PART II Overview Generation of Revenue, Income, and Cash ITEM 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations. ITEM 6.  Selected Financial Data. ITEM 5.  Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities. At December 31, 2020, all of our Shares were owned by Ford Holdings LLC, a wholly owned subsidiary of Ford. We did not issue or sell any equity interests during 2020, and there is no market for our Shares. We paid cash distributions to our parent of $2.9 billion and $2.4 billion in 2019 and 2020, respectively. Not required. Our primary focus is to profitably support the sale of Ford and Lincoln vehicles. We work with Ford to maximize customer and dealer satisfaction and loyalty, offering a wide variety of financing products and outstanding service. We strive to continually improve processes focusing on the customer and the dealer to manage costs and ensure the efficient use of capital. As a result, Ford Credit is uniquely positioned to drive incremental sales, improve customer satisfaction and owner loyalty to Ford, and direct profits and distributions back to Ford to support its overall business, including vehicle development. We leverage three fundamental strategies in the management of our operations: The principal factors that influence our earnings are the amount and mix of finance receivables, operating leases, and financing margins. The performance of these receivables and operating leases over time, mainly through the impact of credit losses and variations in the residual value of leased vehicles, also affects our earnings. The amount of our finance receivables and operating leases depends on many factors, including: For finance receivables, financing margin equals the difference between revenue earned on finance receivables and the cost of borrowed funds. For operating leases, financing margin equals revenue earned on operating leases, less depreciation expense and the cost of borrowed funds. Interest rates earned on most receivables and rental charges on operating leases generally are fixed at the time the contracts are originated. On some receivables, primarily dealer wholesale financing, we charge interest at a floating rate that varies with changes in short-term interest rates. • To employ prudent origination practices while maintaining a managed level of risk; • To have efficient and effective servicing and collection practices; and • To fund the business efficiently while managing our balance sheet risk. • The volume of new and used vehicle sales and leases; • The extent to which we purchase retail financing and operating lease contracts and the extent to which we provide wholesale financing; • The sales price of the vehicles financed; • The level of dealer inventories; • Ford-sponsored special financing programs available exclusively through us; and • The availability of cost-effective funding. 24