Ford Motor Company – Quality of Earnings Growth Analysis

Ford Motor Company: Quality of p y y Earnings Growth Analysis (A) 1 Ford Motor Company ? ? Earnings improvement over past 3 quarters have come from accounting adjustments Nov 11, 2003 ? ? Common stock price: $13. 14 52-week range: $6 to $13 (Still some 60% below its beginning 1999 price level) ? ? ? ? ? ? Incorporated in Delaware Incorporate in 1919 Acquired: Ford Motor Company, Michigan Company incorporated in 1903 Acquired to produce and sell automobiles designed and engineered by Henry Ford d In 2003: Worlds 2nd largest producer of cars and trucks combined f Along with its subsidiaries engaged in other business as well.. ? ? Financing Renting vehicles and equipment 2 Ford Motor Company ? Two principal business sectors include.. , ? ? Automobile – design develop manufacture sold and serviced design, develop, manufacture, cars and trucks Financial services.. , – – Companies include include.. , ? Ford Motor Credit Company ? The Hertz Corporation – rented out cars, light trucks, industrial and construction equipment Engaged in.. , ? Vehicle related financing ? Leasing ? Insurance 3 Revitalization Plan ? In 2003: two years into revitalization plan aimed at.. , ? ?

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Reversing a declining market share Turning losses into profits High-incentive spending – – ? Plan included.. , ? 2002: $3,000 2001: $1,200 ? ? ? ? ? ? ? ? Reduction R d ti workforce kf Introduction of new cars production 2004 (500 Sedan) Aggressive cost cutting – End of 2003: $1. 3 billion Improved product quality Reduction of plant capacity Divestutures Discontinuance o flow margin models – Ford Escort Redesign of the F-Series pickup ? Low interest rates and high profitability achieved g y 4 Revitalization Plan ? Continuing problems.. , ? ?

Persistent losses incurred by the company’s European operations – lost $1,2 billion over the first nine months of 2003 In 2003: takes charge of $600 million for restructuring its European operations ? ? $56 million of which was recognized in 3rd quarter 2003 income statement Company expected the restructuring to contribute $450 million to 2004 operating earnings and about $550 million per year 5 Financial Results by Major Business Automotive sector A t ti t Financial Services sector Income/(loss) before cumulative effect of change in accounting principle Cumulative effect of change in accounting principle Total company net income/(loss)

First Nine Months Net Income/(Loss) 2002 -805 805 957 152 -1002 -850 6 Unusual It U l Items Included in Ford’s I l d d i F d’ Nine Months Results (in Millions) First Nine Months Benefit/ (Charge) B fit/ (Ch ) 142 -525 -141 141 -46 -570 570 -457 -113 Interest Income on U. S. federal tax refund Loss on sale of Kwik-Fit and other businesses SFAS No. 133 non cash charge No non-cash Non-cash accrual for European end-of-life vehicles directive Total unusual items Memo: Automotive sector Financial Services sector 7 Accounting Related Observations ? ? Underlying profitability did not appear to be improving i i Had made a no. of accounting adjustments that contributed roughly $2 billi of earnings t ib t d hl billion f i improvement over first nine months of 2003 Doubt – company distorted results? 8 Discussion Question Do you agree with the conclusion that ‘a meaningful amount of Ford’s F d’ earnings i i improvement over th t three quarters h come f t has from accounting adjustments, as a opposed to real improvements in the company’s underlying profitability? 9 Discussion Question

What a adjustment, if any, would you make to the 2003 first nine month first-nine-month earnings to determine if 2003 ninenine month earnings did or did not represents a ‘real’ improvement? 10 Discussion Question Do you agree with Ford’s measurement and assessment of the value to investors of 1) its automotive segment’s total operating-related cash-flows, cash flows 2) Ford Credit’s managed debt to equity ratio and 3) Credit s debt-to-equity ratio, Total company fixed-charge ratios? Why? 11 Discussion Question Do you agree or disagree with Standard & Poor’s 2003 downgrades of Ford’s Long Term credit rating? Why? Ford s Long-Term 12

Ford Motor Company and Subsidiaries, Sector Statement of Income for the Periods Ended Sept 30, 2003 and 2002 (in Millions Except Per Share Amounts) Third Quarter Nine Months Third Quarter Nine Months 2003 2002 2003 2002 2003 2002 2003 2002 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) AUTOMOTIVE Sales Costs and expenses Cost of sales Selling, administrative and other expenses Total costs and expenses Operating income / (loss) Interest income Interest expense I t t Net interest income/ (expense) Equity in net income / (loss) of affiliated companies Income/ (loss) before income taxes Automotive FINANCIAL SERVICES Revenues Costs and expenses Interest expense Depreciation Operating and other expenses Provision for credit and insurance losses Total costs and expenses Income / (Loss) before income taxes- Financial Services 30,337 28,437 2,536 30,973 (636) 445 373 72 (45) (609) 32,396 30,568 2,467 33,035 (639) 378 340 38 (17) (618) 98,719 91,205 7,321 98,526 193 727 915 (188) 48 53 99,764 92,736 7,140 99,876 (112) 661 1,037 1 037 (376) (97) (585) 100 94 8 102 -2 1 1 0 0 -2 100 94 8 102 -2 1 1 0 0 -2 100 92 7 100 0 1 1 0 0 0 100 93 7 100 0 1 1 0 0 -1 6,551 1,552 2,095 1,342 1 342 530 5,519 1,032 6,942 1,868 2,530 1,180 1 180 792 6,370 572 19,727 4,794 6,939 3,767 3 767 1,802 17,302 2,425 21,242 5,741 7,631 3,832 3 832 2,523 19,727 1,515 100 24 32 20 8 84 16 100 27 36 17 11 92 8 100 24 35 19 9 88 12 100 27 36 18 12 93 7 13

Ford Motor Company and Subsidiaries, Sector Statement of Income for the Periods Ended Sept 30, 2003 and 2002 (in Millions Except Per Share Amounts) Third Quarter Nine Months 2003 2002 2003 2002 (unaudited) (unaudited) (unaudited) (unaudited) TOTAL COMPANY Income / (loss) before income taxes Provision for/ (benefit from) income taxes income / (loss) before minority interests Minority interests in ne income / (loss) of subsidiaries Income / (loss) from continuing operations income/ (loss) from discontinued/ held-for-sale operations Loss on disposal of discontinued/held-for-sale operations Cumulative effect of change in accounting C l ti ff t f h i ti principle Net income/ (loss) Income/ (loss) attributable to Common and Class B Stock after Preferred Stock dividends Average number of shares of Common and g Class B Stock outstanding 423 141 282 45 237 2 (46) 81 (127) 117 (244) (27) (55) (264) $ (25) $ (25) 1,831 2,478 672 1,806 245 1,561 (4) (5) (264) 1,288 1,288 1,832 930 350 580 285 295 48 95 1,002 $ (850) $ (861) 1,814 $ (326) $ (330) 1,822 14

Ford Motor Company and Subsidiaries, Sector Statement of Income for the Periods Ended Sept 30, 2003 and 2002 (in Millions Except Per Share Amounts) Third Quarter Nine Months 2003 2002 2003 2002 (unaudited) (unaudited) (unaudited) (unaudited) AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK Basic income / (loss) Income/ (loss) from continuing operations Income / (loss) from discontinued / held- for sale operations Loss on disposal of discontinued/held-for-sale operations Cumulative effect of change in accounting principle Net income/ (loss) Basic income / (loss) Income/ (loss) from continuing operations Income/ (loss) from discontinued/ held-forI / (l )f di ti d/ h ld f sale operations Loss on disposal of discontinued/held-forsale operations Cumulative effect of change in accounting principle Net income / (loss) Cash dividends 0. 13 (0. 14) (0. 01) (0. 03) 0. 85 0. 16 (0. 03) (0. 05) (0. 14) $ (0. 01) $ 0. 13 $ (0. 18) (0. 14) (0. 01) (0. 03) (0. 13) 0. 70 0. 81 (0. 55) $ (0. 47) 0. 16 (0. 03) (0. 05) (0. 14) (0. 01) (0 01) 0. 10 (0. 18) (0 18) 0. 10 (0. 13) 0. 68 0 68 0. 30 (0. 55) (0. 47) (0 47) 0. 30 15

Ford Motor Company and Subsidiaries, C Consolidated lid d Statement of Income for the Periods Ended Sept 30, 2003 and 2002 (in Millions, Except Per Share Amounts) Third Quarter Nine Months Third Quarter Nine Months 2003 2002 2003 2002 2003 2002 2003 2002 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) AUTOMOTIVE Sales and revenues Automotive sales Financial Services revenue Total Sales and revenues Automotive interest income Costs and expenses Cost of sales Selling, administrative and other expenses Interest expense provision for credit and insurance losses Total costs and expenses Automotive equity in net income / (loss) of subsidiaries Income / (loss) before income taxes Provision for/ (benefit from) income taxes Income/ (loss) before minority interests Minority interests in net income/ (loss) of subsidiaries Income / (loss) from continuing operations income / (loss) from discontinued/held-for-sale operations Loss on disposal of discontinued/ held-for-sale operations Cumulative effect of change in accounting principle i i l Net income /(loss) Income / (loss) attributable to Common and Class B Stock after Preferred Stock dividends Average number of shares of Common and Class B Stock outstanding 30,337 6,551 36,888 , 445 28437 5973 1925 530 36865 -45 423 141 282 45 237 2 $32,396 6,942 39,338 , 378 30568 6177 2208 792 39745 -17 -46 81 -127 117 -244 -27 -55 $98,719 19,727 118,446 , 727 91205 18027 5709 1802 116743 48 2478 672 1806 245 1,561 -4 -5 -264 264 $1,288 $1,288 1832 $99,764 21,242 121,006 , 661 92736 18,603 6778 2523 120640 -97 930 350 580 285 295 -48 -95 -1,002 1 002 ($850) ($861) 1814 82 18 100 1 77 16 5 1 100 0 1 0 1 0 1 0 0 -1 1 0 0 5 82 18 100 1 78 16 6 2 101 0 0 0 0 0 -1 0 0 0 -1 -1 5 83 17 100 1 77 15 5 2 99 0 2 1 2 0 1 0 0 0 1 1 2 82 18 100 1 77 15 6 2 100 0 1 0 0 0 0 0 0 -1 1 -1 -1 1 -264 264 ($25) ($25) 1831 ($326) ($330) 1822 16

Ford Motor Company and Subsidiaries, C Consolidated lid d Statement of Income for the Periods Ended Sept 30, 2003 and 2002 (in Millions, Except Per Share Amounts) Third Quarter Nine Months 2003 2002 2003 2002 (unaudited) (unaudited) (unaudited) (unaudited) AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK Basic income / (loss) income / (loss) from continuing opeations Income / (loss) from discontinued / held- for sale operations Loss on disposal of discontinued/held-for-sale operations Cumulative effect of change in accounting principle Net income/ (loss) Diluted income / (loss) Income /(loss) from continuing operations Income/ (loss) from discontinued/held-forI / (l )f di ti d/h ld f sale operations Loss on disposal of discontinued/held-forsale operations Cumulative effect of change in accounting principle Net income/ (loss) Cash dividends $0. 13 ($0. 14) -0. 01 -0. 03 $0. 85 $0. 16 -0. 03 -0. 05 -0. 14 -$0. 01 $0. 13 -$0. 18 ($0. 14) -0. 01 -0. 03 -0. 15 $0. 70 $0. 81 -0. 55 -$0. 47 $0. 16 -0. 03 -0. 05 ($0. 14) -$0 01 $0. 01 $0. 10 -$0 18 $0. 18 $0. 10 ($0. 13) $0. 68 $0 68 $0. 30 ($0. 55) -$0 47 $0. 47 $0. 30 17

Ford Motor Company and Subsidiaries, Sector Balance Sheet (in Millions) September 30, 2003 (unaudited) ASSETS Automotive Cash and Cash equivalents Marketable securities Loaned securities L d iti Total cash, marketable and loaned securities Receivables, net Inventories Deferred income taxes Other current assets Current receivable from Financial Services Total current assets Equity in net assets of affiliated companies Net property Deferred income taxes Goodwill Other intangible assets Assets of discontinued/held-for-sale operations Other assets Total automotive assets Financial Services Cash and Cash equivalents Investments in securities Finance receivable, net Net investment in operating leases Retained interest in sold receivables Goodwill Other intangible assets Assets of discontinued/held-for-sale operations Other assets Receivable from Automotive Total financial Services assets Total assets December 31, 2002 September 30, December 31, 2003 (unaudited) 2002 $6,817 12,226 6,942 6 942 25,985 2,755 10,085 3,358 5,514 637 48,334 48 334 1,858 40,471 11,039 5,212 837 11,408 11 408 119,159 21,070 1,323 109,173 33,761 10,203 , 763 241 15,272 3,947 195,753 $314,912 $5,180 17,464 22,644 2,065 6,980 3,462 4,551 1,062 40,764 40 764 2,470 36,364 11,694 4,805 812 98 10,783 10 783 107,790 7,070 807 97,030 40,055 17,618 , 752 248 2,406 16,643 4,803 187,432 $295,222 2 4 2 8 1 3 1 2 0 15 1 13 4 2 0 0 4 38 7 0 35 11 3 0 0 0 5 1 62 100 2 6 8 1 2 1 2 0 14 1 12 4 2 0 0 4 37 2 0 33 14 6 0 0 1 6 2 63 100 18

Ford Motor Company and Subsidiaries, Sector Balance Sheet (in Millions) September 30, 2003 (unaudited) LIABILITIES AND STOCKHOLDERS EQUITY Automotive Trade payables Other payables Accrued liabilities Debt payable within one year Total current liabilities Senior debt Subordinated debt Total long-term debt Other liabilities Deferred income taxes Liabilities of discontinued/held-for-sale operations Payable t Fi P bl to Financial S i i l Services Total Automotive liabilities Financial Services Payables Debt Deferred income taxes Other liabilities and deferred income Liabilities of discontinued / held-for-sale operations Payable to Automotive Total Financial Services liabilities December 31, 2002 September 30, December 31, 2003 (unaudited) 2002 $15,797 2,710 31,348 976 50,831 14,149 5,843 19,992 48,849 338 24 3,947 3 947 123,981 2,235 159,268 , 11,521 8,491 637 182,152 $14,606 2,485 27,644 557 45,292 13,607 13,607 46,886 303 138 4,803 4 803 111,029 1,890 148,058 11,644 , 9,448 831 1,062 172,933 5 1 10 0 16 4 2 6 16 0 0 1 5 1 9 0 15 5 5 16 0 0 2 19 1 51 4 3 0 0 58 1 50 4 3 0 0 59

Ford Motor Company and Subsidiaries, Sector Balance Sheet (in Millions) September 30, December 31, September 30, December 31, 2003 ( (unaudited) di d) 2002 2003 ( (unaudited) di d) 2002 Company-obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures of the Company Minority interests Stockholders equity Capital stock Common Stock, par value $ 0. 01 per share (1,837 million shares issued) Class B Stock, par value $ 0. 01 per share ( 71 million shares issued) Capital in excess of par value of stock Accumulated other comprehensive income/ (loss) Treasury stock Earnings rreatained for use in business Total stockholders equity Total liabilities and stockholders equity 5,670 589 0 2 18 1 5,432 -4 756 4,756 -1,903 9,398 8,190 $314,912 18 1 5,420 -6 531 6,531 -1,977 8,659 5,590 $295,222 0 0 2 -2 2 -1 3 3 100 0 0 2 -2 2 -1 3 2 100 20

Ford Motor Company and Subsidiaries, Consolidated Balance Sheet (in Million) September 30, December 31, September 30, December 31, 2003 (unaudited) 2002 2003 (unaudited) 2002 ASSETS Cash and Cash equivalents Marketable securities Loaned securities Receivables, net Finance receivable, net Fi i bl t Net investment in operating leases Retained interest in sold receivables Inventories Equity in net assets of affiliated companies Net property Deferred income taxes Goodwill Other intangible assets Assets of discontinued/held-for-sale operations Other assets Total automotive assets $27,887 13,549 6,942 2,755 109,173 109 173 33,761 10,203 10,085 2,877 42,077 14,397 5,975 1,078 29,569 $310,328 $ $12,250 18,271 2,065 97,030 97 030 40,055 17,618 6,980 3,569 37,935 15,213 5,557 1,060 2,504 29,250 $289,357 $ 9 4 2 1 35 11 3 3 1 14 5 2 0 0 10 100 4 6 1 34 14 6 2 1 13 5 2 0 1 10 100 21

Ford Motor Company and Subsidiaries, Consolidated Balance Sheet (in Million) September 30, December 31, September 30, December 31, 2003 (unaudited) 2002 2003 (unaudited) 2002 LIABILITIES AND STOCKHOLDERS EQUITY Payables Accrued liabilities Debt Other liabilities and deferred income Deferred income taxes Liabilities of discontinued/held-for-sale operations Total liabilities Minority interests Company-obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures of the Company Stockholders equity Capital stock Common Stock, par value $ 0. 01 per share ( 1,837 million shares issued) Class B Stock, par value $ 0. 1 per share (71 million shares issued) Capital in excess of par value of stock Accumulated other comprehensive income / (loss) Treasury stock Earnings retained for use in business Total stockholders equity Total liabilities and stockholders equity $20,742 29,113 180,236 56,922 14,512 24 301,549 589 $18,981 25,088 162,222 56,276 14,561 969 278,097 7 9 58 18 5 0 97 0 7 9 56 19 5 0 96 5,670 0 2 18 1 5,432 -4,756 -1,903 9,398 8,190 $310,328 18 1 5,420 -6,531 -1,977 8,659 5,590 $289,357 0 0 2 -2 -1 3 3 100 0 0 2 -2 -1 3 2 100 22 Ford Motor Company and Subsidiaries Condensed Subsidiaries, Sector Statement of Cash Flows for the Periods Ended Sept. 30, 2003 and 2002 (in Millions) Nine Months 2003 Nine Months 2002 (unaudited) (unaudited) Financial Financial Automotive Services Automotive Services $5,180 $7,070 $4,064 $3,133 4,875 1,516 6,391 13,318 -166 13,152 10,877 -4,698 6,179 11,457 -53 11,404

Cash and cash equivalents at january 1 Cash Flows from operating activities before securities trading Net sales/ (purchases) of trading securities Net cash flows from operating activities Cash flows from investing activities Capital expenditures Acquisitions of receivables and lease investments Collections of receivables and lease investments Net acquisitions of daily rental vehicles Purchases of securities Sales and maturities of securities Proceeds from salesof receivables and lease investments Proceeds from sales of businesses Repayment of debt from discontinued operations Net investing activity with Financial Services Cash paid for acquisitions Cash recognized on consolidation of joint ventures Other Net cash (used in) /provided by investing activities -5,568 -7,356 4,136 77 2,975 256 696 -4,784 -4 784 -271 -42,305 33,921 -1,487 -490 589 15,781 15 781 204 1,421 -4,632 -1,460 1,232 -452 -60,461 38,204 -1,658 -423 390 28,237 28 237 409 -22 20 7,383 7 383 -72 -4,545 -4 545 690 4,527 4 527 23 Ford Motor Company and Subsidiaries Condensed Subsidiaries, Sector Statement of Cash Flows for the Periods Ended Sept. 0, 2003 and 2002 (in Millions) Nine Months 2003 Nine Months 2002 Financial Financial Automotive Services Automotive Services Cash flows f C h fl from fi financing activities i ti iti Cash dividends Net sales/ (purchases) of Common Stock Proceeds from mandaorily redeemable convertible preferred securities Changes in short-term debt g Proceeds from issuance of other debt Principal payments on other debt Net financing activity with Automotive Other Net cash (used in)/ provided by financing activities Effect of exchange rate changes on cash Net transactions with Automotive/Financial Services Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at September 30 -549 -43 -555 196 -179 883 -689 -6 -583 188 425 1,637 $6,817 3,405 , 16,338 -23,173 -2,975 9 -6,396 286 -425 14,000 $21,070 -123 281 -736 -20 3,943 -14 -966 4,597 $8,661 -13,332 , 13,991 -13,193 -409 60 -12,883 207 966 4,221 $7,354 24 Ford Motor Company and Subsidiaries, Condensed Subsidiaries Consolidated Statement of Cash Flows for the Periods Ended Sept 30, 2003 and 2002 (in Millions) Nine Months 2003 2002 (unaudited) (unaudited) $12,250 $12 250 $7,197 $7 197 18,193 1,350 19,543 22,334 -4,751 17,583

Cash and cash equivalents at January 1 Cash flows from operating activities before securities trading Net sales/ (purchases) of trading securities Net cash flows from operating activities Cash flows from investing activities Capital expenditures Acquisitions of receivables and lease investments Collections of receivables and lease investments Net acquisitions of daily rental vehicles Purchases of securities Sales and maturities of securities Proceeds from sales of receivables and lease investments Proceeds from sale of businesses Repayment of debt from discontinued operations Cash paid for acquisitions Cash recognized on consolidation of joint ventures Other Net cash (used in)/provided by investing activities -5,839 -42,305 33,921 -1,487 -7,846 4,725 4 725 15,781 281 1,421 256 716 -376 -5,084 -60,461 38,204 -1,658 -1,883 1,622 1 622 28,237 -22 618 -427 25

Ford Motor Company and Subsidiaries, Condensed Subsidiaries Consolidated Statement of Cash Flows for the Periods Ended Sept 30, 2003 and 2002 (in Millions) Nine Months 2003 2002 (unaudited) (unaudited) Cash flows from financing activities Cash dividends Net sales/(purchases) of Common Stock Proceeds from mandatorily redeemable convertible preferred securities Changes in short-term debt Proceeds from issuance of other debt y Principal payments on other debt Other Net cash (used in)/ provided by financing activities Effect of exchange rate changes on cash Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at September 30 -549 -43 -555 196 4,900 -13,455 14,272 -13,929 40 -8,531 193 8,818 $16,015 3,226 17,221 -23,862 3 -4,004 474 15,637 $27,887 26

Results by Business Sector for the First Nine Months of 2003 and 2002 (in Millions) First Nine Months Net Income/(Loss) 2003 Over/(Under) a 2003 2002 2002 Income/ (loss) before income taxes Automotive sector Financial Services sector Total company Provision for/(benefit from) income taxes Minority interests in net income / (loss) of subsidiaries Income/ (loss) from continuing operations Income / (loss) from discontinued/held-for-sale operation Loss on disposal of discontinued/held-for-sale operations discontinued/held for sale Cumulative effect of change in accounting principle Net income /(loss) a $53 2,425 2,478 672 245 1,561 -4 -5 5 -264 $1,288 ($585) 1,515 930 350 285 295 -48 -95 95 -1,002 ($850) $638 910 1,548 322 -40 1,266 44 90 738 $2,138 Certain amounts were reclassified to conform to current period presentation consistent with the presentation in our 10-K Report. Reclassifications include profits and losses related to discontinued and held-for-sale operations. 27

First Nine Months Automotive Sector Results Before Income Taxes (in Millions) First Nine Months Net Income/(Loss) Before Income Taxes 2003 Over/(Under) a 2003 2002 2002 $1,565 $1,977 ($412) -1,226 -126 -53 56 91 -1,258 -254 $ $53 -532 -526 -141 -352 -3 -1,554 -1,008 ($ ($585) ) -694 400 88 408 94 296 754 $ $638 North America Automotive segment International Automotive segment Ford Europe Ford South America Ford Asia Pacific Premier Automotive Group Other International Total International Automotive segment Other Automotive Total Automotive sector 28 First Nine Months Financial Services Sector Income / (Loss) Before Income Taxes for 2003 and 2002 (in Millions) Ford Credit Hertiz a Other Financial Services Total Financial Services sector

First Nine Months Income/(Loss) Before Income Before Income Taxes 2003 Over/(Under) 2003 2002 2002 $2,197 $1,375 $822 184 173 11 44 -33 77 $2,425 $1,515 $910 a Includes amortization expense related to intangibles recognized upon consolidation of Hertz 29 Credit Losses and Loss to Receivables ratios for the Loss-to-Receivables First Nine Months of 2003 and 2002 (in Millions Except for Ratios) 2003 Credit losses On-balance sheet g Managed Loss-to-receivables ratio On-balance sheet (including credit losses associated with reacquired receivables)a a First Nine Months 2003 Over/(Under) 2002 2002 $1,723 2,025 1. 65% $313 19 0. 17ppts $2,425 2,006 1. 48% 1. 54% 1. 65% 0. 11 ppts

We believe that the use of the on-balance sheet loss-to-receivables ratio that includes the credit losses on reacquired receivables is useful to our investors because it provides a more complete presentation ofour on-balance sheet credit loss performance 30 Pre-Tax Impact of Sales Receivables Through Off-Balance Sheet Securitization First Nine Months 2003 Net gain on sales of receivables Servicing fees Interest income from retained securities Excess spread and other Total revenue related to receivables sales Reduction in financing margins from current-period seuritizations a Reduction in financing margin from prior-period securtiztiona Pre-tax Pre ta impact of recei ables sales receivables $329 528 545 737 2,139 2 139 -457 1,988 ($306) 2002 $289 514 449 500 1,752 1 752 -547 1,568 ($363)

Calculated on a basis using a borrowing cost equal to the actual financing rate paid to securitization investors, which was significantly lower than Ford Credit’s average borrowing cost for unsecurred debt for the periods presented. If calculated on a ba a 31 Liquidity and Capital Resources 2003 September 30 January 1 Cash and Cash equivalents Marketable securities Loaned securities a Total cash, Marketable securities and loaned securities VEBA assets Gross cash $6. 8 12. 2 7. 00 26 0. 9 $26. 9 $5. 2 17. 4 22. 6 2. 7 $25. 3 2002 September 30 $8. 7 16. 1 24. 8 0. 9 $25. 7 January 1 $4. 1 10. 9 15 2. 7 $17. 7 a As part of our investment strategy, we engage in securities lending to improve the income received from our cash portfolios. See Note 4 of the Notes to Financial Statements for additional discussion on securities lending. (Not reproduced) 32 Operating Cash Flows

Gross cash at end of period Gross cash at beginning of period Total change in gross cash Operating-ralated cash flows Automotive income/ (loss) before income taxes Capital expenditures Depreciation and special tools amortization Changes in receivables, inventory and trade payables Pension plan contributions Capital transactions with Financial Services sectora Other Total operating-related cash flows before tax refunds Tax refunds Total operating-related cash flows Divestitures and asset sales Acquisitions and capital contributions A i ii d i l ib i Total acquisitions and divestitures Financing-related cash flows Dividends paid to shareholders Convertible preferred securities Changes in total Automotive sector debt Other Total fi T t l financing-ralated cash fl i l t d h flows Cash from FIN 46 consolidations b Total change in gross cash Third Quarter 2003 2002 $26. 90 $25. 70 28. 7 24. 9 ($1. 8) $ $0. 8 $ ($0. 6) -2. 2 1. 3 -0. 9 -0. 2 1. 2 -1. 0 -2. 4 0. 6 -1. 8 0. 1 0. 1 -0. 2 -0. 1 -0. 1 -0. 4 04 0. 3 ($1. 8) ($0. 6) -1. 7 1. 2 -0. 6 -0. 1 0. 4 0. 5 -0. 9 1. 8 0. 9 0. 1 0. 1 -0. 2 -0. 1 0. 1 -0. 2 02 $0. 8 First Nine Months 2003 2002 $26. 90 $25. 70 25. 3 17. $1. 6 $ $8. 0 $ ($0. 1) -5. 6 4 -1. 4 -1. 7 2. 8 1. 7 -0. 1 1. 4 1. 3 0. 5 0. 5 -0. 5 0. 1 -0. 1 -0. 5 05 0. 3 $1. 6 ($0. 6) -4. 6 3. 7 -0. 4 -0. 4 -0. 3 3. 2 0. 6 2. 6 3. 2 0. 5 -0. 1 01 0. 4 -0. 6 4. 9 -0. 1 0. 2 4. 4 44 $8. 0 33 a b Reflects operating-related cash flows (I. e. dividends, capital contributions, loans, and loan repayments). See “Adoption of New Accounting Standard” below. Reconciliation Between Financial Statement Cash Flows from Operating Activities before Securities Trading and Operating-Related Cash Flows Third Quarterrst Nin 2003 2002 2003 Cash flows from operating activities before securities tradinga ($0. 9) $2. 8 $4. Item included in operating-related cash flow Capital transactions with Financial Services sector 1. 2 0. 4 2. 8 Capital expenditures -2. 2 -1. 7 -5. 6 Net transactions between Automotive and Financial 0. 7 0. 4 Services sectors b Other, Other primarily exclusion of cash in flows from VEBA in-flows draw-down -0. 6 -0. 6 -1. 2 Total reconciling items -0. 9 -1. 9 -3. 6 Operating-related cash flows ($1. 8) $0. 9 $1. 3 34 Calculation of Ford Credit’s Financial Statement Leverage (in Billions Except for Ratios) September 30, September 30, 2003 2002 Total debt Total stockholders equity Debt-to-equity ratio (to 1) $149. 60 12. 5 12 $140. 30 13. 7 10. December 31 2002 $140. 30 13. 6 10. 3 35 Calculation of Ford Credit’s Managed Leverage (in Billions Except for Ratios) September 30, September 30, 2003 2002 Total debt Securitized off-balance sheet receivables outstanding Retained interest i securitized off-balance sheet receivables R t i di t t in iti d ff b l h t i bl Adjustments for cash and cash equivalents Adjustments for SFAS No. 133 Adjusted debt Total stockholders equity (including minority interest) Adjustment f SFAS No. 133 Adj t t for N Adjusted equity Managed debt-to-equity ratio (to 1) $149. 6 48. 8 -10. 2 10 2 -20. 3 -5. 4 $162. 5 $12. 50 0. 3 03 $12. 8 12. 7 $140. 3 65. 8 -9. 97 -7. 1 -6. 0 $183. 3 $13. 70 0. 5 05 $14. 2 12. 9 December 31 2002 $140. 3 71. 4 -17. 6 17 6 -6. 8 -6. 2 $181. 1 $13. 60 0. 5 05 $14. 1 12. 8 36 Vehicle U it P d ti i F V hi l Unit Production in Fourth th Quarter of 2003 Unit P d ti U it Production Fourth Quarter 2003 Project Fourth Over/ (Under) Quarter 2003 Fourth Quarter 2002 920,000 -31,000 430,000 430 000 -20 000 20,000 195,000 25,000 Business Unit Ford North America Ford Europe PAG 37 Ford Motors Company and Subsidiaries Calculation Subsidiaries, of Ratios of Earnings to Combined Fixed Charges Dividends (in Millions) Nine Months 2003 For the Years Ended December 31 2001 2000 1999 1998 2002

Earnings Income before income taxes and cumulative effect of changes in accounting principles a $2,478 $2 478 $953 ($7,422) $8,299 ($7 422) $8 299 $9,857 $9 857 $24,257 $24 257 Equity in net (income)/loss of affiliates included in income before taxes -126 137 550 50 3 29 Adjusted fixed charges b 6,272 9,642 11,218 11,264 9,328 9,130 Earnings $8,624 $10,732 $4,346 $19,613 $19,188 $33,416 Combined Fixed Charges and Preferred Stock Dividends Interest expensec $5,757 $8,871 $10,862 $10,892 $9,017 $8,834 Interest portion on rental expensed 288 371 322 297 251 218 Preferred stock divident requirements of majority owned subsidiaries and trusts 190 353 55 55 55 55 Fixed h Fi d charges 6,235 6 235 9,595 9 595 11,239 11 239 11,244 11 244 9,323 9 323 9,107 9 107 Ford Preferred Stock dividend requirements e 22 22 22 22 121 Total combined fixed charges and preferred stock dividends $6,235 $9,617 $11,261 $11,266 $9,345 $9,228 Ratios Ratio of earnings to fixed charges 1. 4 1. 1 f 1. 7 2. 1 3. 79 Ratio of earnings to combined fixed charges and preferred stock dividends 1. 4 1. 1 f 1. 7 2. 1 3. 69 Discontinued operations are excluded from all amounts a Income before taxes includes equity income from uncosolidated subsidiaries. Fixed charges, as shown above, adjusted to exclude the amount of interest capitalized during the period and preferred stock dividend requirements of majority owned subsidiaries and trusts and dividends from unconsolidated subsidiaries. c Includes interest, whether expensed or capitalized, and amortization of debt expense and discount or premium relating to any indebtedness. d One-third of all rental expense is deemed to be interest. e Preferred stock dividend requirements of Ford Motor Company were increased to an amount representing the pre-tax earnings which would be required to cover such dividend requirements based on Ford Motor Company’s effective income tax rates. f

Earnings for the year ended December 31, 2001 were inadequate to cover fixed charges. The coverage deficiency was $6. 7 billion for ratio of earnings to fixed charges and $6 8 billion for ratio of earnings to combined fixed charges and preferred stock div $6. 8 g Earnings used in calculation of this ratio include the $15,955 million gain on the spin-off of The Associates Excluding this gain the ratio is 1. 9 38 Quality of Earnings Determinants Economic Environment Impact Recurring Economic Activities Accounting P li A ti Policy Users’ Objectivity Tax Policy Users Objectives Cash Flow Production Asset Quality Total d Change i EPS T t l and Ch in Volatility One-time Events O ti E t Financial Status 39

Characteristics of High-Quality EPS Ch t i ti f Hi h Q lit Companies ? ? ? ? ? Consistent conservative accounting policy – prudent measurement of company s financial condition and net income company’s Pretax income stream that is derived from recurring, rather than one-time, transactions related to the basic business of the company Sales that quickly convert to cash after being recorded for accounting purposes Net income level and growth rate that is not dependent on lowering of tax rate through means Debt level appropriate for business and a capital structure that has not been manipulated to produce EPS effects 40 Characteristics of High-Quality EPS Ch t i ti f Hi h Q lit Companies ? ? ?

Earnings trends that are stable, predictable, and indicative of future earnings levels Fixed assets used in generation of earnings are well maintained up to date p Income figure presented is relevant to the user’s objective 41 Discussion Question What is the basis for lowering LT debt rating to BBB- with a stable outlook? 42 Assessing Earnings Quality ? Two assessments.. , ? ? Absolute level of earning quality Quality of sources of changes in its earnings over time ? ? Quality of factors that lead to the company’s company s 2003 9-month earnings improvement Examination of influence on growth rate of of.. , ? ? Two earnings figures used to measure the growth rate Factors contributing to its earnings growth 43 Assessing Earnings Quality ? Accounting earnings are expected to by and large reflect.. , reflect ? ?

Corporation’s current economic progress Future levels of economic achievement Beginning period earnings and ending period earnings for earnings quality distortions that may inflate or deflate the earnings growth rate Quality of earnings contributing to the growth in earnings Shifts in the quality of the periodic earnings being used to measure growth ? Quality of earnings growth analysis examines examines.. , ? ? ? 44 Assessing Earnings Quality ? ? ? ? ? Earning quality as a gauge of management’s bias toward prudence Accounting quality of the change in earnings from one accounting period to another in order to appreciate the role played by accounting decisions and practices in the earnings change Asses what portion of earnings is potentially available in distributable cash Assessment of the riskiness of a stock Identify accounting ‘red flags’ which may suggest that the character of the company is changing, its accounting figures are potentially misleading 45

Assessing Earnings Quality ? ? ? ? No absolute scale used to measure degrees of earnings quality Possible to distinguish between extreme of high and low quality high-and low-quality earnings High quality earnings – regarded at the levels they are reported at as credible and reliable indicators of a corporation’s ability to corporation s generate economic values in the past Low quality earnings – earnings as presented in a corporation’s financial statements are potentially misleading as to its past past, current, or future economic prospects 46 Earlier Skepticism ? Ford’s announced 2003 financial and market share target called for for…, ? ? Targeted EPS of $0. 0 Automotive break-even and massive improvement in Ford Europe’s profits to be achieved through through.. , ? ? ? Accelerate cost cutting Higher market share Flat pricing in north America ? ? Expected to beat current 21. 1 market share in North America this year, having lost share in 2002 for the second consecutive year Able to offset rising marketing costs g g 47 Reasons f M R for More th 100% F d’ than Ford’s Earnings Improvement ? ? ? ? ? ? 48 Reversal of prior warranty accruals ($268 million benefits to g ) earnings in the first nine months) Last year’s $600 million accrual for a lawsuit settlement did not recur Loan loss provisions declined $753 million year-on-year, as Ford concluded that it already has an adequate ($3. bn) reserve for losses on its balance sheet Marking to market of derivatives contributed a $400 million positive swing from last year ($198 million loss swung to a $200 million profit) Securitization gains increased $40 million year-on-year Above Accounting adjustments contributed ~2 billion of earnings improvement over first 9 months of this year, which compares with a $1. 1 billion improvement in Ford’s reported pretax earnings Real Cost Savings and Loss ? ? ? ? ? ? Underlying profitability does not appear to be improving Recall costs down: $800 million Manufacturing and engineering costs have declined $1. 2 billion Purchased material costs declined by $300 million Auto company’s improving profitability had been magnified by a no. of accounting measures Costs savings have been more than offset by.. , ? ? ? Higher pension and healthcare costs $1. 1 billion Negative pricing (estimated at $850 million) Lower volume $2. 9 billion 49

Concern’s about Cash Flow ? Ford’s cash flow has not improved commensurately with the improvement in Ford’s Automotive earnings.. , ? ? Free cash in first 9 months 2003: -$1. 9 billion Free cash in first 9 months 2002: $900 million ? Earnings quality is not about to get better because.. , because ? ? Continuing accounting adjustments Large charge that Ford is now taking for the perennial restructuring of its European operations 50 Discussion Question Do you believe Ford’s nine-month results represents a real improvement or not? 51 Discussion Question What should be the benchmark to measure improvement? 52 Other Doubtful Issues 2003 Earnings ? ? ? ? ? ?

Favorable impact on Ford South America results a non recurrence y p period a y year of currency devaluation experienced in the same p ago Low income tax rate (672/2478 = 27. 1% vs. 350/930 = 37. 6%) Other auto motive loss reduced by $754 million due to non recurrence of losses in non core business that have been sold or shut down and lower interest expense Announced European restructuring charge pushed off to the 4th quarter Lower interest rates (Average borrowing rate was 4. 3% compared to 5. 2% a year ago) No write-down of aircraft leases in 2002 (Other financial services $44 million paid up from loss of $33 million in prior year) 53 Other Suggested Adjustments to 2003 Earnings ? ? ? ?

In cash flow related to operations of the Automotive sector exclude capital transactions with financial service sector item Managed debt-to-equity ratio disclosures – better to use fixed charge ratios for the purpose of assessing financial risk Automotive cash flow in 2003 in only about to break even break-even Longer range earning prospects in US and Europe are clouded by price erosion plus ongoing proliferation of new products and persistence of substantial excess production capacity 54 Discussion Question Why Ford’s LT credit rated at low end of the investment grade? Why it was down graded? Why the outlook was rated ‘stable’? 55 Reasons for Lower Rating ? ? Profitability and cash flow remaining poor Belief – only limited improvement will be achievable over next few years 56 Ford’s Version of Argument ? ? ? ? ? ? ? ? ? Great products introduced Exceeded cost cutting targets – expenses cut $2. billion g g p Outstanding cash availability – $48 billion in cash and quick assets On track to achieve financial milestone Financial position will continue to improve Improving industry demand and pricing European restructuring should curtail recent losses Announced more than 7,700 job cuts worldwide in past month Reserves Reser es are appropriate estimated based on cookbook methodolog – methodology taking into account actual loss experience.. , ? ? ? ? ? 57 Reserves for warranty Reserves for marketing costs Reserves f credit l R for dit losses Reserves for pension expenses Reserves for health care costs Ford’s Strengths ? ? ? Sizable market share across all major North American vehicle product segments A i hi l d t t Profitable captive finance services operations Substantial liquidity 58 Ford’s Weaknesses ? ? ? ? ?

Over dependence on profitability of light trucks Over dependence on profitability of North American operations Difficult competitive environment in all key geographic markets Massive un funded pension and retiree medical liabilities Heavy ongoing financing requirements related to Ford Credit 59 Common L b l for the Financial C Labels f th Fi i l Number Game ? ? ? ? ? Aggressive accounting Earnings management Income smoothing Fraudulent financial reporting Creative accounting practices 60 Rewards of Financial Number Game ? Share-price effects ? ? ? ? ? Higher share prices Reduced share price volatility Increased corporate valuation Lower cost of equity Increased value of stock options Improved redit quality Higher debt rating Lower borrowing costs Less stringent financial covenants ? Borrowing cost effects B i ff ? ? ? ? ? ? Bonus plan effects Political cost effects ? ? Decreased regulations g Avoidance of higher taxes 61 Earnings Management ? Actions taken to alter a company’s reported earnings ? Such actions will not leave any impact on cash flows or economic earnings ? ? Legally permissible actions to creative interpretation within th b ithi the boundaries of accounting and reporting d i f ti d ti standards to outright fraud Make things look better than they actually are, or making them look worse than warranted 62 Earnings Management ? ? ?

Active manipulation of accounting results for the purposes of creating an altered impression of business performance Using accounting p g g policies to maximize the utility of y managers Abusive earnings management — involves use of various forms of gemmickry to distort a company’s true financial performance in order to achieve a desired result 63 Need for Earnings Management ? ? ? ? ? ? ? ? ? ? 64 Pressure to meet analysts expectations Executives wishing to keep their jobs Capturing market fancy Increasing competition and difficulty to maintain sales g p y and earnings growth Lagging behind ambitious targets Price cuts eating into profits margins Cashing out on ESOP Career and personal ego g Potential M&A deals Valutaion before MBOs Techniques used for Earnings T h i df E i Management ? Overstatement of revenues and assets ? ? ? ? ? ?

Recording premat re sales premature Deferring expenses Exploit perceived ambiguities Establishment or adjustment of reserves E t bli h t dj t t f Disclosing as one time expenses Shifting costs between recurring and capital ? ? Understating liabilities Discretionary accruals 65 Income Smoothing ? ? Process of manipulating the time profile of earnings t make the reported income stream i to k th t di t less variable, without altering reported earnings over the long run Smooth earning considered as an indicator of earnings visibility 66 Methods of Earnings Management ? Big-Bath charges ? ? ? ? ? Overload expenses attributable to one event Writing down assets Discontinuance of an operating division and product line Establishing restructuring reserves g g Helps to.. ? ? ? ? ? Concealing actual operating expenses Excess write offs Created C t d expense accruals l Write-off lost of bad investments Form of corporate house cleaning ? Distorts future performance p 67 Methods of Earnings Management ? Restructuring charge ? ? ? Large chunk cost dumped Clean up earnings misrepresentation of the past Becoming recurring now a days One time charge in form of contingency reserve Creating excess expense accruals Creating excess reserves Also called rainy day earnings fund Masks the excess growth rate ? ? Non recurring Non-recurring charges ? Cookie-Jar reserves ? ? ? ? 68 Methods of Earnings Management ? ? ? ? ? ? ? ?

Determining impaired loss or profit Estimating stage of completion of percentage of completion contracts Estimating environmental obligation accruals Making or changing pension actuarial assumptions Merger and acquisition activities – best time to adjust Consolidation tricks Managing deferred taxes Timing capital management g g 69 Methods of Earnings Management ? Capitalization / deferring practices ? Discretion used to the benefits in in.. , ? ? ? ? Intangible assets expensing Software capitalization Advertising costs R expenses ? ? ? ? ? Warranty reserves Depreciation & amortization p Materiality Mis leading reporting – Adjusted EPS Incomplete press releases I l t l 70 Methods of Earnings Management ? ? ? ? ? ? ? ?

Inventory cost determination Goodwill G d ill amortization periods ti ti i d Collection of estimates Change in estimate Change in accounting principle As is restatement of error Synthetic leases Off balance sheet reporting 71 Methods of Earnings Management ? ? ? ? ? ? ? ? ? Loan loss reserves of banks Equity structuring avoiding acquisitions Side letters – two way commitments Rights of return g Related party revenue Bill and hold transactions Upfront U f t service f i fees Capitalizing – start up costs and interest costs Purchased in-process R in process 72 Methods of Earnings Management ? ? ? ? ? Boosting shareholders’ equity Overvalued AR Overstating physical counts – Inventory Increasing reported valuation Delaying an inventory write-down 73 Corporate Frauds ? Boosting revenues ? ?

Bill and hold sales Channel stuffing Selling write-off inventory Ploughing back product warranties Lower depreciation charge due to write-off of equipment Capitalizing advertising expenses Reducing the allowance for doubtful accounts ? Aggressive accounting actions ? ? ? ? ? ? ? ? ? ? Up charges – over charging vendors g g g Reversal of actual entries Gross profit entries Deal deal expanses Related party transactions with top management 74 Classifying Creative Accounting Practices ? ? ? ? ? Recognizing premature or fictitious revenue Aggressive capitalization and extended amortization policies Misreported assets and liabilities Getting creative with income statement Problems with cash-flow reporting – misleading the cash flow grouping 75 Conditions Leading to Earnings C diti L di t E i Management ? ? ? ? ? ? ? ? ?

Meeting market targets IPO offering Incentive compensation Size of firm and political view on the firm Close to violation of debt covenant Earning either somewhat below or above LT trend believed by management to sustainable Earnings volatility induced by series of nonrecurring items Change in top management of the firm has taken place Large associated with restructuring and related charges have p been accrued in past 76 Methods f Ab i E M th d of Abusive Earnings i Management ? ? ? ? ? ? ? ? Invoicing and goods under custody Keeping open accounting period and i K i ti i d d invoicing i i Recognizing without shipping sales Recognizing full sales of partial shipments Reveres reserves as overstated Understating allowances for credit losses Recognized revenues on disputed claims Incomplete goods sold 77 Fictitious Revenue Creation ? ? ? Persuasive evidence of an agreement – no actual agreement t l t Channel stuffing Side letters 78

Common Earnings Management Practices 1. Shifting income between periods: Revenues Borrowing earnings from the future 1. Premature recognition of revenues Example: Xerox Expenses 2. Capitalization of expenses Example: WorldCom Postponing earnings to the future 3. Deferring recognition of revenues Example: Microsoft 4. Exaggerating current expenses/losses to create cookie jar reserves Example: Microsoft 79 Note: ? t Earningst = ? t Cash Flowst Common Earnings Management Practices (cont’d): J. E. Actual J. E. 1. 1 Borrowing revenues from the future DR Cash CR revenue Proper recognition J. E. DR CR cash def. revenue later: def. revenue revenue 2. Deferring expenses to the future

DR Asset later: Expense CR cash asset DR expense CR cash 3. Deferring revenue to the future DR CR cash def. revenue later: def. revenue revenue DR loss liability CR liability/Asset cash DR Cash CR revenue 4. Exaggerating current 4 E i expenses/losses to create cookie jar later: later: DR CR No journal entry loss cash 80 Common Earnings Management Practices 2. – – Classification of gains and losses: Classifying one-time gains as earnings from continuing operations y g g g g p Classifying losses from continuing operations as one-time items 3. – Hiding Debt in unconsolidated subsidiaries Example: Enron Legitimate Earnings Management (Within GAAP)

Violation of GAAP or SEC rules Manipulation of accruals to: I. I smooth earnings th i II. Turn permanent expenses into temporary losses 81 Fraud vs. Earnings Management vs “Conservative” Accounting •A Aggressive recognition of provisions and i iti f ii d reserves • Overvaluation of R purchase acquisitions • Overstate asset write-offs Earnings Management “Aggressive” Accounting • Understate provision for bad debts Within GAAP • Drawing down provisions/reserves in an overly aggressive manner “Fraudulent” Accounting • Recording sales before realizable; recording fictitious sales • Backdating sales invoices • Overstating inventory Violates GAAP

When EM is fraudulent? ? Quality earnings have 3 basic qualities.. , ? ? ? Repeatable Controllable Bankable ? EM and accrual methods are fraudulent under th f ll i d l th d f d l t d the following circumstances ? ? ? ? When they are used to satisfy analysts’ expectations When they are used to realize bonuses When transactions are structured or carried out to alter financial reports Whenever they are used for reasons other than to provide accurate financial information to investors and stakeholders Determined b motive…. D t i d by ti 83 ? Quality earnings have 3 basic qualities.. , ? ? ? Repeatable Controllable Bankable 84 Detecting Earnings Management ? ? ? ? ? ?

Cash flows that are not correlated with earnings Receivables that are not correlated with revenues Allowances for uncollectible accounts that are not correlated with receivables Reserves that are not correlated with revenue growth or balance sheet items Questionable acquisition reserves – restructuring charges or reserves set aside for disposals Earnings that consistently and p g y precisely meet analysts’ y y expectations 85 Detecting Earnings Management ? ? ? Strategic timing of expenditure decisions Management of specific accrual account balances M t f ifi l tb l Evaluating total accruals to detect earnings management ? Total accruals = Net income – Cash from operations ? ? What types of accounting judgments do total accruals capture? What earnings management devices do total accruals miss? g g ? ? Build a model to predict nondiscretionary total Estimate discretionary accruals as (1) minus (2) accruals 86