<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 2, 1995
REGISTRATION NO. 33-58599
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------
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
(302) 774-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
CHARLES L. HENRY
1007 MARKET STREET
WILMINGTON, DELAWARE 19898
(302) 774-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
HOWARD J. RUDGE, ESQ. JOHN W. WHITE, ESQ.
E. I. DU PONT DE NEMOURS AND COMPANY CRAVATH, SWAINE & MOORE
1007 MARKET STREET WORLDWIDE PLAZA, 825 EIGHTH AVENUE
WILMINGTON, DELAWARE 19898 NEW YORK, NEW YORK 10019
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment, check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This registration statement contains two forms of prospectus, one of which is
to be used in connection with an offering in the United States and Canada (the
"U.S. Prospectus"), and the other of which is to be used in connection with a
concurrent offering outside the United States and Canada (the "International
Prospectus"). The U.S. Prospectus and the International Prospectus are
identical except for the front and back cover pages, the inside front cover
pages, the text under the captions "Underwriting" and "Subscription and Sale"
in the U.S. Prospectus and the International Prospectus, respectively, the text
under the caption "Notice to Canadian Investors" in the U.S. Prospectus and
certain cross-references relating to such sections. The form of the U.S.
Prospectus is included herein and is followed by those pages to be used in the
International Prospectus which differ from those in the U.S. Prospectus. Each
of the pages for the International Prospectus included herein is labeled "I-."
Final forms of such prospectuses will be filed with the Securities and Exchange
Commission pursuant to Rule 424(b), if necessary.
i
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 2, 1995
17,000,000 Shares
E. I. du Pont de Nemours and Company
Common Stock
($.60 par value)
--------
Of the 17,000,000 shares being offered, 13,600,000 shares initially are being
offered in the United States and Canada (the "U.S. Shares") by the U.S.
Underwriters (the "U.S. Offering") and 3,400,000 shares initially are being
concurrently offered outside the United States and Canada (the "International
Shares") by the Managers (the "International Offering" and, together with the
U.S. Offering, the "Offerings"). The offering price and underwriting discounts
and commissions of the U.S. Offering and the International Offering are
identical. On May 1, 1995, the reported last sale price of the Common Stock on
the New York Stock Exchange Composite Tape was $66 1/8 per share.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Company (1)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share.................................. $ $ $
Total (2).................................. $ $ $
</TABLE>
(1) Before deduction of expenses payable by the Company, estimated at $903,000.
(2) The Company has granted the U.S. Underwriters and the Managers an option,
exercisable by CS First Boston Corporation for 30 days from the date of
this Prospectus, to purchase a maximum of 2,550,000 additional shares to
cover over-allotments of shares. If the option is exercised in full, the
total Price to Public will be $ , Underwriting Discounts and Commissions
will be $ , and Proceeds to Company will be $ . See "Underwriting".
--------
Global Coordinator
CS First Boston
--------
The U.S. Shares are offered by the several U.S. Underwriters when, as and if
issued by the Company, delivered to and accepted by the U.S. Underwriters and
subject to their right to reject orders in whole or in part. It is expected
that the U.S. Shares will be ready for delivery on or about May , 1995.
CS First Boston
Merrill Lynch & Co.
Morgan Stanley & Co.
Incorporated
The date of this Prospectus is , 1995.
<PAGE>
IN CONNECTION WITH THE OFFERINGS, CS FIRST BOSTON CORPORATION ON BEHALF OF
THE U.S. UNDERWRITERS AND THE MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
E. I. du Pont de Nemours and Company ("DuPont" or the "Company") is subject
to the informational requirements of the Securities Exchange Act of 1934 (the
"Exchange Act"), and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). These reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at its principal offices at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials also can be obtained from the Public Reference Section of the
Commission at prescribed rates at the principal offices of the Commission
located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Common Stock is listed on the New York Stock Exchange (Symbol: DD), and reports
and information concerning the Company can be inspected at such exchange, 20
Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form S-
3 under the Securities Act of 1933 (the "Act") with respect to the shares of
Common Stock offered hereby (including all amendments and supplements thereto,
the "Registration Statement"). This Prospectus, which forms a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement and the exhibits filed therewith, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. Statements contained herein concerning the provisions of such
documents are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference. The Registration Statement and the exhibits thereto
can be inspected and copied at the public reference facilities and regional
offices referred to above.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the following
documents heretofore filed with the Commission pursuant to the Exchange Act:
(i) the Company's Annual Report on Form 10-K for the year ended December 31,
1994, including the 1995 Proxy Statement for the Annual Meeting of Shareholders
dated March 17, 1995, as amended by the Proxy Supplement dated April 13, 1995;
(ii) the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1995; (iii) the Company's Current Reports on Form 8-K dated January 25,
1995, April 7, 1995 (as amended), April 24, 1995 and April 27, 1995; and (iv)
the Company's Registration of Common Stock on Form 8-A.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to termination of the Offerings shall be deemed to be incorporated in this
Prospectus by reference and to be a part hereof from the respective dates of
the filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed document which also
is, or is deemed to be, incorporated by reference herein, modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of any and all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents which are not specifically incorporated
by reference into such documents. Requests for such copies should be directed
to Capital Markets, DuPont Finance, E. I. du Pont de Nemours and Company, 1007
Market Street, Wilmington, Delaware 19898, or telephone (302) 774-1000.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information (including financial
information and the notes thereto) included elsewhere in this Prospectus or
incorporated herein by reference.
THE COMPANY
DuPont is the largest United States chemical producer and one of the leading
chemical producers worldwide. The Company conducts fully integrated petroleum
operations primarily through its wholly owned subsidiary Conoco Inc.
("Conoco"). Conoco 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.
The Company operates globally through approximately twenty strategic business
units and is organized for financial reporting purposes into five principal
industry segments--Chemicals, Fibers, Polymers, Petroleum and Diversified
Businesses. 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 47% 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 1994 was about 107,000 people.
REDEMPTION OF DUPONT COMMON STOCK FROM SEAGRAM
On April 6, 1995, the Company acquired 156 million shares of its Common Stock
beneficially owned by The Seagram Company Ltd. ("Seagram") for $56.25 per share
(the "Seagram Redemption"). The consideration for the acquired shares consisted
of (i) $1 billion in cash, (ii) 90-day promissory notes of the Company in an
aggregate principal amount of approximately $7.3 billion and (iii) warrants of
the Company valued at approximately $440 million exercisable for 156 million
shares of the Company's Common Stock.
THE OFFERINGS
<TABLE>
<S> <C>
Common Stock Offered(1):
U.S. Offering..................... 13,600,000 shares
International Offering............ 3,400,000 shares
-----------
Total............................ 17,000,000 shares
Common Stock Outstanding(1):
Before the Offerings (at May 1,
1995)............................ 526,686,089 shares
After the Offerings(1)............ 543,686,089 shares
Use of Proceeds.................... The net proceeds of the Offerings will be
used for the repayment of a portion of the
short-term indebtedness incurred by the
Company in connection with the Seagram
Redemption. See "Redemption of DuPont
Common Stock from Seagram" and "Use of
Proceeds".
New York Stock Exchange Symbol..... DD
</TABLE>
- --------
(1) Does not include up to 2,550,000 shares of Common Stock subject to the
over-allotment option granted by the Company to the U.S. Underwriters and
the Managers.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------
1994(1) 1993 1992 1991 1990
------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS
AND RATIOS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERA-
TIONS DATA:
Sales............................ $39,333 $37,098 $37,799 $38,695 $40,047
Selling, General and
Administrative Expenses......... 2,888 3,081 3,553 3,576 3,718
Gain From Sale of an Interest in
Coal Business................... -- -- -- (391) --
Restructuring.................... (142) 1,621 475 828 --
Write-Down of Intangible Assets.. -- 214 -- -- --
Operating Profit................. 4,439 1,450 2,212 3,383 4,837
Interest and Debt Expense........ 559 594 643 752 773
Earnings Before Income Taxes..... 4,382 958 1,811 2,818 4,154
Income Before Extraordinary Item
and Transition Effect of
Accounting Changes.............. 2,727 566 975 1,403 2,310
Extraordinary Charge from Early
Extinguishment of Debt.......... -- (11) (69) -- --
Transition Effect of Changes in
Accounting Principles(2)........ -- -- (4,833) -- --
------- ------- ------- ------- -------
Net Income (Loss)................ $ 2,727 $ 555 $(3,927) $ 1,403 $ 2,310
======= ======= ======= ======= =======
Income Before Extraordinary Item
and Transition Effect of
Accounting Changes Per Share of
Common Stock.................... $ 4.00 $ .83 $ 1.43 $ 2.08 $ 3.40
======= ======= ======= ======= =======
Net Income (Loss) Per Share of
Common Stock.................... $ 4.00 $ .81 $ (5.85) $ 2.08 $ 3.40
======= ======= ======= ======= =======
Dividends Per Common Share....... $ 1.82 $ 1.76 $ 1.74 $ 1.68 $ 1.62
Average Number of Shares
Outstanding..................... 680 677 673 671 676
OTHER DATA:
Cash Provided by Operations...... $ 5,664 $ 5,380 $ 4,388 $ 5,461 $ 5,146
Capital Expenditures............. 3,241 3,725 4,524 5,246 5,513
Depreciation, Depletion and
Amortization.................... 2,976 2,833 2,655 2,640 2,625
Research and Development Expense. 1,047 1,132 1,277 1,298 1,428
Fixed Charge Coverage Ratio...... 6.1x 2.0x 2.7x 3.5x 4.7x
CONSOLIDATED BALANCE SHEET DATA
(AT PERIOD END):
Working Capital.................. $ 3,543 $ 1,460 $ 2,002 $ 3,381 $ 2,210
Total Assets..................... 36,892 37,053 38,870 36,559 38,128
Borrowings and Capital Lease
Obligations..................... 7,668 9,327 10,992 8,297 9,591
Stockholders' Equity............. 12,822 11,230 11,765 16,739 16,418
Total Debt as Percent of Total
Capitalization.................. 37% 45% 48% 33% 37%
</TABLE>
- --------
(1) On a pro forma basis, if the Seagram Redemption had occurred: (i) at
January 1, 1994 (assuming that the related indebtedness had been
outstanding throughout 1994), Interest and Debt Expense would have been
$994, Earnings Before Income Taxes would have been $3,907, Net Income would
have been $2,352, Net Income Per Share of Common Stock would have been
$4.47 (on the basis of 524 average outstanding shares) and the Fixed Charge
Coverage Ratio would have been 4.0x; and (ii) at December 31, 1994,
Borrowings and Capital Lease Obligations would have been $15,004,
Stockholders' Equity would have been $4,471 and Total Debt as Percent of
Total Capitalization would have been 76%. On a pro forma basis, if the
Seagram Redemption and the Offerings had occurred at January 1, 1994
(assuming that the related indebtedness had been outstanding throughout
1994 and that the U.S. Underwriters' and the Managers' over-allotment
option had not been exercised and proceeds are net of underwriting
discounts and estimated expenses), the Net Income Per Share of Common Stock
would have been $4.42. Pro forma data are not necessarily indicative of
results of operations or financial position in subsequent periods.
(2) 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 and $1,045, respectively, as of
January 1, 1992 for the effects of transition to these two standards.
5
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
THREE-MONTHS ENDED
MARCH 31(1)
--------------------------------
1995(2) 1994
---------------- ---------------
(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS AND RATIOS)
<S> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Sales...................................... $ 10,502 $ 9,190
Selling, General and Administrative Ex-
penses.................................... 740 664
Interest and Debt Expense.................. 120 142
Earnings Before Income Taxes............... 1,698 1,152
Net Income ................................ $ 959 $ 642
=============== ===============
Net Income Per Share of Common Stock....... $ 1.40 $ .94
=============== ===============
Dividends Per Common Share................. $ .47 $ .44
Average Number of Shares Outstanding....... 681 678
OTHER DATA:
Cash Provided by Operations................ $ 991 $ 1,091
Capital Expenditures....................... 688 692
Depreciation, Depletion and Amortization... 648 703
Fixed Charge Coverage Ratio................ 9.3x 6.2x
CONSOLIDATED BALANCE SHEET DATA (AT PERIOD
END):
Working Capital............................ $ 4,311 $ 2,105
Total Assets............................... 38,691 38,512
Borrowings and Capital Lease Obligations... 8,174 10,343
Stockholders' Equity....................... 13,516 11,630
Total Debt as Percent of Total Capitaliza-
tion...................................... 37% 47%
</TABLE>
- --------
(1) The summary consolidated financial data for the three-month periods ended
March 31, 1995 and March 31, 1994, respectively, have been derived from
unaudited financial statements but reflect, in the opinion of the Company,
all adjustments, consisting of normal recurring adjustments, necessary to
present fairly the results of operations and financial position for such
periods.
(2) On a pro forma basis, if the Seagram Redemption had occurred: (i) at
January 1, 1995 (assuming the related indebtedness had been outstanding
throughout the first quarter of 1995), Interest and Debt Expense would have
been $235, Earnings Before Income Taxes would have been $1,568, Net Income
would have been $867, Net Income Per Share of Common Stock would have been
$1.65 (on the basis of 525 average outstanding shares) and the Fixed Charge
Coverage Ratio would have been 5.9x, and (ii) at March 31, 1995, Borrowings
and Capital Lease Obligations would have been $15,510, Stockholders' Equity
would have been $5,165 and Total Debt as Percent of Total Capitalization
would have been 74%. On a pro forma basis, if the Seagram Redemption and
the Offerings had occurred at January 1, 1995 (assuming that the related
indebtedness had been outstanding throughout the first quarter of 1995, the
U.S. Underwriters' and the Managers' over-allotment option had not been
exercised and proceeds are net of underwriting discounts and estimated
expenses), the Net Income Per Share of Common Stock would have been $1.62.
Pro forma data are not necessarily indicative of results of operations or
financial position in subsequent periods.
6
<PAGE>
THE COMPANY
DuPont is the largest United States chemical producer and one of the leading
chemical producers worldwide. The Company conducts fully integrated petroleum
operations primarily through its wholly owned subsidiary Conoco and, in 1993,
ranked eighth in the worldwide production of petroleum liquids by U.S.-based
companies, ninth in the production of natural gas, and seventh in refining
capacity. Conoco 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.
The Company operates globally through 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 47% 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 1994 was about 107,000 people.
The Company is organized for financial reporting purposes into five principal
industry segments--Chemicals, Fibers, Polymers, Petroleum, and Diversified
Businesses.
Chemicals. In 1994, Chemicals generated $3.8 billion in sales (9.6% of the
Company's total sales) and $386 million of after tax operating income ("ATOI")
(12.4% of the Company's total ATOI). 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. The Company is
the world's leading producer of titanium dioxide, which is used in paper, paint
and plastic. Fluorochemicals produces the broadest range of alternatives to
chlorofluorocarbons, including refrigerants, foam expansion agents, propellants
and cleaning agents. Specialty Chemicals includes specialty chemicals and
materials and environmental services, more than 60 percent of the sales of
which comes from industrial chemicals such as ammonia, cyanide and peroxygen
products.
Fibers. In 1994, Fibers generated $6.8 billion in sales (17.2% of the
Company's total sales) and $701 million of ATOI (22.6% of the Company's total
ATOI). A diversified mix of specialty fibers is produced to serve end uses
including protective apparel, active sportswear, packaging and high-strength
composites in aerospace. 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. Fibers includes the Company's "Lycra" spandex, nylon,
"Dacron" polyester, "Nomex" heat-resistant and "Kevlar" high-strength aramid
fibers businesses.
Polymers. In 1994, Polymers generated $6.3 billion in sales (16.1% of the
Company's total sales) and $717 million of ATOI (23.1% of the Company's total
ATOI). Engineering polymers, elastomers, "Teflon" and other 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 the manufacturing and marketing of more than
100 DuPont product lines used by the automotive industry, and "Corian" building
products.
Petroleum. In 1994, Petroleum generated $16.8 billion in sales (42.7% of the
Company's total sales) and $680 million of ATOI (21.9% of the Company's total
ATOI). Petroleum operations are carried out through Conoco and range from
exploration for crude oil and natural gas to the marketing of finished
products. The upstream part of the business finds, develops and produces oil
and gas and processes natural gas to recover higher-value liquids that are sold
separately. The downstream part of the business refines crude oil and other
feedstocks to produce high-quality fuels, lubricants and other products that
are sold to customers primarily in the United States and Europe, and more
recently in the Asia Pacific region. The downstream business also produces
intermediates for use as chemical feedstocks and a wide range of specialty
products such as petroleum coke and lubricating oils for commercial and
industrial customers worldwide. Conoco's retail operations include over 2,400
service stations in 13 countries.
7
<PAGE>
Diversified Businesses. In 1994, Diversified Businesses generated $5.7
billion in sales (14.4% of the Company's total sales) and $623 million of ATOI
(20.0% of the Company's total ATOI). Diversified Businesses include the
following strategic business units: Agricultural Products, Electronic
Materials, Films, Medical Products and Printing and Publishing. Agricultural
Products include herbicides and other products developed for specific
agricultural applications. Electronic Materials is involved with a consortium
that will design and develop high-definition television, photomasks used in the
production of semi-conductor devices, printed circuit materials and photo
imagable coverlay for flexible circuit board manufacture. Films produces
polyester film and audio/video film. Medical Products offers diagnostic imaging
systems, blood chemistry analyzers and centrifuge and detection products for
life science research and also includes the Company's 50 percent interest in
The DuPont Merck Pharmaceutical Company. Printing and Publishing sells
proofing, packaging and graphic arts products. The Diversified Businesses
segment also includes the Company's 50% interest in CONSOL Energy Inc., a coal
operations joint venture.
E. I. du Pont de Nemours and Company was founded in 1802 and was incorporated
in Delaware in 1915. Its principal executive offices are located at 1007 Market
Street, Wilmington, Delaware 19898, and its telephone number is (302) 774-1000.
REDEMPTION OF DUPONT COMMON STOCK FROM SEAGRAM
On April 6, 1995, the Company acquired 156 million shares of its Common Stock
beneficially owned by Seagram for $56.25 per share. The consideration for the
acquired shares consisted of (i) $1 billion in cash, (ii) 90-day promissory
notes of the Company in an aggregate principal amount of approximately $7.3
billion and (iii) warrants of the Company valued at approximately $440 million
exercisable for 156 million shares of the Company's Common Stock. Seagram
continues to hold approximately 8.2 million shares, or 1.6% of the shares
outstanding following the transaction.
Subsequent to April 6, 1995, the notes issued to Seagram were paid and
replaced by private placement commercial paper borrowings of the Company.
The warrants issued to Seagram expire on October 6, 1997, October 6, 1998 and
October 6, 1999 with respect to 48 million shares at $89.33 per share, 54
million shares at $101.14 per share and 54 million shares at $113.63 per share,
respectively. In general, as long as the warrants are held by Seagram, the
warrants are exercisable only during the 60-day periods immediately preceding
their respective expiration dates. However, the warrants would become
exercisable sooner in connection with certain significant corporate events. The
warrants are not transferable until May 15, 1996. Following such date, the
Company would have the right to buy the warrants from Seagram before Seagram
would be permitted to transfer the warrants to a third party. Any warrants that
are transferred to non-affiliates of Seagram would be exercisable at any time
prior to their expiration. The warrants contain standard anti-dilution
adjustments.
In connection with the Seagram Redemption, the Company and Seagram terminated
their 1986 agreement and entered into a new agreement relating to their future
relationship. The new agreement has a term of 15 years, but may be terminated
sooner under certain circumstances. The new agreement contains a variety of
"standstill" restrictions applicable to Seagram which, among other things,
prohibit Seagram from acquiring shares of Common Stock, except upon exercise of
the warrants and a negligible number of additional shares. The new agreement
also provides that, if Seagram exercises the warrants, Seagram would have the
right to designate representatives to the Company's board of directors
(although a smaller percentage than under the 1986 agreement). In addition, the
new agreement provides that Seagram will vote its shares of Common Stock
(including any shares issued upon exercise of the warrants) proportionately
with other stockholders, except that Seagram may vote its shares in its
discretion on the occurrence of certain significant corporate events.
8
<PAGE>
Effective as of the closing of the Seagram Redemption, Seagram's
representatives on the Company's board of directors (Edgar M. Bronfman, Charles
R. Bronfman, Edgar Bronfman, Jr. and John L. Weinberg) resigned from such
positions.
Agreements with respect to the Seagram Redemption have been filed as exhibits
to the Company's Current Report on Form 8-K dated April 7, 1995 (as amended)
which is incorporated herein by reference.
USE OF PROCEEDS
The net proceeds to the Company from the Offerings are estimated to be
approximately $1,092 million (or approximately $1,256 million if the over-
allotment option granted to the U.S. Underwriters and Managers is exercised in
full) after deduction of underwriting discounts and estimated offering expenses
based on an assumed public offering price of $66 1/8 per share, the closing
price of DuPont Common Stock on May 1, 1995. Such net proceeds will be used for
the repayment of a portion of the private placement commercial paper borrowings
incurred in connection with the Seagram Redemption. The weighted average
interest rate of such borrowings was 6.17% at April 25, 1995. See "Redemption
of DuPont Common Stock from Seagram".
The Company currently expects that the long-term funding for the Seagram
Redemption will include: (i) cash flow from operations and selective sales of
assets; (ii) a Flexitrust program (the "Flexitrust Program") that will effect
the sale or distribution of up to 24 million additional newly issued shares of
DuPont Common Stock over the next several years, provided that such sale or
distribution will begin no sooner than 60 days after closing of the Offerings,
to satisfy existing employee compensation and benefit programs; and (iii) up to
$2.0 billion from public and private offerings of equity securities, including
the Offerings. Such offerings may also include the Company's offer to sell up
to $500 million of Common Stock to the DuPont Pension Trust Fund. It is unknown
whether the DuPont Pension Trust Fund will accept any such offer or the price
and other terms of any such transaction.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is traded on the New York Stock Exchange under the symbol
DD. The table below sets forth the high and low closing prices of the Common
Stock as reported on the New York Stock Exchange Composite Tape as reported in
The Wall Street Journal and quarterly cash dividends declared per share of
Common Stock during the periods indicated. For a recent closing price of the
Common Stock, see the cover page of this Prospectus.
<TABLE>
<CAPTION>
PRICE RANGE CASH
------------- DIVIDENDS
LOW HIGH DECLARED
------ ------ ---------
<S> <C> <C> <C>
1993
First Quarter ended March 31, 1993...................... $44.50 $50.00 $0.44
Second Quarter ended June 30, 1993...................... 46.50 53.88 0.44
Third Quarter ended September 30, 1993.................. 45.88 49.63 0.44
Fourth Quarter ended December 31, 1993.................. 44.50 50.50 0.44
1994
First Quarter ended March 31, 1994...................... 48.25 59.88 0.44
Second Quarter ended June 30, 1994...................... 51.50 62.38 0.44
Third Quarter ended September 30, 1994.................. 56.88 61.38 0.47
Fourth Quarter ended December 31, 1994.................. 50.75 60.50 0.47
1995
First Quarter ended March 31, 1995...................... 53.13 61.00 0.47
Second Quarter (through May 1, 1995).................... 61.00 66.88 0.52
</TABLE>
Future dividend policy will depend on the Company's earnings, capital
requirements, financial condition and other factors considered relevant by the
Company's board of directors. As of April 27, 1995, there were 170,456 holders
of record of the Common Stock. Holders of record of the Common Stock as of May
15, 1995 will receive the second quarter dividend indicated above.
9
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company
at March 31, 1995, (i) as adjusted for the Seagram Redemption and (ii) as
adjusted to reflect the Seagram Redemption, the Offerings and the Flexitrust
Program, assuming that the U.S. Underwriters' and the Managers' over-allotment
option is not exercised and proceeds are net of underwriting discounts and
estimated expenses. This table should be read in conjunction with the
consolidated financial statements and related notes thereto. See "Use of
Proceeds" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Subsequent Events" for a discussion of possible future
sales or distributions of equity securities not reflected in this
Capitalization table.
<TABLE>
<CAPTION>
MARCH 31, 1995
---------------------------------------------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
AS ADJUSTED FOR THE
AS ADJUSTED FOR SEAGRAM REDEMPTION,
THE SEAGRAM THE OFFERINGS AND THE
ACTUAL REDEMPTION(1) FLEXITRUST PROGRAM(2)(3)
------- --------------- ------------------------
<S> <C> <C> <C>
Short-Term Borrowings and
Capital Lease Obligations. $ 1,897 $ 1,897 $ 8,141
Notes Payable(4)........... -- 7,336 --
Long-Term Borrowings and
Capital Lease Obligations. 6,277 6,277 6,277
------- ------- -------
Total Indebtedness....... 8,174 15,510 14,418
------- ------- -------
Minority Interests......... 209 209 209
------- ------- -------
Shareholders' Equity(5)
Preferred Stock........... 237 237 237
Common Stock.............. 409(6) 409 434
Additional Paid-In Capi-
tal...................... 4,828 5,267 7,919
Retained Earnings......... 8,042 8,042 8,042
Treasury Stock............ -- (8,790) (8,790)
Unearned Compensation..... -- -- (1,585)
------- ------- -------
Total Shareholders' Equi-
ty...................... 13,516 5,165 6,257
------- ------- -------
Total Capitalization....... $21,899 $20,884 $20,884
======= ======= =======
</TABLE>
- --------
(1) In connection with the Seagram Redemption the Company issued warrants to
purchase 156 million shares of Common Stock. For a description of the
warrants see "Redemption of DuPont Common Stock from Seagram".
(2) Assumes a public offering price of $66 1/8 per share, the closing price of
DuPont Common Stock on May 1, 1995.
(3) Reflects the issuance of 24 million shares of Common Stock, at an assumed
price of $66 1/8 per share, the closing price of DuPont Common Stock on May
1, 1995, under the Flexitrust Program, which is reflected in the line-items
"Common Stock" and "Additional Paid-In Capital". Because no shares of
Common Stock have been distributed or sold under the Flexitrust Program,
the amount of "Unearned Compensation" is equal to the value ascribed to the
Common Stock contributed. The shares issued to the Flexitrust Program will
be reflected in calculations of Net Income Per Share of Common Stock, and
Unearned Compensation will be reduced when such shares are distributed or
sold.
(4) Represents 90-day notes issued to Seagram in connection with the Seagram
Redemption. The Company has redeemed the notes from the proceeds of private
placement commercial paper.
(5) Should be read in conjunction with "Consolidated Statement of Stockholders'
Equity" on page F-5 and related Notes.
(6) See Note 23 to the Financial Statements for a discussion of shares of
Common Stock available for issuance pursuant to employee compensation
plans.
10
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------
1994(1) 1993 1992 1991 1990
------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS
AND RATIOS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Sales.................... $39,333 $37,098 $37,799 $38,695 $40,047
Selling, General and
Administrative Expenses. 2,888 3,081 3,553 3,576 3,718
Gain From Sale of an
Interest in Coal
Business................ -- -- -- (391) --
Restructuring............ (142) 1,621 475 828 --
Write-Down of Intangible
Assets.................. -- 214 -- -- --
Operating Profit......... 4,439 1,450 2,212 3,383 4,837
Interest and Debt
Expense................. 559 594 643 752 773
Earnings Before Income
Taxes................... 4,382 958 1,811 2,818 4,154
Income Before
Extraordinary Item and
Transition Effect of
Accounting Changes...... 2,727 566 975 1,403 2,310
Extraordinary Charge from
Early Extinguishment of
Debt.................... -- (11) (69) -- --
Transition Effect of
Changes in Accounting
Principles(2)........... -- -- (4,833) -- --
------- ------- ------- ------- -------
Net Income (Loss)........ $ 2,727 $ 555 $(3,927) $ 1,403 $ 2,310
======= ======= ======= ======= =======
Income Before
Extraordinary Item and
Transition Effect of
Accounting Changes Per
Share of Common Stock.....$ 4.00 $ .83 $ 1.43 $ 2.08 $ 3.40
======= ======= ======= ======= =======
Net Income (Loss) Per
Share of Common Stock... $ 4.00 $ .81 $ (5.85) $ 2.08 $ 3.40
======= ======= ======= ======= =======
Dividends Per Common
Share................... $ 1.82 $ 1.76 $ 1.74 $ 1.68 $ 1.62
Average Number of Shares
Outstanding............. 680 677 673 671 676
OTHER DATA:
Cash Provided by
Operations.............. $ 5,664 $ 5,380 $ 4,388 $ 5,461 $ 5,146
Capital Expenditures..... 3,241 3,725 4,524 5,246 5,513
Depreciation, Depletion
and Amortization........ 2,976 2,833 2,655 2,640 2,625
Research and Development
Expense................. 1,047 1,132 1,277 1,298 1,428
Fixed Charge Coverage
Ratio................... 6.1x 2.0x 2.7x 3.5x 4.7x
CONSOLIDATED BALANCE SHEET
DATA (AT PERIOD END):
Working Capital.......... $ 3,543 $ 1,460 $ 2,002 $ 3,381 $ 2,210
Total Assets............. 36,892 37,053 38,870 36,559 38,128
Borrowings and Capital
Lease Obligations....... 7,668 9,327 10,992 8,297 9,591
Stockholders' Equity..... 12,822 11,230 11,765 16,739 16,418
Total Debt as Percent of
Total Capitalization.... 37% 45% 48% 33% 37%
</TABLE>
- --------
(1) On a pro forma basis, if the Seagram Redemption had occurred: (i) at
January 1, 1994 (assuming that the related indebtedness had been
outstanding throughout 1994), Interest and Debt Expense would have been
$994, Earnings Before Income Taxes would have been $3,907, Net Income
would have been $2,352, Net Income Per Share of Common Stock would have
been $4.47 (on the basis of 524 average outstanding shares) and the Fixed
Charge Coverage Ratio would have been 4.0x; and (ii) at December 31, 1994,
Borrowings and Capital Lease Obligations would have been $15,004,
Stockholders' Equity would have been $4,471 and Total Debt as Percent of
Total Capitalization would have been 76%. On a pro forma basis, if the
Seagram Redemption and the Offerings had occurred on January 1, 1994
(assuming that the related indebtedness had been outstanding throughout
1994 and that the U.S. Underwriters' and the Managers' over-allotment
option had not been exercised and proceeds are net of underwriting
discounts and estimated expenses), the Net Income Per Share of Common
Stock would have been $4.42. Pro forma data are not necessarily indicative
of results of operations or financial position in subsequent periods.
(2) 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 and $1,045, respectively,
as of January 1, 1992 for the effects of transition to these two
standards.
11
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31(1)
--------------------------------
1995(2) 1994
---------------- ---------------
(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS AND RATIOS)
<S> <C> <C>
CONSOLIDATED STATEMENT OF OPERATION DATA:
Sales...................................... $ 10,502 $ 9,190
Selling, General and Administrative Ex-
penses.................................... 740 664
Interest and Debt Expense.................. 120 142
Earnings Before Income Taxes............... 1,698 1,152
Net Income................................. $ 959 $ 642
=============== ===============
Net Income Per Share of Common Stock....... $ 1.40 $ .94
=============== ===============
Dividends Per Common Share................. $ .47 $ .44
Average Number of Shares Outstanding....... 681 678
OTHER DATA:
Cash Provided by Operations................ $ 991 $ 1,091
Capital Expenditures....................... 688 692
Depreciation, Depletion and Amortization... 648 703
Fixed Charge Coverage Ratio................ 9.3x 6.2x
CONSOLIDATED BALANCE SHEET DATA (AT PERIOD
END):
Working Capital............................ $ 4,311 $ 2,105
Total Assets............................... 38,691 38,512
Borrowings and Capital Lease Obligations... 8,174 10,343
Stockholders' Equity....................... 13,516 11,630
Total Debt as Percent of Total Capitaliza-
tion...................................... 37% 47%
</TABLE>
- --------
(1) The selected consolidated financial data for the three-month periods ended
March 31, 1995 and March 31, 1994, respectively, have been derived from
unaudited financial statements but reflect, in the opinion of the Company,
all adjustments, consisting of normal recurring adjustments, necessary to
present fairly the results of operations and financial position for such
periods.
(2) On a pro forma basis, if the Seagram Redemption had occurred: (i) at
January 1, 1995 (assuming the related indebtedness had been outstanding
throughout the first quarter of 1995), Interest and Debt Expense would have
been $235, Earnings Before Income Taxes would have been $1,568, Net Income
would have been $867, Net Income Per Share of Common Stock would have been
$1.65 (on the basis of 525 average outstanding shares) and the Fixed Charge
Coverage Ratio would have been 5.9x, and (ii) at March 31, 1995, Borrowings
and Capital Lease Obligations would have been $15,510, Stockholders' Equity
would have been $5,165 and Total Debt as Percent of Total Capitalization
would have been 74%. On a pro forma basis, if the Seagram Redemption and
the Offerings had occurred at January 1, 1995 (assuming that the related
indebtedness had been outstanding throughout the first quarter of 1995, the
U.S. Underwriters' and the Managers' over-allotment option had not been
exercised and proceeds are net of underwriting discounts and estimated
expenses), the Net Income Per Share of Common Stock would have been $1.62.
Pro forma data are not necessarily indicative of results of operations or
financial position in subsequent periods.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Analysis of Operations
Financial Results. The Company reported net income for the first quarter of
1995 of $959 million, or $1.40 per share, up 49 percent from the $642 million,
or $.94 per share, earned in the first quarter 1994.
As previously announced, on April 6, 1995, DuPont redeemed 156 million shares
of DuPont Common Stock from Seagram. This transaction did not affect first
quarter results, but will have a positive effect on earnings per share in
future quarters.
Agricultural Products and certain businesses in the Polymers and Chemicals
segments reported strong financial performance in the first quarter. Strong
demand for Chemicals and Specialties and higher selling prices were further
augmented by the weaker U.S. dollar. Europe and Asia had improved earnings over
last year's first quarter. Petroleum performance was down from last year due to
difficult industry conditions.
Industry Segment Performance. The following text and accompanying
"Consolidated Industry Segment Information" table compare business segment
results for the first quarter of 1995 with the same period last year.
Sales for the first quarter were $10.5 billion, up $1.3 billion or 14
percent. For combined Chemicals and Specialties segments, sales were up 17
percent with 11 percent higher volume. Selling prices were up 6 percent,
reflecting in part the currency effect of a weaker dollar. For the Petroleum
segment, sales were up 10 percent versus last year, largely on higher refined
product volumes.
. Chemicals segment earnings were $167 million, up $84 million, or 101
percent, principally attributable to better results for white pigments
and specialty chemicals. Segment sales increased 22 percent with the most
significant increases occurring outside the United States. Sales volume
was up 14 percent, while selling prices increased 8 percent.
. Fibers segment earnings of $205 million were up $61 million, or 42
percent, principally reflecting improvements in aramids, "Dacron"
polyester, nylon, and "Lycra" spandex. Segment sales were 13 percent
higher, on 8 percent higher volume and 5 percent higher selling prices.
. Polymers segment earnings were $235 million, up $88 million, or 60
percent, from last year. Engineering polymers, packaging and industrial
polymers, and elastomers continue to perform very well, primarily
reflecting higher sales. Segment sales improved 20 percent, reflecting 14
percent higher volume, and 6 percent higher selling prices.
. Petroleum segment earnings were $186 million, down $29 million, or 13
percent, due to the decline in worldwide refined product margins.
However, upstream earnings were $169 million, up 27 percent due to higher
crude oil prices and lower costs more than offsetting lower U.S. natural
gas prices and lower international oil and gas production. Downstream
earnings were $17 million, down from $82 million earned in the prior
year, on significantly lower margins.
. Diversified Businesses segment earnings totaled $237 million, up $89
million or 60 percent. The earnings improvement was largely attributable
to better results from agricultural products and films. Segment sales
were up 17 percent, largely reflecting higher sales of agricultural
products outside the United States. Segment selling prices were up 4
percent, while sales volume increased by 13 percent.
13
<PAGE>
Consolidated Industry Segment Information
(Dollars in millions)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------
1995 1994
--------- ---------
<S> <C> <C>
SALES
Chemicals.................................................. $ 1,035 $ 848
Fibers..................................................... 1,854 1,645
Polymers................................................... 1,777 1,483
Petroleum.................................................. 4,253 3,862
Diversified Businesses..................................... 1,583 1,352
--------- --------
Total.................................................... $ 10,502 $ 9,190
========= ========
AFTER-TAX OPERATING INCOME
Chemicals.................................................. $ 167 $ 83
Fibers..................................................... 205 144
Polymers................................................... 235 147
Petroleum.................................................. 186 215
Diversified Businesses..................................... 237 148
--------- --------
Total.................................................... 1,030 737
Interest and Other Corporate Expenses Net of Tax........... (71) (95)
--------- --------
NET INCOME................................................. $ 959 $ 642
========= ========
</TABLE>
Financial Condition at March 31, 1995. DuPont recorded a net cash inflow from
operations of $991 million in the first quarter of 1995, as compared with
$1,091 million in the first quarter of 1994. Inflows from higher net income
were offset by outflows for increased working capital, primarily accounts
receivable-trade and inventories. The first quarter increase in working capital
reflects higher sales overall, the seasonal pattern in certain businesses
(principally crop protection chemicals), and a weakening of the U.S. dollar
during the quarter. Capital expenditures for plant, property and equipment and
investments in equity affiliates were $688 million for the quarter, essentially
the same as a year ago.
The Company increased its Common Stock dividend by 10.6 percent from $.47 to
$.52 per share effective in the second quarter 1995.
The total debt as percent of total capitalization ratio was 37% at both March
31, 1995 and December 31, 1994. The ratio of current assets to current
liabilities remained unchanged at 1.5:1 at both March 31, 1995 and December 31,
1994.
Days' sales outstanding averaged 38 days in the first quarter, down one day
from the first quarter of 1994, but up two days from the prior quarter. The
ratio of earnings to fixed changes was 9.3 for the first three months of 1995,
up from 6.1 for the year 1994.
Subsequent Events
On April 6, 1995, the Company acquired 156 million shares of its Common Stock
beneficially owned by Seagram for $56.25 per share. The consideration for the
acquired shares consisted of (i) $1 billion in cash, (ii) 90-day promissory
notes of the Company in an aggregate principal amount of approximately $7.3
billion and (iii) warrants of the Company valued at approximately $440 million
exercisable for 156 million shares of the Company's Common Stock. Seagram
continues to hold approximately 8.2 million shares, or 1.6% of the shares
outstanding following the transaction.
14
<PAGE>
On a pro forma basis as if the Seagram Redemption had occurred at January 1,
1995, the ratio of earnings to fixed charges for the first three months of 1995
would have been 5.9 and, at March 31, 1995, the total debt as percent of total
capitalization would have been 74%.
The warrants issued to Seagram expire on October 6, 1997, October 6, 1998 and
October 6, 1999 with respect to 48 million shares at $89.33 per share, 54
million shares at $101.14 per share and 54 million shares at $113.63 per share,
respectively. In general, so long as the warrants are held by Seagram, the
warrants are exercisable only during the 60-day periods immediately preceding
their respective expiration dates. However, the warrants would become
exercisable sooner in connection with certain significant corporate events. The
warrants are not transferable until May 15, 1996. Following such date, the
Company would have the right to buy the warrants from Seagram before Seagram
would be permitted to transfer the warrants to a third party. Any warrants
which are transferred to non-affiliates of Seagram would be exercisable at any
time prior to their expiration. The warrants contain standard anti-dilution
adjustments.
Following the Seagram Redemption, Moody's Investors Service ("Moody's")
lowered its rating on the Company's senior long-term debt to Aa3 from Aa2. The
Company's commercial paper rating was not under review and was affirmed at
Prime-1 by Moody's. Standard & Poor's Corporation ("S&P") lowered its rating on
the Company's senior debt and preferred stock to AA- from AA and affirmed its
commercial paper rating of A-1+. The ratings outlook by S&P remains negative.
The Company does not expect that these changes or any prospective change in its
credit ratings as a result of the Seagram Redemption will have a material
impact on its interest and debt expenses or on its access to borrowings.
Subsequent to April 6, 1995, the notes issued to Seagram have been paid and
replaced by private placement commercial paper borrowings of the Company. The
weighted average interest rate associated with such commercial paper borrowings
was 6.17% at April 25, 1995.
During April 1995, the Company's unused short-term bank credit lines
supporting its existing commercial paper program were raised to $1,145 million.
A credit line was also established for the Company's new private placement
commercial paper program instituted in connection with the Seagram Redemption
in the amount of $6,225 million. Total unused short-term bank credit lines of
the Company outstanding as of April 25, 1995 were $7,370 million.
The Company currently expects that the long-term funding for the Seagram
Redemption will include: (i) cash flow from operations and selective sales of
assets; (ii) a Flexitrust Program that will effect the sale or distribution of
up to 24 million additional newly issued shares of DuPont Common Stock over the
next several years, provided that such sale or distribution will begin no
sooner than 60 days after the closing of the Offerings, to satisfy existing
employee compensation and benefit programs; and (iii) up to $2 billion from
public and private offerings of equity securities, including the Offerings.
Such offerings may also include the Company's offer to sell up to $500 million
of Common Stock to the DuPont Pension Trust Fund. It is unknown whether the
DuPont Pension Trust Fund will accept any such offer or the price and other
terms of any such transaction. DuPont expects its total debt as percent of
total capitalization to return to its target range of 35% to 40% by year end
1996.
The Company currently expects capital expenditures to decrease from a planned
$3.6 billion to a total of $3.3 billion in 1995. In 1994, capital expenditures
were $3.1 billion.
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
ANALYSIS OF OPERATIONS
Sales. Sales in 1994 were $39.3 billion, up 6 percent from 1993. Petroleum
segment sales increased 7 percent, while the combined chemicals and specialties
segments of Chemicals, Fibers, Polymers and Diversified Businesses were up 6
percent. The chemicals and specialties segments sales increase was 8 percent
15
<PAGE>
after adjusting for businesses acquired and divested, reflecting 9 percent
higher sales volume, with improvements in every region. Europe was particularly
strong, with sales volume up 14 percent, reflecting the economic recovery in
that region. Selling prices, while trending upward in 1994, still averaged 1
percent below average 1993 levels. Full-year currency effect on 1994 average
prices versus 1993 was negligible.
Sales in 1993 were $37.1 billion, 2 percent below 1992, reflecting 2 percent
reductions for the combined chemicals and specialties segments and for the
petroleum segment. Lower sales were principally due to lower prices, largely
the result of adverse exchange effects from a stronger dollar, partly offset by
higher volume.
Earnings. Net income in 1994 was $2,727 million, or $4.00 per share, compared
to $555 million, or $.81 per share, in 1993. Results in 1993 included
nonrecurring items--principally for restructuring, write-down of intangible
assets, product liability charges, asset sales and benefits from tax law
changes--which totaled a net charge of $1.65 per share. For similar
nonrecurring items in 1994, the total net charge was $.07 per share. Excluding
these charges from both years, 1994 net income was $2,775 million, or $4.07 per
share, versus $1,677 million, or $2.46 per share, in 1993, up 65 percent. This
increase principally reflects improvements in the chemicals and specialties
segments from higher sales volume, lower fixed costs and a slightly lower tax
rate. The coal business improved, reflecting a full year of normal operations,
as compared to prior year results, which had been adversely affected by United
Mine Workers strikes. Petroleum segment earnings were lower, principally
reflecting reduced downstream worldwide refined product margins and the adverse
impact of refinery downtime, partly offset by better results in upstream
operations.
Net income in 1993 was $555 million, or $.81 per share, compared with a loss
of $3,927 million, or $(5.85) per share, in 1992. Excluding tax benefits in
1993, nonrecurring and extraordinary items from both years and one-time charges
in 1992 for the 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. The improvement principally resulted from
higher petroleum segment earnings from lower costs and increased production
outside the United States, partly offset by lower coal results, which were
impaired by strikes.
Taxes. Income tax expense totaled $1,655 million for 1994, $392 million for
1993 and $836 million for 1992. Effective income tax rate (EITR) was 37.8%,
40.9% and 46.2% for each of these years, respectively. Over the last three
years, the Company's EITR exceeded the U.S. statutory rate of 35 percent in
1994 and 1993 and 34 percent in 1992, principally because of the higher tax
rates associated with petroleum production operations outside the United
States. The 1994 EITR decreased about 3 percentage points from the prior year,
reflecting a lower EITR for the chemicals and specialties segments and a lower
proportion of higher-taxed petroleum earnings to total Company earnings. The
decrease in the 1993 EITR versus 1992 reflected a lower effective tax rate in
Petroleum operations and a $265 million tax benefit, principally arising from
U.K. Petroleum Revenue Tax law revisions, partly offset by an increased
proportion of higher-taxed petroleum earnings.
The Company paid total taxes of $7.5 billion in 1994, compared to $6.4
billion in 1993 and $6.6 billion in 1992. 1994 total tax payments were higher
than 1993, reflecting higher taxes on income and higher gas and oil excise
taxes. Tax payments in 1993 were less than 1992, reflecting lower income taxes.
Restructuring. In 1993, restructuring was aimed at improving competitiveness
in global markets and focus on the customer. This included plans to eliminate
approximately 10,900 positions worldwide and to reduce large internal business
sectors in favor of smaller, more responsive, strategic business units. The
1993 pretax charge to earnings for these business restructuring activities was
$1.6 billion. At year-end 1994, restructuring reserve balances are about $300
million, approximately two-thirds of which will be paid during 1995. As this
program is concluded, these future cash payments are not expected to have a
material impact on the Company's liquidity. Additional details on these
restructuring charges are set forth in Note 6 to the financial statements.
16
<PAGE>
It is estimated that 1994 operating results included about $450 million in
pretax savings related to restructuring activities that have been completed.
Evaluation of the need for additional restructuring is ongoing and is made in
conjunction with corporate strategies to build and maintain globally
competitive businesses. However, requisite across-the-board downsizing is
believed to be complete, and no additional restructuring costs of the magnitude
experienced in recent years are anticipated.
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 flow in excess of these needs
was used to reduce borrowings.
Cash Provided by Operations. Cash provided by operations totaled $5.7 billion
in 1994, about $300 million more than in 1993. In substance, the increase was
the result of higher net income partly offset by higher cash payments for
restructuring. As shown on the Consolidated Statement of Cash Flows, net income
in 1994, adjusted for noncash charges and credits, was up $1.3 billion over
that of 1993. Noncash charges in 1993 included asset write-downs and write-offs
as part of that year's restructuring program. In 1993, the net change in
operating assets and liabilities resulted in an inflow of more than $900
million, reflecting higher current liabilities, principally due to
restructuring charges and reduced inventories and accounts receivable. Cash
provided by operations in 1993 totaled $5.4 billion, up $1.0 billion from 1992,
reflecting higher net income, excluding restructuring charges, and lower
working capital.
Capital Expenditures. Capital expenditures of $3.1 billion in 1994, including
investments in affiliates, were 15 percent below the prior year's level.
Capital expenditures of $3.7 billion in 1993 were 19 percent lower than in
1992. Lower capital expenditures in recent years result from a more focused and
rigorous approach to spending capital, combined with the implementation of
engineering and design practices that have significantly improved capital
productivity.
In the Petroleum segment, capital expenditures were $1.6 billion, essentially
equal to the 1993 level. The most significant Petroleum expenditures in 1994
were for the continued development of the Heidrun field in Norway and the
Belida field in Indonesia, the acquisition of an additional interest in the
Britannia field in the United Kingdom and for an improvement at the Billings
refinery to comply with the U.S. Clean Air Act.
For other segments, capital spending in 1994 continued to concentrate on
strengthening and growing strategic businesses outside the United States. This
included projects for "Adi-Pure" adipic acid and "Zytel" engineering polymers
in Singapore, THF/"Terathane" polyether glycol in Spain and "Tyvek" spunbonded
products in Luxembourg. In the United States, significant expenditures were
also made for commercialization of CFC alternatives and for modernization of
"Dacron" polyester and "Tyvek" spunbonded products facilities. Improvement
projects mainly concentrated on enhancing the efficiency and yields of existing
refineries and manufacturing facilities.
Proceeds From Sales of Assets. Proceeds from sales of assets were $432
million in 1994, versus $1.2 billion in 1993 and $179 million in 1992. In 1994,
$212 million came from the sale of petroleum properties, none individually
significant, and the balance principally from sales of the "Sclair", Petroleum
Additives and "Selar" businesses. Principal proceeds in 1993 were $270 million
from connector systems, $280 million from acrylics and $300 million from the
sale of the Remington Arms Company.
Dividends. Dividends per share of common stock in 1994 were $1.82, versus
$1.76 in 1993 and $1.74 in 1992. The regular quarterly dividend was increased
from $.44 per share to $.47 per share in the third quarter of 1994. The common
stock dividend payout in relation to cash provided by operations was 22 percent
in 1994 and 1993, as compared to 27 percent in 1992.
Borrowings. Borrowings at year-end 1994 were $7.6 billion, as compared to
$9.3 billion and $10.9 billion in 1993 and 1992, respectively. Improved cash
flow during 1994, principally due to higher cash flow provided by operations
and lower capital expenditures, was used to reduce borrowings by $1.7 billion.
As a
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<PAGE>
result, the debt ratio (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) at year-end 1994 was 37
percent, versus 45 percent in 1993.
Working Capital Investment. Working capital investment (excluding cash and
cash equivalents, marketable securities, short-term borrowings and capital
lease obligations) increased about $700 million in 1994, principally due to
accounts receivable and inventory increases related to the exchange effect of a
weaker dollar and a decrease in other accrued liabilities resulting from cash
payments for "Benlate" DF 50 fungicide settlements and restructuring. These
increases in investment were partially offset by higher accounts payable and a
decrease in deferred tax asset balances as tax benefits were realized during
the year. In 1993, working capital investment decreased $1.1 billion,
reflecting lower inventories and accounts receivable and higher current
liabilities, which increased principally due to the 1993 restructuring charge.
The ratio of current assets to current liabilities, including cash and cash
equivalents, marketable securities, short-term borrowings and capital lease
obligations, at year-end 1994 was 1.5:1, as compared to 1.2:1 in 1993 and 1992.
FINANCIAL INSTRUMENTS
Derivatives and Other Hedging Instruments. The Company enters into
contractual arrangements (derivatives) in the ordinary course of business to
hedge its exposure to foreign currency, interest rate and commodity price
risks. The counterparties to these contractual arrangements 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, to
the extent possible, by restricting the period over which unpaid balances are
allowed to accumulate. The Company does not anticipate nonperformance by
counterparties to these contracts, and no material loss would be expected from
any such nonperformance. Procedures are in place to regularly monitor and
report to management the market and counterparty credit risks associated with
these instruments.
Foreign Currency. The Company routinely uses forward exchange contracts to
hedge its net exposures, by currency, related to the foreign currency-
denominated monetary assets and liabilities of its operations. The primary
business objective of this hedging program is to maintain an approximately
balanced position in foreign currencies so that exchange gains and losses
resulting from exchange rate changes, net of related tax effects, are
minimized.
In addition, from time to time, the Company will enter into forward exchange
contracts to establish with certainty the U.S. dollar amount of future firm
commitments denominated in a foreign currency. Decisions regarding whether or
not to hedge a given commitment are made on a case-by-case basis taking into
consideration the amount and duration of the exposure, market volatility and
economic trends. Forward exchange contracts are also used to manage near-term
foreign currency cash requirements and to place foreign currency deposits and
marketable securities investments into currencies offering favorable returns.
Interest Rates. The Company uses a combination of financial instruments,
including interest rate swaps, interest and principal currency swaps and
structured medium-term financings, as part of its program to manage the fixed
and floating interest rate mix of the total debt portfolio and related overall
cost of borrowing.
Interest rate swaps involve the exchange of fixed for floating rate interest
payments to effectively convert fixed rate debt into floating rate debt based
on LIBOR or commercial paper rates. Interest rate swaps also involve the
exchange of floating for fixed rate interest payments to effectively convert
floating rate debt into fixed rate debt. Interest rate swaps allow the Company
to maintain a target range of floating rate debt.
Under interest and principal currency swaps, the Company receives
predetermined foreign currency-denominated payments corresponding, both as to
timing and amount, to the fixed or floating interest rate
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<PAGE>
and fixed principal amounts to be paid by the Company under concurrently issued
foreign currency-denominated bonds. In return, the Company pays U.S. dollar
interest and a fixed U.S. dollar principal amount to the counterparty, thereby
effectively converting the foreign currency-denominated bonds into U.S. dollar-
denominated obligations for both interest and principal. Interest and principal
currency swaps allow the Company to be fully hedged against fluctuations in
currency exchange rates and foreign interest rates and to achieve U.S. dollar
fixed or floating interest rate payments below the market interest rate, at the
date of issuance, for borrowings of comparable maturity.
Structured medium-term financings consist of a structured medium-term note
and a concurrently executed structured medium-term swap that, for any and all
calculations of the note's interest and/or principal payments over the term of
the note, provides a fully hedged transaction such that the note is effectively
converted to a U.S. dollar-denominated fixed or floating interest rate payment.
Structured medium-term swaps allow the company to be fully hedged against
fluctuations in exchange rates and interest rates and to achieve U.S. dollar
fixed or floating interest rate payments below the market interest rate, at the
date of issuance, for borrowings of comparable maturity.
Commodity Hedges and Trading. The Company enters into exchange-traded and
over-the-counter commodity futures contracts to hedge its exposure to price
fluctuations on anticipated crude oil, refined products and natural gas
transactions and certain raw material purchases.
Commodity trading in petroleum futures contracts is a natural extension of
cash market trading and is used to physically acquire about 15 percent of North
America refining crude supply requirements. The commodity futures market has
underlying principles of increased liquidity and longer trading periods than
the cash market and is one method of reducing exposure to the price risk
inherent in the petroleum business. Typically, trading is conducted to manage
price risk around near-term (30-60 days) supply requirements. Occasionally, as
market views and conditions allow, longer-term positions will be taken to
manage price risk for the company's equity production (crude and natural gas)
or net supply requirements. The Company's use of futures contracts reduces the
effects of price volatility, thereby protecting against adverse short-term
price movements, while limiting, somewhat, the benefits of favorable short-term
price movements.
From time to time, on a limited basis, the Company also purchases and sells
petroleum-based futures contracts for trading purposes. After-tax gain/loss
from such trading has not been material.
Additional details on these and other financial instruments are set forth in
Note 27 to the financial statements.
ENVIRONMENTAL MATTERS
The Company operates about 150 manufacturing facilities, five petroleum
refineries, 20 natural gas processing plants and numerous product-handling and
distribution facilities around the world, all of which are significantly
affected by a broad array of laws and regulations relating to the protection of
the environment. It is the Company's policy to comply fully with or to exceed
all legal requirements worldwide. In addition, since some risk to the
environment is associated with the Company's operations, as it is with other
companies engaged in similar businesses, voluntary programs are in place to
minimize that risk. These programs are designed to reduce air emissions,
curtail the generation of hazardous waste, decrease the volume of wastewater
discharges and improve the energy efficiency of operations. The cost of
complying with increasingly complex environmental laws and regulations, as well
as the Company's own internal programs, is significant, and will continue to be
so for the foreseeable future, but is not expected to have a material impact on
the Company's competitive or financial position. The enactment of broader or
more stringent environmental laws or regulations in the future, however, could
lead to an upward reassessment of the potential environmental costs provided
below.
New waste treatment facilities and pollution control and other equipment are
routinely installed to satisfy both legal requirements and the company's waste
elimination and pollution prevention goals. About
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<PAGE>
$400 million was spent for capital projects related to environmental
requirements and Company goals in 1994. The Company currently estimates
expenditures for environmental-related capital projects will total about the
same in 1995. The Company anticipates significant capital expenditures may be
required over the next decade for treatment, storage and disposal facilities
for solid and hazardous waste and for compliance with the 1990 Amendments to
the Clean Air Act (the "CAA"). For example, environmental capital costs in 1993
and 1994 related to the CAA Amendments included expenditures in the Petroleum
segment to meet federal requirements for reformulated gasoline/clean fuels, and
additional environmental capital expenditures are anticipated for plant air
emission controls, primarily in the Chemicals and Petroleum segments. Although
considerable uncertainty will remain with regard to future estimates of capital
expenditures until all new CAA regulatory requirements are known, related
capital costs over the next two years are currently estimated to total
approximately $20 million.
Estimated pretax environmental expenses charged to current operations totaled
about $950 million in 1994, as compared to $1 billion in 1993 and $900 million
in 1992. These expenses included the remediation accruals discussed below,
operating, maintenance and depreciation costs for solid waste, air and water
pollution control facilities and costs incurred in conducting environmental
research activities. The largest of these expenses resulted from the operation
of water pollution control facilities and solid waste management facilities,
each of which accounted for about $200 million. About 75 percent of total
annual expenses resulted from the operations of the Company's Chemicals,
Fibers, Polymers and Diversified Businesses segments in the United States,
primarily the Chemicals and Polymers segments. Expenses are expected to
increase over the next several years as a result of additional operating costs
associated with new pollution prevention and control equipment.
Remediation Accruals. The Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA", often referred to as "Superfund") and the Resource
Conservation and Recovery Act (the "RCRA") both require that the Company
undertake certain remediation activities at sites where the company conducts or
once conducted operations or at sites where Company-generated waste was
disposed. DuPont accrues for those remediation activities 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 1994 the Company accrued $185 million for environmental
remediation activities, compared to $183 million and $160 million in 1993 and
1992, respectively. At December 31, 1994, the Company's balance sheet included
an accrued liability of $616 million as compared to $522 million and $465
million at year-end 1993 and 1992, respectively. Approximately 75 percent of
the company's environmental accrual is attributable to RCRA and similar
remediation liabilities and 25 percent to CERCLA liabilities. Expenditures for
such previously accrued remediation activities were $91 million in 1994, $126
million in 1993 and $121 million in 1992.
The Company's assessment of the potential impact of these two principal
remediation statutes 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, feasibility studies to select from among various
remediation methods, approval by applicable authorities and, finally, the
actual implementation of the remediation plan. Remediation activities occur
over a relatively long period of time and vary in cost substantially from site
to site depending on the mix of unique site characteristics, the development of
new remediation technologies and the evolving regulatory framework. The
Company's assessment of those costs is a continuous process which takes into
account the factors affecting each specific site. DuPont Environmental
Remediation Services, a wholly owned subsidiary, provides technical capability
to address the Company's remediation needs in a cost-effective manner, while
protecting human health and the environment.
RCRA, as amended in 1984, provides for extensive regulation of the treatment,
storage and disposal of hazardous waste. The regulations currently provide that
companies seeking to periodically renew RCRA permits, or close facilities with
permits, must, as a condition of renewal or closure, undertake certain
20
<PAGE>
corrective measures to remediate contamination caused by prior operations. The
RCRA corrective action program affects the Company differently than the CERCLA
program in that the cost of RCRA corrective action activities is typically
borne solely by the Company. The Company anticipates that significant ongoing
expenditures for RCRA corrective actions may be required over the next two
decades. Annual expenditures for the 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. The company's expenditures associated with RCRA and similar
remediation activities were approximately $70 million in 1994, $90 million in
1993 and $103 million in 1992.
The Company from time to time receives requests for information or notices of
potential liability from the Environmental Protection Agency (the "EPA") and
state environmental agencies, alleging that the Company is a "potentially
responsible party" ("PRP") under CERCLA or equivalent state legislation. In
addition, the Company has on occasion been made a party to cost recovery
litigation by those agencies. These requests, notices and lawsuits assert
potential liability for remediation costs of various waste treatment or
disposal sites that are not Company owned but allegedly contain wastes
attributable to the Company from past operations. As of December 31, 1994, the
Company was aware of potential liability under CERCLA or state laws at about
310 sites around the United States. The CERCLA or state remediation process is
actively under way at one stage or another at about 145 of those sites. In
addition, the Company has resolved its liability at 48 sites, either by
completing necessary remedial actions with other PRPs or by participating in
"de minimis buyouts" with other PRPs whose waste, like the Company's, only
represented a small fraction of the total waste present at a site.
The Company's expenditures associated with CERCLA or state remediation
activities were approximately $21 million in 1994, $36 million in 1993 and $18
million in 1992. Over the next decade the Company may incur significant costs
under CERCLA. Considerable uncertainty exists with respect to these costs, and
under the most adverse circumstances potential liability may exceed amounts
accrued as of December 31, 1994. The Company's share of the remediation cost at
these sites in many instances cannot be precisely estimated 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 the 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. There are a few sites where
the Company is a major participant, but neither the cost to the Company of
remediation at those sites, nor at all CERCLA sites in the aggregate, is
expected to have a material impact on the competitive or financial position of
the Company. The process of estimating CERCLA remediation costs, the financial
viability of other PRPs and the PRPs' respective shares of liability is
ongoing. Often these estimates are performed by third parties and, thus far,
have not been subject to material uncertainty or dispute. Moreover, other PRPs
at sites where the Company is a party typically have the financial strength to
meet their obligations and, where they do not, or where certain PRPs cannot be
located, the Company's own share of liability has not materially increased. The
Company's general experience has been that, in most cases, its share of
estimated costs at any given site has trended downward as this process has
matured.
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 as to the cost
and timing of expenditures. The Company is actively pursuing claims against
insurers with respect to RCRA and CERCLA liabilities. Potential recoveries in
this litigation have not been offset against the accruals discussed above.
21
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 900,000,000 shares of
Common Stock, par value $.60 per share, and 23,000,000 shares of preferred
stock, without par value. As of May 1, 1995, 526,686,089 shares of Common Stock
were issued and outstanding. As of May 1, 1995, 1,672,594 shares of $4.50
Series Preferred Stock and 700,000 shares of $3.50 Series Preferred Stock were
issued and outstanding.
COMMON STOCK
Dividends. The holders of Common Stock are entitled to receive dividends when
and as dividends are declared by the board of directors of the Company out of
funds legally available therefor, but not until all cumulative dividends on all
series of preferred stock shall have been paid or declared and set apart for
payment.
Voting Rights. Holders of DuPont Common Stock have the right to vote on all
questions to the exclusion of all other stockholders, except as otherwise
expressly provided by law or unless DuPont shall be in default in the payment
of dividends on preferred stock for a period of six months. In the latter
event, until accumulated and unpaid dividends on preferred stock of all series
shall have been paid, the holders of the outstanding preferred stock shall have
the exclusive right, voting separately and as a class, to elect two directors,
or if the total number of directors of DuPont be only three, then only one
director, at each meeting of stockholders held for the purpose of electing
directors.
Liquidation Rights. On liquidation, dissolution, or winding up of DuPont,
whether voluntary or involuntary, after payments have been made to holders of
preferred stock, holders of DuPont Common Stock have the right to share ratably
the remaining assets available for distribution.
No Preemptive Rights. Holders of DuPont Common Stock do not have any
preemptive rights.
PREFERRED STOCK
Pursuant to the Certificate of Incorporation of the Company, the board of
directors of the Company is authorized to establish and designate one or more
series of preferred stock, without further authorization of the Company's
stockholders, and to fix the number of shares, the dividend and certain other
rights, preferences and limitations of any such series. Thus, any series may,
if so determined by the board of directors, be convertible into Common Stock or
another security of the Company and have certain other relative rights,
preferences and limitations as the board of directors shall determine. As a
result, any class or series of preferred stock could have rights which would
adversely affect the voting power of the Common Stock.
Dividends. Dividends on the $4.50 Series Preferred Stock are payable annually
at the rate of $4.50 per annum. Dividends on the $3.50 Series Preferred Stock
are payable annually at the rate of $3.50 per annum. Holders of $4.50 Series
Preferred Stock and $3.50 Series Preferred Stock are entitled to receive any
dividends to which they are entitled before dividends are paid to holders of
Common Stock.
Voting Rights. Holders of $4.50 Series Preferred Stock and $3.50 Series
Preferred Stock do not have the right to vote on any question except as
otherwise required by applicable law or unless the Company is in default in the
payment of dividends for a period of six months. In such a case, the holders of
$4.50 Series Preferred Stock and $3.50 Series Preferred Stock shall have the
exclusive right, voting separately and as a class, to elect two directors, or
if the total number of directors of the Company is only three, then only one
director, at each meeting of the stockholders held for the purpose of electing
directors.
Liquidation Rights. In the event of voluntary liquidation, holders of
preferred stock are entitled to accumulated dividends and $115 a share for the
$4.50 Series, $107 a share for the $3.50 Series; in the event
22
<PAGE>
of involuntary liquidation, holders of both currently outstanding series of
preferred stock are entitled to accumulated dividends and $100 a share.
Redemption. The preferred stock may be redeemed at any time in whole or in
part for the redemption prices of $120 and accumulated dividends, and $100 and
accumulated dividends, respectively, on the $4.50 Series Preferred Stock and
the $3.50 Series Preferred Stock.
No Preemptive Rights. Holders of preferred stock do not have any preemptive
rights.
WARRANTS TO PURCHASE COMMON STOCK
In connection with the Seagram Redemption, the Company issued to Seagram
warrants exercisable for 156 million shares of Common Stock. For a discussion
of the terms of such warrants, see "Redemption of DuPont Common Stock from
Seagram".
23
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
The following is a general discussion of the principal United States Federal
tax consequences of the ownership and disposition of Common Stock by a holder
that, for United States Federal income tax purposes, is not a "United States
person" (a "Non-United States Holder"). This discussion is not intended to be
exhaustive and is based on statutes, regulations, rulings and court decisions
as currently in effect all of which may be changed either retroactively or
prospectively. This discussion does not consider any specific facts or
circumstances that may apply to a particular Non-United States Holder and
applies only to Non-United States Holders that hold Common Stock as a capital
asset. Prospective investors are urged to consult their tax advisors regarding
the United States Federal tax consequences of acquiring, holding and disposing
of Common Stock (including such investor's status as a United States person or
Non-United States Holder) as well as any tax consequences that may arise under
the laws of any state, municipality or other taxing jurisdiction.
For purposes of this discussion, "United States person" means a citizen or
resident of the United States, a corporation or partnership created or
organized in the United States or under the laws of the United States or of any
political subdivision thereof, or an estate or trust whose income is includible
in gross income for United States Federal income tax purposes regardless of its
source.
DIVIDENDS
Dividends paid to a Non-United States Holder generally will be subject to
withholding of United States Federal income tax at the rate of 30%, unless the
withholding rate is reduced under an applicable income tax treaty between the
United States and the country of tax residence of the Non-United States Holder.
No U.S. withholding will apply if the dividend is effectively connected with a
trade or business conducted within the United States by the Non-United States
Holder (or, alternatively, where an income tax treaty applies, if the dividend
is effectively connected with a permanent establishment maintained within the
United States by the Non-United States Holder), but, instead, the dividend will
be subject to the United States Federal income tax on net income that applies
to United States persons (and, with respect to corporate holders, may also be
subject to the branch profits tax). A Non-United States Holder may be required
to satisfy certain certification requirements in order to claim treaty benefits
or to otherwise claim a reduction of or exemption from withholding under the
foregoing rules. A Non-United States Holder that is eligible for a reduced rate
of U.S. withholding tax pursuant to a tax treaty may obtain a refund of any
excess amounts currently withheld by filing an appropriate claim for refund
with the United States Internal Revenue Service (the "Service").
GAIN ON DISPOSITION
Subject to special rules described below, a Non-United States Holder will
generally not be subject to United States Federal income tax on gain recognized
on a sale or other disposition of Common Stock unless the gain is effectively
connected with a trade or business conducted within the United States by the
Non-United States Holder (or, alternatively, where an income tax treaty
applies, unless the gain is effectively connected with a permanent
establishment maintained within the United States by the Non-United States
Holder). Any such effectively connected gain would be subject to the United
States Federal income tax on net income that applies to United States persons
(and, with respect to corporate holders, may also be subject to the branch
profits tax). Such tax is not collected by withholding.
In addition, an individual Non-United States Holder who holds Common Stock
would generally be subject to tax at a 30% rate on any gain recognized on the
disposition of such Common Stock if such individual is present in the United
States for 183 days or more in the taxable year of disposition and either
(i) has a "tax home" in the United States (as specifically defined for purposes
of the United States Federal income tax) or (ii) maintains an office or other
fixed place of business in the United States and the income from the sale of
the stock is attributable to such office or other fixed place of business.
Individual Non-United States Holders may also be subject to tax pursuant to
provisions of United States Federal income tax law applicable to certain United
States expatriates.
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<PAGE>
Also, special rules apply to Non-United States Holders if the Company is or
becomes a "United States real property holding corporation" for United States
Federal income tax purposes. The Company believes that it has not been, is not
currently, and is not likely to become, a United States real property holding
corporation. If the Company were a United States real property holding
corporation, gain or loss on a sale of the Common Stock by any Non-United
States Holder (other than, in most cases, a Non-United States Holder that owns
or owned (directly or constructively) 5% or less of the Common Stock during the
five-year period ending on the date of such sale) would be treated as income
effectively connected with the conduct of a trade or business within the United
States by the holder and subject to the net income tax described above.
UNITED STATES FEDERAL ESTATE TAXES
Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as specially defined for United States Federal estate tax
purposes) of the United States at the date of death, or Common Stock subject to
certain lifetime transfers made by such an individual, will be included in such
individual's estate for United States Federal estate tax purposes and may be
subject to United States Federal estate tax, unless an applicable estate tax
treaty provides otherwise. Estates of nonresident aliens are generally allowed
a credit that is equivalent to an exclusion of $60,000 of assets from the
estate for United States Federal estate tax purposes.
LEGISLATIVE DEVELOPMENTS
Legislation was proposed in 1990 and again in 1992 that, if enacted, would
have resulted under certain circumstances in the imposition of United States
Federal income tax on gain realized from the disposition of Common Stock by
certain Non-U.S. Holders who own or owned 10% or more of the Common Stock.
It is impossible to predict whether or in what form any such legislation or
other legislation might be enacted and what the scope or effective date of any
such legislation might be.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the Service and to each Non-United States
Holder the amount of dividends paid to, and the tax withheld with respect to,
such holder, regardless of whether any tax was actually withheld. That
information may also be made available to the tax authorities of the country in
which a Non-United States Holder resides.
United States Federal backup withholding tax (which, generally, is imposed at
the rate of 31% on certain payments to persons not otherwise exempt who fail to
furnish information required under United States information reporting
requirements) generally will not apply to dividends paid to a Non-United States
Holder either at an address outside the United States (provided that the payor
does not have actual knowledge that the payee is a United States person) or if
the dividends are subject to withholding at the 30% rate (or lower treaty
rate). As a general matter, information reporting the backup withholding also
will not apply to a payment of the proceeds of a sale of Common Stock by a
foreign office of a broker. However, information reporting requirements (but
not backup withholding) will apply to a payment of the proceeds of a sale of
Common Stock by a foreign office of a broker that is a United States person, or
by a foreign office of a foreign broker that derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the
United States, or that is a "controlled foreign corporation" as to the United
States, unless the broker has documentary evidence in its records that the
holder is a Non-United States Holder and certain conditions are met, or the
holder otherwise establishes an exemption. Payment by a United States office of
a broker of the proceeds of a sale of Common Stock is subject to both backup
withholding and information reporting unless the holder certifies as to its
non-United States status under penalties of perjury or otherwise establishes an
exemption (and the broker has no actual knowledge to the contrary.) The backup
withholding tax is not an additional tax and may be credited against the Non-
United States Holder's United States Federal income tax liability or refunded
to the extent excess amounts are withheld provided that the required
information is supplied to the Internal Revenue Service.
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<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated , 1995 (the "U.S. Underwriting Agreement"), the
underwriters named below (the "U.S. Underwriters"), for whom CS First Boston
Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan
Stanley & Co. Incorporated are acting as representatives (the
"Representatives"), have severally but not jointly agreed to purchase from the
Company the following respective numbers of U.S. Shares:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER U.S. SHARES
----------- -----------
<S> <C>
CS First Boston Corporation...................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated............
Morgan Stanley & Co. Incorporated.............................
----------
Total..................................................... 13,600,000
==========
</TABLE>
The U.S. Underwriting Agreement provides that the obligations of the U.S.
Underwriters are subject to certain conditions precedent and that the U.S.
Underwriters will be obligated to purchase all of the U.S. Shares offered
hereby if any are purchased. The U.S. Underwriting Agreement provides that, in
the event of a default by a U.S. Underwriter, in certain circumstances the
purchase commitments of non-defaulting U.S. Underwriters may be increased or
the U.S. Underwriting Agreement may be terminated.
The Company has entered into a Subscription Agreement (the "Subscription
Agreement") with the Managers of the International Offering (the "Managers")
providing for the concurrent offer and sale of the International Shares outside
the United States and Canada. The closing of the U.S. Offering is a condition
to the closing of the International Offering and vice versa.
The Company has granted to the U.S. Underwriters and the Managers an option
exercisable by CS First Boston Corporation, expiring at the close of business
on the 30th day after the date of this Prospectus, to purchase up to 2,550,000
additional shares at the public offering price, less the underwriting discounts
and commissions, all as set forth on the cover page of this Prospectus. The
U.S. Underwriters and Managers may exercise such option only to cover over-
allotments in the sale of the shares of Common Stock offered in the Offerings.
To the extent that this option to purchase is exercised, each U.S. Underwriter
and each Manager will become obligated, subject to certain conditions, to
purchase approximately the same percentage of additional shares being sold to
the U.S. Underwriters and the Managers as the number of U.S. Shares set forth
next to such U.S. Underwriter's name in the preceding table bears to the total
number of U.S. Shares in such table and as the number set forth next to such
Manager's name in the corresponding table in the prospectus relating to the
International Offering bears to the total number of International Shares in
such table.
The Company has been advised by the Representatives that the U.S.
Underwriters propose to offer the U.S. Shares in the United States and Canada
to the public initially at the public offering price set forth on the cover
page of this Prospectus and, through the Representatives, to certain dealers at
such price less a concession of $ per share, and the U.S. Underwriters and
such dealers may allow a discount of $ per share on sales to certain other
dealers. After the initial public offering, the public offering price and the
concession and discount to dealers may be changed.
26
<PAGE>
The public offering price, the aggregate underwriting discounts and
commissions per share and per share concession and discount to dealers for the
U.S. Offering and the concurrent International Offering will be identical.
Pursuant to an Agreement Between the U.S. Underwriters and Managers (the
"Intersyndicate Agreement") relating to the Offerings, changes in the public
offering price, concession and discount to dealers will be made only upon the
mutual agreement of CS First Boston Corporation, as representative of the U.S.
Underwriters, and CS First Boston Limited ("CSFBL"), on behalf of the Managers.
Pursuant to the Intersyndicate Agreement, each of the U.S. Underwriters has
agreed that, as part of the distribution of the U.S. Shares and subject to
certain exceptions, it has not offered or sold, and will not offer or sell,
directly or indirectly, any shares of Common Stock or distribute any prospectus
relating to the Common Stock to any person outside the United States or Canada
or to any other dealer who does not so agree. Each of the Managers has agreed
or will agree that, as part of the distribution of the International Shares and
subject to certain exceptions, it has not offered or sold, and will not offer
or sell, directly or indirectly, any shares of Common Stock or distribute any
prospectus relating to the Common Stock in the United States or Canada or to
any other dealer who does not so agree. The foregoing limitations do not apply
to stabilization transactions or to transactions between the U.S. Underwriters
and the Managers pursuant to the Intersyndicate Agreement. As used herein,
"United States" means the United States of America (including the States and
the District of Columbia), its territories, possessions and other areas subject
to its jurisdiction, "Canada" means Canada, its provinces, its territories,
possessions and other areas subject to its jurisdiction, and an offer or sale
shall be in the United States or Canada if it is made to (i) any individual
resident in the United States or Canada or (ii) any corporation, partnership,
pension, profit-sharing or other trust or other entity (including any such
entity acting as an investment adviser with discretional authority) whose
office most directly involved with the purchase is located in the United States
or Canada.
Pursuant to the Intersyndicate Agreement, sales may be made between the U.S.
Underwriters and the Managers of such number of shares of Common Stock as may
be mutually agreed upon. The price of any shares so sold will be the public
offering price, less such amount as may be mutually agreed upon by CS First
Boston Corporation, as representative of the U.S. Underwriters, and CSFBL, on
behalf of the Managers, but not exceeding the selling concession applicable to
such shares. To the extent there are sales between the U.S. Underwriters and
the Managers pursuant to the Intersyndicate Agreement, the number of shares of
Common Stock initially available for sale by the U.S. Underwriters or by the
Managers may be more or less than the amount appearing on the cover page of
this Prospectus. Neither the U.S. Underwriters nor the Managers are obligated
to purchase from the other any unsold shares of Common Stock.
This Prospectus may be used by underwriters and dealers in connection with
sales of International Shares to persons located in the United States, to the
extent such sales are permitted by the contractual limitations on sales
described above.
The Company has agreed not to offer, sell, contract to sell, pledge or
otherwise dispose of, or cause to be filed with the Commission a registration
statement under the Securities Act relating to, or announce any offering of,
any shares of Common Stock or any securities convertible into, or exchangeable
or exercisable for, shares of Common Stock, except the shares of Common Stock
offered in the Offerings, for a period of 180 days from the date hereof without
the prior written consent of CS First Boston Corporation; provided, however,
that the Company may (i) issue Common Stock or any securities convertible into,
or exchangeable or exercisable for, shares of Common Stock pursuant to the
terms of any securities outstanding on the date hereof or other obligations
binding upon the Company and in effect on the date hereof, (ii) sell shares of
Common Stock to the Flexitrust Program and register such Common Stock and,
beginning no sooner than 60 days after the closing of the Offerings, distribute
or sell such Common Stock from the Flexitrust Program, and (iii) sell shares of
Common Stock to the DuPont Pension Trust Fund and register such Common Stock.
Such restrictions would not apply to shares of DuPont's Common Stock offered by
the Company as consideration for a merger or other stock-based acquisition,
should such a transaction occur.
27
<PAGE>
The Company has agreed to indemnify the U.S. Underwriters and the Managers
against certain liabilities, including civil liabilities under the Securities
Act, or to contribute to payments that the U.S. Underwriters and the Managers
may be required to make in respect thereof.
Certain U.S. Underwriters and Managers and their affiliates have from time to
time provided investment banking, commercial banking and financial advisory
services to DuPont, for which they have been paid customary fees.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Common Stock in Canada is being made only on a
private placement basis exempt from the requirement that the Company prepare
and file a prospectus with the securities regulatory authorities in each
province where trades of Common Stock are effected. Accordingly, any resale of
the Common Stock in Canada must be made in accordance with applicable
securities laws which will vary depending on the relevant jurisdiction and
which may require resales to be made in accordance with available statutory
exemptions or pursuant to a discretionary exemption granted by the applicable
Canadian securities regulatory authority. Purchasers are advised to seek legal
advice prior to any resale of the Common Stock.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Common Stock in Canada who receives a purchase confirmation
will be deemed to represent to the Company and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Common Stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions".
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
All of the Company's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Ontario purchasers to effect service of process within Canada upon
the issuer or such persons. All or a substantial portion of the assets of the
issuer and such persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the issuer or such persons in
Canada or to enforce a judgment obtained in Canadian courts against such issuer
or persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Common Stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Common Stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #88/5, a copy of which may be obtained from the Company. Only one
such report must be filed in respect of Common Stock acquired on the same date
and under the same prospectus exemption.
28
<PAGE>
EXPERTS
The financial statements as of December 31, 1994 and 1993 and for each of the
three years in the period ended December 31, 1994 included in this Prospectus
have been so included in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock and certain other
legal matters in connection with the Offerings will be passed upon by Howard J.
Rudge, Senior Vice President and General Counsel of the Company. Cravath,
Swaine & Moore, New York, New York, will pass on certain legal matters for the
U.S. Underwriters and the Managers. Mr. Rudge beneficially owned as of May 2,
1995, 99,776 shares of Common Stock, including 86,756 shares of which he has
the right to acquire beneficial ownership within 60 days through the exercise
of stock options awarded under the Company's Stock Performance Plan.
29
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Price Waterhouse LLP, Independent Accountants................... F-2
Consolidated Income Statement for the Years Ended December 31, 1994, 1993
and 1992................................................................. F-3
Consolidated Balance Sheet at December 31, 1994 and 1993.................. F-4
Consolidated Statement of Stockholders' Equity for the Years Ended
December 31, 1994, 1993 and 1992......................................... F-5
Consolidated Statement of Cash Flows for the Years Ended December 31,
1994, 1993 and 1992...................................................... F-6
Notes to Financial Statements............................................. F-7
Unaudited Subsequent Event--Effect of Seagram Redemption.................. F-33
Supplemental Petroleum Data............................................... F-34
Quarterly Financial Data.................................................. F-40
Consolidated Geographic Data.............................................. F-41
Consolidated Income Statement for the Three Months Ended March 31, 1995
and 1994 (Unaudited)..................................................... F-42
Consolidated Balance Sheet at March 31, 1995 (Unaudited) and December 31,
1994..................................................................... F-43
Consolidated Statement of Cash Flows for the Three Months Ended March 31,
1995 and 1994 (Unaudited)................................................ F-44
Notes to Financial Statements (Unaudited)................................. F-45
</TABLE>
F-1
<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 F-3-
F-33 present fairly, in all material respects, the financial position of E. I.
du Pont de Nemours and Company and its subsidiaries at December 31, 1994 and
1993, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, 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.
Price Waterhouse LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
February 16, 1995
F-2
<PAGE>
FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
SALES*.............................................. $39,333 $37,098 $37,799
Other Income (Note 2)............................... 926 743 553
------- ------- -------
Total.............................................. 40,259 37,841 38,352
------- ------- -------
Cost of Goods Sold and Other Operating Charges
(Notes 3 and 12)................................... 21,977 21,624 22,046
Selling, General and Administrative Expenses........ 2,888 3,081 3,553
Depreciation, Depletion and Amortization............ 2,976 2,833 2,655
Exploration Expenses, Including Dry Hole Costs and
Impairment of Unproved Properties.................. 357 361 416
Research and Development Expense.................... 1,047 1,132 1,277
Interest and Debt Expense (Note 4).................. 559 594 643
Taxes Other Than on Income* (Note 5)................ 6,215 5,423 5,476
Restructuring (Note 6).............................. (142) 1,621 475
Write-Down of Intangible Assets (Note 6)............ -- 214 --
------- ------- -------
Total.............................................. 35,877 36,883 36,541
------- ------- -------
EARNINGS BEFORE INCOME TAXES........................ 4,382 958 1,811
Provision for Income Taxes (Note 7)................. 1,655 392 836
------- ------- -------
INCOME BEFORE EXTRAORDINARY ITEM AND TRANSITION
EFFECT OF ACCOUNTING CHANGES....................... 2,727 566 975
Extraordinary Charge from Early Extinguishment of
Debt (Note 8)...................................... -- (11) (69)
Transition Effect of Changes in Accounting
Principles
(Notes 1, 7 and 25)................................ -- -- (4,833)
------- ------- -------
NET INCOME (LOSS)................................... $ 2,727 $ 555 $(3,927)
======= ======= =======
EARNINGS PER SHARE OF COMMON STOCK (Note 9)
INCOME BEFORE EXTRAORDINARY ITEM AND TRANSITION
EFFECT OF ACCOUNTING CHANGES...................... $ 4.00 $ .83 $ 1.43
Extraordinary Charge from Early Extinguishment of
Debt (Note 8)..................................... -- (.02) (.10)
Transition Effect of Changes in Accounting
Principles
(Notes 1, 7 and 25)............................... -- -- (7.18)
------- ------- -------
NET INCOME (LOSS).................................. $ 4.00 $ .81 $ (5.85)
======= ======= =======
</TABLE>
- --------
*Includes petroleum excise taxes of $5,291, $4,477 and $4,508 in 1994, 1993 and
1992, respectively.
See accompanying Notes to Financial Statements.
F-3
<PAGE>
FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
DECEMBER 31
---------------
1994 1993
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents (Note 10)............................ $ 856 $ 1,109
Marketable Securities (Note 10)................................ 253 85
Accounts and Notes Receivable (Note 11)........................ 5,213 4,894
Inventories (Note 12).......................................... 3,969 3,818
Prepaid Expenses............................................... 259 231
Deferred Income Taxes (Note 7)................................. 558 762
------- -------
Total Current Assets......................................... 11,108 10,899
------- -------
PROPERTY, PLANT AND EQUIPMENT (Note 13)........................ 48,838 47,926
Less: Accumulated Depreciation, Depletion and Amortization..... 27,718 26,503
------- -------
21,120 21,423
------- -------
INVESTMENT IN AFFILIATES (Note 14)............................. 1,662 1,607
OTHER ASSETS (Notes 7 and 15).................................. 3,002 3,124
------- -------
TOTAL........................................................ $36,892 $37,053
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable (Note 16)..................................... $ 2,734 $ 2,444
Short-Term Borrowings and Capital Lease Obligations (Note 17).. 1,292 2,796
Income Taxes (Note 7).......................................... 409 321
Other Accrued Liabilities (Note 18)............................ 3,130 3,878
------- -------
Total Current Liabilities.................................... 7,565 9,439
LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS (Notes 19
and 20)....................................................... 6,376 6,531
OTHER LIABILITIES (Note 21).................................... 8,438 8,200
DEFERRED INCOME TAXES (Note 7)................................. 1,494 1,466
------- -------
Total Liabilities............................................ 23,873 25,636
------- -------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES................ 197 187
------- -------
STOCKHOLDERS' EQUITY (see page F-5)
Preferred Stock................................................ 237 237
Common Stock, $.60 par value; 900,000,000 shares authorized;
issued at December 31: 1994--681,004,944; 1993--677,577,437... 408 407
Additional Paid-In Capital..................................... 4,771 4,660
Reinvested Earnings............................................ 7,406 5,926
------- -------
Total Stockholders' Equity................................... 12,822 11,230
------- -------
TOTAL........................................................ $36,892 $37,053
======= =======
</TABLE>
See accompanying Notes to Financial Statements.
F-4
<PAGE>
FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<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 22 and 23), $.60 par value;
900,000,000 shares authorized; issued at December
31:
1994--681,004,944; 1993--677,577,437; 1992--
675,008,236........................................ 408 407 405
------- ------- -------
ADDITIONAL PAID-IN CAPITAL (Notes 22 and 23)
Balance at Beginning of Year........................ 4,660 4,551 4,418
Common Stock Issued in Connection with Compensation
Plans.............................................. 111 109 133
------- ------- -------
Balance at End of Year.............................. 4,771 4,660 4,551
------- ------- -------
REINVESTED EARNINGS
Balance at Beginning of Year........................ 5,926 6,572 11,681
Net Income (Loss)................................... 2,727 555 (3,927)
------- ------- -------
8,653 7,127 7,754
------- ------- -------
Preferred Dividends................................. (10) (10) (10)
Common Dividends (1994--$1.82; 1993--$1.76; 1992--
$1.74)............................................. (1,237) (1,191) (1,172)
------- ------- -------
Total Dividends................................... (1,247) (1,201) (1,182)
------- ------- -------
Balance at End of Year.............................. 7,406 5,926 6,572
------- ------- -------
TOTAL STOCKHOLDERS' EQUITY.......................... $12,822 $11,230 $11,765
======= ======= =======
</TABLE>
See accompanying Notes to Financial Statements.
F-5
<PAGE>
FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR..... $ 1,109 $ 1,640 $ 468
------- ------- -------
CASH PROVIDED BY OPERATIONS
Net Income (Loss).................................. 2,727 555 (3,927)
Adjustments to Reconcile Net Income to Cash
Provided by Operations:
Extraordinary Charge from Early Extinguishment of
Debt (Note 8)................................... -- 11 69
Transition Effect of Accounting Changes (Notes 1,
7 and 25)....................................... -- -- 4,833
Depreciation, Depletion and Amortization......... 2,976 2,833 2,655
Dry Hole Costs and Impairment of Unproved
Properties...................................... 152 201 185
Other Noncash Charges and Credits--Net........... (140) 843 (174)
Decrease in Operating Assets:
Accounts and Notes Receivable................... 30 103 104
Inventories and Other Operating Assets.......... 19 664 219
Increase (Decrease) in Operating Liabilities:
Accounts Payable and Other Operating
Liabilities.................................... (432) 686 907
Accrued Interest and Income Taxes (Notes 4 and
7)............................................. 332 (516) (483)
------- ------- -------
Cash Provided by Operations................... 5,664 5,380 4,388
------- ------- -------
INVESTMENT ACTIVITIES (NOTE 24)
Purchases of Property, Plant and Equipment......... (3,050) (3,621) (4,448)
Investments in Affiliates.......................... (90) (70) (127)
Payments for Businesses Acquired................... (5) (409) --
Proceeds from Sales of Assets...................... 432 1,160 179
Investments in Short-Term Financial Instruments--
Net............................................... (379) (85) (70)
Miscellaneous--Net................................. (41) (53) (87)
------- ------- -------
Cash Used for Investment Activities........... (3,133) (3,078) (4,553)
------- ------- -------
FINANCING ACTIVITIES
Dividends Paid to Stockholders..................... (1,247) (1,201) (1,182)
Net Increase (Decrease) in Short-Term Borrowings... (517) (2,024) 2,310
Long-Term and Other Borrowings:
Receipts......................................... 824 1,806 2,976
Payments......................................... (2,032) (1,392) (2,711)
Common Stock Issued in Connection with Compensation
Plans............................................. 94 67 86
------- ------- -------
Cash Provided by (Used for) Financing
Activities................................... (2,878) (2,744) 1,479
------- ------- -------
Effect of Exchange Rate Changes on Cash............ 94 (89) (142)
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR........... $ 856 $ 1,109 $ 1,640
------- ------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS... $ (253) $ (531) $ 1,172
======= ======= =======
</TABLE>
See accompanying Notes to Financial Statements.
F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(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 7 and 25.
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, excluding
marketable securities, 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
under the sum-of-the-years' digits method and other substantially similar
methods. 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.
Beginning in 1995, nonpetroleum PP&E placed in service will be depreciated
using the straight-line method. This change in accounting principle is being
made to reflect management's belief that the productivity of such PP&E will not
appreciably diminish in the early years of its useful life, and it will not be
subject to significant additional maintenance in the later years of its useful
life. In these circumstances, straight-line depreciation is preferable in that
it provides a better matching of costs with revenues. Additionally, the change
to the straight-line method will conform to predominant industry practice.
Although the effect of this change on net income will be impacted by the level
of future capital spending, the change is not expected to have a material
effect on 1995 results.
F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Petroleum PP&E, other than "Oil and Gas Properties" 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 nature of the assets
involved determines if a 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. The
company continually evaluates the reasonableness of its amortization for
intangibles. In addition, if it becomes probable that expected future
undiscounted cash flows associated with intangible assets are less than their
carrying value, the assets are written down to their fair value.
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 has been determined using 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 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.
Provision has been made for income taxes on unremitted earnings of
subsidiaries and affiliates, except in cases in which earnings of foreign
subsidiaries are deemed to be permanently invested. Investment tax credits or
grants are accounted for in the period earned (the flow-through method).
F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
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 routinely uses forward exchange contracts to hedge its net exposures,
by currency, related to the foreign currency-denominated monetary assets and
liabilities of its operations. 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 from time to time enters into forward exchange
contracts and similar agreements to effectively convert 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 as part of its program
to manage the fixed and floating interest rate mix of its total debt portfolio
and related overall cost of borrowing. The differential to be paid or received
is accrued as interest rates change and is recognized in income over the life
of the agreements.
Commodity Hedges and Trading
The company enters into commodity futures contracts to hedge its exposure to
price fluctuations on anticipated crude oil, refined products and natural gas
transactions and certain raw material purchases. Gains and losses on these
hedge contracts are deferred and included in the measurement of the related
transaction. From time to time, on a limited basis, the company also purchases
and sells petroleum-based futures contracts for trading purposes. Changes in
the market values of these trading contracts are reflected in income in the
period the change occurs.
Reclassifications
Certain reclassifications of prior years' data have been made to conform to
1994 classifications.
2. OTHER INCOME
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Royalty income................................................ $ 95 $111 $118
Interest income, net of miscellaneous interest expense........ 111 160 178
Equity in earnings of affiliates (see Note 14)................ 361 121 216
Sales of assets............................................... 92 198 40
Miscellaneous income and expenses--net........................ 267 153 1
---- ---- ----
$926 $743 $553
==== ==== ====
</TABLE>
F-9
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
3. FUNGICIDE RECALL AND CLAIMS PROVISION
During 1991, the company initiated a stop-sale and recall of "Benlate" DF 50
fungicide. The company accrued $175, $200 and $212 in 1994, 1993 and 1992,
respectively, for estimated costs in excess of insurance coverage. The related
liability included in the Consolidated Balance Sheet is not reduced by the
amounts of any expected insurance recoveries. Adverse changes in estimates for
such costs could result in additional future charges.
4. INTEREST AND DEBT EXPENSE
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Interest and debt cost incurred.............................. $703 $825 $860
Less: Interest and debt cost capitalized..................... 143 194 194
Foreign currency adjustments*................................ 1 37 23
---- ---- ----
$559 $594 $643
==== ==== ====
</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 $598 in 1994, $614 in 1993 and
$611 in 1992.
5. TAXES OTHER THAN ON INCOME
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Petroleum excise taxes (also included in Sales):
U.S................................................... $1,049 $ 803 $ 709
Non-U.S............................................... 4,242 3,674 3,799
Payroll taxes.......................................... 424 443 459
Property taxes......................................... 202 201 201
Import duties.......................................... 159 151 146
Production and other taxes............................. 139 151 162
------ ------ ------
$6,215 $5,423 $5,476
====== ====== ======
</TABLE>
6. RESTRUCTURING CHARGES AND WRITE-DOWN OF INTANGIBLE ASSETS
Restructuring charges are directly related to management decisions to reduce
worldwide employment levels and realign worldwide production and support
facilities in order to improve productivity and competitiveness. Charges
principally reflect employee separation costs, costs of shutting down certain
facilities and contract cancellation costs.
In the third quarter of 1993, the company recorded a restructuring charge of
$1,621. The principal component of this charge related to employee separation
costs of $665. This charge was for the involuntary and voluntary termination of
approximately 10,900 employees, and was based on plans that identified the
number of employees to be terminated, their functions and their businesses.
Substantially all of this charge was for estimated termination payments and
enhanced benefit costs for terminated employees. As of December 31, 1994,
almost 9,000 employees have been terminated under this program and about $420
has been settled and charged against the related $665 liability. In addition,
during the fourth quarter 1994, the
F-10
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
restructuring reserve balance was reduced by $45 principally to reflect lower
estimates for employee separation costs and a reduction of about 500 in the
number of employees to be terminated. As a result, about $200 remains as a
liability in the company's Consolidated Balance Sheet at December 31, 1994.
This $200 balance includes certain termination payments for former employees
that extend beyond December 31, 1994 under the terms of various separation
agreements, in addition to the liability for employees yet to be terminated.
All restructuring plans have been announced, and most of the remaining 1,400
employee terminations will be in Europe. The majority of these employees will
be terminated during 1995, and the program will be completed in 1997 concurrent
with the last plant closing.
The remaining portion of the restructuring charge, $956, is related to asset
write-downs and facility shutdowns, principally:
a) The decision to discontinue the manufacture of silver halide films in
New Jersey and to consolidate manufacturing at existing facilities in
Germany and North Carolina. A charge of $330 was recorded to fully reserve
discontinued facilities and to cover other costs directly associated with
manufacturing and product line rationalizations of the printing and
publishing business;
b) Write-downs of operating assets to be sold, specifically, certain
North American petroleum-producing properties. The petroleum properties
were written down by $233 to their estimated net realizable value,
generally based on their respective estimated selling prices;
c) The write-down of a polymers plant in Texas by $102 to its estimated
net realizable value. This charge covered the net book value of the
facilities and estimated dismantlement costs less estimated salvage
proceeds since it was uncertain at that time whether an appropriate buyer
could be identified. This plant was subsequently sold as discussed below;
d) Charges of $108 related to restructuring by an equity affiliate,
write-off of chlorofluorocarbon (CFC) manufacturing facilities in South
America, and contract cancellations; and
e) A write-off of $70 associated with rationalization of certain fibers
facilities in the United States, Europe and South America.
This portion of the restructuring, after 1994 adjustments described below, is
expected to be essentially completed in 1995. The related reserve balances at
year-end 1994 were about $100.
In the fourth quarter 1992, the company recorded charges of $475 for
termination incentives and payments, as well as certain other charges, related
to business restructuring. During 1994, an additional $25 charge was recorded
to reflect higher-than-projected employee termination costs. This restructuring
is complete.
Adjustments of 1993 Restructuring Charges
1994 earnings included a $167 benefit associated with several adjustments of
restructuring provisions established in September 1993. Revisions related to
asset write-downs and facility shutdowns totaled $122 and reflected higher-
than-anticipated proceeds from the disposal of a portion of a plant previously
written down, continuation of CFC operations in South America, at the request
of local government, to allow for an orderly transition to alternative
products, and further refinement of certain of the other items reflected in the
1993 restructuring charge. In addition, an adjustment of $45 was made to
reflect lower estimates for employee separation costs.
F-11
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Write-Down of Intangible Assets
A charge of $214 was recorded in the third quarter 1993 for the write-down of
intangible assets (technology and goodwill) associated with a series of
acquisitions made by the printing and publishing business in 1989. Such action
was taken when it became probable that undiscounted future cash flows would not
be adequate to support carrying values. (See Note 1, "Intangible Assets.")
7. PROVISION FOR INCOME TAXES
Effective January 1, 1992, the company adopted SFAS No. 109, "Accounting for
Income Taxes." On adoption, 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 $1,344 in
1994, $896 in 1993 and $1,213 in 1992.
<TABLE>
<CAPTION>
1994 1993 1992
------ ----- -------
<S> <C> <C> <C>
Current tax expense:
U.S. federal....................................... $ 337 $ 321 $ 34
U.S. state and local............................... 47 21 5
Non-U.S............................................ 1,023 758 857
------ ----- -------
Total............................................. 1,407 1,100 896
------ ----- -------
Deferred tax expense:
U.S. federal....................................... 497 (486) (319)
U.S. state and local............................... (55) (53) (35)
Non-U.S............................................ (136) (198) 133
------ ----- -------
Total............................................. 306 (737) (221)
------ ----- -------
Other(1)............................................ (58) 29 161
------ ----- -------
Provision for Income Taxes (Excluding Extraordinary
Item and Transition Effect of Accounting Change)... 1,655 392 836
Extraordinary Item.................................. -- (7) (39)
Transition Effect of Change in Accounting for
Postretirement Benefits Other Than Pensions........ -- -- (2,130)
Stockholders' Equity(2)............................. (26) (20) (11)
------ ----- -------
Total Provision................................... $1,629 $ 365 $(1,344)
====== ===== =======
</TABLE>
- --------
(1) Represents exchange (gains)/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.
Deferred income taxes result from temporary differences between the financial
and tax bases of the company's assets and liabilities. The tax effects of
temporary 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:
F-12
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Depreciation........................................... $ 144 $(105) $ 232
Accrued employee benefits.............................. (19) (69) (69)
Other accrued expenses................................. 185 (346) (67)
Intangible drilling costs.............................. (48) (68) 10
Inventory.............................................. (87) 109 (53)
Unrealized exchange gains/(losses)..................... 103 (22) (125)
Investment in subsidiaries and affiliates.............. (7) (4) --
Other temporary differences............................ 33 30 (55)
Tax loss/tax credit carryforwards...................... 90 4 (103)
Valuation allowance change--net........................ 17 8 9
Tax rate changes....................................... -- (274) --
Tax status changes..................................... (105) -- --
----- ----- -----
$ 306 $(737) $(221)
===== ===== =====
</TABLE>
The significant components of deferred tax assets and liabilities at December
31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
----------------- -----------------
DEFERRED TAX ASSET LIABILITY ASSET LIABILITY
------------ ------ --------- ------ ---------
<S> <C> <C> <C> <C>
Depreciation............................ $ -- $2,940 $ -- $2,808
Accrued employee benefits............... 2,873 630 2,875 651
Other accrued expenses.................. 782 4 963 --
Intangible drilling costs............... -- 289 -- 337
Inventory............................... 174 310 107 330
Unrealized exchange gains............... -- 19 85 --
Tax loss/tax credit carryforwards....... 395 -- 590 --
Investment in subsidiaries and
affiliates............................. 37 125 34 130
Other................................... 331 835 352 878
------ ------ ------ ------
Total................................... 4,592 $5,152 5,006 $5,134
====== ======
Less: Valuation allowance............... (357) (445)
------ ------
Net..................................... $4,235 $4,561
====== ======
</TABLE>
Current deferred tax liabilities (included in the Consolidated Balance Sheet
caption "Income Taxes") were $63 and $67 at December 31, 1994 and 1993,
respectively. In addition, deferred tax assets of $82 and $198 were included in
Other Assets at December 31, 1994 and 1993, respectively (see Note 15).
F-13
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
An analysis of the company's effective income tax rate (excluding
extraordinary item and transition effect of accounting changes) follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ----- ----
<S> <C> <C> <C>
Statutory U.S. federal income tax rate............. 35.0% 35.0% 34.0%
Higher effective tax rate on non-U.S. operations
(principally Petroleum)........................... 9.9 51.9 20.5
Lower effective tax rate on operations within U.S.
possessions....................................... (1.1) (5.6) (2.4)
Alternative fuels credit........................... (2.1) (6.9) (2.0)
Tax rate changes................................... -- (28.6)(1) --
Tax status changes................................. (2.4)(2) -- --
Other--net......................................... (1.5) (4.9) (3.9)
---- ----- ----
Effective income tax rate.......................... 37.8% 40.9% 46.2%
==== ===== ====
</TABLE>
- --------
(1) Reflects a net tax benefit of $265, arising principally from U.K. Petroleum
Revenue Tax law revisions.
(2) Reflects a tax valuation allowance benefit of $105 related to a change in
tax status resulting from a transfer of properties among certain North Sea
affiliates.
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>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
U.S. (including exports).............................. $2,651 $ (167) $ 136
Other regions......................................... 1,731 1,125 1,675
------ ------ ------
$4,382 $ 958 $1,811
====== ====== ======
</TABLE>
At December 31, 1994, unremitted earnings of non-U.S. subsidiaries totaling
$4,333 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, 1994,
the tax effect of such carryforwards approximated $395. Of this amount, $176
has no expiration date, $20 expires in 1995, $139 expires after 1995 but before
2001 and $60 expires between 2001 and 2010.
8. EXTRAORDINARY CHARGE FROM EARLY EXTINGUISHMENT OF DEBT
In 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.
9. EARNINGS PER SHARE OF COMMON STOCK
Earnings per share are calculated on the basis of the following average
number of common shares outstanding: 1994--679,999,916; 1993--676,622,115; and
1992--673,454,935.
F-14
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
10. CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES
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.
Marketable securities represent investments in fixed and variable rate
financial instruments classified as available-for-sale securities and reported
at fair value.
11. ACCOUNTS AND NOTES RECEIVABLE
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
Trade--net of allowances of $86 in 1994 and $97 in 1993...... $4,244 $4,020
Miscellaneous................................................ 969 874
------ ------
$5,213 $4,894
====== ======
</TABLE>
Accounts and notes receivable are carried at amounts which approximate fair
value.
See Note 30 for a description of business segment markets and associated
concentrations of credit risk.
12. INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
Chemicals.................................................... $ 237 $ 250
Fibers....................................................... 677 571
Polymers..................................................... 617 550
Petroleum.................................................... 1,365 1,367
Diversified Businesses....................................... 1,073 1,080
------ ------
$3,969 $3,818
====== ======
</TABLE>
The excess of replacement or current cost over stated value of inventories
for which cost has been determined under the LIFO method approximated $819 and
$766 at December 31, 1994 and 1993, 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 88 percent
and 87 percent of consolidated inventories before LIFO adjustment at December
31, 1994 and 1993, 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).
13. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31
---------------
1994 1993
------- -------
<S> <C> <C>
Chemicals.................................................. $ 5,086 $ 4,984
Fibers..................................................... 10,574 10,280
Polymers................................................... 7,827 7,742
Petroleum.................................................. 17,999 17,698
Diversified Businesses..................................... 5,377 5,265
Corporate.................................................. 1,975 1,957
------- -------
$48,838 $47,926
======= =======
</TABLE>
F-15
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Property, plant and equipment includes gross assets acquired under capital
leases of $148 and $72 at December 31, 1994 and 1993, respectively; related
amounts included in accumulated depreciation, depletion and amortization were
$88 and $57 at December 31, 1994 and 1993, respectively.
14. 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 $326 in 1994, $243 in 1993 and
$124 in 1992.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------
RESULTS OF OPERATIONS 1994 1993 1992
--------------------- ------- ------- -------
<S> <C> <C> <C>
Sales*.............................................. $ 9,161 $ 8,030 $ 8,173
Earnings before income taxes........................ 947 446 771
Net Income.......................................... 732 252 568
DuPont's equity in earnings of affiliates (see Note
2)................................................. 361 121 216
======= ======= =======
</TABLE>
- --------
*Includes sales to DuPont of $828 in 1994, $752 in 1993 and $803 in 1992.
<TABLE>
<CAPTION>
DECEMBER 31
--------------
FINANCIAL POSITION 1994 1993
------------------ ------- ------
<S> <C> <C>
Current assets.............................................. $ 3,254 $2,703
Noncurrent assets........................................... 8,147 6,813
------- ------
Total assets.............................................. $11,401 $9,516
------- ------
Short-term borrowings*...................................... $ 648 $ 475
Other current liabilities................................... 2,065 1,820
Long-term borrowings*....................................... 2,590 2,220
Other long-term liabilities................................. 2,934 2,847
------- ------
Total liabilities......................................... $ 8,237 $7,362
------- ------
DuPont's investment in affiliates (includes advances)....... $ 1,662 $1,607
------- ------
</TABLE>
- --------
* DuPont's pro rata interest in total borrowings was $1,220 in 1994 and $985 in
1993, of which $599 in 1994 and $388 in 1993 was guaranteed by the company.
These amounts are included in the guarantees disclosed in Note 28.
15. OTHER ASSETS
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
Prepaid pension cost (see Note 26).......................... $1,502 $1,384
Intangible assets........................................... 225 278
Other securities and investments............................ 508 474
Deferred income taxes (see Note 7).......................... 82 198
Miscellaneous............................................... 685 790
------ ------
$3,002 $3,124
====== ======
</TABLE>
F-16
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Other securities and investments includes $351 and $391 at December 31, 1994
and 1993, respectively, representing marketable securities classified as
available for sale and reported at fair value. The remainder 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. Such
securities are reported at cost.
16. ACCOUNTS PAYABLE
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
Trade........................................................ $1,847 $1,675
Payables to banks............................................ 321 264
Compensation awards.......................................... 222 94
Other........................................................ 344 411
------ ------
$2,734 $2,444
====== ======
</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.
17. SHORT-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
Commercial paper(1)......................................... $ 450 $ 325
Bank borrowings:
U.S. dollars............................................... -- 25
Other currencies(2)........................................ 264 395
Master notes................................................ -- 495
Medium-term notes payable within one year................... 519 853
Long-term borrowings payable within one year(3)............. -- 636
Industrial development bonds payable on demand.............. 51 50
Capital lease obligations................................... 8 17
------ ------
$1,292 $2,796
====== ======
</TABLE>
- --------
(1) An interest rate swap effectively converted $50 of these floating rate
borrowings to a fixed rate obligation at December 31, 1994 and 1993, as
part of the program to manage the fixed and floating interest rate mix of
total borrowings. The interest rate was 8.3 percent and the remaining
maturity was 1.2 years at December 31, 1994.
(2) 1993 includes 1,173 million Norwegian krone borrowing ($158 at the December
31, 1993 exchange rate) with an average interest rate of 5.9 percent.
(3) 1993 includes notes denominated as 125 billion Italian lire with a 12.375
percent Italian lira fixed interest rate. Concurrent with the issuance of
these notes, the company entered into interest and principal currency swaps
that effectively established a $100 fixed principal amount with a 7.45
percent U.S. dollar fixed interest rate.
F-17
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
The estimated fair value of the company's short-term borrowings, including
interest rate financial instruments, 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, was $1,300 and $2,900 at December 31, 1994 and 1993,
respectively.
Unused short-term bank credit lines were approximately $1,360 and $2,100 at
December 31, 1994 and 1993, respectively. These lines support short-term
industrial development bonds, a portion of the company's commercial paper
program and other borrowings.
The weighted average interest rate on short-term borrowings outstanding at
December 31, 1994 and 1993 was 5.85% and 4.91%, respectively.
18. OTHER ACCRUED LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
Payroll and other employee benefits............................ $ 725 $ 694
Taxes other than on income..................................... 422 380
Postretirement benefits other than pensions (see Note 25)...... 333 343
Restructuring charges.......................................... 219 810
Miscellaneous.................................................. 1,431 1,651
------ ------
$3,130 $3,878
====== ======
</TABLE>
19. LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
U.S. dollar:
Industrial development bonds due 2001-2024................... $ 295 $ 234
Medium-term notes due 1995-2005(1)........................... 592 837
8.50% notes due 1996......................................... 251 252
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......................................... 303 304
9.15% notes due 2000(2)...................................... 306 307
6.00% debentures due 2001 ($660 face value, 13.95% yield to
maturity)................................................... 430 411
6.75% notes due 2002(3)...................................... 299 299
8.00% notes due 2002......................................... 253 254
8.50% notes due 2003(2)...................................... 300 300
8.13% notes due 2004......................................... 331 349
8.25% notes due 2006......................................... 282 299
8.25% debentures due 2022.................................... 372 399
7.95% debentures due 2023(3)................................. 299 299
7.50% debentures due 2033(3)................................. 247 247
6.25% Swiss franc notes due 2000(4)........................... 103 103
Other loans (various currencies) due 1995-2005(5)............. 725 701
Capital lease obligations..................................... 86 34
------ ------
$6,376 $6,531
====== ======
</TABLE>
- --------
(1) Average interest rates at December 31, 1994 and 1993 were 7.5 percent and
6.8 percent, respectively.
F-18
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
(2) The company entered into an interest rate swaption agreement for each of
these notes as part of the program to manage the fixed and floating
interest rate mix of total borrowings. Each agreement gives the swaption
counterparty the one-time option to put the company into an interest rate
swap with a notional amount of $300, whereby the company would, over the
remaining term of the notes, receive fixed rate payments essentially
equivalent to the fixed interest rate of the underlying notes, and pay the
counterparty a floating rate of interest essentially equivalent to the rate
the company pays on its commercial paper. If exercised, the swaptions would
effectively convert the notes to a floating rate obligation over the
remaining maturity of the notes. The premium received from the
counterparties for these swaptions is being amortized to income, using the
effective interest method, over the remaining maturity of the notes. The
fair value and carrying value of these swaptions at December 31, 1994 and
1993 were not material.
(3) Interest rate swaps effectively converted $775 of these notes and
debentures to a floating rate obligation as part of the program to manage
the fixed and floating interest rate mix of total borrowings. The remaining
average maturity of these swaps was 2.2 years at December 31, 1994.
(4) Represents notes denominated as 150 million Swiss francs with a 6.25
percent Swiss franc fixed interest rate. Concurrent with the issuance of
these notes, the company entered into an interest and principal currency
swap that effectively established a $103 fixed principal amount with a 6.9
percent U.S. dollar fixed interest rate.
(5) Includes notes denominated as 160 million Australian dollars with a 16.5
percent Australian dollar fixed interest rate issued by the company's
majority-owned Canadian subsidiary, which were effectively converted to a
Canadian dollar borrowing with an implicit 12.43 percent Canadian dollar
fixed interest rate. Also includes a loan of 190 million pounds sterling
($296 and $292 at the respective 1994 and 1993 year-end exchange rates)
with a floating money market-based interest rate.
Average interest rates on industrial development bonds and on other loans
(various currencies) were 6.1 percent and 7.3 percent at December 31, 1994, and
6.0 percent and 7.4 percent at December 31, 1993.
Maturities of long-term borrowings, together with sinking fund requirements
in each of the four years after December 31, 1995, are as follows:
1996............ $908 1998............ $407
1997............ $798 1999............ $443
The estimated fair value of the company's long-term borrowings, including
interest rate financial instruments, 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 was $6,600 and $7,500 at December 31, 1994 and 1993,
respectively.
F-19
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
20. 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, 1994, are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES*
------- ---------
<S> <C> <C>
Minimum lease payments for years ending December 31:
1995...................................................... $ 20 $ 290
1996...................................................... 16 224
1997...................................................... 11 182
1998...................................................... 11 156
1999...................................................... 11 124
Remainder................................................. 104 673
---- ------
173 $1,649
======
Less: Estimated executory costs........................... 7
----
Net minimum lease payments................................. 166
Less: Imputed interest.................................... 72
----
Present value of net minimum lease payments................ 94
Due in 1995............................................... 8
----
Due after 1995............................................ $ 86
====
</TABLE>
- --------
* Minimum lease payments have not been reduced by minimum sublease rentals due
in the future under noncancelable subleases related to operating leases in
the amount of $102.
Rental expense under operating leases was $355 in 1994, $429 in 1993 and $453
in 1992.
21. OTHER LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31 1994 1993
----------- ------ ------
<S> <C> <C>
Accrued postretirement benefits cost (see Note 25)............ $6,058 $5,998
Reserves for employee-related costs........................... 937 989
Miscellaneous................................................. 1,443 1,213
------ ------
$8,438 $8,200
====== ======
</TABLE>
22. STOCKHOLDERS' EQUITY
Shares of new common stock issued in connection with employee compensation
and benefit plans were 3,427,507 in 1994, 2,569,201 in 1993 and 3,766,099 in
1992.
23. 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 are as follows:
F-20
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
1994 1993 1992
--------- ---------- ----------
<S> <C> <C> <C>
Outstanding at January 1..................... 8,916,709 10,525,892 12,693,600
Options:
Exercised................................... 2,199,142 1,534,403 1,960,028
Terminated.................................. 43,215 74,780 207,680
Outstanding at December 31................... 6,674,352 8,916,709 10,525,892
</TABLE>
In January 1995, the board of directors approved the worldwide 1995 Corporate
Sharing Program and awarded to essentially all employees a one-time grant of
options to acquire 100 shares of DuPont common stock at the fair market value
($57 per share) on the date of grant.
Awards for 1994 under the DuPont Stock Performance Plan (granted to key
employees in 1995) consisted of 3,133,091 options to acquire DuPont common
stock at fair market value of $55.50 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 are as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Outstanding at January 1.................... 14,553,921 13,594,606 13,822,375
Options granted............................. 2,324,720 2,160,360 2,425,130
Average price.............................. $52.50 $46.01 $49.21
Options exercised........................... 1,954,064 1,092,473 2,456,592
Average price.............................. $32.46 $27.77 $26.78
Options expired or terminated............... 229,677 108,572 196,307
At December 31:
Participants............................... 1,318 1,226 1,188
Options outstanding........................ 14,694,900 14,553,921 13,594,606
Average price.............................. $40.83 $37.62 $35.47
Options exercisable........................ 12,384,780 12,418,711 11,202,016
Shares available for option................ 27,527,631 26,215,426 25,092,886
</TABLE>
At December 31, 1994, there were 559,463 stock appreciation rights (SARs)
outstanding, at an average option price of $32.51 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 17, 1995 to
September 20, 2004.
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 $208 for 1994, $87 for 1993 and $87
for 1992. 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 $220 in 1994, $89 in 1993 and $85 in 1992. In
accordance with the terms of the Variable Compensation Plan and similar plans
of subsidiaries, 1,326,922 shares of common stock were awaiting delivery from
awards for 1994 and prior years.
24. 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
F-21
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
of $93 was reflected in Other Liabilities. Of the total purchase price, $259
and $170 were reflected in property, plant and equipment and inventories,
respectively.
In 1994, there were no individually material items included in Proceeds from
Sales of Assets. Proceeds from sales in 1993 principally include $270 from the
sale of the connector systems business, $280 from the sale of the acrylics
business and $300 from the sale of the Remington Arms Company. 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.
25. 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 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. Other postretirement benefits cost includes the
following components:
<TABLE>
<CAPTION>
HEALTH LIFE
CARE INSURANCE TOTAL
------ --------- -----
<S> <C> <C> <C>
1994
Service cost--benefits allocated to current period... $ 56 $ 17 $ 73
Interest cost on accumulated postretirement benefit
obligation.......................................... 288 77 365
Amortization of net gains and prior service credit... (78) 8 (70)
---- ---- ----
Other postretirement benefits cost................... $266 $102 $368
==== ==== ====
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>
The lower health care costs in 1994 and 1993 versus 1992 were due to changes
in the company's health care benefits programs in the United States, which
were announced on December 31, 1992. 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.
F-22
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(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, 1994 and 1993.
<TABLE>
<CAPTION>
HEALTH LIFE
CARE INSURANCE TOTAL
------- --------- -------
<S> <C> <C> <C>
1994
Accumulated postretirement benefit obligation
for:
Current pensioners and survivors............... $(2,366) $ (570) $(2,936)
Fully eligible employees....................... (139) -- (139)
Other employees................................ (674) (319) (993)
------- ------- -------
(3,179) (889) (4,068)
Unrecognized net loss/(gain).................... (1,267) 3 (1,264)
Unrecognized prior service credit............... (1,059) -- (1,059)
------- ------- -------
Accrued postretirement benefits cost............ $(5,505) $ (886) $(6,391)
======= ======= =======
Amount included in Other Accrued Liabilities
(see Note 18).................................. $ 333
=======
Amount included in Other Liabilities (see Note
21)............................................ $ 6,058
=======
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 18).................................. $ 343
=======
Amount included in Other Liabilities (see Note
21)............................................ $ 5,998
=======
</TABLE>
The health care accumulated postretirement benefit obligation was determined
at December 31, 1994 using a health care cost escalation rate of 8 percent
decreasing to 5 percent over 8 years and at December 31, 1993 using a health
care escalation rate of 10 percent decreasing to 5 percent over 10 years. The
assumed long-term rate of compensation increase used for life insurance was 5
percent. The discount rate was 9 percent at December 31, 1994 and 7.25 percent
at December 31, 1993. A one-percentage-point increase in the health care cost
escalation rate would have increased the accumulated postretirement benefit
obligation by $251 at December 31, 1994, and the 1994 other postretirement
benefit cost would have increased by $44.
26. 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.
F-23
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Net pension cost/(credit) for defined benefit plans includes the following
components:
<TABLE>
<CAPTION>
1994 1993 1992
---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Service cost--benefits
earned during the peri-
od...................... $ 380 $ 301 $ 283
Interest cost on pro-
jected benefit obliga-
tion.................... 1,079 1,038 980
Return on assets:
Actual (gain)/loss...... $ 214 $(1,880) $(1,055)
Deferred gain/(loss).... (1,540) (1,326) 617 (1,263) (164) (1,219)
------- ------- -------
Amortization of net gains
and prior service cost.. (91) (123) (127)
------- ------- -------
Net pension
cost/(credit)........... $ 42 $ (47) $ (83)
======= ======= =======
</TABLE>
The change in the annual pension cost/(credit) was primarily due to the
discount rate used to determine the present value of future benefits and the
return on pension trust assets.
The funded status of these plans was as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------------
1994 1993
------------------ ------------------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation......... $(10,342) $(11,681)
-------- --------
Accumulated benefit obligation.... $(10,744) $(12,177)
-------- --------
Projected benefit obligation...... $(12,303) $(14,195)
Plan assets at fair value.......... 14,223 15,250
-------- --------
Excess of assets over projected
benefit obligation................ 1,920 1,055
Unrecognized net (gains)(1)........ (877) (35)
Unrecognized prior service cost.... 459 364
-------- --------
Prepaid pension cost(2)............ $ 1,502 $ 1,384
======== ========
</TABLE>
- --------
(1) Includes the unamortized balance of $(1,339) and $(1,513) at December 31,
1994 and 1993, 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 $820 and $744 and the
related projected benefit obligation of $1,213 and $1,228 at December 31,
1994 and 1993, respectively.
For U.S. plans, the projected benefit obligation was determined using a
discount rate of 9 percent at December 31, 1994 and 7.25 percent at December
31, 1993, 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 during 1993 to a special retiree health care account to be used toward the
payment of these benefits. This transfer had no impact on earnings (see Note
25).
F-24
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
27. DERIVATIVES AND OTHER HEDGING INSTRUMENTS
The company enters into contractual arrangements (derivatives) in the
ordinary course of business to hedge its exposure to foreign currency, interest
rate and commodity price risks. The counterparties to these contractual
arrangements 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, to the extent possible, by restricting the period
over which unpaid balances are allowed to accumulate. The company does not
anticipate nonperformance by counterparties to these contracts, and no material
loss would be expected from any such nonperformance. Procedures are in place to
regularly monitor and report to management the market and counterparty credit
risks associated with these instruments. The company's accounting policies with
respect to these financial instrument transactions are set forth in Note 1.
Foreign Currency
The company routinely uses forward exchange contracts to hedge its net
exposures, by currency, related to the foreign currency-denominated monetary
assets and liabilities of its operations. The primary business objective of
this hedging program is to maintain an approximately balanced position in
foreign currencies so that exchange gains and losses resulting from exchange
rate changes, net of related tax effects, are minimized.
Principal foreign currency exposures and related hedge positions at December
31, 1994 were as follows:
<TABLE>
<CAPTION>
OPEN CONTRACTS TO
BUY/(SELL)
FOREIGN CURRENCY NET
NET MONETARY ------------------ AFTER-
ASSET/(LIABILITY) AFTER- TAX
CURRENCY EXPOSURE PRETAX TAX EXPOSURE
-------- ----------------- -------- -------- --------
<S> <C> <C> <C> <C>
British Pound................... $(1,428) $ 2,306 $ 1,427 $(1)
German Mark..................... $ (593) $ 955 $ 595 $ 2
Norwegian Krone................. $ (564) $ 914 $ 567 $ 3
French Franc.................... $ 451 $ (620) $ (453) $(2)
Italian Lira.................... $ 205 $ (333) $ (206) $(1)
Dutch Guilder................... $ 273 $ (355) $ (271) $ 2
Japanese Yen.................... $ (205) $ 285 $ 204 $(1)
</TABLE>
In addition, the company from time to time will enter into forward exchange
contracts to establish with certainty the U.S. dollar amount of future firm
commitments denominated in a foreign currency. Decisions regarding whether or
not to hedge a given commitment are made on a case-by-case basis, taking into
consideration the amount and duration of the exposure, market volatility and
economic trends. At December 31, 1994, no such commitments were hedged. Forward
exchange contracts are also used to manage near-term foreign currency cash
requirements and to place foreign currency deposits and marketable securities
investments into currencies offering favorable returns. Net cash
inflow/(outflow) from settlement of forward exchange contracts was $139, $(84)
and $146 for the years 1994, 1993 and 1992, respectively.
Interest Rates
The company uses a combination of financial instruments, including interest
rate swaps, interest and principal currency swaps and structured medium-term
financings, as part of its program to manage the fixed and floating interest
rate mix of the total debt portfolio and related overall cost of borrowing.
F-25
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Interest rate swaps involve the exchange of fixed for floating rate interest
payments that are fully integrated with underlying fixed rate bonds or notes to
effectively convert fixed rate debt into floating rate debt based on LIBOR or
commercial paper rates. Interest rate swaps also involve the exchange of
floating for fixed rate interest payments that are fully integrated with
commercial paper or other floating rate borrowings to effectively convert
floating rate debt into fixed rate debt. Both types of interest rate swaps are
denominated in U.S. dollars. Interest rate swaps allow the company to maintain
a target range of floating rate debt. Notional amounts do not represent the
amounts exchanged by the counterparties, and thus are not a measure of market
or credit exposure to the company. The amounts exchanged by the counterparties
are calculated on the basis of the notional amounts and the fixed and floating
interest rates.
The following interest rate swaps were outstanding at December 31, 1994:
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
NOTIONAL AVERAGE RATE
TYPE OF SWAP AMOUNT RATE PAID RECEIVED
------------ -------- --------- --------
<S> <C> <C> <C>
Pay Fixed, Receive Floating...................... $ 50 8.3% 4.5%
Pay Floating, Receive Fixed...................... $775 5.4% 5.8%
</TABLE>
These interest rate swaps mature in 1 to 3 years, with a weighted average
maturity of 2.1 years.
Under interest and principal currency swaps, the company receives
predetermined foreign currency-denominated payments corresponding, both as to
timing and amount, to the fixed or floating interest rate and fixed principal
amount to be paid by the company under concurrently issued foreign currency-
denominated bonds. In return, the company pays a U.S. dollar-denominated fixed
or floating interest rate and a U.S. dollar-denominated fixed principal amount
to the counterparty, thereby effectively converting the foreign currency-
denominated bonds into U.S. dollar-denominated obligations for both interest
and principal. Interest and principal currency swaps allow the company to be
fully hedged against fluctuations in currency exchange rates and foreign
interest rates and to achieve U.S. dollar fixed or floating interest rate
payments below the market interest rate, at the date of issuance, for
borrowings of comparable maturity.
One interest and principal currency swap was outstanding at December 31, 1994
that effectively converted a 150 million Swiss franc borrowing with a 6.25
percent Swiss franc fixed interest rate and a maturity of 2000 to a U.S. dollar
fixed principal amount of $103 with a 6.9 percent U.S. dollar fixed interest
rate.
Structured medium-term financings consist of:
a) A structured medium-term note with interest and/or principal payments
(denominated in either U.S. dollars or foreign currencies) determined using
a specified calculation incorporating changes in currency exchange rates or
other financial indices; and
b) A concurrently executed structured medium-term swap that, for any and all
calculations of the note's interest and/or principal payments over the term
of the note, provides a fully hedged transaction such that the note is
effectively converted to a U.S. dollar-denominated fixed or floating
interest rate with a U.S. dollar-denominated fixed principal amount.
Structured medium-term swaps allow the company to be fully hedged against
fluctuations in exchange rates and interest rates and to achieve U.S. dollar
fixed or floating interest rate payments below the market interest rate, at
the date of issuance, for borrowings of comparable maturity.
F-26
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
The face amount of these structured medium-term financings outstanding at
December 31, 1994 was $522, with a weighted average interest rate of 6.1
percent, and a weighted average maturity of 1.9 years.
In addition, the company's majority-owned Canadian subsidiary had a
structured medium-term financing outstanding at December 31, 1994 that
effectively converted a 160 million Australian dollar borrowing, with a
16.5 percent Australian dollar fixed interest rate and a maturity of 1996,
to a Canadian dollar borrowing with an implicit 12.43 percent Canadian
dollar fixed interest rate.
It is the company's policy that foreign currency bonds and structured medium-
term notes will not be issued unless a hedge of the market risks inherent in
such borrowings is executed simultaneously with a management-approved, highly
credit-worthy counterparty to provide a fully hedged transaction.
Interest rate financial instruments did not have a material effect on the
company's overall cost of borrowing at December 31, 1994 and 1993.
See also Notes 17 and 19 for additional descriptions of interest rate
financial instruments.
Summary of Outstanding Derivative Financial Instruments
Set forth below is a summary of the notional amounts, estimated fair values
and carrying amounts of outstanding financial instruments at December 31, 1994
and 1993.
Notional amounts represent the face amount of the contractual arrangements
and are not a measure of market or credit exposure. Estimated fair values
represent a reasonable approximation of amounts the company would have received
from/(paid to) a counterparty at December 31 to unwind the positions prior to
maturity. Estimated fair value of forward exchange contracts is based on market
prices for contracts of comparable time to maturity. Estimated fair value of
swaps represents the present value of remaining net cash flows to maturity
under swap agreements, discounted using market-implied future interest rates
existing at December 31, 1994 and 1993, respectively. At December 31, 1994, the
company had no plans to unwind these positions prior to maturity. Carrying
amounts represent the receivable/(payable) recorded in the Consolidated Balance
Sheet. See also Notes 10, 11, 15, 16, 17 and 19 for fair values and carrying
amounts of other financial instruments.
Notional Amount, Estimated Fair Value and Carrying Amount of Outstanding
Derivative Financial Instruments
<TABLE>
<CAPTION>
NOTIONAL ESTIMATED CARRYING
TYPE OF INSTRUMENT AMOUNT FAIR VALUE AMOUNT
------------------ -------- ---------- --------
<S> <C> <C> <C>
Forward Exchange Contracts
December 31, 1994.............................. $7,978 $ 62 $ 73
1993........................................... 9,181 7 10
Interest Rate Swaps
December 31, 1994.............................. $ 825 $(47) $ (1)
1993........................................... 775 (3) 2
Interest and Principal Currency Swaps
December 31, 1994.............................. $ 103 $ 21 $ 11
1993........................................... 204 (24) (31)
Structured Medium-Term Swaps
December 31, 1994.............................. $ 646 $ 23 $ 36
1993........................................... 1,172 30 38
</TABLE>
F-27
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Estimated fair values shown above only represent the value of the hedge or
swap component of these transactions, and thus are not indicative of the fair
value of the company's overall hedged position. The estimated fair value of the
company's total debt portfolio, 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, was $7,900 and $10,400 at December 31, 1994 and 1993,
respectively. The improvement in fair value of $2,500 in 1994 was primarily due
to lower borrowing levels and the change in the interest rate environment. As
fully hedged transactions, the estimated fair values of the integrated debt and
interest rate financial instruments do not affect income and are not recorded
in the financial statements, but rather only represent the amount to unwind the
debt and financial instruments at a specific point in time prior to maturity.
Commodity Hedges and Trading
The company enters into exchange-traded and over-the-counter commodity
futures contracts to hedge its exposure to price fluctuations on anticipated
crude oil, refined products and natural gas transactions and certain raw
material purchases.
Commodity trading in petroleum futures contracts is a natural extension of
cash market trading and is used to physically acquire about 15 percent of North
America refining crude supply requirements. The commodity futures market has
underlying principles of increased liquidity and longer trading periods than
the cash market and is one method of reducing exposure to the price risk
inherent in the petroleum business. Typically, trading is conducted to manage
price risk around near-term (30-60 days) supply requirements. Occasionally, as
market views and conditions allow, longer-term positions will be taken to
manage price risk for the company's equity production (crude and natural gas)
or net supply requirements. These positions may not exceed anticipated equity
production or net supply requirements for the hedge period. The company's use
of futures contracts reduces the effects of price volatility, thereby
protecting against adverse short-term price movements, while limiting,
somewhat, the benefits of favorable short-term price movements. Open hedge
positions and deferred gains/losses for petroleum futures contracts were
immaterial at December 31, 1994 and 1993.
From time to time, on a limited basis, the company also purchases and sells
petroleum-based futures contracts for trading purposes. After-tax gain/loss
from such trading has not been material.
28. 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 practices or releases
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. At
F-28
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
December 31, 1994, such accrual amounted to $616 and, in management's opinion,
was appropriate based on existing facts and circumstances. Under the most
adverse circumstances, however, this potential liability could be significantly
higher. In the event that future remediation expenditures are in excess of
amounts accrued, management does not anticipate that they will have a material
adverse effect on the consolidated financial position of the company.
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, 1994,
these indirect guarantees totaled $13. In addition, at December 31, 1994, the
company had directly guaranteed $832 of the obligations of certain affiliated
companies and others. No material loss is anticipated by reason of such
agreements and guarantees.
29. GEOGRAPHIC INFORMATION
<TABLE>
<CAPTION>
UNITED OTHER
STATES EUROPE REGIONS CONSOLIDATED
------- ------- ------- ------------
<S> <C> <C> <C> <C>
1994
Sales to Unaffiliated Customers(1)......... $20,769 $14,216 $4,348 $39,333
Transfers Between Geographic Areas(2)...... 2,044 673 507 --
------- ------- ------ -------
Total..................................... $22,813 $14,889 $4,855 $39,333
------- ------- ------ -------
After-Tax Operating Income................. $ 1,993 $ 874 $ 240 $ 3,107
Identifiable Assets at December 31......... $16,933 $10,232 $3,857 $31,022
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
</TABLE>
- --------
(1) Sales outside the United States of products manufactured in and exported
from the United States totaled $3,625 in 1994, $3,500 in 1993 and $3,509 in
1992.
(2) Products are transferred between geographic areas on a basis intended to
reflect as nearly as practicable the "market value" of the products.
30. 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
F-29
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
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>
1994
Sales to Unaffiliated
Customers(1)........... $3,760 $6,767 $6,318 $16,815(2) $5,673 $39,333
Transfers Between Seg-
ments.................. 208 44 181 388 36 --
------ ------ ------ ------- ------ -------
Total.................. $3,968 $6,811 $6,499 $17,203 $5,709 $39,333
------ ------ ------ ------- ------ -------
Operating Profit........ $ 536 $1,083 $1,084 $ 1,141 $ 595 $ 4,439
Provision for Income
Taxes.................. (208) (412) (423) (486) (191) (1,720)
Equity in Earnings of
Affiliates............. 58 30 56 25 219 388
------ ------ ------ ------- ------ -------
After-Tax Operating In-
come(3)................ $ 386 $ 701 $ 717 $ 680 $ 623 $ 3,107(4)
------ ------ ------ ------- ------ -------
Identifiable Assets at
December 31............ $2,880 $6,020 $5,160 $11,961 $5,001 $31,022(5)
------ ------ ------ ------- ------ -------
Depreciation, Depletion
and Amortization....... $ 412 $ 512 $ 403 $ 1,191 $ 434 $ 3,106(6)
Capital Expenditures.... $ 298 $ 541 $ 310 $ 1,576 $ 283 $ 3,151(7)
<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 Seg-
ments.................. 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 In-
come(8)(9)(10)......... $ 166 $ 169 $ 177 $ 812(11) $ (407)(12) $ 917(4)
------ ------ ------ ------- ------ -------
Identifiable Assets at
December 31............ $2,960 $5,771 $5,226 $11,938 $5,029 $30,924(5)
------ ------ ------ ------- ------ -------
Depreciation, Depletion
and Amortization....... $ 303 $ 658 $ 527 $ 1,379 $ 460 $ 3,451(6)
Capital Expenditures.... $ 294 $ 751 $ 428 $ 1,659 $ 329 $ 3,655(7)
<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 Seg-
ments.................. 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 In-
come(13)............... $ 226 $ 409 $ 318 $ 337 $ (49)(14) $ 1,241(4)
------ ------ ------ ------- ------ -------
Identifiable Assets at
December 31............ $3,201 $5,738 $5,412 $12,307 $6,033 $32,691(5)
------ ------ ------ ------- ------ -------
Depreciation, Depletion
and Amortization....... $ 317 $ 592 $ 409 $ 1,006 $ 410 $ 2,839(6)
Capital Expenditures.... $ 366 $ 856 $ 642 $ 1,781 $ 558 $ 4,397(7)
</TABLE>
- --------
(1) Sales of refined petroleum products of $12,853 in 1994, $12,403 in 1993
and $12,681 in 1992 exceeded 10 percent of consolidated sales.
(2) Excludes crude oil and refined product exchanges and trading transactions
totaling $2,254 in 1994, $3,808 in 1993 and $3,881 in 1992.
F-30
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
(3) Includes the following (charges)/benefits (a):
<TABLE>
<S> <C>
Chemicals(b)......................................................... $ (5)
Fibers............................................................... 25
Polymers............................................................. 11
Petroleum(c)......................................................... (26)
Diversified Businesses(d)............................................ (53)
----
$(48)
====
</TABLE>
--------
(a) Reflects a net benefit of $112 from adjustments in estimates
associated with the third quarter 1993 restructuring charge of which
$88 relates to adjustments for other than employee separation costs.
The $112 is reflected in Chemicals $22; Fibers $25; Polymers $11; and
Diversified Businesses $54.
(b) Includes a charge of $27 associated with the discontinuation of
certain products, asset sales and write-downs.
(c) Includes a charge of $58 for employee separation costs, a loss of $95
from the write-down of certain North Sea oil properties to be sold and
a benefit of $127 principally related to a favorable change in tax
status resulting from a transfer of properties among certain North Sea
affiliates.
(d) Includes charges of $110 associated with the "Benlate" DF 50 fungicide
recall and $27 for the write-down of assets and discontinuation of
certain products, and a benefit of $30 from an adjustment of prior-
year tax provisions.
(4) The following reconciles After-Tax Operating Income to Net Income:
<TABLE>
<CAPTION>
1994 1993 1992
------ ----- ------
<S> <C> <C> <C>
After-Tax Operating In-
come................... $3,107 $ 917 $1,241
Interest and Other Cor-
porate Expenses Net of
Tax(a)................. (380) (351) (266)
------ ----- ------
Net Income(b)........... $2,727 $ 566 $ 975
====== ===== ======
</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.
(b) Before extraordinary item and transition effect of accounting changes.
See the Consolidated Income Statement.
(5) The following reconciles Identifiable Assets to Total Assets:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Identifiable Assets at December 31.................. $31,022 $30,924 $32,691
Investment in Affiliates............................ 1,662 1,607 1,746
Corporate Assets.................................... 4,208 4,522 4,433
------- ------- -------
Total Assets at December 31......................... $36,892 $37,053 $38,870
======= ======= =======
</TABLE>
(6) Includes depreciation on research and development facilities, impairment
of unproved properties and depreciation reflected in 1993 and 1992
restructuring charges.
(7) Excludes investments in affiliates.
F-31
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
(8) Includes the following third-quarter charges for asset write-downs,
employee separation costs, facility shutdowns and other restructuring
costs (see Note 6):
<TABLE>
<S> <C>
Chemicals(a)........................................................ $ 112
Fibers(b)........................................................... 266
Polymers(c)......................................................... 148
Petroleum(d)........................................................ 172
Diversified Businesses(e)........................................... 413
------
$1,111
======
</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 for asset write-downs, primarily for certain North
American petroleum-producing properties sold in the fourth quarter.
(e) Includes $264 for asset write-downs, principally facilities for the
printing and publishing business.
(9) 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).
(10) 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.
(11) Includes a $21 loss from sale of petroleum-producing properties and a $32
gain from exchange of several proved and unproved North Sea petroleum
properties for an interest in a Norwegian offshore pipeline and cash;
since these are not "similar productive assets" as defined under
Accounting Principles Board Opinion No. 29, a gain was recognized on the
exchange.
(12) Includes a charge of $184 for the write-down of intangible assets
(technology and goodwill) associated with the printing and publishing
business.
(13) Includes the following fourth-quarter charges for termination incentives
and payments, as well as other charges, related to business restructurings
(see Note 6):
<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.
F-32
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
(14) Includes charge of $134 associated with "Benlate" DF 50 fungicide recall.
Products are transferred between segments on a basis intended to reflect as
nearly as practicable the "market value" of the products.
----------------
UNAUDITED SUBSEQUENT EVENT--EFFECT OF SEAGRAM REDEMPTION
On April 6, 1995, the Company acquired 156 million shares of its Common Stock
beneficially owned by Seagram for $56.25 per share. The consideration for the
acquired shares consisted of (i) $1 billion in cash, (ii) 90-day promissory
notes of the Company in an aggregate principal amount of $7.3 billion and (iii)
warrants of the Company valued at approximately $440 million exercisable for
156 million shares of Common Stock.
The warrants issued to Seagram expire on October 6, 1997, October 6, 1998,
and October 6, 1999 with respect to 48 million shares at $89.33 per share, 54
million shares at $101.14 per share and 54 million shares at $113.63 per share,
respectively. In general, as long as the warrants are held by Seagram, the
warrants are exercisable only during the 60 day periods immediately preceding
their respective expiration dates. However, the warrants would become
exercisable sooner in connection with certain significant corporate events. The
warrants are not transferable until May 15, 1996. Following such date, the
Company would have the right to buy the warrants from Seagram before Seagram
would be permitted to transfer the warrants to a third party. Any warrants that
are transferred to non-affiliates of Seagram would be exercisable at any time
prior to their expiration. The warrants contain standard anti-dilution
adjustments.
On a pro forma basis if the Seagram Redemption had occurred: (i) at January
1, 1994 (assuming the related indebtedness had been outstanding throughout
1994), Interest and Debt Expense would have been $994, Earnings Before Income
Taxes would have been $3,907, Net Income would have been $2,352, Net Income Per
Share of Common Stock would have been $4.47 (on the basis of 523,999,916
average outstanding shares) and the Fixed Charge Coverage Ratio would have been
4.0x; and (ii) at December 31, 1994, Short-Term Borrowings and Capital Lease
Obligations would have been $8,628, Stockholders' Equity would have been
$4,471, and Working Capital would have been ($4,808).
Subsequent to April 6, 1995, the notes issued to Seagram have been paid and
replaced by private placement commercial paper borrowings of the Company. The
weighted average interest rate associated with the commercial paper borrowings
was 6.17% at April 25, 1995.
F-33
<PAGE>
SUPPLEMENTAL PETROLEUM DATA
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN MILLIONS)
OIL AND GAS PRODUCING ACTIVITIES
The disclosures on pages F-34 to F-39 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.
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 1994 continue to exclude
petroleum reserve data applicable to the company's petroleum assets in Libya.
RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
TOTAL WORLDWIDE UNITED STATES EUROPE OTHER REGIONS(1)
------------------------- ---------------------- ----------------------------- -------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
------- ------- ------- ----- ----- ----- ------- ------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED COMPANIES
Revenues:
Sales to unaffiliated
customers.............. $ 2,196 $ 2,177 $ 1,990 $ 552 $ 538 $ 535 $ 1,015 $ 1,000 $ 874 $ 629 $ 639 $ 581
Transfers to other
company operations..... 733 930 1,003 401 558 583 332 372 407 -- -- 13
Exploration, including
dry hole costs.......... (323) (329) (347) (130) (107) (82) (110) (109) (165) (83) (113) (100)
Production............... (786) (868) (1,039) (327) (424) (492) (377) (363) (473) (82) (81) (74)
Depreciation, depletion,
amortization and
valuation provisions.... (957) (1,140) (786) (334) (591)(2) (433) (533)(3) (468) (296) (90) (81) (57)
Other(4)................. 67 (20) (55) 38 (17) (8) 25 9 (28) 4 (12) (19)
Income taxes............. (463) (281) (626) 7 84 2 (122)(5) (16)(6) (219) (348) (349) (409)
------- ------- ------- ----- ----- ----- ------- ------- ----- ----- ----- -----
Total consolidated
companies............... 467 469 140 207 41 105 230 425 100 30 3 (65)
------- ------- ------- ----- ----- ----- ------- ------- ----- ----- ----- -----
EQUITY AFFILIATES
Results of operations of
equity affiliates....... (16) (13) (13) 1 (1) (1) (17) (12) (12) -- -- --
------- ------- ------- ----- ----- ----- ------- ------- ----- ----- ----- -----
Total.................... $ 451 $ 456 $ 127 $ 208 $ 40 $ 104 $ 213 $ 413 $ 88 $ 30 $ 3 $ (65)
======= ======= ======= ===== ===== ===== ======= ======= ===== ===== ===== =====
</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 certain U.S.
petroleum-producing properties to be sold.
(3) Includes a charge of $115 ($95 after taxes) for impairment of certain North
Sea oil properties to be sold.
(4) Includes gain/(loss) on disposal of fixed assets and other miscellaneous
revenues and expenses.
(5) Includes a tax benefit of $127 principally related to a favorable change in
tax status resulting from a transfer of properties among certain North Sea
affiliates.
(6) Includes a benefit of $241 resulting from tax law changes in the United
Kingdom.
F-34
<PAGE>
SUPPLEMENTAL PETROLEUM DATA
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(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)
-------------------- -------------- -------------- -----------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
------ ------ ------ ---- ---- ---- ---- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED COMPANIES
Property acquisitions:
Proved(3).............. $ 139 $ 111 $ 16 $ 14 $ 93 $ 16 $115 $ 5 $-- $ 10 $ 13 $ --
Unproved............... 36 11 23 18 8 7 5 -- -- 13 3 16
Exploration............. 403 352 432 151 83 99 136 158 221 116 111 112
Development............. 713 864 806 174 195 206 466 567 498 73 102 102
------ ------ ------ ---- ---- ---- ---- ---- ---- ----- ----- -----
Total consolidated
companies.............. 1,291 1,338 1,277 357 379 328 722 730 719 212 229 230
------ ------ ------ ---- ---- ---- ---- ---- ---- ----- ----- -----
EQUITY AFFILIATES
Property acquisitions:
Proved................. -- 43 -- -- 43 -- -- -- -- -- -- --
Development............. 75 70 38 12 16 19 63 54 19 -- -- --
------ ------ ------ ---- ---- ---- ---- ---- ---- ----- ----- -----
Total equity affiliates. 75 113 38 12 59 19 63 54 19 -- -- --
------ ------ ------ ---- ---- ---- ---- ---- ---- ----- ----- -----
Total................... $1,366 $1,451 $1,315 $369 $438 $347 $785 $784 $738 $ 212 $ 229 $ 230
====== ====== ====== ==== ==== ==== ==== ==== ==== ===== ===== =====
</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) Does not include properties acquired through property exchanges.
CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
TOTAL WORLDWIDE UNITED STATES EUROPE OTHER REGIONS*
----------------------- -------------------- -------------------- --------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED COMPANIES
Gross costs:
Proved properties...... $11,057 $11,663 $11,356 $4,806 $4,934 $5,587 $4,950 $5,582 $4,732 $1,301 $1,147 $1,037
Unproved properties.... 790 701 1,152 291 321 471 323 218 461 176 162 220
Accumulated
depreciation,
depletion, amortization
and valuation
allowances:
Proved properties...... 6,173 6,467 6,171 3,073 3,023 3,244 2,122 2,604 2,169 978 840 758
Unproved properties.... 185 261 347 110 162 235 6 13 13 69 86 99
------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total net costs of
consolidated companies. 5,489 5,636 5,990 1,914 2,070 2,579 3,145 3,183 3,011 430 383 400
------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
EQUITY AFFILIATES
Net costs of equity
affiliates:
Proved properties...... 253 177 66 93 92 36 160 85 30 -- -- --
------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total................... $ 5,742 $ 5,813 $ 6,056 $2,007 $2,162 $2,615 $3,305 $3,268 $3,041 $ 430 $ 383 $ 400
======= ======= ======= ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
- --------
* Includes Canada, Dubai and Indonesia.
F-35
<PAGE>
SUPPLEMENTAL PETROLEUM DATA
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(IN MILLIONS OF BARRELS)
ESTIMATED PROVED RESERVES OF OIL(1)
<TABLE>
<CAPTION>
TOTAL WORLDWIDE UNITED STATES EUROPE OTHER REGIONS(2)
------------------ ---------------- ---------------- ---------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
---- ----- ----- ---- ---- ---- ---- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PROVED DEVELOPED AND
UNDEVELOPED RESERVES OF
CONSOLIDATED COMPANIES
Beginning of year....... 964 1,034 1,112 344 421 470 390 391 392 230 222 250
Revisions and other
changes............... 51 14 26 14 (6) (13) 26 13 37 11 7 2
Extensions and
discoveries........... 50 83 23 8 19 9 21 41 10 21 23 4
Improved recovery...... 10 7 3 9 5 3 -- -- -- 1 2 --
Purchase of
reserves(3)........... 43 25 5 14 7 5 29 2 -- -- 16 --
Sale of reserves(4).... (33) (64) (12) (20) (62) (12) (13) (2) -- -- -- --
Production............. (132) (135) (123) (33) (40) (41) (59) (55) (48) (40) (40) (34)
---- ----- ----- --- --- --- --- --- --- ----- ----- -----
End of year............. 953 964 1,034 336 344 421 394 390 391 223 230 222
---- ----- ----- --- --- --- --- --- --- ----- ----- -----
PROVED DEVELOPED AND
UNDEVELOPED RESERVES OF
EQUITY AFFILIATES
Beginning of year....... 19 19 -- -- -- -- 19 19 -- -- -- --
Revisions and other
changes............... 6 -- -- -- -- -- 6 -- -- -- -- --
Extensions and
discoveries........... 11 -- 19 -- -- -- 11 -- 19 -- -- --
Production............. (1) -- -- -- -- -- (1) -- -- -- -- --
---- ----- ----- --- --- --- --- --- --- ----- ----- -----
End of year............. 35 19 19 -- -- -- 35 19 19 -- -- --
---- ----- ----- --- --- --- --- --- --- ----- ----- -----
Total................... 988 983 1,053 336 344 421 429 409 410 223 230 222
---- ----- ----- --- --- --- --- --- --- ----- ----- -----
PROVED DEVELOPED
RESERVES OF
CONSOLIDATED COMPANIES
Beginning of year....... 708 750 778 332 397 441 160 153 118 216 200 219
End of year............. 706 708 750 324 332 397 171 160 153 211 216 200
==== ===== ===== === === === === === === ===== ===== =====
</TABLE>
- --------
(1) 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.
(2) Includes Canada, Dubai and Indonesia.
(3) Includes reserves acquired through property exchanges.
(4) Includes reserves disposed of through property exchanges.
F-36
<PAGE>
SUPPLEMENTAL PETROLEUM DATA
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(IN BILLION CUBIC FEET)
ESTIMATED PROVED RESERVES OF GAS
<TABLE>
<CAPTION>
TOTAL WORLDWIDE UNITED STATES EUROPE OTHER REGIONS(1)
------------------- ------------------- ------------------- ---------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PROVED DEVELOPED AND
UNDEVELOPED RESERVES OF
CONSOLIDATED COMPANIES
Beginning of year....... 3,680 3,445 3,619 1,802 1,928 2,149 1,752 1,417 1,321 126 100 149
Revisions and other
changes............... 317 72 (36) 121 (22) (55) 187 54 56 9 40 (37)
Extensions and
discoveries........... 514 712 307 139 196 127 356 507 172 19 9 8
Improved recovery...... -- 1 -- -- 1 -- -- -- -- -- -- --
Purchase of
reserves(2)........... 375 53 37 42 53 37 321 -- -- 12 -- --
Sale of reserves(3).... (71) (122) (51) (37) (49) (51) (34) (68) -- -- (5) --
Production............. (485) (481) (431) (318) (305) (279) (151) (158) (132) (16) (18) (20)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
End of year............. 4,330 3,680 3,445 1,749 1,802 1,928 2,431 1,752 1,417 150 126 100
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
PROVED DEVELOPED AND
UNDEVELOPED RESERVES OF
EQUITY AFFILIATES
Beginning of year....... 586 368 128 586 368 128 -- -- -- -- -- --
Revisions and other
changes............... 255 72 167 255 72 167 -- -- -- -- -- --
Extensions and
discoveries........... -- -- 75 -- -- 75 -- -- -- -- -- --
Purchase of reserves... 2 151 -- 2 151 -- -- -- -- -- -- --
Production............. (13) (5) (2) (13) (5) (2) -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
End of year............. 830 586 368 830 586 368 -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total................... 5,160 4,266 3,813 2,579 2,388 2,296 2,431 1,752 1,417 150 126 100
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
PROVED DEVELOPED
RESERVES OF
CONSOLIDATED COMPANIES
Beginning of year....... 2,570 2,539 2,750 1,717 1,837 2,013 738 618 602 115 84 135
End of year............. 2,496 2,570 2,539 1,687 1,717 1,837 683 738 618 126 115 84
===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
- --------
(1) Includes Canada, Dubai and Indonesia.
(2) Includes reserves acquired through property exchanges.
(3) Includes reserves disposed of through property exchanges.
F-37
<PAGE>
SUPPLEMENTAL PETROLEUM DATA
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED
OIL AND GAS RESERVES
The information on the following page 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, 1994 data averaged $14.38 for the United States, $15.81 for
Europe and $16.08 for Other Regions, and the gas prices per thousand cubic
feet averaged approximately $1.59 for the United States, $2.87 for Europe and
$1.34 for 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 on the following page, 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.
F-38
<PAGE>
SUPPLEMENTAL PETROLEUM DATA
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN MILLIONS)
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL
AND GAS RESERVES
<TABLE>
<CAPTION>
TOTAL WORLDWIDE UNITED STATES EUROPE OTHER REGIONS*
------------------------- ------------------------- ------------------------- ----------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED
COMPANIES Future
cash flows:
Revenues........... $23,836 $19,558 $24,439 $ 7,201 $ 7,199 $10,027 $12,945 $ 9,380 $10,785 $3,690 $2,979 $3,627
Production costs... (8,967) (9,117) (10,011) (3,411) (4,361) (5,228) (4,719) (4,005) (4,119) (837) (751) (664)
Development costs.. (1,693) (1,802) (1,719) (184) (515) (534) (1,439) (1,143) (1,001) (70) (144) (184)
Income tax expense. (6,084) (3,607) (6,022) (873) (414) (1,060) (2,893) (1,514) (2,585) (2,318) (1,679) (2,377)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
Future net cash
flows.............. 7,092 5,032 6,687 2,733 1,909 3,205 3,894 2,718 3,080 465 405 402
Discounted to
present value at a
10% annual rate.... (2,817) (1,818) (2,379) (1,154) (655) (1,239) (1,522) (1,021) (1,000) (141) (142) (140)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
Total consolidated
companies.......... 4,275 3,214 4,308 1,579 1,254 1,966 2,372 1,697 2,080 324 263 262
------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
EQUITY AFFILIATES
Standardized measure
of discounted
future net cash
flows of equity
affiliates......... 211 99 70 102 96 55 109 3 15 -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
Total............... $ 4,486 $ 3,313 $ 4,378 $ 1,681 $ 1,350 $ 2,021 $ 2,481 $ 1,700 $ 2,095 $ 324 $ 263 $ 262
======= ======= ======= ======= ======= ======= ======= ======= ======= ====== ====== ======
</TABLE>
- --------
* Includes Canada, Dubai and Indonesia.
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>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Balance at January 1................................ $ 3,214 $ 4,308 $ 3,558
Sales and transfers of oil and gas produced, net of
production costs................................... (2,143) (2,239) (2,053)
Development costs incurred during the period........ 713 864 833
Net changes in prices and in development and produc-
tion costs......................................... 1,275 (3,017) 765
Extensions, discoveries and improved recovery, less
related costs...................................... 775 915 453
Revisions of previous quantity estimates............ 796 130 178
Purchases (sales) of reserves in place--net......... 333 (120) (42)
Accretion of discount............................... 529 791 689
Net change in income taxes.......................... (1,174) 1,493 (369)
Other............................................... (43) 89 296
------- ------- -------
Balance at December 31.............................. $ 4,275 $ 3,214 $ 4,308
======= ======= =======
</TABLE>
F-39
<PAGE>
QUARTERLY FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
1994
Sales..................... $9,190 $10,161 $ 9,845 $10,137
Cost of Goods Sold and
Other Expenses(1)........ 8,101 8,924 8,958 9,335
Net Income................ 642 792(2) 647(3) 646(4)
Earnings Per Share of
Common Stock............. .94 1.16 .95 .95
Dividends Per Share of
Common Stock............. .44 .44 .47 .47
Market Price of Common
Stock(5):
High..................... 59 7/8 62 3/8 61 3/8 60 1/2
Low...................... 48 1/4 51 1/2 56 7/8 50 3/4
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(6) 516(7) (680)(8) 237(9)(10)
Earnings (Loss) Per Share
of Common Stock.......... .73 .76 (1.01) .35(9)
Dividends Per Share of
Common Stock............. .44 .44 .44 .44
Market Price of Common
Stock(5):
High..................... 50 53 7/8 49 5/8 50 1/2
Low...................... 44 1/2 46 1/2 45 7/8 44 1/2
</TABLE>
- --------
(1) Excludes interest and debt expense and provision for income taxes.
(2) Includes a charge of $47 ($.07 per share) associated with "Benlate" DF 50
fungicide recall.
(3) Includes a net charge of $3 reflecting: a benefit of $50 from adjustments
in estimates associated with the third quarter 1993 restructuring charge;
a charge of $58 for employee separation costs; a loss of $95 from the
write-down of certain North Sea oil properties to be sold; a charge of $27
associated with the discontinuation of certain products, assets sales and
write-downs and a benefit of $127 principally related to a favorable
change in tax status resulting from a transfer of properties among certain
North Sea affiliates.
(4) Includes a net benefit of $2 reflecting: a benefit of $62 from adjustments
in estimates associated with the third quarter 1993 restructuring charge;
a charge of $63 associated with the "Benlate" DF 50 fungicide recall; a
charge of $27 for the write-down of assets and discontinuation of certain
products; and a benefit of $30 from an adjustment of prior-year tax
provisions.
(5) As reported on the New York Stock Exchange, Inc. Composite Transactions
Tape.
(6) Includes a gain of $32 ($.05 per share) from exchange of North Sea
properties (see footnote 11 to Note 30).
(7) Includes a loss of $21 ($.03 per share) from sale of petroleum-producing
properties.
(8) Includes restructuring charges of $1,111 ($1.64 per share) and write-down
of intangible assets of $184 ($.27 per share), partially offset by a net
tax benefit of $265 ($.39 per share).
(9) Before extraordinary item.
(10) 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.
F-40
<PAGE>
CONSOLIDATED GEOGRAPHIC DATA
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
CAPITAL TOTAL ASSETS AVERAGE
EXPENDITURES DECEMBER 31 EMPLOYMENT
------------- --------------- ---------------
1994 1993 1994 1993 1994 1993
------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
United States..................... $1,520 $1,842 $19,857 $20,610 73,507 81,587
Europe............................ 1,317 1,277 11,957 11,315 22,624 22,427
Other Regions..................... 404 606 5,078 5,128 14,376 15,395
------ ------ ------- ------- ------- -------
Total............................. $3,241 $3,725 $36,892 $37,053 110,507 119,409
====== ====== ======= ======= ======= =======
</TABLE>
Capital expenditures, total assets and average employment are assigned to
geographic areas, generally based on physical location.
F-41
<PAGE>
FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT(A)(B)
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
----------------------
1995 1994
--------- ---------
<S> <C> <C>
SALES.................................................... $ 10,502 $ 9,190
Other Income............................................. 361 205
--------- --------
Total................................................... 10,863 9,395
--------- --------
Cost of Goods Sold and Other Expenses.................... 7,603 6,675
Selling, General and Administrative Expenses............. 740 664
Depreciation, Depletion and Amortization................. 648(c) 703
Exploration Expenses, Including Dry Hole Costs
and Impairment of Unproved Properties................... 54 59
Interest and Debt Expense................................ 120 142
--------- --------
Total................................................... 9,165 8,243
--------- --------
EARNINGS BEFORE INCOME TAXES............................. 1,698 1,152
Provision for Income Taxes............................... 739 510
--------- --------
NET INCOME............................................... $ 959 $ 642
========= ========
EARNINGS PER SHARE OF COMMON STOCK (d)................... $ 1.40 $ .94
========= ========
DIVIDENDS PER SHARE OF COMMON STOCK...................... $ .47 $ .44
========= ========
</TABLE>
See accompanying Notes to Financial Statements.
F-42
<PAGE>
FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET(A)(B)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1995 1994
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents.............................. $ 1,681 $ 856
Marketable Securities.................................. 271 253
Accounts and Notes Receivable.......................... 5,810 5,213
Inventories(e)......................................... 4,283 3,969
Prepaid Expenses....................................... 343 259
Deferred Income Taxes.................................. 446 558
------- -------
Total Current Assets................................. 12,834 11,108
PROPERTY, PLANT AND EQUIPMENT, less accumulated
depreciation, deletion and amortization (March 31,
1995--$27,998; December 31, 1994--$27,718)............ 21,022 21,120
INVESTMENT IN AFFILIATES............................... 1,753 1,662
OTHER ASSETS........................................... 3,082 3,002
------- -------
TOTAL................................................ $38,691 $36,892
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable....................................... $ 2,688 $ 2,734
Short-Term Borrowings and Capital Lease Obligations.... 1,897 1,292
Income Taxes........................................... 720 409
Other Accrued Liabilities.............................. 3,218 3,130
------- -------
Total Current Liabilities............................ 8,523 7,565
LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS..... 6,277 6,376
OTHER LIABILITIES...................................... 8,531 8,438
DEFERRED INCOME TAXES.................................. 1,635 1,494
------- -------
Total Liabilities.................................... 24,966 23,873
------- -------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES........ 209 197
------- -------
STOCKHOLDERS' EQUITY
Preferred Stock........................................ 237 237
Common Stock, $.60 par value; 900,000,000 shares
authorized; shares issued at March 31, 1995--
682,222,510; December 31, 1994--681,004,944........... 409 408
Additional Paid-In Capital............................. 4,828 4,771
Reinvested Earnings.................................... 8,042 7,406
------- -------
Total Stockholders' Equity........................... 13,516 12,822
------- -------
TOTAL................................................ $38,691 $36,892
======= =======
</TABLE>
See accompanying Notes to Financial Statements.
F-43
<PAGE>
FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS(A)(B)
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(DOLLARS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------
1995 1994
--------- ----------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS
Net Income ............................................. $ 959 $ 642
Adjustments to Reconcile Net Income to Cash Provided by
Operations:
Depreciation, Depletion and Amortization.............. 648 703
Dry Hole Costs and Impairment of Unproved Properties.. 12 18
Other Noncash Charges and Credits--Net................ (17) (72)
Change in Operating Assets and Liabilities--Net....... (611) (200)
-------- ----------
Cash Provided by Operations.......................... 991 1,091
-------- ----------
INVESTMENT ACTIVITIES
Purchases of Property, Plant and Equipment.............. (626) (662)
Investment in Affiliates................................ (62) (30)
Proceeds from Sales of Assets........................... 117 20
Investments in Short-Term Financial Instruments--Net.... 204 (882)
Miscellaneous--Net...................................... (36) 135
-------- ----------
Cash Used for Investment Activities.................. (403) (1,419)
-------- ----------
FINANCING ACTIVITIES
Dividends Paid to Stockholders.......................... (323) (301)
Net Increase in Borrowings.............................. 494 998
Common Stock Issued in Connection with Compensation
Plans.................................................. 8 45
-------- ----------
Cash Provided by Financing Activities................ 179 742
-------- ----------
Effect of Exchange Rate Changes on Cash................. 58 23
-------- ----------
INCREASE IN CASH AND CASH EQUIVALENTS................... $ 825 $ 437
======== ==========
</TABLE>
See accompanying Notes to Financial Statements.
F-44
<PAGE>
NOTES TO FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
(a) These statements are unaudited, but reflect all adjustments that, in the
opinion of management, are necessary to provide a fair presentation of the
financial position, results of operations and cash flows for the dates and
periods covered. All such adjustments are of a normal recurring nature. Certain
reclassifications of 1994 data have been made to conform to 1995
classifications.
(b) Subsequent Event--On April 6, 1995, the company acquired 156 million
shares of its common stock from Seagram for $56.25 per share. Consideration
consisted of (i) $1,000 in cash, (ii) 90-day promissory notes totaling
approximately $7,300 and (iii) warrants valued at $440 exercisable for 156
million shares of the company's common stock. In general, the warrants issued
in the transaction allow Seagram to purchase 48 million DuPont shares for a 60-
day period ending on October 6, 1997 at a price of $89 per share; 54 million
shares for a 60-day period ending on October 6, 1998 at a price of $101 per
share; and 54 million shares for a 60-day period ending on October 6, 1999 at a
price of $114 per share. The warrants are exercisable sooner in connection with
certain significant corporate events. The warrants are subject to various
conditions, including limitations on transfer to third parties.
Subsequent to April 6, 1995, the notes issued to Seagram have been paid and
replaced by private-placement commercial paper borrowings of the company. The
weighted-average interest rate associated with such borrowings was 6.17 percent
at April 25, 1995.
On a pro forma basis, if this share redemption had occurred: (i) at January
1, 1995 (assuming that the related indebtedness had been outstanding throughout
the first quarter of 1995), Interest and Debt Expense would have been $235,
Earnings Before Income Taxes would have been $1,568, Net Income would have been
$867, and Net Income Per Share of Common Stock would have been $1.65 (on the
basis of 525,352,598 average outstanding shares), and (ii) at March 31, 1995,
Short-Term Borrowings and Capital Lease Obligations would have been $9,233,
Stockholders' Equity would have been $5,165 and Working Capital would have been
($4,040).
The company currently expects that the long-term funding for this transaction
will include: (i) cash flow from operations and selective sales of assets; (ii)
a Flexitrust program that will effect the sale or distribution of up to
24,000,000 additional newly-issued shares of DuPont common Stock over the next
several years to satisfy existing employee compensation and benefit programs;
and (iii) up to $2,000 from public and private offerings of equity securities.
Accordingly, pro forma data for the first quarter 1995 are not necessarily
indicative of results of operations or financial position in subsequent
periods.
(c) Effective with property, plant and equipment (PP&E) placed in service
beginning in 1995 for the company's nonpetroleum businesses, the company
changed from an accelerated method to a straight-line method of depreciation.
This change in accounting principle is being made to reflect management's
belief that the productivity of such PP&E will not appreciably diminish in the
early years of its useful life, and it will not be subject to significant
additional maintenance in the later years of its useful life. In these
circumstances, straight-line depreciation is preferable in that it provides a
better matching of costs with revenues. Additionally, the change to the
straight-line method will conform to predominant industry practice. This change
did not have a material impact for first quarter 1995, and it is not expected
to have a material effect for full year 1995 results.
F-45
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(d) Earnings per share are calculated on the basis of the following average
number of common shares outstanding:
Three Months Ended March 31:
1995--681,352,598
1994--678,476,595
(e) Inventories
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1995 1994
-------- -----------
<S> <C> <C>
Chemicals............................................. $ 262 $ 237
Fibers................................................ 696 677
Polymers.............................................. 671 617
Petroleum............................................. 1,393 1,365
Diversified Businesses................................ 1,261 1,073
------ ------
Total................................................ $4,283 $3,969
====== ======
</TABLE>
F-46
<PAGE>
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY U.S. UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE SUCH DATE.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 3
Prospectus Summary........................................................ 4
The Company............................................................... 7
Redemption of DuPont Common Stock from Seagram............................ 8
Use of Proceeds........................................................... 9
Price Range of Common Stock and Dividends................................. 9
Capitalization............................................................ 10
Selected Consolidated Financial Information............................... 11
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 13
Description of Capital Stock.............................................. 22
Certain United States Federal Tax Consequences to Non-United States
Holders.................................................................. 24
Underwriting.............................................................. 26
Notice to Canadian Residents.............................................. 28
Experts................................................................... 29
Legal Matters............................................................. 29
Index to Consolidated Financial Statements................................ F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[LOGO OF DUPONT APPEARS HERE]
17,000,000 Shares
Common Stock
($.60 par value)
PROSPECTUS
CS First Boston
Merrill Lynch & Co.
Morgan Stanley & Co.
Incorporated
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 2, 1995
17,000,000 Shares
E.I. du Pont de Nemours and Company
Common Stock
($.60 par value)
--------
Of the 17,000,000 shares being offered, 13,600,000 shares are initially being
offered in the United States and Canada (the "U.S. Shares") by the U.S.
Underwriters (the "U.S. Offering") and 3,400,000 shares are initially being
concurrently offered outside the United States and Canada (the "International
Shares") by the Managers (the "International Offering" and, together with the
U.S. Offering, the "Offerings"). The offering price and underwriting discounts
and commissions of the U.S. Offering and the International Offering are
identical. On May 1, 1995, the reported last sale price of the Common Stock on
the New York Stock Exchange Composite Tape was $66 1/8 per share.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Company (1)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share.................................. $ $ $
Total (2).................................. $ $ $
</TABLE>
(1) Before deduction of expenses payable by the Company estimated at $903,000.
(2) The Company has granted the U.S. Underwriters and the Managers an option,
exercisable by CS First Boston Corporation for 30 days from the date of
this Prospectus, to purchase a maximum of 2,550,000 additional shares
solely to cover over-allotments of shares. If the option is exercised in
full, the total Price to Public will be $ . Underwriting Discounts and
Commissions will be $ and Proceeds to Company will be $ . See
"Subscription and Sale."
--------
Global Coordinator
CS First Boston
--------
The International Shares are offered by the several Managers when, as and if
issued by the Company, delivered to and accepted by the Managers and subject to
their right to reject orders in whole or in part. It is expected that the
International Shares will be ready for delivery on or about May , 1995.
CS First Boston
Merrill Lynch International Limited Morgan Stanley & Co.
International
The date of this Prospectus is , 1995.
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY MANAGER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE SUCH DATE.
In this Prospectus, references to "dollars" and "$" are to United States
dollars.
IN CONNECTION WITH THE OFFERINGS, CS FIRST BOSTON CORPORATION ON BEHALF OF
THE U.S. UNDERWRITERS AND THE MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... I-3
Incorporation of Certain Documents by Reference........................... I-3
Prospectus Summary........................................................ 4
The Company............................................................... 7
Redemption of DuPont Common Stock from Seagram............................ 8
Use of Proceeds........................................................... 9
Price Range of Common Stock and Dividends................................. 9
Capitalization............................................................ 10
Selected Consolidated Financial Information............................... 11
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 13
Description of Capital Stock.............................................. 22
Certain United States Federal Tax Consequences to Non-United States Hold-
ers...................................................................... 24
Subscription and Sale..................................................... I-4
Experts................................................................... 29
Legal Matters............................................................. 29
Index to Consolidated Financial Statements................................ F-1
</TABLE>
I-2
<PAGE>
AVAILABLE INFORMATION
E.I. du Pont de Nemours and Company ("DuPont" or the "Company") is subject to
the informational requirements of the Securities Exchange Act of 1934 (the
"Exchange Act"), and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). These reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at its principal offices at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials also can be obtained from the Public Reference Section of the
Commission at prescribed rates at the principal offices of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Common
Stock is listed on the New York Stock Exchange (Symbol: DD), and reports and
information concerning the Company can be inspected at such exchange, 20 Broad
Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form S-
3 under the Securities Act of 1933 (the "Act") with respect to the shares of
Common Stock offered hereby (including all amendments and supplements thereto,
the "Registration Statement"). This Prospectus, which forms a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement and the exhibits filed therewith, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. Statements contained herein concerning the provisions of such
documents are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference. The Registration Statement and the exhibits thereto
can be inspected and copied at the public reference facilities and regional
offices referred to above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the following
documents heretofore filed with the Commission pursuant to the Exchange Act:
(i) the Company's Annual Report on Form 10-K for the year ended December 31,
1994, including the 1995 Proxy Statement for the Annual Meeting of Shareholders
dated March 17, 1995, as amended by the Proxy Supplement dated April 13, 1995;
(ii) the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1995; (iii) the Company's Current Reports on Form 8-K dated January 25,
1995, April 7, 1995, (as amended), April 24, 1995 and April 27, 1995 and (iv)
the Company's Registration of Common Stock on Form 8-A.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to termination of the Offerings shall be deemed to be incorporated in this
Prospectus by reference and to be a part hereof from the respective dates of
the filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed document which also
is, or is deemed to be, incorporated by reference herein, modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of any and all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents which are not specifically incorporated
by reference into such documents. Requests for such copies should be directed
to Capital Markets, DuPont Finance, E. I. du Pont de Nemours and Company, 1007
Market Street, Wilmington, Delaware 19898, or telephone (302) 774-1000.
I-3
<PAGE>
SUBSCRIPTION AND SALE
The institutions named below (the "Managers") have, pursuant to a
Subscription Agreement dated , 1995 (the "Subscription Agreement"),
severally and not jointly, agreed with the Company to subscribe and pay for the
following respective numbers of International Shares as set forth opposite
their names:
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL
MANAGER SHARES
------- -------------
<S> <C>
CS First Boston Limited..........................................
Merrill Lynch International Limited..............................
Morgan Stanley & Co. International Limited.......................
---------
Total.................................................... 3,400,000
=========
</TABLE>
The Subscription Agreement provides that the obligations of the Managers are
such that, subject to certain conditions precedent, the Managers will be
obligated to purchase all the International Shares offered hereby if any are
purchased. The Subscription Agreement provides that, in the event of a default
by a Manager, in certain circumstances the purchase commitments of non-
defaulting Managers may be increased or the Subscription Agreement may be
terminated.
The Company has entered into an Underwriting Agreement (the "Underwriting
Agreement") with the U.S. Underwriters of the U.S. Offering (the "U.S.
Underwriters") providing for the concurrent offer and sale of the U.S. Shares
in the United States and Canada. The closing of the U.S. Offering is a
condition to the closing of the International Offering and vice versa.
The Company has granted to the Managers and the U.S. Underwriters an option,
exercisable by CS First Boston Corporation, expiring at the close of business
on the 30th day after the date of this Prospectus, to purchase up to 2,550,000
additional shares at the public offering price, less the underwriting discounts
and commission, all as set forth on the cover page of this Prospectus. The
Managers and the U.S Underwriters may exercise such option only to cover over-
allotments in the sale of the shares of Common Stock offered in the Offerings.
To the extent that this option to purchase is exercised, each Manager and each
U.S. Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same
I-4
<PAGE>
percentage of additional shares being sold to the Managers and the U.S.
Underwriters as the number of International Shares set forth next to such
Manager's name in the preceding table bears to the total number of
International Shares in such table and as the number set forth next to such
U.S. Underwriter's name in the corresponding table in the prospectus relating
to the U.S. Offering bears to the total number of U.S. Shares in such table.
The Company has been advised by CS First Boston Limited, on behalf of the
Managers, that the Managers propose to offer the International Shares outside
the United States and Canada initially at the public offering price set forth
on the cover page of this Prospectus and, through the Managers, to certain
dealers at such price less a commission of $ per share, and the Managers may
reallow a commission of $ per share on sales to certain other dealers. After
the initial public offering, the public offering price and commission and
reallowance may be changed.
The public offering price and the aggregate underwriting discounts and
commission per share for the International Offering and the concurrent U.S.
Offering will be identical. Pursuant to an Agreement Between the U.S.
Underwriters and Managers (the "Intersyndicate Agreement") relating to the
Offerings, changes in the offering price, the aggregate underwriting discounts
and commissions per share and per share commission and reallowance to dealers
will be made only upon the mutual agreement of CS First Boston Limited, on
behalf of the Managers, and CS First Boston Corporation, as representative of
the U.S. Underwriters, on behalf of the U.S. Underwriters.
Pursuant to the Intersyndicate Agreement, each of the Managers has agreed
that, as part of the distribution of International Shares and subject to
certain exceptions, it has not offered or sold, and will not offer or sell,
directly or indirectly, any shares of Common Stock or distribute any prospectus
relating to the Common Stock in the United States or Canada or to any other
dealer who does not so agree. Each of the U.S. Underwriters has agreed that, as
part of the distribution of the U.S. Shares and subject to certain exceptions,
it has not offered or sold and will not offer or sell, directly or indirectly,
any shares of Common Stock or distribute any prospectus relating to the Common
Stock to any person outside the United States and Canada or to any other dealer
who does not so agree. The foregoing limitations do not apply to stabilization
transactions or to transactions between the Managers and the U.S. Underwriters
pursuant to the Intersyndicate Agreement. As used herein "United States" means
the United States of America (including the States and the District of
Columbia), its territories, possessions and other areas subject to its
jurisdiction, "Canada" means Canada, its provinces, territories, possessions
and other areas subject to its jurisdiction, and an offer or sale shall be in
the United States or Canada if it is made to (i) any individual resident in the
United States or Canada or (ii) any corporation, partnership, pension, profit-
sharing or other trust or other entity (including any such entity acting as an
investment adviser with discretionary authority) whose office most directly
involved with the purchase is located in the United States or Canada.
Pursuant to the Intersyndicate Agreement, sales may be made between the
Managers and the U.S. Underwriters of such number of shares of Common Stock as
may be mutually agreed upon. The price of any shares so sold will be the public
offering price less such amount agreed upon by CS First Boston Limited, on
behalf of the Managers, and CS First Boston Corporation, as representative of
the U.S. Underwriters, but not exceeding the selling concession applicable to
such shares. To the extent there are sales between the Managers and the U.S.
Underwriters pursuant to the Intersyndicate Agreement, the number of shares of
Common Stock initially available for sale by the Managers or by the U.S.
Underwriters may be more or less than the amount appearing on the cover page of
this Prospectus. Neither the Managers nor the U.S. Underwriters are obligated
to purchase from the other any unsold shares of Common Stock.
Each of the Managers and the U.S. Underwriters severally represents and
agrees that (i) it has not offered or sold, and will not offer or sell, in the
United Kingdom, by means of any document, any shares of Common Stock other than
to persons whose ordinary business it is to buy or sell shares or debentures,
either as a principal or agent, or in circumstances which do not constitute an
offer to the public within the meaning of the Companies Act 1985, (ii) it has
complied and will comply with all applicable provisions of the Financial
I-5
<PAGE>
Services Act of 1986 with respect to anything done by it in relation to any
shares of Common Stock in, from or otherwise involving the United Kingdom, and
(iii) it has only issued or passed on and will only issue or pass on to any
person in the United Kingdom any document received by it in connection with the
issue of any shares of Common Stock if the person is of a kind described in
Article 9(3) of the Financial Services Act of 1986 (Investment Advertisements)
(Exemptions) Order 1988 (as amended by Article 6(c) of the Financial Services
Act of 1986 (Investment Advertisements) Order 1992) or is a person to whom the
document may otherwise lawfully be issued or passed on.
The Company has agreed not to offer, sell, contract to sell, pledge or
otherwise dispose of, or cause to be filed with the Commission a registration
statement under the Securities Act relating to, or announce any offering of,
any shares of Common Stock or any securities convertible into, or exchangeable
or exercisable for, shares of Common Stock, except the shares of Common Stock
offered in the Offerings, for a period of 180 days from the date hereof without
the prior written consent of CS First Boston Corporation, as a representative
of the U.S. Underwriters; provided however, that the Company may (i) issue
Common Stock or any securities convertible into, or exchangeable or exercisable
for, shares of Common Stock pursuant to the terms of any securities outstanding
on the date hereof or other obligations binding upon the Company and in effect
on the date hereof, (ii) sell shares of Common Stock to the Flexitrust Program
and register such Common Stock and, beginning no sooner than 60 days after the
closing of the Offerings, distribute or sell such Common Stock from the
Flexitrust Program, and (iii) sell such shares of Common Stock to the DuPont
Pension Trust Fund and register such Common Stock. Such restrictions would not
apply to shares of DuPont's Common Stock offered by the Company as
consideration for a merger or other stock-based acquisition, should such a
transaction occur.
The Company has agreed to indemnify the Managers and the U.S. Underwriters
against certain liabilities, including civil liabilities under the Securities
Act, or to contribute to payments that the Managers and the US. Underwriters
may be required to make in respect thereof.
I-6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized statement of the expenses (all but the SEC
Registration fees are estimates) in connection with the issuance of the shares
of Common Stock being registered hereunder.
<TABLE>
<S> <C>
SEC Registration fees............................................ $417,547
Blue Sky fees and expenses....................................... $ 25,000
Printing and engraving expenses.................................. $100,000
Accounting fees and expenses..................................... $ 50,000
Stock exchange listing fees...................................... $ 35,000
Miscellaneous.................................................... $275,453
--------
Total.......................................................... $903,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation and Bylaws of DuPont provide for the
indemnification of each director and officer of DuPont in connection with any
claim, action, suit or proceeding brought or threatened by reason of his or her
position with DuPont. In addition, the General Corporation Law of the State of
Delaware ("Delaware Law") permits DuPont to indemnify its directors, officers
and others against judgments, fines, amounts paid in settlement and attorneys'
fees resulting from various types of legal actions or proceedings if the
actions of the party being indemnified meet the standards of conduct specified
in the Delaware Law.
The Company's directors and officers, are, in addition, insured against loss
arising from any claim against them or a wrongful act or omission with certain
exceptions and limitations.
ITEM 16. EXHIBITS.
Each of the following Exhibits is filed or incorporated by reference in this
Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1 Form of U.S. Underwriting Agreement
1.2 Form of Subscription Agreement
3.1 Certificate of Incorporation of the Registrant, filed as an exhibit
to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994, and incorporated herein by reference
3.2 By-laws of the Registrant, filed as an exhibit to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1993, and
incorporated herein by reference
12 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Price Waterhouse LLP
</TABLE>
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Act"), each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes that: (1) For purposes of
determining any liability under the Act, the information omitted from the form
of prospectus filed as part of this Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be
part of this Registration Statement as of the time it was declared effective;
and (2) For the purpose of determining any liability under the Act, each post-
effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON A FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF WILMINGTON, STATE OF DELAWARE ON THE 2ND DAY OF MAY,
1995.
E. I. du Pont de Nemours and Company
/s/ Charles L. Henry
By: _________________________________
CHARLES L. HENRY
SENIOR VICE-PRESIDENT--DUPONT
FINANCE
PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW ON MAY 2, 1995 BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED.
++++++
E. S. Woolard, Jr. Chairman and +
Director +
(Principal +
Executive +
Officer) +
+
J. A. Krol Vice Chairman and + /s/ C. L. Henry
Director + By: _______________________
+ C. L. HENRY
C. S. Nicandros Vice Chairman and + SENIOR VICE PRESIDENT--
Director + DUPONT FINANCE
+ (PRINCIPAL FINANCIAL
P. N. Barnevik Director ++ AND ACCOUNTING OFFICER
A. F. Brimmer Director + AND ATTORNEY-IN-FACT
L. C. Duemling Director + FOR BRACKETED INDIVIDUALS)
E. B. du Pont Director +
M. P. MacKimm Director +
H. R. Sharp, III Director +
C. M. Vest Director +
+
+ /s/ H. J. Rudge
Original powers of attorney authorizing + By: ______________________
C. L. Henry and H. J. Rudge, jointly, to + H. J. RUDGE
sign the registration statement and + SENIOR VICE PRESIDENT
amendments thereto on behalf of the above- + AND GENERAL COUNSEL
named directors and officers are filed with + (ATTORNEY-IN-FACT FOR
the Registration Statement. + BRACKETED INDIVIDUALS)
++++++
II-3
<PAGE>
[Insert Number of Shares
for Entire Offering of U.S. and International Securities]
E. I. DU PONT DE NEMOURS AND COMPANY
Common Stock
UNDERWRITING AGREEMENT
----------------------
, 1995
CS First Boston Corporation
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated,
As Representatives of the Several Underwriters,
c/o CS First Boston Corporation,
Park Avenue Plaza,
New York, N.Y. 10055.
Dear Sirs:
1. Introductory. E. I. du Pont de Nemours and Company, a Delaware
corporation ("Company"), proposes to issue and sell to the several Underwriters
named in Schedule A hereto ("Underwriters") [ ] shares
("U.S. Firm Securities") of its Common Stock ($.60 par value) ("Securities").
It is understood that the Company is concurrently entering into a
Subscription Agreement, dated the date hereof ("Subscription Agreement"), with
CS First Boston Limited ("CSFBL"), Merrill Lynch International Limited, Morgan
Stanley & Co. International Limited and the other managers named therein
("Managers") relating to the concurrent offering and sale of [
shares] of Securities ("International Firm Securities") outside the United
States and Canada ("International Offering").
In addition, the Company proposes to issue and sell (i) to the
Underwriters, at the option of the Underwriters, an aggregate of not more than
[ ] additional shares of Securities ("U.S. Optional Securities") and (ii)
to the Managers, at the option of the Managers, an aggregate of not more than
[ ] additional shares of Securities ("International Optional Securities")
as set forth below. The U.S. Firm Securities and the U.S. Optional Securities
are hereinafter called the "U.S. Securities"; the International Firm Securities
and the International Optional Securities are hereinafter called the
"International Securities"; the U.S. Firm Securities and the International Firm
Securities are hereinafter called the "Firm Securities"; the U.S. Optional
Securities and the International Optional Securities are hereinafter called the
"Optional Securities". The U.S. Securities and the International Securities are
collectively referred to as the "Offered Securities". To provide for the
coordination of their activities, the Underwriters and the Managers have entered
into an Agreement Between U.S. Underwriters and Managers which permits them,
among
<PAGE>
other things, to sell the Offered Securities to each other for purposes of
resale. The Company hereby agrees with the several Underwriters as follows:
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement (No. 33-58599) relating to the Offered
Securities, including a form of prospectus relating to the U.S. Securities
and a form of prospectus relating to the International Securities being
offered in the International Offering, has been filed with the Securities
and Exchange Commission ("Commission") and either (i) has been declared
effective under the Securities Act of 1933 ("Act") and is not proposed to
be amended or (ii) is proposed to be amended by amendment or post-effective
amendment. If the Company does not propose to amend such registration
statement and if any post-effective amendment to such registration
statement has been filed with the Commission prior to the execution and
delivery of this Agreement, the most recent such amendment has been
declared effective by the Commission. For purposes of this Agreement,
"Effective Time" means (i) if the Company has advised the Representatives
that it does not propose to amend such registration statement, the date and
time as of which such registration statement, or the most recent post-
effective amendment thereto (if any) filed prior to the execution and
delivery of this Agreement, was declared effective by the Commission, or
(ii) if the Company has advised the Representatives that it proposes to
file an amendment or post-effective amendment to such registration
statement, the date and time as of which such registration statement, as
amended by such amendment or post-effective amendment, as the case may be,
is declared effective by the Commission. "Effective Date" means the date
of the Effective Time. Such registration statement, as amended at the
Effective Time, including all material incorporated by reference therein
and including all information (if any) deemed to be a part of such
registration statement as of the Effective Time pursuant to Rule 430A(b)
under the Act, is hereinafter referred to as the "Registration Statement",
and the form of prospectus relating to the U.S. Securities and the form of
prospectus relating to the International Securities, each as first filed
with the Commission pursuant to and in accordance with Rule 424(b) ("Rule
424(b)") under the Act or (if no such filing is required) as included in
the Registration Statement, including all material incorporated by
reference in each such prospectus, are hereinafter referred to as the "U.S.
Prospectus" and the "International Prospectus", respectively, and
collectively as the "Prospectuses".
(b) If the Effective Time is prior to the execution and delivery of
this Agreement: (i) on the Effective Date, the Registration Statement
conformed in all respects to the requirements of the Act and the rules and
regulations of the Commission ("Rules and Regulations") and did not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and (ii) on the date of this Agreement, the Registration
Statement conforms, and at the time of filing of each of the Prospectuses
pursuant to Rule 424(b), the Registration Statement and each of the
Prospectuses will conform, in all respects to the requirements of the Act
and the Rules and Regulations, and none of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading. If the Effective Time is subsequent
to the execution and delivery of this Agreement: on the Effective Date, the
Registration Statement and each of the Prospectuses will conform in all
respects to the requirements of the Act and the Rules and Regulations, and
none of such documents will include any untrue statement of a material
fact or will omit to state any material fact required
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to be stated therein or necessary to make the statements therein not
misleading. The two preceding sentences do not apply to statements in or
omissions from the Registration Statement or either of the Prospectuses
based upon written information furnished to the Company by any Underwriter
through the Representatives or by any Manager through CSFBL specifically
for use therein, it being understood and agreed that the only such
information is that described as such in Section 7(b).
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectuses; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification except for such
jurisdictions in which the failure to so qualify would not have a material
adverse effect on the business or properties of the Company.
(d) Each subsidiary of the Company has been duly incorporated and is
an existing corporation in good standing under the laws of the jurisdiction
of its incorporation, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectuses;
and each subsidiary of the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires
such qualification; all of the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized and validly issued and
is fully paid and nonassessable; and the capital stock of each subsidiary
owned by the Company, directly or through subsidiaries, is owned free from
liens, encumbrances and defects, provided, however that no violation of
this representation and warranty shall be deemed to have occurred unless
such failure or failures to be duly incorporated, existing, in good
standing with adequate power and authority; such failure or failures to be
qualified to do business as a foreign corporation; or such failure or
failures of all of such outstanding capital stock to be duly authorized,
validly issued, fully paid, non assessable and owned free from liens,
encumbrances and defects, would individually or in the aggregate have a
material adverse effect on the Company and its subsidiaries taken as a
whole.
(e) The Offered Securities and all other outstanding shares of capital
stock of the Company have been duly authorized; all outstanding shares of
capital stock of the Company are, and, when the Offered Securities have
been delivered and paid for in accordance with this Agreement and the
Subscription Agreement on each Closing Date (as defined below), such
Offered Securities will have been, validly issued, fully paid and
nonassessable and will conform to the description thereof contained in the
Prospectuses; and the stockholders of the Company have no preemptive rights
with respect to the Securities.
(f) Except as disclosed in the Prospectuses, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter or
Manager for a brokerage commission, finder's fee or other like payment in
connection with the issue or sale of the Offered Securities.
(g) The Offered Securities have been approved for listing on The New
York Stock Exchange.
(h) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the transactions contemplated
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by this Agreement or the Subscription Agreement in connection with the
issuance and sale of the Offered Securities by the Company, except such as
have been obtained and made under the Act and such as may be required under
state securities laws.
(i) The execution, delivery and performance of this Agreement and the
Subscription Agreement, and the issuance and sale of the Offered Securities
will not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any statute, any rule, regulation or
order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any subsidiary of the Company or
any of their properties, or any agreement or instrument to which the
Company or any such subsidiary is a party or by which the Company or any
such subsidiary is bound or to which any of the properties of the Company
or any such subsidiary is subject, or the charter or by-laws of the Company
or any such subsidiary, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by this
Agreement and the Subscription Agreement, respectively.
(j) This Agreement and the Subscription Agreement have been duly
authorized, executed and delivered by the Company.
(k) Except as disclosed in the Prospectuses, the Company and its
subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and
except as disclosed in the Prospectuses, the Company and its subsidiaries
hold any leased real or personal property under valid and enforceable
leases with no exceptions that would materially interfere with the use made
or to be made thereof by them unless such failure or failures to have good
and marketable title, free from liens, encumberances and defects or such
failure to hold under valid and enforceable leases, would not, individually
or in the aggregate, have a material adverse effect on the Company and its
subsidiaries taken as a whole.
(l) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(m) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a material adverse effect on the Company and its subsidiaries
taken as a whole.
(n) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or presently
employed by them, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(o) Except as disclosed in the Prospectuses, neither the Company nor
any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or
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any court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate have a material adverse effect on
the Company and its subsidiaries taken as a whole; and the Company is not
aware of any pending investigation which might lead to such a claim.
(p) Except as disclosed in the Prospectuses, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of its subsidiaries, would individually or
in the aggregate have a material adverse effect on the condition (financial
or other), business, prospects or results of operations of the Company and
its subsidiaries taken as a whole, or would materially and adversely affect
the ability of the Company to perform its obligations under this Agreement
or the Subscription Agreement, or which are otherwise material in the
context of the sale of the Offered Securities; and no such actions, suits
or proceedings are threatened or, to the Company's knowledge, contemplated.
(q) The financial statements included in the Registration Statement
and Prospectuses present fairly the financial position of the Company and
its consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and, except as otherwise
disclosed in the Prospectuses, such financial statements have been prepared
in conformity with the generally accepted accounting principles in the
United States applied on a consistent basis; and the schedules included in
the Registration Statement present fairly the information required to be
stated therein.
(r) Except as disclosed in the Prospectuses, since the date of the
latest audited financial statements included in the Prospectuses there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in or contemplated
by the Prospectuses, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(s) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectuses, will not be an "investment company" as
defined in the Investment Company Act of 1940.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of $ per share, the respective
numbers of shares of U.S. Firm Securities set forth opposite the names of the
Underwriters in Schedule A hereto.
The Company will deliver the U.S. Firm Securities to the Representatives
for the accounts of the Underwriters, against payment of the purchase price by
wire transfer in Federal (same day) funds to the account of E.I. du Pont de
Nemours and Company at Morgan Guaranty Trust Company (Acct. No. 747-00-003), at
A.M., New York time, on , or at such other time not later than
seven full business days thereafter as CS First Boston Corporation ("CSFBC") and
the Company determine, such time being herein referred to as the "First Closing
Date", provided that the Company
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shall reimburse the Underwriters for the difference between making such payment
in same day and next day funds. The certificates for the U.S. Firm Securities
so to be delivered will be in definitive form, in such denominations and
registered in such names as CSFBC requests and will be made available for
checking and packaging at the office of CSFBC, at least 24 hours prior to the
First Closing Date.
In addition, upon written notice from CSFBC given to the Company from time
to time not more than 30 days subsequent to the date of the Prospectus, the
Underwriters may purchase all or less than all of the U.S. Optional Securities
at the purchase price per Security to be paid for the U.S. Firm Securities. The
U.S. Optional Securities to be purchased by the Underwriters on any Optional
Closing Date shall be in the same proportion to all the Optional Securities to
be purchased by the Underwriters and the Managers on such Optional Closing Date
as the U.S. Firm Securities bear to all the Firm Securities. The Company agrees
to sell to the Underwriters such U.S. Optional Securities and the Underwriters
agree, severally and not jointly, to purchase such U.S. Optional Securities.
Such U.S. Optional Securities shall be purchased for the account of each
Underwriter in the same proportion as the number of shares of U.S. Firm
Securities set forth opposite such Underwriter's name bears to the total number
of shares of U.S. Firm Securities (subject to adjustment by CSFBC to eliminate
fractions) and may be purchased by the Underwriters only for the purpose of
covering over-allotments made in connection with the sale of the U.S. Firm
Securities. No Optional Securities shall be sold or delivered unless the U.S.
Firm Securities and the International Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC on behalf of Underwriters and the Managers to the Company.
It is understood that CSFBC is authorized to make payment for and accept
delivery of such Optional Securities on behalf of the Underwriters and Managers
pursuant to the terms of CSFBC's instructions to the Company.
Each time for the delivery of and payment for the U.S. Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than seven full business days after written notice of
election to purchase Optional Securities is given. The Company will deliver the
U.S. Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, against payment of
the purchase price therefor by wire transfer in Federal (same day) funds to the
account of E.I. du Pont de Nemours and Company, at Morgan Guaranty Trust Company
(Acct. No. 747-00-003), provided that the Company shall reimburse the
Underwriters for the difference between making such payment in same day and next
day funds. The certificates for the U.S. Optional Securities will be in
definitive form, in such denominations and registered in such names as CSFBC
requests upon reasonable notice prior to such Optional Closing Date and will be
made available for checking and packaging at the office of CSFBC, at a
reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the U.S. Securities for sale to the public as set
forth in the U.S. Prospectus.
5. Certain Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) If the Effective Time is prior to the execution and delivery of
this Agreement, the Company will file each of the Prospectuses with the
Commission pursuant to and in accordance with subparagraph (1) (or, if
applicable and if consented to by CSFBC, subparagraph (4)) of Rule 424(b)
not later than the earlier of (A) the second business day following the
execution
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<PAGE>
and delivery of this Agreement or (B) the fifth business day after the
Effective Date. The Company will advise CSFBC promptly of any such filing
pursuant to Rule 424(b).
(b) The Company will advise CSFBC promptly of any proposal to amend
or supplement the registration statement as filed or either of the related
prospectuses or the Registration Statement or either of the Prospectuses
and will not effect such amendment or supplementation without first
consulting with CSFBC; and the Company will also advise CSFBC promptly of
the effectiveness of the Registration Statement (if the Effective Time is
subsequent to the execution and delivery of this Agreement) and of any
amendment or supplementation of the Registration Statement or either of the
Prospectuses and of the institution by the Commission of any stop order
proceedings in respect of the Registration Statement and will use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter, Manager or dealer, any event occurs as a result
of which either or both of the Prospectuses as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend either or both of the Prospectuses to comply
with the Act, the Company will promptly notify CSFBC of such event and will
promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither CSFBC's consent to,
nor the Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the Effective Date which will satisfy the provisions
of Section 11(a) of the Act. For the purpose of the preceding sentence,
"Availability Date" means the 45th day after the end of the fourth fiscal
quarter following the fiscal quarter that includes the Effective Date,
except that, if such fourth fiscal quarter is the last quarter of the
Company's fiscal year, "Availability Date" means the 90th day after the end
of such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies of the
Registration Statement (four of which will be signed and will include all
exhibits), each preliminary prospectus relating to the U.S. Securities,
and, so long as delivery of a prospectus relating to the Offered Securities
is required to be delivered under the Act in connection with sales by any
Underwriter or dealer, the U.S. Prospectus and all amendments and
supplements to such documents, in each case as soon as available and in
such quantities as CSFBC requests. The Company will pay the expenses of
printing and distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions in the United
States as CSFBC designates and will continue such qualifications in effect
so long as required for the distribution.
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<PAGE>
(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Securities Exchange Act of 1934 or mailed to
stockholders, and (ii) from time to time, such other information concerning
the Company as CSFBC may reasonably request.
(h) The Company will pay all expenses incident to the performance of
its obligations under this Agreement and will reimburse the Underwriters
(if and to the extent incurred by them) for any filing fees and other
expenses (including fees and disbursements of counsel) incurred by them in
connection with qualification of the Offered Securities for sale under the
laws of such jurisdictions in the United States as CSFBC designates and the
printing of memoranda relating thereto, for any travel expenses of the
Company's officers and employees and any other expenses of the Company in
connection with attending or hosting meetings with prospective purchasers
of the Offered Securities and for expenses incurred in distributing
preliminary prospectuses and the Prospectuses (including any amendments and
supplements thereto) to the Underwriters.
(i) For a period of 180 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly,
or file with the Commission a registration statement under the Act relating
to, any additional shares of its Securities or securities convertible into
or exchangeable or exercisable for any shares of its Securities, or
publicly disclose the intention to make any such offer, sale, pledge,
disposal or filing, without the prior written consent of CSFBC except
issuances of Securities pursuant to the conversion or exchange of
convertible or exchangeable securities or the exercise of warrants or
options, in each case outstanding on the date hereof, grants of employee
stock options pursuant to the terms of a plan in effect on the date hereof,
issuances of Securities pursuant to the exercise of such options, sales of
shares of its Securities to its Flexitrust program and the registration of
such Securities and, beginning no sooner than 60 days after the First
Closing Date, the distribution or sale of such Securities from the
Flexitrust program, sales of shares of Securities to the DuPont Pension
Trust Fund and the registration of such Securities or issuances of
Securities pursuant to the Company's dividend reinvestment plan.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the U.S. Firm Securities on the
First Closing Date and the U.S. Optional Securities to be purchased on each
Optional Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company herein, to the accuracy of the statements
of Company officers made pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time is prior to the execution
and delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the amendment
or post-effective amendment to the registration statement to be filed
shortly prior to the Effective Time), of Price Waterhouse LLP in form and
substance satisfactory to CSFBC, with respect to the financial statements
and certain financial information contained in or incorporated by reference
into the Registration Statement and the Prospectuses.
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(b) If the Effective Time is not prior to the execution and delivery
of this Agreement, the Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or such later date
as shall have been consented to by CSFBC. If the Effective Time is prior
to the execution and delivery of this Agreement, each of the Prospectuses
shall have been filed with the Commission in accordance with the Rules and
Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company or its
subsidiaries which, in the judgment of a majority in interest of the
Underwriters including the Representatives, is material and adverse and
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the U.S. Securities; (ii)
any downgrading in the rating of any debt securities or preferred stock of
the Company by any "nationally recognized statistical rating organization"
(as defined for purposes of Rule 436(g) under the Act), (iii) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (iv) any banking moratorium
declared by U.S. Federal or New York authorities; or (v) any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority in
interest of the Underwriters including the Representatives, the effect of
any such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the U.S. Securities.
(d) The Representatives shall have received an opinion, dated such
Closing Date, of the General Counsel or any Assistant General Counsel of
the Company, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the Prospectuses;
and the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease property or the conduct of its business requires
such qualification except for such jurisdictions in which the failure
to so qualify would not have a material adverse effect on the business
or properties of the Company;
(ii) The Offered Securities delivered on such Closing Date and
all other outstanding shares of the Common Stock of the Company have
been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectuses; and the stockholders of the Company have no preemptive
rights with respect to the Offered Securities;
(iii) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement or the
Subscription Agreement in
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<PAGE>
connection with the issuance or sale of the Offered Securities by the
Company, except such as have been obtained and made under the Act and
such as may be required under state securities laws;
(iv) The execution, delivery and performance of this Agreement
and the Subscription Agreement and the issuance and sale of the
Offered Securities will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any
statute, any rule, regulation or order of any governmental agency or
body or any court having jurisdiction over the Company or any of its
properties, or any agreement or instrument to which the Company is a
party or by which the Company is bound or to which any of the
properties of the Company is subject, or the charter or by-laws of the
Company and will not result in any such breach or violation or
constitute any such default with respect to any subsidiary of the
Company if such breach or breaches, violation or violations or default
or defaults, would individually or in the aggregate have a material
adverse effect on the Company and its subsidiaries taken as a whole,
and the Company has full power and authority to authorize, issue and
sell the Offered Securities as contemplated by this Agreement and the
Subscription Agreement, respectively;
(v) The Registration Statement was declared effective under the
Act as of the date and time specified in such opinion, each of the
Prospectuses either were filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date
specified therein or were included in the Registration Statement (as
the case may be), and, to the best of the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and no proceedings for
that purpose have been instituted or are pending or contemplated under
the Act, and the Registration Statement and each of the Prospectuses
and each amendment or supplement thereto, as of their respective
effective or issue dates, complied as to form in all material respects
with the requirements of the Act and the Rules and Regulations; such
counsel have no reason to believe that the Registration Statement or
any amendment thereto, as of its effective date or as of such Closing
Date, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that either of the
Prospectuses or any amendment or supplement thereto, as of its issue
date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; the descriptions in the
Registration Statement and the Prospectuses of statutes, legal and
governmental proceedings and contracts and other documents are
accurate and fairly present the information required to be shown; and
such counsel do not know of any legal or governmental proceedings
required to be described in the Registration Statement or the
Prospectuses which are not described as required or of any contracts
or documents of a character required to be described in the
Registration Statement or the Prospectuses or to be filed as exhibits
to the Registration Statement which are not described and filed as
required; it being understood that such counsel need express no
opinion as to the financial statements or other financial data
contained in the Registration Statement or the Prospectuses; and
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(vi) This Agreement and the Subscription Agreement have been
duly authorized, executed and delivered by the Company.
(e) The Representatives shall have received from Cravath, Swaine &
Moore, counsel for the Underwriters, such opinion or opinions, dated such
Closing Date, with respect to the incorporation of the Company, the
validity of the Offered Securities delivered on such Closing Date, the
Registration Statement, the Prospectuses and other related matters as the
Representatives may require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them to
pass upon such matters.
(f) The Representatives shall have received a certificate, dated such
Closing Date, of the Chairman or any Vice Chairman and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement
are true and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date, that no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission and that, subsequent to the date of the most recent
financial statements in the Prospectuses, there has been no material
adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries
taken as a whole except as set forth in or contemplated by the Prospectuses
or as described in such certificate.
(g) The Representatives shall have received a letter, dated such
Closing Date, of Price Waterhouse LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than five days prior to such
Closing Date for the purposes of this subsection.
(h) On such Closing Date, the Managers shall have purchased the
International Firm Securities or the International Optional Securities, as
the case may be, pursuant to the Subscription Agreement.
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
request. CSFBC may in its sole discretion waive on behalf of the Underwriters
compliance with any conditions to the obligations of the Underwriters hereunder,
whether in respect of an Optional Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, either of the Prospectuses, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any
11
<PAGE>
Underwriter through the Representatives specifically for use therein, it being
understood and agreed that the only information furnished by any Underwriter
consists of the information described as such in subsection (b) below.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, either of the
Prospectuses, or any amendment or supplement thereto, or any related preliminary
prospectus, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein, and will reimburse any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred, it being understood and agreed that the only such
information furnished by any Underwriter consists of the following information
in the U.S. Prospectus furnished on behalf of each Underwriter: the last
paragraph at the bottom of the cover page concerning the terms of the offering
by the Underwriters, the legend concerning over-allotments and stabilizing on
the inside front cover page and the concession and reallowance figures appearing
in the fifth paragraph under the caption "Underwriting".
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the U.S.
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the
12
<PAGE>
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering of the U.S.
Securities (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the U.S. Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the Company who
has signed the Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase U.S. Securities hereunder on either the First or
any Optional Closing Date and the aggregate number of shares of U.S. Securities
that such defaulting Underwriter or Underwriters agreed but failed to purchase
does not exceed 10% of the total number of shares of U.S. Securities that the
Underwriters are obligated to purchase on such Closing Date, CSFBC may make
arrangements satisfactory to the Company for the purchase of such U.S.
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date the non-defaulting Underwriters shall
be obligated severally, in proportion to their respective commitments hereunder,
to purchase the U.S. Securities that such defaulting Underwriters agreed but
failed to purchase on such Closing Date. If any Underwriter or Underwriters so
default and the aggregate number of shares of U.S. Securities with respect to
which such default or defaults occur exceeds 10% of the total number of shares
of U.S. Securities that the Underwriters are obligated to purchase on such
Closing Date and arrangements satisfactory to CSFBC and the Company for the
purchase of such U.S. Securities by other persons are not made within 36 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Company, except as provided in Section
9 (provided that if such default occurs with respect to U.S. Optional Securities
after the First Closing Date, this Agreement will not terminate as to the U.S.
Firm Securities or any U.S. Optional Securities purchased prior to such
termination). As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
13
<PAGE>
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the U.S. Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the U.S. Securities by the
Underwriters is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Underwriters pursuant to Section 7 shall
remain in effect and if any U.S. Securities have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 5
shall also remain in effect. If the purchase of the U.S. Securities by the
Underwriters is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 or the occurrence of any
event specified in clause (iii), (iv), or (v) of Section 6(c), the Company will
reimburse the Underwriters for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the U.S. Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
the Representatives, c/o CS First Boston Corporation, Park Avenue Plaza, New
York, N.Y. 10055, Attention: Investment Banking Department--Transactions
Advisory Group, or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 1007 Market Street, Wilmington, DE 19898,
Attention: Vice President and Treasurer, DuPont Finance; provided, however,
that any notice to an Underwriter pursuant to Section 7 will be mailed,
delivered or telegraphed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
12. Representation of Underwriters. The Representatives will act for the
several Underwriters in connection with this financing, and any action under
this Agreement taken by the Representatives jointly or by CSFBC will be binding
upon all the Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the Federal and
state courts in the Borough of Manhattan in The City of New York in any suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
14
<PAGE>
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to us the Company of the
counterparts hereof, whereupon it will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
E. I. DU PONT DE NEMOURS AND COMPANY
By...........................
[Insert title]
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written.
CS First Boston Corporation
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
Acting on behalf of themselves and
as the Representatives of the
several Underwriters.
By CS First Boston Corporation
By..............................
15
<PAGE>
SCHEDULE A
Underwriter Number of
Firm Securities
---------------
CS First Boston Corporation ...........................
Merrill Lynch, Pierce, Fenner & Smith Incorporated .....
Morgan Stanley & Co. Incorporated ......................
Total .......................
16
<PAGE>
[Insert Number of Shares
for Entire Offering of International and U.S. Securities]
E. I. DU PONT DE NEMOURS AND COMPANY
Common Stock
SUBSCRIPTION AGREEMENT
----------------------
, 1995
To: CS First Boston Limited
Merrill Lynch International Limited
Morgan Stanley & Co. International Limited
[Insert Names of any Other Managers]
c/o: CS First Boston Limited ("CSFBL")
One Cabot Square
London, England E14 4QJ
Dear Sirs:
1. Introductory. E. I. du Pont de Nemours and Company, a Delaware
corporation ("Company"), proposes to issue and sell to the several Managers
named in Schedule A hereto ("Managers") [ ] shares ("International
Firm Securities") of its Common Stock ($.60 par value) ("Securities").
It is understood that the Company is concurrently entering into an
Underwriting Agreement, dated the date hereof ("Underwriting Agreement"), with
certain United States underwriters listed in Schedule A thereto (the "U.S.
Underwriters"), for whom CS First Boston Corporation ("CSFBC"), Merrill Lynch,
Pierce, Fenner and Smith Incorporated and Morgan Stanley & Co. Incorporated are
acting as representatives (the "U.S. Representatives"), relating to the
concurrent offering and sale of shares of Securities ("U.S. Firm
Securities") in the United States and Canada ("U.S. Offering").
In addition, the Company proposes to issue and sell (i) to the U.S.
Underwriters, at the option of the U.S. Underwriters, an aggregate of not more
than [ ] additional shares of Securities ("U.S. Optional Securities") and
(ii) to the Managers, at the option of the Managers, an aggregate of not more
than [ ] additional shares of Securities ("International Optional
Securities") as set forth below. The U.S. Firm
<PAGE>
Securities and the U.S. Optional Securities are hereinafter called the "U.S.
Securities"; the International Firm Securities and the International Optional
Securities are hereinafter called the "International Securities"; the U.S. Firm
Securities and the International Firm Securities are hereinafter called the
"Firm Securities"; the U.S. Optional Securities and the International Optional
Securities are hereinafter called the "Optional Securities". The U.S. Securities
and the International Securities are collectively referred to as the "Offered
Securities". To provide for the coordination of their activities, the U.S.
Underwriters and the Managers have entered into an Agreement Between U.S.
Underwriters and Managers which permits them, among other things, to sell the
Offered Securities to each other for purposes of resale. The Company hereby
agrees with the several Managers as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Managers that:
(a) A registration statement (No. 33-58599) relating to the Offered
Securities, including a form of prospectus relating to the U.S. Securities
and a form of prospectus relating to the International Securities being
offered in the International Offering, has been filed with the Securities
and Exchange Commission ("Commission") and either (i) has been declared
effective under the Securities Act of 1933 ("Act") and is not proposed to
be amended or (ii) is proposed to be amended by amendment or post-effective
amendment. If the Company does not propose to amend such registration
statement and if any post-effective amendment to such registration
statement has been filed with the Commission prior to the execution and
delivery of this Agreement, the most recent such amendment has been
declared effective by the Commission. For purposes of this Agreement,
"Effective Time" means (i) if the Company has advised CSFBL that it does
not propose to amend such registration statement, the date and time as of
which such registration statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and delivery of
this Agreement, was declared effective by the Commission, or (ii) if the
Company has advised CSFBL that it proposes to file an amendment or post-
effective amendment to such registration statement, the date and time as of
which such registration statement, as amended by such amendment or post-
effective amendment, as the case may be, is declared effective by the
Commission. "Effective Date" means the date of the Effective Time. Such
registration statement, as amended at the Effective Time, including all
material incorporated by reference therein and including all information
(if any) deemed to be a part of such registration statement as of the
Effective Time pursuant to Rule 430A(b) under the Act, is hereinafter
referred to as the "Registration Statement", and the form of prospectus
relating to the U.S. Securities and the form of prospectus relating to the
International Securities, each as first filed with the Commission pursuant
to and in accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if
no such filing is required) as included in the Registration Statement,
including all material incorporated by reference in each such prospectus,
are hereinafter referred to as the "U.S. Prospectus" and the "International
Prospectus", respectively, and collectively as the "Prospectuses".
(b) If the Effective Time is prior to the execution and delivery of
this Agreement: (i) on the Effective Date, the Registration Statement
conformed in all respects to the requirements of the Act and the rules and
regulations of the Commission ("Rules and Regulations") and did not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and (ii) on the date of this Agreement, the Registration
Statement conforms, and at the time of filing of each of the Prospectuses
pursuant to Rule 424(b), the Registration Statement and each of the
Prospectuses will conform, in all respects to the requirements of the Act
and the Rules and Regulations, and none of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading. If the Effective Time is subsequent
to the execution and delivery of this Agreement: on the Effective Date,
2
<PAGE>
the Registration Statement and each of the Prospectuses will conform in all
respects to the requirements of the Act and the Rules and Regulations, and
none of such documents will include any untrue statement of a material fact
or will omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The two preceding
sentences do not apply to statements in or omissions from the Registration
Statement or either of the Prospectuses based upon written information
furnished to the Company by any Manager through CSFBL or by any U.S.
Underwriter through the U.S. Representatives specifically for use therein,
it being understood and agreed that the only such information is that
described as such in Section 7(b).
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectuses; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification except for such
jurisdictions in which the failure to so qualify would not have a material
adverse effect on the business or properties of the Company.
(d) Each subsidiary of the Company has been duly incorporated and is
an existing corporation in good standing under the laws of the jurisdiction
of its incorporation, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectuses;
and each subsidiary of the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires
such qualification except for such jurisdictions in which the failure to so
qualify would not have a material adverse effect on the business or
properties of the Company.; all of the issued and outstanding capital stock
of each subsidiary of the Company has been duly authorized and validly
issued and is fully paid and nonassessable; and the capital stock of each
subsidiary owned by the Company, directly or through subsidiaries, is owned
free from liens, encumbrances and defects, provided, however that no
violation of this representation and warranty shall be deemed to have
occurred unless such failure or failures to be duly incorporated, existing,
in good standing with adequate power and authority; such failure or
failures to be qualified to do business as a foreign corporation; or such
failure or failures of all of such outstanding capital stock to be duly
authorized, validly issued, fully paid, non assessable and owned free from
liens, encumbrances and defects, would individually or in the aggregate
have a material adverse effect on the Company and its subsidiaries taken as
a whole.
(e) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized; all outstanding
shares of capital stock of the Company are, and, when the Offered
Securities have been delivered and paid for in accordance with this
Agreement and the Underwriting Agreement on each Closing Date (as defined
below), such Offered Securities will have been, validly issued, fully paid
and nonassessable and will conform to the description thereof contained in
the Prospectuses; and the stockholders of the Company have no preemptive
rights with respect to the Securities.
(f ) Except as disclosed in the Prospectuses, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Manager or U.S.
Underwriter for a brokerage commission, finder's fee or other like payment
in connection with the issue or sale of the Offered Securities.
(g) The Offered Securities have been approved for listing on The New
York Stock Exchange subject to notice of issuance.
3
<PAGE>
(h) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement or the
Underwriting Agreement in connection with the issuance and sale of the
Offered Securities by the Company, except such as have been obtained and
made under the Act and such as may be required under state securities laws.
(i) The execution, delivery and performance of this Agreement and the
Underwriting Agreement, and the issuance and sale of the Offered Securities
will not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any statute, any rule, regulation or
order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any subsidiary of the Company or
any of their properties, or any agreement or instrument to which the
Company or any such subsidiary is a party or by which the Company or any
such subsidiary is bound or to which any of the properties of the Company
or any such subsidiary is subject, or the charter or by-laws of the Company
or any such subsidiary, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by this
Agreement and the Underwriting Agreement, respectively.
(j) This Agreement and the Underwriting Agreement have been duly
authorized, executed and delivered by the Company.
(k) Except as disclosed in the Prospectuses, the Company and its
subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and
except as disclosed in the Prospectuses, the Company and its subsidiaries
hold any leased real or personal property under valid and enforceable
leases with no exceptions that would materially interfere with the use made
or to be made thereof by them unless such failure or failures to have good
and marketable title, free from liens, encumberances and defects or such
failure to hold under valid and enforceable leases, would not, individually
or in the aggregate, have a material adverse effect on the Company and its
subsidiaries taken as a whole.
(l) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(m) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a material adverse effect on the Company and its subsidiaries
taken as a whole.
(n) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or presently
employed by them, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the Company and its subsidiaries taken as a whole.
4
<PAGE>
(o) Except as disclosed in the Prospectuses, neither the Company nor
any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate have a material adverse effect on
the Company and its subsidiaries taken as a whole; and the Company is not
aware of any pending investigation which might lead to such a claim.
(p) Except as disclosed in the Prospectuses, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of its subsidiaries, would individually or
in the aggregate have a material adverse effect on the condition (financial
or other), business, prospects or results of operations of the Company and
its subsidiaries taken as a whole, or would materially and adversely affect
the ability of the Company to perform its obligations under this Agreement
or the Underwriting Agreement, or which are otherwise material in the
context of the sale of the Offered Securities; and no such actions, suits
or proceedings are threatened or, to the Company's knowledge, contemplated.
(q) The financial statements included in the Registration Statement
and Prospectuses present fairly the financial position of the Company and
its consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis;
and the schedules included in the Registration Statement present fairly the
information required to be stated therein.
(r) Except as disclosed in the Prospectuses, since the date of the
latest audited financial statements included in the Prospectuses there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in or contemplated
by the Prospectuses, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(s) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectuses, will not be an "investment company" as
defined in the Investment Company Act of 1940.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Managers, and the Managers agree, severally and not jointly, to purchase from
the Company, at a purchase price of U.S.$[ ] per share, the respective
numbers of shares of International Firm Securities set forth opposite the names
of the Managers in Schedule A hereto.
The Company will deliver the International Firm Securities to CSFBL for the
accounts of the Managers, against payment of the purchase price in U.S. dollars
by wire transfer in Federal (same day) funds to the account of E.I. du Pont de
Nemours and Company at Morgan Guaranty Trust Company
5
<PAGE>
(Acct. No. 747-00-003), at A.M., New York time, , or at
such other time not later than seven full business days thereafter as CSFBL and
the Company determine, such time being herein referred to as the "First Closing
Date", provided that the Company shall reimburse the Managers for the difference
between making such payment in same day and next day funds. The certificates for
the International Firm Securities so to be delivered will be in definitive form,
in such denominations and registered in such names as CSFBL requests and will be
made available for checking and packaging at the office of CSFBC, at least 24
hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company from time
to time not more than 30 days subsequent to the date of the Prospectus, the
Managers may purchase all or less than all of the International Optional
Securities at the purchase price per Security to be paid for the International
Firm Securities. The International Optional Securities to be purchased by the
Managers on any Optional Closing Date shall be in the same proportion to all the
Optional Securities to be purchased by the Managers and U.S. Underwriters on
such Optional Closing Date as the International Firm Securities bear to all the
Firm Securities. The Company agrees to sell to the Managers such International
Optional Securities and the Managers agree, severally and not jointly, to
purchase such International Optional Securities. Such International Optional
Securities shall be purchased for the account of each Manager in the same
proportion as the number of shares of International Firm Securities set forth
opposite such Manager's name bears to the total number of shares of
International Firm Securities (subject to adjustment by CSFBL to eliminate
fractions) and may be purchased by the Manager only for the purpose of covering
over-allotments made in connection with the sale of the International Firm
Securities. No Optional Securities shall be sold or delivered unless the
International Firm Securities and the U.S. Firm Securities previously have been,
or simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC on behalf of the Managers and the U.S. Underwriters to the
Company. It is understood that CSFBC is authorized to make payment for and
accept delivery of such Optional Securities on behalf of the U.S. Underwriters
and Managers pursuant to the terms of CSFBC's instructions to the Company.
Each time for the delivery of and payment for the International Optional
Securities, being herein referred to as an "Optional Closing Date", which may be
the First Closing Date (the First Closing Date and each Optional Closing Date,
if any, being sometimes referred to as a "Closing Date"), shall be determined by
CSFBC but shall be not later than seven full business days after written notice
of election to purchase Optional Securities is given. The Company will deliver
the International Optional Securities being purchased on each Optional Closing
Date to CSFBL for the accounts of the several Managers, against payment of the
purchase price therefor by wire transfer in Federal (same day) funds to the
account of E.I. du Pont de Nemours and Company, at Morgan Guaranty Trust Company
(Acct. No. 747-00-003), provided that the Company shall reimburse the Managers
for the difference between making such payment in same day and next day funds.
The certificates for the International Optional Securities will be in definitive
form, in such denominations and registered in such names as CSFBL requests upon
reasonable notice prior to such Optional Closing Date and will be made available
for checking and packaging at the office of CSFBC, at a reasonable time in
advance of such Optional Closing Date.
4. Offering by Managers. It is understood that the several Managers
propose to offer the International Securities for sale to the public as set
forth in the International Prospectus. In connection with the distribution of
the International Securities, the Managers, through a stabilizing manager, may
over-allot or effect transactions on any exchange, in any over-the-counter
market or otherwise which stabilize or maintain the market prices of the
International Securities at levels other than those which might otherwise
prevail, but in such event and in relation thereto, the Managers will act for
themselves and not as agents of the Company, and any loss resulting from over-
allotment and stabilization will be borne, and
6
<PAGE>
any profit arising therefrom will be beneficially retained, by the Managers.
Such stabilizing, if commenced, may be discontinued at any time.
5. Certain Agreements of the Company. The Company agrees with the several
Managers that:
(a) If the Effective Time is prior to the execution and delivery of
this Agreement, the Company will file each of the Prospectuses with the
Commission pursuant to and in accordance with subparagraph (1) (or, if
applicable and if consented to by CSFBL, subparagraph (4)) of Rule 424(b)
not later than the earlier of (A) the second business day following the
execution and delivery of this Agreement or (B) the fifth business day
after the Effective Date. The Company will advise CSFBL promptly of any
such filing pursuant to Rule 424(b).
(b) The Company will advise CSFBL promptly of any proposal to amend
or supplement the registration statement as filed or either of the related
prospectuses or the Registration Statement or either of the Prospectuses
and will not effect such amendment or supplementation without first
consulting with CSFBL; and the Company will also advise CSFBL promptly of
the effectiveness of the Registration Statement (if the Effective Time is
subsequent to the execution and delivery of this Agreement) and of any
amendment or supplementation of the Registration Statement or either of the
Prospectuses and of the institution by the Commission of any stop order
proceedings in respect of the Registration Statement and will use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any U.S. Underwriter, Manager or dealer, any event occurs as a
result of which either or both of the Prospectuses as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if it is necessary at any time to amend either or both of the Prospectuses
to comply with the Act, the Company will promptly notify CSFBL of such
event and will promptly prepare and file with the Commission, at its own
expense, an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance. Neither CSFBL's
consent to, nor the Managers' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the Effective Date which will satisfy the provisions
of Section 11(a) of the Act. For the purpose of the preceding sentence,
"Availability Date" means the 45th day after the end of the fourth fiscal
quarter following the fiscal quarter that includes the Effective Date,
except that, if such fourth fiscal quarter is the last quarter of the
Company's fiscal year, "Availability Date" means the 90th day after the end
of such fourth fiscal quarter.
(e) The Company will furnish to the Managers copies of the
Registration Statement (four of which will be signed and will include all
exhibits), each preliminary prospectus relating to the International
Securities, and, until completion of the distribution of the International
Securities as determined by CSFBL, the International Prospectus and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as
7
<PAGE>
CSFBL requests. The Company will pay the expenses of printing and
distributing to the Managers all such documents.
(f) No action has been or, prior to the completion of the
distribution of the Offered Securities, will be taken by the Company in any
jurisdiction outside the United States and Canada that would permit a
public offering of the Offered Securities, or possession or distribution of
the International Prospectus, or any amendment or supplement thereto, or
any related preliminary prospectus issued in connection with the offering
of the Offered Securities, or any other offering material, in any country
or jurisdiction where action for that purpose is required.
(g) During the period of five years hereafter, the Company will
furnish to CSFBL and, upon request, to each of the other Managers, as soon
as practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company will furnish to CSFBL
(i) as soon as available, a copy of each report and any definitive proxy
statement of the Company filed with the Commission under the Securities
Exchange Act of 1934 or mailed to stockholders, and (ii) from time to time,
such other information concerning the Company as CSFBL may reasonably
request.
(h) The Company will pay all expenses incident to the performance of
its obligations under this Agreement and will reimburse the Managers (if
and to the extent incurred by them) for any travel expenses of the
Company's officers and employees and any other expenses of the Company in
connection with attending or hosting meetings with prospective purchasers
of the Offered Securities and for expenses incurred in distributing
preliminary prospectuses and the Prospectuses (including any amendments and
supplements thereto) to the Managers.
(i) For a period of 180 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly,
or file with the Commission a registration statement under the Act relating
to, any additional shares of its Securities or securities convertible into
or exchangeable or exercisable for any shares of its Securities, or
publicly disclose the intention to make any such offer, sale, pledge,
disposal or filing, without the prior written consent of CSFBC except
issuances of Securities pursuant to the conversion or exchange of
convertible or exchangeable securities or the exercise of warrants or
options, in each case outstanding on the date hereof, grants of employee
stock options pursuant to the terms of a plan in effect on the date hereof,
issuances of Securities pursuant to the exercise of such options, sales of
shares of its Securities to its Flexitrust program and the registration of
such Securities and, beginning no sooner than 60 days after the First
Closing Date, the distribution or sale of such Securities from the
Flexitrust program, sales of shares of Securities to the DuPont Pension
Trust Fund and the registration of such Securities or issuances of
Securities pursuant to the Company's dividend reinvestment plan.
6. Conditions of the Obligations of the Managers. The obligations of the
several Managers to purchase and pay for the International Firm Securities on
the First Closing Date and the International Optional Securities to be purchased
on each Optional Closing Date will be subject to the accuracy of the
representations and warranties on the part of the Company herein, to the
accuracy of the statements of Company officers made pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and to
the following additional conditions precedent:
8
<PAGE>
(a) The Managers shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time is prior to the execution
and delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the amendment
or post-effective amendment to the registration statement to be filed
shortly prior to the Effective Time), of Price Waterhouse LLP in the agreed
form.
(b) If the Effective Time is not prior to the execution and delivery
of this Agreement, the Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or such later date
as shall have been consented to by CSFBL. If the Effective Time is prior to
the execution and delivery of this Agreement, each of the Prospectuses
shall have been filed with the Commission in accordance with the Rules and
Regulations and Section 5(a) of this Agreement. Prior to such Closing Date,
no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Company or the Managers, shall be
contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (A) a change in U.S. or international financial,
political or economic conditions or currency exchange rates or exchange
controls as would, in the judgment of CSFBL, be likely to prejudice
materially the success of the proposed issue, sale or distribution of the
International Securities, whether in the primary market or in respect of
dealings in the secondary market, or (B)(i) any change, or any development
or event involving a prospective change, in the condition (financial or
other), business, properties or results of operations of the Company or its
subsidiaries which, in the judgment of CSFBL, is material and adverse and
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the International
Securities; (ii) any downgrading in the rating of any debt securities or
preferred stock of the Company by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the
Act), (iii) any suspension or limitation of trading in securities generally
on the New York Stock Exchange, or any setting of minimum prices for
trading on such exchange, or any suspension of trading of any securities of
the Company on any exchange or in the over-the-counter market; (iv) any
banking moratorium declared by U.S. Federal or New York authorities; or (v)
any outbreak or escalation of major hostilities in which the United States
is involved, any declaration of war by the United States Congress or any
other substantial national or international calamity or emergency if, in
the judgment of CSFBL, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment
for the International Securities.
(d) The Managers shall have received an opinion, dated such Closing
Date, of the General Counsel or any Assistant General Counsel of the
Company, in the agreed form.
(e) The Managers shall have received from Cravath, Swaine & Moore,
counsel for the Managers, such opinion or opinions, dated such Closing
Date, with respect to the incorporation of the Company, the validity of the
Offered Securities delivered on such Closing Date, the Registration
Statement, the Prospectuses and other related matters as the Managers may
require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
9
<PAGE>
(f) The Managers shall have received a certificate, dated such
Closing Date, of the Chairman or any Vice Chairman and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement
are true and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date, that no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission and that, subsequent to the date of the most recent
financial statements in the Prospectuses, there has been no material
adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries
taken as a whole except as set forth in or contemplated by the Prospectuses
or as described in such certificate.
(g) The Managers shall have received a letter, dated such Closing
Date, of Price Waterhouse LLP which meets the requirements of subsection
(a) of this Section, except that the specified date referred to in such
subsection will be a date not more than five days prior to such Closing
Date for the purposes of this subsection.
(h) On such Closing Date, the U.S. Underwriters shall have purchased
the U.S. Firm Securities or the U.S. Optional Securities, as the case may
be, pursuant to the Underwriting Agreement.
Documents described as being "in the agreed form" are documents which are in the
forms which have been initialled for the purpose of identification by Cravath
Swaine & Moore, copies of which are held by the Company and CSFBL with such
changes as CSFBL may approve. The Company will furnish the Managers with such
conformed copies of such opinions, certificates, letters and documents as the
Managers reasonably request. CSFBL may in its sole discretion waive on behalf of
the Managers compliance with any conditions to the obligations of the Managers
hereunder, whether in respect of an Optional Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Manager against any losses, claims, damages or liabilities,
joint or several, to which such Manager may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
either of the Prospectuses, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Manager for any legal or other expenses reasonably incurred by
such Manager in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Manager through CSFBL specifically
for use therein, it being understood and agreed that the only information
furnished by any Manager consists of the information described as such in
subsection (b) below.
(b) Each Manager will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or
10
<PAGE>
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, either of the Prospectuses, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Manager through CSFBL specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Manager consists of
the following information in the International Prospectus furnished on behalf of
each Manager: the last paragraph at the bottom of the cover page concerning the
terms of the offering by the Managers, the legend concerning over-allotments and
stabilizing on the inside front cover page and the concession and reallowance
figures appearing in the fifth paragraph under the caption "Subscription and
Sale".
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Managers on the other from the offering of
the International Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Managers on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Managers on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering of the International Securities (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Managers. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Managers
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The amount
paid by an indemnified party as a result of the losses, claims, damages or
11
<PAGE>
liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Manager shall be required to contribute
any amount in excess of the amount by which the total price at which the
International Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Manager has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Managers' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Manager within the meaning of the Act; and the obligations of the Managers under
this Section shall be in addition to any liability which the respective Managers
may otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
8. Default of Managers. If any Manager or Managers default in their
obligations to purchase International Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of International
Securities that such defaulting Manager or Managers agreed but failed to
purchase does not exceed 10% of the total number of shares of International
Securities that the Managers are obligated to purchase on such Closing Date,
CSFBL may make arrangements satisfactory to the Company for the purchase of such
International Securities by other persons, including any of the Managers, but if
no such arrangements are made by such Closing Date the non-defaulting Managers
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the International Securities that such defaulting
Managers agreed but failed to purchase on such Closing Date. If any Manager or
Managers so default and the number of shares of International Securities with
respect to which such default or defaults occur exceeds 10% of the total number
of shares of International Securities that the Managers are obligated to
purchase on such Closing Date and arrangements satisfactory to CSFBL and the
Company for the purchase of such International Securities by other persons are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Manager or the Company,
except as provided in Section 9 (provided that if such default occurs with
respect to International Optional Securities after the First Closing Date, this
Agreement will not terminate as to the International Firm Securities or any
International Optional Securities purchased prior to such termination). As used
in this Agreement, the term "Manager" includes any person substituted for a
Manager under this Section. Nothing herein will relieve a defaulting Manager
from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Managers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Manager, the Company or any of their respective representatives, officers
or directors or any controlling person, and will survive delivery of and payment
for the International Securities. If this Agreement is terminated pursuant to
Section 8 or if for any reason the purchase of the International Securities by
the Managers is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Managers pursuant to Section 7 shall remain
in effect and if any International Securities have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 5
shall also remain in effect. If the purchase of the International Securities by
the
12
<PAGE>
Managers is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 or the occurrence of any
event specified in Section 6(c)(A) or clause (iii), (iv), or (v) of Section
6(c)(B), the Company will reimburse the Managers for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the International Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Managers, will be mailed, delivered or telexed and confirmed to CSFBL at
One Cabot Square, London E14 4QJ England, Attention: Company Secretary, or, if
sent to the Company, will be mailed, delivered or telegraphed and confirmed to
it at 1007 Market Street, Wilmington, DE 19898 , Attention: Vice President and
Treasurer, DuPont Finance, provided, however, that any notice to a Manager
pursuant to Section 7 will be mailed, delivered or telexed and confirmed to such
Manager.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
12. Representation of Managers. CSFBL will act for the several Managers
in connection with this financing, and any action under this Agreement taken by
CSFBL will be binding upon all the Managers.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
13
<PAGE>
If the foregoing is in accordance with the Managers' understanding of our
agreement, kindly sign and return to the Company one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the several
Managers in accordance with its terms.
Very truly yours,
E. I. DU PONT DE NEMOURS AND COMPANY
By..........................
[Insert title]
The foregoing Subscription Agreement is
hereby confirmed and accepted as of the
date first above written.
CS First Boston Limited
By:..........................
[Insert title]
Merrill Lynch International Limited
Morgan Stanley & Co. International
[Insert Names of any Other Managers]
Each by its duly authorized attorney-in-fact:
....................................
[Insert name]
14
<PAGE>
SCHEDULE A
Manager Number of
Firm Securities
---------------
CS First Boston Limited ........................
Merrill Lynch International Limited ............
Morgan Stanley & Co. International Limited .....
Total ............
15
<PAGE>
EXHIBIT 12
E. I. DU PONT DE NEMOURS AND COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS THREE
ENDED MONTHS
MARCH 31, ENDED YEARS ENDED DECEMBER 31
1995 MARCH 31, ------------------------------------------
PRO FORMA(A) 1995 1994 1993 1992 1991 1990
------------ --------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income.............. $ 867 $ 959 $2,727 $ 566(b) $ 975(b) $1,403 $2,310
Provision for Income
Taxes.................. 701 739 1,655 392 836 1,415 1,844
Minority Interests in
Earnings of
Consolidated
Subsidiaries........... 9 9 18 5 10 6 3
Adjustment for Companies
Accounted for by the
Equity Method.......... (4) (4) 18 41 6 35 29
Capitalized Interest.... (38) (38) (143) (194) (194) (197) (161)
Amortization of
Capitalized Interest... 39 39 154 144 101 94 84
------ ------ ------ ------ ------ ------ ------
1,574 1,704 4,429 954 1,734 2,756 4,109
------ ------ ------ ------ ------ ------ ------
FIXED CHARGES:
Interest and Debt
Expense-Borrowings.... 235 120 559 594 643 752 773
Adjustment for
Companies Accounted
for by the Equity
Method-Interest and
Debt Expense.......... 17 17 55 42 62 11 9
Capitalized Interest... 38 38 143 194 194 197 161
Rental Expense
Representative of
Interest Factor....... 30 30 118 143 151 162 163
------ ------ ------ ------ ------ ------ ------
320 205 875 973 1,050 1,122 1,106
------ ------ ------ ------ ------ ------ ------
Total Adjusted Earnings
Available for Payment
of Fixed Charges....... $1,894 $1,909 $5,304 $1,927 $2,784 $3,878 $5,215
====== ====== ====== ====== ====== ====== ======
Number of Times Fixed
Charges Are Earned..... 5.9 9.3 6.1 2.0 2.7 3.5 4.7
====== ====== ====== ====== ====== ====== ======
</TABLE>
- --------
(a) On a pro forma basis, as if the Seagram Redemption had occurred at January
1, 1995 (assuming that the related indebtedness had been outstanding
throughout the first quarter of 1995).
(b) Income Before Extraordinary Item and Transition Effect of Accounting
Changes.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 of our report dated February 16, 1995,
relating to the financial statements of E. I. du Pont de Nemours and Company,
which appears in such Prospectus. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
May 1, 1995
