Annual Report 2011 - Ford Motor Company
Annual Report 2011 - Ford Motor Company
Annual Report 2011 - Ford Motor Company
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
Notes to the Financial Statements<br />
NOTE 21. EMPLOYEE SEPARATION ACTIONS<br />
As part of our plan to realign our vehicle assembly capacity to operate profitably at the current demand and changing<br />
model mix, we have implemented a number of different employee separation plans. The accounting for employee<br />
separation plans is dependent on the specific design of the plans.<br />
Under certain labor agreements, we are required to pay transitional benefits to our employees who are idled. For<br />
employees who will be temporarily idled, we expense the benefits on an as-incurred basis. For employees who will be<br />
permanently idled, we expense all of the future benefits payments in the period when it is probable that the employees will<br />
be permanently idled. Our reserve balance for these future benefit payments to permanently idled employees takes into<br />
account several factors: the demographics of the population at each affected facility, redeployment alternatives, estimate<br />
of benefits to be paid, and recent experience relative to voluntary redeployments.<br />
We also incur payments to employees for separation actions. The costs of voluntary employee separation actions are<br />
recorded at the time of employee acceptance, unless the acceptance requires explicit approval by the <strong>Company</strong>. The<br />
costs of involuntary separation programs are accrued when management has approved the program and the affected<br />
employees are identified.<br />
Automotive Sector<br />
Transitional Benefits<br />
Our collective bargaining agreements with the UAW and the CAW require us to pay a portion of wage and benefits for<br />
a specified period of time to employees who are considered permanently idled and who meet certain conditions. We have<br />
established a reserve for employee benefits that we expect to provide under our collective bargaining agreements. At<br />
December 31, <strong>2011</strong> and 2010, this reserve was $153 million and $372 million, respectively.<br />
The balance in the reserve primarily relates to the closure of our St. Thomas Assembly Plant in Canada, which was<br />
announced in the fourth quarter of 2009.<br />
Separation Actions<br />
The following table shows pre-tax charges for hourly and salaried employee separation actions, which are recorded in<br />
Automotive cost of sales and Selling, administrative and other expenses for the years ended December 31 (in millions):<br />
<strong>Ford</strong> Europe<br />
<strong>Ford</strong> North America<br />
<strong>Ford</strong> South America<br />
<strong>Ford</strong> Asia Pacific Africa<br />
The charges above exclude costs for pension and OPEB.<br />
Financial Services Sector<br />
Separation Actions<br />
<strong>2011</strong><br />
$ 67<br />
154<br />
15<br />
38<br />
2010<br />
$ 56<br />
110<br />
3<br />
1<br />
2009<br />
$ 109<br />
225<br />
20<br />
17<br />
We recorded in Selling, administrative and other expenses pre-tax charges of $32 million, $33 million, and $64 million<br />
for <strong>2011</strong>, 2010, and 2009, respectively, for employee separation actions. These charges exclude costs for pension and<br />
OPEB.<br />
<strong>Ford</strong> <strong>Motor</strong> <strong>Company</strong> | <strong>2011</strong> <strong>Annual</strong> <strong>Report</strong> 157