DuPont 2014 Annual Report Download - page 41

Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, continued
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The company's key assumptions used in calculating its pension and other long-term employee benefits are the expected return on
plan assets, the rate of compensation increases and the discount rate (see Note 17 to the Consolidated Financial Statements). For
2015, long-term employee benefits expense from continuing operations is expected to increase by about $190 million due to lower
discount rates and the adoption of the new mortality tables in the U.S. at December 31, 2014 (see Note 17 to the Consolidated
Financial Statements for more information related to the adoption of the new mortality tables).
Environmental Matters
The company operates global manufacturing, product handling and distribution facilities that are subject to a broad array of
environmental laws and regulations. Such rules are subject to change by the implementing governmental agency, and the company
monitors these changes closely. Company policy requires that all operations fully meet or exceed legal and regulatory requirements.
In addition, the company implements voluntary programs to reduce air emissions, minimize the generation of hazardous waste,
decrease the volume of water use and discharges, increase the efficiency of energy use and reduce the generation of persistent,
bioaccumulative and toxic materials. Management has noted a global upward trend in the amount and complexity of proposed
chemicals regulation. The costs to comply with complex environmental laws and regulations, as well as internal voluntary programs
and goals, are significant and will continue to be significant for the foreseeable future.
Pre-tax environmental expenses charged to current operations are summarized below:
(Dollars in millions) 2014 2013 2012
Environmental operating costs $ 605 $ 602 $ 595
Increase in remediation accrual 95 90 110
$ 700 $ 692 $ 705
About 75 percent of total pre-tax environmental expenses charged to current operations in 2014 resulted from operations in the
U.S. Based on existing facts and circumstances, management does not believe that year over year changes, if any, in environmental
expenses charged to current operations will have a material impact on the company's financial position, liquidity or results of
operations.
Environmental Operating Costs
As a result of its operations, the company incurs costs for pollution abatement activities including waste collection and disposal,
installation and maintenance of air pollution controls and wastewater treatment, emissions testing and monitoring, and obtaining
permits. The company also incurs costs related to environmental related research and development activities including
environmental field and treatment studies as well as toxicity and degradation testing to evaluate the environmental impact of
products and raw materials.
Remediation Accrual
Changes in the remediation accrual balance are summarized below:
(Dollars in millions)
Balance at December 31, 2012 $ 436
Remediation payments (68)
Increase in remediation accrual 90
Balance at December 31, 2013 $ 458
Remediation payments (75)
Increase in remediation accrual 95
Balance at December 31, 2014 $ 478
Annual expenditures are expected to continue to increase in the near future; however, they are not expected to vary significantly
from the range of such expenditures experienced in the past few years. Longer term, expenditures are subject to considerable
uncertainty and may fluctuate significantly.