DuPont 2012 Annual Report Download - page 32

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The following table highlights the potential impact on the company's pre-tax earnings due to changes in certain key assumptions with respect to the company's
pension and other long-term employee benefit plans, based on assets and liabilities at December 31, 2012:

(Dollars in millions)




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
Discount rate $107 $(114)
Expected rate of return on plan assets 92 (92)
Additional information with respect to pension and other long-term employee benefits expenses, liabilities and assumptions is discussed under "Long-term
Employee Benefits" beginning on page 34 and in Note 18 to the Consolidated Financial Statements.
Environmental Matters
DuPont accrues for remediation activities when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made. The
company has recorded a liability of $436 million as of December 31, 2012; these accrued liabilities exclude claims against third parties and are not
discounted. As remediation activities vary substantially in duration and cost from site to site, it is difficult to develop precise estimates of future site
remediation costs. The company's estimates are based on a number of factors, including the complexity of the geology, the nature and extent of contamination,
the type of remedy, the outcome of discussions with regulatory agencies and other PRPs at multi-party sites and the number of and financial viability of other
PRPs. Therefore, considerable uncertainty exists with respect to environmental remediation costs and, under adverse changes in circumstances, the potential
liability may range up to three times the amount accrued.
Legal Contingencies
The company's results of operations could be affected by significant litigation adverse to the company, including product liability claims, patent infringement
and antitrust claims, and claims for third party property damage or personal injury stemming from alleged environmental torts. The company records
accruals for legal matters when the information available indicates that it is probable that a liability has been incurred and the amount of the loss can be
reasonably estimated. Management makes adjustments to these accruals to reflect the impact and status of negotiations, settlements, rulings, advice of counsel
and other information and events that may pertain to a particular matter. Predicting the outcome of claims and lawsuits and estimating related costs and
exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates. In making determinations of likely outcomes of
litigation matters, management considers many factors. These factors include, but are not limited to, the nature of specific claims including unasserted
claims, the company's experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of
resolving the matter through alternative dispute resolution mechanisms and the matter's current status. Considerable judgment is required in determining
whether to establish a litigation accrual when an adverse judgment is rendered against the company in a court proceeding. In such situations, the company will
not recognize a loss if, based upon a thorough review of all relevant facts and information, management believes that it is probable that the pending judgment
will be successfully overturned on appeal. A detailed discussion of significant litigation matters is contained in Note 16 to the Consolidated Financial
Statements.
Income Taxes
The breadth of the company's operations and the global complexity of tax regulations require assessments of uncertainties and judgments in estimating taxes
the company will ultimately pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions,
outcomes of tax litigation and resolution of disputes arising from federal, state and international tax audits in the normal course of business. The resolution of
these uncertainties may result in adjustments to the company's tax assets and tax liabilities. It is reasonably possible that changes to the company's global
unrecognized tax benefits could be significant, however, due to the uncertainty regarding the timing of completion of audits and possible outcomes, a current
estimate of the range of increases or decreases that may occur within the next twelve months cannot be made.
Deferred income taxes result from differences between the financial and tax basis of the company's assets and liabilities and are adjusted for changes in tax
rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit
will not be realized. Significant judgment is required in evaluating the need for and magnitude of appropriate valuation allowances against deferred tax assets.
The realization of these assets is dependent on generating future taxable income, as well as successful implementation of various tax planning strategies. For
example, changes in facts and circumstances that alter the probability that the company will realize deferred tax assets could result in recording a
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