Ford 2011 Annual Report Download - page 61

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Ford Motor Company | 2011 Annual Report 59
Our long-term strategy is to reduce the risk of our funded defined benefit pension plans, including minimizing the
volatility of the value of our pension assets relative to pension liabilities and the need for unplanned use of capital
resources to fund the plans. The strategy will reduce balance sheet, cash flow, and income exposures and, in turn,
reduce our risk profile. The key elements of this strategy include:
• Limiting liability growth in our defined benefit plans by closing participation to new participants;
• Reducing plan deficits through discretionary cash contributions;
• Progressively re-balancing assets to more fixed income investments, with a target asset allocation to be reached
over the next several years of about 80% fixed income investments and 20% growth assets, which will provide a
better matching of plan assets to the characteristics of the liabilities, thereby reducing our net exposure; and
• Taking other strategic actions to reduce pension liabilities.
In 2011, we contributed $1.1 billion to our worldwide funded pension plans and made $400 million of benefit payments
directly by the Company for unfunded plans. During 2012, we expect to contribute from Automotive cash and cash
equivalents $3.5 billion to our worldwide funded plans (including discretionary contributions to our U.S. plans of $2 billion),
and to make $350 million of benefit payments directly by the Company for unfunded plans, for a total of about $3.8 billion.
Based on current assumptions and regulations, we do not expect to have a legal requirement to fund our major
U.S. pension plans in 2012.
As disclosed previously, based on present planning assumptions for long-term asset returns, a normalization of
discount rates and planned cash contributions, we expect our global pension obligations in total to be fully funded over the
next few years, with variability on a plan-by-plan basis.
For a detailed discussion of our pension plans, see Note 17 of the Notes to the Financial Statements.
Liquidity Sufficiency. One of the four key priorities of our business plan is to finance our plan and strengthen our
balance sheet, while at the same time having resources available to grow our business. The actions described above are
consistent with this priority. Based on our planning assumptions, we believe that we have sufficient liquidity and capital
resources to continue to invest in new products that customers want and value, grow our business, pay our debts and
obligations as and when they come due, pay a sustainable dividend, and provide a cushion within an uncertain global
economic environment. We will continue to look for opportunities to strengthen our balance sheet, primarily by working to
ensure our underlying business generates positive Automotive operating-related cash flow, even as we continue to invest
in the growth of our business.
Within the limitations provided under our Credit Agreement, on December 8, 2011, our Board of Directors declared a
dividend of $0.05 per share on our Common and Class B Stock, payable on March 1, 2012 to stockholders of record on
January 31, 2012.