Ford 2002 Annual Report Download - page 85

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NOTES TO FINANCIAL STATEMENTS
NOTE 19. ACQUISITIONS, DISPOSITIONS, RESTRUCTURINGS AND OTHER ACTIONS
ACCOUNTING FOR ACQUISITIONS
We account for our acquisitions under the purchase method. The assets acquired, liabilities assumed, and the results of
operations of the acquired company since the acquisition date are included in our financial statements on a consolidated
basis. On a pro forma basis, none of these acquisitions would have had a material effect on our results of operations.
2002
SALE OF KWIK-FIT HOLDINGS LTD. AND OTHER
In November 2002, we completed the sale of our interest in Kwik-Fit Holdings Ltd., our European all-makes vehicle repair
business, to an acquisition company formed by CVC Capital Partners. The sales price of £330 million (equivalent to about
$500 million) consisted of a combination of approximately $300 million in cash and a note with a face value of approximately
$200 million. We recognized a pre-tax loss of $519 million in cost of sales in 2002, which is in addition to the after-tax,
non-cash transition charges related to SFAS 142 described in Note 7. In addition, we acquired a 19% equity stake in the
acquisition company. Our disposal of our interest in Kwik-Fit has not been reflected as a discontinued operation due to
our continued involvement as an equity investor in the acquisition company.
Other pre-tax charges during the year totaled $143 million which represented primarily impairments and dispositions of our
interest in e-commerce ventures.
EUROPEAN CHARGES
Continuing our European Transformation Strategy with respect to our Ford-brand operations in Europe, we recorded a
pre-tax charge in Automotive cost of sales of $173 million in the fourth quarter of 2002. The charge included previously
announced restructuring of the Genk (Belgium) vehicle assembly plant and the Cologne (Germany) facilities. Employee
separation included a workforce reduction of about 1,800 employees (1,740 hourly and 60 salaried) related to the planned
transfer of the Transit vehicle production to the Ford Otosan (Turkey) joint venture, die-casting rationalization and other
manufacturing actions.
PREMIER AUTOMOTIVE GROUP CHARGES
We recorded a restructuring pre-tax charge in Automotive cost of sales of $157 million in the fourth quarter 2002 related
to workforce reductions in our Premier Automotive Group operations of about 940 employees (225 hourly and 715 salary).
The hourly reductions result from line speed reductions at our Halewood, England plant and the salary reductions (voluntary
redundancy) relate to efficiency actions.
2001
FOURTH QUARTER IMPAIRMENT AND OTHER CHARGES
Charges of $5.7 billion before taxes and $4.1 billion after taxes are summarized below, followed by explanatory detail.
Fixed-asset impairments
North America $ 3.1
South America 0.7
Total fixed-asset impairments 3.8
Precious metals 1.0
Personnel (primarily North America salaried) 0.6
All other 0.3
Total pre-tax charges $ 5.7
Memo: After-tax effect of charges $ 4.1
In response to significantly deteriorating business conditions resulting in operating losses, we conducted extensive business
reviews of our Automotive operations in North America and South America during the fourth quarter. As part of these
reviews, we determined that projected undiscounted cash flows were not sufficient to justify the carrying values of the
related long-lived assets. Asset impairment charges of $3,084 million in North America and $744 million in South America
were recorded in Automotive cost of sales, reflecting a write-down to estimated fair value, as determined by independent
valuations. The impairment increased depreciation, special tool amortization, and goodwill amortization by $2,688 million,
$867 million, and $273 million, respectively.