Restructuring and Related Activities

12 Months Ended

Dec. 31, 2023

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure

RESTRUCTURING ACTIONS

We generally record costs associated with voluntary separations at the time of employee acceptance. We record costs associated with involuntary separation programs in Operating expenses 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.

Below are employee separation actions and exit and disposal activities that have been initiated. In addition, we continue to review our global businesses and may take additional restructuring actions to maintain long-term competitiveness.

Europe

During the third quarter of 2023, we initiated various actions to improve our cost structure and competitiveness in Europe which will simplify our business model and reduce the number of countries that we operate in. We anticipate the restructuring and recognition of related expenses will be substantially complete by the end of 2025. Total charges, primarily attributable to employee separations and non-cash reclassification of accumulated foreign currency translation gains and losses to income, are not expected to be significant.

South America

In June 2021, we announced that our subsidiaries in Brazil and Argentina would cease originating receivables and wind down operations. During the fourth quarter of 2021, we completed the sale of our wholesale and dealer receivables portfolio in Brazil and ceased originations of wholesale and dealer receivables in Argentina. During the years ended December 31, 2021 and 2022, we reclassified accumulated foreign currency translation gains of $14 million and losses of $155 million, respectively, to Other income/(loss), net upon the liquidation of most of our investments in Brazil.

NOTE 12. EMPLOYEE SEPARATION AND RESTRUCTURING ACTIONS (Continued)

In December 2021, we received a capital contribution from a subsidiary of Ford 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 reacquired Ford’s minority interest share and, in exchange, transferred assets associated with an Argentina-based subsidiary to Ford. In addition, during the first quarter of 2022, we sold our shares in a second Argentina-based subsidiary to Ford. The difference between the carrying value of the net assets transferred and sold to Ford and the consideration received from Ford was $61 million, reported as a reduction to Shareholder’s interest. As a result of the transfer and sale, Ford Credit reclassified $75 million of accumulated foreign currency translation losses to net income, included in Other income/(loss), net.

Accumulated foreign currency translation losses associated with our remaining investments in Brazil and Argentina included in Accumulated other comprehensive income/(loss) at December 31, 2023 were $223 million. We expect to reclassify these losses to income upon substantially complete liquidation of our investments, which may occur over multiple reporting periods.