Summary
Ford Motor Company (F) has disclosed via an 8-K filing that it expects to record a significant pre-tax remeasurement loss of approximately $1.7 billion in its fourth quarter 2023 results. This loss is primarily attributable to the mark-to-market accounting method for its pension and other postretirement employee benefits (OPEB) plans, driven by lower discount rates compared to the prior year. While this remeasurement will reduce net income by an estimated $1.3 billion after-tax, it is classified as a 'special item' and therefore will not impact the company's adjusted EBIT or adjusted earnings per share. Importantly for investors, this accounting adjustment does not affect Ford's cash position in 2023, nor does it alter the company's expected pension contributions for 2024. The filing also notes that Ford's funded plans remain fully funded on an aggregate basis. However, the underfunded status for pension and OPEB plans is expected to increase by year-end 2023, largely due to this remeasurement loss, with underfunding projected at $2.3 billion for pension plans and $4.7 billion for OPEB plans.
Key Highlights
- 1Ford expects a pre-tax remeasurement loss of approximately $1.7 billion in Q4 2023 related to pension and OPEB plans.
- 2The loss is driven by lower discount rates and is accounted for as a 'special item' under the mark-to-market method.
- 3This accounting adjustment is not expected to impact Ford's adjusted EBIT or adjusted earnings per share.
- 4The remeasurement will reduce net income by approximately $1.3 billion on an after-tax basis.
- 5The event does not impact Ford's cash position in 2023 or its expected pension contributions for 2024.
- 6Aggregate funded pension plans remain fully funded.
- 7The underfunded status of pension and OPEB plans is expected to increase year-end 2023 due to the remeasurement.