DuPont 2013 Annual Report Download - page 75

E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
F-28
At December 31, 2013, DuPont had recorded charges of $1,175, within other operating charges, which represents the company's
best estimate of the loss associated with resolving these claims. The year ended December 31, 2013, included net charges of $352,
consisting of a $425 charge offset by $73 of insurance recoveries. The years ended December 31, 2012 and 2011, included charges
of $575 and $175, respectively. At December 31, 2013, DuPont had accruals of $489 related to these claims. The company has
an applicable insurance program with a deductible equal to the first $100 of costs and expenses. The insurance program limits are
$725 for costs and expenses in excess of the $100. DuPont has submitted and will continue to submit requests for payment to its
insurance carriers for costs associated with this matter. The company has begun to receive payment from its insurance carriers
and continues to seek recovery although the timing and outcome remain uncertain.
Litigation
The company is subject to various legal proceedings arising out of the normal course of its business including product liability,
intellectual property, commercial, environmental and antitrust lawsuits. It is not possible to predict the outcome of these various
proceedings. Except as otherwise noted, management does not anticipate their resolution will have a materially adverse effect on
the company's consolidated financial position or liquidity. However, the ultimate liabilities could be significant to results of
operations in the period recognized.
PFOA
DuPont used PFOA (collectively, perfluorooctanoic acids and its salts, including the ammonium salt), as a processing aid to
manufacture some fluoropolymer resins at various sites around the world including its Washington Works plant in West Virginia.
At December 31, 2013, DuPont has accruals of $15 related to the PFOA matters discussed below.
The accrual includes charges related to DuPont's obligations under agreements with the U.S. Environmental Protection Agency
and voluntary commitments to the New Jersey Department of Environmental Protection. These obligations include surveying,
sampling and testing drinking water in and around certain company sites and offering treatment or an alternative supply of drinking
water if tests indicate the presence of PFOA in drinking water at or greater than the national Provisional Health Advisory.
Drinking Water Actions
In August 2001, a class action, captioned Leach v DuPont, was filed in West Virginia state court alleging that residents living near
the Washington Works facility had suffered, or may suffer, deleterious health effects from exposure to PFOA in drinking water.
DuPont and attorneys for the class reached a settlement in 2004 that binds about 80,000 residents. In 2005, DuPont paid the
plaintiffs’ attorneys’ fees and expenses of $23 and made a payment of $70, which class counsel designated to fund a community
health project. The company funded a series of health studies which were completed in October 2012 by an independent science
panel of experts (the “C8 Science Panel”). The studies were conducted in communities exposed to PFOA to evaluate available
scientific evidence on whether any probable link exists, as defined in the settlement agreement, between exposure to PFOA and
human disease.
The C8 Science Panel found probable links, as defined in the settlement agreement, between exposure to PFOA and pregnancy-
induced hypertension, including preeclampsia; kidney cancer; testicular cancer; thyroid disease; ulcerative colitis; and diagnosed
high cholesterol.
In May 2013, a panel of three independent medical doctors released its initial recommendations for screening and diagnostic
testing of eligible class members. The medical panel is expected to address monitoring and may make additional recommendations
in a subsequent report. The medical panel has not communicated its anticipated schedule for completion. The company is obligated
to fund up to $235 for a medical monitoring program for eligible class members. In January 2012, the company put $1 in an
escrow account to fund medical monitoring as required by the settlement agreement. The court has appointed a Medical Monitoring
Director to implement the medical panel's recommendations who is in the process of setting up a program. Testing has not yet
begun and no money has been disbursed from the fund. While it is probable that the company will incur losses related to funding
the medical monitoring program, such losses cannot be reasonably estimated due to uncertainties surrounding implementation.
In addition, the company must continue to provide water treatment designed to reduce the level of PFOA in water to six area water
districts, including the Little Hocking Water Association (LHWA), and private well users.