DuPont 2015 Annual Report Download - page 47

Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, continued
46
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 18 to the Consolidated Financial Statements). For
2016, long term employee benefits expense from continuing operations is expected to decrease by about $230 million due to the
adoption of the full yield curve approach and a higher discount rate which will be partially offset by a lower expected return on
plan assets for the US pension plan from 8.5% to 8.0%. The adoption of the full yield curve approach will reduce 2016 expense
by $210 million as a result of a $10 million and $200 million reduction in service and interest cost components, respectively. The
estimated 2016 long term employee benefit expense from continuing operations does not include the impact of any settlement
losses or curtailment gains resulting from actions associated with the 2016 global cost savings and restructuring program, as it
cannot be estimated at this time.
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) 2015 2014 2013
Environmental operating costs $ 380 $ 380 $ 375
Increase in remediation accrual 118 95 90
$ 498 $ 475 $ 465
About 75 percent of total pre-tax environmental expenses charged to current operations in 2015 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. Annual expenditures 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.
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, 2013 $ 458
Remediation payments (75)
Increase in remediation accrual 95
Balance at December 31, 2014 $ 478
Remediation payments (104)
Increase in remediation accrual 118
Balance at December 31, 2015 $ 492