DEARBORN, Mich. — This morning, Ford Motor Credit Co. reported that its net income for 2007 was down by $508 million when compared with 2006.

Overall, net income came in at $775 million for the year, compared with $1.283 billion a year earlier.

On a pre-tax basis, Ford Credit said it earned $1.215 billion in 2007, down $738 million from 2006.

According to officials, the decline in full-year earnings was due to several factors, including the non-recurrence of credit loss reserve reductions, higher borrowing costs, higher depreciation expense for leased vehicles and higher costs due to the North American business transformation initiative.

However, executives said these factors were offset partially by lower net losses related to market valuation adjustments from derivatives and lower expenses thanks to improved operating costs.

In the fourth quarter of 2007, Ford Credit indicated net income was $186 million, down $93 million from a year earlier. On a pre-tax basis, the captive earned $263 million in the fourth quarter, compared with $406 million in the previous year.

The reasons for decrease in fourth-quarter earnings were very similar to those the company gave for the full year decline.

Officials attributed the drop to the non-recurrence of credit loss reserve reductions, higher borrowing costs and higher depreciation expense for leased vehicles. Again, executives said these were offset partially by lower expenses and the non-recurrence of losses related to market valuation adjustments from derivatives.

"We had a good year in 2007 with a business that performed consistently and predictably," explained Mike Bannister, chairman and chief executive officer. "With our sound business fundamentals, we have a strong foundation for the future."

Ford Credit went on to predict that its earnings in 2008 would about equal to its earnings in 2007.

As of Dec. 31, Ford Credit's on-balance sheet net receivables totaled $141 billion, compared with $135 billion at year-end 2006. Managed receivables were $147 billion, down from $148 billion a year ago, officials indicated.