Item 7.01. Regulation FD Disclosure.
Ford Motor Company uses the mark-to-market method of accounting for pension and
other postretirement employee benefits (OPEB). Under this method, we recognize
pension and OPEB remeasurement gains and losses in income when incurred rather
than amortizing them over time as a component of net periodic benefit cost. The
remeasurement gains and losses are reported as special items since we believe
they are not reflective of our ongoing operating activities.
We expect to record a pre-tax remeasurement gain in our fourth quarter 2022
results of approximately $50 million related to our pension and OPEB plans. This
includes a $1.7 billion loss associated with pension plans in the United States,
a $450 million gain associated with pension plans outside the United States, and
a $1.3 billion gain associated with OPEB plans globally. Overall, the small
remeasurement gain is primarily explained by higher discount rates compared with
year-end 2021 largely offset by pension asset returns that were lower than our
assumptions. On an after-tax basis, the remeasurement is expected to decrease
our net income by about $220 million. The decrease is due to the net deferred
tax expense we expect to recognize as a result of the variability in tax rates
in the jurisdictions where there are remeasurement gains or losses. Because the
remeasurement is a special item, it will not impact our total Company adjusted
EBIT or adjusted earnings per share. The remeasurement did not have an impact on
our cash in 2022, and does not change our expectations for pension contributions
in 2023. In aggregate, our funded plans remain fully funded.
Including the impact of remeasurement gains and losses during 2022, we expect
the underfunded status for our pension and OPEB plans to be about $0.2 billion
and $4.5 billion, respectively, at year-end 2022, compared with $0.3 billion and
$6.0 billion, respectively, at year-end 2021. The change to the underfunded
status of our plans in the aggregate primarily reflects the impact of higher
discount rates.
© Edgar Online, source Glimpses