Kimberly-Clark 2008 Annual Report Download - page 92

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KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 14. Contingencies and Legal Matters
Litigation
The following is a brief description of certain legal and administrative proceedings to which the Corporation
or its subsidiaries is a party or to which the Corporation’s or its subsidiaries’ properties are subject. In
management’s opinion, none of the legal and administrative proceedings described below, individually or in the
aggregate, is expected to have a material adverse effect on the Corporation’s business, financial condition, results
of operations or liquidity.
Contingency
One of the Corporation’s North American tissue mills has an agreement to provide its local utility company
a specified amount of electric power for each of the next eight years. In the event that the mill was shut down, the
Corporation would be required to continue to operate the power generation facility on behalf of its owner, the
local utility company. The net present value of the cost to fulfill this agreement as of December 31, 2008 is
estimated to be approximately $117 million. Management considers the probability of closure of this mill to be
remote.
Environmental Matters
The Corporation has been named as a potentially responsible party under the provisions of the federal
Comprehensive Environmental Response, Compensation and Liability Act, or analogous state statutes, at a
number of waste disposal sites, none of which, individually or in the aggregate, in management’s opinion, is
likely to have a material adverse effect on the Corporation’s business, financial condition, results of operations or
liquidity.
In May 2007, a wholly-owned subsidiary of the Corporation was served a summons in Pennsylvania state
court by the Delaware County Regional Water Quality Authority (“Delcora”). Also in May 2007, Delcora
initiated an administrative action against the Corporation. Delcora is a public agency that operates a sewerage
system and a wastewater treatment facility serving industrial and municipal customers, including
Kimberly-Clark’s Chester Mill. Delcora also regulates the discharge of wastewater from the Chester
Mill. Delcora has alleged in the summons and the administrative action that the Corporation underreported the
quantity of effluent discharged to Delcora from the Chester Mill for several years due to an inaccurate effluent
metering device and owes additional amounts. The Corporation’s action for declaratory judgment in the Federal
District Court for the Eastern District of Pennsylvania was dismissed in December 2007 on grounds of
abstention. The Corporation appealed this dismissal to the Third Circuit Court of Appeals. The Third Circuit
directed the parties to mediation, which during the third quarter of 2008 resulted in a procedural agreement to
appoint a neutral and qualified hearing officer. As a result of this arrangement with Delcora, the Corporation has
dismissed its appeal to the Third Circuit. The Corporation continues to believe that Delcora’s allegations lack
merit and is vigorously defending against Delcora’s actions. In management’s opinion, this matter is not
expected to have a material adverse effect on the Corporation’s business, financial condition, results of
operations or liquidity.
Note 15. Synthetic Fuel Partnerships
The Corporation had minority interests in two synthetic fuel partnerships. Although these partnerships were
variable interest entities that were subject to the requirements of FIN 46(R), the Corporation was not the primary
beneficiary, and the entities were not consolidated. Synthetic fuel produced by the partnerships was eligible for
synthetic fuel tax credits through 2007; the partnerships were dissolved in 2008 at no cost to the Corporation. In
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