In addition, credit losses related to the off-balance sheet securitized receivables are included in the initial and ongoing  valuation of Ford Credit’s residual interest in the securitization transaction (see “Off-balance Sheet Arrangements – Sales of  Receivables by Ford Credit” for definition) and neither impact the  Provision for credit and insurance losses  on the income  statement nor influence the assessment of the adequacy of the  Allowance for credit losses  related to Ford Credit’s on-balance  sheet receivables. Therefore, over the life of each off-balance sheet securitization transaction, the gain or loss on sale of receivables, income from  residual interest in securitization transactions, interest income from retained securities, servicing fees and other receivable sale  income is equal to the net financing margin and credit losses that would have been reported had Ford Credit reported the  receivables on its balance sheet and funded them through asset-backed financings. The net impact of off-balance sheet securitizations on Ford Credit’s earnings in a given period will vary depending on the  amount and type of receivables sold and the timing of the transactions in the current period and the preceding two-to-three  year period, as well as the interest rate environment at the time the finance receivables were originated and securitized. The following table shows, on an analytical basis, the earnings impact of off-balance sheet securitizations as if Ford Credit had  reported them as on-balance sheet and funded them through asset-backed financings for the periods indicated (in millions): In 2004, the impact on earnings of reporting the sold receivables as off-balance sheet securitizations was $86 million lower  than had these transactions been structured as on-balance sheet securitizations. This difference resulted from recalendarization  effects caused by gain-on-sale accounting requirements, as discussed above. This effect will fluctuate as the amount of  receivables sold in Ford Credit’s off-balance sheet securitizations increases or decreases over time. In a steady state of  securitization activity, the difference between reporting securitizations on- or off-balance sheet in a particular year approaches  zero. While the difference in earnings impact between on- or off-balance sheet securitizations is minimal, this funding source  has provided Ford Credit with significant borrowing cost savings compared with unsecured debt and funding flexibility in a  difficult economic environment. The improvement in earnings primarily reflected higher vehicle and equipment rental volumes, lower fleet costs and higher  proceeds received in excess of book value on the disposal of used vehicles and equipment, offset partially by lower pricing.  3 4 Hertz 2004  Over/(Under)  2003 2004 2003 Financing revenue Retail revenue $ 1,926 $ 3,371 $  (1,445) Wholesale revenue 1,097 1,080 17 Total financing revenue 3,023 4,451 (1,428) Borrowing cost (854) (1,443) 589 Net financing margin 2,169 3,008 (839) Credit losses (244) (551) 307 Income before income taxes $ 1,925 $ 2,457 $  (532) Memo: Income related to off-balance sheet securitizations  $ 1,839 $ 2,377 $  (538) Recalendarization impact of off-balance sheet securitizations  (86) (80) (6) MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS