Ford Asia Pacific and Africa/Mazda Segment Other Automotive FINANCIAL SERVICES SECTOR RESULTS OF OPERATIONS 2004 COMPARED WITH 2003 Ford Credit Ford Credit analyzes its financial performance primarily on an on-balance sheet and managed basis. It retains interests in  receivables sold in off-balance sheet securitizations, and with respect to subordinated retained interests, has credit risk. As  a result, it evaluates credit losses, receivables and leverage on a managed basis as well as on an on-balance sheet basis.  In contrast, Ford Credit does not have the same financial interest in the performance of receivables sold in whole-loan sale  transactions, and as a result it generally reviews the performance of the serviced portfolio only to evaluate the effectiveness  of its origination and collection activities. To evaluate the performance of these activities, Ford Credit monitors a number of  measures, such as repossession statistics, losses on repossessions and the number of bankruptcy filings. Mazda. The improvement in earnings primarily reflected our share of Mazda’s improved operating results. Ford Asia Pacific and Africa. The improvement in earnings primarily reflected favorable changes in currency exchange rates,  higher vehicle unit sales and positive net pricing.  The improvement in loss primarily reflected the non-recurrence of a charge in 2002 related to the sale of non-core businesses,  primarily Kwik-Fit Holdings Ltd. Details of the full year Financial Services sector  Income/(loss) before income taxes  for 2004 and 2003 are shown below (in millions): Income/(Loss) Before Income Taxes 2004 2003 2004 Over/  (Under)  2003 Ford Credit $ 4,431 $  2,956 $  1,475 Hertz* 493 228 265 Other Financial Services 84 63 21  Total Financial Services sector $ 5,008 $  3,247 $  1,761 * Includes amortization expense related to intangibles recognized upon consolidation of Hertz. The increase in income before income taxes of $1,475 million primarily reflected improved credit loss performance and  improved leasing results. The improved credit loss performance primarily resulted from fewer repossessions and a lower  average loss per repossession. The improvement in leasing results primarily reflected higher used vehicle prices and a reduction  in the percentage of vehicles returned to Ford Credit at lease termination.  Ford Credit reviews its business performance from several perspectives, including:  • On-balance sheet basis - includes the receivables Ford Credit owns and receivables sold for legal purposes that remain on  Ford Credit’s balance sheet; • Securitized off-balance sheet basis - includes receivables sold in securitization transactions that are not reflected on Ford  Credit’s balance sheet; • Managed basis - includes on-balance sheet and securitized off-balance sheet receivables that Ford Credit continues to  service; and • Serviced basis - includes managed receivables and receivables sold in whole-loan sale transactions where Ford Credit retains  no interest in the sold receivables, but which it continues to service. 3 0 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS