Ford 2010 Annual Report Download - page 155

Notes to the Financial Statements
Ford Motor Company | 2010 Annual Report 153
NOTE 22. 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. The
following table summarizes the activity in the reserve:
Reserve (in millions)
Reserve (in millions)Reserve (in millions)
Reserve (in millions)
Number of Employees
Number of EmployeesNumber of Employees
Number of Employees
Full
FullFull
Full-
---Year Year Year
Year
2010
20102010
2010
Full
FullFull
Full-
---Year Year Year
Year
2009
20092009
2009
Full
FullFull
Full-
---Year Year Year
Year
2010
20102010
2010
Full
FullFull
Full-
---Year Year Year
Year
2009
20092009
2009
Beginning balance ................................................................
......................
$ 374 $ 411 2,436 4,187
Additions to transitional benefits reserve/transfers from voluntary
separation program (i.e., rescissions) ................................
.......................
36 318 302 1,542
Voluntary separations and relocations ................................
........................
(54) (87) (517) (983)
Benefit payments and other adjustments ................................
....................
16 (268) — (2,310)
Ending balance ................................................................
...........................
$ 372 $ 374 2,221 2,436
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
UAW Voluntary Separations. We established a separation reserve for costs associated with separation actions
recorded at the time of employee acceptance of a voluntary termination. At December 31, 2010 and 2009, this reserve
was $28 million and $46 million, respectively. The ending balance in the reserve primarily represents the cost of
separation packages for employees who accepted separation packages but have not yet left the Company, as well as
employees who accepted a retirement package and ceased duties but remain on our employment rolls until they reach
retirement eligibility.
We recorded in Automotive cost of sales pre-tax charges of $79 million, $120 million and $323 million for 2010, 2009,
and 2008, respectively.