NEW YORK (CNN/Money) - Ford Motor Co. raised its guidance for 2003 earnings Monday, while saying it had reached an agreement with its former parts unit to assume more of its retirement costs, which will result in a $1.6 billion charge.
Ford, the world's No. 2 automaker, said it now expects to earn between $1.05 and $1.10 a share for the year from continuing operations, up from its earlier guidance of 95 cents to $1.05 a share. Analysts surveyed by earnings tracker First Call already had a consensus forecast of $1.07 a share for the full-year earnings, up from the 47 cents a share it earned in 2002.
The company said it would take a net pre-tax charge of about $1.6 billion, or 52 cents a share, to its fourth quarter results that would be excluded from that guidance, due to its agreement with Visteon Corp., the company's former auto parts unit that was spun off in 2000. The company said this is largely a non-cash charge and primarily reflects the transfer to Ford from Visteon of certain post-retirement health care and life insurance benefit liabilities, estimated to be $3 billion.
As part of the agreement, Visteon, Ford's largest parts supplier, agreed to price cuts. Visteon will pay $150 million to Ford on the automaker's 2003 purchases, in lieu of further price reductions for 2003. In addition, it committed to a schedule of annual price reductions over the next four years. Ford and Visteon will also share equally the estimated $200 million cost to separate Visteon's information technologies systems from Ford's IT systems.
Ford also announced it would take a charge of about $150 million for disposition of several non-core businesses, and that its previously announced restructuring of its European operations would result in a charge of about $450 million in the fourth quarter.
Ford also said it would contribute $1 billion to its U.S. pension funds and $6 billion to its Voluntary Employees' Beneficiary Association (VEBA) trust.
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