Dow Chemical 2011 Annual Report Download - page 205

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NOTE N – COMMITMENTS AND CONTINGENT LIABILITIES
Litigation
Breast Implant Matters
On May 15, 1995, Dow Corning Corporation (“Dow Corning”), in which the Company is a 50 percent shareholder, voluntarily
filed for protection under Chapter 11 of the Bankruptcy Code to resolve litigation related to Dow Corning’s breast implant and
other silicone medical products. On June 1, 2004, Dow Corning’s Joint Plan of Reorganization (the “Joint Plan”) became
effective and Dow Corning emerged from bankruptcy. The Joint Plan contains release and injunction provisions resolving all
tort claims brought against various entities, including the Company, involving Dow Corning’s breast implant and other silicone
medical products.
To the extent not previously resolved in state court actions, cases involving Dow Corning’s breast implant and other
silicone medical products filed against the Company were transferred to the U.S. District Court for the Eastern District of
Michigan (the “District Court”) for resolution in the context of the Joint Plan. On October 6, 2005, all such cases then pending
in the District Court against the Company were dismissed. Should cases involving Dow Corning’s breast implant and other
silicone medical products be filed against the Company in the future, they will be accorded similar treatment. It is the opinion
of the Company’s management that the possibility is remote that a resolution of all future cases will have a material impact on
the Company’s consolidated financial statements.
As part of the Joint Plan, Dow and Corning Incorporated agreed to provide a credit facility to Dow Corning in an aggregate
amount of $300 million; the aggregate amount was reduced to $150 million effective June 1, 2011. The Company’s share of the
credit facility was originally $150 million, but was reduced to $75 million effective June 1, 2011, and is subject to the terms
and conditions stated in the Joint Plan. At December 31, 2011, no draws had been taken against the credit facility.
DBCP Matters
Numerous lawsuits have been brought against the Company and other chemical companies, both inside and outside of the
United States, alleging that the manufacture, distribution or use of pesticides containing dibromochloropropane (“DBCP”) has
caused personal injury and property damage, including contamination of groundwater. It is the opinion of the Company’s
management that the possibility is remote that the resolution of such lawsuits will have a material impact on the Company’s
consolidated financial statements.
Environmental Matters
Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the
liability can be reasonably estimated based on current law and existing technologies. At December 31, 2011, the Company had
accrued obligations of $733 million for probable environmental remediation and restoration costs, including $69 million for the
remediation of Superfund sites and $50 million for environmental liabilities recognized in the fourth quarter of 2011 related to
the Camaçari, Brazil site. This is management’s best estimate of the costs for remediation and restoration with respect to
environmental matters for which the Company has accrued liabilities, although it is reasonably possible that the ultimate cost
with respect to these particular matters could range up to approximately twice that amount. Consequently, it is reasonably
possible that environmental remediation and restoration costs in excess of amounts accrued could have a material impact on the
Company’s results of operations, financial condition and cash flows. It is the opinion of the Company’s management, however,
that the possibility is remote that costs in excess of the range disclosed will have a material impact on the Company’s results of
operations, financial condition and cash flows. Inherent uncertainties exist in these estimates primarily due to unknown
conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation technologies
for handling site remediation and restoration. At December 31, 2010, the Company had accrued obligations of $607 million for
probable environmental remediation and restoration costs, including $59 million for the remediation of Superfund sites.
The following table summarizes the activity in the Company's accrued obligations for environmental matters for the years
ended December 31, 2011 and 2010:
Accrued Obligations for Environmental Matters
In millions
Balance at January 1
Additional accruals
Charges against reserve
Foreign currency impact
Balance at December 31
2011
$ 607
286
(149)
(11)
$ 733
2010
$ 619
159
(171)
—
$ 607