Free Writing Prospectus
Filed Pursuant to Rule 433
Dated March 17, 2014
Registration Statement Nos. 333-173928 and 333-173928-09
| 1 Slide RISK FACTORS -- FORD MOTOR CREDIT COMPANY LLC 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: We cannot be certain that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking 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 Form 10-K for the year ended December 31, 2013, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. •Decline in industry sales volume, particularly in the United States or Europe, due to financial crisis, recession, geopolitical events, or other factors; •Decline in Ford's market share or failure to achieve growth; • Lower-than-anticipated market acceptance of Ford's new or existing products; •Market shift away from sales of larger, more profitable vehicles beyond Ford's current planning assumption, particularly in the United States; •An increase in or continued volatility of fuel prices, or reduced availability of fuel; •Continued or increased price competition resulting from industry excess capacity, currency fluctuations, or other factors; • Fluctuations in foreign currency exchange rates, commodity prices, and interest rates; •Adverse effects resulting from economic, geopolitical, or other events; • Economic distress of suppliers that may require Ford to provide substantial financial support or take other measures to ensure supplies of components or materials and could increase costs, affect liquidity, or cause production constraints or disruptions; •Work stoppages at Ford or supplier facilities or other limitations on production (whether as a result of labor disputes, natural or man-made disasters, tight credit markets or other financial distress, production constraints or difficulties, or other factors); • Single-source supply of components or materials; • Labor or other constraints on Ford's ability to maintain competitive cost structure; • Substantial pension and postretirement health care and life insurance liabilities impairing our liquidity or financial condition; •Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates or investment returns); •Restriction on use of tax attributes from tax law "ownership change;” • The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns, or increased warranty costs; • Increased safety, emissions, fuel economy, or other regulations resulting in higher costs, cash expenditures, and/ or sales restrictions; •Unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise; •A change in requirements under long-term supply arrangements committing Ford to purchase minimum or fixed quantities of certain parts, or to pay a minimum amount to the seller ("take-or-pay" contracts); •Adverse effects on results from a decrease in or cessation or clawback of government incentives related to investments; • Inherent limitations of internal controls impacting financial statements and safeguarding of assets; •Cybersecurity risks to operational systems, security systems, or infrastructure owned by Ford, Ford Credit, or a third-party vendor or supplier; • Failure of financial institutions 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 credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors; •Higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles; • Increased competition from banks or other financial institutions seeking to increase their share of financing Ford vehicles; and •New or increased credit, consumer, or data protection or other regulations resulting in higher costs and/or additional financing restrictions. |
| 2 Slide March 2014 Ford Credit Auto Lease Trust 2014-A Roadshow Free Writing Prospectus Registration Statement No. 333-173928 Ford Credit Auto Lease Two LLC (“the depositor”) Ford Credit Auto Lease Trusts (“the issuer”) This document constitutes a free writing prospectus for purposes of the Securities Act of 1933. The depositor has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Website at www.sec.gov. Alternatively, you may request that a copy of the prospectus be sent to you by calling toll-free 1-888-603-5847. |
| 3 Slide FCALT 2014-A ROADSHOW TRANSACTION PARTICIPANTS Issuer Ford Credit Auto Lease Trust (“FCALT”) 2014-A Depositor Ford Credit Auto Lease Two LLC Servicer and Sponsor Ford Motor Credit Company LLC Indenture Trustee The Bank of New York Mellon Owner Trustee U.S. Bank Trust National Association Joint-Lead Managers Barclays Deutsche Bank RBS |
| 4 Slide • FCALT 2014-A plans to issue $1,250,000,000 of triple-A rated Class A notes, $70,290,000 of double-A rated Class B notes, $65,550,000 of single-A rated Class C notes(1) • FCALT 2014-A will be the seventh public term ABS issuance from Ford Credit’s lease securitization program. Ford Credit previously sponsored three Rule 144A term lease ABS transactions in 2009 and 2010 • FCALT 2014-A will use a senior/subordinate, sequential pay structure pre and post-event of default • Similar to previous Ford Credit lease securitizations, FCALT 2014-A will use an exchange note legal structure. The exchange note is secured by a reference pool of leases and leased vehicles • The principal amount of the notes will be based on the securitization value of the leases. The securitization value of a lease is the sum of the present values of (1) the remaining scheduled monthly payments plus (2) the base residual value of the related leased vehicle - The base residual value for a leased vehicle is the lesser of the contract residual value and the ALG base residual value(2). For the majority (94.38%) of FCALT 2014-A leased vehicles, the contract residual value is greater than the ALG base residual value, so the base residual value will equal the ALG base residual value - The discount rate applied to each lease is the greater of (1) 6.15% or (2) the lease factor • The reference pool cutoff date is March 1, 2014. The first payment date will be April 15, 2014 • Credit enhancement for the offered notes will consist of building overcollateralization, subordination, a reserve account and available excess spread • FCALT 2014-A provides robust disclosure of collateral performance - Credit loss and residual performance by vintage origination is shown in the Prospectus Supplement (Annex B) - Original pool characteristics, updated balances, credit loss and residual performance for prior FCALT transactions is shown in the Prospectus Supplement (Annex C) - Quarterly supplemental reporting will be published on Ford Credit’s website (see slides 14 and 22), which will include an updated payment schedule of the remaining leases and monthly residual performance by vehicle type ---------------------------------------------- (1) The Class A-1 notes will be issued under Rule 144A and the Class A-2, A-3, A-4, B, and C notes will be issued publicly (Ford Credit may initially retain some or all of the notes) (2) ALG base residual value represents either ALG residual value at inception or the oldest ALG mark-to-market available for a vehicle FCALT 2014-A ROADSHOW TRANSACTION SUMMARY |
| 5 Slide FCALT 2014-A ROADSHOW TRANSACTION STRUCTURE (2) At pricing speed of 100% prepayment assumption Class Class Class Class Class Class Class A-1 Notes A-2a Notes A-2b Notes A-3 Notes A-4 Notes B Notes C Notes Total Principal Amount $230,000,000 $525,000,000 $375,000,000 $120,000,000 $70,290,000 $65,550,000 $1,385,840,000 Class Split (1) 14.74% 33.64% 24.03% 7.69% 4.50% 4.20% Rating (S&P/Fitch) A-1(sf) / F1+sf AAA(sf) / AAAsf AAA(sf) / AAAsf AAA(sf) / AAAsf AA+(sf) / AAsf A+(sf) / Asf Offering Type 144A Public Public Public Public Public WAL to Maturity (years) (2) 0.32 1.14 1.83 2.20 2.35 2.46 Benchmark Int. LIBOR EDSF 1 mo. LIBOR EDSF Int. Swaps Int. Swaps Int. Swaps Fixed/Floating Fixed Fixed Floating Fixed Fixed Fixed Fixed Interest Accrual Method Act / 360 30 / 360 Act / 360 30 / 360 30 / 360 30 / 360 30 / 360 Payment Frequency Monthly Monthly Monthly Monthly Monthly Monthly Monthly Principal Window (months) (2) 1 - 7 7 - 20 7 - 20 20 - 26 26 - 28 28 - 29 29 - 31 Expected Final (2) 10/15/2014 11/15/2015 11/15/2015 05/15/2016 7/15/2016 8/15/2016 10/15/2016 Legal Final (3) 4/15/2015 10/17/2016 10/17/2016 4/17/2017 6/15/2017 8/15/2017 10/15/2018 ERISA Eligible Yes Yes Yes Yes Yes Yes Yes (1) As a percent of initial total securitization value (3) The trust will pay interest and principal on the notes on the 15th day of each month (or, if not a business day, the next business day). |
| 6 Slide FCALT 2014-A ROADSHOW CLASS A CREDIT ENHANCEMENT (1) As a percent of initial total securitization value • Triple A credit enhancement for FCALT 2014-A (20.40%/22.90%) will remain unchanged relative to FCALT 2013-B • Includes overcollateralization, subordination, and cash reserve • Estimated excess spread of 4.20% is 2bps lower than 2013-B (4.22%) • The distribution of hard credit enhancement is unchanged: • Subordination is 8.70%, consistent with FCALT 2013-B • Initial over-collateralization is 11.20% of the initial securitization value, consistent with FCALT 2013-B • Target O/C is 13.70% of the initial securitization value, consistent with FCALT 2013-B • The cash reserve is 0.50% of the initial securitization value, consistent with FCALT 2013-B • The amortizing nature of the collateral, the sequential payment structure, and the non-declining cash reserve account and overcollateralization are expected to result in credit enhancement increasing over time as a percent of the outstanding securitization value FCALT 2014-A H/(L) FCALT 2014-A FCALT 2013-B FCALT 2013-B Initial(1) Target Initial(1) Target Initial(1) Target Subordinated Notes 8.70% 8.70% 8.70% 8.70% 0.00% 0.00% Overcollateralization 11.20% 13.70% 11.20% 13.70% 0.00% 0.00% Reserve Account 0.50% 0.50% 0.50% 0.50% 0.00% 0.00% Total Hard Credit Enhancement for Class A Notes 20.40% 22.90% 20.40% 22.90% 0.00% 0.00% Est. Excess Spread per Annum 4.20% 4.22% (0.02%) |
| 7 Slide FCALT 2014-A ROADSHOW A-2b FLOATING RATE NOTE • FCALT 2014-A will issue a fixed rate Class A-2a note and un-hedged floating rate A-2b note • The Class A-2a and Class A-2b notes are collectively referred to as the "Class A-2 notes" and constitute a single class and have equal rights to payments of principal and interest, which will be made on a pro rata basis • The allocation of the principal amount of the Class A-2 notes between the Class A-2a notes and the Class A-2b notes will be determined on or before the day of pricing • Class A-2a and Class A-2b notes will each be sized to demand with the Class A-2b note not to exceed $393,000,000 |
| 8 Slide (1) The ALG base residual values for the leased vehicles in the reference pool are generally lower than the contract residual values of those vehicles. As a result, the base residual value of 94.38% of the leased vehicles in the reference pool by securitization value equals the ALG base residual value of the leased vehicle, with 93.75% equal to the ALG residual value and 0.63% equal to the oldest ALG mark-to-market value that the servicer has for the leased vehicles. (2) Weighted by the securitization value of each lease on the cutoff date of March 1, 2014. (3) This weighted average excludes leases representing 6.42% of the initial securitization value that have lessees who do not have FICO scores because they (a) are not individuals and use the leased vehicles for commercial purposes, or (b) are individuals with minimal or no recent credit history. For a description of FICO scores, you should read "Sponsor and Servicer - Origination, Purchasing and Underwriting" in the prospectus. There can be no assurance that FICO scores will be an accurate predictor of the likelihood of repayment of the related lease or that any lessee's credit score would not be lower if obtained on the cutoff date. FCALT 2014-A ROADSHOW COLLATERAL COMPOSITION OF REFERENCE POOL Number of leases 63,870 Initial total securitization value 1,560,634,969.99 Residual portion of initial total securitization value 1,013,855,086.02 Residual portion as a % of initial total securitization value 64.96% Base monthly payments plus base residual value 1,731,503,340.19 Base residual value 1,146,236,007.92(1) Base residual value as a % of initial total securitization value 73.45% Base residual value as a % of base monthly payments plus base residual value 66.20% Weighted average original term 33.2 months(2) Weighted average remaining term 23.8 months(2) Seasoning 9.4 months(2) Weighted average FICO® score 745(2) (3) Minimum discount rate 6.15% |
| 9 Slide FCALT 2014-A ROADSHOW COLLATERAL HIGHLIGHTS • Broad distribution of residual maturities • Seasoned assets continue to be included in the FCALT transactions (results in enhancement build during the early part of the transaction) • ALG MTM forecasts a gain of 2% as a percentage of Base Residual Value • FCALT transactions include shorter tenor leases on average relative to other lease ABS issuers – The weighted average original term of FCALT 2014-A is 33.2 months • Favorable model diversification in FCALT 2014-A: – Top model (Escape) is only 18.14% of the pool – Top 3 models comprise 48.36% of the pool • FCALT 2014-A includes a more diverse product mix of cars and CUVs (85.15%) and lower concentration of SUV’s/Trucks (14.85%) relative to precedent transactions(1) • Transactions include sustained high weighted average FICO® scores • FCALT 2014-A residual portion of securitization value in line with recent FCALT transactions FCALT 2014-A FCALT 2013-B FCALT 2013-A FCALT 2012-B FCALT 2012-A FCALT 2011-B FCALT 2011-A Max 6-month Residual Maturities as a % Base Residual value 28.98% 34.83% 36.04% 37.30% 32.85% 33.02% 32.21% Seasoning (months) 9.4 9.3 10.4 9.4 8.1 10.0 9.9 Model Diversification Top Model Top 3 Models 18.14% 48.36% 16.80% 47.31% 14.75% 42.92% 14.76% 41.98% 14.88% 42.36% 15.22% 40.50% 16.32% 42.17% SUVs and Trucks as % of Total Securitization Value 14.85% 17.42% 25.97% 30.43% 31.26% 26.35% 25.77% Weighted Average FICO 745 746 748 745 749 747 742 Residual Portion of Securitization Value 64.96% 64.69% 63.85% 63.11% 63.74% 64.20% 64.05% (1) Vehicle type reflects classification of 2011 and newer model year Explorers and 2013 and newer model year Escapes as CUVs rather than SUVs |
| 10 Slide FCALT 2014-A ROADSHOW COLLATERAL STRATIFICATION – ORIGINAL TERM FCALT 2012-B FCALT 2013-A 24-35 Months 30.2% 36-39 Months 69.7% 40+ Months 0.1% 24-35 Months 17.3% 36-39 Months 82.6% 40+ Months 0.1% FCALT 2013-B 24-35 months 29.4% 36-39 months 70.6% 40+ months 0.0% FCALT 2014-A 24-35 months 27.8% 36-39 months 72.1% 40+ months 0.1% |
| 11 Slide MI 24.6% NY 14.0% CA 10.0% NJ 9% OH 6.8% Other 36.1% MI 18.3% NY 15.7% CA 9.7% NJ 9.4% OH 6.6% Other 40.3% MI 27.3% NY 11.9% CA 9.5% NJ 7.1% OH 6.7% Other 37.4% FCALT 2014-A ROADSHOW COLLATERAL STRATIFICATION – GEOGRAPHIC DISTRIBUTION FCALT 2012-B FCALT 2013-A FCALT 2013-B FCALT 2014-A MI 20.7% NY 15.3% NJ 9.7% CA 9.7% OH 7.0% Other 37.6% Geographic concentration has remained consistent with prior transactions Top 5 States: 62.6% Top 5 States: 62.4% Top 5 States: 59.7% Top 5 States: 63.9% |
| 12 Slide CUV 50.1% Car 35.1% Truck 11.9% SUV 2.9% FCALT 2014-A ROADSHOW COLLATERAL STRATIFICATION – VEHICLE TYPE FCALT 2012-B FCALT 2013-A FCALT 2013-B FCALT 2014-A CUV 48.7% Car 33.9% Truck 12.9% SUV 4.5% CUV 42.6% Car 31.5% Truck 14.4% SUV 11.6% CUV 36.4% Car 33.2% Truck 12.6% SUV 17.8% • FCALT 2014-A continues to have broad diversification by vehicle type • Truck and SUV concentrations reflect recent origination trends, representing: 14.85% in FCALT 2014-A, 17.42% in 2013-B, 25.97% in FCALT 2013-A, and 30.42% in FCALT 2012-B • Vehicle type reflects classification of 2011 and newer model year Explorers and 2013 model year Escapes as CUVs rather than SUVs as they are built on a car platform and have fuel efficiency similar to the CUV category |
| 13 Slide Escape 18.1% Explorer 15.3% Fusion 14.9% F-150 11.9% Edge 10.4% MKZ 6.5% Focus 5.8% MKX 4.7% MKS 2.9% Flex 1.7% Other 7.9% Escape 16.8% Explorer 15.3% Fusion 15.2% F-150 12.8% Edge 12.2% Focus 6.1% MKZ 5.3% MKX 5.0% MKS 2.8% Flex 1.6% Other 7.1% Explorer 14.8% F-150 14.3% Escape 13.9% Edge 13.8% Fusion 11.5% MKX 6.1% Focus 5.9% MKZ 5.7% MKS 3.2% Taurus 2.2% Other 8.8% Top 1: 18.1%; Top 3: 48.4% Escape 14.8% Edge 14.7% F-150 12.5% Explorer 12.0% Fusion 11.6% MKZ 6.8% MKX 6.4% Focus 5.4% MKS 3.9% Taurus 2.4% Other 9.4% FCALT 2014-A pool features favorarble model diversification FCALT 2014-A ROADSHOW COLLATERAL STRATIFICATION – VEHICLE MODEL (1) Models representing greater than 1.00% of initial total securitization value FCALT 2012-B FCALT 2013-A FCALT 2013-B FCALT 2014-A Top 1: 14.8%; Top 3: 42.0% Top 1: 14.8%; Top 3: 42.9% Top 1: 16.8%; Top 3: 47.3% |
| 14 Slide FCALT 2014-A ROADSHOW PAYMENT SCHEDULE This payment schedule will be updated quarterly and posted on the Ford Credit website: www.fordcredit.com/institutionalinvestments/index.jhtml Scheduled Month Securitization Value Base Monthly Payments Base Residual Value Initial Balance 1,560,634,969.99 $ Initial Balance $1,560,634,969.99 2014- March 1,543,879,414.86 24,784,285.63 $ 4.23% - $ 0.00% April 1,527,037,577.87 24,784,285.63 4.23% 0.00 0.00% May 1,510,109,016.61 24,784,285.63 4.23% 0.00 0.00% June 1,493,093,283.10 24,784,285.63 4.23% 0.00 0.00% July 1,475,989,921.87 24,784,285.63 4.23% 0.00 0.00% August 1,438,395,885.15 24,469,199.07 4.18% 20,717,689.55 1.81% September 1,408,327,864.58 24,251,927.92 4.14% 13,215,706.35 1.15% October 1,382,304,333.98 24,095,185.78 4.12% 9,173,308.55 0.80% November 1,352,538,019.09 23,882,491.80 4.08% 12,994,912.50 1.13% December 1,323,002,379.76 23,663,631.88 4.04% 12,829,946.15 1.12% January 1,294,597,348.22 23,453,872.32 4.01% 11,757,237.90 1.03% 2015- February 1,263,768,853.31 23,174,404.87 3.96% 14,313,890.30 1.25% March 1,231,393,559.59 22,845,264.28 3.90% 16,030,802.60 1.40% April 1,197,085,172.75 22,448,500.56 3.84% 18,193,901.68 1.59% May 1,159,416,946.50 21,965,986.91 3.75% 21,859,308.85 1.91% June 1,119,842,543.27 21,434,678.75 3.66% 24,103,008.36 2.10% July 1,075,471,539.80 20,785,021.66 3.55% 29,345,354.27 2.56% August 1,022,643,969.10 19,935,711.30 3.41% 38,422,520.00 3.35% September 964,940,628.49 19,002,344.01 3.25% 43,958,633.72 3.84% October 887,010,484.76 17,663,446.23 3.02% 65,226,515.26 5.69% November 806,828,038.05 16,243,910.06 2.78% 68,497,149.61 5.98% December 724,158,184.57 14,776,480.65 2.52% 72,039,788.15 6.28% January 681,620,403.04 14,066,931.92 2.40% 32,192,367.00 2.81% 2016- February 626,540,477.03 13,083,083.02 2.24% 45,499,974.56 3.97% March 568,999,914.11 12,049,550.61 2.06% 48,711,265.54 4.25% April 513,911,818.92 11,033,589.48 1.89% 46,979,089.70 4.10% May 455,583,276.58 9,920,670.47 1.70% 51,049,017.80 4.45% June 397,856,747.30 8,809,107.62 1.51% 51,258,946.79 4.47% July 342,760,201.90 7,718,172.35 1.32% 49,423,368.09 4.31% August 279,954,802.78 6,438,492.01 1.10% 58,128,325.40 5.07% September 213,779,996.57 5,073,947.67 0.87% 62,539,357.22 5.46% October 167,415,108.23 3,947,248.49 0.67% 43,515,975.36 3.80% November 114,773,719.95 2,649,302.54 0.45% 50,851,858.15 4.44% December 49,358,890.67 1,217,697.52 0.21% 64,786,269.93 5.65% January 32,419,669.71 805,816.15 0.14% 16,386,816.65 1.43% 2017- February 15,018,458.94 377,767.93 0.06% 17,189,970.85 1.50% March 621,475.03 17,879.01 0.00% 14,456,273.13 1.26% April 327,709.41 10,505.03 0.00% 286,572.70 0.03% May 278,388.40 8,916.10 0.00% 42,189.00 0.00% June 199,540.05 6,775.26 0.00% 73,601.00 0.01% July 153,856.87 5,161.30 0.00% 41,584.90 0.00% August 149,506.92 5,161.30 0.00% 0.00 0.00% September 137,613.27 4,357.79 0.00% 8,323.70 0.00% October 76,033.82 2,579.32 0.00% 59,715.00 0.01% November 35,178.71 1,133.18 0.00% 40,112.65 0.00% December 0.00 0.00 0.00% 35,359.00 0.00% Total $ 585,267,332.27 100.00% $ 1,146,236,007.92 100.00% Total Scheduled Base Monthly Payments plus Base Residual Value $1,731,503,340.19 Total Base Residual Value as a % of Total Scheduled Base Monthly Payments plus Base Residual Value 66.20% |
| 15 Slide FCALT 2014-A ROADSHOW RESIDUAL MATURITY vs. ENHANCEMENT BUILD Residual Maturity Profile vs. Hard Credit Enhancement for Class A Notes(1) • Because enhancement as a percentage of the FCALT 2014-A pool balance increases during the transaction, the amount of residual stress that each class can support increases over time • The inclusion of seasoned leases in the pool is expected to increase the enhancement early in the life of the transaction • The residual maturities are well distributed and a diverse mix of vehicle types mature in each period; maximum percentage of residual maturities in any 3 month period is 17.95%, similar to previous FCALT transactions (1) Hard credit enhancement consists of overcollateralization, subordination and the reserve account; Assumes zero loss, pricing speed of 100% PPC % of Residuals Maturing Each Period Hard Credit Enhancement as a % of Current Securitization Value 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Car CUV SUV Truck Total Hard 'AAA' CE (1) Hard credit enhancement consists of overcollateralization, subordination and the reserve account; Assumes zero loss, pricing speed of 100% PPC |
| 16 Slide FCALT 2014-A ROADSHOW RESIDUAL BREAKEVEN ANALYSIS • 0% prepayments • 40% / 40% / 20% (year 1 / 2 / 3) distribution for losses • 2-month lag on receipt of auction proceeds for residual • 50% recovery of charge-offs (with a 3-month lag on credit loss recoveries) Assumptions: • Base net credit loss of 1.00% of initial total securitization value • Estimated 4.20% excess spread per annum • Includes 11.20% initial overcollateralization growing to a target of 13.70%; 8.70% of subordination for the Class A Notes, 4.20% of subordination for the Class B Notes, and 0.50% cash reserve account (1) After stress defaults Class A-1 Notes Cumulative Net Credit Loss Net Loss % 1.00% 3.00% 5.00% Turn in Rate(1) 1x 3x 5x 70% 100.0% 100.0% 100.0% 80% 100.0% 100.0% 100.0% 90% 100.0% 100.0% 100.0% 100% 100.0% 100.0% 100.0% Class A-2 Notes Cumulative Net Credit Loss Net Loss % 1.00% 3.00% 5.00% Turn in Rate(1) 1x 3x 5x 70% 100.0% 100.0% 100.0% 80% 100.0% 100.0% 100.0% 90% 90.4% 90.5% 90.7% 100% 81.4% 81.5% 81.7% Class A-3 Notes Cumulative Net Credit Loss Net Loss % 1.00% 3.00% 5.00% Turn in Rate(1) 1x 3x 5x 70% 68.8% 67.1% 65.2% 80% 60.2% 58.7% 57.1% 90% 53.5% 52.2% 50.7% 100% 48.2% 47.0% 45.7% Class A-4 Notes Cumulative Net Credit Loss Net Loss % 1.00% 3.00% 5.00% Turn in Rate(1) 1x 3x 5x 70% 53.6% 51.3% 48.8% 80% 46.9% 44.9% 42.7% 90% 41.7% 39.9% 37.9% 100% 37.6% 35.9% 34.2% Class B Notes Cumulative Net Credit Loss Net Loss % 1.00% 2.50% 4.00% Turn in Rate(1) 1x 2.5x 4x 70% 44.7% 42.6% 40.5% 80% 39.1% 37.3% 35.5% 90% 34.7% 33.2% 31.5% 100% 31.3% 29.9% 28.4% Class C Notes Cumulative Net Credit Loss Net Loss % 1.00% 2.00% 3.00% Turn in Rate(1) 1x 2x 3x 70% 36.3% 34.8% 33.3% 80% 31.8% 30.5% 29.1% 90% 28.3% 27.1% 25.9% 100% 25.4% 24.4% 23.3% The tables show the percentage of base residual loss, after defaults, that can be sustained before the notes incur a loss at various turn-in rates and multiples of base case credit losses |
| 17 Slide FCALT 2014-A ROADSHOW FORD CREDIT’S U.S. MANAGED LEASE PORTFOLIO Average Number of Leases Outstanding (000) 677 438 331 422 572 Source: Manheim Consulting, March 2014 (January 1995 = 100) • Ford Credit targets a consistent presence in the leasing market -- Ford Credit never exited the leasing business • In 2008 and 2009, Ford Credit reduced lease originations due to: – Enhanced focus on retail – Lower auto sales • As market conditions improved, Ford Credit has increased its purchase target for lease with originations resuming growth in 2010 Number of Leases Originated Source: FCALT 2014-A Prospectus Supplement Manheim Used Vehicle Value Index |
| 18 Slide See Appendix for footnotes FCALT 2014-A ROADSHOW FORD CREDIT’S U.S. LEASE PORTFOLIO – RESIDUAL PERFORMANCE • Ford Credit’s managed portfolio residual realizations have posted gains of 4.80% for the year ending December 31, 2013 and 10.51% for the year ending December 31, 2012 • Rating agencies stress residuals in excess of 30%, which is higher than Ford Credit’s worst year in 2008 (not shown) when the portfolio experienced residual losses of 18.26% • Rating agencies apply their residual value stress to all vehicles scheduled to be returned over the life of the transaction for FCALT 2014-A, while periods of severe residual stress have historically been shorter • Rating agencies assume a 100% return rate even though Ford Credit’s highest return rate was 82.31% in 2008 (not shown) Year Ended December 31, 2013 2012 2011 2010 2009 Number of Leases Terminated 162,874 104,812 177,657 325,523 296,560 Number of Vehicles Returned and Sold 111,007 62,763 98,930 214,597 224,455 Return Rate 68.16% 59.88% 55.69% 65.92% 75.69% Vehicles Returned and Sold Average Adjusted MSRP $34,121 $35,473 $32,055 $33,562 $35,679 Average ALG Residual Value 17,611 17,301 14,301 16,263 17,532 Average Residual Loss (Gain) (845) (1,819) (3,302) (1,934) 23 Residual Loss (Gain) as a % of Adjusted MSRP (%)(1) Car 3.20% (1.44)%ll (6.93)%ll (1.64)%ll 2.49%ll CUV (6.78) (10.16)% (13.50)% (7.99)% (2.49)% SUV (2) ( 6.74) (10.22)% (11.61)% (6.50)% 0.41% Truck (10.43) (14.32)% (15.46)% (11.60)% (5.21)% Average ( 2.48)% (5.13)% (10.30)% (5.76)% 0.06% Residual Loss (Gain) as a % of ALG Residual Value(3) (4.80)% (10.51)% (23.09)% (11.89)% 0.13% Terminated Leases Average Contract Residual Value as a % of Adjusted MSRP(4) 56.67% 52.58% 48.86% 52.20% 54.11% Average ALG Residual Value as a % of Adjusted MSRP(5) 50.76% 48.01% 44.40% 47.52% 48.61% Contract Residual Value Higher (Lower) than ALG Residual Value 5.92ppts 4.57ppts 4.46ppts 4.69ppts 5.50ppts |
| 19 Slide See Appendix for footnotes FCALT 2014-A ROADSHOW FORD CREDIT’S U.S. LEASE PORTFOLIO – CREDIT PERFORMANCE Delinquency, Repossession and Credit Loss Experience Year Ended December 31, 2013 2012 2011 2010 2009 Average number of leases outstanding(1) 571,990 421,935 330,953 438,324 676,511 Average portfolio outstanding (in millions)(2) $14,843 $10,828 $7,921 $9,218 $14,946 Delinquencies Average number of delinquencies(3) 31 - 60 days 4,495 3,212 2,818 6,013 10,277 61 - 90 days 390 227 287 603 1,101 Over 90 days 35 21 42 109 240 Average number of delinquencies as a percentage of average number of leases outstanding 31 - 60 days 0.79% 0.76% 0.85% 1.37% 1.52% 61 - 90 days 0.07% 0.05% 0.09% 0.14% 0.16% Over 90 days 0.01% 0.00% 0.01% 0.02% 0.04% Repossessions and Credit Losses Repossessions as a percentage of average number of leases outstanding 0.62% 0.58% 0.79% 1.73% 2.12% Aggregate net losses (gains) (in millions)(4) $19 ($6) ($6) $38 $118 Net losses (gains) as a percentage of average portfolio outstanding(4) 0.13% (0.06)% (0.07)% 0.42% 0.79% Net losses (gains) as a percentage of gross liquidations(5) 0.34% (0.17)% (0.13)% 0.49% 1.38% Number of leases charged off 6,672 3,614 3,698 11,038 20,215 Number of leases charged off as a percentage of average number of leases outstanding 1.17% 0.86% 1.12% 2.52% 2.99% Average net loss (gain) on leases charged off $2,787 ($1,757) ($1,569) $3,475 $5,852 |
| 20 Slide Return Rate* Cumulative Residual Loss / (Gain)** FCALT 2014-A ROADSHOW SECURITIZATION POOL PERFORMANCE * Prior to FCALT 2012-B, term extensions were repurchased by Ford Credit resulting in pool return rates being modestly lower than those of the portfolio ** As a percentage of initial Base Residual Value *** Total credit loss as a percent of initial total securitization value Gain Loss Cumulative Net Credit Losses*** • Transaction performance reflects the present strength in the used vehicle market - Return rates of about 50% - Cumulative residual gains • Consistent credit loss performance Source: Investor Reports for referenced FCALT transactions Commentary |
| 21 Slide Break-even = 100% Return Rate Assumed FCALT 2014-A ROADSHOW BREAK-EVEN ANALYSIS* Return Rate Cumulative Residual Loss / (Gain) A-4 Break-even = 34.2%(1) A-3 Break-even = 45.7%(1) A-2 Break-even 81.7%(1) Memo: Worst Recent 12-Month Portfolio Experience = 82% (CY 2008) (1) Refer to assumptions on slide 16 Break-Even for FCALT 2014-A Compared to Historical Pool Performance Memo: Worst Recent 12-Month Portfolio Experience = 18.3% (CY 2008) * Assumes Cumulative net loss stress of 5%; break-evens are specific to FCALT 2014-A Memo: Worst Recent 12-Month Portfolio Experience = 82% (CY 2008) |
| 22 Slide Residual Gain/(Loss) per Returned Vehicle as a % of ALG Residual Value RESIDUAL GAIN/(LOSS) BY PRIOR POOL EXAMPLES • Residual performance for the U.S. lease portfolio versus ALG residual values resulted in a 4.80% gain in 2013 • Residual performance on recent transactions has resulted in significant gains for most vehicle types • The residual performance information is updated quarterly for each public lease transaction and posted on Ford Credit’s website: www.fordcredit.com/institutionalinvestments/index.jhtml FCALT 2014-A ROADSHOW FCALT 2011-A FCALT 2011-B |
| 23 Slide Ford Corporate Information |
| 24 Slide TOTAL COMPANY 2013 FOURTH QUARTER AND FULL YEAR SUMMARY* • In Fourth Quarter, Total Company profitable for 18th consecutive quarter; Automotive operating-related cash flow positive; liquidity strong • Top-line grew for fifth consecutive quarter • Strong pre-tax profit in North America and record Fourth Quarter profit in Asia Pacific Africa; Ford Credit solidly profitable • For Full Year, Total Company pre-tax profit among the best in our history with record Automotive operating-related cash flow; Automotive operating profit the highest in more than a decade with record profits in North America and Asia Pacific Africa and lower loss in Europe • Top-line grew with market share gains in the U.S., South America, and Asia Pacific Africa, which was driven by record market share in China; retail share higher in Europe • Global pension plans funded status improved about $10 billion compared with year-end 2012 • 2014 outlook unchanged: Automotive revenue to be about equal to 2013, Automotive operating margin to be lower, and Automotive operating-related cash flow to be positive, but substantially lower. Total Company pre-tax profit to range from $7 billion to $8 billion Total Company Full Year Results Among The Best In Our History With Records In North America And Asia Pacific Africa; Expect Solid Performance In 2014 * Excludes special items; Business Unit records are since at least 2000 when we began reporting specific Business Unit results; Automotive operating-related cash flow records are since at least 2001 |
| 25 Slide TOTAL COMPANY 2013 HIGHLIGHTS • Launched 11 vehicles globally • Revealed next-generation Mustang, to be offered globally for the first time • Focus was the world’s best-selling nameplate and Fiesta was the world’s best-selling subcompact car through September • Achieved F-Series U.S. truck sales leadership for 37th year in a row and U.S. vehicle sales leadership for 32nd year in a row • Accelerated Europe product launch plans to at least 25 vehicles in 5 years • Continued growth in China supported by opening of two new plants by our joint ventures and plans to bring two new global products to JMC • Announced plan to launch 17 vehicles over the next two years in Middle East and Africa, our new Business Unit, to accelerate growth in the region • Doubled quarterly dividend to 10 cents per share • Record profit sharing to be paid to U.S. hourly employees for 2013 • Upgraded to investment grade by S&P; now rated investment grade by four of the major agencies |
| 26 Slide FCALT 2014-A ROADSHOW CORPORATE RATINGS S&P Moody's Fitch DBRS Issuer Ratings Ford Motor BBB- N/A BBB- BBB (low) Ford Credit BBB- N/A BBB- BBB (low) FCE Bank plc * BBB N/A BBB- NR Senior Long-Term Unsecured Ford Motor BBB- Baa3 BBB- BBB (low) Ford Credit BBB- Baa3 BBB- BBB (low) FCE Bank plc * BBB Baa3 BBB- NR Short-Term Unsecured Ford Credit NR P-3 F3 R-3 Outlook Stable Stable Stable Stable * S&P assigns FCE a long-term senior unsecured credit rating one notch higher than Ford Credit with a negative outlook. The negative outlook reflects the negative trend S&P has assigned to UK banking industry risk. |
| FCALT 2014-A ROADSHOW GLOBAL CORE PLATFORMS 27 Slide 27 |
| 28 Slide APPENDIX |
| 29 Slide (1) The percentage equivalent to the average residual loss (gain) for leased vehicles of each vehicle type that were returned and sold, divided by the average adjusted MSRP for those vehicles. The vehicle types do not include a small number of vehicles that are not manufactured by Ford or for which Ford Credit does not have a valid vehicle identification number. (2) All Explorers and Escapes are classified as SUV regardless of model year. (3) The percentage equivalent to the average residual loss (gain) for leased vehicles that were returned and sold, divided by the average ALG residual value for those vehicles. (4) The percentage equivalent to the average contract residual value for leased vehicles that terminated during the period, divided by the average adjusted MSRP of those vehicles. (5) The percentage equivalent to the average ALG residual value for leased vehicles that terminated during the period, divided by the average adjusted MSRP of those vehicles. FCALT 2014-A ROADSHOW FOOTNOTES TO RESIDUAL TABLE ON SLIDE 18 APPENDIX 1 of 2 With regard to the residual table on slide 18, "terminated leases" are leases for which (1) the related leased vehicle was returned during the period and sold by December 31, 2013, (2) the related leased vehicle was purchased pursuant to the lease during the period or (3) the lease defaulted during the period. |
| 30 Slide (1) Average of the number of leases outstanding at the beginning and end of each month in the period. (2) Average of the aggregate lease balance of leases outstanding at the beginning and end of each month in the period. (3) Average of the number of leases delinquent at the beginning and end of each month in the period. The period of delinquency is the number of days that more than $49.99 of a scheduled monthly payment is past due, excluding accounts with bankrupt lessees. (4) Net losses are equal to the aggregate lease balance (including lease and other charges) of all leases that the servicer determined to be uncollectible in the period less any amounts received in the period on leases charged off in the period or any prior periods. Beginning in 2012, net losses excluded all external costs associated with repossession of the vehicle prior to charge off and included all external costs associated with the disposition of the vehicle after charge off. Prior to 2012, net losses excluded all external costs associated with repossession and disposition of the vehicle prior to charge off and included all external costs associated with continued collection efforts or repossession and disposition of the vehicle after charge off. An estimated loss is recorded at the time a vehicle is repossessed and this estimated loss is adjusted to reflect the actual loss after the vehicle is sold. Realized losses for a securitized pool of leases for any period are equal to the total securitization value of all leases that the servicer determined to be uncollectible in the period less any amounts received in the period on leases charged off in the period or any prior periods. In addition, realized losses for a securitized pool of leases include all external costs associated with the repossession and disposition of the vehicles in that pool because the servicer is entitled to be reimbursed for these costs. Therefore, realized losses for a securitized pool of leases may be higher or lower than net losses for those leases. (5) Gross liquidations are cash payments and charge offs that reduce the outstanding balance of a lease. APPENDIX 2 of 2 FCALT 2014-A ROADSHOW FOOTNOTES TO CREDIT PERFORMANCE TABLE ON SLIDE 19 |
