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Ford Motor Credit Company reported a pre-tax profit of $434 million in the second quarter of 2014, compared with $454 million a year earlier. The lower pre-tax profit was more than explained by a higher level of insurance losses from storm damage to dealer inventory. Ford Credit’s net income was $264 million in the second quarter of 2014, compared with $275 million in the previous year.

“We have grown our receivables, maintaining our principles of prudent lending and our record of consistent profitability,” Chairman and CEO Bernard Silverstone said. “Our focus on exceptional dealer and customer service and our integrated market approach with Ford Motor Company continue to benefit the enterprise.”

On June 30, 2014, Ford Credit’s total net receivables were $107 billion, compared with $100 billion at year-end 2013. Managed receivables were $111 billion on June 30, 2014, up from $103 billion on Dec. 31, 2013. On June 30, 2014, managed leverage was 8.6:1, compared with 8.5:1 at year-end 2013.

Ford Credit now expects full-year pre-tax profit to be higher than 2013, improved from about equal to or higher than 2013. Ford Credit also now expects year-end managed receivables of $112 billion to $115 billion, up from prior guidance of about $110 billion. Ford Credit continues to expect managed leverage in the range of 8:1 to 9:1, and distributions to its parent of about $250 million.

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About Ford Motor Credit Company

Ford Motor Credit Company LLC has provided dealer and customer financing to support the sale of Ford Motor Company products since 1959. Ford Credit is a wholly owned subsidiary of Ford. For more information, visit www.fordcredit.com or www.lincolnafs.com.

— — — — —* The financial results discussed herein are presented on a preliminary basis; final data will be included in Ford Credit’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.

Risk Factors

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 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.

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 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.

  FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES PRELIMINARY CONSOLIDATED INCOME STATEMENT For the Periods Ended June 30, 2013 and 2014 (in millions)     Second Quarter First Half 2013   2014 2013   2014 (unaudited) Financing revenue Operating leases $                     818 $                 1,001 $ 1,572 $           1,967 Retail Financing 680 691 1,377 1,387 Dealer Financing 385 424 763 817 Other 24   21   49   42   Total financing revenue 1,907 2,137 3,761 4,213 Depreciation on vehicles subject to operating leases (553 ) (742 ) (1,034 ) (1,447 ) Interest expense (682 ) (673 ) (1,365 ) (1,339 ) Net financing margin 672 722 1,362 1,427 Other revenue Insurance premiums earned 30 31 59 63 Other income, net 46   66   123   117   Total financing margin and other revenue 748 819 1,544 1,607 Expenses Operating expenses 240 281 490 531 Provision for credit losses 20 27 49 58 Insurance expenses 34   77   44   85   Total expenses 294   385   583   674   Income before income taxes 454 434 961 933 Provision for income taxes 179   170   322   357   Net income $                     275   $                 264   $ 639   $           576   __________ Certain prior period amounts in our Consolidated Income Statement were reclassified to conform to the presentation in our 2013 Form 10-K Report.   CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the Periods Ended June 30, 2013 and 2014 (in millions)   Second Quarter First Half 2013 2014 2013 2014 (unaudited) Net income $ 275 $ 264 $ 639 $ 576 Other comprehensive income/(loss), net of tax Foreign currency translation (51 ) 85   (238 ) 3   Total other comprehensive income/(loss), net of tax (51 ) 85   (238 ) 3   Comprehensive income $                     224   $                 349   $ 401   $           579     FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES PRELIMINARY CONSOLIDATED BALANCE SHEET (in millions) December 31, 2013 June 30, 2014 (unaudited) ASSETS Cash and cash equivalents $ 9,424 $ 6,825 Marketable securities 1,943 3,020 Finance receivables, net 81,636 86,718 Net investment in operating leases 18,277 19,875 Notes and accounts receivable from affiliated companies 1,077 794 Derivative financial instruments 585 673 Other assets 2,666   2,536   Total assets $ 115,608   $           120,441     LIABILITIES Accounts payable Customer deposits, dealer reserves, and other $ 1,445 $ 1,182 Affiliated companies 211   526   Total accounts payable 1,656 1,708 Debt 98,693 103,038 Deferred income taxes 1,627 1,864 Derivative financial instruments 506 320 Other liabilities and deferred income 2,522   2,356   Total liabilities 105,004 109,286   SHAREHOLDER’S INTEREST Shareholder’s interest 5,217 5,217 Accumulated other comprehensive income 717 720 Retained earnings 4,670   5,218   Total shareholder’s interest 10,604   11,155   Total liabilities and shareholder’s interest $ 115,608   $           120,441       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.   December 31, 2013 June 30, 2014 (unaudited) ASSETS Cash and cash equivalents $ 4,198 $ 2,186 Finance receivables, net 45,796 43,085 Net investment in operating leases 8,116 9,012 Derivative financial instruments 5 3   LIABILITIES Debt $ 40,728 $ 38,322 Derivative financial instruments 88 40   FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES APPENDIX   In evaluating Ford Credit’s financial performance, Ford Credit management uses financial measures based on Generally Accepted Accounting Principles (“GAAP”), as well as financial measures that include adjustments from GAAP.  

RECONCILIATION OF NON-GAAP MEASURES TO GAAP:

  Net Finance Receivables and Operating Leases December 31, 2013 June 30, 2014

Receivables (a)

(in billions) Net Receivables Finance Receivables – North America Segment

Consumer

Retail financing $ 40.9 $ 41.7

Non-Consumer

Dealer financing (b) 22.1 23.4 Other 1.0   1.0   Total finance receivables -- North America Segment 64.0 66.1 Finance Receivables – International Segment

Consumer

Retail financing 10.8 11.8

Non-Consumer

Dealer financing (b) 8.3 10.4 Other 0.4   0.3   Total finance receivables -- International Segment 19.5 22.5 Unearned interest supplements (1.5 ) (1.6 ) Allowance for credit losses (0.4 ) (0.3 ) Finance receivables, net 81.6 86.7 Net investment in operating leases 18.3   19.9   Total net receivables $ 99.9   $           106.6     Managed receivables Total net receivables $ 99.9 $ 106.6 Unearned interest supplements and residual support 3.1 3.5 Allowance for credit losses 0.4 0.4 Other, primarily accumulated supplemental depreciation —   0.1   Total managed receivables $ 103.4   $           110.6       Managed Leverage Calculation December 31, 2013 June 30, 2014 (in billions) Total debt (c) $ 98.7 $ 103.0 Adjustments for cash, cash equivalents, and marketable securities (d) (10.8 ) (9.3 ) Adjustments for derivative accounting (e) (0.2 ) (0.3 ) Total adjusted debt $ 87.7   $           93.4     Equity (f) $ 10.6 $ 11.2 Adjustments for derivative accounting (e) (0.3 ) (0.4 ) Total adjusted equity $ 10.3   $           10.8     Managed leverage (to 1) = Total adjusted debt / Total adjusted equity 8.5 8.6

Memo: Financial statement leverage (to 1) = Total debt / Equity

9.3 9.2

__________

(a)   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. (b) Dealer financing primarily includes wholesale loans to dealers to finance the purchase of vehicle inventory. (c) Includes debt reported on Ford Credit’s balance sheet that is issued in securitization transactions 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. (d) Excludes marketable securities related to insurance activities. (e) Primarily related to market valuation adjustments to derivatives due to movements in interest rates. Adjustments to debt are related to designated fair value hedges and adjustments to equity are related to retained earnings. (f) Shareholder’s interest reported on Ford Credit’s balance sheet.  

Media:Margaret MellottFord CreditCommunications313.322.5393mmellott@ford.comFixed Income Investment Community:Steve Dahle313.621.0881fixedinc@ford.com