DuPont 2009 Annual Report Download - page 85

E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
could be required to make under the guarantees. The company would be required to perform on these guarantees in
the event of default by the guaranteed party.
The company assesses the payment/performance risk by assigning default rates based on the duration of the
guarantees. These default rates are assigned based on the external credit rating of the counterparty or through internal
credit analysis and historical default history for counterparties that do not have published credit ratings. For
counterparties without an external rating or available credit history, a cumulative average default rate is used.
At December 31, 2009 and December 31, 2008, a liability of $146 and $121, respectively, was recorded for these
obligations, representing the amount of payment/performance risk for which the company deems probable. This
liability is principally related to obligations of the company’s polyester films joint venture, which are guaranteed by the
company.
In certain cases, the company has recourse to assets held as collateral, as well as personal guarantees from customers
and suppliers. Assuming liquidation, these assets are estimated to cover approximately 32 percent of the $358 of
guaranteed obligations of customers and suppliers. Set forth below are the company’s guaranteed obligations at
December 31, 2009:
Short-Term Long-Term Total
Obligations for customers, suppliers and other affiliated and
unaffiliated companies1,2:
Bank borrowings (terms up to 6 years) $505 $134 $639
Leases on equipment and facilities (terms up to 3 years) 12 1 13
Obligations for equity affiliates2:
Bank borrowings (terms up to 3 years) 7 22 29
Leases on equipment and facilities (terms up to 1 year) 3 - 3
Total obligations for customers, suppliers, affiliated and other
unaffiliated companies, and equity affiliates 527 157 684
Obligations for divested subsidiaries3:
Conoco (terms up to 17 years) - 16 16
Consolidation Coal Sales Company (terms up to 2 years) 31 72 103
Total obligations for divested subsidiaries 31 88 119
$558 $245 $803
1Existing guarantees for customers, suppliers, and other unaffiliated companies arose as part of contractual agreements.
2Existing guarantees for equity affiliates and other affiliated companies arose for liquidity needs in normal operations.
3The company has guaranteed certain obligations and liabilities related to divested subsidiaries Conoco and Consolidation Coal Sales
Company. Conoco and Consolidation Coal Sales Company have indemnified the company for any liabilities the company may incur
pursuant to these guarantees.
Operating Leases
The company uses various leased facilities and equipment in its operations. The terms for these leased assets vary
depending on the lease agreement.
Prior to November 2009, the company leased short-lived equipment under a master operating lease program. Lease
payments for these assets totaled $38 in 2009, $55 in 2008 and $59 in 2007, and were reported as operating expenses
in the Consolidated Income Statements. The leases under this program were considered operating leases and
accordingly the related assets and liabilities were not recorded on the Consolidated Balance Sheets. In November
2009 the lease was terminated. The company purchased the assets for a total of $53, the residual value of the assets at
the lease termination date.
Future minimum lease payments (including residual value guarantee amounts) under non-cancelable operating leases
are $221, $182, $155, $123 and $88 for the years 2010, 2011, 2012, 2013 and 2014, respectively, and $147 for
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