Ford 2007 Annual Report Download - page 91

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Notes to the Financial Statements
Ford Motor Company | 2007 Annual Report 89
NOTE 18. EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES (Continued)
Our collective bargaining agreement with the CAW contains a provision pursuant to which we are required to pay idled
employees a portion of their wages and certain benefits for a specified period of time based on the number of credits an
employee has received. This agreement is scheduled to expire in September 2008. We refer to these benefits under the
UAW and CAW agreements as "Jobs Bank Benefits."
The Jobs Bank Benefits reserve includes an amount for benefits expected to be provided in their present form under
the current UAW and CAW collective bargaining agreements. The Jobs Bank Benefits provided to our hourly employees
at facilities that will be closed by 2010 are expensed when it becomes probable that the employees will be permanently
idled.
We recorded the expense in Automotive cost of sales, and the following table summarizes the activity in the related Jobs
Bank Benefits reserve:
!
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The reserve balance above takes into account several factors: the demographics of the population at each affected
facility, redeployment alternatives, and recent experience relative to voluntary redeployments. Due to the complexities
inherent in estimating this reserve, our actual costs could differ materially. We continue to expense costs associated with
the small number of employees who are temporarily idled on an as-incurred basis.
Separation Actions
The cost of voluntary employee separation actions is recorded at the time of an employee's acceptance, unless the
acceptance requires explicit approval by the Company. The costs of conditional voluntary separations are accrued when all
conditions are satisfied. The costs of involuntary separation programs are accrued when management has approved the
program and the affected employees are identified.
UAW Voluntary Separations. During 2006, we offered voluntary separation packages to our entire UAW hourly
workforce, established a reserve for the costs associated with this action., and recorded an expense in Automotive cost of
sales. The following table summarizes the activity in the related separation reserve:
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The 2007 ending balance in the reserve represents, in part, the cost of separation packages for employees
(1,374 shown in the table above) who accepted a retirement package and ceased duties, but who will remain on our
employment rolls until they reach retirement eligibility. The reserve for these employees will be released over the period
through the end of 2009. The remaining balance of the reserve reflects costs associated with employee tuition programs.