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. The carrying amounts recorded for all indemnifications as of December 31, 2012 and 2011 were $31 and $105, respectively. The decrease in the carrying amount at December 31, 2012 primarily relates to the payment associated with the settlement of the 2008 lawsuit filed by subsidiaries of Koch Industries, Inc. (INVISTA).

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, 2012, the company had directly guaranteed $535 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 50 percent of the $350 of guaranteed obligations of customers and suppliers. Set forth below are the company's guaranteed obligations at December 31, 2012:



	Short-Term		Long-Term		Total
Obligations for customers and suppliers¹:
Bank borrowings (terms up to 5 years)	$	284	$	64	$	348
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	$	469	$	66	$	535


^1.	Existing guarantees for customers and suppliers arose as part of contractual agreements. As of December 31, 2012, approximately $14 of these guarantees relate to customers of the Performance Coatings business.


^2.	Existing guarantees for equity affiliates arose for liquidity needs in normal operations.

Operating Leases

The company uses various leased facilities and equipment in its operations. The terms for these leased assets vary depending on the lease agreement.

Future minimum lease payments (including residual value guarantee amounts) under non-cancelable operating leases are $320, $260, $213, $178 and $153 for the years 2013, 2014, 2015, 2016 and 2017, respectively, and $290 for subsequent years and are not reduced by non-cancelable minimum sublease rentals due in the future in the amount of $3. Net rental expense under operating leases was $316, $268 and $229 in 2012, 2011 and 2010, respectively.

Asset Retirement Obligations

The company has recorded asset retirement obligations primarily associated with closure, reclamation and removal costs for mining operations related to the production of titanium dioxide in Performance Chemicals. The company's asset retirement obligation liabilities were $64 and $59 at December 31, 2012 and 2011.

Imprelis^®

The company has received claims and been served with multiple lawsuits alleging that the use of Imprelis^® herbicide caused damage to certain trees. The lawsuits seeking class action status have been consolidated in multidistrict litigation in federal court in Philadelphia, Pennsylvania. In addition, about 80 individual actions on behalf of approximately 180 plaintiffs have been filed in state court in various jurisdictions. DuPont has removed most of these cases to federal court in Philadelphia, Pennsylvania.

DuPont and lead and liaison counsel for plaintiffs in the multidistrict litigation sought preliminary approval from the court of a class action settlement; the court scheduled a hearing on February 5, 2013. The settlement would incorporate the company's existing claims process and provide certain additional relief. The proposed settlement class would include affected property owners and lawn care companies who do not "opt out" of the settlement. DuPont would have the ability to cancel the agreement if the number of “opt-outs” is unsatisfactory to DuPont. If the settlement is approved, DuPont would pay about $7 in plaintiffs' attorney fees and expenses and bear the costs of notifying potential class participants. In addition, DuPont would provide a warranty against new damage, if any, caused by the use of Imprelis® on class members' properties through May 2015.

In August 2011, the company suspended sales of Imprelis^® and in September 2011 began a process to fairly resolve claims associated with the use of Imprelis^®. The company believes that the number of unasserted claims is limited due to the fact that sales were suspended in August 2011 and the product was last applied during the 2011 spring application season.

The company has established review processes to verify and evaluate damage claims. There are several variables that impact the evaluation process including the number of trees on a property, the species of tree with reported damage, the height of the tree, the extent of damage and the possibility for trees to naturally recover over time. Upon receiving claims, DuPont verifies their accuracy and validity which often requires physical review of the property.

In 2012 and 2011, DuPont had recorded charges of $575 and $175, respectively, to resolve these claims, bringing the total charges to $750 at December 31, 2012. It is reasonably possible that additional charges could result related to this matter. While there is a high degree of uncertainty, total charges could range up to $900. Predicting the impact of Imprelis^® on living organisms and how those organisms may react over time are significant factors driving the uncertainty of future charges. Imprelis^® was applied throughout the United States and the ability of any particular species of tree to naturally recover over time may be different depending on the property's geography and associated climate. 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.

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 uses 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, 2012, 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 higher cholesterol (hypocholesterolemia).

A panel of three medical experts will determine an appropriate medical monitoring protocol, if any, as a result of these findings. If a medical monitoring protocol for any of these diseases is defined, DuPont is required to fund a medical monitoring program to pay for such medical testing. Plaintiffs may pursue personal injury claims against DuPont only for those human diseases for which the C8 Science Panel determined a probable link exists. In January 2012, the company put $1 in an escrow account as required by the settlement agreement. Under the settlement agreement, the company's total obligation to pay for medical monitoring cannot exceed $235. 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.

An Ohio action brought by the LHWA is ongoing. In addition to general claims of PFOA contamination of drinking water, the action claims “imminent and substantial endangerment to health and or the environment” under the Resource Conservation and Recovery Act (RCRA). DuPont denies these claims and is defending itself vigorously.

At December 31, 2012, twenty-five lawsuits alleging personal injury and one lawsuit alleging wrongful death from exposure to PFOA in drinking water are pending in federal court in Ohio and West Virginia. DuPont denies the allegations in these lawsuits and is defending itself vigorously.

While DuPont believes that it is reasonably possible that it could incur losses related to PFOA matters in addition to those matters discussed above for which it has established accruals, a range of such losses, if any, cannot be reasonably estimated at this time.

Monsanto Patent Dispute

On August 1, 2012, a St. Louis, Missouri jury awarded $1,000 in damages to Monsanto on its claims that the company willfully infringed Monsanto's RE 39,247 patent directed to Roundup^®Ready^®soybean seed technology. On November 16, 2012, the court unsealed sanctions against the company for “fraud against the court,” which precluded the company from presenting a license defense at trial and ordered the company to pay Monsanto's attorneys' fees associated with the sanctions. The court has yet to decide several post-trial motions, including Monsanto's motion to enhance the damage award. The court has discretion to enhance damages for willful infringement by up to three times the jury verdict. The company intends to appeal this verdict, the sanctions ruling and damage enhancement, if any, when it is appropriate to do so. The company believes that it will prevail on appeal. Accordingly, as of December 31, 2012, no amounts have been accrued related to this matter.

Monsanto alleged that by combining Pioneer's Optimum^® GAT^® trait with Monsanto's patented Roundup^®Ready^®trait, Pioneer violated its 2002 Amended and Restated Roundup^®Ready^®Soybean License Agreement and, in doing so, infringed Monsanto's RE 39,247 patent. The company has never sold soybeans containing a combination of the Optimum^® GAT^® and Roundup^®Ready^® traits and discontinued in 2011 its commercialization efforts for such soybeans.

Environmental

The company is also subject to contingencies pursuant to environmental laws and regulations that in the future may require the company to take further action to correct the effects on the environment of prior disposal practices or releases of chemical or petroleum substances by the company or other parties. The company accrues for environmental remediation activities consistent with the policy set forth in Note 1. Much of this liability results from the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, often referred to as Superfund), RCRA and similar state and global laws. These laws require the company to undertake certain investigative, remediation and restoration activities at sites where the company conducts or once conducted operations or at sites where company-generated waste was disposed. The accrual also includes estimated costs related to a number of sites identified by the company for which it is probable that environmental remediation will be required, but which are not currently the subject of enforcement activities.

Remediation activities vary substantially in duration and cost from site to site. These activities, and their associated costs, depend on the mix of unique site characteristics, evolving remediation technologies, diverse regulatory agencies and enforcement policies, as well as the presence or absence of potentially responsible parties. At December 31, 2012, the Consolidated Balance Sheet included a liability of $436, relating to these matters and, in management's opinion, is appropriate based on existing facts and circumstances. The average time frame, over which the accrued or presently unrecognized amounts may be paid, based on past history, is estimated to be 15-20 years. Considerable uncertainty exists with respect to these costs and, under adverse changes in circumstances, potential liability may range up to three times the amount accrued as of December 31, 2012.