<PAGE>
1993
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1993 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 IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1007 MARKET STREET
WILMINGTON, DELAWARE 19898
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 302-774-1000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT
(EACH CLASS IS REGISTERED ON THE NEW YORK STOCK EXCHANGE, INC.):
TITLE OF EACH CLASS
COMMON STOCK ($.60 PAR VALUE)
PREFERRED STOCK
(WITHOUT PAR VALUE-CUMULATIVE)
$4.50 SERIES
$3.50 SERIES
6% DEBENTURES DUE 2001
8 1/2% DEBENTURES DUE 2016
(CALLED ON FEBRUARY 24, 1994)
NO SECURITIES ARE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 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 .
Aggregate market value of voting stock (excluding outstanding shares
beneficially owned by directors and officers) as of March 1, 1994, was
approximately $26.5 billion. As of such date, 678,703,215 shares of the
company's common stock, $.60 par value, were outstanding.
Documents Incorporated by Reference
(Specific pages incorporated are indicated under the applicable Item herein):
<TABLE>
<CAPTION>
INCORPORATED BY
DOCUMENT REFERENCE IN PART NO.
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<S> <C>
The company's 1993 Annual Report to Stockholders........ I, II, and IV
The company's Proxy Statement, dated March 18, 1994, in
connection with the Annual Meeting of Stockholders to
be held on April 27, 1994.............................. III
</TABLE>
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<PAGE>
E. I. DU PONT DE NEMOURS AND COMPANY
The terms "DuPont" or the "company" as used herein refer to E. I. du Pont de
Nemours and Company and its consolidated subsidiaries (which are wholly owned
or majority-owned), or to E. I. du Pont de Nemours and Company, as the context
may indicate.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
PART I
Item 1. Business ................................................... 3
Item 2. Properties ................................................. 6
Item 3. Legal Proceedings .......................................... 11
Item 4. Submission of Matters to a Vote of Security Holders ........ 13
Executive Officers of the Registrant ....................... 13
PART II
Market for the Registrant's Common Equity and Related
Item 5. Stockholder Matters ....................................... 14
Item 6. Selected Financial Data .................................... 14
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 14
Item 8. Financial Statements and Supplementary Data ................ 14
Item 9. Disagreements on Accounting and Financial Disclosure ....... 14
PART III
Item 10. Directors and Executive Officers of the Registrant ......... 15
Item 11. Executive Compensation ..................................... 15
Security Ownership of Certain Beneficial Owners and
Item 12. Management ................................................ 15
Item 13. Certain Relationships and Related Transactions ............. 15
PART IV
Exhibits, Financial Statement Schedules, and Reports on Form
Item 14. 8-K ....................................................... 15
Signatures............................................................ 18
</TABLE>
NOTE ON INCORPORATION BY REFERENCE
Throughout this report, various information and data are incorporated by
reference to portions of the company's 1993 Annual Report to Stockholders
(those portions are hereinafter referred to as Exhibit 13). Any reference in
this report to disclosures in Exhibit 13 shall constitute incorporation by
reference of that specific material into this Form 10-K.
2
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PART I
ITEM 1. BUSINESS
DuPont was founded in 1802 and was incorporated in Delaware in 1915. The
company is the largest United States chemical producer and is one of the
leading chemical producers worldwide. The company conducts fully integrated
petroleum operations primarily through its wholly owned subsidiary Conoco Inc.
and, in 1992, ranked eighth in the worldwide production of petroleum liquids by
U.S.-based companies and tenth in the production of natural gas. Conoco Inc.
and other subsidiaries and affiliates of DuPont conduct exploration,
production, mining, manufacturing or selling activities, and some are
distributors of products manufactured by the company.
During 1993, the company significantly changed the way it was organized.
Large business sectors were eliminated and replaced by approximately twenty
strategic business units. Within the strategic business units approximately 85
businesses manufacture and sell a wide range of products to many different
markets, including the energy, transportation, textile, construction,
automotive, agricultural, printing, health care, packaging and electronics
markets.
The company and its subsidiaries have operations in about 70 nations
worldwide and, as a result, about 45% of consolidated sales are derived from
sales outside the United States, based on the location of the corporate unit
making the sale. Total worldwide employment at year-end 1993 was about 114,000
people.
The company is organized for financial reporting purposes into five principal
industry segments--Chemicals, Fibers, Polymers, Petroleum, and Diversified
Businesses.
The following information describing the businesses of the company can be
found on the indicated pages of Exhibit 13:
<TABLE>
<CAPTION>
ITEM PAGE(S)
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<S> <C>
Discussion of Business Developments in 1993:
Letter to Stockholders............................................. 2,4*, 5,7
Industry Segment Reviews:
Business Discussions, Principal Products and Principal Markets:
Chemicals........................................................ 20-21
Fibers........................................................... 21-23
Polymers......................................................... 23-24
Petroleum........................................................ 24-26
Diversified Businesses........................................... 27-28
Sales, Transfers, Operating Profit, After-Tax Operating Income, and
Identifiable Assets for 1993, 1992, and 1991...................... 55-57
Geographic Information:
Sales, Transfers, After-Tax Operating Income, Identifiable Assets,
and U.S. Export Sales for 1993, 1992, and 1991.................... 54
Revenues by Product Class (See footnote 1 on page 56 of Exhibit 13).. 56
</TABLE>
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* Exclude photograph and related caption on page 4.
SOURCES OF SUPPLY
The company utilizes numerous firms as well as internal sources to supply a
wide range of raw materials, energy, supplies, services and equipment. To
assure availability, the company maintains multiple sources for most raw
materials, including hydrocarbon feedstocks, and for fuels. Large volume
purchases are generally procured under competitively priced supply contracts.
3
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A majority of sales in the Chemicals, Fibers, and Polymers segments'
businesses is dependent on hydrocarbon feedstocks derived from crude oil and
natural gas. Current hydrocarbon feedstock requirements are met by Conoco and
other major oil companies. A joint venture with OxyChem, a subsidiary of
Occidental Petroleum Corporation, manufactures and supplies a significant
portion of the company's requirements for ethylene glycol. A joint venture with
subsidiaries of RWE AG supplies the company's requirements for coal. A
significant portion of the company's caustic/chlorine needs is supplied by a
joint venture with Olin Corporation.
The major purchased commodities, raw materials, and supplies for the
following industry segments in 1993 are listed below:
<TABLE>
<CAPTION>
CHEMICALS FIBERS DIVERSIFIED BUSINESSES POLYMERS
--------- ------ ---------------------- --------
<S> <C> <C> <C>
acetylene adipic acid aluminum acetic acid
benzene ammonia gold acetone
carbon- benzene metribuzin butadiene
tetrachloride butadiene palladium/platinum caustic soda
caustic soda cyclohexane silver chlorine
chlorine ethylene glycol ethane
chloroform isophthalic acid ethylene glycol
cyclohexane nitrogen nitrogen
fluorspar packaging materials packaging materials
hydrofluoric acid paraxylene paraxylene
oxygen/nitrogen polyethylene polyethylene
packaging
materials
perchloroethylene
propylene
sulfur
titanium ores
</TABLE>
In the Petroleum segment, the major commodities and raw materials purchased
are the same as those produced. Approximately 59% of the crude oil processed in
the company's U.S. refineries in 1993 came from U.S. sources. In 1993, the
company's refineries outside the United States processed principally North Sea
and Middle East crude oils.
In addition, during 1993, the company consumed substantial amounts of
electricity and natural gas.
PATENTS AND TRADEMARKS
The company owns and is licensed under various patents, which expire from
time to time, covering many products, processes and product uses. No individual
patent is of material importance to any of the industry segments, although
taken as a whole, the rights of the company and the products made and sold
under patents and licenses are important to the company's business. During
1993, the company was granted 591 U.S. and 1,828 non-U.S. patents.
The company also has about 900 registered trademarks for its products.
Ownership rights in trademarks continue indefinitely if the trademarks are
continued in use and properly protected.
SEASONALITY
In general, sales of the company's products are not substantially affected by
seasonality. However, the Diversified Businesses segment is impacted by
seasonality of sales of agricultural products with highest sales in the first
half of the year, particularly the second quarter. Within the Petroleum
segment, the mix of refined products, natural gas and natural gas liquids
varies because of increased demand for gasoline in the summer months and
natural gas, heating oil and propane during the winter months.
4
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MAJOR CUSTOMERS
The company's sales are not materially dependent on a single customer or
small group of customers. The Fibers and Polymers segments, however, have
several large customers in their respective industries that are important to
these segments' operating results.
COMPETITION
Principal competitors in the chemical industry include major chemical
companies based in the United States, Europe, Japan, the Republic of China and
other Asian nations. Competitors offer a comparable range of products from
agricultural, commodity and specialty chemicals to plastics, fibers and medical
products. The company also competes in certain product markets with smaller,
more specialized firms. Principal competitors in the petroleum industry are
integrated oil companies, many of which also have substantial petrochemical
operations, and a variety of other firms including independent oil and gas
producers, pipeline companies, and large and small refiners and marketers. In
addition, the company competes with the growing petrochemical operations in
oil-producing countries.
Businesses in the Chemicals, Fibers, Polymers, and Diversified Businesses
segments compete on a variety of factors such as price, product quality or
specifications, customer service and breadth of product line, depending on the
characteristics of the particular market involved. The Petroleum segment
business is highly price-competitive and competes as well on quality and
reliability of supply.
Further information relating to competition is included in two areas of
Exhibit 13 (1) the "Letter to Stockholders" on pages 2, 4*, 5, 7 and (2)
Industry Segment Reviews on pages 20-28.
RESEARCH AND DEVELOPMENT
The company's substantial research and development activities are primarily
funded with internal resources and conducted at over 60 domestic sites in 21
states at both dedicated research facilities and manufacturing plants. DuPont
operates several large research centers near Wilmington, Delaware supporting
strategic business units in its Chemicals, Fibers, Polymers and Diversified
Businesses segments. Among these, the Experimental Station laboratories engage
in fundamental, exploratory and applied research, and the Stine-Haskell
Research Center conducts agricultural product research and toxicological
research of company products to assure they are safe for manufacture and use.
At its facility in Ponca City, Oklahoma, the company conducts research for new
products and technologies for petroleum operations as well as other segments of
the business. DuPont also operates research facilities at a number of locations
outside the United States in Belgium, Canada, France, Germany, Japan,
Luxembourg, Mexico, Netherlands, Switzerland and the United Kingdom reflecting
the company's growing global business interests.
Research and development activities include exploratory studies to advance
scientific knowledge in fields of interest to the company; basic and applied
work to support and improve existing products and processes; and scouting work
to identify and develop new business opportunities in relevant fields. Each
strategic business unit of the company funds research and development
activities to support its business mission. The corporate laboratories are
responsible for assuring that leading-edge science and engineering concepts are
identified and diffused throughout the DuPont technical community. All R&D
activities are coordinated by senior R&D management to insure that business and
corporate technical activities are integrated and that the core technical
competencies underlying DuPont's current and future businesses remain healthy
and continue to provide competitive advantages.
Further information regarding research and development is in Exhibit 13 on
page 4 of the "Letter to Stockholders." Annual research and development expense
and such expense shown "As Percent of Combined Segment Sales" for the five
years 1989 through 1993 are included under the heading "General" of the Five-
Year Financial Review on page 65 of Exhibit 13.
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* Exclude photograph and related caption on page 4.
5
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ENVIRONMENTAL MATTERS
Information relating to environmental matters is included in two areas of
Exhibit 13 (1) the "Letter to Stockholders" on page 5 and (2) "Management's
Discussion and Analysis" on pages 33-34.
RISKS ATTENDANT TO FOREIGN OPERATIONS
The company's petroleum exploration and production operations outside the
United States are exposed to risks due to possible actions by host governments
such as increases or variations in tax and royalty payments, participation in
the company's concessions, limited or embargoed production, mandatory
exploration or production controls, nationalization, and export controls. Civil
unrest and changes in government are also potential hazards. Under certain
circumstances, the company has attempted to minimize its exposure by carrying
political risk insurance.
The profitability of the company's worldwide exploration and production
operations is also exposed to risks due to actions of the United States
government through tax legislation, executive order, and commercial
restrictions. Actions by both the United States and host governments have
affected operations significantly in the past, and may continue to impact
operations in the future.
ITEM 2. PROPERTIES
The company owns and operates manufacturing, processing, production,
refining, marketing, research and development facilities worldwide. In
addition, the company owns and leases petroleum properties worldwide.
DuPont's corporate headquarters is located in Wilmington, Delaware, and the
company's petroleum businesses are headquartered in Houston, Texas. In
addition, the company operates sales offices, regional purchasing offices,
distribution centers and various other specialized service locations.
Further information regarding properties is included in Exhibit 13 in the
Industry Segment Reviews on pages 20-28. Information regarding research and
development facilities is incorporated by reference to Item 1, Business--
Research and Development on page 5 of this report. Additional information with
respect to the company's property, plant and equipment, and leases is
incorporated by reference to Schedules V and VI on pages 20-22 of this report,
and is contained in Notes 14 and 21 to the company's consolidated financial
statements on pages 46 and 50 of Exhibit 13.
CHEMICALS, FIBERS, POLYMERS, AND DIVERSIFIED BUSINESSES
Approximately 75% of the property, plant and equipment related to operations
in the Chemicals, Fibers, Polymers, and Diversified Businesses is located in
the United States and Puerto Rico. This investment is located at some 85 sites,
principally in Texas, Delaware, Virginia, North Carolina, Tennessee, West
Virginia, South Carolina, and New Jersey. The principal locations within these
states are as follows:
<TABLE>
<S> <C> <C> <C>
TEXAS DELAWARE VIRGINIA NORTH CAROLINA
----- -------- -------- --------------
Beaumont Edge Moor Front Royal Brevard
Corpus Christi Glasgow James River Fayetteville
LaPorte Newark Martinsville Kinston
Orange Newport Richmond Raleigh
Victoria Seaford Waynesboro Wilmington
TENNESSEE WEST VIRGINIA SOUTH CAROLINA NEW JERSEY
--------- ------------- -------------- ----------
Chattanooga Belle Camden Deepwater
Memphis Martinsburg Charleston Gibbstown
New Johnsonville Parkersburg Florence
Old Hickory
</TABLE>
Property, plant and equipment outside the United States and Puerto Rico is
located at about 70 sites, principally in Canada, the United Kingdom, Germany,
Netherlands, Luxembourg, Singapore, Taiwan,
6
<PAGE>
Mexico, France, Japan, Spain, Brazil, Republic of Korea, Argentina and Belgium.
Products from more than one business are frequently produced at the same
location.
The company's plants and equipment are well maintained and in good operating
condition. Sales as a percent of capacity were 85% in 1993, 88% in 1992, and
86% in 1991. These properties are directly owned by the company except for some
auxiliary facilities and miscellaneous properties, such as certain buildings
and transportation equipment, which are leased. Although no title examination
of the properties has been made for the purpose of this report, the company
knows of no material defects in title to any of these properties.
PETROLEUM BUSINESSES
The company owns and leases oil and gas properties worldwide. Exploration,
production, and natural gas and gas products properties are described generally
on pages 24-26 and 58-63 of Exhibit 13. Estimated proved reserves of oil and
gas are found on page 58 of Exhibit 13. Information regarding the company's
refining, marketing, supply, and transportation properties is also provided on
pages 24-26 of Exhibit 13.
PETROLEUM PRODUCTION
The following tables show the company's interests in petroleum production and
natural gas deliveries. Petroleum liquids production comprises crude oil and
condensate and natural gas liquids (NGL) removed for the company's account from
its natural gas deliveries. Natural gas deliveries represent Conoco's share of
deliveries from leases in which the company has an ownership interest. NGL's
extracted from purchased natural gas by the company's gas processing plants are
discussed under the topic "Natural Gas and Gas Products" on pages 9 and 10.
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
[THOUSANDS OF BARRELS DAILY (MBD)]
<S> <C> <C> <C>
Petroleum Liquids Production of Fully
Consolidated Companies
United States
Crude oil and condensate.............. 94 103 113
Natural gas liquids................... 14 7 9
--- --- ---
Total United States................. 108 110 122
Europe
Crude oil and condensate.............. 146 125 115
Natural gas liquids................... 6 7 6
--- --- ---
Total Europe(a)..................... 152 132 121
Other Regions
Crude oil and condensate.............. 106 92 99
Natural gas liquids................... 1 1 0
--- --- ---
Total Other Regions(a).............. 107 93 99
--- --- ---
Total Worldwide..................... 367 335 342
=== === ===
<CAPTION>
[MILLION CUBIC FEET DAILY (MCFD)]
<S> <C> <C> <C>
Natural Gas Deliveries of Fully Consoli-
dated Companies
United States........................... 834 762 756
Europe(a)............................... 409 360 320
Other Regions........................... 50 55 54
----- ----- -----
Subtotal Fully Consolidated........... 1,293 1,177 1,130
Natural Gas Deliveries of Equity Affili-
ates
United States........................... 18 3 0
----- ----- -----
Total Worldwide....................... 1,311 1,180 1,130
===== ===== =====
(a) Excludes royalty volumes produced and
marketed by the company:
Petroleum Liquids (MBD)................. 37 38 40
Natural Gas Deliveries (MMCFD).......... 6 10 9
</TABLE>
7
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AVERAGE PRODUCTION COSTS AND SALES PRICES
The following table presents data as prescribed by the Securities and
Exchange Commission (SEC). Accordingly, the unit costs do not include income
taxes and exploration, development and general overhead costs. Since these
excluded costs are material, the following data should not be interpreted as
measures of profitability or relative profitability. See Results of Operations
for Oil- and Gas-Producing Activities on page 59 of Exhibit 13 for a more
complete disclosure of revenues and expenses. See also the references to crude
oil and natural gas prices and volumes in business review of the Petroleum
segment on pages 24-26 of Exhibit 13.
<TABLE>
<CAPTION>
UNITED OTHER
STATES EUROPE REGIONS
------ ------ -------
(U.S. DOLLARS)
<S> <C> <C> <C>
For the year ended December 31, 1993
Average production costs per barrel equivalent of
petroleum produced(a)................................. $4.97 $4.34 $1.63
Average sales prices of produced petroleum(b)
Per barrel of crude oil and condensate sold.......... 14.66 17.35 15.32
Per thousand cubic feet (MCF) of natural gas sold.... 1.94 2.77 1.32
For the year ended December 31, 1992
Average production costs per barrel equivalent of
petroleum produced(a)................................. 5.86 6.73 1.98
Average sales prices of produced petroleum(b)
Per barrel of crude oil and condensate sold.......... 17.35 19.39 17.30
Per MCF of natural gas sold.......................... 1.70 2.77 1.02
For the year ended December 31, 1991
Average production costs per barrel equivalent of
petroleum produced(a)................................. 6.14 5.24 1.74
Average sales prices of produced petroleum(b)
Per barrel of crude oil and condensate sold.......... 20.04 20.98 16.90
Per MCF of natural gas sold.......................... 1.59 3.17 1.19
</TABLE>
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(a) Average production costs per barrel of equivalent liquids, with natural gas
converted to liquids at a ratio of 6 MCF of gas to one barrel of liquids.
(b) Excludes proceeds from sales of interest in oil and gas properties.
PRESENT ACTIVITIES
<TABLE>
<CAPTION>
TOTAL UNITED OTHER
WORLDWIDE STATES EUROPE REGIONS
--------- ------ ------ -------
(NUMBER OF WELLS)
<S> <C> <C> <C> <C>
At December 31, 1993
Number of wells drilling*
Gross....................................... 46 25 17 4
Net......................................... 25 20 3 2
Number of productive wells**
Oil wells--gross............................ 16,385 15,819 222 344
--net.................................... 4,672 4,524 26 122
Gas wells--gross............................ 7,563 7,442 65 56
--net................................... 2,869 2,792 24 53
</TABLE>
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*Includes wells being completed.
**Approximately 186 gross (72 net) oil wells and 602 gross (177 net) gas wells,
all in the United States, have multiple completions.
8
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DEVELOPED AND UNDEVELOPED PETROLEUM ACREAGE
<TABLE>
<CAPTION>
TOTAL UNITED OTHER
WORLDWIDE STATES EUROPE REGIONS
--------- ------ ------ -------
(THOUSANDS OF ACRES)
<S> <C> <C> <C> <C>
At December 31, 1993
Developed acreage
Gross...................................... 8,031 3,121 1,094 3,816
Net........................................ 3,510 1,735 307 1,468
Undeveloped acreage
Gross...................................... 82,735 2,166 5,797 74,772
Net........................................ 34,283 1,463 1,859 30,961
NET EXPLORATORY AND DEVELOPMENT WELLS DRILLED
<CAPTION>
TOTAL UNITED OTHER
WORLDWIDE STATES EUROPE REGIONS
--------- ------ ------ -------
(NUMBER OF NET WELLS COMPLETED)
<S> <C> <C> <C> <C>
For the year ended December 31, 1993
Exploratory--productive...................... 15.6 10.7 3.4 1.5
--dry 24.5 16.3 2.5 5.7
Development--productive...................... 175.2 158.3 5.0 11.9
--dry................................... 24.5 24.0 0.0 0.5
For the year ended December 31, 1992
Exploratory--productive...................... 17.1 11.6 4.5 1.0
--dry................................... 22.0 10.2 5.0 6.8
Development--productive...................... 121.9 107.9 4.1 9.9
--dry................................... 13.1 10.9 0.7 1.5
For the year ended December 31, 1991
Exploratory--productive...................... 21.4 14.3 5.3 1.8
--dry................................... 37.4 16.8 10.6 10.0
Development--productive...................... 184.5 171.3 3.0 10.2
--dry................................... 7.6 7.6 0.0 0.0
</TABLE>
ESTIMATES OF TOTAL PROVED RESERVES FILED WITH OTHER FEDERAL AGENCIES COVERING
THE YEAR 1993
The company is not required to file, and has not filed on a recurring basis,
estimates of its total proved net oil and gas reserves with any U.S. or non-
U.S. governmental regulatory authority or agency other than the Department of
Energy (DOE) and the SEC. The estimates furnished to the DOE have been
consistent with those furnished to the SEC. They are not necessarily directly
comparable, however, due to special DOE reporting requirements such as
requirements to report in some instances on a gross, net or total operator
basis, and requirements to report in terms of smaller units. In no instance
have the estimates for the DOE differed by more than 5% from the corresponding
estimates reflected in total reserves reported to the SEC.
NATURAL GAS AND GAS PRODUCTS
The company has interests in 30 natural gas processing plants in the United
States. Natural gas liquids extracted for the company's account from produced
and purchased gas averaged 68,631 barrels per day in 1993 and 60,901 barrels
per day in 1992. The company operates 16 of the gas plants: 1 in Colorado, 3 in
Louisiana, 2 in New Mexico, 4 in Oklahoma, and 6 in Texas. Other natural gas
facilities include an 800-mile intrastate natural gas pipeline system in
Louisiana, owned by Louisiana Gas System, Inc., a wholly owned subsidiary, and
natural gas and natural gas liquids pipelines in several states. C&L Processors
Partnership, a 50% owned equity affiliate, has an additional 13 natural gas
liquids plants in Oklahoma and Texas, and
9
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Conoco's pro rata share of NGL production is 7,885 barrels per day. In May
1993, Conoco acquired a 22.5% interest in Gulf Coast Fractionators, a natural
gas fractionator located in Mt. Belvieu, Texas, which is currently expanding
from a capacity of 64,000 barrels per day to 104,000 barrels per day. Outside
the United States, the company operates a 50% owned gas processing facility at
Theddlethorpe, England, and owns a 41% interest in Phoenix Park Gas Processors,
whose gas processing facility at Point Lisas, Trinidad, provided a net NGL
production of 3,661 barrels per day to Conoco in 1993.
REFINING
The company currently owns and operates four refineries in the United States
located at Lake Charles, Louisiana; Ponca City, Oklahoma; Billings, Montana;
and Denver, Colorado. The company also owns and operates the Humber refinery in
the United Kingdom and has a 25% interest in a refinery at Karlsruhe in
Germany. Capacities at year-end 1993 as well as inputs processed during 1993
are summarized in the following table:
<TABLE>
<CAPTION>
TOTAL UNITED UNITED
WORLDWIDE STATES KINGDOM GERMANY*
--------- ------ ------- --------
(THOUSANDS OF BARRELS DAILY)
<S> <C> <C> <C> <C>
At December 31, 1993
Refinery crude oil and condensate
distillation capacity (excluding
additional feedstocks input to other
refinery units)........................... 595 422 130 43
For the year ended December 31, 1993
Inputs processed
Crude oil and condensate................. 568 391 131 46
Additional feedstocks input to other re-
finery units............................ 106 28 62 16
</TABLE>
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* Represents 25% interest in the Karlsruhe refinery.
Utilization of refinery capacity depends on the market demand for petroleum
products and the availability of crude oil and other feedstocks.
MARKETING
In the United States, the company sells refined products at retail in 38
states, principally under the "Conoco" brand. In addition, the company markets
a wide range of products other than at retail in all 50 states and the District
of Columbia. Refined products are also sold in Austria, Germany and the United
Kingdom under the "Jet" and "Conoco" brands; in Belgium, France and Luxembourg
under the "Seca" brand; and in Switzerland under the "OK Coop" brand. The "Jet"
brand is used for marketing in the Czech Republic, Denmark, Finland, Hungary,
Ireland, Norway, Poland, Sweden, and Thailand. The company has commenced
operations in Spain through a 50% equity affiliate.
SUPPLY AND TRANSPORTATION
The company has an extensive pipeline system for crude oil and refined
products. Information concerning daily pipeline shipments is presented below:
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
(THOUSANDS OF BARRELS)
<S> <C> <C> <C>
Average Daily Pipeline Shipments
Pipeline shipments of consolidated companies......... 761 816 822
Equity in shipments of nonconsolidated affiliates.... 366 334 315
</TABLE>
Conoco Pipe Line Company (CPL), a wholly owned subsidiary and operator of the
company's U.S. petroleum pipeline system, transported approximately 722
thousand barrels per day of crude oil and refined
10
<PAGE>
products in 1993. In addition to pipeline facilities, CPL operates, under a
management contract, four marine terminals, one coke-exporting facility and 52
product terminals located throughout the United States. These facilities are
wholly or jointly owned by the company. Crude oil is gathered in the Rocky
Mountain, mid-continent and southern Louisiana areas primarily for delivery to
local refiners. Refined products pipelines are located in the Rocky Mountain
and mid-continent areas to serve regional demand centers. Other U.S.
transportation assets include numerous tank cars, barges, tank trucks and other
motor vehicles.
The company also operates a fleet of seagoing crude oil tankers. These
vessels, principally of Liberian registry, are described as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
(THOUSANDS OF DEADWEIGHT TONS)
<S> <C> <C> <C>
Controlled Seagoing Vessel Capacity
Owned and Leased............................. 1,139 947 759
Trip Charger................................. -- 174 261
---------- ---------- ----------
Total Capacity............................... 1,139 1,121 1,020
========== ========== ==========
<CAPTION>
(NUMBER OF VESSELS)
<S> <C> <C> <C>
Number of Vessels 80,000 DWT and Above
Single Hull.................................. 4 6 7
Double Hull.................................. 4 2 --
---------- ---------- ----------
Total Vessels................................ 8 8 7
========== ========== ==========
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
Because of the size and nature of its business, the company is subject to
numerous lawsuits and claims with respect to such matters as product
liabilities, governmental regulations and other actions arising out of the
normal course of business. While the effect on future financial results is not
subject to reasonable estimation because considerable uncertainty exists, in
the opinion of company counsel, the ultimate liabilities resulting from such
lawsuits and claims will not materially affect the consolidated financial
position of the company.
To date, DuPont has been served with more than 500 lawsuits in several
jurisdictions, principally Florida, Hawaii and Puerto Rico, by growers who
allege plant damage from using "Benlate" DF 50 fungicide. Seventy (70) of these
suits have been disposed of: 12 by dismissal, 3 by summary judgment, 52 by
settlement, 1 by directed verdict in DuPont's favor at trial, and 2 by jury
verdict in DuPont's favor. Additionally, DuPont obtained summary judgment in 7
Florida cases, based on the economic loss doctrine which limits damages to
breach of warranty. In our most recent trial (2 cases), a Florida jury returned
a verdict in DuPont's favor. In 5 other trials, jury verdicts have been
returned against DuPont, but for an average of less than a third of the
compensatory damages claimed by the plaintiffs. In 4 of these trials, the
juries also allocated liability to the plaintiffs. DuPont has appealed these
jury verdicts. DuPont also had one jury verdict for the company. DuPont
believes that "Benlate" DF 50 fungicide did not cause the alleged damages.
DuPont had earlier paid claims based on the belief that, at the time, "Benlate"
DF 50 would be found to be a contributor to the reported plant damage. In 1992,
after eighteen months of extensive research, DuPont scientists concluded that
"Benlate" DF 50 was not responsible for plant damage reports received since
March 1991. Concurrent with these research findings, DuPont stopped paying
claims relating to those reports.
Since 1989, DuPont has been served with approximately fifty-two, lawsuits in
several jurisdictions, principally in Texas, Florida, Maryland and Arizona
alleging damages as a result of leaks in certain polybutylene plumbing systems.
A nationwide class action has been filed in state and federal court in Houston,
Texas, but the class has not 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
11
<PAGE>
extruded from polybutylene connected by plastic 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. Presently, DuPont is
active in twenty-four suits. There have been twenty-four lawsuits of which the
company has disposed of twenty-three by pretrial settlements and one by
dismissal. DuPont has not been to trial in any case.
On October 24, 1988, the Louisiana Department of Environmental Quality (LDEQ)
issued a Compliance Order and Notice of Proposed Penalty to Conoco Inc. for
alleged violations of the Louisiana Hazardous Waste Regulations. Following an
inspection, LDEQ proposed a penalty of $165,000 for alleged violations related
to the handling of by-product caustic and other refinery waste management
practices. The company's legal counsel believes that the allegations are
generally without factual basis, and that the penalty will be significantly
reduced.
On April 3, 1991, the Environmental Protection Agency (EPA) assessed a civil
penalty of $1.3 million pursuant to a Complaint and Notice of Hearing alleging
violations of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) in
connection with the distribution of a company fungicide. The allegations arise
out of the discovery that a herbicide may have been introduced inadvertently
into some batches of the fungicide during formulation at contractor sites in
1988 and 1989. The company was made aware of the potential problem by
complaints from growers and notified EPA in August 1989 that it was undertaking
a voluntary recall of suspect batches. EPA issued a stop sale order in
September 1989 accompanied by a formal request for a product recall. The
company has reviewed its recall with EPA and they have expressed satisfaction
with the company's efforts. The company intends to seek a settlement of the
Complaint and expects that the assessed penalty will be reduced.
On October 15, 1993, 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 is
seeking a civil penalty of $1.4 million. DuPont's legal counsel believes that
most of the allegations are legally without merit and that the case will
ultimately settle for a significantly smaller amount.
DuPont has entered into a voluntary agreement with the 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 which 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 EPA's issuance of new reporting criteria, the second phase of its
audit is scheduled to begin in mid-1994.
On October 18, 1991, EPA issued an Administrative Order under the Resource
Conservation and Recovery Act (RCRA) directing Conoco Pipe Line 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 (DOJ) filed a
lawsuit against 10 entities, including CPLC, to enforce the Order and collect
penalties. The DOJ calculates CPLC's maximum penalties as of April 1, 1993 at
approximately $2.6 million. The lawsuit is in the discovery phase, and CPLC
intends to vigorously defend this matter.
On July 1, 1993, EPA filed an administrative complaint against DuPont. EPA
alleged that DuPont violated the premanufacturing notification regulations of
the U.S. Toxic Substances Control Act (TSCA) and sought a $158,375 penalty.
DuPont and EPA have signed an agreement to settle the complaint. Under the
settlement, DuPont paid EPA $80,000, but did not admit that EPA's legal
conclusions were true.
12
<PAGE>
On December 21, 1993, Conoco's Denver Refinery received a Notice of Violation
from EPA, Region VIII, and the Colorado Department of Health requesting a civil
penalty of $169,500 in a dispute over proper scope and scheduling of certain
RCRA on-site investigation activities. The investigation activities have
previously been the subject of a settlement with EPA and the Colorado
Department of Health, and the work performed has been in compliance with such
agreement in the opinion of company counsel. As such, it is anticipated that
the fine will be significantly reduced pursuant to negotiations between the
parties.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list, as of March 1, 1994, of the company's executive
officers.
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
AGE SINCE
--- ---------
<S> <C> <C>
Chairman of the Board of Directors and Chief Executive Officer
Edgar S. Woolard, Jr.(1)....................................... 59 1981
Vice Chairmen of the Board of Directors
John A. Krol(1)................................................ 57 1987
Constantine S. Nicandros(1).................................... 60 1981
Other Executive Officers:
Jerald A. Blumberg, Senior Vice President...................... 54 1990
Archie W. Dunham, Senior Vice President........................ 55 1985
Gary W. Edwards, Senior Vice President......................... 52 1991
Michael B. Emery, Senior Vice President........................ 55 1990
Charles L. Henry, Senior Vice President and Chief Financial
Officer....................................................... 52 1986
Charles O. Holliday, Jr., Senior Vice President................ 45 1992
Robert v.d. Luft, Senior Vice President........................ 58 1988
Robert E. McKee, III, Senior Vice President.................... 48 1992
Joseph A. Miller, Jr., Senior Vice President................... 52 1994
Stacey J. Mobley, Senior Vice President........................ 48 1992
D. John Ogren, Senior Vice President........................... 50 1992
Howard J. Rudge, Senior Vice President and General Counsel..... 58 1994
John F. Schmutz, Senior Vice President......................... 61 1985
W. Earl Tatum, Senior Vice President........................... 60 1985
</TABLE>
- --------
(1) Member of the Board of Directors.
The Company's executive officers are elected or appointed for the ensuing
year or for an indefinite term, and until their successors are elected or
appointed. Each officer named above has been an officer or an executive of
DuPont or its subsidiaries during the past five years.
13
<PAGE>
PART II
Information with respect to the following Items can be found on the indicated
pages of Exhibit 13 if not otherwise included herein.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The company's common stock is listed on the New York Stock Exchange, Inc.
(symbol DD) and certain non-U.S. exchanges. The number of record holders of
common stock was 181,264 at December 31, 1993 and 179,171 at March 1, 1994.
<TABLE>
<CAPTION>
PAGE(S)
--------
<S> <C>
Quarterly Financial Data:
Dividends Per Share of Common Stock.................................. 64
Market Price of Common Stock (High/Low).............................. 64
ITEM 6. SELECTED FINANCIAL DATA
Five-Year Financial Review:
Summary of Operations................................................ 65
Financial Position at Year End....................................... 65
General.............................................................. 65
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Letter to Stockholders................................................. 2,4*,5,7
Industry Segment Reviews:
Chemicals............................................................ 20-21
Fibers............................................................... 21-23
Polymers............................................................. 23-24
Petroleum............................................................ 24-26
Diversified Businesses............................................... 27-28
Management's Discussion and Analysis:
Analysis of Operations............................................... 30-31
Cash Flows and Financial Condition................................... 31-32
Environmental Matters................................................ 33-34
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<S> <C>
Financial Statements:
Report of Independent Accountants..................................... 36
Consolidated Income Statement for 1993, 1992 and 1991................. 37
Consolidated Balance Sheet as of December 31, 1993 and December 31,
1992................................................................. 38
Consolidated Statement of Stockholders' Equity for 1993, 1992 and
1991................................................................. 39
Consolidated Statement of Cash Flows for 1993, 1992 and 1991.......... 40
Notes to Financial Statements......................................... 41-57
Supplemental Financial Information:
Supplemental Petroleum Data:
Oil-and-Gas Producing Activities.................................... 58-63
Quarterly Financial Data and related notes for the following items for
the two years 1993 and 1992:
Sales................................................................. 64
Cost of Goods Sold and Other Expenses................................. 64
Net Income (Loss)..................................................... 64
Earnings (Loss) Per Share of Common Stock............................. 64
</TABLE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
- --------
* Exclude photograph and related caption on page 4.
14
<PAGE>
PART III
Information with respect to the following Items is incorporated by reference
to the pages indicated in the company's 1994 Annual Meeting Proxy Statement
dated March 18, 1994, filed in connection with the Annual Meeting of
Stockholders to be held April 27, 1994. However, information regarding
executive officers is contained in Part I of this report (page 13) pursuant to
General Instruction G of this form.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Election of Directors................................................... 4-8
Compliance With the Securities Exchange Act............................. 9
ITEM 11. EXECUTIVE COMPENSATION
Compensation of Directors............................................... 2-3
Compensation and Stock Option Information............................... 12-13
Retirement Benefits..................................................... 14-15
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Beneficial Ownership of Securities...................................... 8-9
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Election of Directors................................................... 4-8
</TABLE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules and Exhibits
1. Financial Statements (See listing at Part II, Item 8 of this report
regarding financial statements, which are incorporated by reference to
Exhibit 13.)
2. Financial Statement Schedules
The following should be read in conjunction with the previously referenced
Financial Statements:
<TABLE>
<CAPTION>
ITEM PAGE
---- ----
<S> <C>
Report of Independent Accountants on Financial Statement Schedules........ 19
Schedule V--Property, Plant and Equipment................................. 20
Schedule VI--Accumulated Depreciation, Depletion and Amortization of Prop-
erty, Plant and Equipment................................................ 21
Footnotes to Schedules V and VI........................................... 22
Schedule VII--Guarantees of Securities of Other Issuers................... 23
Schedule IX--Short-Term Borrowings........................................ 24
</TABLE>
Financial Statement Schedules listed under SEC rules but not included in this
report are omitted because: a) they are not applicable; b) they are not
required under the provisions of Regulation S-X; or c) the required information
is shown in the financial statements or notes thereto incorporated by
reference.
Condensed financial information of the parent company is omitted because
restricted net assets of consolidated subsidiaries do not exceed 25% of
consolidated net assets. Footnote disclosure of restrictions on
15
<PAGE>
the ability of subsidiaries and affiliates to transfer funds is omitted because
the restricted net assets of subsidiaries combined with the company's equity
in the undistributed earnings of affiliated companies does not exceed 25% of
consolidated net assets at December 31, 1993.
Separate financial statements of affiliated companies accounted for by the
equity method are omitted because no such affiliate individually constitutes a
20% significant subsidiary.
3. EXHIBITS
The following list of exhibits includes both exhibits submitted with this
Form 10-K as filed with the SEC and those incorporated by reference to other
filings:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 Company's Certificate of Incorporation, as last amended December 22,
1989 (incorporated by reference to Exhibit 3.1 of the company's Annual
Report on Form 10-K for the year ended December 31, 1989).
3.2 Company's Bylaws, as last revised November 24, 1993.
4 The company agrees to provide the Commission, on request, copies of
instruments defining the rights of holders of long-term debt of the
company and its subsidiaries.
10.1 Amendment dated as of March 26, 1986 to, and restatement of, the
Agreement dated as of October 2, 1981 between The Seagram Company Ltd.
and the company (incorporated by reference to Exhibit 10.1 of the
company's Annual Report on Form 10-K for the year ended December 31,
1991).
10.2* Company's Corporate Sharing Plan, as last amended August 28, 1991
(incorporated by reference to Exhibit 10.2 of the company's Annual
Report on Form 10-K for the year ended December 31, 1992).
10.3* Company's Deferred Compensation Plan for Directors, as last amended
November 21, 1986 (incorporated by reference to Exhibit 10.3 of the
company's Annual Report on Form 10-K for the year ended December 31,
1992).
10.4* Company's Supplemental Retirement Income Plan, as last amended
effective October 1, 1991 (incorporated by reference to Exhibit 10.4
of the company's Annual Report on Form 10-K for the year ended
December 31, 1991).
10.5* Company's Pension Restoration Plan, as last amended effective October
1, 1991 (incorporated by reference to Exhibit 10.5 of the company's
Annual Report on Form 10-K for the year ended December 31, 1991).
10.6* Retirement Restoration Plan of Conoco Inc., as last amended effective
July 23, 1990 (incorporated by reference to Exhibit 10.6 of the
company's Annual Report on Form 10-K for the year ended December 31,
1990).
10.7* Company's Stock Option Plan, as last amended effective April 29, 1992
(incorporated by reference to Exhibit 10.7 of the company's Annual
Report on Form 10-K for the year ended December 31, 1992).
11 Statement re computation of earnings per share--assuming full
dilution.
12 Statement re computation of the ratio of earnings to fixed charges.
13 The 1993 "Letter to Stockholders," Business Review Section, and
Financial Information Section of the Annual Report to Shareholders for
the year ended December 31, 1993, which are furnished to the
Commission for information only, and not filed except as expressly
incorporated by reference in this Report.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
</TABLE>
- --------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K.
16
<PAGE>
(b) Reports on Form 8-K
The following Current Report on Form 8-K was filed during the quarter ended
December 31, 1993.
(1) On October 27, 1993, a Current Report on Form 8-K was filed in
connection with Debt Securities that may be offered on a delayed or
continuous basis under its Registration Statements on Form S-3 (No. 33-
39161 and No. 33-48128). Under Item 7, "Financial Statements and Exhibits,"
the Registrant's Earnings Press Release, dated October 27, 1993 was filed.
17
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 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 AND IN THE CAPACITIES INDICATED, ON
THE 18TH DAY OF MARCH, 1994.
E. I. DU PONT DE NEMOURS AND COMPANY
(Registrant)
C. L. Henry
By______________________________________
C. L. HENRY
SENIOR VICE PRESIDENT--DUPONT FINANCE
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED ON THE 18TH DAY OF MARCH 1994, BY THE FOLLOWING PERSONS
ON BEHALF OF THE REGISTRANT IN THE CAPACITIES INDICATED:
CHAIRMAN AND DIRECTOR
(PRINCIPAL EXECUTIVE
OFFICER):
E. S. Woolard, Jr.
- -------------------------
E. S. WOOLARD, JR.
VICE CHAIRMAN AND VICE CHAIRMAN AND
DIRECTOR: DIRECTOR:
J. A. Krol C. S. Nicandros
- ------------------------- -------------------------
J. A. KROL C. S. NICANDROS
DIRECTORS:
P. N. Barnevik L. C. Duemling M. P. MacKimm
- ------------------------- ------------------------- -------------------------
P. N. BARNEVIK L. C. DUEMLING M. P. MACKIMM
E. P. Blanchard, Jr. E. B. Du Pont W. K. Reilly
- ------------------------- ------------------------- -------------------------
E. P. BLANCHARD, JR. E. B. DU PONT W. K. REILLY
A. F. Brimmer C. M. Harper H. R. Sharp, III
- ------------------------- ------------------------- -------------------------
A F. BRIMMER C. M. HARPER H. R. SHARP, III
C. R. Bronfman R. E. Heckert C. M. Vest
- ------------------------- ------------------------- -------------------------
C. R. BRONFMAN R. E. HECKERT C. M. VEST
E. M. Bronfman H. W. Johnson J. L. Weinberg
- ------------------------- ------------------------- -------------------------
E. M. BRONFMAN H. W. JOHNSON J. L. WEINBERG
E. Bronfman, Jr. E. L. Kolber
- ------------------------- -------------------------
E. BRONFMAN, JR. E. L. KOLBER
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Stockholders and the Board of Directors of E. I. du Pont de Nemours and
Company
Our audits of the consolidated financial statements referred to in our report
dated February 17, 1994 appearing on page 36 of the 1993 Annual Report to
Stockholders of E. I. du Pont de Nemours and Company, (which report and
consolidated financial statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the Financial Statement
Schedules listed in Item 14(a) of this Form 10-K. In our opinion, these
Financial Statement Schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
PRICE WATERHOUSE
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
February 17, 1994
19
<PAGE>
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT(a)
FOR THE YEARS 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
<CAPTION>
COLUMN A COLUMN B COLUMN C. COLUMN D COLUMN E COLUMN F
- ------------------------------------------------------------------------------------
BALANCE AT OTHER BALANCE AT
BEGINNING ADDITIONS CHANGES - END OF
CLASSIFICATION OF YEAR AT COST RETIREMENTS ADD(DEDUCT)(b) YEAR
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Chemicals............. $ 4,946 $ 294 $ 253 $ (3) $ 4,984
Fibers................ 9,875 751 308 (38) 10,280
Polymers.............. 7,567 428 292 39 7,742
Petroleum............. 17,499 1,659 1,460 -- 17,698
Diversified Business-
es................... 5,504 329 571 3 5,265
Corporate............. 1,844 194 81 -- 1,957
------- ------ ------- ------- -------
Total............... $47,235 $3,655 $ 2,965 $ 1 $47,926
======= ====== ======= ======= =======
1992
Chemicals............. $ 4,655 $ 366 $ 122 $ 47 $ 4,946
Fibers................ 9,344 856 280 (45) 9,875
Polymers.............. 7,142 642 203 (14) 7,567
Petroleum............. 16,248 1,781 529 (1) 17,499
Diversified Business-
es................... 5,153 558 217 10 5,504
Corporate............. 1,649 194 2 3 1,844
------- ------ ------- ------- -------
Total............... $44,191 $4,397 $ 1,353 $ -- $47,235
======= ====== ======= ======= =======
1991
Chemicals............. $ 4,406 $ 476 $ 160 $ (67) $ 4,655
Fibers................ 8,828 765 285 36 9,344
Polymers.............. 6,754 607 162 (57) 7,142
Petroleum............. 14,592 2,301 624 (21) 16,248
Diversified Business-
es................... 8,658 680 343 (3,842) 5,153
Corporate............. 1,581 197 -- (129) 1,649
------- ------ ------- ------- -------
Total............... $44,819 $5,026 $ 1,574 $(4,080) $44,191
======= ====== ======= ======= =======
</TABLE>
- --------
See page 22 for footnotes.
20
<PAGE>
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE VI--ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT(a)
FOR THE YEARS 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------------
ADDITIONS
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING COST AND CHANGES - END OF
DESCRIPTION OF YEAR EXPENSES(b) RETIREMENTS ADD(DEDUCT)(c) YEAR
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Chemicals............. $ 2,907 $ 303 $ 101 $ (2) $ 3,107
Fibers................ 6,166 658 306 (35) 6,483
Polymers.............. 4,403 527 428 37 4,539
Petroleum............. 8,188 1,339 942 -- 8,585
Diversified Business-
es................... 2,999 460 446 -- 3,013
Corporate............. 690 124 38 -- 776
------- ------ ------- ------- -------
Total............... $25,353 $3,411 $ 2,261 $ -- $26,503
======= ====== ======= ======= =======
1992
Chemicals............. $ 2,708 $ 317 $ 169 $ 51 $ 2,907
Fibers................ 5,908 592 281 (53) 6,166
Polymers.............. 4,196 409 197 (5) 4,403
Petroleum............. 7,398 985 195 -- 8,188
Diversified Business-
es................... 2,782 410 204 11 2,999
Corporate............. 589 105 -- (4) 690
------- ------ ------- ------- -------
Total............... $23,581 $2,818 $ 1,046 $ -- $25,353
======= ====== ======= ======= =======
1991
Chemicals............. $ 2,657 $ 294 $ 152 $ (91) $ 2,708
Fibers................ 5,633 566 279 (12) 5,908
Polymers.............. 3,918 445 146 (21) 4,196
Petroleum............. 6,748 927 271 (6) 7,398
Diversified Business-
es................... 4,215 571 317 (1,687) 2,782
Corporate............. 546 98 -- (55) 589
------- ------ ------- ------- -------
Total............... $23,717 $2,901 $ 1,165 $(1,872) $23,581
======= ====== ======= ======= =======
</TABLE>
- --------
See page 22 for footnotes.
21
<PAGE>
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS)
SCHEDULE V--FOOTNOTES
(a) See Property, Plant and Equipment (PP&E) in Note 1 to the company's
Consolidated Financial Statements on page 41 of Exhibit 13 for accounting
policy with respect to certain additions and retirements.
(b) Principally reflects intersegment transfers. In addition, 1991 reflects
restructuring of the coal business described in Note 6 on page 43 of
Exhibit 13.
SCHEDULE VI--FOOTNOTES
(a) See Property, Plant and Equipment in Note 1 to the company's Consolidated
Financial Statements on page 41 of Exhibit 13 for accounting policy with
respect to the methods and rates used for depreciation, depletion and
amortization.
(b) The following reconciles the amounts shown herein as Additions Charged to
Cost and Expenses and the amounts shown as Depreciation, Depletion and
Amortization in the Consolidated Income Statement on page 37 of Exhibit 13.
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Depreciation, Depletion and Amortization per Sched-
ule VI............................................. $3,411 $2,818 $2,901
Included in Research and Development Expense........ (84) (85) (110)
Impairment of Unproved Properties included in
Exploration Expenses............................... (50) (66) (105)
Provision for Dismantlement and Abandonment Costs... 40 21 16
Included in Restructuring Charges................... (484) (33) (62)
------ ------ ------
Per Consolidated Income Statement................... $2,833 $2,655 $2,640
====== ====== ======
</TABLE>
(c) Principally reflects intersegment transfers. In addition, 1991 reflects
restructuring the coal business described in Note 6 on page 43 of Exhibit
13.
22
<PAGE>
E.I DUPONT DE NEMOURS AND COMPANY
AND CONSOLIDATED SUBSIDIARIES
SCHEDULE VII--GUARANTEES OF SECURITIES OF OTHER ISSUERS
AS OF DECEMBER 31, 1993
(DOLLARS IN MILLIONS)
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN F
- --------------------------------------------------------------------------------
NAME OF ISSUER TITLE OF ISSUE
OF SECURITIES OF EACH CLASS TOTAL AMOUNT NATURE
GUARANTEED BY PERSON FOR OF SECURITIES GUARANTEED OF
WHICH STATEMENT IS FILED GUARANTEED AND OUTSTANDING GUARANTEE(a)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
C&L Processors Partnership. Bank Loan $ 32 Principal & Interest
Consol Energy Inc.......... Revenue Bonds 103(b) Principal
Crosfield Electronics Lim-
ited...................... Bank Loans 43 Principal & Interest
Retail Facilities Loan Pro-
gram...................... Bank Loans 27 Principal & Interest
Jupiter Sulfur Inc......... Bank Loan 38 Principal & Interest
Polar Lights Company....... Bank Loans 200 Principal & Interest
</TABLE>
- --------
Note: Columns D, E and G have been omitted as the answers thereto were
"none."
(a) The annual aggregate amount of interest guaranteed is approximately $22.
(b) DuPont has received a cross-guarantee for 50% of this amount from another
party.
23
<PAGE>
E. I. DU PONT DE NEMOURS AND COMPANY
AND CONSOLIDATED SUBSIDIARIES
SCHEDULE IX--SHORT-TERM BORROWINGS
FOR THE YEARS 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -------------------------------------------------------------------------------------------------
AT YEAR END DURING THE YEAR
------------------------- ----------------------------------------------
WEIGHTED WEIGHTED
CATEGORY OF AVERAGE MAXIMUM AVERAGE AVERAGE
SHORT-TERM BORROWINGS BALANCE INTEREST RATE(a) OUTSTANDING OUTSTANDING(b) INTEREST RATE(a)(b)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
- ----
Commercial Paper(c)... $ 325 3.3% $3,363 $2,517 3.1%
Bank Borrowings:
--U.S. Dollars...... 25 4.9 216 133 6.6
--Other
Currencies(d)(e)... 395 5.9 411 256 5.9
Master Notes(f)....... 495 3.2 533 427 3.1
1992
- ----
Commercial Paper(c)... $2,182 3.5% $3,038 $1,995 3.6%
Bank Borrowings:
--U.S. Dollars(g)... 169 3.9 169 52 4.2
--Other
Currencies(h)(e)... 262 7.7 399 295 9.0
Master Notes(f)....... 570 3.6 883 515 3.7
1991
- ----
Commercial Paper(c)... $ 102 4.5% $3,174 $2,242 6.0%
Bank Borrowings:
--U.S. Dollars(i)... 21 2.8 842 829 6.2
--Other
Currencies(e)...... 156 15.1 330 248 12.7
Master Note(f)........ 394 4.7 642 382 5.9
</TABLE>
- --------
(a) Indicated interest rates exclude the effect of interest rate swap
agreements that effectively convert floating rate borrowings to fixed rate
borrowings.
(b) Based on month-end data, except for commercial paper and master notes which
are based on daily data, and certain non-U.S. subsidiary bank borrowings
which are based on quarterly data.
(c) Unsecured promissory notes with maturities not in excess of 270 days.
(d) Includes 1,173 million Norwegian Krone borrowings (U.S. $158) with an
average interest rate of 5.9%.
(e) Average interest rates include the effect of borrowings in certain
currencies where local inflation has resulted in relatively high interest
rates.
(f) Master notes were issued to U.S. banks and are payable on demand.
(g) Includes $157 with a floating money market based interest rate.
(h) Includes 200 million Australian dollar borrowings (U.S. $140) with a
floating money market based interest rate.
(i) Interest rates include the effect of a subsidiary's 0% interest export
incentive financing.
24
<PAGE>
E. I. DU PONT DE NEMOURS AND COMPANY
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 Company's Certificate of Incorporation, as last amended December 22,
1989 (incorporated by reference to Exhibit 3.1 of the company's Annual
Report on Form 10-K for the year ended December 31, 1989).
3.2 Company's Bylaws, as last revised November 24, 1993.
4 The company agrees to provide the Commission, on request, copies of
instruments defining the rights of holders of long-term debt of the
company and its subsidiaries.
10.1 Amendment dated as of March 26, 1986 to, and restatement of, the
Agreement dated as of October 2, 1981 between The Seagram Company Ltd.
and the company (incorporated by reference to Exhibit 10.1 of the
company's Annual Report on Form 10-K for the year ended December 31,
1991).
10.2* Company's Corporate Sharing Plan, as last amended August 28, 1991
(incorporated by reference to Exhibit 10.2 of the company's Annual
Report on Form 10-K for the year ended December 31, 1992).
10.3* Company's Deferred Compensation Plan for Directors, as last amended
November 21, 1986 (incorporated by reference to Exhibit 10.3 of the
company's Annual Report on Form 10-K for the year ended December 31,
1992).
10.4* Company's Supplemental Retirement Income Plan, as last amended
effective October 1, 1991 (incorporated by reference to Exhibit 10.4
of the company's Annual Report on Form 10-K for the year ended
December 31, 1991).
10.5* Company's Pension Restoration Plan, as last amended effective October
1, 1991 (incorporated by reference to Exhibit 10.5 of the company's
Annual Report on Form 10-K for the year ended December 31, 1991).
10.6* Retirement Restoration Plan of Conoco Inc., as last amended effective
July 23, 1990 (incorporated by reference to Exhibit 10.6 of the
company's Annual Report on Form 10-K for the year ended December 31,
1990).
10.7* Company's Stock Option Plan, as last amended effective April 29, 1992
(incorporated by reference to Exhibit 10.7 of the company's Annual
Report on Form 10-K for the year ended December 31, 1992).
11 Statement re computation of earnings per share--assuming full
dilution.
12 Statement re computation of the ratio of earnings to fixed charges.
13 The 1993 "Letter to Stockholders," Business Review Section, and
Financial Information Section of the Annual Report to Shareholders for
the year ended December 31, 1993, which are furnished to the
Commission for information only, and not filed except as expressly
incorporated by reference in this Report.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
</TABLE>
- --------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K.
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
E. I. DU PONT DE NEMOURS AND COMPANY
INCORPORATED UNDER THE LAWS OF DELAWARE
AS REVISED November 24, 1993
<PAGE>
BYLAWS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I.
MEETING OF STOCKHOLDERS:
Section 1. Annual....................................................... 1
Section 2. Special...................................................... 1
Section 3. Notice....................................................... 1
Section 4. Quorum....................................................... 1
Section 5. Organization................................................. 1
Section 6. Voting....................................................... 1
Section 7. Inspectors................................................... 1
ARTICLE II.
BOARD OF DIRECTORS:
Section 1. Number....................................................... 2
Section 2. Term......................................................... 2
Section 3. Increase of Number........................................... 2
Section 4. Resignation.................................................. 2
Section 5. Vacancies.................................................... 2
Section 6. Regular Meetings............................................. 2
Section 7. Special Meetings............................................. 2
Section 8. Quorum....................................................... 2
Section 9. Place of Meeting, Etc........................................ 2
Section 10 Interested Directors; Quorum................................. 2
ARTICLE III.
COMMITTEES OF THE BOARD:
Section 1. Committees................................................... 3
Section 2. Procedure.................................................... 3
Section 3. Reports to the Board......................................... 3
Section 4. Strategic Direction Committee................................ 3
Section 5. Audit Committee.............................................. 3
Section 6 Environmental Policy Committee............................... 3
Section 7. Compensation and Benefits Committee.......................... 3
ARTICLE IV.
OFFICE OF THE CHAIRMAN.................................................... 4
ARTICLE V.
OFFICERS:
Section 1. Officers
Section 2. Chairman of the Board........................................ 4
Section 3. Vice Chairmen................................................ 4
Section 4. Vice Presidents.............................................. 4
Section 5. Senior Vice President--Finance............................... 4
Section 6. Treasurer.................................................... 4
Section 7. Assistant Treasurer.......................................... 4
Section 8. Controller................................................... 4
Section 9. Assistant Controller......................................... 5
Section 10. Secretary.................................................... 5
Section 11. Assistant Secretary.......................................... 5
Section 12. Removal...................................................... 5
Section 13. Resignation.................................................. 5
Section 14. Vacancies.................................................... 5
</TABLE>
<PAGE>
ARTICLE VI.
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
MISCELLANEOUS:
Section 1. Indemnification of Directors or Officers...................... 5
Section 2. Certificate for Shares........................................ 5
Section 3. Transfer of Shares............................................ 6
Section 4. Regulations................................................... 6
Section 5. Record Date of Stockholders................................... 6
Section 6. Corporate Seal................................................ 6
ARTICLE VII.
AMENDMENTS................................................................ 6
</TABLE>
<PAGE>
BYLAWS
OF
E. I. DU PONT DE NEMOURS AND COMPANY
ARTICLE I.
MEETING OF STOCKHOLDERS
Section 1. Annual. Meetings of the stockholders for the purpose of electing
Directors, and transacting such other proper business as may be brought before
the meeting, shall be held annually at such date, time and place, within or
without the State of Delaware as may be designated by the Board of Directors
("Board").
Section 2. Special. Special meetings of the stockholders may be called by the
Board and shall be called by the Secretary at the request in writing of the
holders of record of at least twenty-five percent of the outstanding stock of
the corporation entitled to vote. Special meetings shall be held within or
without the State of Delaware, as the Board shall designate.
Section 3. Notice. Written notice of each meeting of stockholders, stating
the place, date and hour of the meeting, and the purpose or purposes thereof,
shall be mailed not less than ten nor more than sixty days before the date of
such meeting to each stockholder entitled to vote thereat.
Section 4. Quorum. Unless otherwise provided by statute, the holders of
shares of stock entitled to cast a majority of votes at a meeting, present
either in person or by proxy, shall constitute a quorum at such meeting.
Absence of a quorum of the holders of Common Stock or Preferred Stock at any
meeting or adjournment thereof, at which under the Certificate of Incorporation
the holders of Preferred Stock have the right to elect any Directors, shall not
prevent the election of Directors by the other class of stockholders entitled
to elect Directors as a class if the necessary quorum of stockholders of such
other class shall be present in person or by proxy.
Section 5. Organization. The Chairman of the Board or, in the Chairman's
absence, a Vice Chairman shall preside at meetings of stockholders. The
Secretary of the Company shall act as Secretary of all meetings of the
stockholders, but in the absence of the Secretary the presiding officer may
appoint a Secretary of the meeting. The order of business for such meetings
shall be determined by the Chairman of the Board, or, in the Chairman's
absence, by a Vice Chairman.
Section 6. Voting. Each stockholder entitled to vote at any meeting shall be
entitled to one vote, in person or by written proxy, for each share held of
record. Upon the demand of any stockholder, such stockholder shall be entitled
to vote by ballot. All elections and questions shall be decided by plurality
vote, except as otherwise required by statute.
Section 7. Inspectors. At each meeting of the stockholders the polls shall be
opened and closed; the proxies and ballots shall be received and be taken in
charge, and all questions touching the qualification of voters and the validity
of proxies, and the acceptance or rejection of votes shall be decided by three
Inspectors, two of whom shall have power to make a decision. Such Inspectors
shall be appointed by the Board before the meeting, or in default thereof, by
the presiding officer at the meeting, and shall be sworn to the faithful
performance of their duties. If any of the Inspectors previously appointed
shall fail to attend or refuse or be unable to serve, substitutes shall be
appointed by the presiding officer.
1
<PAGE>
ARTICLE II.
BOARD OF DIRECTORS
Section 1. Number. The business and affairs of the Company shall be under the
direction of the Board. The number of Directors, which shall not be less than
ten, shall be determined from time to time by the vote of two-thirds of the
whole Board.
Section 2. Term. Each Director shall hold office until the next annual
election of Directors and until the Director's successor is elected and
qualified.
Section 3. Increase of Number. In case of any increase in the number of
Directors between Annual Meetings of Stockholders, each additional Director
shall be elected by the vote of two-thirds of the whole Board.
Section 4. Resignation. A Director may resign at any time by giving written
notice to the Chairman of the Board or the Secretary. The acceptance thereof
shall not be necessary to make it effective; and such resignation shall take
effect at the time specified therein or, in the absence of such specification,
it shall take effect upon the receipt thereof.
Section 5. Vacancies. In case of any vacancy in the Board for any cause, the
remaining Directors, by vote of majority of the whole Board, may elect a
successor to hold office for the unexpired term of the Director whose place is
vacant.
Section 6. Regular Meetings. Regular meetings of the Board shall be held at
such times as the Board may designate. A notice of each regular meeting shall
not be required.
Section 7. Special Meetings. Special meetings of the Board shall be held
whenever called by the direction of the Chairman of the Board, or of one-third
of the Directors.
The Secretary shall give notice of such special meetings by mailing the same
at least two days before the meeting, or by telegraphing the same at least one
day before the meeting to each Director; but such notice may be waived by any
Director. Unless otherwise indicated in the notice thereof, any and all
business may be transacted at a special meeting. At any meeting at which every
Director shall be present, any business may be transacted, irrespective of
notice.
Section 8. Quorum. One-third of the Board shall constitute a quorum. If there
be less than a quorum present at any meeting, a majority of those present may
adjourn the meeting from time to time.
Except as otherwise provided by law, the Certificate of Incorporation, or by
these Bylaws, the affirmative vote of a majority of the Directors present at
any meeting at which there is a quorum shall be necessary for the passage of
any resolution.
Section 9. Place of Meeting, Etc. The Directors shall hold the meetings, and
may have an office or offices in such place or places within or outside the
State of Delaware as the Board from time to time may determine.
Section 10. Interested Directors; Quorum
1) No contract or other transaction between the Company and one or more of
its Directors, or between the Company and any other corporation, partnership,
association, or other organization in which one or more of the Directors of the
Company is a Director or officer, or has a financial interest, shall be void or
voidable, because the Director is present at or participates in the meeting of
the Board or committee thereof which authorizes the contract or transaction, or
solely because such Director's vote is counted for such purpose, if:
2
<PAGE>
(a) The material facts as to such Director's relationship or interest and
as to the contract or transaction are disclosed or are known to the Board
or the committee, and the Board or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested Directors, even though the disinterested Directors be less
than a quorum; or
(b) The material facts as to such Director's relationship or interest and
as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the Company as of the time
it is authorized, approved or ratified, by the Board, a committee thereof,
or the stockholders; and
2) Common or interested Directors may be counted in determining the presence
of a quorum at a meeting of the Board or of a committee which authorizes the
contract or transaction.
ARTICLE III.
COMMITTEES OF THE BOARD
Section 1. Committees. The Board shall by the affirmative vote of a majority
of the whole Board, elect from the Directors a Strategic Direction Committee,
an Audit Committee, an Environmental Policy Committee, and a Compensation and
Benefits Committee, and may, by resolution passed by a majority of the whole
Board, designate one or more additional committees, each committee to consist
of one or more Directors. The Board shall designate for each of these
committees a Chairman, and, if desired, a Vice Chairman, who shall continue as
such during the pleasure of the Board. The number of members of each committee
shall be determined from time to time by the Board.
Section 2. Procedure. Each Committee shall fix its own rules of procedure and
shall meet where and as provided by such rules. A majority of a committee shall
constitute a quorum. In the absence or disqualification of a member of any
committee, the members of such committee present at any meeting, and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in the
place of any such absent or disqualified member.
Section 3. Reports To The Board. Each Committee shall keep regular minutes of
its proceedings and shall periodically report to the Board summaries of the
Committee's significant completed actions and such other matters as requested
by the Board.
Section 4. Strategic Direction Committee. The Strategic Direction Committee
shall review the Company's strategic direction and overall objectives and shall
have such powers and perform such duties as may be assigned to it from time to
time by the Board.
Section 5. Audit Committee. The Audit Committee shall employ independent
public accountants, subject to stockholder ratification at each annual meeting,
review the adequacy of internal accounting controls and the accounting
principles employed in financial reporting, and shall have such power and
perform such duties as may be assigned to it from time to time by the Board.
None of the Members of the Audit Committee shall be an officer or employee of
the Company or its subsidiaries.
Section 6. Environmental Policy Committee. The Environmental Policy Committee
shall review the Company's environmental policies and practices and shall have
such powers and perform such duties as may be assigned to it from time to time
by the Board.
Section 7. Compensation and Benefits Committee. The Compensation and Benefits
Committee shall have the power and authority vested in it by the Compensation
Plans of the Company and shall have such powers and perform such duties as may
be assigned to it from time to time by the Board. None of the members of the
Compensation and Benefits Committee shall be an officer or employee of the
Company or its subsidiaries.
3
<PAGE>
ARTICLE IV.
OFFICE OF THE CHAIRMAN
The Board shall elect an Office of the Chairman whose members shall include
the Chairman of the Board, the Vice Chairmen, and such other officers as may be
designated by the Board. The Office of the Chairman shall have responsibility
for the strategic direction and operations of all the businesses of the Company
and shall have such powers and perform such duties as may be assigned to it
from time to time by the Board.
All significant completed actions by the Office of the Chairman shall be
reported to the Board at the next succeeding Board meeting, or at its meeting
held in the month following the taking of such action.
ARTICLE V.
OFFICERS
Section 1. Officers. The officers of the Company shall be a Chairman of the
Board, one or more Vice Chairmen, a Senior Vice President--Finance and a
Secretary.
The Board and the Office of the Chairman, may appoint such other officers as
they deem necessary, who shall have such authority and shall perform such
duties as may be prescribed, respectively, by the Board or the Office of the
Chairman.
Section 2. Chairman of the Board. The Chairman of the Board shall be the
chief executive officer of the Company and subject to the Board and the Office
of the Chairman, the Chairman shall have general charge of the business and
affairs of the Company. The Chairman shall preside at all meetings of the
stockholders and of the Board. The Chairman may sign and execute all authorized
bonds, contracts or other obligations, in the name of the Company, and with the
Treasurer may sign all certificates of the shares in the capital stock of the
Company.
Section 3. Vice Chairmen. The Vice Chairmen shall have such powers and
perform such duties as may be assigned to the Vice Chairmen by the Chairman of
the Board. In the absence or inability to act of the Chairman of the Board, a
Vice Chairman shall perform the duties of the Chairman of the Board.
Section 4. Vice Presidents. The Board or the Office of the Chairman may
appoint one or more Vice Presidents. Each Vice President shall have such title,
powers and duties as may be assigned to such Vice President by the Board or the
Office of the Chairman.
Section 5. Senior Vice President--Finance. The Senior Vice President--Finance
shall be the chief financial officer of the Company, and shall have such powers
and perform such duties as may be assigned to such Senior Vice President--
Finance by the Board or the Office of the Chairman.
Section 6. Treasurer. The Board shall appoint a Treasurer. Under the general
direction of the Senior Vice President--Finance, the Treasurer shall have such
powers and perform such duties as may be assigned to such Treasurer by the
Board or the Office of the Chairman.
Section 7. Assistant Treasurer. The Board or the Office of the Chairman may
appoint one or more Assistant Treasurers. Each Assistant Treasurer shall have
such powers and shall perform such duties as may be assigned to such Assistant
Treasurer by the Board or the Office of the Chairman.
Section 8. Controller. The Board may appoint a Controller. Under the general
direction of the Senior Vice President--Finance, the Controller shall have such
powers and perform such duties as may be assigned to such Controller by the
Board or the Office of the Chairman.
4
<PAGE>
Section 9. Assistant Controller. The Board or the Office of the Chairman may
appoint one or more Assistant Controllers. Each Assistant Controller shall have
such powers and shall perform such duties as may be assigned to such Assistant
Controller by the Board or the Office of the Chairman.
Section 10. Secretary. The Secretary shall keep the minutes of all the
meetings of the Board and the minutes of all the meetings of the stockholders;
the Secretary shall attend to the giving and serving of all notices of meetings
as required by law or these Bylaws; the Secretary shall affix the seal of the
Company to any instruments when so required; and the Secretary shall in general
perform all the corporate duties incident to the office of Secretary, subject
to the control of the Board or the Chairman of the Board, and such other duties
as may be assigned to the Secretary by the Board or the Chairman of the Board.
Section 11. Assistant Secretary. The Board or the Office of the Chairman may
appoint one or more Assistant Secretaries. Each Assistant Secretary shall have
such powers and shall perform such duties as may be assigned to such Assistant
Secretary by the Board or the Chairman of the Board or a Vice Chairman; and
such Assistant Secretary shall affix the seal of the Company to any instruments
when so required.
Section 12. Removal. All officers may be removed or suspended at any time by
the vote of the majority of the whole Board. All officers, agents and
employees, other than officers elected or appointed by the Board, may be
suspended or removed by the committee or by the officer appointing them.
Section 13. Resignation. Any officer may resign at any time by giving written
notice to the Chairman of the Board, a Vice Chairman or the Secretary. Unless
otherwise stated in such notice of resignation, the acceptance thereof shall
not be necessary to make it effective; and such resignation shall take effect
at the time specified therein or, in the absence of such specification, it
shall take effect upon the receipt thereof.
Section 14. Vacancies. A vacancy in any office shall be filled in the same
manner as provided for election or appointment to such office.
ARTICLE VI.
MISCELLANEOUS
Section 1. Indemnification of Directors or Officers. Each person who is or
was a Director or officer of the Company (including the heirs, executors,
administrators or estate of such person) shall be indemnified by the Company as
of right to the full extent permitted by the General Corporation Law of
Delaware against any liability, cost or expense asserted against such Director
or officer and incurred by such Director or officer by reason of the fact that
such person is or was a Director or officer. The right to indemnification
conferred by this Section shall include the right to be paid by the Company the
expenses incurred in defending in any action, suit or proceeding in advance of
its final disposition, subject to the receipt by the Company of such
undertakings as might be required of an indemnitee by the General Corporation
Law of Delaware.
In any action by an indemnitee to enforce a right to indemnification
hereunder or by the Company to recover advances made hereunder, the burden of
proving that the indemnitee is not entitled to be indemnified shall be on the
Company. In such an action, neither the failure of the Company (including its
Board, independent legal counsel or stockholders) to have made a determination
that indemnification is proper, nor a determination by the Company that
indemnification is improper, shall create a presumption that the indemnitee is
not entitled to be indemnified or, in the case of such an action brought by the
indemnitee, be a defense thereto. If successful in whole or in part in such an
action, an indemnitee shall be entitled to be paid also the expense of
prosecuting or defending same. The Company may, but shall not be obligated to,
maintain insurance at its expense, to protect itself and any such person
against any such liability, cost or expense.
Section 2. Certificate for Shares. The certificate for shares of the capital
stock of the Company shall be in such form, not inconsistent with the
Certificate of Incorporation as shall be prescribed by the Board.
5
<PAGE>
Every stockholder shall have a certificate signed by the Chairman of the Board
or a Vice Chairman, and the Treasurer, certifying the number of shares owned by
such stockholder in the Company, provided that if any such certificate is
countersigned by a transfer agent or registrar other than the Company or its
employee, then and other signature on the certificate may be a facsimile.
The name of the person owning the shares represented thereby, with the number
of such shares and the date of issue, shall be entered on the Company's books.
All certificates surrendered to the Company shall be cancelled, and no new
certificates shall be issued until the former certificate for the same number
of shares of the same class shall have been surrendered and cancelled, except
that the Board may determine, from time to time, the conditions and provisions
on which new certificates may be used in substitution of any certificates that
may have been lost, stolen or destroyed.
Section 3. Transfer of Shares. Shares in the capital stock of the Company
shall be transferred by the record holder thereof, in person, or by any such
person's attorney upon surrender and cancellation of certificates for a like
number of shares.
Section 4. Regulations. The Board also may make rules and regulations
concerning the issue, transfer and registration of certificates for shares of
the capital stock of the Company.
The Board may appoint one or more transfer agents and one or more registrars
of transfers, and may require all stock certificates to bear the signature of a
transfer agent and a registrar of transfer.
Section 5. Record Date of Stockholders. The Board may fix in advance a date,
not exceeding sixty days preceding the date of any meeting of stockholders, or
the date for the payment of any dividend or other distribution, or the date for
the allotment of rights, or the date when any change or conversion or exchange
of capital stock shall go into effect, as a record date for the determination
of the stockholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of any such dividend or other distribution, or to
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, and in such case only such
stockholders as shall be stockholders of record on the date so fixed shall be
entitled to such notice of, and to vote at, such meeting, or to receive any
such dividend or other distribution, or to receive such allotment of rights, or
to exercise such rights, as the case may be, notwithstanding any transfer of
any stock on the books of the Company after such record date fixed as
aforesaid.
Section 6. Corporate Seal. The seal of the Company shall be circular in form,
containing the words "E. I. DU PONT DE NEMOURS AND CO." and "DELAWARE" on the
circumference, surrounding the words "FOUNDED" and "SEAL," and the date "1802."
The seal shall be in the custody of the Secretary. A duplicate of the seal
may be kept and used by the Senior Vice President--Finance, any Vice President,
DuPont Finance, the Treasurer, or by any Assistant Secretary or Assistant
Treasurer.
ARTICLE VII.
AMENDMENTS
The Board shall have the power to adopt, amend and repeal the Bylaws of the
Company, by a vote of the majority of the whole Board, at any regular or
special meeting of the Board, provided that notice of intention to adopt, amend
or repeal the Bylaws in whole or in part shall have been given at the next
preceding meeting, or, without any such notice, by the vote of two-thirds of
the whole Board.
I hereby certify that the foregoing is a true and correct copy of the Bylaws of
E. I. du Pont de Nemours and Company.
Witness my hand and the corporate seal of the Company this day of
19 .
_____________________________________
Secretary
6
<PAGE>
EXHIBIT 11
E. I. DU PONT DE NEMOURS AND COMPANY
EARNINGS PER SHARE--ASSUMING FULL DILUTION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------------------------------------
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Earnings (loss) on com-
mon stock.............. $ 545 $ (3,937) $ 1,393 $ 2,300 $ 2,470
Adjustments required for
dividend equivalent
payments and stock
appreciation rights
(net of tax)........... -- -- 1 (2) 2
Adjustments required for
interest on convertible
debt(a)................ -- -- -- 15 --
----------- ----------- ----------- ----------- -----------
Adjusted earnings (loss)
on common stock........ $ 545 $ (3,937) $ 1,394 $ 2,313 $ 2,472
=========== =========== =========== =========== ===========
Average number of shares
outstanding (excludes
shares in treasury).... 676,622,115 673,454,935 670,743,786 675,960,751 700,505,538
Adjustments required for
awarded but undelivered
shares under the
Variable Compensation
Plan (average), stock
options, and stock
appreciation rights(b). 3,785,582 -- 4,740,453 1,951,293 2,562,918
Adjustments required for
convertible debt(a) ... -- -- -- 5,404,509 --
----------- ----------- ----------- ----------- -----------
Adjusted average number
of common shares....... 680,407,697 673,454,935 675,484,239 683,316,553 703,068,456
=========== =========== =========== =========== ===========
Earnings (loss) per
share--assuming full
dilution............... $ .80 $ (5.85) $ 2.06 $ 3.38 $ 3.52
=========== =========== =========== =========== ===========
Earnings (loss) per
share--as published.... $ .81 $ (5.85) $ 2.08 $ 3.40 $ 3.53
=========== =========== =========== =========== ===========
</TABLE>
- --------
(a) The Zero Coupon Convertible Subordinated Notes were retired during 1992.
1991 versus 1990 convertible debt was outstanding for the entire year; as a
result, conversion was antidilutive, and no adjustment was required in
1991.
(b) In 1992, these adjustments are not considered for the fully diluted
earnings per share calculation due to their antidilutive effect.
<PAGE>
EXHIBIT 12
E. I. DU PONT DE NEMOURS AND COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------
1993 1992 1991 1990 1989
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Income Before Extraordinary Item and
Transition
Effect of Accounting Changes......... $ 566 $ 975 $1,403 $2,310 $2,480
Provision for Income Taxes............ 392 836 1,415 1,844 1,844
Minority Interests in Earnings of Con-
solidated Subsidiaries............... 5 10 6 3 24
Adjustment for Companies Accounted for
by the Equity Method................. 41 6 35 29 38
Capitalized Interest.................. (194) (194) (197) (161) (108)
Amortization of Capitalized Interest.. 144 101 94 84 78
------ ------ ------ ------ ------
954 1,734 2,756 4,109 4,356
------ ------ ------ ------ ------
Fixed Charges:
Interest and Debt Expense--Borrowings. 594 643 752 773 586
Adjustment for Companies Accounted for
by the Equity Method--Interest and
Debt Expense......................... 42 62 11 9 23
Capitalized Interest.................. 194 194 197 161 108
Rental Expense Representative of In-
terest Factor........................ 143 151 162 163 149
------ ------ ------ ------ ------
973 1,050 1,122 1,106 866
------ ------ ------ ------ ------
Total Adjusted Earnings Available for
Payment of Fixed Charges............. $1,927 $2,784 $3,878 $5,215 $5,222
====== ====== ====== ====== ======
Number of Times Fixed Charges Are
Earned............................... 2.0 2.7 3.5 4.7 6.0
====== ====== ====== ====== ======
</TABLE>
<PAGE>
Exhibit 13
To Our Stockholders
In 1993 we accelerated our unrelenting drive to become the most
successful, customer-focused chemical and energy company in the world.
We made excellent progress on many fronts even though world economic conditions
remained very unfavorable and our industries continued to experience extensive
excess capacity. We enter 1994 with strong momentum primarily because our
employees understand the reality of this hostile environment and have made
outstanding efforts to strengthen our businesses worldwide. I am extremely
grateful for the determined spirit exhibited by our people in this time of great
uncertainty.
Excluding nonrecurring items, our earnings were up 25 percent compared to
the prior year even though sales declined. Strong cash management allowed us to
reduce total borrowings by more than $1 billion.
Our net income for 1993 was $555 million, or $.81 per share, compared with
a loss for 1992 of $3,927 million, or $5.85 per share. Excluding nonrecurring
items from both years and one-time charges in 1992 for adoption of new
accounting standards, 1993 earnings were $1,677 million, or $2.46 per share,
compared to $1,341 million, or $1.98 per share, earned last year. Total sales
for 1993 were $37.1 billion, down 2 percent versus 1992.
We benefited significantly from a strong performance by Petroleum
operations. Excluding one-time items, Conoco earnings increased more than 70
percent in spite of low crude oil prices. We also saw gains in the Diversified
Businesses segment where earnings increased 146 percent excluding nonrecurring
items and coal results, which were adversely affected by a strike. This reflects
strong results from crop protection chemicals and cost improvements in printing
and publishing.
Clearly, the cash management and productivity improvement strategies we
implemented during the last few years are paying off. We still have a
considerable way to go, however, in accomplishing the total company
transformation that I discussed in last year's annual report. But in 1993 we
made substantial progress in every key area of transformation emphasis. Consider
some highlights:
In our continuing effort to globalize our strongest businesses, we
completed the purchase of ICI's nylon operations, which now gives us a
leadership position in Europe. We formed an alliance with Asahi to enhance our
nylon opportunities in Asia. Conoco is involved in an ambitious petroleum
development venture in Russia, the Polar Lights project. DuPont and Kirovo-
Chepetsk Chemical Enterprise in Russia formed a joint venture to market
fluoropolymer products worldwide. We formed a joint venture to manufacture
electronic materials for microcircuits to help accelerate growth in China's
electronics industry. A new plant, expected to be the most advanced
manufacturing facility of its kind in China, will start up in the third quarter
of 1995.
Last year also saw a marked improvement in productivity as we achieved a
6 percent gain. Cost reduction programs we have been pursuing since 1991 have
yielded good results with regard to fixed
2
<PAGE>
costs and spending rates. Currently our European operations are engaged in a
$500 million cost reduction program, which will be completed by the end of 1994.
Regarding business focus, we divested a number of businesses including
connectors, acrylics and Remington Arms. These divestitures follow others of
recent years and represent our decision to focus intently on businesses where
we have clear competitive advantage and technological strength. Conoco
completed a number of transactions to strengthen our petroleum portfolio, most
significantly the trade of our Milne Point field in Alaska and some
exploration acreage for an interest in a British Petroleum-operated producing
field in the Gulf of Mexico.
One superb advantage we have for improving both productivity and business
focus is DuPont research. Much of our R&D is aimed at improving the quality,
speed and efficiency of manufacturing processes vital to our competitiveness.
Another substantial portion of our research dollar goes to improving our
product offerings in existing markets. We are also maintaining our commitment
to discovery research, which is essential to our future. DuPont's success in
the 20th century has been made possible by innovative science. Leadership in
science and technology will continue to be an indispensable element of our
business strategy.
4
<PAGE>
In terms of our environmental commitment, we continued to make outstanding
progress. In the United States, preliminary estimates indicate we have reduced
emissions of air toxics by 60 percent and airborne carcinogens by 70 percent
compared to 1987 base year figures. We met U.S. EPA's voluntary 33/50 interim
goal with a 33 percent reduction of 17 large volume toxic materials. Of 740
million pounds of packaging materials shipped to customers, 230 million pounds
or 30 percent were returned for reuse or recycling. Conoco placed two more
double-hulled tankers into service; double-hulled vessels now make up half our
fleet. More than 120 double-walled underground storage tanks have been
installed at Conoco-owned service stations. A detailed discussion of our
environmental performance is available in our 1993 Environmental Progress
Report.
As indicated earlier, last year was a particularly challenging time for our
people. Cost reductions have resulted in the elimination of more than 20,000
jobs since 1991. It has been painful to see dedicated and talented people depart
the company, even though we all are aware that the economic realities we face
leave no other choice. While more consolidations are likely to occur, we believe
that most of the across-the-board "downsizing" is accomplished. Throughout the
company I am increasingly encountering examples of individual initiative and
team spirit that a leaner organization encourages and makes possible.
As our employees grow accustomed to the pace of change that will be a
permanent fact of life in 21st century business, we are holding fast to our
core value of treating every individual with respect and dignity. In an era of
stiff global competition, an employer is responsible for creating a workplace
in which people can grow and maintain their employability in the face of the
change and dislocation that will characterize all global companies in the
years ahead. Security comes only from providing superior value to customers.
We encourage our people to be resourceful, to seize present opportunities and
to create new ones. This is the formula for a successful future for the
company and for ourselves.
A significant action taken in 1993 involved restructuring the company to
eliminate the large sectors or departments into which we had historically
grouped our businesses. The company now is organized into business units which
are smaller, more flexible and less encumbered by the bureaucracy and costs
that the sector staff and structure represented. The streamlined operational
structure of the company is represented by the businesses listed on the chart
on the inside front cover of this report. The new structure permits each
business and every employee to focus on the customer and be more responsive to
customer needs. The feedback we've received from customers has been very
encouraging.
Also in 1993, the first trials in the litigation involving our "Benlate" DF
50 fungicide were held; others are ongoing. To date, more than 60 cases have
been disposed of by settlement, summary judgment in our favor or dismissal. Jury
verdicts have been returned against the company, but for an average of less than
a third of the compensatory damages claimed by the plaintiffs. We are appealing
those. We also recently had one jury verdict for the company. Based on our
science, we are convinced that our product did not cause any damage and that it
is safe when applied at label rates.
Overall, 1993 was a time in which our transformation process shifted into a
higher gear. Our performance in the face of hostile economic conditions in major
markets underscored that the company is financially strong; we expect these
economic conditions to continue. However, we are positioned to show improvement
even if current conditions remain unchanged, and we have strong upside potential
when growth accelerates in the U.S. or the economies of Europe and Japan begin
to recover.
5
<PAGE>
What's ahead for 1994? We are in a period of rapid change and uncertainty.
We face many smaller, flexible rapid-response companies around the world. In
such an environment our focus has to be on the customer.
In these circumstances we state our objectives in terms of performance. Our
overall goal is focused, profitable growth achieved through a combination of
healthy businesses and committed, enthusiastic employees. We seek to provide our
shareholders with an average 15 percent total annual return while posting a 20
percent return on equity and a 10 percent annual growth in earnings through a
business cycle. Each of our businesses has clear financial and growth objectives
to support these corporate objectives.
We're also devoting careful attention to portfolio management. We have
determined certain business characteristics that are fundamental to our
strategy. DuPont's businesses in the next century will be science-based where
we have a clear technological advantage; in which the size and scope of the
business and its ability to grow are meaningful to a company as large as
DuPont; and in which we know we can be competitive and win on a global basis.
It goes without saying that our businesses will also be able to achieve the
high levels of safety and environmental performance, and maintain the other
values that we have traditionally set for ourselves here at DuPont.
Our experiences during the past two years are reminders that focusing on
fundamentals works. In particular, focusing on the customer always works. But
we can't be successful unless our people are also committed and enthusiastic.
Our businesses know the importance of building winning teams. Only people can
make sure that DuPont offers the lowest cost, the best product, the fastest
and most efficient service -- all hallmarks of a successful global competitor.
I have never seen a more dynamic period for world business than in the
past two years. It has not been an easy time, and it has sometimes been a
painful time. But there is no question that the actions we are taking are
beginning to pay large dividends which will become more apparent in the
months ahead.
We communicated this last dynamism last year in our annual report, which
generated some controversy as we graphically signaled the bold step change
necessary for future success. In this year's annual report, we are featuring
a series of attributes that describe both healthy businesses and committed,
enthusiastic employees. Our people tell this story in their own words and
through their own accomplishments. This report once again reflects the
exciting environment of a company that has embraced change and is determined
to win.
EDGAR S. WOOLARD, JR.
Chairman
February 24, 1994
7
<PAGE>
Business Review
- -------------------------------------------------------------------------------
chemicals
---------
. Chemicals manufactures a wide range of commodity and specialty products,
including titanium dioxide, fluorochemicals and polymer intermediates,
used in the paper, plastics, chemical processing, refrigeration, textile
and environmental management industries. Under an initiative begun last
year, these businesses are grouped into strategic business units (see
chart inside front cover*).
===================================
SALES
-----------------------------
($ in billions)
1991 1992 1993
3.5 3.6 3.5
ATOI
-----------------------------
($ in millions)
1991 1992 1993
316 226 166
-----------------------------------
Despite difficult economic conditions, Chemicals pressed forward with its
strategy to increase DuPont's global presence in key businesses such as
titanium dioxide and nylon intermediates, and pursue growth opportunities in
fluorochemicals and specialty intermediates.
As part of this strategy, construction was largely completed during the
year on the "Ti-Pure" titanium dioxide facility in Kuan Yin, Taiwan; some
commercial production began in January 1994 and full start-up is scheduled for
May. DuPont is the world's largest producer of titanium dioxide, a white
pigment used in paper, paint and plastics.
In nylon intermediates, construction of a world-scale adipic acid
plant in Singapore increases our presence in Asia Pacific. Some production is
scheduled to start at the new Singapore plant later this year and full start-
up is planned for 1995. There is growing demand in Asia Pacific for adipic
acid, a key building block for nylon and polyurethanes. The addition of a
nylon intermediates plant as a result of the acquisition of ICI's nylon
business enhances our position in Europe.
Among other major developments during the year, we started up the world's
largest hydrofluorocarbon-134a plant at Corpus Christi, Texas, bringing our
total capacity of this chlorofluorocarbon (CFC) substitute to more than 110
million pounds a year, including production in Ponca City, Oklahoma, and
Chiba, Japan. We are an industry leader in CFC alternatives, with a full line
of refrigerant products marketed under the "Suva" trademark. These products
have zero or significantly reduced ozone depletion potential.
Also during the year, Chemicals continued with business restructuring and
other cost-reduction initiatives. The results of these efforts began to show
up toward the end of the year, with an improvement in fourth-quarter
performance.
1993 VERSUS 1992
Sales were down 2 percent, primarily from lower U.S. volume. Additional sales
volume from acquisitions outside the United States was offset by lower prices,
largely due to the currency effects of a stronger dollar.
After-tax operating income (ATOI) was 27 percent lower than the prior
year, resulting from higher nonrecurring charges for facility shutdowns,
employee separation and other business restructuring. Excluding these charges
from both years, ATOI was $282 million, up 2 percent from $277 million in
1992. This reflects improvements in specialty chemicals, intermediates and
fluorochemicals. These improvements were principally from lower costs, partly
offset by lower earnings from white pigment, which experienced declining
prices for most of the year despite increases in volume.
*This chart is not incorporated by reference in this Report.
20
<PAGE>
1992 VERSUS 1991
Sales were up 4 percent, with higher sales volume outside the United States
partly offset by lower prices. ATOI declined 28 percent. Excluding a 1992
charge of $49 million from accounting changes, and nonrecurring items from
both years, earnings were up 9 percent reflecting improvements in nylon
intermediates and a number of other basic and specialty chemicals businesses.
OUTLOOK
Cost reduction and other steps taken to enhance efficiency have put Chemicals
in position for improved financial performance, especially in the event of
renewed vigor in major world economies. In particular, the market for DuPont
white pigment is improving as demand increases for high-quality titanium
dioxide produced by our proprietary technology. However, while we have
significantly reduced our production of CFCs, we continue to be disappointed
by the market's slower than anticipated transition away from CFCs to the more
environmentally acceptable alternatives.
- -------------------------------------------------------------------------------
fibers
-------------
. A diversified mix of specialty fibers is produced to serve end uses
ranging from high-strength composites in aerospace to protective apparel,
active sportswear and packaging. High-volume fibers are produced for
apparel and home fabrics, carpeting and industrial applications, and sold
directly to the textile and other industries for processing into products
used in consumer and industrial markets. Under an initiative begun last
year, these businesses are grouped into strategic business units (see
chart inside front cover*).
Fibers continued to pursue three long-term strategies: grow through improved
quality, service, cost, innovation, and strategic acquisition; penetrate new
high-growth worldwide markets; and develop and promote new high-technology
fiber and resin products to replace traditional materials such as metals.
The global nylon business -- including the newly acquired nylon business
of ICI-- was restructured to meet customer needs with fewer people, improved
productivity and less capital investment. We are aiming for global revenue
growth. "Lycra" spandex intensified its development of new products and end-
use markets globally. It also invested in processes and systems to further
enhance quality. The newest "Lycra" plant in Singapore became a world-class
performer after only six months of operation. Two new, fully automated, modern
polyester filament production lines -- the cornerstone of the "Dacron"
modernization program -- will be operating at the Kinston, North Carolina,
plant by the end of 1994, adding approximately 100 million pounds of capacity.
In flooring systems, we continued with business restructuring aimed at
becoming the low-cost producer. Fixed costs were significantly reduced while
markets strengthened -- particularly the U.S. commercial carpet business. Three
new consumer brands were launched -- "DuPont Approved Stainmaster Plus",
"DuPont Approved Masterlife", and "DuPont Approved Grand Luxura". A national
network of 3,000 top carpet retailers -- known as "DuPont Approved
MasterStores" -- was created; the network includes only retailers who offer the
full line of DuPont-branded products.
*This chart is not incorporated by reference in this Report.
21
<PAGE>
fibers cont.
---------
-------------------------------
Sales
---------------------
($ in billions)
1991 1992 1993
6.1 6.1 6.2
ATOI
---------------------
($ in millions)
1991 1992 1993
416 409 169
Industrial nylon's lower volumes were partially offset by increased sales
of specialty products such as yarns for airbags -- a rapidly expanding market
for which nylon 6,6 has become the fiber of choice.
In nonwovens, DuPont built on its world leadership in the rapidly
growing, high-technology segment of this multi-billion dollar market. The
nonwovens businesses -- "Sontara" spunlaced fabric, "Tyvek" spunbonded olefins
and "Typar" spunbonded polypropylene -- are organized to work across product
lines and geographic regions to solve market needs in medical, apparel,
construction, packaging, reinforcement and absorbents. "Typar" grew in Europe
and the United States as the leading nonwoven for broadloom carpet backing.
Strong growth in Europe came from our new, reinforced "Tyvek", which is used
for breathable roofliners; these simplify construction techniques. "Sontara"
maintained a strong position in the worldwide health care industry as the
preferred material for surgical gowns and drapes. It continues to grow in
diverse consumer applications including window shades, specialty wipes, man-
made leather and adult incontinence products.
The "Nomex" flame-resistant and "Kevlar" high-strength aramid fibers
businesses focused on enhancing quality, customer service, productivity and
cycle time. Construction was completed on a "Kevlar" pulp plant at Richmond,
Virginia, and a "Nomex" fiber plant at Asturias, Spain. Four new products were
introduced for enhanced worker protection. "Kevlar LT" is a new fiber for the
lightest and thinnest bullet-resistant vests available. "Nomex 111A" provides
protection against static electricity as well as flame and thermal shock, for
flight suits and in apparel for the oil, chemical and munitions industries.
"Kevlar Kleen" is a low-linting fiber for cut-resistant gloves for food
handling and use in clean rooms, while "Kevlar Plus" gives higher protection
in gloves used in metal stamping operations. Composites gained in three vital
areas: growth, cost position and market partnerships. DuPont is emerging as
the number one U.S. supplier of advanced materials and is partnering with
leading companies in Europe and Asia.
1993 VERSUS 1992
Sales were 2 percent above the prior year, principally due to the sales added
from the acquisition of ICI's nylon business. Worldwide sales volume was up 5
percent, while prices declined, largely due to the exchange effects of a
stronger dollar. Sales were about even with last year in all regions except in
Asia, where sales were up 9 percent, mainly reflecting business expansion in
the region. Absent additional sales from the ICI acquisition, European sales
were down 16 percent, with about two-thirds of the decline due to price
effects of the stronger dollar.
After-tax operating income (ATOI) was down $240 million from 1992,
principally due to higher restructuring charges. Excluding nonrecurring items
from both years, earnings were $425 million, down 11 percent from $478 million
in 1992. This reflects lower results for "Lycra", "Dacron", and nylon,
particularly in Europe.
1992 VERSUS 1991
Sales were up less than 1 percent, as slightly higher prices were nearly
offset by lower volume. ATOI was down 2 percent from 1991. Excluding
nonrecurring items from both years and a 1992 charge of $104 million for
accounting changes, earnings were up 4 percent, principally reflecting
improved results for the textile and flooring systems businesses.
22
<PAGE>
OUTLOOK
Major restructuring initiatives have been undertaken to reduce costs and
enhance efficiency. Further economic improvement in the United States and
recovery in Europe and Japan would increase and accelerate the benefits of the
restructuring programs. Development of new products and new applications for
existing products provides opportunities for growth in selected markets.
- -------------------------------------------------------------------------------
polymers
------------
. Engineering polymers, elastomers, fluoropolymers, ethylene polymers,
finishes and performance films are produced to serve industries
including packaging, construction, chemical processing, electrical,
paper, textiles and transportation. This group also includes the
automotive businesses, which are engaged in manufacturing and marketing
more than 100 DuPont product lines used by the automotive industry.
Under an initiative begun last year, these businesses are grouped into
strategic business units (see chart inside front cover*).
Polymers is on track with a strategy that is focused on core strengths in
engineering polymers, ethylene polymers, fluoropolymers and finishes, to
enhance our position in the automotive, packaging, construction and electrical
markets.
Developments during the year included the acquisition of ICI's nylon
resins business and the announcement of a new nylon polymer facility as
further steps toward growing our global nylon resins business. The ICI move
will broaden our base in Europe. The polymer facility, located on Pulau Sakra,
off Singapore, is needed to meet growing customer demand for DuPont "Zytel"
nylon resin throughout the Asia Pacific region. Start-up is scheduled for
1995. "Zytel" is used in a wide range of applications, including automotive
and electrical components. We also purchased Ciba-Geigy's PBT (polybutylene
terephthalate) polyester business in Germany, which strengthens our global
position in polyester resins and electrical markets. Except for "Corian" solid
surface material, used in applications such as sinks and countertops, we sold
our acrylics business to ICI as part of our strategy of focusing resources on
those businesses in which we have unique strengths and the opportunity for
global growth. A combination of cost-reduction programs and improving market
conditions, primarily in the United States, brought gains late in the year.
1993 VERSUS 1992
Sales were up less than 1 percent as increased sales in the United States were
essentially offset by lower sales in other regions. A worldwide 5 percent
volume increase was offset by lower prices resulting principally from the
currency exchange effects of a stronger dollar.
===================================
Sales
-----------------------------------
($ in billions)
1991 1992 1993
5.6 5.9 5.9
ATOI
-----------------------------------
($ in millions)
1991 1992 1993
119 318 177
-----------------------------------
* This chart is not incorporated by reference in this Report
23
<PAGE>
polymers cont.
---------
After-tax operating income (ATOI) was down 44 percent from 1992 reflecting
higher restructuring costs in 1993, including a $64 million charge for
shutdown of a portion of the plant in LaPorte, Texas. Excluding nonrecurring
items from both periods, ATOI was $340 million, even with last year. This
reflects increased earnings from the United States and Asia Pacific, offset by
lower earnings in Europe and Canada. The earnings gain in the United States
resulted primarily from improvement in businesses supplying the automotive
original equipment and after-markets, and electrical markets.
1992 VERSUS 1991
Sales were up 5 percent reflecting a 7 percent increase in volume partly
offset by 2 percent lower selling prices. ATOI increased about $200 million.
Excluding a 1992 charge of $75 million for accounting changes and nonrecurring
items from both years, earnings were up 67 percent. The earnings gain reflects
better results for automotive finishes and higher sales volume for engineering
polymers.
OUTLOOK
Polymers is well positioned for global growth in selected markets. Cost-
reduction initiatives and strategic alignments already undertaken further
enhance our prospects for profitable growth in the event of global economic
resurgence. Late-year results for packaging and industrial polymers,
automotive and engineering polymers, helped by improving market conditions in
the United States, indicate the potential benefits from a more widespread
economic recovery.
- -------------------------------------------------------------------------------
petroleum
----------
. Petroleum operations are carried out through Conoco, and range
from exploring for crude oil and natural gas to marketing finished
products. The upstream business finds, develops and produces crude
oil and natural gas and processes natural gas to capture liquid
hydrocarbons, such as ethane and propane, that are sold separately at
higher value. The downstream business refines crude oil and other
feedstocks into products such as gasoline and heating oil, and
markets finished products to customers, primarily in the United
States and Europe. Downstream also produces intermediates used as
petrochemical feedstocks and specialty products such as petroleum
coke and lubricating oils used in commercial and industrial
applications.
24
<PAGE>
===================================
Sales
-----------------------------------
($ in billions)
1991 1992 1993
15.9 16.1 15.8
ATOI
-----------------------------------
($ in millions)
1991 1992 1993
814 337 812
-----------------------------------
Conoco's strategies are to grow core upstream producing areas in North America
and the North Sea and core downstream operations in the United States and
Western Europe; create new core businesses in selected areas of high value and
growth potential; and continuously rationalize the asset base, optimizing
the portfolio and reducing costs.
In upstream, these strategies have significantly affected the portfolio
in the past two years. In 1991, we had 476 producing fields in North America.
Today, we have 60 percent fewer fields, but we have retained essentially all
of the original production volume. The largest portfolio transaction in 1993
was the trade of Conoco's Milne Point Field in Alaska and some deepwater Gulf
of Mexico acreage for an interest in British Petroleum's Amberjack Field in
the Gulf of Mexico.
We also increased our equity interest in Dubai, the Kotter and Logger
fields in the Netherlands, and the Britannia Field in the United Kingdom,
while disposing of interests in Australia and France. All these steps were
taken to improve our portfolio of assets for healthier businesses and improved
profitability.
In exploration, we made seven promising discoveries and drilled 32
successful reservoir evaluation wells. Our two most significant discoveries
were in the United States. Excluding the impact of purchases and sales of
reserves in place, we replaced more than 100 percent of our production last
year, in part reflecting the addition of reserves for the Britannia Field in
the U.K. North Sea. Overall, including the effect of purchases and sales to
restructure our portfolio, and including reserves of equity affiliates,
worldwide oil and gas reserves increased slightly last year, while our cost
structure improved significantly.
Production has begun from three new fields in the U.K. North Sea core
area -- Lyell, Murdoch and Alba. Lyell and Murdoch are good examples of how new
technology and partnering are being applied to reduce development costs.
Design work continues on the development of the Britannia Field in the North
Sea, and the Heidrun project in Norway is on schedule to produce first oil in
1995.
In Indonesia, the Belida project is ahead of schedule, under budget and
producing oil at a considerably higher rate than anticipated. Significant
progress is being made in Russia on the Ardalin Field development. In
addition, Conoco and our Russian partner, Arkhangelskgeologia, have recently
signed an agreement for the evaluation of a new oil development project north
of Ardalin.
We continue to have high hopes that Nigeria can become a new core area. We
were awarded a deepwater block during the year, and recently completed a
seismic survey over the area.
In the United States, we continue to pursue strategic growth in natural gas
processing, a very profitable business. Natural gas liquids production
increased by 13 percent over 1992.
Our U.S. downstream network is seeing good results from consolidation into
three regional units -- Rocky Mountain, Mid-Continent and Gulf Coast. The Rocky
Mountain unit in particular posted improved results, reflecting success in
reducing costs and capturing market opportunities.
During 1994, the major challenge for the Gulf Coast regional business
unit is to prepare for the changing market conditions that will result from
the transition to cleaner, reformulated gasoline next January, under federal
clean air legislation. The Lake Charles refinery can manufacture reformulated
gasoline with lower new capital investment than the industry as a whole.
In European downstream, our German affiliate had its best-ever earnings
year, reflecting higher earnings from the Karlsruhe refinery, a major
acquisition of retail stations, and continued expansion in eastern Germany. We
are making substantial progress in expanding our marketing network elsewhere
in Europe and began retail marketing in Norway and Finland. In Eastern Europe,
our strategy couples
25
<PAGE>
petroleum cont.
- ---------
refining and marketing opportunities, and we are moving forward with several
refinery purchase options in countries where we have already begun retail
marketing.
In Southeast Asia, we are trying to penetrate a market of high growth and
good margins. We are evaluating participation in a joint venture for
construction of a 100,000-barrel-per-day high-conversion refinery at
Petronas's new world-class facility in Melaka, Malaysia. The project would
give Conoco a 40 percent interest in the refinery's expanded section. This,
along with our new marketing network in Thailand, would establish a beachhead
that could lead to an integrated system like our system in Europe.
1993 VERSUS 1992
Sales were down 2 percent on lower crude oil prices despite higher volumes.
Earnings of $812 million were up 141 percent largely on lower costs, higher
production volumes and a lower overall effective tax rate. Overhead and
operating expenses were reduced approximately $400 million, or 12 percent,
adding more than $200 million to earnings. 1993 earnings included a net
benefit of $230 million due to tax law changes partly offset by property
dispositions and restructuring charges of $161 million. 1992 results included
restructuring charges of $96 million. Excluding these items, earnings were up
72 percent to $743 million compared with $433 million in the prior year.
Upstream earnings were $509 million, up $310 million or 156 percent from
1992. After adjusting for nonrecurring items, earnings for the year were up
$194 million or 79 percent on lower costs, higher international crude oil and
worldwide natural gas volumes, and higher U.S. natural gas prices. Lower crude
oil prices and higher production-related depreciation partly offset the
improvement.
Worldwide petroleum liquids production from Conoco's leases averaged
367,000 barrels per day, up 10 percent from 1992. The average realized selling
price for crude oil was $14.66 per barrel in the United States and $16.50 per
barrel outside the United States, down 16 percent and 11 percent,
respectively. Worldwide natural gas deliveries for consolidated and equity
affiliate operations of 1,311 million cubic feet per day were up 11 percent.
The average price for natural gas in the United States was $1.94 per thousand
cubic feet, up 14 percent. Outside the United States, the average natural gas
price was up 3 percent to $2.62 per thousand cubic feet.
Downstream earnings were $303 million, up 120 percent from $138 million in
1992. After adjusting for nonrecurring items, full-year earnings of $302
million were up $116 million or 62 percent reflecting lower costs and higher
refined product margins. Feedstocks processed at the company's refineries
increased 2 percent in 1993 to 674,000 barrels per day. Worldwide product
sales of 876,000 barrels per day were up 4 percent from the prior year.
1992 VERSUS 1991
Sales were up slightly from 1991, while earnings were down 59 percent on lower
worldwide crude oil prices and refined product margins. 1992 operating income
included charges of $96 million for restructuring and $47 million for
accounting changes, while 1991 included a charge of $40 million for
nonrecurring items. Excluding accounting changes and other nonrecurring items,
earnings of $480 million were down 44 percent.
OUTLOOK
With energy market conditions likely to remain soft for the near term, the
focus for ongoing improvement in financial performance will continue to be on
managing costs and restructuring assets, and identifying investment
opportunities consistent with this market outlook.
26
<PAGE>
- -------------------------------------------------------------------------------
diversified businesses
---------
. Diversified Businesses are characterized by broad opportunities
for future growth and the promise of increased profitability, with
the shared advantage of DuPont research and development. Under an
initiative begun last year, these businesses are grouped into
strategic business units (see chart inside front cover*).
AGRICULTURAL PRODUCTS
Agricultural Products had an excellent sales year, despite a depressed
European agricultural market and floods in the U.S. Midwest. We strengthened
our position as one of the world's largest producers of crop protection
chemicals, with continued growth in the United States, Canada, Australia,
Japan and parts of Europe and South America. During the year, we introduced
our "Synchrony STS" system in the U.S Midwest; this system links the new
postemergence sulfonylurea herbicide "Synchrony" with specific varieties of a
soybean seed to maximize weed control. We also introduced a new sugarbeet
herbicide in Europe, continuing our strategy of introducing high-value new
products for specific applications.
ELECTRONIC MATERIALS
Electronics' performance improved as a result of earlier business realignments
and initiatives to reduce cost. Divestiture of the electronic connectors
business was completed in the first quarter of 1993. Microcircuit and
semiconductor materials recorded increases in sales and market share, which
were offset by declines in sales of cleaning agents based on
chlorofluorocarbons. The newly acquired Philips photomask operation in Germany
is running smoothly, consolidating our position as a leading supplier of
photomasks to semiconductor manufacturers in the Americas and Europe. A new
joint venture in China for microcircuit materials increases our opportunities
in this rapidly growing market.
PRINTING AND PUBLISHING
The printing and publishing businesses continued to improve through
restructuring and reductions in fixed costs. A graphic arts film coater in Neu
Isenberg, Germany, was started up and all worldwide coating operations will be
consolidated at that facility in 1994. Products introduced included new
Crosfield workstations for electronic imaging, the DuPont "HyperColor" system
for high-fidelity color, and the DuPont "Digital Proofing System".
MEDICAL PRODUCTS
Medical Products focused on programs to maximize sales in a soft worldwide
health care market, while continuing to reduce costs. We expanded our share
among hospital groups with the signing of a single-source, multi-year contract
with Columbia/HCA Health Care Corporation.
===================================
Sales
-----------------------------------
($ in billions)
1991 1992 1993
7.7 6.2 5.7
ATOI
-----------------------------------
($ in millions)
1991 1992 1993
107 (49) (407)
* This chart is not incorporated by reference in this Report.
27
<PAGE>
diversified businesses cont.
---------
Product introductions included the new "LINX" laser printer for diagnostic
imaging, new tests for the "aca" and "Dimension" blood chemistry analyzers,
new centrifuges and a variety of detection products for life science research.
The DuPont Merck Pharmaceutical Company, of which DuPont owns 50 percent, had
another year of significant sales and earnings growth with revenue exceeding
$1 billion for the first time.
CONSOL
CONSOL Energy Inc., a coal operations joint venture owned 50 percent by
DuPont, experienced strikes against its unionized operations for much of 1993.
However, a new five-year contract was negotiated with the United Mine Workers
of America in December that gave the company additional operating flexibility
at union-represented mines. In July, CONSOL acquired Island Creek Coal Inc.,
including eight mining complexes with expected production of 10 to 12 million
tons per year.
1993 VERSUS 1992
Sales decreased 7 percent due to lower volume reflecting the absence of sales
from the divested connector systems business. Selling prices were 2 percent
lower, as higher prices in the United States were more than offset by lower
prices elsewhere, reflecting the stronger dollar.
The segment had a loss of $407 million in 1993 as compared to a loss of
$49 million the prior year. This results from increased net nonrecurring
charges, principally higher restructuring costs, partly offset by a gain on
the sale of Remington Arms Company. Restructuring included $448 million for
asset write-downs, primarily after-tax charges for restructuring plant
operations and write-offs of intangibles in printing and publishing. In
addition, a $126 million charge was taken for product liability claims and
legal expenses, related to the "Benlate" DF 50 fungicide recall. Excluding
nonrecurring items and coal results from both years, earnings were up 146
percent. The increase is attributable to increased earnings from crop
protection chemicals and films, and substantially lower costs in printing and
publishing.
1992 VERSUS 1991
Sales decreased 20 percent reflecting the absence of coal business revenues in
1992 which became part of a joint venture accounted for under the equity
method. Earnings declined from $107 million in 1991 to a loss of $49 million
in 1992. Excluding a $65 million 1992 charge for accounting changes and
nonrecurring items, earnings were $241 million, up 22 percent, principally
reflecting cost reductions in printing and publishing and higher medical
products earnings.
OUTLOOK
Diversified Businesses serves a wide range of industries, with various
opportunities and challenges. One example is health care reform in the United
States. We are considering the challenges and opportunities this may present.
Steps have been taken to improve the profitability of the businesses in this
group, through restructuring, realignment and cost reduction.
28
<PAGE>
FINANCIAL INFORMATION
30 Management's Discussion and Analysis
35 Responsibilities for Financial Reporting
36 Report of Independent Accountants
Financial Statements:
37 Consolidated Income Statement
38 Consolidated Balance Sheet
39 Consolidated Statement of Stockholders' Equity
40 Consolidated Statement of Cash Flows
41 Notes to Financial Statements
58 Supplemental Petroleum Data
64 Quarterly Financial Data
64 Consolidated Geographic Data
65 Five-Year Financial Review
29
<PAGE>
Management's Discussion and Analysis
This review and discussion of financial performance should be read in
conjunction with the letter to stockholders (pages 2-7), business reviews
(pages 20-28) and the consolidated financial statements (pages 37-57).
ANALYSIS OF OPERATIONS
Events of Note
. In the first quarter the company sold its worldwide connector systems
business to Hicks, Muse and Company, as part of its strategy for divestiture
of non-core businesses. Proceeds were about $270 million, with negligible
impact on earnings.
. At mid-year, DuPont and Imperial Chemical Industries Ltd. (ICI) completed
transactions in which DuPont acquired for about $475 million ICI's worldwide
fibers business and ICI acquired for $280 million DuPont's acrylics business,
excluding "Corian". The purchase strengthens the company's nylon market
position, particularly in Europe, where most of ICI's business was based. The
acrylics sale had minimal earnings impact.
. In the third quarter, the company announced additional restructurings and
recorded after-tax charges of $1.3 billion, principally for asset write-offs,
the most significant of which were for goodwill, technology and
rationalization of excess capacity in the printing and publishing businesses.
. In the fourth quarter, the company completed sales of the Remington Arms
Company and DuPont Canada's "Sclair" polyethylene business. A net after-tax
gain of $52 million was recorded. Proceeds of $300 million from the Remington
sale were used primarily to retire debt.
. Also in the fourth quarter, the company took an additional $126 million
after-tax charge in connection with the "Benlate" DF 50 fungicide recall. This
additional accrual for "Benlate" DF 50 updates the estimate of costs based on
recent experience of court trials, review of case histories and rate of
spending on litigation. Adverse changes in estimates for these costs could
result in additional future charges.
Restructuring
During 1993, the company announced a number of steps for strategic
restructuring, primarily for improving competitiveness in global markets, but
also to streamline internal organizations and eliminate large business sectors
in favor of smaller, strategic business units. Restructuring charges of $1,295
million, after taxes, were taken in the third quarter. These include $375
million for employee separation costs related to the elimination of about
9,000 positions worldwide. Other charges were for write-offs, principally of
goodwill and technology arising from printing and publishing acquisitions in
the late 1980's, various facilities shutdowns and asset write-downs. The
latter included write-downs for certain North American petroleum-producing
properties sold in the fourth quarter, polymer production lines in LaPorte,
Texas, nylon textile production lines in Martinsville, Virginia, and polyester
filament production lines in Cooper River, South Carolina. It is estimated
that 1994 earnings will reflect more than $300 million of after-tax cost
savings related to this restructuring.
Sales
Sales in 1993 were $37.1 billion, down 2 percent from 1992. Sales in the
Petroleum segment and the combination of all other segments were both about 2
percent below 1992. Lower sales were principally due to lower prices, partly
offset by higher volumes. The sales decline for the combined Chemicals,
Fibers, Polymers, and Diversified Businesses segments reflects 4 percent lower
sales outside of the United States, largely due to adverse exchange effects
from a stronger dollar, partly offset by higher volume. After adjusting for
the divestiture of the connector systems business, U.S. sales were up 1
percent, reflecting slightly higher volume and prices. Fibers had increased
sales resulting from the acquisition of ICI's nylon business, and Polymers had
increased sales to the U.S. automotive industry.
Sales in 1992 were $37.8 billion, 2 percent below 1991, principally
reflecting the absence of sales from the coal business, which has been
accounted for under the equity method since the beginning of 1992. After
adjusting for the coal business, sales were up 2 percent, principally
reflecting higher volumes worldwide. Currency exchange rates had no
significant effect on the change in sales.
30 DUPONT
<PAGE>
Management's Discussion and Analysis
Earnings
Net income in 1993 was $555 million or $.81 per share, compared with a loss in
1992 of $3,927 million, or $(5.85) per share. Results in 1993 include higher
restructuring charges, partly offset by reductions in cost of goods sold;
selling, general and administrative expenses; interest; and other expenses.
1993 results also reflect a lower effective tax rate in Petroleum operations
and a net benefit of $265 million resulting from tax law changes, primarily in
the United Kingdom. Excluding the 1993 tax benefit, nonrecurring and
extraordinary items from both years, and one-time charges in 1992 for adoption
of new accounting standards, 1993 earnings were $1,677 million, or $2.46 per
share, 25 percent higher than the $1,341 million, or $1.98 per share, earned
in 1992. This improvement reflects higher Petroleum segment earnings,
resulting principally from lower costs and increased production outside of the
United States. Excluding the coal business that was adversely affected by
United Mine Workers strikes for most of the year, combined earnings from
segments other than Petroleum also improved, primarily due to cost reductions.
1992 net income* was $975 million, compared to $1,403 million in 1991.
Excluding nonrecurring charges and the after-tax effect of accounting changes
on 1992 earnings, 1992 earnings were $1,698 million, down 2 percent from 1991.
Improvements in the Polymers and Diversified Businesses segments were offset
by lower earnings for Petroleum.
Taxes
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
($ in millions)
Income tax expense $ 392 $ 836 $ 1,415
Effective income tax rate (EITR) 40.9% 46.2% 50.2%
</TABLE>
==============================================================================
Over the last three years, the company's EITR exceeded the U.S. statutory
rate of 35% in 1993, and 34% in 1992 and 1991, principally because of the
higher tax rates associated with petroleum production operations outside the
United States. The 1993 EITR decreased about 5 percentage points from the
prior year, principally reflecting a lower effective tax rate in Petroleum
operations and the $265 million tax benefit described above, partly offset by
an increased proportion of higher-taxed Petroleum earnings. The decrease in
the 1992 EITR, versus 1991, reflected a lower proportion of higher-taxed
Petroleum earnings due to a reduced level of earnings in that segment, partly
offset by an increase in the EITR from adoption of SFAS No. 109.
The company paid total taxes of $6.4 billion in 1993, compared to $6.6
billion in 1992 and $6.4 billion in 1991. 1993 total tax payments were lower
than 1992 reflecting lower taxes on income. Tax payments in 1992 were more
than 1991, reflecting higher import duties and energy taxes outside the United
States, partly offset by lower income tax payments.
CASH FLOWS AND FINANCIAL CONDITION
During the past three years, cash provided by operations was the primary
source of funding for the company's capital investment programs and dividends.
Cash provided by operations in 1993 totaled $5.4 billion, $1.0 billion
higher than 1992. This principally reflects higher net income, excluding
restructuring charges, and lower working capital. The 1993 third-quarter
restructuring charge of $1.3 billion after taxes had minimal impact on cash
provided by operations in 1993. Cash provided by operations in 1992 totaled
$4.4 billion, down $1.1 billion from 1991, principally reflecting lower net
income and a smaller benefit from working capital reductions.
Capital expenditures of $3.7 billion in 1993, including expenditures for
investments in affiliates, were $800 million, or 18 percent, below last year.
Capital expenditures in 1992 were 14 percent lower than the 1991 level. The
Petroleum segment accounted for 45 percent of total capital expenditures in
1993, up from 40 percent of the total in 1992, reflecting a proportionately
higher curtailment of expenditures in segments other than Petroleum. The most
significant Petroleum expenditures were for development of the Heidrun Field
in Norway, the Murdoch and Alba North fields in the United Kingdom and the
Belida field in Indonesia. For other segments, capital spending in 1993
continued to concentrate on strengthening and growing strategic businesses
outside of the United States. This includes projects for "Adi-Pure" adipic
acid and "Lycra" spandex in Singapore, "Ti-Pure" titanium dioxide in Taiwan,
and "Nomex" aramid fibers and THF/"Terathane" polyether glycols in Spain. In
the United States, significant expenditures were also made for
commercialization of CFC alternatives and for modernization of "Dacron"
polyester facilities. Improvement projects mainly concentrated on enhancing
the efficiency and yields of existing refineries, including desulfurization of
gasoline and diesel fuels, upgrading petroleum retail marketing networks, and
X-ray film manufacturing.
Capital expenditures for 1994 are estimated at $3.4 billion.
- -------------------------------------------------------------------------------
*Before extraordinary item and transition effect of accounting changes.
31 DUPONT
<PAGE>
Management's Discussion and Analysis
===============================================================================
<TABLE>
<CAPTION>
Capital Expenditures by Industry Segment ($ in billions)
-----------------------------------------------------------------------
1991 1992 1993
-----------------------------------------------------------------------
<S> <C> <C> <C>
Chemicals .5 .4 .3
Fibers .8 .9 .8
Polymers .6 .6 .4
Petroleum 2.3 1.8 1.7
Diversified Businesses .7 .6 .3
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
Dividends and Cash Provided by Operations ($ in billions)
- -------------------------------------------------------------------------------
1991 1992 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividends 1.1 1.2 1.2
Cash Provided by 5.5 4.4 5.4
Operations
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
Total Capitalization at Year End
($ in billions)
- -------------------------------------------------------------------------------
1991 1992 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Capitalization 25.2 22.9 20.7
Total Debt 33% 48% 45%
Stockholders' Equity 67% 52% 55%
===============================================================================
</TABLE>
Proceeds from sales of assets were about $1.2 billion in 1993, versus
about $180 million in 1992 and $1.4 billion in 1991. 1993 proceeds primarily
reflected the sales of connector systems, acrylics, the Remington Arms Company
and petroleum properties. 1991 included $570 million for the sale of an
interest in the coal business.
Dividends per share of common stock in 1993 were $1.76, compared with
$1.74 in 1992 and $1.68 in 1991. The regular quarterly dividend remained at
$.44 per share. Dividends were last increased in the second quarter of 1992
from $.42 per share. The common stock dividend payout, in relation to cash
provided by operations, was 22 percent, as compared to a 27 percent payout in
1992 and 21 percent in 1991.
Borrowings at year-end 1993 were $9.3 billion, compared to $10.9 billion
and $8.2 billion in 1992 and 1991, respectively. The $1.6 billion decrease in
borrowings in 1993 reflects improved cash flow and a $434 million decrease in
cash and cash equivalents. The cash flow improvement results from lower costs,
excluding noncash restructuring charges, increased proceeds from sales of non-
strategic businesses and significantly lower capital expenditures. The year-
end 1993 debt ratio* was 45 percent, as compared to 48 percent in 1992,
reflecting the lower level of borrowings, partly offset by a reduction in
stockholders' equity due to lower net income, resulting from restructuring.
Working capital investment (excluding cash and cash equivalents, short-
term borrowings and capital lease obligations) decreased $1.1 billion in 1993,
reflecting lower inventories and accounts receivable, and higher current
liabilities, principally due to the third-quarter restructuring charges. In
1992, working capital investment declined about $600 million, reflecting lower
accounts receivable and higher accounts payable and other accrued liabilities.
The ratio of current assets to current liabilities, including cash and
cash equivalents, short-term borrowings and capital lease obligations, at year-
end 1993 was 1.2:1, as compared to 1.2:1 in 1992 and 1.4:1 in 1991.
* Total short- and long-term borrowings and capital lease obligations divided
by the sum of these amounts plus stockholders' equity and minority interests
in consolidated subsidiaries.
32 DUPONT
<PAGE>
Management's Discussion and Analysis
ENVIRONMENTAL MATTERS
Recognizing that some risk to the environment is associated with the company's
operations, as it is with other companies engaged in similar businesses, the
company is committed to protecting the environment and has a program to reduce
emissions and generation of hazardous waste. The company complies worldwide
with government regulations relating to the protection of the environment.
Expenditures to comply with these increasingly stringent environmental laws
and regulations could be significant over the next ten to twenty years but are
not expected to have a material impact on the company's competitive or
financial position. If new laws and regulations containing more stringent
requirements are enacted, expenditures may be higher than the assessments of
potential environmental costs provided below.
New waste treatment facilities and pollution control and other equipment
are being installed to satisfy legal requirements and to make progress in
achieving the company's waste elimination and prevention goals. About $500
million was spent for capital projects related to environmental requirements
and company goals in 1993. The company currently forecasts expenditures for
environmental-related capital projects totaling about $500 million in 1994.
These amounts may increase in future years. The company anticipates
significant capital expenditures may be required over the next decade for
treatment, storage, and disposal facilities for solid and hazardous waste. In
addition, compliance costs under the 1990 Clean Air Act Amendments are
expected to be significant. Environmental capital expenditures in 1992 and
1993 included expenditures in the Petroleum segment to meet federal
requirements related to reformulated gasoline/clean fuels. Additional
environmental capital expenditures are anticipated for plant air emission
controls, primarily in the Chemicals and Petroleum segments; however,
considerable uncertainty will remain with regard to estimates of capital
expenditures until regulatory requirements are known.
Estimated pretax environmental expenses charged to current operations,
including the remediation accruals discussed below, totaled about $1 billion
in 1993, as compared to $900 million in 1992 and 1991. These expenses include
operating, maintenance, and depreciation costs for solid waste treatment,
storage and disposal facilities and for air and water pollution control
facilities; costs incurred in conducting environmental research activities;
and other matters. The largest of these expenses results from the operation of
water pollution control facilities (related to compliance with the Clean Water
Act) and the operation of solid waste management facilities, each of which
accounts for about one quarter of the total. More than 80 percent of total
annual expenses relate to the company's Chemicals, Fibers, Polymers, and
Diversified Businesses segments in the United States, primarily the Chemicals
and Polymers segments. Expenses may increase over the next several years as a
result of additional operating expenses associated with expected new pollution
prevention and control equipment.
The company accrues for certain environmental remediation activities
relating to past operations, including those under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA, often referred
to as Superfund) and the Resource Conservation and Recovery Act (RCRA)
described below, when it is probable that a liability has been incurred and
reasonable estimates can be made. Accrued liabilities are exclusive of claims
against third parties and are not discounted. During 1993, the company accrued
$183 million for environmental remediation activities, compared to $160
million and $130 million in 1992 and 1991, respectively. At December 31, 1993,
the company's balance sheet included an accrued liability of $522 million as
compared to $465 million and $426 million at year-end 1992 and 1991,
respectively. Expenditures for such previously accrued remediation activities
were $126 million in 1993, $121 million in 1992 and $91 million in 1991.
33 Dupont
<PAGE>
Management's Discussion and Analysis
The company's assessment of the potential impact of the two principal
remediation statutes, RCRA and CERCLA, follows below. The assessment is
subject to considerable uncertainty due to the complex, ongoing and evolving
process of generating estimates of remediation costs. The various stages of
remediation include initial broad-based analysis of a site, on-site
investigation (including soil and ground water analyses), feasibility studies
(comparing and selecting from among various remediation methods and
technologies), approval by applicable authorities, and finally the actual
implementation of the remediation plan. This process is affected by the
ongoing development of new remediation technologies and regulations and occurs
over a relatively long period of time. The company's assessment takes into
account the stage of the process each site is in at the time of assessment,
the degree of uncertainty surrounding estimates for each phase of remediation,
and other factors affecting a specific site.
RCRA, as amended in 1984, provides for extensive regulation of the
treatment, storage and disposal of hazardous waste. Included in these
regulations are bans on the land disposal of certain hazardous wastes and
requirements for correcting contamination from past practices at operating
sites subject to RCRA. The company anticipates significant additional
expenditures may be required over the next two decades. Annual expenditures
for RCRA corrective actions near term are not expected to vary significantly
from the range of such expenditures over the past few years. Longer term,
expenditures are subject to considerable uncertainty and may fluctuate
significantly (perhaps between $50 million and $300 million in any one year),
as a result of: the developing nature of administrative regulations; how the
laws and regulations may be applied to sites; and multiple choices and costs
associated with diverse technologies that may be used in corrective actions.
The company is actively pursuing claims against insurers with respect to RCRA
liabilities.
The company from time to time receives notices from the Environmental
Protection Agency (EPA) and state environmental agencies that the company is a
"potentially responsible party" (PRP) under CERCLA and equivalent state
legislation. These notices assert potential liability for remediation costs of
various waste treatment or disposal sites that are not company-owned and
allegedly contain wastes attributable to the company from past operations. The
company may incur significant costs, which could exceed $150 million in the
aggregate over the next decade with respect to these sites. The company's
share of the remediation cost at these sites in many instances cannot be
accurately predicted due to the large number of PRPs involved; the scarcity of
reliable data pertaining to many of these sites; uncertainty as to how the
laws and regulations may be applied to these sites; and multiple choices and
costs associated with diverse technologies that may be used in remediation.
For most sites, the company's potential liability will be significantly less
than the total site remediation costs because the percentage of material
attributable to the company versus that attributable to other PRPs is
relatively low and the other PRPs have the financial strength to meet their
obligations. The company is actively pursuing claims against insurers with
respect to CERCLA liabilities.
Although future remediation expenditures in excess of current reserves
could be significant, the effect on future financial results is not subject to
reasonable estimation because considerable uncertainty exists, principally
from evolving requirements and their effects on individual sites, selection of
technology to meet compliance standards and the cost and timing of
expenditures. These expenditures in the aggregate, however, are not expected
to have a material impact on the company's competitive or financial position.
34 DUPONT
<PAGE>
Responsibilities for Financial Reporting
Management is responsible for the consolidated financial statements and the
other financial information contained in this Annual Report. The financial
statements have been prepared in accordance with generally accepted accounting
principles considered by management to present fairly the company's financial
position, results of operations and cash flows. The financial statements
include some amounts that are based on management's best estimates and
judgments.
The company's system of internal controls is designed to provide
reasonable assurance as to the protection of assets against loss from
unauthorized use or disposition, and the reliability of financial records for
preparing financial statements and maintaining accountability for assets. The
company's business ethics policy is the cornerstone of our internal control
system. This policy sets forth management's commitment to conduct business
worldwide with the highest ethical standards. The business ethics policy also
requires that the documents supporting all transactions clearly describe their
true nature and that all transactions be properly reported and classified in
the financial records. The system is monitored by an extensive program of
internal audit, and management believes that the system of internal accounting
controls at December 31, 1993 meets the objectives noted above.
The financial statements have been audited by the company's independent
accountants, Price Waterhouse. The purpose of their audit is to independently
affirm the fairness of management's reporting of financial position, results
of operations and cash flows. To express the opinion set forth in their
report, they study and evaluate the internal accounting controls to the extent
they deem necessary. Their report is shown on page 36. The adequacy of the
company's internal accounting controls and the accounting principles employed
in financial reporting are under the general oversight of the Audit Committee
of the Board of Directors. This Committee also has responsibility for
employing the independent accountants, subject to stockholder ratification. No
member of this Committee may be an officer or employee of the company or any
subsidiary or affiliated company. The independent accountants and the internal
auditors have direct access to the Audit Committee, and they meet with the
Committee from time to time, with and without management present, to discuss
accounting, auditing and financial reporting matters.
/s/ Edgar S. Woolard, Jr. /s/ Charles L. Henry
Edgar S. Woolard, Jr. Charles L. Henry
Chairman of the Board Senior Vice President
and Chief Executive Officer DuPont Finance
and Chief Financial Officer
35 DUPONT
<PAGE>
Report of Independent Accountants
To the Stockholders and the Board of Directors of
E. I. du Pont de Nemours and Company
In our opinion, the consolidated financial statements appearing on pages 37
through 57 of this Annual Report present fairly, in all material respects, the
financial position of E. I. du Pont de Nemours and Company and its
subsidiaries at December 31,1993 and 1992, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1993, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, the
company changed its method of accounting for postretirement benefits other
than pensions and for income taxes in 1992.
/s/ Price Waterhouse
Price Waterhouse
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
February 17, 1994
36 DUPONT
<PAGE>
Financial Statements
E.I. du Pont de Nemours and Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED INCOME STATEMENT DOLLARS IN MILLIONS, EXCEPT PER SHARE
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales* $ 37,098 $ 37,799 $ 38,695
Other Income (Note 2) 743 553 828
----------------------------------------------------
Total 37,841 38,352 39,523
----------------------------------------------------
Cost of Goods Sold and Other Operating Charges (Notes 3 and 13) 21,396 21,856 22,528
Selling, General and Administrative Expenses 3,309 3,743 3,576
Depreciation, Depletion and Amortization 2,833 2,655 2,640
Exploration Expenses, Including Dry Hole Costs
and Impairment of Unproved Properties 361 416 602
Research and Development Expense 1,132 1,277 1,298
Interest and Debt Expense (Note 4) 594 643 752
Taxes Other Than on Income* (Note 5) 5,423 5,476 4,872
Gain from Sale of an Interest in Coal Business (Note 6) -- -- (391)
Restructuring Charges (Note 7) 1,835 475 828
----------------------------------------------------
Total 36,883 36,541 36,705
----------------------------------------------------
Earnings Before Income Taxes 958 1,811 2,818
Provision for Income Taxes (Note 8) 392 836 1,415
----------------------------------------------------
Income Before Extraordinary Item and Transition Effect
of Accounting Changes 566 975 1,403
Extraordinary Charge from Early Extinguishment of Debt (Note 9) (11) (69) --
Transition Effect of Changes in Accounting Principles (Notes 1, 8, and 26) -- (4,833) --
----------------------------------------------------
Net Income (Loss) $ 555 $ (3,927) $ 1,403
===================================================================================================================================
Earnings Per Share of Common Stock (Note 10)
Income Before Extraordinary Item and Transition Effect
of Accounting Changes $ .83 $ 1.43 $ 2.08
Extraordinary Charge from Early Extinguishment of Debt (Note 9) (.02) (.10) --
Transition Effect of Changes in Accounting Principles (Notes 1, 8, and 26) -- (7.18) --
----------------------------------------------------
Net Income (Loss) $ .81 $ (5.85) $ 2.08
===================================================================================================================================
</TABLE>
* Includes petroleum excise taxes of $4,477, $4,508, and $3,867 in 1993, 1992,
and 1991, respectively.
See pages 41-57 for Notes to Financial Statements.
37 Dupont
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET DOLLARS IN MILLIONS, EXCEPT PER SHARE
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
December 31 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and Cash Equivalents (Note 11) $ 1,240 $ 1,674
Accounts and Notes Receivable (Note 12) 4,848 5,238
Inventories (Note 13) 3,818 4,401
Prepaid Expenses 231 345
Deferred Income Taxes (Note 8) 762 570
-----------------------------------------
Total Current Assets 10,899 12,228
-----------------------------------------
Property, Plant and Equipment (Note 14) 47,926 47,235
Less: Accumulated Depreciation, Depletion and Amortization 26,503 25,353
-----------------------------------------
21,423 21,882
-----------------------------------------
Investment in Affiliates (Note 15) 1,607 1,746
Other Assets (Notes 8 and 16) 3,124 3,014
-----------------------------------------
Total $37,053 $38,870
===================================================================================================================================
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable (Note 17) $ 2,444 $ 2,771
Short-Term Borrowings and Capital Lease Obligations (Note 18) 2,796 3,799
Income Taxes (Note 8) 321 189
Other Accrued Liabilities (Note 19) 3,878 3,467
-----------------------------------------
Total Current Liabilities 9,439 10,226
Long-Term Borrowings and Capital Lease Obligations (Notes 20 and 21) 6,531 7,193
Other Liabilities (Note 22) 8,200 7,707
Deferred Income Taxes (Note 8) 1,466 1,802
-----------------------------------------
Total Liabilities 25,636 26,928
-----------------------------------------
Minority Interests in Consolidated Subsidiaries 187 177
-----------------------------------------
Stockholders' Equity (See page 39)
Preferred Stock 237 237
Common Stock, $.60 par value; 900,000,000 shares authorized;
issued at December 31: 1993--677,577,437; 1992--675,008,236 407 405
Additional Paid-In Capital 4,660 4,551
Reinvested Earnings 5,926 6,572
-----------------------------------------
Total Stockholders' Equity 11,230 11,765
-----------------------------------------
Total $37,053 $38,870
===================================================================================================================================
</TABLE>
See pages 41-57 for Notes to Financial Statements.
38 DUPONT
<PAGE>
- -------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF DOLLARS IN MILLIONS, EXCEPT PER SHARE
STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Preferred Stock, without par value-cumulative
23,000,000 shares authorized; issued at December 31:
$4.50 Series -- 1,672,594 shares (callable at $120) $ 167 $ 167 $ 167
$3.50 Series -- 700,000 shares (callable at $102) 70 70 70
----------------------------------------------------
237 237 237
----------------------------------------------------
Common Stock (Notes 23 and 24), $.60 par value;
900,000,000 shares authorized; issued at December 31:
1993 -- 677,577,437; 1992 -- 675,008,236; 1991 -- 671,242,137 407 405 403
----------------------------------------------------
Additional Paid-In Capital (Notes 23 and 24)
Balance at Beginning of Year 4,551 4,418 4,342
Common Stock:
Issued in Connection with Compensation and Benefit Plans 109 133 81
Repurchased and Retired -- -- (5)
----------------------------------------------------
Balance at End of Year 4,660 4,551 4,418
----------------------------------------------------
Reinvested Earnings (Note 23)
Balance at Beginning of Year 6,572 11,681 11,437
Net Income (Loss) 555 (3,927) 1,403
----------------------------------------------------
7,127 7,754 12,840
- -----------------------------------------------------------------------------------------------------------------------------------
Preferred Dividends (10) (10) (10)
Common Dividends (1993 -- $1.76; 1992 -- $1.74; 1991 -- $1.68) (1,191) (1,172) (1,127)
----------------------------------------------------
Total Dividends (1,201) (1,182) (1,137)
----------------------------------------------------
Common Stock Repurchased and Retired -- -- (22)
----------------------------------------------------
Balance at End of Year 5,926 6,572 11,681
----------------------------------------------------
Total Stockholders' Equity $11,230 $11,765 $16,739
===================================================================================================================================
</TABLE>
See pages 41-57 for Notes to Financial Statements.
39 DUPONT
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS DOLLARS IN MILLIONS
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and Cash Equivalents at Beginning of Year $ 1,674 $ 468 $ 611
--------------------------------------------
Cash Provided by Operations
Net Income (Loss) 555 (3,927) 1,403
Adjustments to Reconcile Net Income to Cash Provided by Operations:
Extraordinary Charge from Early Extinguishment of Debt (Note 9) 11 69 --
Transition Effect of Accounting Changes (Notes 1, 8 and 26) -- 4,833 --
Depreciation, Depletion and Amortization 2,833 2,655 2,640
Dry Hole Costs and Impairment of Unproved Properties 201 185 311
Other Noncash Charges and Credits--Net (Note 7) 843 (174) (546)
Decrease in Operating Assets:
Accounts and Notes Receivable 103 104 380
Inventories and Other Operating Assets 664 219 740
Increase (Decrease) in Operating Liabilities:
Accounts Payable and Other Operating Liabilities 686 907 823
Accrued Interest and Income Taxes (Notes 4 and 8) (516) (483) (290)
--------------------------------------------
Cash Provided by Operations 5,380 4,388 5,461
--------------------------------------------
Investment Activities (Note 6)
Purchases of Property, Plant and Equipment (3,621) (4,448) (5,065)
Investments in Affiliates (70) (127) (220)
Payments for Businesses Acquired (409) -- --
Proceeds from Sales of Assets 1,160 179 1,380
Miscellaneous--Net (41) (123) (40)
--------------------------------------------
Cash Used for Investment Activities (2,981) (4,519) (3,945)
--------------------------------------------
Financing Activities
Dividends Paid to Stockholders (1,201) (1,182) (1,137)
Net Increase (Decrease) in Short-Term Borrowings (Note 6) (2,024) 2,310 (1,301)
Long-Term and Other Borrowings (Notes 6 and 9):
Receipts 1,806 2,976 3,075
Payments (1,392) (2,711) (2,255)
Common Stock:
Issued in Connection with Compensation Plans 67 86 7
Repurchased and Retired -- -- (27)
--------------------------------------------
Cash Provided by (Used for) Financing Activities (2,744) 1,479 (1,638)
--------------------------------------------
Effect of Exchange Rate Changes on Cash (89) (142) (21)
--------------------------------------------
Cash and Cash Equivalents at End of Year $ 1,240 $ 1,674 $ 468
--------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents $ (434) $ 1,206 $ (143)
===========================================================================================================================
</TABLE>
See pages 41-57 for Notes to Financial Statements.
40 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
1. Summary of Significant Accounting Policies
DuPont observes the generally accepted accounting principles described below.
These, together with the other notes that follow, are an integral part of the
consolidated financial statements.
Accounting Changes
In 1992, DuPont adopted Statement of Financial Accounting Standards (SFAS) No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and
SFAS No. 109, "Accounting for Income Taxes." The company recorded charges to
net income of $3,788 ($5.63 per share) and $1,045 ($1.55 per share),
respectively, as of January 1, 1992 for the effects of transition to these two
new standards. See also Notes 8 and 26.
Basis of Consolidation
The accounts of wholly owned and majority-owned subsidiaries are included in the
consolidated financial statements. Investments in affiliates owned 20 percent
or more and corporate joint ventures are accounted for under the equity method.
Investments in noncorporate joint ventures of petroleum operations are
consolidated on a pro rata basis. Other securities and investments are
generally carried at cost.
Inventories
Substantially all inventories are valued at cost as determined by the last-in,
first-out (LIFO) method; in the aggregate, such valuations are not in excess of
market. Elements of cost in inventories include raw materials, direct labor and
manufacturing overhead. Stores and supplies are valued at cost or market,
whichever is lower; cost is generally determined by the average cost method.
Property, Plant and Equipment
Property, plant and equipment (PP&E) is carried at cost and, except for
petroleum PP&E, is generally classified in depreciable groups and depreciated by
accelerated methods that produce results similar to the sum-of-the-years' digits
method. Depreciation rates range from 4 percent to 12 percent per annum on
direct manufacturing facilities and from 2 percent to 10 percent per annum on
other facilities; in some instances appropriately higher or lower rates are
used. Generally, for PP&E acquired prior to 1991, the gross carrying value of
assets surrendered, retired, sold or otherwise disposed of is charged to
accumulated depreciation and any salvage or other recovery therefrom is credited
to accumulated depreciation. For disposals of PP&E acquired after 1990, the
gross carrying value and related accumulated depreciation are removed from the
accounts and included in determining gain or loss on such disposals.
Petroleum PP&E, other than that described below, is depreciated on the
straight-line method at various rates calculated to extinguish carrying values
over estimated useful lives. When petroleum PP&E is surrendered, retired, sold
or otherwise disposed of, the assets involved determine if gain or loss is
recognized, or the gross carrying value is charged to accumulated depreciation,
depletion and amortization and any salvage or other recovery therefrom is
credited to accumulated depreciation, depletion and amortization.
Maintenance and repairs are charged to operations; replacements and
betterments are capitalized.
Oil and Gas Properties
The company's exploration and production activities are accounted for under the
successful-efforts method. Costs of acquiring unproved properties are
capitalized, and impairment of those properties, which are individually
insignificant, is provided for by amortizing the cost thereof based on past
experience and the estimated holding period. Geological, geophysical and delay
rental costs are expensed as incurred. Costs of exploratory dry holes are
expensed as the wells are determined to be dry. Costs of productive properties,
production and support equipment, and development costs are capitalized and
amortized on a unit-of-production basis.
Intangible Assets
Identifiable intangible assets such as purchased patents and trademarks are
amortized on a straight-line basis over their estimated useful lives. Goodwill
is amortized over periods up to 40 years on the straight-line method.
Environmental Liabilities and Expenditures
Accruals for environmental matters are recorded in operating expenses when it is
probable that a liability has been incurred and the amount of the liability can
be reasonably estimated. Accrued liabilities are exclusive of claims against
third parties and are not discounted.
In general, costs related to environmental remediation are charged to expense.
Environmental costs are capitalized if the costs increase the value of the
property and/or mitigate or prevent contamination from future operations.
Income Taxes
The provision for income taxes for 1993 and 1992 has been determined under SFAS
No. 109, which requires use of the asset and liability approach to accounting
for income taxes. Under that approach, deferred taxes represent the future tax
consequences expected to occur when the reported amounts of assets and
liabilities are recovered or paid. The provision for income taxes represents
income taxes paid or payable for the current year plus the change in deferred
taxes during the year. Deferred taxes result from differences between the
financial and tax bases of the company's assets and liabilities and are adjusted
for changes in tax rates and tax laws
41 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
when changes are enacted. Valuation allowances are recorded to reduce deferred
tax assets when it is more likely than not that a tax benefit will not be
realized.
Prior to 1992, the provision for income taxes was determined under
Accounting Principles Board (APB) Opinion No. 11, which required use of the
deferral method. Under that method, the provision for income taxes was based
on pretax financial income, which differed from taxable income because certain
elements of income and expense were reflected in different periods for
financial accounting and tax purposes. Deferred taxes were provided on these
timing differences using the tax rate in effect when the timing difference
originated, and the effects of reversing timing differences were reflected at
those historical tax rates.
Provision has been made for income taxes on unremitted earnings of
subsidiaries and affiliates, except in cases in which these earnings are deemed
to be permanently invested. Investment tax credits or grants are accounted for
in the period earned (the flow-through method).
Foreign Currency Translation
The company has determined that the U.S. dollar is the "functional currency" of
its worldwide operations. Foreign currency asset and liability amounts are
translated into U.S. dollars at end-of-period exchange rates, except for
inventories, prepaid expenses and property, plant and equipment, which are
translated at historical rates. Income and expenses are translated at average
exchange rates in effect during the year, except for expenses related to balance
sheet amounts that are translated at historical exchange rates. The company
enters into forward exchange contracts to hedge against the adverse impact of
foreign currency fluctuations on the monetary assets and liabilities of
operations outside the United States. Exchange gains and losses, net of their
related tax effects, are included in income in the period in which they occur.
In addition, the company enters into forward exchange contracts and similar
agreements to effectively convert certain firm foreign currency commitments to
U.S. dollar-denominated transactions. Gains and losses on these specific
commitment hedges are deferred and included in the measurement of the related
foreign currency transactions.
In the Consolidated Statement of Cash Flows, the company reports the cash
flows resulting from its hedging activities in the same category as the related
item that is being hedged.
Interest Rate Swap Agreements
The company enters into interest rate swap agreements to moderate its exposure
to interest rate changes and/or to lower the overall cost of borrowings. The
differential to be paid or received is accrued as interest rates change and is
recognized in income over the life of the agreements.
Reclassifications
Certain reclassifications of prior years' data have been made to conform to 1993
classifications.
2. Other Income
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------
<S> <C> <C> <C>
Royalty income $111 $118 $120
Interest income, net of
miscellaneous interest expense 160 178 193
Equity in earnings of affiliates
(see Note 15) 121 216 18
Sales of assets 198 40 442
Miscellaneous income and
expenses-net 153 1 55
-------------------------
$743 $553 $828
====================================================================
</TABLE>
3. Fungicide Recall and Claims Provision
During 1991, the company initiated a stop-sale and recall of "Benlate" DF 50
fungicide. The company accrued $200, $212 and $343 in 1993, 1992 and 1991
respectively, for estimated costs in excess of insurance coverage. Adverse
changes in estimates for such costs could result in additional future charges.
4. Interest and Debt Expense
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------
<S> <C> <C> <C>
Interest and debt cost incurred $825 $860 $968
Less: Interest and debt cost capitalized 194 194 197
Foreign currency adjustments* 37 23 19
------------------------
$594 $643 $752
====================================================================
</TABLE>
* Represents exchange gains associated with local currency borrowings in
hyperinflationary economies. These amounts effectively offset the related
inflationary interest expense arising from currency devaluations.
Interest paid (net of amounts capitalized) was $614 in 1993, $611 in 1992 and
$712 in 1991.
42 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
5. Taxes Other Than on Income
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------
<S> <C> <C> <C>
Petroleum excise taxes
(also included in Sales):
U.S. $ 803 $ 709 $ 664
Non-U.S. 3,674 3,799 3,203
Payroll taxes 443 459 479
Property taxes 201 201 207
Import duties 151 146 136
Production and other taxes 151 162 183
------------------------------
$5,423 $5,476 $4,872
==================================================================
</TABLE>
6. Investment Activities
Payments for businesses acquired in 1993 include $380 as part of the
third-quarter acquisition of Imperial Chemical Industries P.L.C.'s worldwide
nylon business. In addition to the cash payment, a deferred payment of $93 is
reflected in Other Liabilities. Of the total purchase price, $259 and $170 were
reflected in property, plant and equipment and inventories, respectively.
Proceeds from sales of businesses in 1993 principally include $270 from the
first-quarter sale of the connector systems business, $280 from the
third-quarter sale of the acrylics business, and $300 from the fourth-quarter
sale of Remington Arms. Assets sold in connection with these sales amounted to
$656, of which $336 was property, plant and equipment with the remainder divided
about equally between inventories and other current assets.
On December 31, 1991, DuPont and subsidiaries of RWE AG of Germany
(collectively, Rheinbraun) formed a corporate joint venture owned 50% each. To
form this joint venture, DuPont sold an approximate 34% interest in its coal
business, principally Consolidation Coal Company, to Rheinbraun. Proceeds to
the company were $570. DuPont contributed the remainder of its coal business
interests to the joint venture, and the venture assumed $896 of short- and
long-term borrowings of the coal business. Rheinbraun contributed the interest
purchased from DuPont, other U.S. coal interests and $320 cash, which was used
at December 31, 1991 to pay down venture borrowings. This corporate joint
venture, CONSOL Energy Inc., is accounted for under the equity method.
7. Restructuring Charges
Restructuring charges are directly related to corporate decisions to reduce
worldwide employment levels and realign worldwide production and support
facilities in order to improve productivity and competitiveness. Charges
include write-offs of intangibles, employee separation costs, costs of shutting
down certain facilities and contract cancellation costs.
Charges of $1,835 were recorded in the third quarter of 1993. Asset
writedowns and facility shutdowns totaled $1,206 million, principally for
rationalization of excess capacity and write-offs of goodwill and technology in
the printing and publishing business and for certain North American petroleum
properties sold in the fourth quarter. Employee separation costs totaled $559,
of which approximately $190 will be paid from the company's pension trust.
Costs for miscellaneous items were $70.
In the fourth quarter of 1992, the company recorded charges of $475 for
termination incentives and payments, as well as certain other charges, related
to business restructurings.
During 1991 the company announced various cost reduction programs, primarily
in the U.S. chemicals and specialties businesses. The cost of these programs
accrued in the fourth quarter 1991 was $828. About $417 of this amount was paid
from the company's pension trust.
43 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
8. Provision for Income Taxes
Effective January 1, 1992, the company adopted SFAS No. 109, "Accounting for
Income Taxes." Information shown below for 1991 was determined under the
provisions of APB Opinion No. 11. On adoption of SFAS No. 109, the company
recorded an increase in deferred tax liabilities at January 1, 1992, and a
charge to income of $1,045, principally to provide deferred taxes for purchase
business combinations consummated prior to 1992 for which it was not practicable
to adjust all remaining assets and liabilities to pretax amounts. Total income
taxes paid worldwide were $896 in 1993, $1,213 in 1992 and $1,661 in 1991.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense:
U.S. federal $ 321 $ 34 $ 665
U.S. state and local 21 5 42
Non-U.S. 758 857 1,012
----------------------------------
Total 1,100 896 1,719
Deferred tax expense:
U.S. federal (486) (319) (549)
U.S. state and local (53) (35) (64)
Non-U.S. (198) 133 206
----------------------------------
Total (737) (221) (407)
----------------------------------
Other/1/ 29 161 103
----------------------------------
Provision for Income Taxes
(Excluding Extraordinary Item
and Transition Effect
of Accounting Change) 392 836 $ 1,415
===========
Extraordinary Item (7) (39)
Transition Effect of Change
in Accounting for Postretirement
Benefits Other Than Pensions -- (2,130)
Stockholders' Equity/2/ (20) (11)
-----------------------
Total Provision/3/ $ 365 $ (1,344)
========================================================================
</TABLE>
/1/ Represents exchange losses associated with the company's hedged non-U.S. tax
liabilities. These amounts offset the tax effect arising from related
hedging activities. The 1992 amount also includes $97 representing exchange
gains on unhedged non-U.S. deferred tax liabilities established in
conjunction with the adoption of SFAS No. 109. Excluding this item, exchange
gains and losses, net of their related tax effects, were not material in the
periods presented.
/2/ Represents tax benefit of certain stock compensation amounts that are
deductible for income tax purposes but do not affect net income.
/3/ 1993 includes a net tax benefit of $265, arising principally from U.K.
Petroleum Revenue Tax law revisions.
Deferred income taxes result from temporary differences between the financial
and tax bases of the company's assets and liabilities. Temporary differences
are determined in accordance with SFAS No. 109 commencing in 1992 and are more
inclusive than timing differences as determined under previously applicable
accounting principles. Deferred income taxes for years prior to 1992 have not
been restated. The tax effects of temporary/timing differences and tax loss/tax
credit carryforwards included in the deferred income tax provision (excluding
extraordinary item and transition effect of accounting change) are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
1993 1992 1991
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation $ (105) $ 232 $ 154
Accrued employee benefits (69) (69) (434)
Other accrued expenses (346) (67) (169)
Intangible drilling costs (68) 10 33
Inventory 109 (53) 101
Unrealized exchange losses (22) (125) (37)
Investment in subsidiaries and affiliates (4) -- --
Other temporary/timing differences 30 (55) (58)
Tax loss/tax credit carryforwards 4 (103) 3
Valuation allowance change--net 8 9 --
Tax rate changes (274) -- --
-----------------------------
$ (737) $ (221) $ (407)
=========================================================================
</TABLE>
44 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
The significant components of deferred tax assets and liabilities at December
31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
1993 1992
- ---------------------------------------------------------------------------------------
Deferred Tax Asset Liability Asset Liability
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Depreciation $ -- $ 2,808 $ 5 $ 3,111
Accrued employee benefits 2,875 651 2,763 649
Other accrued expenses 963 -- 626 --
Intangible drilling costs -- 337 -- 420
Inventory 107 330 182 317
Unrealized exhange gains/losses 85 -- 60 --
Tax loss/tax credit carryforwards 590 -- 594 --
Investment in subsidiaries
and affiliates 34 130 26 123
Other 352 878 370 829
--------------------------------------------------
Total 5,006 $ 5,134 4,626 $ 5,449
========= =========
Less : Valuation allowance (445) (437)
--------- ---------
Net $ 4,561 $ 4,189
=======================================================================================
</TABLE>
Current deferred tax liabilities (included in the Consolidated Balance Sheet
caption "Income Taxes") were $67 and $28 at December 31, 1993 and 1992,
respectively. In addition, at December 31, 1993, a $198 deferred tax asset was
included in Other Assets (see Note 16).
An analysis of the company's effective income tax rate (excluding
extraordinary item and transition effect of accounting changes) follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory U.S. federal income tax rate 35.0% 34.0% 34.0%
Higher effective tax rate on non-U.S.
operations (principally Petroleum) 51.9 20.5 22.9
Lower effective tax rate on operations
within U.S. possessions (5.6) (2.4) (1.1)
Lower effective tax rate on export sales (2.5) (1.6) (1.3)
Alternative fuels credit (6.9) (2.0) (1.0)
States taxes (2.2) (0.6) (0.5)
Tax rate changes (28.6) -- --
Rate differential on reversing timing
differences -- -- (2.9)
Other-net (0.2) (1.7) 0.1
--------------------------------
Effective income tax rate 40.9% 46.2% 50.2%
================================================================================
</TABLE>
Earnings before income taxes shown below are based on the location of the
corporate unit to which such earnings are attributable. However, since such
earnings are often subject to taxation in more than one country, the income tax
provision shown above as U.S. or non-U.S. does not correspond to the earnings
set forth below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------
<S> <C> <C> <C>
U.S. (including exports) $ (167) $ 136 $ 860
Other regions 1,125 1,675 1,958
------------------------------
$ 958 $1,811 $2,818
=================================================================
</TABLE>
At December 31, 1993, unremitted earnings of non-U.S. subsidiaries totaling
$3,526 were deemed to be permanently invested. No deferred tax liability has
been recognized with regard to the remittance of such earnings. It is not
practicable to estimate the income tax liability that might be incurred if such
earnings were remitted to the United States.
Under the tax laws of various jurisdictions in which the company operates,
deductions or credits that cannot be fully utilized for tax purposes during the
current year may be carried forward, subject to statutory limitations, to reduce
taxable income or taxes payable in a future year. At December 31, 1993, the tax
effect of such carryforwards approximated $590. Of this amount, $303 has no
expiration date, $26 expires in 1994, $154 expires after 1994 but before 2000,
and $107 expires between 2000 and 2009.
45 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
9. Extraordinary Charge from Early Extinguishment of Debt
In December 1993, there was a charge of $11, net of a tax benefit of $7, for the
redemption of $285 of outstanding debentures. In 1992, outstanding debt of $603
was redeemed with a resulting charge of $69, net of a tax benefit of $39.
Charges principally represent call premium and unamortized discount,
respectively.
10. Earnings Per Share of Common Stock
Earnings per share are calculated on the basis of the following average number
of common shares outstanding: 1993 - 676,622,115; 1992 - 673,454,935; and 1991
- - 670,743,786.
11. Cash and Cash Equivalents
Cash equivalents represent investments with maturities of three months or less
from time of purchase. They are carried at cost plus accrued interest, which
approximates fair value because of the short maturity of these instruments.
Cash and cash equivalents are used, in part, to support a portion of the
company's commercial paper program.
12. Accounts and Notes Receivable
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
December 31 1993 1992
- -----------------------------------------------------------------
<S> <C> <C>
Trade-net of allowances
of $97 in 1993 and $91 in 1992 $4,020 $4,234
Miscellaneous 828 1,004
-------------------
$4,848 $5,238
=================================================================
</TABLE>
Accounts and notes receivable are carried at amounts which approximate fair
value.
See Note 29 for a description of business segment markets and associated
concentrations of credit risk.
13. Inventories
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
December 31 1993 1992
- -----------------------------------------------------------------
<S> <C> <C>
Chemicals $ 250 $ 233
Fibers 571 600
Polymers 550 740
Petroleum 1,367 1,350
Diversified Businesses 1,080 1,478
-------------------
$3,818 $4,401
=================================================================
</TABLE>
The excess of replacement or current cost over stated value of inventories for
which cost has been determined under the LIFO method approximated $766 and
$1,187 at December 31, 1993 and 1992, respectively. In the aggregate, the
market value of the company's vertically integrated petroleum and
petroleum-based chemical products exceeds cost. Inventories valued at LIFO
comprised 87 percent and 85 percent of consolidated inventories before LIFO
adjustment at December 31, 1993 and 1992, respectively.
The liquidation of LIFO inventory quantities carried in the aggregate at lower
costs prevailing in prior years increased 1993 net income by about $50 ($.07 per
share).
14. Property, Plant and Equipment
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
December 31 1993 1992
------- -------
<S> <C> <C>
Chemicals $ 4,984 $ 4,946
Fibers 10,280 9,875
Polymers 7,742 7,567
Petroleum 17,698 17,499
Diversified Businesses 5,265 5,504
Corporate 1,957 1,844
----------------------
$47,926 $47,235
=================================================================
</TABLE>
Property, plant and equipment includes gross assets acquired under capital
leases of $72 and $109 at December 31, 1993 and 1992, respectively; related
amounts included in accumulated depreciation, depletion and amortization were
$57 and $72 at December 31, 1993 and 1992, respectively.
Maintenance and repairs expense was $1,475 in 1993, $1,645 in 1992 and $1,819
in 1991.
46 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
15. Summarized Financial Information for Affiliated Companies
Summarized combined financial information for affiliated companies for which
DuPont uses the equity method of accounting (see Note 1, "Basis of
Consolidation") is shown below on a 100 percent basis. The most significant of
these affiliates are CONSOL Energy, Inc. and The DuPont Merck Pharmaceutical
Company; DuPont has a 50 percent equity ownership in each of these companies.
Dividends received from equity affiliates were $243 in 1993, $124 in 1992 and
$138 in 1991.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Year Ended December 31
- ---------------------------------------------------------------------
Results of operations 1993 1992 1991
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Sales/1/ $8,030 $8,173 $4,751
Earnings before income taxes 446 771 347
Net Income 252 568 187
DuPont's equity in earnings
of affiliates (see Note 2) 121 216 18
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31
- ---------------------------------------------------------------------
Financial position 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
Current assets $2,703 $2,474
Noncurrent assets 6,813 7,042
--------------------
Total assets $9,516 $9,516
--------------------
Short-term borrowings/2/ $ 475 $ 623
Other current liabilities 1,820 1,504
Long-term borrowings/2/ 2,220 1,767
Other long-term liabilities 2,847 2,250
--------------------
Total liabilities $7,362 $6,144
--------------------
DuPont's investment in affiliates
(includes advances) $1,607 $1,746
=====================================================================
</TABLE>
/1/ Includes sales to DuPont of $752 in 1993, $803 in 1992 and $602 in 1991.
/2/ DuPont's pro rata interest in total borrowings was $985 in 1993 and $839 in
1992, of which $388 in 1993 and $274 in 1992 was guaranteed by the company.
These amounts are included in the guarantees disclosed in Note 27.
16. Other Assets
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
Prepaid pension cost (see Note 25) $1,384 $1,448
Intangible assets 278 461
Other securities and investments 474 397
Deferred income taxes (see Note 8) 198 --
Miscellaneous 790 708
-------------------
$3,124 $3,014
=====================================================================
</TABLE>
At December 31, 1993, $391 of the $474 of other securities and investments
represents marketable securities carried at cost, the fair value of which
approximated cost based on quoted market prices. The remaining $83 of other
securities and investments represents numerous small investments in securities
for which there are no quoted market prices and for which it is not practicable
to determine fair value.
17. Accounts Payable
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
Trade $1,675 $1,913
Payables to banks 264 390
Compensation awards 94 90
Other 411 378
-------------------
$2,444 $2,771
=====================================================================
</TABLE>
Payables to banks represents checks issued on certain disbursement accounts
but not presented to the banks for payment. The reported amounts approximate
fair value because of the short maturity of these obligations.
47 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
18. Short-Term Borrowings and Capital Lease Obligations
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
Commercial paper/1/ $ 325 $2,182
Bank borrowings:
U.S. dollars/2/ 25 169
Other currencies/3/ 395 262
Master notes 495 570
Indexed notes payable within
one year:/4/
U.S. dollars 152 15
Other currencies 107 25
Long-term borrowings payable
within one year:
U.S. dollars 1,130 503
Other currencies/5/ 100 8
Industrial development bonds
payable on demand 50 50
Capital lease obligations 17 15
--------------------
$2,796 $3,799
=====================================================================
</TABLE>
/1/ The company had an outstanding interest rate swap agreement at December 31,
1993 and 1992 that effectively converted $50 of floating rate borrowings to
fixed rate borrowings with an average interest rate of 8.5 percent. The
remaining term of this swap agreement was more than one year at December 31,
1993.
/2/ 1992 includes $157 with a floating money market based interest rate.
/3/ 1993 includes 1,173 million Norwegian krone borrowings ($158 at the year-end
exchange rate) with an average interest rate of 5.9 percent.
1992 includes 200 million Australian dollar borrowings ($140 at the December
31, 1992 exchange rate) with a floating money market based interest rate.
/4/ Principal repayments are indexed to changes in various exchange rates and
can theoretically range from zero to twice the face amount of the note. Interest
payments are calculated on the face amount using either a fixed or floating
interest rate. Concurrent with the issuance of each of these notes, the company
entered into contractual agreements that effectively converted each note to a
U.S. dollar-denominated borrowing with (1) a fixed principal repayment amount
independent of changes in the indexation factor, and (2) either a fixed or
floating rate of interest comparing favorably with rates for the company's
nonindexed borrowings of comparable maturity.
/5/ 1993 amount represents notes denominated as 125 billion Italian lire with a
12.375 percent interest rate. Concurrent with the issuance of these notes,
the company entered into contractual agreements that effectively established
U.S. dollar-denominated principal with U.S. dollar interest payable at a
7.45 percent fixed rate.
The fair value of the company's short-term borrowings at December 31, 1993 is
estimated to be $2,900 based on quoted market prices for the same or similar
issues or on current rates offered to the company for debt of the same remaining
maturities.
Unused short-term bank credit lines amounted to approximately $2,100 at
December 31, 1993. These lines support short-term industrial development bonds,
master note borrowings and a portion of the company's commercial paper program
and other borrowings.
19. Other Accrued Liabilities
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
Payroll and other employee
benefits $ 694 $ 662
Taxes other than on income 380 412
Postretirement benefits
other than pensions
(see Note 26) 343 344
Restructuring charges 810 370
Miscellaneous 1,651 1,679
-------------------
$3,878 $3,467
=====================================================================
</TABLE>
48 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
20. Long-Term Borrowings and Capital Lease Obligations
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
U.S. dollar:
Industrial development bonds
due 2001-2022 $ 234 $ 304
Medium-term notes due
1994-2002/1/ 837 1,044
9.00% notes due 1994 -- 252
8.50% notes due 1996 252 253
8.45% notes due 1996 300 300
8.65% notes due 1997 300 300
8.50% notes due 1998 302 302
7.50% notes due 1999 304 305
9.15% notes due 2000/2/ 307 309
6.00% debentures due 2001
($660 face value, 13.95%
yield to maturity) 411 395
6.75% notes due 2002/3/ 299 299
8.00% notes due 2002 254 254
8.50% notes due 2003/4/ 300 300
8.13% notes due 2004 349 349
8.25% notes due 2006 299 299
8.50% debentures due 2006 -- 158
8.50% debentures due 2016 -- 284
8.25% debentures due 2022 399 399
7.95% debentures due 2023/5/ 299 --
7.50% debentures due 2033/6/ 247 --
12.375% Italian lira notes due 1994 -- 100
6.25% Swiss franc notes due 2000/7/ 103 --
Other loans (various currencies)
due 1994-2005/8/ 701 923
Capital lease obligations 34 64
-------------------
$6,531 $7,193
=====================================================================
</TABLE>
/1/ Average interest rates at December 31, 1993 and 1992 were 6.78 percent and
6.79 percent, respectively. The company had outstanding interest rate swap
agreements at December 31, 1993 and 1992, that effectively converted $197 and
$259, respectively, of long-term fixed rate borrowings to floating rate
obligations with an effective interest rate less than that generally available
for the company's commercial paper. The remaining term of these swap agreements
was more than one year at December 31, 1993.
/2/ Concurrent with the issuance of these notes, the company entered into an
interest rate swap agreement that effectively converted these notes to an 8.55
percent fixed rate obligation over their term. The counterparty has the option,
in 1997, to convert the swap to a floating rate essentially equivalent to the
rate the company pays on its commercial paper.
/3/ Subsequent to the issuance of these notes, the company entered into interest
rate swap agreements that effectively converted $250 of these notes to a
floating rate obligation. The remaining average term of these swap agreements
was more than one year at December 31, 1993.
/4/ Subsequent to the issuance of these notes, the company entered into an
interest rate swap agreement that could effectively convert these notes to a
floating rate obligation. The counterparty has the right to exercise the option
in 2001, converting the notes to a floating rate essentially equivalent to the
rate the company pays on its commercial paper.
/5/ Subsequent to the issuance of these debentures, the company entered into
interest rate swap agreements that effectively converted $225 of these
debentures to a floating rate obligation. The remaining term of these swap
agreements was more than one year at December 31, 1993.
/6/ Concurrent with the issuance of these debentures, the company entered into
an interest rate swap agreement that effectively converted the debentures to a
floating rate obligation. The remaining term of this swap agreement was more
than one year at December 31, 1993.
/7/ Represents notes denominated as 150 million Swiss francs with a 6.25 percent
interest rate. Concurrent with the issuance of these notes, the company entered
into a contractual agreement that effectively established U.S. dollar-
denominated principal with U.S. dollar interest payable at a 6.9 percent fixed
rate.
/8/ Includes notes denominated as 160 million Australian dollars with a 16.5
percent interest rate issued by the company's majority-owned Canadian
subsidiary, which were effectively converted to a 149 million Canadian dollar
obligation with an implicit 12.43 percent annual cost through a series of
currency swap agreements and forward exchange contracts.
Also includes a loan in the amount of 190 million pounds sterling ($292 and
$287 at the respective 1993 and 1992 year-end exchange rates) with a floating
money market based interest rate.
1992 includes a bank loan in the amount of 4 billion Belgian financial francs
($121 at the 1992 year-end exchange rate). The company entered into forward
exchange contracts that effectively converted interest payments for the current
interest settlement period to U.S. dollar-denominated amounts.
Average interest rates on industrial development bonds and on other loans
(various currencies) were 5.5 percent and 7.4 percent at December 31, 1993, and
6.2 percent and 7.3 percent at December 31, 1992, respectively.
Maturities of long-term borrowings, together with sinking fund requirements in
each of the four years after December 31, 1994, are as follows:
1995 - $386 1997 - $789
1996 - $872 1998 - $417
The fair value of the company's long-term borrowings at December 31, 1993 is
estimated to be $7,500 based on quoted market prices for the same or similar
issues or on current rates offered to the company for debt of the same remaining
maturities.
49 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
21. Leases
The company uses various leased facilities and equipment in its operations. The
company's future minimum lease payments under operating and capital leases,
together with the present value of the net minimum capital lease payments at
December 31, 1993, are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Capital Operating
Leases Leases
- ---------------------------------------------------------------------
<S> <C> <C>
Minimum lease payments for
years ending December 31:*
1994 $ 24 $ 322
1995 14 248
1996 9 191
1997 4 157
1998 4 118
Remainder 40 695
-------------------------
95 $ 1,731
===========
Less: Estimated executory costs 8
-----------
Net minimum lease payments 87
Less: Imputed interest 36
-----------
Present value of net minimum 51
lease payments
Due in 1994 17
-----------
Due after 1994 $ 34
=====================================================================
</TABLE>
* Minimum lease payments have not been reduced by minimum sublease rentals due
in the future under noncancelable subleases related to capital and operating
leases in the amounts of $0 and $135, respectively.
Rental expense under operating leases was $429 in 1993, $453 in 1992 and $486
in 1991.
22. Other Liabilities
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
Accrued postretirement benefits
cost (see Note 26) $5,998 $5,964
Reserves for employee-related costs 989 750
Miscellaneous 1,213 993
--------------------
$8,200 $7,707
=====================================================================
</TABLE>
23. Stockholders' Equity
Shares of new common stock issued in connection with employee compensation and
benefit plans were 2,569,201 in 1993, 3,766,099 in 1992 and 2,179,976 in 1991.
Shares repurchased and retired were 785,800 in 1991.
24. Compensation Plans
In 1990, the Board of Directors approved the adoption of a worldwide Corporate
Sharing Program. Under the program, in February 1991, essentially all employees
each received a one-time grant of options to acquire 100 shares of DuPont common
stock at the fair market value ($38.25 per share) at date of grant. Common
shares subject to option under this Plan follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at January 1 10,525,892 12,693,600 --
Options:
Granted -- -- 13,228,900
Exercised 1,534,403 1,960,028 1,700
Terminated 74,780 207,680 533,600
Outstanding at December 31 8,916,709 10,525,892 12,693,600
=====================================================================
</TABLE>
Awards for 1993 under the DuPont Stock Performance Plan (granted to key
employees in 1994) consisted of 2,308,490 options to acquire DuPont common stock
at fair market value of $52.50 per share. Payment of the purchase price must be
made in cash or in DuPont common stock (at fair market value on the date of
exercise). Common shares subject to option under this Plan, including options
granted in prior years under plans of acquired companies, follows:
50 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at January 1 13,594,606 13,822,375 13,516,271
Options granted 2,160,360 2,425,130 2,955,450
Average price $46.01 $49.21 $36.22
Options exercised 1,092,473 2,456,592 2,073,691
Average price $27.77 $26.78 $24.73
Options expired or terminated 108,572 196,307 575,655
At December 31:
Participants 1,226 1,188 1,166
Options outstanding 14,553,921 13,594,606 13,822,375
Average price $37.62 $35.47 $31.47
Options exercisable 12,418,711 11,202,016 10,991,715
Shares available for option 26,215,426 25,092,886 24,651,486
========================================================================
</TABLE>
At December 31, 1993, 700,473 stock appreciation rights (SARs) were
outstanding, at an average option price of $32.06 per share. SARs may be
exercised only in tandem with the exercise of an accompanying stock option. As
each SAR is exercised, one additional stock option is cancelled. Expiration
dates for outstanding options and SARs ranged from February 20, 1994 to July
26, 2003.
Awards under the Variable Compensation Plan may be granted in stock and/or
cash to employees who have contributed most in a general way to the company's
success, consideration being given to ability to succeed to more important
managerial responsibility. Such awards were $87 for 1993, $87 for 1992 and $125
for 1991. Amounts credited to the Variable Compensation Fund are dependent on
company earnings, and are subject to maximum limits as defined by the Plan. The
amounts credited to the fund were $89 in 1993, $85 in 1992 and $125 in 1991. In
accordance with the terms of the Variable Compensation Plan and similar plans of
subsidiaries, 870,447 shares of common stock were awaiting delivery from awards
for 1993 and prior years.
25. Pensions
The company has noncontributory defined benefit plans covering substantially all
U.S. employees. The benefits for these plans are based primarily on years of
service and employees' pay near retirement. The company's funding policy is
consistent with the funding requirements of federal law and regulations.
Pension coverage for employees of the company's non-U.S. consolidated
subsidiaries is provided, to the extent deemed appropriate, through separate
plans. Obligations under such plans are systematically provided for by
depositing funds with trustees, under insurance policies or by book reserves.
Net pension credit for defined benefit plans includes the following
components:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost - benefits earned
during the period $ 301 $ 283 $ 259
Interest cost on projected
benefit obligation 1,038 980 860
Return on assets:
Actual gain $ (1,880) $ (1,055) $ (2,937)
Deferred gain (loss) 617 (1,263) (164) (1,219) 1,789 (1,148)
-------- --------- ---------
Amortization of net gains and
prior service cost (123) (127) (142)
------- ------ -------
Net pension credit $ (47) $ (83) $ (171)
===============================================================================================================
</TABLE>
The change in the annual pension credit was primarily due to the discount rate
used to determine the present value of future benefits.
51 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
The funded status of these plans was as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
December 31 1993 1992
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation $ (11,681) $ (9,834)
--------- ---------
Accumulated benefit obligation $ (12,177) $ (10,218)
--------- ---------
Projected benefit obligation $ (14,195) $ (11,815)
Plan assets at fair value 15,250 14,648
--------- ---------
Excess of assets over projected benefit obligation 1,055 2,833
Unrecognized net gains/1/ (35) (1,792)
Unrecognized prior service cost 364 407
--------- ---------
Prepaid pension cost/2/ $ 1,384 $ 1,448
============================================================================================================
</TABLE>
/1/ Includes the unamortized balance of $(1,513) and $(1,691) at December 31,
1993 and 1992, respectively, of unrecognized net gain at January 1, 1985, the
initial application date of Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions."
/2/ Excludes the pension liability for unfunded plans of $744 and $617 and the
related projected benefit obligation of $1,228 and $941 at December 31, 1993 and
1992, respectively.
For U.S. plans, the projected benefit obligation was determined using a
discount rate of 7.25 percent at December 31, 1993 and 8.5 percent at December
31, 1992, and an assumed long-term rate of compensation increase of 5 percent.
The assumed long-term rate of return on plan assets is 9 percent. Plan assets
consist principally of common stocks and U.S. government obligations. For
non-U.S. plans, no one of which was material, similar economic assumptions were
used.
The Omnibus Budget Reconciliation Act of 1990 permits employers to transfer
some of the excess funds from an overfunded pension trust to pay the company
portion of certain postretirement health care benefits. The company transferred
$260 million and $200 million during 1993 and 1992, respectively, to a special
retiree health care account to be used toward the payment of these benefits.
These transfers had no impact on earnings (see Note 26).
26. Other Postretirement Benefits
The parent company and certain subsidiaries provide medical, dental and life
insurance benefits to pensioners and survivors. The associated plans are
unfunded, and approved claims are paid from company funds. Under the terms of
the benefit plans, the company reserves the right to change, modify or
discontinue the plans.
In 1992 the company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." Medical, dental and life insurance
costs for these plans and related disclosures for 1993 and 1992 are determined
under the provisions of SFAS No. 106. Cash expenditures are not affected by
this accounting change. At January 1, 1992, the accumulated postretirement
benefit obligation was $5,990, and related accrued liabilities were $68,
resulting in a transition charge of $5,922.
The cost of these benefits was $347 in 1993 and $591 in 1992. The decrease in
cost in 1993 versus 1992 was due to plan changes, as discussed below. In 1991,
$247 of such cost was expensed as paid. Other postretirement benefits cost for
1993 and 1992 includes the following components:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Health Life
Care Insurance Total
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1993
Service cost - benefits allocated
to current period $ 55 $ 12 $ 67
Interest cost on accumulated
postretirement benefit obligation 305 69 374
Amortization of net gains and
prior service credit (94) -- (94)
-------------------------------------
Other postretirement benefits cost $ 266 $ 81 $ 347
-------------------------------------
1992
Service cost - benefits allocated
to current period $ 82 $ 11 $ 93
Interest cost on accumulated
postretirement benefit obligation 431 67 498
-------------------------------------
Other postretirement benefits cost $ 513 $ 78 $ 591
==========================================================================================
</TABLE>
52 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
The following provides a reconciliation of the accumulated postretirement
benefit obligation to the liabilities reflected in the balance sheet at December
31, 1993 and 1992.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Health Life
Care Insurance Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1993
Accumulated postretirement
benefit obligation for:
Current pensioners and survivors $ (2,993) $ (692) $ (3,685)
Fully eligible employees (146) -- (146)
Other employees (934) (404) (1,338)
-------------------------------------
(4,073) (1,096) (5,169)
Unrecognized net loss/(gain) (285) 252 (33)
Unrecognized prior service credit (1,139) -- (1,139)
-------------------------------------
Accrued postretirement
benefits cost $ (5,497) $ (844) $ (6,341)
=====================================
Amount included in Other
Accrued Liabilities (see Note 19) $ 343
=========
Amount included in Other
Liabilities (see Note 22) $ 5,998
- ----------------------------------------------------------------------=========
1992
Accumulated postretirement
benefit obligation for:
Current pensioners and survivors $ (3,144) $ (576) $ (3,720)
Fully eligible employees (879) -- (879)
Other employees (909) (253) (1,162)
-------------------------------------
(4,932) (829) (5,761)
Unrecognized net loss/(gain) (554) 7 (547)
-------------------------------------
Accrued postretirement
benefits cost $ (5,486) $ (822) $ (6,308)
=====================================
Amount included in Other
Accrued
Liabilities (see Note 19) $ 344
=========
Amount included in Other
Liabilities (see Note 22) $ 5,964
================================================================================
</TABLE>
On December 31, 1992 the company announced changes in its health care benefits
programs in the United States. These changes provide for increased cost control
through prevention and managed care, and for increased cost sharing by employees
and pensioners. The impact of these changes resulted in an unrecognized prior
service credit of $1,219 at the beginning of 1993; the accumulated
postretirement benefit obligation was reduced by a similar amount.
The health care accumulated postretirement benefit obligation was determined
at December 31, 1993 and 1992 using health care cost escalation rates of 10
percent and 11 percent, respectively, decreasing to 5 percent over ten years.
The assumed long-term rate of compensation increase used for life insurance was
5 percent. The discount rate was 7.25 percent at December 31, 1993 and 8.5
percent at December 31, 1992. A one-percentage-point increase in the health
care cost escalation rate would have increased the accumulated postretirement
benefit obligation by $446 at December 31, 1993, and the 1993 other
postretirement benefit cost would have increased by $46.
27. Commitments and Contingent Liabilities
The company has various purchase commitments for materials, supplies and items
of permanent investment incident to the ordinary conduct of business. In the
aggregate, such commitments are not at prices in excess of current market.
The company is subject to various lawsuits and claims with respect to such
matters as product liabilities, governmental regulations and other actions
arising out of the normal course of business. While the effect on future
financial results is not subject to reasonable estimation because considerable
uncertainty exists, in the opinion of company counsel, the ultimate liabilities
resulting from such lawsuits and claims will not materially affect the
consolidated financial position of the company.
The company is also subject to contingencies pursuant to environmental laws
and regulations that in the future may require the company to take action to
correct the effects on the environment of prior disposal or release of chemical
or petroleum substances by the company or other parties. The company has
accrued for certain environmental remediation activities consistent with the
policy set forth in Note 1. Although future remediation accruals and
expenditures could be significant, the effect on future financial results is not
subject to reasonable estimation. Management does not anticipate, however, that
they will have a material adverse effect on the consolidated financial position
of the company.
To hedge against the adverse impact of foreign currency fluctuations on the
monetary assets and liabilities of operations outside the United States, the
company enters into forward exchange contracts. At December 31, 1993, the
company had outstanding forward exchange contracts maturing between January 4,
1994 and December 19, 1996 to purchase $6,764 (principally the U.K. pound
[$2,934] and
53 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
Norwegian krone [$1,517]), and to sell $2,832 (principally the Norwegian krone
[$478], Italian lira [$413], Canadian dollar [$304], and French franc [$271]) of
various currencies. The company's balance sheet at December 31, 1993 reflects
an accrual of $36 for unrealized losses associated with these contracts. The
amounts recorded approximate fair value of forward exchange contracts based on
quoted prices for contracts of comparable maturities and terms.
As described above and in Notes 18 and 20, the company has entered into a
variety of contractual agreements (financial instruments) to hedge exposures to
interest rate and foreign exchange risks. The counterparties to these
agreements are major financial institutions. The company is exposed to credit
loss in the event of nonperformance by these counterparties. The company
manages this exposure to credit loss through credit approvals, limits and
monitoring procedures and, where possible, by restricting the period over which
unpaid balances are allowed to accumulate. The company does not anticipate
nonperformance by counterparties to these agreements and no material loss would
be expected from such nonperformance.
The company has indirectly guaranteed various debt obligations under
agreements with certain affiliated and other companies to provide specified
minimum revenues from shipments or purchases of products. At December 31, 1993,
these indirect guarantees totaled $14. In addition, at December 31, 1993, the
company had directly guaranteed $620 of the obligations of certain affiliated
companies and others. No material loss is anticipated by reason of such
agreements and guarantees.
28. Geographic Information
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
United Other
States Europe Regions Consolidated
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993
Sales to Unaffiliated Customers/1/ $ 20,342 $ 12,639 $ 4,117 $ 37,098
Transfers Between Geographic Areas/2/ 2,260 395 522 --
--------------------------------------------------------------
Total $ 22,602 $ 13,034 $ 4,639 $ 37,098
==============================================================
After-Tax Operating Income $ 133 $ 721 $ 63 $ 917
Identifiable Assets at December 31 $ 17,117 $ 9,995 $ 3,812 $ 30,924
- -------------------------------------------------------------------------------------------------------------------------
1992
Sales to Unaffiliated Customers/1/ $ 20,331 $ 13,571 $ 3,897 $ 37,799
Transfers Between Geographic Areas/2/ 2,477 298 469 --
--------------------------------------------------------------
Total $ 22,808 $ 13,869 $ 4,366 $ 37,799
==============================================================
After-Tax Operating Income $ 528 $ 624 $ 89 $ 1,241
Identifiable Assets at December 31 $ 19,197 $ 9,667 $ 3,827 $ 32,691
- -------------------------------------------------------------------------------------------------------------------------
1991
Sales to Unaffiliated Customers/1/ $ 21,609 $ 13,041 $ 4,045 $ 38,695
Transfers Between Geographic Areas/2/ 2,467 378 417 --
--------------------------------------------------------------
Total $ 24,076 $ 13,419 $ 4,462 $ 38,695
==============================================================
After-Tax Operating Income $ 861 $ 961 $ (50) $ 1,772
Identifiable Assets at December 31 $ 19,345 $ 8,987 $ 3,537 $ 31,869
=========================================================================================================================
</TABLE>
/1/ Sales outside the United States of products manufactured in and exported
from the United States totaled $3,500 in 1993, $3,509 in 1992 and $3,812 in
1991.
/2/ Products are transferred between geographic areas on a basis intended to
reflect as nearly as practicable the "market value" of the products.
54 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
29. Industry Segment Information
The company has five principal business segments that manufacture and sell a
wide range of products to many different markets, including the energy,
transportation, textile, construction, automotive, electronics, printing, health
care, packaging and agricultural markets. The company's sales are not
materially dependent on a single customer or small group of customers. The
Fibers and Polymers segments, however, have several large customers in their
respective industries that are important to these segments' operating results.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified
Chemicals Fibers Polymers Petroleum Businesses Consolidated
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1993
Sales to Unaffiliated Customers/1/ $ 3,546 $ 6,188 $ 5,869 $ 15,771/2/ $ 5,724 $ 37,098
Transfers Between Segments 475 14 23 428 1 -
------------------------------------------------------------------------------------------
Total $ 4,021 $ 6,202 $ 5,892 $ 16,199 $ 5,725 $ 37,098
==========================================================================================
Operating Profit $ 237 $ 258 $ 255 $ 1,195 $ (495) $ 1,450
Provision for Income Taxes (99) (144) (108) (428) 162 (617)
Equity in Earnings of Affiliates 28 55 30 45 (74) 84
------------------------------------------------------------------------------------------
After-Tax Operating Income/3, 4, 5/ $ 166 $ 169 $ 177 $ 812/6/ $ (407) $ 917/7/
==========================================================================================
Identifiable Assets at December 31 $ 2,960 $ 5,771 $ 5,226 $ 11,938 $ 5,029 $ 30,924/8/
==========================================================================================
Depreciation, Depletion and Amortization $ 303 $ 658 $ 527 $ 1,379 $ 460 $ 3,451/9/
Capital Expenditures $ 294 $ 751 $ 428 $ 1,659 $ 329 $ 3,655/10/
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified
Chemicals Fibers Polymers Petroleum Businesses Consolidated
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1992
Sales to Unaffiliated Customers/1/ $ 3,617 $ 6,074 $ 5,856 $ 16,065/2/ $ 6,187 $ 37,799
------------------------------------------------------------------------------------------
Transfers Between Segments 187 6 51 414 5 -
Total $ 3,804 $ 6,080 $ 5,907 $ 16,479 $ 6,192 $ 37,799
==========================================================================================
Operating Profit $ 324 $ 591 $ 471 $ 1,008 $ (182) $ 2,212
Provision for Income Taxes (128) (246) (185) (707) 101 (1,165)
Equity in Earnings of Affiliates 30 64 32 36 32 194
------------------------------------------------------------------------------------------
After-Tax Operating Income/11/ $ 226 $ 409 $ 318 $ 337 $ (49)/12/ $ 1,241/7/
==========================================================================================
Identifiable Assets at December 31 $ 3,201 $ 5,738 $ 5,412 $ 12,307 $ 6,033 $ 32,691/8/
==========================================================================================
Depreciation, Depletion and Amortization $ 317 $ 592 $ 409 $ 1,006 $ 410 $ 2,839/9/
Capital Expenditures $ 366 $ 856 $ 642 $ 1,781 $ 558 $ 4,397/10/
===================================================================================================================================
</TABLE>
55 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified
Chemicals Fibers Polymers Petroleum Businesses/13/ Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1991
Sales to Unaffiliated Customers/1/ $ 3,478 $ 6,056 $ 5,565 $ 15,851/2/ $ 7,745 $ 38,695
Transfers Between Segments 216 11 57 390 149 --
-------------------------------------------------------------------------------------------
Total $ 3,694 $ 6,067 $ 5,622 $ 16,241 $ 7,894 $ 38,695
===========================================================================================
Operating Profit $ 439 $ 603 $ 223 $ 1,872 $ 246 $ 3,383
Provision for Income Taxes (161) (226) (79) (1,088) (44) (1,598)
Equity in Earnings of Affiliates 38 39 (25) 30 (95) (13)
-------------------------------------------------------------------------------------------
After-Tax Operating Income/14/ $ 316/15/ $ 416/16/ $ 119/17/ $ 814/18/ $ 107/19/ $ 1,772/7/
===========================================================================================
Identifiable Assets at December 31 $ 2,985 $ 5,459 $ 5,061 $ 12,140 $ 6,224 $ 31,869/8/
===========================================================================================
Depreciation, Depletion and Amortization $ 294 $ 566 $ 445 $ 943 $ 571 $ 2,917/9/
Capital Expenditures $ 476 $ 765 $ 607 $ 2,301 $ 680 $ 5,026/10/
====================================================================================================================================
</TABLE>
/1/ Sales of refined petroleum products of $12,403 in 1993, $12,681 in 1992 and
$12,232 in 1991 exceeded 10 percent of consolidated sales.
/2/ Excludes crude oil and refined product exchanges and trading transactions.
/3/ Includes the following third quarter charges for asset write-downs,
employee separation costs, facility shutdowns and other restructuring costs
(see Note 7):
<TABLE>
- -----------------------------------------------------
<S> <C>
Chemicals/a/ $ 112
Fibers/b/ 266
Polymers/c/ 148
Petroleum/d/ 172
Diversified Businesses/e/ 597
--------
$1,295
=====================================================
</TABLE>
/a/ Includes $59 for asset write-downs and facility shutdowns for the
fluorochemicals and specialty chemicals businesses.
/b/ Includes $46 for facility shutdowns and asset write-downs, primarily for
the nylon business.
/c/ Includes $64 for shutdown of a portion of a polymers plant in LaPorte,
Texas.
/d/ Includes $147 primarily for asset write-downs of certain North American
petroleum-producing properties sold in the fourth quarter.
/e/ Includes $448 for asset write-downs, primarily intangibles and facilities
for the printing and publishing business.
/4/ Includes a net benefit of $265 resulting from tax law changes. The
Petroleum segment reflects $230, primarily due to a reduction in deferred U.K.
petroleum revenue taxes, and $35 is reflected in the remaining segments
(Chemicals, $6; Fibers, $10; Polymers, $10; and Diversified Businesses, $9).
/5/ Includes a net charge of $92 related to certain product liability claims
and litigation costs ($144, of which $126 is associated with the "Benlate" DF 50
fungicide recall) and a loss on the sale of a polyethylene business ($17),
partly offset by a gain from the sale of the Remington Arms Company ($69). The
foregoing amounts are reflected in the Chemicals ($10), Polymers ($25) and
Diversified Businesses ($57) segments.
/6/ Includes a $21 loss from sale of petroleum-producing properties and a $32
gain from exchange of North Sea properties.
/7/ The following reconciles After-Tax Operating Income to Net Income:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------------
<S> <C> <C> <C>
After-Tax Operating Income $ 917 $1,241 $1,772
Interest and Other Corporate
Expenses Net of Tax/a/ (351) (266) (369)
----------------------------
Net Income/b/ $ 566 $ 975 $1,403
========================================================================
</TABLE>
/a/ Includes interest and debt expense and other corporate expenses such as
exchange gains and losses (including the company's share of equity
affiliates' exchange gains and losses), minority interests in earnings of
consolidated subsidiaries and amortization of capitalized interest. The
year 1992 includes an exchange gain of $97 related to unhedged non-U.S.
deferred tax liabilities, which were established on the adoption of SFAS
No. 109. The year 1991 includes interest benefit of $60 associated with
refunds of taxes paid in prior years.
/b/ Before extraordinary item and transition effect of accounting changes. See
the Consolidated Income Statement on page 37.
/8/ The following reconciles Identifiable Assets to Total Assets:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Identifiable Assets at December 31 $30,924 $32,691 $31,869
Investment in Affiliates 1,607 1,746 1,580
Corporate Assets 4,522 4,433 3,110
-----------------------------
Total Assets at December 31 $37,053 $38,870 $36,559
========================================================================
</TABLE>
/9/ Includes depreciation on research and development facilities, impairment of
unproved properties and depreciation reflected in restructuring charges.
/10/ Excludes investments in affiliates.
56 DUPONT
<PAGE>
- --------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
/11/ Includes the following fourth quarter charges for termination incentives
and payments, as well as other charges, related to business restructurings (see
Note 7):
<TABLE>
- ----------------------------------------------------
<S> <C>
Chemicals/a/ $ 51
Fibers/b/ 69
Polymers 22
Petroleum/c/ 96
Diversified Businesses/d/ 91
------
$329
====================================================
</TABLE>
/a/ Includes $38 charge for project and facility shutdowns.
/b/ Includes $38 charge principally for shutdown of fire-damaged facilities.
/c/ Includes $17 charge for shutdown of refinery facilities.
/d/ Includes $42 charge principally for withdrawal from certain printing and
publishing business lines.
/12/ Includes charge of $134 associated with "Benlate" DF 50 fungicide recall.
/13/ Effective December 31, 1991, the company's coal business is accounted for
under the equity method with its results included in the Diversified Businesses
segment. For 1991, the Diversified Businesses segment includes the following
amounts for the coal business (see Note 6):
<TABLE>
<CAPTION>
- -------------------------------------------------------
1991
- -------------------------------------------------------
<S> <C>
Sales to Unaffiliated
Customers $1,752
Transfers Between Segments 145
--------
Total $1,897
--------
Operating Profit $ 524
Provision for Income Taxes (264)
Equity in Earnings of Affiliates 1
--------
After-Tax Operating Income $ 261/a/
========
Identifiable Assets at December 31 $ --/b/
========
Depreciation, Depletion and Amortization $ 167
Capital Expenditures $ 199
=======================================================
</TABLE>
/a/ Includes $152 gain from sale of an interest in the coal business.
/b/ Effective December 31, 1991, the company's coal business became part of a
joint venture accounted for under the equity method. If fully consolidated
at this date, identifiable assets of the coal business would have been
$2,588.
/14/ Includes the following fourth quarter charges related to the company's
cost reduction and business restructuring programs (see Note 7):
<TABLE>
- ----------------------------------------------------
<S> <C>
Chemicals $ 55
Fibers 116
Polymers 141
Petroleum 54
Diversified Businesses 171
------
$537
====================================================
</TABLE>
/15/ Includes $89 gain from sale of methanol business partly offset by $18
charge associated with a partial withdrawal from the "Freon" chlorofluorocarbon
manufacturing business.
/16/ Includes $29 charge for facility shutdowns.
/17/ Includes $11 gain from sale of a business.
/18/ Includes $54 benefit from refunds of taxes paid in prior years, partly
offset by charges of $20 related to supplemental amortization for U.S. unproved
properties and $20 for withdrawal from operations in Ecuador.
/19/ Includes $152 gain from sale of an interest in coal business (see Note 6)
and $161 gain from sales of interests in other businesses and assets. Also
includes charges of $216 associated with "Benlate" DF 50 fungicide recall and
$16 associated with additional restructuring activities.
See segment discussions on pages 20 to 28 for a description of each industry
segment. Products are transferred between segments on a basis intended to
reflect as nearly as practicable the "market value" of the products.
57 DUPONT
<PAGE>
- --------------------------------------------------
Supplemental Petroleum Data
- --------------------------------------------------
DOLLARS IN MILLIONS
-------------------------------------
Oil- and Gas-Producing Activities
The disclosures on pages 58 through 63 are presented in accordance with the
provisions of Statement of Financial Accounting Standards No. 69. Accordingly,
volumes of reserves and production exclude royalty interests of others, and
royalty payments are reflected as reductions in revenues./1/
In January 1989, the U.S. Treasury Department was authorized by the President
to modify the sanctions levied against Libya in 1986. In June 1989, Conoco was
granted a license by the Treasury Department to resume its activities in Libya,
and commenced negotiations with the Libyan government's national oil company.
Although negotiations are continuing, Conoco has not resumed its participation
in Libyan operations. Accordingly, disclosures for 1993 continue to exclude
petroleum reserve data applicable to the company's petroleum assets in Libya.
Estimated Proved Reserves of Oil and Gas/2/
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Total Worldwide United States Europe Other Regions/3/
- ------------------------------------------------------------------------------------------------------------------------------------
Oil/4/--in millions of barrels 1993 1992 1991 1993 1992 1991 1993 1992 1991 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Proved Developed and Undeveloped
Reserves of Fully Consolidated
Companies
Beginning of the year 1,034 1,112 1,045 421 470 475 391 392 290 222 250 280
Revisions and other changes 14 26 3 (6) (13) 6 13 37 (7) 7 2 4
Extensions and discoveries 83 23 136 19 9 13 41 10 121 23 4 2
Improved recovery 7 3 44 5 3 12 -- -- 32 2 -- --
Purchase of reserves 25 5 17 7 5 17 2 -- -- 16 -- --
Sale of reserves (64) (12) (9) (62) (12) (9) (2) -- -- -- -- --
Production (135) (123) (124) (40) (41) (44) (55) (48) (44) (40) (34) (36)
---------------------------------------------------------------------------------------------
End of year 964 1,034 1,112 344 421 470 390 391 392 230 222 250
- ------------------------------------------------------------------------------------------------------------------------------------
Proved Developed Reserves of
Fully Consolidated Companies
Beginning of year 750 778 856 397 441 455 153 118 154 200 219 247
End of year 708 750 778 332 397 441 160 153 118 216 200 219
====================================================================================================================================
Gas--in billion cubic feet
- ------------------------------------------------------------------------------------------------------------------------------------
Proved Developed and Undeveloped
Reserves of Fully Consolidated
Companies
- ------------------------------------------------------------------------------------------------------------------------------------
Beginning of year 3,445 3,619 3,850 1,928 2,149 2,299 1,417 1,321 1,383 100 149 168
Revisions and other changes 72 (36) (114) (22) (55) (128) 54 56 19 40 (37) (5)
Extensions and discoveries 712 307 185 196 127 166 507 172 10 9 8 9
Improved recovery 1 -- 39 1 -- 9 -- -- 30 -- -- --
Purchase of reserves 53 37 166 53 37 166 -- -- -- -- -- --
Sale of reserves (122) (51) (90) (49) (51) (87) (68) -- -- (5) -- (3)
Production (481) (431) (417) (305) (279) (276) (158) (132) (121) (18) (20) (20)
---------------------------------------------------------------------------------------------
End of year 3,680 3,445 3,619 1,802 1,928 2,149 1,752 1,417 1,321 126 100 149
- ------------------------------------------------------------------------------------------------------------------------------------
Proved Developed and Undeveloped
Reserves of Equity Affiliates
Beginning of year 368 128 -- 368 128 -- -- -- -- -- -- --
Revisions and other changes 72 167 128 72 167 128 -- -- -- -- -- --
Extensions and discoveries -- 75 -- -- 75 -- -- -- -- -- -- --
Purchase of reserves 151 -- -- 151 -- -- -- -- -- -- -- --
Production (5) (2) -- (5) (2) -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------
End of year 586 368 128 586 368 128 -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Proved Developed and
Undeveloped Reserves
Total 4,266 3,813 3,747 2,388 2,296 2,277 1,752 1,417 1,321 126 100 149
- ------------------------------------------------------------------------------------------------------------------------------------
Proved Developed Reserves of
Fully Consolidated Companies
Beginning of year 2,539 2,750 2,753 1,837 2,013 1,984 618 602 622 84 135 147
End of year 2,570 2,539 2,750 1,717 1,837 2,013 738 618 602 115 84 135
====================================================================================================================================
</TABLE>
/1/ Elsewhere in this Annual Report, sales data for 1991 relating to production
outside the United States include royalty interests attributable to other
parties, and related royalty payments are reflected as costs.
/2/ Oil reserves comprise crude oil and condensate and natural gas liquids (NGL)
expected to be removed for the company's account from its natural gas
deliveries. Royalty interests in reserves outside North America that are
dependent on rates of production or prices were calculated using projected rates
of production and prices that existed at the time the quantities were estimated.
/3/ Includes Canada, Dubai and Indonesia.
/4/ The company's share of equity affiliate oil reserves (19 million barrels in
1993 and 1992) is excluded.
58 DUPONT
<PAGE>
- --------------------------------
Supplemental Petroleum Data
- --------------------------------
DOLLARS IN MILLIONS
-------------------
Results of Operations for Oil- and Gas-Producing Activities
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Total Worldwide United States Europe Other Regions/1/
- ------------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Sales to unaffiliated
customers $2,177 $1,990 $2,102 $ 538 $ 535 $ 564 $1,000 $ 874 $ 942 $ 639 $ 581 $ 596
Transfers to other company
operations 930 1,003 1,115 558 583 720 372 407 363 -- 13 32
Exploration, including dry
hole costs (329) (347) (493) (107) (82) (137) (109) (165) (163) (113) (100) (193)
Production (868) (1,039) (978) (424) (492) (525) (363) (473) (384) (81) (74) (69)
Depreciation, depletion,
amortization
and valuation provisions (1,140) (786) (744) (591)/2/ (433) (413) (468) (296) (242) (81) (57) (89)
Other/3/ (20) (55) 141 (17) (8) 119 9 (28) 41 (12) (19) (19)
Income taxes (281)/4/ (626) (881) 84 2 (98) (16)/4/ (219) (340) (349) (409) (443)
------------------------------------------------------------------------------------------------------
Results of operations of
fully consolidated companies $ 469 $ 140 $ 262 $ 41 $ 105 $ 230 $ 425 $ 100 $ 217 $ 3 $ (65) $ (185)
------------------------------------------------------------------------------------------------------
Results of operations of
equity affiliates (13) (13) (2) (1) (1) (2) (12) (12) -- -- -- --
------------------------------------------------------------------------------------------------------
Total results of operations $ 456 $ 127 $ 260 $ 40 $ 104 $ 228 $ 413 $ 88 $ 217 $ 3 $ (65) $ (185)
====================================================================================================================================
</TABLE>
/1/ Comprises exploration costs in all areas outside the United States and
Europe and production operations primarily in Canada, Dubai and Indonesia.
/2/ Includes a charge of $219 ($137 after taxes) for impairment of U.S.
producing properties sold in the fourth quarter.
/3/ Includes gain (loss) on disposal of fixed assets and other miscellaneous
revenues and expenses.
/4/ Includes a benefit of $241 resulting from tax law changes in the United
Kingdom.
59 DUPONT
<PAGE>
- --------------------------------
Supplemental Petroleum Data
- --------------------------------
DOLLARS IN MILLIONS
-------------------
Capitalized Costs Relating to Oil- and Gas-Producing Activities
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Total Worldwide United States Europe Other Regions*
- ------------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross Costs:
Proved properties $11,663 $11,356 $10,698 $ 4,934 $ 5,587 $ 5,619 $ 5,582 $ 4,732 $ 4,145 $ 1,147 $ 1,037 $ 934
Unproved properties 701 1,152 1,241 321 471 483 218 461 528 162 220 230
Accumulated depreciation,
depletion,
amortization and
valuation allowances:
Proved properties 6,467 6,171 5,677 3,023 3,244 3,050 2,604 2,169 1,895 840 758 732
Unproved properties 261 347 318 162 235 225 13 13 21 86 99 72
----------------------------------------------------------------------------------------------------------
Net costs of fully
consolidated companies $ 5,636 $ 5,990 $ 5,944 $ 2,070 $ 2,579 $ 2,827 $ 3,183 $ 3,011 $ 2,757 $ 383 $ 400 $ 360
----------------------------------------------------------------------------------------------------------
Net costs of equity
affiliates 177 66 18 92 36 18 85 30 -- -- -- --
----------------------------------------------------------------------------------------------------------
Total net costs $ 5,813 $ 6,056 $ 5,962 $ 2,162 $ 2,615 $ 2,845 $ 3,268 $ 3,041 $ 2,757 $ 383 $ 400 $ 360
====================================================================================================================================
</TABLE>
* Includes Canada, Dubai and Indonesia.
60 DUPONT
<PAGE>
- --------------------------------
Supplemental Petroleum Data
- --------------------------------
DOLLARS IN MILLIONS
-------------------
Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development
Activities/1/
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Total Worldwide United States Europe Other Regions/2/
- ------------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Property acquisitions:
Proved $ 111 $ 16 $ 227 $ 93 $ 16 $ 227 $ 5 $ -- $ -- $ 13 $ -- $ --
Unproved 11 23 217 8 7 24 -- -- 165/3/ 3 16 28
Exploration 352 432 653 83 99 172 158 221 279 111 112 202
Development 864 806 883 195 206 346 567 498 472 102 102 65
---------------------------------------------------------------------------------------------------------
Total for fully
consolidated companies $1,338 $1,277 $1,980 $ 379 $ 328 $ 769 $ 730 $ 719 $ 916 $ 229 $ 230 $ 295
---------------------------------------------------------------------------------------------------------
Cost incurred for
equity affiliates 70 38 10 16 19 10 54 19 -- -- -- --
---------------------------------------------------------------------------------------------------------
Total costs incurred $1,408 $1,315 $1,990 $ 395 $ 347 $ 779 $ 784 $ 738 $ 916 $ 229 $ 230 $ 295
====================================================================================================================================
</TABLE>
/1/ These data comprise all costs incurred in the activities shown, whether
capitalized or charged to expense at the time they were incurred.
/2/ Includes Canada, Dubai and Indonesia.
/3/ Essentially reflects acquisitions of North Sea properties that contain
probable reserves for which development is either underway or being actively
planned.
61 DUPONT
<PAGE>
- --------------------------------
Supplemental Petroleum Data
- --------------------------------
DOLLARS IN MILLIONS
-------------------
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil
and Gas Reserves
The information below has been prepared in accordance with Statement of
Financial Accounting Standards No. 69, which requires the standardized measure
of discounted future net cash flows to be based on year-end sales prices, costs
and statutory income tax rates, and a 10 percent annual discount rate.
Specifically, the per-barrel oil sales prices used to calculate the December 31,
1993 data averaged $11.00 for the United States and $12.47 for Europe and Other
Regions, and the gas prices per thousand cubic feet averaged approximately $1.92
for the United States and $2.70 for Europe and Other Regions. Because prices
used in the calculation are as of December 31, the standardized measure could
vary significantly from year-to-year based on market conditions at that specific
date.
The projections should not be viewed as realistic estimates of future cash
flows nor should the "standardized measure" be interpreted as representing
current value to the company. Material revisions to estimates of proved
reserves may occur in the future, development and production of the reserves may
not occur in the periods assumed, actual prices realized are expected to vary
significantly from those used and actual costs may also vary. The company's
investment and operating decisions are not based on the information presented
below, but on a wide range of reserve estimates that includes probable as well
as proved reserves, and on different price and cost assumptions from those
reflected in this information.
Beyond the above considerations, the "standardized measure" is also not
directly comparable with asset balances appearing elsewhere in the financial
statements, because any such comparison would require reconciling adjustments,
including reduction of the asset balances for related deferred income taxes.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Total Worldwide United States Europe Other Regions*
1993 1992 1993 1992 1993 1992 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Future cash flows:
Revenues $ 19,558 $ 24,439 $ 7,199 $ 10,027 $ 9,380 $ 10,785 $ 2,979 $ 3,627
Production costs (9,117) (10,011) (4,361) (5,228) (4,005) (4,119) (751) (664)
Development costs (1,802) (1,719) (515) (534) (1,143) (1,001) (144) (184)
Income tax expense (3,607) (6,022) (414) (1,060) (1,514) (2,585) (1,679) (2,377)
--------------------------------------------------------------------------------------------
Future net cash flows $ 5,032 $ 6,687 $ 1,909 $ 3,205 $ 2,718 $ 3,080 $ 405 $ 402
Discounted to present
value at a 10% annual rate (1,818) (2,379) (655) (1,239) (1,021) (1,000) (142) (140)
--------------------------------------------------------------------------------------------
Standardized measure of
discounted future net
cash flows of fully
consolidated companies $ 3,214 $ 4,308 $ 1,254 $ 1,966 $ 1,697 $ 2,080 $ 263 $ 262
--------------------------------------------------------------------------------------------
Standardized measure of
discounted future net cash
flows of equity affiliates 99 70 96 55 3 15 -- --
--------------------------------------------------------------------------------------------
Standardized measure of
discounted future net
cash flows - Total $ 3,313 $ 4,378 $ 1,350 $ 2,021 $ 1,700 $ 2,095 $ 263 $ 262
=============================================================================================================================
</TABLE>
* Includes Canada, Dubai and Indonesia.
62 DUPONT
<PAGE>
- --------------------------------
Supplemental Petroleum Data
- --------------------------------
DOLLARS IN MILLIONS
-------------------
Summary of Changes in Standardized Measure of Discounted
Future Net Cash Flows Relating to Proved Oil and Gas Reserves
For Fully Consolidated Companies
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1 $ 4,308 $ 3,558 $ 6,059
Sales and transfers of oil and gas produced, net of production costs (2,239) (2,053) (2,245)
Development costs incurred during the period 864 833 883
Net changes in prices and in development and production costs (3,017) 765 (7,487)
Extensions, discoveries and improved recovery, less related costs 915 453 840
Revisions of previous quantity estimates 130 178 284
Purchases (sales) of reserves in place-net (120) (42) 39
Accretion of discount 791 689 1,301
Net change in income taxes 1,493 (369) 3,891
Other 89 296 (7)
---------------------------------
Balance at December 31 $ 3,214 $ 4,308 $ 3,558
====================================================================================================================
</TABLE>
63 DUPONT
<PAGE>
- --------------------------------------------------
Quarterly Financial Data
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Quarter Ended March 31 June 30 September 30 December 31
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993
Sales $ 9,070 $ 9,546 $ 9,231 $ 9,251
Cost of Goods Sold and Other Expenses/1/ 8,247 8,684 10,375 8,983
Net Income (Loss) 493/2/ 516/3/ (680)/4/ 237/5,6/
Earnings (Loss) Per Share of Common Stock .73 .76 (1.01) .35/5/
Dividends Per Share of Common Stock .44 .44 .44 .44
Market Price of Common Stock/7/:
High 50 53 7/8 49 5/8 50 1/2
Low 44 1/2 46 1/2 45 7/8 44 1/2
- ----------------------------------------------------------------------------------------------------------------------------------
1992
Sales $ 9,160 $ 9,745 $ 9,733 $ 9,161
Cost of Goods Sold and Other Expenses/1/ 8,393 9,021 9,082 9,402
Net Income (Loss)/8/ 439 277/9/ 420 (161)/10/
Earnings (Loss) Per Share of Common Stock/8/ .64 .41 .63 (.25)
Dividends Per Share of Common Stock .42 .44 .44 .44
Market Price of Common Stock/7/:
High 50 1/2 54 7/8 54 1/4 50 7/8
Low 43 1/2 45 7/8 46 3/8 45 1/4
==================================================================================================================================
</TABLE>
/1/ Excludes interest and debt expense and provision for income taxes.
/2/ Includes a gain of $32 ($.05 per share) from exchange of North Sea
properties.
/3/ Includes a loss of $21 ($.03 per share) from sale of petroleum-producing
properties.
/4/ Includes restructuring charges of $1,295 ($1.91 per share), partially offset
by a net tax benefit of $265 ($.39 per share).
/5/ Before extraordinary item.
/6/ Includes net charge of $92 ($.13 per share) related to certain product
liability claims and litigation costs ($144, of which $126 is associated with
the "Benlate" DF 50 fungicide recall) and a loss on the sale of a polyethylene
business ($17), partly offset by a gain from the sale of the Remington Arms
Company ($69). Also includes a benefit of about $50 ($.07 per share) as a
result of the liquidation of certain LIFO inventory quantities.
/7/ As reported on the New York Stock Exchange, Inc. Composite Transactions
Tape.
/8/ Before extraordinary item and transition effect of accounting changes. See
the Consolidated Income Statement on page 37. Includes exchange gain (loss)
related to unhedged non-U.S. deferred tax liabilities, which were established
on the adoption of SFAS No. 109, for quarters ended: March 31 - $55 ($.08 per
share); June 30 - $(73) ($.11 per share); September 30 - $44 ($.07 per share);
December 31 - $71 ($.10 per share).
/9/ Includes charge of $134 ($.20 per share) associated with "Benlate" DF 50
fungicide recall.
/10/ Includes charge of $329 ($.49 per share) for termination incentives and
payments, as well as certain other charges, related to business restructurings.
- --------------------------------
Consolidated Geographic Data
- --------------------------------
DOLLARS IN MILLIONS
-------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Capital Total Assets Average
Expenditures December 31 Employment
- ----------------------------------------------------------------------------------------------
1993 1992 1993 1992 1993 1992
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United States $ 1,842 $ 2,323 $20,610 $22,859 81,587 91,808
Europe 1,277 1,596 11,315 11,114 22,427 20,987
Other Regions 606 605 5,128 4,897 15,395 15,952
---------------------------------------------------------------
Total $ 3,725 $ 4,524 $37,053 $38,870 119,409 128,747
==============================================================================================
</TABLE>
Capital expenditures, total assets and average employment are assigned to
geographic areas, generally based on physical location.
64 DUPONT
<PAGE>
- --------------------------------------------------
Five-Year Financial Review/1/
- --------------------------------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE
-------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Summary of Operations
Sales $37,098 $37,799 $38,695 $40,047 $35,534
Earnings Before Income Taxes $ 958 $ 1,811 $ 2,818 $ 4,154 $ 4,324
Provision for Income Taxes $ 392 $ 836 $ 1,415 $ 1,844 $ 1,844
Net Income/2/ $ 566 $ 975 $ 1,403 $ 2,310 $ 2,480
Percent of Average Stockholders'
Equity/2/ 4.8% 8.1% 8.3% 14.3% 15.7%
Earnings Per Share of Common Stock/2,3/ $ .83 $ 1.43 $ 2.08 $ 3.40 $ 3.53
- -------------------------------------------------------------------------------------------------
Financial Position at Year End
Working Capital $ 1,460 $ 2,002 $ 3,381 $ 2,210 $ 1,996
Total Assets $37,053 $38,870 $36,559 $38,128 $34,715
Long-Term Borrowings and Capital Leases $ 6,531 $ 7,193 $ 6,456 $ 5,663 $ 4,149
Stockholders' Equity $11,230 $11,765 $16,739 $16,418 $15,798
Total Debt as Percent of Total
Capitalization 45% 48% 33% 37% 33%
- -------------------------------------------------------------------------------------------------
General
For the Year:
Capital Expenditures $ 3,725 $ 4,524 $ 5,246 $ 5,513 $ 4,481
Depreciation, Depletion and
Amortization $ 2,833 $ 2,655 $ 2,640 $ 2,625 $ 2,530
Research and Development Expense $ 1,132 $ 1,277 $ 1,298 $ 1,428 $ 1,387
As Percent of Combined Segment
Sales for:
Chemicals, Fibers, Polymers and
Diversified Businesses
(excluding Coal) 5.1% 5.6% 5.8% 6.2% 6.2%
Petroleum 0.3% 0.4% 0.4% 0.3% 0.5%
Average Number of Shares Outstanding
(millions) 677 673 671 676 701
Dividends Per Common Share $ 1.76 $ 1.74 $ 1.68 $ 1.62 $ 1.45
Dividends as Percent of Earnings on
Common Stock/2/ 212% 122% 81% 48% 41%
Common Stock Prices:
High $53 7/8 $54 7/8 $50 $42 3/8 $42 1/8
Low $44 1/2 $43 1/2 $32 3/4 $31 3/8 $28 5/8
Year-End Close $48 1/4 $47 1/8 $46 5/8 $36 3/4 $41
At Year End:
Employees (thousands) 114 125 133 144 146
Common Stockholders of Record
(thousands) 181 188 195 199 196
Book Value Per Common Share $ 16.22 $ 17.08 $ 24.58 $ 24.16 $ 22.71
=================================================================================================
</TABLE>
/1/ See Management's Discussion and Analysis on pages 30 to 34, Consolidated
Income Statement on page 37, Notes to Financial Statements on pages 41 to 57 and
Quarterly Financial Data on page 64 for information relating to significant
items affecting the results of operations and financial position.
/2/ Before effect on income of extraordinary item (1993 and 1992) and transition
effect of accounting changes (1992). See the Consolidated Income Statement on
page 37.
/3/ Based on the average number of common shares outstanding.
65 DUPONT
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME ORGANIZED UNDER LAWS OF
- ------------------------------------------------------- -----------------------
<S> <C>
Conoco Canada Limited.................................. Canada
Conoco Developments Ltd................................ England
Conoco Inc............................................. Delaware
Conoco Indonesia Inc................................... Delaware
Conoco International, Inc.............................. Delaware
Conoco Investments Norge A/S........................... Norway
Conoco Ireland Ltd..................................... Delaware
Conoco Limited......................................... England
Conoco Mineraloel GmbH................................. Germany
Conoco Norway Inc...................................... Delaware
Conoco Petroleum Limited............................... England
Conoco Petroleum Norge A/S............................. Norway
Conoco Pipe Line Company............................... Delaware
Conoco Specialty Products, Inc......................... Delaware
Conoco Timan-Pechora Ltd............................... Bermuda
Conoco (U.K.) Limited.................................. England
Consol Energy Inc. (50% owned)......................... Delaware
Continental Oil Company of Libya....................... Delaware
Danube Insurance Ltd................................... Bermuda
Douglas Oil Company of California...................... California
Dubai Petroleum Company................................ Delaware
Du Pont Agrichemicals Caribe, Inc...................... Delaware
Du Pont Argentina S.A.................................. Argentina
Du Pont Asia Pacific, Ltd. ............................ Delaware
Du Pont (Australia) Limited............................ Australia
Du Pont Canada Inc. (76.49% owned)..................... Canada
Du Pont Chemical and Energy Operations, Inc............ Delaware
Du Pont Delaware, Inc.................................. Delaware
Du Pont Diagnostics, Inc............................... Delaware
Du Pont de Colombia, S.A............................... Colombia
Du Pont de Nemours (Belgium) N.V....................... Belgium
Du Pont de Nemours (Deutschland) GmbH.................. Germany
Du Pont de Nemours (France) S.A........................ France
Du Pont de Nemours International S.A................... Switzerland
Du Pont de Nemours Italiana S.p.A...................... Italy
Du Pont de Nemours (Luxembourg) S.A.................... Luxembourg
Du Pont de Nemours (Nederland) B.V..................... Netherlands
Du Pont do Brasil S.A.................................. Brazil
Du Pont Electronic Materials, Inc...................... Delaware
Du Pont Energy Company................................. Delaware
Du Pont Engineering Products, S.A...................... Luxembourg
Du Pont Feedstocks Company............................. Delaware
Du Pont Foreign Sales Corporation...................... Virgin Islands
Du Pont Iberica, S.A................................... Spain
Du Pont (K.K.)......................................... Delaware
Du Pont Korea, Ltd..................................... Republic of Korea
Du Pont Merck Pharmaceutical Company (Delaware Partner-
ship) (50% owned)..................................... Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME ORGANIZED UNDER LAWS OF
- ------------------------------------------------------- -----------------------
<S> <C>
Du Pont Merck Pharma (Puerto Rico Partnership) (50%
owned)................................................ Puerto Rico
Du Pont (New Zealand) Ltd.............................. New Zealand
Du Pont Photomasks, Inc................................ Texas
Du Pont Polymeres S.A.................................. Luxembourg
Du Pont, S.A. de C.V................................... Mexico
Du Pont Scandanavia A.B................................ Sweden
Du Pont (Singapore) Pte. Ltd........................... Singapore
Du Pont (Singapore) Fibres Pte. Ltd. (90% owned)....... Singapore
Du Pont Specialty Operations, B.V...................... Netherlands
Du Pont Taiwan Ltd..................................... Taiwan
Du Pont (Thailand) Co. Ltd............................. Thailand
Du Pont (U.K.) Limited................................. England
Kayo Oil Company....................................... Delaware
Societe Europeene Des Carburants....................... Belgium
World Wide Transport, Inc.............................. Liberia
</TABLE>
Subsidiaries not listed would not, if considered in the aggregate as a single
subsidiary, constitute a significant subsidiary.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (No. 33-39161 and
No. 33-48128) and Form S-8 (No. 33-51817, No. 33-43918, No. 2-74004, No. 33-
51821 and No. 33-36339) of E. I. du Pont de Nemours and Company of our report
dated February 17, 1994 appearing on page 36 of the Annual Report to
Stockholders which is incorporated in this Annual Report on Form 10-K. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedules, which appears on page 19 of this Form 10-K.
Price Waterhouse
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
March 18, 1994
