DuPont 2006 Annual Report Download - page 95

Download and view the complete annual report

Please find page 95 of the 2006 DuPont annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

under synthetic lease and are due should the company decide neither to renew these leases nor to exercise its
purchase option. At December 31, 2006, 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 $294, $155, $109, $82 and $59 for the years 2007, 2008, 2009, 2010 and 2011 respectively, and
$107 for subsequent years and are not reduced by noncancelable minimum sublease rentals due in the future
in the amount of $10. Net rental expense under operating leases was $282 in 2006, $265 in 2005, and $272 in
2004.
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. The company’s asset retirement obligation liabilities were $62 and $58 at December 31, 2006
and 2005, respectively.
Litigation
Benlate»
In 1991, DuPont began receiving claims by growers that use of Benlate»50 DF fungicide had caused crop
damage. DuPont has since been served with thousands of lawsuits, most of which have been disposed of
through trial, dismissal or settlement. The status of Benlate»cases is indicated in the table below.
2006 2005 2004
Status of Cases at December 31,
Filed — — 1
Resolved 3 30 4
Pending 60 63 93
In March 2006, DuPont settled the only case pending in Australia alleging plant damage for about 375
thousand dollars. Nine cases are pending in Florida state court, involving allegations that Benlate»caused crop
damage. The court dismissed for failure to prosecute one of the nine cases in November 2006 on DuPont’s
motion. Plaintiffs are expected to appeal. Two of the nine cases, involving twenty-seven Costa Rican fern
growers, were tried during the second quarter of 2006 resulting in a $56 judgment against DuPont. At trial, the
plaintiffs sought damages in the range of $270 to $400. The plaintiffs as well as DuPont have filed post trial
motions and DuPont will appeal the verdict. DuPont believes that the appeal will be resolved in its favor and,
therefore, has not established a reserve relating to the judgment.
Twenty-three of the pending cases seek to reopen settlements with the company by alleging that the company
committed fraud and misconduct, as well as violations of federal and state racketeering laws. The dismissal of
16 of the reopener cases by the Florida federal court was affirmed by the 11th Circuit Court of Appeals in late
2006. Plaintiffs have until the end of February 2007 to appeal. DuPont settled one of the two cases pending in
Florida state court for 200 thousand dollars in September 2006. In December 2005, the Ninth Circuit Court of
Appeals reversed the Hawaii federal court’s dismissal of the five reopener cases before it. These five cases are
consolidated for trial to begin in April 2007. The remaining case in Hawaii state court was settled in part for
$1.2. The remainder of this case was dismissed on DuPont’s motion. Plaintiffs have appealed.
F-32
E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)