DuPont 2009 Annual Report Download - page 25

Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
For plans other than the principal U.S. pension plan, pension expense is typically determined using the fair value of
assets. The fair value of assets in all pension plans was $17.1 billion at December 31, 2009, and the related projected
benefit obligations were $22.8 billion. In addition, obligations under the company’s unfunded other long-term
employee benefit plans were $4.1 billion at December 31, 2009.
The following table highlights the potential impact on the company’s pre-tax earnings due to changes in certain key
assumptions with respect to the company’s pension and other long-term employee benefit plans, based on assets and
liabilities at December 31, 2009:
1/2 Percentage 1/2 Percentage
Pre-tax Earnings Benefit (Charge) Point Point
(Dollars in millions) Increase Decrease
Discount Rate $71 $(73)
Expected rate of return on plan assets 83 (83)
Additional information with respect to pension and other long-term employee benefits expenses, liabilities and
assumptions is discussed under ‘‘Long-Term Employee Benefits’’ beginning on page 40.
Environmental Matters
DuPont accrues for remediation activities when it is probable that a liability has been incurred and a reasonable
estimate of the liability can be made. The company’s estimates are based on a number of factors, including the
complexity of the geology, the nature and extent of contamination, the type of remedy, the outcome of discussions with
regulatory agencies and other PRPs at multiparty sites and the number of and financial viability of other PRPs. The
company has recorded a liability of $396 million on the Consolidated Balance Sheet as of December 31, 2009; these
accrued liabilities exclude claims against third parties and are not discounted.
Considerable uncertainty exists with respect to environmental remediation costs and, under adverse changes in
circumstances, the potential liability may range up to two to three times the amount accrued. Much of this liability
results from the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, often referred to
as the Superfund), the Resource Conservation and Recovery Act (RCRA) and similar state and global laws. These laws
require the company to undertake certain investigative and remedial activities at sites where the company conducts or
once conducted operations or at sites where company-generated waste was disposed. The accrual also includes a
number of sites identified by the company for which it is probable that environmental remediation will be required, but
which are not currently the subject of enforcement activities. Federal and state authorities may seek fines and penalties
for violation of the various laws and governmental regulations and could, among other things, impose liability on the
company for cleaning up the damage resulting from company-generated waste disposal. Over the next two decades,
the company could incur significant costs under both CERCLA and RCRA.
Remediation activities vary substantially in duration and cost from site to site. These activities and their associated
costs, depend on the mix of unique site characteristics, evolving remediation technologies, diverse regulatory agencies
and enforcement policies, as well as the presence or absence of PRPs. Therefore, it is difficult to develop precise
estimates of future site remediation costs.
Legal Contingencies
The company’s results of operations could be affected by significant litigation adverse to the company, including
product liability claims, patent infringement and antitrust claims, and claims for third party property damage or personal
injury stemming from alleged environmental torts. The company records accruals for legal matters when the
information available indicates that it is probable that a liability has been incurred and the amount of the loss can be
reasonably estimated. Management makes adjustments to these accruals to reflect the impact and status of
negotiations, settlements, rulings, advice of counsel and other information and events that may pertain to a particular
matter. Predicting the outcome of claims and lawsuits and estimating related costs and exposure involves substantial
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