Document and Entity Information Document	12 Months Ended
Document and Entity Information Document	Dec. 31, 2018 USD ($) shares
Entity Registrant Name	FORD MOTOR CREDIT CO LLC
Entity Central Index Key	0000038009
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding \| shares	0
Entity Shell Company	false
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Public Float \| $	$ 0
Membership Interests Description	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.

Consolidated Income Statement - USD ($) $ in Millions	12 Months Ended
Consolidated Income Statement - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Financing revenue
Operating leases	$ 5,795	$ 5,552	$ 5,555
Retail financing	3,891	3,451	3,070
Dealer financing	2,207	1,903	1,760
Other	84	70	38
Total Financing Revenue	11,977	10,976	10,423
Depreciation on vehicles subject to operating leases	(3,867)	(4,135)	(4,329)
Interest expense	(3,930)	(3,175)	(2,755)
Net financing margin	4,180	3,666	3,339
Other revenue
Insurance premiums earned	167	158	156
Fee based revenue and other	238	243	0
Total financing margin and other revenue	4,585	4,067	3,495
Expenses
Operating expenses	1,429	1,295	1,274
Provision for credit losses	532	588	547
Insurance expenses	77	124	125
Total expenses	2,038	2,007	1,946
Other income, net	80	250	330
Income before income taxes	2,627	2,310	1,879
Provision for income taxes	403	(697)	506
Net income	$ 2,224	$ 3,007	$ 1,373

Consolidated Statement of Comprehensive Income - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Net income	$ 2,224	$ 3,007	$ 1,373
Other comprehensive income/(loss), net of tax
Foreign currency translation	(410)	471	(283)
Other comprehensive income/(loss), net of tax	(410)	471	(283)
Comprehensive Income (Loss)	$ 1,814	$ 3,478	$ 1,090

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Consolidated Balance Sheet - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
ASSETS
Cash and cash equivalents	$ 9,607	$ 9,558
Marketable securities	1,308	2,881
Finance receivables, net	118,814	116,003
Net investment in operating leases	27,449	26,661
Notes and accounts receivable from affiliated companies	905	1,076
Derivative financial instruments	670	935
Other assets	3,456	3,329
Total assets	162,209	160,443
Liabilities
Customer deposits, dealer reserves, and other	1,097	1,171
Affiliated companies	426	592
Total accounts payable	1,523	1,763
Debt	140,146	137,828
Deferred income taxes	2,595	2,386
Derivative financial instruments	663	310
Other liabilities and deferred income	2,307	2,272
Total liabilities	147,234	144,559
Shareholder's interest
Shareholder's interest	5,227	5,227
Accumulated other comprehensive income	(829)	(419)
Retained earnings	10,577	11,076
Total shareholder’s interest	14,975	15,884
Total liabilities and shareholder's interest	162,209	160,443
Variable Interest Entity, Primary Beneficiary [Member]
ASSETS
Cash and cash equivalents	2,728	3,479
Finance receivables, net	58,662	56,250
Net investment in operating leases	16,332	11,503
Derivative financial instruments	27	64
Liabilities
Debt	53,269	46,437
Derivative financial instruments	$ 24	$ 2

Consolidated Statement of Shareholder's Interest - USD ($) $ in Millions	3 Months Ended				12 Months Ended
	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Stockholders' interest attributable to noncontrolling interest	$ 0		$ 0		$ 0	$ 0	$ 0	$ 1
Total shareholder’s interest	14,975		15,884		14,975	15,884	12,803	$ 11,714
Shareholder's Interest [Roll Forward]
Balance at beginning of period		$ 15,884		$ 12,803	15,884	12,803	11,713
Net income	526	701	1,814	333	2,224	3,007	1,373
Net Income (Loss) Attributable to Noncontrolling Interest					0	0	0
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest					2,224	3,007	1,373
Other comprehensive income/(loss), net of tax					(410)	471	(283)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent					(410)	471	(283)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest					0	0	0
Distributions declared					(2,723)	(406)	(1)
Balance at end of period	14,975		15,884		14,975	15,884	12,803
Shareholder's Interest [Member]
Shareholder's Interest [Roll Forward]
Balance at beginning of period		5,227		5,227	5,227	5,227	5,227
Net income					0	0	0
Other comprehensive income/(loss), net of tax					0	0	0
Distributions declared					0	0	0
Balance at end of period	5,227		5,227		5,227	5,227	5,227
Accumulated Other Comprehensive Income/(Loss) (Note11) [Member]
Shareholder's Interest [Roll Forward]
Balance at beginning of period		(419)		(890)	(419)	(890)	(607)
Net income					0	0	0
Other comprehensive income/(loss), net of tax					(410)	471	(283)
Distributions declared					0	0	0
Balance at end of period	(829)		(419)		(829)	(419)	(890)
Retained Earnings [Member]
Shareholder's Interest [Roll Forward]
Balance at beginning of period		$ 11,076		$ 8,466	11,076	8,466	7,093
Net income					2,224	3,007	1,373
Other comprehensive income/(loss), net of tax					0	0	0
Distributions declared					(2,723)	(406)	0
Balance at end of period	$ 10,577		11,076		10,577	11,076	8,466
Noncontrolling Interest [Member]
Shareholder's Interest [Roll Forward]
Distributions declared					0	0	(1)
Parent [Member]
Shareholder's Interest [Roll Forward]
Distributions declared					$ (2,723)	(406)	$ 0
Accounting Standards Update 2014-09 [Member]
Shareholder's Interest [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption			9			9
Accounting Standards Update 2014-09 [Member] \| Shareholder's Interest [Member]
Shareholder's Interest [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption			0			0
Accounting Standards Update 2014-09 [Member] \| Accumulated Other Comprehensive Income/(Loss) (Note11) [Member]
Shareholder's Interest [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption			0			0
Accounting Standards Update 2014-09 [Member] \| Retained Earnings [Member]
Shareholder's Interest [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption			9			9
Accounting Standards Update 2014-09 [Member] \| Noncontrolling Interest [Member]
Shareholder's Interest [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption			0			0
Accounting Standards Update 2014-09 [Member] \| Parent [Member]
Shareholder's Interest [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption			$ 9			$ 9

Consolidated Statement of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities
Net income	$ 2,224	$ 3,007	$ 1,373
Adjustments to reconcile net income/(loss) to net cash provided by operations
Provision for credit losses	532	588	547
Depreciation and amortization	4,735	4,928	5,121
Amortization of upfront interest supplements	(2,041)	(1,686)	(1,341)
Net change in deferred income taxes	259	(923)	340
Net change in other assets	(276)	(606)	(413)
Net change in other liabilities	115	480	462
All other operating activities	155	(123)	142
Net cash provided by/(used in) operating activities	5,703	5,665	6,231
Cash flows from investing activities
Purchases of finance receivables	(44,384)	(43,232)	(37,494)
Principal collections of finance receivables	42,553	37,277	30,924
Purchases of operating lease vehicles	(14,306)	(12,780)	(14,441)
Liquidations of operating lease vehicles	9,223	8,538	7,920
Net change in wholesale receivables and other	(2,661)	(874)	(1,499)
Purchases of marketable securities	(3,632)	(5,899)	(7,289)
Proceeds from sales and maturities of marketable securities	5,171	6,316	6,756
Settlements of derivatives	226	(117)	215
All other investing activities	102	(30)	(105)
Net cash provided by/(used in) investing activities	(7,708)	(10,801)	(15,013)
Cash flows from financing activities
Proceeds from issuances of long-term debt	49,954	44,994	42,971
Principal payments on long-term debt	(42,530)	(39,372)	(38,000)
Change in short-term debt, net	(2,263)	1,195	3,403
Cash distributions to parent	(2,723)	(406)	0
All other financing activities	(151)	(105)	(103)
Net cash provided by/(used in) financing activities	2,287	6,306	8,271
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	(217)	327	(246)
Cash, cash equivalents and restricted cash at January 1 (Note 3)	9,747	9,682	8,185
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect	65	1,497	(757)
Cash, cash equivalents and restricted cash at December 31 (Note 3)	$ 9,747	$ 9,682	$ 8,185

Presentation	12 Months Ended
Presentation	Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Presentation	PRESENTATION Principles of Consolidation The accompanying consolidated financial statements include Ford Motor Credit Company LLC, its controlled domestic and foreign subsidiaries and joint ventures, 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”). Affiliates that we do not consolidate, but for which we have significant influence over operating and financial policies, are accounted for using the equity method. We are an indirect, wholly owned subsidiary of Ford Motor Company (“Ford”). We prepare our financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). We reclassify certain prior period amounts in our consolidated financial statements to conform to current year presentation. In June 2018, Argentina was classified as having a highly inflationary economy due to the three-year cumulative consumer price index exceeding 100%. As a result, we changed the functional currency for our operations in Argentina from the Argentine peso to the U.S. dollar as of July 1, 2018. Nature of Operations We offer a wide variety of automotive financing products to and through automotive dealers throughout the world. Our portfolio consists of finance receivables and net investment in operating leases. We also service the finance receivables and net investment in operating leases we originate and purchase, make loans to Ford affiliates, and provide insurance services related to our financing programs. See Notes 4 and 5 for additional information. We conduct our financing operations directly and indirectly through our subsidiaries and affiliates. We offer substantially similar products and services throughout many different regions, subject to local legal restrictions and market conditions. See Note 17 for key operating data on our business segments and for geographic information on our regions. The predominant share of our business consists of financing Ford vehicles and supporting Ford dealers. Any extended reduction or suspension of Ford’s production or sale of vehicles due to a decline in consumer demand, work stoppage, governmental action, negative publicity or other event, or significant changes to marketing programs sponsored by Ford, would have an adverse effect on our business. Certain subsidiaries are subject to regulatory capital requirements that may limit the ability of those subsidiaries to pay dividends.

Accounting Policies

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Accounting Policies

ACCOUNTING POLICIES

For each accounting topic that is addressed in its own note, the description of the accompanying accounting policy may be found in the related note. The remaining accounting policies are described below.

Use of Estimates

The preparation of financial statements requires the use of estimates, as determined by management. Because of the inherent uncertainty involved in making estimates, actual results reported in future periods might be based upon amounts that differ from those estimates. The accounting estimates that are most important to our business involve the allowance for credit losses and accumulated depreciation on vehicles subject to operating leases.

NOTE 2. ACCOUNTING POLICIES (Continued)

Foreign Currency

We remeasure monetary assets and liabilities denominated in a currency that is different than a reporting entity’s functional currency from the transactional currency to the legal entity’s functional currency. The effect of this remeasurement process, and the results of our foreign currency hedging activities are reported in Other income, net.

Generally, our foreign subsidiaries use the local currency as their functional currency. We translate the assets and liabilities of our foreign subsidiaries from their respective functional currencies to U.S. dollars using end-of-period exchange rates. Changes in the carrying value of these assets and liabilities attributable to fluctuations in exchange rates are recognized in Foreign currency translation, a component of Total Other comprehensive income / (Ioss), net of tax. Upon sale or upon complete or substantially complete liquidation of an investment in a foreign subsidiary, the amount of accumulated foreign currency translation related to the entity is reclassified to Net income and recognized as part of the gain or loss on the investment.

Fair Value Measurements

Cash equivalents, marketable securities, and derivative financial instruments are remeasured and presented on our financial statements on a recurring basis at fair value, while other assets and liabilities are measured at fair value on a nonrecurring basis.

In measuring fair value, we use various valuation methods and prioritize the use of observable inputs. The use of observable and unobservable inputs and their significance in measuring fair value are reflected in our fair value hierarchy.


•	Level 1 – inputs include quoted prices for identical instruments and are the most observable


•	Level 2 – inputs include quoted prices for similar instruments and observable inputs such as interest rates, currency exchange rates, and yield curves


•	Level 3 – inputs include data not observable in the market and reflect management judgment about the assumptions market participants would use in pricing the instruments

Transfers into and transfers out of the hierarchy levels are recognized as if they had taken place at the end of the reporting period.

Adoption of New Accounting Standards

Accounting Standards Update (“ASU”) 2017-12, Derivatives and Hedging. On January 1, 2018, we adopted the amendments to Accounting Standards Codification (“ASC”) 815 which aligns hedge accounting with risk management activities and simplifies the requirements to qualify for hedge accounting. Adoption did not have a material impact on our financial statements.

ASU 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities. On January 1, 2018, we adopted ASU 2016-01 and the related amendments. This standard amends various aspects of the 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 consolidated income statement.

NOTE 2. ACCOUNTING POLICIES (Continued)

We also adopted the following standards during 2018, none of which had a material impact to our financial statements or financial statement disclosures:



Standard		Effective Date
2017-08	Nonrefundable Fees and Other Costs - Premium Amortization on Purchased Callable Debt Securities	January 1, 2018
2016-18	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 of Certain Cash Receipts and Cash Payments	January 1, 2018

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 / 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. We plan to adopt the new standard, and the related amendments, on its effective date of January 1, 2020 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 on our consolidated balance sheet and do not expect a material impact to our consolidated income 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 obligations. The new standard, and the related amendments, are effective on January 1, 2019. Adoption of the standard as a lessor will not significantly impact our financial statements. As a lessee, it will add about $100 million of right-of-use assets and lease obligations to our balance sheet and will not significantly impact our income statement. We will 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 and not reassess whether any contracts entered into prior to adoption are leases.

Cash, Cash Equivalents, and Marketable Securities

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES

Cash and Cash Equivalents. Included in Cash and cash equivalents are highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of change in value due to interest rate, quoted price, or penalty on withdrawal. A debt security is classified as a cash equivalent if it meets these criteria and if it has a remaining time to maturity of three months or less from the date of acquisition. Amounts on deposit and available upon demand, or negotiated to provide for daily liquidity without penalty, are classified as Cash and cash equivalents. Time deposits, certificates of deposit, and money market accounts that meet the above criteria are reported at par value on our balance sheet.

Marketable Securities. Investments in securities with a maturity date greater than three months at the date of purchase and other securities for which there is more than an insignificant risk of change in value due to interest rate, quoted price, or penalty on withdrawal are classified as Marketable securities. These investments are reported at fair value. We generally measure fair value using prices obtained from pricing services. Pricing methods and inputs to valuation models used by the pricing services depend on the security type (i.e., asset class). Where possible, fair values are generated using market inputs including quoted prices (the closing price in an exchange market), bid prices (the price at which a buyer stands ready to purchase), and other market information. For fixed income securities that are not actively traded, the pricing services use alternative methods to determine fair value for the securities, including quotes for similar fixed income securities, matrix pricing, discounted cash flow using benchmark curves, or other factors. In certain cases, when market data are not available, we may use broker quotes to determine fair value.

An annual review is performed on the security prices received from our pricing services, which includes discussion and analysis of the inputs used by the pricing services to value our securities. We also compare the price of certain securities sold close to the quarter end to the price of the same security at the balance sheet date to ensure the reported fair value is reasonable.

Realized and unrealized gains and losses and interest income on our marketable securities are recorded in Other income, net. Realized gains and losses are measured using the specific identification method.

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 at December 31 (in millions):



	Fair Value Level	2017		2018
Cash and cash equivalents
U.S. government	1	$	—	$	139
U.S. government and agencies	2	300		25
Non-U.S. government and agencies	2	703		114
Corporate debt	2	25		884
Total marketable securities classified as cash equivalents		1,028		1,162
Cash, time deposits and money market funds		8,530		8,445
Total cash and cash equivalents		$	9,558	$	9,607

Marketable Securities
U.S. government	1	$	966	$	289
U.S. government and agencies	2	384		65
Non-U.S. government and agencies	2	660		610
Corporate debt	2	848		198
Other marketable securities	2	23		146
Total marketable securities		$	2,881	$	1,308

NOTE 3. Cash, Cash Equivalents, and Marketable Securities (Continued)

Cash, Cash Equivalents, and Restricted Cash

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



	December 31, 2017		December 31, 2018
Cash and cash equivalents	$	9,558	$	9,607
Restricted cash included in other assets (a)	124		140
Total cash, cash equivalents, and restricted cash	$	9,682	$	9,747

__________


(a)	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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Finance Receivables

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Financing Receivables

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

Revenue from finance receivables is recognized using the interest method and includes the accretion of certain direct origination costs that are deferred and interest supplements received from Ford and affiliated companies. The unearned interest supplements on finance receivables are included in Finance receivables, net on the balance sheet, and the earned interest supplements are included in Total financing revenue on the income statement.

We measure finance receivables at fair value for purposes of disclosure using internal valuation models. These models project future cash flows of financing contracts based on scheduled contract payments (including principal and interest). The projected cash flows are discounted to present value based on assumptions regarding credit losses, pre-payment speed, and applicable spreads to approximate current rates. Our assumptions regarding pre-payment speed and credit losses are based on historical performance. The fair value of finance receivables is categorized within Level 3 of the hierarchy.

On a nonrecurring basis, we also measure at fair value retail contracts greater than 120 days past due or deemed to be uncollectible, and individual dealer loans probable of foreclosure. We use the fair value of collateral, adjusted for estimated costs to sell, to determine the fair value of our receivables. The collateral for a retail receivable is the vehicle financed, and for dealer loans is real estate or other property.

The fair value of collateral for retail receivables is calculated by multiplying the outstanding receivable balances by the average recovery value percentage. The fair value of collateral for dealer loans is determined by reviewing various appraisals, which include total adjusted appraised value of land and improvements, alternate use appraised value, broker’s opinion of value, and purchase offers.

Consumer Portfolio. Receivables in this portfolio include products offered to individuals and businesses that finance the acquisition of Ford and Lincoln vehicles from dealers for personal or commercial use. Retail financing includes retail installment contracts for new and used vehicles and direct financing leases with retail customers, government entities, daily rental companies, and fleet customers.

Non-Consumer Portfolio. Receivables in this portfolio include products offered to automotive dealers and receivables purchased from Ford and its affiliates. The products include:


•	Dealer financing – includes wholesale loans to dealers to finance the purchase of vehicle inventory, also known as floorplan financing, as well as loans to dealers to finance working capital and improvements to dealership facilities, to finance the purchase of dealership real estate, and to finance other dealer programs. Wholesale financing is approximately 94% of our dealer financing.

•

Other financing – includes purchased receivables from Ford and its affiliates, primarily related to the sale of parts and accessories to dealers and certain used vehicles from daily rental fleet companies. In addition, we provide financing to Ford for vehicles that Ford leases to its employees. These receivables are excluded from our credit quality reporting since the performance of this group of receivables is generally guaranteed by Ford.

Notes and accounts receivable from affiliated companies are presented separately on the balance sheet. These receivables are based on intercompany relationships and the balances are settled regularly. We do not assess these receivables for potential credit losses, nor are they subjected to aging analysis, credit quality reviews, or other formal assessments. As a result, Notes and accounts receivable from affiliated companies are not subject to the following disclosures contained herein.

NOTE 4. FINANCE RECEIVABLES (Continued)

Finance Receivables, Net

Finance receivables, net at December 31 were as follows (in millions):



	2017			2018
Consumer
Retail financing, gross	$	78,467		$	79,747
Unearned interest supplements from Ford and affiliated companies	(3,280		)	(3,508		)
Consumer finance receivables	75,187			76,239

Non-Consumer
Dealer financing (a)	39,241			40,996
Other financing (b)	2,172			2,168
Non-Consumer finance receivables	41,413			43,164
Total recorded investment (c)	$	116,600		$	119,403

Recorded investment in finance receivables	$	116,600		$	119,403
Allowance for credit losses	(597		)	(589		)
Finance receivables, net	$	116,003		$	118,814

Net finance receivables subject to fair value (d)	$	112,717		$	115,059
Fair value	112,133			114,593

__________

(a)

At December 31, 2017 and 2018, includes $4.8 billion and $6.0 billion, respectively, of receivables generated by divisions and affiliates of Ford in connection with vehicle inventories released from Ford and in transit to the destination dealers. The amount of interest earned from Ford and affiliated companies associated with receivables from gate-released vehicles in transit to dealers for the years ended December 31, 2016, 2017 and 2018 was $129 million, $166 million, and $261 million, respectively. At December 31, 2017 and 2018, also includes $466 million and $662 million, respectively, of dealer financing receivables with entities (primarily dealers) that are reported as consolidated subsidiaries of Ford. For the years ended December 31, 2016, 2017, and 2018, the interest earned on receivables from consolidated subsidiaries of Ford to which we provide dealer financing was $9 million, $7 million, and $8 million, respectively. Consolidated subsidiaries of Ford include dealerships that are partially owned by Ford as consolidated VIEs and also certain overseas affiliates.

(b)

This amount represents other financing receivables with Ford and entities (primarily dealers) that are reported as consolidated subsidiaries of Ford, which includes amounts associated with purchased receivables and receivables associated with the financing of vehicles that Ford leases to employees. The amount of interest earned from Ford and affiliated companies associated with these other financing receivables totaled $38 million, $70 million, and $84 million for the years ended December 31, 2016, 2017, and 2018, respectively.

(c)

The amount of earned interest supplements on consumer and non-consumer receivables from Ford and affiliated companies totaled $1.6 billion, $2.0 billion, and $2.4 billion, for the years ended December 31, 2016, 2017, and 2018, respectively. The related amount of cash received from interest supplements totaled $2.3 billion, $2.3 billion, and $2.7 billion for the years ended December 31, 2016, 2017, and 2018, respectively.


(d)	At December 31, 2017 and 2018, Finance receivables, net includes $3.3 billion and $3.8 billion, respectively, of direct financing leases that are not subject to fair value disclosure requirements.

Excluded from finance receivables at December 31, 2017 and 2018 was $241 million and $264 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, 2017 and 2018 were consumer receivables of $38.9 billion and $40.7 billion, respectively, and non-consumer receivables of $24.5 billion and $25.7 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).

NOTE 4. FINANCE RECEIVABLES (Continued)

Contractual maturities of total finance receivables outstanding at December 31, 2018 reflect contractual repayments due from customers or borrowers and were as follows (in millions):



	Due in Year Ending December 31,
	2019		2020		2021		Thereafter		Total
Consumer
Retail financing, gross (a)	$	23,689	$	20,518	$	16,716	$	18,824	$	79,747

Non-Consumer
Dealer financing	38,589		972		200		1,235		40,996
Other financing	2,154		5		6		3		2,168
Total finance receivables	$	64,432	$	21,495	$	16,922	$	20,062	$	122,911

__________


(a)	Contractual maturities of retail financing, gross include $309 million of estimated unguaranteed residual values related to direct financing leases.

Our finance receivables are generally pre-payable without penalty, so prepayments may cause actual maturities to differ from contractual maturities.

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 $24 million and $20 million at December 31, 2017 and 2018, respectively.

The aging analysis of finance receivables balances at December 31 was as follows (in millions):



	2017		2018
Consumer
31-60 days past due	$	748	$	859
61-90 days past due	113		123
91-120 days past due	36		39
Greater than 120 days past due	37		39
Total past due	934		1,060
Current	74,253		75,179
Consumer finance receivables	75,187		76,239

Non-Consumer
Total past due	122		76
Current	41,291		43,088
Non-Consumer finance receivables	41,413		43,164
Total recorded investment	$	116,600	$	119,403

NOTE 4. FINANCE RECEIVABLES (Continued)

Credit Quality

Consumer Portfolio. When originating all classes of consumer receivables (i.e., retail and lease products), 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. After a proprietary risk score is generated, we decide whether to originate 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.

After origination, we review the credit quality of retail financing based on customer payment activity. As each customer develops a payment history, we use an internally developed behavioral scoring model to assist in determining the best collection strategies, which allows us to focus collection activity on higher-risk accounts. These models are used to refine our risk-based staffing model to ensure collection resources are aligned with portfolio risk. Based on data from this scoring model, contracts are categorized by collection risk. Our collection models evaluate several factors, including origination characteristics, updated credit bureau data, and payment patterns.

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


•	Pass – current to 60 days past due;


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


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

Non-Consumer Portfolio. We extend credit to dealers primarily in the form of lines of credit to purchase new Ford and Lincoln vehicles as well as used vehicles. Payment is required when the dealer has sold the vehicle. Each non-consumer lending request is evaluated by considering the borrower’s financial condition and the underlying collateral securing the loan. We use a proprietary model to assign each dealer a risk rating. This model uses historical dealer performance data to identify key factors about a dealer that we consider most significant in predicting a dealer’s ability to meet its financial obligations. We also consider numerous other financial and qualitative factors of the dealer’s operations, including capitalization and leverage, liquidity and cash flow, profitability, and credit history with ourselves and other creditors.

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


•	Group I – strong to superior financial metrics;


•	Group II – fair to favorable financial metrics;


•	Group III – marginal to weak financial metrics; and


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

We generally suspend credit lines and extend no further funding to dealers classified in Group IV.

We regularly review our model to confirm the continued business significance and statistical predictability of the model and may make and updates to improve the performance of the model. In addition, we regularly audit dealer inventory and dealer sales records to verify that the dealer is in possession of the financed vehicles and is promptly paying each receivable following the sale of the financed vehicle. The frequency of on-site vehicle inventory audits depends primarily on the dealer’s risk rating. Under our policies, on-site vehicle inventory audits of low-risk dealers are conducted only as circumstances warrant. On-site vehicle inventory audits of higher-risk dealers are conducted with increased frequency based primarily on the dealer’s risk rating, but also considering the results of our electronic monitoring of the dealer’s performance, including daily payment verifications and monthly analysis of the dealer’s financial statements, payoffs, aged inventory, over credit line and delinquency reports. We typically perform a credit review of each dealer annually and more frequently review certain dealers based on the dealer’s risk rating and total exposure. We adjust the dealer’s risk rating, if necessary.

NOTE 4. FINANCE RECEIVABLES (Continued)

The credit quality of dealer financing receivables is evaluated based on our internal dealer risk rating analysis. A dealer has the same risk rating for its entire dealer financing regardless of the type of financing.

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



	2017		2018
Dealer financing
Group I	$	31,551	$	33,656
Group II	5,912		5,635
Group III	1,640		1,576
Group IV	138		129
Total recorded investment	$	39,241	$	40,996

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, 2017 and 2018 was $386 million and $370 million, or 0.5% and 0.5% of consumer receivables, respectively. The recorded investment of non-consumer receivables that were impaired at December 31, 2017 and 2018 was $138 million and $129 million, or 0.3% and 0.3% of non-consumer receivables, respectively. Impaired finance receivables are evaluated both collectively and specifically. See Note 6 for additional information related to the development of our allowance for credit losses.

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.

Net Investments in Operating Leases

12 Months Ended

Dec. 31, 2018

Leases, Operating [Abstract]

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.

Revenue from rental payments received on operating leases is recognized on a straight-line basis over the term of the lease. The accrual of revenue on operating leases is discontinued at the time an account is determined to be uncollectible.

We receive interest supplements and residual support payments on certain leasing transactions under agreements with Ford. We recognize these upfront collections from Ford and other vehicle acquisition costs as part of Net investment in operating leases, which are amortized to Depreciation on vehicles subject to operating leases over the term of the lease contract. The amount of unearned interest supplements and residual support included in Net investment in operating leases at December 31, 2017 and 2018 was $2.8 billion and $3.3 billion, respectively. The amount of earned interest supplements and residual support costs included in Depreciation on vehicles subject to operating lease for the years ended December 31, 2016, 2017, and 2018 was $1.9 billion, $2.1 billion, and $2.4 billion, respectively. The amount of interest supplements and residual support cash received totaled $2.0 billion, $2.4 billion, and $2.8 billion for the years ended December 31, 2016, 2017, and 2018, respectively.

Depreciation expense on vehicles subject to operating leases is recognized on a straight-line basis in an amount necessary to reduce the leased vehicle value to its estimated residual value at the end of the lease term. Our policy is to promptly sell returned off-lease vehicles. We evaluate our depreciation for leased vehicles on a regular basis taking into consideration various assumptions, such as expected residual values at lease termination (including residual value support payments from Ford) and the estimated number of vehicles that will be returned to us. Adjustments to depreciation expense reflecting revised estimates of expected residual values at the end of the lease terms are recorded prospectively on a straight-line basis. Upon disposition of the vehicle, the difference between net book value and actual proceeds is recorded as an adjustment to Depreciation on vehicles subject to operating leases.

We evaluate the carrying value of held-and-used long-lived asset groups (such as vehicles subject to operating leases) for potential impairment when we determine a triggering event has occurred. When a triggering event occurs, a test for recoverability is performed by comparing projected undiscounted future cash flows to the carrying value of the asset group. If the test for recoverability identifies a possible impairment, the asset group’s fair value is measured in accordance with the fair value measurement framework. An impairment charge is recognized for the amount by which the carrying value of the asset group exceeds its estimated fair value. For the periods presented, we have not recorded any impairment charges.

Net investment in operating leases at December 31 was as follows (in millions):



	2017			2018
Vehicles, at cost (a)	$	32,659		$	33,593
Accumulated depreciation	(5,927		)	(6,066		)
Net investment in operating leases before allowance for credit losses	26,732			27,527
Allowance for credit losses	(71		)	(78		)
Net investment in operating leases	$	26,661		$	27,449

__________


(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, 2017 and 2018, net investment in operating leases before allowance for credit losses includes $11.5 billion and $16.3 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 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).

NOTE 5. NET INVESTMENT IN OPERATING LEASES (Continued)

We have a sale-leaseback agreement with Ford primarily for vehicles that Ford leases to employees of Ford and its subsidiaries. The financing we provide under this agreement is reflected on our balance sheet in Finance receivables, net. The revenue related to these agreements is reflected in Other financing revenue. Prior to January 1, 2017, this activity was reflected on our income statement in Operating leases revenue and Depreciation on vehicles subject to operating leases. For the year ended December 31, 2016, the operating lease revenue related to these vehicles was $302 million, while the depreciation expense related to these vehicles was $275 million.

The amounts contractually due for minimum rentals on operating leases at December 31, 2018 were as follows (in millions):



	2019		2020		2021		2022		2023
Minimum rentals on operating leases	$	4,708	$	2,929	$	1,083	$	83	$	6

Our operating leases are generally pre-payable without penalty and may cause actual amounts due to differ from amounts contractually due.

Allowance for Credit Losses

12 Months Ended

Dec. 31, 2018

Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]

ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses represents our estimate of the probable credit loss inherent in finance receivables and operating leases as of the balance sheet date. The adequacy of the allowance for credit losses is assessed quarterly and the assumptions and models used in establishing the allowance are evaluated regularly. Because credit losses may vary substantially over time, estimating credit losses requires a number of assumptions about matters that are uncertain. The majority of credit losses are attributable to consumer receivables.

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

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

Consumer Portfolio and Operating Leases

We estimate the allowance for credit losses on consumer receivables and on operating leases using a combination of measurement models and management judgment. The models consider factors such as historical trends in credit losses and recoveries (including key metrics such as delinquencies, repossessions, and bankruptcies), the composition of the present portfolio (including vehicle brand, term, risk evaluation, and new/used vehicles), trends in historical used vehicle values, and economic conditions. Estimates from these models rely on historical information and may not fully reflect losses inherent in the present portfolio. Therefore, we may adjust the estimate to reflect management judgment regarding observable changes in recent economic trends and conditions, portfolio composition, and other relevant factors.

We make projections of two key assumptions to assist in estimating the consumer allowance for credit losses:


•	Frequency – number of finance receivables and operating lease contracts that are expected to default over the loss emergence period (“LEP”), measured as repossessions; and


•	Loss severity – expected difference between the amount a customer owes when the finance contract is charged off and the amount received, net of expenses, from selling the repossessed vehicle.

NOTE 6. ALLOWANCE FOR CREDIT LOSSES (Continued)

Collective Allowance for Credit Losses. The collective allowance is evaluated primarily using a collective loss-to-receivables (“LTR”) model that, based on historical experience, indicates credit losses have been incurred in the portfolio even though the particular accounts that are uncollectible cannot be specifically identified. The LTR model is based on the most recent years of history. An LTR for each product is calculated by dividing credit losses (i.e., charge-offs net of recoveries) by average net finance receivables or average net investment in operating leases, excluding unearned interest supplements and residual support, allowance for credit losses, and other (primarily accumulated supplemental depreciation). The average LTR that is calculated for each product is multiplied by the end-of-period balances for that given product.

Our largest markets also use a loss projection model to estimate losses inherent in the portfolio. The loss projection model applies recent monthly performance metrics, stratified by contract type (retail or lease), contract term (e.g., 60-month), and risk rating to our active portfolio to estimate the losses that have been incurred.

The LEP is an assumption within our models and represents the average amount of time between when a loss event first occurs to when it is charged off. This time period starts when the consumer begins to experience financial difficulty. It is evidenced, typically through delinquency, before eventually resulting in a charge-off. The LEP is a multiplier in the calculation of the collective consumer allowance for credit losses.

For accounts greater than 120 days past due, the uncollectible portion is charged off, such that the remaining recorded investment is equal to the estimated fair value of the collateral less costs to sell.

Specific Allowance for Impaired Receivables. Consumer receivables involved in TDRs are specifically assessed for impairment. A specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the contract’s original effective interest rate or the fair value of any collateral adjusted for estimated costs to sell.

After establishing the collective and specific allowance for credit losses, if management believes the allowance does not reflect all losses inherent in the portfolio due to changes in recent economic trends and conditions, or other relevant factors, an adjustment is made based on management judgment.

Non-Consumer Portfolio

We estimate the allowance for credit losses for non-consumer receivables based on historical LTR ratios, expected future cash flows, and the fair value of collateral.

Collective Allowance for Credit Losses. We estimate an allowance for non-consumer receivables that are not specifically identified as impaired using an LTR model for each financing product based on historical experience. This LTR is an average of the most recent historical experience and is calculated consistent with the consumer receivables LTR approach. All accounts that are specifically identified as impaired are excluded from the calculation of the non-specific or collective allowance.

Specific Allowance for Impaired Receivables. Dealer financing is evaluated by segmenting individual loans by the risk characteristics of the loan (such as the amount of the loan, the nature of the collateral, and the financial status of the debtor). The loans are analyzed to determine whether individual loans are impaired, and a specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the loan’s original effective interest rate or the fair value of the collateral adjusted for estimated costs to sell.

After establishing the collective and specific allowance for credit losses, if management believes the allowance does not reflect all losses inherent in the portfolio due to changes in recent economic trends and conditions, or other relevant factors, an adjustment is made based on management judgment.

NOTE 6. ALLOWANCE FOR CREDIT LOSSES (Continued)

An analysis of the allowance for credit losses related to finance receivables and net investment in operating leases for the years ended December 31 was as follows (in millions):



	2017
	Finance Receivables									Net Investment in Operating Leases			Total Allowance
	Consumer			Non-Consumer			Total			Net Investment in Operating Leases			Total Allowance
Allowance for credit losses
Beginning balance	$	469		$	15		$	484		$	64		$	548
Charge-offs	(510		)	(7		)	(517		)	(208		)	(725		)
Recoveries	139			9			148			96			244
Provision for credit losses	471			(2		)	469			119			588
Other (a)	13			—			13			—			13
Ending balance	$	582		$	15		$	597		$	71		$	668

Analysis of ending balance of allowance for credit losses
Collective impairment allowance	$	560		$	13		$	573		$	71		$	644
Specific impairment allowance	22			2			24			—			24
Ending balance	582			15			597			71			$	668

Analysis of ending balance of finance receivables and net investment in operating leases
Collectively evaluated for impairment	74,801			41,275			116,076			26,732
Specifically evaluated for impairment	386			138			524			—
Recorded investment	75,187			41,413			116,600			26,732

Ending balance, net of allowance for credit losses	$	74,605		$	41,398		$	116,003		$	26,661

__________


(a)	Primarily represents amounts related to translation adjustments.



	2018
	Finance Receivables									Net Investment in Operating Leases			Total Allowance
	Consumer			Non-Consumer			Total			Net Investment in Operating Leases			Total Allowance
Allowance for credit losses
Beginning balance	$	582		$	15		$	597		$	71		$	668
Charge-offs (a)	(528		)	(67		)	(595		)	(202		)	(797		)
Recoveries	163			7			170			104			274
Provision for credit losses	359			68			427			105			532
Other (b)	(10		)	—			(10		)	—			(10		)
Ending balance	$	566		$	23		$	589		$	78		$	667

Analysis of ending balance of allowance for credit losses
Collective impairment allowance	$	546		$	14		$	560		$	78		$	638
Specific impairment allowance	20			9			29			—			29
Ending balance	566			23			589			78			$	667

Analysis of ending balance of finance receivables and net investment in operating leases
Collectively evaluated for impairment	75,869			43,035			118,904			27,527
Specifically evaluated for impairment	370			129			499			—
Recorded investment	76,239			43,164			119,403			27,527

Ending balance, net of allowance for credit losses	$	75,673		$	43,141		$	118,814		$	27,449

__________


(a)	Non-consumer charge-offs primarily reflect a U.S. dealer’s floorplan inventory and dealer loan determined to be uncollectible.


(b)	Primarily represents amounts related to translation adjustments.

Transfers of Receivables

12 Months Ended

Dec. 31, 2018

Transfers and Servicing [Abstract]

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 primarily in the United States, Canada, the United Kingdom, Germany and China.

We use special purpose entities (“SPEs”) that are considered VIEs for most of our on-balance sheet securitizations. The SPEs are established for the sole purpose of financing the securitized financial assets. The SPEs are generally financed through the issuance of notes or commercial paper into the public or private markets or directly with conduits. We may purchase subordinated notes of the VIEs in addition to the investment we make as the residual interest holder of the transaction.

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

Finance Receivables Classification

Finance receivables are accounted for as held for investment (“HFI”) if management has the intent and ability to hold the receivables for the foreseeable future or until maturity or payoff. The determination of intent and ability to hold for the foreseeable future is highly judgmental and requires management to make good faith estimates based on all information available at the time of origination or purchase. If management does not have the intent and ability to hold the receivables, then the receivables are classified as held for sale (“HFS”).

Each quarter, we make a determination of whether it is probable that finance receivables originated or purchased during the quarter will be held for the foreseeable future based on historical receivables sale experience, internal forecasts and budgets, as well as other relevant, reliable information available through the date of evaluation. For purposes of this determination, we define probable to mean at least 70% likely and, consistent with our budgeting and forecasting period, we define foreseeable future to mean twelve months. We classify receivables on a receivable-by-receivable basis. Specific receivables included in off-balance sheet securitizations or whole-loan sale transactions are usually not identified until the month in which the sale occurs.

Held for Investment

Finance receivables originated or purchased during the quarter for which we determine that it is probable we will hold for the following twelve months are classified as HFI and recorded at the time of origination or purchase at fair value and are subsequently reported at amortized cost, net of any allowance for credit losses. Cash flows resulting from the origination or purchase of and from the sale of receivables that were originally classified as HFI are recorded as an investing activity since GAAP requires the statement of cash flows presentation to be based on the original classification of the receivables.

Held for Sale

Finance receivables originated or purchased during the quarter for which we determine that it is not probable we will hold for the following twelve months are classified as HFS and carried at the lower of cost or fair value. Cash flows resulting from the origination or purchase and sale of these receivables are recorded as an operating activity. Once a decision has been made to sell receivables that were originally classified as HFI, the receivables are reclassified as HFS and carried at the lower of cost or fair value. The valuation adjustment, if applicable, is recorded in Other income, net to recognize the receivables at the lower of cost or fair value. Once receivables that were classified as HFS are sold, the receivables are removed from the balance sheet and the fair value adjustment is incorporated into the book value of receivables for purposes of determining the gain or loss on sale.

NOTE 7. TRANSFERS OF RECEIVABLES (Continued)

On-Balance Sheet Securitization Transactions

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 at December 31 (in billions):



	2017
	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)
VIE (b)
Retail financing	$	1.8	$	32.6	$	0.2	$	32.4	$	27.7
Wholesale financing	1.2		23.9		—		23.9		11.5
Finance receivables	3.0		56.5		0.2		56.3		39.2
Net investment in operating leases	0.5		11.5		—		11.5		7.2
Total VIE	$	3.5	$	68.0	$	0.2	$	67.8	$	46.4

Non-VIE
Retail financing	$	0.3	$	6.3	$	—	$	6.3	$	5.7
Wholesale financing	—		0.6		—		0.6		0.5
Finance receivables	0.3		6.9		—		6.9		6.2
Net investment in operating leases	—		—		—		—		—
Total Non-VIE	$	0.3	$	6.9	$	—	$	6.9	$	6.2

Total securitization transactions
Retail financing	$	2.1	$	38.9	$	0.2	$	38.7	$	33.4
Wholesale financing	1.2		24.5		—		24.5		12.0
Finance receivables	3.3		63.4		0.2		63.2		45.4
Net investment in operating leases	0.5		11.5		—		11.5		7.2
Total securitization transactions	$	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.

NOTE 7. TRANSFERS OF RECEIVABLES (Continued)



	2018
	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)
VIE (b)
Retail financing	$	1.9	$	34.0	$	0.2	$	33.8	$	29.2
Wholesale financing	0.3		24.9		—		24.9		13.9
Finance receivables	2.2		58.9		0.2		58.7		43.1
Net investment in operating leases	0.5		16.3		—		16.3		10.2
Total VIE	$	2.7	$	75.2	$	0.2	$	75.0	$	53.3

Non-VIE
Retail financing	$	0.3	$	6.7	$	—	$	6.7	$	5.9
Wholesale financing	—		0.8		—		0.8		0.6
Finance receivables	0.3		7.5		—		7.5		6.5
Net investment in operating leases	—		—		—		—		—
Total Non-VIE	$	0.3	$	7.5	$	—	$	7.5	$	6.5

Total securitization transactions
Retail financing	$	2.2	$	40.7	$	0.2	$	40.5	$	35.1
Wholesale financing	0.3		25.7		—		25.7		14.5
Finance receivables	2.5		66.4		0.2		66.2		49.6
Net investment in operating leases	0.5		16.3		—		16.3		10.2
Total securitization transactions	$	3.0	$	82.7	$	0.2	$	82.5	$	59.8

__________


(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.

Interest expense related to securitization debt for the years ended December 31 was as follows (in millions):



	2016		2017		2018
VIE	$	671	$	827	$	1,220
Non-VIE	102		128		177
Total securitization transactions	$	773	$	955	$	1,397

Certain of our securitization entities may enter into derivative transactions to mitigate interest rate exposure, primarily resulting from fixed-rate assets securing floating-rate debt and, in certain instances, currency exposure resulting from assets in one currency and debt in another currency. In certain instances, the counterparty enters into offsetting derivative transactions with us to mitigate its interest rate risk resulting from derivatives with our securitization entities. These related derivatives are not the obligations of our securitization entities. See Note 9 for additional information regarding the accounting for derivatives. Our exposures based on the fair value of derivative instruments with external counterparties related to securitization programs at December 31 were as follows (in millions):



	2017				2018
	Derivative Asset		Derivative Liability		Derivative Asset		Derivative Liability
Derivatives of the VIEs	$	64	$	2	$	27	$	24
Derivatives related to the VIEs	23		29		12		11
Other securitization related derivatives	34		—		31		14
Total exposures related to securitization	$	121	$	31	$	70	$	49

NOTE 7. TRANSFERS OF RECEIVABLES (Continued)

Derivative expense / (income) related to our securitization transactions for the years ended December 31 was as follows (in millions):



	2016			2017			2018
Derivatives of the VIEs	$	23		$	(38	)	$	30
Derivatives related to the VIEs	(4		)	(6		)	(11		)
Other securitization related derivatives	10			(16		)	(2		)
Total derivative expense / (income) related to securitization	$	29		$	(60	)	$	17

Variable Interest Entities

12 Months Ended

Dec. 31, 2018

Variable Interest Entities [Abstract]

VARIABLE INTEREST ENTITIES

A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. Nearly all of our VIEs are special purpose entities used for our securitizations.

We have the power to direct significant activities of our special purpose entities when we have the ability to exercise discretion in the servicing of financial assets, issue additional debt, exercise a unilateral call option, add assets to revolving structures, or control investment decisions.

Assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against our general assets. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on our general assets; rather, they represent claims against the specific assets of the consolidated VIEs.

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.

The transactions create and pass along risks to the variable interest holders, depending on the assets securing the debt and the specific terms of the transactions. We aggregate and analyze the asset-backed securitization transactions based on the risk profile of the product and the type of funding structure, including:


•	Retail financing – consumer credit risk and pre-payment risk;


•	Wholesale financing – dealer credit risk and Ford risk, as the receivables owned by the VIEs primarily arise from the financing provided by us to Ford-franchised dealers; therefore, the collections depend upon the sale of Ford vehicles; and


•	Net investment in operating leases – vehicle residual value risk, consumer credit risk, and pre-payment risk.

As residual interest holder, we are exposed to the underlying residual and credit risk of the collateral and are exposed to interest rate risk in some transactions. The amount of risk absorbed by our residual interests generally is represented by and limited to the amount of overcollateralization of the assets securing the debt and any cash reserves.

NOTE 8. VARIABLE INTEREST ENTITIES (Continued)

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.

VIEs that are exposed to interest rate or currency risk may reduce their risks by entering into derivative transactions. In certain instances, we have entered into derivative transactions with the counterparty to protect the counterparty from risks absorbed through its derivative transactions with the VIEs.

Although not contractually required, we regularly support our wholesale securitization programs by repurchasing receivables of a dealer from a VIE when the dealer’s performance is at risk, which transfers the corresponding risk of loss from the VIE to us. In order to continue to fund the wholesale receivables, we also may contribute additional cash or wholesale receivables if the collateral falls below the required levels. The balances of cash related to these contributions were $0 at both December 31, 2017 and 2018, and ranged from $0 to $9 million during 2017 and $0 to $179 million during 2018.

See Note 7 for additional information on the financial position and financial performance of our VIEs and Note 9 for additional information regarding derivatives.

Derivative Financial Instruments and Hedging Activities

12 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

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:


•	Interest rate contracts, including swaps, that are used to manage the effects of interest rate fluctuations;


•	Foreign currency exchange contracts, including forwards, that are used to manage foreign exchange exposure; and


•	Cross-currency interest rate swap contracts that are used to manage foreign currency and interest rate exposures on foreign-denominated debt.

We review our hedging program, derivative positions, and overall risk management strategy on a regular basis.

Derivative Financial Instruments and Hedge Accounting. Derivative assets and derivative liabilities are reported in Derivative financial instruments on our balance sheet at fair value and presented on a gross basis.

Our derivatives are over-the-counter customized derivative transactions and are not exchange traded. We estimate the fair value of these instruments using industry-standard valuation models such as a discounted cash flow. These models project future cash flows and discount the future amounts to a present value using market-based expectations for interest rates, foreign exchange rates, and the contractual terms of the derivative instruments. The discount rate used is the relevant interbank deposit rate (e.g., LIBOR) plus an adjustment for nonperformance risk. The adjustment reflects the full credit default swap (“CDS”) spread applied to a net exposure, by counterparty, considering the master netting agreements and any posted collateral. We use our counterparty’s CDS spread when we are in a net asset position and our own CDS spread when we are in a net liability position.

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.

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

Fair Value Hedges. We use derivatives to reduce the risk of changes in the fair value of debt. We have designated certain receive-fixed, pay-float interest rate swaps as fair value hedges of fixed-rate debt. The risk being hedged is the risk of changes in the fair value of the hedged debt attributable to changes in the benchmark interest rate. If the hedge relationship is deemed to be highly effective, we report the changes in the fair value of the hedged debt related to the risk being hedged in Debt and Interest expense. Net interest settlements and accruals, and the fair value changes on hedging instruments are reported in Interest expense. The cash flows associated with fair value hedges are reported in Net cash provided by / (used in) operating activities in our statement of cash flows.

When a fair value hedge is de-designated, or when the derivative is terminated before maturity, the fair value adjustment to the hedged debt continues to be reported as part of the carrying value of the debt and is recognized in Interest expense over its remaining life.

Derivatives Not Designated as Hedging Instruments. We report net interest settlements and accruals and changes in the fair value of interest rate swaps not designated as hedging instruments in Other income, net. Foreign currency revaluation on accrued interest along with gains and losses on foreign exchange contracts and cross currency interest rate swaps are reported in Other income, net. Cash flows associated with non-designated or de-designated derivatives are reported in Net cash provided by / (used in) investing activities in our statement of cash flows.

Income Effect of Derivative Financial Instruments

The gains / (losses), by hedge designation, reported in income for the years ended December 31 were as follows (in millions):



	2016			2017			2018
Fair value hedges
Interest rate contracts
Net interest settlements and accruals on hedging instruments	$	367		$	217		$	10
Fair value changes on hedging instruments (a)	(120		)	(268		)	(155		)
Fair value changes on hedged debt (a)	124			267			153
Derivatives not designated as hedging instruments
Interest rate contracts	(9		)	58			(84		)
Foreign currency exchange contracts (b)	179			(150		)	163
Cross-currency interest rate swap contracts	398			103			(244		)
Total	$	939		$	227		$	(157	)

__________


(a)	For 2016 and 2017, the fair value changes on hedging instruments and on hedged debt were reported in Other income, net; effective 2018, these amounts were reported in Interest expense.


(b)	Reflects forward contracts between Ford Credit and an affiliated company.

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

Balance Sheet Effect of Derivative Financial Instruments

Derivative assets and liabilities are reported 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 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, at December 31 were as follows (in millions):



	2017						2018
	Notional		Fair Value of Assets		Fair Value of Liabilities		Notional		Fair Value of Assets		Fair Value of Liabilities
Fair value hedges
Interest rate contracts	$	28,008	$	248	$	135	$	22,989	$	158	$	208
Derivatives not designated as hedging instruments
Interest rate contracts	60,504		276		137		76,904		235		274
Foreign currency exchange contracts	2,406		3		10		4,318		45		24
Cross-currency interest rate swap contracts	4,006		408		28		5,235		232		157
Total derivative financial instruments, gross (a) (b)	$	94,924	$	935	$	310	$	109,446	$	670	$	663

__________


(a)	At December 31, 2017 and 2018, we held collateral of $15 million and $19 million, and we posted collateral of $38 million and $59 million, respectively.


(b)	At December 31, 2017 and 2018, the fair value of assets and liabilities available for counterparty netting was $162 million and $233 million, respectively. All derivatives are categorized within Level 2 of the fair value hierarchy.

Other Assets and Other Liabilities and Deferred Income

12 Months Ended

Dec. 31, 2018

Other Assets and Other Liabilities and Deferred Income [Abstract]

OTHER ASSETS AND OTHER LIABILITIES AND DEFERRED INCOME

OTHER ASSETS AND OTHER LIABILITIES AND DEFERRED REVENUE

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

Other assets at December 31 were as follows (in millions):



	2017		2018
Accrued interest and other non-finance receivables	$	1,117	$	1,080
Collateral held for resale, at net realizable value, and other inventory	780		877
Prepaid reinsurance premiums and other reinsurance recoverables	611		658
Deferred charges – income taxes	247		216
Property and equipment, net of accumulated depreciation (a)	177		192
Restricted cash	124		140
Investment in non-consolidated affiliates	107		123
Deferred charges	127		96
Other	39		74
Total other assets	$	3,329	$	3,456

__________


(a)	Accumulated depreciation was $354 million and $367 million at December 31, 2017 and 2018, respectively.

Other liabilities and deferred revenue at December 31 were as follows (in millions):



	2017		2018
Unearned insurance premiums and fees	$	723	$	775
Interest payable	722		752
Income tax and related interest (a)	301		369
Deferred revenue	148		113
Payroll and employee benefits	68		70
Other	310		228
Total other liabilities and deferred revenue	$	2,272	$	2,307

__________


(a)	Includes tax and interest payable to affiliated companies of $99 million and $193 million at December 31, 2017 and 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 December 31, 2018, respectively. There were no material adjustments to the fair values of these investments for the year ending December 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 $124 million and $87 million at December 31, 2017 and December 31, 2018, respectively. 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.

Debt and Commitments

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

DEBT AND COMMITMENTS

We have a commercial paper program with qualified institutional investors. We also obtain other short-term funding from the issuance of demand notes to retail investors through our demand notes program. We have certain securitization programs that issue short-term asset-backed debt securities that are sold to institutional investors. Bank borrowings by several of our international affiliates in the ordinary course of business are an additional source of short-term funding. We obtain long-term debt funding through the issuance of a variety of unsecured and asset-backed debt securities in the U.S. and international capital markets.

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.

Debt is reported on our balance sheet at par value adjusted for unamortized discount or premium, unamortized issuance costs, and adjustments related to designated fair value hedging (see Note 9 for additional information). Debt due within one year at issuance is classified as short-term. Debt due after one year at issuance is classified as long-term. Discounts, premiums, and costs directly related to the issuance of debt are capitalized and amortized over the life of the debt or to the put date and are recorded in Interest expense using the effective interest method. Gains and losses on the extinguishment of debt are recorded in Other income, net.

Debt outstanding and interest rates at December 31 were as follows (in millions):



							Interest Rates
	Debt						Average Contractual				Average Effective
	2017			2018			2017		2018		2017		2018
Short-term debt
Unsecured debt
Floating rate demand notes	$	5,660		$	5,880
Commercial paper	4,889			3,749
Other short-term debt	5,890			4,213
Asset-backed debt	786			943
Total short-term debt	17,225			14,785			3.0	%	3.5	%	3.0	%	3.5	%
Long-term debt
Unsecured debt
Notes payable within one year	13,298			14,373
Notes payable after one year	55,687			52,409
Asset-backed debt
Notes payable within one year	17,817			22,130
Notes payable after one year	34,051			36,844
Unamortized (discount) / premium	(1		)	2
Unamortized issuance costs	(228		)	(211		)
Fair value adjustments (a)	(21		)	(186		)
Total long-term debt	120,603			125,361			2.5	%	2.8	%	2.6	%	2.8	%
Total debt	$	137,828		$	140,146		2.6	%	2.8	%	2.6	%	2.9	%

Fair value of debt	$	139,677		$	138,888
Interest rate characteristics of debt payable after one year
Fixed interest rate	65,569			61,749
Variable interest rate (generally based on LIBOR or other short-term rates)	24,169			27,504
Total payable after one year	$	89,738		$	89,253

__________

(a) These adjustments relate to designated fair value hedges. The carrying value of hedged debt was $39.0 billion and $38.0 billion at December 31, 2017 and 2018, respectively.

NOTE 11. DEBT AND COMMITMENTS (Continued)

With the exception of commercial paper, which is issued at a discount, the average contractual rates reflect the stated contractual interest rate. Average effective rates reflect the average contractual interest rate plus amortization of discounts, premiums, and issuance fees. Fair value adjustments relate to designated fair value hedges of unsecured debt.

We measure debt at fair value for purposes of disclosure using quoted prices for our own debt with approximately the same remaining maturities. Where quoted prices are not available, we estimate fair value using discounted cash flows and market-based expectations for interest rates, credit risk, and the contractual terms of the debt instruments. For certain short-term debt with an original maturity date of one year or less, we assume that book value is a reasonable approximation of the debt’s fair value. The fair value of debt is categorized within Level 2 of the hierarchy. The fair value of debt includes $16.4 billion and $13.8 billion of short-term debt at December 31, 2017 and 2018, respectively, carried at cost, which approximates fair value. We paid interest of $2.4 billion, $2.9 billion, and $3.5 billion in 2016, 2017, and 2018, respectively, on debt.

Other short-term debt with affiliated companies was $72 million and $80 million at December 31, 2017 and 2018, respectively. Interest expense with affiliated companies is reported in Interest expense and was immaterial during the respective periods.

Maturities

Debt maturities at December 31, 2018 were as follows (in millions):



	2019 (a)		2020		2021		2022		2023		Thereafter (b)		Total
Unsecured debt	$	28,215	$	15,073	$	15,288	$	8,343	$	5,895	$	7,810	$	80,624
Asset-backed debt	23,073		19,004		7,865		4,487		2,595		2,893		59,917
Total	51,288		34,077		23,153		12,830		8,490		10,703		140,541
Unamortized discount													2
Unamortized issuance costs													(211		)
Fair value adjustments													(186		)
Total debt													$	140,146

__________


(a)	Includes $14,785 million for short-term and $36,503 million for long-term debt.


(b)	Matures between 2024 and 2028.

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 $35.4 billion ($17.4 billion of retail financing, $6.0 billion of wholesale financing, and $12.0 billion of operating leases) at December 31, 2018. In the United States, we are able to obtain funding within two days for our unutilized capacity in some of our committed asset-backed facilities. These committed liquidity facilities have varying maturity dates, with $17.9 billion having maturities within the next twelve months and the remaining balance having maturities through 2020. We plan capacity renewals to protect our global funding needs, optimize capacity utilization, and maintain sufficient liquidity.

NOTE 11. DEBT AND COMMITMENTS (Continued)

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 December 31, 2018, $20.7 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.

Unsecured Credit Facilities

At December 31, 2018, we and our majority-owned subsidiaries had $6.0 billion of contractually committed unsecured credit facilities with financial institutions, including the FCE Credit Agreement, the Ford Bank Credit Agreement, and the allocation under Ford’s corporate credit facility. At December 31, 2018, $5.3 billion was available for use.

FCE’s £745 million (equivalent to $954 million at December 31, 2018) syndicated credit facility (the “FCE Credit Agreement”) matures in 2021. At December 31, 2018, £505 million (equivalent to $646 million) was available for use. Ford Bank’s €240 million (equivalent to $275 million at December 31, 2018) syndicated credit facility (the “Ford Bank Credit Agreement”) matures in 2021. At December 31, 2018, all €240 million was available for use.

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

Lenders under the Ford corporate credit facility have commitments totaling $13.4 billion, with 75% of the commitments maturing on April 30, 2023 and 25% of the commitments maturing on April 30, 2021. 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 liquidity. At December 31, 2018, all $3.0 billion was available for use.

Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

Ford Motor Credit Company LLC is a disregarded entity for United States income tax purposes and Ford’s consolidated United States federal and state income tax returns include certain of our domestic subsidiaries. In accordance with our intercompany tax sharing agreement with Ford, United States income tax liabilities or credits are allocated to us generally on a separate return basis calculated as if we were taxable as a corporation.

We account for U.S. tax on global intangible low-tax income in the period incurred.

The Provision for income taxes for the years ended December 31 was estimated as follows (in millions):



	2016			2017			2018
Current
Federal	$	(41	)	$	(6	)	$	72
Non-U.S.	222			241			153
State and local	(15		)	(9		)	(81		)
Total current	166			226			144
Deferred
Federal	284			(1,016		)	283
Non-U.S.	1			30			(125		)
State and local	55			63			101
Total deferred	340			(923		)	259
Provision for / (Benefit from) income taxes	$	506		$	(697	)	$	403

A reconciliation of the Provision for income taxes with the United States statutory tax rate as a percentage of Income before income taxes for the years ended December 31 is as follows:



	2016		2017		2018
U.S. statutory tax rate	35.0	%	35.0	%	21.0	%
Effect of (in percentage points):
Non-U.S. tax rates under U.S. rate	(3.8	)	(4.0	)	1.7
State and local income taxes	1.3		1.5		0.6
Dispositions and restructurings	—		—		(8.9	)
U.S. tax on non-U.S. earnings	(4.9	)	15.6		0.4
Enacted change in tax laws	—		(78.1	)	—
Other	(0.7	)	(0.2	)	0.5
Effective tax rate	26.9	%	(30.2	)%	15.3	%

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. This act includes, among other items, a permanent reduction to the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018, and requires immediate taxation of accumulated, unremitted non-U.S. earnings. As a result, at December 31, 2017, we recognized a tax benefit of $1.8 billion from revaluing U.S. net deferred tax liabilities and tax expense of $375 million to record U.S. tax on unremitted non-U.S. earnings.

At December 31, 2018, $3.1 billion of non-U.S. earnings are considered indefinitely reinvested in operations outside the United States, for which deferred taxes have not been provided. Repatriation of these earnings in their entirety would result in an incremental liability of about $110 million.

NOTE 12. INCOME TAXES (Continued)

Deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax bases, and net operating loss carryforwards and tax credit carryforwards on a taxing jurisdiction basis. We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid.

Our accounting for deferred tax consequences represents our best estimate of the likely future tax consequences of events that have been recognized in our financial statements or tax returns and their future probability. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets. If, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized, we record a valuation allowance.

The components of deferred tax assets and liabilities at December 31 were as follows (in millions):



	2017			2018
Deferred tax assets
Net operating loss carryforwards	$	1,310		$	339
Provision for credit losses	204			175
Other foreign	79			106
Employee benefit plans	33			28
Foreign tax credits	1,244			1,297
Other	51			50
Total gross deferred tax assets	2,921			1,995
Less: Valuation allowance	(68		)	(81		)
Total net deferred tax assets	2,853			1,914
Deferred tax liabilities
Leasing transactions	4,017			3,126
Finance receivables	523			639
Other foreign	391			524
Other	61			4
Total deferred tax liabilities	4,992			4,293
Net deferred tax liability	$	2,139		$	2,379

At December 31, 2018, we have a valuation allowance of $81 million for deferred tax assets primarily related to our Mexico operations.

In accordance with our intercompany tax sharing agreement with Ford, United States income tax liabilities or credits are allocated to us, generally on a separate return basis. In this regard, the deferred tax assets related to foreign tax credits and net operating loss carryforwards represent amounts primarily due from Ford. We reflect a deferred asset for foreign tax credits within our balance sheet due to our tax sharing agreement with Ford which provides for full reimbursement for the use of these credits. We reflect a deferred asset for net operating loss carryforwards due to our profit history and expected reversal of our deferred tax liability. Under our tax sharing agreement with Ford, we are generally paid for these assets at the earlier of our use on a separate return basis or their expiration.

Operating loss carryforwards for tax purposes were $1.1 billion at December 31, 2018, resulting in a deferred tax asset of $339 million. These losses begin to expire in 2019 with a substantial portion expiring in 2038. Tax benefits of net operating loss carryforwards and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances.

NOTE 12. INCOME TAXES (Continued)

In accordance with our intercompany tax sharing agreement with Ford, we earn interest on net tax assets and pay interest on certain tax liabilities. Interest earned is included in Other income, net while interest expense is included in Interest expense and the amounts were immaterial in 2017 and 2018.

The changes in the unrecognized tax benefits for the years ended December 31 were as follows (in millions):



	2017			2018
Beginning balance	$	80		$	90
Increase - tax positions in prior periods	18			28
Increase - tax positions in current period	1			7
Decrease - tax positions in prior periods	(2		)	(6		)
Settlements	(7		)	(1		)
Lapse of statute of limitations	(7		)	—
Foreign currency translation adjustments	7			(3		)
Ending balance	$	90		$	115

The amount of unrecognized tax benefits at December 31, 2017 and 2018 that would impact the effective tax rate if recognized was $85 million and $111 million, respectively. We do not believe it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease during the next twelve months.

Examinations by tax authorities have been completed through 2008 in Germany, 2011 in the United States, 2013 in Canada, and 2015 in the United Kingdom. We have settled our U.S. federal income tax matters related to tax years prior to 2012 in accordance with our intercompany tax sharing agreement with Ford.

We recognize income tax-related penalties in Provision for / (Benefit from) income taxes on our income statement. We recognize accrued interest expense related to unrecognized tax benefits in jurisdictions where we file tax returns separate from Ford in Other income, net on our income statement. For the years ended December 31, 2016, 2017, and 2018, we recorded net tax related interest income of $8 million, $5 million, and net tax related interest expense of $7 million, respectively, in our income statement. At December 31, 2017 and 2018, we recorded a net payable of $5 million and $7 million, respectively, for tax related interest in Other liabilities and deferred income.

We paid income taxes of $107 million, $220 million, and $188 million in 2016, 2017, and 2018, respectively.

Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2018

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME / (LOSS)

The changes in the balance of Accumulated Other Comprehensive Income / (Loss) (“AOCI”) attributable to Ford Credit for the years ended December 31 were as follows (in millions):



	2016			2017			2018
Foreign currency translation
Beginning AOCI balance	$	(607	)	$	(890	)	$	(419	)
Net gain / (loss) on foreign currency translation	(283		)	471			(410		)
Ending AOCI balance	$	(890	)	$	(419	)	$	(829	)

Insurance

12 Months Ended

Dec. 31, 2018

Insurance [Abstract]

INSURANCE

We conduct insurance underwriting operations primarily through The American Road Insurance Company (“TARIC”). TARIC is a wholly owned subsidiary of Ford Credit operating in the United States and Canada. TARIC provides physical damage insurance coverage for Ford Credit financed vehicles at dealer locations and Ford and Lincoln vehicles in transit between final assembly plants and dealer locations. In addition, TARIC provides a variety of other insurance products and services to Ford and its affiliates, including contractual liability insurance on extended service contracts. TARIC provides commercial automobile and general liability insurance and surety bonds for Ford in the United States.

Insurance premiums earned are reported net of reinsurance as Insurance premiums earned. These premiums are earned over their respective policy periods. Physical damage insurance premiums, including premiums on vehicles financed at wholesale by us, are recognized as income on a monthly basis. Premiums from extended service plan contracts and other contractual liability coverages are earned over the life of the policy based on historical loss experience. Commissions and premium taxes are deferred and amortized over the term of the related policies on the same basis on which premiums are earned.

Reserves for insurance losses and loss adjustment expenses are established based on actuarial estimates and historical loss development patterns, which represents management’s best estimate. If management believes the reserves do not reflect all losses due to changes in conditions, or other relevant factors, an adjustment is made based on management judgment.

Reinsurance activity primarily consists of ceding a majority of the contractual liability insurance business related to automotive extended service plan contracts for a ceding commission. Commissions on ceded amounts are earned on the same basis as related premiums. Reinsurance contracts do not relieve TARIC from its obligations to its policyholders. Failure of reinsurers to honor their obligations could result in losses to TARIC. Therefore, TARIC either directly or indirectly (via insurance brokers) monitors the underlying business and financial performance of the reinsurers. In addition, where deemed necessary, TARIC may require collateral or utilize multiple reinsurers to mitigate concentration risk.

Insurance Assets

Cash, cash equivalents, and marketable securities related to insurance activities at December 31 were as follows (in millions):



	2017		2018
Cash and cash equivalents	$	162	$	59
Marketable securities	449		649
Total cash, cash equivalents, and marketable securities	$	611	$	708

TARIC is required by law to maintain deposits with regulatory authorities. These deposited securities totaled $12 million at both December 31, 2017 and 2018 and were included in Marketable securities.

Amounts paid to reinsurers relating to the unexpired portion of the underlying automotive service contracts, and amounts recoverable from reinsurers on unpaid losses, including incurred but not reported losses are reported in Other assets. Prepaid reinsurance premiums and other reinsurance recoverables were $611 million and $658 million at December 31, 2017 and 2018, respectively. This includes amounts ceded to Ford and its affiliates of $95 million and $97 million at December 31, 2017 and 2018, respectively.

Insurance Liabilities

Other liabilities and deferred income includes unearned insurance premiums and fees of $723 million and $775 million at December 31, 2017 and 2018, respectively. This includes amounts from Ford and its affiliates of $621 million and $667 million at December 31, 2017 and 2018.

NOTE 14. INSURANCE (Continued)

The reserve for reported insurance losses and an estimate of unreported insurance losses, based on past experience, was $8 million and $11 million at December 31, 2017 and 2018, respectively, and was included in Other liabilities and deferred income.

Insurance Premiums

Insurance premiums written and earned for the years ended December 31 were as follows (in millions):



	2016						2017						2018
	Written			Earned			Written			Earned			Written			Earned
Direct	$	371		$	298		$	385		$	320		$	392		$	346
Assumed	—			—			—			—			—			—
Ceded	(215		)	(142		)	(227		)	(162		)	(225		)	(179		)
Net premiums	$	156		$	156		$	158		$	158		$	167		$	167

The net premiums earned with Ford and its affiliates were $133 million, $154 million, and $176 million for the years ended December 31, 2016, 2017, and 2018, respectively.

Insurance Expenses

Insurance underwriting losses and expenses are reported as Insurance expenses. The components of insurance expenses for the years ended December 31 were as follows (in millions):



	2016			2017			2018
Insurance losses	$	146		$	143		$	101
Loss adjustment expenses	5			8			5
Reinsurance income and other expenses, net	(26		)	(27		)	(29		)
Insurance expenses	$	125		$	124		$	77

Insurance expenses with Ford and its affiliates were $55 million, $63 million, and $71 million for the years ended December 31, 2016, 2017, and 2018, respectively.

Insurance expenses were reduced by ceded insurance expenses of $95 million, $104 million, and $114 million for the years ended December 31, 2016, 2017, and 2018, respectively.

Other Income, Net

12 Months Ended

Dec. 31, 2018

Other Income and Expenses [Abstract]

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 years ended December 31 were as follows (in millions):



	2016			2017		2018
Gains / (Losses) on derivatives	$	575		$	11	$	(165	)
Currency revaluation gains / (losses)	(575		)	44		12
Interest and investment income (a)	85			112		198
Insurance fee income	90			—		—
Other	155			83		35
Total other income, net	$	330		$	250	$	80

__________


(a)	Includes interest income primarily on notes receivable from affiliated companies of $5 million, $9 million, and $10 million, for December 31, 2016, 2017, and 2018, respectively.

Retirement Benefits	12 Months Ended
Retirement Benefits	Dec. 31, 2018
Retirement Benefits [Abstract]
RETIREMENT BENEFITS AND SHARE-BASED COMPENSATION	RETIREMENT BENEFITS We are a participating employer in certain retirement plans that are sponsored by Ford. As described below, Ford allocates costs to us under these plans based on the total number of participating or eligible employees at Ford Credit. Further information about these sponsored plans is available in Ford’s Annual Report on Form 10-K for the year ended December 31, 2018, filed separately with the Securities and Exchange Commission. Employee Retirement Plans Benefits earned under certain Ford-sponsored retirement plans are generally based on an employee’s length of service, salary, and contributions. The allocation amount can be impacted by key assumptions (e.g., discount rate and average rate of increase in compensation) that Ford uses in determining its retirement plan obligations. Retirement plan costs allocated to Ford Credit for our employees participating in the Ford-sponsored defined benefit plans were $125 million, $56 million, and $55 million for the years ended December 31, 2016, 2017, and 2018, respectively. Allocated costs for defined contribution and savings plans were $5 million, $7 million, and $7 million for the years ended December 31, 2016, 2017, and 2018, respectively, and were charged to Operating expenses. Postretirement Health Care and Life Insurance Benefits Postretirement health care and life insurance benefits are provided under certain Ford plans, which provide benefits to retired salaried employees in North America. Our employees generally may become eligible for these benefits if they retire while working for us; however, benefits and eligibility rules may be modified from time to time. Postretirement health care and life insurance costs allocated to Ford Credit for our employees participating in the Ford-sponsored plans were $3 million, $3 million, and $4 million for the years ended December 31, 2016, 2017, and 2018, respectively, and were charged to Operating expenses.

Segment and Geographic Information

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT AND GEOGRAPHIC INFORMATION

We conduct our financing operations directly and indirectly through our subsidiaries and affiliates. We offer substantially similar products and services throughout many different regions, subject to local legal restrictions and market conditions. We segment our business 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 review our business performance by segment on a managed basis. Receivables are presented on a managed basis, as it closely approximates the customer’s outstanding balance on the receivables, which is the basis for earning revenue. Our managed receivables equal net finance receivables and net investment in operating leases, excluding unearned interest supplements and residual support, allowance for credit losses, and other (primarily accumulated supplemental depreciation).

We measure the performance of our segments primarily on an income before income taxes basis, after excluding market valuation adjustments to derivatives and exchange-rate fluctuations on foreign currency-denominated transactions, which are reflected in Unallocated Other. These adjustments are excluded when assessing our segment performance because they are carried out at the corporate level. We also adjust segment performance to reallocate interest expense among the segments reflecting debt and equity levels proportionate to their product risk.

NOTE 17. SEGMENT AND GEOGRAPHIC INFORMATION (Continued)

Key operating data for our business segments for the years ended or at December 31 were as follows (in millions):



	Americas		Europe		Asia Pacific		Total Segments		Unallocated Other (a)			Total
2016
Total revenue (b)	$	9,505	$	984	$	351	$	10,840	$	69		$	10,909
Income before income taxes	1,511		238		61		1,810		69			1,879
Other disclosures:
Depreciation on vehicles subject to operating leases	4,291		38		—		4,329		—			4,329
Interest expense	2,301		278		176		2,755		—			2,755
Provision for credit losses	494		29		24		547		—			547
Net finance receivables and net investment in operating leases	113,335		18,846		4,684		136,865		(6,675		)	130,190
Total assets	119,012		21,755		5,322		146,089		—			146,089

2017
Total revenue (b)	$	9,928	$	981	$	468	$	11,377	$	—		$	11,377
Income before income taxes	1,795		329		85		2,209		101			2,310
Other disclosures:
Depreciation on vehicles subject to operating leases	4,091		44		—		4,135		—			4,135
Interest expense	2,641		257		277		3,175		—			3,175
Provision for credit losses	542		28		18		588		—			588
Net finance receivables and net investment in operating leases	118,392		24,957		7,152		150,501		(7,837		)	142,664
Total assets	124,645		28,204		7,594		160,443		—			160,443

2018
Total revenue (b)	$	10,706	$	1,160	$	516	$	12,382	$	—		$	12,382
Income before income taxes	2,208		391		102		2,701		(74		)	2,627
Other disclosures:
Depreciation on vehicles subject to operating leases	3,828		39		—		3,867		—			3,867
Interest expense	3,331		283		322		3,936		(6		)	3,930
Provision for credit losses	497		20		15		532		—			532
Net finance receivables and net investment in operating leases	123,403		26,029		5,444		154,876		(8,613		)	146,263
Total assets	128,498		27,804		5,907		162,209		—			162,209

__________


(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 and 2018, 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.

NOTE 17. SEGMENT AND GEOGRAPHIC INFORMATION (Continued)

Geographic Information

Key data, split geographically into the United States (which is our country of domicile), Canada, and All other, for the years ended or at December 31 were as follows (in millions):



	2016		2017		2018
Total revenue (a)
United States	$	8,151	$	8,378	$	9,043
Canada	1,093		1,193		1,315
All other	1,665		1,806		2,024
Total revenue	$	10,909	$	11,377	$	12,382

Net property and net investment in operating leases
United States	$	24,199	$	23,162	$	24,057
Canada	2,873		3,302		3,155
All other	293		374		429
Net property and net investment in operating leases	$	27,365	$	26,838	$	27,641

__________


(a)	Total revenue for 2016 includes Total financing revenue, Insurance premiums earned, and Other income, net. For 2017 and 2018, 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.

Selected Quarterly Financial Data

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

SELECTED QUARTERLY FINANCIAL DATA

SELECTED QUARTERLY FINANCIAL DATA (unaudited)

Selected financial data by calendar quarter were as follows (in millions):



	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full Year
2017 (a)
Total revenue	$	2,731		$	2,802		$	2,863		$	2,981		$	11,377
Depreciation on vehicles subject to operating leases	(1,064		)	(1,037		)	(989		)	(1,045		)	(4,135		)
Interest expense	(729		)	(769		)	(810		)	(867		)	(3,175		)
Total financing margin and other revenue	938			996			1,064			1,069			4,067
Provision for credit losses	152			99			169			168			588
Net income	333			446			414			1,814			3,007

2018
Total revenue	$	3,020		$	3,099		$	3,081		$	3,182		$	12,382
Depreciation on vehicles subject to operating leases	(1,028		)	(963		)	(907		)	(969		)	(3,867		)
Interest expense	(912		)	(997		)	(989		)	(1,032		)	(3,930		)
Total financing margin and other revenue	1,080			1,139			1,185			1,181			4,585
Provision for credit losses	119			92			156			165			532
Net income	701			479			518			526			2,224

__________


(a)	The fourth quarter 2017 net income includes favorable tax benefits of $1.4 billion related to U.S. tax legislation in the Tax Cuts and Jobs Act of 2017. See Note 12 for additional information.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

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

Lease Commitments

We have rental commitments for certain land, buildings, and equipment that expire over various contractual periods. Minimum non-cancelable operating lease commitments at December 31, 2018 were as follows (in millions):



	2019		2020		2021		2022		2023		Thereafter
Minimum rentals on operating leases	$	19	$	14	$	11	$	10	$	9	$	34

Rental expense under cancelable and non-cancelable leases of $26 million, $26 million, and $28 million was recorded in Operating expenses for the years ended December 31, 2016, 2017, and 2018, respectively.

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.

The maximum potential payments under these guarantees and limited indemnities totaled $52 million and $34 million at December 31, 2017 and 2018, respectively. Of these values, $44 million and $29 million at December 31, 2017 and 2018, respectively, were counter-guaranteed by Ford to us. There were no recorded liabilities related to guarantees and limited indemnities at December 31, 2017 and 2018.

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.

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.

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.

NOTE 19. COMMITMENTS AND CONTINGENCIES (Continued)

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

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

For nearly all 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. On January 9, 2019, FCE Bank plc received a decision from the Italian Competition Authority, which included an assessment of a fine against FCE Bank plc in the amount of about $50 million. FCE plans to appeal the decision and the fine with the ultimate resolution of the material potentially taking several years. While we have determined that an adverse outcome is not probable, the reasonably possible loss could be up to the fine amount.

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

Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Consolidation, Subsidiaries or Other Investments, Consolidated Entities, Policy [Policy Text Block]

The accompanying consolidated financial statements include Ford Motor Credit Company LLC, its controlled domestic and foreign subsidiaries and joint ventures, 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”). Affiliates that we do not consolidate, but for which we have significant influence over operating and financial policies, are accounted for using the equity method. We are an indirect, wholly owned subsidiary of Ford Motor Company (“Ford”).

Basis of Accounting and Intercompany Transactions [Abstract]

Basis of Accounting and Intercompany Transactions [Policy Text Block]

We prepare our financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”).

Reclassifications [Abstract]

Comparability of Prior Year Financial Data, Policy [Policy Text Block]

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

Foreign Currency Translation [Abstract]

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Generally, our foreign subsidiaries use the local currency as their functional currency. We translate the assets and liabilities of our foreign subsidiaries from their respective functional currencies to U.S. dollars using end-of-period exchange rates. Changes in the carrying value of these assets and liabilities attributable to fluctuations in exchange rates are recognized in Foreign currency translation, a component of Total Other comprehensive income / (Ioss), net of tax. Upon sale or upon complete or substantially complete liquidation of an investment in a foreign subsidiary, the amount of accumulated foreign currency translation related to the entity is reclassified to Net income and recognized as part of the gain or loss on the investment.

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments, Policy [Policy Text Block]

Cash equivalents, marketable securities, and derivative financial instruments are remeasured and presented on our financial statements on a recurring basis at fair value, while other assets and liabilities are measured at fair value on a nonrecurring basis.

In measuring fair value, we use various valuation methods and prioritize the use of observable inputs. The use of observable and unobservable inputs and their significance in measuring fair value are reflected in our fair value hierarchy.


•	Level 1 – inputs include quoted prices for identical instruments and are the most observable


•	Level 2 – inputs include quoted prices for similar instruments and observable inputs such as interest rates, currency exchange rates, and yield curves


•	Level 3 – inputs include data not observable in the market and reflect management judgment about the assumptions market participants would use in pricing the instruments