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Table of Contents E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
was $13,050 and $10,800 at December 31, 2011 and 2010, respectively.
14. OTHER LIABILITIES
December 31, 2011 2010
Employee benefits:
Accrued other long-term benefit costs (Note 17) $ 4,063 $ 3,670
Accrued pension benefit costs (Note 17) 9,186 5,401
Accrued environmental remediation costs 316 317
Miscellaneous 1,943 1,638
$ 15,508 $ 11,026
Miscellaneous includes asset retirement obligations, litigation accruals, tax contingencies, royalty payables and certain obligations related to divested
businesses.
15. COMMITMENTS AND CONTINGENT LIABILITIES
Guarantees
Indemnifications
In connection with acquisitions and divestitures, the company has indemnified respective parties against certain liabilities that may arise in connection with
these transactions and business activities prior to the completion of the transaction. The term of these indemnifications, which typically pertain to
environmental, tax and product liabilities, is generally indefinite. In addition, the company indemnifies its duly elected or appointed directors and officers to
the fullest extent permitted by Delaware law, against liabilities incurred as a result of their activities for the company, such as adverse judgments relating to
litigation matters. If the indemnified party were to incur a liability or have a liability increase as a result of a successful claim, pursuant to the terms of the
indemnification, the company would be required to reimburse the indemnified party. The maximum amount of potential future payments is generally
unlimited. The carrying amounts recorded for all indemnifications as of December 31, 2011 and 2010 were $105 and $100, respectively. Although it is
reasonably possible that future payments may exceed amounts accrued, due to the nature of indemnified items, it is not possible to make a reasonable estimate
of the maximum potential loss or range of loss. No assets are held as collateral and no specific recourse provisions exist.
In connection with the 2004 sale of the majority of the net assets of Textiles and Interiors, the company indemnified the purchasers, subsidiaries of Koch
Industries, Inc. (INVISTA), against certain liabilities primarily related to taxes, legal and environmental matters and other representations and warranties
under the Purchase and Sale Agreement. The estimated fair value of the indemnity obligations under the Purchase and Sale Agreement was $70 and was
included in the indemnifications balance of $105 at December 31, 2011 . Under the Purchase and Sale Agreement, the company's total indemnification
obligation for the majority of the representations and warranties cannot exceed $1,400 . The other indemnities are not subject to this limit. In March 2008,
INVISTA filed suit in the Southern District of New York alleging that certain representations and warranties in the Purchase and Sale Agreement were
breached and, therefore, that DuPont is obligated to indemnify it. DuPont disagrees with the extent and value of INVISTA's claims. DuPont has not changed
its estimate of its total indemnification obligation under the Purchase and Sale Agreement as a result of the lawsuit. A 2012 trial date has been set.
Obligations for Equity Affiliates & Others
The company has directly guaranteed various debt obligations under agreements with third parties related to equity affiliates, customers and suppliers. At
December 31, 2011, the company had directly guaranteed $563 of such obligations, and $20 relating to guarantees of historical obligations for divested
subsidiaries. This represents the maximum potential amount of future (undiscounted) payments that the company 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.
F-22