Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐

Yes

☑

All of the limited liability company interests in the registrant (“Shares”) are held by an affiliate of the registrant. None of the Shares are publicly traded.

REDUCED DISCLOSURE FORMAT

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.


Exhibit Index begins on page 4240

FORD MOTOR CREDIT COMPANY LLC

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended ~~March 31,~~September 30, 2021



	Table of Contents	Page

	Part I. Financial Information
Item 1	Financial Statements	1
	Consolidated Income Statements	1
	Consolidated Statements of Comprehensive Income	1
	Consolidated Balance Sheets	2
	Consolidated Statements of Shareholder’s Interest	3
	Consolidated Statements of Cash Flows	4
	Notes to the Financial Statements	5
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2425
	Recent Developments	2425
	Definitions and Information Regarding Causal Factors	2526
	Results of Operations	2728
	Financing Shares and Contract Placement Volume	2930
	Financial Condition	3031
	Credit Risk	3132
	Residual Risk	3334
	Credit Ratings	3435
	Funding and Liquidity	3536
	Leverage	3937
	Outlook	3937
	Cautionary Note on Forward-Looking Statements	4038
	Accounting Standards Issued But Not Yet Adopted	4139
Item 3	Quantitative and Qualitative Disclosures About Market Risk	4139
Item 4	Controls and Procedures	4139
	Part II. Other Information
Item 1	Legal Proceedings	4240
Item 5	Other Information	4240
Item 6	Exhibits	4240
	Signature	4341

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

(in millions)


		For the periods ended March 31,				For the periods ended September 30,
		2020		2021					2020		2021		2020		2021
		First Quarter					Third Quarter				First Nine Months
		(unaudited)				(unaudited)
Financing revenue	Financing revenue							Financing revenue
Operating leases	Operating leases	$	1,459	$	1,380			Operating leases	$	1,407	$	1,285	$	4,267	$	4,032
Retail financing	Retail financing	976		990				Retail financing	1,008		955		2,925		2,949
Dealer financing	Dealer financing	485		286				Dealer financing	345		148		1,171		621
Other financing	Other financing	22		14				Other financing	22		9		71		36
Total financing revenue	Total financing revenue	2,942		2,670				Total financing revenue	2,782		2,397		8,434		7,638
Depreciation on vehicles subject to operating leases	Depreciation on vehicles subject to operating leases	(1,052)		(568)				Depreciation on vehicles subject to operating leases	(537)		(441)		(2,579)		(1,200)
Interest expense	Interest expense	(984)		(804)				Interest expense	(792)		(668)		(2,615)		(2,152)
Net financing margin	Net financing margin	906		1,298				Net financing margin	1,453		1,288		3,240		4,286
Other revenue	Other revenue							Other revenue
Insurance premiums earned	Insurance premiums earned	47		27				Insurance premiums earned	32		15		113		59
Fee based revenue and other	Fee based revenue and other	43		20				Fee based revenue and other	41		61		133		134
Total financing margin and other revenue	Total financing margin and other revenue	996		1,345				Total financing margin and other revenue	1,526		1,364		3,486		4,479
Expenses	Expenses							Expenses
Operating expenses	Operating expenses	362		343				Operating expenses	311		323		978		988
Provision for credit losses (Note 4)	Provision for credit losses (Note 4)	586		(40)				Provision for credit losses (Note 4)	86		(59)		765		(265)
Insurance expenses	Insurance expenses	6		5				Insurance expenses	16		5		82		14
Total expenses	Total expenses	954		308				Total expenses	413		269		1,825		737

Other income / (loss), net (Note 10)		(12)		(75)
Other income / (loss), net (Note 11)								Other income / (loss), net (Note 11)	10		(18)		35		(80)

Income before income taxes	Income before income taxes	30		962				Income before income taxes	1,123		1,077		1,696		3,662
Provision for income taxes		36		117
Net income / (loss)		$	(6)	$	845
Provision for / (Benefit from) income taxes								Provision for / (Benefit from) income taxes	82		97		185		186
Net income								Net income	$	1,041	$	980	$	1,511	$	3,476

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)


		For the periods ended March 31,				For the periods ended September 30,
		2020		2021					2020		2021		2020		2021
		First Quarter					Third Quarter				First Nine Months
		(unaudited)				(unaudited)
Net income / (loss)		$	(6)	$	845
Net income								Net income	$	1,041	$	980	$	1,511	$	3,476
Other comprehensive income / (loss), net of tax	Other comprehensive income / (loss), net of tax							Other comprehensive income / (loss), net of tax
Foreign currency translation	Foreign currency translation	(348)		(101)				Foreign currency translation	238		(179)		(23)		(172)
Comprehensive income / (loss)		$	(354)	$	744
Comprehensive income								Comprehensive income	$	1,279	$	801	$	1,488	$	3,304

The accompanying notes are part of the consolidated financial statements.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions)


		December 31, 2020		March 31, 2021			December 31, 2020		September 30, 2021
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
Cash and cash equivalents (Note 3)	Cash and cash equivalents (Note 3)	$	14,349	$	10,869	Cash and cash equivalents (Note 3)	$	14,349	$	12,963
Marketable securities (Note 3)	Marketable securities (Note 3)	4,860		3,948		Marketable securities (Note 3)	4,860		2,046
Finance receivables, net	Finance receivables, net					Finance receivables, net
Retail installment contracts, dealer financing, and other financing	Retail installment contracts, dealer financing, and other financing	97,043		92,779		Retail installment contracts, dealer financing, and other financing	97,043		83,705
Finance leases	Finance leases	8,027		7,798		Finance leases	8,027		7,299
Total finance receivables, net of allowance for credit losses of $1,305 and $1,223 (Note 4)		105,070		100,577
Total finance receivables, net of allowance for credit losses of $1,305 and $984 (Note 4)						Total finance receivables, net of allowance for credit losses of $1,305 and $984 (Note 4)	105,070		91,004
Net investment in operating leases (Note 5)	Net investment in operating leases (Note 5)	26,655		26,561		Net investment in operating leases (Note 5)	26,655		25,459
Notes and accounts receivable from affiliated companies	Notes and accounts receivable from affiliated companies	853		529		Notes and accounts receivable from affiliated companies	853		519
Derivative financial instruments (Note 7)	Derivative financial instruments (Note 7)	2,601		1,685		Derivative financial instruments (Note 7)	2,601		1,479
Assets held-for-sale	Assets held-for-sale	36		14		Assets held-for-sale	36		27
Other assets (Note 8)	Other assets (Note 8)	3,705		3,085		Other assets (Note 8)	3,705		2,571
Total assets	Total assets	$	158,129	$	147,268	Total assets	$	158,129	$	136,068

LIABILITIES	LIABILITIES					LIABILITIES
Accounts payable	Accounts payable					Accounts payable
Customer deposits, dealer reserves, and other	Customer deposits, dealer reserves, and other	$	1,087	$	1,136	Customer deposits, dealer reserves, and other	$	1,087	$	1,089
Affiliated companies	Affiliated companies	490		844		Affiliated companies	490		576
Total accounts payable	Total accounts payable	1,577		1,980		Total accounts payable	1,577		1,665
Debt (Note 9)	Debt (Note 9)	137,677		126,792		Debt (Note 9)	137,677		118,956
Deferred income taxes	Deferred income taxes	504		524		Deferred income taxes	504		502
Derivative financial instruments (Note 7)	Derivative financial instruments (Note 7)	524		577		Derivative financial instruments (Note 7)	524		454
Other liabilities and deferred revenue (Note 8)	Other liabilities and deferred revenue (Note 8)	2,280		2,084		Other liabilities and deferred revenue (Note 8)	2,280		2,120
Total liabilities	Total liabilities	142,562		131,957		Total liabilities	142,562		123,697

SHAREHOLDER’S INTEREST	SHAREHOLDER’S INTEREST					SHAREHOLDER’S INTEREST
Shareholder’s interest	Shareholder’s interest	5,227		5,227		Shareholder’s interest	5,227		5,227
Accumulated other comprehensive income / (loss)	Accumulated other comprehensive income / (loss)	(478)		(579)		Accumulated other comprehensive income / (loss)	(478)		(650)
Retained earnings	Retained earnings	10,818		10,663		Retained earnings	10,818		7,794
Total shareholder’s interest	Total shareholder’s interest	15,567		15,311		Total shareholder’s interest	15,567		12,371
Total liabilities and shareholder’s interest	Total liabilities and shareholder’s interest	$	158,129	$	147,268	Total liabilities and shareholder’s interest	$	158,129	$	136,068

The following table includes assets to be used to settle the liabilities of the consolidated variable interest entities (“VIEs”). These assets and liabilities are included in the consolidated balance sheets above.


		December 31, 2020		March 31, 2021			December 31, 2020		September 30, 2021
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	2,822	$	4,794	Cash and cash equivalents	$	2,822	$	5,657
Finance receivables, net	Finance receivables, net	51,472		48,902		Finance receivables, net	51,472		43,248
Net investment in operating leases	Net investment in operating leases	12,794		10,026		Net investment in operating leases	12,794		8,759
Derivative financial instruments	Derivative financial instruments	0		2		Derivative financial instruments	—		11
LIABILITIES	LIABILITIES					LIABILITIES
Debt	Debt	$	46,770	$	43,387	Debt	$	46,770	$	39,576
Derivative financial instruments	Derivative financial instruments	56		30		Derivative financial instruments	56		10

The accompanying notes are part of the consolidated financial statements.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S INTEREST

(in millions, unaudited)


		Shareholder’s Interest		Accumulated Other Comprehensive Income / (Loss)		Retained Earnings		Total Shareholder’s Interest			Shareholder’s Interest		Accumulated Other Comprehensive Income / (Loss)		Retained Earnings		Total Shareholder’s Interest
Balance at December 31, 2019	Balance at December 31, 2019	$	5,227	$	(850)	$	12,012	$	16,389	Balance at December 31, 2019	$	5,227	$	(850)	$	12,012	$	16,389
Adoption of accounting standards (Note 2)	Adoption of accounting standards (Note 2)	0		0		(242)		(242)		Adoption of accounting standards (Note 2)	—		—		(242)		(242)
Net income / (loss)	Net income / (loss)	0		0		(6)		(6)		Net income / (loss)	—		—		(6)		(6)
Other comprehensive income / (loss), net of tax	Other comprehensive income / (loss), net of tax	0		(348)		0		(348)		Other comprehensive income / (loss), net of tax	—		(348)		—		(348)
Distributions declared	Distributions declared	0		0		(343)		(343)		Distributions declared	—		—		(343)		(343)
Balance at March 31, 2020	Balance at March 31, 2020	$	5,227	$	(1,198)	$	11,421	$	15,450	Balance at March 31, 2020	$	5,227	$	(1,198)	$	11,421	$	15,450

Net income / (loss)										Net income / (loss)	—		—		476		476
Other comprehensive income / (loss), net of tax										Other comprehensive income / (loss), net of tax	—		87		—		87
Distributions declared										Distributions declared	—		—		(826)		(826)
Balance at June 30, 2020										Balance at June 30, 2020	$	5,227	$	(1,111)	$	11,071	$	15,187

Net income / (loss)										Net income / (loss)	—		—		1,041		1,041
Other comprehensive income / (loss), net of tax										Other comprehensive income / (loss), net of tax	—		238		—		238
Distributions declared										Distributions declared	—		—		(831)		(831)
Balance at September 30, 2020										Balance at September 30, 2020	$	5,227	$	(873)	$	11,281	$	15,635

Balance at December 31, 2020	Balance at December 31, 2020	$	5,227	$	(478)	$	10,818	$	15,567	Balance at December 31, 2020	$	5,227	$	(478)	$	10,818	$	15,567
Net income / (loss)	Net income / (loss)	0		0		845		845		Net income / (loss)	—		—		845		845
Other comprehensive income / (loss), net of tax	Other comprehensive income / (loss), net of tax	0		(101)		0		(101)		Other comprehensive income / (loss), net of tax	—		(101)		—		(101)
Distributions declared	Distributions declared	0		0		(1,000)		(1,000)		Distributions declared	—		—		(1,000)		(1,000)
Balance at March 31, 2021	Balance at March 31, 2021	$	5,227	$	(579)	$	10,663	$	15,311	Balance at March 31, 2021	$	5,227	$	(579)	$	10,663	$	15,311

Net income / (loss)										Net income / (loss)	—		—		1,651		1,651
Other comprehensive income / (loss), net of tax										Other comprehensive income / (loss), net of tax	—		108		—		108
Distributions declared										Distributions declared	—		—		(4,000)		(4,000)
Balance at June 30, 2021										Balance at June 30, 2021	$	5,227	$	(471)	$	8,314	$	13,070

Net income / (loss)										Net income / (loss)	—		—		980		980
Other comprehensive income / (loss), net of tax										Other comprehensive income / (loss), net of tax	—		(179)		—		(179)
Distributions declared										Distributions declared	—		—		(1,500)		(1,500)
Balance at September 30, 2021										Balance at September 30, 2021	$	5,227	$	(650)	$	7,794	$	12,371

The accompanying notes are part of the consolidated financial statements.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


		For the periods ended March 31,					For the periods ended September 30,
		2020		2021			2020		2021
		First Three Months					First Nine Months
		(unaudited)					(unaudited)
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income / (loss)		$	(6)	$	845
Net income						Net income	$	1,511	$	3,476
Adjustments to reconcile net income to net cash provided in operations	Adjustments to reconcile net income to net cash provided in operations					Adjustments to reconcile net income to net cash provided in operations
Provision for credit losses		586		(40)
Increase / (decrease) in provision for credit losses						Increase / (decrease) in provision for credit losses	765		(265)
Depreciation and amortization	Depreciation and amortization	1,250		738		Depreciation and amortization	3,150		1,752
Amortization of upfront interest supplements	Amortization of upfront interest supplements	(532)		(578)		Amortization of upfront interest supplements	(1,634)		(1,716)
Net change in finance and wholesale receivables held-for-sale	Net change in finance and wholesale receivables held-for-sale	(74)		0		Net change in finance and wholesale receivables held-for-sale	(74)		—
Net change in deferred income taxes	Net change in deferred income taxes	38		13		Net change in deferred income taxes	98		(15)
Net change in other assets	Net change in other assets	(322)		341		Net change in other assets	(313)		558
Net change in other liabilities	Net change in other liabilities	(758)		229		Net change in other liabilities	(299)		(43)
All other operating activities	All other operating activities	63		114		All other operating activities	118		119
Net cash provided by / (used in) operating activities	Net cash provided by / (used in) operating activities	245		1,662		Net cash provided by / (used in) operating activities	3,322		3,866

Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Purchases of finance receivables	Purchases of finance receivables	(8,222)		(8,467)		Purchases of finance receivables	(32,145)		(25,076)
Principal collections of finance receivables	Principal collections of finance receivables	10,258		10,315		Principal collections of finance receivables	30,006		31,378
Purchases of operating lease vehicles	Purchases of operating lease vehicles	(3,441)		(2,841)		Purchases of operating lease vehicles	(8,523)		(8,367)
Proceeds from termination of operating lease vehicles	Proceeds from termination of operating lease vehicles	2,768		2,488		Proceeds from termination of operating lease vehicles	7,227		8,716
Net change in wholesale receivables and other short-duration receivables	Net change in wholesale receivables and other short-duration receivables	(881)		2,628		Net change in wholesale receivables and other short-duration receivables	11,758		8,525
Proceeds from sale of business	Proceeds from sale of business	1,340		0		Proceeds from sale of business	1,340		—
Purchases of marketable securities	Purchases of marketable securities	(680)		(3,701)		Purchases of marketable securities	(6,957)		(7,143)
Proceeds from sales and maturities of marketable securities	Proceeds from sales and maturities of marketable securities	1,535		4,598		Proceeds from sales and maturities of marketable securities	6,029		9,940
Settlements of derivatives	Settlements of derivatives	159		56		Settlements of derivatives	(107)		(44)
All other investing activities	All other investing activities	(22)		(10)		All other investing activities	81		(53)
Net cash provided by / (used in) investing activities	Net cash provided by / (used in) investing activities	2,814		5,066		Net cash provided by / (used in) investing activities	8,709		17,876

Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Proceeds from issuances of long-term debt	Proceeds from issuances of long-term debt	11,623		4,631		Proceeds from issuances of long-term debt	30,168		17,000
Principal payments on long-term debt	Principal payments on long-term debt	(12,652)		(14,814)		Principal payments on long-term debt	(34,807)		(35,729)
Change in short-term debt, net	Change in short-term debt, net	(904)		568		Change in short-term debt, net	(3,331)		1,712
Cash distributions to parent	Cash distributions to parent	(343)		(1,000)		Cash distributions to parent	(2,000)		(6,500)
All other financing activities	All other financing activities	(21)		(11)		All other financing activities	(79)		(52)
Net cash provided by / (used in) financing activities	Net cash provided by / (used in) financing activities	(2,297)		(10,626)		Net cash provided by / (used in) financing activities	(10,049)		(23,569)

Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(252)		(67)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	2		(77)

Net increase / (decrease) in cash, cash equivalents and restricted cash	Net increase / (decrease) in cash, cash equivalents and restricted cash	$	510	$	(3,965)	Net increase / (decrease) in cash, cash equivalents and restricted cash	$	1,984	$	(1,904)

Cash, cash equivalents and restricted cash at beginning of period (Note 3)	Cash, cash equivalents and restricted cash at beginning of period (Note 3)	$	9,268	$	14,996	Cash, cash equivalents and restricted cash at beginning of period (Note 3)	$	9,268	$	14,996
Net increase / (decrease) in cash, cash equivalents and restricted cash	Net increase / (decrease) in cash, cash equivalents and restricted cash	510		(3,965)		Net increase / (decrease) in cash, cash equivalents and restricted cash	1,984		(1,904)
Cash, cash equivalents and restricted cash at end of period (Note 3)	Cash, cash equivalents and restricted cash at end of period (Note 3)	$	9,778	$	11,031	Cash, cash equivalents and restricted cash at end of period (Note 3)	$	11,252	$	13,092

The accompanying notes are part of the consolidated financial statements.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

Table of Contents


Footnote		Page
Note 1	Presentation	6
Note 2	Accounting Policies	6
Note 3	Cash, Cash Equivalents, and Marketable Securities	8
Note 4	Finance Receivables and Allowance for Credit Losses	9
Note 5	Net Investment in Operating Leases	13
Note 6	Transfers of Receivables and Variable Interest Entities	14
Note 7	Derivative Financial Instruments and Hedging Activities	17
Note 8	Other Assets and Other Liabilities and Deferred Revenue	19
Note 9	Debt	20


Note 10	~~Other Income / (Loss)~~Employee Separation and Restructuring Actions	20

Note 11	~~Segment Information~~Other Income / (Loss)	21

Note 12	Segment Information	22

Note 13	Commitments and Contingencies	2223

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1. PRESENTATION

Principles of Consolidation

The consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) for interim financial information, and instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, these unaudited financial statements include all adjustments considered necessary for a fair statement of the results of operations and financial condition for interim periods for Ford Motor Credit Company LLC, its consolidated subsidiaries, and its consolidated VIEs in which Ford Motor Credit Company LLC is the primary beneficiary (collectively referred to herein as “Ford Credit,” “we,” “our,” or “us”). Results for interim periods should not be considered indicative of results for any other interim period or for the full year. Reference should be made to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K Report”). We are an indirect, wholly owned subsidiary of Ford Motor Company (“Ford”). We reclassify certain prior period amounts in our consolidated financial statements to conform to current year presentation.

NOTE 2. ACCOUNTING POLICIES

Adoption of New Accounting Standards

~~ASU~~Accounting Standards Update (“ASU”) 2019-12 - Income Taxes - Simplifying the Accounting for Income Taxes. Effective January 1, 2021, we adopted the amendments in this ASU to simplify the accounting for income taxes. The only amendment that had a material effect on our financial statements clarified that an entity may elect, ~~to,~~ but is not required, to reflect an allocation of consolidated current and deferred tax expense for non-taxable legal entities that are treated as disregarded by taxing authorities in their separately issued financial statements.

With the adoption of the amendments, our financial statements no longer reflect an allocation of the Ford Motor Company consolidated United States current and deferred tax expense to us and certain of our United States subsidiaries that are treated as disregarded entities for United States tax purposes. These amendments reduce complexity in accounting for income taxes and better reflect our external obligations to tax authorities. Following the adoption, in April 2021, we entered into a Second Amended and Restated Tax Sharing Agreement with Ford.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 2. ACCOUNTING POLICIES (Continued)

The effect of the retrospective adoption of this amendment on our consolidated income statement, balance sheet, and statement of cash flows was as follows (in millions):

For the Period Ended March 31, 2020
Previously Reported Adjustments
due to
ASU 2019-12 As Revised
Income Statement
Provision for income taxes $ 9 $ 27 $ 36
Net income / (loss) 21 (27) (6)
As of December 31, 2020
Previously Reported Adjustments
due to
ASU 2019-12 As Revised
Balance Sheet
Other assets $ 4,593 $ (888) $ 3,705
Deferred income taxes (a) 2,907 (2,403) 504
Other liabilities and deferred income 2,306 (26) 2,280
Accumulated other comprehensive income / (loss) (413) (65) (478)
Retained earnings 9,212 1,606 10,818
For the Period Ended March 31, 2020
Previously Reported Adjustments
due to
ASU 2019-12 As Revised
Statement of Cash Flows
Cash flows from operating activities
   Net income / (loss) $ 21 $ (27) $ (6)
   Net change in deferred income taxes (272) 310 38
   Net change in other liabilities (583) (175) (758)
   All other operating activities 103 (40) 63
Cash flows from financing activities
   Cash distributions to parent $ (275) $ (68) $ (343)


	For the Period Ended September 30, 2020
	Third Quarter						First Nine Months
	Previously Reported		Adjustments due to ASU 2019-12		As Revised		Previously Reported		Adjustments due to ASU 2019-12		As Revised
Income Statement
Provision for / (Benefit from) income taxes	$	264	$	(182)	$	82	$	409	$	(224)	$	185
Net income	859		182		1,041		1,287		224		1,511

~~__________~~


	As of December 31, 2020
	Previously Reported		Adjustments due to ASU 2019-12		As Revised
Balance Sheet
Other assets	$	4,593	$	(888)	$	3,705
Deferred income taxes (a)	2,907		(2,403)		504
Other liabilities and deferred income	2,306		(26)		2,280
Accumulated other comprehensive income / (loss)	(413)		(65)		(478)
Retained earnings	9,212		1,606		10,818

	For the Period Ended September 30, 2020
	First Nine Months
	Previously Reported		Adjustments due to ASU 2019-12		As Revised
Statement of Cash Flows
Cash flows from operating activities
Net income	$	1,287	$	224	$	1,511
Net change in deferred income taxes	234		(136)		98
Net change in other assets	(1,235)		922		(313)
Net change in other liabilities	(205)		(94)		(299)
All other operating activities	159		(41)		118
Cash flows from financing activities
Cash distributions to parent	(1,125)		(875)		(2,000)

_________

(a)Change reflects a reduction in U.S. deferred tax liabilities of $3.4 billion (primarily leasing transactions of $2.8 billion) and a reduction of U.S. deferred tax assets of $1.0 billion (primarily associated with foreign tax credit carryforwards of $0.7 billion).

Adoption of ASU 2019-12 also resulted in a revised impact of the cumulative effect of initially applying ASU 2016-13, Credit Losses – Measurement of Credit Losses on Financial Instruments. The adjustment to the January 1, 2020 opening balance of Retained earnings for the adoption of ASU 2016-13 was previously reported as $202 million, and adjustments due to ASU 2019-12 were $40 million. Accordingly, the revised amount is $242 million.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 2. ACCOUNTING POLICIES (Continued)

We also adopted the following ASUs during 2021, none of which had a material impact to our consolidated financial statements or financial statement disclosures:


ASU		Effective Date
2020-06	Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity	January 1, 2021
2021-01	Reference Rate Reform	January 1, 2021

Accounting Standards Issued But Not Yet Adopted

The Company considers the applicability and impacts of all ASUs. ASUs were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements.

~~Item 1. Financial Statements (Continued)~~

~~FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES~~

~~NOTES TO THE FINANCIAL STATEMENTS~~

~~NOTE 2. ACCOUNTING POLICIES (Continued)~~

Provision for Income Taxes

For interim tax reporting, we estimate one single effective tax rate for subsidiaries that are subject to tax, which is applied to the year-to-date ordinary income / (loss). Tax effects of significant unusual or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur.

With the adoption of ASU 2019-12, the effective tax rate at December 31, 2020 has changed retrospectively from 26.2% to 9.7% reflecting income tax no longer allocated to disregarded entities.

NOTE 3. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES

The fair values of cash, cash equivalents, and marketable securities measured at fair value on a recurring basis were as follows (in millions):


		Fair Value Level	December 31, 2020		March 31, 2021			Fair Value Level	December 31, 2020		September 30, 2021
Cash and cash equivalents	Cash and cash equivalents						Cash and cash equivalents
United States government	United States government	1	$	3,255	$	16	United States government	1	$	3,255	$	1,715
United States government agencies	United States government agencies	2	640		50		United States government agencies	2	640		—
Non-United States government and agencies	Non-United States government and agencies	2	717		1,345		Non-United States government and agencies	2	717		454
Corporate debt	Corporate debt	2	970		945		Corporate debt	2	970		995
Total marketable securities classified as cash equivalents	Total marketable securities classified as cash equivalents		5,582		2,356		Total marketable securities classified as cash equivalents		5,582		3,164
Cash, time deposits, and money market funds	Cash, time deposits, and money market funds		8,767		8,513		Cash, time deposits, and money market funds		8,767		9,799
Total cash and cash equivalents	Total cash and cash equivalents		$	14,349	$	10,869	Total cash and cash equivalents		$	14,349	$	12,963

Marketable securities	Marketable securities						Marketable securities
United States government	United States government	1	$	1,082	$	537	United States government	1	$	1,082	$	448
United States government agencies	United States government agencies	2	485		600		United States government agencies	2	485		175
Non-United States government and agencies	Non-United States government and agencies	2	2,693		2,195		Non-United States government and agencies	2	2,693		878
Corporate debt	Corporate debt	2	308		342		Corporate debt	2	308		291
Other marketable securities	Other marketable securities	2	292		274		Other marketable securities	2	292		254
Total marketable securities	Total marketable securities		$	4,860	$	3,948	Total marketable securities		$	4,860	$	2,046

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 3. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES (Continued)

Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash, as reported in the consolidated statements of cash flows, were as follows (in millions):


		December 31, 2020		March 31, 2021			December 31, 2020		September 30, 2021
Cash and cash equivalents	Cash and cash equivalents	$	14,349	$	10,869	Cash and cash equivalents	$	14,349	$	12,963
Restricted cash (a)	Restricted cash (a)	647		162		Restricted cash (a)	647		129
Total cash, cash equivalents, and restricted cash	Total cash, cash equivalents, and restricted cash	$	14,996	$	11,031	Total cash, cash equivalents, and restricted cash	$	14,996	$	13,092

__________

(a)Restricted cash is included in Other assets on our consolidated balance sheets and is primarily held to meet certain local governmental and regulatory reserve requirements and cash held under the terms of certain contractual agreements. Restricted cash does not include required minimum balances or cash securing debt issued through securitization transactions.

~~Item 1. Financial Statements (Continued)~~

~~FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES~~

~~NOTES TO THE FINANCIAL STATEMENTS~~

NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

We manage finance receivables as “consumer” and “non-consumer” portfolios. The receivables are generally secured by the vehicles, inventory, or other property being financed.

Finance receivables are recorded at the time of origination or purchase at fair value and are subsequently reported at amortized cost, net of any allowance for credit losses.

For all finance receivables, we define “past due” as any payment, including principal and interest, that is at least 31 days past the contractual due date.

Total Finance Receivables, Net

Total finance receivables, net were as follows (in millions):


		December 31, 2020		March 31, 2021			December 31, 2020		September 30, 2021
Consumer	Consumer					Consumer
Retail installment contracts, gross	Retail installment contracts, gross	$	73,726	$	72,078	Retail installment contracts, gross	$	73,726	$	68,385
Finance leases, gross	Finance leases, gross	8,431		8,192		Finance leases, gross	8,431		7,644
Retail financing, gross	Retail financing, gross	82,157		80,270		Retail financing, gross	82,157		76,029
Unearned interest supplements from Ford and affiliated companies	Unearned interest supplements from Ford and affiliated companies	(3,987)		(3,696)		Unearned interest supplements from Ford and affiliated companies	(3,987)		(3,086)
Consumer finance receivables	Consumer finance receivables	78,170		76,574		Consumer finance receivables	78,170		72,943

Non-Consumer	Non-Consumer					Non-Consumer
Dealer financing	Dealer financing	26,517		23,453		Dealer financing	26,517		17,424
Other financing	Other financing	1,688		1,773		Other financing	1,688		1,621
Non-Consumer finance receivables	Non-Consumer finance receivables	28,205		25,226		Non-Consumer finance receivables	28,205		19,045
Total recorded investment	Total recorded investment	$	106,375	$	101,800	Total recorded investment	$	106,375	$	91,988

Recorded investment in finance receivables	Recorded investment in finance receivables	$	106,375	$	101,800	Recorded investment in finance receivables	$	106,375	$	91,988
Allowance for credit losses	Allowance for credit losses	(1,305)		(1,223)		Allowance for credit losses	(1,305)		(984)
Total finance receivables, net	Total finance receivables, net	$	105,070	$	100,577	Total finance receivables, net	$	105,070	$	91,004

Net finance receivables subject to fair value (a)	Net finance receivables subject to fair value (a)	$	97,043	$	92,779	Net finance receivables subject to fair value (a)	$	97,043	$	83,705
Fair value (b)	Fair value (b)	98,630		94,151		Fair value (b)	98,630		85,085

__________

(a)Net finance receivables subject to fair value exclude finance leases.

(b)The fair value of finance receivables is categorized within Level 3 of the fair value hierarchy.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Finance leases are comprised of sales-type and direct financing leases. Financing revenue from finance leases for the ~~first~~third quarter of 2020 and 2021 was ~~$95~~$96 million and ~~$90~~$86 million, respectively, and for the first nine months of 2020 and 2021 was $268 million and $264 million, respectively, and is included in Retail financing on the consolidated income statements.

At December 31, 2020 and ~~March 31,~~September 30, 2021, accrued interest was $181 million and ~~$164~~$125 million, respectively, which we report in Other assets on the consolidated balance sheets.

Included in the recorded investment in finance receivables were consumer and non-consumer receivables that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. See Note 6 for additional information.

~~Item 1. Financial Statements (Continued)~~

~~FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES~~

~~NOTES TO THE FINANCIAL STATEMENTS~~

~~NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES~~ ~~(Continued)~~

Credit Quality

Consumer Portfolio. Credit quality ratings for consumer receivables are based on our aging analysis. Consumer receivables credit quality ratings are as follows:

•Pass – current to 60 days past due;

•Special Mention – 61 to 120 days past due and in intensified collection status; and

•Substandard – greater than 120 days past due and for which the uncollectible portion of the receivables has already been charged off, as measured using the fair value of collateral less costs to sell.

The credit quality analysis of consumer receivables at December 31, 2020 was as follows (in millions):


		Amortized Cost Basis by Origination Year																	Amortized Cost Basis by Origination Year
		Prior to 2016		2016		2017		2018		2019		2020		Total		Percent			Prior to 2016		2016		2017		2018		2019		2020		Total		Percent
Consumer	Consumer																	Consumer
31-60 days past due	31-60 days past due	$	45	$	62	$	103	$	162	$	166	$	143	$	681	0.9	%	31-60 days past due	$	45	$	62	$	103	$	162	$	166	$	143	$	681	0.9	%
61-120 days past due	61-120 days past due	7		12		24		44		45		31		163		0.2		61-120 days past due	7		12		24		44		45		31		163		0.2
Greater than 120 days past due	Greater than 120 days past due	11		6		7		8		7		2		41		0		Greater than 120 days past due	11		6		7		8		7		2		41		—
Total past due	Total past due	63		80		134		214		218		176		885		1.1		Total past due	63		80		134		214		218		176		885		1.1
Current	Current	782		2,519		6,656		13,725		20,856		32,747		77,285		98.9		Current	782		2,519		6,656		13,725		20,856		32,747		77,285		98.9
Total	Total	$	845	$	2,599	$	6,790	$	13,939	$	21,074	$	32,923	$	78,170	100.0	%	Total	$	845	$	2,599	$	6,790	$	13,939	$	21,074	$	32,923	$	78,170	100.0	%

The credit quality analysis of consumer receivables at ~~March 31,~~September 30, 2021 was as follows (in millions):


		Amortized Cost Basis by Origination Year																	Amortized Cost Basis by Origination Year
		Prior to 2017		2017		2018		2019		2020		2021		Total		Percent			Prior to 2017		2017		2018		2019		2020		2021		Total		Percent
Consumer	Consumer																	Consumer
31-60 days past due	31-60 days past due	$	57	$	64	$	106	$	117	$	117	$	5	$	466	0.6	%	31-60 days past due	$	44	$	54	$	94	$	114	$	157	$	50	$	513	0.7	%
61-120 days past due	61-120 days past due	9		14		25		31		30		1		110		0.1		61-120 days past due	7		12		21		28		34		14		116		0.2
Greater than 120 days past due	Greater than 120 days past due	16		7		7		7		3		0		40		0.1		Greater than 120 days past due	12		7		8		10		9		—		46		—
Total past due	Total past due	82		85		138		155		150		6		616		0.8		Total past due	63		73		123		152		200		64		675		0.9
Current	Current	2,453		5,455		11,761		18,760		30,591		6,938		75,958		99.2		Current	1,195		3,452		8,114		14,566		25,369		19,572		72,268		99.1
Total	Total	$	2,535	$	5,540	$	11,899	$	18,915	$	30,741	$	6,944	$	76,574	100.0	%	Total	$	1,258	$	3,525	$	8,237	$	14,718	$	25,569	$	19,636	$	72,943	100.0	%

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Non-Consumer Portfolio. The credit quality of dealer financing receivables is evaluated based on our internal dealer risk rating analysis. We use a proprietary model to assign each dealer a risk rating. This model uses historical dealer performance data to identify key factors about a dealer that we consider most significant in predicting a dealer’s ability to meet its financial obligations. We also consider numerous other financial and qualitative factors of the dealer’s operations, including capitalization and leverage, liquidity and cash flow, profitability, and credit history with ourselves and other creditors.

Dealers are assigned to one of four groups according to risk ratings as follows:

•Group I – strong to superior financial metrics;

•Group II – fair to favorable financial metrics;

•Group III – marginal to weak financial metrics; and

•Group IV – poor financial metrics, including dealers classified as uncollectible.

The credit quality analysis of dealer financing receivables at December 31, 2020 was as follows (in millions):


		Amortized Cost Basis by Origination Year																					Amortized Cost Basis by Origination Year
		Dealer Loans																					Dealer Loans
		Prior to 2016		2016		2017		2018		2019		2020		Total		Wholesale Loans		Total		Percent			Prior to 2016		2016		2017		2018		2019		2020		Total		Wholesale Loans		Total		Percent
Group I	Group I	$	503	$	129	$	110	$	188	$	70	$	248	$	1,248	$	18,769	$	20,017	75.5	%	Group I	$	503	$	129	$	110	$	188	$	70	$	248	$	1,248	$	18,769	$	20,017	75.5	%
Group II	Group II	38		20		11		35		3		87		194		4,680		4,874		18.4		Group II	38		20		11		35		3		87		194		4,680		4,874		18.4
Group III	Group III	9		0		3		19		3		35		69		1,464		1,533		5.8		Group III	9		—		3		19		3		35		69		1,464		1,533		5.8
Group IV	Group IV	2		0		0		0		2		6		10		83		93		0.3		Group IV	2		—		—		—		2		6		10		83		93		0.3
Total (a)	Total (a)	$	552	$	149	$	124	$	242	$	78	$	376	$	1,521	$	24,996	$	26,517	100.0	%	Total (a)	$	552	$	149	$	124	$	242	$	78	$	376	$	1,521	$	24,996	$	26,517	100.0	%

__________

(a)Total past due dealer financing receivables at December 31, 2020 were $99 million.

The credit quality analysis of dealer financing receivables at ~~March 31,~~September 30, 2021 was as follows (in millions):


		Amortized Cost Basis by Origination Year																					Amortized Cost Basis by Origination Year
		Dealer Loans																					Dealer Loans
		Prior to 2017		2017		2018		2019		2020		2021		Total		Wholesale Loans		Total		Percent			Prior to 2017		2017		2018		2019		2020		2021		Total		Wholesale Loans		Total		Percent
Group I	Group I	$	582	$	108	$	178	$	55	$	146	$	124	$	1,193	$	16,210	$	17,403	74.2	%	Group I	$	464	$	91	$	173	$	46	$	111	$	260	$	1,145	$	12,498	$	13,643	78.3	%
Group II	Group II	31		11		40		3		23		63		171		4,358		4,529		19.3		Group II	12		5		25		2		6		70		120		2,888		3,008		17.3
Group III	Group III	17		0		9		2		13		24		65		1,380		1,445		6.2		Group III	10		—		1		—		1		24		36		676		712		4.1
Group IV	Group IV	0		0		1		1		3		3		8		68		76		0.3		Group IV	—		—		4		—		—		5		9		52		61		0.3
Total (a)	Total (a)	$	630	$	119	$	228	$	61	$	185	$	214	$	1,437	$	22,016	$	23,453	100.0	%	Total (a)	$	486	$	96	$	203	$	48	$	118	$	359	$	1,310	$	16,114	$	17,424	100.0	%

__________

(a)Total past due dealer financing receivables at ~~March 31,~~September 30, 2021 were ~~$70~~$64 million.

Non-Accrual of Revenue. The accrual of financing revenue is discontinued at the time a receivable is determined to be uncollectible or when it is 90 days past due. Accounts may be restored to accrual status only when a customer settles all past-due deficiency balances and future payments are reasonably assured. For receivables in non-accrual status, subsequent financing revenue is recognized only to the extent a payment is received. Payments are generally applied first to outstanding interest and then to the unpaid principal balance.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Troubled Debt Restructuring (“TDR”). A restructuring of debt constitutes a TDR if ~~we grant~~ a concession is granted to a debtor for economic or legal reasons related to the debtor’s financial difficulties that we otherwise would not consider. Consumer and non-consumer receivables that have a modified interest rate below market rate or that were modified in reorganization proceedings pursuant to the ~~United States~~U.S. Bankruptcy Code, except non-consumer receivables that are current with minimal risk of loss, are considered to be TDRs. We do not grant concessions on the principal balance of ~~our~~the receivables. If a receivable is modified in a reorganization proceeding, all payment requirements of the reorganization plan need to be met before remaining balances are forgiven.

Allowance for Credit Losses

The allowance for credit losses represents ~~our~~an estimate of the lifetime expected credit losses inherent in finance receivables as of the balance sheet date.

Adjustments to the allowance for credit losses are made by recording charges to the Provision for credit losses on our consolidated income statements. The uncollectible portion of a finance receivable is charged to the allowance for credit losses at the earlier of when an account is deemed to be uncollectible or when an account is 120 days delinquent, taking into consideration the financial condition of the customer or borrower, the value of the collateral, recourse to guarantors, and other factors.

Charge-offs on finance receivables include uncollected amounts related to principal, interest, late fees, and other allowable charges. Recoveries on finance receivables previously charged off as uncollectible are credited to the allowance for credit losses. In the event we repossess the collateral, the receivable is charged off and ~~we record~~ the collateral is recorded at its estimated fair value less costs to sell and ~~report it~~reported in Other assets on ~~the~~our consolidated balance sheets.

An analysis of the allowance for credit losses related to finance receivables for the periods ended ~~March 31~~September 30 was as follows (in millions):


		First Quarter 2020						Third Quarter 2020				First Nine Months 2020
		Consumer		Non-Consumer		Total				Consumer		Non-Consumer		Total		Consumer		Non-Consumer		Total
Allowance for credit losses	Allowance for credit losses								Allowance for credit losses
Beginning balance	Beginning balance	$	496	$	17	$	513		Beginning balance	$	1,211	$	74	$	1,285	$	496	$	17	$	513
Adoption of ASU 2016-13 (a)	Adoption of ASU 2016-13 (a)	247		5		252			Adoption of ASU 2016-13 (a)	—		—		—		247		5		252
Charge-offs	Charge-offs	(145)		(1)		(146)			Charge-offs	(104)		(5)		(109)		(329)		(6)		(335)
Recoveries	Recoveries	43		2		45			Recoveries	41		2		43		117		5		122
Provision for credit losses	Provision for credit losses	534		52		586			Provision for credit losses	95		(9)		86		723		42		765
Other (b)	Other (b)	(18)		(1)		(19)			Other (b)	8		1		9		(3)		—		(3)
Ending balance	Ending balance	$	1,157	$	74	$	1,231		Ending balance	$	1,251	$	63	$	1,314	$	1,251	$	63	$	1,314


		First Quarter 2021						Third Quarter 2021				First Nine Months 2021
		Consumer		Non-Consumer		Total				Consumer		Non-Consumer		Total		Consumer		Non-Consumer		Total
Allowance for credit losses	Allowance for credit losses								Allowance for credit losses
Beginning balance	Beginning balance	$	1,245	$	60	$	1,305		Beginning balance	$	1,022	$	39	$	1,061	$	1,245	$	60	$	1,305
Charge-offs	Charge-offs	(97)		0		(97)			Charge-offs	(58)		(2)		(60)		(210)		(5)		(215)
Recoveries	Recoveries	53		3		56			Recoveries	50		1		51		158		6		164
Provision for credit losses	Provision for credit losses	(30)		(10)		(40)			Provision for credit losses	(58)		(1)		(59)		(242)		(23)		(265)
Other (b)	Other (b)	(1)		0		(1)			Other (b)	(9)		—		(9)		(4)		(1)		(5)
Ending balance	Ending balance	$	1,170	$	53	$	1,223		Ending balance	$	947	$	37	$	984	$	947	$	37	$	984

__________

(a)Cumulative pre-tax adjustments related to the adoption of ASU 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments, were recorded toin retained earnings as of January 1, 2020.

(b)Primarily represents amounts related to translation adjustments.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The allowance for credit losses considers ~~the~~ economic conditions attributable to the COVID-19 pandemic. The allowance reflects economic uncertainty and an expectation of continued higher unemployment, which ~~increase~~increases the probability of default and loss given default rates used in our estimate of the lifetime expected credit losses for our consumer portfolio, especially in the United States.

During the third quarter and first ~~quarter~~nine months of 2021, the allowance for credit losses decreased ~~$82~~$77 million and $321 million, respectively, primarily reflecting improvement in the economic outlook that caused us to lower our expectation of lifetime losses attributable to COVID-19. The full impact of COVID-19 on our credit losses depends on future developments, such as the ultimate duration and scope of the outbreak (including any potential future waves and the success of vaccination programs), resolution of macroeconomic ~~uncertainty, and the extent to which our customers and dealers are able to utilize government relief and payment deferral programs.~~assumptions driven by COVID-19. Although net charge-offs remained low in the third quarter and first nine months ended ~~March 31,~~September 30, 2021, due in part to government stimulus, changes in consumer spending behavior, and high vehicle collateral values, the ~~future~~ impact of COVID-19 on future credit losses remains uncertain. We will continue to monitor economic trends and conditions and portfolio performance and will adjust the reserve accordingly.

NOTE 5. NET INVESTMENT IN OPERATING LEASES

Net investment in operating leases consists primarily of lease contracts for vehicles with individuals, daily rental companies, and fleet customers with terms of 60 months or less. Included in Net investment in operating leases are net investment in operating leases that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. See Note 6 for additional information.

Net investment in operating leases was as follows (in millions):


		December 31, 2020		March 31, 2021			December 31, 2020		September 30, 2021
Vehicles, at cost (a)	Vehicles, at cost (a)	$	32,495	$	32,266	Vehicles, at cost (a)	$	32,495	$	30,467
Accumulated depreciation	Accumulated depreciation	(5,840)		(5,705)		Accumulated depreciation	(5,840)		(5,008)
Net investment in operating leases	Net investment in operating leases	$	26,655	$	26,561	Net investment in operating leases	$	26,655	$	25,459

__________

(a)Includes interest supplements and residual support payments we receive on certain leasing transactions under agreements with Ford and affiliated companies, and other vehicle acquisition costs.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 6. TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES

We securitize finance receivables and net investment in operating leases through a variety of programs using amortizing, variable funding, and revolving structures. We also sell finance receivables in structured financing transactions. Due to the similarities between securitization and structured financing, we refer to structured financings as securitization transactions. Our securitization programs are targeted to institutional investors in both public and private transactions in capital markets primarily in the United States, Canada, the United Kingdom, Germany, and China.

The finance receivables sold for legal purposes and net investment in operating leases included in securitization transactions are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions. They are not available to pay our other obligations or the claims of our other creditors. The debt is the obligation of our consolidated securitization entities and not the obligation of Ford Credit or our other subsidiaries.

We use special purpose entities (“SPEs”) to issue asset-backed securities in our securitization transactions. We have deemed most of these special purpose entities to be VIEs of which we are the primary beneficiary, and therefore, are consolidated. The SPEs are established for the sole purpose of financing the securitized financial assets. The SPEs are generally financed through the issuance of notes or commercial paper into the public or private markets or directly with conduits.

We continue to recognize our financial assets related to our sales of receivables when the financial assets are sold to a consolidated VIE or a consolidated voting interest entity. We derecognize our financial assets when the financial assets are sold to a non-consolidated entity and we do not maintain control over the financial assets.

We have the power to direct significant activities of our special purpose entities when we have the ability to exercise discretion in the servicing of financial assets, issue additional debt, exercise a unilateral call option, add assets to revolving structures, or control investment decisions. We generally retain economic interests in the asset-backed securitization transactions, which are retained in the form of senior or subordinated interests, cash reserve accounts, residual interests, and servicing rights. For accounting purposes, we are precluded from recording the transfers of assets in securitization transactions as sales.

We have no obligation to repurchase or replace any securitized asset that subsequently becomes delinquent in payment or otherwise is in default, except when representations and warranties about the eligibility of the securitized assets are breached, or when certain changes are made to the underlying asset contracts. Securitization investors have no recourse to us or our other assets and have no right to require us to repurchase the investments. We generally have no obligation to provide liquidity or contribute cash or additional assets to the VIEs and do not guarantee any asset-backed securities. We may be required to support the performance of certain securitization transactions, however, by increasing cash reserves.

Certain of our securitization entities may enter into derivative transactions to mitigate interest rate exposure, primarily resulting from fixed-rate assets securing floating-rate debt. In certain instances, the counterparty enters into offsetting derivative transactions with us to mitigate its interest rate risk resulting from derivatives with our securitization entities. These related derivatives are not the obligations of our securitization entities. See Note 7 for additional information regarding derivatives.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 6. TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES (Continued)

Most of these securitization transactions utilize VIEs. The following tables show the assets and debt related to our securitization transactions that were included in our consolidated financial statements (in billions):


		December 31, 2020											December 31, 2020
		Cash and Cash Equivalents		Finance Receivables and Net Investment in Operating Leases (a)						Related Debt (c)			Cash and Cash Equivalents		Finance Receivables and Net Investment in Operating Leases (a)						Related Debt (c)
				Before Allowance for Credit Losses		Allowance for Credit Losses		After Allowance for Credit Losses							Before Allowance for Credit Losses		Allowance for Credit Losses		After Allowance for Credit Losses
VIE (b)	VIE (b)											VIE (b)
Retail financing	Retail financing	$	2.0	$	35.8	$	0.4	$	35.4	$	28.4	Retail financing	$	2.0	$	35.8	$	0.4	$	35.4	$	28.4
Wholesale financing	Wholesale financing	0.2		16.1		0		16.1		10.7		Wholesale financing	0.2		16.1		—		16.1		10.7
Finance receivables	Finance receivables	2.2		51.9		0.4		51.5		39.1		Finance receivables	2.2		51.9		0.4		51.5		39.1
Net investment in operating leases	Net investment in operating leases	0.6		12.8		0		12.8		7.7		Net investment in operating leases	0.6		12.8		—		12.8		7.7
Total VIE	Total VIE	$	2.8	$	64.7	$	0.4	$	64.3	$	46.8	Total VIE	$	2.8	$	64.7	$	0.4	$	64.3	$	46.8

Non-VIE	Non-VIE											Non-VIE
Retail financing	Retail financing	$	0.4	$	7.9	$	0.1	$	7.8	$	7.6	Retail financing	$	0.4	$	7.9	$	0.1	$	7.8	$	7.6
Wholesale financing	Wholesale financing	0		0.3		0		0.3		0.2		Wholesale financing	—		0.3		—		0.3		0.2
Finance receivables	Finance receivables	0.4		8.2		0.1		8.1		7.8		Finance receivables	0.4		8.2		0.1		8.1		7.8
Net investment in operating leases	Net investment in operating leases	0		0		0		0		0		Net investment in operating leases	—		—		—		—		—
Total Non-VIE	Total Non-VIE	$	0.4	$	8.2	$	0.1	$	8.1	$	7.8	Total Non-VIE	$	0.4	$	8.2	$	0.1	$	8.1	$	7.8

Total securitization transactions	Total securitization transactions											Total securitization transactions
Retail financing	Retail financing	$	2.4	$	43.7	$	0.5	$	43.2	$	36.0	Retail financing	$	2.4	$	43.7	$	0.5	$	43.2	$	36.0
Wholesale financing (d)	Wholesale financing (d)	0.2		16.4		0		16.4		10.9		Wholesale financing (d)	0.2		16.4		—		16.4		10.9
Finance receivables	Finance receivables	2.6		60.1		0.5		59.6		46.9		Finance receivables	2.6		60.1		0.5		59.6		46.9
Net investment in operating leases	Net investment in operating leases	0.6		12.8		0		12.8		7.7		Net investment in operating leases	0.6		12.8		—		12.8		7.7
Total securitization transactions	Total securitization transactions	$	3.2	$	72.9	$	0.5	$	72.4	$	54.6	Total securitization transactions	$	3.2	$	72.9	$	0.5	$	72.4	$	54.6

__________

(a)Unearned interest supplements and residual support are excluded from securitization transactions.

(b)Includes assets to be used to settle the liabilities of the consolidated VIEs.

(c)Includes unamortized discount and debt issuance costs.

(d)The global adjusted pool balance of the wholesale finance receivables included in the securitization trusts was $16.4 billion and the required pool balance was $14.1 billion. The global adjusted pool balance includes funds on deposit in the trust accounts. As of December 31, 2020, the adjusted pool balance was $2.3 billion higher than the required pool balance.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 6. TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES (Continued)


		March 31, 2021											September 30, 2021
		Cash and Cash Equivalents		Finance Receivables and Net Investment in Operating Leases (a)						Related Debt (c)			Cash and Cash Equivalents		Finance Receivables and Net Investment in Operating Leases (a)						Related Debt (c)
				Before Allowance for Credit Losses		Allowance for Credit Losses		After Allowance for Credit Losses							Before Allowance for Credit Losses		Allowance for Credit Losses		After Allowance for Credit Losses
VIE (b)	VIE (b)											VIE (b)
Retail financing	Retail financing	$	2.1	$	34.3	$	0.4	$	33.9	$	26.6	Retail financing	$	1.8	$	31.5	$	0.3	$	31.2	$	24.4
Wholesale financing	Wholesale financing	2.0		15.0		0		15.0		10.4		Wholesale financing	3.4		12.0		—		12.0		9.6
Finance receivables	Finance receivables	4.1		49.3		0.4		48.9		37.0		Finance receivables	5.2		43.5		0.3		43.2		34.0
Net investment in operating leases	Net investment in operating leases	0.7		10.0		0		10.0		6.4		Net investment in operating leases	0.5		8.8		—		8.8		5.6
Total VIE	Total VIE	$	4.8	$	59.3	$	0.4	$	58.9	$	43.4	Total VIE	$	5.7	$	52.3	$	0.3	$	52.0	$	39.6

Non-VIE	Non-VIE											Non-VIE
Retail financing	Retail financing	$	0.4	$	6.9	$	0.1	$	6.8	$	6.6	Retail financing	$	0.3	$	5.8	$	0.1	$	5.7	$	5.3
Wholesale financing	Wholesale financing	0		0.3		0		0.3		0.2		Wholesale financing	—		0.3		—		0.3		0.2
Finance receivables	Finance receivables	0.4		7.2		0.1		7.1		6.8		Finance receivables	0.3		6.1		0.1		6.0		5.5
Net investment in operating leases	Net investment in operating leases	0		0		0		0		0		Net investment in operating leases	—		—		—		—		—
Total Non-VIE	Total Non-VIE	$	0.4	$	7.2	$	0.1	$	7.1	$	6.8	Total Non-VIE	$	0.3	$	6.1	$	0.1	$	6.0	$	5.5

Total securitization transactions	Total securitization transactions											Total securitization transactions
Retail financing	Retail financing	$	2.5	$	41.2	$	0.5	$	40.7	$	33.2	Retail financing	$	2.1	$	37.3	$	0.4	$	36.9	$	29.7
Wholesale financing (d)	Wholesale financing (d)	2.0		15.3		0		15.3		10.6		Wholesale financing (d)	3.4		12.3		—		12.3		9.8
Finance receivables	Finance receivables	4.5		56.5		0.5		56.0		43.8		Finance receivables	5.5		49.6		0.4		49.2		39.5
Net investment in operating leases	Net investment in operating leases	0.7		10.0		0		10.0		6.4		Net investment in operating leases	0.5		8.8		—		8.8		5.6
Total securitization transactions	Total securitization transactions	$	5.2	$	66.5	$	0.5	$	66.0	$	50.2	Total securitization transactions	$	6.0	$	58.4	$	0.4	$	58.0	$	45.1

__________

(a)Unearned interest supplements and residual support are excluded from securitization transactions.

(b)Includes assets to be used to settle the liabilities of the consolidated VIEs.

(c)Includes unamortized discount and debt issuance cost.

(d)The global adjusted pool balance of the wholesale finance receivables included in the securitization trusts was ~~$15.3~~$12.3 billion and the required pool balance was ~~$13.5~~$12.3 billion. The global adjusted pool balance includes funds on deposit in the trust accounts. ~~As of March 31, 2021, the adjusted pool balance was $1.8 billion higher than the required pool balance.~~

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, our operations are exposed to global market risks, including the effect of changes in interest rates and foreign currency exchange rates. To manage these risks, we enter into highly effective derivative contracts. We have elected to apply hedge accounting to certain derivatives. Derivatives that are designated in hedging relationships are evaluated for effectiveness using regression analysis at the time they are designated and throughout the hedge period. Some derivatives do not qualify for hedge accounting; for others, we elect not to apply hedge accounting.

Income Effect of Derivative Financial Instruments

The gains / (losses), by hedge designation, reported in income for the periods ended ~~March 31~~September 30 were as follows (in millions):


		First Quarter				Third Quarter				First Nine Months
		2020		2021				2020		2021		2020		2021
Fair value hedges	Fair value hedges						Fair value hedges
Interest rate contracts	Interest rate contracts						Interest rate contracts
Net interest settlements and accruals on hedging instruments	Net interest settlements and accruals on hedging instruments	$	28	$	101		Net interest settlements and accruals on hedging instruments	$	94	$	98	$	190	$	299
Fair value changes on hedging instruments	Fair value changes on hedging instruments	1,110		(641)			Fair value changes on hedging instruments	(103)		(142)		1,119		(680)
Fair value changes on hedged debt	Fair value changes on hedged debt	(1,093)		590			Fair value changes on hedged debt	96		135		(1,095)		638
Cross-currency interest rate swap contracts	Cross-currency interest rate swap contracts						Cross-currency interest rate swap contracts
Net interest settlements and accruals on hedging instruments	Net interest settlements and accruals on hedging instruments	0		(3)			Net interest settlements and accruals on hedging instruments	(1)		(2)		(1)		(6)
Fair value changes on hedging instruments	Fair value changes on hedging instruments	0		(50)			Fair value changes on hedging instruments	(10)		(28)		(10)		(67)
Fair value changes on hedged debt	Fair value changes on hedged debt	0		44			Fair value changes on hedged debt	6		25		6		58
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments						Derivatives not designated as hedging instruments
Interest rate contracts	Interest rate contracts	(74)		(31)			Interest rate contracts	(4)		—		(90)		(25)
Foreign currency exchange contracts (a)	Foreign currency exchange contracts (a)	207		52			Foreign currency exchange contracts (a)	(106)		79		60		87
Cross-currency interest rate swap contracts	Cross-currency interest rate swap contracts	(151)		(245)			Cross-currency interest rate swap contracts	210		(194)		213		(390)
Total	Total	$	27	$	(183)		Total	$	182	$	(29)	$	392	$	(86)

__________

(a)Reflects forward contracts between us and an affiliated company.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

Balance Sheet Effect of Derivative Financial Instruments

Derivative assets and liabilities are reported on the balance sheets at fair value and are presented on a gross basis. The notional amounts of the derivative instruments do not necessarily represent amounts exchanged by the parties and are not a direct measure of our financial exposure. We also enter into master agreements with counterparties that may allow for netting of exposures in the event of default or breach of the counterparty agreement. Collateral represents cash received or paid under reciprocal arrangements that we have entered into with our derivative counterparties, which we do not use to offset our derivative assets and liabilities.

The fair value of our derivative instruments and the associated notional amounts were as follows (in millions):


		December 31, 2020						March 31, 2021							December 31, 2020						September 30, 2021
		Notional		Fair Value of Assets		Fair Value of Liabilities		Notional		Fair Value of Assets		Fair Value of Liabilities			Notional		Fair Value of Assets		Fair Value of Liabilities		Notional		Fair Value of Assets		Fair Value of Liabilities
Fair value hedges	Fair value hedges													Fair value hedges
Interest rate contracts	Interest rate contracts	$	26,924	$	1,331	$	4	$	25,646	$	934	$	204	Interest rate contracts	$	26,924	$	1,331	$	4	$	26,007	$	853	$	150
Cross-currency interest rate swap contracts	Cross-currency interest rate swap contracts	885		46		0		885		2		0		Cross-currency interest rate swap contracts	885		46		—		885		—		29
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments													Derivatives not designated as hedging instruments
Interest rate contracts	Interest rate contracts	70,318		663		439		61,608		425		314		Interest rate contracts	70,318		663		439		52,018		316		183
Foreign currency exchange contracts	Foreign currency exchange contracts	4,378		4		80		5,098		49		34		Foreign currency exchange contracts	4,378		4		80		5,925		129		53
Cross-currency interest rate swap contracts	Cross-currency interest rate swap contracts	6,849		557		1		6,822		275		25		Cross-currency interest rate swap contracts	6,849		557		1		6,547		181		39
Total derivative financial instruments, gross (a) (b)	Total derivative financial instruments, gross (a) (b)	$	109,354	$	2,601	$	524	$	100,059	$	1,685	$	577	Total derivative financial instruments, gross (a) (b)	$	109,354	$	2,601	$	524	$	91,382	$	1,479	$	454

__________

(a)At December 31, 2020 and ~~March 31,~~September 30, 2021, we held collateral of $9 million, and ~~$3 million, respectively, and~~ we posted collateral of $96 million and ~~$76~~$59 million, respectively.

(b)At December 31, 2020 and ~~March 31,~~September 30, 2021, the fair value of assets and liabilities available for counterparty netting was $204 million and ~~$396~~$358 million, respectively. All derivatives are categorized within Level 2 of the fair value hierarchy.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 8. OTHER ASSETS AND OTHER LIABILITIES AND DEFERRED REVENUE

Other assets and other liabilities and deferred revenue consist of various balance sheet items that are combined for financial statement presentation due to their respective materiality compared with other individual asset and liability items.

Other assets were as follows (in millions):


		December 31, 2020		March 31, 2021			December 31, 2020		September 30, 2021
Accrued interest and other non-finance receivables (a)	Accrued interest and other non-finance receivables (a)	$	837	$	820	Accrued interest and other non-finance receivables (a)	$	837	$	622
Prepaid reinsurance premiums and other reinsurance recoverables	Prepaid reinsurance premiums and other reinsurance recoverables	708		719		Prepaid reinsurance premiums and other reinsurance recoverables	708		737
Collateral held for resale, at net realizable value	Collateral held for resale, at net realizable value	675		577		Collateral held for resale, at net realizable value	675		286
Restricted cash	Restricted cash	647		162		Restricted cash	647		129
Property and equipment, net of accumulated depreciation (b)	Property and equipment, net of accumulated depreciation (b)	219		220		Property and equipment, net of accumulated depreciation (b)	219		220
Deferred charges - income taxes (a)	Deferred charges - income taxes (a)	166		166		Deferred charges - income taxes (a)	166		177
Investment in non-consolidated affiliates	Investment in non-consolidated affiliates	132		140		Investment in non-consolidated affiliates	132		147
Operating lease assets	Operating lease assets	98		88		Operating lease assets	98		78
Other	Other	223		193		Other	223		175
Total other assets (a)	Total other assets (a)	$	3,705	$	3,085	Total other assets (a)	$	3,705	$	2,571

__________

(a)Prior period amounts have been updated as a result of our adoption of ASU 2019-12, Simplifying the Accounting for Income Taxes. See Note 2 for additional information.

(b)Accumulated depreciation was $365 million and ~~$372~~$310 million at December 31, 2020 and ~~March 31,~~September 30, 2021, respectively.

Other liabilities and deferred revenue were as follows (in millions):


		December 31, 2020		March 31, 2021			December 31, 2020		September 30, 2021
Unearned insurance premiums and fees	Unearned insurance premiums and fees	$	822	$	833	Unearned insurance premiums and fees	$	822	$	853
Interest payable	Interest payable	857		633		Interest payable	857		605
Income tax and related interest (a) (b)	Income tax and related interest (a) (b)	121		191		Income tax and related interest (a) (b)	121		242
Operating lease liabilities	Operating lease liabilities	100		91		Operating lease liabilities	100		80
Deferred revenue	Deferred revenue	87		77		Deferred revenue	87		75
Other	Other	293		259		Other	293		265
Total other liabilities and deferred revenue (a)	Total other liabilities and deferred revenue (a)	$	2,280	$	2,084	Total other liabilities and deferred revenue (a)	$	2,280	$	2,120

__________

(a)Prior period amounts have been updated as a result of our adoption of ASU 2019-12, Simplifying the Accounting for Income Taxes. See Note 2 for additional information.

(b)Includes income tax and interest payable to affiliated companies of $16 million and ~~$86~~$116 million at December 31, 2020 and ~~March 31,~~September 30, 2021, respectively.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 9. DEBT

Debt outstanding and interest rates were as follows (in millions):


						Interest Rates													Interest Rates
		Debt				Average Contractual				Average Effective					Debt				Average Contractual				Average Effective
		December 31, 2020		March 31, 2021		2020		2021		2020		2021			December 31, 2020		September 30, 2021		2020		2021		2020		2021
Short-term debt	Short-term debt													Short-term debt
Unsecured debt	Unsecured debt													Unsecured debt
Floating rate demand notes	Floating rate demand notes	$	6,458	$	7,159									Floating rate demand notes	$	6,458	$	8,643
Other short-term debt	Other short-term debt	3,940		3,635										Other short-term debt	3,940		4,010
Asset-backed debt (a)	Asset-backed debt (a)	1,031		1,182										Asset-backed debt (a)	1,031		403
Total short-term debt	Total short-term debt	11,429		11,976		1.5	%	1.3	%	1.6	%	1.3	%	Total short-term debt	11,429		13,056		1.5	%	1.3	%	1.6	%	1.3	%
Long-term debt	Long-term debt													Long-term debt
Unsecured debt	Unsecured debt													Unsecured debt
Notes payable within one year	Notes payable within one year	17,185		16,222										Notes payable within one year	17,185		13,229
Notes payable after one year	Notes payable after one year	54,197		48,880										Notes payable after one year	54,197		47,396
Asset-backed debt (a)	Asset-backed debt (a)													Asset-backed debt (a)
Notes payable within one year	Notes payable within one year	21,345		20,207										Notes payable within one year	21,345		19,187
Notes payable after one year	Notes payable after one year	32,276		28,867										Notes payable after one year	32,276		25,542
Unamortized (discount) / premium	Unamortized (discount) / premium	30		36										Unamortized (discount) / premium	30		30
Unamortized issuance costs	Unamortized issuance costs	(252)		(243)										Unamortized issuance costs	(252)		(227)
Fair value adjustments (b)	Fair value adjustments (b)	1,467		847										Fair value adjustments (b)	1,467		743
Total long-term debt	Total long-term debt	126,248		114,816		2.7	%	2.6	%	2.7	%	2.6	%	Total long-term debt	126,248		105,900		2.7	%	2.6	%	2.7	%	2.6	%
Total debt	Total debt	$	137,677	$	126,792	2.6	%	2.5	%	2.6	%	2.5	%	Total debt	$	137,677	$	118,956	2.6	%	2.5	%	2.6	%	2.5	%

Fair value of debt (c)	Fair value of debt (c)	$	139,796	$	128,979									Fair value of debt (c)	$	139,796	$	121,369

__________

(a)Asset-backed debt issued in securitizations is the obligation of the consolidated securitization entity that issued the debt and is payable only out of collections on the underlying securitized assets and related enhancements. This asset-backed debt is not the obligation of Ford Credit or our other subsidiaries.

(b)These adjustments are related to hedging activity and include discontinued hedging relationship adjustments of $299 million and ~~$273~~$220 million at December 31, 2020 and ~~March 31,~~September 30, 2021, respectively. The carrying value of hedged debt was $45.5 billion and ~~$40.7~~$38.0 billion at December 31, 2020 and ~~March 31,~~September 30, 2021, respectively.

(c)At December 31, 2020 and ~~March 31,~~September 30, 2021, the fair value of debt includes $10.4 billion and ~~$10.8~~$12.7 billion of short-term debt, respectively, carried at cost, which approximates fair value. All other debt is categorized within Level 2 of the fair value hierarchy.

NOTE 10. EMPLOYEE SEPARATION AND RESTRUCTURING ACTIONS

We record costs associated with voluntary separations at the time of employee acceptance, unless the acceptance requires explicit approval by Ford Credit. We record costs associated with involuntary separation programs when management has approved the plan for separation, the affected employees are identified, and it is unlikely that actions required to complete the separation plan will change significantly. Costs associated with benefits that are contingent on the employee continuing to provide service are accrued over the required service period.

South America. In June 2021, we announced that our subsidiaries in Brazil and Argentina had committed to a plan to cease originating receivables by the end of 2021 and would begin the process of selling or otherwise winding down operations in those markets. During the third quarter, we entered into an agreement to sell our Brazil wholesale and dealer receivables and classified the $27 million portfolio as held-for-sale. The sale was completed effective October 1, 2021. During the first nine months of 2021, we recorded approximately $11 million related to employee separation costs in Operating expenses, the majority of which will be paid in 2021.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 10. EMPLOYEE SEPARATION AND RESTRUCTURING ACTIONS (Continued)

Accumulated foreign currency translation losses associated with our investments in Brazil and Argentina included in Accumulated other comprehensive income / (loss) at September 30, 2021 were $439 million. We expect to reclassify these losses to income upon sale, transfer, or substantially complete liquidation of our investments, which may occur over multiple reporting periods. Although the timing for the completion of these actions is uncertain, as they may be subject to regulatory approval, we expect reclassification of accumulated foreign currency translation adjustments to begin in the fourth quarter of 2021 with the majority of losses to be recognized in 2022 or later.

NOTE 11. OTHER INCOME / (LOSS)

Other income / (loss) consists of various line items that are combined on the consolidated income statements due to their respective materiality compared with other individual income and expense items.

The amounts included in Other income / (loss), net for the periods ended ~~March 31~~September 30 were as follows (in millions):


		First Quarter				Third Quarter				First Nine Months
		2020		2021				2020		2021		2020		2021
Gains / (Losses) on derivatives	Gains / (Losses) on derivatives	$	(18)	$	(265)		Gains / (Losses) on derivatives	$	93	$	(140)	$	176	$	(381)
Currency revaluation gains / (losses)	Currency revaluation gains / (losses)	(61)		183			Currency revaluation gains / (losses)	(90)		109		(259)		262
Interest and investment income	Interest and investment income	63		(2)			Interest and investment income	13		9		103		22
Other	Other	4		9			Other	(6)		4		15		17
Total other income / (loss), net	Total other income / (loss), net	$	(12)	$	(75)		Total other income / (loss), net	$	10	$	(18)	$	35	$	(80)

2021

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE ~~11.~~12. SEGMENT INFORMATION

We conduct our financing operations directly and indirectly through our subsidiaries and affiliates. We offer substantially similar products and services throughout many different regions, subject to local legal restrictions and market conditions. In our consolidated financial statements, we have three reportable segments based on geographic regions: the United States and Canada, Europe, and All Other. Our All Other segment includes China, India, Mexico, Brazil, Argentina, and our joint venture in South Africa. Items excluded in assessing segment performance because they are managed at the corporate level, including market valuation adjustments to derivatives and exchange-rate fluctuations on foreign currency-denominated transactions, are reflected in Unallocated Other.

Key financial information for our business segments for the periods ended or at ~~March 31~~September 30 was as follows (in millions):


		United States and Canada		Europe		All Other		Total Segments		Unallocated Other (a)		Total			United States and Canada		Europe		All Other		Total Segments		Unallocated Other (a)		Total

First Quarter 2020
Third Quarter 2020														Third Quarter 2020
Total revenue														Total revenue	$	2,510	$	245	$	100	$	2,855	$	—	$	2,855
Income before income taxes														Income before income taxes	932		73		14		1,019		104		1,123
Depreciation on vehicles subject to operating leases														Depreciation on vehicles subject to operating leases	549		(12)		—		537		—		537
Interest expense														Interest expense	666		87		49		802		(10)		792
Provision for credit losses														Provision for credit losses	79		1		6		86		—		86

Third Quarter 2021														Third Quarter 2021
Total revenue														Total revenue	$	2,129	$	208	$	136	$	2,473	$	—	$	2,473
Income before income taxes														Income before income taxes	978		55		45		1,078		(1)		1,077
Depreciation on vehicles subject to operating leases														Depreciation on vehicles subject to operating leases	439		2		—		441		—		441
Interest expense														Interest expense	566		64		55		685		(17)		668
Provision for credit losses														Provision for credit losses	(67)		1		7		(59)		—		(59)

First Nine Months 2020														First Nine Months 2020
Total revenue	Total revenue	$	2,631	$	281	$	120	$	3,032	$	0	$	3,032	Total revenue	$	7,589	$	770	$	321	$	8,680	$	—	$	8,680
Income before income taxes	Income before income taxes	22		17		7		46		(16)		30		Income before income taxes	1,399		155		38		1,592		104		1,696
Depreciation on vehicles subject to operating leases	Depreciation on vehicles subject to operating leases	1,039		13		0		1,052		0		1,052		Depreciation on vehicles subject to operating leases	2,578		1		—		2,579		—		2,579
Interest expense	Interest expense	845		90		65		1,000		(16)		984		Interest expense	2,237		259		169		2,665		(50)		2,615
Provision for credit losses	Provision for credit losses	520		53		13		586		0		586		Provision for credit losses	675		68		22		765		—		765
Net finance receivables and net investment in operating leases (b)	Net finance receivables and net investment in operating leases (b)	118,006		24,346		4,034		146,386		(8,610)		137,776		Net finance receivables and net investment in operating leases (b)	114,266		22,023		4,329		140,618		(9,137)		131,481
Total assets (c)	Total assets (c)	123,894		27,604		5,295		156,793		0		156,793		Total assets (c)	122,995		25,720		4,859		153,574		—		153,574

First Quarter 2021
First Nine Months 2021														First Nine Months 2021
Total revenue	Total revenue	$	2,384	$	241	$	92	$	2,717	$	0	$	2,717	Total revenue	$	6,808	$	687	$	336	$	7,831	$	—	$	7,831
Income before income taxes	Income before income taxes	996		66		(15)		1,047		(85)		962		Income before income taxes	3,440		202		52		3,694		(32)		3,662
Depreciation on vehicles subject to operating leases	Depreciation on vehicles subject to operating leases	562		6		0		568		0		568		Depreciation on vehicles subject to operating leases	1,185		15		—		1,200		—		1,200
Interest expense	Interest expense	638		80		56		774		30		804		Interest expense	1,804		216		162		2,182		(30)		2,152
Provision for credit losses	Provision for credit losses	(52)		(1)		13		(40)		0		(40)		Provision for credit losses	(284)		(6)		25		(265)		—		(265)
Net finance receivables and net investment in operating leases (b)	Net finance receivables and net investment in operating leases (b)	107,790		22,561		4,838		135,189		(8,051)		127,138		Net finance receivables and net investment in operating leases (b)	98,555		18,943		5,315		122,813		(6,350)		116,463
Total assets	Total assets	116,720		25,110		5,438		147,268		0		147,268		Total assets	108,917		21,163		5,988		136,068		—		136,068

__________

(a)Finance receivables, net and Net investment in operating leases includes unearned interest supplements and residual support, allowance for credit losses, and other (primarily accumulated supplemental depreciation).

(b)Excludes held-for-sale finance receivables.

(c)Amounts have been updated as a result of our adoption of ASU 2019-12, Simplifying the Accounting for Income Taxes. See Note 2 for additional information.

2122

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE ~~12.~~13. COMMITMENTS AND CONTINGENCIES

Commitments and contingencies primarily consist of guarantees and indemnifications ~~and~~as well as litigation and claims.

Guarantees and Indemnifications

Guarantees and indemnifications are recorded at fair value at their inception. For financial guarantees, subsequent to initial recognition, the guarantee liability is adjusted at each reporting period to reflect the current estimate of expected payments resulting from possible default events over the remaining life of the guarantee. The probability of default is applied to the expected exposure at the time of default less recoveries to determine the expected payments. Factors to consider when estimating the probability of default include the obligor’s financial position, forecasted economic environment, historical loss rates, and other communications. For non-financial guarantees, we regularly review our performance risk under these arrangements, and in the event it becomes probable we will be required to perform under a guarantee or indemnity, the amount of probable payment is recorded.

The maximum potential payments under these guarantees and limited indemnities totaled $153 million and ~~$137~~$109 million at December 31, 2020 and ~~March 31,~~September 30, 2021, respectively. Of these values, $62 million and ~~$51~~$25 million at December 31, 2020 and ~~March 31,~~September 30, 2021, respectively, were counter-guaranteed by Ford to us. There were no recorded liabilities related to guarantees and limited indemnities at December 31, 2020 or ~~March 31,~~September 30, 2021.

In some cases, we have guaranteed debt and other financial obligations of outside third parties and unconsolidated affiliates, including Ford. Expiration dates vary, and guarantees will terminate on payment and / or cancellation of the underlying obligation. A payment by us would be triggered by the failure of the third party to fulfill its obligation covered by the guarantee. In some circumstances, we are entitled to recover from a third party amounts paid by us under the guarantee. However, our ability to enforce these rights is sometimes stayed until the guaranteed party is paid in full and may be limited in the event of insolvency of the third party or other circumstances.

In the ordinary course of business, we execute contracts involving indemnifications standard in the industry and indemnifications specific to a transaction. These indemnifications might include and are not limited to claims relating to any of the following: environmental, tax, and shareholder matters; intellectual property rights; governmental regulations and employment-related matters; dealer and other commercial contractual relationships; and financial matters, such as securitizations. Performance under these indemnities generally would be triggered by a breach of the contract brought by a counterparty or a third-party claim. While some of these indemnifications are limited in nature, many of them do not limit potential payment. Therefore, we are unable to estimate a maximum amount of future payments that could result from claims made under these unlimited indemnities.

2223

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE ~~12.~~13. COMMITMENTS AND CONTINGENCIES (Continued)

Litigation and Claims

Various legal actions, proceedings, and claims (generally, “matters”) are pending or may be instituted or asserted against us. These include, but are not limited to, matters arising out of governmental regulations; tax matters; alleged illegal acts resulting in fines or penalties; financial services; employment-related matters; dealer and other contractual relationships; personal injury matters; investor matters; and financial reporting matters. Certain of the pending legal actions are, or purport to be, class actions. Some of the matters involve or may involve claims for compensatory, punitive, or antitrust or other treble damages in very large amounts, sanctions, assessments, or other relief, which, if granted, would require very large expenditures.

The extent of our financial exposure to these matters is difficult to estimate. Many matters do not specify a dollar amount for damages, and many others specify only a jurisdictional minimum. To the extent an amount is asserted, our historical experience suggests that in most instances the amount asserted is not a reliable indicator of the ultimate outcome.

We accrue for matters when losses are deemed probable and reasonably estimable. In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood that we will prevail, and the severity of any potential loss. We reevaluate and update our accruals as matters progress over time.

For nearly all matters where our historical experience with similar matters is of limited value (i.e., “non-pattern matters”), we evaluate the matters primarily based on the individual facts and circumstances. For non-pattern matters, we evaluate whether there is a reasonable possibility of a material loss in excess of any accrual that can be estimated. It is reasonably possible that some of the matters for which accruals have not been established could be decided unfavorably and could require us to pay damages or make other expenditures. On January 9, 2019, FCE received a decision from the Italian Competition Authority (“ICA”), which included an assessment of a fine against FCE in the amount of €42 million (equivalent to ~~$50~~$48 million at ~~March 31,~~September 30, 2021). On March 8, 2019, FCE appealed the decision and the fine to the Italian administrative court, and on November 24, 2020, the Italian administrative court ruled in favor of FCE. On December 23, 2020, the ICA filed an appeal of the Italian administrative court’s decision to the Italian Council of State. While we have determined that an adverse outcome is not probable, the reasonably possible loss could be up to the fine amount.

As noted, the litigation process is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. Our assessments are based on our knowledge and experience, but the ultimate outcome of any matter could require payment substantially in excess of the amount that we have accrued and / or disclosed.

2324

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Recent Developments

Semiconductor Chip Shortage

The automotive industry continues to face a significant shortage of semiconductors due in large part to strong cross-industry demand, which has presented challenges and production disruptions globally, including at Ford’s assembly plants. This shortage has led to lower dealer inventories of both new and used vehicles, resulting in lower ~~non-consumer~~ receivables and higher residual values, as discussed in more detail in the Financial Condition and Residual Risk sections in Item 2 of this Report. Based on the overall recovery rate we are seeing for the industry, we believe the automotive semiconductor shortage ~~may not be fully resolved until 2022.~~will remain fluid and could extend into 2023. For additional information regarding the semiconductor shortage, see the “Recent Developments” section in Item 2 of Ford Motor Company’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~September 30, 2021.

Adoption of New Accounting Standards

Effective January 1, 2021, we adopted Accounting Standards Update ("ASU") 2019-12, which allows for the simplification of accounting for income taxes. As a result, ROE, net income, distributions, leverage, and equity have been updated in the prior comparator periods to reflect the update. This amendment will reduce our U.S. tax allocation and as a result we expect our net income and ROE to increase allowing us to support additional distributions to Ford. Also, as a result of the adoption, our leverage is lower this quarter. We continue to target managed leverage in the range of 8:1 to 9:1 and expect our managed leverage to return to this range later this year. For additional information on the tax accounting change, see Note 2 of our Notes to the Financial Statements.

2425

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Definitions and Information Regarding Causal Factors

In general, we measure year-over-year changes in EBT using the causal factors listed below:

•Volume and Mix – Volume and Mix are primarily reflected within Net financing margin on the consolidated income statements.

◦Volume primarily measures changes in net financing margin driven by changes in average managed receivables at prior period financing margin yield (defined below in financing margin) at prior period exchange rates. Volume changes are primarily driven by the volume of new and used vehicles sold and leased, the extent to which we purchase retail financing and operating lease contracts, the extent to which we provide wholesale financing, the sales price of the vehicles financed, the level of dealer inventories, Ford-sponsored special financing programs available exclusively through us, and the availability of cost-effective funding.

◦Mix primarily measures changes in net financing margin driven by period-over-period changes in the composition of our average managed receivables by product within each region.

•Financing Margin – Financing Margin is reflected within Net financing margin on the consolidated income statements.

◦Financing margin variance is the period-to-period change in financing margin yield multiplied by the present period average managed receivables at prior period exchange rates. This calculation is performed at the product and country level and then aggregated. Financing margin yield equals revenue, less interest expense and scheduled depreciation for the period, divided by average managed receivables for the same period.

◦Financing margin changes are driven by changes in revenue and interest expense. Changes in revenue are primarily driven by the level of market interest rates, cost assumptions in pricing, mix of business, and competitive environment. Changes in interest expense are primarily driven by the level of market interest rates, borrowing spreads, and asset-liability management.

•Credit Loss – Credit Loss is reflected within Provision for credit losses on the consolidated income statements.

◦Credit loss is the change in the provision for credit losses at prior period exchange rates. For analysis purposes, management splits the provision for credit losses into net charge-offs and the change in the allowance for credit losses.

◦Net charge-off changes are primarily driven by the number of repossessions, severity per repossession, and recoveries. Changes in the allowance for credit losses are primarily driven by changes in historical trends in credit losses and recoveries, changes in the composition and size of our present portfolio, changes in trends in historical used vehicle values, and changes in forward looking macroeconomic conditions. For additional information, refer to the “Critical Accounting Estimates - Allowance for Credit Losses” section of Item 7 of Part II of our 2020 Form 10-K Report.

•Lease Residual – Lease Residual is reflected within Depreciation on vehicles subject to operating leases on the consolidated income statements.

◦Lease residual measures changes to residual performance at prior period exchange rates. For analysis purposes, management splits residual performance primarily into residual gains and losses, and the change in accumulated supplemental depreciation.

◦Residual gain and loss changes are primarily driven by the number of vehicles returned to us and sold, and the difference between the auction value and the depreciated value (which includes both base and accumulated supplemental depreciation) of the vehicles sold. Changes in accumulated supplemental depreciation are primarily driven by changes in our estimate of the expected auction value at the end of the lease term and changes in our estimate of the number of vehicles that will be returned to us and sold. Depreciation on vehicles subject to operating leases reflects early termination losses on operating leases due to customer default events. For additional information, refer to the “Critical Accounting Estimates – Accumulated Depreciation on Vehicles Subject to Operating Leases” section of Item 7 of Part II of our 2020 Form 10-K Report.

•Exchange – Reflects changes in EBT driven by the effects of converting functional currency income to U.S. dollars.

•Other – Primarily includes Operating expenses, Other revenue, Insurance expenses, and Other income / (Loss), net on the consolidated income statements at prior period exchange rates.

◦Changes in operating expenses are primarily driven by salaried personnel costs, facilities costs, and costs associated with the origination and servicing of customer contracts.

◦In general, other income / (loss) changes are primarily driven by changes in earnings related to market valuation adjustments to derivatives (primarily related to movements in interest rates), which are included in unallocated risk management, and other miscellaneous items.

2526

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

In addition, the following definitions and calculations apply to the tables contained in Item 2 of this report:

• Cash (as shown in the Funding and Liquidity and Leverage sections) – Cash and cash equivalents and Marketable securities reported on Ford Credit’s balance sheets, excluding amounts related to insurance activities.

• Debt (as shown in the Key Metrics and Leverage tables) – Debt on Ford Credit’s balance sheets. Includes debt issued in securitizations and payable only out of collections on the underlying securitized assets and related enhancements. Ford Credit holds the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions.

• Earnings Before Taxes (“EBT”) – Reflects Income before income taxes as reported on our consolidated income statements.

• Return on Equity (“ROE”) (as shown in the Key Metrics table) – Reflects return on equity calculated by annualizing net income for the period and dividing by monthly average equity for the period.

•Securitization and Restricted Cash (as shown in the Liquidity table) – Securitization cash is held for the benefit of the securitization investors (for example, a reserve fund). Restricted cash is primarily held to meet certain local governmental and regulatory reserve requirements and cash held under the terms of certain contractual agreements.

• Securitizations (as shown in the Public Term Funding Plan table) – Public securitization transactions, Rule 144A offerings sponsored by Ford Credit, and widely distributed offerings by Ford Credit Canada.

• Term Asset-Backed Securities (as shown in the Funding Structure table) – Obligations issued in securitization transactions that are payable only out of collections on the underlying securitized assets and related enhancements.

•Total Net Receivables (as shown in the Key Metrics and Financial Condition tables) – Includes finance receivables (retail financing and wholesale) sold for legal purposes and net investment in operating leases included in securitization transactions that do not satisfy the requirements for accounting sale treatment. These receivables and operating leases are reported on Ford Credit’s balance sheets and are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations of Ford Credit or the claims of Ford Credit’s other creditors.

• Unallocated Other (as shown in the Segment Results table) – Items excluded in assessing segment performance because they are managed at the corporate level, including market valuation adjustments to derivatives and exchange-rate fluctuations on foreign currency-denominated transactions.

2627

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Results of Operations

Key Metrics


		First Quarter									Third Quarter					First Nine Months
GAAP Financial Measures	GAAP Financial Measures	2020			2021			H / (L)				GAAP Financial Measures	2020			2021			H / (L)			2020			2021			H / (L)
Total Net Receivables ($B)	Total Net Receivables ($B)	$	137.8		$	127.1		(8)		%		Total Net Receivables ($B)	$	131.5		$	116.5		(11)		%	$	131.5		$	116.5		(11)		%
Loss-to-Receivables (bps) (a)	Loss-to-Receivables (bps) (a)	62			22			(40)				Loss-to-Receivables (bps) (a)	30			—			(30)			35			5			(30)
Auction values (b)	Auction values (b)	$	19,235		$	21,925		14		%		Auction values (b)	$	22,160		$	28,045		27		%	$	20,490		$	25,150		23		%
EBT ($M)	EBT ($M)	$	30		$	962		$	932			EBT ($M)	$	1,123		$	1,077		$	(46)		$	1,696		$	3,662		$	1,966
ROE (%) (c)	ROE (%) (c)	—		%	22		%	22 ppts				ROE (%) (c)	26.3		%	29.2		%	2.9 ppts			12.7		%	32.3		%	19.6 ppts

Other Balance Sheet Metrics	Other Balance Sheet Metrics											Other Balance Sheet Metrics
Debt ($B)	Debt ($B)	$	136.8		$	126.8		(7)		%		Debt ($B)										$	133.0		$	119.0		(10.5)		%
Net liquidity ($B)	Net liquidity ($B)	$	28.1		$	33.7		20		%		Net liquidity ($B)										$	31.1		$	33.0		5		%
Financial statement leverage (to 1) (c)	Financial statement leverage (to 1) (c)	8.9			8.3			(0.6)				Financial statement leverage (to 1) (c)										8.5			9.6			1.1

__________

(a)United States retail financing only.

(b)United States 36-month off-lease auction values at Q1Q3 2021 mix and YTD amounts at 2021 YTD mix.

(c)Prior period amounts have been updated as a result of our adoption of ASU 2019-12, Simplifying the Accounting for Income Taxes. See Note 2 of our Notes to the Financial Statements for additional information.


Non-GAAP Financial Measures	Non-GAAP Financial Measures	March 31, 2020		March 31, 2021		H / (L)		Non-GAAP Financial Measures	September 30, 2020		September 30, 2021		H / (L)
Managed Receivables ($B) (a)	Managed Receivables ($B) (a)	$	146.4	$	135.2	(8)	%	Managed Receivables ($B) (a)	$	140.6	$	122.8	(12.6)	%
Managed Leverage (to 1) (b) (c)	Managed Leverage (to 1) (b) (c)	8.0		7.3		(0.7)		Managed Leverage (to 1) (b) (c)	7.5		8.4		0.9

__________

(a)See “Financial Condition” section for reconciliation to GAAP.

(b)See “Leverage” section for reconciliation to GAAP.

(c)Prior period amount has been updated as a result of our adoption of ASU 2019-12, Simplifying the Accounting for Income Taxes. See Note 2 of our Notes to the Financial Statements for additional information.

~~First~~Third Quarter 2021 Compared with ~~First~~Third Quarter 2020

The following table shows the factors that contributed to the ~~first~~third quarter 2021 EBT (in millions):

Change in EBT by Causal Factor

~~First~~Third quarter 2020 EBT

301,123

Volume / Mix

~~(48)~~(84)

Financing margin

~~(3)~~(92)

Credit loss

~~625~~145

Lease residual

~~448~~61

Exchange

17—

Other

~~(107)~~(76)

~~First~~Third quarter 2021 EBT

~~962~~1,077

Our ~~first~~third quarter 2021 EBT was ~~$962~~$1,077 million, ~~$932~~$46 million ~~higher~~lower than a year ago, ~~primarily~~ reflecting ~~the non-recurrence of the first quarter 2020 increase~~lower net financing margin due to semiconductor shortages, partially offset by higher auction values, lower charge-offs, and reductions in the credit loss reserve ~~due to COVID-19 as well as favorable auction performance on off-lease vehicles, partially offset by unfavorable performance in market valuation adjustments to derivatives due to rising interest rates.~~reflecting an expectation of lower lifetime losses. ROE was ~~22%~~29.2%, 222.9 percentage points higher than a year ago ~~as a result of higher EBT.~~driven by lower equity. Total net receivables were ~~$10.7~~$15 billion lower than a year ago, ~~an 8%~~a 11% decline. The loss-to-receivables ratio remained at a low level in the ~~first~~third quarter of 2021, at ~~0.22%, 40~~zero basis points, 30 basis points lower than a year ago. ~~First~~Third quarter 2021 ~~United States~~ auction values were ~~14%~~27% higher than a year ago.

Our balance sheet is strong and inherently liquid reflecting cumulative debt maturities having a longer tenor than asset maturities. This means that we generate liquidity as our balance sheet size declines because of lower Ford volume. Managed receivables of ~~$135.2~~$122.8 billion at quarter end were ~~$11.2~~$17.8 billion lower year-over-year. At the end of the ~~first~~third quarter, we had ~~$33.7~~$33.0 billion in net liquidity.

2728

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Segment Results

Results of operations by segment and Unallocated Other for the periods ended ~~March 31~~September 30 are shown below (in millions):


		First Quarter						Third Quarter				First Nine Months
		2020		2021		H / (L)				2020		2021		H / (L)		2020		2021		H / (L)
Results	Results								Results
United States and Canada segment	United States and Canada segment	$	22	$	996	$	974		United States and Canada segment	$	932	$	978	$	46	$	1,399	$	3,440	$	2,041
Europe segment	Europe segment	17		66		49			Europe segment	73		55		(18)		155		202		47
All Other segment	All Other segment	7		(15)		(22)			All Other segment	14		45		31		38		52		14
Total segments earnings before taxes	Total segments earnings before taxes	$	46	$	1,047	$	1,001		Total segments earnings before taxes	$	1,019	$	1,078	$	59	$	1,592	$	3,694	$	2,102
Unallocated other	Unallocated other	(16)		(85)		(69)			Unallocated other	104		(1)		(105)		104		(32)		(136)
Earnings before taxes	Earnings before taxes	$	30	$	962	$	932		Earnings before taxes	$	1,123	$	1,077	$	(46)	$	1,696	$	3,662	$	1,966
Provision for income taxes (a)		36		117		81
Net Income / (loss) (a)		$	(6)	$	845	$	851
Taxes (a)									Taxes (a)	(82)		(97)		(15)		(185)		(186)		(1)
Net Income (a)									Net Income (a)	$	1,041	$	980	$	(61)	$	1,511	$	3,476	$	1,965

(a)Prior period amounts have been updated as a result of our adoption of ASU 2019-12, Simplifying the Accounting for Income Taxes. See Note 2 of our Notes to the Financial Statements for additional information.

For additional information, see Note 1112 of our Notes to the Financial Statements.

United States and Canada Segment

The United States and Canada segment ~~first~~third quarter 2021 EBT of ~~$996~~$978 million was ~~$974~~$46 million higher than ~~first~~third quarter 2020, explained primarily by a reduction in the credit loss reserve in the third quarter of 2021 and favorable operating lease residual performance, partially offset by unfavorable financing margin and lower volume driven by the impact of the global semiconductor shortage. United States and Canada segment first nine months 2021 EBT of $3,440 million was $2,041 million higher than the first nine months 2020, explained primarily by favorable operating lease residual performance, the non-recurrence of the first quarter 2020 increase to the credit loss reserve due to deterioration in macroeconomic conditions related to COVID-19, ~~as well as favorable auction performance on off-lease vehicles.~~and reductions in the credit loss reserve in the first nine months of 2021, partially offset by unfavorable financing margin and lower volume driven by the impact of the global semiconductor shortages.

Europe Segment

The Europe segment ~~first~~third quarter 2021 EBT of ~~$66~~$55 million was ~~$49~~$18 million ~~higher~~lower than ~~first~~third quarter 2020, explained primarily by lower volume reflecting the impact of the global semiconductor shortage on receivables. The Europe segment first nine months 2021 EBT of $202 million was $47 million higher than the first nine months 2020, explained primarily by the non-recurrence of ~~the first quarter 2020 increase to the~~a credit loss reserve increase due to COVID-19 and 2020 restructuring costs, partially offset by lower volume driven by the impact of ~~COVID-19 and~~the global semiconductor shortage ~~impacting~~on receivables.

All Other Segment

The All Other segment ~~first~~third quarter 2021 ~~loss~~EBT of ~~$15~~$45 million was ~~$22~~$31 million ~~lower~~higher than third quarter 2020, explained primarily by restructuring. All Other segment first nine months EBT of $52 million was $14 million higher than first ~~quarter~~nine months 2020, explained primarily by restructuring.

Unallocated Other

Unallocated Other was a ~~$85~~$1 million loss for ~~first~~third quarter 2021, ~~a $69~~$105 million ~~higher loss than first~~deterioration from third quarter 2020, reflecting the non-recurrence of positive market valuation adjustments to derivatives. Unallocated Other first nine months was a $32 million loss and $136 million deterioration from to the first nine months of 2020, explained by unfavorable performance in market valuation adjustments to derivatives due to rising interest rates.

2829

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Financing Shares and Contract Placement Volume

Our focus is on supporting Ford and Lincoln dealers and customers. This includes going to market with Ford and our dealers to support vehicle sales with financing products and marketing programs. Ford’s marketing programs may encourage or require Ford Credit financing and influence the financing choices customers make. As a result, our financing share, volume, and contract characteristics vary from period to period as Ford’s marketing programs change.

The following table shows our retail financing and operating lease share of new Ford and Lincoln brand sales, wholesale financing share of new Ford and Lincoln brand vehicles acquired by dealers (in percent), and contract placement volume for new and used vehicles (in thousands) in several key markets:


		First Quarter				Third Quarter				First Nine Months
		2020		2021				2020		2021		2020		2021
Share of Ford and Lincoln Sales (a)	Share of Ford and Lincoln Sales (a)						Share of Ford and Lincoln Sales (a)
United States	United States	56	%	47	%		United States	55	%	46	%	63	%	47	%
Canada	Canada	63		60			Canada	75		72		69		69
United Kingdom	United Kingdom	44		35			United Kingdom	40		34		42		35
Germany	Germany	44		37			Germany	39		39		39		39
China	China	34		41			China	40		45		37		44

Wholesale Share	Wholesale Share						Wholesale Share
United States	United States	74	%	72	%		United States	74	%	72	%	74	%	72	%
Canada	Canada	47		13			Canada	30		8		42		10
United Kingdom	United Kingdom	100		100			United Kingdom	100		100		100		100
Germany	Germany	93		91			Germany	93		90		93		91
China	China	51		66			China	64		66		60		66

Contract Placement Volume - New and Used (000)	Contract Placement Volume - New and Used (000)						Contract Placement Volume - New and Used (000)
United States	United States	205		196			United States	259		149		761		532
Canada	Canada	23		25			Canada	53		34		101		96
United Kingdom	United Kingdom	30		25			United Kingdom	37		18		80		68
Germany	Germany	29		18			Germany	28		16		76		54
China	China	16		32			China	33		39		77		103

__________

(a)United States and Canada exclude Fleet sales, other markets include ~~Fleet.~~Fleet sales.

United States and ~~United Kingdom~~Canada contract placement volumes in the ~~first~~third quarter of 2021 were ~~lower than a year ago, reflecting decreased share. Germany contract placement volume in the first quarter of 2021 was also~~ lower than a year ago, reflecting lower Ford sales and lower share. United Kingdom and Germany contract placement volume in the third quarter of 2021 was lower than a year ago, reflecting lower Ford sales. China contract placement volume in the ~~first~~third quarter of 2021 was higher than a year ago, primarily reflecting higher ~~Ford sales and higher~~ share.

2930

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Financial Condition

Our receivables, including finance receivables and operating leases, were as follows (in billions):


		March 31, 2020		December 31, 2020		March 31, 2021			September 30, 2020		December 31, 2020		September 30, 2021
Net Receivables	Net Receivables							Net Receivables
United States and Canada Segment	United States and Canada Segment							United States and Canada Segment
Consumer financing	Consumer financing	$	52.8	$	58.4	$	57.4	Consumer financing	$	58.7	$	58.4	$	54.7
Non-Consumer financing	Non-Consumer financing	30.6		19.5		16.8		Non-Consumer financing	21.0		19.5		13.1
Net investment in operating leases	Net investment in operating leases	26.8		26.4		26.3		Net investment in operating leases	26.3		26.4		25.2
Total United States and Canada Segment	Total United States and Canada Segment	$	110.2	$	104.3	$	100.5	Total United States and Canada Segment	$	106.0	$	104.3	$	93.0

Europe Segment	Europe Segment							Europe Segment
Consumer financing	Consumer financing	$	14.2	$	15.1	$	14.3	Consumer financing	$	14.5	$	15.1	$	13.4
Non-Consumer financing	Non-Consumer financing	9.3		7.4		7.3		Non-Consumer financing	6.5		7.4		4.7
Net investment in operating leases	Net investment in operating leases	0.2		0.3		0.3		Net investment in operating leases	0.3		0.3		0.3
Total Europe Segment	Total Europe Segment	$	23.7	$	22.8	$	21.9	Total Europe Segment	$	21.3	$	22.8	$	18.4

All Other Segment	All Other Segment							All Other Segment
Consumer financing	Consumer financing	$	2.8	$	3.4	$	3.6	Consumer financing	$	3.0	$	3.4	$	3.9
Non-Consumer financing	Non-Consumer financing	1.1		1.2		1.1		Non-Consumer financing	1.2		1.2		1.2
Net investment in operating leases	Net investment in operating leases	—		—		—		Net investment in operating leases	—		—		—
Total Other Segment	Total Other Segment	$	3.9	$	4.6	$	4.7	Total Other Segment	$	4.2	$	4.6	$	5.1

Total net receivables	Total net receivables	$	137.8	$	131.7	$	127.1	Total net receivables	$	131.5	$	131.7	$	116.5

Managed Receivables	Managed Receivables							Managed Receivables
Total net receivables (GAAP)	Total net receivables (GAAP)	$	137.8	$	131.7	$	127.1	Total net receivables (GAAP)	$	131.5	$	131.7	$	116.5
Unearned interest supplements and residual support	Unearned interest supplements and residual support	6.3		6.5		6.0		Unearned interest supplements and residual support	6.7		6.5		4.8
Allowance for credit losses	Allowance for credit losses	1.2		1.3		1.2		Allowance for credit losses	1.3		1.3		1.0
Other, primarily accumulated supplemental depreciation	Other, primarily accumulated supplemental depreciation	1.1		1.0		0.9		Other, primarily accumulated supplemental depreciation	1.1		1.0		0.5
Total managed receivables (Non-GAAP)	Total managed receivables (Non-GAAP)	$	146.4	$	140.5	$	135.2	Total managed receivables (Non-GAAP)	$	140.6	$	140.5	$	122.8

At ~~March 31,~~September 30, 2020, December 31, 2020, and ~~March 31,~~September 30, 2021, total net receivables includes consumer receivables before allowance for credit losses of ~~$37.0~~$41.1 billion, $43.7 billion, and ~~$41.2~~$37.3 billion, respectively, and non-consumer receivables before allowance for credit losses of ~~$25.7~~$17.4 billion, $16.4 billion, and ~~$15.3~~$12.3 billion, respectively, that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. In addition, at ~~March 31,~~September 30, 2020, December 31, 2020, and ~~March 31,~~September 30, 2021, total net receivables includes net investment in operating leases of ~~$14.4~~$14.6 billion, $12.8 billion, and ~~$10.0~~$8.8 billion, respectively, that have been included in securitization transactions but continue to be reported in our consolidated financial statements. The receivables and net investment in operating leases are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations or the claims of our other creditors. We hold the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions. For additional information on our securitization transactions, refer to the “Securitization Transactions” and “On-Balance Sheet Arrangements” sections of Item 7 of Part II of our 2020 Form 10-K Report and Note 6 of our Notes to the Financial Statements for the period ended ~~March 31,~~September 30, 2021.

Total net receivables at ~~March 31,~~September 30, 2021 were ~~$10.7~~$15.0 billion lower compared with ~~March 31,~~September 30, 2020 and ~~$4.6~~$15.2 billion lower compared with December 31, 2020, primarily reflecting lower wholesale receivables as a result of lower dealer inventories due to the semiconductor shortage.

Our operating lease portfolio was ~~21%~~22% of total net receivables at ~~March 31,~~September 30, 2021. Leasing is an important product, and our leasing strategy balances sales, share, residuals, and long-term profitability. Operating leases in the United States and Canada represent 99% of our total operating lease portfolio.

3031

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Credit Risk

Credit risk is the possibility of loss from a customer’s or dealer’s failure to make payments according to contract terms. Credit losses are a normal part of a lending business, and credit risk has a significant impact on our business. We manage the credit risk of our consumer (retail financing) and non-consumer (dealer financing) receivables to balance our level of risk and return using our consistent underwriting standards, effective proprietary scoring system (discussed below), and world-class servicing. The allowance for credit losses (also referred to as the credit loss reserve) represents our estimate of the expected credit losses inherent in our finance receivables for the lifetime of those receivables as of the balance sheet date. The allowance for credit losses is estimated using a combination of models and management judgment and is based on such factors as historical loss performance, portfolio quality, receivable levels, and forward-looking macroeconomic scenarios. The adequacy of our allowance for credit losses is assessed quarterly and the assumptions and models used in establishing the allowance are evaluated regularly.

Most of our charge-offs are related to retail financing. ~~Charge-offs~~Net charge-offs are affected by the number of vehicle repossessions, the unpaid balance outstanding at the time of repossession, the auction price of repossessed vehicles, and other amounts owed. We also incur credit losses on our dealer financing, but default rates for these receivables historically have been substantially lower than those for retail financing.

In purchasing retail financing contracts, we use a proprietary scoring system that measures credit quality using information infrom sources including the credit application, proposed contract terms, credit bureau data, and other information. After a proprietary risk score is generated, we decide whether to purchase a contract using a decision process based on a judgmental evaluation of the applicant, the credit application, the proposed contract terms, credit bureau information (e.g., FICO score), proprietary risk score, and other information. Our evaluation emphasizes the applicant’s ability to pay and the applicant’s creditworthiness ~~focusing~~with a focus on payment, affordability, applicant credit history, and stability as key considerations. While FICO is a part of our scoring system, our models enable us to more effectively determine the probability that a customer will pay than using credit scores alone. When we originate business, our models project expected losses and we price accordingly. We ensure the business fits our risk appetite.

For additional information on our allowance for credit losses and the quality of our receivables, ~~and COVID-19 impacts,~~ see Note 4 of our Notes to the Financial Statements.

United States Origination Metrics

The following table shows United States retail financing and operating lease average placement FICO and higher risk portfolio mix metrics. Also shown are extended term mix and United States retail financing average placement terms.


		First Quarter				Third Quarter				First Nine Months
		2020		2021				2020		2021		2020		2021
Origination Metrics	Origination Metrics						Origination Metrics
Average placement FICO	Average placement FICO	739		748			Average placement FICO	738		751		740		748
Higher risk portfolio mix	Higher risk portfolio mix	6	%	6	%		Higher risk portfolio mix	6	%	5	%	6	%	5	%
Greater than or equal to 84 months placement mix	Greater than or equal to 84 months placement mix	7	%	4	%		Greater than or equal to 84 months placement mix	4	%	3	%	9	%	4	%
Average placement term (months)	Average placement term (months)	66		64			Average placement term (months)	67		62		69		63

Our ~~first~~third quarter 2021 average placement FICO score increased compared with the same period a year ago, and remained strong. We support customers across the credit spectrum. Our higher risk business, as classified at contract inception, ~~consistently~~ represents 6%5% of our portfolio and has been stable for over 15 years.

During the ~~first~~third quarter of 2021, our average retail financing placement term decreased by ~~two~~five months from a year ~~ago, and retail~~ago. Retail financing contracts of 84 months and longer decreased from a year ago, ~~and have returned to normal levels~~ and continue to be a small part of our business. We remain focused on managing the trade cycle—building customer relationships and loyalty while offering financing products and terms that customers want. Our origination and risk management processes deliver robust portfolio performance.

3132

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

United States Retail Financing Credit Losses

The following table shows the primary drivers of credit losses in the United States retail financing business, which comprised ~~64%~~68% of our worldwide consumer finance receivables at ~~March 31,~~September 30, 2021.


		First Quarter						Third Quarter					First Nine Months
		2020			2021					2020			2021			2020			2021
Credit Loss Drivers	Credit Loss Drivers								Credit Loss Drivers
Over-60-Day delinquencies (excl. bankruptcies)	Over-60-Day delinquencies (excl. bankruptcies)	0.16		%	0.13		%		Over-60-Day delinquencies (excl. bankruptcies)	0.13		%	0.11		%	0.15		%	0.11		%
Repossessions (000)	Repossessions (000)	7			5				Repossessions (000)	5			3			15			11
Repossession ratio	Repossession ratio	1.24		%	0.92		%		Repossession ratio	1.04		%	0.71		%	0.93		%	0.75		%
Loss severity (000) (a)	Loss severity (000) (a)	$	11.4		$	10.6			Loss severity (000) (a)	$	9.8		$	8.3		$	10.7		$	8.9
Charge-offs ($M)		$	73		$	29
Net charge-offs ($M)									Net charge-offs ($M)	$	39		$	—		$	131		$	20
LTR ratio (%) (b)	LTR ratio (%) (b)	0.62		%	0.22		%		LTR ratio (%) (b)	0.30		%	—		%	0.35		%	0.05		%

__________

(a)The expected difference between the amount a customer owes when the finance contract is charged off and the amount received, net of expenses, from selling the repossessed vehicle.

(b) Loss-to-Receivables (“LTR”) ratios are net charge-offs divided by average managed receivables.

Delinquencies and net charge-offs remained at low levels induring the third quarter. The ~~first~~third quarter 2021 ~~repossession ratio~~repossessions and ~~LTR~~repossession ratio were lower than a year ~~ago.~~ago, when involuntary repossessions resumed after being temporarily suspended due to COVID-19. Our ~~favorable~~ LTR ratio and net charge-offs of zero in the ~~first~~third quarter of 2021 reflect government ~~relief programs and~~stimulus, changes in consumer spending ~~behavior.~~behavior, and high vehicle collateral values that contributed to historically low losses. The impact of COVID-19 has created significant volatility in the economy, and while the ~~full~~macroeconomic outlook has improved since the onset of the pandemic, the future impact ~~of COVID-19~~ on our retail ~~customers is~~credit losses remains uncertain.

Worldwide Credit Losses

The following table shows key metrics related to worldwide credit losses:


		First Quarter						Third Quarter					First Nine Months
		2020			2021					2020			2021			2020			2021
Charge-offs ($M)		$	101		$	41
Net charge-offs ($M)									Net charge-offs ($M)	$	67		$	9		$	213		$	51
LTR ratio (%)	LTR ratio (%)	0.35		%	0.16		%		LTR ratio (%)	0.24		%	0.04		%	0.25		%	0.07		%
Credit loss reserve ($M)	Credit loss reserve ($M)	$	1,231		$	1,223			Credit loss reserve ($M)	$	1,314		$	984		$	1,314		$	984
Reserve as percent of EOP Managed Receivables	Reserve as percent of EOP Managed Receivables	1.07		%	1.17		%		Reserve as percent of EOP Managed Receivables	1.19		%	1.04		%	1.19		%	1.04		%

Our worldwide credit loss metrics remain strong. ~~The~~Net charge-offs and the worldwide LTR ratio in the ~~first~~third quarter of 2021 improved from a year ago reflecting government stimulus in response to the COVID-19 ~~pandemic.~~ pandemic and high vehicle collateral values.

Our credit loss reserve is based on such factors as historical loss performance, portfolio quality, receivables level, and forward-looking macroeconomic scenarios. The credit loss reserve was lower than a year ago, ~~but~~reflecting an improved macroeconomic outlook since the ~~reserve as a percent~~onset of ~~managed receivables was higher than a year ago reflecting portfolio mix of lower wholesale receivables.~~the pandemic. The credit loss reserve at ~~March 31,~~September 30, 2021 considers the remaining economic ~~conditions~~uncertainty attributable to COVID-19, such as elevated unemployment levels, and assumes that higher levels of retail delinquencies and charge-offs will occur in future periods asonce economic stimulus ~~ends~~ and rent and mortgage forbearance programs ~~expire.~~end. The full impact of COVID-19 on our worldwide credit losses depends on future developments, such as the ~~ultimate duration and scope~~containment of the outbreak (including ~~any potential future waves and~~ the success of vaccination ~~programs)~~programs and efficacy against new variants), and resolution of macroeconomic uncertainty in the labor market and ~~the extent to which our customers and dealers are able to utilize government relief and payment deferral programs.~~supply chain. Our credit loss reserve reflects lifetime expected losses as of the balance sheet date and is adjusted accordingly based on our assessment of the portfolio and economic trends and conditions. During the ~~first~~third quarter of 2021, we reduced our reserve primarily due to improvements in the economic outlook that caused us to lower our expectation of lifetime losses attributable to macroeconomic assumptions driven by COVID-19. See Note 4 of our Notes to the Financial Statements for more information.

3233

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Residual Risk

Leasing is an important product that many customers want and value, and operating lease customers also are more likely to buy or lease another Ford or Lincoln vehicle. We manage our lease share with an enterprise view to support sales, protect residual values, and manage the trade cycle. Ford Credit and Ford work together under a leasing strategy that considers share, term, model mix, geography, and other factors.

We are exposed to residual risk on operating leases and similar balloon payment products where the customer may return the financed vehicle to us. Residual risk is the possibility that the amount we obtain from returned vehicles will be less than our estimate of the expected residual value for the vehicle. We estimate the expected residual value by evaluating recent auction values, return volumes for our leased vehicles, industry wide used vehicle prices, marketing incentive plans, and vehicle quality data. For operating leases, changes in expected residual values impact depreciation expense, which is recognized on a straight-line basis over the life of the lease.

For additional information on our residual risk on operating leases, refer to the “Critical Accounting Estimates – Accumulated Depreciation on Vehicles Subject to Operating Leases” section of Item 7 of Part II of our 2020 Form 10-K Report.

United States Ford and Lincoln Brand Operating Leases

The following table shows share of Ford and Lincoln brand retail financing and operating lease sales, placement volume, and residual performance metrics for our United States operating lease portfolio, which represents ~~85%~~84% of our total net investment in operating leases at ~~March 31,~~September 30, 2021.


		First Quarter						Third Quarter					First Nine Months
		2020			2021					2020			2021			2020			2021
Lease Share of Retail Sales	Lease Share of Retail Sales								Lease Share of Retail Sales
Ford Credit	Ford Credit	22		%	16		%		Ford Credit	18		%	15		%	18		%	16		%
Industry (a)	Industry (a)	31		%	26		%		Industry (a)	27		%	23		%	29		%	25		%

Placement Volume (000)	Placement Volume (000)								Placement Volume (000)
24-Month	24-Month	11			10				24-Month	12			12			32			33
36-Month	36-Month	38			41				36-Month	59			28			133			106
39-Month / Other	39-Month / Other	21			11				39-Month / Other	4			3			32			23
Total	Total	70			62				Total	75			43			197			162

Residual Performance	Residual Performance								Residual Performance
Return rates	Return rates	76		%	61		%		Return rates	63		%	24		%	71		%	39		%
Return volume (000)	Return volume (000)	67			51				Return volume (000)	65			21			190			108
Off-lease auction values (b)	Off-lease auction values (b)	$	19,235		$	21,925			Off-lease auction values (b)	$	22,160		$	28,045		$	20,490		$	25,150

__________

(a)Source: J.D. Power PIN.

(b)36-month off-lease auction values; quarterly amounts at Q1Q3 2021 mix and YTD amounts at 2021 YTD mix.

Our United States operating lease share of retail sales in the ~~first~~third quarter of 2021 was lower compared with a year ago and remains well below the industry average, reflecting the Ford sales mix. Our ~~first~~third quarter 2021 total lease placement volume was down compared with a year ago, ~~primarily~~ reflecting lower ~~lease share~~total industry volume, lower Ford retail deliveries, and lower Ford Credit share ~~partially offset by higher industry volume.~~of Ford retail sales.

Lease return volume and return rate in the ~~first~~third quarter of 2021 were down from a year ago, reflecting improved auction values, as a result of lower dealer inventories due to the semiconductor shortage. Our ~~first~~third quarter 2021 36-month off-lease auction values were up ~~14%~~27% year-over-year, ~~and up 7% compared with fourth quarter 2020, performing better than expected. We are now forecasting 2021 full-year 36-month off-lease auction values~~reflecting continued strong demand for used vehicles including the impact of lower new vehicle production due to ~~be higher than 2020, consistent with third party estimates.~~the semiconductor shortage.

3334

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Credit Ratings

Our short-term and long-term debt is rated by four credit rating agencies designated as nationally recognized statistical rating organizations (“NRSROs”) by the United States Securities and Exchange Commission: DBRS, Fitch, Moody’s, and S&P.

In several markets, locally recognized rating agencies also rate us. A credit rating reflects an assessment by the rating agency of the credit risk associated with a corporate entity or particular securities issued by that entity. Rating agencies’ ratings of us are based on information provided by us and other sources. Credit ratings assigned to us from all of the NRSROs are closely associated with their opinions on Ford. Credit ratings are not recommendations to buy, sell, or hold securities and are subject to revision or withdrawal at any time by the assigning rating agency. Each rating agency may have different criteria for evaluating company risk and, therefore, ratings should be evaluated independently for each rating agency.

~~The following~~There have been no rating actions ~~were~~ taken by these NRSROs since the filing of our ~~2020~~Quarterly Report on Form ~~10-K Report:~~

•~~On March 29, 2021, Moody’s affirmed~~10-Q the ~~credit rating for Ford Credit at Ba2 and revised the outlook to stable, from negative.~~quarter ended June 30, 2021.

The following table summarizes certain of the credit ratings and outlook presently assigned by these four NRSROs:

NRSRO RATINGS

Ford Credit

NRSROs

Long-Term Senior Unsecured

Short -Term Unsecured

Outlook/Trend

Minimum
Long-Term Investment Grade Rating

DBRS

BB (high)

R-4

~~Negative~~Stable

BBB (low)

Fitch

BB+

~~Negative~~Stable

BBB-

Moody’s

Ba2

Stable

Baa3

S&P

BB+

Negative

BBB-

3435

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Funding and Liquidity

We ended the ~~first~~third quarter of 2021 with ~~$33.7~~$33.0 billion of liquidity. During the quarter, we completed $5$4 billion of public term funding.

Key elements of our funding strategy include:

•Maintain strong ~~liquidity; continue to renew and expand committed ABS capacity~~liquidity

•Prudently access public markets

•Flexibility to increase ABS mix as needed; preserving assets and committed capacity

•Target managed leverage of 8:1 to 9:1

•Maintain self-liquidating balance sheet

Our liquidity profile continues to be diverse, robust, and focused on maintaining liquidity levels that meet our business and funding requirements. We regularly stress test our balance sheet and liquidity to ensure that we continue to meet our financial obligations through economic cycles.

The following table shows funding for our managed receivables (in billions):


Funding Structure	Funding Structure	March 31, 2020			December 31, 2020			March 31, 2021			Funding Structure	September 30, 2020			December 31, 2020			September 30, 2021
Term unsecured debt	Term unsecured debt	$	75.4		$	76.6		$	69.4		Term unsecured debt	$	74.0		$	76.6		$	65.2
Term asset-backed securities	Term asset-backed securities	55.7			54.6			50.2			Term asset-backed securities	53.2			54.6			45.1
Ford Interest Advantage / Deposits	Ford Interest Advantage / Deposits	5.7			6.5			7.2			Ford Interest Advantage / Deposits	5.9			6.5			8.6
Other (a)	Other (a)	5.4			5.7			7.2			Other (a)	6.5			5.7			5.8
Equity (a)	Equity (a)	15.5			15.6			15.3			Equity (a)	15.6			15.6			12.4
Adjustments for cash	Adjustments for cash	(11.3)			(18.5)			(14.1)			Adjustments for cash	(14.6)			(18.5)			(14.3)
Total Managed Receivables (b)	Total Managed Receivables (b)	$	146.4		$	140.5		$	135.2		Total Managed Receivables (b)	$	140.6		$	140.5		$	122.8

Securitized Funding as a percent of Managed Receivables	Securitized Funding as a percent of Managed Receivables	38.1		%	38.8		%	37.1		%	Securitized Funding as a percent of Managed Receivables	37.8		%	38.8		%	36.7		%

__________

(b)Reconciliation to GAAP provided in the Financial Condition section.

Managed receivables of ~~$135.2~~$122.8 billion as of ~~March 31,~~September 30, 2021, were funded primarily with term unsecured debt and term asset-backed securities. Securitized funding as a percent of managed receivables was ~~37.1%~~36.7% at the end of the ~~first~~third quarter. The calendarization of the funding plan will result in quarterly fluctuations of the securitized funding percentage.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

Public Term Funding Plan

The following table shows our issuances for full year 2019 and 2020, planned issuances for full year 2021, and our global public term funding issuances through ~~April 27,~~October 26, 2021, excluding short-term funding programs (in billions):


		2019 Actual		2020 Actual		2021 Forecast	Through April 27			2019 Actual		2020 Actual		2021 Forecast	Through October 26
Unsecured	Unsecured	$	17	$	14	$ 5 - 9	$	1	Unsecured	$	17	$	14	$ 5 - 7	$	5
Securitizations	Securitizations	14		13		7 - 10	5		Securitizations	14		13		8 - 9	8
Total public	Total public	$	31	$	27	$ 12 - 19	$	6	Total public	$	31	$	27	$ 13 - 16	$	13

For 2021, we now project full year public term funding in the range of ~~$12~~$13 billion to ~~$19~~$16 billion. Public funding is significantly reduced from 2019 and 2020, reflecting our smaller balance sheet. Through ~~April 27,~~October 26, 2021, we have completed $6$13 billion of public term issuances.

Liquidity

We define gross liquidity as cash, cash equivalents, and marketable securities (excluding amounts related to insurance activities) and committed capacity (which includes our asset-backed facilities and unsecured credit facilities), less utilization of liquidity. Utilization of liquidity is the amount funded under our liquidity sources and also includes the cash required to support securitization transactions and restricted cash. Net liquidity available for use is defined as gross liquidity less certain adjustments as described below. While not included in available liquidity, these adjustments represent additional funding sources for future originations.

The following table shows our liquidity sources and utilization (in billions):

March 31,
2020 December 31,
2020 March 31,
2021
Liquidity Sources
Cash $ 11.3 $ 18.5 $ 14.1
Committed asset-backed facilities 35.9 38.1 38.2
Other unsecured credit facilities 2.8 2.5 2.5
   Total liquidity sources $ 50.0 $ 59.1 $ 54.8
Utilization of Liquidity
Securitization and restricted cash $ (3.1) $ (3.9) $ (5.4)
Committed asset-backed facilities (18.6) (16.7) (11.9)
Other unsecured credit facilities (0.5) (0.5) (0.6)
   Total utilization of liquidity $ (22.2) $ (21.1) $ (17.9)
Gross liquidity $ 27.8 $ 38.0 $ 36.9
Asset-backed capacity in excess of eligible receivables and other adjustments 0.3 (2.6) (3.2)
   Net liquidity available for use $ 28.1 $ 35.4 $ 33.7

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

~~Liquidity (Continued)~~


	September 30, 2020		December 31, 2020		September 30, 2021
Liquidity Sources
Cash	$	14.6	$	18.5	$	14.3
Committed asset-backed facilities	37.4		38.1		37.7
Other unsecured credit facilities	2.4		2.5		2.7
Total liquidity sources	$	54.4	$	59.1	$	54.7

Utilization of Liquidity
Securitization and restricted cash	$	(3.5)	$	(3.9)	$	(6.1)
Committed asset-backed facilities	(17.4)		(16.7)		(11.5)
Other unsecured credit facilities	(0.5)		(0.5)		(0.4)
Total utilization of liquidity	$	(21.4)	$	(21.1)	$	(18.0)

Gross liquidity	$	33.0	$	38.0	$	36.7
Asset-backed capacity in excess of eligible receivables and other adjustments	(1.9)		(2.6)		(3.7)
Net liquidity available for use	$	31.1	$	35.4	$	33.0

Our net liquidity available for use will fluctuate quarterly based on factors including near-term debt maturities, receivable growth and decline, and timing of funding transactions. At ~~March 31,~~September 30, 2021, our net liquidity available for use was ~~$33.7~~$33.0 billion, ~~$1.7~~$2.4 billion lower than year-end 2020. At ~~March 31,~~September 30, 2021, our liquidity sources including cash, committed asset-backed facilities, and unsecured credit facilities totaled ~~$54.8~~$54.7 billion, down ~~$4.3~~$4.4 billion from year-end 2020.

Cash. At ~~March 31,~~September 30, 2021, our Cash totaled ~~$14.1~~$14.3 billion, compared with $18.5 billion at year-end 2020. In the normal course of our funding activities, we may generate more proceeds than are required for our immediate funding needs. These excess amounts are held primarily in highly liquid investments, which provide liquidity for our anticipated and unanticipated cash needs and give us flexibility in the use of our other funding programs. Our Cash primarily includes United States Department of Treasury obligations, federal agency securities, bank time deposits with investment-grade institutions, investment-grade commercial paper, debt obligations of a select group of non-U.S. governments, non-U.S. governmental agencies, supranational institutions, non-U.S. central banks, and money market funds that carry the highest possible ratings.

The average maturity of these investments ranges from approximately three to six months and is adjusted based on market conditions and liquidity needs. We monitor our cash levels and average maturity on a daily basis. Cash includes restricted cash and amounts to be used only to support our securitization transactions of $3.9 billion and ~~$5.4~~$6.1 billion at December 31, 2020 and ~~March 31,~~September 30, 2021, respectively. The increase is primarily due to cash required to support our United States wholesale trust as a result of the decline in the receivable balance.

Material Cash Requirements. Our material cash requirements include: (1) the purchase of retail financing and operating lease contracts from dealers and providing wholesale financing for dealers to finance new and used vehicles; and (2) debt repayments (for additional information on debt, see the “Balance Sheet Liquidity Profile” section below and the “Aggregate Contractual Obligations” section in Item 7 and Note 9 of the Notes to the Financial Statements in our 2020 Form 10-K Report). In addition, subject to approval by our Board of Directors, shareholder distributions may require the expenditure of a material amount of cash. Moreover, we may be subject to additional material cash requirements that are contingent upon the occurrence of certain events, e.g., legal contingencies, uncertain tax positions, and other matters.

We plan to utilize our liquidity (as described above) and our cash flows from business operations to fund our material cash requirements.

Committed Capacity. At ~~March 31,~~September 30, 2021, our committed capacity totaled ~~$40.7~~$40.4 billion, compared with $40.6 billion at December 31, 2020. Our committed capacity is primarily comprised of committed ABS facilities from bank-sponsored commercial paper conduits and other financial institutions and committed unsecured credit facilities with financial institutions.

Committed Asset-Backed Facilities. We and our subsidiaries have entered into agreements with a number of bank-sponsored asset-backed commercial paper conduits and other financial institutions. Such counterparties are contractually committed, at our option, to purchase from us eligible retail financing receivables or to purchase or make advances under asset-backed securities backed by retail financing or wholesale finance receivables or operating leases for proceeds of up to ~~$38.2~~$37.7 billion ($~~22.0~~21.0 billion of retail financing, ~~$4.8~~$4.6 billion of wholesale financing, and ~~$11.4~~$12.1 billion of operating leases) at ~~March 31,~~September 30, 2021. In the United States, we are able to obtain funding within two days of our unutilized capacity in some of our committed asset-backed facilities. These committed facilities have varying maturity dates, with ~~$14.2~~$12.8 billion having maturities within the next twelve months and the remaining balance having maturities through first quarter ~~2023.~~2024. We plan capacity renewals to protect our global funding needs and to optimize capacity utilization.

Our ability to obtain funding under these facilities is subject to having a sufficient amount of eligible assets as well as our ability to obtain interest rate hedging arrangements for certain facilities. At ~~March 31,~~September 30, 2021, ~~$11.9~~$11.5 billion of these commitments were in use and we had ~~$3.9~~$4.2 billion of asset-backed capacity that was in excess of eligible receivables primarily due to the decline in wholesale asset balances. These facilities are free of material adverse change clauses, restrictive financial covenants (for example, debt-to-equity limitations and minimum net worth requirements), and generally, credit rating triggers that could limit our ability to obtain funding. However, the unused portion of these commitments may be terminated if the performance of the underlying assets deteriorates beyond specified levels. Based on our experience and knowledge as servicer of the related assets, we do not expect any of these commitments to be terminated due to such events.

As of ~~March 31,~~September 30, 2021, Ford Bank GmbH (“Ford Bank”) had liquidity of €288 million (equivalent to $333 million) in the form of ~~€123 million (equivalent to $144 million) of senior ABS notes~~ eligible ~~for~~ collateral in the European Central Bank’s monetary policy programs.

Unsecured Credit Facilities. At ~~March 31,~~September 30, 2021, we and our majority-owned subsidiaries had ~~$2.5~~$2.7 billion of contractually committed unsecured credit facilities with financial institutions, including the FCE Credit Agreement and the Ford Bank Credit Agreement. At ~~March 31,~~September 30, 2021, ~~$1.9~~$2.3 billion was available for use.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

~~Liquidity (Continued)~~

FCE’s £780 million (equivalent to ~~$1,074~~$1,049 million at ~~March 31,~~September 30, 2021) syndicated credit facility (the “FCE Credit Agreement”) and Ford Bank’s €240 million (equivalent to ~~$282~~$278 million at ~~March 31,~~September 30, 2021) syndicated credit facility (the “Ford Bank Credit Agreement”) both mature in 2023, except for £95 million of the FCE Credit Agreement that matures in 2022. At ~~March 31,~~September 30, 2021, all £780 million under the FCE Credit Agreement and ~~all €240~~€225 million under the Ford Bank Credit Agreement were available for use.

Both the FCE Credit Agreement and Ford Bank Credit Agreement contain certain covenants, including an obligation for FCE and Ford Bank to maintain their ratio of regulatory capital to risk-weighted assets at no less than the applicable regulatory minimum. The FCE Credit Agreement requires the support agreement between FCE and Ford Credit to remain in effect (and enforced by FCE to ensure that its net worth is maintained at no less than $500 million). The Ford Bank Credit Agreement requires a guarantee of Ford Bank’s obligations under the agreement, provided by Ford Credit, to remain in effect.

Balance Sheet Liquidity Profile

We define our balance sheet liquidity profile as the cumulative maturities, including the impact of expected prepayments and allowance for credit losses of our finance receivables, investment in operating leases, and cash, less the cumulative debt maturities over upcoming annual periods. Our balance sheet is inherently liquid because of the short-term nature of our finance receivables, investment in operating leases, and cash. We ensure our cumulative debt maturities have a longer tenor than our cumulative asset maturities. This positive maturity profile is intended to provide additional liquidity after all of our assets have been funded and is in addition to ~~our~~ liquidity available to protect for stress ~~test.~~scenarios.

The following table shows our cumulative maturities for assets and total debt for the periods presented and unsecured long-term debt maturities in the individual periods presented (in billions):


		April - December 2021		2022		2023		2024 & Beyond			October - December 2021		2022		2023		2024 & Beyond
Balance Sheet Liquidity Profile	Balance Sheet Liquidity Profile									Balance Sheet Liquidity Profile
Assets (a)	Assets (a)	$	64	$	95	$	120	$	147	Assets (a)	$	39	$	73	$	101	$	136
Total debt (b)	Total debt (b)	46		74		92		126		Total debt (b)	27		58		79		118
Memo: Unsecured long-term debt maturities	Memo: Unsecured long-term debt maturities	10		14		11		30		Memo: Unsecured long-term debt maturities	3		14		11		33

__________

(a)Includes gross finance receivables less the allowance for credit losses, investment in operating leases net of accumulated depreciation, and cash. Amounts shown include the impact of expected prepayments.

(b)Excludes unamortized debt (discount) / premium, unamortized issuance costs, and fair value adjustments.

Maturities of investment in operating leases consist primarily of the portion of rental payments attributable to depreciation over the remaining life of the lease and the expected residual value at lease termination. Maturities of finance receivables and investment in operating leases in the table above include expected prepayments for our retail installment sale contracts and investment in operating leases. The table above also reflects adjustments to debt maturities to match the asset-backed debt maturities with the underlying asset maturities.

All wholesale securitization transactions and wholesale receivables are shown maturing in the next 12 months, even if the maturities extend beyond ~~first~~third quarter 2022. The retail securitization transactions under certain committed asset-backed facilities are assumed to amortize immediately rather than amortizing after the expiration of the commitment period. As of ~~March 31,~~September 30, 2021, we had ~~$147~~$136 billion of assets, ~~$76~~$72 billion of which were unencumbered. For additional information on finance receivables, investment in operating leases, and debt, see Notes 4, 5, and 9 of our Notes to the Financial Statements.

Funding and Liquidity Risks

Our funding plan is subject to risks and uncertainties, many of which are beyond our control, including disruption in the capital markets, that could impact both unsecured debt and asset-backed securities issuance and the effects of regulatory changes on the financial markets. Refer to the “Funding and Liquidity Risks” section of Item 7 of Part II of our 2020 Form 10-K Report for more information.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Leverage

We use leverage, or the debt-to-equity ratio, to make various business decisions, including evaluating and establishing pricing for finance receivable and operating lease financing, and assessing our capital structure. We refer to our shareholder’s interest as equity.

The following table shows the calculation of our financial statement leverage and managed leverage (in billions):


		March 31, 2020		December 31, 2020		March 31, 2021			September 30, 2020		December 31, 2020		September 30, 2021
Leverage Calculation	Leverage Calculation							Leverage Calculation
Debt	Debt	$	136.8	$	137.7	$	126.8	Debt	$	133.1	$	137.7	$	119.0
Adjustments for cash	Adjustments for cash	(11.3)		(18.5)		(14.1)		Adjustments for cash	(14.6)		(18.5)		(14.3)
Adjustments for derivative accounting	Adjustments for derivative accounting	(1.6)		(1.5)		(0.8)		Adjustments for derivative accounting	(1.6)		(1.5)		(0.8)
Total adjusted debt	Total adjusted debt	$	123.9	$	117.7	$	111.9	Total adjusted debt	$	116.9	$	117.7	$	103.9

Equity (a)	Equity (a)	$	15.5	$	15.6	$	15.3	Equity (a)	$	15.6	$	15.6	$	12.4
Adjustments for derivative accounting	Adjustments for derivative accounting	—		0.1		—		Adjustments for derivative accounting	0.1		0.1		0.1
Total adjusted equity (a)	Total adjusted equity (a)	$	15.4	$	15.7	$	15.3	Total adjusted equity (a)	$	15.7	$	15.7	$	12.5

Financial statement leverage (to 1) (GAAP) (a)	Financial statement leverage (to 1) (GAAP) (a)	8.9		8.8		8.3		Financial statement leverage (to 1) (GAAP) (a)	8.5		8.8		9.6
Managed leverage (to 1) (Non-GAAP) (a)	Managed leverage (to 1) (Non-GAAP) (a)	8.0		7.5		7.3		Managed leverage (to 1) (Non-GAAP) (a)	7.5		7.5		8.4

__________

Note: Numbers may not sum due to rounding.

We plan our managed leverage by considering market conditions and the risk characteristics of our business. At ~~March 31,~~September 30, 2021, our financial statement leverage was ~~8.3:~~9.6:1, and managed leverage was ~~7.3:~~8.4:1. We target managed leverage in the range of 8:1 to 9:~~1 and expect our managed leverage to return to our target range later in 2021.~~1.

Outlook

~~We continue~~For the full-year, we expect EBT of about $4.6 billion. This amount excludes any impact from the potential reclassification of accumulated foreign currency translation losses to ~~expect full-year 2021 EBT~~income related to ~~be improved compared to 2020.~~our South America restructuring actions.

3937

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Cautionary Note on Forward-Looking Statements

Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:

•Ford and Ford Credit’s financial condition and results of operations have been and may continue to be adversely affected by public health issues, including epidemics or pandemics such as COVID-19;

•Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule, and a shortage of key components, such as semiconductors, can disrupt Ford’s production of vehicles;

•Ford’s long-term competitiveness depends on the successful execution of its Plan;

•Ford’s vehicles could be affected by defects that result in delays in new model launches, recall campaigns, or increased warranty costs;

•Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, or new business strategies;

•Operational systems, security systems, and vehicles could be affected by cyber incidents and other disruptions;

•Ford’s production, as well as Ford’s suppliers’ production, could be disrupted by labor issues, natural or man-made disasters, financial distress, production difficulties, or other factors;

•Ford’s ability to maintain a competitive cost structure could be affected by labor or other constraints;

•Ford’s ability to attract and retain talented, diverse, and highly skilled employees is critical to its success and competitiveness;

•Ford’s new and existing products and mobility services are subject to market acceptance and face significant competition from existing and new entrants in the automotive and mobility industries;

•Ford’s results are dependent on sales of larger, more profitable vehicles, particularly in the United States;

•With a global footprint, Ford’s results could be adversely affected by economic, geopolitical, protectionist trade policies, or other events, including tariffs;

•Industry sales volume in any of Ford’s key markets can be volatile and could decline if there is a financial crisis, recession, or significant geopolitical event;

•Ford may face increased price competition or a reduction in demand for its products resulting from industry excess capacity, currency fluctuations, competitive actions, or other factors;

•Fluctuations in commodity prices, foreign currency exchange rates, interest rates, and market value of Ford or Ford Credit’s investments can have a significant effect on results;

•Ford and Ford Credit’s access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors;

•Ford’s receipt of government incentives could be subject to reduction, termination, or clawback;

•Ford Credit could experience higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;

•Economic and demographic experience for pension and other postretirement benefit plans (e.g., discount rates or investment returns) could be worse than Ford has assumed;

•Pension and other postretirement liabilities could adversely affect Ford’s liquidity and financial condition;

•Ford could experience unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise;

•Ford may need to substantially modify its product plans to comply with safety, emissions, fuel economy, autonomous vehicle, and other regulations;

•Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, and data protection laws and regulations as well as consumers’ heightened expectations to safeguard their personal information; and

•Ford Credit could be subject to new or increased credit regulations, consumer protection regulations, or other regulations.

We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. For additional discussion, see “Item 1A. Risk Factors” in our 2020 Form 10-K Report, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

4038

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Accounting Standards Issued But Not Yet Adopted

~~None.~~The Financial Accounting Standards Board (“FASB”) has issued the following Accounting Standards Update (“ASU”), which is not expected to have a material impact to our financial statements or financial statement disclosures.

ASU

Effective Date (a)

2021-05

Lessors - Certain Leases with Variable Lease Payments

January 1, 2022

(a) Early adoption of the standard is permitted

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

In our Annual Report on Form 10-K for the year ended December 31, 2020, we discuss in greater detail our market risk, counterparty risk, credit risk, residual risk, liquidity risk, and operating risk.

To provide a quantitative measure of the sensitivity of our pre-tax cash flow to changes in interest rates, we use interest rate scenarios that assume a hypothetical, instantaneous increase or decrease of one percentage point in all interest rates across all maturities (a “parallel shift”), as well as a base case that assumes that all interest rates remain constant at existing levels. The differences in pre-tax cash flow between these scenarios and the base case over a 12 month period represent an estimate of the sensitivity of our pre-tax cash flow. Under this model, we estimate that at ~~March 31,~~September 30, 2021, all else constant, such an increase in interest rates would ~~increase~~decrease our pre-tax cash flow by $1$51 million over the next 12 months, compared with a decrease of $3 million at December 31, 2020. In reality, interest rate changes are rarely instantaneous or parallel and rates could move more or less than the one percentage point assumed in our analysis. As a result, the actual impact to pre-tax cash flow could be higher or lower than the results detailed above.

Transition from LIBOR to Alternative Reference Rates

We have been working to transition from the London Interbank Offered Rate (“LIBOR”) to alternative reference rates. We have developed a total company inventory of affected financial instruments and contracts, have been working to transition legacy contracts linked to LIBOR to alternative reference rates, and intend to rely ~~exclusively~~primarily on alternative reference rates for new contracts after 2021.

ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. Marion B. Harris, our President and Chief Executive Officer (“CEO”), and Brian E. Schaaf, our Chief Financial Officer (“CFO”) and Treasurer, have performed an evaluation of the Company’s disclosure controls and procedures, as that term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of ~~March 31,~~September 30, 2021, and each has concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by SEC rules and forms, and that such information is accumulated and communicated to the CEO and CFO to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting. There were no changes in internal control over financial reporting during the quarter ended ~~March 31,~~September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4139

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings.

We have no legal proceedings arising under any federal, state, or local provisions that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment, in which (i) a governmental authority is a party, and (ii) we believe there is the possibility of monetary sanctions (exclusive of interest and costs) in excess of $1 million.

ITEM 5. Other Information.

None.

ITEM 6. Exhibits.

Designation

Description

Method of Filing

~~Exhibit 10~~

~~Second Amended and Restated Tax Sharing Agreement Between Ford Motor Company and Ford Motor Credit Company LLC.~~

~~Filed with this Report.~~

Exhibit 31.1

Rule 15d-14(a) Certification of CEO.

Filed with this Report.

Exhibit 31.2

Rule 15d-14(a) Certification of CFO.

Filed with this Report.

Exhibit 32.1

Section 1350 Certification of CEO.

Furnished with this Report.

Exhibit 32.2

Section 1350 Certification of CFO.

Furnished with this Report.

Exhibit 101.INS

Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language (“Inline XBRL”).

Exhibit 101.SCH

XBRL Taxonomy Extension Schema Document.

Exhibit 101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit 101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

Exhibit 101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

Exhibit 101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

Exhibit 104

Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

__________

*Submitted electronically with this Report in accordance with the provisions of Regulation S-T.

Instruments defining the rights of holders of certain issues of long-term debt of Ford Credit 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 Ford Credit. Ford Credit will furnish a copy of each such instrument to the SEC upon request.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, Ford Motor Credit Company LLC has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

FORD MOTOR CREDIT COMPANY LLC


By:			/s/ Brian E. Schaaf
			Brian E. Schaaf
			Chief Financial Officer and Treasurer

Date:			~~April 28,~~October 27, 2021

4341


☑			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
			For the transition period from ____________________ to ____________________