Ford 2006 Annual Report Download - page 82
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Notes to the Financial Statements
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NOTE 17. EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES (Continued)
Other Employee Separation Actions: We announced in 2006 our plans to reduce North American Automotive salaried-
related costs through the elimination of the equivalent of about 14,000 positions (which included the equivalent of
4,000 positions already eliminated in the first quarter of 2006). Through year-end 2006, about 850 additional salaried
employees have accepted separation packages, and we recognized pre-tax charges of $25 million for these acceptances in
2006. Most salaried reductions are expected to be completed by the end of the first quarter of 2007 and will be achieved
through early retirements, voluntary separations, and if necessary, involuntary separations. In 2005, we announced plans to
reduce salaried positions in North America and incurred about $148 million of pre-tax charges related to these actions
through December 31, 2005.
During 2006 and 2005, Ford Europe initiated hourly and salaried employee separation actions resulting in pre-tax
charges of $109 million and $297 million for 2006 and 2005, respectively.
During 2006 and 2005, PAG initiated hourly and salaried employee restructuring actions resulting in pre-tax charges of
$160 million and $63 million for 2006 and 2005, respectively.
During 2006 and 2005, our Ford Asia Pacific business unit initiated hourly and salaried employee separation actions
resulting in pre-tax charges of approximately $61 million and $32 million, respectively.
The above costs exclude costs for pension and other postretirement employee benefits ("OPEB"). For further
discussion, see Note 23 for employee separation costs related to pension, postretirement health care and life insurance
benefits.
Financial Services Sector
Business Restructuring
In 2006, FCE announced a plan to restructure its business in Germany that supports the sales activities of automotive
financial services of Ford, Jaguar, Land Rover and Mazda vehicles. The plan includes the consolidation of branches into
district offices; these actions are expected to reduce ongoing costs. We recognized pre-tax charges of $30 million in
2006. The costs associated with the business restructuring are primarily related to employee separations and were
charged to Financial Services Operating and other expenses. The restructuring will be completed in 2007.
In 2004, we announced a plan to create an integrated sales platform in the United States and Canada over the next
two years that would support sales activities for Ford Credit and our other business operating units. The plan included the
consolidation of regional sales offices and an integration of branch locations. We recognized pre-tax charges of
$56 million as of December 31, 2006, including $4 million in 2006 and $41 million in 2005. The costs associated with the
sales branch integration are primarily related to employee separations and facility lease breakages and were charged to
Operating and other expenses as incurred. The integration was completed in 2006.
The table below summarizes the pre-tax charges incurred, the related liability at December 31 and the estimated total
costs related to these actions (in millions):
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In 2006, Ford Credit announced plans to consolidate and centralize most of its originations and servicing operations in
the United States to reduce costs and improve process efficiencies. Most related salaried reductions are expected to be
completed by the end of 2007 and will be achieved through attrition, early retirements, voluntary separations, and if
necessary, involuntary separations. In 2006 and 2005, Ford Credit announced various separation programs for North
American and International salaried employees in connection with reorganization and efficiency actions. Ford Credit
recognized pre-tax charges of $9 million and $36 million in 2006 and 2005, respectively, as a result of these actions
(excluding costs for retirement plan and postretirement health care and life insurance benefits).