Monday, November 24, 2008

Ford Motor Company's Retiree Obligations

Ford Motor Co (F-$1.58) said it burned through $7.7 billion in its third-quarter ended September 30, reflecting operating losses and the carmaker’s purchase of Ford Credit debt securities. To conserve cash, Ford has undertaken several cost reduction initiatives, including salaried job cuts and reduced capital spending (up to $1 billion in both 2009 and 2010). Even if management is successful in meeting its objective of trimming $5 billion in cash ouflows from North American operations, the company is still obligated to fund $13.2 billion owed to retired workers (and spouses) covered under terms of a Health Care Settlement Trust Agreement reached with the United Auto Workers union. [ continued…]

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