Accounting for Asset Retirement Obligations

6 Months Ended

Jun. 29, 2014

Accounting for Asset Retirement Obligations [Abstract]

Accounting for Asset Retirement Obligations

Note 12.  Accounting for Asset Retirement Obligations

The Company records asset retirement obligations for situations in which the Company will be required to incur costs to retire tangible long-lived assets. These are primarily related to its PCC satellite facilities and mining operations. The Company has also recorded the provisions related to conditional asset retirement obligations at its facilities.  The Company has recorded asset retirement obligations at all of its facilities except where there are no legal or contractual obligations.

The following is a reconciliation of asset retirement obligations as of June 29, 2014:

	(millions of dollars)
Asset retirement liability, December 31, 2013	$	14.7
Accretion expense		0.3
Reversals		(0.5	)
Acquisition		9.2
Asset retirement liability,  June 29, 2014	$	23.7

The Company’s Performance Materials segment mines various minerals using a surface mining process that requires the removal of overburden.  In certain areas and under various governmental regulations, the Company is obligated to restore the land comprising each mining site to its original condition at the completion of the mining activity.  The table above includes $9.2 million related to this land reclamation liability assumed in connection with the purchase of AMCOL. This liability will be adjusted to reflect the passage of time, mining activities, and changes in estimated future cash outflows.

The asset retirement costs are capitalized as part of the carrying amount of the associated asset. The current portion of the liability of approximately $2.2 million is included in other current liabilities and the long-term portion of the liability of approximately $21.5 million is included in other non-current liabilities in the Condensed Consolidated Balance Sheet as of June 29, 2014.