Ford 2005 Annual Report Download - page 68

Notes to the Financial Statements
NOTE 4. DISCONTINUED OPERATIONS, HELD-FOR-SALE OPERATIONS, OTHER DISPOSITIONS, AND
ACQUISITIONS (Continued)
In 2005, we acquired the minority interest in the Beanstalk Group, LLC ("Beanstalk"), a majority-owned subsidiary that
licensed trademarks, and subsequently sold our 100% interest. Its operations were not consistent with our objective to focus on
our core automotive business. We recorded pre-tax charges of $53 million for the impairment of intangible assets and goodwill in
Cost of sales and $12 million in Interest income and other non-operating income/(expense), net for the loss on sale.
At December 31, 2005, there were no assets or liabilities on our balance sheet related to held-for-sale operations. At
December 31, 2004, the assets of the held-for-sale operations consisted primarily of receivables and inventory totaling
approximately $49 million and $114 million, respectively.
Other Dispositions. In 2005, we completed the sale of our interests in Mahindra & Mahindra Ltd. (approximately 5% interest),
Vastera, Inc. (approximately 19% interest), and Kwik-Fit Group Limited (approximately 18% interest). As a result of the sales, we
recognized pre-tax gains of approximately $22 million, $11 million, and $152 million, respectively in Interest income and other
non-operating income/(expense), net.
We also completed the exchange of 8.3 million shares in Ballard Power Systems Inc. ("Ballard") for an equity interest (50%)
in NuCellSys, GmbH, a 50/50 joint venture with DaimlerChrysler Corporation. As a result of the exchange and the retirement of
certain restrictions, we recognized in Cost of sales a pre-tax charge of $61 million. Our ownership interest in Ballard is 11.5%.
We continue to report this investment under the equity method.
Acquisitions. We also finalized an agreement with Visteon Corporation ("Visteon"), our largest supplier, in which we assumed
control of 17 plants and six other facilities in the United States and Mexico. These assets were transferred to Automotive
Components Holdings, LLC ("ACH"), a temporary business controlled and managed by us, to protect the flow of critical parts and
components in the near-term and, over time, to improve our sourcing flexibility and cost competitiveness. ACH's mission is to
prepare most of the acquired businesses for sale to companies with the capital and expertise to supply us with high-quality
components and systems at competitive prices. We consolidated ACH on October 1, 2005 as part of The Americas segment.
The total 2005 pre-tax loss from the transaction was $468 million reflected in Cost of sales, summarized as follows
(in millions):
Value of ACH Assets/(Liabilities) Received on October 1, 2005
Net property........................................................................................................................................................................................................................ $ 427
Inventory ............................................................................................................................................................................................................................ 299
Warrants for purchase of Visteon stock............................................................................................................................................................................. 165
Other net liabilities............................................................................................................................................................................................................. (10)
Total ................................................................................................................................................................................................................................. $ 881
Cash Paid/Liabilities Assumed
Forgiveness of employee-related liabilities* ..................................................................................................................................................................... $ (500)
Cash paid to escrow account for Visteon restructuring..................................................................................................................................................... (400)
Cash paid for inventories ................................................................................................................................................................................................... (299)
Liability recorded for Visteon restructuring ...................................................................................................................................................................... (150)
Total ................................................................................................................................................................................................................................. $ (1,349)
__________
* As part of the transaction, we forgave $1.1 billion of Visteon's liability to us for employee-related costs of which $600 million was recognized in 2004 as an
allowance for doubtful accounts.
In 2004, we acquired 100% ownership of ZF Batavia, LLC (renamed Batavia Transmissions, LLC) from ZF Transmissions
Technologies LLC. ZF Transmission Technologies LLC, is a company we jointly own (49%) with ZF Friedrichshafen Germany
(51%).
In June 2000, we purchased the Land Rover sport utility vehicle business from the BMW Group. As part of the acquisition, we
agreed to pay two-thirds of the purchase price at closing with the remainder being paid in 2005. During 2005, we made the final
payment of approximately $1.3 billion.
Ford Motor Company Annual Report 2005 66 Ford Motor Company Annual Report 2005 67