<PAGE>
1994
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION
13 OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1994 COMMISSION FILE NUMBER 1-815
E. I. DU PONT DE NEMOURS AND COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 51-0014090
(I.R.S. EMPLOYER IDENTIFICATION NO.)
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
1007 MARKET STREET
WILMINGTON, DELAWARE 19898
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 302-774-1000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT
(EACH CLASS IS REGISTERED ON THE NEW YORK STOCK EXCHANGE, INC.):
TITLE OF EACH CLASS
COMMON STOCK ($.60 PAR VALUE)
PREFERRED STOCK
(WITHOUT PAR VALUE-CUMULATIVE)
$4.50 SERIES
$3.50 SERIES
6% DEBENTURES DUE 2001
NO SECURITIES ARE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
--- ---
Aggregate market value of voting stock (excluding outstanding shares
beneficially owned by directors and officers) as of March 7, 1995, was
approximately $28.1 billion. As of such date, 681,246,974 shares of the
company's common stock, $.60 par value, were outstanding.
Documents Incorporated by Reference
(Specific pages incorporated are indicated under the applicable Item herein):
<TABLE>
<CAPTION>
INCORPORATED BY
REFERENCE IN PART NO.
---------------------
<S> <C>
The company's 1994 Annual Report to Stockholders........ I, II, and IV
The company's Proxy Statement, dated March 17, 1995, in
connection with the Annual Meeting of Stockholders to
be held on April 26, 1995.............................. III
</TABLE>
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<PAGE>
E. I. DU PONT DE NEMOURS AND COMPANY
------------------
The terms "DuPont" or the "company" as used herein refer to E. I. du Pont de
Nemours and Company and its consolidated subsidiaries (which are wholly owned
or majority-owned), or to E. I. du Pont de Nemours and Company, as the context
may indicate.
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TABLE OF CONTENTS
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PAGE
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PART I
Item 1. Business ................................................... 3
Item 2. Properties ................................................. 6
Item 3. Legal Proceedings .......................................... 11
Item 4. Submission of Matters to a Vote of Security Holders ........ 14
Executive Officers of the Registrant........................ 14
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters........................................ 15
Item 6. Selected Financial Data .................................... 15
Management's Discussion and Analysis of Financial Condition
Item 7. and Results of Operations ................................. 15
Item 8. Financial Statements and Supplementary Data ................ 16
Item 9. Disagreements on Accounting and Financial Disclosure ....... 16
PART III
Item 10. Directors and Executive Officers of the Registrant ......... 16
Item 11. Executive Compensation ..................................... 16
Item 12. Security Ownership of Certain Beneficial Owners and
Management ................................................ 16
Item 13. Certain Relationships and Related Transactions ............. 16
PART IV
Exhibits, Financial Statement Schedules and Reports on Form
Item 14. 8-K ....................................................... 17
Signatures............................................................ 19
</TABLE>
NOTE ON INCORPORATION BY REFERENCE
Throughout this report, various information and data are incorporated by
reference to portions of the company's 1994 Annual Report to Stockholders
(those portions are hereinafter referred to as Exhibit 13). Any reference in
this report to disclosures in Exhibit 13 shall constitute incorporation by
reference of that specific material into this Form 10-K.
2
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PART I
ITEM 1. BUSINESS
DuPont was founded in 1802 and was incorporated in Delaware in 1915. The
company is the largest United States chemical producer and is one of the
leading chemical producers worldwide. The company conducts fully integrated
petroleum operations primarily through its wholly owned subsidiary Conoco Inc.
and, in 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 Inc. and other subsidiaries and affiliates of DuPont
conduct exploration, production, mining, manufacturing or selling activities,
and some are distributors of products manufactured by the company.
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.
The following information describing the businesses of the company can be
found on the indicated pages of Exhibit 13:
<TABLE>
<CAPTION>
ITEM PAGE(S)
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Discussion of Business Developments in 1994:
Letter to Stockholders.............................................. 1-4*
Industry Segment Reviews:
Business Discussions, Principal Products and Principal Markets:
Chemicals......................................................... 16-17**
Fibers............................................................ 18-19**
Polymers.......................................................... 20-21**
Petroleum......................................................... 22-25**
Diversified Businesses............................................ 26-28**
Sales, Transfers, Operating Profit, After-Tax Operating Income, and
Identifiable Assets for 1994, 1993, and 1992....................... 61-63
Geographic Information:
Sales, Transfers, After-Tax Operating Income, Identifiable Assets,
and U.S. Export Sales for 1994, 1993, and 1992..................... 60
Revenues by Product Class (See footnote 1 on page 62 of Exhibit 13)... 62
</TABLE>
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* Includes text of letter except for inserts and for chart on page 3 and
references thereto.
** Each review starts with paragraph describing segment products and principal
markets; information above such paragraph is excluded.
SOURCES OF SUPPLY
The company utilizes numerous firms as well as internal sources to supply a
wide range of raw materials, energy, supplies, services and equipment. To
assure availability, the company maintains multiple sources for most raw
materials, including hydrocarbon feedstocks, and for fuels. Large volume
purchases are generally procured under competitively priced supply contracts.
3
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A majority of sales in the Chemicals, Fibers, and Polymers segments'
businesses is dependent on hydrocarbon feedstocks derived from crude oil and
natural gas. Current hydrocarbon feedstock requirements are met by Conoco and
other major oil companies. A joint venture with OxyChem, a subsidiary of
Occidental Petroleum Corporation, manufactures and supplies a significant
portion of the company's requirements for ethylene glycol. A joint venture with
subsidiaries of RWE AG supplies the company's requirements for coal. A
significant portion of the company's caustic/chlorine needs is supplied by a
joint venture with Olin Corporation.
The major purchased commodities, raw materials, and supplies for the
following industry segments in 1994 are listed below:
<TABLE>
<CAPTION>
DIVERSIFIED
CHEMICALS FIBERS BUSINESSES POLYMERS
--------- ------ ----------- --------
<S> <C> <C> <C>
acetylene adipic acid aluminum acetic acid
benzene ammonia gold butadiene
carbon-
tetrachloride butadiene metribuzin caustic soda
caustic soda cyclohexane palladium/platinum chlorine
chlorine ethylene glycol silver ethane
chloroform isophthalic acid ethylene glycol
cyclohexane nitrogen fiberglass
fluorspar packaging materials nitrogen
hydrofluoric acid paraxylene packaging materials
methanol polyethylene paraxylene
oxygen/nitrogen polyethylene
packaging
materials
perchloroethylene
propylene
sulfur
titanium ores
</TABLE>
In the Petroleum segment, the major commodities and raw materials purchased
are the same as those produced. Approximately 58% of the crude oil processed in
the company's U.S. refineries in 1994 came from U.S. sources. In 1994, the
company's refineries outside the United States processed principally North Sea
and Middle East crude oils.
In addition, during 1994, the company consumed substantial amounts of
electricity and natural gas.
PATENTS AND TRADEMARKS
The company owns and is licensed under various patents, which expire from
time to time, covering many products, processes and product uses. No individual
patent is of material importance to any of the industry segments, although
taken as a whole, the rights of the company and the products made and sold
under patents and licenses are important to the company's business. During
1994, the company was granted 491 U.S. and 1,933 non-U.S. patents.
The company also has about 900 registered trademarks for its products.
Ownership rights in trademarks continue indefinitely if the trademarks are
continued in use and properly protected.
SEASONALITY
In general, sales of the company's products are not substantially affected by
seasonality. However, the Diversified Businesses segment is impacted by
seasonality of sales of agricultural products with highest sales in the first
half of the year, particularly the second quarter. Within the Petroleum
segment, the mix of refined products, natural gas and natural gas liquids
produced and sold varies because of increased demand for gasoline in the summer
months and natural gas, heating oil and propane during the winter months.
4
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MAJOR CUSTOMERS
The company's sales are not materially dependent on a single customer or
small group of customers. The Fibers and Polymers segments, however, have
several large customers in their respective industries that are important to
these segments' operating results.
COMPETITION
Principal competitors in the chemical industry include major chemical
companies based in the United States, Europe, Japan, People's Republic of China
and other Asian nations. Competitors offer a comparable range of products from
agricultural, commodity and specialty chemicals to plastics, fibers and medical
products. The company also competes in certain product markets with smaller,
more specialized firms. Principal competitors in the petroleum industry are
integrated oil companies (including national oil companies), many of which also
have substantial petrochemical operations, and a variety of other firms
including independent oil and gas producers, pipeline companies, and large and
small refiners and marketers. In addition, the company competes with the
growing petrochemical operations in oil-producing countries.
Businesses in the Chemicals, Fibers, Polymers, and Diversified Businesses
segments compete on a variety of factors such as price, product quality or
specifications, customer service and breadth of product line, depending on the
characteristics of the particular market involved. The Petroleum segment
business is highly price-competitive and competes as well on quality and
reliability of supply.
Further information relating to competition is included in two areas of
Exhibit 13 (1) the "Letter to Stockholders" on pages 1-4 and (2) Industry
Segment Reviews on pages 16-28.
RESEARCH AND DEVELOPMENT
The company's substantial research and development activities are primarily
funded with internal resources and conducted at over 60 domestic sites in 21
states at both dedicated research facilities and manufacturing plants. DuPont
operates several large research centers near Wilmington, Delaware, supporting
strategic business units in its Chemicals, Fibers, Polymers and Diversified
Businesses segments. Among these, the Experimental Station laboratories engage
in fundamental, exploratory and applied research, and the Stine-Haskell
Research Center conducts agricultural product research and toxicological
research of company products to assure they are safe for manufacture and use.
At its facility in Ponca City, Oklahoma, the company conducts research for new
products and technologies for petroleum operations as well as other segments of
the business. DuPont also operates research facilities at a number of locations
outside the United States in Belgium, Canada, France, Germany, Japan,
Luxembourg, Mexico, The Netherlands, Switzerland and the United Kingdom
reflecting the company's growing global business interests.
Research and development activities include exploratory studies to advance
scientific knowledge in fields of interest to the company; basic and applied
work to support and improve existing products and processes; and scouting work
to identify and develop new business opportunities in relevant fields. Each
strategic business unit of the company funds research and development
activities to support its business mission. The corporate laboratories are
responsible for assuring that leading edge science and engineering concepts are
identified and diffused throughout the DuPont technical community. All R&D
activities are coordinated by senior R&D management to insure that business and
corporate technical activities are integrated and that the core technical
competencies underlying DuPont's current and future businesses remain healthy
and continue to provide competitive advantages.
Further information regarding research and development is in Exhibit 13 on
pages 3 and 4 of the "Letter to Stockholders." Annual research and development
expense and such expense shown "As Percent of Combined Segment Sales" for the
five years 1990 through 1994 are included under the heading "General" of the
Five-Year Financial Review on page 73 of Exhibit 13.
5
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ENVIRONMENTAL MATTERS
Information relating to environmental matters is included in two areas of
Exhibit 13: (1) "Management's Discussion and Analysis" on pages 34-36; and (2)
Note 28 to the Financial Statements on page 59.
RISKS ATTENDANT TO FOREIGN OPERATIONS
The company's petroleum exploration and production operations outside the
United States are exposed to risks due to possible actions by host governments
such as increases or variations in tax and royalty payments, participation in
the company's concessions, limited or embargoed production, mandatory
exploration or production controls, nationalization and export controls. Civil
unrest and changes in government are also potential hazards. In certain
circumstances the company has attempted to minimize its exposure by carrying
political risk insurance.
The profitability of the company's exploration and production operations is
similarly exposed to risks due to actions of the United States government
through tax legislation, executive order, and commercial restrictions. Actions
by both the United States and host governments have affected operations
significantly in the past and may continue to impact operations in the future.
ITEM 2. PROPERTIES
The company owns and operates manufacturing, processing, production,
refining, marketing, research and development facilities worldwide. In
addition, the company owns and leases petroleum properties worldwide.
DuPont's corporate headquarters is located in Wilmington, Delaware, and the
company's petroleum businesses are headquartered in Houston, Texas. In
addition, the company operates sales offices, regional purchasing offices,
distribution centers and various other specialized service locations.
Further information regarding properties is included in Exhibit 13 in the
Industry Segment Reviews on pages 16-28. Information regarding research and
development facilities is incorporated by reference to Item 1, Business--
Research and Development on page 5 of this report. Additional information with
respect to the company's property, plant and equipment, and leases is contained
in Notes 13 and 20 to the company's consolidated financial statements on pages
49 and 52 of Exhibit 13.
CHEMICALS, FIBERS, POLYMERS, AND DIVERSIFIED BUSINESSES
Approximately 75% of the property, plant and equipment related to operations
in the Chemicals, Fibers, Polymers, and Diversified Businesses is located in
the United States and Puerto Rico. This investment is located at some 85 sites,
principally in Texas, Delaware, Virginia, North Carolina, Tennessee, West
Virginia, South Carolina, and New Jersey. The principal locations within these
states are as follows:
<TABLE>
<S> <C> <C> <C>
TEXAS DELAWARE VIRGINIA NORTH CAROLINA
----- -------- -------- --------------
Beaumont Edge Moor Front Royal Brevard
Corpus Christi Glasgow James River Fayetteville
LaPorte Newark Martinsville Kinston
Orange Seaford Richmond Raleigh
Victoria Waynesboro Wilmington
TENNESSEE WEST VIRGINIA SOUTH CAROLINA NEW JERSEY
--------- ------------- -------------- ----------
Chattanooga Belle Camden Deepwater
Memphis Martinsburg Charleston Parlin
New Johnsonville Parkersburg Florence
Old Hickory
</TABLE>
6
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Property, plant and equipment outside the United States and Puerto Rico is
located at about 70 sites, principally in Canada, the United Kingdom, Germany,
The Netherlands, Luxembourg, Singapore, Mexico, Taiwan, Spain, France, Brazil,
Japan, Republic of Korea, Belgium and Argentina. Products from more than one
business are frequently produced at the same location.
The company's plants and equipment are well maintained and in good operating
condition. Sales as a percent of capacity were 87% in 1994, 85% in 1993, and
88% in 1992. These properties are directly owned by the company except for some
auxiliary facilities and miscellaneous properties, such as certain buildings
and transportation equipment, which are leased. Although no title examination
of the properties has been made for the purpose of this report, the company
knows of no material defects in title to any of these properties.
PETROLEUM BUSINESSES
The company owns and leases oil and gas properties worldwide. Exploration,
production, and natural gas and gas products properties are described generally
on pages 22-25 and 64-70 of Exhibit 13. Estimated proved reserves of oil and
gas are found on pages 66 and 67 of Exhibit 13. Information regarding the
company's refining, marketing, supply, and transportation properties is also
provided on pages 22-25 of Exhibit 13.
PETROLEUM PRODUCTION
The following tables show the company's interests in petroleum liquids
production and natural gas deliveries. Petroleum liquids production comprises
crude oil and condensate produced for the company's account plus its share of
natural gas liquids (NGL's) removed from natural gas deliveries from owned
leases and NGL's acquired through gas plant ownership. Natural gas deliveries
represent Conoco's share of deliveries from leases in which the company has an
ownership interest.
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
[THOUSANDS OF BARRELS DAILY (MBD)]
<S> <C> <C> <C>
Petroleum Liquids Production
Consolidated Companies
Crude Oil, Condensate, and Natural Gas Li-
quids from Owned Reserves:
United States............................ 94 108 110
Europe................................... 160 152 132
Other Regions............................ 109 107 93
----------- ----------- -----------
Subtotal from Owned Reserves........... 363 367 335
Natural Gas Liquids from Gas Plant Owner-
ship:
United States............................ 57 55 54
----------- ----------- -----------
Total Production--Consolidated Opera-
tions................................. 420 422 389
Share of Equity Affiliates
Crude Oil, Condensate, and Natural Gas Li-
quids from Owned Reserves................. 4 -- --
Natural Gas Liquids from Gas Plant Owner-
ship...................................... 12 12 7
----------- ----------- -----------
Total Production--Equity Affiliates.... 16 12 7
----------- ----------- -----------
Total Petroleum Liquids Production..... 436 434 396
=========== =========== ===========
<CAPTION>
[MILLION CUBIC FEET DAILY (MMCFD)]
<S> <C> <C> <C>
Natural Gas Deliveries
Consolidated Companies
Natural Gas Deliveries from Owned Reserves:
United States............................ 871 834 762
Europe................................... 398 409 360
Other Regions............................ 44 50 55
----------- ----------- -----------
Subtotal Fully Consolidated............ 1,313 1,293 1,177
Share of Equity Affiliates
Natural Gas Deliveries from Owed Reserves:
United States............................ 34 18 3
----------- ----------- -----------
Total Worldwide........................ 1,347 1,311 1,180
=========== =========== ===========
</TABLE>
7
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AVERAGE PRODUCTION COSTS AND SALES PRICES
The following table presents data as prescribed by the Securities and
Exchange Commission (SEC). Accordingly, the unit costs do not include income
taxes and exploration, development and general overhead costs. Since these
excluded costs are material, the following data should not be interpreted as
measures of profitability or relative profitability. See Results of Operations
for Oil and Gas Producing Activities on page 64 of Exhibit 13 for a more
complete disclosure of revenues and expenses. See also the references to crude
oil and natural gas prices and volumes in business review of the Petroleum
segment on pages 22-25 of Exhibit 13.
<TABLE>
<CAPTION>
UNITED OTHER
STATES EUROPE REGIONS
------ ------ -------
(U.S. DOLLARS)
<S> <C> <C> <C>
For the year ended December 31, 1994
Average production costs per barrel equivalent of
petroleum produced(a)................................. $3.99 $4.37 $1.62
Average sales prices of produced petroleum(b)
Per barrel of crude oil and condensate sold.......... 13.36 15.65 15.18
Per thousand cubic feet (MCF) of natural gas sold.... 1.78 2.90 1.61
For the year ended December 31, 1993
Average production costs per barrel equivalent of
petroleum produced(a)................................. 4.97 4.34 1.63
Average sales prices of produced petroleum(b)
Per barrel of crude oil and condensate sold.......... 14.66 17.35 15.32
Per MCF of natural gas sold.......................... 1.94 2.77 1.32
For the year ended December 31, 1992
Average production costs per barrel equivalent of
petroleum produced(a)................................. 5.86 6.73 1.98
Average sales prices of produced petroleum(b)
Per barrel of crude oil and condensate sold.......... 17.35 19.39 17.30
Per MCF of natural gas sold.......................... 1.70 2.77 1.02
</TABLE>
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(a) Average production costs per barrel of equivalent liquids, with natural gas
converted to liquids at a ratio of 6 MCF of gas to one barrel of liquids.
(b) Excludes proceeds from sales of interest in oil and gas properties.
PRESENT ACTIVITIES
<TABLE>
<CAPTION>
TOTAL UNITED OTHER
WORLDWIDE STATES EUROPE REGIONS
--------- ------ ------ -------
(NUMBER OF WELLS)
<S> <C> <C> <C> <C>
At December 31, 1994
Number of wells drilling*
Gross....................................... 33 12 15 6
Net......................................... 19 9 5 5
Number of productive wells**
Oil wells--gross............................ 12,867 12,263 242 362
--net.................................... 4,356 4,202 26 128
Gas wells--gross............................ 7,489 7,366 66 57
--net................................... 2,932 2,855 23 54
</TABLE>
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* Includes wells being completed.
** Approximately 165 gross (77 net) oil wells and 722 gross (229 net) gas
wells, all in the United States, have multiple completions.
8
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DEVELOPED AND UNDEVELOPED PETROLEUM ACREAGE
<TABLE>
<CAPTION>
TOTAL UNITED OTHER
WORLDWIDE STATES EUROPE REGIONS
--------- ------ ------ -------
(THOUSANDS OF ACRES)
<S> <C> <C> <C> <C>
At December 31, 1994
Developed acreage
Gross....................................... 8,023 3,350 899 3,774
Net......................................... 3,592 1,852 269 1,471
Undeveloped acreage
Gross....................................... 79,878 1,772 5,182 72,924
Net......................................... 51,158 1,271 2,228 47,659
</TABLE>
NET EXPLORATORY AND DEVELOPMENT WELLS DRILLED
<TABLE>
<CAPTION>
TOTAL UNITED OTHER
WORLDWIDE STATES EUROPE REGIONS
--------- ------ ------ -------
(NUMBER OF NET WELLS COMPLETED)
<S> <C> <C> <C> <C>
For the year ended December 31, 1994
Exploratory--productive...................... 23.8 16.2 2.8 4.8
--dry................................... 39.3 30.0 1.7 7.6
Development--productive...................... 116.4 88.7 5.5 22.2
--dry................................... 14.3 13.3 0.0 1.0
For the year ended December 31, 1993
Exploratory--productive...................... 15.6 10.7 3.4 1.5
--dry................................... 24.5 16.3 2.5 5.7
Development--productive...................... 175.2 158.3 5.0 11.9
--dry................................... 24.5 24.0 0.0 0.5
For the year ended December 31, 1992
Exploratory--productive...................... 17.1 11.6 4.5 1.0
--dry................................... 22.0 10.2 5.0 6.8
Development--productive...................... 121.9 107.9 4.1 9.9
--dry................................... 13.1 10.9 0.7 1.5
</TABLE>
ESTIMATES OF TOTAL PROVED RESERVES FILED WITH OTHER FEDERAL AGENCIES COVERING
THE YEAR 1994
The company is not required to file, and has not filed on a recurring basis,
estimates of its total proved net oil and gas reserves with any U.S. or non-
U.S. governmental regulatory authority or agency other than the Department of
Energy (DOE) and the SEC. The estimates furnished to the DOE have been
consistent with those furnished to the SEC. They are not necessarily directly
comparable, however, due to special DOE reporting requirements such as
requirements to report in some instances on a gross, net or total operator
basis, and requirements to report in terms of smaller units. In no instance
have the estimates for the DOE differed by more than 5% from the corresponding
estimates reflected in total reserves reported to the SEC.
NATURAL GAS AND GAS PRODUCTS
Upstream operations in the United States include consolidated interests in 30
natural gas processing plants located in Colorado, Louisiana, New Mexico,
Oklahoma and Texas. Sixteen of the plants are operated by the company. The
company's share of total natural gas liquids production (NGL) from the 30
plants averaged 71,881 barrels per day in 1994 and 68,631 barrels per day in
1993, of which 14,537 barrels per day in 1994 and 13,937 barrels per day in
1993 came from produced natural gas. Conoco's 50% owned equity affiliate, C&L
Processors Partnership, has an additional 12 natural gas processing plants in
Oklahoma and Texas, and the company's pro rata share of NGL production was
7,908 in 1994 and 7,885 in 1993. Other natural gas and gas products facilities
in the United States include an 800-mile intrastate natural gas pipeline system
in Louisiana operated by Conoco's 100% owned subsidiary Louisiana Gas System,
Inc., natural gas
9
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and natural gas liquids pipelines in several states, and a 22.5% equity
interest in a 104,000-barrel-per-day natural gas liquids fractionating plant in
Mt. Belvieu, Texas, owned by affiliated Gulf Coast Fractionators.
Outside the United States, the company's Conoco (U.K.) Limited subsidiary
operates a 50% owned gas processing facility at Theddlethorpe, England.
Kinetica, a 50% joint venture between Conoco (U.K.) and electricity generator
PowerGen, transports and markets natural gas in England. Phoenix Park Gas
Processors, a 40% owned equity affiliate, operates a natural gas plant at Point
Lisas, Trinidad.
REFINING
The company currently owns and operates four refineries in the United States
located at Lake Charles, Louisiana; Ponca City, Oklahoma; Billings, Montana;
and Denver, Colorado. The company also owns and operates the Humber refinery in
England and has a 25% interest in a refinery at Karlsruhe in Germany. In
November 1994, Conoco and Petronas each acquired a 50% interest in a company
that will build a 100,000-barrel-per-day refinery near the city of Melaka,
Malaysia, with completion in late 1997. Conoco and Petronas are evaluating
potential third partners that would acquire a 15% interest in the joint venture
and would lower Conoco's ownership to 40% and Petronas' ownership to 45%.
Capacities at year-end 1994 as well as inputs processed during 1994 are
summarized in the following table:
<TABLE>
<CAPTION>
TOTAL UNITED UNITED
WORLDWIDE STATES KINGDOM GERMANY*
--------- ------ ------- --------
(THOUSANDS OF BARRELS DAILY)
<S> <C> <C> <C> <C>
At December 31, 1994
Refinery crude oil and condensate distilla-
tion capacity (excluding additional
feedstocks input to other refinery units). 602 429 130 43
For the year ended December 31, 1994
Inputs processed Crude oil and condensate.. 593 422 125 46
Additional feedstocks input to other refin-
ery units................................. 103 29 59 15
</TABLE>
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* Represents 25% interest in the Karlsruhe refinery.
Utilization of refinery capacity depends on the market demand for petroleum
products, availability of crude oil and other feedstocks, and the economics of
converting crude oil into refined products.
The company announced in August 1994 the formation of Excel Paralubes, a
company owned 50% each by Conoco and Atlas Processing Company (a Pennzoil
subsidiary), to construct a lube oil hydrocracker facility at Lake Charles,
Louisiana, to produce more than 15,000 barrels per day of high-quality base
oils to be used in finished lubricants.
MARKETING
In the United States, the company sells refined products at retail in 39
states, principally under the "Conoco" brand. In addition, the company markets
a wide range of products other than at retail in all 50 states and the District
of Columbia. Refined products are also sold in Austria, Germany and the United
Kingdom under the "Jet" and "Conoco" brands; in Belgium, France and Luxembourg
under the "Seca" brand; and in Switzerland under the "OK Coop" brand. The "Jet"
brand is used for marketing in the Czech Republic, Denmark, Finland, Hungary,
Ireland, Norway, Poland, Spain, Sweden and Thailand.
SUPPLY AND TRANSPORTATION
The company has an extensive pipeline system for crude oil and refined
products. Information concerning daily pipeline shipments is presented below:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(THOUSANDS OF BARRELS)
<S> <C> <C> <C>
Average Daily Pipeline Shipments
Pipeline shipments of consolidated companies......... 849 761 816
Equity in shipments of nonconsolidated affiliates.... 365 366 334
</TABLE>
10
<PAGE>
Conoco Pipe Line Company (CPL), a wholly owned subsidiary and operator of the
company's U.S. petroleum pipeline system, transported approximately 820
thousand barrels per day of crude oil and refined products in 1994. In addition
to pipeline facilities, CPL operates, under a management contract, four marine
terminals, one coke-exporting facility and 52 product terminals located
throughout the United States. These facilities are wholly or jointly owned by
the company. Crude oil is gathered in the Rocky Mountain, mid-continent and
southern Louisiana areas primarily for delivery to local refiners. Refined
products pipelines are located in the Rocky Mountain and mid-continent areas to
serve regional demand centers. Other U.S. transportation assets include
numerous tank cars, barges, tank trucks and other motor vehicles.
The company also operates a fleet of seagoing crude oil tankers. These
vessels, principally of Liberian registry, are described as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(THOUSANDS OF DEADWEIGHT TONS)
<S> <C> <C> <C>
Controlled Seagoing Vessel Capacity
Owned or Leased............................... 881 1,139 947
Trip Charter.................................. -- -- 174
--- ----- -----
Total Capacity.............................. 881 1,139 1,121
=== ===== =====
<CAPTION>
(NUMBER OF VESSELS)
<S> <C> <C> <C>
Number of Vessels 80,000 DWT and Above
Single Hull................................... 3 4 6
Double Hull................................... 4 4 2
--- ----- -----
Total Vessels............................... 7 8 8
=== ===== =====
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
In 1991, DuPont received claims by growers that use of "Benlate" 50 DF
fungicide had caused crop damages. Based on the belief that "Benlate" 50 DF
would be found to be a contributor to the claimed damage, DuPont paid claims.
In 1992, after 18 months of extensive research, DuPont scientists concluded
that "Benlate" 50 DF was not responsible for plant damage reports received
since March 1991. Concurrent with these research findings, DuPont stopped
paying claims relating to those reports. To date, DuPont has been served with
more than 660 lawsuits in several jurisdictions, principally Florida, Hawaii,
and Puerto Rico, by growers who allege plant damage from using "Benlate" 50 DF
fungicide. Over half of the lawsuits brought against the company since 1991
have been disposed of by trial, dismissal or settlement, including 330 in 1994
and 45 thus far in 1995. There were four jury trials involving nine lawsuits
completed in 1994. In the first three trials in Florida and Alabama, the juries
found no product defect and no damages attributable to "Benlate" 50 DF
fungicide. In the fourth trial involving one lawsuit in South Carolina, the
jury found against DuPont and awarded damages of $17.2 million to the
plaintiff. The trial judge, however, later struck the punitive damages portion
of the award reducing the jury verdict to about $7.5 million. In January 1995,
at the conclusion of a seven-month trial in Kona, Hawaii, the jury awarded the
plaintiff $23.9 million. DuPont believes it has strong grounds for setting both
of these adverse verdicts aside on appeal. A second trial in Hawaii of nine
consolidated cases resulted, in March 1995, in a total award of $8.5 million in
compensatory damages. The plaintiffs' request for punitive damages was denied.
DuPont plans to appeal. Also in March 1995, a trial involving two growers in
Puerto Rico was resolved in accordance with the terms of a judgment agreement
negotiated with the plaintiffs before the jury verdict was returned. With the
conclusion of these most recent trials, only three of the 125 cases involving
"Benlate" 50 DF filed in Puerto Rico and three of more than 100 filed in Hawaii
remain unresolved. DuPont believes that "Benlate" 50 DF fungicide did not cause
the alleged damages and intends to prove this in ongoing matters.
Since 1989, DuPont has been served with about 100 lawsuits in several
jurisdictions, principally in Texas, Maryland, Arizona, Colorado and New Jersey
alleging damages as a result of leaks in certain polybutylene
11
<PAGE>
plumbing systems. In most cases, DuPont is a codefendant with Shell, Hoechst-
Celanese, and parts manufacturers. The polybutylene plumbing systems consist of
flexible pipe extruded from polybutylene connected by fittings made from
acetal. Shell Chemical is the sole producer of polybutylene; the acetals are
provided by Hoechst-Celanese and DuPont. It is not known how many commercial
and residential units nationwide have plumbing systems containing acetals
manufactured by DuPont. During 1994, DuPont settled a majority of the Texas
lawsuits in which it was a defendant. In these cases DuPont will provide up to
$34 million to cover approximately 64,000 claims. DuPont has not been to trial
in any case. Class certification was denied in February 1995 in a nationwide
class action filed in state court in Houston, Texas. Other class actions have
been filed in Arizona, New Jersey, Colorado and San Diego County, California.
The total number of potential plaintiffs included in all class actions filed
has not been determined at this time. Claims outside of litigation are handled
by the Plumbing Claims Group, a nonprofit corporation formed and funded by
Shell, Hoechst-Celanese and DuPont to carry out repairs to leaking
polybutylene/acetal plumbing systems.
The company's balance sheets reflect accruals for estimated costs associated
with these matters. Adverse changes in estimates of such costs could result in
additional future charges.
On October 24, 1988, the Louisiana Department of Environmental Quality (LDEQ)
issued a Compliance Order and Notice of Proposed Penalty to Conoco Inc. for
alleged violations of the Louisiana Hazardous Waste Regulations. Following an
inspection, LDEQ proposed a penalty of $165,000 for alleged violations related
to the handling of by-product caustic and other refinery waste management
practices. The company's legal counsel believes that the allegations are
generally without factual basis, and that the penalty will be significantly
reduced.
On April 3, 1991, the Environmental Protection Agency (EPA) assessed a civil
penalty of $1.3 million pursuant to a Complaint and Notice of Hearing alleging
violations of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) in
connection with the distribution of a company fungicide. The allegations arise
out of the discovery that a herbicide may have been introduced inadvertently
into some batches of the fungicide during formulation at contractor sites in
1988 and 1989. The company was made aware of the potential problem by
complaints from growers and notified EPA in August 1989 that it was undertaking
a voluntary recall of suspect batches. EPA issued a stop sale order in
September 1989 accompanied by a formal request for a product recall. The
company has reviewed its recall with EPA and they have expressed satisfaction
with the company's efforts. DuPont has agreed to settle the EPA civil complaint
on behalf of itself and two of its contractors for $1 million. The EPA has
agreed to terminate its stop sale order and recall request with respect to the
product.
On June 28, 1991, DuPont entered into a voluntary agreement with the EPA to
conduct an audit of the U.S. sites under the Toxic Substance Control Act
(TSCA). Agreement participation is not an admission of TSCA noncompliance.
Maximum stipulated penalties that DuPont could pay under the agreement are
capped at $1 million. The first phase of the audit was completed, but no
findings have been issued. Subject to the EPA's issuance of new reporting
criteria (delayed since 1991), a second phase of the audit will begin.
On October 18, 1991, the EPA issued an Administrative Order under the
Resource Conservation and Recovery Act (RCRA) directing Conoco Pipeline Company
(CPLC) to undertake specific remedial measures related to a former oil
reprocessing facility in Converse County, Wyoming. CPLC contested the
Administrative Order, and has taken voluntary measures at the site together
with other interested parties. On February 19, 1993, the U.S. Department of
Justice filed a lawsuit against 10 entities, including CPLC, to enforce the
Order and collect penalties. CPLC has settled this matter with the U.S.
Government, and that settlement has been approved by the Court. CPLC along with
four other companies has agreed to a cleanup of this site which is estimated to
cost between $4.4 million and $8.9 million and pay as a group $300,000 in civil
penalties. CPLC's share of this settlement is approximately 8%. CPLC has
proceeded against other parties to reduce its share of the settlement.
12
<PAGE>
On October 15, 1993, the EPA filed a complaint in the U.S. District Court,
Eastern District of Texas (Beaumont), against DuPont alleging various
violations of the Clean Water Act at the Sabine River Works. Included were
alleged unauthorized discharges, effluent limitation violations and monitoring
and reporting violations under the plant's wastewater permit. On April 20,
1994, the government and DuPont reached a settlement in this action under the
terms of which DuPont agreed to pay a civil penalty of $516,430 and to
implement a Supplemental Environmental Project with an estimated cost to DuPont
of $3.2 million. A Consent Order resolving the matter was entered by the
District Court October 7, 1994.
On December 21, 1993, Conoco's Denver refinery received a Notice of Violation
from the EPA, Region VIII, and the Colorado Department of Health requesting a
civil penalty of $169,500 in a dispute over proper scope and scheduling of
certain RCRA on-site investigation activities. The investigation activities
have previously been the subject of a settlement with the EPA and the Colorado
Department of Health, and the work performed has been in compliance with such
agreement in the opinion of company counsel. As such, it is anticipated that
the fine will be significantly reduced pursuant to negotiations between the
parties.
On April 11, 1994, the Texas Natural Resource Conservation Commission (TNRCC)
issued a Notice of Executive Director's Preliminary Report and Petition for a
TNRCC Order assessing penalties of $122,640 for alleged violations at DuPont's
Beaumont Works Plant of the Texas Solid Waste Disposal Act, the Texas Water
Code and the applicable regulations. The matter has been resolved at the staff
level through settlement. DuPont, without admitting the truth of any
allegation, has agreed to pay a penalty of $90,000.
On May 13, 1994, the EPA, Region II, filed an Administration Complaint
seeking a $143,000 penalty alleging that DuPont's Deepwater, New Jersey,
facility failed to file Emergency Planning Community Right-To-Know Act/Toxic
Release Inventory report forms for two chemical substances. The parties settled
the Administrative Complaint on December 5, 1994. Under the terms of the
settlement the EPA withdrew one allegation and agreed to clarify the regulation
supporting its remaining allegation. DuPont paid a penalty of $56,250 and
agreed to conduct a Supplemental Environmental Project.
On June 30, 1994, the California Department of Toxic Substances Control
issued to DuPont's Antioch Works in Antioch, California, an Enforcement Order
alleging violations of state hazardous waste regulations. The alleged
violations center principally on the status of several tanks at the site. The
Order would require DuPont to undertake certain remedial activities around the
tanks and pay a fine of $200,000. DuPont has filed a Notice of Defense in the
matter for a hearing before the Office of Administrative Hearings of the
California Department of General Services.
On July 1, 1994, the EPA issued a proposed Administrative Penalty Assessment
to Conoco Inc. for alleged violations of the Clean Water Act related to
wastewater discharges from Conoco's Lake Charles, Louisiana, refinery. The
proposed Penalty Assessment sought a civil penalty of $125,000 for alleged
discharge permit exceedences that occurred during the past five years. The
company has reached agreement with the EPA on the wording of the Consent
Agreement and Order assessing administrative penalties and has now resolved the
matter with payment of a fine of $125,000.
On July 15, 1994, Conoco's Denver, Colorado, refinery received a Notice of
Violation (NOV) and Cease and Desist Order from the State of Colorado for
violations of its state clean water permit. The NOV alleges twenty-one
violations of effluent parameters and other permit conditions from January 1993
to the present. Although the State had indicated previously it would seek a
penalty in excess of $100,000, Conoco has reached an agreement with the State
to settle the alleged permit variances for payment of a fine of $30,000 and
performance of two supplemental environmental projects (SEP). The estimated
cost of the SEPs is around $150,000.
On August 26, 1994, DuPont was advised by the Delaware Attorney General's
office that it was seeking a civil penalty of $100,000 in connection with the
accidental release on March 13, 1994, of low pH wastewater from a landfill
waste pond containing waste from DuPont's Edge Moor, Delaware, titanium dioxide
pigment
13
<PAGE>
plant. DuPont and the State of Delaware have agreed to settle the matter for a
payment of an Administrative Penalty of $50,000 and the donation of $25,000
worth of equipment to the Delaware State Emergency Response Team.
The EPA filed on October 7, 1994, an administrative complaint against DuPont
proposing to assess $1.9 million in civil penalties for distributing triazine
herbicides with product labels that the EPA alleges were not in compliance with
its new Worker Protection Standards. The labels were submitted to the EPA for
approval in July 1993 and accepted by the EPA in November. However, in March of
1994, the EPA notified DuPont of alleged errors in the labels after most of the
products had been shipped and were in the distribution chain. DuPont has
cooperated with the EPA in making label changes and has issued supplemental
labeling for all products that had been distributed. DuPont believes the
proposed penalties are unwarranted and excessive and plans to contest or seek a
substantial reduction of them.
On January 31, 1995, DuPont received a Notice of Proposed Assessment of Civil
Penalty from the Region III office of the EPA alleging various violations of
the Clean Water Act at DuPont's Edge Moor Plant in Edge Moor, Delaware. The
Proposed Assessment seeks a Class II administrative penalty of $121,000. The
matter is under negotiation with the EPA.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list, as of March 7, 1995, of the company's executive
officers.
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
AGE SINCE
--- ---------
<S> <C> <C>
Chairman of the Board of Directors and Chief Executive Officer
Edgar S. Woolard, Jr.(1)....................................... 60 1981
Vice Chairmen of the Board of Directors
John A. Krol(1)................................................ 58 1987
Constantine S. Nicandros(1).................................... 61 1981
Other Executive Officers:
Jerald A. Blumberg, Senior Vice President...................... 55 1990
Archie W. Dunham, Senior Vice President........................ 56 1985
Gary W. Edwards, Senior Vice President......................... 53 1991
Michael B. Emery, Senior Vice President........................ 56 1990
Charles L. Henry, Senior Vice President and Chief Financial Of-
ficer......................................................... 53 1986
Charles O. Holliday, Jr., Senior Vice President................ 46 1992
Robert v.d. Luft, Senior Vice President........................ 59 1988
Robert E. McKee, III, Senior Vice President.................... 49 1992
Joseph A. Miller, Jr., Senior Vice President................... 53 1994
Stacey J. Mobley, Senior Vice President........................ 49 1992
Howard J. Rudge, Senior Vice President and General Counsel..... 59 1994
</TABLE>
- --------
(1) Member of the Board of Directors.
The Company's executive officers are elected or appointed for the ensuing
year or for an indefinite term, and until their successors are elected or
appointed. Each officer named above has been an officer or an executive of
DuPont or its subsidiaries during the past five years.
14
<PAGE>
PART II
Information with respect to the following Items can be found on the indicated
pages of Exhibit 13 if not otherwise included herein.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The company's common stock is listed on the New York Stock Exchange, Inc.
(symbol DD) and certain non-U.S. exchanges. The number of record holders of
common stock was 172,244 at December 31, 1994 and 171,207 at March 7, 1995.
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Quarterly Financial Data:
Dividends Per Share of Common Stock................................... 71
Market Price of Common Stock (High/Low)............................... 71
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<S> <C>
Five-Year Financial Review:
Summary of Operations..................................................... 73
Financial Position at Year End............................................ 73
General................................................................... 73
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
<TABLE>
<S> <C>
Letter to Stockholders.................................................. 1-4*
Industry Segment Reviews:
Chemicals............................................................. 16-17**
Fibers................................................................ 18-19**
Polymers.............................................................. 20-21**
Petroleum............................................................. 22-25**
Diversified Businesses................................................ 26-28**
Management's Discussion and Analysis:
Sales................................................................. 30
Earnings.............................................................. 30
Taxes................................................................. 30
Restructuring......................................................... 31
Cash Flows and Financial Condition.................................... 31-32
Financial Instruments................................................. 32-34
Environmental Matters................................................. 34-36
</TABLE>
- --------
* Includes text of letter except for inserts and for chart on page 3 and
references thereto.
** Each review starts with paragraph describing segment products and principal
markets; information above such paragraph is excluded.
15
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Financial Statements:
Report of Independent Accountants.................................... 38
Consolidated Income Statement for 1994, 1993 and 1992................ 39
Consolidated Balance Sheet as of December 31, 1994 and December 31,
1993................................................................ 40
Consolidated Statement of Stockholders' Equity for 1994, 1993 and
1992................................................................ 41
Consolidated Statement of Cash Flows for 1994, 1993 and 1992......... 42
Notes to Financial Statements........................................ 43-63
Supplemental Financial Information:
Supplemental Petroleum Data:
Oil and Gas Producing Activities................................... 64-70
Quarterly Financial Data and related notes for the following items
for the two years 1994 and 1993:
Sales................................................................ 71
Cost of Goods Sold and Other Expenses................................ 71
Net Income (Loss).................................................... 71
Earnings (Loss) Per Share of Common Stock............................ 71
Dividends Per Share of Common Stock.................................. 71
Market Price of Common Stock......................................... 71
</TABLE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Information with respect to the following Items is incorporated by reference
to the pages indicated in the company's 1995 Annual Meeting Proxy Statement
dated March 17, 1995, filed in connection with the Annual Meeting of
Stockholders to be held April 26, 1995. However, information regarding
executive officers is contained in Part I of this report (page 14) pursuant to
General Instruction G of this form.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Election of Directors................................................... 4-8
Compliance With the Securities Exchange Act............................. 9
ITEM 11. EXECUTIVE COMPENSATION
Compensation of Directors............................................... 2-3
Compensation and Stock Option Information............................... 12-13
Retirement Benefits..................................................... 14-15
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Beneficial Ownership of Securities...................................... 8-9
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Election of Directors................................................... 4-8
</TABLE>
16
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules and Exhibits
1. Financial Statements (See listing at Part II, Item 8 of this report
regarding financial statements, which are incorporated by reference to
Exhibit 13.)
2. Financial Statement Schedules
The following should be read in conjunction with the previously referenced
Financial Statements:
Financial Statement Schedules listed under SEC rules but not included in
this report are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto
incorporated by reference.
Condensed financial information of the parent company is omitted because
restricted net assets of consolidated subsidiaries do not exceed 25% of
consolidated net assets. Footnote disclosure of restrictions on the ability
of subsidiaries and affiliates to transfer funds is omitted because the
restricted net assets of subsidiaries combined with the company's equity in
the undistributed earnings of affiliated companies does not exceed 25% of
consolidated net assets at December 31, 1994.
Separate financial statements of affiliated companies accounted for by
the equity method are omitted because no such affiliate individually
constitutes a 20% significant subsidiary.
3. Exhibits
The following list of exhibits includes both exhibits submitted with this
Form 10-K as filed with the SEC and those incorporated by reference to other
filings:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 Company's Certificate of Incorporation, as last amended December 22,
1989.
3.2 Company's Bylaws, as last revised November 24, 1993 (incorporated by
reference to Exhibit 3.2 of the company's Annual Report on Form 10-K
for the year ended December 31, 1993).
4 The company agrees to provide the Commission, on request, copies of
instruments defining the rights of holders of long-term debt of the
company and its subsidiaries.
10.1 Amendment dated as of March 26, 1986 to, and restatement of, the
Agreement dated as of October 2, 1981 between The Seagram Company Ltd.
and the company (incorporated by reference to Exhibit 10.1 of the
company's Annual Report on Form 10-K for the year ended December 31,
1991).
10.2* Company's Corporate Sharing Plan, as last amended August 28, 1991
(incorporated by reference to Exhibit 10.2 of the company's Annual
Report on Form 10-K for the year ended December 31, 1992).
10.3* Company's Deferred Compensation Plan for Directors, as last amended
November 21, 1986 (incorporated by reference to Exhibit 10.3 of the
company's Annual Report on Form 10-K for the year ended December 31,
1992).
10.4* Company's Supplemental Retirement Income Plan, as last amended
effective October 1, 1991 (incorporated by reference to Exhibit 10.4
of the company's Annual Report on Form 10-K for the year ended
December 31, 1991).
10.5* Company's Pension Restoration Plan, as last amended effective October
1, 1991 (incorporated by reference to Exhibit 10.5 of the company's
Annual Report on Form 10-K for the year ended December 31, 1991).
10.6* Retirement Restoration Plan of Conoco Inc., as last amended effective
December 1, 1994.
</TABLE>
- --------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K.
17
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.7* Company's Stock Performance Plan, as last amended effective September
28, 1994 (incorporated by reference to Exhibit 10.7 of the company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.8* Company's Variable Compensation Plan, as last amended effective
November 24, 1993, reflecting changes approved by the Board on that
date for Shareholder approval on April 27, 1994 (incorporated by
reference to Exhibit 10.8 of the company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1994).
10.9* Company's Salary Deferral & Savings Restoration Plan effective April
26, 1994 (incorporated by reference to Exhibit 10.9 of the company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
11 Statement re computation of earnings per share--assuming full
dilution.
12 Statement re computation of the ratio of earnings to fixed charges
(includes information concerning average outstanding borrowings and
interest rates).
13 The 1994 "Letter to Stockholders," Business Review Section, and
Financial Information Section of the Annual Report to Shareholders for
the year ended December 31, 1994, which are furnished to the
Commission for information only, and not filed except as expressly
incorporated by reference in this Report.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
</TABLE>
- --------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K.
(b) Reports on Form 8-K
The following Current Report on Form 8-K was filed during the quarter ended
December 31, 1994.
(1) On October 26, 1994, a Current Report on Form 8-K was filed in
connection with Debt Securities that may be offered on a delayed or
continuous basis under its Registration Statements on Form S-3 (No. 33-
48128 and No. 33-53327). Under Item 7, "Financial Statements and Exhibits,"
the Registrant's Earnings Press Release, dated October 26, 1994 was filed.
18
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED AND IN THE CAPACITIES INDICATED, ON
THE 20TH DAY OF MARCH, 1995.
E. I. DU PONT DE NEMOURS AND COMPANY
(Registrant)
C. L. Henry
By______________________________________
C. L. HENRY SENIOR VICE PRESIDENT--
DUPONT FINANCE (PRINCIPAL FINANCIAL
AND ACCOUNTING OFFICER)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED ON THE 20TH DAY OF MARCH 1995, BY THE FOLLOWING PERSONS
ON BEHALF OF THE REGISTRANT IN THE CAPACITIES INDICATED:
CHAIRMAN AND DIRECTOR
(PRINCIPAL EXECUTIVE
OFFICER):
E. S. Woolard, Jr.
- -------------------------
E. S. WOOLARD, JR.
VICE CHAIRMAN AND VICE CHAIRMAN AND
DIRECTOR: DIRECTOR:
J. A. Krol C. S. Nicandros
- ------------------------- -------------------------
J. A. KROL C. S. NICANDROS
DIRECTORS:
P. N. Barnevik L. C. Duemling H. R. Sharp, III
- ------------------------- ------------------------- -------------------------
P. N. BARNEVIK L. C. DUEMLING H. R. SHARP, III
A. F. Brimmer E. B. Du Pont C. M. Vest
- ------------------------- ------------------------- -------------------------
A. F. BRIMMER E. B. DU PONT C. M. VEST
C. R. Bronfman C. M. Harper J. L. Weinberg
- ------------------------- ------------------------- -------------------------
C. R. BRONFMAN C. M. HARPER J. L. WEINBERG
E. M. Bronfman M. P. MacKimm
- ------------------------- -------------------------
E. M. BRONFMAN M. P. MACKIMM
E. Bronfman, Jr. W. K. Reilly
- ------------------------- -------------------------
E. BRONFMAN, JR. W. K. REILLY
19
<PAGE>
E. I. DU PONT DE NEMOURS AND COMPANY
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 Company's Certificate of Incorporation, as last amended December 22,
1989.
3.2 Company's Bylaws, as last revised November 24, 1993 (incorporated by
reference to Exhibit 3.2 of the company's Annual Report on Form 10-K
for the year ended December 31, 1993).
4 The company agrees to provide the Commission, on request, copies of
instruments defining the rights of holders of long-term debt of the
company and its subsidiaries.
10.1 Amendment dated as of March 26, 1986 to, and restatement of, the
Agreement dated as of October 2, 1981 between The Seagram Company Ltd.
and the company (incorporated by reference to Exhibit 10.1 of the
company's Annual Report on Form 10-K for the year ended December 31,
1991).
10.2* Company's Corporate Sharing Plan, as last amended August 28, 1991
(incorporated by reference to Exhibit 10.2 of the company's Annual
Report on Form 10-K for the year ended December 31, 1992).
10.3* Company's Deferred Compensation Plan for Directors, as last amended
November 21, 1986 (incorporated by reference to Exhibit 10.3 of the
company's Annual Report on Form 10-K for the year ended December 31,
1992).
10.4* Company's Supplemental Retirement Income Plan, as last amended
effective October 1, 1991 (incorporated by reference to Exhibit 10.4
of the company's Annual Report on Form 10-K for the year ended
December 31, 1991).
10.5* Company's Pension Restoration Plan, as last amended effective October
1, 1991 (incorporated by reference to Exhibit 10.5 of the company's
Annual Report on Form 10-K for the year ended December 31, 1991).
10.6* Retirement Restoration Plan of Conoco Inc., as last amended effective
December 1, 1994.
10.7* Company's Stock Performance Plan, as last amended effective September
28, 1994 (incorporated by reference to Exhibit 10.7 of the company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.8* Company's Variable Compensation Plan, as last amended effective
November 24, 1993, reflecting changes approved by the Board on that
date for Shareholder approval on April 27, 1994 (incorporated by
reference to Exhibit 10.8 of the company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1994).
10.9* Company's Salary Deferral & Savings Restoration Plan effective April
26, 1994 (incorporated by reference to Exhibit 10.9 of the company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
11 Statement re computation of earnings per share--assuming full
dilution.
12 Statement re computation of the ratio of earnings to fixed charges
(includes information concerning average outstanding borrowings and
interest rates).
13 The 1994 "Letter to Stockholders," Business Review Section, and
Financial Information Section of the Annual Report to Shareholders for
the year ended December 31, 1994, which are furnished to the
Commission for information only, and not filed except as expressly
incorporated by reference in this Report.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
</TABLE>
- --------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K.
<PAGE>
EXHIBIT 3.1
CHARTER
of
E. I. DU PONT DE NEMOURS AND COMPANY
------------------------------------
DUPONT
Incorporated Under The Laws of Delaware
<PAGE>
CHARTER
of
E. I. DU PONT DE NEMOURS AND COMPANY
DUPONT
Incorporated Under The Laws of Delaware
AUTHORIZED CAPITAL
Preferred Stock .............................. 23,000,000 Shares No. Par Value
Common Stock ................................. 900,000,000 Shares $.60 Par Value
-------------------------
Original Certificate Filed September 4, 1915
Certificate of Amendment Filed December 4, 1922
Certificate of Amendment Filed June 19, 1925
Certificate of Amendment Filed October 27, 1926
Certificate of Amendment Filed January 19, 1929
Certificate of Amendment Filed April 23, 1934
Certificate of Amendment Filed June 18, 1937
Certificate of Amendment Filed September 29, 1939
Certificate of Amendment Filed March 15, 1940
Certificate of Amendment Filed March 10, 1942
Certificate of Change of
Resident Agent Filed April 23, 1946
Certificate of Amendment Filed April 25, 1947
Certificate of Change of
Resident Agent Filed May 23, 1947
Certificate of Amendment Filed June 15, 1949
Certificate of Amendment Filed July 6, 1955
Certificate of Change of
Resident Agent Filed July 6, 1955
Certificate of Amendment Filed November 13, 1957
Certificate of Change of
Resident Agent Filed June 19, 1963
Certificate of Change of
Resident Agent Filed September 21, 1966
Certificate of Amendment Filed April 8, 1968
Certificate of Amendment Filed April 13, 1970
Certificate of Amendment Filed April 8, 1974
Agreement of Merger
Amending Certificate
of Incorporation Filed October 17, 1977
Certificate of Amendment Filed April 16, 1979
Certificate of Amendment Filed April 21, 1980
Certificate of Amendment Filed August 17, 1981
Certificate of Amendment Filed May 4, 1987
Certificate of Amendment Filed December 21, 1989
Restated Certificate Filed December 22, 1989
<PAGE>
E. I. DU PONT DE NEMOURS AND COMPANY
RESTATED CERTIFICATE OF INCORPORATION
E. I. du Pont de Nemours and Company, a corporation organized
and existing under the Laws of the State of Delaware, hereby
certifies as follows:
1. The name of the corporation is E. I. du Pont de Nemours
and Company. The date of filing its original Certificate of
Incorporation with the Secretary of State was September 4, 1915.
2. This Restated Certificate of Incorporation only
restates and integrates and does not further amend the
provisions of the Certificate of Incorporation of this
corporation as heretofore amended or supplemented and there is
no discrepancy between those provisions and the provisions of
this Restated Certificate of Incorporation.
3. The text of the Certificate of Incorporation as amended
or supplemented heretofore is hereby restated without further
amendments or changes to read as herein set forth in full.
First: -- The name of the corporation is
E. I. DU PONT DE NEMOURS AND COMPANY
Second: -- The principal office of the corporation is to be
located at No. 1007 Market Street, in the City of Wilmington, in
the County of New Castle, in the State of Delaware. The name of
its resident agent is E. I. du Pont de Nemours and Company,
whose address is Room 8042, DuPont Building, No. 1007 Market
Street, in the City of Wilmington, County of New Castle, State
of Delaware 19898.
Third: -- The nature of the business of the corporation and
the objects and purposes proposed to be transacted, promoted or
carried on by it, are as follows:
(a) To manufacture, produce, prepare, experiment with,
purchase, and otherwise acquire, import, export, sell,
distribute, and otherwise dispose of, and generally to trade and
deal in, in any manner whatsoever, (1) chemicals of every
description, organic or inorganic, natural or synthetic, in the
form of raw materials, intermediates, or finished products, and
chemicals which may be used in the manufacture of any and all
products of every kind whatsoever; and (2) chemical products of
every kind and description.
- 1 -
<PAGE>
(b) To engage in research, exploration, laboratory and
development work relating to any substance, compound or mixture,
now known or which may hereafter be known, discovered or
developed, and to perfect, develop, manufacture, use, apply and
generally deal in any such substance, compound or mixture.
(c) To purchase or otherwise acquire, hold, own, occupy,
develop, improve, sell, dispose of and convey real property and
any and every interest therein either within or without the
State of Delaware and anywhere in the world; to extract, remove,
produce or prepare from any such property any animal, vegetable,
mineral or other product or material therein or thereon, either
by agricultural pursuits, mining, quarrying, or by any other
method or means now know or that may hereafter be discovered or
invented, and to avail itself in every manner of each and every
resource of such property by reducing it to proper form and by
use, sale or other disposition thereof.
(d) To erect, purchase, sell, lease, manage, occupy and
improve buildings and to do and perform all things needful and
lawful for the holding, development and improvement of the same
for residence, trade and business purposes; to buy, own,
operate, improve, lease and occupy, lands and buildings for
hotels, apartment houses, dwelling houses, and business
structures of all kinds, for the accommodation of the public and
of individuals; to manage, operate, conduct, and carry on,
hotels, apartment houses, dwelling houses, office buildings,
restaurants, cafes, pharmacies, drug stores, theaters, and other
places for the accommodation of the public and of individuals.
(e) To manufacture, acquire, own, sell or otherwise
dispose of all kinds of goods, merchandise and personal property
of every nature whatsoever either within or without the State of
Delaware and anywhere in the world.
(f) To engage in all kinds of business, including the
following but without excluding others: All manufacturing,
milling, mining, quarrying, building, construction and
industrial works and operations; development and utilization of
every kind of power; the acquirement, construction, use,
operation, sale and other disposition of all kinds of machinery,
plants, factories, warehouses, elevators, buildings and other
structures, bridges, wharves, docks, slips, dams, power works,
water works, boats, ships, engines, cars, equipment and
appliances, whether in connection with said business or other-
wise, and generally the utilization of all instrumentalities,
methods, processes and appliances, in all ways and by all means
now known or which may hereafter be discovered or invented.
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<PAGE>
(g) To apply for, obtain, register, purchase, lease or
otherwise to acquire, and to hold, use, own, operate and
introduce, and to sell, assign or otherwise to dispose of any
trademarks, trade names, brands, copyrights, concessions,
patents, inventions, formulae, improvements and processes used
in connection with or secured under letters patent of the
United States, or any other country, or otherwise, and to use,
exercise, develop, grant licenses in respect of, or otherwise to
turn to account any such trademarks, copyrights, concessions,
patents, licenses, processes and the like, or any such property
or rights.
(h) To subscribe or cause to be subscribed for, and to
purchase or otherwise acquire, hold for investment, or
otherwise, sell, assign, transfer, mortgage, pledge, exchange,
distribute or otherwise dispose of the whole or any part of the
shares of the capital stock, bonds, coupons, mortgages, deeds of
trust, debentures, securities, obligations, evidences of
indebtedness, notes, goodwill, rights, assets and property of
any and every kind whatsoever, or any part thereof of itself or
any other corporation or corporations, stock companies,
association or associations, now or hereafter existing, and
whether created by or under the laws of the State of Delaware,
or of any other state, district, territory or colony of the
United States, or any other country or otherwise, and to use,
operate, manage and control such properties or any of them,
either in the name of such other corporation or corporations,
stock company or association, or in the name of this
corporation, and while owners of any of said shares of capital
stock or bonds or other property to exercise all the rights,
powers and privileges of ownership of every kind and
description, including the right to vote thereon, with power to
designate some person for that purpose from time to time to the
same extent as natural persons might or could do.
(i) To endorse, guarantee and secure the payment and
satisfaction of the bonds, coupons, mortgages, deeds of trust,
debentures, securities, obligations, evidences of indebtedness,
and shares of the capital stock of other corporations, and also
to guarantee and secure the payment or satisfaction of dividends
on shares of the capital stock of other corporations; also to
undertake the whole or any part of the assets and liabilities,
existing or prospective, of any person, firm or association,
also to procure any other person or corporation to assume any
such obligation or obligations.
(j) Without in any particular limiting any of the objects
and powers of the corporation, it is hereby expressly declared
and provided that the corporation shall have power to do all the
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<PAGE>
things hereinbefore enumerated, and also to issue or exchange
stock, bonds and other obligations in payment for property
purchased or acquired by it, or for any other object in or about
its business; to borrow money without limit; to mortgage or
pledge its franchises, real or personal property, income and
profits accruing to it, any stocks, bonds or other obligations,
or any property which may be acquired by it; to secure any bonds
or other obligations by it issued or incurred; to guarantee any
dividends, or bonds, or contracts, or other obligations; to make
and perform contracts of any kind and description, and in
carrying on its business, or for the purpose of attaining or
furthering any of its objects, to do any and all other acts and
things, and to exercise any and all other powers which a
co-partnership or natural person could do and exercise, and
which now or hereafter may be authorized by law in any part of
the world.
(k) To carry on any business whatsoever which the
corporation may deem proper or convenient in connection with any
of the foregoing purposes or otherwise, or which may be
calculated directly or indirectly to promote the interests of
the corporation or to enhance the value of its property; and it
is the purpose of the corporation from time to time to do any
one or more of the acts and things herein set forth; and it may
conduct its business in other states, in the territories, the
District of Columbia, the colonies and dependencies and in
foreign countries and places;it may have one office or more than
one office and keep the books of the company outside the State
of Delaware, except as otherwise provided by law.
Fourth: -- The total authorized stock of the corporation is
as follows:
The total number of shares of all classes of stock which
the corporation shall have authority to issue shall be Nine
Hundred Twenty-Three Million (923,000,000), of which
Twenty-Three Million (23,000,000) shares shall be Preferred
Stock without par value and Nine Hundred Million (900,000,000)
shares shall be Common Stock having a par value of Sixty Cents
($0.60) each.
I. The Preferred Stock may be issued from time to time in
one or more series, each of such series to have such designa-
tion, preferences and relative, optional or other rights, and
qualifications, limitations or restrictions thereof, as are
stated and expressed herein, or in a resolution or resolutions
providing for the issue of such series adopted by the Board of
Directors as hereinafter provided.
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<PAGE>
II. (a) The 1,688,850 shares of the corporation's Preferred
Stock issued and outstanding on April 25, 1947,
shall constitute a series of Preferred Stock,
designated as "Preferred Stock - $4.50 Series"
(hereinafter sometimes called the "$4.50 Series
Stock"). The Board of Directors may from time to
time authorize the issuance of additional shares of
Preferred Stock as $4.50 Series Stock.
(b) The shares of $4.50 Series Stock shall bear
dividends at the rate of Four Dollars and Fifty
Cents ($4.50) per annum from and after April 25,
1947, provided, however, that any shares of said
Series issued after April 25, 1947 shall bear
dividends from and after such date or dates as the
Board of Directors from time to time may determine.
(c) In the event of any liquidation or dissolution or
winding-up of the corporation, whether voluntary or
involuntary, the Preferred Stock - $4.50 Series
shall entitle the holders thereof to be paid, in
the event of any involuntary liquidation or
dissolution or winding-up of the corporation,
One Hundred Dollars ($100.00) per share with all
unpaid accumulated dividends thereon to the date of
such payment or, in the event of any voluntary
liquidation or dissolution or winding-up of the
corporation, One Hundred Fifteen Dollars ($115.00)
per share with all unpaid accumulated dividends
thereon to the date of such payment.
(d) The Preferred Stock - $4.50 Series shall be subject
to redemption on or before April 25, 1952 at One
Hundred Twenty-Five Dollars ($125.00) per share and
accumulated dividends thereon to the date of
redemption, and thereafter at One Hundred Twenty
Dollars ($120.00) per share and accumulated
dividends thereon to the date of redemption, upon
the terms and in the manner as hereinafter
provided.
III. Authority is hereby expressly granted to the Board of
Directors of the corporation, subject to the provisions of this
Article FOURTH, to authorize the issue of one or more series of
Preferred Stock in addition to the $4.50 Series and with respect
to each such series to fix by resolution or resolutions
providing for the issue of such series:
(a) The number of shares to constitute such series and
the distinctive designation thereof;
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<PAGE>
(b) The dividend rate on the shares of such series and
the date or dates from which dividends shall
accumulate;
(c) The amount per share over and above any accumulated
dividends thereon which the shares of such series
shall be entitled to receive upon redemption;
(d) The amount per share over and above accumulated
dividends which such series shall be entitled to
receive (1) upon involuntary liquidation or
dissolution or winding-up of the corporation, which
amount shall not exceed $100.00 a share, and
(2) upon voluntary liquidation or dissolution or
winding-up of the corporation; and
(e) The rights, if any, which the shares of such series
may have for conversion into shares of any other
class or classes or any other series of the same or
any other class or classes of stock of the
corporation.
All shares of any one series of Preferred Stock shall be
identical with each other in all respects, except that shares of
any one series issued at different times may differ as to the
dates from which the initial dividends thereon shall accumulate;
and all series shall rank equally and be identical in all
respects, except as permitted in the foregoing provisions of
this Section III.
IV. The Preferred Stock shall entitle the holders thereof
to receive, when and as declared from the surplus or net
earnings of the corporation, cumulative dividends, payable
quarterly on such dates as the Board of Directors may determine,
at the rates fixed herein or fixed by the Board of Directors for
the respective series, as herein provided, and no more, which
dividends shall be paid or set apart before any dividend shall
be set apart or paid on the Common Stock. The dividend payment
dates for all series of Preferred Stock shall be the same and no
dividends shall be declared on any series in respect of any
quarterly dividend payment unless there shall likewise be or
have been declared on all shares of Preferred Stock of each
other series at the time outstanding like proportionate
dividends ratably in proportion to the respective annual
dividend rates fixed therefor.
V. In the event of any liquidation or dissolution or
winding-up of the corporation, whether voluntary or involuntary,
the Preferred Stock shall entitle the holders thereof to be paid
the amounts fixed herein or fixed by the Board of Directors for
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<PAGE>
the respective series as herein provided, including all unpaid
accumulated dividends thereon to the date of such payment,
before any amount shall be paid to the holders of the Common
Stock of the corporation.
Such payments to the holders of the Preferred Stock shall
be made without preference or priority of one series over any
other series and shall be made before any amount shall be paid
to the holders of the Common Stock. If the assets of the
corporation distributable upon any such liquidation or dissolu-
tion or winding-up of the corporation shall be insufficient to
permit the payments to the holders of the Preferred Stock of the
full amounts above provided for, including an amount equivalent
to all unpaid accumulated dividends as aforesaid, the said
assets shall be allocated to the respective series of Preferred
Stock in the ratios that such aggregate liquidation value of the
issued shares of each series bears to the aggregate liquidation
value of the issued shares of all series of Preferred Stock as
fixed for the respective series of Preferred Stock in the
Certificate of Incorporation or in the resolution or resolutions
of the Board of Directors providing for the issuance of the
respective series, and shall be distributed among the holders of
the respective series of Preferred Stock according to their
respective shares.
VI. The Preferred Stock of any series shall be subject to
redemption at any time in whole or in part at the amount fixed
herein, or fixed by the Board of Directors as herein provided,
for the redemption of such series including an amount equivalent
to all unpaid accumulated dividends thereon, upon not less than
sixty days' notice addressed to the respective holders of record
of the stock to be redeemed at their addresses as the same shall
appear on the stock transfer records of the corporation in such
manner as the Board of Directors shall determine.
VII. The holders of the Preferred Stock shall have no
voting power on any questions whatsoever except as otherwise
provided by law, and except that in the event that the
corporation shall fail to pay any dividend on the Preferred
Stock when it regularly becomes due and such default shall
continue for the period of six (6) months, then until but not
after such time as accumulated and unpaid dividends on all
outstanding 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 the corpora-
tion be only three, then only one director, at each meeting of
the stockholders of the corporation held for the purpose of
electing directors. At all meetings of stockholders held for
the purpose of electing directors at which the holders of
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<PAGE>
Preferred Stock shall have the exclusive right, voting
separately and as a class, to elect any directors as aforesaid,
the presence in person or by proxy of the holders of a majority
of the outstanding shares of Preferred Stock shall be required
to constitute a quorum of such class for the election of any
directors by holders of Preferred Stock, as a class, provided,
however, that the absence of a quorum of the holders of
Preferred Stock shall not prevent the election at any such
meeting or adjournment thereof of the remaining directors for
whose election a class vote of the holders of Preferred Stock is
not required, if the necessary quorum of the stockholders
entitled to vote in the election of such remaining directors is
present in person or by proxy in accordance with the by-laws of
the corporation; and provided further, that in the absence of a
quorum of the holders of Preferred Stock, a majority of those
holders of such Preferred Stock who are present in person or by
proxy shall have power to adjourn the election of those
directors to be elected by their class from time to time without
notice other than announcement at the meeting until the
requisite amount of holders of Preferred Stock shall be present
in person or by proxy.
The holders of Common Stock shall have the right to vote on
all questions to the exclusion of all other stockholders except
as hereinbefore specifically stated.
VIII. Whenever, at any time, full accumulated dividends as
aforesaid for all past dividend periods and for the current
dividend period shall have been paid, or declared and set apart
for payment, on the then outstanding Preferred Stock, the Board
of Directors may declare dividends on the Common Stock of the
corporation.
IX. Upon any liquidation or dissolution or winding-up of
the corporation, whether voluntary or involuntary, the assets
and funds of the corporation remaining, after the payments have
been made to the holders of the Preferred Stock, as provided in
Section V hereof, shall be divided and paid to the holders of
the Common Stock according to their respective shares.
X. From time to time the Preferred Stock or the Common
Stock may be increased according to law.
XI. From time to time the Preferred Stock and the Common
Stock may be issued in such amounts and proportions and for such
consideration as may be fixed by the Board of Directors, or, in
the case of Common Stock issued upon the exercise of the options
referred to in Section XIII hereof, as provided in such Section.
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<PAGE>
XII. No stockholder of the corporation, of whatever class
or series, shall have any preemptive or preferential right of
subscription to any shares of any series of the Preferred Stock
of the corporation, authorized hereunder or under any amendment
hereof, or to any obligations convertible into said Preferred
Stock of any series of the corporation, issued or sold, nor any
right of subscription to any thereof other than such, if any, as
the Board of Directors of the corporation in its discretion from
time to time may determine, and the Board of Directors may issue
said Preferred Stock of any series of the corporation, or
obligations convertible into said Preferred Stock of any series,
without offering said Preferred Stock, or said obligations,
either in whole or in part, to any stockholders of the
corporation.
No holder of any shares of the Preferred Stock of any
series of the corporation shall have any preemptive or preferen-
tial right of subscription to any shares of stock of any class
of the corporation, or to any obligations convertible into
shares of stock of any class of the corporation, issued or sold,
nor any right of subscription to any thereof other than such, if
any, as the Board of Directors of the corporation in its
discretion from time to time may determine.
XIII. The Board of Directors may create and issue to
employees (including officers and directors) of this corpora-
tion, or of any corporation in which this corporation shall
directly or indirectly own fifty percent or more of the voting
stock, options to purchase the corporation's Common Stock in
accordance with the terms of any duly adopted compensation plan.
The sales of stock so optioned may be unissued, or issued and
reacquired shares of Common Stock of the corporation, as shall
be determined by the Board of Directors, and the Board shall
have power to take all action necessary and appropriate in
connection with any such issuance or sale of shares. The
options shall be evidenced by such instruments as shall be
approved by the Board of Directors. The terms upon which, the
time or times at or within which, and the consideration for
which such options may be issued, and for which any shares of
stock may be issued or sold by the corporation upon the exercise
of such options, shall be such as shall be stated in the
resolution or resolutions adopted by the Board of Directors
providing for the creation and issuance of such options and, in
every case, set forth or incorporated by reference in the
instrument or instruments evidencing such options. The judgment
of the Board of Directors as to the consideration and suffi-
ciency thereof for the issuance of such options and for the
issuance or sale of stock pursuant to the exercise thereof shall
be conclusive.
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<PAGE>
Any standing committee duly designated by resolution passed
by a majority of the whole Board of Directors and consisting of
two or more of the directors, shall have and may exercise any or
all of the rights, powers and functions of the Board of
Directors specified in this Section XIII, or otherwise pertain-
ing to any duly adopted compensation plan, to the extent
provided in a resolution passed by a majority of the whole Board
or in the By-Laws of the corporation.
XIV. The amount of capital stock with which this
corporation will commence business is Seventy-Five Hundred
Dollars ($7,500).
Fifth: -- The names and places of residence of each of the
original subscribers to the capital stock and the number of
shares subscribed for by each are as follows:
Number
Name Residence of Shares
----------------- ------------------- ---------
Pierre S. du Pont Christiana Hundred,
Delaware 25
John J. Raskob Brandywine Hundred,
Delaware 25
John P. Laffey Wilmington, Delaware 25
Sixth: -- The corporation is to have perpetual existence.
Seventh: -- The private property of the stockholders shall
not be subject to the payment of corporate debts to any extent
whatever.
Eighth: -- The number of the directors of the corporation
shall be fixed from time to time by the by-laws and the number
may be increased or decreased as therein provided.
In case of any increase in the number of directors the
additional directors shall be elected as provided by the By-Laws
by the directors or by the stockholders at an annual or special
meeting.
In case of any vacancy in the Board of Directors for any
cause the remaining Directors by affirmative vote of a majority
of the whole Board of Directors may elect a successor to hold
office for the unexpired term of the Director whose place is
vacant and until the election of his successor.
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<PAGE>
In furtherance, but not in limitation of the powers
conferred by law, the Board of Directors are expressly
authorized:
(a) To hold their meetings outside of the State of Delaware
at such places as from time to time may be designated by the
By-Laws or by resolution of the Board. The By-Laws may
prescribe the number of directors necessary to constitute a
quorum of the Board of Directors, which number may be less than
a majority of the whole number of directors.
(b) To appoint the regular officers of the corporation, and
such other officers as they may deem necessary for the proper
conduct of the business of the Company.
(c) To remove at any time any officer elected or appointed
by the Board of Directors but only by the affirmative vote of a
majority of the whole Board of Directors.
(d) To remove any other officer or employee of the
corporation or to confer such power on any committee or superior
officer of the corporation, unless such removals are otherwise
regulated by the By-Laws.
(e) To appoint standing committees by the affirmative vote
of a majority of the whole Board, and such standing committees
shall have and may exercise such powers as shall be conferred or
authorized by the By-Laws.
(f) To issue the stock of every class in such amounts and
proportions as they may determine up to the total amount of the
authorized capital stock or any increase thereof, subject,
however, to the provisions of this certificate.
(g) From time to time to fix and determine and to vary the
sum to be reserved over and above its capital stock paid in as
working capital before declaring any dividends among its stock-
holders; to direct and determine the use and disposition of any
surplus or net profits over and above the capital stock paid in;
to fix the time of declaring and paying any dividend, and,
unless otherwise provided in the By-Laws, to determine the
amount of any dividend. All sums reserved as working capital or
otherwise may be applied from time to time to the acquisition or
purchase of its bonds or other obligations or shares of its own
capital stock or other property to such extent and in such
manner and upon such terms as the Board of Directors shall deem
expedient, and neither the stock, bonds or other property so
acquired shall be regarded as accumulated profits for the
purpose of declaring or paying dividends unless otherwise
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<PAGE>
determined by the Board of Directors, but shares of such capital
stock so purchased or acquired may be resold, unless such shares
shall have been retired for the purpose of decreasing the
Company's capital stock as provided by law.
(h) From time to time to determine whether and to what
extent, and at what times and places, and under what conditions
and regulations the accounts and books of the corporation, or
any of them, shall be open to the inspection of the stock-
holders, and no stockholders shall have any right to inspect any
account or book or document of the corporation, except as
conferred by statute or authorized by the Board of Directors or
by a resolution of the stockholders.
(i) Subject always to By-Laws made by the stockholders, to
make By-Laws; and, from time to time, to alter, amend or repeal
any By-Laws; but any By-Laws made by the Board of Directors may
be altered or repealed by the stockholders at any annual
meeting, or at any special meeting, provided notice of such
proposed alteration or repeal be included in the notice of the
meeting.
(j) With the written assent, without a meeting of the
holders of two-thirds of its stock, or pursuant to the
affirmative vote, in person or by proxy, at any meeting called
as provided in the By-Laws, of the holders of two-thirds of its
stock, issued and outstanding, the Board of Directors may sell,
convey, assign, transfer or otherwise dispose of, the property,
assets, rights and privileges of the corporation as an entirety,
for such consideration and on such terms as they may determine.
Ninth: -- A director of the corporation shall not be
personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section
174 of the General Corporation Law of Delaware, or (iv) for any
transaction from which the director derived any improper
personal benefit. If the General Corporation Law of Delaware is
amended after approval by the stockholders of this article to
authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a
director of the corporation shall be eliminated or limited to
the full extent permitted by the General Corporation Law of
Delaware, as so amended.
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<PAGE>
Any repeal or modification of the foregoing paragraph by
the stockholders of the corporation shall not adversely affect
any right or protection of a director of the corporation exist-
ing at the time of such repeal or modification.
4. This Restated Certificate of Incorporation was duly
adopted by the Board of Directors in accordance with Section 245
of the General Corporation Law of the State of Delaware.
5. This Restated Certificate of Incorporation shall be
effective at 5:00 p.m. Eastern Standard Time on December 22,
1989.
IN WITNESS WHEREOF, said E. I. du Pont de Nemours and
Company has caused this certificate to be signed by John F.
Schmutz, its Senior Vice President and General Counsel, and
attested by Roger W. Arrington, its Secretary, this 21st day of
December, 1989.
E. I. DU PONT DE NEMOURS AND COMPANY
By: JOHN F. SCHMUTZ
----------------------------------------
Senior Vice President and General Counsel
ATTEST:
By: R. W. Arrington
-------------------------
Secretary
I hereby certify that the within and foregoing is a true
and correct copy of the Restated Certificate of Incorporation of
E. I. du Pont de Nemours and Company.
Witness my hand and the corporate seal of the Company
this day of 19 .
-------------------------
Secretary
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<PAGE>
PREFERRED STOCK - $3.50 SERIES
Certificate Authorizing the
Issue of Preferred
Stock - $3.50 Series Filed April 30, 1947
Certificate Decreasing the
Number of Authorized
Shares of Preferred
Stock - $3.50 Series Filed July 6, 1955
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<PAGE>
CERTIFICATE SETTING FORTH COPY OF RESOLUTION
OF THE BOARD OF DIRECTORS OF
E. I. DU PONT DE NEMOURS AND COMPANY
ESTABLISHING AND AUTHORIZING THE ISSUE
OF A NEW SERIES OF PREFERRED STOCK DESIGNATED
"PREFERRED STOCK - $3.50 SERIES"
(Pursuant to Section 13 of the General Corporation Law of the
State of Delaware and of the Certificate of Incorporation, as
amended, of E. I. du Pont de Nemours and Company)
- --------------------------------------------------------------------------------
We, W. J. Beadle, a Vice-President, and W. F. Raskob,
Secretary, of E. I. du Pont de Nemours and Company, a
corporation of the State of Delaware, do hereby certify under
the seal of said Corporation as follows:
That at a special meeting of the Board of Directors of the
Corporation duly called for the consideration of the resolutions
hereinafter set forth and on notice thereof duly given in
accordance with the By-Laws of the Corporation and with the laws
of the State of Delaware, and held on April 29, 1947, and
pursuant to power and authority expressly vested in the Board of
Directors by the provisions of the General Corporation Law of
the State of Delaware and Article FOURTH of the Certificate of
Incorporation, as amended, of E. I. du Pont de Nemours and
Company, the Board of Directors duly adopted the following
resolutions:
"RESOLVED that the Board of Directors hereby
establishes and authorizes the issue of a new series of
Preferred Stock without par value of the corporation and
hereby fixes the designation, the number of shares to be
issued, the dividend rate, the redemption price and the
amount payable upon liquidation or dissolution or
winding-up of the corporation with respect to such new
series of Preferred Stock without par value as follows,
such attributes to be in addition to the other provisions
set forth in Article Fourth of the Certificate of
Incorporation as amended, which are applicable to all
shares of Preferred Stock without par value irrespective of
any variations between the shares of Preferred Stock
without par value of the different series:
(a) The new series of Preferred Stock without par
value established by this resolution is hereby
designated Preferred Stock - $3.50 Series;
- 15 -
<PAGE>
(b) Preferred Stock - $3.50 Series be and hereby
is authorized to be issued in the amount of 1,000,000
shares;
(c) The dividend rate on the Preferred Stock -
$3.50 Series shall be $3.50 per share per annum and no
more, and dividends on the 1,000,000 shares of
Preferred Stock - $3.50 Series herein authorized to be
issued shall accumulate from and after April 25, 1947;
(d) The amount per share over and above any
accumulated dividends thereon which the shares of
Preferred Stock - $3.50 Series shall be entitled to
receive upon redemption is as follows: if redeemed on
or before
April 25, 1952, $107.00 a share; thereafter on or before
April 25, 1955, $106.00 a share; thereafter on or before
April 25, 1958, $105.00 a share; thereafter on or before
April 25, 1961, $104.00 a share; thereafter on or before
April 25, 1964, $103.00 a share; and thereafter, $102.00
a share; and
(e) The amount per share over and above
accumulated dividends which the shares of Preferred
Stock - $3.50 Series shall be entitled to receive upon
involuntary liquidation or dissolution or winding-up
of the corporation is $100.00 a share, and upon
voluntary liquidation or dissolution or winding-up of
the corporation is $107.00 a share.
FURTHER RESOLVED that a certificate setting forth
a copy of the foregoing resolution providing for the
establishment and issue of 1,000,000 shares of
Preferred Stock - $3.50 Series shall be made under the
seal of the corporation, signed by the President or a
Vice-President and by the Secretary or an Assistant
Secretary of the corporation, acknowledged by such
President or Vice-President before an officer
authorized by the laws of Delaware to take acknowledg-
ments of deeds, and shall be filed and a copy thereof
shall be recorded pursuant to and in the manner
provided pursuant to and in the manner provided by
Section 13 of the Delaware Corporation Law."
- 16 -
<PAGE>
IN WITNESS WHEREOF, we have hereunto signed this
certificate and have caused the corporate seal of the
Corporation to be hereunto affixed this 29th day of April, A.D.
1947.
E. I. DU PONT DE NEMOURS AND COMPANY
By: W. J. Beadle
Vice-President
Attest:
W. F. Raskob
Secretary
- ------------------------------------
E. I. DU PONT DE NEMOURS AND CO.
FOUNDED 1802
SEAL
DELAWARE
- ------------------------------------
- 17 -
<PAGE>
STATE OF DELAWARE } ss
COUNTY OF NEW CASTLE }
BE IT REMEMBERED, that on this 29th day of April, A.D.
1947, before the subscriber, a Notary Public in and for the
State and County aforesaid, authorized by the laws of Delaware
to take acknowledgments of deeds, personally appeared W. J.
Beadle, Vice-President of E. I. du Pont de Nemours and Company,
the Corporation mentioned in and which executed the foregoing
Certificate, known to me personally to be such, and he, the said
W. J. Beadle, as such Vice-President, acknowledged the said
Certificate to be his act and deed and the act and deed of said
Corporation, and that the seal thereto affixed is the common and
corporate seal of said Corporation duly affixed by its
authority, and that his act of executing, acknowledging and
delivering said Certificate was duly authorized by the Board of
Directors of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this Certificate above
written.
J. H. CASSIDY
Notary Public
- --------------------------
J. H. CASSIDY
Notary Public
Appointed July 3, 1946
For Two Years
Delaware
- --------------------------
- 18 -
<PAGE>
CERTIFICATE SETTING FORTH COPY OF RESOLUTION
OF THE BOARD OF DIRECTORS OF
E. I. DU PONT DE NEMOURS AND COMPANY
DECREASING THE AUTHORIZED NUMBER OF SHARES
OF PREFERRED STOCK - $3.50 SERIES
FROM ONE MILLION SHARES TO
SEVEN HUNDRED THOUSAND SHARES
(Pursuant to Section 151(g) of the General Corporation Law
of the State of Delaware and the Certificate of Incorporation,
as amended, of E. I. du Pont de Nemours and Company)
- --------------------------------------------------------------------------------
We, L. du P. Copeland, a Vice-President, and F. G. Hess,
Assistant Secretary, of E. I. du Pont de Nemours and Company, a
corporation of the State of Delaware, DO HEREBY CERTIFY under
the seal of said Corporation as follows:
That at a meeting of the Board of Directors of the
Corporation duly called, and held on the 20th day of June, 1955,
in accordance with the By-Laws of the Corporation and with the
laws of the State of Delaware, and pursuant to power and
authority expressly vested in the Board of Directors by the
provisions of the General Corporation Law of the State of
Delaware and Article Fourth of the Certificate of Incorporation,
as amended, of E. I. du Pont de Nemours and Company, the Board
of Directors duly adopted the following resolution:
"RESOLVED, by the Board of Directors of this Company
that pursuant to authority expressly vested in it by the
provisions of this Company's Certificate of Incorporation,
as amended, the Series of 1,000,000 shares of Preferred
Stock, without par value, designated 'Preferred Stock -
$3.50 Series' (provided for in a resolution of the Board of
Directors of this Company adopted April 29, 1947 and a
certificate therefor duly filed and a copy thereof duly
recorded) shall be and stand decreased by 300,000 shares of
said 'Preferred Stock - $3.50 Series,' that have been duly
retired and are not now outstanding, to 700,000 shares
thereof by a certificate hereby authorized and directed to
be made, signed, acknowledged and filed, and a copy thereof
recorded in accordance with the provisions of Title 8,
Section 151 of the Revised Code of Delaware of 1953,
setting forth a statement that a decrease in said Series of
1,000,000 shares of 'Preferred Stock - $3.50 Series' by
300,000 shares thereof not now outstanding, to 700,000
- 19 -
<PAGE>
shares of said 'Preferred Stock - $3.50 Series' without par
value, had been authorized and directed by a resolution
duly adopted by the Board of Directors of this Company on
the 20th day of June 1955."
IN WITNESS WHEREOF, we have hereunto signed this certifi-
cate and have caused the corporate seal of the Corporation to be
hereunto affixed this 20th day of June, A.D. 1955.
E. I. DU PONT DE NEMOURS AND COMPANY
By: L. DU P. COPELAND
Vice-President
Attest:
F. G. HESS
Asst. Secretary
- ------------------------------------
E. I. DU PONT DE NEMOURS AND CO.
FOUNDED 1802
SEAL
DELAWARE
- ------------------------------------
- 20 -
<PAGE>
STATE OF DELAWARE } ss
COUNTY OF NEW CASTLE }
BE IT REMEMBERED, that on this 20th day of June, A.D. 1955,
before the subscriber, a Notary Public in and for the State and
County aforesaid, authorized by the laws of Delaware to take
acknowledgments of deeds, personally appeared L. du P. Copeland,
Vice-President of E. I. du Pont de Nemours and Company, the
Corporation mentioned in and which executed the foregoing
Certificate, known to me personally to be such, and he, the said
L. du P. Copeland, as such Vice-President, acknowledged the said
Certificate to be his act and deed and the act and deed of said
Corporation, and that the seal thereto affixed is the common and
corporate seal of said Corporation duly affixed by its
authority, and that his act of executing, acknowledging and
delivering said Certificate was duly authorized by the Board of
Directors of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this Certificate above
written.
RICHARD H. TALLANT
Notary Public
- -----------------------------
RICHARD H. TALLANT
Notary Public
Appointed October 5, 1953
For Two Years
Delaware
- -----------------------------
- 21 -
<PAGE>
EXHIBIT 10.6
RETIREMENT RESTORATION PLAN OF CONOCO INC.
------------------------------------------
SECTION 1. PURPOSE
A. Retirement Restoration Benefit feature: The purpose of this
feature of the Plan is to provide each member of the Title
Two of the Pension and Retirement Plan ("Retirement Plan")
all benefits otherwise payable in accordance with the terms
thereof, but for the limitation on maximum benefits set
forth in Section 4(8) of the Retirement Plan.
B. Retirement Restoration Compensation feature: The purpose of
this feature of the Plan is to provide each member of the
Retirement Plan who is a participant in the Incentive
Compensation Plan of Conoco Inc. under which awards were
granted on and after January 1, 1981, and the Incentive
Compensation Plan of E. I. du Pont de Nemours and Company
and such other Incentive Compensation Plan ("ICP Plan") as
may from time to time be in effect in substitution therefor
and in which members of the Retirement Plan shall
participate, all benefits to which the participant would be
entitled if compensation, as defined in the Retirement Plan,
included the annual awards (or in the case of Members who
did not have an Hour of Service under the Retirement Plan on
or after August 1, 1994, one-half the annual awards) granted
to the member under the ICP Plan then in effect.
C. Retirement Restoration Enhancement feature: The purpose of
this feature of the Plan is to provide each member of the
Retirement Plan who was not eligible for benefits under the
Temporary Retirement/Termination Incentive Program due to
salary grade and who is approved for retirement enhancement
by the President of Conoco Inc. or his delegee, retirement
benefits provided for in the Retirement Plan under the terms
of the Temporary Retirement/Termination Incentive Program,
but without the limitations on salary grade and election
date.
SECTION 2. ADMINISTRATION
A. The Plan shall be administered by the Employee Benefit Plans
Board ("Board") as defined in Section 1(6) of the Retirement
Plan.
B. The Board shall have the power to interpret the Plan,
establish rules for the administration of the Plan, and make
all other determinations necessary or desirable for the
Plan's administration.
- 1 -
<PAGE>
SECTION 2. ADMINISTRATION
C. The decision of the Board on any question concerning or
involving the interpretation or administration of the Plan
shall be final and conclusive.
SECTION 3. ELIGIBILITY FOR BENEFITS AND AMOUNT OF BENEFITS
A. Retirement Restoration Benefit feature: All members of the
Retirement Plan who would otherwise be entitled to benefits
from the Retirement Plan in accordance with the terms
thereof, but for the limitation on maximum benefits set
forth in Section 4(8) of the Retirement Plan, shall be paid
such benefits under this feature to the extent such benefits
exceed the limitation.
B. Retirement Restoration Compensation feature:
(1) All members of the Retirement Plan, who are entitled to
benefits from the Retirement Plan in accordance with the
terms thereof, shall be paid benefits under this feature
as follows:
(a) In an amount equal to the amount of benefits which
would have been paid to the members pursuant to
Section 4 of the Retirement Plan if compensation,
as defined in section 1(9)(a), included the annual
awards (or in the case of Members who do not have
an Hour of Service under the Retirement Plan on or
after August 1, 1994, one-half of the annual
awards) granted to members on or after January 1,
1981, under the ICP Plan(s). Anything to the
contrary notwithstanding, all members of the
Retirement Plan who would otherwise be entitled to
benefits from this Plan pursuant to the preceding
sentence, shall be paid such benefits only to the
extent that compensation, as defined in Section
1(9)(a) of the Retirement Plan, does not include
the annual awards (or in the case of Members who
do not have an Hour of Service under the
Retirement Plan on or after August 1, 1994, one-
half of the annual awards) granted to members on
or after January 1, 1981, under the ICP Plan(s).
(b) In an amount equal to the amount of benefits which
would have been paid to the member pursuant to:
(i) Section 16 of the Retirement Plan if annual
compensation, as defined in Section 16(1)(l) of
the Retirement Plan, included the annual awards
- 2 -
<PAGE>
(or in the case of Members who do not have an Hour
of Service under the Retirement Plan on or after
August 1, 1994, one-half of the annual awards)
granted to members on or after January 1, 1981,
under the ICP Plan; or
(ii) Section 20 of the Retirement Plan if basic
earnings, as defined in Section 20(1)(b) of the
Retirement Plan, included the annual awards (or
in the case of Members who do not have an Hour
of Service under the Retirement Plan on or
after August 1, 1994, one-half of the annual
awards) granted to members on or after January 1,
1981, under the ICP Plan.
C. Retirement Restoration Enhancement feature: Each member of
the Retirement Plan, who was not eligible for benefits under
the Temporary Retirement/Termination Incentive Program due
to salary grade and who is approved for Retirement
Enhancement by the President of Conoco Inc. or his delegee,
shall be paid benefits under this feature that would have
been paid pursuant to the Retirement Plan, the Retirement
Restoration Benefit feature of this Plan, and the Retirement
Restoration Compensation feature of this Plan, enhanced
under the terms of the Temporary Retirement/Termination
Incentive Program, but without the limitations on salary
grade and election date, less any benefit payable under the
Retirement Plan, the Retirement Restoration Benefit feature
of this Plan, and the Retirement Restoration Compensation
feature of this Plan.
SECTION 4. PAYMENT OF BENEFITS
A. This Plan shall be an unfunded plan, and payments of
benefits pursuant to this Plan shall be made from the
general assets of Conoco Inc.
B. Benefits paid under this Plan to a participant or designated
beneficiary shall be paid in the form of a single life
annuity, or in any of the forms detailed in Section 4(3)(a)
or 4(3)(b) of the Retirement Plan in an amount actuarially
equivalent to such single life annuity. The receipt of
benefits may be deferred in accordance with procedures
established by the Employee Benefit Plans Board. Elections
regarding the form and payment of benefits shall be made
independent of any election under the Retirement Plan and in
such manner and at such time as the Employee Benefit Plans
Board prescribes.
- 3 -
<PAGE>
SECTION 4. PAYMENT OF BENEFITS
C. Benefits payable under this Plan shall begin to be paid
within a reasonable time after the amount of a participant's
benefits pursuant to this Plan has been established.
Notwithstanding the preceding sentence, participants who
retire pursuant to Section 4(2)(d) of the Retirement Plan
cannot begin to receive the benefits payable under this Plan
until the end of the first full calendar month following age
50.
SECTION 5. BENEFICIARIES
A. Beneficiaries under this Plan shall be named in accordance
with procedures established by the Employee Benefit Plans
Board.
B. Notwithstanding anything to the contrary contained herein or
in the Retirement Plan, a participant or beneficiary who is
awaiting payment pursuant to a lump sum election may, until
death, change the beneficiary designated to receive benefits
under this Plan.
C. In no event shall any change in beneficiary pursuant to
Section 5(b) affect the amount of benefits payable under
this Plan.
SECTION 6. AMENDMENT, SUSPENSION, TERMINATION
The Board of Directors of Conoco Inc. may, at any time, amend,
suspend, or terminate this Plan.
- 4 -
<PAGE>
EMPLOYEE BENEFIT PLANS BOARD OF CONOCO INC.
RULES FOR THE ELECTION OF PAYMENTS FROM THE PLANS
1. An election of the type of payment the employee wants to
receive from the Retirement Restoration Benefit Plan of
Conoco Inc., the Retirement Restoration Compensation Plan of
Conoco Inc., and/or the Retirement Restoration Enhancement
Plan of Conoco Inc. (the Plans) may be made at any time up
to 30 days prior to the date of retirement and becomes
irrevocable 30 days prior to the date of retirement.
Employees who have not made an election 30 days prior to the
date of retirement may make an election only with the
approval of the Employee Benefit Plans Board. Such election
shall be irrevocable.
2. In the event an employee fails to make an election 30 days
prior to retirement, such employee shall be deemed to have
elected one lump sum payment (without deferral) unless
authorized by the Employee Benefit Plans Board to do
otherwise in accordance with Rule No. 1 above.
3. If any employee elects lump sum payment, the employee may,
up to 30 days before the date of retirement, elect to defer
such lump sum and receive it in annual installments (1 to
15) beginning in the month after the effective retirement
date or beginning the first day of any January within five
years after the effective retirement date. If an employee
has elected to defer receipt of a lump sum in accordance
with the first sentence of this paragraph, he may, by
November 30 preceding delivery of any remaining install-
ments, make one final irrevocable election to further defer
any undelivered amounts, provided that the total number of
annual installments after retirement from all elections does
not exceed 15, and all payments are made by the end of the
20th year after retirement.
4. Deferred lump sum amounts paid after the month following
retirement will earn interest at a rate corresponding to the
average of Moody's AAA ten-year Municipal Bond Rate for the
13 weeks preceding the beginning of each new quarter. The
interest will be compounded quarterly and will be deferred.
If the rate changes, the new rate will apply to all amounts
beginning with the following quarter.
5. Each installment will equal the amount of the remaining lump
sum and accumulated interest divided by the number of annual
installments remaining (including the payment being
determined).
- 1 -
<PAGE>
6. As in the Retirement Plan of Conoco Inc., if an employee
elects a joint and survivor annuity, the amount of such
annuity shall be actuarially determined based on the ages of
the employee and survivor designated under the Plans and the
actuarial assumptions included in such Retirement Plan.
7. All benefit payments shall be made, or begin to be made, no
later than the month following the employee's date of
retirement (or the month following the employee's fiftieth
birthday, if later) unless the employee has elected
otherwise in accordance with Rule No. 3 above.
8. If benefits under the Plan (lump sum, retiree annuity, or
survivor annuity) are increased as a result of incentive
compensation award(s) granted after retirement, the increase
shall be effective the first day of the month following the
date of the grant. The payment option elected at retirement
shall apply to such additional benefit. In determining the
actuarial factor for payment options other than straight
life annuity for the additional benefit, the ages of the
retiree and designated survivor and the applicable interest
rates shall be determined as of the date the increase is
effective. If a retiree dies after having retired with a
joint and survivor annuity, but prior to the granting of the
award, the increased benefit to the survivor shall be
determined assuming that the retiree died just after the
award was granted.
9. The primary retirement plan is defined as the qualified
retirement plan of which the employee/retiree is/was a
member. If the employee/retiree is/was a member of more
than one qualified retirement plan of the corporate
employer, it shall mean the plan which provides the largest
benefit to the retiree or beneficiary(ies).
10. A retiree who has elected a lump sum (or who has made no
election) may make or change a beneficiary designation in
writing on the current Restoration Plans retirement
application form at any time prior to the earlier of death
or receipt of the full lump sum distribution. If a retiree
who has designated a beneficiary(ies) under this Rule
No. 10 dies after his date of retirement but prior to full
distribution of the lump sum, the balance of the
distribution shall be paid in one lump sum to the
designated beneficiary(ies) named under the Plans. If the
deceased retiree made no beneficiary designation under the
Plans, such lump sum shall be paid to the retiree's
beneficiary(ies) as named under the primary retirement
plan, or, if there is no beneficiary so named under the
primary retirement plan, to the retiree's estate.
- 2 -
<PAGE>
11. A beneficiary designated pursuant to Rule No. 10 who is
entitled to receive a lump sum because a retiree who had
elected a lump sum (or made no election) died subsequent to
the retiree's date of retirement may make or change a
beneficiary designation on the current Restoration Plan
retirement application form at any time prior to the
earlier of death or receipt of the full lump sum
distribution. If a beneficiary who has designated a
beneficiary(ies) dies prior to full distribution of the
lump sum, the balance of the distribution shall be paid in
one lump sum to the beneficiary so designated under this
Rule No. 11. If the deceased beneficiary made no
beneficiary designation under the Plans, but designated a
beneficiary under the primary retirement plan, such lump
sum shall be paid to the beneficiary so designated. If the
beneficiary designated no beneficiaries under either the
Plans or the primary retirement plan, such lump sum shall
be paid to the beneficiary's estate.
12. If a married employee who is eligible for preretirement
surviving spouse coverage under Title Two of the Pension
and Retirement Plan dies, the surviving spouse benefits
shall be restored under the Plans in the same manner as the
primary retirement benefits, except that the payments shall
be converted to a lump sum based on the spouse's age and
the actuarial assumptions included in the qualified
retirement plan. Such lump sums may not be deferred.
13. For benefit determination purposes under the Plans, it
shall be assumed that all employees elect to receive (or
begin to receive) payment under the qualified retirement
plan at the earliest possible date.
14. In the event of changes in the relevant laws or
circumstances, the Employee Benefit Plans Board may, in its
sole discretion, accelerate or change the manner of payment
of any deferred lump sum benefit from the Restoration
Plans.
- 3 -
<PAGE>
Exhibit 11
E. I. DU PONT DE NEMOURS AND COMPANY
EARNINGS PER SHARE - ASSUMING FULL DILUTION
(Dollars in millions, except per share)
<TABLE>
<CAPTION>
Years Ended December 31
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Earnings (loss) on common stock .............. $2,717 $545 $(3,937) $1,393 $2,300
Adjustments required for dividend equivalent
payments and stock appreciation rights
(net of tax) ............................... - - - 1 (2)
Adjustments required for interest on
convertible debt(a) ........................ - - - - 15
Adjusted earnings (loss) on common stock ..... $2,717 $545 $(3,937) $1,394 $2,313
=========== =========== =========== =========== ===========
Average number of shares outstanding
(excludes shares in treasury) .............. 679,999,916 676,622,115 673,454,935 670,743,786 675,960,751
Adjustments required for awarded but
undelivered shares under the Variable
Compensation Plan (average), stock options,
and stock appreciation rights(b) ........... 4,542,903 3,785,582 - 4,740,453 1,951,293
Adjustments required for convertible debt(a) . - - - - 5,404,509
Adjusted average number of common shares ..... 684,542,819 680,407,697 673,454,935 675,484,239 683,316,553
=========== =========== =========== =========== ===========
Earnings (loss) per share - assuming full
dilution ................................... $ 3.97 $.80 $ (5.85) $ 2.06 $ 3.38
=========== =========== =========== =========== ===========
Earnings (loss) per share - as published ..... $ 4.00 $.81 $ (5.85) $ 2.08 $ 3.40
=========== =========== =========== =========== ===========
</TABLE>
(a) The Zero Coupon Convertible Subordinated Notes were retired during 1992.
1991 versus 1990 convertible debt was outstanding for the entire year; as
a result, conversion was antidilutive, and no adjustment was required in
1991.
(b) In 1992, these adjustments are not considered for the fully diluted
earnings per share calculation due to their antidilutive effect.
<PAGE>
Exhibit 12
E. I. DU PONT DE NEMOURS AND COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<TABLE>
<CAPTION>
Years Ended December 31
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net Income ............................................ $2,727 $ 566(a) $ 975(a) $1,403 $2,310
Provision for Income Taxes ............................ 1,655 392 836 1,415 1,844
Minority Interests in Earnings of Consolidated
Subsidiaries ........................................ 18 5 10 6 3
Adjustment for Companies Accounted for
by the Equity Method ................................ 18 41 6 35 29
Capitalized Interest .................................. (143) (194) (194) (197) (161)
Amortization of Capitalized Interest .................. 154 144 101 94 84
------ ------ ------ ------ ------
4,429 954 1,734 2,756 4,109
------ ------ ------ ------ ------
Fixed Charges:
Interest and Debt Expense - Borrowings(b)............ 559 594 643 752 773
Adjustment for Companies Accounted for by
the Equity Method - Interest and Debt Expense ..... 55 42 62 11 9
Capitalized Interest ................................ 143 194 194 197 161
Rental Expense Representative of Interest Factor .... 118 143 151 162 163
------ ------ ------ ------ ------
875 973 1,050 1,122 1,106
------ ------ ------ ------ ------
Total Adjusted Earnings Available for Payment of
Fixed Charges ....................................... $5,304 $1,927 $2,784 $3,878 $5,215
====== ====== ====== ====== ======
Number of Times Fixed Charges Are Earned .............. 6.1 2.0 2.7 3.5 4.7
====== ====== ====== ====== ======
</TABLE>
(a) Income Before Extraordinary Item and Transition Effect of Accounting
Changes.
(b) The weighted average interest rate on short term borrowings outstanding at
December 31, 1994 and 1993 was 5.85% and 4.91%, respectively. Average
dollar amount of borrowings outstanding for the years ending December 31,
1994, 1993, and 1992, was $9,140, $11,390, and $10,770 respectively, based
on month-end balance during this period, and the average interest rate for
such borrowings was 7.24%, 6.56%, and 7.37%, respectively.
<PAGE>
Exhibit 13
Last year was an excellent year for DuPont, in which the commitment of our
people and our focus on customers and productivity resulted in a striking
success. The transformation of our company during the last three years has taken
us from the position of an average performer to that of a very strong performer.
We believe we have developed the competitive strength in terms of cost and
customer focus that will allow us to compete effectively in the future, even
when economic conditions are less favorable than in 1994. At the beginning of
1994 we saw that the transformation initiated in 1991 was reaping benefits, and
the world economy finally seemed to be in our favor. We expected a good year; we
had a terrific year. Our people around the world deserve the
<PAGE>
credit for outstanding accomplishments in the marketplace and in our operations.
Long-term competitive advantage requires committed employees determined to build
healthy businesses. The results of 1994 demonstrate that commitment.
Financially, 1994 was a year of record earnings. Excluding non-recurring
items, earnings rose 65 percent compared to the prior year. Net income for 1994
was $2.7 billion or $4.00 per share compared to $555 million or $.81 per share
in 1993. Return on equity was 22.6 percent. Total 1994 sales were $39.3 billion,
up 6 percent over 1993. We ended 1994 in excellent shape financially, reducing
borrowings by $1.7 billion. We are in a good position to grow our businesses
globally.
While most of our businesses had a good year, some performances were
especially noteworthy. Several of our polymer-based businesses showed excellent
results, in particular automotive, engineering polymers, packaging and
industrial polymers and nonwovens. Agricultural products also performed
strongly. Our energy business did well in 1994 with Conoco performing
competitively opposite other companies in the petroleum industry. Overall, we
have a solid portfolio of businesses, and we are targeting to have all our
businesses earn our cost of capital (12 percent) by the end of 1995. Regionally,
a highlight was the performance of our European operations, which tripled
earnings on strong volume growth and a multi-year $500 million cost reduction
program that contributed cost savings of about $200 million in 1994.
Last year was also a good year for DuPont shareholders, with a total return
of 20 percent. However, we don't focus on performance in any one year, but
aspire to deliver superior results over time. As the chart* on page 3 indicates,
DuPont stock has outperformed the S&P 500 Stock Index during the past 10 years
with an average total return of 17.5 percent annually compared to 14.3 percent
for the S&P.
When you look at the strong results of the past year, it is readily
apparent that we have been on the right track with the changes we put in place.
The biggest changes of the past few years have been customer focus and cost
control. We had customers in mind when we eliminated the old, large department
organizations and reorganized the company into many separate strategic business
units. Many of our customers are telling us that they've seen in DuPont a
dramatic shift from an internal focus to a focus on being successful for and
with our customers.
* This information is not incorporated by reference in this Report.
2
<PAGE>
The second major change we have made is in reducing costs by changing
attitudes about how we spend money. In 1991, we started with a goal to reduce
our fixed cost base by $1 billion; we've exceeded that goal. After adjusting for
inflation, our 1994 fixed costs are more than $2.5 billion lower than in 1991.
Undeniably, cost reductions have made the last several years a painful time. But
these actions were vital to our competitive success. We now are focused on
providing only the products and services that customers will pay for, and more
and more customers see partnership with DuPont as a key element in their own
success. We are becoming the preferred supplier to many customers because we
have the products, innovation, technology and capable people long associated
with DuPont, and now we can also compete on price. Our improved cost position
also allows us to compete in many new growth markets around the world.
We will be able to take advantage of those new opportunities because of
another big accomplishment of the past three years--we stayed the course with
globalizing our businesses. Even as we reduced costs and restructured the
company, we continued to expand around the world. We intend to be the leading
chemical and energy company in every region where we operate, and at the moment
we are focused in a special way on Asia. We had a very successful start-up of a
new titanium dioxide plant in Taiwan, which complements other chemical plants
recently built in Singapore, Korea and four new operations in China. We are
evaluating at least 20 other new initiatives in Asia. Elsewhere, Conoco began
pumping oil in Russia in 1994, and our Polar Lights project there is becoming
the technological and environmental standard against which all other petroleum
development projects in ecologically sensitive areas will be judged.
If there was one disappointment during the year, it was in safety, where
our performance was well below DuPont's rigorous standards. Even though we still
lead industry in the most important statistical categories of safety
performance, we are determined to return to and exceed our previous standards.
During 1994, we adopted a new Safety, Health and Environment Commitment.
Historically, we have maintained that the only acceptable standard for injuries
and illnesses is zero, and this has served us well. Our new commitment extends
that same philosophy to environmental incidents, wastes and emissions.
We can adopt this commitment because of the confidence we have in our
technological strength. Science and technology are the
3
<PAGE>
historical bedrock of DuPont's competitive advantage and remain so. In recent
years, the attention surrounding change and transformation at the company has
sometimes eclipsed the ongoing achievements of our scientists and engineers.
They continue to provide discoveries that are renewing our product lines and
making our operations more efficient, more productive and more environmentally
sound.
Looking ahead to 1995, we will now seek to move from our present position
of a very strong company into that small group of companies that are universally
acknowledged as the best in the world because of their ability to sustain top
performance regardless of the business climate. A characteristic shared by such
companies is that every employee has a connection to customers and feels that
her or his personal growth and career development are closely tied to profitable
business and company growth. During 1994, I spoke to employees at plant or
business sites around the world on 30 occasions and had extensive informal
discussions throughout the organization. I am convinced that employee commitment
is vital to achieving higher levels of sustained performance. Most of our people
can and want to achieve more. I have challenged our managers to create work
environments and business practices that will enable DuPonters to do so. This
will help us to consolidate DuPont's distinctive strengths in world markets.
I am often asked what makes DuPont different from the many other major
companies that have also been going through cost reductions, re-engineering and
various types of change. I respond that DuPont starts with strengths others
don't have, and then we build on them. We have a broad range of outstanding
products, a superb reputation for market-driven innovation and outstanding
people. These all contribute to the power of the DuPont brand which benefits
from generations of credibility, trust and quality few others can match. We are
proud of our unique strengths and heritage, and we are enthusiastic about the
opportunities for profitable global growth and continued success that stretch
before us.
/s/ E. S. Woolard Jr.
E. S. Woolard, Jr., Chairman
March 1, 1995
4
<PAGE>
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.
Improving conditions in most economies around the world and strategic
reorganization helped increase the global presence and business success for
"Ti-Pure" titanium dioxide and specialty chemicals businesses.
Building on its position as the world's leading titanium dioxide producer,
DuPont began full production from its 60,000-ton plant in Kuan Yin, Taiwan, and
became a premier local supplier to Asia Pacific customers. The new plant brings
total DuPont capacity of the white pigment to 770,000 tons a year. Titanium
dioxide is used in paper, paint and plastic, and DuPont has long been a leading
supplier to these industries, offering products specific to customer needs, such
as "Ti-Pure" RPS rutile paper slurry supplied to the paper industry (see
above*).
DuPont Fluorochemicals has spent more than $500 million to develop and
commercialize alternatives to the ozone-depleting chlorofluorocarbons (CFCs) and
is now producing the broadest range of CFC alternatives with product families
including "Suva" refrigerants, "Formacel" foam expansion agents, "Dymel"
propellants and "Vertrel" cleaning agents. Early in 1995, DuPont commercialized
non-ozone-depleting "Suva" 9000 for applications that include home air
conditioners and heat pumps.
* This information is not incorporated by reference in this Report.
16
<PAGE>
Specialty Chemicals continued to undergo changes to become more globally
competitive. Employment dropped from 8,500 four years ago to 5,500 in 1994, and
$350 million in costs have been trimmed, in total, during the past three years.
While this group of businesses includes specialty chemicals and materials and
environmental services, more than 60 percent of sales comes from industrial
chemicals such as ammonia, cyanide and peroxygen products. Proprietary strengths
continue in chemical specialties such as "Teflon" fabric protectors for apparel
and home furnishings.
1994 Versus 1993
Sales of $3.8 billion were up 6 percent, reflecting higher sales volume, with
most of the gains attributable to markets outside the United States. While
prices were trending upward during the second half of this year, average selling
prices were slightly less than last year's.
After-tax operating income (ATOI) was $386 million, up 133 percent from last
year's results, which included $116 million in nonrecurring charges, principally
for asset write-downs and facility shutdowns. Excluding nonrecurring charges
from both years, earnings were $391 million, up 39 percent.
1993 Versus 1992
Sales were down 2 percent, primarily reflecting lower U.S. volume. Additional
sales volume from acquisitions outside the United States was offset by lower
prices, largely due to the currency effects of a stronger dollar. ATOI was 27
percent lower, due to higher charges for facility shutdowns and employee
separation costs. Excluding nonrecurring charges, ATOI was $282 million, up 2
percent, reflecting improvement in specialty chemicals and fluorochemicals,
partly offset by lower results from "Ti-Pure" titanium dioxide.
Chemicals*
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Sales ($ in Billions)
<S> <C>
1992 3.6
1993 3.5
1994 3.8
<CAPTION>
ATOI ($ in Millions)
<S> <C>
1992 226
1993 166
1994 386
</TABLE>
*See Industry Segment Information (Note 30 to Financial Statements.)
Outlook
Solid growth from global expansion in 1994 is expected to continue in 1995. The
European and Asia Pacific regions remain particularly strong. Increased demand
for "Ti-Pure" titanium dioxide as well as gains in market share should further
improve overall results. The pricing environment is also expected to improve,
and competitive profit margins will be maintained as raw material costs
increase. By year-end 1994 DuPont had ceased CFC production for sale in
developed countries except the United States. The U.S. government has requested
that DuPont continue production of CFCs through 1995 to service existing
refrigeration and air conditioning equipment. CFC production in 1995 will be
based on customer purchase commitments. While the consumer transition to CFC
alternatives has been slower than anticipated, DuPont expects to maintain its
key role in this process and is well-positioned to be the premier supplier of
CFC alternatives.
17
<PAGE>
A diversified mix of specialty fibers is produced to serve end uses ranging from
protective apparel, active sportswear and packaging to 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 businesses continued to focus on quality and service to increase market
share, participating in new high-growth markets worldwide, and developing high-
technology fiber and resin products to replace traditional materials.
Nonwovens grew revenues 15 percent in 1994. Growth performance was broad based,
with contributions coming from all market areas and regions. Nonwovens'
portfolio of flexible sheet structure technologies--"Tyvek", "Sontara", "Typar"-
- -serves diverse markets in packaging (see above*), construction, medical and
safety apparel, reinforcing backings and absorbents.
New product development milestones include expanding the use of post-consumer
recycle (PCR) in "Tyvek" from secure envelopes to protective apparel. This
technology advancement was recognized in the United States by the National
Recycle Coalition's Buy Recycled Business Alliance award for most innovative new
product. The "Sontara" business introduced a new family of antimicrobial wiping
cloths and commercialized an insulating windbarrier for outdoor apparel.
Concrete formliners, derived from "Typar" technology, are used in building water
spillways, sewers and bridge beams in Europe and North America.
Helped by high worldwide brand recognition, "Lycra" spandex continues to lead
the thrust into established and new markets. The "Lycra" strategy is to offer
the highest-value product, supported by strong research and development,
marketing and manufacturing in all growth areas. DuPont and China World Best
Development agreed to form a joint
* This information is not incorporated by reference in this Report.
18
<PAGE>
venture to manufacture and market "Lycra" in China. There is substantial
commitment to growth in other parts of Asia, supported by world-scale
manufacturing facilities in Japan and Singapore.
The nylon business continues to meet customer needs through improved
productivity and efficiency. Re-engineering of all facets of nylon over the next
three years will improve competitiveness, principally in the United Kingdom,
Germany and the Netherlands. DuPont and Fibra, a member of the Vicunha group in
Brazil, initiated a joint venture to serve the South American textile nylon
market. A joint venture with Far Eastern Textile Ltd. has been established to
construct a nylon 6,6 plant in Taiwan and to market textile nylon in Taiwan and
China. And as part of its strategy to serve an expanding global tire cord
market, DuPont and Ballapur Industries Ltd. formed a venture to build the first
nylon 6,6 plant in India.
The "Dacron" polyester business completed an aggressive modernization program in
1994. This included start-up of two new filament yarn lines in Kinston, North
Carolina, which quickly established new standards for quality and uniformity.
The Cape Fear, North Carolina, plant completed upgrading its polyester
ingredients operation to lower cost and improve quality. The additional capacity
comes at a time of tight supply in the polyester market.
DuPont Advanced Fibers Systems' "Nomex" heat-resistant and "Kevlar" high-
strength aramid fibers businesses benefited from increased demand in the
industrial economies. The new "Nomex" fiber plant in Asturias, Spain, became
fully commercial. DuPont and Teijin Ltd. of Japan established joint ventures to
produce and sell "Nomex" aramid papers in Asia Pacific.
1994 Versus 1993
Fibers segment sales of $6.8 billion were up 9 percent, principally reflecting
the acquisition of ICI's nylon business.
Fibers*
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Sales ($ in Billions)
<S> <C>
1992 6.1
1993 6.2
1994 6.8
<CAPTION>
ATOI ($ in Millions)
<S> <C>
1992 409
1993 169
1994 701
</TABLE>
*See Industry Segment Information (Note 30 to Financial Statements.)
Excluding this acquisition, sales were up 5 percent, reflecting 6 percent higher
volume, principally from outside the United States, partly offset by 1 percent
lower average selling prices.
Fibers segment after-tax operating income (ATOI) of $701 million was 315 percent
above the $169 million earned in 1993. Excluding nonrecurring items, earnings
were $676 million versus $425 million mainly due to improved results for nylon,
nonwovens and aramids.
1993 Versus 1992
Sales, including the additional sales from the ICI nylon business, were 2
percent above the prior year. Worldwide sales volume was up 5 percent, while
prices were lower largely due to the exchange effects of a stronger dollar.
ATOI was down $240 million from the prior year principally due to higher
restructuring charges. Excluding nonrecurring items from both years, earnings
were $425 million, down 11 percent from 1992, reflecting lower results for
"Lycra", "Dacron" and nylon, particularly in Europe.
Outlook
DuPont will continue to reduce costs and enter joint ventures to better compete
in global markets. Fibers businesses will benefit from superior value products,
aggressive marketing and strong brand recognition.
19
<PAGE>
Engineering polymers, elastomers, fluoropolymers, ethylene polymers, finishes
and performance films are produced to serve industries including packaging,
construction, chemical processing, electrical, paper, textiles and
transportation. This group also includes the automotive businesses, which are
engaged in manufacturing and marketing more than 100 DuPont product lines used
by the automotive industry.
Polymers had a very successful year with record results and continues on track
with its strategy of focusing on core strengths and customer needs. Polymers
businesses achieved strong leadership positions in high-growth end-use markets
such as automotive, electrical components and packaging.
DuPont Packaging & Industrial Polymers continued growth through technological
innovation and partnering with customers (see above*).
For DuPont Engineering Polymers, several factors contributed to excellent
results including cost reduction, faster-than-expected economic recovery in
Europe, increased automobile manufacturing in the Americas and new products to
meet customer needs for higher performance materials. New capacity for nylon
6,6, polybutylene terephthalate (PBT) polyester and liquid crystal polymers
supports customers' growth objectives around the globe. A new $100 million plant
in Singapore will begin producing "Zytel" nylon 6,6 resins in mid-1995. When
production begins in Singapore, DuPont will become the first nylon supplier to
manufacture and compound nylon 6,6 resins in all three major regions of the
world.
The resurgence of the U.S. auto industry was the key factor in the success of
the Polymers businesses linked to that industry. DuPont Automotive revenue and
earnings increased for the third straight year. Commercial sales began from the
new "Butacite" polyvinyl butyral plant, located in Korea, and purchase was
completed of ICI's 50 percent share of IDAC, an automotive coatings joint
venture. New "Spectramaster"
* This information is not incorporated by reference in this Report.
20
<PAGE>
and "Chromavision" color systems expanded the automotive refinishes offerings.
"Bexloy" W automotive engineering resin won the prestigious Society of Plastics
Engineers Award for the Dodge and Plymouth "Neon" fascia in the automotive
exterior body category. "Sentryglas" composites, made with "Butacite" sheeting,
are the first and only glass systems that meet building codes for minimizing
hurricane damage.
Early in 1995, DuPont and Dow Chemical signed a letter of intent to explore
forming a joint enterprise for the discovery, development, production and sale
of thermoset and thermoplastic elastomer products used primarily in the
automotive, general rubber, wire and cable, construction, molded goods, durable
adhesives and oil and polymer modification markets.
DuPont is planning a $150 million global expansion program to increase its
fluoropolymer resin capacity for copolymer resins by 75 percent. These increases
are in response to rapidly growing demands, particularly in the U.S. wire and
cable market. Plans for completion of capacity increases in late 1997 involve
products sold under the company's "Teflon" trademark. Demand for high-
performance Category 5 wire insulation, which is typically specified in local
area network (LAN) installations in U.S. markets, is driving a substantial
portion of the growth. "Teflon" offers superior electrical properties for use in
LAN insulation.
1994 Versus 1993
Segment sales of $6.3 billion increased 8 percent from 1993 and, after adjusting
for businesses divested in 1993, were up 12 percent. This results from 13
percent higher sales volume, with increases in all regions, partly offset by 1
percent lower selling prices.
After-tax operating income (ATOI) was $717 million, up 305 percent. This
reflects significantly improved results for engineering polymers, packaging and
industrial polymers, elastomers, fluoroproducts and automotive products.
Excluding nonrecurring items from both years, earnings were $706 million, up 108
percent from $340 million
Polymers*
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Sales ($ in Billions)
<S> <C>
1992 5.9
1993 5.9
1994 6.3
<CAPTION>
ATOI ($ in Millions)
<S> <C>
1992 318
1993 177
1994 717
</TABLE>
* See Industry Segment Information (Note 30 to Financial Statements.)
earned in 1993. This reflects higher sales volume and lower costs among most
businesses, with earnings from the European region nearly four times greater
than in the prior year.
1993 Versus 1992
Sales increased less than 1 percent, as a 5 percent worldwide volume increase
was nearly offset by lower prices, principally resulting from currency exchange
effects of the stronger dollar. ATOI was down 44 percent, reflecting higher
restructuring costs. Excluding nonrecurring items, 1993 ATOI was $340 million,
even with 1992. This reflected earnings gains in the United States, principally
from automotive businesses, offset by lower earnings in Europe and Canada.
Outlook
Future success for Polymers will depend on continued growth, improved
productivity and reduction of fixed costs. Profitability has improved over the
last three years and earnings have grown fivefold since 1991, while revenue
increased 14 percent in the same period. The primary growth region will be Asia
Pacific, and Polymers businesses are well-positioned to be major players in
that growth. It is expected that North American automobile markets will grow at
a slower rate than experienced over the last few years, making it critical to
achieve success in regions outside the United States.
21
<PAGE>
Petroleum operations are carried out through Conoco, and range from exploring
for crude oil and natural gas to marketing 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. These are sold to
customers primarily in the United States and Europe, and more recently in the
Asia Pacific region. Downstream 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.
Within an environment that is highly competitive, Conoco is focusing on three
basic strategies: maintaining healthy core businesses while reducing operating
costs; selectively expanding its existing businesses; and developing new
businesses where it sees opportunities for profitable growth. More than ever
before, it is pursuing these strategies through productive linkages with
partners, customers and suppliers.
During 1994, Conoco further directed its existing operations to concentrate on
core geographic areas where it can maintain a competitive cost position. In
exploration and production operations, an aggressive ongoing portfolio
optimization program resulted in the sale or exchange of interests in a number
of nonstrategic producing properties worldwide, including the declining Hutton
and Murchison oil fields and the Anglia gas field in the North Sea. In return,
Conoco increased access to future production in highly desirable oil and gas
producing areas. Significant acquisitions included additional interests in two
giant North Sea fields--the undeveloped Britannia gas and condensate field and
the Anglo-Norwegian Statfjord field--and in the Elk Basin oil field in Wyoming.
Concentrating activities within strategic core areas also helped Conoco lower
its upstream overhead and operating costs more than 7 percent during the year.
Since 1991, it has
22
<PAGE>
increased upstream earnings per barrel by 14 percent, despite a $4.00-per-barrel
drop in average crude oil prices during the period.
New production also contributed to the company's earnings. Offshore Indonesia,
the third platform in the Belida development came onstream on schedule and under
budget in August. In the U.K. North Sea, the partner-operated Alba oil field and
Galleon gas field both came onstream during the year.
Overall, refining operations processed record volumes of feedstock while
responding to increasingly stringent environmental requirements. New products,
including reformulated gasoline, were introduced to meet U.S. Clean Air Act
Amendment provisions effective January 1995. In U.S. marketing, focused
strategies enabled Conoco to increase higher-margin branded sales 9 percent
during 1994--triple the industry's average volume growth.
Conoco also took important steps to expand its businesses. During the year it
announced a joint venture with Pennzoil to produce high-quality base oils, the
feedstock from which finished lubricating oils are made. Construction is under
way adjacent to Conoco's Lake Charles, Louisiana, refinery on a $500 million
lube oil hydrocracker that will enable the company to process low-cost sour
crude into a base oil of higher quality than that obtained through traditional
solvent extraction processes. When the venture begins production in 1997, it is
projected to be the lowest-cost manufacturer of base oils in the United States.
In western Europe, Conoco continues to expand its highly efficient retail
operations, which include over 2,400 stations in 13 countries. During 1994
Conoco partnered with Saras, an Italian refining company, to open the first
"Jet" stations in Spain. Plans are to build a network of 100 stations across
northern Spain by the year 2000. In Germany, Conoco has extended operations into
the eastern part of the country with 43 "Jet" stations, predominantly high-
quality, high-volume sites that offer a rapid payback on the original
investment. We are also building new markets in the Czech Republic, Poland and
Hungary. At the end of 1994, the company had a total of 32 retail stations in
these three countries, and sales volumes are expected to double during 1995.
Conoco is currently negotiating to acquire refining capacity in the Czech
Republic.
As Conoco strengthened its position in existing markets, the company invested
for growth in additional areas of the world. In Russia, the joint venture with
Arkhangelskgeologia celebrated first oil in August from the Ardalin field inside
the Arctic Circle. This history-making event, the first new field development by
a Russian-Western partnership, has opened opportunities for further investment
in Russia's oil-rich northern areas.
Off the coast of Norway, construction of the massive Heidrun oil platform is
nearing completion. This $3.5 billion project, of which the Norwegian state oil
company is the majority interest holder, is a monumental technological
undertaking, involving the development by Conoco of the world's first tension
leg platform constructed from concrete. Operations are on schedule for first oil
in August 1995. At its peak, the Heidrun field will produce more than 200,000
barrels of oil per day.
Also in 1995, production will begin from the Ganymede and Callisto gas fields
offshore the United Kingdom.
Conoco has significantly increased its emphasis on the growing natural gas
market in both Europe and North America. In the North Sea, it raised its
interest in the giant Britannia gas field to more than 42 percent. Britannia,
with estimated recoverable reserves of 2.5 trillion cubic feet of natural gas
and 140 million barrels of condensate and natural gas liquids, is the largest
known undeveloped field in the U.K. North Sea. In December, the U.K. government
granted approval
23
<PAGE>
for joint development of the Britannia field to Conoco and Chevron in a unique
partnership agreement (see page 22*). Production is scheduled to begin in 1998.
Also in December, Conoco signed an agreement to participate in Interconnector, a
natural gas pipeline linking the U.K. market with continental Europe. When it is
completed, this pipeline will allow Conoco to export gas produced offshore the
United Kingdom to continental European gas markets, creating attractive
opportunities for further growth.
In North America, 80 percent of Conoco's exploratory wells now have natural gas
objectives. During 1994, successful discoveries were made in the Val Verde Basin
of West Texas, the San Juan Basin of New Mexico and the Basing field in Alberta,
Canada. Conoco also obtained interests in gas properties in Wyoming's Green
River Basin.
The company has also been highly successful in identifying new natural gas
reserves associated with coal fields. Conoco is one of the few companies with
the expertise and resources to produce coalbed methane on a global basis.
Building on experience in the United States, where Conoco has partnered with the
company's coal joint venture, CONSOL Energy Inc., to extract coalbed methane in
the Appalachian Mountains, in 1994 the company began exploration in France,
Germany, and Australia.
Downstream, Conoco is rapidly building a presence in the fast-growing Asia
Pacific market. It has opened 27 retail outlets in Thailand in less than two
years, and plans to continue expanding at a rate of up to 25 new stations a
year.
Over the next 10 years, Conoco expects the Asia Pacific market will become a
major region for its downstream business. To support this growth, in November
Conoco signed an agreement for a joint venture with Petronas, the Malaysian
national oil company, to construct and operate a 100,000-barrel-per-day high-
conversion refinery, which will be complete in late 1997.
1994 Versus 1993
Sales of $16.8 billion for the year were up 7 percent compared to 1993 due to
increased U.S. refinery production and higher excise taxes, which are included
in revenues. Lower worldwide crude oil prices and natural gas prices in the
United States held down this increase. Earnings of $680 million were down 16
percent from $812 million in the prior year. 1994 earnings included a net charge
of $26 million as a result of a $127 million international tax benefit offset by
a $95 million write-down of North Sea oil properties to be sold, and $58 million
for employee separation costs. 1993 earnings included a $230 million benefit due
to tax law changes, partly offset by property dispositions and restructuring
charges of $161 million. After adjusting for these nonrecurring items, earnings
were $706 million in 1994, down 5 percent from $743 million in 1993.
Upstream earnings were $483 million, down $26 million or 5 percent from $509
million in 1993. After adjusting for nonrecurring items, 1994 earnings were a
record $471 million, up 7 percent from the previous year, despite lower
worldwide crude oil prices. Lower costs, net benefits associated with portfolio
restructuring programs and higher natural gas liquid margins all contributed to
these record results.
Worldwide crude oil, condensate and natural gas liquids production was 436,000
barrels per day for the year compared with 434,000 barrels per day in 1993. The
net realized crude oil price averaged $15.10 per barrel, down 5 percent compared
with $15.96 in 1993. Worldwide natural
* This information is not incorporated by reference in this Report.
24
<PAGE>
gas production for the year was 1,347 million cubic feet per day, up 3 percent
from 1993. Natural gas prices averaged $2.11 per million cubic feet in 1994,
down 3 percent from the prior year.
Downstream earnings were $197 million compared with $303 million in 1993.
Excluding nonrecurring items, 1994 earnings of $235 million were $67 million or
22 percent below 1993, primarily due to the fourth quarter's performance, which
was $84 million below last year. The weaker fourth quarter results were mainly
due to low downstream margins in the United States and Europe and downtime at
our three largest refineries related to maintenance programs in the United
Kingdom and Oklahoma and a major accident in Lake Charles, Louisiana. All
producing units at these refineries were fully operational by year end. Despite
the equipment downtime, U.S. refinery production was up from the prior year.
Total feedstocks processed increased 3 percent in 1994 to 696,000 barrels per
day, while worldwide product sales of 931,000 barrels per day were up 6 percent
from the prior year.
1993 Versus 1992
Sales were down slightly from 1992 while earnings were up 141 percent on lower
costs, higher production volumes and a lower overall effective tax rate. 1993
operating
Petroleum*
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Sales ($ in Billions)
<S> <C>
1992 16.1
1993 15.8
1994 16.8
<CAPTION>
ATOI ($ in Millions)
<S> <C>
1992 337
1993 812
1994 680
</TABLE>
*See Industry Segment Information (Note 30 to Financial Statements.)
income included a net benefit of $230 million due to tax law changes partly
offset by property dispositions and restructuring charges of $161 million, while
1992 income included a restructuring charge of $96 million. Excluding these
nonrecurring items, 1993 earnings of $743 million were up 72 percent from $433
million in the prior year.
Outlook
Worldwide demand for energy is projected to grow slowly over the near term. This
will limit upward movement in prices and margins, although both are expected to
remain subject to considerable volatility. Conoco's focus on improving the
profitability of its core businesses while investing in strategic areas for
growth should position the company well for continued earnings improvement in
this highly competitive environment.
25
<PAGE>
Agricultural Products
Sales growth continued across all regions, particularly in the United States,
where use of "Accent" post-emergent corn herbicide gained broad acceptance. In
Europe, "Titus" corn herbicide and "Classic" herbicide for soybeans were also
widely used. Late in the year, U.S. registration for the post-emergent corn
herbicide "Basis" was received. "Basis" is yet another product in a wide array
of high-value new products which are developed for specific agricultural
applications. Innovation in packaging also continues with the objective of
reducing exposure to the farmer or applicator. There is an ongoing effort to
improve the convenience, safety and environmental capability of products. Water
soluble packets made of new polyvinyl alcohol film, a package that dissolves
completely in about a minute when placed in water, reduces worker exposures and
simplifies disposal.
Electronic Materials
Electronic Materials performance improved with market share gains and increased
demand for products. Both sales and earnings were at record levels. DuPont was
one of only two U.S. companies selected to participate in the NHK (Japan
Broadcasting Co.) consortium, which will design and develop high-definition
television. Commercial introduction of this TV will coincide with the 1998
Winter Olympics scheduled in Nagano, Japan. DuPont will partner with Shanghai
Precision Photomask Corporation Ltd. in a
26
<PAGE>
joint venture to manufacture advanced photomasks that are an essential element
in the production of semi-conductor devices used in high-technology electronic
equipment. The new venture will contribute to the rapid growth of China's
electronics industry. The new plant is expected to begin operations in 1996. In
printed circuit materials, "Riston" photoresists are in record demand. Also,
"Pyralux" PC, a one-of-a-kind photo imagable coverlay for flexible circuit board
manufacture, was introduced.
Films
Films performance was strong in all major markets and regions. In revenue
growth, Asia Pacific was more than 20 percent better. All businesses are driven
by excellent customer satisfaction results. Fifteen percent of revenue was from
new products introduced over the past three years. Late in the year the "Mylar"
polyester film line in Circleville, Ohio, was converted to a new product
development facility to accelerate growth opportunities in polyester films.
Capacity utilization was high for "Mylar" and PET Resins and Chemicals. Teijin-
DuPont Films, a 50/50 joint venture, successfully started up polyester polymer
and audio/video film facilities in the United States.
Medical Products
Medical Products focused on programs to maximize sales in a soft worldwide
health care market, while continuing to reduce costs. We continued to expand our
share among U.S. hospital groups by leveraging a unique combination of DuPont
resources and core competencies to help customers reduce total operating costs.
Product introductions included the new "LINX" remote review diagnostic imaging
system, the "aca" Star and the "Dimension" XL blood chemistry analyzers, and a
variety of new centrifuge and detection products for life science research. The
DuPont Merck Pharmaceutical Company experienced another year of significant
earnings growth and recently received FDA clearance to market "ReVia" for the
treatment of alcoholism (see page 26*), and "Neurolite" for brain imaging.
Printing and Publishing
Printing and Publishing continued to focus on manufacturing and product
revitalization while continuing to drive for sales growth and reduced cost.
Significant sales gains were recorded in the proofing and packaging product
lines and in particular the Latin American and Asia Pacific markets. Graphic
arts operations benefited from consolidation at Neu Isenburg, Germany, and
world-class manufacturing facilities were completed at Leeds, England, for
offset plates and at Towanda, Pennsylvania, for proofing products. Key products
introduced were new "Crosfield" workstations for electronic imaging,
"Waterproof" proofing systems and "Silverlith" direct-to-plate systems.
Advertising, direct marketing and promotional materials, which are the lifeblood
of the printing and publishing industry, were cut substantially during the
economic downturn. Now with economic recovery, printing and publishing is seeing
an upturn in its business.
CONSOL
CONSOL Energy Inc., a coal operations joint venture owned 50 percent by DuPont,
showed substantially improved results in 1994. Although high-sulfur coal
continued to be depressed, overall coal demand was strong following strikes by
the United Mine Workers which affected results in much of 1993. Improved demand
and the effects of a full year of operation of mines acquired from Island Creek
Coal Inc. resulted in record production and sales for coal operations.
1994 Versus 1993
Sales of $5.7 billion were 5 percent over 1993 after adjusting for the absence
of the sporting goods business which was sold last year. Sales volume was up 7
percent, while average prices were down about 2 percent. Sales were up across
all regions with the largest percentage gain coming from South America, where
sales improved 27 percent. After-tax operating income (ATOI) was $623 million as
compared with a loss of $407 million in 1993.
* This information is not incorporated by reference in this Report.
27
<PAGE>
1993 results included significant nonrecurring charges principally for
restructuring costs which were partly offset by gains from the sale of the
Remington Arms Company. Costs were incurred for reorganization of plant
operations, write-off of intangibles in printing and publishing and additional
charges taken for product liability and legal expenses related to the "Benlate"
DF 50 fungicide recall. Excluding nonrecurring items from both years, ATOI was
$676 million versus $238 million earned last year. This reflects higher sales
and lower costs in agricultural products, better pharmaceutical results and
significantly higher coal earnings compared to last year, which were adversely
affected by strikes.
1993 Versus 1992
Sales were 7 percent lower, reflecting the absence of sales from the divested
connectors business. Selling prices were 2 percent lower, reflecting higher
prices in the United States more than offset by lower prices in other regions,
reflecting the stronger dollar. Excluding nonrecurring items and the coal
results from both years, earnings were up 146 percent attributable to increases
in agricultural products earnings and better results from films and printing and
publishing.
Diversified Businesses*
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Sales ($ in Billions)
<S> <C>
1992 6.2
1993 5.7
1994 5.7
<CAPTION>
ATOI ($ in Millions)
<S> <C>
1992 (49)
1993 (407)
1994 623
</TABLE>
*See Industry Segment Information (Note 30 to Financial Statements).
Outlook
The outlook for Diversified Businesses will continue to largely depend on the
success of agricultural products, which itself depends to some extent on weather
and other variable conditions around the world. Agricultural Products is
positioned to serve growing market needs with a broad array of products which
are becoming increasingly widely accepted. Other businesses in this segment
continue with plans to increase market share and improve productivity while
paying attention to holding the line on cost increases. The pricing environment
continues to be more favorable and pricing increases are expected to be a
positive factor in results for 1995.
28
<PAGE>
__ Financial Information
30 Management's Discussion and Analysis
37 Responsibilities for Financial Reporting
38 Report of Independent Accountants
Financial Statements:
39 Consolidated Income Statement
40 Consolidated Balance Sheet
41 Consolidated Statement of Stockholders' Equity
42 Consolidated Statement of Cash Flows
43 Notes to Financial Statements
64 Supplemental Petroleum Data
71 Quarterly Financial Data
72 Consolidated Geographic Data
73 Five-Year Financial Review
29
<PAGE>
Management's Discussion and Analysis
This review and discussion of financial performance should be read in
conjunction with the letter to stockholders (pages 1-4),business reviews (pages
16-28) and the consolidated financial statements (pages 39-63).
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
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 $1.98
per share, earned in 1992. The improvement principally resulted from higher
petroleum segment earnings from lower costs and increased production outside the
United States, partly offset by lower coal results, which were impaired by
strikes.
<TABLE>
<CAPTION>
Taxes ($ in millions)
- --------------------------------------------------------------------------------
1994 1993 1992
---------------------------------------
<S> <C> <C> <C>
Income tax expense $1,655 $392 $836
Effective income tax rate (EITR) 37.8% 40.9% 46.2%
</TABLE>
================================================================================
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.
30
<PAGE>
Management's Discussion and Analysis
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.
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" spun-bonded
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.
Capital expenditures are expected to increase to $3.6 billion in 1995, to
take advantage of growth opportunities.
31
<PAGE>
Management's Discussion and Analysis
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
result, the debt ratio* 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 securties, 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.
- -------------------------
*Total short- and long-term borrowings and capital lease obligations divided by
the sum of these amounts plus stockholders' equity and minority interests in
consolidated subsidiaries.
32
<PAGE>
Management's Discussion and Analysis
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 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.
33
<PAGE>
Management's Discussion and Analysis
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 $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 (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 (RCRA) both require that the company undertake certain
remediation activities at sites where the company conducts or once conducted
operations or
34
<PAGE>
Management's Discussion and Analysis
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 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 (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.
35
<PAGE>
Management's Discussion and Analysis
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.
36
<PAGE>
Responsibilities for Financial Reporting
Management is responsible for the consolidated financial statements and the
other financial information contained in this Annual Report. The financial
statements have been prepared in accordance with generally accepted accounting
principles considered by management to present fairly the company's financial
position, results of operations and cash flows. The financial statements include
some amounts that are based on management's best estimates and judgments.
The company's system of internal controls is designed to provide reasonable
assurance as to the protection of assets against loss from unauthorized use or
disposition, and the reliability of financial records for preparing financial
statements and maintaining accountability for assets. The company's business
ethics policy is the cornerstone of our internal control system. This policy
sets forth management's commitment to conduct business worldwide with the
highest ethical standards and in conformity with applicable laws. The business
ethics policy also requires that the documents supporting all transactions
clearly describe their true nature and that all transactions be properly
reported and classified in the financial records. The system is monitored by an
extensive program of internal audit, and management believes that the system of
internal accounting controls at December 31, 1994 meets the objectives noted
above.
The financial statements have been audited by the company's independent
accountants, Price Waterhouse LLP. The purpose of their audit is to
independently affirm the fairness of management's reporting of financial
position, results of operations and cash flows. To express the opinion set forth
in their report, they study and evaluate the internal accounting controls to the
extent they deem necessary. Their report is shown on page 38. The adequacy of
the company's internal accounting controls and the accounting principles
employed in financial reporting are under the general oversight of the Audit
Committee of the Board of Directors. This Committee also has responsibility for
employing the independent accountants, subject to stockholder ratification. No
member of this Committee may be an officer or employee of the company or any
subsidiary or affiliated company. The independent accountants and the internal
auditors have direct access to the Audit Committee, and they meet with the
Committee from time to time, with and without management present, to discuss
accounting, auditing and financial reporting matters.
/s/ Edgar S. Woolard, Jr.
Edgar S. Woolard, Jr.
Chairman of the Board
and Chief Executive Officer
/s/ Charles L. Henry
Charles L. Henry
Senior Vice President
DuPont Finance
and Chief Financial Officer
February 16, 1995
37
<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 39-63
of this Annual Report present fairly, in all material respects, the financial
position of E. I. du Pont de Nemours and Company and its subsidiaries at
December 31, 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.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
February 16, 1995
38
<PAGE>
Financial Statements
E. I. du Pont de Nemours and Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
Consolidated Income Statement
(Dollars in millions, except per share)
- ----------------------------------------------------------------------------------------------------------------------------
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 pages 43-63 for Notes to Financial Statements.
39
<PAGE>
Financial Statements
E. I. du Pont de Nemours and Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
Consolidated Balance Sheet
(Dollars in millions, except per share)
- ------------------------------------------------------------------------------------------------------------------------------------
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 41)
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 pages 43-63 for Notes to Financial Statements.
40
<PAGE>
Financial Statements
E. I. du Pont de Nemours and Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
Consolidated Statement of Stockholders' Equity
(Dollars in millions, except per share)
- ---------------------------------------------------------------------------------------------------------------------
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 pages 43-63 for Notes to Financial Statements.
41
<PAGE>
Financial Statements
E. I. du Pont de Nemours and Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
(Dollars in millions)
- ---------------------------------------------------------------------------------------------------------------------
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 pages 43-63 for Notes to Financial Statements.
42
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
1. Summary of Significant Accounting Policies
DuPont observes the generally accepted accounting principles described below.
These, together with the other notes that follow, are an integral part of the
consolidated financial statements.
Accounting Changes
In 1992, DuPont adopted Statement of Financial Accounting Standards (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" and SFAS No. 109, "Accounting for Income Taxes." The company
recorded charges to net income of $3,788 ($5.63 per share) and $1,045 ($1.55
per share), respectively, as of January 1, 1992 for the effects of transition
to these two new standards. See also Notes 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.
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.
43
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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).
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.
44
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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>
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 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
45
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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.
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.")
46
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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:
<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>
47
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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).
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.
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.
48
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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>
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.
49
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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>
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.
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.
50
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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.
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.
51
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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:
<TABLE>
<S> <C>
1996--$908 1998--$407
1997--$798 1999--$443
</TABLE>
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.
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.
52
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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:
<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 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.
53
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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.
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>
54
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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.
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 period $ 380 $ 301 $ 283
Interest cost on projected
benefit obligation 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.
55
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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).
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)
Net Monetary Foreign Currency Net
Asset/(Liability) ------------------------- After-Tax
Currency Exposure Pretax After-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>
56
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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.
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
57
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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.
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>
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.
58
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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 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.
59
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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.
60
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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 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 Segments 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 Income/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 Segments 475 14 23 428 1 -
----------------------------------------------------------------------------
Total $ 4,021 $ 6,202 $ 5,892 $16,199 $ 5,725 $37,098
----------------------------------------------------------------------------
Operating Profit $ 237 $ 258 $ 255 $ 1,195 $ (495) $ 1,450
Provision for Income Taxes (99) (144) (108) (428) 162 (617)
Equity in Earnings of Affiliates 28 55 30 45 (74) 84
----------------------------------------------------------------------------
After-Tax Operating Income/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/
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
61
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Diversified
Chemicals Fibers Polymers Petroleum Businesses Consolidated
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1992
Sales to Unaffiliated Customers/1/ $ 3,617 $ 6,074 $ 5,856 $16,065/2/ $ 6,187 $37,799
Transfers Between Segments 187 6 51 414 5 -
----------------------------------------------------------------------------
Total $ 3,804 $ 6,080 $ 5,907 $16,479 $ 6,192 $37,799
----------------------------------------------------------------------------
Operating Profit $ 324 $ 591 $ 471 $ 1,008 $ (182) $ 2,212
Provision for Income Taxes (128) (246) (185) (707) 101 (1,165)
Equity in Earnings of Affiliates 30 64 32 36 32 194
----------------------------------------------------------------------------
After-Tax Operating Income/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.
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 Income $3,107 $ 917 $1,241
Interest and Other Corporate
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 on page 39.
62
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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.
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.
14 Includes charge of $134 associated with "Benlate" DF 50 fungicide recall.
See segment discussions on pages 16-28 for a description of each industry
segment. Products are transferred between segments on a basis intended to
reflect as nearly as practicable the "market value" of the products.
63
<PAGE>
Supplemental Petroleum Data
(Dollars in millions)
Oil and Gas Producing Activities
The disclosures on pages 64-70 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
----------------------------- ----------------------------- -----------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
-----------------------------------------------------------------------------------------------
<S> <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
Transfers to other
company operations 733 930 1,003 401 558 583 332 372 407
Exploration, including
dry hole costs (323) (329) (347) (130) (107) (82) (110) (109) (165)
Production (786) (868) (1,039) (327) (424) (492) (377) (363) (473)
Depreciation, depletion,
amortization and
valuation provisions (957) (1,140) (786) (334) (591)/2/ (433) (533)/3/ (468) (296)
Other/4/ 67 (20) (55) 38 (17) (8) 25 9 (28)
Income taxes (463) (281) (626) 7 84 2 (122)/5/ (16)/6/ (219)
-----------------------------------------------------------------------------------------------
Total consolidated
companies 467 469 140 207 41 105 230 425 100
-----------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------
Other Regions/1/
-----------------------------
1994 1993 1992
-----------------------------
<S> <C> <C> <C>
Consolidated Companies
Revenues:
Sales to unaffiliated customers $ 629 $ 639 $ 581
Transfers to other
company operations - - 13
Exploration, including
dry hole costs (83) (113) (100)
Production (82) (81) (74)
Depreciation, depletion,
amortization and
valuation provisions (90) (81) (57)
Other/4/ 4 (12) (19)
Income taxes (348) (349) (409)
-----------------------------
Total consolidated
companies 30 3 (65)
-----------------------------
Equity Affiliates
Results of operations
of equity affiliates - - -
-----------------------------
Total $ 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.
64
<PAGE>
Supplemental Petroleum Data
(Dollars in millions)
Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development
Activities/1/
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Total Worldwide United States Europe
----------------------------- ----------------------------- -----------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated Companies
Property acquisitions:
Proved/3/ $ 139 $ 111 $ 16 $ 14 $ 93 $ 16 $ 115 $ 5 $ -
Unproved 36 11 23 18 8 7 5 - -
Exploration 403 352 432 151 83 99 136 158 221
Development 713 864 806 174 195 206 466 567 498
-----------------------------------------------------------------------------------------------
Total consolidated companies 1,291 1,338 1,277 357 379 328 722 730 719
-----------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------
Other Regions/2/
-----------------------------
1994 1993 1992
-----------------------------
<S> <C> <C> <C>
Consolidated Companies
Property acquisitions:
Proved/3/ $ 10 $ 13 $ -
Unproved 13 3 16
Exploration 116 111 112
Development 73 102 102
-----------------------------
Total consolidated companies 212 229 230
-----------------------------
Equity Affiliates
Property acquisitions:
Proved - - -
Development - - -
-----------------------------
Total equity affiliates - - -
-----------------------------
Total $ 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
----------------------------- ----------------------------- -----------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
-----------------------------------------------------------------------------------------------
<S> <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
Unproved properties 790 701 1,152 291 321 471 323 218 461
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
Unproved properties 185 261 347 110 162 235 6 13 13
-----------------------------------------------------------------------------------------------
Total net costs of
consolidated companies 5,489 5,636 5,990 1,914 2,070 2,579 3,145 3,183 3,011
-----------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------
Other Regions*
-----------------------------
1994 1993 1992
-----------------------------
<S> <C> <C> <C>
Consolidated Companies
Gross costs:
Proved properties $ 1,301 $ 1,147 $ 1,037
Unproved properties 176 162 220
Accumulated depreciation,
depletion, amortization
and valuation allowances:
Proved properties 978 840 758
Unproved properties 69 86 99
-----------------------------
Total net costs of
consolidated companies 430 383 400
-----------------------------
Equity Affiliates
Net costs of equity affiliates:
Proved properties - - -
-----------------------------
Total $ 430 $ 383 $ 400
- -----------------------------------------------------------------
</TABLE>
* Includes Canada, Dubai and Indonesia.
65
<PAGE>
Supplemental Petroleum Data
(In millions of barrels)
Estimated Proved Reserves of Oil/1/
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Total Worldwide United States Europe
----------------------------- ----------------------------- -----------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
-----------------------------------------------------------------------------------------------
<S> <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
Revisions and other changes 51 14 26 14 (6) (13) 26 13 37
Extensions and discoveries 50 83 23 8 19 9 21 41 10
Improved recovery 10 7 3 9 5 3 - - -
Purchase of reserves/3/ 43 25 5 14 7 5 29 2 -
Sale of reserves/4/ (33) (64) (12) (20) (62) (12) (13) (2) -
Production (132) (135) (123) (33) (40) (41) (59) (55) (48)
-----------------------------------------------------------------------------------------------
End of year 953 964 1,034 336 344 421 394 390 391
-----------------------------------------------------------------------------------------------
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
-----------------------------------------------------------------------------------------------
Proved Developed Reserves
of Consolidated Companies
Beginning of year 708 750 778 332 397 441 160 153 118
End of year 706 708 750 324 332 397 171 160 153
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------
Other Regions/2/
-----------------------------
1994 1993 1992
-----------------------------
<S> <C> <C> <C>
Proved Developed and Undeveloped
Reserves of Consolidated
Companies
Beginning of year 230 222 250
Revisions and other changes 11 7 2
Extensions and discoveries 21 23 4
Improved recovery 1 2 -
Purchase of reserves/3/ - 16 -
Sale of reserves/4/ - - -
Production (40) (40) (34)
-----------------------------
End of year 223 230 222
-----------------------------
Proved Developed and Undeveloped
Reserves of Equity Affiliates
Beginning of year - - -
Revisions and other changes - - -
Extensions and discoveries - - -
Production - - -
-----------------------------
End of year - - -
-----------------------------
Total 223 230 222
-----------------------------
Proved Developed Reserves
of Consolidated Companies
Beginning of year 216 200 219
End of year 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.
66
<PAGE>
Supplemental Petroleum Data
(In billion cubic feet)
Estimated Proved Reserves of Gas
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Total Worldwide United States Europe
----------------------------- ----------------------------- -----------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
-----------------------------------------------------------------------------------------------
<S> <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
Revisions and other changes 317 72 (36) 121 (22) (55) 187 54 56
Extensions and discoveries 514 712 307 139 196 127 356 507 172
Improved recovery - 1 - - 1 - - - -
Purchase of reserves/2/ 375 53 37 42 53 37 321 - -
Sale of reserves/3/ (71) (122) (51) (37) (49) (51) (34) (68) -
Production (485) (481) (431) (318) (305) (279) (151) (158) (132)
-----------------------------------------------------------------------------------------------
End of year 4,330 3,680 3,445 1,749 1,802 1,928 2,431 1,752 1,417
-----------------------------------------------------------------------------------------------
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
-----------------------------------------------------------------------------------------------
Proved Developed Reserves
of Consolidated Companies
Beginning of year 2,570 2,539 2,750 1,717 1,837 2,013 738 618 602
End of year 2,496 2,570 2,539 1,687 1,717 1,837 683 738 618
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------
Other Regions/1/
-----------------------------
1994 1993 1992
-----------------------------
<S> <C> <C> <C>
Proved Developed and Undeveloped
Reserves of Consolidated
Companies
Beginning of year 126 100 149
Revisions and other changes 9 40 (37)
Extensions and discoveries 19 9 8
Improved recovery - - -
Purchase of reserves/2/ 12 - -
Sale of reserves/3/ - (5) -
Production (16) (18) (20)
-----------------------------
End of year 150 126 100
-----------------------------
Proved Developed and Undeveloped
Reserves of Equity Affiliates
Beginning of year - - -
Revisions and other changes - - -
Extensions and discoveries - - -
Purchase of reserves - - -
Production - - -
-----------------------------
End of year - - -
-----------------------------
Total 150 126 100
-----------------------------
Proved Developed Reserves
of Consolidated Companies
Beginning of year 115 84 135
End of year 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.
67
<PAGE>
Supplemental Petroleum Data
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.
68
<PAGE>
Supplemental Petroleum Data
(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
----------------------------- ----------------------------- -----------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
-----------------------------------------------------------------------------------------------
<S> <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
Production costs (8,967) (9,117) (10,011) (3,411) (4,361) (5,228) (4,719) (4,005) (4,119)
Development costs (1,693) (1,802) (1,719) (184) (515) (534) (1,439) (1,143) (1,001)
Income tax expense (6,084) (3,607) (6,022) (873) (414) (1,060) (2,893) (1,514) (2,585)
-----------------------------------------------------------------------------------------------
Future net cash flows 7,092 5,032 6,687 2,733 1,909 3,205 3,894 2,718 3,080
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)
-----------------------------------------------------------------------------------------------
Total consolidated
companies 4,275 3,214 4,308 1,579 1,254 1,966 2,372 1,697 2,080
-----------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------
Other Regions*
-----------------------------
1994 1993 1992
-----------------------------
<S> <C> <C> <C>
Consolidated Companies
Future cash flows:
Revenues $ 3,690 $ 2,979 $ 3,627
Production costs (837) (751) (664)
Development costs (70) (144) (184)
Income tax expense (2,318) (1,679) (2,377)
-----------------------------
Future net cash flows 465 405 402
Discounted to present value
at a 10% annual rate (141) (142) (140)
-----------------------------
Total consolidated
companies 324 263 262
-----------------------------
Equity Affiliates
Standardized measure of
discounted future net
cash flows of equity
affiliates - - -
-----------------------------
Total $ 324 $ 263 $ 262
- -----------------------------------------------------------------
</TABLE>
* Includes Canada, Dubai and Indonesia.
69
<PAGE>
Supplemental Petroleum Data
(Dollars in millions)
Summary of Changes in Standardized Measure of Discounted Future Net Cash Flows
Relating to Proved Oil and Gas Reserves for Fully Consolidated Companies
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
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 production 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>
70
<PAGE>
Quarterly Financial Data
(Dollars in millions, except per share)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Quarter Ended March 31 June 30 September 30 December 31
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 on page 63).
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.
71
<PAGE>
Consolidated Geographic Data
(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.
72
<PAGE>
Five-Year Financial Review/1/
(Dollars in millions, except per share)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Summary of Operations
Sales $39,333 $37,098 $37,799 $38,695 $40,047
Earnings Before Income Taxes $ 4,382 $ 958 $ 1,811 $ 2,818 $ 4,154
Provision for Income Taxes $ 1,655 $ 392 $ 836 $ 1,415 $ 1,844
Net Income/2/ $ 2,727 $ 566 $ 975 $ 1,403 $ 2,310
As Percent of Average Stockholders' Equity/2/ 22.6% 4.8% 8.1% 8.3% 14.3%
Earnings Per Share of Common Stock/2/,/3/ $ 4.00 $ .83 $ 1.43 $ 2.08 $ 3.40
---------------------------------------------------------------
Financial Position at Year 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:
Short Term $ 1,292 $ 2,796 $ 3,799 $ 1,841 $ 3,928
Long Term $ 6,376 $ 6,531 $ 7,193 $ 6,456 $ 5,663
Stockholders' Equity $12,822 $11,230 $11,765 $16,739 $16,418
Total Debt as Percent of Total Capitalization 37% 45% 48% 33% 37%
---------------------------------------------------------------
General
For the Year:
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
As Percent of Combined Segment Sales for:
Chemicals, Fibers, Polymers and
Diversified Businesses 4.5% 5.1% 5.6% 5.8% 6.2%
Petroleum 0.3% 0.3% 0.4% 0.4% 0.3%
Average Number of Shares Outstanding (millions) 680 677 673 671 676
Dividends Per Common Share $ 1.82 $ 1.76 $ 1.74 $ 1.68 $ 1.62
Dividends as Percent of Earnings on Common Stock/2/ 46% 212% 122% 81% 48%
Common Stock Prices:
High $ 62 3/8 $ 53 7/8 $ 54 7/8 $ 50 $ 42 3/8
Low $ 48 1/4 $ 44 1/2 $ 43 1/2 $ 32 3/4 $ 31 3/8
Year-End Close $ 56 1/8 $ 48 1/4 $ 47 1/8 $ 46 5/8 $ 36 3/4
At Year End:
Employees (thousands) 107 114 125 133 144
Common Stockholders of Record (thousands) 172 181 188 195 199
Book Value Per Common Share $ 18.48 $ 16.22 $ 17.08 $ 24.58 $ 24.16
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 See Management's Discussion and Analysis on pages 30-36, Consolidated Income
Statement on page 39, Notes to Financial Statements on pages 43-63 and
Quarterly Financial Data on page 71 for information relating to significant
items affecting the results of operations and financial position.
2 Before effect on income of extraordinary item (1993 and 1992) and transition
effect of accounting changes (1992). See the Consolidated Income Statement on
page 39.
3 Based on the average number of common shares outstanding.
73
<PAGE>
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
Name Organized Under Laws of
---- -----------------------
Conoco Canada Limited ............................. Canada
Conoco Developments Ltd. .......................... England
Conoco Inc. ....................................... Delaware
Conoco Indonesia Inc. ............................. Delaware
Conoco International, Inc. ........................ Delaware
Conoco Investments Norge A/S ...................... Norway
Conoco Ireland Ltd. ............................... Delaware
Conoco Limited .................................... England
Conoco Mineraloel GmbH ............................ Germany
Conoco Norway Inc. ................................ Delaware
Conoco Petroleum Limited .......................... England
Conoco Petroleum Norge A/S ........................ Norway
Conoco Pipe Line Company .......................... Delaware
Conoco Specialty Products, Inc. ................... Delaware
Conoco Timan-Pechora Ltd. ......................... Bermuda
Conoco (U.K.) Limited ............................. England
Consol Energy Inc. (50% owned) .................... Delaware
Continental Oil Company of Libya .................. Delaware
Danube Insurance Ltd. ............................. Bermuda
Douglas Oil Company of California ................. California
Dubai Petroleum Company ........................... Delaware
DuPont Agrichemicals Caribe, Inc. ................. Delaware
DuPont Argentina S.A. ............................. Argentina
DuPont Asia Pacific, Ltd. ......................... Delaware
DuPont (Australia) Limited ........................ Australia
DuPont Canada Inc. (76.79% owned) ................. Canada
DuPont Chemical and Energy Operations, Inc. ....... Delaware
DuPont Delaware, Inc. ............................. Delaware
DuPont Diagnostics, Inc. .......................... Delaware
DuPont de Colombia, S.A. .......................... Colombia
DuPont de Nemours (Belgium) N.V. .................. Belgium
DuPont de Nemours (Deutschland) GmbH .............. Germany
DuPont de Nemours (Flandre), S.A. ................. France
DuPont de Nemours (France) S.A. ................... France
DuPont de Nemours International S.A. .............. Switzerland
DuPont de Nemours Italiana S.p.A. ................. Italy
DuPont de Nemours (Luxembourg) S.A. ............... Luxembourg
DuPont de Nemours (Nederland) B.V. ................ The Netherlands
DuPont do Brasil S.A. ............................. Brazil
DuPont Electronic Materials, Inc. ................. Delaware
DuPont Energy Company ............................. Delaware
DuPont Engineering Products, S.A. ................. Luxembourg
DuPont Feedstocks Company ......................... Delaware
DuPont Foreign Sales Corporation .................. Virgin Islands
DuPont Iberica, S.A. .............................. Spain
<PAGE>
Name Organized Under Laws of
---- -----------------------
DuPont (K.K.) ..................................... Delaware
DuPont Korea, Ltd. ................................ Republic of Korea
DuPont Merck Pharmaceutical Company (Delaware
Partnership) (50% owned) ........................ Delaware
DuPont Merck Pharma (Puerto Rico Partnership)
(50% owned) ..................................... Puerto Rico
DuPont (New Zealand) Ltd. ......................... New Zealand
DuPont Photomasks, Inc. ........................... Texas
DuPont, S.A. de C.V. .............................. Mexico
DuPont Scandanavia A.B. ........................... Sweden
DuPont (Singapore) Pte. Ltd. ...................... Singapore
DuPont (Singapore) Fibres Pte. Ltd. (90% owned) ... Singapore
DuPont Taiwan Ltd. ................................ Taiwan
DuPont (Thailand) Co. Ltd. ........................ Thailand
DuPont Treasury Ltd. .............................. England
DuPont (U.K.) Limited ............................. England
Kayo Oil Company .................................. Delaware
Societe Europeene Des Carburants .................. Belgium
World Wide Transport, Inc. ........................ Liberia
Subsidiaries not listed would not, if considered in the aggregate as a
single subsidiary, constitute a significant subsidiary.
2
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (No. 33-48128
and No. 33-53327) and Form S-8 (No. 33-51817, No. 33-43918, No. 2-74004,
No. 33-51821 and No. 33-36339) of E. I. du Pont de Nemours and Company of
our report dated February 16, 1995 appearing on page 38 of the Annual Report
to Stockholders which is incorporated in this Annual Report on Form 10-K.
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
March 20, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED INCOME STATEMENT FILED AS PART OF
THE ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 856
<SECURITIES> 253
<RECEIVABLES> 5,213<F1>
<ALLOWANCES> 86
<INVENTORY> 3,969
<CURRENT-ASSETS> 11,108
<PP&E> 48,838
<DEPRECIATION> 27,718
<TOTAL-ASSETS> 36,892
<CURRENT-LIABILITIES> 7,565
<BONDS> 6,376
<COMMON> 408
0
237
<OTHER-SE> 12,177
<TOTAL-LIABILITY-AND-EQUITY> 36,892
<SALES> 39,333
<TOTAL-REVENUES> 40,259
<CGS> 21,977<F2>
<TOTAL-COSTS> 35,318<F3>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 559
<INCOME-PRETAX> 4,382
<INCOME-TAX> 1,655
<INCOME-CONTINUING> 2,727
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,727
<EPS-PRIMARY> 4.00
<EPS-DILUTED> 0
<FN>
<F1>Includes Other Accounts In Addition To Notes and Accounts Receivable-Trade.
<F2>Includes Other Operating Charges.
<F3>Cost of Goods Sold and Other Operating Charges; Selling, General and
Administrative Expenses; Depreciation, Depletion and Amortization; Exploration
Expenses, Including Dry Hole Costs and Impairment of Unproved Properties;
Research and Development Expense; Taxes Other Than On Income; and
Restructuring.
</FN>
</TABLE>
