DuPont 2007 Annual Report Download - page 88

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wholly owned subsidiary of DuPont and was renamed DuPont Performance Elastomers LLC (DPE). In July 2007,
DPE pled guilty to conspiring to fix prices and paid a fine of CDN $4, approximately $3.8 USD, resolving all criminal
antitrust allegations against it related to PCP in Canada.
In late March 2007, the EU antitrust authorities issued a Statement of Objections that makes antitrust allegations
regarding the PCP market against DPE, relating to the joint venture’s activities, and DuPont, to which both have
responded. In December 2007, the EU antitrust authorities issued their decision, including the imposition of fines
against DPE, Dow and DuPont totaling EURO 59.25 (approximately $87 USD). The company will seek appellate
review.
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, is being paid in six equal, annual installments. The annual installment
payments for 2005, 2006 and 2007 have been made. The agreement also requires the subsidiary to provide ongoing
cooperation with the DOJ’s investigation.
As a result of its April 2004 agreements with Dow, DuPont established accruals in 2004 of $268 and increased its
accruals by $65 in the first quarter 2007. As a result of the EU decision in the fourth quarter 2007, the company
reversed $44 of its accruals related to this matter. At December 31, 2007, the company has accruals of
approximately $130 related to this matter and a receivable of $17 for the amount it expects to be reimbursed by Dow.
Spelter, West Virginia
In September 2006, a West Virginia state court certified a class action against DuPont that seeks relief including the
provision of remediation services and property value diminution damages for 7,000 residential properties in the
vicinity of a closed zinc smelter in Spelter, West Virginia. The action also seeks medical monitoring for an
undetermined number of residents in the class area. 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 October 2007 trial was conducted in four phases: liability, medical monitoring, property and
punitive damages. The jury found against DuPont in all four phases awarding $55.5 for property remediation and
$196.2 in punitive damages. No specific amount was awarded in the medical monitoring phase although in post trial
motions, plaintiffs estimate medical monitoring at $130. Also, in post trial motions, plaintiffs’ attorneys seek legal
fees equivalent to one-third of the total award plus $8 in expenses. The company believes it has a strong basis for
appeal and will seek the right to appeal all four phases. As of December 31, 2007, the company had recorded
accruals of $55, although given the uncertainties inherent in litigation, there can be no assurance as to the final
outcome.
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. 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
F-31
E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)