DEARBORN, Mich. – Ford Motor Credit Company reported net income of $2 billion in 2010, an improvement of $0.7 billion from earnings of $1.3 billion a year earlier. On a pre-tax basis, Ford Credit earned $3.1 billion in 2010, compared with $2 billion in the previous year.

The captive lender said the full year increase in pretax earnings is primarily explained by a lower provision for credit losses and lower depreciation expense for leased vehicles related to higher auction values, offset partially by lower volume and the non-recurrence of net gains related to unhedged currency exposure primarily from cross-border intercompany lending.

In the fourth quarter of 2010, Ford Credit’s net income was $367 million, a decrease of $85 million from a year earlier. On a pre-tax basis, Ford Credit earned $572 million in the fourth quarter of 2010, compared with $714 million in the previous year. The decrease in pre-tax earnings primarily reflected lower volume and the non-recurrence of lower lease depreciation expense related to lower gains as fewer leases terminated and the vehicles were sold.

“We are pleased with our 2010 performance, which enabled us to increase our planned distributions,” Ford Credit Chairman and CEO Mike Bannister said. “We expect results to be solid though more moderate in 2011 as we continue to provide strong support for Ford, our dealers and customers.”

On Dec. 31, 2010, Ford Credit’s on-balance sheet net receivables totaled $81 billion, compared with $93 billion at year-end 2009. Managed receivables were $83 billion on Dec. 31, 2010, down from $95 billion at year-end 2009. The lower receivables primarily reflected the discontinuation of Jaguar, Land Rover, Mazda and Volvo financing and lower industry volumes in recent years.

On Dec. 31, 2010, managed leverage was 6.7 to 1. Ford Credit distributed $1 billion to Ford Motor Company in the fourth quarter of 2010 for a total of $2.5 billion of distributions in 2010.

For full-year 2011, Ford Credit expects to be solidly profitable but at a lower level than in 2010, reflecting primarily the non-recurrence of lease depreciation expenses and credit loss reserve reductions of the same magnitude as 2010. At year-end 2011, managed receivables are anticipated to be in the range of $80 billion to $85 billion. Ford Credit expects to pay distributions to Ford Motor of about $2 billion in 2011.