UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-815
E. I. du Pont de Nemours and Company
(Exact Name of Registrant as Specified in Its Charter)
Delaware 51-0014090
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1007 Market Street, Wilmington, Delaware 19898
(Address of Principal Executive Offices)
(302) 774-1000
(Registrant's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
679,678,463 shares of common stock, $0.60 par value, were outstanding at
April 30, 1994.
1
<PAGE>
Form 10-Q
E. I. DU PONT DE NEMOURS AND COMPANY
Table of Contents
Page
----
Part I
Item 1. Financial Statements
Consolidated Income Statement ................................. 3
Consolidated Statement of Cash Flows .......................... 4
Consolidated Balance Sheet .................................... 5
Notes to Financial Statements ................................. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Results ............................................. 7
Industry Segment Performance .................................. 7
Consolidated Industry Segment Information ..................... 9
Financial Condition ........................................... 10
Part II
Item 1. Legal Proceedings ...................................... 10
Item 4. Submission of Matters to a Vote of Security Holders .... 12
Item 6. Exhibits and Reports on Form 8-K ....................... 13
Signature ......................................................... 14
Exhibit Index ..................................................... 15
Exhibit 10.7 - Stock Performance Plan of E. I. du Pont
de Nemours and Company ......................................... 16
Exhibit 10.8 - Variable Compensation Plan of E. I. du Pont
de Nemours and Company .......................................... 27
Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges .... 33
2
<PAGE>
Form 10-Q
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
Three Months Ended
CONSOLIDATED INCOME STATEMENT<Fa> March 31
- -----------------------------------------------------------------------
(Dollars in millions, except per share) 1994 1993
- ----------------------------------------------------------------------
SALES ......................................... $ 9,190 $ 9,070
Other Income .................................. 205 208
------- -------
Total ..................................... 9,395 9,278
------- -------
Cost of Goods Sold and Other Expenses ......... 6,675 6,772
Selling, General and Administrative Expenses .. 664 742
Depreciation, Depletion and Amortization ...... 703 677
Exploration Expenses, Including Dry Hole Costs
and Impairment of Unproved Properties ....... 59 56
Interest and Debt Expense ..................... 142 144
------- -------
Total ..................................... 8,243 8,391
------- -------
EARNINGS BEFORE INCOME TAXES .................. 1,152 887
Provision for Income Taxes .................... 510 394
------- -------
NET INCOME .................................... $ 642 $ 493
======= =======
EARNINGS PER SHARE OF COMMON STOCK<Fb> ........ $ .94 $ .73
======= =======
DIVIDENDS PER SHARE OF COMMON STOCK ........... $ .44 $ .44
======= =======
See page 6 for Notes to Financial Statements.
3
<PAGE>
<TABLE>
Form 10-Q
<CAPTION>
Three Months Ended
CONSOLIDATED STATEMENT OF CASH FLOWS<Fa> March 31
- ---------------------------------------------------------------------------------------------
(Dollars in millions) 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS
Net Income ........................................................ $ 642 $ 493
Adjustments to Reconcile Net Income to Cash
Provided by Operations:
Depreciation, Depletion and Amortization ...................... 703 677
Dry Hole Costs and Impairment of Unproved Properties .......... 18 12
Other Noncash Charges and Credits - Net ....................... (72) (14)
Change in Operating Assets and Liabilities - Net .............. (200) (405)
------ -----
Cash Provided by Operations ................................. 1,091 763
------ -----
INVESTMENT ACTIVITIES
Purchases of Property, Plant and Equipment ........................ (662) (890)
Investment in Affiliates .......................................... (30) (16)
Miscellaneous - Net ............................................... 108 308
------ -----
Cash Used for Investment Activities ......................... (584) (598)
------ -----
FINANCING ACTIVITIES
Dividends Paid to Stockholders .................................... (301) (300)
Net Increase in Borrowings ........................................ 998 955
Common Stock Issued in Connection with Compensation Plans ......... 45 11
------ -----
Cash Provided by Financing Activities ....................... 742 666
------ -----
Effect of Exchange Rate Changes on Cash ............................. 23 (35)
------ -----
INCREASE IN CASH AND CASH EQUIVALENTS ............................... $1,272 $ 796
====== =====
See page 6 for Notes to Financial Statements.
</TABLE>
4
<PAGE>
<TABLE>
Form 10-Q
<CAPTION>
CONSOLIDATED BALANCE SHEET<Fa> March 31 December 31
- ---------------------------------------------------------------------------------------------
(Dollars in millions, except per share) 1994 1993
- ---------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents .................................... $ 2,512 $ 1,240
Accounts and Notes Receivable ................................ 5,216 4,848
Inventories<Fc> .............................................. 3,970 3,818
Prepaid Expenses ............................................. 335 231
Deferred Income Taxes ........................................ 627 762
------- -------
Total Current Assets ....................................... 12,660 10,899
PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation,
depletion and amortization (March 31, 1994 - $27,021;
December 31, 1993 - $26,503) ................................. 21,282 21,423
INVESTMENT IN AFFILIATES ....................................... 1,653 1,607
OTHER ASSETS ................................................... 2,917 3,124
------- -------
TOTAL ...................................................... $38,512 $37,053
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable ............................................. $ 2,408 $ 2,444
Short-Term Borrowings and Capital Lease Obligations .......... 3,929 2,796
Income Taxes ................................................. 441 321
Other Accrued Liabilities .................................... 3,777 3,878
------- -------
Total Current Liabilities .................................. 10,555 9,439
LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS ............. 6,414 6,531
OTHER LIABILITIES .............................................. 8,252 8,200
DEFERRED INCOME TAXES .......................................... 1,468 1,466
------- -------
Total Liabilities .......................................... 26,689 25,636
------- -------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES ................ 193 187
------- -------
STOCKHOLDERS' EQUITY
Preferred Stock .............................................. 237 237
Common Stock, $.60 par value; 900,000,000 shares authorized;
shares issued at March 31, 1994 - 679,487,795;
December 31, 1993 - 677,577,437 408 407
Additional Paid-In Capital ................................... 4,718 4,660
Reinvested Earnings .......................................... 6,267 5,926
------- -------
Total Stockholders' Equity ................................. 11,630 11,230
------- -------
TOTAL ...................................................... $38,512 $37,053
======= =======
See page 6 for Notes to Financial Statements.
</TABLE>
5
<PAGE>
Form 10-Q
NOTES TO FINANCIAL STATEMENTS
(Dollars in millions)
[FN]
<Fa>These statements are unaudited, but reflect all adjustments that, in the
opinion of management, are necessary to provide a fair statement of the
financial position, results of operations and cash flows for the dates
and periods covered. All such adjustments are of a normal recurring
nature. Certain reclassifications of 1993 data have been made to
conform to 1994 classifications.
<Fb>Earnings per share are calculated on the basis of the following average
number of common shares outstanding.
Three Months Ended March 31:
1994 -- 678,476,595
1993 -- 675,497,105
<Fc>Inventories March 31 December 31
----------- 1994 1993
-------- -----------
Chemicals .................................. $ 303 $ 250
Fibers ..................................... 619 571
Polymers ................................... 479 550
Petroleum .................................. 1,364 1,367
Diversified Businesses ..................... 1,205 1,080
------ ------
Total $3,970 $3,818
====== ======
6
<PAGE>
Form 10-Q
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(a) Results of Operations
(1) Financial Results:
Net income for the first quarter of 1994 was $642 million,
or $.94 per share, compared with $493 million, or $.73 per share,
earned in the first quarter 1993. Excluding a prior-year
$32 million nonrecurring gain from exchange of North Sea petroleum
properties, first quarter 1994 net income was up 39 percent,
principally due to lower costs.
The first quarter earnings marked the company's best
quarterly performance since 1990. Excluding the 1993 nonrecurring
item, each industry segment posted earnings gains over last year.
Efforts to focus on businesses where we have a competitive
advantage and technological strength, combined with significant
reduction in costs, are having the desired effect on earnings. In
addition, compared to last year, the company is seeing increased
demand in key markets for a number of its businesses, including
automotive products, engineering polymers, nylon, "Lycra" spandex,
and nonwovens. Not only is demand generally improved in the United
States, but market conditions are better in Europe and Asia, where
the chemicals and specialties sales are up 15 percent and 6 percent
respectively.
(2) Industry Segment Performance:
The following text and accompanying "Consolidated Industry
Segment Information" table compare segment results for the first
quarter of 1994 with the same period last year.
Sales totaled $9.2 billion, up $120 million or 1 percent.
Despite lower worldwide crude oil prices, Petroleum segment sales
were up 2 percent versus last year on higher worldwide natural gas
prices and volumes and higher international crude oil volumes. For
combined segments other than Petroleum, sales were up 1 percent,
reflecting 5 percent higher volume, partly offset by 4 percent lower
selling prices.
o Chemicals segment earnings were $83 million, up $14 million,
or 20 percent, attributable to better results for fluoro-
chemicals and specialty chemicals. Sales decreased
1 percent, as 3 percent higher volume was more than offset
by a 4 percent decline in selling prices.
7
<PAGE>
Form 10-Q
o Fibers segment earnings of $144 million were up
$42 million, or 41 percent, as improvements in nylon and
"Lycra" spandex were partly offset by lower results for
"Dacron" polyester. Segment results reflect lower costs
and an improvement in European business from weaker
conditions a year ago. Segment sales were 14 percent
higher. After adjusting for additional sales from the
acquisition of ICI's nylon business, sales volume was up
6 percent. Prices were down 2 percent, principally from
the currency effect of a stronger dollar.
o Polymers segment earnings were $147 million, up
$70 million or 91 percent from last year. Both automotive
products and engineering polymers improved significantly,
reflecting lower costs and higher sales. Adjusting for
the absence of sales from the acrylics business divested
last year, segment sales were up 5 percent, reflecting
9 percent higher volume, partly offset by 4 percent lower
prices.
o Petroleum segment earnings were $215 million, up
$15 million, or 8 percent, excluding the prior-year
property exchange benefit. The earnings improvement is
attributable to stronger domestic downstream performance,
reflecting higher refined product margins. Upstream
earnings were down 5 percent, reflecting a drop of more
than 20 percent in crude oil prices. Higher worldwide
natural gas prices and volumes, higher crude oil volumes
outside of the United States, and lower costs were
sufficient to offset most of the impact of the lower crude
oil prices.
o Diversified Businesses segment earnings totaled
$148 million, up $41 million or 38 percent from the prior
year. This reflects earnings improvements in crop protec-
tion chemicals and printing and publishing, primarily from
lower costs. Segment sales were down 1 percent after
adjusting for prior-year divestitures of the connector
systems and sporting goods businesses, primarily reflect-
ing lower sales of crop protection chemicals and medical
products in the United States.
8
<PAGE>
Form 10-Q
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
Three Months Ended
CONSOLIDATED INDUSTRY SEGMENT INFORMATION March 31
- ---------------------------------------------------------------------
(Dollars in millions) 1994 1993
- ---------------------------------------------------------------------
SALES
- -----
Chemicals ................................. $ 848 $ 859
Fibers .................................... 1,645 1,447
Polymers .................................. 1,483 1,460
Petroleum ................................. 3,862 3,794
Diversified Businesses .................... 1,352 1,510
------- -------
Total ................................. $ 9,190 $ 9,070
======= =======
AFTER-TAX OPERATING INCOME
- --------------------------
Chemicals ................................. $ 83 $ 69
Fibers .................................... 144 102
Polymers .................................. 147 77
Petroleum ................................. 215 232(a)
Diversified Businesses .................... 148 107
------- -------
Total ................................. 737 587
Interest and Other Corporate
Expenses Net of Tax ..................... (95) (94)
------- -------
NET INCOME ................................ $ 642 $ 493
- ---------- ======= =======
(a) Includes $32 gain from exchange of North Sea properties.
9
<PAGE>
Form 10-Q
(b) Financial Condition at March 31, 1994
The following comments pertain to the "Consolidated Statement of
Cash Flows." In the first quarter 1994, DuPont recorded a net cash inflow
of $507 million from Operations and Investment Activities. This inflow
reflects improved business results, coupled with reductions in both
operating and capital expenditures, partly offset by increases in working
capital. The increase in working capital was mostly due to higher Accounts
Receivable-Trade and Inventories, reflecting increased business activity and
the seasonal pattern in certain businesses (principally crop protection
chemicals). Days' sales outstanding averaged 39 days in the first quarter,
down one day from the first quarter of 1993. After payment of $301 million
for dividends, the cash inflow was $206 million. This inflow, plus other
inflows totaling $68 million and borrowings of $998 million made to
accomplish a planned buildup in cash balances, resulted in a total increase
in cash for the quarter of $1,272 million.
Certain ratios are shown below:
At 3/31/94 At 12/31/93
---------- -----------
Debt Ratio (total debt to total
capitalization) 46.7% 45.0%
Current Ratio (current assets
to current liabilities) 1.2:1 1.2:1
The ratio of earnings to fixed charges is 6.2 for the first three months of
1994. The ratio is up from 2.0 for the year 1993. The 1993 ratio reflects
$1.8 billion (pretax) of restructuring charges.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In 1991, DuPont received claims by growers that use of "Benlate"
50 DF fungicide had caused crop damages. Based on the belief that "Benlate"
50 DF would be found to be a contributor to the claimed damage, DuPont paid
claims. In 1992, after 18 months of extensive research, DuPont scientists
concluded that "Benlate" 50 DF was not responsible for plant damage reports
received since March 1991. Concurrent with these research findings, DuPont
stopped paying claims relating to those reports. To date, DuPont has been
served with more than 550 lawsuits in several jurisdictions, principally
Florida, Hawaii, and Puerto Rico, by growers who allege plant damage from
using "Benlate" 50 DF fungicide. DuPont recently settled 220 lawsuits for
various amounts totaling about $214 million. The settlement follows two
recent verdicts in a Florida trial in which a jury found "Benlate" to be
free of defects. With this settlement, about half of the lawsuits brought
against the company since 1991 have been disposed of. Excluding this
settlement, more than 75 "Benlate" cases have been disposed of by courts,
juries, and settlements, many in DuPont's favor. Even where juries have
10
<PAGE>
Form 10-Q
awarded growers any damages, those damages have been, on average, less than
a third of what they sought, and growers have been found to share
responsibility for their claimed losses. DuPont believes that "Benlate" 50
DF fungicide did not cause the alleged damages and intends to continue to
prove this in ongoing matters.
Since 1989, DuPont has been served with approximately 60 lawsuits in
several jurisdictions, principally in Texas, Florida, Maryland and Arizona
alleging damages as a result of leaks in certain polybutylene plumbing
systems. Two nationwide class actions have been filed in state and federal
courts in Houston, Texas, but neither has been certified as of this date.
In most cases, DuPont is a codefendant with Shell, Hoechst-Celanese and
other parts manufacturers. The polybutylene plumbing systems consist of
flexible pipe extruded from polybutylene connected by fittings made from
acetal. Shell Chemical is the sole producer of polybutylene; the acetals
are provided by Hoechst-Celanese and DuPont. DuPont entered the market in
1983 and it is not known as to the number of commercial or dwelling units
that have polybutylene plumbing systems, or the number of commercial or
dwelling units that have DuPont's product in their plumbing systems. During
1994, DuPont settled a majority of the Texas lawsuits. Presently, DuPont is
active in eleven suits involving 1,028 plaintiffs. Forty-five lawsuits have
been disposed of (44 by pretrial settlements, 1 by dismissal). DuPont has
not been to trial in any case.
On June 28, 1991, DuPont entered into a voluntary agreement with the
Environmental Protection Agency (EPA) to conduct an audit of the U.S. sites
under the Toxic Substance Control Act (TSCA). Agreement participation is
not an admission of TSCA noncompliance. Maximum stipulated penalties that
DuPont could pay under the agreement are capped at $1 million. The first
phase of the audit was completed, but no findings have been issued. Subject
to the EPA's issuance of new reporting criteria, the second phase of its
audit is expected to begin at the end of 1994.
On October 18, 1991, the EPA issued an Administrative Order under the
Resource Conservation and Recovery Act (RCRA) directing Conoco Pipeline
Company (CPLC) to undertake specific remedial measures related to a former
oil reprocessing facility in Converse County, Wyoming. CPLC contested the
Administrative Order, and has taken voluntary measures at the site together
with other interested parties. On February 19, 1993, the U.S. Department of
Justice filed a lawsuit against 10 entities, including CPLC, to enforce the
Order and collect penalties. CPLC has settled this matter with the U.S.
government pending approval by the Court. CPLC along with four other com-
panies have agreed to a cleanup of this site which is estimated to cost
between $4.4 million and $8.9 million and pay as a group, $300,000 in civil
penalties. CPLC's share of this settlement is approximately 11%. CPLC
plans to seek recovery of these amounts from other nonsettling parties.
On October 15, 1993, the EPA filed a complaint in the U.S. District
Court, Eastern District of Texas (Beaumont), against DuPont alleging various
violations of the Clean Water Act at the Sabine River Works. Included are
alleged unauthorized discharges, effluent limitation violations, and
monitoring and reporting violations under the plant's NPDES permit. The
Government was seeking a civil penalty of $1.4 million. On April 20, 1994,
11
<PAGE>
Form 10-Q
the Government and DuPont reached a settlement in this action. DuPont has
agreed to pay a civil penalty of $516,430 and to implement a Supplemental
Environmental Project with an estimated cost to DuPont of $3.2 million. A
consent decree will be drafted and agreed to by the parties contained in the
settlement as well as other requirements including reporting and stipulated
penalties. The consent order will be noticed in the Federal Register for
30 day public comment before being entered by the court.
On April 11, 1994, the Texas Natural Resource Conservation
Commission (TNRCC) issued a Notice of Executive Director's Preliminary Report
and Petition for a TNRCC Order assessing penalties of $122,640 for alleged
violations at DuPont's Beaumont Works Plant of the Texas Solid Waste Disposal
Act, the Texas Water Code and the applicable regulations. The company's
legal counsel believes that the basis for the penalty calculations asserted
by TNRCC does not accurately reflect the facts concerning the impact on the
environment nor the significance of the allegations and, therefore a signif-
icant reduction in penalty is appropriate.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Business transacted at the Annual Meeting:
A total of 571,981,115 shares of common stock were voted in person
or by proxy at the annual meeting of stockholders on April 27, or
84.3 percent of the shares entitled to be voted. Business was transacted as
follows:
1. ELECTION OF DIRECTORS: The 16 nominees listed in the proxy
statement were elected to serve on the Board of Directors for the
ensuing year. All nominees were members of the Board. The vote
tabulation with respect to each nominee follows:
Votes Cast Votes Cast Against
Director For or Withheld
P. N. Barnevik 570,047,761 1,922,499
A. F. Brimmer 570,441,734 1,528,526
C. R. Bronfman 569,913,639 2,056,621
E. M. Bronfman 569,865,825 2,104,435
E. Bronfman, Jr. 569,872,556 2,097,704
L. C. Duemling 570,555,836 1,414,424
E. B. du Pont 570,667,441 1,302,819
C. M. Harper 570,500,297 1,469,963
J. A. Krol 570,655,305 1,314,955
M. P. MacKimm 570,631,408 1,338,852
C. S. Nicandros 570,633,275 1,336,985
W. K. Reilly 570,393,348 1,576,912
H. R. Sharp, III 570,614,964 1,355,296
C. M. Vest 570,396,262 1,573,998
J. L. Weinberg 570,403,970 1,566,290
E. S. Woolard, Jr. 570,465,377 1,504,883
12
<PAGE>
Form 10-Q
2. RATIFICATION OF INDEPENDENT ACCOUNTANTS: The proposal to ratify the
appointment of Price Waterhouse as independent accountants for 1994
was approved by a vote of 569,177,760 shares for, 761,076 shares
against and 2,042,279 abstentions and broker nonvotes.
3. AMENDMENT OF STOCK PERFORMANCE PLAN: The proposal to amend the
Stock Performance Plan was approved by a vote of 537,728,743 shares
for, 30,490,378 shares against and 3,761,994 abstentions and broker
nonvotes.
4. POLITICAL NONPARTISANSHIP: A stockholder proposal concerning
political contributions was defeated by a vote of 507,385,938 shares
against, 13,148,536 shares for and 51,446,641 abstentions and broker
nonvotes.
5. CUMULATIVE VOTING: A stockholder proposal to provide for cumulative
voting in the election of directors was defeated by a vote of
469,057,938 shares against, 61,778,504 shares for and 41,144,672
abstentions and broker nonvotes.
6. SITE LISTING: A stockholder proposal to list in the company's
annual environmental progress report each site expected to cause
environmental liabilities to accrue to the company was defeated by a
vote of 505,842,160 shares against, 15,782,471 shares for and
50,356,484 abstentions and broker nonvotes.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibit index filed with this Form 10-Q is on page 15.
(b) Reports on Form 8-K
1. The company filed a Current Report on Form 8-K, dated
January 26, 1994, in connection with Debt Securities that
may be offered on a delayed or continuous basis under
Registration Statements on Form S-3 (No. 33-39161 and
No. 33-48128). Through this Form 8-K, a copy of the
Registrant's Earnings Press Release, dated January 26,
1994, was filed under Item 7.
13
<PAGE>
Form 10-Q
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
E. I. DU PONT DE NEMOURS AND COMPANY
(Registrant)
Date: May 10, 1994
--------------------------------------
By /s/C. L. Henry
--------------------------------------
C. L. Henry
Senior Vice President - DuPont Finance
(As Duly Authorized Officer
and Principal Financial
and Accounting Officer)
14
EXHIBIT 10.7
STOCK PERFORMANCE PLAN
Originally Adopted - November 12, 1957
Last Amended - November 24, 1993
and reflecting changes approved by the Board on that date
for Shareholder approval on April 27, 1994
E. I. DU PONT DE NEMOURS AND COMPANY
16
<PAGE>
STOCK PERFORMANCE PLAN
I. PURPOSES
The purposes of this Stock Performance Plan (the "Plan")
are: (a) to provide greater incentive for employees who are or
will be primarily responsible for the growth and success of the
business to exert their best efforts on behalf of E. I. du Pont
de Nemours and Company ("the Company"); and (b) to further the
identity of interests of such employees with those of the
Company's stockholders generally by encouraging them to acquire
stock ownership in the Company.
II. FORM OF GRANTS
1. Grants under this Plan may be made in the form of
stock options, stock options accompanied by stock
appreciation rights, restricted stock or a combi-
nation of any of these forms and may be made in
replacement of or as alternatives to salary or grants
under any other plan or program of a plan company.
2. Stock options to purchase shares of the Company's
common stock granted under this Plan may be either
incentive, performance or other stock options
qualified under the Internal Revenue Code as in
effect from time to time ("qualified stock options")
or stock options that are not qualified under the
Internal Revenue Code ("nonqualified stock options"),
or a combination of qualified and nonqualified stock
options.
3. Stock appreciation rights may be granted by the
Company under this Plan upon such terms and condi-
tions as the Compensation and Benefits Committee may
determine. Such rights may be granted only when they
accompany the concurrent grant of stock options.
Each stock appreciation right shall give the grantee
the right to receive a payment equal to the excess of
the fair market value of a share of the Company's
common stock on the date when such right is exercised
over the option price provided for in the accompany-
ing stock option. Such rights may be exercised only
if the grantee exercises the accompanying stock
option by purchasing one share of the Company's
common stock for each stock appreciation right
exercised.
17
<PAGE>
The number of shares subject to exercise under an
accompanying stock option shall be automatically
reduced by one share for each stock appreciation
right exercised.
4. Shares of restricted stock granted under this Plan
shall be subject to restriction, such as forfeiture
and a minimum vesting period. A grantee shall
generally have all incidents of ownership in
restricted stock, including the right to dividends
(unless otherwise restricted) and to vote. Shares
may be evidenced by book-entry registration, a stock
certificate registered in the grantee's name but held
in the Company's custody or issuance of an appro-
priate legended stock certificate, as determined by
the Compensation and Benefits Committee.
III. LIMITATIONS ON GRANTS
1. The aggregate number of shares of the Company's stock
which may be made subject to stock options granted
under this Plan shall not exceed 36,000,000, or 5% of
such number for any optionee, during any five
consecutive years, of which only 6,000,000 shares may
be subject to restricted stock grants. The number of
stock appreciation rights which may be granted to any
optionee under this Plan shall not exceed 50% of the
number of shares made subject to an accompanying
stock option.
2. If any stock option or restricted stock (without
benefit of dividends) granted under this Plan shall
terminate or expire for any reason without having
been exercised or vested in full, the shares not
acquired under such grant shall become available
again for further grants under this Plan; provided
also, that shares withheld by or tendered to the
Company as payment of exercise price or other
consideration or satisfaction of withholding taxes
shall become available again for further grants to
employees who are not executive officers; provided,
however, that the shares which become so available
for further grants shall not include any shares as to
which a stock option has been reduced by reason of
receiving payments under accompanying stock
appreciation rights. The limitations set forth above
shall be subject to adjustment as provided in Article
XII hereof.
18
<PAGE>
IV. ADMINISTRATION
1. Except as otherwise specifically provided, the Plan
shall be administered by the Compensation and
Benefits Committee of the Company's Board of
Directors. The Compensation and Benefits Committee
shall be elected pursuant to the Bylaws of the
Company, and the members thereof shall be ineligible
for grants while serving on said Committee.
2. The Compensation and Benefits Committee is
authorized, subject to the provisions of the Plan,
from time to time to establish such rules and
regulations as it deems appropriate for the proper
administration of the Plan, and to make such
determinations and take such steps in connection
therewith as it deems necessary or advisable.
3. The Compensation and Benefits Committee shall,
subject to the provisions of the Plan, determine the
time or times when stock options will be granted,
which employees, if any, shall be granted stock
options, the types of stock options to be granted,
whether they shall be granted singly or in combi-
nation, when they shall be exercisable, the number of
shares to be covered by each stock option or options,
and the terms and conditions of such stock options;
which employees, if any, shall also be granted
accompanying stock appreciation rights, the number of
stock appreciation rights which shall be granted to
each of them, and the terms and conditions of such
rights; and the time or times when restricted stock
will be granted, which employees, if any, shall be
granted restricted stock, the number of restricted
shares to be granted, the restrictions or conditions
on the right to transfer or dispose of such shares,
and the terms and conditions of such restricted
stock, including the number, amount, and timing of
vesting increments.
4. The decision of the Compensation and Benefits
Committee with respect to any questions arising as to
interpretation of this Plan, including the sever-
ability of any and all of the provisions thereof,
shall be final, conclusive and binding.
5. The Company's Board of Directors may elect a Special
Stock Performance Committee pursuant to the Bylaws of
the Company which shall have and may exercise all the
rights, powers and duties of the Compensation and
Benefits Committee specified in this Plan for pur-
poses of making grants for significant achievements
19
<PAGE>
by employees who are not directors or executive
officers of the Company. The Special Stock
Performance Committee may also be authorized by the
Compensation and Benefits Committee to assume certain
administrative responsibilities under this Plan.
V. ELIGIBILITY FOR GRANTS
1. Grants under this Plan may be made to employees
(including those who are directors or executive
officers of the Company) as determined by the
Compensation and Benefits Committee (or Board of
Directors, if the grantee is a director of the
Company). In determining those employees to whom
grants are to be made, the Compensation and Benefits
Committee (or Board of Directors, if the beneficiary
is a director of the Company) may take into
consideration present and potential contributions to
the Company's success by such employees, and any
other factors which the Compensation and Benefits
Committee (or Board of Directors, if the grantee is a
director of the Company) may deem relevant in
connection with accomplishing the purposes of the
Plan.
2. The term "employee" may include an employee of a
corporation or other business entity in which the
Company shall directly or indirectly own fifty
percent or more of the outstanding voting stock or
other ownership interest, but shall exclude any
director who is not also an officer or a full-time
employee of a plan company. The term "plan company"
as used in this Plan shall mean a business entity
whose employees are eligible for grants under this
Plan). The term "grantee" as used in this Plan means
an employee to whom a grant has been made under this
Plan or, where appropriate, his or her successor in
interest upon death.
VI. RECOMMENDATIONS AND GRANTS
1. Recommendations for grants to members of the Board of
Directors shall be made by the Compensation and
Benefits Committee. Recommendations for grants to
employees who are not members of the Board of
Directors shall be made to the Compensation and
Benefits Committee by the Office of the Chairman.
20
<PAGE>
2. Any grant to a director shall be made in the sole
discretion of the Board of Directors, a majority of
whose members taking final action on any such grant
shall be ineligible for grants under Article V. Any
grant to an employee who is not a member of the Board
of Directors shall be made by the Compensation and
Benefits Committee which shall take final action on
any such grant.
3. Grants may be made at any time under this Plan and in
any of the forms or combinations thereof provided in
Article II hereof. A grantee may receive and may
hold more than one grant under this Plan.
4. The date on which a grant shall be deemed to have
been made under this Plan shall be the date of the
Compensation and Benefits Committee (or Board of
Directors, if the grantee is a director) authoriza-
tion of the award or such later date as may be
determined by the Compensation and Benefits Committee
(or Board of Directors, if the grantee is a director)
at the time the grant is authorized. Each grantee
shall be advised in writing by the Company of a grant
and the terms and conditions thereof, which terms and
conditions, as the Compensation and Benefits
Committee from time to time shall determine, shall
not be inconsistent with the provisions of this Plan.
VII. OPTION PRICE
The price per share of the Company's common stock which
may be purchased upon exercise of a stock option granted under
this Plan shall be determined by the Compensation and Benefits
Committee, but shall in no event be less than the fair market
value of such share on the date the stock option is granted, and
in no event less than the par value thereof. The price so
determined also shall be applicable to any accompanying stock
appreciation right. For purposes of this Plan, fair market
value shall be the average of the high and low prices of the
Company's common stock as reported on the "NYSE-Composite
Transactions Tape" on the date of grant of a stock option or the
date of exercise of a stock option or stock appreciation right,
or if no sales of such stock were reported on said Tape on such
date, the average of the high and low prices of such stock on
the next preceding day on which sales were reported on said
Tape. Such price shall be subject to adjustment as provided in
Article XII hereof.
21
<PAGE>
VIII. OPTION TERM
The term of each stock option and each stock appreciation
right granted under this Plan shall be for such period as the
Compensation and Benefits Committee shall determine, but not for
more than ten years from date of grant.
IX. EXERCISE OF OPTIONS
1. Subject to the provisions of this Plan, each stock
option and each stock appreciation right granted
hereunder shall be exercisable on such date or dates
and during such period and for such number of shares
or stock appreciation rights as the Compensation and
Benefits Committee may determine. However, in no
event shall a stock option or stock appreciation
right be exercisable prior to six months from date of
grant. The Compensation and Benefits Committee may
fix from time to time a minimum number of shares
which must be purchased at the time a stock option is
exercised.
2. A grantee electing to exercise a stock option shall
at the time of exercise pay the Company the full
purchase price of the shares he or she has elected to
purchase. Payment of the purchase price shall be
made in cash, the Company's common stock (valued at
fair market value on the date of exercise), or a
combination thereof, as the Compensation and Benefits
Committee may determine from time to time. A grantee
electing to exercise a stock appreciation right
granted under this Plan shall so notify the Company
at the same time he or she elects to exercise an
accompanying stock option. Payment by the Company
for such stock appreciation right may be in cash,
common stock (valued at fair market value on date of
exercise), or a combination thereof, as the
Compensation and Benefits Committee may determine
from time to time, but no fractional share of common
stock shall be delivered. With respect to shares of
the Company's common stock to be delivered upon
exercise of a stock option or a stock appreciation
right, the Compensation and Benefits Committee shall
periodically determine whether, and to what extent,
such stock shall be in the form of new common stock
issued for such purposes, or common stock acquired by
the Company.
22
<PAGE>
3. Notwithstanding any other provision of this Plan,
when the fair market value of a share of the
Company's common stock on the date a grantee elects
to exercise a stock option is less than such amount
per share as may be determined by the Compensation
and Benefits Committee from time to time, the Company
may at its election pay the grantee in cash for each
share he or she elected to purchase an amount equal
to the excess of such fair market value over the
option price provided for in the stock option. The
Compensation and Benefits Committee shall period-
ically determine whether the Company shall make such
cash payment upon exercise of a stock option. When
the Company makes a payment to the grantee under this
paragraph 3 of Article IX, it shall not require the
grantee to tender the full purchase price of the
shares he or she has elected to purchase, the
Company's obligation to issue or deliver such shares
shall be null and void, and the right to purchase
such number of shares subject to option shall be
terminated. Such payment by the Company shall be
deemed to be an exercise of a stock option and the
purchase of shares thereunder for purposes of
paragraph 3 of Article II and Article III.
X. NONTRANSFERABILITY OF GRANTS
During a grantee's lifetime no stock option or stock
appreciation right granted under this Plan shall be transferable,
and stock options and stock appreciation rights may be exercised
only by the grantee.
XI. TERMINATION OF EMPLOYMENT
1. The Compensation and Benefits Committee shall, subject
to the provisions of the Plan, determine the rules
relating to rights under stock options, stock
appreciation rights and restricted stock grants upon a
grantee's termination of employment.
2. A grantee shall forfeit all rights under stock
options, stock appreciation rights and restricted
stock grants -
(a) if the grantee is dismissed or leaves the
service of the plan companies for any reason
other than his or her death, or retirement
pursuant to the provisions of the pension or
retirement plan or policy of a plan company, or
23
<PAGE>
(b) if the grantee retires pursuant to the pro-
visions of the pension or retirement plan or
policy of a plan company, and if thereafter the
Compensation and Benefits Committee, after a
hearing at which the grantee shall be entitled
to be present, shall find that he or she has
willfully engaged in any activity which is harm-
ful to the interest of any of such companies;
provided, however, that such stock options, stock
appreciation rights and restricted stock grants may
continue in effect to such extent and under such
conditions as the Compensation and Benefits Committee
may determine; and provided, further, that the
Compensation and Benefits Committee may accelerate or
waive any restrictions or conditions applicable to
restricted stock grants, in whole or in part, based
on such factors and criteria as the Compensation and
Benefits Committee may determine.
3. Upon the death of the grantee or his or her retire-
ment pursuant to the provisions of the pension or
retirement plan or policy of a plan company, which-
ever shall first occur, the number of shares subject
to option and the number of stock appreciation rights
shall be limited to that number of shares and rights
which the grantee could have acquired or exercised
under the terms of his or her grant or grants on the
date of such death or retirement, and the options or
rights representing the remainder of the grant or
grants shall terminate.
XII. ADJUSTMENTS
1. In the event of any stock dividend, split-up,
reclassification or other analogous change in
capitalization, the Compensation and Benefits
Committee shall make such adjustments, in the light
of the change, as it deems to be equitable, both to
the grantees and to the Company, in -
(a) the number of shares and prices per share
applicable to outstanding stock options,
(b) the number of outstanding stock appreciation
rights and their price,
(c) the number of shares applicable to outstanding
restricted stock grants,
24
<PAGE>
(d) the aggregate limitation set forth in
Article III with respect to the number of shares
which may be made subject to options and
restricted stock grants.
Furthermore, in the event of a distribution to common
stockholders other than interim or year-end dividends
declared as such by the Board of Directors, the
Compensation and Benefits Committee shall make such
adjustments, in the light of the distribution, as it
deems to be equitable, both to the grantees and to
the Company, in respect of the items described in
(a), (b) and (c) above.
2. Any fractional shares or fractional stock apprecia-
tion rights resulting from adjustments made pursuant
to this Article shall be eliminated.
XIII. AMENDMENTS
The Board of Directors reserves the right to modify this
Plan from time to time or to repeal the Plan entirely, or to
direct the discontinuance of grants either temporarily or
permanently; provided, however, that no modification of this
Plan shall operate to annul, without the consent of the grantee,
a grant already made hereunder; provided, also, that no
modification without approval of the stockholders shall -
(a) increase the number of shares which may be made
subject to stock options or restricted stock grants,
or the number of stock appreciation rights which may
be granted under this Plan in the aggregate, except
by way of adjustments as provided in Article XII,
(b) permit grant of stock options and stock appreciation
rights at a price less than fair market value,
(c) extend the maximum term of stock options and stock
appreciation rights, or
(d) permit a grant under this Plan to a member of the
Compensation and Benefits Committee;
except that the Board of Directors may take any action it deems
advisable to ensure that qualified stock options may be granted
under this Plan in accordance with the provisions of the
Internal Revenue Code, as it may be amended.
25
<PAGE>
XIV. MISCELLANEOUS
1. The Compensation and Benefits Committee may adopt
such modifications, procedures, and subplans as may
be necessary or desirable to comply with provisions
of the laws of countries other than the United States
in which the Company or a plan company may operate to
assure the viability of the benefits of grants made
to employees in such countries and to meet the
purposes of the Plan.
2. Grantees may use shares of the Company's common stock
to satisfy withholding taxes relating to grants under
this Plan to the extent provided in terms and
conditions established by the Compensation and
Benefits Committee.
26
EXHIBIT 10.8
VARIABLE COMPENSATION PLAN
Originally Adopted - February 3, 1905
Last Amended - November 24, 1993
E. I. DU PONT DE NEMOURS AND COMPANY
27
<PAGE>
VARIABLE COMPENSATION PLAN
I. PURPOSES
The purposes of this Variable Compensation Plan (the
"Plan") are: (a) to provide greater incentive for employees
continually to exert their best efforts on behalf of E. I.
du Pont de Nemours and Company (the "Company") by granting them
compensation that, combined with their regular salaries, results
in total compensation that is competitive based on performance;
and (b) to further the identity of interests of such employees
with those of the Company's stockholders generally.
II. FORM OF GRANTS
1. Variable compensation under this Plan may be granted
in acquired common stock of this Company, or in new
common stock to be issued directly to the
beneficiaries, or in cash, or in two or more of said
forms.
2. The Compensation and Benefits Committee shall
determine the portion of each award under this Plan
to be paid in cash and the portion to be delivered to
the beneficiary in the form of common stock.
III. LIMITATIONS ON GRANTS
1. Grants under this Plan shall be made from the
Variable Compensation Fund which the Company shall
establish and to which shall be credited annually an
amount to be determined by the Compensation and
Benefits Committee. This amount shall not exceed 20%
of the "variable net income."
2. The term "variable net income" for any year, as used
in this Plan, shall mean the amount of net income as
shown in the Consolidated Income Statement of this
Company and its subsidiaries set forth in the Annual
Report to the Stockholders for such year, with
adjustments for any significant items of income or
loss which the Compensation and Benefits Committee in
its discretion may deem appropriate; further adjusted
by
28
<PAGE>
(a) adding any amount which has been deducted in
computing said net income with respect to any
provision for the Variable Compensation Fund,
and
(b) deducting an amount equal to 6% of the "variable
net capital employed," as defined in paragraph 3
of this Article.
3. The term "variable net capital employed" for any
year, as used in this Plan, shall mean the average of
the amounts of Stockholders' Equity as of
December 31st of such year and December 31st of the
preceding year, as shown in the Consolidated Balance
Sheets of this Company and its subsidiaries set forth
in the Annual Reports to the Stockholders, after
adjusting said amounts, however, by adding to
Stockholders' Equity as stated in the later of such
Balance Sheets any amount which has been deducted in
computing net income with respect to any provision
for the Variable Compensation Fund, as described in
paragraph 2(a) of this Article.
4. Grants for each year need not have an aggregate value
equal to the entire amount available in the Variable
Compensation Fund. Any ungranted portion of the Fund
shall be carried forward and be available for grants
in a succeeding year or years, and while grants in
the aggregate for any year may exceed the amount
credited for that year to the Variable Compensation
Fund, they shall not exceed the total amount in the
Fund.
IV. ADMINISTRATION
1. Except as otherwise specifically provided, the Plan
shall be administered by the Compensation and
Benefits Committee of the Company's Board of
Directors. The Compensation and Benefits Committee
shall be elected pursuant to the Bylaws of the
Company, and the members thereof shall be ineligible
for grants for services performed while serving on
said Committee.
2. The decision of the Compensation and Benefits
Committee with respect to any questions arising as to
interpretation of this Plan, including the sever-
ability of any and all of the provisions thereof,
shall be final, conclusive and binding.
29
<PAGE>
V. ELIGIBILITY FOR GRANTS
1. Grants under the Plan may be made to those employees
who have contributed the most in a general way to the
Company's success by their ability, efficiency, and
loyalty, consideration being given to ability to
succeed in more important managerial responsibility
in the Company. Grants may also be made to:
(a) a person performing services on a consultant
basis,
(b) an employee who retired or plans to retire
pursuant to the provisions of the pension and
retirement plan or policy of a plan company,
(c) a former employee, and
(d) the surviving spouse or estate of a deceased
employee.
No grant may be made to a director except for
services performed as an employee of a plan company.
2. Except as set forth in subparagraphs (a) to (d) of
the preceding paragraph, to be eligible for a grant
an employee shall be employed by a plan company as of
the date final action is taken on a grant under this
Plan and shall be expected to continue in the employ
of such a company. Except in special cases, any
employee receiving a grant shall have been in the
continuous employ of a plan company at least two
years on January 1st of the year in which the grant
is being made.
3. For purposes of this Plan, the term "employee" shall
include an employee of a corporation or other
business entity in which the Company shall directly
or indirectly own fifty percent or more of the
outstanding voting stock or other ownership interest.
The term "plan company" as used in this Plan shall
mean a business entity whose employees are eligible
for grants under this Plan.
VI. GRANTS
1. The Compensation and Benefits Committee shall
determine each year the total amount of the Variable
Compensation Fund to be distributed. Grants for any
calendar year shall be made as soon as practicable
after the close of such calendar year.
30
<PAGE>
2. Employees in countries other than the United States
may be granted variable compensation through plans or
programs other than this Plan.
VII. STOCK FOR GRANTS
1. With respect to the portion of grants under this Plan
to be delivered in common stock, the Compensation and
Benefits Committee of the Company's Board of
Directors shall determine whether, and to what
extent, such portion of the grants shall be in new
common stock to be issued directly to beneficiaries,
or in common stock acquired by the Company.
2. The value per share at which common stock is to be
granted to beneficiaries under this Plan shall be
fixed and determined by the Board of Directors.
Common stock to be delivered in payment of grants
under this Plan shall be issued or registered in the
names of beneficiaries at the time of delivery
provided under Article IX hereof.
VIII. RECOMMENDATIONS AND GRANTS
1. Recommendations for grants to members of the Board of
Directors shall be made by the Compensation and
Benefits Committee. Recommendations for grants to
employees who are not members of the Board of
Directors shall be made to the Compensation and
Benefits Committee by the Office of the Chairman.
2. Any grant to a director shall be made in the sole
discretion of the Board of Directors, a majority of
whose members taking final action on any such grant
shall be ineligible for grants under Article V. Any
grant to an employee who is not a member of the Board
of Directors shall be made in the sole discretion of
the Compensation and Benefits Committee which shall
take final action on any such grant. No person shall
have a right to a grant under this Plan until final
action has been taken to make such grant. At the
discretion of the Compensation and Benefits
Committee, grants to employees of a plan company may
be made subject to approval by the board of directors
or other management group of such company.
31
<PAGE>
3. Action to establish a minimum liability for variable
compensation grants under this Plan, if deemed
appropriate, shall be taken by the Compensation and
Benefits Committee prior to year-end of the calendar
year for which grants are to be made.
VIII. DELIVERY OF GRANTS
When any stock or cash is granted under this Plan,
certificates of stock, or cash, as the case may be, representing
such grant, shall be delivered to the beneficiary promptly, or
at such future times and under such terms and conditions as the
Compensation and Benefits Committee may determine. If it is
determined that the grant be delivered promptly to the bene-
ficiary, that beneficiary may be given the option to defer
delivery of the grant to the extent provided in terms and
conditions established by the Compensation and Benefits
Committee.
IX. AMENDMENTS
While it is the present intention of the Company to make
grants annually, the Board of Directors reserves the right to
modify this Plan from time to time or to repeal the Plan
entirely, or to direct the discontinuance of making grants
either temporarily or permanently; provided, however, that no
modification of this Plan shall operate to annul, without the
consent of the beneficiary, a grant already made hereunder;
provided, also, that no modification without approval of the
stockholders shall increase the maximum amount which may be
credited to the Variable Compensation Fund as hereinabove
provided.
XI. MISCELLANEOUS
All expenses and costs in connection with the operation
of this Plan shall be borne by the Company and no part thereof
shall be charged against the Variable Compensation Fund.
32
<TABLE>
Exhibit 12
E. I. DU PONT DE NEMOURS AND COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<CAPTION>
Three Months Ended Years Ended December 31
March 31, 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Income Before Extraordinary Item and Transition
Effect of Accounting Changes ........................ $ 642 $ 566 $ 975 $1,403 $2,310 $2,480
Provision for Income Taxes ............................ 510 392 836 1,415 1,844 1,844
Minority Interests in Earnings of Consolidated
Subsidiaries ........................................ 4 5 10 6 3 24
Adjustment for Companies Accounted for
by the Equity Method ................................ 15 41 6 35 29 38
Capitalized Interest .................................. (35) (194) (194) (197) (161) (108)
Amortization of Capitalized Interest .................. 31 144 101 94 84 78
1,167 954 1,734 2,756 4,109 4,356
Fixed Charges:
Interest and Debt Expense - Borrowings .............. 142 594 643 752 773 586
Adjustment for Companies Accounted for by the
Equity Method - Interest and Debt Expense ......... 12 42 62 11 9 23
Capitalized Interest ................................ 35 194 194 197 161 108
Rental Expense Representative of Interest Factor .... 36 143 151 162 163 149
225 973 1,050 1,122 1,106 866
Total Adjusted Earnings Available for Payment of
Fixed Charges ....................................... $1,392 $1,927 $2,784 $3,878 $5,215 $5,222
====== ====== ====== ====== ====== ======
Number of Times Fixed Charges are Earned .............. 6.2 2.0 2.7 3.5 4.7 6.0
====== ====== ====== ====== ====== ======
</TABLE>
33
