Ford 2011 Annual Report Download - page 159

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