DuPont 2009 Annual Report Download - page 42

Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
The company’s income can be significantly affected by pension and defined contribution benefits as well as other
long-term employee benefits. The following table summarizes the extent to which the company’s income over each of
the last 3 years was affected by pre-tax charges and credits related to long-term employee benefits.
(Dollars in millions) 2009 2008 2007
Defined benefit plan (benefits)/charges $155 $(362) $ (54)
Defined contribution plan charges 245 250199
Other long-term employee benefit charges 220 181 192
Net amount $620 $ 69 $237
1Includes an accrual of $16 million for company match and contribution based on compensation paid in 2009 for 2008 service.
The above (benefits)/charges for pension and other long-term employee benefits are determined as of the beginning of
each year. The increase in pension expense in 2009 primarily reflects unfavorable returns on pension assets during
2008. The decrease in pension expense in 2008 primarily reflects favorable returns on pension assets during 2007.
The company’s key assumptions used in calculating its pension and other long-term employee benefits are the
expected return on plan assets, the rate of compensation increases and the discount rate (see Note 22 to the
Consolidated Financial Statements). For 2010, long-term employee benefits expense is expected to increase by about
$410 million, principally due to lower market-related value of pension assets.
Other Employee-Related Benefits
In October 2009, the company announced revisions to its vacation benefits policy covering all U.S. employees.
Effective December 31, 2010, entitled vacation for the following year will no longer vest at the end of each preceding
year. In addition, vacation will be earned monthly and accrued on the first day of each calendar month during the year
beginning in 2011. These revisions to the company’s vacation benefits policy will provide a one-time benefit of
approximately $160 million in 2010.
Environmental Matters
DuPont operates global manufacturing, product handling and distribution facilities that are subject to a broad array of
environmental laws and regulations. Such rules are subject to change by the implementing governmental agency, and
the company monitors these changes closely. Company policy requires that all operations fully meet or exceed legal
and regulatory requirements. In addition, DuPont implements voluntary programs to reduce air emissions, minimize
the generation of hazardous waste, decrease the volume of water use and discharges, increase the efficiency of energy
use and reduce the generation of persistent, bioaccumulative and toxic materials. Management has noted a global
upward trend in the amount and complexity of proposed chemicals regulation. The costs to comply with complex
environmental laws and regulations, as well as internal voluntary programs and goals, are significant and will continue
to be significant for the foreseeable future.
Environmental Operating Costs
As a result of its operations, DuPont incurs costs for pollution abatement activities including waste collection and
disposal, installation and maintenance of air pollution controls and wastewater treatment, emissions testing and
monitoring, and obtaining permits. The company also incurs costs related to environmental related research and
development activities including environmental field and treatment studies as well as toxicity and degradation testing to
evaluate the environmental impact of products and raw materials. Related to these activities, DuPont incurred
environmental operating costs of $483 million in 2009, $525 million in 2008 and $500 million in 2007.
Remediation Expenditures
RCRA, which extensively regulates the treatment, storage and disposal of hazardous waste, requires that permitted
facilities undertake an assessment of environmental contamination. If conditions warrant, companies may be required
to remediate contamination caused by prior operations. In contrast to CERCLA, the costs of the RCRA corrective action
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