DuPont 2006 Annual Report Download - page 100

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matters and the likelihood of additional future claims it is reasonably possible that actual losses may exceed
the amount accrued. However, a range of such losses cannot be reasonably estimated at this time.
General
The company is subject to various lawsuits and claims arising out of the normal course of its business. These
lawsuits and claims include actions based on alleged exposures to products, intellectual property and
environmental matters and contract and antitrust claims. Management has noted a nationwide trend in
purported class actions against chemical manufacturers generally seeking relief such as medical monitoring,
property damages, off-site remediation and punitive damages arising from alleged environmental torts without
claiming present personal injuries. Such cases may allege contamination from unregulated substances or
remediated sites. For example, in September 2006, a West Virginia state court certified a class action against
DuPont seeking damages similar to those listed above allegedly related to a closed zinc smelter. The smelter
was owned and operated by at least three companies between 1910 and 2001, including DuPont between 1928
and 1950. DuPont performed remedial measures at the request of the EPA in the late 1990’s and in 2001
repurchased the site to facilitate and complete the remediation. The company contests the merits of this case
and plans to defend itself vigorously against this and similar cases, if any, in the future. Although it is not
possible to predict the outcome of these various lawsuits and claims, management does not anticipate they will
have a material adverse effect on the company’s consolidated financial position or liquidity. However, the
ultimate liabilities may be significant to results of operations in the period recognized. The company accrues
for contingencies when the information available indicates that it is probable that a liability has been incurred
and the amount of the liability can be reasonably estimated.
Environmental
The company is also subject to contingencies pursuant to environmental laws and regulations that in the future
may require the company to take further action to correct the effects on the environment of prior disposal
practices or releases of chemical or petroleum substances by the company or other parties. The company
accrues for environmental remediation activities consistent with the policy set forth in Note 1. Much of this
liability results from the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA,
often referred to as Superfund), the Resource Conservation and Recovery Act (RCRA) and similar state 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 estimated costs related to 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 CERCLA,
RCRA or state enforcement activities.
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 potentially responsible
parties. At December 31, 2006 and 2005, the Consolidated Balance Sheet includes a liability of $349 and
$343, respectively, relating to these matters and, in management’s opinion, is appropriate based on existing
facts and circumstances. The average time frame, over which the accrued or presently unrecognized amounts
may be paid, based on past history, is estimated to be 15-20 years. Considerable uncertainty exists with respect
to these costs and, under adverse changes in circumstances, potential liability may range up to two to three
times the amount accrued as of December 31, 2006.
Other
The company has various purchase commitments incident to the ordinary conduct of business. In the
aggregate, such commitments are not at prices in excess of current market.
F-37
E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)