Baker Hughes 2007 Annual Report Download - page 148

2007 Form 10-K 65
Other
In the normal course of business with customers, vendors
and others, we have entered into off-balance sheet arrange-
ments, such as letters of credit and other bank issued guar-
antees, which totaled approximately $466.8 million at
December 31, 2007. We also had commitments outstanding
for purchase obligations related to capital expenditures and
inventory under purchase orders and contracts of approximately
$293.1 million at December 31, 2007. It is not practicable to
estimate the fair value of these financial instruments. None of
the off-balance sheet arrangements either has, or is likely to
have, a material effect on our consolidated financial statements.
NOTE 16. OTHER SUPPLEMENTAL INFORMATION
Product Warranty Liability
The changes in the aggregate product warranty liability are
as follows:
Balance as of December 31, 2005 $ 13.4
Claims paid (6.3)
Additional warranties 11.4
Revisions in estimates for previously
issued warranties 3.0
Other 1.1
Balance as of December 31, 2006 22.6
Claims paid (10.0)
Additional warranties 3.7
Revisions in estimates for previously
issued warranties (1.9)
Other 0.4
Balance as of December 31, 2007 $ 14.8
Asset Retirement Obligations
On December 31, 2005, we adopted FASB Interpretation
No. 47, Conditional Asset Retirement Obligations (“FIN 47”).
FIN 47 clarifies that the term “conditional asset retirement
obligation” as used in SFAS No. 143, Accounting for Asset
Retirement Obligations, refers to a legal obligation to perform
an asset retirement activity in which the timing and/or method
of settlement are conditional on a future event that may or
may not be within the control of the entity. The obligation
to perform the asset retirement activity is unconditional even
though uncertainty exists about the timing and/or method of
settlement. FIN 47 also clarifies when an entity would have
sufficient information to reasonably estimate the fair value of
an asset retirement obligation. The adoption of FIN 47 resulted
in a charge of $0.9 million, net of tax of $0.5 million, recorded
as the cumulative effect of accounting change in the consoli-
dated statement of operations. In conjunction with the adop-
tion, we recorded conditional asset retirement obligations of
$1.6 million as the fair value of the costs associated with the
special handling of asbestos related materials in certain facilities.
We have certain facilities that contain asbestos related
materials for which a liability has not been recognized because
we are unable to determine the time frame over which these
obligations may be settled. Our normal practice is to conduct
asbestos abatement procedures when required by contractual
requirements related to asset disposals or when a facility with
asbestos is subject to significant renovation or is demolished.
We have no plans or expectations to sell, abandon or demolish
these other facilities nor do we anticipate the need for major
renovations to them resulting from technological or operations
changes or other factors. We expect these other facilities to
be operational in their current state for the foreseeable future
and, therefore, the time frame over which these obligations
will be settled cannot be determined. As a result, sufficient
information does not exist to enable us to reasonably estimate
the fair value of the asset retirement obligation.
The changes in the asset retirement obligation liability are
as follows:
Balance as of December 31, 2005 $ 17.4
Liabilities incurred 1.3
Liabilities settled (1.2)
Accretion expense 0.3
Revisions to existing liabilities (2.3)
Translation adjustments 0.2
Balance as of December 31, 2006 15.7
Liabilities incurred 3.2
Liabilities settled (2.5)
Accretion expense 0.4
Revisions to existing liabilities (0.9)
Translation adjustments (0.1)
Balance as of December 31, 2007 $ 15.8
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss, net of tax, is com-
prised of the following at December 31:
2007 2006
Foreign currency
translation adjustments $ 11.9 $ (60.3)
Pension and other
postretirement benefits (56.1) (126.9)
Total $ (44.2) $ (187.2)
Other
Supplemental consolidated statement of operations infor-
mation is as follows for the years ended December 31:
2007 2006 2005
Rental expense
(generally transporta-
tion equipment and
warehouse facilities) $ 179.4 $ 161.0 $ 138.7
Research and
development 233.5 216.2 188.2