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Table of Contents
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued
PFOA
The Performance Chemicals segment uses a form of PFOA (collectively, perfluorooctanoic acid and its salts, including the ammonium salt) as a processing
aid to manufacture fluoropolymer resins and dispersions. The Performance Materials segment uses PFOA in the manufacture of raw materials for
perfluoroelastomer parts and some fluoroelastomers. In the fall of 2002, DuPont began producing rather than purchasing PFOA to support these
manufacturing processes. PFOA is not used in the manufacture of fluorotelomers; however, it is an unintended by-product present at trace levels in some
fluorotelomer-based products.
PFOA is bio-persistent and has been detected at very low levels in the blood of the general population. As a result, EPA initiated a process to enhance its
understanding of the sources of PFOA in the environment and the pathways through which human exposure to PFOA is occurring. In 2005, EPA issued a
draft risk assessment on PFOA stating that the cancer data for PFOA may be best described as "suggestive evidence of carcinogenicity, but not sufficient to
assess human carcinogenic potential" under EPA's Guidelines for Carcinogen Risk Assessment. The EPA risk assessment is ongoing. Although EPA has
stated that there remains considerable scientific uncertainty regarding potential risks associated with PFOA, it also stated that it does not believe that there is
any reason for consumers to stop using any products because of concerns about PFOA.
DuPont respects EPA's position raising questions about exposure routes and the potential toxicity of PFOA and DuPont and other companies have outlined
plans to continue research, emission reduction and product stewardship activities to help address EPA's questions. In January 2006, DuPont pledged its
commitment to EPA's 2010/15 PFOA Stewardship Program. The EPA program asks participants (1) to commit to achieve, no later than 2010, a 95 percent
reduction in both facility emissions and product content levels of PFOA, PFOA precursors and related higher homologue chemicals and (2) to commit to
working toward the elimination of PFOA, PFOA precursors and related higher homologue chemicals from emissions and products by no later than 2015.
DuPont has exceeded the EPA's 2010 objective. In February 2007, DuPont announced its commitment to no longer make, use or buy PFOA by 2015, or
sooner if possible. To achieve this goal, DuPont developed PFOA replacement technology and is converting customers to fluoropolymer resins and
dispersions manufactured using the replacement technology. DuPont has been introducing its next generation fluorotelomers products and converting
customers to their use.
In 2009, EPA issued a national Provisional Health Advisory for PFOA of 0.4 parts per billion (ppb) in drinking water. In 2007, NJDEP identified a
preliminary drinking-water guidance level for PFOA of 0.04 ppb as part of the first phase of an ongoing process to establish a state drinking-water standard.
For additional information regarding PFOA matters, see Note 15 to the Consolidated Financial Statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Derivatives and Other Hedging Instruments
In the ordinary course of business, the company enters into contractual arrangements (derivatives) to hedge its exposure to foreign currency, interest rate and
commodity price risks under established procedures and controls. For additional information on these derivatives and related exposures, see Note 19 to the
Consolidated Financial Statements.
The following table summarizes the impacts of the company's foreign currency hedging program on the company's results of operations for the years ended
December 31, 2011, 2010 and 2009, and includes the company's pro rata share of its equity affiliates' exchange gains and losses and corresponding gains and
losses on foreign currency exchange contracts:
(Dollars in millions) 2011 2010 2009
Pre-tax exchange loss $ (163) $ (13) $ (205)
Tax benefit (expense) 82 (71) 91
After-tax exchange loss $ (81) $ (84) $ (114)
In addition to the contracts disclosed in Note 19 to the Consolidated Financial Statements, from time to time, the company will enter into foreign currency
exchange contracts to establish with certainty the USD amount of future firm commitments denominated in a foreign currency. Decisions regarding whether
or not to hedge a given commitment are made on a case-by-case basis, taking into consideration the amount and duration of the exposure, market volatility
and economic trends. Foreign currency exchange contracts are also used, from time to time, to manage near-term foreign currency cash requirements.
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