Steve Dahle - Ford Motor Co. Bernard B. Silverstone - Ford Motor Credit Co. LLC Marion Harris - Ford Motor Credit Co. LLC Neil M. Schloss - Ford Motor Co.

Eric J. Selle - SunTrust Robinson Humphrey, Inc. Garland Buchanan - Legal & General Investment Management America, Inc.

Good morning. Thank you for standing by, and welcome to the Second Quarter Ford Credit Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I would now like to hand the floor to Stephen Dahle, Associate Director, Ford Investor Relations. Thank you, Mr. Dahle, I hand the floor to you. Steve Dahle - Ford Motor Co.: Thank you, LaTonya, and good morning, ladies and gentlemen. Welcome to all of you who are joining us either via phone or webcast. On behalf of the entire Ford management team, I'd like to thank you for spending time with us today. With me this morning are Bern Silverstone, Ford Credit Chairman and Chief Executive Officer; Marion Harris, Ford Credit Chief Financial Officer; and Neil Schloss, Ford Vice President and Treasurer. Before we begin, I would like to review a few items. As a reminder, we've moved the format of this call to focus only on Ford Credit's earnings and we have expanded the content of our communications to provide increased disclosure on topics for which we commonly receive questions from the fixed income investment community. All automotive-related questions should be directed to the Ford Equity Investor Relations contacts, as detailed in the Ford press release. I'd also like to remind everyone that we posted our Ford Credit University slides on our Investor website on July 15. These slides contain helpful information for investors to better understand our business and financial reporting. We welcome your feedback and questions, as we strive to improve our investor communications. A copy of this morning's Ford press release and the Ford Credit earnings slides that we will be using on our call today have been posted on the Ford Motor Company's Investor and Media websites for your reference. The Ford Credit Investor website also contains the slides. The financial results discussed herein are presented on a preliminary basis. The final data will be included in our Form 10-Q. Additionally, the financial results presented here are on a GAAP basis and in some cases on a non-GAAP basis. Any non-GAAP financial measures discussed on this call are reconciled to the U.S.GAAP equivalent as part of the appendix to the slide deck. Finally, today's presentation includes some forward-looking statements about our expectations for Ford Credit's future performance. Actual results could differ materially from those suggested by our comments here. The most significant factors that could affect future results are summarized at the end of this presentation. These risks and other key information are detailed in our SEC filings, including our annual, quarterly and current reports to the SEC. With that, I would like to turn the call over to Ford Credit Chairman and Chief Executive, Bernard Silverstone. Bernard B. Silverstone - Ford Motor Credit Co. LLC: Thank you, Steve. Let me add good morning to everyone, and on behalf of Marion, Neil and myself, thank you for dialing in or indeed joining via webcast. So, today, we will review our results for the second quarter and we'll look at key metrics and trends for the business, bring you up to speed on our funding, of course, and as usual take your questions. So we can get started if we can turn to slide one, where you should be familiar with this. We talked about this slide last quarter, but I did want to quickly touch on it, again, today, really to reinforce our focus on running our business with clear operating principles executed by our very experienced team. Consistency and discipline continue to define our origination practices and world-class customer service. Additionally, strong risk management and focus on business fundamentals are cornerstones of how we run the business and they really underpin our results. So if we can move to slide two and we will start the review of some of those results for our operations for the second quarter. So as you can see, in the second quarter, we made $400 million of pre-tax profit. Now that was lower than a year ago, but is still a very solid result and that puts us at more than $900 million in pre-tax profit for the first half of the year. Also, our receivables were up as we continue to grow in line with expectations and you'll see later how our worldwide credit losses were actually down for the second quarter versus the first quarter, but here you see that in the U.S. market our loss-to-receivable ratio was higher versus the second quarter last year. However, the loss-to-receivable ratio remains close to historically low levels and consistent with our expectations for this stage in the ongoing recovery, it continues to edge closer to the longer-term trends. For placements, our average placement FICO scores – just to remind everybody – this is one component of what we use for proprietary scoring models, but it remains very consistent and strong, and U.S. delinquencies, although slightly up, remaining at very low levels. So, starting on the next slide, Marion will go through the results in more detail. Marion Harris - Ford Motor Credit Co. LLC: Thanks, Bernard. On slide three, you'll see our $400 million of pre-tax profit. The decrease from the second quarter of last year can be attributed primarily to unfavorable lease residual performance, higher credit losses and a couple of factors in the category we call other. Partial offsets were favorable volume and mix. These were driven by growth in finance receivables globally, plus operating leases in North America. Unfavorable lease residual performance primarily reflected higher supplemental depreciation in North America related to lower expected auction values on smaller vehicles in our lease portfolio. The higher credit losses reflected higher charge-offs in North America and an increase in the credit loss reserve. The higher charge-offs reflected increased defaults and severity, as well as growth in receivables. Other reflects a few items, including higher storm-related insurance losses and unfavorable derivatives market valuation following the BREXIT vote. The slide four shows North American financing share and contract volume. Financing shares were down slightly in the second quarter and first half from the year ago periods. The lower retail and lease financing shares were driven by marketing programs and the lower total contract volumes from the second quarter and the first half are more than explained by lower retail installment and lease financing shares. Turning to slide five, this shows our financing share and contract volume for our international operations in the second quarter and first half. In Europe, share was largely unchanged from last year and in China, share and volume were higher related to marketing programs. Total contract volume was higher primarily reflecting higher financing share in China and higher industry volume in Europe. Bernard B. Silverstone - Ford Motor Credit Co. LLC: So just on some of those quarter-over-quarter movements that we can see in these share metrics just to give you a little bit more texture. In the U.S., the reduction in share mostly reflects the lower leasing share, which is consistent, in fact, with the outlook that we talked about at the end of the first quarter. And of course, we're always reviewing marketing programs to understand customer needs and market trends and then respond appropriately, which means that it's also quite normal to see quarter-to-quarter fluctuations in share. And additionally, looking at China, we continue to see a gradual increase in market acceptance of credit, as a means to acquire vehicles and that's particularly true amongst younger customers. Marion Harris - Ford Motor Credit Co. LLC: Okay. Thanks, Bernard. So turning to slide six, you'll see placement FICO in the U.S. in the second quarter was up slightly from the first quarter, and our average FICO scores remain very, very consistent. And as Bernard mentioned earlier, FICO is just but one component of our proprietary scoring models. As you know, we support customers across the credit spectrum and our higher risk mix has been running consistently around 6% in recent quarters and has been stable for over 10 years. Our average retail term remained largely consistent with recent periods and lower than the industry. So slide seven shows our U.S. retail and lease credit loss metrics, as we continue to come off an extended period of extraordinarily low credit losses. Delinquencies at 12 basis points remained at historically low levels and repossessions were up slightly in the quarter from the second quarter a year ago. The severity increase in the second quarter from the prior year primarily reflected lower auction values, higher balances at repossession, and higher amounts financed. Severity has been relatively flat from the first quarter. Our charge-offs and loss receivables ratio were higher year-over-year and that reflected primarily higher defaults and severities. So, now on slide eight, as Bernard mentioned earlier, our worldwide credit loss metrics remain very, very strong. Worldwide LTR in the second quarter was higher than a year ago, reflecting primarily U.S. retail and lease business that we covered on the prior slide. The credit loss reserve was up from a year ago, primarily reflecting credit loss performance trends. The reserve as a percentage of managed receivables was also up from the second quarter of 2015. So on slide nine, our lease placement volume in the second quarter was about the same as last year's second quarter, but our lease share continues to run below the industry. We continue to expect our lease share of retail sales to be lower than the first quarter. Bernard B. Silverstone - Ford Motor Credit Co. LLC: I just want to mention here that, as we've talked about before, just to remind everyone that our placements and shares continue to be managed as part of our overall One Ford Lease strategy and we've referred to that before because that's where we work with our Ford partners to plan leasing considering things like share, term, model mix, all those things that we've got unique insights to. And in fact, it helps us balance sales and residual values in the future and of course, as we've also emphasized before, our focus on the trade cycle so that we've got satisfied customers and a sustainable leasing program. As you know, the industry of leasing stayed about flat and we've taken a more proactive approach, we believe, by managing down our lease mix, as we indicated in the first quarter. We think this will help address some of the supply concerns around returns of off-lease vehicles given the growth in leasing these past few years. Marion Harris - Ford Motor Credit Co. LLC: Okay. So, on slide 10, you'll see we had 62,000 units of lease return volume in the second quarter. This was higher than last year and reflects our higher lease placements in recent years, as well as an increase in the return rate. Our used vehicle auction values in the second quarter were lower than a year ago, but have been flat from the prior quarter – past couple of quarters, in fact. Although, Manheim reported an increase in used vehicle values in the quarter, our results reflected a larger mix of two and three-year-old smaller vehicles, which have had lower auction values. Our mix of newer vehicles is just a subset of the broad range and age of products that make up the Manheim Index. Let's go to slide 11. Slide 11 shows our trend in funding of our managed receivables and at the end of the second quarter, managed receivables were $134 billion, up $7 billion from the year-end, and our securitization funding was about 35% of managed receivables. And as we've said in the past, we continue to expect the mix of securitized funding to trend lower over time as our unsecured funding becomes a larger part of our funding structure. However, the calendarization of our funding plan may result in quarterly fluctuation of the securitization funding percentage. Our funding strategy really continues to center on having a very strong investment-grade balance sheet with ample liquidity and funding that's diversified across markets and channels and investors. Just one other thing I want to point out on this slide. You will note that we are no longer providing a range on year-end managed receivables and funding structure and that reflects the recent regulatory changes around the use of non-GAAP measures in guidance. So turning to slide 12, this slide shows our public term funding plan, and we are off to a terrific start this year, and we've completed more than two-thirds of our full year funding plan with only just halfway through this year. And for 2016, we do continue to project funding in the range of $27 billion to $33 billion. This is a bit tightened on the range from the first quarter and both the amount and composition of our full-year funding plan are consistent with our issuance in 2015. Turning to slide 13, you can see our leverage and liquidity metrics. At the end of the second quarter, our financial statement leverage was 10.2 to 1 and our managed leverage was 9.4 to 1. We target managed leverage in the range of 8:1 to 9:1 and our managed leverage was above our targeted range reflecting the recent growth in receivables and the continued impact of a strong U.S. dollar. For liquidity, we target at least $25 billion to protect against downturns and market disruptions. Our quarterly levels can be affected by near-term debt maturities, receivables growth, timing of transactions and other factors like that, but we feel very good about the very strong liquidity we have. So with that, I'll turn it back over to you, Bernard, to wrap things up. Bernard B. Silverstone - Ford Motor Credit Co. LLC: Great. Thank you, Marion. So if we could turn to slide 14, here we show that we now expect our pre-tax results to be lower than 2015, which is really impacted by the higher ongoing depreciation reflected in our expectations of continued lower auction values on smaller vehicles. We do expect, however, that second half pre-tax results will be about in line with our first half results. And as you've heard earlier in the Ford earnings call, both Ford and Ford Credit are already finding improvement actions and working to mitigate some of the risk that we discussed. Also, on this slide in terms of Ford Credit working to return leverage towards our target range, one of the initial actions we've taken is to continue to change our plan for distributions and you can see it's consistent with our first quarter guidance. So, now we go over to the takeaway slide, slide 15, before we turn to your questions. But before I actually go through them, just wanted to touch on the British vote to leave the European Union, as I know that is certainly on many people's minds and to mention at this stage we continue to monitor the developments closely and assess any impact on our business. And of course, we will act appropriately under any new regulations that result as and when we understand and what those are going to be. So, now just to summarize our performance. We've had a solid second quarter and first half. We know expect our pre-tax profits to be lower than 2015, reflecting the increased depreciation charges that we've mentioned throughout this presentation. We do, however, expect our second half pre-tax results to be about in line with the first half results. So, as always, we remain focused on disciplined and consistent execution to support sustained performance, all based on a very strong balance sheet. So that's how I report out. Steve, back to you. Can you open the line for questions. Steve Dahle - Ford Motor Co.: Thank you, Bernard. We will now start the question-and-answer session. As a reminder, we will only take Ford Credit questions on this call. Automotive-related questions should be directed to the Ford Equity Investor Relations contact as detailed in the Ford press release. LaTonya, may we have the first caller, please?

Thank you. And your first question comes from the line of Eric Selle with SunTrust. Eric J. Selle - SunTrust Robinson Humphrey, Inc.: Hi. Good morning, guys. Thanks a lot for the time again. I kind a hitting on the lease share, and I do appreciate how you guys have – I think Mark said it on the last call – you guys are always very early to react, which is why we appreciate color from you guys because you guys are always honest and early. You guys are decisively giving up some lease share. Financing is still available to you. The auto side needs support. Is this a Ford Credit risk-adjusted return decision looking out at the ALG guide? How was this made to move away from the lease market? And is it something that the other financers are going to pick up the slack because there's so much growth in that area? Bernard B. Silverstone - Ford Motor Credit Co. LLC: First, Eric, thanks for joining us, and thanks for your question. So I think I can relate it back to really as we talked about our One Ford Lease strategy. So it's definitely a joint approach to how we think about leasing. I think one of the keys also to underpinning that is our view that leasing has to be sustainable. Not to go back to 2008 and 2009, but you know what happened there. So we're taking a long view in terms of the dimensions we've talked about and they spit out, if you like, some concentration parameters for us and we've used those in aggregate to look at our overall lease share. So we may be giving up some leash share in the short term, but would it be good lease share in the long term? When those customers come back in two or three years' time, if there isn't a comparable lease program, then it's really not sustainable. One of the main benefits, of course, is the loyalty we see, the satisfaction we see, as well as the near-term impact on sales. So we are certainly going to be present in the leasing market at the right level, but we are managing this to make sure it's also sustainable and that when those customers come back at the end of their lease, we can have a good experience and offer them a new product again and hopefully enjoy the kind of loyalty we've always seen from our leasing presence. Eric J. Selle - SunTrust Robinson Humphrey, Inc.: I appreciate the holistic view. I've worked at a bank for 20 years and I always tell my bankers it's easy to initiate a loan; it's hard to sell it. So, obviously, short term/long term is obviously appreciated. Looking in the States, it's obviously well-advertised and well-expected, sedan glut concentrated with the Japanese and Germans. How can they come in and support residuals? We're hearing stuff that they are getting a little bit more conservative on some of their structures. How can they – because I feel like if they support the residuals, some of the overhang goes away. Are you seeing them come in and really come in and support some of that residual risk? Anything they are doing that would help bottom that trough, and kind of how are you all looking internally at that sedan glut? When does the glut kind of peak and kind of move through the snake, per se? When is the worst of it? And are you seeing any of your J3 or G3 captive competitors step up to support the residual risk that they have because it seems like it's more pronounced over there? Bernard B. Silverstone - Ford Motor Credit Co. LLC: I'll kick off on that one and just say that I think you can see it on the numbers on the page there that the industry is still running higher than we are certainly running, so clearly the marketing offers there are presumably being supported in terms of as you say the residuals that are being held out. When that eases, I think it's back to the disciplines we talked about in the earlier call, that if the industry holds its discipline, if indeed the pattern that we are seeing is across the industry in the various segments, and you've called out a couple of segments that I think are very valuable and clear insight on your part there, then you'd think there would be an adjustment. But clearly we don't have insight to their specific plans so I can't give you a call of when that will change. We are taking our own actions and you can see it in our numbers there that we've moderated our leasing programs to make sure we can be there through the cycles. Marion Harris - Ford Motor Credit Co. LLC: Eric, this is Marion. I would just say that where industry leasing is today is about the peak of where it was almost 20 years ago. And so our view is that, at those kinds of levels, it's a bit too high. And as Bernard said, we have to manage our own business and we do that through our One Ford Lease strategy and you want to keep it at such a level that you are not getting people into cars with so much Motor Company subvention that it gets them into a car that they really probably shouldn't be in as opposed to a different, a lower price point vehicle. And you see that. You see it in the luxury segment. Sometimes when folks are chasing share, they will do very aggressive lease programs and they'll support the residual very strongly and in the end that ultimately results in a bunch of returned leases that run through auction at lower prices and over time kill the brand. Eric J. Selle - SunTrust Robinson Humphrey, Inc.: We've all seen the One Ford work through the cycle, so as a credit guy, we appreciate it and I do appreciate your time today. Marion Harris - Ford Motor Credit Co. LLC: Thanks, Eric. Good to hear from you.

Your next question comes from the line of Garland Buchanan with Legal & General. Garland Buchanan - Legal & General Investment Management America, Inc.: Hi. Thank you for taking the question. Can you just confirm, of the remaining $2 billion to $4 billion issuance recorded out of Ford Motor Credit, how much of that is expected in the unsecured market and the tenor views there? And then another question, in terms of rating migration, you've communicated a desire to go upward. Do you think that you need to get through the cycle in order to get that upgrade, or is that something in your conversations with the agencies that you see as possible going into a downturn or even in a downturn? Thanks. Marion Harris - Ford Motor Credit Co. LLC: Yeah. I'd say, I'll start and then kick it very quickly over to Neil. If you look at our slide 12, this shows in the forecast for our funding plan. So we have somewhere between $2 billion and $6 billion left to do in unsecured and you can see it broken out by region and then what we need to do left in securitization. So that gives you some guidance on where and how much is left to do. And then as it relates to tenor and rating agency questions, I will ask Neil to comment. Neil M. Schloss - Ford Motor Co.: Yeah, I think on the tenor question, which I think we both look at the market, but also manage our maturity profile to fit into where we are not overly concentrated in any one calendar year or calendar quarter for that matter. And so we've issued these things sort of three years and 10 years, manage to an average maturity sort of in the middle there, but then we also look at the market from a standpoint of where best to issue. And then on the ratings, I think your guess is probably as good as ours from the standpoint of what it takes. I think we continue both at credit and auto to manage to a, single A credit from a standpoint of our balance sheet. We think we are there. You look at some of the metrics on both leverage for the company, as well as for Credit and they would, based on the rating agency metrics, would say we are single A. So it's getting the business there and obviously getting through a cycle being able to maintain our funding, being able to maintain our base dividend would obviously go a long way to supporting a higher credit rating. Garland Buchanan - Legal & General Investment Management America, Inc.: Okay. So I'm sorry, to confirm then that slide 12, if you just look at the $2 billion to $4 billion issuance remaining, that does not include commercial paper? That's correct? Neil M. Schloss - Ford Motor Co.: Correct. This is unsecured term and secured term. Garland Buchanan - Legal & General Investment Management America, Inc.: Okay. Thanks a lot. Bernard B. Silverstone - Ford Motor Credit Co. LLC: Just to add a little bit of flavor on this page is something that I think underscores some of the values that we've espoused into how we run the business. If you look in the middle there at our European operation and what they funded through July, you can see how we approached having the contingencies in place for Brexit, not knowing how the vote would go, but really having a great step forward on the funding. I think it more talks to the values we espouse about being a consistent player and making sure we are fully funded and that's why we've got the strength of the balance sheet that Neil just referred to. Neil M. Schloss - Ford Motor Co.: Yeah, and specifically on the CP side, we ended the quarter with about $4 billion of commercial paper outstanding, which is up from where it was at the beginning of the year, in part because we now have a two rating from all of the agencies, which obviously creates new demand for us on the short-term programs. Garland Buchanan - Legal & General Investment Management America, Inc.: Thank you.

Thank you. At this time, there are no further questions. Mr. Dahle, I will turn the floor to you for closing remarks. Steve Dahle - Ford Motor Co.: Thanks, LaTonya. With that, I would like to conclude today's call. As a reminder, all of the information that we reviewed today is available on our Investor website; and thank you to all who joined us today.

Thank you for your participation in today's conference call. You may now disconnect.