Attached files

file filename
EX-12 - EXHIBIT 12 - FORD MOTOR CREDIT CO LLCa6280275ex12.htm
EX-15 - EXHIBIT 15 - FORD MOTOR CREDIT CO LLCa6280275ex15.htm
EX-31.1 - EXHIBIT 31.1 - FORD MOTOR CREDIT CO LLCa6280275ex311.htm
EX-31.2 - EXHIBIT 31.2 - FORD MOTOR CREDIT CO LLCa6280275ex312.htm
EX-32.1 - EXHIBIT 32.1 - FORD MOTOR CREDIT CO LLCa6280275ex321.htm
EX-32.2 - EXHIBIT 32.2 - FORD MOTOR CREDIT CO LLCa6280275ex322.htm
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 10-Q
(Mark One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
 
OF THE SECURITIES EXCHANGE ACT OF 1934
   
  For the quarterly period ended March 31, 2010

OR
 
[  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 
OF THE SECURITIES EXCHANGE ACT OF 1934
   
  For the transition period from ___________ to ________________

Commission file number 1-6368
 

 
Ford Motor Credit Company LLC
(Exact name of registrant as specified in its charter)

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

Registrant’s telephone number, including area code: (313) 322-3000
 

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

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

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

Large accelerated filer o   Accelerated filer o         Non-accelerated filer þ          Smaller reporting company o
       (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes  þ No

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


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

EXHIBIT INDEX APPEARS AT PAGE 52
 
 

 

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
For the Periods Ended March 31, 2010 and 2009
(in millions)

   
First Quarter
 
   
2010
   
2009
 
Financing revenue
           
Operating leases
  $ 988     $ 1,398  
Retail
    624       756  
Interest supplements and other support costs earned from
affiliated companies
    867       970  
Wholesale
    225       291  
Other
    20       20  
Total financing revenue
    2,724       3,435  
Depreciation on vehicles subject to operating leases
    (641 )     (1,415 )
Interest expense
    (1,127 )     (1,420 )
Net financing margin
    956       600  
Other revenue
               
Insurance premiums earned, net
    26       29  
Other income, net (Note 13)
    96       64  
Total financing margin and other revenue
    1,078       693  
Expenses
               
Operating expenses
    292       328  
Provision for credit losses (Note 4)
    (51 )     385  
Insurance expenses
    9       16  
Total expenses
    250       729  
Income/(Loss) before income taxes
    828       (36 )
Provision for/(Benefit from) income taxes
    300       (23 )
Net income/(loss)
  $ 528     $ (13 )

The accompanying notes are an integral part of the financial statements.
 
1

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
(in millions)

   
March 31,
   
December 31,
 
   
2010
   
2009
 
ASSETS
           
Cash and cash equivalents
  $ 11,363     $ 10,882  
Marketable securities
    9,824       6,864  
Finance receivables, net (Note 2)
    74,589       77,968  
Net investment in operating leases (Note 3)
    13,302       14,578  
Notes and accounts receivable from affiliated companies
    1,190       1,090  
Derivative financial instruments (Note 11)
    1,528       1,862  
Other assets (Note 7)
    3,759       4,100  
Total assets
  $ 115,555     $ 117,344  
                 
LIABILITIES AND SHAREHOLDER’S INTEREST
               
Liabilities
               
Accounts payable
               
Customer deposits, dealer reserves and other
  $ 1,126     $ 1,082  
Affiliated companies
    1,758       1,145  
Total accounts payable
    2,884       2,227  
Debt (Note 8)
    94,235       96,333  
Deferred income taxes
    1,722       1,816  
Derivative financial instruments (Note 11)
    1,071       1,179  
Other liabilities and deferred income (Note 7)
    4,808       4,809  
Total liabilities
    104,720       106,364  
                 
Shareholder’s interest
               
Shareholder’s interest
    5,149       5,149  
Accumulated other comprehensive income
    879       1,052  
Retained earnings (Note 9)
    4,807       4,779  
Total shareholder’s interest
    10,835       10,980  
Total liabilities and shareholder’s interest
  $ 115,555     $ 117,344  

The following table includes assets to be used to settle the liabilities of the consolidated variable interest entities (“VIEs”).  These assets and liabilities are included in the consolidated balance sheet above.  See Notes 5 and 6 for additional information on our VIEs:

   
March 31,
   
December 31,
 
   
2010
   
2009
 
Cash and cash equivalents
  $ 5,093     $ 4,895  
Finance receivables, net
    54,027       57,353  
Net investment in operating leases
    10,765       10,246  
Derivative financial instruments assets
    39       55  
Debt
    47,929       46,153  
Derivative financial instruments liabilities
    504       528  

The accompanying notes are an integral part of the financial statements.
 
2

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Periods Ended March 31, 2010 and 2009
(in millions)

   
First Quarter
 
   
2010
   
2009
 
Net income/(loss)
  $ 528     $ (13 )
Other comprehensive loss, net of tax:
               
Foreign currency translation
    (173 )     (229 )
Comprehensive income/(loss)
  $ 355     $ (242 )

The accompanying notes are an integral part of the financial statements.
 
3

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
For the Periods Ended March 31, 2010 and 2009
(in millions)

   
First Quarter
 
   
2010
   
2009
 
Cash flows from operating activities
           
Net income/(loss)
  $ 528     $ (13 )
Adjustments to reconcile net income to net cash provided by operations
               
Provision for credit losses
    (51 )     385  
Depreciation and amortization
    748       1,587  
Amortization of upfront interest supplements
    (445 )     (382 )
Net change in deferred income taxes
    (87 )     (293 )
Net change in other assets
    524       809  
Net change in other liabilities
    900       (85 )
All other operating activities
    (12 )     18  
Net cash provided by operating activities
    2,105       2,026  
Cash flows from investing activities
               
Purchases of finance receivables (other than wholesale)
    (5,549 )     (4,910 )
Collections of finance receivables (other than wholesale)
    7,418       8,219  
Purchases of operating lease vehicles
    (1,226 )     (910 )
Liquidations of operating lease vehicles
    1,959       1,626  
Net change in wholesale receivables
    541       4,484  
Net change in notes receivable from affiliated companies
    (4 )     93  
Purchases of marketable securities
    (9,239 )     (5,544 )
Proceeds from sales and maturities of marketable securities
    6,284       5,854  
Proceeds from sales of businesses
          165  
Settlements of derivatives
    174       914  
All other investing activities
    (77 )     (24 )
Net cash provided by investing activities
    281       9,967  
Cash flows from financing activities
               
Proceeds from issuances of long-term debt
    8,767       5,272  
Principal payments on long-term debt
    (8,824 )     (15,214 )
Change in short-term debt, net
    (1,136 )     (4,049 )
Cash distributions (a)
    (500 )      
All other financing activities
    (36 )     (15 )
Net cash used in financing activities
    (1,729 )     (14,006 )
Effect of exchange rate changes on cash and cash equivalents
    (176 )     (192 )
Cumulative correction of a prior period error (b)
          (630 )
                 
Total cash flows from continuing operations
    481       (2,835 )
                 
Cash and cash equivalents, beginning of period
  $ 10,882     $ 15,473  
Change in cash and cash equivalents
    481       (2,835 )
Cash and cash equivalents, end of period
  $ 11,363     $ 12,638  
 
(a) 
See Note 9 for information regarding $1.1 billion of non-cash distributions in the first quarter of 2009.
 
(b) 
In the first quarter of 2009, we recorded a $630 million cumulative adjustment to correct for the overstatement of cash and cash equivalents and certain accounts payable that originated in prior periods. The impact on previously issued annual and interim financial statements was not material.
 
 
The accompanying notes are an integral part of the financial statements.
 
4

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

Table of Contents

 
 
5

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1.  ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information, and instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X.  In the opinion of management, these unaudited financial statements include all adjustments considered necessary for a fair statement of the results of operations and financial conditions for interim periods for Ford Motor Credit Company LLC, its consolidated subsidiaries and consolidated VIEs in which Ford Motor Credit Company LLC is the primary beneficiary (collectively referred to herein as “Ford Credit”, “we”, “our” or “us”).  Results for interim periods should not be considered indicative of results for any other interim period or for the full year.  Reference should be made to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2009 (“2009 10-K Report”).  We are an indirect, wholly owned subsidiary of Ford Motor Company (“Ford”).

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

Interest Supplements and Other Support Costs Earned from Affiliated Companies

As of January 1, 2008, to reduce ongoing obligations to us and to be consistent with general industry practice, Ford began paying interest supplements and residual value support to us at the time we purchase eligible contracts from dealers.  Finance receivables are reported at their outstanding balance, including origination cost and late charges, net of unearned income and unearned interest supplements received from Ford and other affiliates.  The amount of unearned interest supplements for finance receivables was $2.0 billion and $1.9 billion at March 31, 2010 and December 31, 2009, respectively.  Net investment in operating leases are recorded at cost and the vehicles are depreciated on a straight-line basis over the lease term to the estimated residual value.  Unearned interest supplements and residual support payments received from Ford and other affiliates for investments in operating leases are recorded in Other liabilities and deferred income.  The amount of unearned interest supplements and residual support payments for net investment in operating leases was $1.0 billion and $1.1 billion at March 31, 2010 and December 31, 2009, respectively.

At March 31, 2010, in the United States and Canada, Ford is obligated to pay us about $730 million of interest supplements (including supplements related to sold receivables) and about $140 million of residual value support over the terms of the related finance contracts, compared with $1.0 billion of interest supplements and $180 million of residual value support at December 31, 2009, in each case for contracts purchased prior to January 1, 2008.  The unpaid interest supplements and residual value support obligations on these contracts will continue to decline as the contracts liquidate.

Provision for/(Benefit from) Income Taxes

The provision for/(benefit from) income taxes is computed by applying our estimated annual effective tax rate to year-to-date income/(loss) before taxes.  The unusual first quarter 2009 effective tax rate resulted primarily from the impact of first quarter adjustments to prior year estimates of state and local income taxes relative to our financial results.
 
 
6

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 2.  FINANCE RECEIVABLES

We offer a wide variety of automotive financing products to and through automotive dealers throughout the world.  Our finance receivables fall into three categories:

 
Retail financing purchasing retail installment sale and direct financing lease contracts from dealers for new and used vehicles with retail customers, daily rental companies, government entities, and fleet customers;
 
Wholesale financing making loans to dealers to finance the purchase of vehicle inventory, also known as floorplan financing; and
 
Other financing making loans to dealers for improvements to dealership facilities, working capital, and the purchase and financing of dealership real estate.  Other financing also includes purchasing certain receivables generated by Ford, primarily in connection with the delivery of vehicle inventories from Ford, the sale of parts and accessories by Ford to dealers and other receivables generated by Ford.

Finance receivables, net

Net finance receivables at March 31, 2010 and December 31, 2009 were as follows (in millions):

   
March 31,
2010
   
December 31,
2009
 
Retail (including direct financing leases)
  $ 53,772     $ 56,308  
Wholesale
    21,492       22,453  
Other
    2,491       2,474  
Total finance receivables, net of unearned income (a)(b)
    77,755       81,235  
Less:  Unearned interest supplements
    (1,986 )     (1,932 )
Less:  Allowance for credit losses
    (1,180 )     (1,335 )
Finance receivables, net
  $ 74,589     $ 77,968  
                 
Net finance receivables subject to fair value (c)
  $ 72,552     $ 75,584  
Fair value
    73,924       76,807  
 
(a)
At March 31, 2010 and December 31, 2009, includes $637 million and $647 million, respectively, of primarily wholesale receivables with entities that are reported as consolidated subsidiaries of Ford. The consolidated subsidiaries include dealerships that are partially owned by Ford and consolidated as VIEs and also certain overseas affiliates. The associated vehicles that are being financed by us are reported as inventory on Ford’s balance sheet.
 
(b)
At March 31, 2010 and December 31, 2009, includes finance receivables before allowance for credit losses of $59.8 billion and $64.4 billion, respectively, that have been sold for legal purposes in securitization transactions but continue to be included in our consolidated financial statements, of which $123 million is reported as inventory by Ford at March 31, 2010. The receivables are available only for payment of the debt and other obligations issued or arising in the securitization transactions; they are not available to pay our other obligations or the claims of our other creditors. We hold the right to the excess cash flows not needed to pay the debt and other obligations issued or arising in each of these securitization transactions. Refer to Note 5 for additional information.
 
(c)
At March 31, 2010 and December 31, 2009, excludes $2.0 billion and $2.4 billion, respectively, of certain receivables (primarily direct financing leases) that are not subject to fair value disclosure requirements. See Note 10 for fair value methodology.
 
 
 
7

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 3.  NET INVESTMENT IN OPERATING LEASES

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

Net investment in operating leases

Net investment in operating leases at March 31, 2010 and December 31, 2009 were as follows (in millions):

   
March 31,
2010
   
December 31,
2009
 
Vehicles, at cost, including initial direct costs
  $ 19,575     $ 20,983  
Less:  Accumulated depreciation
    (6,097 )     (6,191 )
Net investment in operating leases before
allowance for credit losses (a)
    13,478       14,792  
Less:  Allowance for credit losses
    (176 )     (214 )
Net investment in operating leases
  $ 13,302     $ 14,578  
 
(a)
At March 31, 2010 and December 31, 2009, includes net investment in operating leases before allowance for credit losses of $10.9 billion and $10.4 billion, respectively, that have been included in securitization transactions but continue to be included in our consolidated financial statements. These net investment in operating leases are available only for payment of the debt or other obligations issued or arising in the securitization transactions; they are not available to pay our other obligations or the claims of our other creditors until the associated debt or other obligations are satisfied. Refer to Note 5 for additional information.
 
 
 
8

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 4.  ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses is our estimate of the probable credit losses inherent in finance receivables and operating leases at the date of the balance sheet.  Consistent with our normal practices and policies, we assess the adequacy of our allowance for credit losses quarterly and regularly evaluate the assumptions and models used in establishing the allowance.  Because credit losses can vary substantially over time, estimating credit losses requires a number of assumptions about matters that are uncertain.

Allowance for Credit Losses

Following is an analysis of the allowance for credit losses related to finance receivables, investment in direct financing leases, and investment in operating leases for the periods ended March 31 (in millions):

   
First Quarter
 
   
2010
   
2009
 
Balance, beginning of period
  $ 1,549     $ 1,668  
Provision for credit losses
    (51 )     385  
Total charge-offs and recoveries
               
Charge-offs
    (250 )     (436 )
Recoveries
    117       104  
Net charge-offs
    (133 )     (332 )
Other changes, principally amounts related to translation adjustments
    (9 )     (9 )
Balance, end of period
  $ 1,356     $ 1,712  

The allowance for credit losses is estimated using a combination of models and management judgment, and is based on such factors as portfolio quality, historical loss performance, and receivable levels.  At March 31, 2010, our allowance for credit losses included about $95 million for management’s judgment regarding higher retail installment and lease repossession assumptions compared with historical trends used in our models.  At March 31, 2009, our allowance for credit losses included about $160 million for management’s judgment regarding higher severity assumptions and higher wholesale and dealer loan losses.


NOTE 5.  TRANSFERS OF RECEIVABLES

We securitize finance receivables and net investment in operating leases through a variety of programs, utilizing 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 many different investors in both public and private transactions in capital markets worldwide.

We adopted the Financial Accounting Standards Board’s (“FASB”) new accounting standard related to transfers of financial assets on January 1, 2010.  The standard provides greater transparency about transfers of financial assets and a company's continuing involvement in the transferred financial assets.  The standard also removes the concept of a qualifying special-purpose entity from GAAP and changes the requirements for derecognizing financial assets.  This new standard did not have a material impact on our financial condition, results of operations and financial statement disclosures.
 
 
9

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 5.  TRANSFERS OF RECEIVABLES (Continued)

On-Balance Sheet Securitization Transactions

We transfer finance receivables and net investments in operating leases in securitization transactions to fund operations and to maintain liquidity.  The majority of 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 and net investment in operating leases that have been included in securitization transactions are only available for payment of the debt and other obligations issued or arising in the securitization transactions.  Cash and cash equivalents and marketable securities balances relating to securitization transactions are used only to support the on-balance sheet securitization transactions.  We hold the right to the excess cash flows not needed to pay the debt and other obligations issued or arising in each of these securitization transactions.  The asset-backed debt has been issued either directly by us or by consolidated entities.

Most of these securitization transactions utilize VIEs.  Refer to Note 6 for more information concerning VIEs.  The following table shows the assets and the liabilities related to our securitization transactions that were included in our financial statements at March 31, 2010 and December 31, 2009 (in billions):

   
March 31, 2010
 
   
Cash and Cash Equivalents and Marketable Securities (a)
   
Finance Receivables & Net Investment in Operating Leases
   
Related Debt
 
   
Before Allowance
for Credit Losses
   
Allowance for
Credit Losses
   
After Allowance
for Credit Losses
 
VIE (b)
                             
Retail
  $ 3.4     $ 38.9     $ 0.7     $ 38.2     $ 30.6  
Wholesale
    0.5       15.8       0.0       15.8       10.2  
Finance receivables
    3.9       54.7       0.7       54.0       40.8  
Net investment in operating leases
    1.2       10.9       0.1       10.8       7.1  
Total
  $ 5.1     $ 65.6     $ 0.8     $ 64.8     $ 47.9  
                                         
Non-VIE
                                       
Retail
  $ 0.5     $ 2.5     $ 0.0     $ 2.5     $ 2.8  
Wholesale
    0.0       2.6       0.0       2.6       2.0  
Finance receivables
    0.5       5.1       0.0       5.1       4.8  
Net investment in operating leases
                             
Total (c)
  $ 0.5     $ 5.1     $ 0.0     $ 5.1     $ 4.8  
                                         
Total securitization transactions
                                       
Retail
  $ 3.9     $ 41.4     $ 0.7     $ 40.7     $ 33.4  
Wholesale
    0.5       18.4       0.0       18.4       12.2  
Finance receivables
    4.4       59.8       0.7       59.1       45.6  
Net investment in operating leases
    1.2       10.9       0.1       10.8       7.1  
Total
  $ 5.6     $ 70.7     $ 0.8     $ 69.9     $ 52.7  
 
(a) 
Includes marketable securities totaling $256 million, which are pledged as collateral in a funding arrangement with the European Central Bank (“ECB”).
 
(b) 
Includes assets to be used to settle the liabilities of the consolidated VIEs.
 
(c)
Certain debt issued by the VIEs to affiliated companies served as collateral for accessing the ECB open market operations program. This external funding of $736 million at March 31, 2010 was not reflected as debt of the VIEs and is reflected as non-VIE debt above. The finance receivables backing this external funding are reflected in VIE finance receivables.
 
 
 
10

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 5.  TRANSFERS OF RECEIVABLES (Continued)

   
December 31, 2009
 
   
Cash and Cash Equivalents
   
Finance Receivables & Net Investment in Operating Leases
   
Related Debt
 
   
Before Allowance
for Credit Losses
   
Allowance for
Credit Losses
   
After Allowance
for Credit Losses
 
VIE (a)
                             
Retail
  $ 3.1     $ 41.7     $ 0.8     $ 40.9     $ 31.2  
Wholesale
    0.5       16.5       0.0       16.5       8.4  
Finance receivables
    3.6       58.2       0.8       57.4       39.6  
Net investment in operating leases
    1.3       10.4       0.2       10.2       6.6  
Total
  $ 4.9     $ 68.6     $ 1.0     $ 67.6     $ 46.2  
                                         
Non-VIE
                                       
Retail
  $ 0.3     $ 3.2     $ 0.1     $ 3.1     $ 4.5  
Wholesale
    0.0       3.0       0.0       3.0       2.2  
Finance receivables
    0.3       6.2       0.1       6.1       6.7  
Net investment in operating leases
                             
Total (b)
  $ 0.3     $ 6.2     $ 0.1     $ 6.1     $ 6.7  
                                         
Total securitization transactions
                                       
Retail
  $ 3.4     $ 44.9     $ 0.9     $ 44.0     $ 35.7  
Wholesale
    0.5       19.5       0.0       19.5       10.6  
Finance receivables
    3.9       64.4       0.9       63.5       46.3  
Net investment in operating leases
    1.3       10.4       0.2       10.2       6.6  
Total
  $ 5.2     $ 74.8     $ 1.1     $ 73.7     $ 52.9  
                                         
 
(a) 
Includes assets to be used to settle the liabilities of the consolidated VIEs.
 
(b) 
Certain debt issued by the VIEs to affiliated companies served as collateral for accessing the ECB open market operations program. This external funding of $1.8 billion at December 31, 2009 was not reflected as debt of the VIEs and is reflected as non-VIE debt above. The finance receivables backing this external funding are reflected in VIE finance receivables.
 
 
 
The financial performance related to our securitization transactions for the periods ended March 31 were as follows (in millions):
 
   
First Quarter
 
   
2010
   
2009
 
   
Derivative Expense
   
Interest Expense
   
Total
   
Derivative Expense
   
Interest Expense
   
Total
 
 
VIE
$ 145     $ 332     $ 477     $ 64     $ 478     $ 542  
 
Non-VIE
  4       82       86       34       95       129  
 
Total
$ 149     $ 414     $ 563     $ 98     $ 573     $ 671  
 
 
 
11

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 5.  TRANSFERS OF RECEIVABLES (Continued)

Many of our securitization entities 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.  Refer to Note 10 regarding the fair value of derivatives.  In many instances, the counterparty enters into offsetting derivative transactions with us to mitigate their interest rate risk resulting from derivatives with our securitization entities.  Our exposures based on the fair value of derivative instruments related to securitization programs at March 31, 2010 and December 31, 2009 were as follows (in millions):
   
March 31, 2010
 
   
Derivative Asset
   
Derivative Liability
 
   
Securitization Entities
   
Ford Credit (Excluding Securitization Entities)
   
Total
   
Securitization Entities
   
Ford Credit (Excluding Securitization Entities)
   
Total
 
VIE
  $ 39     $     $ 39     $ 504     $     $ 504  
Non-VIE
    12       314       326       38       23       61  
Total
  $ 51     $ 314     $ 365     $ 542     $ 23     $ 565  



   
December 31, 2009
 
   
Derivative Asset
   
Derivative Liability
 
   
Securitization Entities
   
Ford Credit (Excluding Securitization Entities)
   
Total
   
Securitization Entities
   
Ford Credit (Excluding Securitization Entities)
   
Total
 
VIE
  $ 55     $     $ 55     $ 528     $     $ 528  
Non-VIE
    14       383       397       51       27       78  
Total
  $ 69     $ 383     $ 452     $ 579     $ 27     $ 606  

Off-Balance Sheet Securitization Transactions

We recognized investment and other income of $10 million in the first quarter of 2009 related to the sales of receivables; the amount recognized in the first quarter of 2010 was de minimis.  The amount is included in Other income, net.  Also, we received cash flows of $14 million and $6 million in the first quarter of 2010 and 2009, respectively, related to the net change in retained interests in securitized assets.  These amounts are included in All other investing activities in our consolidated statement of cash flows.
 
 
12

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 6.  VARIABLE INTEREST ENTITIES

We adopted the FASB’s new accounting standard on VIEs on January 1, 2010.  The standard requires ongoing assessments of whether an entity is the primary beneficiary of a VIE, and enhances the disclosures about an entity's involvement with a VIE.  This standard requires the consolidation of a VIE if an entity has both (i) the power to direct the activities of the VIE, and (ii) the obligation to absorb losses or the right to receive residual returns that could potentially be significant to the VIE.  This new standard did not result in any deconsolidation of entities or additional consolidation of 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 most of our on-balance sheet securitizations.

If we determine that we have operating power within the entity and the obligation to absorb losses or receive benefits, we consolidate the VIE as the primary beneficiary, and if not, we do not consolidate.  Our involvement constitutes power that is most significant to the entity when we have unconstrained decision making ability within the entity over key operational functions.  Examples of significant involvements in our securitization entities that constitute power include our ability to exercise discretion in the servicing of financial assets, our ability to issue additional debt, our ability to exercise a unilateral call option, our ability to add assets to revolving structures, and our ability to control the 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.  Conversely, 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.

VIEs of which we are the primary beneficiary

We use VIEs to issue asset-backed securities in transactions to public and private investors, bank conduits and government-sponsored entities or others who obtain funding from government programs.  The asset-backed securities are secured by finance receivables and interests in net investments in operating leases.  We retain interests in our securitization transactions, including senior and subordinated securities issued by the VIEs, rights to cash held for the benefit of the securitization investors, such as cash reserves, and residual interests.  Therefore, the assets continue to be consolidated by us.

The VIE 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.
 
13

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 6.  VARIABLE INTEREST ENTITIES (Continued)

We aggregate and analyze our transactions based on the risk profile of the product and the type of funding structure, including:

 
Retail transactions consumer credit risk and prepayment risk, which are driven by the ability of the customer to pay, as well as the timing of the customer payments;
 
Wholesale transactions 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 lease transactions vehicle residual value risk, consumer credit risk and prepayment risk.

As residual interest holder, we are exposed to the underlying residual and credit risk of the collateral, and may be exposed to interest rate risk.  However, these risks are not incremental to the exposure we have on the underlying assets.  The amount of risk absorbed by our residual interests is generally represented by and limited to the amount of overcollateralization of our assets securing the debt and any cash reserves.

We have no obligation to repurchase or replace any securitized asset that subsequently becomes delinquent in payment or otherwise is in default.  Securitization investors have no recourse to us or our other assets for credit losses on the securitized assets and have no right to require us to repurchase the investments.  Although not contractually required, we regularly support our wholesale securitization programs by repurchasing receivables of a dealer from the VIEs 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 level.  The cash contributions were $20 million and zero at March 31, 2010 and December 31, 2009, respectively, and ranged from zero to $375 million during the first quarter of 2010.  In addition, while not contractually required, we may purchase the commercial paper issued by our FCAR asset-backed commercial paper program.

From time to time, we renegotiate the terms of our funding commitments, which may include reallocating the commitments globally.  We do not guarantee any asset-backed securities and generally have no obligation to provide liquidity or contribute cash or additional assets to the VIEs.  However, in certain securitization transactions, we have dynamic enhancements where we are required to support the performance of the securitization transactions by purchasing additional subordinated notes or increasing cash reserves.

VIEs that are exposed to interest rate or currency risk have reduced their exposure by entering into derivatives.  In certain instances, we have entered into offsetting derivative transactions with the VIE or the counterparty to protect the VIE from these risks that are not mitigated through derivative transactions between the VIE and its counterparty.  See Note 11 for additional information regarding our derivatives.

Refer to Note 5 for information on the financial position and financial performance of our VIEs.

VIEs of which we are not the primary beneficiary

We also have an investment in a joint venture determined to be a VIE of which we are not the primary beneficiary.  The joint venture provides consumer and dealer financing in its local markets and is financed by external debt and additional subordinated interest provided by our joint venture partner.  The operating agreement indicates that the power to direct economically significant activities is shared with our joint venture partner, and the obligation to absorb losses or rights to receive benefits resides primarily with our joint venture partner.  Our investment in the joint venture is accounted for as an equity method investment and is included in Other assets.  Our maximum exposure to any potential losses associated with this VIE is limited to our equity investment, and amounted to $64 million and $67 million at March 31, 2010 and December 31, 2009, respectively.
 
14

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 7.  OTHER ASSETS AND OTHER LIABILITIES AND DEFERRED INCOME

Other assets and other liabilities and deferred income consist of various balance sheet items that are combined for financial statement presentation due to their respective materiality compared with other individual asset and liability items.  This footnote provides more information contained within the combined items.

Other assets at March 31, 2010 and December 31, 2009 were as follows (in millions):

   
March 31,
2010
   
December 31,
2009
 
Accrued interest, rents and other non-finance receivables
  $ 1,092     $ 1,070  
Deferred charges including unamortized dealer commissions
    629       665  
Collateral held for resale, at net realizable value
    555       624  
Restricted cash (a)
    383       308  
Prepaid reinsurance premiums and other
               
reinsurance receivables
    257       275  
Investment in used vehicles held for resale, at net realizable value
    190       458  
Property and equipment, net of accumulated depreciation of $346 and
$348 at March 31, 2010 and December 31, 2009, respectively
    166       177  
Investment in non-consolidated affiliates
    126       123  
Retained interests in securitized assets
    13       26  
Other
    348       374  
Total other assets
  $ 3,759     $ 4,100  
                 
 
(a) 
Includes cash collateral required to be held against loans with the European Investment Bank as well as cash held to meet certain local governmental and regulatory reserve requirements.
 
 
 
Other liabilities and deferred income at March 31, 2010 and December 31, 2009 were as follows (in millions):

   
March 31,
2010
   
December 31,
2009
 
Income taxes payable (a)
  $ 1,582     $ 1,328  
Deferred income
    1,042       1,111  
Interest payable
    801       1,007  
Unrecognized tax benefits
    686       596  
Unearned insurance premiums
    292       315  
Other
    405       452  
Total other liabilities and deferred income
  $ 4,808     $ 4,809  
 
(a) 
Includes $1,606 million and $1,352 million payable to Ford and affiliated companies in accordance with our intercompany tax sharing agreement at March 31, 2010 and December 31, 2009, respectively.
 
 
 
 
15

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)


We have an asset-backed commercial paper program in the United States with qualified institutional investors.  We also obtain other short-term funding from the issuance of demand notes to retail investors through our floating rate demand notes program.  We have certain asset-backed securitization programs that issue short-term 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 United States and international capital markets.  We also sponsor a number of asset-backed securitization programs that issue long-term debt securities that are sold to institutional investors in the United States and international capital markets.

Debt

At March 31, 2010 and December 31, 2009, debt was as follows (in millions):

   
Interest Rates
             
   
Average Contractual (a)
   
Weighted-Average (b)
   
March 31,
   
December 31,
 
   
2010
   
2009
   
2010
   
2009
   
2010
   
2009
 
Short-term debt
                                   
Asset-backed commercial paper (c)
    0.5%       0.9%                 $ 6,468     $ 6,369  
Ford Interest Advantage (d)
    2.3%       2.7%                   4,178       3,680  
Other asset-backed short-term debt (c)
    3.6%       2.6%                   2,603       4,482  
Other short-term debt (e)
    3.8%       4.2%                   834       891  
Total short-term debt
    1.9%       2.0%       2.8%       3.0%       14,083       15,422  
Long-term debt
                                               
Senior indebtedness
                                               
Notes payable within one year (e)
                                    8,570       7,053  
Notes payable after one year (e)
                                    28,138       32,124  
Asset-backed debt (c)
                                               
Notes payable within one year
                                    19,642       18,952  
Notes payable after one year
                                    24,018       23,076  
Unamortized Discount
                                    (474 )     (525 )
Fair value adjustments (f)
                                    258       231  
Total long-term debt (g)
    5.3%       5.4%       5.1%       5.1%       80,152       80,911  
Total debt
    4.8%       4.8%       4.8%       4.8%     $ 94,235     $ 96,333  
                                                 
Fair value of debt (h)
                                  $ 96,528     $ 97,962  
 
 
(a) 
First quarter of 2010 and fourth quarter of 2009 average contractual rates exclude the effects of derivatives and facility fees.
 
(b) 
First quarter of 2010 and fourth quarter of 2009 weighted-average rates include the effects of derivatives and facility fees.
 
(c)
Obligations issued in securitizations that are payable only out of collections on the underlying securitized assets and related enhancements. Refer to Note 5 for information regarding on-balance sheet securitization transactions.
 
(d)
The Ford Interest Advantage program consists of our floating rate demand notes.
 
(e) 
Includes debt with affiliated companies as indicated in the table below.
 
(f)
Adjustments related to designated fair value hedges of unsecured debt.
 
(g)
Average contractual and weighted-average interest rates for total long-term debt reflect the rates for both notes payable within one year and notes payable after one year.
 
(h) 
Fair value of debt reflects interest accrued but not yet paid of $836 million and $1,074 million at March 31, 2010 and December 31, 2009, respectively. Interest accrued is reported in Other liabilities and deferred income and Accounts payable – Affiliated companies. See Note 10 for fair value methodology.
 
 
 
                                                 
                                   
March 31,
   
December 31,
 
                                    2010     2009  
Debt with affiliated companies
                                               
Other short-term debt
                                  $ 397     $ 403  
Notes payable within one year
                                    38       40  
Notes payable after one year
                                    229       121  
Total debt with affiliated companies
                                  $ 664     $ 564  
 
 
 
16

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 8.  DEBT (Continued)

Debt Repurchases.  Through private market transactions, we repurchased an aggregate of $201 million and $272 million principal amount of our outstanding notes in the first quarter of 2010 and 2009, respectively.  As a result, we recorded a pre-tax loss of $7 million and a pre-tax gain of $14 million, net of unamortized premiums and discounts, in Other income, net in the first quarter of 2010 and 2009, respectively.

Short-term and long-term debt matures at various dates through 2048.  Maturities are as follows (in millions):

   
2010 (a)
   
2011(b)
   
2012
   
2013
   
2014
   
Thereafter (c)
   
Total
 
Unsecured debt maturities
  $ 9,288     $ 11,611     $ 6,990     $ 4,696     $ 3,638     $ 5,497     $ 41,720  
Asset-backed debt maturities
    24,477       15,801       8,528       2,028       225       1,672       52,731  
Unamortized discount (d)
    (1 )     (2 )     (180 )     (67 )     (186 )     (38 )     (474 )
Fair value adjustments (d)
    3       89       107       46       13             258  
Total debt maturities
  $ 33,767     $ 27,499     $ 15,445     $ 6,703     $ 3,690     $ 7,131     $ 94,235  
 
 
(a) 
Includes $13,418 million for short-term and $20,349 million for long-term debt.
 
(b) 
Includes $665 million for short-term and $26,834 million for long-term debt.
 
(c) 
Approximately $4.2 billion of unsecured debt matures between 2015 and 2020 with the remaining balance maturing after 2030.
 
(d) 
Unamortized discount and fair value adjustments are presented based on maturity date of related debt.
 


NOTE 9.  RETAINED EARNINGS

The following table summarizes earnings retained for use in the business for the periods ended March 31 (in millions):
 
   
First Quarter
 
   
2010
   
2009
 
Retained earnings, beginning balance
  $ 4,779     $ 4,985  
Net income/(loss)
    528       (13 )
Distributions
    (500 )     (1,054 )
Retained earnings, ending balance
  $ 4,807     $ 3,918  

 
In the first quarter of 2009, a plan was announced to restructure Ford’s debt through a combination of a conversion offer by Ford and tender offers by us.  As part of this debt restructuring, we commenced a cash tender offer for Ford’s secured term loan under Ford’s secured credit agreement, pursuant to which we purchased from lenders thereof $2.2 billion principal amount of term loan for an aggregate cost of about $1.1 billion (including transaction costs).  This transaction settled on March 27, 2009, following which we distributed the term loan to our immediate parent, Ford Holdings LLC, whereupon it was forgiven.  The transaction is reflected in the table above as a $1,054 million distribution, which consists of the fair value of the term loan purchased plus transaction expenses.
 
 
17

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 10.  FAIR VALUE MEASUREMENTS

Certain assets and liabilities are presented on our financial statements at fair value.  Assets and liabilities measured at fair value on a recurring basis on our balance sheet include cash equivalents, marketable securities, derivative financial instruments and retained interests in securitized assets.  Assets and liabilities measured at fair value on a recurring basis for disclosure only include finance receivables and debt.  The fair value of these items are presented together with the related carrying value in Notes 2 and 8, respectively.

We adopted the FASB’s new accounting standard on fair value measurements on January 1, 2010.  The standard requires both new disclosures and clarifies existing disclosures.  The standard also requires a greater level of disaggregated information in the fair value hierarchy as well as expands disclosures about valuation techniques and inputs to measure fair value, as defined below.

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  The fair value should be based on assumptions that market participants would use, including a consideration of non-performance risk.  In determining fair value, we use various valuation methodologies and prioritize the use of observable inputs.  We assess the inputs used to measure fair value using a three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market:

 
Level 1 inputs include quoted prices for identical instruments and are the most observable.
 
Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, currency exchange rates and yield curves.
 
Level 3 inputs are not observable in the market and include management’s judgments about the assumptions market participants would use in pricing the asset or liability.

For instruments measured using Level 3 inputs, a reconciliation of the beginning and ending balances is disclosed.

Valuation Methodologies

Cash, Cash Equivalents and Marketable Securities.  Cash and all highly liquid investments with a maturity of 90 days or less at the date of purchase are classified as Cash and cash equivalents.  Investments in securities with a maturity date greater than 90 days at the date of purchase are classified as Marketable securities.  Cash on hand, time deposits, certificates of deposit, and money market accounts are reported at par value, which approximates fair value.  For other investment securities, we generally measure fair value based on a market approach using prices obtained from pricing services.  We review all pricing data for reasonability and observability of inputs.  Pricing methodologies 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 dealer stands ready to purchase) and other market information.  For securities that are not actively traded, the pricing services obtain quotes for similar fixed-income securities or utilize matrix pricing, benchmark curves or other factors to determine fair value.  In certain cases, when observable pricing data is not available, we estimate the fair value of investment securities based on an income approach using industry standard valuation models and estimates regarding non-performance risk.
 
18

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 10.  FAIR VALUE MEASUREMENTS (Continued)

Derivative Financial Instruments.  Our derivatives are over-the-counter customized derivative transactions and are not exchange traded.  We estimate the fair value of these instruments based on an income approach using industry standard valuation models.  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 non-performance risk.  The adjustment reflects the full credit default swap (“CDS”) spread applied to a net exposure, by counterparty.  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.

In certain cases, market data is not available and we use management judgment to develop assumptions which are used to determine fair value.  This includes situations for longer-dated instruments where market data is less observable.  Also, for interest rate swaps and cross-currency interest rate swaps used in securitization transactions, the notional amount of the swap is based on actual payments on the securitized contracts.  We use management judgment to estimate the timing and amount of the swap cash flows based on historical pre-payment speeds.

Retained Interests in Securitized Assets.  We estimate the fair value of retained interests based on an income approach using internal valuation models.  These models project future cash flows of the monthly collections on the sold finance receivables in excess of amounts needed for payment of the debt and other obligations issued or arising in the securitization transactions.  The projected cash flows are discounted to a present value based on market inputs and our own assumptions regarding credit losses, prepayment speed and the discount rate.

Finance Receivables.  We generally estimate the fair value of finance receivables based on an income approach using internal valuation models.  These models project future cash flows of financing contracts incorporating appropriate funding pricing and enhancement requirements.  The projected cash flows are discounted to a present value based on market inputs and our own assumptions regarding credit losses, pre-payment speed and the discount rate.  Our assumptions regarding prepayment speed and credit losses are based on historical performance.

Debt.  We estimate the fair value of debt based on a market approach using quoted market prices or current market rates for similar debt with approximately the same remaining maturities, where possible.  Where market prices are not available, we estimate fair value based on an income approach using discounted cash flow models.  These models project future cash flows and discount the future amounts to a present value using market-based expectations for interest rates, our own credit risk and the contractual terms of the debt instruments.  For asset-backed debt issued in securitization transactions, the principal payments are based on the actual payments on the securitized contracts.  We use management judgment to estimate the timing and amount of the debt cash flows based on historical pre-payment speeds.
 
19

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 10.  FAIR VALUE MEASUREMENTS (Continued)

Input Hierarchy

The following tables summarize the fair values by input hierarchy for financial instruments measured at fair value on a recurring basis at March 31, 2010 and December 31, 2009 (in millions):

   
March 31, 2010
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Assets
                       
Cash equivalents financial instruments
                       
U.S. government
  $ 1,179     $     $     $ 1,179  
Government-sponsored enterprises
          850             850  
Corporate debt
          300             300  
Government non U.S.
          427             427  
Total cash equivalents financial instruments (a)
    1,179       1,577             2,756  
Marketable securities
                               
U.S. government
    6,860                   6,860  
Government-sponsored enterprises
          1,996             1,996  
Corporate debt
          165             165  
Mortgage-backed
          244             244  
Government non U.S.
          323             323  
Other liquid investments (b)
          236             236  
Total marketable securities
    6,860       2,964             9,824  
Derivative financial instruments
                               
Interest rate contracts
          1,120       330       1,450  
Foreign exchange forward contracts
          6             6  
Cross currency interest rate swap contracts
          72             72  
Total derivative financial instruments (c)
          1,198       330       1,528  
Retained interests in securitized assets (d)
                13       13  
Total assets at fair value
  $ 8,039     $ 5,739     $ 343     $ 14,121  
                                 
Liabilities
                               
Derivative financial instruments
                               
Interest rate contracts
          312       365       677  
Foreign exchange forward contracts
          92             92  
Cross currency interest rate swap contracts
          134       168       302  
Total derivative financial instruments (c)
  $     $ 538     $ 533     $ 1,071  
Total liabilities at fair value
  $     $ 538     $ 533     $ 1,071  
 
(a)
Excludes $6,566 million of time deposits, certificates of deposit, money market accounts, and other cash equivalents reported at par value, which approximates fair value. In addition to these cash equivalents, we also had cash on hand totaling $2,041 million.
 
(b)
Includes certificates of deposits and time deposits with maturities greater than 90 days at the date of purchase.
 
(c)
See Note 11 for additional information regarding derivative financial instruments.
 
(d)
Retained interests in securitized assets are reported in Other assets.
 
 
 
20

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 10.  FAIR VALUE MEASUREMENTS (Continued)

   
December 31, 2009
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Assets
                       
Cash equivalents financial instruments
                       
U.S. government
  $ 75     $     $     $ 75  
Government-sponsored enterprises
          400             400  
Corporate debt
          75             75  
Government non U.S.
          29             29  
Total cash equivalents financial instruments (a)
    75       504             579  
Marketable securities
                               
U.S. government
    5,256                   5,256  
Government-sponsored enterprises
          1,098             1,098  
Corporate debt
          159       4       163  
Mortgage-backed
          237             237  
Government non U.S.
          65             65  
Other liquid investments (b)
          45             45  
Total marketable securities
    5,256       1,604       4       6,864  
Derivative financial instruments
                               
Interest rate contracts
          1,230       407       1,637  
Foreign exchange forward contracts
          22             22  
Cross currency interest rate swap contracts
          203             203  
Total derivative financial instruments (c)
          1,455       407       1,862  
Retained interests in securitized assets (d)
                26       26  
Total assets at fair value
  $ 5,331     $ 3,563     $ 437     $ 9,331  
                                 
Liabilities
                               
Derivative financial instruments
                               
Interest rate contracts
          409       437       846  
Foreign exchange forward contracts
          51             51  
Cross currency interest rate swap contracts
          144       138       282  
Total derivative financial instruments (c)
  $     $ 604     $ 575     $ 1,179  
Total liabilities at fair value
  $     $ 604     $ 575     $ 1,179  
 
(a)
Excludes $7,514 million of time deposits, certificates of deposit, money market accounts, and other cash equivalents reported at par value, which approximates fair value. In addition to these cash equivalents, we also had cash on hand totaling $2,789 million.
 
(b)
Includes certificates of deposits and time deposits with maturities greater than 90 days at the date of purchase.
 
(c)
See Note 11 for additional information regarding derivative financial instruments.
 
(d)
Retained interests in securitized assets are reported in Other assets.
 
 
 
21

 
Item 1.  Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS (Continued)

NOTE 10.  FAIR VALUE MEASUREMENTS (Continued)

Reconciliation of Changes in Level 3 Financial Instrument Balances

The following summarizes the changes in Level 3 financial instruments measured at fair value on a recurring basis for the periods ended March 31 (in millions):

   
2010
 
   
Fair Value at December 31,
2009
   
Total Realized
/Unrealized
Gains/(Losses)
   
Net
Purchases/ (Settlements)
   
Net Transfers
Into/(Out of)
Level 3
   
Fair Value at March 31,
2010
   
Change in
Unrealized
Gains/(Losses)
on Instruments
Still Held (a)
 
Marketable securities
                                   
Corporate debt
  $ 4     $ (4 )   $     $     $     $  
Total marketable securities
    4       (4 )                        
Derivative financial
instruments, net
    (168 )     (72 )     37             (203 )     (40 )
Retained interests in
securitized assets
    26       0       (13 )           13       0  
Total
  $ (138 )   $ (76 )   $ 24     $     $ (190 )   $ (40 )
 
(a)
For those assets and liabilities still held at reporting date.
 


 
   
2009 (a)
 
   
Fair Value at December 31,
2008
   
Total Realized
/Unrealized
Gains/(Losses)
   
Net
Purchases/ (Settlements)
   
Net Transfers
Into/(Out of)
Level 3
   
Fair Value at March 31,
2009
   
Change in
Unrealized
Gains/(Losses)
on Instruments
Still Held (b)
 
Marketable securities
                                   
Corporate debt
  $ 5     $ (4 )   $     $     $ 1     $ (4 )
Total marketable securities
    5       (4 )                 1       (4 )
Derivative financial
instruments, net
    (81 )     (23 )     18