Ford Warns Of $1.6 Billion Charge But Lifts Profit Outlook

By Agence France-Presse Ford Motor Co. said Dec. 22 that it plans to take a $1.6 billion fourth-quarter charge to earnings as it overhauls its financial relationship with its former parts unit, Visteon Corp. The world's No. 2 automaker said that most of the charge, equivalent to 52 cents a share, reflects the assumption of health care and insurance costs related to retirees of Visteon, which Ford spun off in 2000. Visteon will take down its prices over the next four years, and both companies will share Visteon capital investment costs, the companies said. Visteon also will pay Ford $150 million as part of a price-reduction program for 2003. Under the agreement, 20,000 Ford union workers staffing Visteon plants are to begin to move over to Ford while Visteon replaces them with its own union workers. "The agreements we signed with Visteon will enable our largest supplier to deliver parts and components to Ford at more competitive prices," said Don Leclair, Ford Motor Co.'s chief financial officer. Separately, on the earnings front Ford revised its 2003 operating profit upward to a range of $1.05 to $1.10, from an earlier estimate of 95 cents to $1.05 a share. "The increase in our 2003 earnings outlook primarily reflects continued strong cost savings, strong unit revenue from the new F-150 and other vehicles, and the ongoing strength of Ford Motor Credit's operating results," said LeClair. The automaker also said that it would take a non-cash $150 million pre-tax charge in the fourth quarter, with an additional $100 million to $150 million planned next year, for the divestment of certain non-core assets. Costs relating to Ford's restructuring of its European operations will translate into a fourth-quarter charge of $450 million, followed by a $100 million to $150 million charge in the first half of 2004. Ford said it will also add $1 billion to its U.S. pension fund and $6 billion to the voluntary employees beneficiary association trust, the company said. Copyright Agence France-Presse, 2003