Ford 2013 Annual Report Download - page 104

102 Ford Motor Company | 2013 Annual Report
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
NOTE 14. RETIREMENT BENEFITS
We, and certain of our subsidiaries, provide retirement benefits including the following:
Defined Benefit Pension Plans. We have defined benefit pension plans in the United States, Canada, United
Kingdom, Germany and other locations covering hourly and salaried employees. The largest portion of our worldwide
obligation is associated with our U.S. plans. The vast majority of our worldwide defined benefit plans are closed to new
participants.
In general, our defined benefit pension plans are funded (i.e., have restricted assets from which benefits are paid).
Our unfunded defined benefit pension plans are treated on a “pay as you go” basis with benefit payments from general
Company cash. These unfunded plans primarily include certain plans in Germany and U.S. defined benefit plans for
senior management.
OPEB. We have defined benefit OPEB plans, primarily certain health care and life insurance benefits, in the United
States, Canada, and other locations covering hourly and salaried employees. The largest portion of our worldwide
obligation is associated with our U.S. plans. Our OPEB plans are unfunded and the benefits are paid from general
Company cash.
Defined Contribution and Savings Plans. We have also established defined contribution and savings plans in the
United States and other locations for hourly and salaried employees. Contributions to these plans, if any, are made from
general Company cash and are expensed as incurred. The expense for our worldwide defined contribution and savings
plans was $238 million, $181 million, and $135 million for the years ended December 31, 2013, 2012, and 2011,
respectively. This includes the expense for Company-matching contributions to our primary employee savings plan in the
United States of $99 million, $70 million, and $54 million for the years ended December 31, 2013, 2012, and 2011,
respectively.
Defined benefit pension and OPEB plan obligations are measured based on the present value of projected future
benefit payments for all participants for services rendered to date. The measurement of projected future benefits is
dependent on the provisions of each specific plan, demographics of the group covered by the plan, and other key
measurement assumptions. For plans that provide benefits dependent on salary assumptions, we include a projection of
salary growth in our measurements. No assumption is made regarding any potential changes to benefit provisions
beyond those to which we are presently committed (e.g., in existing labor contracts).
The net periodic benefit costs associated with the Company's defined benefit pension and OPEB plans are
determined using assumptions regarding the benefit obligation and the market-related value of plan assets (where
applicable) as of the beginning of each year. We have elected to use a market-related value of plan assets to calculate
the expected return on assets in net periodic benefit costs. The market-related value recognizes changes in the fair value
of plan assets in a systematic manner over five years. Net periodic benefit costs are recorded in Automotive cost of sales
and Selling, administrative, and other expenses. The funded status of the benefit plans, which represents the difference
between the benefit obligation and fair value of plan assets, is calculated on a plan-by-plan basis. The benefit obligation
and related funded status are determined using assumptions as of the end of each year. The impact of plan amendments
and actuarial gains and losses are recorded in Accumulated other comprehensive income/(loss), and generally are
amortized as a component of net periodic cost over the remaining service period of our active employees. Unamortized
gains and losses are amortized only to the extent they exceed 10% of the higher of the market-related value of assets or
the benefit obligation of the respective plan (i.e., outside of corridor).
Curtailment gains or losses are recorded when an event occurs that significantly reduces the expected years of future
service or eliminates the accrual of defined benefits for the future services of a significant number of employees. We
record a curtailment gain when the employees who are entitled to the benefits terminate their employment; we record a
curtailment loss when it becomes probable a loss will occur. Upon a settlement, we recognize the proportionate amount of
the unamortized gains and losses if the cost of all settlements during the year exceeds the interest component of net
periodic cost for the affected plan. Expense from curtailments and settlements is recorded in Automotive cost of sales and
Selling, administrative, and other expenses.