Mercedes 2003 Annual Report Download - page 137
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Please find page 137 of the 2003 Mercedes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.7. Turnaround Plan for the Chrysler Group
The DaimlerChrysler Supervisory Board approved a multi-year turn-
around plan for the Chrysler Group in 2001. Key initiatives for the
turnaround plan over the period 2001 through 2003 included a
workforce reduction and an elimination of excess capacity. The
workforce reduction affected represented and non-represented
hourly and salaried employees. To eliminate excess capacity, the
Chrysler Group has eliminated shifts and reduced line speeds at
certain manufacturing facilities, and adjusted volumes at compo-
nent, stamping and powertrain facilities. Additionally, the Chrysler
Group has or is in the process of idling, closing or disposing of cer-
tain manufacturing plants.
The net charges recorded for the plan in the year ended Decem-
ber 31, 2001 were €3,064 million (€1,934 million net of taxes) and
are presented as a separate line item on the accompanying consol-
idated statements of income (loss) (€2,555 million and €509 mil-
lion would have otherwise been reflected in cost of sales and sell-
ing, administrative and other expenses, respectively). The initial
charges of €3,047 million were recorded in February 2001 with the
approval of the turnaround plan. Additional charges of €268 million
in 2001 resulted from the subsequent impairment and disposal
costs associated with a component plant as well as costs for a spe-
cial early retirement program. The return to income adjustments of
€251 million in 2001 include revisions of estimates based upon
information currently available or actual settlements. These adjust-
ments reflect lower than anticipated costs associated with work-
force reduction initiatives, including the involuntary severance ben-
efits, and favorable resolution of supplier contract cancellation
claims.
The net charges recorded for the plan in 2002, were €694 million
(€439 million net of taxes) and are presented as a separate line
item on the accompanying consolidated statements of income
(loss) (€680 million and €14 million would have otherwise been
reflected in cost of sales and selling, administrative and other
expenses, respectively). These additional charges and adjustments
were for costs associated with the idling, closing or disposal of cer-
tain manufacturing facilities in 2002 and 2003 and ongoing work-
force reduction measures as well as revisions of estimates based
upon information currently available or actual settlements.
The net charges recorded for the plan in 2003, were €469 million
(€288 million net of taxes) and are presented as a separate line
item on the accompanying consolidated statements of income (loss)
(€462 million and €7 million would have otherwise been reflected
in cost of sales and selling, administrative and other expenses,
respectively). These additional charges and adjustments were
recorded for costs associated with the closing, significant down-
sizing or sale of certain manufacturing facilities in 2003, 2004 and
2005, related workforce reduction measures as well as revisions
of estimates based upon information currently available or actual
settlements.
The pretax amounts for turnaround plan charges since initiation
in the first quarter of 2001 are comprised of the following:
| 133
132
(in millions of €)
Total
Other costs
Asset
write-downs
Workforce
reductions
–
1,403
93
(122)
1,374
(211)
–
(695)
38
506
353
(41)
312
(297)
–
(152)
(89)
280
182
27
209
(151)
–
(108)
(32)
198
–
836
148
–
984
–
(984)
–
–
–
269
30
299
–
(299)
–
–
–
234
15
249
–
(249)
–
–
–
–
808
27
(129)
706
(154)
(63)
–
21
510
99
(16)
83
(215)
(6)
–
(67)
305
26
(15)
11
(128)
(3)
–
(37)
148
–
3,047
268
(251)
3,064
(365)
(1,047)
(695)
59
1,016
721
(27)
694
(512)
(305)
(152)
(156)
585
442
27
469
(279)
(252)
(108)
(69)
346
Reserve balance
at January 1, 2001
Initial charges
Additional charges
Adjustments
Net charges
Payments
Amount charged
against assets
Amount recognized by
and transferred to
the employee benefit plans
Currency translation
adjustment
Reserve balance
at December 31, 2001
Additional charges
Adjustments
Net charges
Payments
Amount charged
against assets
Amount recognized by
and transferred to
the employee benefit plans
Currency translation
adjustment
Reserve balance
at December 31, 2002
Additional charges
Adjustments
Net charges
Payments
Amount charged
against assets
Amount recognized by
and transferred to
the employee benefit plans
Currency translation
adjustment
Reserve balance
at December 31, 2003