DuPont 2014 Annual Report Download - page 78

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E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
F-25
14. OTHER LIABILITIES
December 31, 2014 2013
Employee benefits:
Accrued other long-term benefit costs (Note 17) $ 2,666 $ 2,530
Accrued pension benefit costs (Note 17) 9,167 5,575
Accrued environmental remediation costs 362 374
Miscellaneous 1,624 1,700
$ 13,819 $ 10,179
Miscellaneous includes asset retirement obligations, litigation accruals, tax contingencies, royalty payables, non-current portion
of employee separation accruals 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.
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, 2014, the company had directly guaranteed $513 of such obligations. This amount
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.
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 35 percent of the $328 of guaranteed obligations of
customers and suppliers. Set forth below are the company's guaranteed obligations at December 31, 2014:
Short-Term Long-Term Total
Obligations for customers and suppliers1:
Bank borrowings (terms up to 7 years) $ 226 $ 100 $ 326
Leases on equipment and facilities (terms up to 4 years) — 2 2
Obligations for equity affiliates2:
Bank borrowings (terms up to 1 year) 185 — 185
Total $ 411 $ 102 $ 513
1 Existing guarantees for customers and suppliers, as part of contractual agreements.
2 Existing guarantees for equity affiliates' liquidity needs in normal operations.