will assume a $1.65 billion insurance obligation from its former subsidiary
as part of a complicated arrangement to reduce the heavily unionized parts-suppliers' cost structure.
Visteon also agreed to make a one-time payment to Ford effectively to discount purchases the former parent has already made, and Visteon agreed to a schedule of price reductions over the next four years intended to bring it into line with other suppliers.
These and other measures will result in Ford taking a pretax charge in the current fourth quarter of $1.65 billion, or about 52 cents a share after tax. Along with a $150 million charge for business divestitures and a previously disclosed $450 million restructuring charge, Ford's fourth-quarter earnings will be reduced by about 72 cents after tax by one-time items.
Factoring out those unpleasantries, Ford expects to earn $1.05 to $1.10 a share in 2003, not the 95 cents to $1.05 it previously expected. Analysts had been forecasting earnings of $1.07.
Ford attributed the better operating number to cost savings, "strong unit revenue from the new F-150 and other vehicles and the ongoing strength of Ford Motor Credit's operating results."
Ford has been able to trounce analyst estimates over the last two quarters, and in each case cited similar factors, although it appeared gains from asset securitizations were the real reason. The shares were recently up 26 cents, or 1.7%, to $15.50. Visteon was down 4 cents, or 0.4%, to $9.96.