UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



R	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended ~~September 30, 2017~~March 31, 2018



£	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from ____________________ to ____________________
	Commission file number 1-6368

Ford Motor Credit Company LLC

(Exact name of registrant as specified in its charter)



Delaware	38-1612444
(State of organization)	(I.R.S. employer identification no.)
One American Road, Dearborn, Michigan	48126
(Address of principal executive offices)	(Zip code)

(313) 322-3000

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

o Yes þ No

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.

Exhibits ~~begins~~begin on page 5250

FORD MOTOR CREDIT COMPANY LLC

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended ~~September 30, 2017~~March 31, 2018




	Table of Contents	Page

	Part I. Financial Information
Item 1	Financial Statements	1
	Consolidated Income Statement	1
	Consolidated Statement of Comprehensive Income	1
	Consolidated Balance Sheet	2
	Consolidated Statement of Shareholder’s Interest	3
	~~Condensed~~ Consolidated Statement of Cash Flows	4
	Notes to the Financial Statements	5
	Report of Independent Registered Public Accounting Firm	2523
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2624
	Results of Operations	2624
	Financing Shares and Contract Placement Volume	3129
	Financial Condition	3432
	Credit Risk	3634
	Residual Risk	4038
	Credit Ratings	4240
	Funding and Liquidity	4341
	Leverage	4745
	Outlook	4846
	~~Risk Factors~~Cautionary Note on Forward-Looking Statements	4947
	Accounting Standards Issued But Not Yet Adopted	5048
	Other Financial Information	5048
Item 3	Quantitative and Qualitative Disclosures About Market Risk	5048
Item 4	Controls and Procedures	5149
	Part II. Other Information
Item 5	Other Information	5250
Item 6	Exhibits	5250
	Signature	5351

PART I. FINANCIAL INFORMATION

ITEM 1. Financial ~~Statements.~~Statements

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT

(in millions)


	For the periods ended September 30,												For the periods ended March 31,
	2016			2017			2016			2017			2017			2018
	Third Quarter						First Nine Months						First Quarter
	(unaudited)												(unaudited)
Financing revenue
Operating leases	$	1,409		$	1,394		$	4,115		$	4,141		$	1,366		$	1,415
Retail financing	780			891			2,273			2,518			802			948
Dealer financing	450			462			1,333			1,389			451			536
Other	10			17			29			51			17			22
Total financing revenue	2,649			2,764			7,750			8,099			2,636			2,921
Depreciation on vehicles subject to operating leases	(1,085		)	(989		)	(3,174		)	(3,090		)	(1,064		)	(1,028		)
Interest expense	(697		)	(810		)	(2,030		)	(2,308		)	(729		)	(912		)
Net financing margin	867			965			2,546			2,701			843			981
Other revenue
Insurance premiums earned	38			38			118			120			40			41
Fee based revenue and other	—			61			—			177			55			58
Total financing margin and other revenue	905			1,064			2,664			2,998			938			1,080
Expenses
Operating expenses	287			324			891			930			304			345
Provision for credit losses (Note 6)	138			169			403			420			152			119
Insurance expenses	22			28			113			121			31			12
Total expenses	447			521			1,407			1,471			487			476

Other income, net (Note 13)	109			57			224			173			30			37

Income before income taxes	567			600			1,481			1,700			481			641
Provision for income taxes	181			186			441			507
Provision for / (Benefit from) income taxes													148			(60		)
Net income	$	386		$	414		$	1,040		$	1,193		$	333		$	701

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(in millions)

For the periods ended September 30,
2016 2017 2016 2017
Third Quarter First Nine Months
(unaudited)
Net income $ 386
$ 414
$ 1,040
$ 1,193
Other comprehensive income/(loss), net of tax (Note 12)
Foreign currency translation (72 ) 204
(41 ) 485
Total other comprehensive income/(loss), net of tax (72 ) 204
(41 ) 485
Comprehensive income/(loss) 314
618
999
1,678
Less: Comprehensive income/(loss) attributable to noncontrolling interests —
—
—
—
Comprehensive income/(loss) attributable to Ford Motor Credit Company $ 314
$ 618
$ 999
$ 1,678



	For the periods ended March 31,
	2017		2018
	First Quarter
	(unaudited)
Net income	$	333	$	701
Other comprehensive income / (loss), net of tax (Note 12)
Foreign currency translation	90		113
Comprehensive income / (loss)	$	423	$	814

The accompanying notes are part of the financial statements.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions)


	December 31, 2016			September 30, 2017			December 31, 2017			March 31, 2018
	(unaudited)						(unaudited)
ASSETS
Cash and cash equivalents (Note 3)	$	8,077		$	8,835		$	9,558		$	8,766
Marketable securities (Note 3)	3,280			3,101			2,881			3,708
Finance receivables, net (Note 4)	102,981			110,597			116,003			120,936
Net investment in operating leases (Note 5)	27,209			26,931			26,661			26,715
Notes and accounts receivable from affiliated companies	811			957			1,076			903
Derivative financial instruments (Note 9)	909			982			935			754
Other assets (Note 10)	2,822			3,075			3,329			3,301
Total assets	$	146,089		$	154,478		$	160,443		$	165,083

LIABILITIES
Accounts payable
Customer deposits, dealer reserves, and other	$	1,065		$	1,236		$	1,171		$	1,303
Affiliated companies	336			705			592			922
Total accounts payable	1,401			1,941			1,763			2,225
Debt (Note 11)	126,492			132,380			137,828			141,974
Deferred income taxes	3,230			3,633			2,386			2,251
Derivative financial instruments (Note 9)	166			420			310			794
Other liabilities and deferred income (Note 10)	1,997			2,020			2,272			2,154
Total liabilities	133,286			140,394			144,559			149,398

SHAREHOLDER’S INTEREST
Shareholder’s interest	5,227			5,227			5,227			5,227
Accumulated other comprehensive income/(loss) (Note 12)	(890		)	(405		)
Accumulated other comprehensive income / (loss) (Note 12)							(419		)	(306		)
Retained earnings	8,466			9,262			11,076			10,764
Total shareholder’s interest attributable to Ford Motor Credit Company	12,803			14,084
Shareholder’s interest attributable to noncontrolling interests	—			—
Total shareholder’s interest	12,803			14,084			15,884			15,685
Total liabilities and shareholder’s interest	$	146,089		$	154,478		$	160,443		$	165,083

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 sheet above. See Notes 7 and 8 for additional information on our VIEs.


	December 31, 2016		September 30, 2017		December 31, 2017		March 31, 2018
	(unaudited)				(unaudited)
ASSETS
Cash and cash equivalents	$	3,047	$	2,511	$	3,479	$	2,866
Finance receivables, net	50,857		52,834		56,250		59,145
Net investment in operating leases	11,761		9,908		11,503		11,984
Derivative financial instruments	25		60		64		63

LIABILITIES
Debt	$	43,730	$	43,302	$	46,437	$	50,366
Derivative financial instruments	5		2		2		5

The accompanying notes are part of the financial statements.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDER’S INTEREST

(in millions, unaudited)


	Shareholder’s Interest Attributable to Ford Motor Credit Company																	Shareholder’s Interest		Accumulated Other Comprehensive Income / (Loss) (Note 12)			Retained Earnings			Total Shareholder’s Interest
	Shareholder’s Interest		Accumulated Other Comprehensive Income/(Loss) (Note 12)			Retained Earnings			Total			Shareholder’s Interest Attributable to Non-Controlling Interests			Total Shareholder’s Interest
Balance at December 31, 2015	$	5,227	$	(607	)	$	7,093		$	11,713		$	1		$	11,714
Net income	—		—			1,040			1,040			—			1,040
Other comprehensive income/(loss), net of tax	—		(41		)	—			(41		)	—			(41		)
Distributions declared	—		—			—			—			(1		)	(1		)
Balance at September 30, 2016	$	5,227	$	(648	)	$	8,133		$	12,712		$	—		$	12,712

Balance at December 31, 2016	$	5,227	$	(890	)	$	8,466		$	12,803		$	—		$	12,803		$	5,227	$	(890	)	$	8,466		$	12,803
Net income	—		—			1,193			1,193			—			1,193			—		—			333			333
Other comprehensive income/(loss), net of tax	—		485			—			485			—			485
Other comprehensive income / (loss), net of tax																		—		90			—			90
Adoption of accounting standard (Note 2)	—		—			9			9			—			9			—		—			9			9
Distributions declared	—		—			(406		)	(406		)	—			(406		)	—		—			(28		)	(28		)
Balance at September 30, 2017	$	5,227	$	(405	)	$	9,262		$	14,084		$	—		$	14,084
Balance at March 31, 2017																		$	5,227	$	(800	)	$	8,780		$	13,207

Balance at December 31, 2017																		$	5,227	$	(419	)	$	11,076		$	15,884
Net income																		—		—			701			701
Other comprehensive income / (loss), net of tax																		—		113			—			113
Distributions declared																		—		—			(1,013		)	(1,013		)
Balance at March 31, 2018																		$	5,227	$	(306	)	$	10,764		$	15,685

The accompanying notes are part of the financial statements.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

~~CONDENSED~~ CONSOLIDATED STATEMENT OF CASH FLOWS

(in millions)


	For the periods ended September 30,						For the periods ended March 31,
	2016			2017			2017			2018
	First Nine Months						First Quarter
	(unaudited)						(unaudited)
Cash flows from operating activities
Net cash provided by/(used in) operating activities	$	4,807		$	4,451
Net cash provided by / (used in) operating activities							$	1,460		$	2,009

Cash flows from investing activities
Purchases of finance receivables	(29,605		)	(30,543		)	(9,388		)	(11,085		)
Collections of finance receivables	24,174			27,254
Principal collections of finance receivables							8,880			10,814
Purchases of operating lease vehicles	(10,974		)	(9,935		)	(3,270		)	(3,592		)
Liquidations of operating lease vehicles	6,090			6,623
Proceeds from termination of operating lease vehicles							2,166			2,481
Net change in wholesale receivables and other short-duration receivables	836			1,560			(1,510		)	(3,668		)
Purchases of marketable securities	(5,794		)	(4,359		)	(1,883		)	(2,287		)
Proceeds from sales and maturities of marketable securities	4,368			4,564			1,479			1,422
Settlements of derivatives	8			(48		)	22			100
All other investing activities	(152		)	(20		)	(11		)	143
Net cash provided by/(used in) investing activities	(11,049		)	(4,904		)
Net cash provided by / (used in) investing activities							(3,515		)	(5,672		)

Cash flows from financing activities
Proceeds from issuances of long-term debt	31,789			29,982			13,243			16,779
Principal payments on long-term debt	(29,499		)	(30,291		)	(11,731		)	(12,156		)
Change in short-term debt, net	905			1,709			722			(793		)
Cash distributions to parent	—			(406		)	(28		)	(1,013		)
All other financing activities	(90		)	(74		)	(37		)	(28		)
Net cash provided by/(used in) financing activities	3,105			920
Net cash provided by / (used in) financing activities							2,169			2,789

Effect of exchange rate changes on cash and cash equivalents	(74		)	291
Effect of exchange rate changes on cash, cash equivalents and restricted cash							58			106

Net increase/(decrease) in cash and cash equivalents	$	(3,211	)	$	758
Net increase / (decrease) in cash, cash equivalents and restricted cash							$	172		$	(768	)

Cash and cash equivalents at January 1	$	8,886		$	8,077
Net increase/(decrease) in cash and cash equivalents	(3,211		)	758
Cash and cash equivalents at September 30	$	5,675		$	8,835
Cash, cash equivalents and restricted cash at January 1							$	8,185		$	9,682
Net increase / (decrease) in cash, cash equivalents and restricted cash							172			(768		)
Cash, cash equivalents and restricted cash at March 31							$	8,357		$	8,914

The accompanying notes are part of the 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	9
Note 5	Net Investment in Operating Leases	12
Note 6	Allowance for Credit Losses	13
Note 7	Transfers of Receivables	1514
Note 8	Variable Interest Entities	16
Note 9	Derivative Financial Instruments and Hedging Activities	1716
Note 10	Other Assets and Other Liabilities and Deferred Income	1918
Note 11	Debt and Commitments	2019
Note 12	Accumulated Other Comprehensive ~~Income/~~Income / (Loss)	2019
Note 13	Other Income, Net	2120
Note 14	Segment Information	2120
Note 15	Commitments and Contingencies	2321

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1. PRESENTATION

The consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“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 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 ~~Current~~Annual Report on Form ~~8-K dated April 27,~~10-K for the year ended December 31, 2017 (“~~April 27,~~ 2017 Form ~~8-K~~10-K Report”). We are an indirect, wholly owned subsidiary of Ford Motor Company (“Ford”).

We reclassified certain prior period amounts in our consolidated financial statements to conform to current year presentation.

~~Forso Nordic AB.~~ We hold a 50% interest in Forso Nordic AB (“Forso”), a joint venture with Credit Agricole Consumer Finance SA (“CACF”). Forso was established to support the sale of Ford vehicles in Denmark, Finland, Norway, and Sweden by providing retail and dealer financing in these markets. We have exercised our call option to purchase CACF’s shares in the joint venture, and as a result, effective August 23, 2017, we consolidated the joint venture for financial reporting purposes. The consolidated results are included in the Europe segment. Our ~~Income before income taxes~~ includes a $17 million loss, reflecting historical foreign currency translation, as a result of the consolidation. We measured the fair value of joint venture assets and liabilities at the date of consolidation and recognized $1.5 billion in assets (primarily finance receivables) and $1.3 billion in liabilities (primarily debt) on our balance sheet. We expect to finalize the purchase price of CACF’s shares during the fourth quarter of 2017.

NOTE 2. ACCOUNTING POLICIES

Provision for Income Taxes

For interim tax reporting we estimate one single effective tax rate, 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.

For the first quarter of 2018, our effective tax rate benefit was 9.3%. During the first quarter of 2018, we recognized $235 million of benefit for non-U.S. capital loss carryforwards expected to be realized in the foreseeable future.

Adoption of New Accounting Standards

~~Accounting Standard Update (“ASU”) 2014-09,Revenue - Revenue from Contracts with Customers.~~ ASU 2017-12, Derivatives and Hedging.~~We have~~ On January 1, 2018, we adopted the ~~new~~amendments to accounting standard ~~ASC 606 Revenue from Contracts~~codification (“ASC”) 815 which aligns hedge accounting with ~~Customers~~risk management activities and ~~all~~simplifies the ~~related amendments as of January 1, 2017 using the modified retrospective method. The comparative information has~~requirements to qualify for hedge accounting. Adoption did not ~~been restated and continues~~have a material impact on our financial statements. We continue to be reported under the accounting standards in effect for those periods. Adoption of the new revenue standard resulted in changes to the timing of revenue recognition and in the reclassification between financial statement line items. Underassess opportunities enabled by the new standard to expand our risk management strategies.

ASU 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities. On January 1, 2018, we ~~recognize insurance commissions at~~adopted ASU 2016-01 and the ~~time of sale~~related amendments. This standard amends various aspects of the ~~product or service~~recognition, measurement, presentation, and disclosure of financial instruments. We adopted the measurement alternative for equity investments without readily determinable fair values (often referred to as cost method investments) on a prospective basis. As a result, these investments will be revalued upon occurrence of an observable price change for similar investments and for impairments. We anticipate adoption may increase the volatility on our ~~customer; previously, such~~consolidated income ~~was recognized over the life of the insurance contract. The new standard also provided additional clarity that resulted in reclassifications from~~ statement.~~Other income, net~~ to~~a new financial statement line entitled~~ ~~Fee based revenue and other~~.

~~We recognized the cumulative effect of initially applying the new standard as a $9 million increase to the opening balance of~~ ~~Retained earnings~~ ~~with the offset primarily reflected in~~ ~~Other assets. When compared to the previous standard, the impact of adopting the new standardwas immaterial to~~ ~~Other assets~~ ~~and~~ ~~Retained earnings~~ ~~at September 30, 2017 and~~ ~~Net income~~ ~~for the periods ended September 30, 2017. Under the previous standard, amounts reported in~~ ~~Fee based revenue and other~~ ~~for the period ended September 30, 2017 would have been included in~~ ~~Other income, net~~.

~~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 standards during ~~2017,~~2018, none of which had a material impact to our financial statements or financial statement disclosures:



Standard		Effective Date
~~2017-05~~2017-08	~~Gains~~Nonrefundable Fees and ~~Losses from the Derecognition of Nonfinancial Assets~~Other Costs - ~~Clarifying the Scope of Asset Derecognition Guidance~~Premium Amortization on Purchased Callable Debt Securities	January 1, ~~2017~~2018
~~2017-04~~2016-18	~~Goodwill and Other~~Statement of Cash Flows - ~~Simplifying the Test for Goodwill Impairment~~Restricted Cash	January 1, ~~2017~~2018
~~2017-03~~2016-16	~~Accounting Changes and Error Corrections and Investments~~Income Taxes - ~~Equity Method and Joint Ventures~~Intra-Entity Transfers of Assets Other Than Inventory	January 1, ~~2017~~2018
~~2017-01~~2016-15	~~Business Combinations~~Statement of Cash Flows - ~~Clarifying the Definition~~Classification of ~~a Business~~Certain Cash Receipts and Cash Payments	January 1, ~~2017~~
~~2016-17~~	~~Consolidation - Interests Held through Related Parties That Are Under Common Control~~	~~January 1, 2017~~
~~2016-09~~	~~Stock Compensation - Improvements to Employee Share-Based Payment Accounting~~	~~January 1, 2017~~
~~2016-07~~	~~Equity Method and Joint Ventures - Simplifying the Transition to the Equity Method of Accounting~~	~~January 1, 2017~~
~~2016-06~~	~~Derivatives and Hedging - Contingent Put and Call Options in Debt Instruments~~	~~January 1, 2017~~
~~2016-05~~	~~Derivatives and Hedging - Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships~~	~~January 1, 2017~~
~~2016-04~~	~~Extinguishments of Liabilities - Recognition of Breakage for Certain Prepaid Stored-Value Products~~	~~January 1, 2017~~
~~2017-09~~	~~Stock Compensation - Scope of Modification Accounting~~	~~April 1, 2017~~2018

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 2. ACCOUNTING POLICIES (Continued)

Accounting Standards Issued But Not Yet Adopted

The following represent the standards that will, or are expected to, result in a significant change in practice ~~and/~~and / or have a significant financial impact to Ford Credit.

ASU 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments. In June 2016, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard which replaces the current incurred loss impairment method with a method that reflects expected credit losses. The new standard is effective as of January 1, 2020, and early adoption is permitted as of January 1, 2019. We will adopt the new credit loss guidance by recognizing the cumulative effect of initially applying the new standard as an adjustment to the opening balance of Retained earnings. We anticipate adoption will increase the amount of expected credit losses reported in Finance ~~Receivables, Net~~receivables, net on our consolidated balance sheet and do not expect a material impact to our income ~~statement.~~statement.

ASU 2016-02, Leases. In February 2016, the FASB issued a new accounting standard which provides guidance on the recognition, measurement, presentation, and disclosure of leases. The new standard supersedes the present U.S. GAAP standard on leases and requires substantially all leases to be reported on the balance sheet as right-of-use assets and lease ~~liabilities, as well as additional disclosures.~~obligations. We plan to adopt the standard at its effective date of January 1, 2019. We anticipate adoption of the standard will add about $100 million inof right-of-use assets and lease obligations to our balance sheet and will not significantly impact pre-tax profit. We plan to elect the practical expedients upon transition that will retain the lease classification and initial direct costs for any leases that exist prior to adoption of the standard. We will not reassess whether any contracts entered into prior to adoption are leases. We are in the ~~early stages~~process of ~~implementation.~~cataloging our existing lease contracts and implementing changes to our systems.

~~ASU 2017-12, Derivatives and Hedging.~~ In August 2017, the FASB issued a new accounting standard which aligns hedge accounting with risk management activities and simplifies the requirements to qualify for hedge accounting. We plan to adopt the new standard effective January 1, 2018 and are assessing the impact to our hedge accounting processes and financial statement disclosures. We anticipate adoption will not have a material impact to our financial statements.

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

The following table categorizes the fair values of cash, cash equivalents, and marketable securities measured at fair value on a recurring basis on our balance sheet (in millions):


	Fair Value Level	December 31, 2016		September 30, 2017		Fair Value Level	December 31, 2017		March 31, 2018
Cash and cash equivalents
U.S. government	1	$	924	$	112	1	$	—	$	44
U.S. government agencies	2	—		200
U.S. government and agencies						2	300		50
Non-U.S. government and agencies	2	142		357		2	703		556
Corporate debt	2	—		—		2	25		274
Total marketable securities classified as cash equivalents		1,066		669			1,028		924
Cash, time deposits and money market funds		7,011		8,166			8,530		7,842
Total cash and cash equivalents		$	8,077	$	8,835		$	9,558	$	8,766

Marketable securities
Marketable Securities
U.S. government	1	$	1,634	$	670	1	$	966	$	1,116
U.S. government agencies	2	505		384
U.S. government and agencies						2	384		265
Non-U.S. government and agencies	2	632		971		2	660		1,517
Corporate debt	2	475		1,051		2	848		680
Other marketable securities	2	34		25		2	23		130
Total marketable securities		$	3,280	$	3,101		$	2,881	$	3,708

Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash as reported in the statement of cash flows are presented separately on our consolidated balance sheet as follows (in millions):



	December 31, 2017		March 31, 2018
Cash and cash equivalents	$	9,558	$	8,766
Restricted cash included in other assets	124		148
Total cash, cash equivalents, and restricted cash	$	9,682	$	8,914

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 4. FINANCE RECEIVABLES

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, net were as follows (in millions):


	December 31, 2016			September 30, 2017			December 31, 2017			March 31, 2018
Consumer
Retail financing, gross	$	68,121		$	75,592		$	78,467		$	79,627
Unearned interest supplements from Ford and affiliated companies	(2,783		)	(3,136		)	(3,280		)	(3,258		)
Consumer finance receivables	65,338			72,456			75,187			76,369

Non-Consumer
Dealer financing	36,951			36,818			39,241			43,230
Other financing	1,176			1,898			2,172			1,937
Non-Consumer finance receivables	38,127			38,716			41,413			45,167
Total recorded investment	$	103,465		$	111,172		$	116,600		$	121,536

Recorded investment in finance receivables	$	103,465		$	111,172		$	116,600		$	121,536
Allowance for credit losses	(484		)	(575		)	(597		)	(600		)
Finance receivables, net	$	102,981		$	110,597		$	116,003		$	120,936

Net finance receivables subject to fair value (a)	$	100,857		$	107,506		$	112,717		$	117,432
Fair value	101,576			107,286			112,133			116,785

__________


(a)	At December 31, ~~2016~~2017 and ~~September 30, 2017,~~March 31, 2018, Finance receivables, netincludes ~~$2.1~~$3.3 billion and ~~$3.1~~$3.5 billion,, respectively, of direct financing leases that are not subject to fair value disclosure requirements. The fair value of finance receivables is categorized within Level 3 of the fair value hierarchy.

Excluded from finance receivables at December 31, ~~2016andSeptember 30,~~ 2017 and March 31, 2018 was ~~$224~~$241 million and ~~$225~~$244 million, respectively, of accrued uncollected interest, which we report in Other assets on our balance sheet.

Included in recorded investment in finance receivables at December 31, ~~2016~~2017 and ~~September 30, 2017~~March 31, 2018, were consumer receivables of ~~$32.5~~$38.9 billion and ~~$35.2~~$39.3 billion, respectively, and non-consumer receivables of ~~$26.0~~$24.5 billion and ~~$23.6~~$26.6 billion, respectively, that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. The receivables 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 Ford Credit’s other creditors. 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 (see Note 7 for additional information).

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 4. FINANCE RECEIVABLES (Continued)

Aging

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. The recorded investment of consumer receivables greater than 90 days past due and still accruing interest was ~~$21~~$24 million and $2823 million at December 31, ~~2016~~2017 and~~September 30, 2017~~, March 31, 2018, respectively. The recorded investment of non-consumer receivables greater than 90 days past due and still accruing interest was $1 million and de ~~minimis and $1 million~~minimus at December 31, ~~2016~~2017 and ~~September 30, 2017,~~March 31, 2018, respectively.

The aging analysis of finance receivables balances was as follows (in millions):


	December 31, 2016		September 30, 2017		December 31, 2017		March 31, 2018
Consumer
31-60 days past due	$	760	$	682	$	748	$	667
61-90 days past due	114		111		113		85
91-120 days past due	34		40		36		33
Greater than 120 days past due	39		37		37		41
Total past due	947		870		934		826
Current	64,391		71,586		74,253		75,543
Consumer finance receivables	65,338		72,456		75,187		76,369

Non-Consumer
Total past due	107		135		122		95
Current	38,020		38,581		41,291		45,072
Non-Consumer finance receivables	38,127		38,716		41,413		45,167
Total recorded investment	$	103,465	$	111,172	$	116,600	$	121,536

Credit Quality

Consumer ~~Portfolio~~Portfolio.

Credit quality ratings for consumer receivables are based on our aging analysis. Refer to the aging table above.

Consumer receivables credit quality ratings are as follows:

Pass – current to 60 days past ~~due~~due;

Special Mention – 61 to 120 days past due and in intensified collection ~~status~~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~~sell.

Non-Consumer ~~Portfolio~~Portfolio.

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

Group I – strong to superior financial ~~metrics~~metrics;

Group II – fair to favorable financial ~~metrics~~metrics;

Group III – marginal to weak financial ~~metrics~~metrics; and

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

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 4. FINANCE RECEIVABLES (Continued)

The credit quality analysis of our dealer financing receivables was as follows (in millions):


	December 31, 2016		September 30, 2017		December 31, 2017		March 31, 2018
Dealer financing
Group I	$	29,926	$	29,602	$	31,551	$	34,584
Group II	5,552		5,585		5,912		6,694
Group III	1,380		1,479		1,640		1,844
Group IV	93		152		138		108
Total recorded investment	$	36,951	$	36,818	$	39,241	$	43,230

Impaired Receivables

Impaired consumer receivables include accounts that have been rewritten or modified in reorganization proceedings pursuant to the U.S. Bankruptcy Code that are considered to be Troubled Debt Restructurings (“TDRs”), as well as all accounts greater than 120 days past due. Impaired non-consumer receivables represent accounts with dealers that have weak or poor financial metrics or dealer financing that has been modified in TDRs. The recorded investment of consumer receivables that were impaired at December 31, ~~2016~~2017 and ~~September 30, 2017~~March 31, 2018 was $~~367~~386 million, or ~~0.6%~~0.5% of consumer receivables, and ~~$387~~$380 million, or 0.5% of consumer receivables, respectively. The recorded investment of non-consumer receivables that were impaired at December 31, ~~2016~~2017 and~~September 30, 2017~~ March 31, 2018 was $~~107~~138 million, or 0.3% of non-consumer receivables, and ~~$152~~$108 million, or ~~0.4%~~0.2% of non-consumer receivables, respectively. Impaired finance receivables are evaluated both collectively and specifically.

The accrual of revenue is discontinued at the time a receivable is determined to be uncollectible. 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.

A restructuring of debt constitutes a TDR if we grant a concession 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 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 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. Finance receivables involved in TDRs are specifically assessed for impairment.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 5. NET INVESTMENT IN OPERATING LEASES

Net investment in operating leases consist primarily of lease contracts for vehicles with retail customers, daily rental companies, and fleet customers with terms of 60 months or less.

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


	December 31, 2016			September 30, 2017			December 31, 2017			March 31, 2018
Vehicles, at cost (a)	$	32,823		$	32,684		$	32,659		$	32,821
Accumulated depreciation	(5,550		)	(5,684		)	(5,927		)	(6,035		)
Net investment in operating leases before allowance for credit losses	27,273			27,000			26,732			26,786
Allowance for credit losses	(64		)	(69		)	(71		)	(71		)
Net investment in operating leases	$	27,209		$	26,931		$	26,661		$	26,715

__________


(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.

At December 31, ~~2016~~2017 and ~~September 30, 2017,~~March 31, 2018, net investment in operating leases before allowance for credit losses includes ~~$11.8~~$11.5 billion and ~~$9.9~~$12.0 billion, respectively, of net investment in operating leases that have been included in securitization transactions but continue to be reported in our consolidated financial statements. These net ~~investment~~investments 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 our 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 (see Note 7 for additional information).

We have a sale-leaseback agreement with Ford primarily for vehicles that Ford leases to employees of Ford and its subsidiaries. Effective January 1, 2017, the financing we provide under this agreement is reflected on our balance sheet in ~~Finance receivables, net. Previously, these amounts were reflected in~~ ~~Net investment in operating leases. The amount included in~~ ~~Net investment in operating leases~~ ~~at December 31, 2016 was $907 million. The revenue related to these agreements is now reflected in~~ ~~Other financing revenue. Previously, this activity was reflected on our income statement in~~ ~~Operating leases revenue~~ ~~and~~ ~~Depreciation on vehicles subject to operating leases~~ ~~which was $73 million and $67 million for the third quarter of 2016, respectively, and $222 million and $201 million for the first nine months of 2016, respectively.~~

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 6. ALLOWANCE FOR CREDIT LOSSES

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


	Third Quarter 2016
	Finance Receivables									Net Investment in Operating Leases				Total Allowance
	Consumer			Non-Consumer			Total
Allowance for credit losses
Beginning balance	$	432		$	17		$	449		$	63			$	512
Charge-offs	(108		)	(5		)	(113		)	(44		)		(157		)
Recoveries	29			1			30			20				50
Provision for credit losses	112			1			113			25				138
Other (a)	(1		)	—			(1		)	(1		)		(2		)
Ending balance	$	464		$	14		$	478		$	63			$	541

	First Nine Months 2016																First Quarter 2017
	Finance Receivables									Net Investment in Operating Leases				Total Allowance			Finance Receivables									Net Investment in Operating Leases			Total Allowance
	Consumer			Non-Consumer			Total						Consumer					Non-Consumer			Total
Allowance for credit losses
Beginning balance	$	357		$	16		$	373		$	49			$	422		$	469		$	15		$	484		$	64		$	548
Charge-offs	(304		)	(7		)	(311		)	(125		)		(436		)	(123		)	(2		)	(125		)	(52		)	(177		)
Recoveries	89			4			93			60				153			34			—			34			24			58
Provision for credit losses	323			1			324			79				403			121			—			121			31			152
Other (a)	(1		)	—			(1		)	—				(1		)	3			—			3			—			3
Ending balance	$	464		$	14		$	478		$	63			$	541		$	504		$	13		$	517		$	67		$	584

Analysis of ending balance of allowance for credit losses
Collective impairment allowance	$	445		$	12		$	457		$	63			$	520		$	483		$	13		$	496		$	67		$	563
Specific impairment allowance	19			2			21			—				21			21			—			21			—			21
Ending balance	464			14			478			63				$	541		504			13			517			67			$	584

Analysis of ending balance of finance receivables and net investment in operating leases
Collectively evaluated for impairment	64,743			36,120			100,863			27,024							66,075			40,468			106,543			26,495
Specifically evaluated for impairment	366			140			506			—							385			164			549			—
Recorded investment	65,109			36,260			101,369			27,024							66,460			40,632			107,092			26,495

Ending balance, net of allowance for credit losses	$	64,645		$	36,246		$	100,891		$	26,961						$	65,956		$	40,619		$	106,575		$	26,428

__________


(a)	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 6. ALLOWANCE FOR CREDIT LOSSES~~ ~~(Continued)~~


	Third Quarter 2017
	Finance Receivables									Net Investment in Operating Leases				Total Allowance
	Consumer			Non-Consumer			Total
Allowance for credit losses
Beginning balance	$	507		$	15		$	522		$	66			$	588
Charge-offs	(132		)	—			(132		)	(51		)		(183		)
Recoveries	36			4			40			25				65
Provision for credit losses	146			(6		)	140			29				169
Other (a)	5			—			5			—				5
Ending balance	$	562		$	13		$	575		$	69			$	644

	First Nine Months 2017																First Quarter 2018
	Finance Receivables									Net Investment in Operating Leases				Total Allowance			Finance Receivables									Net Investment in Operating Leases			Total Allowance
	Consumer			Non-Consumer			Total						Consumer					Non-Consumer			Total
Allowance for credit losses
Beginning balance	$	469		$	15		$	484		$	64			$	548		$	582		$	15		$	597		$	71		$	668
Charge-offs	(366		)	(3		)	(369		)	(155		)		(524		)	(131		)	(2		)	(133		)	(51		)	(184		)
Recoveries	105			8			113			73				186			39			1			40			26			66
Provision for credit losses	341			(7		)	334			86				420			92			2			94			25			119
Other (a)	13			—			13			1				14			2			—			2			—			2
Ending balance	$	562		$	13		$	575		$	69			$	644		$	584		$	16		$	600		$	71		$	671

Analysis of ending balance of allowance for credit losses
Collective impairment allowance	$	541		$	13		$	554		$	69			$	623		$	563		$	15		$	578		$	71		$	649
Specific impairment allowance	21			—			21			—				21			21			1			22			—			22
Ending balance	562			13			575			69				$	644		584			16			600			71			$	671

Analysis of ending balance of finance receivables and net investment in operating leases
Collectively evaluated for impairment	72,069			38,564			110,633			27,000							75,989			45,059			121,048			26,786
Specifically evaluated for impairment	387			152			539			—							380			108			488			—
Recorded investment	72,456			38,716			111,172			27,000							76,369			45,167			121,536			26,786

Ending balance, net of allowance for credit losses	$	71,894		$	38,703		$	110,597		$	26,931						$	75,785		$	45,151		$	120,936		$	26,715

__________


(a)	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 7. TRANSFERS OF RECEIVABLES

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 including the United States, Canada, several European countries, Mexico, and China.

We engage in securitization transactions to fund operations and to maintain liquidity. Our securitization transactions are recorded as asset-backed debt and the associated assets are not derecognized and continue to be included in our financial statements.

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. 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. The debt is the obligation of our consolidated securitization entities and not the obligation of Ford Credit or our other subsidiaries.

Most of these securitization transactions utilize VIEs. See Note 8 for additional information concerning VIEs. The following tables show the assets and debt related to our securitization transactions that were included in our financial statements (in billions):


	December 31, 2016										December 31, 2017
	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)
	Cash and Cash Equivalents		Before Allowance for Credit Losses		Allowance for Credit Losses		After Allowance for Credit Losses		Related Debt (c)		Cash and Cash Equivalents		Before Allowance for Credit Losses		Allowance for Credit Losses		After Allowance for Credit Losses		Related Debt (c)
VIE (b)
Retail financing	$	1.5	$	25.9	$	0.2	$	25.7	$	22.7	$	1.8	$	32.6	$	0.2	$	32.4	$	27.7
Wholesale financing	1.0		25.2		—		25.2		13.6		1.2		23.9		—		23.9		11.5
Finance receivables	2.5		51.1		0.2		50.9		36.3		3.0		56.5		0.2		56.3		39.2
Net investment in operating leases	0.5		11.8		—		11.8		7.4		0.5		11.5		—		11.5		7.2
Total VIE	$	3.0	$	62.9	$	0.2	$	62.7	$	43.7	$	3.5	$	68.0	$	0.2	$	67.8	$	46.4

Non-VIE
Retail financing	$	0.4	$	6.6	$	—	$	6.6	$	6.1	$	0.3	$	6.3	$	—	$	6.3	$	5.7
Wholesale financing	—		0.8		—		0.8		0.6		—		0.6		—		0.6		0.5
Finance receivables	0.4		7.4		—		7.4		6.7		0.3		6.9		—		6.9		6.2
Net investment in operating leases	—		—		—		—		—		—		—		—		—		—
Total Non-VIE	$	0.4	$	7.4	$	—	$	7.4	$	6.7	$	0.3	$	6.9	$	—	$	6.9	$	6.2

Total securitization transactions
Retail financing	$	1.9	$	32.5	$	0.2	$	32.3	$	28.8	$	2.1	$	38.9	$	0.2	$	38.7	$	33.4
Wholesale financing	1.0		26.0		—		26.0		14.2		1.2		24.5		—		24.5		12.0
Finance receivables	2.9		58.5		0.2		58.3		43.0		3.3		63.4		0.2		63.2		45.4
Net investment in operating leases	0.5		11.8		—		11.8		7.4		0.5		11.5		—		11.5		7.2
Total securitization transactions	$	3.4	$	70.3	$	0.2	$	70.1	$	50.4	$	3.8	$	74.9	$	0.2	$	74.7	$	52.6

__________


(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.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 7. TRANSFERS OF RECEIVABLES (Continued)


	September 30, 2017										March 31, 2018
	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)
	Cash and Cash Equivalents		Before Allowance for Credit Losses		Allowance for Credit Losses		After Allowance for Credit Losses		Related Debt (c)		Cash and Cash Equivalents		Before Allowance for Credit Losses		Allowance for Credit Losses		After Allowance for Credit Losses		Related Debt (c)
VIE (b)
Retail financing	$	1.7	$	29.9	$	0.2	$	29.7	$	25.7	$	2.0	$	33.4	$	0.2	$	33.2	$	29.1
Wholesale financing	0.3		23.1		—		23.1		11.3		0.3		25.9		—		25.9		13.8
Finance receivables	2.0		53.0		0.2		52.8		37.0		2.3		59.3		0.2		59.1		42.9
Net investment in operating leases	0.5		9.9		—		9.9		6.3		0.6		12.0		—		12.0		7.5
Total VIE	$	2.5	$	62.9	$	0.2	$	62.7	$	43.3	$	2.9	$	71.3	$	0.2	$	71.1	$	50.4

Non-VIE
Retail financing	$	0.3	$	5.3	$	—	$	5.3	$	4.7	$	0.3	$	5.9	$	—	$	5.9	$	5.2
Wholesale financing	—		0.5		—		0.5		0.5		—		0.7		—		0.7		0.7
Finance receivables	0.3		5.8		—		5.8		5.2		0.3		6.6		—		6.6		5.9
Net investment in operating leases	—		—		—		—		—		—		—		—		—		—
Total Non-VIE	$	0.3	$	5.8	$	—	$	5.8	$	5.2	$	0.3	$	6.6	$	—	$	6.6	$	5.9

Total securitization transactions
Retail financing	$	2.0	$	35.2	$	0.2	$	35.0	$	30.4	$	2.3	$	39.3	$	0.2	$	39.1	$	34.3
Wholesale financing	0.3		23.6		—		23.6		11.8		0.3		26.6		—		26.6		14.5
Finance receivables	2.3		58.8		0.2		58.6		42.2		2.6		65.9		0.2		65.7		48.8
Net investment in operating leases	0.5		9.9		—		9.9		6.3		0.6		12.0		—		12.0		7.5
Total securitization transactions	$	2.8	$	68.7	$	0.2	$	68.5	$	48.5	$	3.2	$	77.9	$	0.2	$	77.7	$	56.3

__________


(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.~~cost.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 8. VARIABLE INTEREST ENTITIES

We use special purpose entities to issue asset-backed securities in transactions to public and private investors. We have deemed most of these special purpose entities to be VIEs of which we are the primary beneficiary. The asset-backed securities are backed by finance receivables and interests in net investments in operating leases. The assets continue to be consolidated by us. We retain interests in our securitization VIEs, including subordinated securities issued by the VIEs, rights to cash held for the benefit of the securitization investors, and rights 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.

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.

See Note 7 for additional information on the financial position and financial performance of our ~~VIEs.~~

~~Item 1. Financial Statements (Continued)~~VIEs and Note 9 for additional information regarding derivatives.

~~FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES~~

~~NOTES TO THE FINANCIAL STATEMENTS~~

NOTE 9. 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/~~gains / (losses), by hedge designation, recorded in income for the periods ended ~~September 30~~March 31 were as follows (in millions):


	Third Quarter						First Nine Months						First Quarter
	2016			2017			2016			2017			2017			2018
Fair value hedges
Interest rate contracts
Net interest settlements and accruals excluded from the assessment of hedge effectiveness	$	95		$	50		$	292		$	182
Ineffectiveness (a)	(1		)	—			21			—
Net interest settlements and accruals on hedging instruments													$	70		$	26
Fair value changes on hedging instruments (a)													(89		)	(339		)
Fair value changes on hedged debt (a)													85			329
Derivatives not designated as hedging instruments
Interest rate contracts	21			20			(70		)	57			7			(17		)
Foreign currency exchange contracts	37			(61		)	129			(151		)
Foreign currency exchange contracts (b)													(29		)	(12		)
Cross-currency interest rate swap contracts	128			5			463			79			58			(58		)
Total	$	280		$	14		$	835		$	167		$	102		$	(71	)

__________

(a)

For the ~~third~~first quarter ~~and first nine months~~ of ~~2016, hedge ineffectiveness reflects~~2017, the ~~net change in~~ fair value changes on ~~derivatives of $228 million loss~~hedging instruments and ~~$655 million gain, respectively, and change in value~~ on hedged debt ~~attributable to the change~~were reported in ~~benchmark interest rates of $227 million gain~~Other income, net;effective first quarter 2018, these amounts were reported in Interest expense.

(b)

Reflects forward contracts between Ford Credit and $634 million loss, respectively. For the third quarter and first nine months of 2017, hedge ineffectiveness reflects the net change in fair value on derivatives of $40 million loss and $95 million loss, respectively, and change in value on hedged debt attributable to the change in benchmark interest rates of $40 million gain and $95 million gain, respectively.an affiliated company.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 9. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

Balance Sheet Effect of Derivative Financial Instruments

Derivative assets and liabilities are recorded on the balance sheet 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~~exposure 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, presented gross, were as follows (in millions):


	December 31, 2016						September 30, 2017						December 31, 2017						March 31, 2018
	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
Interest rate contracts	$	33,175	$	487	$	80	$	31,802	$	323	$	132	$	28,008	$	248	$	135	$	30,250	$	139	$	516
Derivatives not designated as hedging instruments
Interest rate contracts	61,689		156		74		57,144		227		119		60,504		276		137		60,453		282		184
Foreign currency exchange contracts ~~(a)~~	1,791		24		4		3,732		62		147		2,406		3		10		2,885		28		34
Cross-currency interest rate swap contracts	3,201		242		8		3,998		370		22		4,006		408		28		5,712		305		60
Total derivative financial instruments, gross (b) (c)	$	99,856	$	909	$	166	$	96,676	$	982	$	420
Total derivative financial instruments, gross (a) (b)													$	94,924	$	935	$	310	$	99,300	$	754	$	794

__________


(a)	~~Includes forward contracts between Ford Credit~~At December 31, 2017 and ~~an affiliated company.~~March 31, 2018, we held collateral of $15 million and $22 million, respectively, and we posted collateral of $38 million and $55 million, respectively.


(b)	At December 31, ~~2016~~2017 and ~~September 30, 2017, we held collateral of $15 million and $11 million, respectively, and we posted collateral of $12 million and $31 million, respectively.~~


~~(c)~~	~~At December~~March 31, ~~2016 and September 30, 2017,~~2018, the fair value of assets and liabilities available for counterparty netting was ~~$113~~$162 million and ~~$226~~$231 million, respectively. All derivatives are categorized within Level 2 of the fair value hierarchy.

Fair Value Hedges

The carrying value of and fair value adjustments to our hedged debt were as follows (in millions):



	December 31, 2017					March 31, 2018
	Carrying Value		Fair Value Adjustments (a)			Carrying Value		Fair Value Adjustments (a)
Debt	$	38,976	$	(21	)	$	39,733	$	(360	)

__________


(a)	At December 31, 2017 and March 31, 2018, the balance includes unfavorable adjustments of $77 million and $66 million, respectively, related to discontinued hedging relationships.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 10. OTHER ASSETS AND OTHER LIABILITIES AND DEFERRED INCOME

Other assets and other liabilities and deferred income 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, 2016		September 30, 2017		December 31, 2017		March 31, 2018
Accrued interest and other non-finance receivables	$	889	$	1,048	$	1,117	$	1,059
Collateral held for resale, at net realizable value, and other inventory	621		607		780		755
Prepaid reinsurance premiums and other reinsurance recoverables	546		594		611		624
Deferred charges – income taxes	205		244		247		239
Property and equipment, net of accumulated depreciation (a)	156		176		177		181
Restricted cash (b)					124		148
Deferred charges	122		129		127		126
Restricted cash (b)	108		121
Investment in non-consolidated affiliates	153		113		107		126
Other	22		43		39		43
Total other assets	$	2,822	$	3,075	$	3,329	$	3,301

__________


(a)	Accumulated depreciation was $~~347~~354 million and ~~$359~~$363 million at December 31, ~~2016~~2017 and ~~September 30, 2017,~~March 31, 2018, respectively.


(b)	Restricted cash primarily includes cash 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.

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


	December 31, 2016		September 30, 2017		December 31, 2017		March 31, 2018
Unearned insurance premiums and fees	$	650	$	706	$	723	$	736
Interest payable	661		535		722		608
Income tax and related interest(a)	294		281		301		297
Deferred revenue	143		152		148		150
Payroll and employee benefits	51		65		68		45
Other	198		281		310		318
Total other liabilities and deferred income	$	1,997	$	2,020	$	2,272	$	2,154

__________

(a) Includes tax and interest payable to affiliated companies of $99 million and $103 million at December 31, 2017 and March 31, 2018, respectively.

We have investments in entities for which we do not have the ability to exercise significant influence and fair values are not readily available. We have elected to record these investments at cost (less impairment, if any), adjusted for changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. We report the carrying value of these investments in Other assets in our consolidated balance sheet. These investments were $7 million and $9 million at December 31, 2017 and March 31, 2018, respectively. There were no material adjustments to the fair values of these investments during the period ending March 31, 2018.

Deferred revenue balances presented above include amounts from contracts with customers primarily related to admission fee revenue on group financing products available in Argentina and were ~~$120~~$124 million ~~$120 million, and $128 million~~ at both December 31, ~~2016, January 1,~~ 2017, and ~~September 30, 2017, respectively. The January 1, 2017 balance reflects adoption of the new revenue recognition standard. See Note 2 for additional information.~~March 31, 2018.

Admission fee revenue on group financing products is generally recognized evenly over the term of the agreement, which is up to 84 months. Increases in the admission fee deferred revenue balance are the result of payments due during the current period in advance of satisfying our performance under the contract and decreases are a result of revenue recognized during the current period that was previously deferred. ~~The total amount of admission fee revenue recognized for the first nine months of 2017 that was included in the beginning balance of deferred revenue at January 1, 2017 was $21 million.~~

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 11. DEBT AND COMMITMENTS

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, 2016			September 30, 2017			2016		2017		2016		2017		December 31, 2017			March 31, 2018			2017		2018		2017		2018
Short-term debt
Unsecured debt
Floating rate demand notes	$	5,986		$	5,718										$	5,660		$	5,735
Commercial paper	4,507			5,627											4,889			4,758
Other short-term debt	3,803			5,196											5,890			5,034
Asset-backed debt	1,063			1,151											786			1,138
Total short-term debt	15,359			17,692			2.3	%	2.6	%	2.3	%	2.6	%	17,225			16,665			3.0	%	2.9	%	3.0	%	2.9	%
Long-term debt
Unsecured debt
Notes payable within one year	12,369			13,487											13,298			14,195
Notes payable after one year	49,308			53,858											55,687			56,504
Asset-backed debt (a)
Notes payable within one year	19,286			16,496											17,817			18,461
Notes payable after one year	30,112			30,909											34,051			36,744
Unamortized discount	(8		)	(1		)									(1		)	1
Unamortized issuance costs	(212		)	(223		)									(228		)	(236		)
Fair value adjustments (b)	278			162											(21		)	(360		)
Total long-term debt	111,133			114,688			2.4	%	2.5	%	2.5	%	2.5	%	120,603			125,309			2.5	%	2.6	%	2.6	%	2.6	%
Total debt	$	126,492		$	132,380		2.4	%	2.5	%	2.4	%	2.5	%	$	137,828		$	141,974		2.6	%	2.6	%	2.6	%	2.7	%

Fair value of debt (c)	$	128,001		$	134,141										$	139,677		$	142,952

__________


(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)	Adjustments related to designated fair value hedges of unsecured debt.


(c)	The fair value of debt includes ~~$14.3~~$16.4 billion and ~~$16.5~~$15.5 billion of short-term debt at December 31, ~~2016~~2017 and ~~September 30, 2017,~~March 31, 2018, respectively, carried at cost, which approximates fair value. All other debt is categorized within Level 2 of the fair value hierarchy.

NOTE 12. ACCUMULATED OTHER COMPREHENSIVE ~~INCOME/~~INCOME / (LOSS)

The changes in the balance of Accumulated ~~other comprehensive income/(loss)~~Other Comprehensive Income / (Loss) (“AOCI”) attributable to Ford Credit for the periods ended ~~September 30~~March 31 were as follows (in millions):

Third Quarter First Nine Months
2016 2017 2016 2017
Foreign currency translation
Beginning balance $ (576 ) $ (609 ) $ (607 ) $ (890 )
Net gain/(loss) on foreign currency translation (72 ) 204
(41 ) 485
Other comprehensive income/(loss), net of tax (72 ) 204
(41 ) 485
Ending balance $ (648 ) $ (405 ) $ (648 ) $ (405 )

Total AOCI ending balance at September 30 $ (648 ) $ (405 ) $ (648 ) $ (405 )



	First Quarter
	2017			2018
Beginning AOCI balance	$	(890	)	$	(419	)
Net gain / (loss) on foreign currency translation	90			113
Ending AOCI balance	$	(800	)	$	(306	)

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 13. OTHER INCOME, NET

Other income consists of various line items that are combined on the income statement due to their respective materiality compared with other individual income and expense items.

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


	Third Quarter						First Nine Months						First Quarter
	2016			2017			2016			2017			2017			2018
Gains/(Losses) on derivatives	$	186		$	(36	)	$	545		$	(15	)
Currency revaluation gains/(losses)	(157		)	51			(585		)	73
Gains / (Losses) on derivatives													$	32		$	(87	)
Currency revaluation gains / (losses)													(34		)	62
Interest and investment income	19			33			71			80			23			42
Insurance fee income	21			—			68			—
Other	40			9			125			35			9			20
Total other income, net	$	109		$	57		$	224		$	173		$	30		$	37

NOTE 14. SEGMENT INFORMATION

We ~~have three reportable segments in~~conduct our ~~consolidated financial statements that align with~~financing operations directly and indirectly through our ~~management reporting structure~~subsidiaries and ~~reflect the manner in which our Chief Operating Decision Maker manages~~affiliates. We offer substantially similar products and services throughout many different regions, subject to local legal restrictions and market conditions. We segment our business ~~including resource allocation and performance assessment. These segments are:~~based on geographic regions: the Americas, Europe, and Asia Pacific. 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. The following is a brief description of our segments:

•Americas Segment --– United States, Canada, Mexico, Brazil, and Argentina

•Europe Segment --– European region and South Africa

•Asia Pacific Segment --– China and India

~~We conduct our financing operations directly and indirectly through our subsidiaries and affiliates.~~

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 14. SEGMENT INFORMATION (Continued)

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


	Americas		Europe		Asia Pacific		Total Segments		Unallocated Other (a)			Total		Americas		Europe		Asia Pacific		Total Segments		Unallocated Other (a)			Total
Third Quarter 2016
Total revenue (b)	$	2,419	$	244	$	88	$	2,751	$	45		$	2,796
Income before income taxes	423		79		20		522		45			567
Other disclosures:
Depreciation on vehicles subject to operating leases	1,072		13		—		1,085		—			1,085
Interest expense	586		69		42		697		—			697
Provision for credit losses	128		6		4		138		—			138

Third Quarter 2017
Total revenue (b)	$	2,493	$	247	123		$	2,863	$	—		$	2,863
Income before income taxes	485		72		23		580		20			600
Other disclosures:
Depreciation on vehicles subject to operating leases	975		14		—		989		—			989
Interest expense	669		65		76		810		—			810
Provision for credit losses	159		7		3		169		—			169

First Nine Months 2016
Total revenue (b)	$	7,063	$	761	$	258	$	8,082	$	10		$	8,092
First Quarter 2017
Total revenue														$	2,405	$	228	$	98	$	2,731	$	—		$	2,731
Income before income taxes	1,168		257		46		1,471		10			1,481		358		77		28		463		18			481
Other disclosures:
Depreciation on vehicles subject to operating leases	3,149		25		—		3,174		—			3,174		1,053		11		—		1,064		—			1,064
Interest expense	1,687		213		130		2,030		—			2,030		617		61		51		729		—			729
Provision for credit losses	369		21		13		403		—			403		144		6		2		152		—			152
Net finance receivables and net investment in operating leases	111,110		19,266		4,049		134,425		(6,573		)	127,852		114,171		20,840		4,947		139,958		(6,955		)	133,003
Total assets	116,462		22,150		4,380		142,992		—			142,992		119,990		23,906		5,636		149,532		—			149,532

First Nine Months 2017
Total revenue (b)	$	7,359	$	709	$	328	$	8,396	$	—		$	8,396
First Quarter 2018
Total revenue														$	2,581	$	295	$	144	$	3,020	$	—		$	3,020
Income before income taxes	1,308		223		69		1,600		100			1,700		515		111		46		672		(31		)	641
Other disclosures:
Depreciation on vehicles subject to operating leases	3,055		35		—		3,090		—			3,090		1,023		5		—		1,028		—			1,028
Interest expense	1,930		187		191		2,308		—			2,308		752		72		91		915		(3		)	912
Provision for credit losses	389		21		10		420		—			420		111		5		3		119		—			119
Net finance receivables and net investment in operating leases	115,331		23,855		5,921		145,107		(7,579		)	137,528		120,392		27,702		7,574		155,668		(8,017		)	147,651
Total assets	120,398		27,323		6,757		154,478		—			154,478		127,013		30,109		7,961		165,083		—			165,083

__________


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

~~(b)~~

~~Total revenue for 2016 includes~~ ~~Total financing revenue, Insurance premiums earned,~~ ~~and~~ ~~Other income, net. For 2017, Total revenue includes~~ ~~Total financing revenue, Insurance premiums earned,~~ ~~and~~ ~~Fee based revenue and other. The change in the definition of Total revenue is the result of our adoption of the new revenue recognition accounting standard as of January 1, 2017 (see Note 2 for additional information).~~

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

~~FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES~~

~~NOTES TO THE FINANCIAL STATEMENTS~~

NOTE 15. COMMITMENTS AND CONTINGENCIES

Commitments and contingencies primarily consist of lease commitments, guarantees and indemnifications, and litigation and claims.

Guarantees and Indemnifications

Guarantees and indemnifications are recorded at fair value at their inception. 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.

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 failure of the guaranteed 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.

Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 15. COMMITMENTS AND CONTINGENCIES (Continued)

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 terms of the contract or by 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.

The maximum potential payments under these guarantees and limited indemnities totaled ~~$35~~$52 million and $3654 million at December 31, ~~2016~~2017 and ~~September 30, 2017~~,March 31, 2018, respectively. Of these values, ~~$31~~$44 millionand $3346 million at December 31, ~~2016~~2017 and ~~September 30, 2017,~~March 31, 2018, respectively, were counter-guaranteed by Ford to us. There were no recorded liabilities related to guarantees and limited indemnities at December 31, ~~2016~~2017 and ~~September 30, 2017.~~March 31, 2018.

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.

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

~~FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES~~

~~NOTES TO THE FINANCIAL STATEMENTS~~

~~NOTE 15. COMMITMENTS AND CONTINGENCIES~~ ~~(Continued)~~

For nearly all of our 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. We do not reasonably expect, based on our analysis, that such matters would have a material effect on future financial statements for a particular year, although such an outcome is ~~possible~~.possible.

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.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholder of

Ford Motor Credit Company LLC:

Results of Review of Financial Statements

We have reviewed the accompanying consolidated balance sheet of Ford Motor Credit Company LLC and its subsidiaries (the “Company”) as of ~~September 30, 2017~~March 31, 2018, and the related consolidated statements of income, ~~and~~ comprehensive income, and shareholder’s interest for the three-month ~~and nine-month~~ periods ended ~~September 30,~~March 31, 2018 and 2017 and ~~2016 and~~ the ~~consolidated statement of shareholder’s interest and~~ condensed consolidated statement of cash flows for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016. These~~including the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements ~~are~~for them to be in conformity with accounting principles generally accepted in the ~~responsibility~~United States of ~~the Company’s management.~~America.

We ~~conducted our review~~have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (“PCAOB”), the consolidated balance sheet of the Company as of December 31, 2017, and the related consolidated statements of income, comprehensive income, shareholder’s interest, and of cash flows for the year then ended (not presented herein), and in our report dated February 8, 2018, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2017, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States),~~PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2016, and the related consolidated statements of income, comprehensive income, shareholder’s interest, and of cash flows for the year then ended (not presented herein), and in our report dated February 9, 2017, except with respect to our opinion on the consolidated financial statements insofar as it relates to the change in composition of reportable segments discussed in Note 17, as to which the date is April 27, 2017, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2016, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP

~~PricewaterhouseCoopers LLP~~

Detroit, Michigan

~~October 26, 2017~~April 25, 2018

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

Results of Operations

Overview

In general, we measure period-to-period changes in pre-tax results using the causal factors listed below:

Volume and Mix – Volume and Mix are primarily reflected within Net financing margin on the income statement.

◦

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 vehicle sales and leases, the extent to which we purchase retail installment sale and 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 for the purchase of retail installment sale and lease contracts and to provide wholesale financing.


◦	Mix primarily measures changes in net financing margin driven by period over period changes in the composition of our average managed receivables by product and by country or region.


~~��~~	Financing Margin – Financing Margin is reflected within Net financing margin on the income statement.

◦

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 the Provision for credit losses on the income statement.


◦	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 economic conditions. For additional information, refer to the “Critical Accounting Estimates – Allowance for Credit Losses” section of Item 7 of ~~Exhibit 99~~Part II to our ~~Current Report on Form 8-K dated April 27, 2017 (“April 27,~~ 2017 Form ~~8-K Report”).~~10-K Report.

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


◦	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. For additional information, refer to the “Critical Accounting Estimates” section of Item 7 of ~~Exhibit 99~~Part II to our ~~April 27,~~ 2017 Form ~~8-K~~10-K Report.

Exchange – Reflects changes in pre-tax results driven by the effects of converting functional currency income to U.S. ~~dollars and is reflected in all lines on the income statement.~~dollars.

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

Other – Primarily includes Operating expenses, Other revenue, and Insurance expenses ~~and~~ ~~Other income, net~~ on the income statement 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, net~~other revenue 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 Other,~~unallocated risk management, and other miscellaneous items.

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

Cash~~(as~~ (as shown on the Funding Structure, Liquidity Sources, and Leverage charts) – Cash and cash equivalentsand ~~and~~ Marketable securities reported on Ford Credit’s balance sheet, excluding amounts related to insurance activities

Earnings Before Taxes (EBT) – Reflects Income before income taxes as reported on Ford Credit’s income statement

Return on Equity (ROE) (as shown on the Key Metrics chart) – Reflects return on equity calculated by annualizing net income for the period and dividing by monthly average equity for the period

Securitizations (as shown on the Public Term Funding Plan chart) – Public securitization transactions, Rule 144A offerings sponsored by Ford ~~Motor~~ Credit, and widely distributed offerings by Ford Credit Canada

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

Total Debt (as shown on the Leverage chart) – Debt on Ford Credit’s balance sheet. 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

~~Unallocated Other~~Total Net Receivables (as shown on the ~~Pre-Tax Results~~Total Net Receivables Reconciliation To Managed Receivables chart) – Includes finance receivables (retail 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 sheet 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 on the EBT by Segment chart) – 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

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

~~Third~~First Quarter ~~2017~~2018 Compared with ~~Third~~First Quarter ~~2016~~2017

The following chart shows our key metrics:

In the ~~third~~first quarter of ~~2017, pre-tax profit of $600~~2018, EBT was $641 million, ~~improved from last~~$160 million higher compared to the prior year. Receivables were 11% higher ~~with growth globally~~compared to the prior year, led by growth in retail ~~receivables and~~financing in all regions. U.S. consumer credit metrics were healthy, with the ~~consolidation~~Loss-to-Receivables ratio at 0.51%, which was 3 basis points lower compared to the prior year. U.S. auction values were up 1% compared to the prior year.

ROE was 18%, 8 percentage points higher compared to the prior year, reflecting the impact of ~~$1.3 billion in~~tax planning.

Our balance sheet remains strong with managed leverage within our target range of 8:1 to 9:1.

We plan to maintain Ford Credit's managed receivables for the ~~Forso joint venture in~~foreseeable future at about the ~~Nordic region (“Forso”). For additional information, see Note 1~~same level as at the end of ~~our Notes~~the quarter. Our focus is to ~~the Financial Statements.~~maintain a strong risk profile for Ford and Ford Credit balancing receivables, funding requirements, liquidity, profitability, and distributions. This will allow us to continue supporting auto sales while preserving capacity for future mobility initiatives. It also will enable relatively consistent distributions to Ford approximately equal to Ford Credit’s annual net income.

FICO scores remain strong, and our origination, servicing and collection practices continue to be disciplined and consistent. Portfolio performance was robust. The loss-to-receivables ratio of 53 basis points was up 8 basis points and within expectations.

~~In the third quarter, we distributed $378 million to our parent.~~

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

~~On a pre-tax basis, we earned $600 million in the third quarter of 2017, compared with $567 million a year ago.~~ The following chart shows the factors that contributed to the strong ~~third~~first quarter ~~pre-tax profit:~~EBT:

Ford Credit’s ~~third~~first quarter ~~pre-tax profit~~EBT was ~~$33~~$160 million higher ~~compared to the prior~~than a year ago, led ~~primarily~~ by strong receivables growth, ~~and~~ lease residual ~~performance.~~

~~Unfavorable~~performance, strong credit loss performance, ~~reflects an increase~~robust margin, and favorable exchange. This was offset in ~~reserves and higher actual losses driven primarily~~part by ~~higher defaults.~~

~~Other includes unfavorable~~the effects of derivatives market valuation, ~~higher operating costs and~~which reflects the non-recurrence of favorable performance a ~~pre-tax loss of $17 million related to the consolidation of the Forso joint venture.~~year ago.

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

We have three reportable segments in our consolidated financial statements that align with our management reporting structure and reflect the manner in which our Chief Operating Decision Maker manages our business, including resource allocation and performance assessment. These segments are: the Americas, Europe, and Asia Pacific. Items excluded in assessing segment performance, because they are managed at the corporate level, are reflected in Unallocated Other. Results of operations by segment and Unallocated Other for the period ended ~~September 30~~March 31 are shown below (in millions). For additional information, see Note 14 of our Notes to the Financial Statements.

Americas Segment

The Americas Segment ~~third~~first quarter ~~pre-tax profit~~EBT of $515 million is $157 million higher compared with ~~2016,~~2017, explained primarily by favorable lease residual performance driven by ~~lower supplemental depreciation~~improved residual losses on the lease ~~portfolio.~~

~~The Americas Segment pre-tax profit of $1.3 billion for the first nine months of 2017 is $140 million higher compared with 2016, more than explained by~~portfolio, robust credit loss performance, strong financing margin, and favorable volume and mix.

Europe Segment

The Europe Segment ~~third~~first quarter ~~pre-tax profit~~EBT of $111 million is ~~lower~~$34 million higher compared with ~~2016,~~2017, explained ~~by a pre-tax loss of $17 million upon consolidation of our Forso joint venture in the Nordic region, partially offset~~primarily by favorable volume and ~~mix.~~

~~The Europe Segment pre-tax profit of $223 million for the first nine months of 2017 is $34 million lower compared with 2016, explained primarily by lower financing margin~~mix, driven by ~~lower yields~~growth in consumer and ~~a pre-tax loss~~non-consumer finance receivables, and the favorable impact of ~~$17 million upon consolidation of our Forso joint venture,~~the weaker U.S. dollar compared to the euro and pound sterling, partially offset by ~~favorable volume and mix.~~higher operating costs driven by Brexit.

Asia Pacific Segment

The Asia Pacific Segment ~~third~~first quarter ~~pre-tax profit~~EBT of $46 million is $18 million higher compared with ~~2016,~~2017, explained primarily by favorable volume and mix and operating cost performance, partially offset by lower financing margin driven by higher borrowing costs.

~~The Asia Pacific Segment pre-tax profit~~Unallocated Other

Unallocated Other first quarter loss of ~~$69~~$31 million ~~for the first nine months of 2017~~ is ~~$23~~a $49 million ~~higher~~deterioration compared with ~~2016, explained~~2017, reflecting primarily ~~by favorable volume and mix, partially offset by lower financing margin driven by higher borrowing cost.~~unfavorable performance in market valuation adjustments to derivatives.

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

~~Unallocated Other~~

Unallocated Other in the third quarter is lower compared with 2016, reflecting primarily less favorable performance in market valuation adjustments to derivatives. For additional information, see Notes 9 and 14 of our Notes to the Financial Statements.

Unallocated Other pre-tax profit of $100 million for the first nine months of 2017 is $90 million higher compared with 2016, reflecting primarily favorable performance in market valuation adjustments to derivatives.

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 ~~quarter~~period to ~~quarter~~period as Ford’s marketing programs ~~change.~~change.

The following chart shows our United States and Canada retail installment and lease share of new ~~Ford-~~Ford and ~~Lincoln-brand~~Lincoln brand vehicle retail sales and wholesale financing share of new ~~Ford-~~Ford and ~~Lincoln-brand~~Lincoln brand vehicles acquired by dealers. Also shown is ~~Americas’~~the Americas segment consumer financing contract placement volume for new and used vehicles. All data is for the periods ended ~~September 30:~~March 31:

In the ~~third~~first quarter of ~~2017, U.S.~~2018, Americas Segment retail and lease share were mixed and total contract placement volume ~~were down~~was up compared to the prior year, reflecting ~~changes in~~ Ford’s marketing programs.

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

The following chart shows Europe’s retail installment and lease share of new ~~Ford-brand~~Ford brand vehicles sold and wholesale financing share of new ~~Ford-brand~~Ford brand vehicles acquired by dealers. Also shown is Europe’s consumer financing contract placement volume for new and used vehicles. All data is for the periods ended ~~September 30:~~March 31:

In the ~~third~~first quarter of ~~2017,~~2018, Europe Segment ~~financing share and~~ contract placement volume ~~were similar~~was down compared to the prior year.

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

The following chart shows Asia Pacific’s retail installment share of new ~~Ford-brand~~Ford and Lincoln brand vehicles sold by dealers and wholesale financing share of new ~~Ford-brand~~Ford and Lincoln brand vehicles acquired by dealers. Also shown is Asia Pacific’s consumer financing contract placement volume for new and used vehicles. All data is for the periods ended ~~September 30:~~March 31:

In the ~~third~~first quarter of ~~2017,~~2018, Asia Pacific Segment total contract placement volume was up ~~55%~~ compared with the prior ~~year, reflecting changes~~year. The increase in retail installment share was driven primarily by higher customer acceptance of financing and Ford’s marketing ~~programs.~~strategy.

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

Financial Condition

Finance Receivables and Operating Leases

Our receivables, including finance receivables and operating leases, were as follows:

Our operating lease portfolio is prudently managed and ~~is about 20%~~was 18% of total net receivables. Leasing is an important product, and our leasing strategy balances sales, share, residuals, and long-term profitability. Our operating leases in the U.S. and Canada represent 99% of our total operating lease portfolio.

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

The following chart shows our reconciliation for our Non-GAAP financial ~~measure,~~measures, managed receivables:

~~__________~~

At December 31, 2015, September 30, 2016, December 31, 2016, and September 30, 2017, includes consumer receivables before allowance for credit losses of $27.6 billion, $29.9 billion, $32.5 billion, and $35.2 billion, respectively, and non-consumer receivables before allowance for credit losses of $26.1 billion, $23.3 billion, $26.0 billion, and $23.6 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 December 31, 2015, September 30, 2016, December 31, 2016, and September 30, 2017, includes net investment in operating leases before allowance for credit losses of $13.3 billion, $10.0 billion, $11.8 billion, and $9.9 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 Ford Credit’s other creditors. 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. For additional information on our securitization transactions, refer to the “Securitization Transactions” and “On-Balance Sheet Arrangements” sections of Item 7 of Exhibit 99 to our April 27, 2017 Form 8-K Report and Note 7 of our Notes to the Financial Statements for the period ended September 30, 2017.

At December 31, 2016, March 31, 2017, December 31, 2017, and March 31, 2018, total net receivables includes consumer receivables before allowance for credit losses of $32.5 billion, $33.4 billion, $38.9 billion, and $39.3 billion, respectively, and non-consumer receivables before allowance for credit losses of $26.0 billion, $26.4 billion, $24.5 billion, and $26.6 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 December 31, 2016, March 31, 2017, December 31, 2017, and March 31, 2018, total net receivables includes net investment in operating leases before allowance for credit losses of $11.8 billion, $12.3 billion, $11.5 billion, and $12.0 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 Ford Credit’s other creditors. 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. 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 2017 Form 10-K Report and Note 7 of our Notes to the Financial Statements for the period ended March 31, 2018.

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 ~~financing~~lending business, and credit risk has a significant impact on our business. We actively manage the credit risk of our consumer (retail financing and operating lease) 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 probable credit losses inherent in our finance receivables and operating leases 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, and receivable levels. The adequacy of our allowance for credit losses is assessed quarterly and the assumptions and models used in establishing the allowance are evaluated regularly. A description of our allowance setting process is provided in the “Critical Accounting Estimates - Allowance for Credit Losses” section of Item 7 of ~~Exhibit 99~~Part II to our ~~April 27,~~ 2017 Form ~~8-K~~10-K Report.

Most of our charge-offs are related to retail finance and operating lease contracts. 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 charge-offs. We also incur credit losses on our dealer financing, but default rates for these receivables historically have been substantially lower than those for retail finance and operating lease contracts. For additional information on severity, refer to the “Critical Accounting Estimates - Allowance for Credit Losses”

section of Item 7 of ~~Exhibit 99~~Part II to our ~~April 27,~~ 2017 Form ~~8-K~~10-K Report.

In purchasing retail finance and operating lease contracts, we use a proprietary scoring system that measures credit quality using information in the credit application, proposed contract terms, credit bureau data, and other ~~information we obtain.~~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 creditworthiness focusing 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 the quality of our receivables, see Note 4 of our Notes to the Financial Statements.

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

U.S. Origination Metrics

We support customers across the credit spectrum. Our higher risk business, as classified at contract inception, consistently represents ~~5%-6%~~6% of our portfolio and has been stable for over 10 years.

The following charts show ~~quarterly~~annual trends for FICO and higher risk mix and retail contract terms:

The ~~third~~first quarter average placement FICO score remained consistent.

Our average retail term ~~is unchanged~~was consistent from the prior year, and retail contracts of 7384 months and longer continued to be a relatively small part of our business. Ford Credit remains focused on managing the trade cycle – building customer relationships and loyalty, while offering financing products and terms customers want.

Ford Credit’s origination and risk management processes deliver robust portfolio performance.

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

U.S. Credit Losses

The following charts show the primary drivers of credit losses in the U.S. retail and lease business, which comprised ~~70%~~67% of our worldwide consumer portfolio at ~~September 30, 2017.~~March 31, 2018. Loss-to-Receivables (“LTR”) ratios are charge-offs ~~on an annualized basis~~ divided by average managed receivables.

~~Credit losses have been at historically low levels for quite some time. Third~~First quarter ~~2017~~2018 charge-offs and ~~the~~ LTR ratio were ~~higher than~~lower compared to the prior year ~~but~~and within our placement expectations.

Compared to the prior year, delinquencies have shown ~~a slight~~ improvement while ~~the repossession rate is higher.~~repossessions are up slightly. Both are within our expectations.

Severity has ~~trended favorably during 2017, primarily reflecting~~improved year-over-year, consistent with an improved auction ~~market.~~market and an increased time to repossession.

Credit quality remains strong, reflecting a strong business environment and healthy consumer credit conditions.

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

Worldwide Credit Losses

The following charts show ~~quarterly~~annual trends of charge-offs (credit losses, net of recoveries), LTR ~~ratios,~~ratio, credit loss reserve, and our credit loss reserve as a percentage of end-of-period (“EOP”) managed receivables:

Our worldwide credit loss metrics remain strong. The worldwide LTR ratio in the ~~third~~first quarter of ~~2017~~2018 is ~~higher than~~lower as compared to the same period in the prior year, reflecting primarily the U.S. retail and lease business as covered above.

Our credit loss reserve is based on such factors as historical loss performance, portfolio quality, and ~~receivable levels.~~receivables level. The credit loss reserve was higher ~~at September 30, 2017,~~as of March 31, 2018, compared to ~~September 30, 2016,~~March 31, 2017, reflecting credit loss performance trends and growth in receivables.

The reserve as a percent of managed receivables was up ~~4 basis points from~~slightly compared to the prior year.

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. Lease~~value, and lease customers also are more likely to buy or lease another Ford or Lincoln vehicle. ~~Ford and Ford Credit~~We manage our lease share with an enterprise view to support sales, protect residual values, and manage the trade cycle. ~~Our~~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~~industrywide used vehicle prices, marketing incentive plans, and vehicle quality data. For operating leases, changes in expected residual values impact ~~the~~ 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 ~~Exhibit 99 to~~Part II of our ~~April 27,~~ 2017 Form ~~8-K~~10-K Report.

U.S. ~~Ford-~~Ford and ~~Lincoln-Brand~~Lincoln Brand Operating Lease Experience

The following charts show lease placement volume and lease share of ~~Ford-~~Ford and ~~Lincoln-brand~~Lincoln brand retail sales for vehicles in the respective periods. The U.S. operating lease portfolio accounted for ~~86%~~87% of our total net investment in operating leases at ~~September 30, 2017.~~March 31, 2018.

~~Third~~First quarter ~~2017~~2018 lease placement volume was updown compared to the prior year, reflecting Ford’s ~~higher lease mix.~~marketing programs.

Industry lease share in the ~~third~~first quarter of ~~2017~~2018 was ~~down compared~~equal to the same period last year. Ford Credit’s lease share was uplower compared to the prior year and remains below the industry, reflecting the Ford sales mix.

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

The following charts show lease return volumes, return rates, and off-lease auction values at constant ~~third~~first quarter ~~2017~~2018 vehicle mix in the respective periods:

Lease return volume and the return rate in the ~~third~~first quarter of ~~2017 was up~~2018 were down from the prior ~~year, reflecting higher lease placements in recent years~~year. Our 24-month and ~~an increased return rate. Our third~~36-month first quarter off-lease auction values were ~~mixed~~higher compared to the ~~same period a year ago, but have continued to improve each quarter since the fourth quarter of 2016.~~prior year.

We continue to plan for lower auction ~~values but our outlook has improved.~~values. We now expect ~~three-year~~ full year ~~2017~~2018 auction values to be ~~down~~ about 3%1 percent to 2 percent lower compared with ~~2016~~2017 at first quarter 2018 constant mix.

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 U.S. Securities and Exchange Commission:

DBRS Limited (“DBRS”);

Fitch Ratings, Inc. (“Fitch”);

Moody’s Investors Service, Inc. (“Moody’s”); and

~~Standard & Poor’s~~S&P Global Ratings ~~Services, a division of McGraw Hill Financial~~ (“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.

There have been no rating actions taken by these NRSROs since the filing of our ~~Quarterly Report on~~2017 Form ~~10-Q for the quarter ended June 30, 2017.~~10-K Report.

The following chart 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 /~~ Outlook/Trend

Minimum

Long-Term Investment Grade Rating

DBRS

BBB

R-2M

Stable

BBB (low)

Fitch

BBB

Stable

BBB-

Moody’s

Baa2

P-2

~~Stable~~Negative

Baa3

S&P

BBB

A-2

Stable

BBB-

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

Funding and Liquidity

Our primary funding and liquidity objective is to be well capitalized with a strong, investment grade balance sheet and ample liquidity to support our financing activities and growth under a variety of market conditions, including short-term and long-term market disruptions.

Our funding strategy remains focused on diversification, and we plan to continue accessing a variety of markets, channels, and investors.

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

Funding Portfolio

The following chart shows the trends in funding for our managed receivables:

Managed receivables of ~~$145~~$156 billion as of ~~September 30, 2017,~~March 31, 2018, were funded primarily with term debt and term asset-backed securities. Securitized funding as a percent of managed receivables was ~~33%~~36%.

We expect the mix of securitized funding to remain around 35%. 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 chart shows our issuances for full year ~~2015~~2016 and ~~2016,~~2017, planned issuances for full year ~~2017,~~2018, and our global public term funding ~~issuances~~issuance through ~~October 25, 2017,~~April 24, 2018, excluding short-term funding programs:

Our total unsecured public term funding plan is categorized by currency of issuance. We plan to continue issuing our European debt from Ford Credit U.S.

For ~~2017, our~~2018, we project full year ~~forecast for~~ public term funding is in the range of ~~$28~~$24 billion to ~~$32~~$31 billion.

The public term funding range is $2 billion to 3 billion lower than the prior forecast, with all of the reduction in unsecured term funding. This reflects higher utilization of private ABS capacity to align to our liquidity target and lower receivables.

Within the unsecured term funding plan, we forecast higher full year issuance in euros and pounds sterling, and lower full year issuance in U.S. dollars, reflecting opportunistic issuance in euros completed in the first quarter. Of the $3 billion of proceeds raised, the majority supported Ford Credit U.S. funding requirements.

Through ~~October 25, 2017,~~April 24, 2018, we have completed ~~about $25~~$11 billion of public term ~~issuance.~~

~~The forecast reflects the potential for Ford Credit U.S. to issue euro-denominated debt and on-lend to FCE to provide funding flexibility given the uncertainty around Brexit.~~

issuances.

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

Liquidity Sources

We define gross liquidity as cash, cash equivalents, and marketable securities (excluding amounts related to insurance activities) and committed capacity (which includes our credit and asset-backed facilities and bank lines), less utilization of liquidity. Utilization of liquidity is the amount funded under our liquidity sources and also includes the cash and cash equivalents required to support securitization transactions. Securitization cash is cash held for the benefit of the securitization investors (for example, a reserve fund). Net liquidity available for use is defined as gross liquidity less certain adjustments for asset-backed capacity in excess of eligible receivables and cash related to the Ford Credit Revolving Extended Variable-utilization program (“FordREV”), which can be accessed through future sales of receivables. While not included in available liquidity, these adjustments represent additional funding sources for future originations.

The following chart shows our liquidity sources and utilization:

Our liquidity available for use will fluctuate quarterly based on factors including near-term debt maturities, receivable growth, and timing of funding transactions. We target liquidity of at least $25 billion.

At ~~September 30, 2017, Ford Credit’s~~March 31, 2018, our liquidity available for use was ~~$2.9~~$28.2 billion ~~higher~~, $1.3 billion lower than at year-end ~~2016 and $1.4 billion higher than at June 30,~~ 2017.

~~As of September 30, 2017, our liquidity remained strong at $29.9 billion.~~ Our sources of liquidity include cash, committed asset-backed facilities, unsecured credit facilities, and the Ford corporate credit facility allocation. ~~As of September 30, 2017,~~At March 31, 2018, our liquidity sources including cash totaled ~~$50.5~~$52.1 billion ~~down $0.4~~, up $0.6 billion from year-end ~~2016.~~2017.

Cash, Cash Equivalents, and Marketable Securities. At ~~September 30,~~both December 31, 2017 and March 31, 2018, our cash, cash equivalents, and marketable securities (excluding amounts related to insurance activities) totaled ~~$11.3 billion, compared with $10.8 billion at year-end 2016.~~$11.8 billion. 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, cash equivalents, and marketable securities (excluding amounts related to insurance activities) primarily include U.S. Department of Treasury obligations, federal agency securities, bank time deposits with investment-grade institutions, commercial paper rated A-1/P-1 or higher, 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~~ratings. .

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

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, cash equivalents, and marketable securities included amounts to be used only to support our securitization transactions of ~~$2.8~~$3.8 billion and ~~$3.4~~$3.2 billion at ~~September 30,~~December 31, 2017 and ~~December~~March 31, ~~2016,~~2018, respectively.

Committed Capacity. At ~~September 30, 2017,~~March 31, 2018, our committed capacity totaled ~~$39.2~~$40.3 billion, ~~down $0.9~~compared with $39.7 billion from December 31, ~~2016.~~2017. Our committed capacity is primarily comprised of committed ~~asset-backed security (“ABS”)~~ABS facilities from bank-sponsored commercial paper conduits and other financial institutions, unsecured credit facilities with financial institutions, and allocated commitments under the Ford corporate credit facility.

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 receivables or to purchase or make advances under asset-backed securities backed by retail or wholesale finance receivables or operating leases for proceeds of up to ~~$33.4~~$33.9 billion ($~~16.2~~16.6 billion of retail financing, $6.3 billion of wholesale financing, and ~~$10.9~~$11.0 billion of operating leases) at ~~September 30, 2017.~~March 31, 2018. These committed facilities have varying maturity dates, with ~~$14.1~~$16 billion having maturities within the next twelve months and the remaining balance having maturities through ~~2019.~~2020. We plan capacity renewals to protect our global funding needs, optimize capacity utilization, and maintain sufficient liquidity.

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 ~~September 30, 2017, $17.0~~March 31, 2018, $19.9 billion of these commitments were in use. These programs 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 programs to be terminated due to such events.

FCE Bank plc (“FCE”) has pre-positioned retail receivables with the Bank of England which supports access to the Discount Window Facility. Pre-positioned assets are neither pledged to nor held as collateral by the Bank of England unless the Discount Window Facility is accessed. FCE’s eligibility to access the Discount Window Facility is not reflected in the Liquidity Sources table above.

Unsecured Credit Facilities. At ~~September 30, 2017,~~March 31, 2018, we and our majority-owned subsidiaries had ~~$5.8~~$6.4 billion of contractually committed unsecured credit facilities with financial institutions, including the FCE Credit Agreement (as defined below) and the allocation under Ford’s corporate credit facility. At ~~September 30, 2017, $4.8~~March 31, 2018, $5.3 billion was available for use.

FCE’s £945 million (equivalent to $1.3 billion at ~~September 30, 2017)~~March 31, 2018) syndicated credit facility (the “FCE Credit Agreement”) matures in 2020. At ~~September 30, 2017, £545~~March 31, 2018, £745 million (equivalent to ~~$730 million)~~$1.0 billion) was available for use. The FCE Credit Agreement contains certain covenants, including an obligation for FCE to maintain its ratio of regulatory capital to risk-weighted assets at no less than the applicable regulatory minimum, and for the support agreement between FCE and Ford Credit to remain in full force and effect (and enforced by FCE to ensure that its net worth is maintained at no less than $500 million).

Lenders under the Ford corporate credit facility have commitments totaling $13.4 billion, with 25% of the commitments maturing on April 30, 2020 and 75% of the commitments maturing on April 30, ~~2022 and 25% of the commitments maturing on April 30, 2020.~~2022. Ford has allocated $3.0 billion of commitments, including commitments under a Chinese renminbi sub-facility, to us on an irrevocable and exclusive basis to support our ~~growth and~~ liquidity. At ~~September 30, 2017,~~March 31, 2018, all $3.0 billion was available for use.

Funding and Liquidity Risks

Refer to the “Funding and ~~Liquidity”~~Liquidity Risks” section of Item 7 of ~~Exhibit 99 to~~Part II of our ~~April 27,~~ 2017 Form ~~8-K~~10-K Report for a list of factors that could affect our liquidity and information on our stress testing.

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 chart shows the calculation of our financial statement leverage and managed ~~leverage (in billions, except for ratios):~~leverage:

We plan our managed leverage by considering prevailing market conditions and the risk characteristics of our business. At ~~September 30, 2017,~~March 31, 2018, our financial statement leverage was ~~9.4:~~9.1:1, and managed leverage was ~~8.7:~~8.4:1. We target managed leverage in the range of 8:1 to 9:1. For information on our planned distributions, refer to the “Outlook” section.

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

Outlook

We now expect full year 2018 EBT to be flat to lower than 2017 ~~pre-tax profit~~as we continue to ~~exceed $2.0 billion driven by strong volume~~plan for lower financing margins due to rising interest rates, and ~~mix and better-than-expected residual values.~~while we expect auction values to trend better than originally expected, we expect them to be down slightly year-over-year.

~~In the third quarter, we distributed $378 million~~We now expect distributions to our ~~parent.~~parent to be higher than plan in 2018.

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

~~Risk Factors~~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:

~~Decline in industry~~Ford’s long-term competitiveness depends on the successful execution of fitness actions;

Industry sales volume, particularly in the United States, Europe, or China, ~~due to~~could decline if there is a financial crisis, recession, or significant geopolitical ~~events, or other factors;~~ event;

~~Lower-than-anticipated market acceptance of~~ Ford’s new orand existing products orand mobility services ~~or failure~~are subject to ~~achieve expected growth;~~market acceptance;

~~Market shift away from~~Ford’s results are dependent on sales of larger, more profitable vehicles, ~~beyond Ford’s current planning assumption,~~ particularly in the United States;

~~Continued or~~Ford may face increased price competition resulting from industry excess capacity, currency fluctuations, or other factors;

Fluctuations in commodity prices, foreign currency exchange rates, ~~commodity prices,~~ and interest ~~rates;~~rates can have a significant effect on results;

~~Adverse effects resulting from~~With a global footprint, Ford’s results could be adversely affected by economic, geopolitical, protectionist trade policies, or other events;

~~Work stoppages at Ford or supplier facilities or other limitations on~~Ford’s production, ~~(whether~~ as ~~a result of~~well as Ford’s suppliers’ production, could be disrupted by labor disputes, natural or man-made disasters, ~~tight credit markets or other~~ financial distress, production ~~constraints or~~ difficulties, or other ~~factors);~~factors;

~~Single-source supply of components or materials;~~

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

~~Substantial pension~~Pension and other postretirement liabilities ~~impairing~~could adversely affect Ford’s liquidity orand financial condition;

~~Worse-than-assumed economic~~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;

~~Restriction on use of tax attributes from tax law “ownership change;”~~

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

~~Increased safety,~~Safety, emissions, fuel economy, orand other regulations ~~resulting in higher costs, cash expenditures, and/or sales restrictions;~~affecting Ford may become more stringent;

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

~~Adverse effects on results from a decrease in or cessation or clawback~~Ford’s receipt of government incentives ~~related~~could be subject to ~~investments;~~reduction, termination, or clawback;

~~Cybersecurity risks to operational~~Operational systems, security systems, ~~or infrastructure owned~~and vehicles could be affected by cyber incidents;

Ford ~~Ford Credit, or a third-party vendor or supplier;~~

~~Failure of financial institutions~~Credit’s access to ~~fulfill commitments under committed credit and liquidity facilities;~~

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

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

~~Increased~~Ford Credit could face increased competition from banks, financial institutions, or other third parties seeking to increase their share of financing Ford vehicles; and

~~New~~Ford Credit could be subject to new or increased credit regulations, consumer or data protection regulations, or other ~~regulations resulting in higher costs and/or additional financing restrictions.~~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 ~~Annual Report on~~2017 Form 10-K ~~for the year ended December 31, 2016 (“2016 Form 10-K Report”),~~Report, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

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

Accounting Standards Issued But Not Yet Adopted

The Financial Accounting Standards Board (“FASB”) has issued the following standards, which are not expected to have a ~~material~~significant change in practice and / or have a significant financial impact (with the exception of those standards ~~2016-02 and 2016-13)~~further discussed in Note 2) to our financial statements or financial statement ~~disclosures:~~disclosures.



Standard		Effective Date (a)
~~2016-18~~2018-02	~~Statement of Cash Flows - Restricted Cash~~	~~January 1, 2018~~
~~2016-16~~	~~Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory~~	~~January 1, 2018~~
~~2016-15~~	~~Statement of Cash Flows - Classification~~Reclassification of Certain ~~Cash Receipts and Cash Payments~~	~~January 1, 2018~~
~~2016-01~~	~~Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities~~	~~January 1, 2018~~
~~2017-12~~	~~Derivatives and Hedging~~	~~January 1, 2019 (b)~~
~~2017-08~~	~~Nonrefundable Fees and~~Tax Effects from Accumulated Other ~~Costs - Premium Amortization on Purchased Callable Debt Securities~~Comprehensive Income	January 1, 2019
2016-02	Leases	January 1, 2019 (b) (c)
2016-13	Credit Losses - Measurement of Credit Losses on Financial Instruments	January 1, 2020 (b)

__________


(a)	Early adoption for each of the standards ~~except standard 2016-01,~~ is permitted.


(b)	For additional information see Note 2 of our Notes to the Financial Statements.


(c)	The FASB has issued the following update to the Leases standard: Accounting Standard Update (“ASU”) 2018-01 (Land Easement Practical Expedient for Transition to Topic 842). We will adopt with the new leases guidance effective January 1, 2019.

Other Financial Information

The interim financial information included in this Quarterly Report on Form 10-Q for the periods ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ has not been audited by PricewaterhouseCoopers LLP (“PwC”). In reviewing such information, PwC has applied limited procedures in accordance with professional standards for reviews of interim financial information. Readers should restrict reliance on PwC’s reports on such information accordingly. PwC is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for its reports on interim financial information, because such reports do not constitute “reports” or “parts” of registration statements prepared or certified by PwC within the meaning of Sections 7 and 11 of the Securities Act of 1933.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

In our ~~2016~~2017 Form 10-K Report, 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 twelve-month period represent an estimate of the sensitivity of our pre-tax cash flow. Under this model, we estimate that at ~~September 30, 2017,~~March 31, 2018, all else constant, such an increase in interest rates would ~~decrease~~increase our pre-tax cash flow by $2$17 million over the next 12 months, compared with an increase of ~~$21~~$14 million at December 31, ~~2016.~~2017. 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.

ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. ~~N. Joy Falotico,~~David W. McClelland, our ~~Chairman of the Board~~President and Chief Executive Officer (“CEO”), and ~~Marion B. Harris,~~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 ~~September 30, 2017~~March 31, 2018, 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 ~~September 30, 2017~~March 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 5. Other ~~Information.~~Information

None.

ITEM 6. ~~Exhibits.~~Exhibits



Designation	Description	Method of Filing

Exhibit 12	Calculation of Ratio of Earnings to Fixed Charges.	Filed with this Report.

Exhibit 15	Letter of PricewaterhouseCoopers LLP, dated ~~October 26, 2017,~~April 25, 2018, relating to financial information.	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 99~~	~~Items 2 - 4 of Part I and Item 1 of Part II of Ford Motor Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.~~	~~Incorporated herein by reference to Ford Motor Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017. File No. 1-3950.~~

Exhibit 101.INS	XBRL Instance Document.	*

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.	*

__________


*	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/ ~~Marion B. Harris~~Brian E. Schaaf
	~~Marion B. Harris~~Brian E. Schaaf
	Chief Financial Officer and Treasurer

Date:	~~October 26, 2017~~April 25, 2018

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