MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2003 COMPARED WITH 2002 Ford Credit Hertz LIQUIDITY AND CAPITAL RESOURCES Automotive Sector 3 5 Gross Cash. Automotive gross cash includes cash and cash equivalents, marketable and loaned securities and assets contained in a short-term Voluntary Employee Beneficiary Association trust (“VEBA”) (see below). Gross cash as of December 31, 2004, 2003 and 2002 is detailed below (in billions): Our strategy is to ensure we have sufficient funding available with a high degree of certainty throughout the business cycle. The  key elements of this strategy include maintaining large gross cash balances, generating cash from operating-related activities,  having a long-dated debt maturity profile, maintaining committed credit facilities and funding long-term liabilities over time.  The improvement in earnings primarily reflected an improved car rental pricing environment and lower costs. The increase in income before income taxes primarily reflected improved credit loss performance and the net favorable market  valuation of derivative instruments and associated exposures, offset partially by the impact of lower average net receivables. Details of the full-year Financial Services sector  Income/(loss) before income taxes  for 2003 and 2002 are shown below (in millions): Income/(Loss) Before Income Taxes 2003 2002 2003 Over/(Under)  2002 Ford Credit $  2,956 $  1,979 $  977 Hertz * 228 200 28 Other Financial Services 63 (61) 124 Total Financial Services sector $  3,247 $  2,118 $  1,129 * Includes amortization expense related to intangibles recognized upon consolidation of Hertz. December 31, 2004 2003 2002 Cash and cash equivalents $ 10.1 $ 6.9 $ 6.2 Marketable securities 8.3 9.3 16.4 Loaned securities* 1.1 5.7 - Total cash, marketable securities and loaned securities 19.5 21.9 22.6 Short-term VEBA assets 4.1  4.0  2.7 Gross cash $ 23.6 $ 25.9 $ 25.3 * As part of our investment strategy, we engage in securities lending to improve the returns on our cash portfolios. See Note 5 of the Notes to the Financial Statements for additional discussion on securities lending.