Item 7.01. Regulation FD Disclosure.
Accounting for Pension and OPEB Plans
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 2021 results of approximately$3.5 billion related to our pension and OPEB plans. This includes a$450 million gain associated with pension plans inthe United States , a$2.7 billion gain associated with pension plans outsidethe United States , and a$380 million gain associated with OPEB plans globally. Overall, the remeasurement gain is primarily explained by higher discount rates compared with year-end 2020 and by growth asset returns in excess of our assumptions. On an after-tax basis, the remeasurement gain is expected to increase our net income by about$2.8 billion . Because the remeasurement gain is a special item, it will not impact our total Company adjusted EBIT or adjusted earnings per share. The remeasurement gain did not have an impact on our cash in 2021, and does not change our expectations for pension contributions in 2022. Including the impact of remeasurement gains and losses during 2021, we expect the underfunded status for our pension and OPEB plans to be about$0.3 billion and$6.0 billion , respectively, at year-end 2021, compared with$6.7 billion and$6.6 billion , respectively, at year-end 2020. The change to the underfunded status of our plans in the aggregate primarily reflects the impact of higher discount rates and continued strong asset performance relative to changes in discount rates.
Special Items for FY2021 Financial Results
Our news release datedJanuary 18, 2022 concerning several special items, including the pension and OPEB special item discussed above, is filed as Exhibit 99 to this Report and incorporated by reference herein. The following table shows, on a preliminary basis, the special items we expect to include in our results when we report fourth quarter and full year 2021 earnings onFebruary 3, 2022 : Q1 2021 Q2 2021 Q3 2021 Q4 2021 FY 2021 Special Items (in billions) Pension and OPEB Remeasurement$ 0.1 $ 0.3 $ 0.0 $ 3.5 $ 3.9 Rivian - Gain on IPO and mark-to-market 0.9 - - 8.2 9.1 Debt Extinguishment premium - - - (1.7) (1.7) Global Redesign (0.4) (0.1) (0.7) (0.5) (1.7) Other (0.1) - - 0.1 (0.0) Total EBIT Special Items$ 0.5 $ 0.1
Deferred Tax Asset and Valuation Allowance $ - $ -
$ -$ 3.6 $ 3.6 Tax on Rivian - Gain on IPO and (0.2) - - (1.7) (1.9)
mark-to-market
Other 0.1 (0.1) 0.5 (0.3) 0.2 Total Tax Special Items$ (0.1) $ (0.1) $ 0.5 $ 1.6 $ 1.9
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Item 9.01. Financial Statements and Exhibits.
EXHIBITS* Designation Description Method of Filing Exhibit 99 News release dated January 18, 2022 Furnished with this Report Exhibit 104 Cover Page Interactive Data File ** (formatted in Inline XBRL)
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