Ford Motor Co. reported record third-quarter net income of $1.69 billion and said it will pay down its debt faster than planned.

Ford’s third-quarter net income was a $690 million improvement from the year-ago period and topped the company’s previous third-quarter high of $1.13 billion, set in 1997.

Excluding special items, Ford reported a pre-tax operating profit of $2.1 billion, or 48 cents per share, an improvement of $1.1 billion from a year ago. Ford has posted pre-tax operating profits for five consecutive quarters.

Ford’s third-quarter revenue was $29 billion, a decline of $1.3 billion from the same period a year ago. Excluding Volvo revenue from 2009, Ford’s revenue in the third quarter was up $1.7 billion compared with the same period a year ago.

Ford North America posted a third quarter pre-tax operating profit of $1.6 billion, a $1.3 billion improvement from third quarter 2009. The company is on track to gain full-year market share in the U.S. market for the second straight year, marking the first time since 1993 that Ford has achieved consecutive annual increases.

Ford also announced new steps to reduce debt, including further paying down its revolving credit line by $2 billion in the third quarter and prepaying the remaining $3.6 billion of debt owed to the VEBA retiree health care trust by the end of October.

The automaker has also launched conversion offers on two convertible debt securities.

Ford’s captive finance arm, Ford Motor Credit, also reported a positive third quarter, with net income increasing by $70 million from the year-ago period to $497 million. On a pre-tax basis, the captive lender earned $766 million in the third quarter and $2.5 billion in the first nine months of 2010, compared with $677 million and $1.3 billion, respectively, in the previous year.

Ford Credit attributed the year-over-year increase to a lower provision for credit losses and lower depreciation expense for leased vehicles, offset partially by lower volume and the non-recurrence of prior-year net gains related to unhedged currency exposures.

“The quality of our portfolio remains high and, linked with our solid business fundamentals, we continue to support Ford Motor Company's business with strong profits and distributions,” Ford Credit Chairman and CEO Mike Bannister said.

Ford Credit said it expects full-year 2010 profits to be higher than 2009, although it also expects fourth quarter profits to be lower compared with recent quarters.

“This was another strong quarter and we continue to gain momentum with our One Ford plan,” said Ford President and CEO Alan Mulally. “Delivering world class products and aggressively restructuring our business has enabled us to profitably grow even at low industry volumes in key regions.”