As it wraps up 2013 as one of the best years in its history, Ford Motor Company also released information about the financial progress it has made on its pension programs.
For starters, Ford says that it has nearly cut in half the underfunded status of its global pension plans compared with the end of 2012. The much-improved funded status at year-end 2013 contributes greatly towards an even healthier balance sheet for the automaker.
In addition, Ford’s U.S. salaried retiree voluntary lump sum program that was initiated in 2012 is now complete. For the program, the automaker made payments to about 35,000 people, or about 37 percent of those eligible, thereby settling $4.2 billion in obligations or roughly 25 percent of the related liability. Ford will incur special item charges of about $850 million, of which $600 million will be in 2013 and $150 million projected to occur in the fourth quarter of the year. Although not explicitly noted by Ford, the remaining $250 million will likely be observed in 2014.
Lastly, Ford reduced the cash requirements during the next three years to fully fund its global funded pension plans. The Blue Oval now expects average annual contributions required over the next three years to be about $1 billion to $2 billion per year, a decrease from the prior outlook of $2 billion to $3 billion per year.
The Motrolix Take
These are all positive developments for The Blue Oval’s financial health. A fiscally-sound Ford means even better world-class Ford products for consumers, in turn resulting in a higher market share and higher profits. And both of those lead to an even more healthy Ford. And then the cycle repeats, and continues repeating.