Filed Under Rule 424(b)(3)
File No. 33-48128
PRICING SUPPLEMENT NO. 40 DATED MARCH 18, 1994
To Prospectus dated June 2, 1992 and
Prospectus Supplement dated July 24, 1992)
E. I. DUPONT DE NEMOURS AND COMPANY
MEDIUM-TERM NOTES, SERIES F
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
(FIXED RATE)
DSE-CUSIP: 26353V BK4
Face Amount: $40,000,000 Net Proceeds to Company: $39,940,000
Issue Price: 100% Specified Currency: U.S. Dollars
Original Issue Date: March 31, 1994 Determination Agent: Goldman, Sachs
& Co.
Stated Maturity: March 31, 1995 Form: [X] Book-Entry
[ ] Certificated
Interest Rate: 4.00%
Interest Payment Dates: September 30, 1994 and March 31, 1995
Minimum Denominations: N/A
(only applicable if Specified
Currency is other than U.S. Dollars)
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Redemption: [X] The Notes cannot be redeemed prior to the Stated Maturity.
[ ] The Notes may be redeemed prior to the Stated Maturity.
Initial Redemption Date:
Initial Redemption Price:
Annual Redemption Price Reduction:
Repayment: [X] The Notes cannot be repaid prior to the Stated Maturity.
[ ] The Notes may be repaid prior to the Stated Maturity.
Initial Repayment Date:
Initial Repayment Price:
Annual Repayment Price Reduction:
Discount Note: [ ] Yes [X] No
Total Amount of OID:
Yield to Maturity:
Initial Accrual Period OID:
Principal Discount or Commission: 0.150% Agent: Goldman, Sachs & Co.
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DESCRIPTION OF NOTES
The following description of the particular terms of the Notes
described herein (which are Indexed Notes) supplements, and to the extent
inconsistent therewith replaces, the descriptions of the general terms and
provisions of the Notes set forth in the accompanying Prospectus Supplement
and of the Debt Securities set forth in the accompanying Prospectus, to
which descriptions reference is hereby made. All terms used but not defined
herein which are defined in the accompanying Prospectus or Prospectus
Supplement shall have the meanings therein assigned to them.
Payment of Interest
The Notes will bear interest at the fixed rate per annum stated
above. Interest will be payable on September 30, 1994 and at Stated
Maturity.
Payment of Principal
The principal amount of a Note payable at Stated Maturity shall be
an amount determined by the Determination Agent on the second Business Day
prior to Stated Maturity based on the following formula:
Face Amount x [100% + (3.00 x (7.07% - CAD BA Rate))]
;provided, however, such determination shall not be less than 60% of the
Face Amount under any circumstance. For purposes of such formula:
"Business Day" means any day, other than a Saturday or Sunday,
that is not a day on which banking institutions are authorized or
required by law or regulation to close in either New York or Toronto.
"CAD BA Rate" means the rate calculated by taking the average
rate for Canadian Dollar banker's acceptances for a period of 12 months
which appears on the Reuters Screen CDOR Page as of 10:00 a.m., New
York time, on the second Business Day prior to that Stated Maturity.
If on such date, the rate cannot be determined in accordance with the
foregoing procedures, the rate for such date will be determined on the
basis of the arithmetic mean of the bid rates of the four Reference
Banks for Canadian Dollar banker's acceptance for a period of 12 months
for settlement on Stated Maturity as of 10:00 a.m., New York time, such
bid rates to have been requested by the Determination Agent.
"Reference Banks" means any major market makers in Canadian Dollar
banker's acceptance rates.
"Reuters Screen CDOR Page" means the display page designated as
page "CDOR" on the Reuters Monitor Money Rates Service (or such other
page as may replace that page on that service) for the purpose of
displaying rates or prices comparable to the CAD BA Rate.
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Hypothetical Repayment Amount
The following table sets forth for purposes of illustration
(i) the principal amount of a Note that will be payable at Stated Maturity
if the CAD BA Rate set forth therein is the CAD BA Rate for purposes of
determining the principal amount of a Note payable at Stated Maturity and
(ii) the related annualized returns assuming such hypothetical repayment
amount.
Annualized
Return
Hypothetical (including
Repayment Amount interest
CAD BA Rate (per U.S. $100.00) payment)
20.400% $60.00 -36.00%
12.000 85.21 -10.79
11.500 86.71 -9.29
11.000 88.21 -7.79
10.500 89.71 -6.29
10.000 91.21 -4.79
9.500 92.71 -3.29
9.000 94.21 -1.79
8.500 95.71 -0.29
8.000 97.21 1.21
7.500 98.71 2.71
7.070 100.00 4.00
7.000 100.21 4.21
6.500 101.71 5.71
6.000 103.21 7.21
5.500 104.71 8.71
5.000 106.21 10.21
4.500 107.71 11.71
4.000 109.21 13.21
3.500 110.71 14.71
IMPORTANT INFORMATION
An investment in the Notes entails significant risks that are not
associated with a similar investment in other Debt Securities. Although
neither payment of interest on nor payment of principal of the Notes is
directly tied to changes in exchange rates, such changes may influence the
Canadian Dollar banker's acceptance rate. The risks associated with an
investment in the Notes include, without limitation, the possibility of
changes in the Canadian Dollar banker's acceptance rate, which may or may
not be the result of significant changes in the rates of exchange between
U.S. Dollars and Canadian Dollars or the imposition or modification of
foreign exchange controls by either the United States or foreign
governments. Such risks generally depend on factors over which the Company
has no control. For example, the exchange rates between U.S. Dollars and
Canadian Dollars are at any moment a result of the supply of, and demand
for, the two relevant currencies. Changes in interest rates and exchange
rates result over time from the interaction of many factors directly or
indirectly affecting economic conditions in the United States and Canada, as
well as economic, military and political developments in other countries.
Of particular importance are rates of inflation, interest rate levels, the
balance of payments and the extent of government surpluses and deficits in
the respective countries, all of which are in turn sensitive to the
monetary, fiscal and trade policies pursued by the governments in such
countries and in other countries important to international trade and
finance. - 3 -
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Also, sovereign governments use a variety of techniques, such as
intervention by a country's central bank or imposition of regulatory
controls or taxes, to affect the level of interest rates and exchange rates
of their currencies. Governments may also issue a new currency to replace
an existing currency or alter the exchange rate or relative exchange
characteristics by devaluation or revaluation of a currency. Thus, a
special risk in purchasing the Notes is that governmental actions could
interfere with or change theretofore freely determined interest rate levels
or currency valuations and fluctuations in market forces. There will be no
adjustment or change in the terms of the Notes in the event that exchange
rates should become fixed, or in the event of any devaluation or revaluation
or imposition of exchange or other regulatory controls or taxes, or in the
event of other developments affecting the Canadian Dollar banker's
acceptance rate, the U.S. Dollar or the Canadian Dollar.
THIS PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND
PROSPECTUS SUPPLEMENT DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN THE
NOTES. THE COMPANY BELIEVES THAT THESE RISKS ARE POTENTIALLY TOO VARIABLE
TO ASCERTAIN AND DESCRIBE WITH ANY REASONABLE DEGREE OF CERTAINTY AND
INCORPORATING EVERY ECONOMIC, FINANCIAL, POLITICAL AND MILITARY
CIRCUMSTANCE, AMONG OTHER THINGS, WOULD BE IMPRACTICAL. PROSPECTIVE
INVESTORS SHOULD THEREFORE CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS
TO THE RISKS ENTAILED BY AN INVESTMENT IN THE NOTES. SUCH NOTES ARE NOT AN
APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO
FOREIGN CURRENCY TRANSACTIONS.
CAD BA RATES
The following table sets forth certain historical CAD BA Rates as
they appear on the Reuters Screen CDOR Page.
Month-End CAD BA Rate
1989:
March 12.75%
June 11.35
September 12.08
December 11.76
1990:
March 11.52
June 13.32
September 12.30
December 11.25
1991:
March 9.62
June 9.21
September 8.20
December 7.14
1992:
March 7.77
June 5.92
September 7.45
December 7.06
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1993: CAD BA RATE
March 6.07
June 5.38
September 5.67
December 4.29
Recent exchange rates are also published in The Wall Street
Journal. On March 18, 1994, the CAD BA Rate, as it appeared on the Reuters
screen CDOR Page, was 5.39%.
The information presented in the above table is furnished as a
matter of information only. In recent years, the CAD BA rate has been
subject to fluctuations. The fluctuations in the CAD BA exchange rates that
have occurred in the past, however, are not necessarily indicative of
fluctuations in the rates that may occur over the term of Notes.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In addition to the consequences summarized in the Prospectus
Supplement under the heading "United States Taxation", set forth below is a
summary of certain United States Federal income tax consequences to original
Holders of the Notes that have purchased the Notes at their Issue Price.
The Federal income tax treatment of the payments on the Notes is
unclear because payment on the Notes at Stated Maturity is entirely
contingent. However, there are at least three possible alternative
approaches.
Under the first approach, interest payments made on September 30,
1994, and at Stated Maturity will be taxable to a Holder that is a United
States person (a "U.S. Holder") as ordinary income at the time they accrue
or are received, depending on the U.S. Holder's method of tax accounting.
At Stated Maturity a U.S. Holder will recognize short-term capital loss if
the amount paid with respect to a Note is less than the Note's Issue Price
and short-term capital gain or possibly ordinary income if the amount paid
is greater than the Issue Price.
Under the second approach, the payments of interest on
September 30, 1994, and at Stated Maturity will be treated as a non-taxable
return of principal and reduce the U.S. Holder's tax basis (which initially
was the Issue Price). On the Stated Maturity, a U.S. Holder will recognize
ordinary income (treated as interest) to the extent the payment made by the
Company exceeds such U.S. Holder's tax basis and capital loss to the extent
it is less than such U.S. Holder's tax basis. In the case of non-U.S.
Holders, such interest will be treated as described in the Prospectus
Supplement under "Non-United States Persons". This approach is based on
existing proposed original issue discount regulations relating to contingent
payment debt obligations (the "Proposed Regulations"), which by their terms
apply to the Notes. However, the Proposed Regulations no longer appear to
reflect the IRS's current position with respect to contingent payment debt
obligations.
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Under the third approach, accrual method U.S. Holders would accrue
original issue discount ("OID") into income, as described in the Prospectus
Supplement, based on the expected yield of the Note using a reasonable
estimate of the payment at Stated Maturity determined as of the end of a
taxable year or as of the issue date, or a market yield for the Note
determined as of the issue date. Such amounts would be subject to
subsequent adjustments to the extent that the estimate was incorrect. The
payments of interest on September 30, 1994, and at Stated Maturity will be
treated first as payments of OID to the extent of accrued OID at such time
and then as a return of principal and, therefore, such payments would not be
included in a U.S. Holder's income. Cash method U.S. Holders would apply
estimates in a similar fashion to that described in the Prospectus
Supplement under "United States Taxation--United States Holders--Short-Term
Notes" to determine the portion of interest received that was taxable. This
approach is based on proposed contingent payment debt regulations that were
announced by the IRS in January 1993 but subsequently withdrawn.
Although under the third approach any gain recognized on the sale
or exchange of a Note would be ordinary income, under the first and second
approaches, it is not clear whether any such gain recognized would be
ordinary income or capital gain, Any loss on the sale or exchange of a Note
would be a capital loss (except in some circumstances under the third
approach).
Backup Withholding. The rate of backup withholding has been
increased from 20% to 31%.
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