Restructuring and Related Activities

12 Months Ended

Dec. 31, 2021

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure

EMPLOYEE SEPARATION AND RESTRUCTURING ACTIONS

We record costs associated with voluntary separations at the time of employee acceptance, unless the acceptance requires explicit approval by Ford Credit. We record costs associated with involuntary separation programs when management has approved the plan for separation, the affected employees are identified, and it is unlikely that actions required to complete the separation plan will change significantly. Costs associated with benefits that are contingent on the employee continuing to provide service are accrued over the required service period.

We executed separation and restructuring actions associated with our plans to transform our business. The impact of these actions was a loss of $55 million and $18 million, primarily separation costs, for the years ended December 31, 2020 and 2021, respectively. The 2021 loss is largely due to our actions in South America as detailed below.

Related to these restructuring actions, we determined that it was not probable that we would hold certain assets for more than the following twelve months, and these assets were reported as held-for-sale. The total value of our Assets held-for-sale presented at fair value at December 31, 2020 was $36 million. There were no Assets held-for-sale at December 31, 2021.

NOTE 12. EMPLOYEE SEPARATION AND RESTRUCTURING ACTIONS (Continued)

Forso. In the first quarter of 2020, we completed the sale of Forso Nordic AB (“Forso”), a wholly owned subsidiary, which provided retail and dealer financing in Denmark, Finland, Norway, and Sweden. Upon completion of the sale we recognized a pre-tax loss of $4 million in Other income/(loss), net and cash proceeds of $1,340 million. As a result of the sale, we liquidated the entity which held our investment and recognized a $33 million loss on the reclassification of accumulated foreign currency translation in Other income/(loss), net.

South America. In June 2021, we announced that our subsidiaries in Brazil and Argentina had committed to a plan to cease originating receivables by the end of 2021 and would begin the process of selling or otherwise winding down operations in those markets. During the fourth quarter of 2021, we completed the sale of our wholesale and dealer receivables portfolio in Brazil ceased originations of wholesale and dealer receivables in Argentina.

In December 2021, we received a capital contribution from a subsidiary of Ford Motor Company in exchange for a minority interest share in one of our Argentina-based subsidiaries. As a result, we recorded $22 million in Shareholder’s interest attributable to noncontrolling interests on our consolidated balance sheet. During the first quarter of 2022, we expect to reacquire Ford Motor Company’s minority interest share in exchange for a transfer of assets at which time we will recognize an incremental loss in our consolidated income statement.

Accumulated foreign currency translation losses associated with our investments in Brazil and Argentina included in Accumulated other comprehensive income/(loss) at December 31, 2021 were $454 million. We expect to reclassify these losses to income upon sale, transfer, or substantially complete liquidation of our investments, which may occur over multiple reporting periods. During the fourth quarter of 2021, we recognized a $14 million gain on the liquidation of a dormant subsidiary in Brazil, in Other income/(loss), net. Although the timing for the completion of our remaining actions is uncertain, as they may be subject to regulatory approval, we expect the majority of losses to be recognized in 2022. About $100 million of losses related to holding companies in Brazil and Argentina is expected to remain on our consolidated balance sheet for a number of years.