ASSET RETIREMENT OBLIGATIONS

3 Months Ended

Mar. 31, 2013

ASSET RETIREMENT OBLIGATIONS

ASSET RETIREMENT OBLIGATIONS

15)          ASSET RETIREMENT OBLIGATIONS

We apply the provisions of ASC Topic 410, Asset Retirements and Environmental Obligations (“ASC 410”), which requires us to make estimates regarding future events in order to record a liability for asset retirement obligations in the period in which a legal obligation is created.  Such liabilities are recorded at fair value, with an offsetting increase to the carrying value of the related long-lived assets.  The fair value is estimated by discounting projected cash flows over the estimated life of the assets using our credit adjusted risk-free rate applicable at the time the obligation is initially recorded.  In future periods, the liability is accreted to its present value and the capitalized cost is depreciated over the useful life of the related asset.  We also adjust the liability for changes resulting from revisions to the timing of future cash flows or the amount of the original estimate.  Upon retirement of the long-lived asset, we either settle the obligation for its recorded amount or incur a gain or loss.

Our asset retirement obligations include estimates for all asset retirement obligations identified for our worldwide facilities.  Our asset retirement obligations are primarily the result of legal obligations for the removal of leasehold improvements and restoration of premises to their original condition upon termination of leases at approximately 20 facilities; legal obligations to close approximately 90 brine supply, brine disposal, waste disposal, and hazardous waste injection wells and the related pipelines at the end of their useful lives; and decommissioning and decontamination obligations that are legally required to be fulfilled upon closure of approximately 30 of our manufacturing facilities.

The following is a summary of the change in the carrying amount of the asset retirement obligations for the quarters ended March 31, 2013 and 2012 and the net book value of assets related to the asset retirement obligations at March 31, 2013 and 2012:

	Quarters ended March 31,
(In millions)	2013			2012
Asset retirement obligation balance at beginning of period	$	20		$	21
Payments	(1		)	(1		)
Asset retirement obligation balance at end of period	$	19		$	20
Net book value of asset retirement obligation assets at end of period	$	—		$	1

Depreciation expense for the quarters ended March 31, 2013 and 2012 was less than $1 million.

At March 31, 2013 and December 31, 2012, $5 million and $6 million, respectively of asset retirement obligations were included in accrued expenses and $14 million were included in other liabilities in our Consolidated Balance Sheet.