DEARBORN, Mich. – Ford Motor Credit Company reported net income of $413 million in the second quarter of 2009, an improvement of $1.8 billion from a net loss of $1.4 billion a year earlier.

On a pre-tax basis, Ford Credit earned $646 million in the second quarter, compared with a loss of $2.4 billion in the previous year. Excluding the $2.1 billion impairment charge for operating leases in the second quarter of 2008, Ford Credit incurred a pre-tax loss of $294 million in the previous year. On a pre-tax basis, Ford Credit earned $610 million in the first half of 2009.

The improvement in pre-tax earnings primarily reflected non-recurrence of the second quarter 2008 impairment charge to the North America operating lease portfolio, lower depreciation expense for leased vehicles due to higher auction values, net gains related to unhedged currency exposure from cross-border intercompany lending, a lower provision for credit losses, and lower operating costs. These factors were offset partially by lower volume and non-recurrence of a gain related to the sale of approximately half of Ford Credit’s ownership interest in its Nordic operations.

“We are pleased with our second quarter results as market conditions remain challenging around the world,” Chairman and CEO Mike Bannister said. “With our solid business fundamentals and our focus on prudent lending, sound risk management and high-quality servicing, we continue to provide valuable support to Ford Motor Company, its dealers and its customers.”

Ford Credit’s on-balance sheet net receivables totaled $99 billion by June 30, compared with $116 billion at year-end 2008. Managed receivables were $100 billion by June 30, down from $118 billion on Dec. 31, 2008. The lower receivables primarily reflected lower North America and Europe receivables, mainly due to lower industry volumes, lower dealer stocks, and the transition of Jaguar, Land Rover and Mazda financing to other finance providers.

On June 30, 2009, managed leverage was 8.4 to 1. During the second quarter of 2009, Ford Credit completed the cash tender offer, commenced in the first quarter of 2009, pursuant to which it purchased $3.4 billion principal amount of Ford Motor Company’s unsecured, nonconvertible debt securities for an aggregate cost of $1.1 billion including transaction costs. Ford Credit transferred these debt securities to Ford Motor Company in satisfaction of $1.1 billion of tax liabilities to Ford Motor Company.

Ford Credit expects its second half results to be lower than its first half 2009 results. Ford Credit does not expect the net gains related to unhedged currency exposures or improvements in lease residual losses in the amounts experienced in the second quarter of 2009 to continue. A continuing decline in receivables will also contribute to lower second half 2009 results.