net $11,692 $13,108
------- -------
- - - - - - -------------- ------- -------

* Certain amounts for 1992 have been restated to conform with presentations
adopted in 1993.

Included in the above receivables at December 31, 1993 and 1992 were $9.0
billion and $10.2 billion, respectively, of variable rate real estate loans.
Loans held for sale, not included above, were $288 million and $195 million at
December 31, 1993 and 1992, respectively.

The percentages of real estate loans by state were as follows at
December 31, 1993, excluding accrued interest receivable, discounts and
premiums, and loss reserves, and including $288 million of loans held for sale:
California - 55.4%; New York - 10.8%; Florida - 3.8%; Illinois - 3.2%; and 46
other states, none of which exceeded 3.0% of total real estate loans.

The following table reflects at the dates indicated the amount of
non-accrual, past due, and troubled debt restructured loans including the
interest income recognized and total interest income that would have been
recognized had the borrowers performed under the original terms of the loans
(in millions):



December 31,
-----------------------------------------------------------------
1993 1992*
-------------------------------- -------------------------------
Total Total
Interest Interest Interest Interest
Income Income if Income Income if
Balance Recognized Performing Balance Recognized Performing
------- ---------- ---------- ------- ---------- ----------

Non-accrual loans $ 708 $17 $ 55 $1,072 $19 $ 93
Accruing loans
contractually past
due 91 days or more 0 0 0 2 0 0
Troubled debt
restructured loans 512 41 45 336 25 32
------ --- ---- ------ --- ----
Total $1,220 $58 $100 $1,410 $44 $125
- - - - - - -------------- ------ --- ---- ------ --- ----
------ --- ---- ------ --- ----


* Certain amounts for 1992 have been restated to conform with presentations
adopted in 1993.

At December 31, 1993, there were no commitments to lend additional funds to
borrowers whose loans were on non-accrual status or were restructured.

An analysis of First Nationwide's allowance for losses on
loans is as follows for the years indicated (in millions):




21
24


Real Consumer
Estate and Other Commercial Total
------ --------- ---------- -----

Balance, December 31, 1990 $267 $16 $ 3 $286

Additions 254 5 14 273
Charge-offs (121) (14) (10) (145)
Recoveries 2 3 - 5
--- --- --- ----
Balance, December 31, 1991 402 10 7 419

Additions 121 3 4 128
Charge-offs (135) (5) (6) (146)
Recoveries 2 1 1 4
---- --- --- ----
Balance, December 31, 1992 390 9 6 405

Additions 137 3 - 140
Charge-offs (152) (5) (6) (163)
Recoveries 12 1 1 14
---- --- --- ----
Balance, December 31, 1993 $387 $ 8 $ 1 $396
---- --- --- ----
---- --- --- ----


Federally chartered savings and loan institutions are regulated
principally by the Office of Thrift Supervision ("OTS"), a bureau of the
Department of Treasury. Deposit insurance for these institutions is provided
by the Federal Deposit Insurance Corporation ("FDIC"). Regulated areas
include: capital requirements, payments of dividends, transactions with
affiliates and activities that might create a serious risk to insured
institutions.

The Bank is subject to regular concurrent examinations of its
operations by the OTS and the FDIC, the most recent of which were completed in
December 1993. In response to examiners' concerns expressed in recent
examinations, the Bank has taken positive steps to improve asset quality and
other areas of its operations. The Bank filed its response to the most recent
OTS examination report in January 1994. Pursuant to an agreement with the OTS,
the FDIC did not issue a separate examination report.

For a discussion of the losses incurred by First Nationwide in 1993
and 1992, see "Financial Review of Ford Motor Company Results".

Ford presently is investigating strategic actions with respect to
First Nationwide. Such actions could include the sale of a substantial portion
of the Bank's assets. It is premature at this time, however, to determine
whether any actions will occur and what impact, if any, such actions could
have on Ford's financial results.

The Hertz Corporation. On March 8, 1994, Ford purchased from
Commerzbank Aktiengesellschaft, a German bank, additional shares of common
stock of Hertz aggregating 5% of the total outstanding voting stock, thereby
bringing Ford's ownership of the total voting stock of Hertz to 54% from 49%.
Since the Company was a principal shareholder of Hertz prior to the purchase
from Commerzbank, no significant change in the relationship between Ford and
Hertz is expected. The effect of this transaction on Ford's consolidated
financial statements is not expected to be material. Hertz had been accounted
for on an equity basis; following the purchase, Hertz's operating results,
assets, liabilities, and cash flows will be consolidated in Ford's financial
statements, as part of the Financial Services business segment. Hertz is
engaged principally in the business of renting automobiles and renting and
leasing trucks, without drivers, in or through approximately 5,200 locations
throughout the U.S. and in over 140 foreign countries.




22
25

GOVERNMENTAL STANDARDS

A number of governmental standards and regulations relating to safety,
corporate average fuel economy ("CAFE"), emissions control, noise control,
damageability and theft prevention are applicable to new motor vehicles,
engines, and equipment manufactured for sale in the United States and Europe.
In addition, manufacturing and assembly facilities in the United States and
Europe are subject to stringent standards regulating air emissions, water
discharges and the handling and disposal of hazardous substances. Such
facilities in the United States also are subject to a comprehensive
federal-state permit program relating to air emissions. Many of the standards
will become increasingly stringent. Moreover, additional and even more
stringent standards and regulations, notably car and truck emissions and CAFE
standards, may be made applicable to future model vehicles as well as to
existing and future facilities. The technological feasibility of achieving
compliance with some of these standards and regulations has not been
established on a commercial basis. Assuming that compliance with all
applicable standards and regulations can be achieved within the prescribed time
frame, it will be extremely costly and it could be necessary for Ford to take
such actions as curtailing or eliminating production of certain cars, trucks
and engines. Such actions could have substantial adverse effects on Ford's
sales volume and profits.

Mobile Source Emissions Control -- As amended in November 1990, the
Federal Clean Air Act (the "Clean Air Act" or the "Act") imposes significantly
more stringent limits on the amount of regulated pollutants that lawfully may
be emitted by new motor vehicles and engines produced for sale in the United
States than those previously in effect. The effective dates of these
standards, some of which have phase-in periods, vary depending upon the type of
vehicle, but begin to apply as early as the 1994 model year. In addition, the
Act doubles the length of the "useful life" during which compliance with the
applicable standards must be achieved. Passenger cars, for example, must
comply for 10 years or 100,000 miles, whichever first occurs. The Act
prohibits, among other things, the sale in or importation into the United
States of any new motor vehicle or engine which is not covered by a certificate
of conformity issued by the United States Environmental Protection Agency (the
"EPA").

The Act also may require production of certain new cars and trucks
capable of operating on fuels other than gasoline or diesel fuel ("alternative
fuels") under a pilot test program to be conducted in California beginning in
the 1996 model year. Under this pilot program, each manufacturer will be
required to sell its pro rata share of 150,000 vehicles in each of the 1996,
1997 and 1998 model years and its pro rata share of 300,000 vehicles in each
model year thereafter. The Act also authorizes certain states to establish
programs to encourage the purchase of such vehicles.

Motor vehicle emissions standards even more stringent than those
referred to above will become effective as early as the 2003 model year, unless
the EPA determines that such standards are not necessary, technologically
feasible or cost-effective.

The Act authorizes California to establish unique emissions control
standards that, in the aggregate, are at least as stringent as the federal
standards if it secures the requisite waiver of federal preemption from the
EPA. The Health and Safety Code of the State of California prohibits, among
other things, the sale to an ultimate purchaser who is a resident of or doing
business in California of a new motor vehicle or engine which is intended for
use or registration in that state which has not been certified by the
California Air Resources Board (the "CARB"). The CARB received a waiver from
the EPA for a series of passenger car and light truck emissions standards (the
"low emission vehicle", or "LEV", standards), effective beginning between the
1994 and 2003 model years, that are more stringent than those prescribed by the
Act for the corresponding periods of time. These California standards are
intended to

23



26
promote the development of various classes of low emission vehicles.
California also requires that a specified percentage of each manufacturer's
vehicles produced for sale in California, beginning at 2% in 1998 and
increasing to 10% in 2003, must be "zero-emission vehicles" ("ZEVs"), which
produce no emissions of regulated pollutants.

Electric vehicles are the only presently known type of zero-emission
vehicles. However, despite intensive research activities, technologies have
not been identified that would allow manufacturers to produce a commercially
viable electric vehicle. To comply with the mandate, manufacturers may have to
offer substantial discounts on electric vehicles, selling them well below cost,
or increase the price or curtail the sale of non-electric vehicles. The
California emissions standards present significant technological challenges to
manufacturers and compliance may require costly actions that would have a
substantial adverse effect on Ford's sales volume and profits.

The Act also permits other states with air quality problems to adopt
new motor vehicle emissions standards identical to those adopted by California,
if such states lawfully adopt such standards two years before commencement of
the affected model year. In October 1991, a group of twelve northeastern
states and the District of Columbia, the Ozone Transport Commission (the
"OTC"), organized under provisions of the Act and executed a Memorandum of
Understanding under which they agreed to propose adoption of the California LEV
standards. On February 1, 1994, the OTC voted to recommend to the EPA that it
require all member states to adopt the California LEV standards in their state
implementation programs. The EPA must act on the petition within nine months
after its receipt. Adoption of the California LEV standards by any state will
present challenges and potential adverse effects similar to those that will be
experienced in California, which may be further aggravated by conditions in a
particular state.

In November 1990, the Department of Environmental Conservation (the
"DEC") of the State of New York adopted regulations, effective beginning in the
1993 model year, that are intended to require that vehicles sold in that state
comply with California's 1993 model year (pre- LEV) emissions standards. In
May 1992, the DEC adopted regulations purporting to implement the California
LEV standards beginning in the 1994 model year. The American Automobile
Manufacturers Association ("AAMA"), of which Ford is a member, and the
Association of International Automobile Manufacturers ("AIAM") challenged the
legality of the DEC's adoption of the LEV standards, as inconsistent with its
legal authority under the Act. A ruling by the U.S. District Court in
Binghamton, New York, that the DEC's adoption of the LEV standards violated
certain provisions of the Act (and was, therefore, invalid) was appealed to the
U.S. Court of Appeals for the Second Circuit (the "Second Circuit Court"). On
February 4, 1994, the Second Circuit Court upheld certain aspects of the State
of New York's adoption of the California LEV standards, including the ZEV sales
mandate. However, the Second Circuit Court also held that the standard would
not apply to 1995 model year vehicles, thereby making the standard applicable to
1996 and beyond model year vehicles. A 1990 Massachusetts law, as implemented
by regulations issued in 1992, purports to adopt the California LEV standards
beginning in the 1995 model year. A special study commission established by
the Massachusetts legislature to re-evaluate adoption of the California Act and
standards recommended proceeding with their adoption. The AAMA and AIAM are
challenging the adoption of the standards in the U.S. District Court in
Massachusetts.

Under the Act, if the EPA determines that a substantial number of any
class or category of vehicles, although properly maintained and used, do not
conform to applicable emissions standards, a manufacturer may be required to
recall and remedy such nonconformity at its expense. Further, if the EPA
determines through testing of production vehicles that emission control
performance requirements are not met, it can halt shipment of motor vehicles of
the configuration tested. California has similar, and in some respects
greater, authority to

24



27
order manufacturers to recall vehicles. Ford has been required, and may in the
future be required, to recall vehicles for such purposes from time to time.
The costs of related repairs or inspections associated with such recalls can be
substantial.

The European Union has established standards which, in many cases,
will require motor vehicle emissions control equipment similar to that used in
the U.S. These standards, which are of generally equivalent stringency to 1983
model year U.S. standards for gasoline-powered vehicles and 1987 model year
standards for diesel-powered vehicles, are applicable to vehicles type-approved
after July 1, 1992, and registered after December 31, 1992. The EU Council of
Ministers has unanimously adopted a common position approving a proposal by the
European Commission to adopt more stringent motor vehicle emission standards.
Under the European Union's new co-decision procedure, the Council's common
position must be referred to the European Parliament (which may accept, modify
or reject the proposal) for further action before the proposal can be adopted.
Under the co-decision procedure, adoption is expected to be completed in the
first half of 1994. The proposed standards would apply to vehicle
homologations (i.e., the European regulatory certification process) beginning
January 1, 1996 and to new vehicle registrations beginning January 1, 1997 and
are of generally equivalent numerical stringency to those which begin to apply
in the U.S. for the 1994 model year. The common position also provides for the
European Commission to propose by the end of 1994 supplementary reductions in
motor vehicle emissions that would take effect beginning January 1, 2000. Such
supplemental reductions would be a function of technical progress achieved
between now and 2000. When the more stringent standards are adopted, European
Union member countries would be permitted to provide "green" incentives for the
purchase of vehicles that comply with the new standards before their effective
date. Certain other European countries also have established, and may in the
future establish, unique automotive emissions standards.

Certain European countries, including member countries of the European
Union, are conducting in-use emissions testing to ascertain compliance of motor
vehicles with applicable emissions standards. These actions could lead to
recalls of vehicles and the future costs of related repairs or inspections
could be substantial.

Motor Vehicle Safety -- Under the National Traffic and Motor Vehicle
Safety Act of 1966, as amended (the "Safety Act"), the National Highway Traffic
Safety Administration (the "Safety Administration") is required to establish
appropriate federal motor vehicle safety standards that are practicable, meet
the need for motor vehicle safety and are stated in objective terms. Since
1968 the Safety Act has prohibited the sale in the United States of any new
motor vehicle or item of motor vehicle equipment that does not conform to
applicable federal motor vehicle safety standards. The Safety Administration
has announced its intention to establish additional such standards in the near
future, which Ford supports in principle. Ford expects to be able to comply
with those standards but only at significantly increased costs, because doing
so will tend to conflict with the need to reduce vehicle weight in order to
meet stringent emissions and fuel economy standards. The Safety Administration
also is required to make a determination on the basis of its investigation
whether motor vehicles or equipment contain defects related to motor vehicle
safety or fail to comply with applicable safety standards and, generally, to
require the manufacturer to remedy any such condition at its own expense. The
same obligation is imposed on a manufacturer which obtains knowledge that any
motor vehicle manufactured by it contains a defect determined in good faith by
it to be related to motor vehicle safety. There currently are pending before
the Safety Administration a number of major investigations relating to alleged
safety defects or alleged noncompliance with applicable safety standards in
vehicles built, imported or sold by Ford. The cost of recall programs to
remedy safety defects or noncompliance, should any be determined to exist as a
result of certain of such investigations, could be substantial.

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28
The European Union, individual Member States within the European Union
and other countries in Europe also have safety standards applicable to motor
vehicles and are likely to adopt additional or more stringent standards in the
future. The cost of complying with these standards, as well as the cost of any
recall programs to remedy safety defects or noncompliance, could be
substantial.

Motor Vehicle Fuel Economy -- Passenger cars and trucks rated at less
than 8,500 pounds gross vehicle weight are required by regulations issued by
the Safety Administration pursuant to the Motor Vehicle Information and Cost
Savings Act (the "Cost Savings Act") to meet separate minimum CAFE standards.
Failure to meet the CAFE standard in any model year, after taking into account
all available credits, is deemed to be unlawful conduct and would subject a
manufacturer to the imposition of a civil penalty equivalent to $5 for each
one-tenth of a mile per gallon ("mpg") under the applicable standard multiplied
by the number of vehicles in the class (i.e., domestic cars, domestic trucks,
imported cars or imported trucks) produced in that model year. Each such class
of vehicle may earn credits either as a result of exceeding the standard in one
or more of the preceding three model years ("carryforward credits") or pursuant
to a plan, approved by the Safety Administration, under which a manufacturer
expects to exceed the standard in one or more of the three succeeding model
years ("carryback credits") but credits earned by a class may not be applied to
any other class of vehicles.

The Cost Savings Act established a passenger car CAFE standard of 27.5
mpg for the 1985 and later model years, which the Safety Administration asserts
it has the authority to amend to a level it determines to be the "maximum
feasible" level (considering the following factors: technological feasibility,
economic practicality, the effect of other federal motor vehicle standards on
fuel economy, and the need of the nation to conserve energy). Pursuant to the
Cost Savings Act, the Safety Administration established CAFE standards
applicable to 1994 and 1995 model year light trucks (under 8,500 lbs. GVW) at
20.5 mpg and 20.6 mpg, respectively (on a combined two-wheel drive/four-wheel
drive basis). It also has issued a Notice of Proposed Rulemaking ("NPRM")
proposing to set standards for light trucks within the range of 20.5 mpg to
21.5 mpg for model years 1996 and 1997.

If the Safety Administration sets light truck standards for the 1996
and 1997 model years within the range proposed in the NPRM referred to above,
Ford expects to be able to comply with the CAFE standards applicable to its
1994 through 1997 model year "domestic" and "import" cars and light trucks,
although it may be necessary to use credits to do so.

Despite Ford's expectations of compliance, however, there are factors
that could jeopardize its ability to comply. These factors include the
possibility of changes in market conditions, including a shift in demand for
larger vehicles and a decline in demand for small and middle-size vehicles; or
conversely, a shortage of reasonably priced gasoline resulting in a decreased
demand for more profitable vehicles and a corresponding increase in demand for
relatively less profitable vehicles.

It is anticipated that efforts may be made to raise the CAFE standard
because of concerns for CO2 emissions, energy security or other reasons.
President Clinton's Climate Change Action Plan sets a goal to improve new
vehicle fuel efficiency in an amount equivalent to at least 2% per year over a
10 to 15 year period, using a combination of regulatory and non-regulatory
measures. If the entire goal, or a substantial portion of the goal, is to be
achieved through higher CAFE standards, Ford would find it necessary to take
various costly actions that would have substantial adverse effects on its sales
volume and profits. For example, Ford could find it necessary to curtail or
eliminate production of larger family-size and luxury passenger cars and
full-size light trucks, restrict offerings of engines and popular options, and
continue or increase market support programs for its most fuel-efficient
passenger cars and light trucks.

26



29
The Energy Tax Act of 1978, as amended, imposes a federal excise tax
on automobiles which do not achieve prescribed fuel economy levels. Additional
legislative proposals could be introduced that, if enacted, would increase
excise taxes or create economic disincentives to purchase any except the least
fuel consuming vehicles. Because of the uncertainties and variables inherent
in testing for fuel economy and the uncertain effect on fuel economy of other
government requirements, it is not possible to predict the amount of excise
tax, if any, which may be incurred.






27
30
LEGAL PROCEEDINGS

Various legal actions, governmental investigations and proceedings and
claims are pending or may be instituted or asserted in the future against the
Company and its subsidiaries, including those arising out of alleged defects in
the Company's products, governmental regulations relating to safety, emissions
and fuel economy, financial services, intellectual property rights, product
warranties and environmental matters. Certain of the pending legal actions
are, or purport to be, class actions. Some of the foregoing matters involve or
may involve compensatory, punitive or antitrust or other treble damage claims
in very large amounts, or demands for recall campaigns, environmental
remediation programs, sanctions or other relief which, if granted, would
require very large expenditures. See "Business of Ford --Governmental
Standards". Included among the foregoing matters are the following:

Product Matters -- Three suits purporting to be nationwide class
actions were filed by some of the plaintiffs of a previously dismissed federal
action that allege claims that are substantially the same as those in the
dismissed federal action -- i.e., that they are or were purchasers or owners of
or passengers in 1976 through 1979 model year Ford vehicles equipped with
certain automatic transmissions who have incurred property damage, personal
injury, economic losses or liability for such losses by reason of an alleged
tendency of the vehicles to slip from park to reverse. A judgment dismissing
the first such suit by the Superior Court for the District of Columbia was
vacated by the local Court of Appeals for the District of Columbia, and renewed
motions to dismiss are under consideration by the Superior Court. The second
suit was filed in the Court of Common Pleas in Philadelphia, Pennsylvania, and
has been stayed pending the entry of final and non-appealable orders in the
action referred to in the immediately preceding sentence. The third suit was
filed in the Circuit Court of Cook County, Illinois. That court granted the
Company's motion to stay proceedings indefinitely and the plaintiffs have
appealed that ruling to the Appellate Court of Illinois for the First Judicial
District-Third Division.

Ford is a defendant in various actions for damages arising out of
automobile accidents where plaintiffs claim that the injuries resulted from (or
were aggravated by) alleged defects in the occupant restraint systems in
vehicle lines of various model years. The damages specified by the plaintiffs
in these actions, including both actual and punitive damages, aggregated
approximately $439 million at January 1, 1994.

Ford is a defendant in various actions involving the alleged
propensity of Bronco II utility vehicles to roll over. The damages specified
in these actions, including both actual and punitive damages, aggregated
approximately $367 million at January 1, 1994.

In some of the actions described in the foregoing paragraphs no dollar
amount of damages is specified or the specific amount referred to is only the
jurisdictional minimum. In addition to the pending actions, accidents have
occurred and claims have arisen which also may result in lawsuits in which such
a defect may be alleged.

Ford is a defendant in various actions for injuries claimed to have
resulted from alleged contact with certain Ford parts and other products
containing asbestos. Damages specified by plaintiffs in complaints in these
actions, including both actual and punitive damages, aggregated approximately
$163 million at January 1, 1994. (In some of these actions no dollar amount of
damages is specified or the specific amount referred to is only the
jurisdictional minimum.) As distinguished from most lawsuits against Ford, in
most of these asbestos-related cases, Ford is but one of many defendants, and
many of these co-defendants have substantial resources.




28
31
Environmental Matters -- Ford has received notices from two government
environmental enforcement agencies concerning two separate matters, each
potentially involving monetary sanctions exceeding $100,000. One agency
believes a Ford facility may have violated regulations relating to the
management of certain of the facility's wastes and the other agency believes a
Ford facility may violate or may have violated limits established by
regulations or permits for emissions or discharges.

Ford has received notices under RCRA, the Superfund Act and applicable
state laws that it (along with others) may be a potentially responsible party
for the costs associated with remediating numerous hazardous substance storage,
recycling or disposal sites in many states and, in some instances, for natural
resource damages. Ford also may have been a generator of hazardous substances
at a number of other sites. The amount of any such costs or damages for which
Ford may be held responsible could be substantial. Contingent losses expected
to be incurred by Ford in connection with many of these sites have been accrued
and are reflected in Ford's financial statements in accordance with generally
accepted accounting principles. However, for many other of these sites the
remediation costs and other damages for which Ford ultimately may be
responsible are not reasonably estimable because of the uncertainties with
respect to factors such as Ford's connection to the site or to materials there,
the involvement of other potentially responsible parties, the application of
laws and other standards or regulations, site conditions, and the nature and
scope of investigations, studies and remediation to be undertaken (including
the technologies to be required and the extent, duration and success of
remediation). As a result, Ford is unable to determine or reasonably estimate
the amount of costs or other damages for which it is potentially responsible in
connection with these sites, although it could be substantial.

Other Matters -- A number of claims have been made or may be asserted
in the future against Ford alleging infringement of patents held by others.
Ford believes that it has valid defenses with respect to the claims that have
been asserted. If some of such claims should lead to litigation, however, and
if the claimant were to prevail, Ford could be required to pay substantial
damages.

On August 7, 1992, Ford was sued in federal court in Nevada by an
individual patent owner seeking damages and an injunction for alleged
infringement of three (later amended to four) U.S. patents characterized by the
individual as covering machine vision inspection technologies, including bar
code reading. Ford and one of its suppliers, Motorola, have filed a
declaratory judgment action in the same court to have those patents and several
other patents directed to machine vision, radiation beam (e.g., laser and
electron beam) uses and semiconductor manufacturing (17 patents in all)
declared invalid, unenforceable and not infringed. If the patent holder were
to prevail, Ford could be required to pay substantial damages of an as yet
indeterminate amount and could become subject to an injunction preventing
future uses of any process or product found to be covered by a valid patent.




29
32
On March 15, 1993, Ford was served with a private purported class
action lawsuit in Texas relating to allegations of paint peeling on unspecified
Ford vehicles. The purported class would include all persons who purchased new
or used Ford vehicles in Texas and who experienced paint peeling as a result of
unspecified defects in Ford's paint process. The plaintiffs seek an
unspecified amount of damages.

Ford has been served with various private purported class action
lawsuits seeking economic damages (including damages for diminution in value
and rescission of purchase agreements) on behalf of Bronco II vehicle owners
relating to the alleged propensity of such vehicles to roll over. The
purported classes include all Bronco II owners in the United States. Each
lawsuit expressly excludes personal injury claimants, whose claims are
discussed above. Several of the lawsuits seek recovery of unspecified punitive
damages. In addition, several of the lawsuits seek an order requiring the
Company to recall and retrofit these vehicles.

Ford of Germany and Volkswagen AG have formed a joint venture to
produce a multi-purpose vehicle ("MPV") in Portugal. The Portuguese government
has agreed to grant an incentive package to the joint venture. On June 15,
1993 the European Court of Justice rejected a claim filed by a French
manufacturer of MPVs challenging the legality of the grant. The same
manufacturer has filed an appeal with the European Court challenging the
decision of the European Commission in December 1992 granting antitrust
approval of the joint venture. Ford has intervened in these proceedings. If
the French manufacturer succeeds in the antitrust case, which Ford considers
unlikely, the joint venture could be dissolved, the grants may have to be
repaid and the participants in the joint venture might have to write off
substantial development costs.

EMPLOYEE RELATIONS

Substantially all hourly employees of Ford in the United States are
included in collective bargaining units represented by unions. Approximately
99% of these unionized hourly employees are represented by the United
Automobile Workers (the "UAW"). Approximately 3% of salaried employees are
represented by unions. Most hourly employees and many nonmanagement salaried
employees of subsidiaries outside the United States also are represented by
unions. Affiliates of Ford also are parties to collective bargaining
agreements in Britain, Spain, Germany and France.

Collective bargaining agreements between Ford and the UAW and between
Ford of Canada and the Canadian Automobile Workers were entered into in 1993
and are scheduled to expire in September 1996.






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33
SELECTED FINANCIAL DATA OF FORD

The following tables set forth selected financial data and
other data concerning Ford for each of the last ten years (dollar amounts in
millions except per share amounts):



SUMMARY OF OPERATIONS 1993 1992 1991 1990 1989 1988 1987 1986
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------

AUTOMOTIVE
Sales $ 91,568 $ 84,407 $ 72,051 $ 81,844 $ 82,879 $ 82,193 $ 71,797 $ 62,868
Operating income/(loss) 1,432 (1,775) (3,769) 316 4,252 6,612 6,256 4,142
Income/(Loss) before income taxes and cumulative
effects of changes in accounting principles 1,291 (1,952) (4,052) 275 5,155 7,312 6,499 4,300
Income/(Loss) before cumulative effects of changes
in accounting principles (1) 940 (1,534) (3,186) 99 3,175 4,609 3,767 2,512
Net income/(loss) 940 (8,628) (3,186) 99 3,175 4,609 3,767 2,512
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES
Revenues $ 16,953 $ 15,725 $ 16,235 $ 15,806 $ 13,267 $ 10,253 $ 8,096 $ 6,826
Income before income taxes and cumulative effects
of changes in accounting principles 2,712 1,825 1,465 1,221 874 1,031 1,385 1,321
Income before cumulative effects of changes in
accounting principles 1,589 1,032 928 761 660 691 858 773
Net income 1,589 1,243 928 761 660 691 858 773
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
TOTAL COMPANY
Income/(Loss) before income taxes and cumulative
effects of changes in accounting principles $ 4,003 $ (127) $ (2,587) $ 1,495 $ 6,030 $ 8,343 $ 7,885 $ 5,620
Provision/(Credit) for income taxes 1,350 295 (395) 530 2,112 2,999 3,226 2,324
Minority interests 124 80 66 105 82 44 34 12
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
Income/(Loss) before cumulative effects of
changes in accounting principles (1) $ 2,529 $ (502) $ (2,258) $ 860 $ 3,835 $ 5,300 $ 4,625 $ 3,285
Cumulative effects of changes in accounting
principles - (6,883) - - - - - -
Net income/(loss) 2,529 (7,385) (2,258) 860 3,835 5,300 4,625 3,285
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
TOTAL COMPANY DATA PER SHARE OF COMMON AND
CLASS B STOCK (2)
Income/(Loss) before cumulative effects of
changes in accounting principles $ 4.55 $ (1.46) $ (4.79) $ 1.86 $ 8.22 $ 10.96 $ 9.05 $ 6.16
Income/(Loss)
Assuming no dilution 4.55 (15.61) (4.79) 1.86 8.22 10.96 9.05 6.16
Assuming full dilution 4.20 (15.61) (4.79) 1.84 8.12 10.80 8.92 6.05
Cash dividends 1.60 1.60 1.95 3.00 3.00 2.30 1.58 1.11
Common stock price range (NYSE)
. High 66 1/8 48 7/8 37 3/4 49 1/8 56 5/8 55 56 3/8 31 3/4
. Low 43 27 3/4 23 3/8 25 41 3/8 38 1/8 28 1/2 18
Average number of shares of Common and Class B
Stock outstanding (in millions) 493 486 476 463 467 484 511 533
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------




SUMMARY OF OPERATIONS 1985 1984
- - - - - - --------------------------------------------------------------------

AUTOMOTIVE
Sales $52,915 $52,527
Operating income/(loss) 2,902 3,528
Income/(Loss) before income taxes and cumulative
effects of changes in accounting principles 3,154 3,909
Income/(Loss) before cumulative effects of changes
in accounting principles (1) 2,012 2,528
Net income/(loss) 2,012 2,528
- - - - - - --------------------------------------------------------------------
FINANCIAL SERVICES
Revenues $ 4,700 $ 3,797
Income before income taxes and cumulative effects
of changes in accounting principles 861 629
Income before cumulative effects of changes in
accounting principles 504 379
Net income 504 379
- - - - - - --------------------------------------------------------------------
TOTAL COMPANY
Income/(Loss) before income taxes and cumulative
effects of changes in accounting principles $ 4,015 $ 4,539
Provision/(Credit) for income taxes 1,487 1,584
Minority interests 13 48
- - - - - - --------------------------------------------------------------------
Income/(Loss) before cumulative effects of
changes in accounting principles (1)
in accounting principles (1) $ 2,515 $ 2,907
Cumulative effects of changes in accounting
principles - -
Net income/(loss) 2,515 2,907

- - - - - - --------------------------------------------------------------------
TOTAL COMPANY DATA PER SHARE OF COMMON AND
CLASS B STOCK (2)
Income/(Loss)
changes in accounting principles $ 4.54 $ 5.26
Income/(Loss)
Assuming no dilution 4.54 5.26
Assuming full dilution 4.40 4.97
Cash dividends 0.80 0.67
Common stock price range (NYSE)
. High 19 3/4 17 1/8
. Low 13 3/8 11
Average number of shares of Common and Class B
Stock outstanding (in millions) 554 552
- - - - - - --------------------------------------------------------------------


(1) 1989 includes an after-tax loss of $424 million from the sale of Rouge
Steel Company.

(2) Share data have been adjusted to reflect stock dividends and stock split.





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34



SUMMARY OF OPERATIONS, CONT. 1993 1992 1991 1990 1989 1988 1987
- - - - - - --------------------------------------------------------------------------------------------------------------------------

TOTAL COMPANY BALANCE SHEET DATA AT YEAR END
Assets
Automotive $ 61,737 $ 57,170 $ 52,397 $ 50,824 $ 45,819 $ 43,128 $ 39,734
Financial Services 137,201 123,375 122,032 122,839 115,074 100,239 76,260
- - - - - - --------------------------------------------------------------------------------------------------------------------------
Total Assets $ 198,938 $ 180,545 $ 174,429 $ 173,663 $160,893 $143,367 $115,994
Long-term debt
Automotive $ 7,084 $ 7,068 $ 6,539 $ 4,553 $ 1,137 $ 1,336 $ 2,058
Financial Services 47,900 42,369 43,680 40,779 37,784 30,777 26,009
Stockholders' equity (3) 15,574 14,753 22,690 23,238 22,728 21,529 18,493
- - - - - - --------------------------------------------------------------------------------------------------------------------------
TOTAL COMPANY FACILITY AND TOOLING DATA
Capital expenditures for facilities (excluding
special tools) $ 4,339 $ 3,613 $ 3,611 $ 4,702 $ 4,412 $ 3,148 $ 2,415
Depreciation 5,456 4,658 3,956 3,185 2,720 2,458 2,107
Expenditures for special tools 2,475 2,177 2,236 2,556 2,354 1,634 1,343
Amortization of special tools 2,012 2,097 1,822 1,695 1,509 1,335 1,353
- - - - - - --------------------------------------------------------------------------------------------------------------------------
TOTAL COMPANY EMPLOYEE DATA - WORLDWIDE
Payroll $ 13,753 $ 13,754 $ 12,850 $ 14,014 $ 13,327 $ 13,010 $ 11,683
Total labor costs 20,087 19,824 17,998 18,962 18,152 18,108 16,591
Average number of employees 322,213 325,333 331,977 368,547 366,641 358,939 351,711
- - - - - - --------------------------------------------------------------------------------------------------------------------------
TOTAL COMPANY EMPLOYEE DATA - U.S. OPERATIONS
Payroll $ 8,888 $ 8,015 $ 7,389 $ 8,309 $ 8,650 $ 8,473 $ 7,762
Average number of employees 166,943 158,377 156,079 179,104 188,286 185,540 180,838
Average hourly labor costs (4)
Earnings $ 20.94 $ 19.92 $ 19.10 $ 18.44 $ 17.77 $ 17.39 $ 16.50
Benefits 18.12 19.24 17.97 14.12 13.21 13.07 12.38
- - - - - - --------------------------------------------------------------------------------------------------------------------------
Total hourly labor costs $ 39.06 $ 39.16 $ 39.07 $ 32.56 $ 30.98 $ 30.46 $ 28.88
- - - - - - --------------------------------------------------------------------------------------------------------------------------





SUMMARY OF OPERATIONS, CONT. 1986 1985 1984
- - - - - - -----------------------------------------------------------------------------

TOTAL COMPANY BALANCE SHEET DATA AT YEAR END
Assets
Automotive $ 34,021 $29,297 $25,781
Financial Services 59,211 45,797 26,209
- - - - - - -----------------------------------------------------------------------------
Total Assets $ 93,232 $75,094 $51,990
Long-term debt
Automotive $ 2,467 $ 2,459 $2,347
Financial Services 19,128 13,753 8,833
Stockholders' equity (3) 14,860 12,269 9,838
- - - - - - -----------------------------------------------------------------------------
TOTAL COMPANY FACILITY AND TOOLING DATA
Capital expenditures for facilities (excluding
special tools) $ 2,179 $ 2,385 $2,332
Depreciation 1,859 1,559 1,405
Expenditures for special tools 1,285 1,417 1,223
Amortization of special tools 1,293 948 979
- - - - - - -----------------------------------------------------------------------------
TOTAL COMPANY EMPLOYEE DATA - WORLDWIDE
Payroll $ 11,290 $10,175 $10,018
Total labor costs 15,610 14,033 13,803
Average number of employees 382,274 369,314 389,917
- - - - - - -----------------------------------------------------------------------------
TOTAL COMPANY EMPLOYEE DATA - U.S. OPERATIONS
Payroll $ 7,704 $ 7,213 $6,875
Average number of employees 181,476 172,165 178,758
Average hourly labor costs (4)
Earnings $ 16.12 $ 15.70 $15.06
Benefits 11.01 10.75 9.40
- - - - - - -----------------------------------------------------------------------------
Total hourly labor costs $ 27.13 $ 26.45 $24.46
- - - - - - -----------------------------------------------------------------------------


(3) The cumulative effects of changes in accounting principles reduced
equity by $6,883 million in 1992.

(4) Per hour worked (in dollars). Excludes data for subsidiary
companies.


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35



SUMMARY OF VEHICLE SALES (5) 1993 1992 1991 1990 1989 1988 1987 1986
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------

U.S. AND CANADIAN
CARS AND TRUCKS (6)
CARS
United States 1,950,238 1,841,248 1,605,972 1,853,095 2,186,344 2,376,766 2,171,442 2,093,698
Canada 126,297 123,551 143,571 147,712 190,037 200,629 187,840 188,887
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
TOTAL CARS 2,076,535 1,964,799 1,749,543 2,000,807 2,376,381 2,577,395 2,359,282 2,282,585

TRUCKS
United States 1,875,711 1,520,049 1,260,439 1,422,116 1,523,275 1,540,926 1,481,059 1,404,002
Canada 125,906 109,161 103,757 112,930 136,082 145,142 151,982 126,758
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
TOTAL TRUCKS 2,001,617 1,629,210 1,364,196 1,535,046 1,659,357 1,686,068 1,633,041 1,530,760
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
TOTAL IN U.S. AND CANADA 4,078,152 3,594,009 3,113,739 3,535,853 4,035,738 4,263,463 3,992,323 3,813,345
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
CARS AND TRUCKS OUTSIDE
U.S. AND CANADA
Germany 831,216 923,763 969,003 979,941 1,023,380 1,008,198 899,609 862,288
Britain 421,939 473,178 481,794 481,260 515,520 507,367 484,057 438,155
Spain 211,413 310,957 340,796 334,665 310,481 281,679 276,448 268,114
Mexico 90,710 126,334 111,849 84,673 86,830 62,663 34,495 43,601
Australia 126,753 120,017 108,986 157,388 158,740 136,203 134,222 143,415
Taiwan 113,861 113,966 102,631 104,073 99,713 79,906 59,082 34,757
Japan 52,805 66,654 96,298 108,437 91,229 61,722 51,446 44,309
Other Countries (7) 36,737 35,496 20,461 18,529 14,723 39,471 119,692 267,761
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
TOTAL OUTSIDE UNITED STATES
AND CANADA 1,885,434 2,170,365 2,231,818 2,268,966 2,300,616 2,177,209 2,059,051 2,102,400
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
TOTAL WORLDWIDE-CARS AND TRUCKS 5,963,586 5,764,374 5,345,557 5,804,819 6,336,354 6,440,672 6,051,374 5,915,745
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
TOTAL WORLDWIDE-TRACTORS (8) - - 13,243 67,570 71,690 76,514 63,914 68,336
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------
TOTAL WORLDWIDE FACTORY SALES 5,963,586 5,764,374 5,358,800 5,872,389 6,408,044 6,517,186 6,115,288 5,984,081
- - - - - - ----------------------------------------------------------------------------------------------------------------------------------




SUMMARY OF VEHICLE SALES (5) 1985 1984
- - - - - - ---------------------------------------------------------

U.S. AND CANADIAN
CARS AND TRUCKS (6)
CARS
United States 1,940,662 2,047,671
Canada 194,540 167,295
- - - - - - ---------------------------------------------------------
TOTAL CARS 2,135,202 2,214,966

TRUCKS
United States 1,260,123 1,238,928
Canada 119,583 94,552
- - - - - - ---------------------------------------------------------
TOTAL TRUCKS 1,379,706 1,333,480
- - - - - - ---------------------------------------------------------
TOTAL IN U.S. AND CANADA 3,514,908 3,548,446
- - - - - - ---------------------------------------------------------
CARS AND TRUCKS OUTSIDE
U.S. AND CANADA
Germany 769,883 789,655
Britain 422,003 371,598
Spain 265,783 269,021
Mexico 70,238 50,560
Australia 177,108 156,304
Taiwan 23,714 33,965
Japan 38,559 34,672
Other Countries (7) 268,304 330,430
- - - - - - ---------------------------------------------------------
TOTAL OUTSIDE UNITED STATES
AND CANADA 2,035,592 2,036,205
- - - - - - ---------------------------------------------------------
TOTAL WORLDWIDE-CARS AND TRUCKS 5,550,500 5,584,651
- - - - - - ---------------------------------------------------------
TOTAL WORLDWIDE-TRACTORS (8) 83,848 82,511
- - - - - - ---------------------------------------------------------
TOTAL WORLDWIDE FACTORY SALES 5,634,348 5,667,162
- - - - - - ---------------------------------------------------------


(5) Includes units manufactured by other companies and sold by Ford.

(6) Factory sales are by source of manufacture, except that Canadian,
Mexican and Australian exports to the United States are included as
U.S. vehicle sales, and U.S. exports to Canada are included as
Canadian vehicle sales.

(7) Includes units sold by Ford in Brazil and Argentina through June 30,
1987, and excludes units sold by Autolatina.

(8) Ford's tractor operation, Ford New Holland, was sold on May 6, 1991.






33

36
FINANCIAL REVIEW OF FORD MOTOR COMPANY RESULTS


Overview

The Company's worldwide net income in 1993 was $2,529 million, or
$4.55 per share of Common and Class B Stock, compared with a loss of $7,385
million, or $15.61 per share in 1992. Sales and revenues totaled $108.5
billion in 1993, up 8% from 1992. Factory unit sales of cars and trucks were
5,964,000, up 200,000 or 3%.

In 1992, Ford adopted new accounting standards for postretirement
benefits (principally retiree health care) and income taxes that resulted in a
one-time charge to net income in 1992 for prior years of $6,883 million.
Excluding the one-time effects of these accounting changes, the Company
incurred a net loss of $502 million or $1.46 per share in 1992.

The Company's financial results in 1993 showed substantial improvement
compared with 1992. Improvements in U.S. Automotive operations included the
favorable effects of higher industry volume, higher share, and improved
margins. Automotive operations outside the U.S. also improved, despite lower
industry volumes in Europe. Earnings from Financial Services operations were a
record and increased 54% compared with 1992.

The Company continued its product development and cost reduction
programs to strengthen its competitive position. In 1993, capital spending for
new products and facilities was $6.8 billion, up $1 billion from 1992.
Automotive debt at the end of 1993 was $8,016 million, down $301 million from
year-end 1992. Cash and marketable securities for the Company's Automotive
segment totaled $9,752 million, up $717 million from year-end 1992.

In 1994, the Company expects continued improvements in operating
results from cost reduction efforts, new product introductions, and a moderate
rate of economic growth in the United States. The Company expects sales for
the U.S. car and truck industry to reach about 15 million units in 1994.
Several new products will be introduced in 1994, including the Ford Windstar,
Ford Aspire, Ford Contour and Mercury Mystique. Per-unit U.S. marketing costs
for Ford, which declined in 1993, should decline further in 1994 as industry
sales increase and new products are introduced.

The Company expects industry sales in Europe to be up slightly in
1994, compared with 1993. As a result of an expected continuation of the
gradual economic recovery in Great Britain and the restructuring actions
undertaken in Europe during 1993, the operating results of European Automotive
operations are projected to improve in 1994, compared with 1993. In Latin
America, the near-term business outlook is favorable, but business conditions
have historically been volatile and subject to rapid change.

FOURTH QUARTER OF 1993

In the fourth quarter of 1993, the Company's worldwide net income was
$719 million or $1.30 per share of Common and Class B Stock, compared with a
loss of $840 million, or $1.85 per share in the fourth quarter of 1992.

34



37
Worldwide Automotive operations earned $297 million in the fourth
quarter of 1993, compared with a loss of $1,037 million a year ago. U.S.
Automotive operations earned $669 million in the fourth quarter of 1993,
compared with a loss of $128 million a year ago, while Automotive operations
outside the U.S. incurred a loss of $372 million, compared with a loss of $909
million a year ago. Financial Services earned $422 million in the fourth
quarter of 1993, compared with $197 million a year ago.

Net income for Automotive operations outside the U.S. were adversely
affected in the fourth quarter of 1993 by restructuring actions at Jaguar ($109
million) and Ford of Australia ($57 million), offset partially by the favorable
one-time effects of a reduction in German tax rates ($59 million). Automotive
operations in the U.S. were favorably affected by the gain on the sale of
Ford's North American automotive seating and seat trim business ($73 million).
The loss a year ago included one-time European restructuring charges of $334
million for Automotive operations and $85 million for Financial Services
operations.

The following discussion of the results of operations excludes the
one-time effects associated with accounting changes in 1992 as discussed above.


1993 RESULTS OF OPERATIONS

AUTOMOTIVE OPERATIONS

Net income from Ford's worldwide Automotive operations was $940
million in 1993 on sales of $91.6 billion. In 1992, worldwide Automotive
operations incurred a loss of $1,534 million (excluding the accounting changes)
on sales of $84.4 billion.

In the U.S., Ford's Automotive operations earned $1,482 million on
sales of $61.6 billion, compared with a loss of $405 million in 1992 on sales
of $51.9 billion. Higher vehicle production, reflecting higher industry sales
and a higher Ford market share, accounted for most of the improvement.
Improved margins, reflecting mainly favorable material costs, manufacturing
efficiencies, and lower marketing costs, were offset partially by higher costs
for new products and related facilities. Results in 1993 included the one-time
favorable effect of tax legislation ($171 million) for the restatement of U.S.
deferred tax balances for the Federal income tax rate increase from 34% to 35%
and the gain on the sale of Ford's North American automotive seating and seat
trim business ($73 million). On an ongoing basis, the effect of the tax rate
change on future tax expense will be unfavorable.

In 1993, the U.S. economy continued to grow at a modest rate. In the
eleven quarters since the recovery began in the Spring of 1991, the rate of
growth in the gross domestic product (GDP) has averaged 2.7%, 60% of the rate
over the comparable period during the last six recoveries. Slow growth has
helped reduce interest rates and inflation to low levels. Industry sales of
cars and trucks in the United States have gradually increased from 12.5 million
units in 1991 to 14.2 million units in 1993. Over this period, Ford's combined
U.S. car and truck market share has improved -- from 23.2% in 1991 to 25.5% in
1993 -- to the highest level since 1978. The Company also has benefited from
reduced marketing incentives, lower supplier cost increases, and other cost
efficiencies.

Full year U.S. car and truck industry volumes increased from 13.1
million units in 1992 to 14.2 million units in 1993. Over 70% of the increase
in industry sales was attributable

35



38
to trucks (including minivans, compact utility vehicles, and compact pickups).
Ford's share of the U.S. car market (including Jaguar) was 22.3%, up 5/10 of a
point from 1992. The Company's U.S. truck share was 30.5%, up 8/10 of a point
from 1992. The improved market share for cars and trucks reflected strong
product acceptance.

Outside the U.S., Ford's Automotive operations lost $542 million in
1993 on sales of $30.0 billion, compared with a loss of $1,129 million in 1992
on sales of $32.5 billion. Results improved despite a weak economy in Europe
that resulted in the lowest level of industry sales in eight years. Savings
from cost reduction actions in Europe and improved results in Latin America,
reflecting primarily higher industry volume in Brazil, more than offset the
effects of lower volume in Europe. The loss in 1993 included restructuring
charges at Jaguar ($174 million), primarily for resourcing stamping and
restructuring other operations to improve efficiency, and at Ford of Australia
($57 million), related to discontinuing production of the Capri and Laser
model, offset partially by the favorable one-time effect of a reduction in
German tax rates ($59 million). Losses in 1992 included restructuring charges
of $334 million.

Ford's European Automotive operations (excluding Jaguar) lost $407
million, compared with a loss of $647 million in 1992. The improvement
reflected nonrecurrence of the one-time restructuring charge ($334 million) in
the fourth quarter of 1992, primarily for planned reductions in employment
levels. Lower vehicle production, reflecting lower industry sales (down 16%),
higher costs for new products, and the unfavorable effect of fluctuations in
foreign currency exchange rates were partially offset by manufacturing
efficiencies and other cost improvements.

Car and truck industry sales in Europe were 12.5 million units in
1993, compared with 15 million units in 1992. Ford's European car market share
(including Jaguar) was 11.8% in 1993, up 3/10 of a point from 1992. Ford's
European truck share improved 9/10 of a point to 12.6%.

FINANCIAL SERVICES OPERATIONS

The Company's Financial Services operations earned a record $1,589
million in 1993, up $557 million from 1992. Higher volume, reduced interest
rates and operating costs, and lower credit losses contributed to record
earnings at Financial Services operations, including Ford Credit, The
Associates, and USL Capital. Results in 1993 included an unfavorable one-time
effect of $31 million from tax legislation in the U.S. Results in 1992 of
$1,032 million excluded a favorable effect of $211 million associated with
one-time accounting changes, mainly for income taxes, but include
organizational restructuring charges relating to European Financial Services
operations ($85 million).

See Item 7. -- "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for the discussion of Ford Credit's 1993
results of operations. In addition, international operations managed by Ford
Credit earned $199 million in 1993, up $11 million from 1992, primarily
reflecting improved net interest margins and lower credit lossess offset
partially by the unfavorable effect of exchange rates.

The Associates earned a record $470 million in the U.S. in 1993, up
$77 million from 1992. The improvement was more than explained by improved
credit loss performance and higher levels of earning assets. In addition,
international operations managed by The Associates earned $38 million in 1993,
the same as in 1992.

First Nationwide incurred a loss of $55 million in 1993, compared with
a loss of $81 million in 1992. The improvement resulted primarily from reduced
borrowing costs, continued improvements in operating costs, a lower adjustment
in 1993 to the carrying value of derivative securities and the gain on sale of
certain branches. These factors were partially offset by lower levels of
earning assets, lower yields from the reinvestment of FDIC

36



39
proceeds, and a reduction in income tax benefits.

First Nationwide's 1993 revenues included $72 million from the Federal
Savings and Loan Insurance Corporation Resolution Fund (FSLIC/RF), compared
with $221 million in 1992. These revenues represented reimbursements for
losses or guaranteed yields on covered assets paid pursuant to First
Nationwide's agreements with FSLIC/RF to acquire certain savings and loan
institutions.

USL Capital earned a record $77 million in 1993, up $17 million from
1992. The improvement resulted primarily from higher earning assets and
continued operating cost reductions. American Road earned $79 million in 1993,
compared with $47 million in 1992. The increase resulted primarily from
improved underwriting experience in extended service plan and floor plan
products, partially offset by lower investment income.


LIQUIDITY AND CAPITAL RESOURCES

AUTOMOTIVE OPERATIONS

Cash and marketable securities of the Company's Automotive operations
were $9,752 million at December 31, 1993, up $717 million from December 31,
1992. The Company paid $1,086 million in cash dividends on its capital stock
during 1993. In 1993, the Company contributed $1 billion to its pension funds.

Automotive capital expenditures were $6.7 billion in 1993, up $1
billion from 1992. Over the last five years (1989 through 1993), the Company's
worldwide capital spending totaled $32 billion. During the next several years,
the pace of spending for product change at Ford will continue at similar or
higher levels.

At December 31, 1993, Automotive debt totaled $8,016 million, which
was 34% of total capitalization (stockholders' equity and Automotive debt),
compared with $8,317 million, or 36% of total capitalization, at year-end 1992.

At December 31, 1993, Ford (parent company only) had long-term
contractually committed credit agreements for use in the U.S. under which $4.8
billion is available from various banks at least through June 30, 1998. The
entire $4.8 billion may be used, at Ford's option, by either Ford or Ford
Credit. As of December 31, 1993, these facilities were unused.

Outside the U.S., Ford has additional long-term contractually
committed credit-line facilities of approximately $2.4 billion. These
facilities are available in varying amounts from 1994 through 1998; none had
been utilized at December 31, 1993.

FINANCIAL SERVICES OPERATIONS

The Financial Services operations rely heavily on their ability to
raise substantial amounts of funds in capital markets in addition to
collections on loans and retained earnings. The levels of funds for certain
Financial Services operations are affected by certain transactions with Ford,
such as capital contributions, dividend payments and the timing of payments for
income taxes. Their ability to obtain funds also is affected by their debt
ratings which, for certain operations, are closely related to the financial
condition and

37



40
outlook for Ford and the nature and availability of support facilities, such as
revolving credit and receivables sales agreements.

For information relating to Ford Credit's liquidity and capital
resources, see "Business of Ford Credit - Borrowings and Other Sources of
Funds" and Item 7. - "Management's Discussion and Analysis of Financial
Condition and Results of Operations". In addition, at December 31, 1993,
international subsidiaries and other credit operations managed by Ford Credit
had $14.2 billion of support facilities available outside the U.S.,
approximately 44% of which were contractually committed. At December 31, 1993,
approximately 42% of these support facilities outside the U.S. were in use.

First Nationwide's principal sources of funds include borrowings,
collections on loans, proceeds from the sale of loans, and customers' deposits.
In addition, the Federal Home Loan Bank System provides both short- and
long-term alternative sources of funds. Other sources include the sale of
mortgage pass-through securities and reverse repurchase agreements. Federal
regulations require that an insured institution maintain certain regulatory
capital requirements. New minimum regulatory capital standards were
established in 1989 and will be phased in through 1994. First Nationwide Bank
met all of the minimum capital requirements in effect at December 31, 1993.

At December 31, 1993, The Associates had contractually committed lines
of credit with banks of $3.1 billion, with various maturities ranging from
January 30, 1994 to December 31, 1994, none of which was utilized at December
31, 1993. Also, at December 31, 1993, The Associates had $4.1 billion of
contractually committed revolving credit facilities with banks, with maturity
dates ranging from February 1, 1994 through October 1, 1997, and $1 billion of
contractually committed receivables sale facilities, $500 million of which are
available through April 15, 1994 and $500 million of which are available
through April 30, 1995; none of these facilities was in use at December 31,
1993. At December 31, 1993, foreign operations managed by The Associates had
$195 million of support facilities available outside the U.S., approximately
64% of which were contractually committed. At December 31, 1993, about 15% of
these support facilities outside the U.S. were in use.

At December 31, 1993, Ford Holdings had outstanding debt of $1.9
billion, all of which was long-term. All of the Ford Holdings debt held by
nonaffiliated persons is guaranteed by Ford. Ford Holdings had no
contractually committed lines of credit at December 31, 1993. In 1993, Ford
Holdings sold 1,728 shares of its Series B Cumulative Preferred Stock having an
aggregate liquidation preference of $173 million and 2,000 shares of its Series
C Cumulative Preferred Stock having an aggregate liquidation preference of $200
million.

American Road's principal sources of funds are insurance premiums,
annuity deposits and investment income. American Road had no debt or credit
lines at December 31, 1993.

At December 31, 1993, USL Capital had $1.4 billion of contractually
committed credit facilities, 70% of which are available through September 1998.
These facilities included $200 million of contractually committed receivables
sale facilities, of which about 86% were in use at December 31, 1993. At
December 31, 1993, foreign operations managed by USL Capital had approximately
$90 million of contractually committed support facilities available outside the
U.S., of which about 75% were in use at December 31, 1993.


38


41
NEW ACCOUNTING STANDARDS

In November 1992, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 112,
"Employers' Accounting for Postemployment Benefits", which requires companies
to account for employee benefits on an accrual basis for periods when employees
are no longer actively employed but have not yet reached retirement. The
effect on the Company's financial statements was not material.

In May 1993, the FASB issued SFAS 114, "Accounting by Creditors for
Impairment of a Loan". The standard requires that impaired loans be measured
based on the present value of expected future cash flows discounted at the
loan's effective interest rate. The Company does not plan to adopt this
standard until January 1, 1995, and the effect is not expected to be material.

In May 1993, the FASB issued SFAS 115, "Accounting for Certain
Investments in Debt and Equity Securities". The standard establishes financial
accounting and reporting requirements for investments in equity securities
(excluding those accounted for under the equity method and investments in
consolidated subsidiaries) that have readily determinable fair values and for
all investments in debt securities. The Company has adopted this standard
effective January 1, 1994, and the effect is not expected to be material.


ITEM 2. FORD CREDIT PROPERTIES

Substantially all of Ford Credit's branch operations presently are
being conducted from leased properties. At December 31, 1993, Ford Credit's
aggregate obligation under leases of real property was $52.2 million. In 1990,
Ford Credit purchased from Ford its central office building in Dearborn,
Michigan.


ITEM 3. FORD CREDIT LEGAL PROCEEDINGS

Various legal actions, governmental proceedings, and other claims are
pending or may be instituted or asserted in the future against Ford Credit and
its subsidiaries.

Ford Credit is a defendant in actions asserting claims under the
antitrust laws and the Automobile Dealers' Day in Court Act resulting from Ford
Credit's termination of financing relationships with former automobile dealers,
and actions alleging violations of various state and federal regulatory laws
concerning financing and insurance, based upon technical interpretations of
their requirements. Some of these matters involve or may involve class
actions, compensatory, punitive or treble damage claims and attorneys fees in
very large amounts, or other requested relief which, if granted, would require
very large expenditures.

39



42
PART II



ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

All shares of the registrant's Common Stock are owned by Ford and,
accordingly, there is no market for such stock. During 1993, Ford Credit
declared and paid to Ford cash dividends of $250 million. Dividends also were
paid to Ford in 1992 and 1991. Ford Credit may pay additional dividends from
time to time depending on Ford Credit's receivables levels, capital
requirements, and profitability.




40
43
ITEM 6. SELECTED FINANCIAL DATA

FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA

SELECTED INCOME STATEMENT DATA (IN MILLIONS)



1993 1992 1991 1990 1989
------ ------ ------ ------ ------

Financing revenue
Operating leases......... $3,603 $2,353 $1,286 $ 768 $ 421
Retail................... 3,305 3,347 3,753 3,864 4,256
Wholesale................ 679 713 1,102 1,116 1,227
Diversified.............. 144 200 271 328 259
Other.................... 221 221 289 604 564
----- ----- ----- ----- -----
Total finance revenue.......... 7,952 6,834 6,701 6,680 6,727

Insurance premiums earned...... -- -- -- -- 513
Investment and other income.... 386 239 301 178 391
----- ----- ----- ----- -----
Total revenue.................. 8,338 7,073 7,002 6,858 7,631

Interest expense............... 2,919 3,076 3,792 4,292 4,639
Depreciation on operating
leases................... 2,676 1,653 1,030 558 311
Provision for credit losses.... 270 418 578 656 908
Insurance claims and
acquisition costs........ -- -- -- -- 380
Operating expenses............. 796 758 718 734 794
----- ----- ----- ----- -----
Total expenses................. 6,661 5,905 6,118 6,240 7,032
----- ----- ----- ----- -----
Equity in net income of
affiliated companies..... 198 155 191 145 31
----- ----- ----- ----- -----
Income before income taxes
and cumulative effects of
changes in accounting
principles................... 1,875 1,323 1,075 763 630
Provision for income taxes 673 425 324 200 181
Minority interest.............. 8 6 2 -- --
----- ----- ----- ----- -----

Income before cumulative
effects of changes in
accounting principles........ 1,194 892 749 563 449
Cumulative effects of changes
in accounting principles..... -- 147 -- -- --
----- ------ ------ ------ ------
Net income..................... $1,194 $1,039 $ 749 $ 563 $ 449
----- ------ ------ ------ ------
----- ------ ------ ------ ------

Net income from financing
operations................... $ 996 $ 737 $ 558 $ 418 $ 287
Net income from insurance
operations................... -- -- -- -- 131*
Net income from affiliated
companies.................... 198 155 191 145 31**
Cumulative effects of changes
in accounting principles..... -- 147 -- -- --
Cash dividends................. 250 600 650 100 450
Return on Equity............... 22.0% 21.2% 15.8% 12.0% 9.7%
Earnings-to-fixed charges
ratio......................... 1.56 1.37 1.23 1.14 1.13
- - - - - - ------------

* Includes income of American Road through September 30, 1989
** Includes income of Ford Holdings for period October 1 - December 31, 1989




41
44
SELECTED BALANCE SHEET DATA (IN BILLIONS)



1993 1992 1991 1990 1989
------ ------ ----- ------ ------

Finance Receivables
Retail...................... $ 38.6 $ 35.6 $ 33.3 $ 36.2 $ 37.0
Wholesale................... 11.7 10.1 11.5 12.7 11.1
Diversified................. 3.1 3.5 4.3 4.8 4.6
Other....................... 3.6 3.3 3.1 6.1 5.7
------ ------ ------ ----- -----
Total finance receivables..... 57.0 52.5 52.2 59.8 58.4
Deduct: Unearned income.... (5.1) (5.1) (5.0) (6.2) (6.4)
Allowance for
credit losses...... (0.7) (0.8) (0.7) (0.8) (0.9)
----- ----- ----- ----- -----
Finance receivables, net...... $ 51.2 $ 46.6 $ 46.5 $ 52.8 $ 51.1
----- ----- ----- ----- -----
----- ----- ----- ----- -----

Operating leases, net......... $ 12.6 $ 7.7 $ 4.3 $ 2.5 $ 1.3
----- ----- ----- ----- -----
----- ----- ----- ----- -----

Assets
Financing operations........ $ 68.4 $ 58.0 $ 55.9 $ 58.0 $ 54.1
Equity in net assets of
affiliated companies...... 1.2 1.0 1.0 1.0 0.8
----- ----- ----- ----- -----
Total Assets.................. $ 69.6 $ 59.0 $ 56.9 $ 59.0 $ 54.9
----- ----- ----- ----- -----
----- ----- ----- ----- -----

CAPITALIZATION (IN BILLIONS)
- - - - - - -----------------------------

Debt payable within one year.. $ 33.4 $ 28.5 $ 25.2 $ 29.1 $ 25.0
Debt payable after one year
Senior...................... 25.5 21.4 22.7 21.5 21.6
Subordinated and other...... -- -- 0.1 0.1 0.1
----- ----- ----- ----- -----
Total debt payable after
one year.................... 25.5 21.4 22.8 21.6 21.7
----- ----- ----- ----- -----
Total debt.................... 58.9 49.9 48.0 50.7 46.7
Stockholder's equity.......... 5.8 4.9 4.7 4.9 4.4
----- ----- ----- ------ -----
Total capital................. $ 64.7 $ 54.8 $ 52.7 $ 55.6 $ 51.1
----- ----- ----- ----- -----
----- ----- ----- ----- -----


Debt-to-equity ratio (to 1)... 10.2 10.2 10.2 10.4 10.5
Debt payable within one
year as percent of
total capital............... 51.6% 52.0% 47.8% 52.3% 48.9%





42
45
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

The principal factors that influence the earnings of Ford Credit are
interest margins, the levels of finance receivables and net investment in
operating leases, and its investment in, and the profitability of, Ford
Holdings.

Interest margins reflect the difference between interest rates earned
on finance receivables and operating leases ("yields"), and the rates paid on
borrowed funds. Yields on most receivables and operating leases generally are
fixed at the time the contracts are acquired. On some receivables, primarily
wholesale financing, yields vary with changes in short-term interest rates.
Borrowed funds include short-term debt, the cost of which reflects changes in
short-term interest rates, and long-term debt, the cost of which generally is
fixed at the time of the debt placement. Interest-rate swap agreements are
used to hedge movements in interest rates related to borrowings and to manage
the match between the interest rates of assets and liabilities.

The levels of finance receivables and net investment in operating
leases depend primarily on the volume of Ford Motor Company vehicle sales,
the extent to which Ford Credit provides the wholesale and retail financing of
those sales, and sales of receivables. Ford periodically sponsors special
financing programs that are available exclusively through Ford Credit which
provide payments to Ford Credit for interest supplements and other support
costs on certain financing and leasing transactions. These programs can
increase Ford Credit's financing volume of Ford Motor Company vehicles.

RESULTS OF OPERATIONS

1993 COMPARED WITH 1992

Ford Credit's consolidated net income in 1993 was $1,194 million, up
$155 million or 15% from 1992. Excluding a one-time gain resulting from the
net effect of the adoption of new accounting standards for income taxes and
postretirement benefits in 1992, net income was up $302 million or 34% from a
year ago. The following comparison of 1993 results with 1992 results excludes
the one-time net gain associated with the accounting changes.

Net income from financing operations was $996 million, up $259 million
or 35% from the prior year. The increase in financing profits was more than
accounted for by higher financing volumes, lower credit losses and higher net
income from gains on sales of retail automotive receivables, partially offset
by the increase in U. S. income taxes and lower net interest margins.




43
46
Lower credit losses reflect lower losses per repossession and fewer
repossessions. Actual credit losses were $228 million (0.35% of average
finance receivables including net investment in operating leases) compared with
$343 million (0.60%) last year. Ford Credit released a portion of the loss
reserves reflecting the continued improvement in actual credit loss experience.
The credit loss coverage ratio for 1993 was 4.0 compared with 2.7 in the prior
year. The decline in net interest margins, including depreciation on operating
leases, reflects primarily the decline in net U.S. borrowing rates from 6.3% in
1992 to 5.3% in 1993, more than offset by lower yields on finance receivables
and net investment in operating leases.

For 1993, equity in net income of affiliated companies (primarily Ford
Holdings) was $198 million, up $43 million from 1992. The increase reflected
higher Ford Holdings net income available to common shareholders, partially
offset by a reduction in Ford Credit's ownership of Ford Holdings common
stock in 1992 as discussed below. At December 31, 1993, Ford Credit owned
about 45% of Ford Holdings common stock, representing about 34% of the voting
power.

Total gross finance receivables and net investment in operating leases
at December 31, 1993 were $69.6 billion, up $9.4 billion (16%) from a year
earlier. The higher financing volume reflects primarily an increase in
short-term operating leases and higher wholesale receivables. Depreciation
expense on operating leases in 1993 was $2,676 million, up $1,023 million or
62% from 1992. The increase reflected the higher levels of operating leases
and was more than offset by higher revenue earned on the lease contracts.

For 1993, Ford Credit financed 38.5% of all new cars and trucks sold by
Ford Motor Company dealers in the U.S. compared with 37.7% in 1992. Ford
Credit provided retail financing for 2,246,000 new and used vehicles in the
United States. Ford Credit provided wholesale financing for 81.4% of Ford
Motor Company U.S. factory sales in 1993 compared with 77.6% in 1992.

1992 COMPARED WITH 1991

Ford Credit's consolidated net income in 1992 was $1,039 million.
Included in net income was a one-time net gain of $147 million that resulted
from the adoption of new accounting standards for income taxes and
postretirement benefits (principally retiree health care). Net income increased
by $239 million for the tax accounting standard partially offset by a decrease
in net income of $92 million for retiree health care. Excluding this one-time
gain, Ford Credit earned net income of $892 million, up $143 million or 19%
from $749 million earned in 1991. The following comparison of 1992 results
with 1991 results excludes the one-time net gain associated with the accounting
changes.

Net income from financing operations in 1992 was $737 million, up $179
million or 32% from 1991. The increase was more than accounted for by lower
credit losses and higher net interest margins. Lower gains on sales of
receivables were a partial offset.

The improvement in credit losses reflected fewer retail repossessions, a
decline in loss per repossessed unit and reduced wholesale losses. Actual
credit losses were $343 million (0.60% of average finance receivables including
net investment in operating leases) compared with $529 million (0.92%) a year
earlier. The credit loss coverage ratio for 1992 was 2.7 compared with 1.6
in 1991. The higher net interest margins reflected primarily a decline in Ford
Credit's net average U.S. borrowing rate from 7.9%




44
47
in 1991 to 6.3% in 1992, partially offset by lower prime-based revenue.

For 1992, equity in net income of affiliated companies (primarily Ford
Holdings) was $155 million compared with $191 million in 1991. The decline
reflected lower Ford Holdings net income available to common shareholders and a
reduction in Ford Credit's ownership of Ford Holdings common stock. The
reduction in ownership was the result of a dividend paid in 1992 to Ford in the
form of Ford Holdings common stock. At December 31, 1992, Ford Credit owned
about 45% of Ford Holdings common stock, representing about 34% of the voting
power.

Total gross finance receivables and net investment in operating leases at
December 31, 1992 were $60.2 billion, up $3.6 billion or 6% from a year
earlier. The increase reflected primarily higher levels of shorter-term
operating leases. Depreciation expense on operating leases in 1992 was $1,653
million, up $622 million or 60% from 1991. The increase reflected the higher
levels of operating leases and was more than offset by higher revenue earned on
the lease contracts.

For 1992, Ford Credit financed 37.7% of all new cars and trucks sold by
Ford Motor Company dealers in the U.S. compared with 35.2% in 1991. Ford
Credit provided retail customers with financing for 1,871,000 new and used
vehicles in the United States in 1992. Ford Credit provided wholesale
financing for 77.6% of Ford Motor Company U.S. factory sales in 1992 compared
with 74.9% in 1991.

NEW ACCOUNTING STANDARDS

In May 1993, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 114, "Accounting by Creditors
for Impairment of a Loan". The standard requires that impaired loans be
measured based on the present value of expected future cash flows discounted at
the loan's effective interest rate. Ford Credit does not plan to adopt this
standard until January 1, 1995, and the effect is not expected to be material.

In May 1993, the FASB also issued Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". The standard establishes financial accounting and reporting
requirements for investments in equity securities (excluding those accounted
for under the equity method and investments in consolidated subsidiaries) that
have readily determinable fair values and for all investments in debt
securities. Ford Credit has adopted this standard effective January 1, 1994,
and the effect is not expected to be material.

Additional information called for by Item 7 is incorporated herein by
reference from Item 1 - Business - "Business of Ford Credit - Credit Loss
Experience", "Business of Ford Credit - Borrowings and Other Sources of Funds",
"Ford Holdings" and "Certain Transactions with Ford and Affiliates", and Item 8
- - - - - - - "Financial Statements and Supplementary Data".

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information called for by Item 8 is set forth at pages FC-1 through
FC-26 of this Form 10-K Report, is incorporated herein by reference and is
listed in the Index to Financial Statements as set forth in Item 14(a)(1) and
14(a)(2).


PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) 1. Financial Statements

Report of Independent Accountants

Ford Motor Credit Company and Subsidiaries

Consolidated Statement of Income and of Earnings Retained for Use in the
Business for the Years Ended December 31, 1993, 1992 and 1991.

Consolidated Balance Sheet, December 31, 1993 and 1992.

Consolidated Statement of Cash Flows for the Years Ended December 31, 1993,
1992 and 1991.




45
48
Notes to Financial Statements.

The financial statements and notes to financial statements listed above
and the schedule listed below are incorporated by reference in Item 8 of this
Report from pages FC-1 through FC-26 of this Form 10-K Report.

Information regarding significant restrictions on the ability of
subsidiaries to transfer funds to the registrant, and condensed financial
information of the registrant are omitted because the amounts related to such
restrictions are not sufficient to require submission.

(a) 2. Financial Statement Schedules

Schedule IX. Ford Motor Credit Company and Subsidiaries -- Short-Term
Borrowings.

Schedules other than that indicated above have been omitted because the
subject matter is disclosed elsewhere in the financial statements and notes
thereto, is not required, is not present, or is not present in amounts
sufficient to require submission.




46
49
(a) 3. Exhibits



DESIGNATION DESCRIPTION METHOD OF FILING
- - - - - - ----------- ----------- ----------------

EXHIBIT 3-A Restated Certificate of Filed as Exhibit 3-A to
Incorporation of Ford Ford Motor Credit Company
Motor Credit Company. Report on Form 10-K for the
year ended December 31, 1987 and
incorporated herein by reference.
File No. 1-6368.

EXHIBIT 3-B By-Laws of Ford Motor Filed as Exhibit 3-B to Ford
Credit Company as amended Motor Credit Company Report
through March 2, 1988. on Form 10-K for the year ended
December 31, 1987 and
incorporated herein by
reference.
File No. 1-6368.

EXHIBIT 4-A Form of Indenture dated Filed as Exhibit 4-A to Ford
as of August 1, 1984 bet- Motor Credit Company Registration
ween Ford Motor Credit Statement No. 2-92561 and incor-
Company and The Chase porated herein by reference.
Manhattan Bank (National
Association) relating to
Debt Securities.

EXHIBIT 4-A-1 Form of First Supplemental Filed as Exhibit 4-C to Ford
Indenture dated August 15, Motor Credit Company Registration
1986 between Ford Motor Statement No. 33-8126 and incor-
Credit Company and The porated herein by reference.
Chase Manhattan Bank (Nat-
ional Association) supple-
menting the Indenture
designated as Exhibit 4-A.


EXHIBIT 4-A-2 Form of Second Supplemental Filed as Exhibit 4-B to Ford
Indenture dated as of Motor Credit Company Current
October 15, 1986 between Report on Form 8-K dated
Ford Motor Credit Company October 17, 1986 and incor-
and The Chase Manhattan Bank porated herein by reference.
(National Association) File No. 1-6368.
supplementing the Indenture
designated as Exhibit 4-A.





47
50


DESIGNATION DESCRIPTION METHOD OF FILING
- - - - - - ----------- ----------- ----------------

Exhibit 4-B Form of Indenture dated as Filed as Exhibit 4-A to Ford
of February 1, 1985 between Motor Credit Company Registration
Ford Motor Credit Company Statement No. 2-95568 and incor-
and Manufacturers Hanover porated herein by reference.
Trust Company relating to
Debt Securities.


EXHIBIT 4-B-1 Form of First Supplemental Filed as Exhibit 4-B to Ford
Indenture dated as of April Motor Credit Company Current
1, 1986 between Ford Motor Report on Form 8-K dated April
Credit Company and 29, 1986 and incorporated herein
Manufacturers Hanover Trust by reference. File No. 1-6368.
Company supplementing the
Indenture designated as
Exhibit 4-B.

EXHIBIT 4-B-2 Form of Second Supplemental Filed as Exhibit 4-B to Ford
Indenture dated as of Motor Credit Company Current
September 1, 1986 between Report on Form 8-K dated August
Ford Motor Credit Company 28, 1986 and incorporated herein
and Manufacturers Hanover by reference. File No. 1-6368.
Trust Company supplementing
the Indenture designated as
Exhibit 4-B.

EXHIBIT 4-B-3 Form of Third Supplemental Filed as Exhibit 4-E to Ford
Indenture dated as of March Motor Credit Company Registration
15, 1987 between Ford Motor Statement No. 33-12928 and incor-
Credit Company and Manu- porated herein by reference.
facturers Hanover Trust
Company supplementing the
Indenture designated as
Exhibit 4-B.

EXHIBIT 4-B-4 Form of Fourth Supplemental Filed as Exhibit 4-F to Post-
Indenture dated as of April Effective Amendment No. 1 to
15, 1988 between Ford Motor Ford Motor Credit Company
Credit Company and Manu- Registration No. 33-20081 and
facturers Hanover Trust incorporated herein by reference.
Company supplementing the
Indenture designated as
Exhibit 4-B.





48
51


DESIGNATION DESCRIPTION METHOD OF FILING
- - - - - - ----------- ----------- ----------------

EXHIBIT 4-B-5 Form of Fifth Supplemental Filed as Exhibit 4-G to Ford
Indenture dated as of Motor Credit Company Registration
September 1, 1990 between Statement No. 33-36946 and
Ford Motor Credit Company incorporated hereby by reference.
and Manufacturers Hanover
Trust Company supplementing
the Indenture designated as
Exhibit 4-B.

EXHIBIT 4-C Indenture dated as of Filed as Exhibit 4-A to Ford
November 1, 1987 between Motor Credit Company Current
Ford Motor Credit Company Report on Form 8-K dated
and Continental Bank, December 10, 1990 and incor-
National Association porated herein by reference.
relating to Debt Securities. File No. 1-6368.

Exhibit 10-J Copy of Amended and Restated Filed with this Report
Profit Maintenance Agreement
dated as of July 1, 1993
between Ford Motor Credit
Company and Ford Motor
Company.

EXHIBIT 10-X Copy of Agreement dated as Filed as Exhibit 10-X to Ford
of February 1, 1980 between Motor Credit Company Report on
Ford Motor Company and Ford Form 10-K for the year ended
Motor Credit Company. December 31, 1980 and incor-
porated herein by reference.
File No. 1-6368.

EXHIBIT 12-A Calculation of Ratio of Filed with this Report.
Earnings to Fixed Charges
of Ford Credit.

EXHIBIT 12-B Calculation of Ratio of Filed with this Report.
Earnings to Combined Fixed
Charges and Preferred Stock
Dividends of Ford.

EXHIBIT 23 Consent of Independent Filed with this Report.
Accountants.

EXHIBIT 24 Powers of Attorney. Filed with this Report.


Instruments defining the rights of holders of certain issues of
long-term debt of the registrant have not been filed as exhibits to this Report
because the authorized principal amount of any one of such issues does not
exceed 10% of the total assets of the registrant. The registrant agrees to
furnish a copy of each of such instruments to the Commission upon request.




49
52
(b) Reports on Form 8-K

Ford Credit filed the following Reports on Form 8-K during the
quarter ended December 31, 1993, none of which contained financial statements:




Date of Report Item
- - - - - - ------------------ --------------------

November 3, 1993............................... Item 5 - Other Events
December 10, 1993.............................. Item 5 - Other Events
December 21, 1993.............................. Item 5 - Other Events





50
53
SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Ford Motor Credit Company


By WILLIAM E. ODOM*
(William E. Odom, Chairman
of the Board of Directors)

Date: March 28, 1994

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.



Signature Title DATE
--------- ----- ----

WILLIAM E. ODOM* Chairman of the Board of March 28, 1994
- - - - - - ------------------------------ Directors and
(William E. Odom) Director (principal
executive officer)

KENNETH J. COATES* Director and Executive Vice March 28, 1994
- - - - - - ------------------------------ President - Finance (principal
(Kenneth J. Coates) financial officer)

PAUL W. LEWIS* Controller (principal March 28, 1994
- - - - - - ------------------------------ accounting officer)
(Paul W. Lewis)

MICHAEL I. AULD* Director March 28, 1994
- - - - - - ------------------------------
(Michael I. Auld)

JOHN G. CLISSOLD* Director March 28, 1994
- - - - - - ------------------------------
(John G. Clissold)

DAVID N. McCAMMON* Director March 28, 1994
- - - - - - ------------------------------
(David N. McCammon)

EDSEL B. FORD II* Director March 28, 1994
- - - - - - ------------------------------
(Edsel B. Ford II)

ROBERT D. WARNER* Director March 28, 1994
- - - - - - ------------------------------
(Robert D. Warner)

KENNETH WHIPPLE* Director March 28, 1994
- - - - - - ------------------------------
(Kenneth Whipple)

*By HURLEY D. SMITH
- - - - - - ------------------------------
(Hurley D. Smith, Attorney-in-Fact)





51
54
INDEX TO FINANCIAL STATEMENTS


Ford Motor Credit Company and Subsidiaries



Report of Independent Accountants ............................ FC-1

Consolidated Statement of Income and of Earnings
Retained for Use in the Business ............................. FC-2

Consolidated Balance Sheet ................................... FC-3

Consolidated Statement of Cash Flows ......................... FC-4

Notes to Financial Statements ................................ FC-5






55

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholder of
Ford Motor Credit Company:

We have audited the consolidated balance sheet of Ford Motor Credit Company and
Subsidiaries at December 31, 1993 and 1992, and the related consolidated
statements of income and of earnings retained for use in the business and cash
flows for each of the three years in the period ended December 31, 1993 and the
financial statement schedule listed in Item 14(a) of this Form 10-K. These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Ford
Motor Credit Company and Subsidiaries at December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.

As discussed in Notes 2, 3 and 10 to the consolidated financial statements, the
Company changed its methods of accounting for postretirement health care
benefits and income taxes in 1992.


COOPERS & LYBRAND


Detroit, Michigan
February 1, 1994





FC-1
56
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME AND OF EARNINGS
RETAINED FOR USE IN THE BUSINESS

(in millions)


FOR THE YEARS ENDED DECEMBER 31
---------------------------------------------
1993 1992 1991
----------- ----------- -----------

Financing revenue
Operating leases $ 3,602.6 $ 2,353.1 $ 1,285.6
Retail 3,305.2 3,347.4 3,753.0
Wholesale 679.6 712.4 1,101.9
Diversified 143.9 199.8 271.1
Other 221.1 221.2 289.4
------------- ------------- -------------

Total financing revenue 7,952.4 6,833.9 6,701.0

Investment and other income 386.0 239.4 301.3
------------- ------------- -------------

Total revenue 8,338.4 7,073.3 7,002.3

Expenses
Interest expense 2,919.3 3,076.5 3,791.8
Depreciation on operating leases (Note 5) 2,675.7 1,652.6 1,030.5
Operating expenses 796.5 758.2 718.0
Provision for credit losses (Note 6) 270.2 418.0 577.9
------------ ------------- -------------

Total expenses 6,661.7 5,905.3 6,118.2
------------- ------------- -------------

Equity in net income of affiliated companies
(Notes 1 and 2) 198.3 155.2 191.0
------------- ------------- -------------

Income before income taxes and cumulative
effects of changes in accounting principles 1,875.0 1,323.2 1,075.1

Provision for income taxes (Note 3) 673.3 424.9 324.0
------------- ------------- -------------

Income before minority interest and cumulative
effects of changes in accounting principles 1,201.7 898.3 751.1

Minority interest in net income of subsidiaries 7.9 6.1 2.3
------------ ------------ ------------

Income before cumulative effects of
changes in accounting principles 1,193.8 892.2 748.8

Cumulative effects of changes in
accounting principles (Notes 2, 3 and 10) - 146.5 -
------------ ------------ ------------

Net income 1,193.8 1,038.7 748.8

Earnings retained for use in the business
Beginning of year 3,956.1 3,717.4 3,934.6
Dividends
Cash (250.0) (600.0) (650.0)
Stock of Ford Holdings, Inc. (Note 2) - (200.0) (316.0)
------------ ------------ ------------

End of year $ 4,899.9 $ 3,956.1 $ 3,717.4
------------- ------------- -------------
------------- ------------- -------------

The accompanying notes are part of the financial statements.





FC-2
57
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions)




DECEMBER 31
-----------------------------
ASSETS 1993 1992
------------- -------------

Cash and cash equivalents (Note 1) $ 992.3 $ 295.0

Investments in securities (Notes 12 and 14) 1,441.3 1,363.6

Finance receivables, net (Notes 4 and 6) 51,162.7 46,611.1

Notes and accounts receivable from affiliated
companies 384.4 420.5

Equity in net assets of affiliated companies
(Notes 1 and 2) 1,201.9 1,004.8

Net investment, operating leases (Notes 5 and 6) 12,600.9 7,747.2

Other assets (Note 7) 1,816.8 1,525.1
------------ ------------

Total assets $ 69,600.3 $ 58,967.3
------------ ------------
------------ ------------


LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES
Accounts payable
Trade and other $ 953.2 $ 685.3
Affiliated companies 261.9 339.5
------------ ------------

Total accounts payable 1,215.1 1,024.8

Debt (Note 8) 58,870.2 49,909.4

Deferred income taxes (Note 3) 2,129.9 1,563.2

Other liabilities and deferred income (Note 10) 1,313.4 1,260.4
------------ ------------

Total liabilities 63,528.6 53,757.8

Minority interest in net assets of subsidiaries 297.0 326.6

STOCKHOLDER'S EQUITY
Capital stock, par value $100 a share, 250,000
shares authorized, issued and outstanding 25.0 25.0
Paid-in surplus (contributions by stockholder) 917.3 917.3
Unrealized gain on marketable equity
securities, net of taxes (Note 1) 17.8 18.6
Foreign currency translation adjustments (Note 1) (85.3) (34.1)
Earnings retained for use in the business 4,899.9 3,956.1
------------ ------------

Total stockholder's equity 5,774.7 4,882.9
------------ ------------

Total liabilities and stockholder's equity $ 69,600.3 $ 58,967.3
------------ ------------
------------ ------------





The accompanying notes are part of the financial statements.






FC-3
58
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(in millions)




FOR THE YEARS ENDED DECEMBER 31
------------------------------------------------
1993 1992 1991
------------- ------------- ---------------

Cash flows from operating activities
Net income $ 1,193.8 $ 1,038.7 $ 748.8
Adjustments to reconcile net income to
net cash provided by operating
activities
Cumulative effects of changes in accounting
principles - (146.5) -
Provision for credit losses 270.2 418.0 577.9
Depreciation and amortization 2,745.8 1,732.7 1,109.0
Gain on sales of finance receivables (92.5) (0.1) (85.9)
Equity in net income of affiliates (198.3) (155.2) (191.0)
Deferred income taxes 565.3 328.2 145.7
Changes in the following items
Other assets (327.0) (169.3) (301.7)
Other liabilities 238.9 20.3 104.7
Other 17.6 (67.9) 62.8
------------- ------------- -------------

Net cash provided by
operating activities 4,413.8 2,998.9 2,170.3
------------- ------------- -------------

Cash flows from investing activities
Purchase of finance receivables (113,424.9) (88,295.2) (84,528.5)
Collection of finance receivables 105,933.6 83,956.9 85,117.7
Proceeds from sales of finance receivables 2,521.3 3,349.6 4,695.1
Purchase of operating lease vehicles (9,908.0) (6,464.0) (3,584.9)
Liquidation of operating lease vehicles 2,317.8 1,324.7 692.1
Other 53.9 (97.2) (92.6)
------------- ------------- -------------

Net cash (used in) provided by
investing activities (12,506.3) (6,225.2) 2,298.9
------------- ------------- -------------

Cash flows from financing activities
Proceeds from issuance of long-term debt 12,934.9 6,517.0 7,439.4
Principal payments on long-term debt (6,326.2) (7,348.1) (5,174.9)
Change in short-term debt, net 2,568.4 3,232.9 (4,923.3)
Cash dividends paid (250.0) (600.0) (650.0)
Other (132.8) (143.3) 412.7
------------- ------------- -------------

Net cash provided by (used in)
financing activities 8,794.3 1,658.5 (2,896.1)

Effect of exchange rate changes on
cash and cash equivalents (4.5) (9.9) (0.5)
------------- ------------- -------------

Net change in cash and cash equivalents 697.3 (1,577.7) 1,572.6

Cash and cash equivalents, beginning of year 295.0 1,872.7 300.1
------------- ------------- -------------

Cash and cash equivalents, end of year $ 992.3 $ 295.0 $ 1,872.7
------------- ------------- -------------
------------- ------------- -------------

Supplementary cash flow information
Interest paid $ 2,871.6 $ 3,198.2 $ 3,760.2
Taxes paid 101.2 4.0 121.1



The accompanying notes are part of the financial statements.






FC-4
59
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS


NOTE 1. ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Ford Motor Credit
Company ("Ford Credit") and its majority-owned domestic and foreign
subsidiaries and joint ventures. Affiliates that are 20-50 percent owned,
principally Ford Holdings, Inc. ("Ford Holdings"), are included in the
consolidated financial statements on an equity basis. Ford Credit is a wholly
owned subsidiary of Ford Motor Company ("Ford").

Net unrealized gains on marketable equity securities reported in a separate
component of stockholder's equity relate to Ford Credit's equity interest in
Ford Holdings' insurance investment portfolio.

Revenue Recognition

Revenue from finance receivables is recognized using the interest (actuarial)
method. Certain loan origination costs are deferred and amortized to financing
revenue over the life of the related loans using the interest method. Rental
revenue on operating leases is recognized as scheduled payments become due.

Allowance for Credit Losses

Allowances for estimated credit losses are established as required based on
historical experience. Other factors that affect collectibility also are
evaluated and additional amounts may be provided. Finance receivables and
lease investments are charged to the allowance for credit losses when an
account is deemed to be uncollectible taking into consideration the financial
condition of the borrower or lessee, the value of the collateral, recourse to
guarantors and other factors. Collateral held for resale included in other
assets is carried at the lower of the recorded investment in the receivable or
its estimated fair value at the date of repossession. Any difference between
the recorded investment in the receivable or lease and the actual sales price
of the underlying collateral is charged to the allowance for credit losses.
Recoveries on finance receivables and lease investments previously charged off
as uncollectible are credited to the allowance for credit losses.





Continued

FC-5
60
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 1. ACCOUNTING POLICIES (continued)

Foreign Currency Translation

Assets and liabilities of foreign subsidiaries are translated at year-end
exchange rates with the effects of these translation adjustments being reported
in a separate component of stockholder's equity. The change in this account
results from translation adjustments recorded during the year.

Cash Equivalents

Ford Credit considers investments purchased with a maturity of three months or
less to be cash equivalents.

Financial Statement Reclassifications

Certain amounts in prior year financial statements have been reclassified to
conform with presentations adopted in 1993.

NOTE 2. EQUITY INVESTMENT IN FORD HOLDINGS

Ford Holdings' primary activities consist of consumer and commercial financing
operations, insurance underwriting, and equipment leasing through its wholly
owned subsidiaries, Associates First Capital Corporation, The American Road
Insurance Company, and USL Capital Corporation (formerly United States Leasing
International, Inc.).

In 1992 and 1991, Ford Credit transferred $200 million and $316 million,
respectively, of Ford Holdings' common stock to Ford as dividends.

At December 31, 1993 and 1992, Ford Credit owned 45% of the common stock
representing 33.8% of the voting power of Ford Holdings. Ford owns the
remaining common stock representing 41.2% of the voting power. The balance of
the voting power is represented by preferred stock owned by persons other than
Ford or Ford Credit. At December 31, 1991, Ford Credit owned 54 percent of
Ford Holdings' common stock.





Continued

FC-6
61
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 2. EQUITY INVESTMENT IN FORD HOLDINGS (continued)

Condensed financial information of Ford Holdings as of December 31 was as
follows:



1993 1992 1991
------------ ------------- -------------
(in millions)

INCOME STATEMENT
Revenue $ 5,291.8 $ 4,816.8 $ 4,814.5
Income before income taxes and
cumulative effects of changes
in accounting principles 830.6 588.0 591.9
Cumulative effects of changes in
accounting principles - 25.8* -
Net income 511.4 382.9 384.4
Preferred stock dividend requirements 74.9 50.8 47.1
Income available for common stockholders 436.5 332.1 337.3

BALANCE SHEET
Assets
Cash and investments in securities $ 5,100.7 $ 3,659.6
Finance receivables, net 24,376.6 20,749.8
Accounts receivable (including affiliated
companies) and other assets 9,121.5 8,321.3
------------ -------------

Total assets $ 38,598.8 $ 32,730.7
------------ -------------
------------ -------------

Liabilities
Accounts payable (including affiliated
companies) and other liabilities $ 4,738.3 $ 3,466.5
Debt payable within one year 13,802.1 12,255.6
Long-term debt 15,767.7 13,511.1
------------ -------------

Total liabilities 34,308.1 29,233.2

Stockholders' equity 4,290.7 3,497.5
------------ -------------

Total liabilities and stockholders'
equity $ 38,598.8 $ 32,730.7
------------ -------------
------------ -------------


Ford Credit's equity in the net assets of Ford Holdings at December 31, 1993
and 1992 was $ 1,199 million and $1,002.6 million, respectively.

*Ford Credit's equity in Ford Holdings' cumulative effects of changes in
accounting principles related to postretirement benefits and income taxes in
the amount of $11.6 million is included in Ford Credit's 1992 cumulative
effects of changes in accounting principles.





Continued

FC-7
62
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 3. INCOME TAXES

Ford Credit and certain of its domestic subsidiaries join Ford in filing
consolidated United States federal and state income tax returns. Pursuant to
an arrangement with Ford, United States income tax liabilities or credits are
allocated to Ford Credit in accordance with the contribution of Ford Credit and
its subsidiaries to Ford's consolidated tax position.

The provision for income taxes consisted of the following:



1993 1992 1991
---- ---- ----
(in millions)

Currently payable/(refundable)
U. S. Federal $ 30.8 $ 21.5 $ 130.1
Foreign 33.0 38.4 32.9
State and local 39.7 30.3 (2.9)
-------- --------- ---------

Total currently payable 103.5 90.2 160.1

Deferred tax liability/(benefit)
U. S. Federal 518.0 309.0 96.4
Foreign (6.5) 0.2 8.0
State and local 58.3 25.5 59.5
-------- --------- ---------

Total deferred 569.8 334.7 163.9
-------- --------- ---------

Total provision for income taxes $ 673.3 $ 424.9* $ 324.0
-------- --------- ------
-------- --------- ------


* Excludes the tax provision related to cumulative effects of changes in
accounting principles.

Ford Credit adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS No. 109"), as of January 1, 1992. The
cumulative effect of this change in accounting principle increased 1992 net
income by $216.6 million. Financial statements for prior years were not
restated to apply the provisions of SFAS No. 109.





Continued

FC-8
63
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 3. INCOME TAXES (continued)

Under SFAS No. 109, deferred income taxes reflect the estimated tax effect of
temporary differences between assets and liabilities for financial reporting
purposes and those amounts as measured by tax laws and regulations. The
components of deferred income tax assets and liabilities as of December 31 were
as follows:



1993 1992
----------------------------- -----------------------------
DEFERRED DEFERRED DEFERRED DEFERRED
TAX TAX TAX TAX
ASSETS LIABILITIES ASSETS LIABILITIES
------------ ------------ ------------ -------------
(in millions) (in millions)

Leasing transactions $ - $ 2,403.7 $ - $ 2,037.0
Provision for credit losses 434.0 - 403.6 -
Purchased tax benefits - 303.2 - 300.5
Employee benefit plans 88.8 - 84.6 -
Loan origination costs - 56.8 - 41.4
Alternative minimum tax 53.7 - 247.3 -
Retail contract earnings method 50.1 - 48.8 -
Interest supplements 40.4 - 35.7 -
Other 47.7 80.9 43.1 47.4
------------ ------------ ------------ -------------

Total deferred income taxes $ 714.7 $ 2,844.6 $ 863.1 $ 2,426.3
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------


Deferred income taxes for 1991 were derived using the guidelines in Accounting
Principles Board Opinion No. 11, "Accounting for Income Taxes" ("APB No. 11").
Under APB No. 11, deferred income taxes result from timing differences in the
recognition of revenues and expenses between financial statements and tax
returns. The principal sources of these differences and the related effect of
each on Ford Credit's provision for income taxes were as follows:



1991
----------
(in millions)

Leasing transactions $ 330.7
Interest supplements 67.3
Purchased tax benefits 34.0
Loan origination costs 1.2
Alternative minimum tax (197.9)
Provision for credit losses (28.8)
Retail contract earnings method (18.2)
Sales of receivables (17.3)
Interest rate swap agreements (5.2)
State taxes (0.1)
Other (1.8)
---------

Total $ 163.9
---------
---------






Continued

FC-9
64
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 3. INCOME TAXES (continued)

A reconciliation of the provision for income taxes as a percentage of income
before income taxes, excluding equity in net income of affiliated companies,
with the United States statutory tax rate for the last three years is shown
below:



1993 1992 1991
---- ---- ----

U. S. statutory tax rate 35.0% 34.0% 34.0%
Effect of (in percentage points)
State and local income taxes 3.8 3.2 4.2
Rate adjustments on U.S. and foreign
deferred taxes 1.7 - -
Investment income not subject to tax or
subject to tax at reduced rates (1.0) (2.0) (3.5)
Other 0.8 1.4 1.9
----- ----- ----

Effective tax rate 40.3% 36.6%* 36.6%
---- ---- ----
---- ---- ----



*Excludes cumulative effects of changes in accounting principles.





Continued

FC-10
65
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 4. FINANCE RECEIVABLES

Finance receivables at December 31 were as follows:


1993 1992
----------- -----------
(in millions)

Retail $ 38,609.3 $ 35,600.7
Wholesale 11,698.5 10,056.9
Diversified 3,084.0 3,550.2
Other 3,626.5 3,279.0
------------ ------------
Total finance receivables 57,018.3 52,486.8
Add: Loan origination costs, net 125.4 101.8
Less: Unearned income (5,263.3) (5,212.5)
Allowance for credit losses (717.7) (765.0)
------------- ------------

Finance receivables, net $ 51,162.7 $ 46,611.1
------------ ------------
------------ ------------


Included in finance receivables is a total of $1.5 billion owed by three
customers with the largest receivable balances. During 1993, Ford Credit
issued irrevocable standby letters of credit in the amount of $223.5 million on
behalf of one of these customers. A major portion of these amounts are
guaranteed by Ford.

At December 31, 1993, other finance receivables primarily consisted of capital
and other dealer loans.

The majority of retail receivables, a portion of diversified receivables and
certain other finance receivables include finance charges that represent income
to be earned in future periods. The remaining finance receivables only include
principal.

The maturities of finance receivables outstanding at December 31, 1993 were as
follows:



DUE IN YEAR DUE
ENDING DECEMBER 31 AFTER
----------------------------------
1994 1995 1996 1996 TOTAL
------------- ------------ ------------ ------------ ------------
(in millions)

Retail $ 14,418.3 $ 10,507.0 $ 7,834.0 $ 5,850.0 $ 38,609.3
Wholesale 11,698.5 - - - 11,698.5
Diversified 258.4 208.1 115.3 2,502.2 3,084.0
Other 2,238.8 136.5 79.2 1,172.0 3,626.5
------------- ------------- ----------- ----------- -------------

Total $ 28,614.0 $ 10,851.6 $ 8,028.5 $ 9,524.2 $ 57,018.3
------------- ------------- ------------ ----------- -------------
------------- ------------- ------------ ----------- -------------


It is Ford Credit's experience that a substantial portion of finance
receivables are repaid before contractual maturity dates. The above table,
therefore, is not to be regarded as a forecast of future cash collections.





Continued

FC-11
66
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 4. FINANCE RECEIVABLES (continued)

Installments, including interest, past-due 60 days or more and the aggregate
receivable balances related to such past-due installments were as follows:



DECEMBER 31, 1993 DECEMBER 31, 1992
--------------------------- ---------------------------
INSTALLMENTS BALANCES INSTALLMENTS BALANCES
------------ -------- ------------ --------
(in millions)

Retail $ 10.2 $ 97.7 $ 11.5 $ 97.1
Diversified 12.9 56.1 10.5 94.3
Other 23.4 95.3 28.9 88.5
-------- -------- -------- --------

Total $ 46.5 $ 249.1 $ 50.9 $ 279.9
-------- -------- -------- --------
-------- -------- -------- --------


Installments past-due less than 60 days included in finance receivables at
December 31, 1993 and 1992 were $297.8 million and $231.1 million,
respectively.

The average yield on net earning finance receivables and operating leases was
as follows: 1993 - 13.4%; 1992 - 13.2%; 1991 - 13.0%.

Included in retail and diversified receivables are investments in direct
financing and leveraged leases related to the leasing of motor vehicles and
various types of transportation and other equipment:



1993 1992
----------- ------------
(in millions)

Investment in direct financing leases
Minimum lease rentals $ 1,752.6 $ 1,713.3
Estimated residual values 1,383.8 1,051.3
Lease origination costs 2.9 1.4
Less: Unearned income (471.4) (451.3)
Allowance for credit losses (47.0) (51.3)
----------- ------------
Net investment in direct
financing leases $ 2,620.9 $ 2,263.4
----------- ------------
----------- ------------


Minimum direct financing lease rentals (including executory costs of $50.5
million) for each of the five succeeding years are as follows (in millions):
1994 - $842.3; 1995 - $533.3; 1996 - $261.8; 1997 - $94.0; 1998 - $16.4;
thereafter - $55.3.





Continued

FC-12
67
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 4. FINANCE RECEIVABLES (continued)




1993 1992
------------- ------------
(in millions)

Investment in leveraged leases
Rentals receivable (net of principal
and interest on nonrecourse debt) $ 1,417.4 $ 1,448.1
Estimated residual values 479.7 481.4
Lease origination costs 3.2 4.6
Less: Unearned income (388.9) (414.0)
Allowance for credit losses (18.9) (18.5)
------------ ------------
Investment in leveraged leases 1,492.5 1,501.6

Less deferred income taxes arising
from leveraged leases (1,398.2) (1,297.9)
------------ ------------

Net investment in leveraged leases $ 94.3 $ 203.7
------------- ------------
------------- ------------



NOTE 5. NET INVESTMENT, OPERATING LEASES

Operating leases at December 31 were as follows:



1993 1992
------------- ------------
(in millions)

Investment in operating leases
Vehicles and other equipment, at cost $ 15,752.7 $ 9,814.5
Lease origination costs 20.3 5.5
Less: Accumulated depreciation (2,974.3) (1,922.3)
Allowance for credit losses (197.8) (150.5)
-------------- ------------
Net investment in operating leases $ 12,600.9 $ 7,747.2
------------ ------------
------------ ------------


Future minimum rentals on operating leases are as follows (in millions): 1994
- - - - - - - $3,346.2; 1995 - $1,632.6; 1996 - $226.4; 1997 - $7.1.

Depreciation expense on operating leases is provided for on a straight-line
basis over the term of the lease and includes gains or losses upon disposal or
impairment of the vehicle.





Continued

FC-13
68
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 6. ALLOWANCE FOR CREDIT LOSSES

Following is an analysis of the allowance for credit losses relating to finance
receivables and operating leases for the past three years:


1993 1992 1991
----------- ---------- -----------
(in millions)


Balance, beginning of year $ 915.5 $ 825.4 $ 894.9

Additions 270.2 418.0 577.9

Deductions
Losses 391.8 476.5 673.9
Recoveries (163.4) (133.9) (145.0)
----------- ---------- -----------

Net losses 228.4 342.6 528.9

Other changes, including reclassifications
and amounts related to finance
receivables sold 41.8 (14.7) 118.5
----------- ---------- -----------

Net deductions 270.2 327.9 647.4
----------- ---------- -----------

Balance, end of year $ 915.5 $ 915.5 $ 825.4
----------- ---------- -----------
----------- ---------- -----------



NOTE 7. OTHER ASSETS

Other assets consist of:


DECEMBER 31
-------------------------------
1993 1992
------------ ------------
(in millions)

Investment in used vehicles held for
resale (Note 12) $ 1,085.8 $ 870.9
Deferred charges and other assets 359.6 266.8
Collateral held for resale 299.9 315.8
Property and equipment, at cost less
accumulated depreciation of $48.2
in 1993 and $41.7 in 1992 71.5 71.6
------------ ------------

Total $ 1,816.8 $ 1,525.1
------------ ------------
------------ ------------






Continued

FC-14
69
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 8. DEBT

Debt at December 31 was as follows:




DECEMBER 31, 1993
-------------------
WEIGHTED
AVERAGE DECEMBER 31
INTEREST ------------------------
RATES MATURITIES 1993 1992
---------- ---------- ------------ ------------
(in millions)

PAYABLE WITHIN ONE YEAR
Commercial paper $ 24,506.1 $ 21,210.5
Other short-term debt* 1,001.0 1,785.2
------------ ------------

Total short-term debt 25,507.1 22,995.7

Senior and subordinated
notes and debentures
payable within one year 7,882.6 5,476.2
------------ ------------

Total payable within
one year 33,389.7 28,471.9
------------ ------------

PAYABLE AFTER ONE YEAR
Unsecured senior notes
Notes 6.77% 1995-2048 25,526.8 21,416.2
Unamortized (discount)/premium (46.8) 7.9
------------- ------------

Total unsecured senior
notes 25,480.0 21,424.1

Unsecured subordinated
convertible debentures 4.5% 1995-1996 0.5 2.0

Other - 11.4
------------ ------------

Total payable after one year 25,480.5 21,437.5
------------ ------------

Total debt $ 58,870.2 $ 49,909.4
------------ ------------
------------ ------------


* Includes $150 million and $800 million with an affiliated company at
December 31, 1993 and 1992, respectively.





Continued

FC-15
70
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 8. DEBT (continued)

Rates were variable on approximately 11.6 percent of the debt payable after one
year including the effects of interest rate swap agreements.

The average amount of commercial paper outstanding during the past three years
was as follows (in millions): 1993 - $22,683; 1992 - $19,358; 1991 - $19,078.
The weighted average commercial paper interest rates per annum for these years
were as follows: 1993 - 3.2%; 1992 - 4.2%; 1991 - 6.9%. The average remaining
term of commercial paper was 28 days at December 31, 1993 and 1992.

The aggregate principal amounts of notes with terms of more than one year from
dates of issue, maturing for each of the five succeeding years are as follows
(in millions): 1994 - $7,882.6; 1995 - $4,662.6; 1996 - $6,260.6; 1997 -
$2,065.6; 1998 - $6,561.1; thereafter - $5,977.4.

Included in debt at December 31, 1993 were obligations payable in foreign
currencies: $2,348.6 million in Canadian dollars; $840.6 million in Australian
dollars; $517.9 million in Japanese yen; $377.6 million in German deutsche
marks; $220.7 million in Luxembourg francs; $156.4 million in Italian lire;
$147.4 million in European currency units; and $136.6 million in Swiss francs.
Certain of these obligations are denominated in currencies other than the
currency of the country of the issuer. Foreign currency forward contracts are
purchased and currency swaps are used to hedge exposure to changes in exchange
rates of such obligations. These obligations are translated in the financial
statements at the rates of exchange established under the related foreign
currency forward contracts and currency swaps and would have been $64.7 million
lower if translated at current exchange rates as of December 31, 1993.

The convertible subordinated debentures are convertible into common stock of
Ford. Ford Credit has entered into an agreement with Ford to purchase from
Ford the common stock required to effect conversion.





Continued

FC-16
71
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 9. SUPPORT FACILITIES

Support facilities represent additional sources of funds, if required. At
January 1, 1994, Ford Credit had approximately $15.7 billion of contractually
committed facilities for use in the United States, 83 percent of which are
available through June 1998. These facilities included $12.8 billion of
revolving credit agreements with banks (which included $4.8 billion of Ford
bank lines that may be used either by Ford or Ford Credit at Ford's option) and
$2.9 billion of agreements to sell retail receivables. At January 1, 1994, all
of these U. S. facilities were unused.

Outside of the United States, an additional $1,185 million of facilities
support borrowing operations in Canada, Australia and Puerto Rico, of which 82
percent are contractually committed and available through June 1998. Canadian
facilities of $759 million included $210 million of Ford Motor Company of
Canada Limited and Ford Ensite International Inc. lines which are available to
Ford Credit Canada Limited at the option of these two companies. Australian
facilities of $401 million included $155 million of Ford Motor Company of
Australia Limited lines which are available to Ford Credit Australia Limited at
the option of Ford Motor Company of Australia Limited. Ford Motor Credit
Company of Puerto Rico, Inc. had $25 million in support facilities at January
1, 1994. Substantially all of these facilities were unused at January 1, 1994.


NOTE 10. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS

Ford Credit and certain of its subsidiaries provide selected health care and
life insurance benefits for retired employees under unfunded plans sponsored by
Ford and certain of its subsidiaries. Ford Credit's U.S. and Canadian
employees may become eligible for those benefits if they retire while working
for Ford Credit; however, benefits and eligibility rules may be modified from
time to time. Prior to 1992, the expense recognized for postretirement health
care benefits was based on actual expenditures for the year. Beginning in
1992, the estimated cost for postretirement health care benefits is accrued on
an actuarially determined basis, in accordance with the requirements of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" ("SFAS No. 106"). Implementation
of SFAS No. 106 has not increased Ford Credit's cash expenditures for
postretirement benefits. Ford Credit elected to recognize immediately the
prior-year unaccrued accumulated postretirement benefit obligation, resulting
in an adverse effect on income of $81.7 million in the first quarter of 1992.
The charge reflected an unaccrued retiree benefit obligation liability of
$131.6 million, offset partially by projected tax benefits of $49.9 million.





Continued

FC-17
72
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE 10. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS (continued)

Net postretirement benefit expense included the following (in millions):



1993 1992
----------- ----------


Benefits attributed to employees' service $ 7.0 $ 12.1
Interest on accumulated benefit obligation 13.1 10.0
----------- ----------
Net postretirement benefit expense $ 20.1 $ 22.1
----------- ----------
----------- ----------

Retiree benefit payments $ 3.2 $ 4.5



The status of these plans, reconciled with the amounts recognized in Ford Credit's balance sheet at December 31, was as
follows (in millions):

1993 1992
----------- ----------

Accumulated Postretirement Benefit Obligation:
- - - - - - ---------------------------------------------
Retirees $ 53.0 $ 43.4
Active employees eligible to retire 23.4 22.0
Other active employees 120.2 112.5
---------- ----------
Total accumulated obligation 196.6 177.9
Unamortized amendments 2.1 -
Unamortized net loss (11.4) (9.7)
---------- ----------

Accrued liability $ 187.3 $ 168.2
---------- ----------
---------- ----------
Assumptions:
Discount rate at year-end 7.5% 8.5%
Present health care cost trend rate 9.7 10.3
Ultimate trend rate in ten years 5.5 5.5
Weighted-average trend rate 6.8 6.9



Changing the assumed health care cost trend rates by one percentage point would
change the aggregate service and interest cost components of net periodic
postretirement benefit cost for 1993 by $3.5 million and the accumulated
postretirement benefit obligation at December 31, 1993 by $29.3 million.





Continued

FC-18
73
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE 11. INDUSTRY SEGMENTS AND FOREIGN OPERATIONS

Ford Credit, its subsidiaries and affiliates operate in two industry segments -
financing and insurance. Financing operations primarily consist of: the
purchase from franchised Ford vehicle dealers of retail installment sale
contracts and retail leases; wholesale financing and capital loans to
franchised Ford vehicle dealers and other dealers associated with such dealers;
loans to vehicle leasing companies; and diversified financing. In addition, a
wholly owned subsidiary of Ford Credit provides these financing services in the
U.S. to other vehicle dealers. Insurance operations conducted through Ford
Credit's equity investment in Ford Holdings consist of: the issuance of single
premium deferred annuities; property and casualty insurance relating to
extended service plan contracts for new and used vehicles manufactured by
affiliated and nonaffiliated companies, primarily originating from Ford
dealers; credit life and credit disability insurance for retail purchasers of
vehicles and equipment; and physical damage insurance covering vehicles and
equipment financed at wholesale by Ford Credit and its subsidiaries.

Ford Credit, through certain of its subsidiaries, operates in several foreign
countries, the most significant of which are Canada and Australia. Total
revenue, income before income taxes and cumulative effects of changes in
accounting principles, and assets identifiable with United States and foreign
operations were as follows:



1993 1992 1991
------------- ------------- ------------
(in millions)

Total revenue
United States operations $ 7,694.8 $ 6,339.2 $ 6,170.6
Foreign operations 643.6 734.1 831.7
------------- ------------ ------------
Total revenue $ 8,338.4 $ 7,073.3 $ 7,002.3
------------- ------------- ------------
------------- ------------- ------------

Income before income taxes and cumulative
effects of changes in accounting principles
United States operations $ 1,610.3 $ 1,084.4 $ 788.3
Foreign operations 66.4 83.6 95.8
Equity in net income of affiliated
companies 198.3 155.2 191.0
------------- ------------ ------------
Total income before income taxes
and cumulative effects of
changes in accounting principles $ 1,875.0 $ 1,323.2 $ 1,075.1
------------- ------------- ------------
------------- ------------- ------------

Assets at December 31
United States operations $ 64,027.3 $ 53,655.2
Foreign operations 4,371.1 4,307.3
Equity in net assets of affiliated
companies 1,201.9 1,004.8
------------- ------------
Total assets $ 69,600.3 $ 58,967.3
------------- ------------
------------- ------------






Continued

FC-19
74
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 12. TRANSACTIONS WITH AFFILIATED COMPANIES

An agreement with Ford provides for payments by Ford to Ford Credit that would
maintain Ford Credit's consolidated income before income taxes and net income
at specified minimum levels. No payments were required under the agreement
during 1993, 1992, or 1991.

Ford Credit and its subsidiaries, from time to time, purchase accounts
receivable of certain divisions and subsidiaries of Ford. The amount of such
receivables outstanding was $1,076.9 million at December 31, 1993 and $948.0
million at December 31, 1992. Agreements with Ford also provide for payment to
Ford Credit for interest supplements and other support costs on certain
financing and leasing transactions. Amounts included in total revenue from
these and other transactions with Ford were as follows (in millions): 1993 -
$583.0; 1992 - $622.8; 1991 - $618.9. Ford Credit and its subsidiaries
purchase from Ford and affiliates certain vehicles which were previously
acquired by Ford principally from its fleet and rental car customers. The cost
of these vehicles held for resale and included in other assets at December 31
was as follows (in millions): 1993 - $456.5; 1992 - $368.1. Ford Credit also
has entered into a sale/leaseback agreement with Ford for vehicles leased to
employees of Ford and its subsidiaries. The net investment in these lease
vehicles included in operating leases at December 31 was as follows (in
millions): 1993 - $562.3; 1992 - $501.3.

Investments in securities include preferred stock of a nonaffiliate ($324
million) and of an affiliate ($335.9 million) which were acquired from Ford.
Investments in these securities are recorded at cost. Ford has provided Ford
Credit with certain guarantees related to Ford Credit's initial investment and
return on investment in this preferred stock, and for certain related finance
receivables. Amounts related to these transactions included in investment and
other income were as follows (in millions): 1993 - $52.7; 1992 - $47.2; 1991
- - - - - - - $57.2.

Ford Credit and its subsidiaries receive technical and administrative advice
and services from Ford and its subsidiaries, occupy office space furnished by
Ford and its subsidiaries and utilize data processing facilities maintained by
Ford. Payments to Ford and its subsidiaries for such services are charged to
operating expenses and were as follows (in millions): 1993 - $57.1; 1992 -
$53.6; 1991 - $59.4.





Continued

FC-20
75
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 12. TRANSACTIONS WITH AFFILIATED COMPANIES (continued)

Retirement benefits are provided under defined benefit plans for employees of
Ford Credit and its subsidiaries in the United States by the Ford General
Retirement Plan and for employees of the foreign subsidiaries in Australia and
Canada by the respective Ford retirement plans. Employee retirement plan costs
allocated to Ford Credit and its subsidiaries from Ford and charged to
operating expenses were as follows (in millions): 1993 - $5.8; 1992 - $6.1;
1991 - $11.0.

At December 31, 1993 and 1992, Ford Credit had guaranteed $94.6 million and
$81.0 million of debt outstanding of other subsidiaries of Ford.

See other notes for additional information regarding transactions with
affiliated companies.


NOTE 13. LITIGATION AND CLAIMS

Various legal actions, governmental proceedings and other claims are pending or
may be instituted or asserted in the future against Ford Credit and its
subsidiaries. Certain of the pending legal actions are, or purport to be,
class actions. Some of these matters involve or may involve compensatory,
punitive or antitrust or other treble damage claims in very significant amounts
or other relief which, if granted, would require very significant expenditures.

Litigation is subject to many uncertainties, the outcome of individual
litigated matters is not predictable with assurance and it is reasonably
possible that some of the foregoing matters could be decided unfavorably to
Ford Credit or the subsidiary involved. Although the amount of liability at
December 31, 1993 with respect to these matters cannot be ascertained, Ford
Credit believes that any resulting liability should not materially affect the
consolidated financial position of Ford Credit and its subsidiaries at December
31, 1993.





Continued

FC-21
76
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 14. FINANCIAL INSTRUMENTS

Book and Estimated Fair Value of Financial Instruments

The estimated fair value of financial instruments held by Ford Credit and its
subsidiaries at December 31, and the valuation techniques used to estimate the
fair value, were as follows:


1993 1992
------------------------------- ------------------------------
ESTIMATED ESTIMATED
BOOK FAIR BOOK FAIR
VALUE VALUE VALUE VALUE
--------------- --------------- -------------- --------------
(in millions) (in millions)

Assets
Cash and cash equivalents $ 992.3 $ 992.3 $ 295.0 $ 295.0
Investments in securities 1,441.3 1,499.8 1,363.6 1,363.6
Finance receivables 46,133.9 46,605.1 42,109.6 42,380.0

Liabilities
Debt payable after one year $ 25,480.5 $ 26,853.5 $ 21,437.5 $ 22,553.0


CASH AND CASH EQUIVALENTS. The book value approximates fair value because of
the short maturity of these instruments.

INVESTMENTS IN SECURITIES. Investments in securities include common stock of a
nonaffiliate, preferred stock of an affiliate and a nonaffiliate which were
acquired from Ford, and subordinated retained interests in receivable sales.
At December 31, 1993, the formula determined fair value of the common stock
exceeded its book value by $58.5 million. Preferred stock is recorded at cost,
which approximates fair value, as Ford provides Ford Credit with certain
guarantees related to Ford Credit's initial investment and return on
investment. Subordinated retained interests in receivable sales are recorded
at the present value of estimated future cash flows discounted at rates
commensurate with this type of instrument, which approximates fair value.

FINANCE RECEIVABLES. The fair value of most receivables is estimated by
discounting future cash flows using an estimated discount rate which reflects
the credit, interest rate and prepayment risks associated with similar types of
instruments. For receivables with short maturities, the book values
approximate fair values. Finance receivables excluded from fair market
valuation include direct financing and leveraged lease investments, and other
miscellaneous accounts receivable.

DEBT. The fair value is estimated based on quoted market prices or on current
rates for similar debt with the same remaining maturities.





Continued

FC-22
77
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 14. FINANCIAL INSTRUMENTS (continued)

Financial Instruments With Off-Balance-Sheet Risk

The following sections describe the various off-balance-sheet financial
instruments that Ford Credit held as of December 31, 1993 and 1992. Also
included is a brief discussion of the fair value of those contracts and certain
risks associated with holding those contracts through maturity.

FOREIGN EXCHANGE INSTRUMENTS. Ford Credit and certain of its subsidiaries have
entered into foreign exchange agreements to manage exposure to foreign exchange
rate fluctuations. These exchange agreements hedge principal and interest
payments on debt that are denominated in foreign currencies. Agreements
entered into to manage these exposures include foreign currency forward
contracts and currency swaps.

Foreign currency forward contracts and currency swaps involve agreements to
purchase or sell specified amounts of foreign currencies at specified rates on
specific future dates.

The fair value of these foreign exchange agreements was estimated using
current market rates. The fair value was estimated to be a net receivable of
$54.1 million at December 31, 1993 and $107.2 million at December 31, 1992.

In the unlikely event that a counterparty fails to meet the terms of the
contract, Ford Credit's market risk is limited to the currency rate
differential. In the case of currency swaps, Ford Credit's market risk also
may include an interest rate differential. At December 31, 1993 and 1992, the
total notional amount of Ford Credit's foreign currency forward contracts and
currency swaps outstanding was $2.1 billion.

INTEREST RATE INSTRUMENTS. Ford Credit and certain of its subsidiaries have
entered into arrangements to manage exposure to fluctuations in interest rates.
These arrangements include primarily interest rate swap agreements and, to a
lesser extent, interest rate options.





Continued

FC-23
78
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 14. FINANCIAL INSTRUMENTS (continued)

Interest rate swap agreements involve the exchange of interest obligations on
fixed and floating interest rate debt without the exchange of the underlying
principal amounts. The differential paid or received on interest rate swap
agreements is recognized as an adjustment to interest expense over the term of
the underlying debt agreement.

Interest rate option contracts allow the holder of the option to purchase or
sell a financial instrument at a specified price and within a specified period
of time.

The fair value of interest rate instruments is the estimated amount Ford Credit
would receive or pay to terminate the agreement or contract. The fair value is
calculated using current market rates and the remaining terms of the agreements
or contracts. At December 31, 1993 and 1992, the fair value of these interest
rate instruments was estimated to be $458.2 million and $273.4 million,
respectively, including unrealized gains of $410.6 million and $221.5 million,
respectively.

In the unlikely event that a counterparty fails to meet the terms of an
interest rate instrument, Ford Credit's exposure is limited to the interest
rate differential. The underlying notional amount on which Ford Credit has
interest rate swap and option agreements outstanding aggregated $31.1 billion
at December 31, 1993 and $16.9 billion at December 31, 1992.

Concentrations of Credit Risk

Ford Credit controls its credit risk through credit standards, limits on
exposure and by monitoring the financial conditions of other parties. The
majority of Ford Credit's finance receivables are geographically diversified
throughout the United States. Foreign finance receivables are concentrated in
Canada and Australia.





Continued

FC-24
79
FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (Continued)


NOTE 15. SELECTED QUARTERLY FINANCIAL DATA
(UNAUDITED)

Selected financial data by calendar quarter for the past two years were as
follows:



TOTAL INTEREST PROVISION FOR NET
REVENUE EXPENSE CREDIT LOSSES INCOME
------- ------- ------------- ------
(in millions)

1993
First Quarter $ 1,960.1 $ 718.2 $ 84.4 $ 315.1
Second Quarter 2,053.6 725.0 68.1 306.2
Third Quarter 2,180.2 733.2 87.3 274.3
Fourth Quarter 2,144.5 742.9 30.4* 298.2
----------- ----------- --------- -----------

Full Year $ 8,338.4 $ 2,919.3 $ 270.2 $ 1,193.8
----------- ----------- --------- -----------
----------- ----------- --------- -----------
1992
First Quarter $ 1,723.4 $ 843.8 $ 105.1 $ 353.7
Second Quarter 1,737.4 790.1 79.7 227.7
Third Quarter 1,784.6 734.1 115.1 240.2
Fourth Quarter 1,827.9 708.5 118.1 217.1
----------- ----------- --------- -----------

Full Year $ 7,073.3 $ 3,076.5 $ 418.0 $ 1,038.7
----------- ----------- --------- -----------
----------- ----------- --------- -----------



____________
* The provision for credit losses for the fourth quarter of 1993 was
reduced by $78.8 million as a result of continued improvement in credit
loss experience.





FC-25
80
SCHEDULE IX

FORD MOTOR CREDIT COMPANY AND SUBSIDIARIES

SCHEDULE IX--SHORT-TERM BORROWINGS(1)

FOR THE YEARS 1993, 1992 AND 1991



(A) (B) (C) (D) (E) (F)
Weighted Weighted
average Maximum Average average
Category of Balance interest amount amount interest
aggregate at end rate at outstanding outstanding rate
short-term of end of during during during
borrowing period period period period(2) period(3)
--------- ------ ------- ------- --------- ---------
(mils.) (mils.) (mils.)

1993
Commercial paper... $24,506.1 3.33% $24,506.1 $22,759.7 3.32%
STBAs.............. -- -- -- -- --
Bank debt.......... -- -- -- -- --
Other short-term
debt(4).......... 851.0 3.62 965.0 870.6 3.36

1992
Commercial paper... $21,210.5 3.64% $22,035.0 $18,807.6 3.94%
STBAs.............. -- -- 72.9 15.3 5.13
Bank debt.......... -- -- 1.0 0.1 6.28
Other short-term
debt(4).......... 985.2 3.76 1,641.6 1,332.9 4.80

1991
Commercial paper... $18,043.4 5.19% $19,990.8 $18,076.6 6.60%
STBAs.............. 188.6 4.23 590.5 499.2 5.87
Bank debt.......... -- -- 7.6 2.3 14.78
Other short-term
debt(4).......... 1,641.7 5.55 2,108.5 1,120.5 6.21




__________
(1) U.S. commercial paper, the majority of commercial paper outstanding,
is comprised of short-term, unsecured promissory notes with maturities ranging
from one day to 270 days. Borrowings under short-term borrowing agreements
(STBAs) are payable on demand. Bank debt outstandings range from short-term
borrowings to bank notes payable on specific dates.
(2) The average amount outstanding during the period represents the
daily average debt outstanding.
(3) The weighted average interest rate represents total annual
short-term interest expense divided by the daily average debt outstanding.
(4) Other short-term debt primarily consists of notes having either a
provision for optional redemption within one year or original maturities of less
than one year, and for 1993 and 1992 excludes $150 million and $800 million,
respectively, due to an affiliated company.


FC-26



81

EXHIBIT INDEX




DESIGNATION DESCRIPTION PAGE
- - - - - - ----------- ----------- ----

EXHIBIT 3-A Restated Certificate of Incorporation of Ford Motor Credit Company.

EXHIBIT 3-B By-Laws of Ford Motor Credit Company as amended through March 2, 1988.

EXHIBIT 4-A Form of Indenture dated as of August 1, 1984 between Ford Motor Credit Company
and The Chase Manhattan Bank (National Association) relating to Debt Securities.

EXHIBIT 4-A-1 Form of First Supplemental Indenture dated August 15, 1986 between Ford Motor
Credit Company and The Chase Manhattan Bank (National Association) supplementing
the Indenture designated as Exhibit 4-A.

EXHIBIT 4-A-2 Form of Second Supplemental Indenture dated as of October 15, 1986 between Ford
Motor Credit Company and The Chase Manhattan Bank (National Association)
supplementing the Indenture designated as Exhibit 4-A.

EXHIBIT 4-B Form of Indenture dated as of February 1, 1985 between Ford Motor Credit Company
and Manufacturers Hanover Trust Company relating to Debt Securities.

EXHIBIT 4-B-1 Form of First Supplemental Indenture dated as of April 1, 1986 between Ford Motor
Credit Company and Manufacturers Hanover Trust Company supplementing the Indenture
designated as Exhibit 4-B.

EXHIBIT 4-B-2 Form of Second Supplemental Indenture dated as of September 1, 1986 between Ford
Motor Credit Company and Manufacturers Hanover Trust Company supplementing
Indenture designated as Exhibit 4-B.





82


DESIGNATION DESCRIPTION PAGE
- - - - - - ----------- ----------- ----

EXHIBIT 4-B-3 Form of Third Supplemental Indenture dated as of March 15, 1987 between
Ford Motor Credit Company and Manufacturers Hanover Trust Company
supplementing the Indenture designated as Exhibit 4-B.

EXHIBIT 4-B-4 Form of Fourth Supplemental Indenture dated as of April 15, 1988 between
Ford Motor Credit Company and Manufacturers Hanover Trust Company
supplementing the Indenture designated as Exhibit 4-B.

EXHIBIT 4-B-5 Form of Fifth Supplemental Indenture dated as of September 1, 1990 between
Ford Motor Credit Company and Manufacturers Hanover Trust Company
supplementing the Indenture designated as Exhibit 4-B.

EXHIBIT 4-C Indenture dated as of November 1, 1987 between Ford Motor Credit Company and
Continental Bank, National Association relating to Debt Securities.

EXHIBIT 10-J Copy of Amended and Restated Profit Maintenance
Agreement dated as of July 1, 1993 between Ford
Motor Credit Company and Ford Motor Company.






83


DESIGNATION DESCRIPTION PAGE
- - - - - - ----------- ----------- ----

EXHIBIT 10-X Copy of Agreement dated as of February 1, 1980
between Ford Motor Company and Ford Motor Credit
Company.
EXHIBIT 12-A Calculation of Ratio of Earnings to Fixed Charges
of Ford Credit.
EXHIBIT 12-B Calculation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends
of Ford.
EXHIBIT 23 Consent of Independent Accountants.
EXHIBIT 24 Powers of Attorney.