Ford 2002 Annual Report Download - page 86

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82
NOTES TO FINANCIAL STATEMENTS
NOTE 19. ACQUISITIONS, DISPOSITIONS, RESTRUCTURINGS AND OTHER ACTIONS (CONTINUED)
Precious metals (primarily palladium) are used in catalytic converters produced to meet required automotive emission
standards. Our business objective has been to ensure adequate supply of these critical commodities. In 2000 and early
2001, we acquired precious metals and entered into forward purchase contracts at then-prevailing market prices in an
environment of uncertain supply and outlook. In the fourth quarter of 2001, our engineers validated a breakthrough catalyst
design, which will help reduce our usage of palladium. For the precious metals physically held, we have substantially
reduced our holdings in excess of those stocking requirements. Beginning in the fourth quarter of 2001, we have written
down the value of the excess metal to its estimated realizable value. In addition, precious metal forward contracts have
been settled in lieu of taking physical delivery of the related metal. Therefore, as required by SFAS No. 133, precious metal
forward purchase contracts have been marked-to-market. The total pre-tax charge for precious metals in the fourth
quarter of 2001 was $953 million.
Personnel charges of $565 million before taxes primarily reflected voluntary salaried employee separations in North America.
Other pre-tax charges mainly reflected a $201 million non-cash charge to equity in net income of affiliated companies,
representing our share of a charge related to Mazda’s pension expenses, and a $160 million charge related to a major
devaluation of the Argentine peso.
PURCHASE OF REMAINDER OF HERTZ CORPORATION
In March 2001, we acquired (for $735 million) the common stock of Hertz that we did not own, which represented about
18% of the economic interest in Hertz. The excess of the purchase price over the fair market value of net assets acquired
was approximately $390 million.
2000
PURCHASE OF LAND ROVER BUSINESS
In June 2000, we purchased the Land Rover sport utility vehicle business from the BMW Group for 3 billion euros
(equivalent to $2.6 billion). We paid two-thirds of the purchase price at closing and will pay the remainder in 2005.
The excess of the purchase price over the fair market value of net assets acquired was approximately $775 million.
EUROPEAN CHARGES
Following an extensive review of the Ford brand Automotive operations in Europe, we recorded a pre-tax charge in
Automotive cost of sales of $1.6 billion in the second quarter. This charge included $1.1 billion for asset impairments and
$468 million for restructuring costs. Employee separation included a workforce reduction of about 3,300 employees (2,900
hourly and 400 salaried) related to the planned cessation of vehicle production at the Dagenham (U.K.) Body and Assembly
Plant. As of December 31, 2002, restructuring actions included in Automotive cost of sales in the second quarter of 2000
are now largely complete. Remaining costs related to the cessation of vehicle production at the Dagenham (U.K.) body and
assembly plant total $26 million, which are principally workforce reduction and other exit-related costs.
The asset impairment charge, attributable to excess capacity related to Ford’s performance in the European market,
reflected the write-down of certain long-lived assets, as determined by an independent valuation.
NEMAK JOINT VENTURE
During the fourth quarter of 2000, we recorded in Automotive cost of sales a pre-tax charge of $205 million related to the
fair value transfer of our Windsor Aluminum Plant, Essex Aluminum Plant, and Casting Process Development Center for an
increased equity interest in our joint venture with Nemak. We reflected the new joint venture in our financial statements on
an equity basis.
NOTE 20. RETIREMENT BENEFITS
EMPLOYEE RETIREMENT PLANS
We have two principal qualified defined benefit retirement plans in the U.S. The Ford-UAW Retirement Plan covers hourly
employees represented by the UAW, and the General Retirement Plan covers substantially all other Ford employees in
the U.S. The hourly plan provides noncontributory benefits related to employee service. The salaried plan provides similar
noncontributory benefits and contributory benefits related to pay and service. Other U.S. and non-U.S. subsidiaries have
separate plans that generally provide similar types of benefits for their employees. Ford-UAW Retirement Plan expense
accruals for employees assigned to Visteon are charged to Visteon.