16. Commitments, Contingencies and Guarantees

a. Rent expense amounted to $18.2 million in 2011, $18.0 million in 2010 and $20.5 million in 2009. The Company is obligated to pay minimum annual rentals under non-cancelable long-term operating leases and capital lease financing obligations as follows:


(In millions)	Leases
2012	$	24.1
2013		22.0
2014		18.2
2015		15.0
2016		11.8
2017 and thereafter		119.3

Total future minimum lease commitments	$	210.4

On July 20, 2011, the Company entered into a 20 year lease for a new corporate headquarters building that will be constructed in Ewing, New Jersey (approximately 10 miles from the Company's existing corporate headquarters in Princeton, New Jersey) to meet office space needs for the foreseeable future. Based on current expectations that the facility will be completed and occupied beginning in early 2013, the lease will expire in 2033. The Company's lease commitment is approximately $116 million over the lease term. In conjunction with its lease of the new headquarters building, the Company will be vacating three leased facilities adjacent to its current Princeton headquarters facility. Based on certain clauses in the lease, the Company is considered the owner, for financial statement reporting purposes, during the construction period, and recorded $17.4 million in construction in progress assets and a corresponding offset in other long-term liabilities.

b. In December 1981, the Company formed a partnership with a supplier of raw materials that mines and processes sodium-based mineral deposits. The Company purchases the majority of its sodium-based raw material requirements from the partnership. The partnership agreement terminates upon two years' written notice by either partner. Under the partnership agreement, the Company has an annual commitment to purchase 240,000 tons of sodium-based raw materials at the prevailing market price. The Company is not engaged in any other material transactions with the partnership or the Company's partner.

c. The Company's distribution of condoms under the TROJAN and other trademarks is regulated by the U.S. Food and Drug Administration ("FDA"). Certain of the Company's condoms, and similar condoms sold by our competitors, contain the spermicide nonoxynol-9 ("N-9"). Some interested groups have issued reports that N-9 should not be used rectally or for multiple daily acts of vaginal intercourse. In late 2008, the FDA issued final labeling guidance for latex condoms but excluded N-9 lubricated condoms from the guidance. While the Company awaits further FDA guidance on N-9 lubricated condoms, the Company believes that its present labeling for condoms with N-9 is compliant with the overall objectives of the FDA's guidance, and that condoms with N-9 will remain a viable contraceptive choice for those couples who wish to use them. However, the Company cannot predict the nature of the labeling that ultimately will be required by the FDA. If the FDA or state governments eventually promulgate rules that prohibit or restrict the use of N-9 in condoms (such as new labeling requirements), the Company could incur costs from obsolete products, packaging or raw materials, and sales of condoms could decline, which, in turn, could decrease the Company's operating income.

d. As of December 31, 2011, the Company had commitments through 2014 to acquire approximately $130.6 million of raw materials, packaging supplies and services from its vendors at market prices. Increase in commitments from $118.8 million at December 31, 2010 is principally the result of a new four-year information systems service agreement. These commitments enable the Company to respond quickly to changes in customer orders or requirements.

e. As of December 31, 2011, the Company had the following guarantees; (i) $4.1 million in outstanding letters of credit drawn on several banks which guarantee payment for such things as insurance claims in the event of the Company's insolvency; (ii) insolvency protection guarantee of approximately $18.2 million to one of its United Kingdom pension plans effective January 1, 2011; (iii) $2.5 million worth of assets in guarantees for its Brazil operations for value added tax assessments currently under appeal; and (iv) guarantees of approximately $0.6 million for the payment of rent on a leased facility in Spain which expires in November 2012.

f. In connection with the Company's acquisition of Unilever's oral care brands in the United States and Canada in October 2003, the Company is required to make additional performance-based payments of a minimum of $5.0 million and a maximum of $12.0 million over the eight year period following the acquisition. The Company made cash payments of $0.5 million in 2011 which was accounted for as additional purchase price. The Company recorded the final performance-based payments in October 2011, and has paid $11.1 million over the eight years of this agreement.

g. On September 22, 2011, the Company, together with FMC Corporation and TATA Chemicals, formed an operating joint venture, Natronx Technologies LLC ("Natronx"). The Company has a one-third ownership interest in Natronx, and its investment is accounted for under the equity method. The joint venture will engage in the manufacturing and marketing of sodium-based, dry sorbents for air pollution control in electric utility and industrial boiler operations. The sorbents, primarily sodium bicarbonate and trona, are used by coal-fired utilities to remove harmful pollutants, such as acid gases, in flue-gas treatment processes. Natronx intends to invest approximately $60 million to construct a 450,000 ton per year facility in Wyoming to produce trona sorbents by the fourth quarter of 2012, the cost of which will be equally shared among all members. The joint venture started business in the fourth quarter of 2011 and the Company made an initial investment of approximately $3 million and is committed to investing upwards of an additional $17 million in 2012.

h. On November 8, 2011, the Company acquired a license for certain oral care technology for cash consideration of $4.3 million. In addition to this initial payment, the Company may be required to make an advanced royalty payment of $5.5 million upon the launch of a product utilizing the licensed technology and an additional $7 million license payment upon the approval of certain claims by the Food and Drug Administration. The Company paid for the acquisition from available cash and will be managed principally within the Consumer Domestic segment.

i. In 2000, the Company acquired majority ownership in its Brazilian subsidiary, Quimica Geral Do Nordeste S.A. ("QGN"). The acquired operations included an inorganic salt manufacturing plant which began site operations in the late 1970's. Located on the site were two closed landfills, two active landfills and a pond for the management of the process waste streams. In 2009, QGN was advised by environmental authorities in the State of Bahia, the Institute of the Environment ("IMA"), that the plant was discharging contaminants into an adjacent creek. After learning of the discharge, QGN took immediate action to cease the discharge and retained two nationally recognized environmental firms to prepare a site investigation / remedial action plan ("SI/RA"). The SI/RA report was submitted by QGN to IMA in April 2010. The report concluded that the likely sources of the discharge were the failure of the pond and closed landfills. QGN ceased site operations in August 2010. In November 2010, IMA responded to QGN's recommendation for an additional study by issuing a notification requiring a broad range of remediation measures (the "Remediation Notification"), which included the shutdown and removal of two on-site landfills. In addition, notwithstanding repeated discussions with IMA at QGN's request to consider QGN's proposed remediation alternatives, in December 2010, IMA imposed a fine of five million reals (approximately $3 million) for the discharge of contaminants above allowable limits, The description of the fine included a reference to aggravating factors which may indicate that local "management's intent" was considered in determining the severity of the fine. QGN filed with IMA an administrative defense to the fine. IMA has not yet responded to QGN's administrative defense.

With respect to the Remediation Notification, QGN engaged in discussions with IMA during which QGN asserted that a number of the remediation measures, including the removal of the landfills, and the timeframes for implementation were not appropriate and requested that the Remediation Notification be withdrawn. In response, in February 2011, IMA issued a revised Remediation Notification providing for further site analysis by QGN, including further study of the integrity of the landfills. The revised Remediation Notice did not include a requirement to remove the landfills. QGN has responded to the revised Remediation Notification providing further information regarding the remediation measures and intends to continue discussions with the Institute of Environment and Waste Management ("INEMA"), successor to IMA, to seek agreement on an appropriate remediation plan. In mid 2011, QGN, consistent with the revised Remediation Notice, began an additional site investigation, capped the two active landfills with an impervious synthetic cover and initiated the closure of the pond. However, discussions are continuing with INEMA concerning the potential removal of the landfills.

As a result of the foregoing events, the Company accrued approximately $3 million in 2009 and an additional $4.8 million in 2010 for remediation, fines and related costs. As of December 31, 2011, $1.7 million has been spent on the remediation activities. If INEMA requires the removal of the landfills and, if the Company is unsuccessful in appealing such decision, the cost could have a material adverse effect on the Company's business, financial condition, results of operations and cash flow.

j. In June 2009, the Company received a subpoena and civil investigative demand from the Federal Trade Commission ("FTC") in connection with a non-public investigation in which the FTC is seeking to determine if the Company has engaged or is engaging in any unfair methods of competition with respect to the distribution and sale of condoms in the United States through potentially exclusionary practices. The Company believes that its distribution and sales practices involving the sale of condoms are in full compliance with applicable law.

The FTC investigation arose out of allegations raised by Mayer Laboratories, Inc. ("Mayer Labs"), a California based condom business competitor whose principal brand of condoms has a U.S. market share of less than one percent. On November 21, 2008, following the Company's receipt of correspondence from counsel for Mayer Labs threatening litigation related to the Company's condom sales and marketing practices, the Company commenced a declaratory judgment action in the United States District Court for the District of New Jersey seeking a ruling that the Company's condom sales and marketing practices are legal. The case subsequently was transferred to the United States District Court for the Northern District of California.

In the litigation, Mayer Labs alleges, among other things, that the Company's long standing shelf space program under which a retail store chain allocates a percentage of shelf space to the Company's products in exchange for price rebates, other sales and marketing practices through which the Company allegedly attempted to influence the brand mix and shelf placement of condoms in certain retail stores, and other alleged anti-competitive activities violated federal and state antitrust laws, and that the Company tortuously interfered with an alleged exclusive business arrangement between Mayer Labs and its supplier. Mayer Labs generally seeks an order declaring the Company's sales and marketing practices related to shelf space allocation for condoms to be illegal, monetary damages and trebling of certain of the damages, disgorgement of profits, injunctive relief, and recovery of reasonable attorneys' fees and costs.

On January 6, 2012, Mayer Labs' served an expert's report indicating that it is seeking damages of between $2.6 million and $3.1 million and trebling of those damages. At this point, it is not possible to estimate the amount of any additional alleged damage claims Mayer Labs may make.

On the same date, the Company filed a motion for summary judgment with respect to Mayer Labs' claims, which was argued before the court on February 10, 2012. If the Company's motion for summary judgment is denied, the matter is scheduled to proceed to trial on April 2, 2012.

Mayer Labs filed a motion for sanctions on February 7, 2012, against the Company, which the Company believes are unjustified and is vigorously contesting. The motion is based on the deletion of emails allegedly relevant to the litigation by James R. Craigie, the Company's Chairman and Chief Executive Officer, and the claim that the Company allegedly failed to make a reasonable and good faith effort to recover certain of the deleted emails. Although the Company believes that it has been able to retrieve substantially all of the deleted emails, the sanctions sought by Mayer Labs include the dismissal of the Company's claims against Mayer Labs; a default judgment against the Company with respect to Mayer Labs' claims against the Company or, alternatively, an adverse inference that the deleted documents would have supported Mayer's claims; an instruction that the Company notify parties opposing the Company in other previous and pending lawsuits if the Company has violated its obligation to preserve documents related to those lawsuits; preclusion of the Company from introducing any email evidence to or from its Chairman and Chief Executive Officer, and payment of attorneys fees.

As noted above with respect to the FTC investigation and the Mayer Labs litigation, the Company believes that its condom sales and marketing practices are in full compliance with applicable law. Moreover, the Company intends to vigorously defend against Mayer Labs' allegations. However, these matters are subject to many uncertainties, and the outcome of investigations and litigation matters is not predictable with assurance. An adverse outcome in any of these matters could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows. Moreover, an adverse outcome with regard to Mayer Labs' motion for sanctions could have a material adverse effect on the outcome of the FTC investigation and the Mayer Labs litigation, and might adversely affect the Company with regard to other litigation.

k. The Company is engaged in disputes with SPD Swiss Precision Diagnostics GmbH ("SPD"), primarily regarding each company's advertising claims for home pregnancy and ovulation test kits. On January 22, 2009, SPD filed a complaint against the Company in the United States District Court for the Northern District of California. The Company's motion to transfer the case to the United States District Court for the District of New Jersey was granted in April 2009. On January 15, 2010, the Company filed a complaint for declaratory relief against SPD, also in the New Jersey District Court, and in response SPD filed counterclaims against the Company. Each company's initial and subsequent claims against the other have been consolidated before that Court. The parties are currently in discovery. No trial date has been set.

Essentially, SPD alleges that the Company uses false and misleading advertising and competes unfairly with respect to its FIRST RESPONSE digital and analog home pregnancy and analog ovulation test kits in violation of the Lanham Act and related state laws. SPD's allegations are principally directed to claims included in advertising to the effect that the Company's digital FIRST RESPONSE pregnancy test kits can detect the pregnancy hormone five days before a woman's missed menstrual period and that its analog FIRST RESPONSE Early Result Pregnancy Test (the "6-Day Product") detects the pregnancy hormone six days before a woman's missed menstrual period. SPD seeks an order to enjoin the Company from making those claims and to remove all such advertising from the marketplace, unspecified damages, trebling of those damages, costs of the action, and reasonable attorneys' fees.

The Company has denied all of SPD's allegations and has asserted that the Food and Drug Administration has cleared the FIRST RESPONSE digital pregnancy test and analog pregnancy test for use 5 and 6 days, respectively, before a woman's missed menstrual period. In addition, the Company asserts claims of false and misleading advertising and unfair competition under the Lanham Act and related state laws with respect to certain of SPD's advertising claims for its ClearBlue Easy home pregnancy test kit and ovulation detection products. The Company seeks an order to enjoin SPD from making those claims and to remove all such advertising from the marketplace, unspecified damages, enhancement of those damages, costs of the action and reasonable attorneys' fees. The Company also seeks a judicial declaration that certain statements on the package for the 6-Day Product (namely, the statement that the 6-Day Product can detect the pregnancy hormone up to six days before a woman's missed period and the statement that, in clinical testing, the 6-Day Product detected pregnancy in 68% of the tested urine samples of pregnant women taken six days before the date of missed period), as well as substantively identical advertising statements that the Company intended to publish in other media, are not actionable. In response, SPD denied all of the Company's allegations and asserted counterclaims with respect to the 6-Day Product summarized above.

The Company intends to vigorously pursue its claims and defenses against SPD. However, this matter is subject to many uncertainties, and the outcome of litigation is not predictable with assurance. An adverse outcome in this matter could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.

l. The Company has recorded liabilities for uncertain income tax positions that, although supportable, may be challenged by the tax authorities. The Company closed the audit of tax years 2008 and 2009 with the U.S. Internal Revenue Service on February 6, 2012. The tax years 2008 and 2009 are currently under audit by several state and international taxing authorities. In addition, certain statutes of limitation are scheduled to expire in the near future. It is reasonably possible that within the next twelve months the liabilities for uncertain tax positions may decrease by approximately $6.8 million related to the settlement of these audits or the lapse of applicable statutes of limitations. Of this amount, $0.6 million would be offset by a corresponding reduction in the amount of deferred tax assets on the balance sheet.

m. The Company, in the ordinary course of its business, is the subject of, or a party to, various other pending or threatened legal actions. Litigation is subject to many uncertainties, and the outcome of individual litigated matters is not predictable with assurance. It is possible that some litigation matters could be decided unfavorably to the Company, and that any such unfavorable decisions could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.