Ford 2006 Annual Report Download - page 98
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Notes to the Financial Statements
96
NOTE 23. RETIREMENT BENEFITS (Continued)
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A one percentage point increase/(decrease) in the assumed health care cost trend rates would increase/(decrease)
the postretirement health care benefit obligation for year-end 2006 by approximately $4.6 billion/$(3.6) billion and the
service and interest component of health care expense for 2006 by $400 million/$(320) million.
As discussed in Note 17, we intend to idle several facilities in North America. As a result of the Way Forward plan, we
have recognized curtailment losses due to the significant reduction in the expected aggregate years of future service of
the employees in the U.S. and Canadian hourly pension plans and the corresponding increase in their expected
aggregate years of future retirement. The curtailment losses include recognition of the increase in the projected benefit
obligation and a portion of the previously unrecognized prior service cost reflecting the reduction in expected future
service. The financial impact is reflected in the tables above.
In September 2006, the FASB issued SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R). This standard requires
employers that sponsor defined benefit plans to recognize the over-funded or under-funded status of a defined benefit
postretirement plan as an asset or liability in its balance sheet and to recognize changes in that funded status in the year
in which the changes occur. Unrecognized prior service credits/costs and net actuarial gains/losses are recognized as a
component of Accumulated other comprehensive income/(loss). Additional minimum pension liabilities and related
intangible assets are eliminated upon adoption of the new standard. SFAS No. 158 requires prospective application and
is effective for financial statements issued for fiscal years ending after December 15, 2006. The following table
summarizes the effect of the initial adoption of SFAS No. 158 (in millions):
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