Mercedes 2002 Annual Report Download - page 114

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108 |Notes to Consolidated Statements of Income (Loss)
7. Turnaround Plan for the Chrysler Group
The DaimlerChrysler Supervisory Board approved a multi-year
turnaround plan for the Chrysler Group in 2001. Key initiatives
for the turnaround plan over the period 2001 through 2003
include a workforce reduction and an elimination of excess
capacity. The workforce reduction affected represented and
non-represented hourly and salary employees. To eliminate
excess capacity, the Chrysler Group is idling, closing or
disposing of certain manufacturing plants, eliminating shifts
and reducing line speeds at certain manufacturing facilities,
and adjusting volumes at component, stamping and powertrain
facilities.
The net charges recorded for the plan in 2001 were 13,064
million (11,934 million net of taxes) and are presented as a
separate line item on the accompanying consolidated state-
ments of income (loss) (12,555 million and 1509 million would
have otherwise been reflected in cost of sales and selling,
administrative and other expenses, respectively).
The initial charges of 13,047 million were recorded in
February 2001 with the approval of the turnaround plan.
Additional charges of 1268 million in 2001 resulted from the
subsequent impairment and disposal costs associated
with a component plant as well as costs for a special early
retirement program. The return to income adjustments of
1251 million in 2001 include revisions of estimates based
upon information currently available or actual settlements.
These adjustments reflect lower than anticipated costs
associated with workforce reduction initiatives, including the
involuntary severance benefits, and favorable resolution of
supplier contract cancellation claims.
The net charges recorded for the plan in 2002, were 1694
million (1439 million net of taxes) and are presented as a sep-
arate line item on the accompanying consolidated statements
of income (loss) (1680 million and 114 million would have
otherwise been reflected in cost of sales and selling, adminis-
trative and other expenses, respectively). These charges were
for additional costs associated with the idling, closing or dis-
posal of certain manufacturing facilities in 2002 and 2003 and
ongoing 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 initia-
tion in the first quarter of 2001 are comprised of the following:
(in millions of 3)Total
Other costs
Asset
write-downs
Workforce
reductions
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 trans-
lation 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 trans-
lation adjustment
Reserve balance
at December 31,
2002
–
1,403
93
(122)
1,374
(211)
–
(695)
38
506
353
(41)
312
(297)
–
(152)
(89)
280
–
836
148
–
984
–
(984)
–
–
–
269
30
299
–
(299)
–
–
–
–
808
27
(129)
706
(154)
(63)
–
21
510
99
(16)
83
(215)
(6)
–
(67)
305
–
3,047
268
(251)
(3,064)
(365)
(1,047)
(695)
59
1,016
721
(27)
694
(512)
(305)
(152)
(156)
585