DuPont 2013 Annual Report Download - page 74

E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
F-27
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 54% of the $376 of guaranteed obligations of customers
and suppliers. Set forth below are the company's guaranteed obligations at December 31, 2013:
Short-Term Long-Term Total
Obligations for customers and suppliers1:
Bank borrowings (terms up to 7 years) $ 309 $ 66 $ 375
Leases on equipment and facilities (terms up to 5 years) — 1 1
Obligations for equity affiliates2:
Bank borrowings (terms up to 1 year) 185 — 185
Total $ 494 $ 67 $ 561
1 Existing guarantees for customers and suppliers, as part of contractual agreements.
2 Existing guarantees for equity affiliates' liquidity needs in normal operations.
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.
Future minimum lease payments (including residual value guarantee amounts) under non-cancelable operating leases are $288,
$262, $239, $208 and $180 for the years 2014, 2015, 2016, 2017 and 2018, respectively, and $347 for subsequent years and are
not reduced by non-cancelable minimum sublease rentals due in the future in the amount of $1. Net rental expense under operating
leases was $303, $316 and $268 in 2013, 2012 and 2011, respectively.
Asset Retirement Obligations
The company has recorded asset retirement obligations primarily associated with closure, reclamation and removal costs for mining
operations related to the production of titanium dioxide in Performance Chemicals. The company's asset retirement obligation
liabilities were $63 and $64 at December 31, 2013 and 2012.
Imprelis®
The company has received claims and has been served with multiple lawsuits alleging that the use of Imprelis® herbicide caused
damage to certain trees. Sales of Imprelis® were suspended in August 2011 and the product was last applied during the 2011 spring
application season. The lawsuits seeking class action status have been consolidated in multidistrict litigation in federal court in
Philadelphia, Pennsylvania.
In February 2013, the court granted preliminary approval of a class action settlement. The settlement incorporates the company's
existing claims process and provides certain additional relief. The proposed settlement class includes affected property owners
and lawn care companies who do not "opt out" of the settlement. As part of the settlement, DuPont has paid $7 in plaintiffs' attorney
fees and expenses. In addition, DuPont is providing a warranty against new damage, if any, caused by the use of Imprelis® on
class members' properties through May 2015. The settlement notification process began on March 25, 2013 and ended on June
28, 2013 which was also the last day to “opt out” of the settlement or file a new claim. The final approval hearing was held on
September 27, 2013 and on October 17, 2013, the court issued an order approving the settlement. One class member has appealed
the order. In addition, about 125 individual actions encompassing about 400 claims for property damage have been filed in state
court in various jurisdictions. DuPont has removed most of these cases to federal court in Philadelphia, Pennsylvania. Once
removed to federal court, the individual actions remain stayed pending further action by the court.
The company has established review processes to verify and evaluate damage claims. There are several variables that impact the
evaluation process including the number of trees on a property, the species of tree with reported damage, the height of the tree,
the extent of damage and the possibility for trees to naturally recover over time. Upon receiving claims, DuPont verifies their
accuracy and validity which often requires physical review of the property.