DuPont 2005 Annual Report Download - page 89

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E. I. du Pont de Nemours and Company
Notes to Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
suppliers. Assuming liquidation, these assets are estimated to cover approximately 54 percent of the $232 of guaranteed
obligations of customers and suppliers. Set forth below are the company’s guaranteed obligations at December 31, 2005:
Short- Long-
Guarantees Term Term Total
Obligations for customers, suppliers and other unaffiliated companies 1:
Bank borrowings (terms up to 7 years) $ 99 $130 $229
Revenue bonds (term 3 years) –33
Obligations for equity affiliates 2:
Bank borrowings (terms up to 8 years) 240 76 316
Leases on equipment and facilities (terms up to 6 years) – 38 38
Total obligations for customers, suppliers, other unaffiliated companies and equity affiliates 339 247 586
Obligations for divested subsidiaries and affiliates 3:
Conoco (terms from 4-22 years) – 178 178
Consolidation Coal Sales Company (term 6 years) – 103 103
INVISTA (terms up to 2 years) 7–7
Total obligations for divested subsidiaries and affiliates 7 281 288
$346 $528 $874
1Existing guarantees for customers and suppliers arose as part of contractual agreements.
2Existing guarantees for equity affiliates arose for liquidity needs in normal operations.
3The company has guaranteed certain obligations and liabilities related to divested subsidiaries, including Conoco and its subsidiaries and affiliates, Consolidation
Coal Sales Company, and INVISTA entities sold to Koch. The Restructuring, Transfer and Separation Agreement between DuPont and Conoco requires Conoco to
use its best efforts to have Conoco, or any of its subsidiaries, substitute for DuPont. Conoco, Koch and Consolidation Coal Sales Company have indemnified the
company for any liabilities the company may incur pursuant to these guarantees.
Operating Leases
The company uses various leased facilities and equipment in its operations. The terms for these leased assets vary depending
on the lease agreement.
As of December 31, 2005, the company had one synthetic lease program relating to short-lived equipment. In connection with
this synthetic lease program, the company had residual value guarantees in the amount of $100 at December 31, 2005. The
guarantee amounts are tied to the unamortized lease values of the assets under synthetic lease and are due should the
company decide neither to renew these leases nor to exercise its purchase option. At December 31, 2005, the company had no
liabilities recorded for these obligations. Any residual value guarantee amounts paid to the lessor may be recovered by the
company from the sale of the assets to a third party.
Future minimum lease payments (including residual value guarantee amounts) under noncancelable operating leases are $276,
$151, $122, $80, and $73 for the years 2006, 2007, 2008, 2009 and 2010 respectively, and $103 for subsequent years, and are not
reduced by noncancelable minimum sublease rentals due in the future in the amount of $3. Net rental expense under operating
leases was $265 in 2005, $272 in 2004 and $269 in 2003.
Asset Retirement Obligations
The company has recorded asset retirement obligations primarily associated with closure, reclamation, and removal costs for
mining operations related to the production of titanium dioxide in Coatings & Color Technologies.
F-30