Notes
to Financial Statements
December 31,
2021 and 2020
Note
1 - Description of the Plan
The
following description of the Ford Motor Company Tax-Efficient Savings Plan for Hourly Employees (the “Plan”) provides only
general information. Participants should refer to the provisions of the Plan, which are governed in all respects by the detailed terms
and conditions contained in the Plan document. The Plan was established effective January 1, 1985.
Type
and Purpose of the Plan - The Plan is a defined contribution plan established to encourage and facilitate systematic retirement savings
and investment by eligible hourly employees of Ford Motor Company (the “Company”) and to provide them with an opportunity
to become stockholders of the Company. The Plan includes provisions for voting shares of Company stock. It is subject to certain provisions
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), applicable to defined contribution pension
plans.
Eligibility
– Regular full time hourly employees are eligible to participate in the Plan immediately after their original date of hire.
Certain other part-time and temporary employees may also be eligible to participate in the Plan. Participation in the Plan is voluntary.
Newly hired eligible employees are automatically enrolled in the Plan at an initial contribution rate of 3 percent of their base wages,
though they may elect to cancel or change their automatic enrollment rate.
Contributions
and Vesting - Participants can contribute a percentage of their base pay and overtime pay to the Plan on a pre-tax, Roth, and/or
after-tax basis, subject to federal tax law and Plan limits. Participants may also elect to contribute all, or a portion, of their distributions
under the Company’s Profit Sharing Plan and certain other bonuses to the Plan on a pre-tax or Roth basis. Pre-tax contributions
are excluded from the participant’s federal and most state and local taxable income. Employees are immediately 100 percent vested
in their contributions to the Plan.
Subject
to provisions of the Plan, participants may elect to roll over amounts from other eligible retirement plans in accordance with the Internal
Revenue Code of 1986, as amended (the "Code"). For the year ended December 31, 2021, rollovers from other eligible retirement
plans totaled $4.8 million, which are included in employee contributions in the statement of changes in net assets available for benefits.
Certain
(as defined) employees hired or rehired beginning November 19, 2007 may be immediately eligible to receive Supplemental Contributions
and/or Retirement Contributions (collectively, “Company Contributions”). Eligible employees receive Supplemental Contributions
of $1.00 for every eligible compensated hour up to 40 hours per week. Eligible employees receive Retirement Contributions of 6.4 percent
of eligible wages up to 40 hours per week. Employees become 100 percent vested in their Company Contributions three years from their
original hire date.
Per
the 2019 Collective Bargaining Agreement between the Company and the UAW, employees not eligible for Retirement Contributions (eligible
for a pension plan instead) were given a one-time $1,000 Company contribution into their TESPHE account on January 31, 2020.
Distributions
- Pre-tax or Roth assets may not be withdrawn by participants until the termination of their employment or until they reach 59-1/2
years of age, except in the case of personal financial hardship. Supplemental Contributions may not be withdrawn by participants until
termination of employment or until they reach 59-1/2 years of age. Retirement Contributions may not be withdrawn by participants until
termination of employment.
Ford Motor
Company Tax-Efficient Savings Plan for Hourly Employees
Notes
to Financial Statements
December 31,
2021 and 2020
Note
1 - Description of the Plan (Continued)
After-tax
assets can be withdrawn at any time without restriction.
Distribution
options include lump-sum, partial, or installment payments. Eligible rollover distributions can be rolled over to an IRA or another employer's
eligible retirement plan.
Activity
for participants in the Ford Stock Fund who have elected to receive dividends paid in the form of cash instead of purchasing additional
shares is reported in the statement of changes in net assets available for benefits.
Participant
Accounts - A participant’s account balance is comprised of employee contributions, Company Contributions, if any, and investment
income earned from the individual investment options selected by the participant less withdrawals, loans, distributions, and fees. In
the absence of participant investment directions, contributions are invested in a target-date fund, a qualified default investment alternative
(“QDIA”) prescribed by final regulations issued by the Department of Labor. Allocations are based on participant earnings,
account balances, or specific participant transactions, as defined. The benefit to which a participant is entitled is determined from
the participant’s vested account balance.
Master
Trust Investment Options and Participation – Employee contributions and Company Contributions are invested in accordance with
the participant’s election in one or more investments, which are held in the Ford Defined Contribution Plans Master Trust (the
“Master Trust”) (see Note 3).
Transfers
of Assets - The Plan permits the transfer of assets among investment options held by the Master Trust, subject to certain trading
restrictions imposed on some of the investment options.
Notes
Receivable from Participants- The Plan permits participants to borrow from their pre-tax, Roth, after-tax, and rollover accounts.
Monthly notes receivable interest rates related to these borrowings are based on the prime rate published in The Wall Street Journal.
Participant notes receivable are collateralized by the participant’s vested account balance.
A
participant is eligible to take out one note receivable per calendar year, and to have up to four notes receivable outstanding at any
one time. General notes receivable may be for a minimum of one year, but not exceeding five years. Notes receivable related to the purchase
of a primary residence may be for a maximum of ten years.
Forfeitures
and Plan Administration Expenses- The Plan permits the Company to use assets forfeited by participants to pay plan administrative
expenses and, to the extent not used to pay such expenses, to reduce the Company's future contributions to the Plan. The Company may
pay certain plan administrative expenses directly.
Party
in Interest Transactions - Certain Master Trust investment options are investment products managed by State Street Global Advisors
(“SSgA”), which is the investment management division of State Street Bank and Trust Company, a wholly owned subsidiary of
State Street Corporation. State Street Bank and Trust Company is the trustee, as defined by the Plan, and the disbursement agent.
Ford Motor
Company Tax-Efficient Savings Plan for Hourly Employees
Notes
to Financial Statements
December 31,
2021 and 2020
Note
2 - Summary of Significant Accounting Policies
Basis
of Accounting – The financial statements of the Plan are prepared
on the accrual basis of accounting.
Investment
Valuation and Income Recognition - The fair value of the Plan's interest
in the Master Trust is based on the beginning of the year value of the Plan's interest in the trust, plus actual contributions and allocated
investment income, less actual distributions and allocated administrative expense (see Note 3).
Investments
held by the Master Trust are stated at fair value, except for the synthetic guaranteed investment contracts (“synthetic GICs”)
which are held through the Master Trust’s investment in the Interest Income Fund and valued at contract value. Since synthetic
GICs are fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available
for benefits attributable to the synthetic GICs. Contract value represents contributions made under the contract, plus earnings, less
participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion
of their investment at contract value.
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. See Note 4 for further discussion of fair value measurements.
Purchases
and sales of securities are recorded on a trade-date basis. Interest income is recorded as earned. Dividends are recorded on the ex-dividend
date.
Notes
Receivable from Participants- Notes receivable from participants are
recorded at their unpaid principal balance plus any accrued interest. Interest income is recorded on the accrual basis. Related fees
are recorded as administrative expenses and are expensed when incurred. Participant notes receivable are written off when deemed uncollectible.
No allowances for credit losses has been recorded as of December 31, 2021 and 2020.
Investment
Contracts - A synthetic GIC is a wrap contract paired with underlying
investments, usually a portfolio of high-quality, short to intermediate term fixed-income securities and a short-term interest fund.
A
synthetic GIC credits a stated interest rate. Investment gains and losses are amortized over the expected duration of the covered investments
through the calculation of the interest rate on a prospective basis. Synthetic GICs provide for a variable crediting rate, which resets
on a periodic basis. The crediting rate set by the wrap contracts resets quarterly. The quarterly crediting rate does not include the
short-term investments (e.g., short-term interest fund) used for benefit-responsive events. While the issuer of the wrap contract provides
assurance that future adjustments to the crediting rate cannot result in a crediting rate less than zero, the actual quarterly interest
rate is impacted by the current yield of the short-term investments.
Ford Motor
Company Tax-Efficient Savings Plan for Hourly Employees
Notes
to Financial Statements
December 31,
2021 and 2020
Note 2
- Summary of Significant Accounting Policies (Continued)
The
crediting rate is primarily based on the current yield-to-maturity of the covered investments, plus or minus amortization of the difference
between the market value and contract value of the covered investments over the duration of the covered investments at the time of computation.
The
crediting rate is most impacted by the change in the annual effective yield to maturity of the underlying securities, but is also affected
by the differential between the contract value and the market value of the covered investments. This difference is amortized over the
duration of the covered investments. Depending on the change in duration from reset period to reset period, the magnitude of the impact
to the crediting rate of the contract to market difference is heightened or lessened. The crediting rate can be adjusted periodically,
but in no event is the crediting rate less than zero percent.
Certain
events limit the ability of the Master Trust to transact at contract value with the insurance company and the financial institution issuer.
Such events include the following: (i) material amendments to the Plan documents (including complete or partial plan termination
or merger with another plan); (ii) changes to the Plan’s prohibition on competing investment options or deletion of equity
wash provisions; (iii) bankruptcy of the plan sponsor or other plan sponsor events (e.g., divestitures or spin-offs of a subsidiary)
which cause a significant withdrawal from the Plan; (iv) the failure of the trust to qualify for exemption from federal income taxes
or any required prohibited transaction exemption under ERISA; (v) any change in law, regulation, ruling, administrative or judicial
position, or accounting requirement, applicable to the Interest Income Fund or the Plan; or (vi) the delivery of any communication
to Plan participants designed to influence a participant not to invest in the Interest Income Fund. The plan administrator does not believe
that the occurrence of any such event, which would limit the Master Trust’s ability to transact at contract value, is probable.
The
synthetic investment contracts generally impose conditions on both the Master Trust and the issuer. If an event of default occurs and
is not cured, the non-defaulting party may terminate the contract. The following may cause the Master Trust to be in default: a breach
of material obligation under the contract; a material misrepresentation; or a material amendment to the Plan agreement. The issuer may
be in default if it breaches a material obligation under the investment contract; makes a material misrepresentation; has a decline in
its long-term credit rating below a threshold set forth in the contract; is acquired or reorganized and the successor issuer does not
satisfy the investment or credit guidelines applicable to issuers. If, in the event of default of an issuer, the Master Trust were unable
to obtain a replacement investment contract, withdrawing plans may experience losses if the value of the Master Trust’s assets
no longer covered by the contract is below contract value. The Master Trust may seek to add additional issuers over time to diversify
the Master Trust’s exposure to such risk, but there is no assurance the Master Trust may be able to do so. The combination of the
default of an issuer and an inability to obtain a replacement agreement could render the Master Trust unable to achieve its objective
of maintaining a stable contract value. The terms of an investment contract generally provide for settlement of payments only upon termination
of the contract or total liquidation of the covered investments. Generally, payments will be made pro-rata, based on the percentage of
investments covered by each issuer. Contract termination occurs whenever the contract value or market value of the covered investments
reaches zero or upon certain events of default.
Ford Motor
Company Tax-Efficient Savings Plan for Hourly Employees
Notes
to Financial Statements
December 31,
2021 and 2020
Note 2
- Summary of Significant Accounting Policies (Continued)
If
the contract terminates due to issuer default (other than a default occurring because of a decline in its rating), the issuer will generally
be required to pay to the Master Trust the excess, if any, of contract value over market value on the date of termination. If a synthetic
GIC terminates due to a decline in the ratings of the issuer, the issuer may be required to pay to the Master Trust the cost of acquiring
a replacement contract (i.e., replacement cost) within the meaning of the contract. If the contract terminates when the market value
equals zero, the issuer will pay the excess of contract value over market value to the Master Trust to the extent necessary for the Master
Trust to satisfy outstanding contract value withdrawal requests. Contract termination also may occur by either party upon election and
notice.
Contributions
- Contributions to the Plan from participants, and when applicable,
from the Company and participating subsidiaries (as defined in the Plan), are recorded in the period that payroll deductions are made
from Plan participants.
Payment
of Benefits - Benefits are recorded when paid.
Use
of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires Plan management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates.
Risks
and Uncertainties - Investment securities are exposed to various risks,
such as interest rate, market, and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty
related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would
materially affect participants’ account balances and the amounts reported in the financial statements.
New
Accounting Pronouncements – There have been no new accounting
pronouncements reflected in the 2021 financial statements.
Subsequent
Events – The Plan has evaluated subsequent events through June 3,
2022, the date the financial statement were available to be issued, and there were no subsequent events requiring adjustments to or disclosure
in the financial statements.
Note 3
- The Master Trust
The
Company established the Master Trust pursuant to a trust agreement between the Company and State Street Bank and Trust Company, as trustee,
in order to permit the commingling of trust assets of several employee benefit plans for investment and administrative purposes. The
assets of the Master Trust are held by State Street Bank and Trust Company.
Employee
benefit plans participating in the Master Trust as of December 31, 2021 and 2020 include the following defined contribution plans:
| · | Ford
Motor Company Savings and Stock Investment Plan for Salaried Employees |
Ford Motor
Company Tax-Efficient
Savings Plan for Hourly Employees
Notes
to Financial Statements
December 31,
2021 and 2020
Note 3
- The Master Trust (Continued)
| · | Ford
Motor Company Tax-Efficient Savings Plan for Hourly Employees |
All
transfers to, withdrawals from, or other transactions regarding the Master Trust shall be conducted in such a way that the proportionate
interest in the Master Trust of each plan and the fair market value of that interest may be determined at any time.
The
interest of each such plan shall be debited or credited (as the case may be) (i) for the entire amount of every contribution received
on behalf of such plan (including participant contributions), every distribution, or other expense attributable solely to such plan,
and every other transaction relating only to such plan; and (ii) for its proportionate share of every item of collected or accrued
income, gain or loss, and general expense, and of any other transactions attributable to the Master Trust or that investment option as
a whole.
A
summary of the net assets of the Master Trust and the Plan’s interest in the Master Trust as of December 31, 2021 and 2020
is as follows (in thousands):
Summary
of Net Assets - Note 3 Master Trust
| |
2021 | | |
2020 | |
| |
Master
Trust
Balances | | |
Plan's
Interest in
Master Trust | | |
Master
Trust
Balances | | |
Plan's
Interest in
Master Trust | |
Investments
- Fair value: | |
| | | |
| | | |
| | | |
| | |
Separate
Account - Common Stock (1) | |
$ | 650,253 | | |
$ | 141,263 | | |
$ | 580,916 | | |
$ | 127,183 | |
Ford
Stock Fund | |
| 3,109,173 | | |
| 1,411,707 | | |
| 1,573,841 | | |
| 713,738 | |
Common
and commingled institutional pools | |
| 18,935,665 | | |
| 5,395,350 | | |
| 16,327,928 | | |
| 4,589,578 | |
Total
Investments at Fair Value | |
| 22,695,091 | | |
| 6,948,320 | | |
| 18,482,685 | | |
| 5,430,499 | |
| |
| | | |
| | | |
| | | |
| | |
Investments
at Contract value - Interest Income Fund | |
| 2,995,599 | | |
| 1,049,495 | | |
| 2,891,230 | | |
| 989,195 | |
Total
Investments | |
| 25,690,690 | | |
| 7,997,815 | | |
| 21,373,915 | | |
| 6,419,694 | |
| |
| | | |
| | | |
| | | |
| | |
Other
Assets/(Liabilities) - Net (2) | |
| (1,950 | ) | |
| - | | |
| 3,314 | | |
| - | |
Total
Net Assets | |
$ | 25,688,740 | | |
$ | 7,997,815 | | |
$ | 21,377,229 | | |
$ | 6,419,694 | |
(1) The
fund is primarily made up of common stock that is owned 100% by the Master Trust.
(2) Includes
accrued but unpaid fees, unsettled trades, and other receivables. In the Plan's Interest in Master Trust, these amounts are
reported within total investments and are not material to the amounts presented.
Ford Motor
Company Tax-Efficient
Savings Plan for Hourly Employees
Notes
to Financial Statements
December 31,
2021 and 2020
Note
3 - The Master Trust (Continued)
During
the year ended December 31, 2021, the Master Trust investment gain was comprised of the following (in thousands):
Net
realized and unrealized gains | |
$ | 4,769,921 | |
| |
| | |
Dividend
and other income | |
| 20,202 | |
| |
| | |
Total
Master Trust investment gains | |
$ | 4,790,123 | |
Note 4
- Fair Value Disclosures
Accounting
standards require certain assets and liabilities be reported at fair value in the financial statements and provide a framework for establishing
that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the inputs and valuation techniques
used to measure fair value.
In
determining fair value, various valuation techniques are utilized and observable inputs are prioritized. The availability of observable
inputs varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument
is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily
observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require
significant management discretion. For other financial instruments, pricing inputs are less observable in the marketplace and may require
management judgment.
The
inputs used to measure fair value are assessed using a three-tier hierarchy based on the extent to which inputs used in measuring fair
value are observable in the market. Level 1 inputs include quoted prices in active markets for identical instruments and are the most
observable. Level 2 inputs include quoted prices for similar assets and inputs such as interest rates and yield curves that are
observable at commonly quoted intervals. Level 3 inputs are not observable in the market and include management's judgments about
the assumptions market participants would use in pricing the asset. In instances where inputs used to measure fair value fall into
different levels of the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input
that is significant to the valuation. The Plan’s assessment of the significance of particular inputs to these fair value measurements
requires judgment and considers factors specific to each asset.
The
following valuation methodologies have been used to value the underlying investments in the Master Trust:
Ford Motor
Company Tax-Efficient
Savings Plan for Hourly Employees
Notes
to Financial Statements
December 31,
2021 and 2020
Note
4 - Fair Value Disclosures (Continued)
Separate
Accounts – Common Stocks – These investments,
except a small portion of the separate account invested in a short-term interest fund to provide liquidity for daily activity, are
valued on the basis of quoted year-end market prices. The short-term interest fund is valued at the net asset value per share, which
is based on the fair value of the underlying net assets.
Ford
Stock Fund – The Ford Stock Fund is a unitized account that is
comprised primarily of Ford Motor Company common stock, except a small portion of the fund is invested in a short-term interest fund
to provide liquidity for daily activity. The Ford Stock Fund consists of assets from the following sources: employee contributions (including
certain rollovers), employee loan repayments, exchanges into the fund from other investment options, Company contributions (vested and
unvested), earnings and dividends. Ford Motor Company common stock is valued on the basis of quoted year-end market prices and the short-term
interest fund is valued at the net asset value per share, which is based on the fair value of the underlying net assets. Transactions
within this fund are considered related party transactions to the Plan.
Common
and Commingled Institutional Pools - The common and commingled institutional
pool investments are valued at the net asset value per share of the individual collective pools included in each respective fund, which
are based on the fair value of the underlying net assets. There were no significant unfunded commitments or redemption restrictions on
these investments.
Interest
Income Fund - The Interest Income Fund, which invests in fully-benefit
responsive synthetic investment contracts, is stated at contract value. Contract value is the amount participants normally receive if
they were to initiate permitted transactions under the terms of the Plan. Contract value represents deposits made to the contract, plus
earnings at guaranteed crediting rates, less withdrawals and applicable fees.
Ford Motor
Company Tax-Efficient
Savings Plan for Hourly Employees
Notes
to Financial Statements
December 31,
2021 and 2020
Note
4 - Fair Value Disclosures (Continued)
Disclosures
concerning assets measured at fair value on a recurring basis are as follows
(in thousands):
Assets
Measured at Fair Value at December 31, 2021
| |
Balance | | |
Quoted
Prices in
Active Markets for
Identical Assets
(Level 1) | | |
Significant
Observable Inputs
(Level 2) | | |
Significant
Unobservable
Inputs
(Level 3) | |
Assets
- Master Trust investments: | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Investments
at Fair Value: | |
| | | |
| | | |
| | | |
| | |
Separate
Account - Common Stock (1) | |
$ | 643,728 | | |
$ | 643,728 | | |
| - | | |
| - | |
Ford
stock fund - Ford common stock | |
| 3,079,548 | | |
| 3,079,548 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Total
Investments at Fair Value | |
$ | 3,723,276 | | |
$ | 3,723,276 | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Investments
Measured at Net Asset Value: | |
| | | |
| | | |
| | | |
| | |
Common
and commingled Institutional pools | |
| 18,935,665 | | |
| | | |
| | | |
| | |
Separate
Account - Common Stock (2) | |
| 6,525 | | |
| | | |
| | | |
| | |
Ford
stock fund - Short-term Interest Fund (2) | |
| 29,625 | | |
| | | |
| | | |
| | |
Total
Investments at NAV | |
| 18,971,815 | | |
| | | |
| | | |
| | |
Total
Master Trust Investments at Fair Value | |
$ | 22,695,091 | | |
| | | |
| | | |
| | |
Assets
Measured at Fair Value at December 31, 2020
| |
Balance | | |
Quoted
Prices in
Active Markets for
Identical Assets
(Level 1) | | |
Significant
Observable Inputs
(Level 2) | | |
Significant
Unobservable
Inputs
(Level 3) | |
Assets
- Master Trust investments: | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Investments
at Fair Value: | |
| | | |
| | | |
| | | |
| | |
Separate
Account - Common Stock (1) | |
$ | 576,782 | | |
$ | 576,782 | | |
| - | | |
| - | |
Ford
stock fund - Ford common stock | |
| 1,564,037 | | |
| 1,564,037 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Total
Investments at Fair Value | |
$ | 2,140,819 | | |
$ | 2,140,819 | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Investments
Measured at Net Asset Value: | |
| | | |
| | | |
| | | |
| | |
Common
and commingled Institutional pools | |
| 16,327,928 | | |
| | | |
| | | |
| | |
Separate
Account - Common Stock (2) | |
| 4,134 | | |
| | | |
| | | |
| | |
Ford
stock fund - Short-term Interest Fund (2) | |
| 9,804 | | |
| | | |
| | | |
| | |
Total
Investments at NAV | |
| 16,341,866 | | |
| | | |
| | | |
| | |
Total
Master Trust Investments at Fair Value | |
$ | 18,482,685 | | |
| | | |
| | | |
| | |
(1) The
fund is primarily made up of common stock that is owned 100% by the Master Trust.
(2) Includes
short-term interest funds that invest primarily in fixed-income securities, including but not limited to, bonds, notes or other investments
such as government securities, commercial paper, certificates of deposit, master notes or variable amount notes, with the objective of
providing current income consistent with the preservation of capital and the maintenance of liquidity.
Ford Motor
Company Tax-Efficient
Savings Plan for Hourly Employees
Notes
to Financial Statements
December 31,
2021 and 2020
Note
4 - Fair Value Disclosures (Continued)
The
Plan’s policy to recognize transfers between levels of the fair value hierarchy is as of the actual date of the event of change
in circumstances that caused the transfer. There were no significant transfers between levels of the fair value hierarchy during 2020
or 2021.
Note 5
- Tax Status
The
Internal Revenue Service (“IRS”) has determined and informed the Company by letter dated May 9, 2017, that the Plan
is designed in accordance with applicable sections of the Code. The Plan has since been amended and restated through December 31,
2021. The Company believes that the Plan is currently designed and being operated in compliance with the Code. Therefore, no provision
for income taxes has been included in the Plan’s financial statements.
The
plan administrator believes it is no longer subject to tax examinations for years prior to 2017.
Note 6
- Administration of Plan Assets
The
Master Trust assets are held by the trustee of the Plan, State Street Bank and Trust Company. The assets of the Interest Income Fund
(the “Fund”) are held by the Fund’s custodian, The Northern Trust Company.
Certain
administrative functions are performed by officers or employees of the Company or its subsidiaries. No such officer or employee receives
compensation from the Plan, nor does the Company allocate any costs to the Plan.
Note
7 - Plan Termination
The
Company, by action of the board of directors, may terminate the Plan at any time. Termination of the Plan would not affect the
rights of a participant as to the continuance of investment, distribution or withdrawal of their account balance. Upon termination
of the Plan, participants would become fully vested. In the event of termination, all participant notes receivable would become
due immediately upon such termination. There are currently no plans to terminate the Plan.
Note
8 - Reconciliation to Form 5500
The
net assets on the financial statements differ from the net assets on the Form 5500 due to the synthetic GICs held in the Master
Trust being recorded at contract value on the financial statements and at fair value on Form 5500. The net assets on the financial
statements compared to those on Form 5500 at December 31, 2021 and 2020 were $9.5 million lower and $35.8 million lower, respectively.
Additionally, the increase in net assets on Form 5500 for the year ended December 31, 2021 is lower than the financial statements
by $26.3 million.