DuPont 2006 Annual Report Download - page 99

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(PFOA) alleged to have been determined to be “likely” to cause cancer in humans. The actions seek
unspecified monetary damages for consumers who purchased cooking products containing Teflon», as well as
the creation of funds for medical monitoring and independent scientific research, attorneys’ fees and other
relief. In December 2005, a motion was filed by a single named plaintiff in the Superior Court for the
Province of Quebec, Canada seeking authorization to institute a class action on behalf of all Quebec
consumers who have purchased or used kitchen items, household appliances or food-packaging containing
Teflon»or Zonyl»non-stick coatings. A ruling on this motion is expected from the Court in 2007. The
plaintiff withdrew its 2006 motion to include all Canadian consumers, not just Quebec residents, of these
products as part of the class. Damages are not quantified, but are alleged to include the cost of replacement
products as well as one hundred dollars per class member as exemplary damages.
The company believes that the 22 class actions and the motion filed in Quebec are without merit and,
therefore, believes it is remote that it will incur losses related to these actions. At December 31, 2006, the
company had not established any reserves related to these matters.
Elastomers Antitrust Matters
Since 2002, the U.S., European Union and Canadian antitrust authorities have investigated the synthetic rubber
markets for possible violations. These investigations included DDE as a result of its participation in the
polychloroprene (PCP) and ethylene propylene diene monomer (EPDM) markets. DDE was a joint venture
between The Dow Chemical Company (Dow) and DuPont. DDE and DuPont were named in related civil
litigation.
In April of 2004, DuPont and Dow entered into a series of agreements under which DuPont obtained complete
control over directing DDE’s response to these investigations and the related litigation and DuPont agreed to a
disproportionate share of the venture’s liabilities and costs related to these matters. Consequently, DuPont bears
any potential liabilities and costs up to the initial $150. Dow is obligated to indemnify DuPont for up to $72.5
by paying 15 to 30 percent toward liabilities and costs in excess of $150. On June 30, 2005, DDE became a
wholly owned subsidiary of DuPont and was renamed DuPont Performance Elastomers LLC (DPE).
DDE resolved all criminal antitrust allegations against it related to PCP in the U.S. through a plea agreement
with the DOJ in January 2005 which was approved by the court on March 29, 2005. The agreement requires
the subsidiary to pay a fine of $84 which, at its election, may be paid in six equal, annual installments. The
annual installment payments for 2005 and 2006 have been made. The agreement also requires the subsidiary
to provide ongoing cooperation with the DOJ’s investigation. DDE responded to investigations by European
Union and Canadian antitrust authorities and DPE continues to cooperate with the authorities.
In November of 2004, the court approved the settlement reached by DDE and attorneys for the class, of
federal antitrust litigation related to PCP for $42, including attorneys’ fees and costs. DDE also reached a
settlement with attorneys for the class, of federal antitrust litigation related to EPDM for $24.6, including
attorneys’ fees and costs. The court approved the EPDM settlement in May 2005. During the second quarter of
2006, the court-appointed fund administrators returned a portion of the class settlement paid in connection
with the PCP class action related to individual claimants that opted out of the class. Including the PCP and
EPDM class settlements, net of the PCP class action funds returned to the company, related to civil lawsuits
and claims alleging antitrust violations in certain synthetic rubber markets, the company has paid $106
through December 31, 2006. As of December 31, 2006 there are no pending civil lawsuits or claims.
As a result of its April 2004 agreements with Dow, DuPont established reserves in 2004 of $268, of which
$18 will be reimbursed by Dow to reflect its share of anticipated losses. At December 31, 2006, the balance of
the reserves is $126, which reflects net adjustments made for claimants who opted out of the PCP settlement
during the second quarter 2006 and includes $56 for the remaining four installment payments to be made
under the plea agreement with the DOJ. Given the uncertainties inherent in predicting the outcome of these
F-36
E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)