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105
Notes to the Financial Statements
105
NOTE 27. COMMITMENTS AND CONTINGENCIES (Continued)
Conditional Asset Retirement Obligations
In March 2005, the FASB issued Interpretation No. 47 ("FIN 47"), Accounting for Conditional Asset Retirement
Obligations. Under FIN 47, companies must accrue for costs related to legal obligations to perform certain activities in
connection with the retirement, disposal or abandonment of assets. The obligation to perform the asset retirement activity
is not conditional even though the timing or method may be conditional.
We have identified asbestos abatement and PCB removal as conditional asset retirement obligations. Asbestos
abatement was estimated using site-specific surveys where available and a per/square foot estimate where surveys were
unavailable. PCB removal costs were based on historical removal costs per transformer and applied to transformers
identified by a PCB transformer global survey we conducted. Other conditional asset retirement obligations exist,
including regulated substances. These costs, however, are not estimable until a triggering event occurs (e.g., plant
closing) due to the absence of historical cost, range of potential settlement dates and variability among plants. Presently
the Company does not have sufficient information to estimate the fair value of these other obligations.
FIN 47 requires that an estimate of conditional asset retirement obligations be recorded as a liability and as an
increase to the asset. The capitalized portion is depreciated over the remaining useful life of the asset. We believe the
most reasonable remaining useful life should be consistent with our depreciation policy. Therefore, the full amount of this
estimate for asbestos abatement and PCB removal was expensed at December 31, 2005, as an after-tax charge of
$251 million shown as a Cumulative effects of changes in accounting principles.
NOTE 28. SUBSEQUENT EVENTS
Held-for-Sale Operations
Aston Martin Lagonda Group Limited ("Aston Martin"), a wholly-owned subsidiary, is part of our PAG segment and
manufactures premium vehicles. During the first quarter of 2007, management committed to sell all or part of Aston
Martin through a stock sale. We expect the sale to be completed in the first half of 2007.
Automobile Protection Corporation ("APCO"), a wholly-owned subsidiary, offers vehicle service contracts and related
after-market products to dealers of all vehicle makes and models. During the first quarter of 2007, management
committed to sell APCO. We expect the sale to be completed in the first half of 2007.
UAW Voluntary Separations
Hourly employees in Ford North America who accepted an early retirement or separation package are expected to
leave the Company by September 2007, though employees have an opportunity to rescind acceptance until the time of
separation. Subsequent to year-end, there have been approximately 1,700 rescissions, which would have reduced the
2006 pre-tax charge by about $150 million. For additional discussion of the voluntary separation programs, see Note 17.