<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 1995
REGISTRATION NO. 33-58599
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------
E. I. DU PONT DE NEMOURS AND COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 51-0014090
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1007 MARKET STREET,
WILMINGTON, DELAWARE 19898
(302) 774-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
CHARLES L. HENRY
1007 MARKET STREET
WILMINGTON, DELAWARE 19898
(302) 774-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
HOWARD J. RUDGE, ESQ. JOHN W. WHITE, ESQ.
E. I. DU PONT DE NEMOURS AND COMPANY CRAVATH, SWAINE & MOORE
1007 MARKET STREET WORLDWIDE PLAZA, 825 EIGHTH AVENUE
WILMINGTON, DELAWARE 19898 NEW YORK, NEW YORK 10019
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment, check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This registration statement contains two forms of prospectus, one of which is
to be used in connection with an offering in the United States and Canada (the
"U.S. Prospectus"), and the other of which is to be used in connection with a
concurrent offering outside the United States and Canada (the "International
Prospectus"). The U.S. Prospectus and the International Prospectus are
identical except for the front and back cover pages, the inside front cover
pages, the text under the captions "Underwriting" and "Subscription and Sale"
in the U.S. Prospectus and the International Prospectus, respectively, the text
under the caption "Notice to Canadian Investors" in the U.S. Prospectus and
certain cross-references relating to such sections. The form of the U.S.
Prospectus is included herein and is followed by those pages to be used in the
International Prospectus which differ from those in the U.S. Prospectus. Each
of the pages for the International Prospectus included herein is labeled "I-."
Final forms of such prospectuses will be filed with the Securities and Exchange
Commission pursuant to Rule 424(b), if necessary.
i
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED APRIL 17, 1995
17,000,000 Shares
E. I. du Pont de Nemours and Company
Common Stock
($.60 par value)
--------
Of the 17,000,000 shares being offered, 13,600,000 shares initially are being
offered in the United States and Canada (the "U.S. Shares") by the U.S.
Underwriters (the "U.S. Offering") and 3,400,000 shares initially are being
concurrently offered outside the United States and Canada (the "International
Shares") by the Managers (the "International Offering" and, together with the
U.S. Offering, the "Offerings"). The offering price and underwriting discounts
and commissions of the U.S. Offering and the International Offering are
identical. On April 12, 1995, the reported last sale price of the Common Stock
on the New York Stock Exchange Composite Tape was $61 7/8 per share.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Company (1)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share.................................. $ $ $
Total (2).................................. $ $ $
</TABLE>
(1) Before deduction of expenses payable by the Company, estimated at $903,000.
(2) The Company has granted the U.S. Underwriters and the Managers an option,
exercisable by CS First Boston Corporation for 30 days from the date of
this Prospectus, to purchase a maximum of 2,550,000 additional shares to
cover over-allotments of shares. If the option is exercised in full, the
total Price to Public will be $ , Underwriting Discounts and Commissions
will be $ , and Proceeds to Company will be $ . See "Underwriting".
--------
Global Coordinator
CS First Boston
--------
The U.S. Shares are offered by the several U.S. Underwriters when, as and if
issued by the Company, delivered to and accepted by the U.S. Underwriters and
subject to their right to reject orders in whole or in part. It is expected
that the U.S. Shares will be ready for delivery on or about May , 1995.
CS First Boston
Merrill Lynch & Co.
Morgan Stanley & Co.
Incorporated
The date of this Prospectus is , 1995.
<PAGE>
IN CONNECTION WITH THE OFFERINGS, CS FIRST BOSTON CORPORATION ON BEHALF OF
THE U.S. UNDERWRITERS AND THE MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THE OFFERINGS, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR
THE ACCOUNTS OF OTHERS IN THE COMMON STOCK OF THE COMPANY PURSUANT TO
EXEMPTIONS FROM RULES 10B-6, 10B-7, AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT
OF 1934.
AVAILABLE INFORMATION
E. I. du Pont de Nemours and Company ("DuPont" or the "Company") is subject
to the informational requirements of the Securities Exchange Act of 1934 (the
"Exchange Act"), and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). These reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at its principal offices at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials also can be obtained from the Public Reference Section of the
Commission at prescribed rates at the principal offices of the Commission
located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Common Stock is listed on the New York Stock Exchange (Symbol: DD), and reports
and information concerning the Company can be inspected at such exchange, 20
Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form S-
3 under the Securities Act of 1933 (the "Act") with respect to the shares of
Common Stock offered hereby (including all amendments and supplements thereto,
the "Registration Statement"). This Prospectus, which forms a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement and the exhibits filed therewith, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. Statements contained herein concerning the provisions of such
documents are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference. The Registration Statement and the exhibits thereto
can be inspected and copied at the public reference facilities and regional
offices referred to above.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the following
documents heretofore filed with the Commission pursuant to the Exchange Act:
(i) the Company's Annual Report on Form 10-K for the year ended December 31,
1994, including the 1995 Proxy Statement for the Annual Meeting of Shareholders
dated March 17, 1995, as amended by the Proxy Supplement dated April 13, 1995;
(ii) the Company's Current Reports on Form 8-K dated April 7, 1995 (as amended)
and January 25, 1995; and (iii) the Company's Registration of Common Stock on
Form 8-A.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to termination of the Offerings shall be deemed to be incorporated in this
Prospectus by reference and to be a part hereof from the respective dates of
the filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed document which also
is, or is deemed to be, incorporated by reference herein, modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of any and all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents which are not specifically incorporated
by reference into such documents. Requests for such copies should be directed
to Capital Markets, DuPont Finance, E. I. du Pont de Nemours and Company, 1007
Market Street, Wilmington, Delaware 19898, or telephone (302) 774-1000.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information (including financial
information and the notes thereto) included elsewhere in this Prospectus or
incorporated herein by reference.
THE COMPANY
DuPont is the largest United States chemical producer and one of the leading
chemical producers worldwide. The Company conducts fully integrated petroleum
operations primarily through its wholly owned subsidiary Conoco Inc.
("Conoco"). Conoco and other subsidiaries and affiliates of DuPont conduct
exploration, production, mining, manufacturing or selling activities, and some
are distributors of products manufactured by the Company.
The Company operates globally through approximately twenty strategic business
units and is organized for financial reporting purposes into five principal
industry segments--Chemicals, Fibers, Polymers, Petroleum and Diversified
Businesses. Within the strategic business units approximately 85 businesses
manufacture and sell a wide range of products to many different markets,
including the energy, transportation, textile, construction, automotive,
agricultural, printing, health care, packaging and electronics markets. The
Company and its subsidiaries have operations in about 70 nations worldwide and,
as a result, about 47% of consolidated sales are derived from sales outside the
United States, based on the location of the corporate unit making the sale.
Total worldwide employment at year-end 1994 was about 107,000 people.
REDEMPTION OF DUPONT COMMON STOCK FROM SEAGRAM
On April 6, 1995, the Company acquired 156 million shares of its Common Stock
beneficially owned by The Seagram Company Ltd. ("Seagram") for $56.25 per share
(the "Seagram Redemption"). The consideration for the acquired shares consisted
of (i) $1 billion in cash, (ii) 90-day promissory notes of the Company in an
aggregate principal amount of approximately $7.3 billion and (iii) warrants of
the Company valued at approximately $440 million exercisable for 156 million
shares of the Company's Common Stock.
THE OFFERINGS
<TABLE>
<S> <C>
Common Stock Offered(1):
U.S. Offering..................... 13,600,000 shares
International Offering............ 3,400,000 shares
-----------
Total............................ 17,000,000 shares
Common Stock Outstanding(1):
Before the Offerings (at April 12,
1995)............................ 526,429,534 shares
After the Offerings(1)............ 543,429,534 shares
Use of Proceeds.................... The net proceeds of the Offerings will be
used for the repayment of a portion of the
short-term indebtedness incurred by the
Company in connection with the Seagram
Redemption. See "Redemption of DuPont
Common Stock from Seagram" and "Use of
Proceeds".
New York Stock Exchange Symbol..... DD
</TABLE>
- --------
(1) Does not include up to 2,550,000 shares of Common Stock subject to the
over-allotment option granted by the Company to the U.S. Underwriters and
the Managers.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1994(1) 1993 1992 1991 1990
------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS
AND RATIOS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERA-
TIONS DATA:
Sales............................ $39,333 $37,098 $37,799 $38,695 $40,047
Selling, General and
Administrative Expenses......... 2,888 3,081 3,553 3,576 3,718
Gain From Sale of an Interest in
Coal Business................... -- -- -- (391) --
Restructuring.................... (142) 1,621 475 828 --
Write-Down of Intangible Assets.. -- 214 -- -- --
Operating Profit................. 4,439 1,450 2,212 3,383 4,837
Interest and Debt Expense........ 559 594 643 752 773
Earnings Before Income Taxes..... 4,382 958 1,811 2,818 4,154
Income Before Extraordinary Item
and Transition Effect of
Accounting Changes.............. 2,727 566 975 1,403 2,310
Extraordinary Charge from Early
Extinguishment of Debt.......... -- (11) (69) -- --
Transition Effect of Changes in
Accounting Principles(2)........ -- -- (4,833) -- --
------- ------- ------- ------- -------
Net Income (Loss)................ $ 2,727 $ 555 $(3,927) $ 1,403 $ 2,310
======= ======= ======= ======= =======
Income Before Extraordinary Item
and Transition Effect of
Accounting Changes Per Share of
Common Stock.................... $ 4.00 $ .83 $ 1.43 $ 2.08 $ 3.40
======= ======= ======= ======= =======
Net Income (Loss) Per Share of
Common Stock.................... $ 4.00 $ .81 $ (5.85) $ 2.08 $ 3.40
======= ======= ======= ======= =======
CONSOLIDATED BALANCE SHEET DATA
(AT PERIOD END):
Working Capital.................. $ 3,543 $ 1,460 $ 2,002 $ 3,381 $ 2,210
Total Assets..................... 36,892 37,053 38,870 36,559 38,128
Borrowings and Capital Lease
Obligations..................... 7,668 9,327 10,992 8,297 9,591
Stockholders' Equity............. 12,822 11,230 11,765 16,739 16,418
OTHER DATA:
Cash Provided by Operations...... $ 5,664 $ 5,380 $ 4,388 $ 5,461 $ 5,146
Capital Expenditures............. 3,241 3,725 4,524 5,246 5,513
Depreciation, Depletion and
Amortization.................... 2,976 2,833 2,655 2,640 2,625
Research and Development Expense. 1,047 1,132 1,277 1,298 1,428
Total Debt as Percent of Total
Capitalization.................. 37% 45% 48% 33% 37%
Fixed Charge Coverage Ratio...... 6.1x 2.0x 2.7x 3.5x 4.7x
Dividends Per Common Share....... $ 1.82 $ 1.76 $ 1.74 $ 1.68 $ 1.62
Average Number of Shares
Outstanding..................... 680 677 673 671 676
</TABLE>
- --------
(1) On a pro forma basis, if the Seagram Redemption had occurred: (i) at
January 1, 1994 (assuming that the related indebtedness had been
outstanding throughout 1994), Interest and Debt Expense would have been
$994, Earnings Before Income Taxes would have been $3,907, Net Income would
have been $2,352, Net Income Per Share of Common Stock would have been
$4.47 (on the basis of 524 average outstanding shares) and the Fixed Charge
Coverage Ratio would have been 4.0x; and (ii) at December 31, 1994,
Borrowings and Capital Lease Obligations would have been $15,004,
Stockholders' Equity would have been $4,471, and Total Debt as Percent of
Total Capitalization would have been 76%. On a pro forma basis, if the
Seagram Redemption and the Offerings had occurred at January 1, 1994
(assuming that the related indebtedness had been outstanding throughout
1994 and that the U.S. Underwriters' and the Managers' over-allotment
option had not been exercised and net of estimated expenses), the Net
Income Per Share of Common Stock would have been $4.42.
(2) In 1992, DuPont adopted Statement of Financial Accounting Standards
("SFAS") No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" and SFAS No. 109, "Accounting for Income Taxes." The Company
recorded charges to net income of $3,788 and $1,045, respectively, as of
January 1, 1992 for the effects of transition to these two standards.
5
<PAGE>
THE COMPANY
DuPont is the largest United States chemical producer and one of the leading
chemical producers worldwide. The Company conducts fully integrated petroleum
operations primarily through its wholly owned subsidiary Conoco and, in 1993,
ranked eighth in the worldwide production of petroleum liquids by U.S.-based
companies, ninth in the production of natural gas, and seventh in refining
capacity. Conoco and other subsidiaries and affiliates of DuPont conduct
exploration, production, mining, manufacturing or selling activities, and some
are distributors of products manufactured by the Company.
The Company operates globally through approximately twenty strategic business
units. Within the strategic business units approximately 85 businesses
manufacture and sell a wide range of products to many different markets,
including the energy, transportation, textile, construction, automotive,
agricultural, printing, health care, packaging and electronics markets. The
Company and its subsidiaries have operations in about 70 nations worldwide and,
as a result, about 47% of consolidated sales are derived from sales outside the
United States, based on the location of the corporate unit making the sale.
Total worldwide employment at year-end 1994 was about 107,000 people.
The Company is organized for financial reporting purposes into five principal
industry segments--Chemicals, Fibers, Polymers, Petroleum, and Diversified
Businesses.
Chemicals. In 1994, Chemicals generated $3.8 billion in sales (9.6% of the
Company's total sales) and $386 million of after tax operating income ("ATOI")
(12.4% of the Company's total ATOI). Chemicals manufactures a wide range of
commodity and specialty products including titanium dioxide, fluorochemicals
and polymer intermediates used in the paper, plastics, chemical processing,
refrigeration, textile and environmental management industries. The Company is
the world's leading producer of titanium dioxide, which is used in paper, paint
and plastic. Fluorochemicals produces the broadest range of alternatives to
chlorofluorocarbons, including refrigerants, foam expansion agents, propellants
and cleaning agents. Specialty Chemicals includes specialty chemicals and
materials and environmental services, more than 60 percent of the sales of
which comes from industrial chemicals such as ammonia, cyanide and peroxygen
products.
Fibers. In 1994, Fibers generated $6.8 billion in sales (17.2% of the
Company's total sales) and $701 million of ATOI (22.6% of the Company's total
ATOI). A diversified mix of specialty fibers is produced to serve end uses
including protective apparel, active sportswear, packaging and high-strength
composites in aerospace. High-volume fibers are produced for apparel and home
fabrics, carpeting and industrial applications and sold directly to the textile
and other industries for processing into products used in consumer and
industrial markets. Fibers includes the Company's "Lycra" spandex, nylon,
"Dacron" polyester, "Nomex" heat-resistant and "Kevlar" high-strength aramid
fibers businesses.
Polymers. In 1994, Polymers generated $6.3 billion in sales (16.1% of the
Company's total sales) and $717 million of ATOI (23.1% of the Company's total
ATOI). Engineering polymers, elastomers, "Teflon" and other fluoropolymers,
ethylene polymers, finishes and performance films are produced to serve
industries including packaging, construction, chemical processing, electrical,
paper, textiles and transportation. This group also includes the automotive
businesses, which are engaged in the manufacturing and marketing of more than
100 DuPont product lines used by the automotive industry, and "Corian" building
products.
Petroleum. In 1994, Petroleum generated $16.8 billion in sales (42.7% of the
Company's total sales) and $680 million of ATOI (21.9% of the Company's total
ATOI). Petroleum operations are carried out through Conoco and range from
exploration for crude oil and natural gas to the marketing of finished
products. The upstream part of the business finds, develops and produces oil
and gas and processes natural gas to recover higher-value liquids that are sold
separately. The downstream part of the business refines crude oil and other
feedstocks to produce high-quality fuels, lubricants and other products that
are sold to customers primarily in the United States and Europe, and more
recently in the Asia Pacific region. The downstream business also produces
intermediates for use as chemical feedstocks and a wide range of specialty
products such as petroleum coke and lubricating oils for commercial and
industrial customers worldwide. Conoco's retail operations include over 2,400
service stations in 13 countries.
6
<PAGE>
Diversified Businesses. In 1994, Diversified Businesses generated $5.7
billion in sales (14.4% of the Company's total sales) and $623 million of ATOI
(20.0% of the Company's total ATOI). Diversified Businesses include the
following strategic business units: Agricultural Products, Electronic
Materials, Films, Medical Products and Printing and Publishing. Agricultural
Products include herbicides and other products developed for specific
agricultural applications. Electronic Materials is involved with a consortium
that will design and develop high-definition television, photomasks used in the
production of semi-conductor devices, printed circuit materials and photo
imagable coverlay for flexible circuit board manufacture. Films produces
polyester film and audio/video film. Medical Products offers diagnostic imaging
systems, blood chemistry analyzers and centrifuge and detection products for
life science research and also includes the Company's 50 percent interest in
The DuPont Merck Pharmaceutical Company. Printing and Publishing sells
proofing, packaging and graphic arts products. The Diversified Businesses
segment also includes the Company's 50% interest in CONSOL Energy Inc., a coal
operations joint venture.
E. I. du Pont de Nemours and Company was founded in 1802 and was incorporated
in Delaware in 1915. Its principal executive offices are located at 1007 Market
Street, Wilmington, Delaware 19898, and its telephone number is (302) 774-1000.
REDEMPTION OF DUPONT COMMON STOCK FROM SEAGRAM
On April 6, 1995, the Company acquired 156 million shares of its Common Stock
beneficially owned by Seagram for $56.25 per share. The consideration for the
acquired shares consisted of (i) $1 billion in cash, (ii) 90-day promissory
notes of the Company in an aggregate principal amount of approximately $7.3
billion and (iii) warrants of the Company valued at approximately $440 million
exercisable for 156 million shares of the Company's Common Stock. Seagram
continues to hold approximately 8.2 million shares, or 1.6% of the shares
outstanding following the transaction.
The notes issued to Seagram bear interest at market rates, are prepayable at
any time without penalty and have covenants and events of default substantially
identical to the Company's publicly held debt securities.
The warrants issued to Seagram expire on October 6, 1997, October 6, 1998 and
October 6, 1999 with respect to 48 million shares at $89.33 per share, 54
million shares at $101.14 per share and 54 million shares at $113.63 per share,
respectively. In general, as long as the warrants are held by Seagram, the
warrants are exercisable only during the 60-day periods immediately preceding
their respective expiration dates. However, the warrants would become
exercisable sooner in connection with certain significant corporate events. The
warrants are not transferable until May 15, 1996. Following such date, the
Company would have the right to buy the warrants from Seagram before Seagram
would be permitted to transfer the warrants to a third party. Any warrants that
are transferred to non-affiliates of Seagram would be exercisable at any time
prior to their expiration. The warrants contain standard anti-dilution
adjustments. In addition, the exercise price and number of shares subject to
the warrants may be adjusted as a result of the Offerings.
In connection with the Seagram Redemption, the Company and Seagram terminated
their 1986 agreement and entered into a new agreement relating to their future
relationship. The new agreement has a term of 15 years, but may be terminated
sooner under certain circumstances. The new agreement contains a variety of
"standstill" restrictions applicable to Seagram which, among other things,
prohibit Seagram from acquiring shares of Common Stock, except upon exercise of
the warrants and a negligible number of additional shares. The new agreement
also provides that, if Seagram exercises the warrants, Seagram would have the
right to designate representatives to the Company's board of directors
(although a smaller percentage than under the 1986 agreement). In addition, the
new agreement provides that Seagram will vote its shares of Common Stock
(including any shares issued upon exercise of the warrants) proportionately
with other stockholders, except that Seagram may vote its shares in its
discretion on the occurrence of certain significant corporate events.
7
<PAGE>
Effective as of the closing of the Seagram Redemption, Seagram's
representatives on the Company's board of directors (Edgar M. Bronfman, Charles
R. Bronfman, Edgar Bronfman, Jr. and John L. Weinberg) resigned from such
positions.
Agreements with respect to the Seagram Redemption have been filed as exhibits
to the Company's Current Report on Form 8-K dated April 7, 1995 (as amended)
which is incorporated herein by reference.
USE OF PROCEEDS
The net proceeds to the Company from the Offerings are estimated to be
approximately $1,024 million (or approximately $1,178 million if the over-
allotment option granted to the U.S. Underwriters and Managers is exercised in
full) after deduction of underwriting discounts and estimated offering expenses
based on an assumed public offering price of $62 per share, the closing price
of DuPont Common Stock on April 11, 1995. Such net proceeds will be used for
the repayment of a portion of the short-term indebtedness incurred in
connection with the Seagram Redemption on April 6, 1995. The interest rate of
such indebtedness was 6.19% at April 7, 1995. See "Redemption of DuPont Common
Stock from Seagram".
The Company currently expects that the long-term funding for the Seagram
Redemption will include: (i) cash flow from operations and selective sales of
assets; (ii) up to $1.5 billion from a Flexitrust program (the "Flexitrust
Program") that will effect the sale or distribution of additional newly issued
shares of DuPont Common Stock over the next several years, provided that such
sale or distribution will begin no sooner than 60 days after closing of the
Offerings, to satisfy existing employee compensation and benefit programs; and
(iii) up to $2.0 billion from public and private offerings of equity
securities, including the Offerings. Such offerings may also include the
Company's anticipated offer to sell up to $500 million of Common Stock to the
DuPont Pension Trust Fund. It is unknown whether the DuPont Pension Trust Fund
will accept any such offer or the price and other terms of any such
transaction.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is traded on the New York Stock Exchange under the symbol
DD. The table below sets forth the high and low closing prices of the Common
Stock as reported on the New York Stock Exchange Composite Tape as reported in
The Wall Street Journal and quarterly cash dividends declared per share of
Common Stock during the periods indicated. For a recent closing price of the
Common Stock, see the cover page of this Prospectus.
<TABLE>
<CAPTION>
PRICE RANGE CASH
------------- DIVIDENDS
LOW HIGH DECLARED
------ ------ ---------
<S> <C> <C> <C>
1993
First Quarter ended March 31, 1993...................... $44.50 $50.00 $0.44
Second Quarter ended June 30, 1993...................... 46.50 53.88 0.44
Third Quarter ended September 30, 1993.................. 45.88 49.63 0.44
Fourth Quarter ended December 31, 1993.................. 44.50 50.50 0.44
1994
First Quarter ended March 31, 1994...................... 48.25 59.88 0.44
Second Quarter ended June 30, 1994...................... 51.50 62.38 0.44
Third Quarter ended September 30, 1994.................. 56.88 61.38 0.47
Fourth Quarter ended December 31, 1994.................. 50.75 60.50 0.47
1995
First Quarter ended March 31, 1995...................... 53.13 61.00 0.47
Second Quarter (through April 12, 1995)................. 61.00 64.75 --
</TABLE>
The dividend for the second quarter of 1995 is expected to be considered at
the board of directors meeting to be held on April 26, 1995. Future dividend
policy will depend on the Company's earnings, capital requirements, financial
condition and other factors considered relevant by the Company's board of
directors. As of April 7, 1995, there were 171,478 holders of record of the
Common Stock.
8
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company
at December 31, 1994, (i) as adjusted for the Seagram Redemption and (ii) as
adjusted to reflect the Seagram Redemption, the Offerings and the Flexitrust
Program, assuming that the U.S. Underwriters' and the Managers' over-allotment
option is not exercised and net of estimated expenses. This table should be
read in conjunction with the consolidated financial statements and related
notes thereto. See "Use of Proceeds" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Subsequent Events" for a
discussion of possible future sales or distributions of equity securities not
reflected in this Capitalization table.
<TABLE>
<CAPTION>
DECEMBER 31, 1994
---------------------------------------------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
AS ADJUSTED FOR THE
AS ADJUSTED FOR SEAGRAM REDEMPTION,
THE SEAGRAM THE OFFERINGS AND THE
ACTUAL REDEMPTION(1) FLEXITRUST PROGRAM(2)(6)
------- --------------- ------------------------
<S> <C> <C> <C>
Short-Term Borrowings and
Capital Lease Obligations. $ 1,292 $ 1,292 $ 1,292
Notes Payable(3)........... -- 7,336 6,312
Long-Term Borrowings and
Capital Lease Obligations. 6,376 6,376 6,376
------- ------- -------
Total Indebtedness....... 7,668 15,004 13,980
------- ------- -------
Minority Interests......... 197 197 197
------- ------- -------
Shareholders' Equity:(4)
Preferred Stock........... 237 237 237
Common Stock.............. 408(5) 408 433
Additional Paid-In Capi-
tal...................... 4,771 5,210 7,709
Retained Earnings......... 7,406 7,406 7,406
Treasury Stock............ -- (8,790) (8,790)
Unearned Compensation..... -- -- (1,500)
------- ------- -------
Total Shareholders' Equi-
ty...................... 12,822 4,471 5,495
------- ------- -------
Total Capitalization....... $20,687 $19,672 $19,672
======= ======= =======
</TABLE>
- --------
(1) In connection with the Seagram Redemption the Company issued warrants to
purchase 156 million shares of Common Stock. For a description of the
warrants see "Redemption of DuPont Common Stock from Seagram".
(2) Assumes a public offering price of $62 per share, the closing price of
DuPont Common Stock on April 11, 1995.
(3) Represents 90-day notes issued to Seagram in connection with the Seagram
Redemption. The Company expects to redeem the notes prior to maturity from
the proceeds of commercial paper and other short-term borrowings.
(4) Should be read in conjunction with "Consolidated Statement of Stockholders'
Equity" on page F-5 and related Notes.
(5) See Note 23 to the Financial Statements for a discussion of shares of
Common Stock available for issuance pursuant to employee compensation
plans.
(6) Reflects the issuance of $1.5 billion of Common Stock under the Flexitrust
Program, which is reflected in the line-items "Common Stock" and
"Additional Paid-In Capital". Because no shares of Common Stock have been
distributed or sold under the Flexitrust Program, the amount of "Unearned
Compensation" is equal to the value ascribed to the Common Stock
contributed. The shares issued to the Flexitrust Program will be reflected
in calculations of Net Income Per Share of Common Stock, and Unearned
Compensation will be reduced, when such shares are distributed or sold.
9
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1994(1) 1993 1992 1991 1990
------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS
AND RATIOS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERA-
TIONS DATA:
Sales............................ $39,333 $37,098 $37,799 $38,695 $40,047
Selling, General and
Administrative Expenses......... 2,888 3,081 3,553 3,576 3,718
Gain From Sale of an Interest in
Coal Business................... -- -- -- (391) --
Restructuring.................... (142) 1,621 475 828 --
Write-Down of Intangible Assets.. -- 214 -- -- --
Operating Profit................. 4,439 1,450 2,212 3,383 4,837
Interest and Debt Expense........ 559 594 643 752 773
Earnings Before Income Taxes..... 4,382 958 1,811 2,818 4,154
Income Before Extraordinary Item
and Transition Effect of
Accounting Changes.............. 2,727 566 975 1,403 2,310
Extraordinary Charge from Early
Extinguishment of Debt.......... -- (11) (69) -- --
Transition Effect of Changes in
Accounting Principles(2)........ -- -- (4,833) -- --
------- ------- ------- ------- -------
Net Income (Loss)................ $ 2,727 $ 555 $(3,927) $ 1,403 $ 2,310
======= ======= ======= ======= =======
Income Before Extraordinary Item
and Transition Effect of
Accounting Changes Per Share of
Common Stock.................... $ 4.00 $ .83 $ 1.43 $ 2.08 $ 3.40
======= ======= ======= ======= =======
Net Income (Loss) Per Share of
Common Stock.................... $ 4.00 $ .81 $ (5.85) $ 2.08 $ 3.40
======= ======= ======= ======= =======
CONSOLIDATED BALANCE SHEET DATA
(AT PERIOD END):
Working Capital.................. $ 3,543 $ 1,460 $ 2,002 $ 3,381 $ 2,210
Total Assets..................... 36,892 37,053 38,870 36,559 38,128
Borrowings and Capital Lease
Obligations..................... 7,668 9,327 10,992 8,297 9,591
Stockholders' Equity............. 12,822 11,230 11,765 16,739 16,418
OTHER DATA:
Cash Provided by Operations...... $ 5,664 $ 5,380 $ 4,388 $ 5,461 $ 5,146
Capital Expenditures............. 3,241 3,725 4,524 5,246 5,513
Depreciation, Depletion and
Amortization.................... 2,976 2,833 2,655 2,640 2,625
Research and Development Expense. 1,047 1,132 1,277 1,298 1,428
Total Debt as Percent of Total
Capitalization.................. 37% 45% 48% 33% 37%
Fixed Charge Coverage Ratio...... 6.1x 2.0x 2.7x 3.5x 4.7x
Dividends Per Common Share....... $ 1.82 $ 1.76 $ 1.74 $ 1.68 $ 1.62
Average Number of Shares
Outstanding..................... 680 677 673 671 676
</TABLE>
- --------
(1) On a pro forma basis, if the Seagram Redemption had occurred: (i) at
January 1, 1994 (assuming that the related indebtedness had been
outstanding throughout 1994), Interest and Debt Expense would have been
$994, Earnings Before Income Taxes would have been $3,907, Net Income
would have been $2,352, Net Income Per Share of Common Stock would have
been $4.47 (on the basis of 524 average outstanding shares) and the Fixed
Charge Coverage Ratio would have been 4.0x; and (ii) at December 31, 1994,
Borrowings and Capital Lease Obligations would have been $15,004,
Stockholders' Equity would have been $4,471 and Total Debt as Percent of
Total Capitalization would have been 76%. On a pro forma basis, if the
Seagram Redemption and the Offerings had occurred on January 1, 1994
(assuming that the related indebtedness had been outstanding throughout
1994 and that the U.S. Underwriters' and the Managers' over-allotment
option had not been exercised and net of estimated expenses), the Net
Income Per Share of Common Stock would have been $4.42.
(2) In 1992, DuPont adopted Statement of Financial Accounting Standards
("SFAS") No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" and SFAS No. 109, "Accounting for Income Taxes." The
Company recorded charges to net income of $3,788 and $1,045, respectively,
as of January 1, 1992 for the effects of transition to these two
standards.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
Taxes
Income tax expense totaled $1,655 million for 1994, $392 million for 1993 and
$836 million for 1992. Effective income tax rate (EITR) was 37.8%, 40.9% and
46.2% for each of these years, respectively. Over the last three years, the
Company's EITR exceeded the U.S. statutory rate of 35 percent in 1994 and 1993
and 34 percent in 1992, principally because of the higher tax rates associated
with petroleum production operations outside the United States. The 1994 EITR
decreased about 3 percentage points from the prior year, reflecting a lower
EITR for the chemicals and specialties segments and a lower proportion of
higher-taxed petroleum earnings to total Company earnings. The decrease in the
1993 EITR versus 1992
11
<PAGE>
reflected a lower effective tax rate in Petroleum operations and a $265 million
tax benefit, principally arising from U.K. Petroleum Revenue Tax law revisions,
partly offset by an increased proportion of higher-taxed petroleum earnings.
The Company paid total taxes of $7.5 billion in 1994, compared to $6.4
billion in 1993 and $6.6 billion in 1992. 1994 total tax payments were higher
than 1993, reflecting higher taxes on income and higher gas and oil excise
taxes. Tax payments in 1993 were less than 1992, reflecting lower income taxes.
Restructuring
In 1993, restructuring was aimed at improving competitiveness in global
markets and focus on the customer. This included plans to eliminate
approximately 10,900 positions worldwide and to reduce large internal business
sectors in favor of smaller, more responsive, strategic business units. The
1993 pretax charge to earnings for these business restructuring activities was
$1.6 billion. At year-end 1994, restructuring reserve balances are about $300
million, approximately two-thirds of which will be paid during 1995. As this
program is concluded, these future cash payments are not expected to have a
material impact on the Company's liquidity. Additional details on these
restructuring charges are set forth in Note 6 to the financial statements.
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
12
<PAGE>
Norway and the Belida field in Indonesia, the acquisition of an additional
interest in the Britannia field in the United Kingdom and for an improvement at
the Billings refinery to comply with the U.S. Clean Air Act.
For other segments, capital spending in 1994 continued to concentrate on
strengthening and growing strategic businesses outside the United States. This
included projects for "Adi-Pure" adipic acid and "Zytel" engineering polymers
in Singapore, THF/"Terathane" polyether glycol in Spain and "Tyvek" spunbonded
products in Luxembourg. In the United States, significant expenditures were
also made for commercialization of CFC alternatives and for modernization of
"Dacron" polyester and "Tyvek" spunbonded products facilities. Improvement
projects mainly concentrated on enhancing the efficiency and yields of existing
refineries and manufacturing facilities.
Capital expenditures are expected to increase to $3.6 billion in 1995, to
take advantage of growth opportunities.
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 (total short- and long-term borrowings and capital lease
obligations divided by the sum of these amounts plus stockholders' equity and
minority interests in consolidated subsidiaries) at year-end 1994 was 37
percent, versus 45 percent in 1993.
Working Capital Investment
Working capital investment (excluding cash and cash equivalents, marketable
securities, short-term borrowings and capital lease obligations) increased
about $700 million in 1994, principally due to accounts receivable and
inventory increases related to the exchange effect of a weaker dollar and a
decrease in other accrued liabilities resulting from cash payments for
"Benlate" DF 50 fungicide settlements and restructuring. These increases in
investment were partially offset by higher accounts payable and a decrease in
deferred tax asset balances as tax benefits were realized during the year. In
1993, working capital investment decreased $1.1 billion, reflecting lower
inventories and accounts receivable and higher current liabilities, which
increased principally due to the 1993 restructuring charge.
The ratio of current assets to current liabilities, including cash and cash
equivalents, marketable securities, short-term borrowings and capital lease
obligations, at year-end 1994 was 1.5:1, as compared to 1.2:1 in 1993 and 1992.
13
<PAGE>
FINANCIAL INSTRUMENTS
Derivatives and Other Hedging Instruments
The Company enters into contractual arrangements (derivatives) in the
ordinary course of business to hedge its exposure to foreign currency, interest
rate and commodity price risks. The counterparties to these contractual
arrangements are major financial institutions. The Company is exposed to credit
loss in the event of nonperformance by these counterparties. The Company
manages this exposure to credit loss through credit approvals, limits and
monitoring procedures and, to the extent possible, by restricting the period
over which unpaid balances are allowed to accumulate. The Company does not
anticipate nonperformance by counterparties to these contracts, and no material
loss would be expected from any such nonperformance. Procedures are in place to
regularly monitor and report to management the market and counterparty credit
risks associated with these instruments.
Foreign Currency
The Company routinely uses forward exchange contracts to hedge its net
exposures, by currency, related to the foreign currency-denominated monetary
assets and liabilities of its operations. The primary business objective of
this hedging program is to maintain an approximately balanced position in
foreign currencies so that exchange gains and losses resulting from exchange
rate changes, net of related tax effects, are minimized.
In addition, from time to time, the Company will enter into forward exchange
contracts to establish with certainty the U.S. dollar amount of future firm
commitments denominated in a foreign currency. Decisions regarding whether or
not to hedge a given commitment are made on a case-by-case basis taking into
consideration the amount and duration of the exposure, market volatility and
economic trends. Forward exchange contracts are also used to manage near-term
foreign currency cash requirements and to place foreign currency deposits and
marketable securities investments into currencies offering favorable returns.
Interest Rates
The Company uses a combination of financial instruments, including interest
rate swaps, interest and principal currency swaps and structured medium-term
financings, as part of its program to manage the fixed and floating interest
rate mix of the total debt portfolio and related overall cost of borrowing.
Interest rate swaps involve the exchange of fixed for floating rate interest
payments to effectively convert fixed rate debt into floating rate debt based
on LIBOR or commercial paper rates. Interest rate swaps also involve the
exchange of floating for fixed rate interest payments to effectively convert
floating rate debt into fixed rate debt. Interest rate swaps allow the Company
to maintain a target range of floating rate debt.
Under interest and principal currency swaps, the Company receives
predetermined foreign currency-denominated payments corresponding, both as to
timing and amount, to the fixed or floating interest rate 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
14
<PAGE>
and to achieve U.S. dollar fixed or floating interest rate payments below the
market interest rate, at the date of issuance, for borrowings of comparable
maturity.
Commodity Hedges and Trading
The Company enters into exchange-traded and over-the-counter commodity
futures contracts to hedge its exposure to price fluctuations on anticipated
crude oil, refined products and natural gas transactions and certain raw
material purchases.
Commodity trading in petroleum futures contracts is a natural extension of
cash market trading and is used to physically acquire about 15 percent of North
America refining crude supply requirements. The commodity futures market has
underlying principles of increased liquidity and longer trading periods than
the cash market and is one method of reducing exposure to the price risk
inherent in the petroleum business. Typically, trading is conducted to manage
price risk around near-term (30-60 days) supply requirements. Occasionally, as
market views and conditions allow, longer-term positions will be taken to
manage price risk for the company's equity production (crude and natural gas)
or net supply requirements. The Company's use of futures contracts reduces the
effects of price volatility, thereby protecting against adverse short-term
price movements, while limiting, somewhat, the benefits of favorable short-term
price movements.
From time to time, on a limited basis, the Company also purchases and sells
petroleum-based futures contracts for trading purposes. After-tax gain/loss
from such trading has not been material.
Additional details on these and other financial instruments are set forth in
Note 27 to the financial statements.
ENVIRONMENTAL MATTERS
The Company operates about 150 manufacturing facilities, five petroleum
refineries, 20 natural gas processing plants and numerous product-handling and
distribution facilities around the world, all of which are significantly
affected by a broad array of laws and regulations relating to the protection of
the environment. It is the Company's policy to comply fully with or to exceed
all legal requirements worldwide. In addition, since some risk to the
environment is associated with the Company's operations, as it is with other
companies engaged in similar businesses, voluntary programs are in place to
minimize that risk. These programs are designed to reduce air emissions,
curtail the generation of hazardous waste, decrease the volume of wastewater
discharges and improve the energy efficiency of operations. The cost of
complying with increasingly complex environmental laws and regulations, as well
as the Company's own internal programs, is significant, and will continue to be
so for the foreseeable future, but is not expected to have a material impact on
the Company's competitive or financial position. The enactment of broader or
more stringent environmental laws or regulations in the future, however, could
lead to an upward reassessment of the potential environmental costs provided
below.
New waste treatment facilities and pollution control and other equipment are
routinely installed to satisfy both legal requirements and the company's waste
elimination and pollution prevention goals. About $400 million was spent for
capital projects related to environmental requirements and Company goals in
1994. The Company currently estimates expenditures for environmental-related
capital projects will total about the same in 1995. The Company anticipates
significant capital expenditures may be required over the next decade for
treatment, storage and disposal facilities for solid and hazardous waste and
for compliance with the 1990 Amendments to the Clean Air Act (the "CAA"). For
example, environmental capital costs in 1993 and 1994 related to the CAA
Amendments included expenditures in the Petroleum segment to meet federal
requirements for reformulated gasoline/clean fuels, and additional
environmental capital expenditures are anticipated for plant air emission
controls, primarily in the Chemicals and Petroleum segments. Although
considerable uncertainty will remain with regard to future estimates of capital
expenditures until all new CAA regulatory requirements are known, related
capital costs over the next two years are currently estimated to total
approximately $20 million.
15
<PAGE>
Estimated pretax environmental expenses charged to current operations totaled
about $950 million in 1994, as compared to $1 billion in 1993 and $900 million
in 1992. These expenses included the remediation accruals discussed below,
operating, maintenance and depreciation costs for solid waste, air and water
pollution control facilities and costs incurred in conducting environmental
research activities. The largest of these expenses resulted from the operation
of water pollution control facilities and solid waste management facilities,
each of which accounted for about $200 million. About 75 percent of total
annual expenses resulted from the operations of the Company's Chemicals,
Fibers, Polymers and Diversified Businesses segments in the United States,
primarily the Chemicals and Polymers segments. Expenses are expected to
increase over the next several years as a result of additional operating costs
associated with new pollution prevention and control equipment.
Remediation Accruals
The Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA", often referred to as "Superfund") and the Resource Conservation and
Recovery Act (the "RCRA") both require that the Company undertake certain
remediation activities at sites where the company conducts or once conducted
operations or at sites where Company-generated waste was disposed. DuPont
accrues for those remediation activities when it is probable that a liability
has been incurred and reasonable estimates can be made. Accrued liabilities are
exclusive of claims against third parties and are not discounted. During 1994
the Company accrued $185 million for environmental remediation activities,
compared to $183 million and $160 million in 1993 and 1992, respectively. At
December 31, 1994, the Company's balance sheet included an accrued liability of
$616 million as compared to $522 million and $465 million at year-end 1993 and
1992, respectively. Approximately 75 percent of the company's environmental
accrual is attributable to RCRA and similar remediation liabilities and 25
percent to CERCLA liabilities. Expenditures for such previously accrued
remediation activities were $91 million in 1994, $126 million in 1993 and $121
million in 1992.
The Company's assessment of the potential impact of these two principal
remediation statutes is subject to considerable uncertainty due to the complex,
ongoing and evolving process of generating estimates of remediation costs. The
various stages of remediation include initial broad-based analysis of a site,
on-site investigation, feasibility studies to select from among various
remediation methods, approval by applicable authorities and, finally, the
actual implementation of the remediation plan. Remediation activities occur
over a relatively long period of time and vary in cost substantially from site
to site depending on the mix of unique site characteristics, the development of
new remediation technologies and the evolving regulatory framework. The
Company's assessment of those costs is a continuous process which takes into
account the factors affecting each specific site. DuPont Environmental
Remediation Services, a wholly owned subsidiary, provides technical capability
to address the Company's remediation needs in a cost-effective manner, while
protecting human health and the environment.
RCRA, as amended in 1984, provides for extensive regulation of the treatment,
storage and disposal of hazardous waste. The regulations currently provide that
companies seeking to periodically renew RCRA permits, or close facilities with
permits, must, as a condition of renewal or closure, undertake certain
corrective measures to remediate contamination caused by prior operations. The
RCRA corrective action program affects the Company differently than the CERCLA
program in that the cost of RCRA corrective action activities is typically
borne solely by the Company. The Company anticipates that significant ongoing
expenditures for RCRA corrective actions may be required over the next two
decades. Annual expenditures for the near term are not expected to vary
significantly from the range of such expenditures over the past few years.
Longer term, expenditures are subject to considerable uncertainty and may
fluctuate significantly, perhaps between $50 million and $300 million in any
one year. The company's expenditures associated with RCRA and similar
remediation activities were approximately $70 million in 1994, $90 million in
1993 and $103 million in 1992.
The Company from time to time receives requests for information or notices of
potential liability from the Environmental Protection Agency (the "EPA") and
state environmental agencies, alleging that the
16
<PAGE>
Company is a "potentially responsible party" ("PRP") under CERCLA or equivalent
state legislation. In addition, the Company has on occasion been made a party
to cost recovery litigation by those agencies. These requests, notices and
lawsuits assert potential liability for remediation costs of various waste
treatment or disposal sites that are not Company owned but allegedly contain
wastes attributable to the Company from past operations. As of December 31,
1994, the Company was aware of potential liability under CERCLA or state laws
at about 310 sites around the United States. The CERCLA or state remediation
process is actively under way at one stage or another at about 145 of those
sites. In addition, the Company has resolved its liability at 48 sites, either
by completing necessary remedial actions with other PRPs or by participating in
"de minimis buyouts" with other PRPs whose waste, like the Company's, only
represented a small fraction of the total waste present at a site.
The Company's expenditures associated with CERCLA or state remediation
activities were approximately $21 million in 1994, $36 million in 1993 and $18
million in 1992. Over the next decade the Company may incur significant costs
under CERCLA. Considerable uncertainty exists with respect to these costs, and
under the most adverse circumstances potential liability may exceed amounts
accrued as of December 31, 1994. The Company's share of the remediation cost at
these sites in many instances cannot be precisely estimated due to the large
number of PRPs involved, the scarcity of reliable data pertaining to many of
these sites, uncertainty as to how the laws and regulations may be applied to
these sites and the multiple choices and costs associated with diverse
technologies that may be used in remediation. For most sites, the Company's
potential liability will be significantly less than the total site remediation
costs because the percentage of material attributable to the Company versus
that attributable to other PRPs is relatively low. There are a few sites where
the Company is a major participant, but neither the cost to the Company of
remediation at those sites, nor at all CERCLA sites in the aggregate, is
expected to have a material impact on the competitive or financial position of
the Company. The process of estimating CERCLA remediation costs, the financial
viability of other PRPs and the PRPs' respective shares of liability is
ongoing. Often these estimates are performed by third parties and, thus far,
have not been subject to material uncertainty or dispute. Moreover, other PRPs
at sites where the Company is a party typically have the financial strength to
meet their obligations and, where they do not, or where certain PRPs cannot be
located, the Company's own share of liability has not materially increased. The
Company's general experience has been that, in most cases, its share of
estimated costs at any given site has trended downward as this process has
matured.
Although future remediation expenditures in excess of current reserves could
be significant, the effect on future financial results is not subject to
reasonable estimation because considerable uncertainty exists as to the cost
and timing of expenditures. The Company is actively pursuing claims against
insurers with respect to RCRA and CERCLA liabilities. Potential recoveries in
this litigation have not been offset against the accruals discussed above.
SUBSEQUENT EVENTS
On April 6, 1995, the Company acquired 156 million shares of its Common Stock
beneficially owned by Seagram for $56.25 per share. The consideration for the
acquired shares consisted of (i) $1 billion in cash, (ii) 90-day promissory
notes of the Company in an aggregate principal amount of approximately $7.3
billion and (iii) warrants of the Company valued at approximately $440 million
exercisable for 156 million shares of the Company's Common Stock. Seagram
continues to hold approximately 8.2 million shares, or 1.6% of the shares
outstanding following the transaction.
The notes issued to Seagram bear interest at market rates, are prepayable at
any time without penalty and have covenants and events of default substantially
identical to the Company's publicly held debt securities.
The warrants issued to Seagram expire on October 6, 1997, October 6, 1998 and
October 6, 1999 with respect to 48 million shares at $89.33 per share, 54
million shares at $101.14 per share and 54 million shares at $113.63 per share,
respectively. In general, so long as the warrants are held by Seagram, the
17
<PAGE>
warrants are exercisable only during the 60-day periods immediately preceding
their respective expiration dates. However, the warrants would become
exercisable sooner in connection with certain significant corporate events. The
warrants are not transferable until May 15, 1996. Following such date, the
Company would have the right to buy the warrants from Seagram before Seagram
would be permitted to transfer the warrants to a third party. Any warrants
which are transferred to non-affiliates of Seagram would be exercisable at any
time prior to their expiration. The warrants contain standard anti-dilution
adjustments. In addition, the exercise price and number of shares subject to
the warrants may be adjusted as a result of the Offerings.
Following the Seagram Redemption, Moody's Investors Service ("Moody's")
placed the Company's long-term debt rating of Aa2 under review for possible
downgrade. The Company's Prime-1 commercial paper rating is not under review by
Moody's. Standard & Poor's Corporation ("S&P") lowered its rating on the
Company's senior debt and preferred stock to AA- from AA and affirmed its
commercial paper rating of A-1+. The ratings outlook by S&P remains negative.
The Company does not expect that these changes or any prospective change in its
credit ratings as a result of the Seagram Redemption will have a material
impact on its interest and debt expenses or on its access to borrowings.
Initially, the Company will redeem the notes issued to Seagram from proceeds
from short-term borrowings, primarily commercial paper.
The Company currently expects that the long-term funding for the Seagram
Redemption will include: (i) cash flow from operations and selective sales of
assets; (ii) up to $1.5 billion from a Flexitrust Program that will effect the
sale or distribution of additional newly issued shares of DuPont Common Stock
over the next several years, provided that such sale or distribution will begin
no sooner than 60 days after the closing of the Offerings, to satisfy existing
employee compensation and benefit programs; and (iii) up to $2 billion from
public and private offerings of equity securities, including the Offerings.
Such offerings may also include the Company's anticipated offer to sell up to
$500 million of Common Stock to the DuPont Pension Trust Fund. It is unknown
whether the DuPont Pension Trust Fund will accept any such offer or the price
and other terms of any such transaction. DuPont expects its debt to total
capitalization ratio to return to its target range of 35% to 40% by year end
1996. DuPont is committed to restoring its financial flexibility.
The Company currently expects capital expenditures to increase to a total of
$3.3 billion in 1995 from the 1994 amount of $3.1 billion.
18
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 900,000,000 shares of
Common Stock, par value $.60 per share, and 23,000,000 shares of preferred
stock, without par value. As of April 12, 1995, 526,429,534 shares of Common
Stock were issued and outstanding. As of April 12, 1995, 1,672,594 shares of
$4.50 Series Preferred Stock and 700,000 shares of $3.50 Series Preferred Stock
were issued and outstanding.
COMMON STOCK
Dividends. The holders of Common Stock are entitled to receive dividends when
and as dividends are declared by the board of directors of the Company out of
funds legally available therefor, but not until all cumulative dividends on all
series of preferred stock shall have been paid or declared and set apart for
payment.
Voting Rights. Holders of DuPont Common Stock have the right to vote on all
questions to the exclusion of all other stockholders, except as otherwise
expressly provided by law or unless DuPont shall be in default in the payment
of dividends on preferred stock for a period of six months. In the latter
event, until accumulated and unpaid dividends on preferred stock of all series
shall have been paid, the holders of the outstanding preferred stock shall have
the exclusive right, voting separately and as a class, to elect two directors,
or if the total number of directors of DuPont be only three, then only one
director, at each meeting of stockholders held for the purpose of electing
directors.
Liquidation Rights. On liquidation, dissolution, or winding up of DuPont,
whether voluntary or involuntary, after payments have been made to holders of
preferred stock, holders of DuPont Common Stock have the right to share ratably
the remaining assets available for distribution.
No Preemptive Rights. Holders of DuPont Common Stock do not have any
preemptive rights.
PREFERRED STOCK
Pursuant to the Certificate of Incorporation of the Company, the board of
directors of the Company is authorized to establish and designate one or more
series of preferred stock, without further authorization of the Company's
stockholders, and to fix the number of shares, the dividend and certain other
rights, preferences and limitations of any such series. Thus, any series may,
if so determined by the board of directors, be convertible into Common Stock or
another security of the Company and have certain other relative rights,
preferences and limitations as the board of directors shall determine. As a
result, any class or series of preferred stock could have rights which would
adversely affect the voting power of the Common Stock.
Dividends. Dividends on the $4.50 Series Preferred Stock are payable annually
at the rate of $4.50 per annum. Dividends on the $3.50 Series Preferred Stock
are payable annually at the rate of $3.50 per annum. Holders of $4.50 Series
Preferred Stock and $3.50 Series Preferred Stock are entitled to receive any
dividends to which they are entitled before dividends are paid to holders of
Common Stock.
Voting Rights. Holders of $4.50 Series Preferred Stock and $3.50 Series
Preferred Stock do not have the right to vote on any question except as
otherwise required by applicable law or unless the Company is in default in the
payment of dividends for a period of six months. In such a case, the holders of
$4.50 Series Preferred Stock and $3.50 Series Preferred Stock shall have the
exclusive right, voting separately and as a class, to elect two directors, or
if the total number of directors of the Company is only three, then only one
director, at each meeting of the stockholders held for the purpose of electing
directors.
Liquidation Rights. In the event of voluntary liquidation, holders of
preferred stock are entitled to accumulated dividends and $115 a share for the
$4.50 Series, $107 a share for the $3.50 Series; in the event
19
<PAGE>
of involuntary liquidation, holders of both currently outstanding series of
preferred stock are entitled to accumulated dividends and $100 a share.
Redemption. The preferred stock may be redeemed at any time in whole or in
part for the redemption prices of $120 and accumulated dividends, and $100 and
accumulated dividends, respectively, on the $4.50 Series Preferred Stock and
the $3.50 Series Preferred Stock.
No Preemptive Rights. Holders of preferred stock do not have any preemptive
rights.
WARRANTS TO PURCHASE COMMON STOCK
In connection with the Seagram Redemption, the Company issued to Seagram
warrants exercisable for 156 million shares of Common Stock. For a discussion
of the terms of such warrants, see "Redemption of DuPont Common Stock from
Seagram".
20
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
The following is a general discussion of the principal United States Federal
tax consequences of the ownership and disposition of Common Stock by a holder
that, for United States Federal income tax purposes, is not a "United States
person" (a "Non-United States Holder"). This discussion is not intended to be
exhaustive and is based on statutes, regulations, rulings and court decisions
as currently in effect all of which may be changed either retroactively or
prospectively. This discussion does not consider any specific facts or
circumstances that may apply to a particular Non-United States Holder and
applies only to Non-United States Holders that hold Common Stock as a capital
asset. Prospective investors are urged to consult their tax advisors regarding
the United States Federal tax consequences of acquiring, holding and disposing
of Common Stock (including such investor's status as a United States person or
Non-United States Holder) as well as any tax consequences that may arise under
the laws of any state, municipality or other taxing jurisdiction.
For purposes of this discussion, "United States person" means a citizen or
resident of the United States, a corporation or partnership created or
organized in the United States or under the laws of the United States or of any
political subdivision thereof, or an estate or trust whose income is includible
in gross income for United States Federal income tax purposes regardless of its
source.
DIVIDENDS
Dividends paid to a Non-United States Holder generally will be subject to
withholding of United States Federal income tax at the rate of 30%, unless the
withholding rate is reduced under an applicable income tax treaty between the
United States and the country of tax residence of the Non-United States Holder.
No U.S. withholding will apply if the dividend is effectively connected with a
trade or business conducted within the United States by the Non-United States
Holder (or, alternatively, where an income tax treaty applies, if the dividend
is effectively connected with a permanent establishment maintained within the
United States by the Non-United States Holder), but, instead, the dividend will
be subject to the United States Federal income tax on net income that applies
to United States persons (and, with respect to corporate holders, may also be
subject to the branch profits tax). A Non-United States Holder may be required
to satisfy certain certification requirements in order to claim treaty benefits
or to otherwise claim a reduction of or exemption from withholding under the
foregoing rules. A Non-United States Holder that is eligible for a reduced rate
of U.S. withholding tax pursuant to a tax treaty may obtain a refund of any
excess amounts currently withheld by filing an appropriate claim for refund
with the United States Internal Revenue Service (the "Service").
GAIN ON DISPOSITION
Subject to special rules described below, a Non-United States Holder will
generally not be subject to United States Federal income tax on gain recognized
on a sale or other disposition of Common Stock unless the gain is effectively
connected with a trade or business conducted within the United States by the
Non-United States Holder (or, alternatively, where an income tax treaty
applies, unless the gain is effectively connected with a permanent
establishment maintained within the United States by the Non-United States
Holder). Any such effectively connected gain would be subject to the United
States Federal income tax on net income that applies to United States persons
(and, with respect to corporate holders, may also be subject to the branch
profits tax). Such tax is not collected by withholding.
In addition, an individual Non-United States Holder who holds Common Stock
would generally be subject to tax at a 30% rate on any gain recognized on the
disposition of such Common Stock if such individual is present in the United
States for 183 days or more in the taxable year of disposition and either
(i) has a "tax home" in the United States (as specifically defined for purposes
of the United States Federal income tax) or (ii) maintains an office or other
fixed place of business in the United States and the income from the sale of
the stock is attributable to such office or other fixed place of business.
Individual Non-United States Holders may also be subject to tax pursuant to
provisions of United States Federal income tax law applicable to certain United
States expatriates.
21
<PAGE>
Also, special rules apply to Non-United States Holders if the Company is or
becomes a "United States real property holding corporation" for United States
Federal income tax purposes. The Company believes that it has not been, is not
currently, and is not likely to become, a United States real property holding
corporation. If the Company were a United States real property holding
corporation, gain or loss on a sale of the Common Stock by any Non-United
States Holder (other than, in most cases, a Non-United States Holder that owns
or owned (directly or constructively) 5% or less of the Common Stock during the
five-year period ending on the date of such sale) would be treated as income
effectively connected with the conduct of a trade or business within the United
States by the holder and subject to the net income tax described above.
UNITED STATES FEDERAL ESTATE TAXES
Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as specially defined for United States Federal estate tax
purposes) of the United States at the date of death, or Common Stock subject to
certain lifetime transfers made by such an individual, will be included in such
individual's estate for United States Federal estate tax purposes and may be
subject to United States Federal estate tax, unless an applicable estate tax
treaty provides otherwise. Estates of nonresident aliens are generally allowed
a credit that is equivalent to an exclusion of $60,000 of assets from the
estate for United States Federal estate tax purposes.
LEGISLATIVE DEVELOPMENTS
Legislation was proposed in 1990 and again in 1992 that, if enacted, would
have resulted under certain circumstances in the imposition of United States
Federal income tax on gain realized from the disposition of Common Stock by
certain Non-U.S. Holders who own or owned 10% or more of the Common Stock.
It is impossible to predict whether or in what form any such legislation or
other legislation might be enacted and what the scope or effective date of any
such legislation might be.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the Service and to each Non-United States
Holder the amount of dividends paid to, and the tax withheld with respect to,
such holder, regardless of whether any tax was actually withheld. That
information may also be made available to the tax authorities of the country in
which a Non-United States Holder resides.
United States Federal backup withholding tax (which, generally, is imposed at
the rate of 31% on certain payments to persons not otherwise exempt who fail to
furnish information required under United States information reporting
requirements) generally will not apply to dividends paid to a Non-United States
Holder either at an address outside the United States (provided that the payor
does not have actual knowledge that the payee is a United States person) or if
the dividends are subject to withholding at the 30% rate (or lower treaty
rate). As a general matter, information reporting the backup withholding also
will not apply to a payment of the proceeds of a sale of Common Stock by a
foreign office of a broker. However, information reporting requirements (but
not backup withholding) will apply to a payment of the proceeds of a sale of
Common Stock by a foreign office of a broker that is a United States person, or
by a foreign office of a foreign broker that derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the
United States, or that is a "controlled foreign corporation" as to the United
States, unless the broker has documentary evidence in its records that the
holder is a Non-United States Holder and certain conditions are met, or the
holder otherwise establishes an exemption. Payment by a United States office of
a broker of the proceeds of a sale of Common Stock is subject to both backup
withholding and information reporting unless the holder certifies as to its
non-United States status under penalties of perjury or otherwise establishes an
exemption (and the broker has no actual knowledge to the contrary.) The backup
withholding tax is not an additional tax and may be credited against the Non-
United States Holder's United States Federal income tax liability or refunded
to the extent excess amounts are withheld provided that the required
information is supplied to the Internal Revenue Service.
22
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated , 1995 (the "U.S. Underwriting Agreement"), the
underwriters named below (the "U.S. Underwriters"), for whom CS First Boston
Corporation, Merrill Lynch & Co. and Morgan Stanley & Co. are acting as
representatives (the "Representatives"), have severally but not jointly agreed
to purchase from the Company the following respective numbers of U.S. Shares:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER U.S. SHARES
----------- -----------
<S> <C>
CS First Boston Corporation...................................
Merrill Lynch & Co. ..........................................
Morgan Stanley & Co. .........................................
----------
Total..................................................... 13,600,000
==========
</TABLE>
The U.S. Underwriting Agreement provides that the obligations of the U.S.
Underwriters are subject to certain conditions precedent and that the U.S.
Underwriters will be obligated to purchase all of the U.S. Shares offered
hereby if any are purchased. The U.S. Underwriting Agreement provides that, in
the event of a default by a U.S. Underwriter, in certain circumstances the
purchase commitments of non-defaulting U.S. Underwriters may be increased or
the U.S. Underwriting Agreement may be terminated.
The Company has entered into a Subscription Agreement (the "Subscription
Agreement") with the Managers of the International Offering (the "Managers")
providing for the concurrent offer and sale of the International Shares outside
the United States and Canada. The closing of the U.S. Offering is a condition
to the closing of the International Offering and vice versa.
The Company has granted to the U.S. Underwriters and the Managers an option
exercisable by CS First Boston Corporation, expiring at the close of business
on the 30th day after the date of this Prospectus, to purchase up to 2,550,000
additional shares at the public offering price, less the underwriting discounts
and commissions, all as set forth on the cover page of this Prospectus. The
U.S. Underwriters and Managers may exercise such option only to cover over-
allotments in the sale of the shares of Common Stock offered in the Offerings.
To the extent that this option to purchase is exercised, each U.S. Underwriter
and each Manager will become obligated, subject to certain conditions, to
purchase approximately the same percentage of additional shares being sold to
the U.S. Underwriters and the Managers as the number of U.S. Shares set forth
next to such U.S. Underwriter's name in the preceding table bears to the total
number of U.S. Shares in such table and as the number set forth next to such
Manager's name in the corresponding table in the prospectus relating to the
International Offering bears to the total number of International Shares in
such table.
The Company has been advised by the Representatives that the U.S.
Underwriters propose to offer the U.S. Shares in the United States and Canada
to the public initially at the public offering price set forth on the cover
page of this Prospectus and, through the Representatives, to certain dealers at
such price less a concession of $ per share, and the U.S. Underwriters and
such dealers may allow a discount of $ per share on sales to certain other
dealers. After the initial public offering, the public offering price and the
concession and discount to dealers may be changed.
The public offering price, the aggregate underwriting discounts and
commissions per share and per share concession and discount to dealers for the
U.S. Offering and the concurrent International Offering will be
23
<PAGE>
identical. Pursuant to an Agreement Between the U.S. Underwriters and Managers
(the "Intersyndicate Agreement") relating to the Offerings, changes in the
public offering price, concession and discount to dealers will be made only
upon the mutual agreement of CS First Boston Corporation, as representative of
the U.S. Underwriters, and CS First Boston Limited ("CSFBL"), on behalf of the
Managers.
Pursuant to the Intersyndicate Agreement, each of the U.S. Underwriters has
agreed that, as part of the distribution of the U.S. Shares and subject to
certain exceptions, it has not offered or sold, and will not offer or sell,
directly or indirectly, any shares of Common Stock or distribute any prospectus
relating to the Common Stock to any person outside the United States or Canada
or to any other dealer who does not so agree. Each of the Managers has agreed
or will agree that, as part of the distribution of the International Shares and
subject to certain exceptions, it has not offered or sold, and will not offer
or sell, directly or indirectly, any shares of Common Stock or distribute any
prospectus relating to the Common Stock in the United States or Canada or to
any other dealer who does not so agree. The foregoing limitations do not apply
to stabilization transactions or to transactions between the U.S. Underwriters
and the Managers pursuant to the Intersyndicate Agreement. As used herein,
"United States" means the United States of America (including the States and
the District of Columbia), its territories, possessions and other areas subject
to its jurisdiction, "Canada" means Canada, its provinces, its territories,
possessions and other areas subject to its jurisdiction, and an offer or sale
shall be in the United States or Canada if it is made to (i) any individual
resident in the United States or Canada or (ii) any corporation, partnership,
pension, profit-sharing or other trust or other entity (including any such
entity acting as an investment adviser with discretional authority) whose
office most directly involved with the purchase is located in the United States
or Canada.
Pursuant to the Intersyndicate Agreement, sales may be made between the U.S.
Underwriters and the Managers of such number of shares of Common Stock as may
be mutually agreed upon. The price of any shares so sold will be the public
offering price, less such amount as may be mutually agreed upon by CS First
Boston Corporation, as representative of the U.S. Underwriters, and CSFBL, on
behalf of the Managers, but not exceeding the selling concession applicable to
such shares. To the extent there are sales between U.S. Underwriters and the
Managers pursuant to the Intersyndicate Agreement, the number of shares of
Common Stock initially available for sale by the U.S. Underwriters or by the
Managers may be more or less than the amount appearing on the cover page of
this Prospectus. Neither the U.S. Underwriters nor the Managers are obligated
to purchase from the other any unsold shares of Common Stock.
This Prospectus may be used by underwriters and dealers in connection with
sales of International Shares to persons located in the United States, to the
extent such sales are permitted by the contractual limitations on sales
described above.
The Company has agreed not to offer, sell, contract to sell, pledge or
otherwise dispose of, or cause to be filed with the Commission a registration
statement under the Securities Act relating to, or announce any offering of,
any shares of Common Stock or any securities convertible into, or exchangeable
or exercisable for, shares of Common Stock, except the shares of Common Stock
offered in the Offerings, for a period of 180 days from the date hereof without
the prior written consent of CS First Boston Corporation; provided, however,
that the Company may (i) issue Common Stock or any securities convertible into,
or exchangeable or exercisable for, shares of Common Stock pursuant to the
terms of any securities outstanding on the date hereof or other obligations
binding upon the Company and in effect on the date hereof, (ii) sell shares of
Common Stock to the Flexitrust Program and register such Common Stock and,
beginning no sooner than 60 days after the closing of the Offerings, distribute
or sell such Common Stock from the Flexitrust Program, and (iii) sell shares of
Common Stock to the DuPont Pension Trust Fund and register such Common Stock.
Such restrictions would not apply to shares of DuPont's Common Stock offered by
the Company as consideration for a merger or other stock-based acquisition,
should such a transaction occur.
The Company has agreed to indemnify the U.S. Underwriters and the Managers
against certain liabilities, including civil liabilities under the Securities
Act, or to contribute to payments that the U.S. Underwriters and the Managers
may be required to make in respect thereof.
Certain U.S. Underwriters and Managers and their affiliates have from time to
time provided investment banking, commercial banking and financial advisory
services to DuPont, for which they have been paid customary fees.
24
<PAGE>
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Common Stock in Canada is being made only on a
private placement basis exempt from the requirement that the Company prepare
and file a prospectus with the securities regulatory authorities in each
province where trades of Common Stock are effected. Accordingly, any resale of
the Common Stock in Canada must be made in accordance with applicable
securities laws which will vary depending on the relevant jurisdiction and
which may require resales to be made in accordance with available statutory
exemptions or pursuant to a discretionary exemption granted by the applicable
Canadian securities regulatory authority. Purchasers are advised to seek legal
advice prior to any resale of the Common Stock.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Common Stock in Canada who receives a purchase confirmation
will be deemed to represent to the Company and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Common Stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions".
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
All of the Company's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Ontario purchasers to effect service of process within Canada upon
the issuer or such persons. All or a substantial portion of the assets of the
issuer and such persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the issuer or such persons in
Canada or to enforce a judgment obtained in Canadian courts against such issuer
or persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Common Stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Common Stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #88/5, a copy of which may be obtained from the Company. Only one
such report must be filed in respect of Common Stock acquired on the same date
and under the same prospectus exemption.
EXPERTS
The financial statements as of December 31, 1994 and 1993 and for each of the
three years in the period ended December 31, 1994 included in this Prospectus
have been so included in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
25
<PAGE>
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock and certain other
legal matters in connection with the Offerings will be passed upon by Howard J.
Rudge, Senior Vice President and General Counsel of the Company. Cravath,
Swaine & Moore, New York, New York, will pass on certain legal matters for the
U.S. Underwriters and the Managers. Mr. Rudge beneficially owned as of April
13, 1995, 99,879 shares of Common Stock, including 87,164 shares of which he
has the right to acquire beneficial ownership within 60 days through the
exercise of stock options awarded under the Company's Stock Performance Plan.
26
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Price Waterhouse LLP, Independent Accountants................... F-2
Consolidated Statement of Income for the Years Ended December 31, 1994,
1993 and 1992............................................................ F-3
Consolidated Balance Sheet at December 31, 1994 and 1993.................. F-4
Consolidated Statement of Stockholders' Equity for the Years Ended Decem-
ber 31, 1994, 1993 and 1992.............................................. F-5
Consolidated Statement of Cash Flows for the Years Ended December 31,
1994, 1993 and 1992...................................................... F-6
Notes to Financial Statements............................................. F-7
Supplemental Petroleum Data............................................... F-34
Quarterly Financial Data.................................................. F-40
Consolidated Geographic Data.............................................. F-41
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and the Board of Directors of
E. I. du Pont de Nemours and Company
In our opinion, the consolidated financial statements appearing on pages F-3-
F-33 present fairly, in all material respects, the financial position of E. I.
du Pont de Nemours and Company and its subsidiaries at December 31, 1994 and
1993, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, the company
changed its method of accounting for postretirement benefits other than
pensions and for income taxes in 1992.
Price Waterhouse LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
February 16, 1995
F-2
<PAGE>
FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
SALES*.............................................. $39,333 $37,098 $37,799
Other Income (Note 2)............................... 926 743 553
------- ------- -------
Total.............................................. 40,259 37,841 38,352
------- ------- -------
Cost of Goods Sold and Other Operating Charges
(Notes 3 and 12)................................... 21,977 21,624 22,046
Selling, General and Administrative Expenses........ 2,888 3,081 3,553
Depreciation, Depletion and Amortization............ 2,976 2,833 2,655
Exploration Expenses, Including Dry Hole Costs and
Impairment of Unproved Properties.................. 357 361 416
Research and Development Expense.................... 1,047 1,132 1,277
Interest and Debt Expense (Note 4).................. 559 594 643
Taxes Other Than on Income* (Note 5)................ 6,215 5,423 5,476
Restructuring (Note 6).............................. (142) 1,621 475
Write-Down of Intangible Assets (Note 6)............ -- 214 --
------- ------- -------
Total.............................................. 35,877 36,883 36,541
------- ------- -------
EARNINGS BEFORE INCOME TAXES........................ 4,382 958 1,811
Provision for Income Taxes (Note 7)................. 1,655 392 836
------- ------- -------
INCOME BEFORE EXTRAORDINARY ITEM AND TRANSITION
EFFECT OF ACCOUNTING CHANGES....................... 2,727 566 975
Extraordinary Charge from Early Extinguishment of
Debt (Note 8)...................................... -- (11) (69)
Transition Effect of Changes in Accounting
Principles
(Notes 1, 7 and 25)................................ -- -- (4,833)
------- ------- -------
NET INCOME (LOSS)................................... $ 2,727 $ 555 $(3,927)
======= ======= =======
EARNINGS PER SHARE OF COMMON STOCK (Note 9)
INCOME BEFORE EXTRAORDINARY ITEM AND TRANSITION
EFFECT OF ACCOUNTING CHANGES...................... $ 4.00 $ .83 $ 1.43
Extraordinary Charge from Early Extinguishment of
Debt (Note 8)..................................... -- (.02) (.10)
Transition Effect of Changes in Accounting
Principles
(Notes 1, 7 and 25)............................... -- -- (7.18)
------- ------- -------
NET INCOME (LOSS).................................. $ 4.00 $ .81 $ (5.85)
======= ======= =======
</TABLE>
- --------
*Includes petroleum excise taxes of $5,291, $4,477 and $4,508 in 1994, 1993 and
1992, respectively.
See accompanying Notes to Financial Statements.
F-3
<PAGE>
FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
DECEMBER 31
---------------
1994 1993
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents (Note 10)............................ $ 856 $ 1,109
Marketable Securities (Note 10)................................ 253 85
Accounts and Notes Receivable (Note 11)........................ 5,213 4,894
Inventories (Note 12).......................................... 3,969 3,818
Prepaid Expenses............................................... 259 231
Deferred Income Taxes (Note 7)................................. 558 762
------- -------
Total Current Assets......................................... 11,108 10,899
------- -------
PROPERTY, PLANT AND EQUIPMENT (Note 13)........................ 48,838 47,926
Less: Accumulated Depreciation, Depletion and Amortization..... 27,718 26,503
------- -------
21,120 21,423
------- -------
INVESTMENT IN AFFILIATES (Note 14)............................. 1,662 1,607
OTHER ASSETS (Notes 7 and 15).................................. 3,002 3,124
------- -------
TOTAL........................................................ $36,892 $37,053
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable (Note 16)..................................... $ 2,734 $ 2,444
Short-Term Borrowings and Capital Lease Obligations (Note 17).. 1,292 2,796
Income Taxes (Note 7).......................................... 409 321
Other Accrued Liabilities (Note 18)............................ 3,130 3,878
------- -------
Total Current Liabilities.................................... 7,565 9,439
LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS (Notes 19
and 20)....................................................... 6,376 6,531
OTHER LIABILITIES (Note 21).................................... 8,438 8,200
DEFERRED INCOME TAXES (Note 7)................................. 1,494 1,466
------- -------
Total Liabilities............................................ 23,873 25,636
------- -------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES................ 197 187
------- -------
STOCKHOLDERS' EQUITY (see page F-5)
Preferred Stock................................................ 237 237
Common Stock, $.60 par value; 900,000,000 shares authorized;
issued at December 31: 1994--681,004,944; 1993--677,577,437... 408 407
Additional Paid-In Capital..................................... 4,771 4,660
Reinvested Earnings............................................ 7,406 5,926
------- -------
Total Stockholders' Equity................................... 12,822 11,230
------- -------
TOTAL........................................................ $36,892 $37,053
======= =======
</TABLE>
See accompanying Notes to Financial Statements.
F-4
<PAGE>
FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
PREFERRED STOCK, without par value--cumulative;
23,000,000 shares authorized; issued at December
31:
$4.50 Series--1,672,594 shares (callable at $120). $ 167 $ 167 $ 167
$3.50 Series--700,000 shares (callable at $102)... 70 70 70
------- ------- -------
237 237 237
------- ------- -------
COMMON STOCK (Notes 22 and 23), $.60 par value;
900,000,000 shares authorized; issued at December
31:
1994--681,004,944; 1993--677,577,437; 1992--
675,008,236........................................ 408 407 405
------- ------- -------
ADDITIONAL PAID-IN CAPITAL (Notes 22 and 23)
Balance at Beginning of Year........................ 4,660 4,551 4,418
Common Stock Issued in Connection with Compensation
Plans.............................................. 111 109 133
------- ------- -------
Balance at End of Year.............................. 4,771 4,660 4,551
------- ------- -------
REINVESTED EARNINGS
Balance at Beginning of Year........................ 5,926 6,572 11,681
Net Income (Loss)................................... 2,727 555 (3,927)
------- ------- -------
8,653 7,127 7,754
------- ------- -------
Preferred Dividends................................. (10) (10) (10)
Common Dividends (1994--$1.82; 1993--$1.76; 1992--
$1.74)............................................. (1,237) (1,191) (1,172)
------- ------- -------
Total Dividends................................... (1,247) (1,201) (1,182)
------- ------- -------
Balance at End of Year.............................. 7,406 5,926 6,572
------- ------- -------
TOTAL STOCKHOLDERS' EQUITY.......................... $12,822 $11,230 $11,765
======= ======= =======
</TABLE>
See accompanying Notes to Financial Statements.
F-5
<PAGE>
FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR..... $ 1,109 $ 1,640 $ 468
------- ------- -------
CASH PROVIDED BY OPERATIONS
Net Income (Loss).................................. 2,727 555 (3,927)
Adjustments to Reconcile Net Income to Cash
Provided by Operations:
Extraordinary Charge from Early Extinguishment of
Debt (Note 8)................................... -- 11 69
Transition Effect of Accounting Changes (Notes 1,
7 and 25)....................................... -- -- 4,833
Depreciation, Depletion and Amortization......... 2,976 2,833 2,655
Dry Hole Costs and Impairment of Unproved
Properties...................................... 152 201 185
Other Noncash Charges and Credits--Net........... (140) 843 (174)
Decrease in Operating Assets:
Accounts and Notes Receivable................... 30 103 104
Inventories and Other Operating Assets.......... 19 664 219
Increase (Decrease) in Operating Liabilities:
Accounts Payable and Other Operating
Liabilities.................................... (432) 686 907
Accrued Interest and Income Taxes (Notes 4 and
7)............................................. 332 (516) (483)
------- ------- -------
Cash Provided by Operations................... 5,664 5,380 4,388
------- ------- -------
INVESTMENT ACTIVITIES (NOTE 24)
Purchases of Property, Plant and Equipment......... (3,050) (3,621) (4,448)
Investments in Affiliates.......................... (90) (70) (127)
Payments for Businesses Acquired................... (5) (409) --
Proceeds from Sales of Assets...................... 432 1,160 179
Investments in Short-Term Financial Instruments--
Net............................................... (379) (85) (70)
Miscellaneous--Net................................. (41) (53) (87)
------- ------- -------
Cash Used for Investment Activities........... (3,133) (3,078) (4,553)
------- ------- -------
FINANCING ACTIVITIES
Dividends Paid to Stockholders..................... (1,247) (1,201) (1,182)
Net Increase (Decrease) in Short-Term Borrowings... (517) (2,024) 2,310
Long-Term and Other Borrowings:
Receipts......................................... 824 1,806 2,976
Payments......................................... (2,032) (1,392) (2,711)
Common Stock Issued in Connection with Compensation
Plans............................................. 94 67 86
------- ------- -------
Cash Provided by (Used for) Financing
Activities................................... (2,878) (2,744) 1,479
------- ------- -------
Effect of Exchange Rate Changes on Cash............ 94 (89) (142)
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR........... $ 856 $ 1,109 $ 1,640
------- ------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS... $ (253) $ (531) $ 1,172
======= ======= =======
</TABLE>
See accompanying Notes to Financial Statements.
F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DuPont observes the generally accepted accounting principles described below.
These, together with the other notes that follow, are an integral part of the
consolidated financial statements.
Accounting Changes
In 1992, DuPont adopted Statement of Financial Accounting Standards (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" and SFAS No. 109, "Accounting for Income Taxes." The company recorded
charges to net income of $3,788 ($5.63 per share) and $1,045 ($1.55 per share),
respectively, as of January 1, 1992 for the effects of transition to these two
new standards. See also Notes 7 and 25.
Basis of Consolidation
The accounts of wholly owned and majority-owned subsidiaries are included in
the consolidated financial statements. Investments in affiliates owned 20
percent or more and corporate joint ventures are accounted for under the equity
method. Investments in noncorporate joint ventures of petroleum operations are
consolidated on a pro rata basis. Other securities and investments, excluding
marketable securities, are generally carried at cost.
Inventories
Substantially all inventories are valued at cost as determined by the last-
in, first-out (LIFO) method; in the aggregate, such valuations are not in
excess of market. Elements of cost in inventories include raw materials, direct
labor and manufacturing overhead. Stores and supplies are valued at cost or
market, whichever is lower; cost is generally determined by the average cost
method.
Property, Plant and Equipment
Property, plant and equipment (PP&E) is carried at cost and, except for
petroleum, PP&E is generally classified in depreciable groups and depreciated
under the sum-of-the-years' digits method and other substantially similar
methods. Depreciation rates range from 4 percent to 12 percent per annum on
direct manufacturing facilities and from 2 percent to 10 percent per annum on
other facilities; in some instances appropriately higher or lower rates are
used. Generally, for PP&E acquired prior to 1991, the gross carrying value of
assets surrendered, retired, sold or otherwise disposed of is charged to
accumulated depreciation and any salvage or other recovery therefrom is
credited to accumulated depreciation. For disposals of PP&E acquired after
1990, the gross carrying value and related accumulated depreciation are removed
from the accounts and included in determining gain or loss on such disposals.
Beginning in 1995, nonpetroleum PP&E placed in service will be depreciated
using the straight-line method. This change in accounting principle is being
made to reflect management's belief that the productivity of such PP&E will not
appreciably diminish in the early years of its useful life, and it will not be
subject to significant additional maintenance in the later years of its useful
life. In these circumstances, straight-line depreciation is preferable in that
it provides a better matching of costs with revenues. Additionally, the change
to the straight-line method will conform to predominant industry practice.
Although the effect of this change on net income will be impacted by the level
of future capital spending, the change is not expected to have a material
effect on 1995 results.
F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Petroleum PP&E, other than "Oil and Gas Properties" described below, is
depreciated on the straight-line method at various rates calculated to
extinguish carrying values over estimated useful lives. When petroleum PP&E is
surrendered, retired, sold or otherwise disposed of, the nature of the assets
involved determines if a gain or loss is recognized, or the gross carrying
value is charged to accumulated depreciation, depletion and amortization and
any salvage or other recovery therefrom is credited to accumulated
depreciation, depletion and amortization.
Maintenance and repairs are charged to operations; replacements and
betterments are capitalized.
Oil and Gas Properties
The company's exploration and production activities are accounted for under
the successful-efforts method. Costs of acquiring unproved properties are
capitalized, and impairment of those properties, which are individually
insignificant, is provided for by amortizing the cost thereof based on past
experience and the estimated holding period. Geological, geophysical and delay
rental costs are expensed as incurred. Costs of exploratory dry holes are
expensed as the wells are determined to be dry. Costs of productive properties,
production and support equipment and development costs are capitalized and
amortized on a unit-of-production basis.
Intangible Assets
Identifiable intangible assets such as purchased patents and trademarks are
amortized on a straight-line basis over their estimated useful lives. Goodwill
is amortized over periods up to 40 years on the straight-line method. The
company continually evaluates the reasonableness of its amortization for
intangibles. In addition, if it becomes probable that expected future
undiscounted cash flows associated with intangible assets are less than their
carrying value, the assets are written down to their fair value.
Environmental Liabilities and Expenditures
Accruals for environmental matters are recorded in operating expenses when it
is probable that a liability has been incurred and the amount of the liability
can be reasonably estimated. Accrued liabilities are exclusive of claims
against third parties and are not discounted.
In general, costs related to environmental remediation are charged to
expense. Environmental costs are capitalized if the costs increase the value of
the property and/or mitigate or prevent contamination from future operations.
Income Taxes
The provision for income taxes has been determined using the asset and
liability approach to accounting for income taxes. Under that approach,
deferred taxes represent the future tax consequences expected to occur when the
reported amounts of assets and liabilities are recovered or paid. The provision
for income taxes represents income taxes paid or payable for the current year
plus the change in deferred taxes during the year. Deferred taxes result from
differences between the financial and tax bases of the company's assets and
liabilities and are adjusted for changes in tax rates and tax laws when changes
are enacted. Valuation allowances are recorded to reduce deferred tax assets
when it is more likely than not that a tax benefit will not be realized.
Provision has been made for income taxes on unremitted earnings of
subsidiaries and affiliates, except in cases in which earnings of foreign
subsidiaries are deemed to be permanently invested. Investment tax credits or
grants are accounted for in the period earned (the flow-through method).
F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Foreign Currency Translation
The company has determined that the U.S. dollar is the "functional currency"
of its worldwide operations. Foreign currency asset and liability amounts are
translated into U.S. dollars at end-of-period exchange rates, except for
inventories, prepaid expenses and property, plant and equipment, which are
translated at historical rates. Income and expenses are translated at average
exchange rates in effect during the year, except for expenses related to
balance sheet amounts that are translated at historical exchange rates. The
company routinely uses forward exchange contracts to hedge its net exposures,
by currency, related to the foreign currency-denominated monetary assets and
liabilities of its operations. Exchange gains and losses, net of their related
tax effects, are included in income in the period in which they occur.
In addition, the company from time to time enters into forward exchange
contracts and similar agreements to effectively convert firm foreign currency
commitments to U.S. dollar-denominated transactions. Gains and losses on these
specific commitment hedges are deferred and included in the measurement of the
related foreign currency transactions.
In the Consolidated Statement of Cash Flows, the company reports the cash
flows resulting from its hedging activities in the same category as the related
item that is being hedged.
Interest Rate Swap Agreements
The company enters into interest rate swap agreements as part of its program
to manage the fixed and floating interest rate mix of its total debt portfolio
and related overall cost of borrowing. The differential to be paid or received
is accrued as interest rates change and is recognized in income over the life
of the agreements.
Commodity Hedges and Trading
The company enters into commodity futures contracts to hedge its exposure to
price fluctuations on anticipated crude oil, refined products and natural gas
transactions and certain raw material purchases. Gains and losses on these
hedge contracts are deferred and included in the measurement of the related
transaction. From time to time, on a limited basis, the company also purchases
and sells petroleum-based futures contracts for trading purposes. Changes in
the market values of these trading contracts are reflected in income in the
period the change occurs.
Reclassifications
Certain reclassifications of prior years' data have been made to conform to
1994 classifications.
2. OTHER INCOME
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Royalty income................................................ $ 95 $111 $118
Interest income, net of miscellaneous interest expense........ 111 160 178
Equity in earnings of affiliates (see Note 14)................ 361 121 216
Sales of assets............................................... 92 198 40
Miscellaneous income and expenses--net........................ 267 153 1
---- ---- ----
$926 $743 $553
==== ==== ====
</TABLE>
F-9
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
3. FUNGICIDE RECALL AND CLAIMS PROVISION
During 1991, the company initiated a stop-sale and recall of "Benlate" DF 50
fungicide. The company accrued $175, $200 and $212 in 1994, 1993 and 1992,
respectively, for estimated costs in excess of insurance coverage. The related
liability included in the Consolidated Balance Sheet is not reduced by the
amounts of any expected insurance recoveries. Adverse changes in estimates for
such costs could result in additional future charges.
4. INTEREST AND DEBT EXPENSE
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Interest and debt cost incurred.............................. $703 $825 $860
Less: Interest and debt cost capitalized..................... 143 194 194
Foreign currency adjustments*................................ 1 37 23
---- ---- ----
$559 $594 $643
==== ==== ====
</TABLE>
- --------
* Represents exchange gains associated with local currency borrowings in
hyperinflationary economies. These amounts effectively offset the related
inflationary interest expense arising from currency devaluations.
Interest paid (net of amounts capitalized) was $598 in 1994, $614 in 1993 and
$611 in 1992.
5. TAXES OTHER THAN ON INCOME
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Petroleum excise taxes (also included in Sales):
U.S................................................... $1,049 $ 803 $ 709
Non-U.S............................................... 4,242 3,674 3,799
Payroll taxes.......................................... 424 443 459
Property taxes......................................... 202 201 201
Import duties.......................................... 159 151 146
Production and other taxes............................. 139 151 162
------ ------ ------
$6,215 $5,423 $5,476
====== ====== ======
</TABLE>
6. RESTRUCTURING CHARGES AND WRITE-DOWN OF INTANGIBLE ASSETS
Restructuring charges are directly related to management decisions to reduce
worldwide employment levels and realign worldwide production and support
facilities in order to improve productivity and competitiveness. Charges
principally reflect employee separation costs, costs of shutting down certain
facilities and contract cancellation costs.
In the third quarter of 1993, the company recorded a restructuring charge of
$1,621. The principal component of this charge related to employee separation
costs of $665. This charge was for the involuntary and voluntary termination of
approximately 10,900 employees, and was based on plans that identified the
number of employees to be terminated, their functions and their businesses.
Substantially all of this charge was for estimated termination payments and
enhanced benefit costs for terminated employees. As of December 31, 1994,
almost 9,000 employees have been terminated under this program and about $420
has been settled and charged against the related $665 liability. In addition,
during the fourth quarter 1994, the
F-10
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
restructuring reserve balance was reduced by $45 principally to reflect lower
estimates for employee separation costs and a reduction of about 500 in the
number of employees to be terminated. As a result, about $200 remains as a
liability in the company's Consolidated Balance Sheet at December 31, 1994.
This $200 balance includes certain termination payments for former employees
that extend beyond December 31, 1994 under the terms of various separation
agreements, in addition to the liability for employees yet to be terminated.
All restructuring plans have been announced, and most of the remaining 1,400
employee terminations will be in Europe. The majority of these employees will
be terminated during 1995, and the program will be completed in 1997 concurrent
with the last plant closing.
The remaining portion of the restructuring charge, $956, is related to asset
write-downs and facility shutdowns, principally:
a) The decision to discontinue the manufacture of silver halide films in
New Jersey and to consolidate manufacturing at existing facilities in
Germany and North Carolina. A charge of $330 was recorded to fully reserve
discontinued facilities and to cover other costs directly associated with
manufacturing and product line rationalizations of the printing and
publishing business;
b) Write-downs of operating assets to be sold, specifically, certain
North American petroleum-producing properties. The petroleum properties
were written down by $233 to their estimated net realizable value,
generally based on their respective estimated selling prices;
c) The write-down of a polymers plant in Texas by $102 to its estimated
net realizable value. This charge covered the net book value of the
facilities and estimated dismantlement costs less estimated salvage
proceeds since it was uncertain at that time whether an appropriate buyer
could be identified. This plant was subsequently sold as discussed below;
d) Charges of $108 related to restructuring by an equity affiliate,
write-off of chlorofluorocarbon (CFC) manufacturing facilities in South
America, and contract cancellations; and
e) A write-off of $70 associated with rationalization of certain fibers
facilities in the United States, Europe and South America.
This portion of the restructuring, after 1994 adjustments described below, is
expected to be essentially completed in 1995. The related reserve balances at
year-end 1994 were about $100.
In the fourth quarter 1992, the company recorded charges of $475 for
termination incentives and payments, as well as certain other charges, related
to business restructuring. During 1994, an additional $25 charge was recorded
to reflect higher-than-projected employee termination costs. This restructuring
is complete.
Adjustments of 1993 Restructuring Charges
1994 earnings included a $167 benefit associated with several adjustments of
restructuring provisions established in September 1993. Revisions related to
asset write-downs and facility shutdowns totaled $122 and reflected higher-
than-anticipated proceeds from the disposal of a portion of a plant previously
written down, continuation of CFC operations in South America, at the request
of local government, to allow for an orderly transition to alternative
products, and further refinement of certain of the other items reflected in the
1993 restructuring charge. In addition, an adjustment of $45 was made to
reflect lower estimates for employee separation costs.
F-11
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Write-Down of Intangible Assets
A charge of $214 was recorded in the third quarter 1993 for the write-down of
intangible assets (technology and goodwill) associated with a series of
acquisitions made by the printing and publishing business in 1989. Such action
was taken when it became probable that undiscounted future cash flows would not
be adequate to support carrying values. (See Note 1, "Intangible Assets.")
7. PROVISION FOR INCOME TAXES
Effective January 1, 1992, the company adopted SFAS No. 109, "Accounting for
Income Taxes." On adoption, the company recorded an increase in deferred tax
liabilities at January 1, 1992 and a charge to income of $1,045, principally to
provide deferred taxes for purchase business combinations consummated prior to
1992 for which it was not practicable to adjust all remaining assets and
liabilities to pretax amounts. Total income taxes paid worldwide were $1,344 in
1994, $896 in 1993 and $1,213 in 1992.
<TABLE>
<CAPTION>
1994 1993 1992
------ ----- -------
<S> <C> <C> <C>
Current tax expense:
U.S. federal....................................... $ 337 $ 321 $ 34
U.S. state and local............................... 47 21 5
Non-U.S............................................ 1,023 758 857
------ ----- -------
Total............................................. 1,407 1,100 896
------ ----- -------
Deferred tax expense:
U.S. federal....................................... 497 (486) (319)
U.S. state and local............................... (55) (53) (35)
Non-U.S............................................ (136) (198) 133
------ ----- -------
Total............................................. 306 (737) (221)
------ ----- -------
Other(1)............................................ (58) 29 161
------ ----- -------
Provision for Income Taxes (Excluding Extraordinary
Item and Transition Effect of Accounting Change)... 1,655 392 836
Extraordinary Item.................................. -- (7) (39)
Transition Effect of Change in Accounting for
Postretirement Benefits Other Than Pensions........ -- -- (2,130)
Stockholders' Equity(2)............................. (26) (20) (11)
------ ----- -------
Total Provision................................... $1,629 $ 365 $(1,344)
====== ===== =======
</TABLE>
- --------
(1) Represents exchange (gains)/losses associated with the company's hedged
non-U.S. tax liabilities. These amounts offset the tax effect arising from
related hedging activities. The 1992 amount also includes $97 representing
exchange gains on unhedged non-U.S. deferred tax liabilities established in
conjunction with the adoption of SFAS No. 109. Excluding this item,
exchange gains and losses, net of their related tax effects, were not
material in the periods presented.
(2) Represents tax benefit of certain stock compensation amounts that are
deductible for income tax purposes but do not affect net income.
Deferred income taxes result from temporary differences between the financial
and tax bases of the company's assets and liabilities. The tax effects of
temporary differences and tax loss/tax credit carryforwards included in the
deferred income tax provision (excluding extraordinary item and transition
effect of accounting change) are as follows:
F-12
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Depreciation........................................... $ 144 $(105) $ 232
Accrued employee benefits.............................. (19) (69) (69)
Other accrued expenses................................. 185 (346) (67)
Intangible drilling costs.............................. (48) (68) 10
Inventory.............................................. (87) 109 (53)
Unrealized exchange gains/(losses)..................... 103 (22) (125)
Investment in subsidiaries and affiliates.............. (7) (4) --
Other temporary differences............................ 33 30 (55)
Tax loss/tax credit carryforwards...................... 90 4 (103)
Valuation allowance change--net........................ 17 8 9
Tax rate changes....................................... -- (274) --
Tax status changes..................................... (105) -- --
----- ----- -----
$ 306 $(737) $(221)
===== ===== =====
</TABLE>
The significant components of deferred tax assets and liabilities at December
31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
----------------- -----------------
DEFERRED TAX ASSET LIABILITY ASSET LIABILITY
------------ ------ --------- ------ ---------
<S> <C> <C> <C> <C>
Depreciation............................ $ -- $2,940 $ -- $2,808
Accrued employee benefits............... 2,873 630 2,875 651
Other accrued expenses.................. 782 4 963 --
Intangible drilling costs............... -- 289 -- 337
Inventory............................... 174 310 107 330
Unrealized exchange gains............... -- 19 85 --
Tax loss/tax credit carryforwards....... 395 -- 590 --
Investment in subsidiaries and
affiliates............................. 37 125 34 130
Other................................... 331 835 352 878
------ ------ ------ ------
Total................................... 4,592 $5,152 5,006 $5,134
====== ======
Less: Valuation allowance............... (357) (445)
------ ------
Net..................................... $4,235 $4,561
====== ======
</TABLE>
Current deferred tax liabilities (included in the Consolidated Balance Sheet
caption "Income Taxes") were $63 and $67 at December 31, 1994 and 1993,
respectively. In addition, deferred tax assets of $82 and $198 were included in
Other Assets at December 31, 1994 and 1993, respectively (see Note 15).
F-13
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
An analysis of the company's effective income tax rate (excluding
extraordinary item and transition effect of accounting changes) follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ----- ----
<S> <C> <C> <C>
Statutory U.S. federal income tax rate............. 35.0% 35.0% 34.0%
Higher effective tax rate on non-U.S. operations
(principally Petroleum)........................... 9.9 51.9 20.5
Lower effective tax rate on operations within U.S.
possessions....................................... (1.1) (5.6) (2.4)
Alternative fuels credit........................... (2.1) (6.9) (2.0)
Tax rate changes................................... -- (28.6)(1) --
Tax status changes................................. (2.4)(2) -- --
Other--net......................................... (1.5) (4.9) (3.9)
---- ----- ----
Effective income tax rate.......................... 37.8% 40.9% 46.2%
==== ===== ====
</TABLE>
- --------
(1) Reflects a net tax benefit of $265, arising principally from U.K. Petroleum
Revenue Tax law revisions.
(2) Reflects a tax valuation allowance benefit of $105 related to a change in
tax status resulting from a transfer of properties among certain North Sea
affiliates.
Earnings before income taxes shown below are based on the location of the
corporate unit to which such earnings are attributable. However, since such
earnings are often subject to taxation in more than one country, the income tax
provision shown above as U.S. or non-U.S. does not correspond to the earnings
set forth below.
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
U.S. (including exports).............................. $2,651 $ (167) $ 136
Other regions......................................... 1,731 1,125 1,675
------ ------ ------
$4,382 $ 958 $1,811
====== ====== ======
</TABLE>
At December 31, 1994, unremitted earnings of non-U.S. subsidiaries totaling
$4,333 were deemed to be permanently invested. No deferred tax liability has
been recognized with regard to the remittance of such earnings. It is not
practicable to estimate the income tax liability that might be incurred if such
earnings were remitted to the United States.
Under the tax laws of various jurisdictions in which the company operates,
deductions or credits that cannot be fully utilized for tax purposes during the
current year may be carried forward, subject to statutory limitations, to
reduce taxable income or taxes payable in a future year. At December 31, 1994,
the tax effect of such carryforwards approximated $395. Of this amount, $176
has no expiration date, $20 expires in 1995, $139 expires after 1995 but before
2001 and $60 expires between 2001 and 2010.
8. EXTRAORDINARY CHARGE FROM EARLY EXTINGUISHMENT OF DEBT
In 1993, there was a charge of $11, net of a tax benefit of $7, for the
redemption of $285 of outstanding debentures. In 1992, outstanding debt of $603
was redeemed with a resulting charge of $69, net of a tax benefit of $39.
Charges principally represent call premium and unamortized discount,
respectively.
9. EARNINGS PER SHARE OF COMMON STOCK
Earnings per share are calculated on the basis of the following average
number of common shares outstanding: 1994--679,999,916; 1993--676,622,115; and
1992--673,454,935.
F-14
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
10. CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES
Cash equivalents represent investments with maturities of three months or
less from time of purchase. They are carried at cost plus accrued interest,
which approximates fair value because of the short maturity of these
instruments. Cash and cash equivalents are used in part to support a portion of
the company's commercial paper program.
Marketable securities represent investments in fixed and variable rate
financial instruments classified as available-for-sale securities and reported
at fair value.
11. ACCOUNTS AND NOTES RECEIVABLE
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
Trade--net of allowances of $86 in 1994 and $97 in 1993...... $4,244 $4,020
Miscellaneous................................................ 969 874
------ ------
$5,213 $4,894
====== ======
</TABLE>
Accounts and notes receivable are carried at amounts which approximate fair
value.
See Note 30 for a description of business segment markets and associated
concentrations of credit risk.
12. INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
Chemicals.................................................... $ 237 $ 250
Fibers....................................................... 677 571
Polymers..................................................... 617 550
Petroleum.................................................... 1,365 1,367
Diversified Businesses....................................... 1,073 1,080
------ ------
$3,969 $3,818
====== ======
</TABLE>
The excess of replacement or current cost over stated value of inventories
for which cost has been determined under the LIFO method approximated $819 and
$766 at December 31, 1994 and 1993, respectively. In the aggregate, the market
value of the company's vertically integrated petroleum and petroleum-based
chemical products exceeds cost. Inventories valued at LIFO comprised 88 percent
and 87 percent of consolidated inventories before LIFO adjustment at December
31, 1994 and 1993, respectively.
The liquidation of LIFO inventory quantities carried in the aggregate at
lower costs prevailing in prior years increased 1993 net income by about $50
($.07 per share).
13. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31
---------------
1994 1993
------- -------
<S> <C> <C>
Chemicals.................................................. $ 5,086 $ 4,984
Fibers..................................................... 10,574 10,280
Polymers................................................... 7,827 7,742
Petroleum.................................................. 17,999 17,698
Diversified Businesses..................................... 5,377 5,265
Corporate.................................................. 1,975 1,957
------- -------
$48,838 $47,926
======= =======
</TABLE>
F-15
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Property, plant and equipment includes gross assets acquired under capital
leases of $148 and $72 at December 31, 1994 and 1993, respectively; related
amounts included in accumulated depreciation, depletion and amortization were
$88 and $57 at December 31, 1994 and 1993, respectively.
14. SUMMARIZED FINANCIAL INFORMATION FOR AFFILIATED COMPANIES
Summarized combined financial information for affiliated companies for which
DuPont uses the equity method of accounting (see Note 1, "Basis of
Consolidation") is shown below on a 100 percent basis. The most significant of
these affiliates are CONSOL Energy Inc. and The DuPont Merck Pharmaceutical
Company; DuPont has a 50 percent equity ownership in each of these companies.
Dividends received from equity affiliates were $326 in 1994, $243 in 1993 and
$124 in 1992.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------
RESULTS OF OPERATIONS 1994 1993 1992
--------------------- ------- ------- -------
<S> <C> <C> <C>
Sales*.............................................. $ 9,161 $ 8,030 $ 8,173
Earnings before income taxes........................ 947 446 771
Net Income.......................................... 732 252 568
DuPont's equity in earnings of affiliates (see Note
2)................................................. 361 121 216
======= ======= =======
</TABLE>
- --------
*Includes sales to DuPont of $828 in 1994, $752 in 1993 and $803 in 1992.
<TABLE>
<CAPTION>
DECEMBER 31
--------------
FINANCIAL POSITION 1994 1993
------------------ ------- ------
<S> <C> <C>
Current assets.............................................. $ 3,254 $2,703
Noncurrent assets........................................... 8,147 6,813
------- ------
Total assets.............................................. $11,401 $9,516
------- ------
Short-term borrowings*...................................... $ 648 $ 475
Other current liabilities................................... 2,065 1,820
Long-term borrowings*....................................... 2,590 2,220
Other long-term liabilities................................. 2,934 2,847
------- ------
Total liabilities......................................... $ 8,237 $7,362
------- ------
DuPont's investment in affiliates (includes advances)....... $ 1,662 $1,607
------- ------
</TABLE>
- --------
* DuPont's pro rata interest in total borrowings was $1,220 in 1994 and $985 in
1993, of which $599 in 1994 and $388 in 1993 was guaranteed by the company.
These amounts are included in the guarantees disclosed in Note 28.
15. OTHER ASSETS
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
Prepaid pension cost (see Note 26).......................... $1,502 $1,384
Intangible assets........................................... 225 278
Other securities and investments............................ 508 474
Deferred income taxes (see Note 7).......................... 82 198
Miscellaneous............................................... 685 790
------ ------
$3,002 $3,124
====== ======
</TABLE>
F-16
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Other securities and investments includes $351 and $391 at December 31, 1994
and 1993, respectively, representing marketable securities classified as
available for sale and reported at fair value. The remainder represents
numerous small investments in securities for which there are no quoted market
prices and for which it is not practicable to determine fair value. Such
securities are reported at cost.
16. ACCOUNTS PAYABLE
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
Trade........................................................ $1,847 $1,675
Payables to banks............................................ 321 264
Compensation awards.......................................... 222 94
Other........................................................ 344 411
------ ------
$2,734 $2,444
====== ======
</TABLE>
Payables to banks represents checks issued on certain disbursement accounts
but not presented to the banks for payment. The reported amounts approximate
fair value because of the short maturity of these obligations.
17. SHORT-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
Commercial paper(1)......................................... $ 450 $ 325
Bank borrowings:
U.S. dollars............................................... -- 25
Other currencies(2)........................................ 264 395
Master notes................................................ -- 495
Medium-term notes payable within one year................... 519 853
Long-term borrowings payable within one year(3)............. -- 636
Industrial development bonds payable on demand.............. 51 50
Capital lease obligations................................... 8 17
------ ------
$1,292 $2,796
====== ======
</TABLE>
- --------
(1) An interest rate swap effectively converted $50 of these floating rate
borrowings to a fixed rate obligation at December 31, 1994 and 1993, as
part of the program to manage the fixed and floating interest rate mix of
total borrowings. The interest rate was 8.3 percent and the remaining
maturity was 1.2 years at December 31, 1994.
(2) 1993 includes 1,173 million Norwegian krone borrowing ($158 at the December
31, 1993 exchange rate) with an average interest rate of 5.9 percent.
(3) 1993 includes notes denominated as 125 billion Italian lire with a 12.375
percent Italian lira fixed interest rate. Concurrent with the issuance of
these notes, the company entered into interest and principal currency swaps
that effectively established a $100 fixed principal amount with a 7.45
percent U.S. dollar fixed interest rate.
F-17
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
The estimated fair value of the company's short-term borrowings, including
interest rate financial instruments, based on quoted market prices for the same
or similar issues or on current rates offered to the company for debt of the
same remaining maturities, was $1,300 and $2,900 at December 31, 1994 and 1993,
respectively.
Unused short-term bank credit lines were approximately $1,360 and $2,100 at
December 31, 1994 and 1993, respectively. These lines support short-term
industrial development bonds, a portion of the company's commercial paper
program and other borrowings.
The weighted average interest rate on short-term borrowings outstanding at
December 31, 1994 and 1993 was 5.85% and 4.91%, respectively.
18. OTHER ACCRUED LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
Payroll and other employee benefits............................ $ 725 $ 694
Taxes other than on income..................................... 422 380
Postretirement benefits other than pensions (see Note 25)...... 333 343
Restructuring charges.......................................... 219 810
Miscellaneous.................................................. 1,431 1,651
------ ------
$3,130 $3,878
====== ======
</TABLE>
19. LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1993
------ ------
<S> <C> <C>
U.S. dollar:
Industrial development bonds due 2001-2024................... $ 295 $ 234
Medium-term notes due 1995-2005(1)........................... 592 837
8.50% notes due 1996......................................... 251 252
8.45% notes due 1996......................................... 300 300
8.65% notes due 1997......................................... 300 300
8.50% notes due 1998......................................... 302 302
7.50% notes due 1999......................................... 303 304
9.15% notes due 2000(2)...................................... 306 307
6.00% debentures due 2001 ($660 face value, 13.95% yield to
maturity)................................................... 430 411
6.75% notes due 2002(3)...................................... 299 299
8.00% notes due 2002......................................... 253 254
8.50% notes due 2003(2)...................................... 300 300
8.13% notes due 2004......................................... 331 349
8.25% notes due 2006......................................... 282 299
8.25% debentures due 2022.................................... 372 399
7.95% debentures due 2023(3)................................. 299 299
7.50% debentures due 2033(3)................................. 247 247
6.25% Swiss franc notes due 2000(4)........................... 103 103
Other loans (various currencies) due 1995-2005(5)............. 725 701
Capital lease obligations..................................... 86 34
------ ------
$6,376 $6,531
====== ======
</TABLE>
- --------
(1) Average interest rates at December 31, 1994 and 1993 were 7.5 percent and
6.8 percent, respectively.
F-18
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
(2) The company entered into an interest rate swaption agreement for each of
these notes as part of the program to manage the fixed and floating
interest rate mix of total borrowings. Each agreement gives the swaption
counterparty the one-time option to put the company into an interest rate
swap with a notional amount of $300, whereby the company would, over the
remaining term of the notes, receive fixed rate payments essentially
equivalent to the fixed interest rate of the underlying notes, and pay the
counterparty a floating rate of interest essentially equivalent to the rate
the company pays on its commercial paper. If exercised, the swaptions would
effectively convert the notes to a floating rate obligation over the
remaining maturity of the notes. The premium received from the
counterparties for these swaptions is being amortized to income, using the
effective interest method, over the remaining maturity of the notes. The
fair value and carrying value of these swaptions at December 31, 1994 and
1993 were not material.
(3) Interest rate swaps effectively converted $775 of these notes and
debentures to a floating rate obligation as part of the program to manage
the fixed and floating interest rate mix of total borrowings. The remaining
average maturity of these swaps was 2.2 years at December 31, 1994.
(4) Represents notes denominated as 150 million Swiss francs with a 6.25
percent Swiss franc fixed interest rate. Concurrent with the issuance of
these notes, the company entered into an interest and principal currency
swap that effectively established a $103 fixed principal amount with a 6.9
percent U.S. dollar fixed interest rate.
(5) Includes notes denominated as 160 million Australian dollars with a 16.5
percent Australian dollar fixed interest rate issued by the company's
majority-owned Canadian subsidiary, which were effectively converted to a
Canadian dollar borrowing with an implicit 12.43 percent Canadian dollar
fixed interest rate. Also includes a loan of 190 million pounds sterling
($296 and $292 at the respective 1994 and 1993 year-end exchange rates)
with a floating money market-based interest rate.
Average interest rates on industrial development bonds and on other loans
(various currencies) were 6.1 percent and 7.3 percent at December 31, 1994, and
6.0 percent and 7.4 percent at December 31, 1993.
Maturities of long-term borrowings, together with sinking fund requirements
in each of the four years after December 31, 1995, are as follows:
1996............ $908 1998............ $407
1997............ $798 1999............ $443
The estimated fair value of the company's long-term borrowings, including
interest rate financial instruments, based on quoted market prices for the same
or similar issues or on current rates offered to the company for debt of the
same remaining maturities was $6,600 and $7,500 at December 31, 1994 and 1993,
respectively.
F-19
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
20. LEASES
The company uses various leased facilities and equipment in its operations.
The company's future minimum lease payments under operating and capital leases,
together with the present value of the net minimum capital lease payments at
December 31, 1994, are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES*
------- ---------
<S> <C> <C>
Minimum lease payments for years ending December 31:
1995...................................................... $ 20 $ 290
1996...................................................... 16 224
1997...................................................... 11 182
1998...................................................... 11 156
1999...................................................... 11 124
Remainder................................................. 104 673
---- ------
173 $1,649
======
Less: Estimated executory costs........................... 7
----
Net minimum lease payments................................. 166
Less: Imputed interest.................................... 72
----
Present value of net minimum lease payments................ 94
Due in 1995............................................... 8
----
Due after 1995............................................ $ 86
====
</TABLE>
- --------
* Minimum lease payments have not been reduced by minimum sublease rentals due
in the future under noncancelable subleases related to operating leases in
the amount of $102.
Rental expense under operating leases was $355 in 1994, $429 in 1993 and $453
in 1992.
21. OTHER LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31 1994 1993
----------- ------ ------
<S> <C> <C>
Accrued postretirement benefits cost (see Note 25)............ $6,058 $5,998
Reserves for employee-related costs........................... 937 989
Miscellaneous................................................. 1,443 1,213
------ ------
$8,438 $8,200
====== ======
</TABLE>
22. STOCKHOLDERS' EQUITY
Shares of new common stock issued in connection with employee compensation
and benefit plans were 3,427,507 in 1994, 2,569,201 in 1993 and 3,766,099 in
1992.
23. COMPENSATION PLANS
In 1990, the board of directors approved the adoption of a worldwide
Corporate Sharing Program. Under the program, in February 1991, essentially all
employees each received a one-time grant of options to acquire 100 shares of
DuPont common stock at the fair market value ($38.25 per share) at date of
grant. Common shares subject to option under this Plan are as follows:
F-20
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
1994 1993 1992
--------- ---------- ----------
<S> <C> <C> <C>
Outstanding at January 1..................... 8,916,709 10,525,892 12,693,600
Options:
Exercised................................... 2,199,142 1,534,403 1,960,028
Terminated.................................. 43,215 74,780 207,680
Outstanding at December 31................... 6,674,352 8,916,709 10,525,892
</TABLE>
In January 1995, the board of directors approved the worldwide 1995 Corporate
Sharing Program and awarded to essentially all employees a one-time grant of
options to acquire 100 shares of DuPont common stock at the fair market value
($57 per share) on the date of grant.
Awards for 1994 under the DuPont Stock Performance Plan (granted to key
employees in 1995) consisted of 3,133,091 options to acquire DuPont common
stock at fair market value of $55.50 per share. Payment of the purchase price
must be made in cash or in DuPont common stock (at fair market value on the
date of exercise). Common shares subject to option under this Plan are as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Outstanding at January 1.................... 14,553,921 13,594,606 13,822,375
Options granted............................. 2,324,720 2,160,360 2,425,130
Average price.............................. $52.50 $46.01 $49.21
Options exercised........................... 1,954,064 1,092,473 2,456,592
Average price.............................. $32.46 $27.77 $26.78
Options expired or terminated............... 229,677 108,572 196,307
At December 31:
Participants............................... 1,318 1,226 1,188
Options outstanding........................ 14,694,900 14,553,921 13,594,606
Average price.............................. $40.83 $37.62 $35.47
Options exercisable........................ 12,384,780 12,418,711 11,202,016
Shares available for option................ 27,527,631 26,215,426 25,092,886
</TABLE>
At December 31, 1994, there were 559,463 stock appreciation rights (SARs)
outstanding, at an average option price of $32.51 per share. SARs may be
exercised only in tandem with the exercise of an accompanying stock option. As
each SAR is exercised, one additional stock option is cancelled. Expiration
dates for outstanding options and SARs ranged from February 17, 1995 to
September 20, 2004.
Awards under the Variable Compensation Plan may be granted in stock and/or
cash to employees who have contributed most in a general way to the company's
success, consideration being given to ability to succeed to more important
managerial responsibility. Such awards were $208 for 1994, $87 for 1993 and $87
for 1992. Amounts credited to the Variable Compensation Fund are dependent on
company earnings, and are subject to maximum limits as defined by the Plan. The
amounts credited to the fund were $220 in 1994, $89 in 1993 and $85 in 1992. In
accordance with the terms of the Variable Compensation Plan and similar plans
of subsidiaries, 1,326,922 shares of common stock were awaiting delivery from
awards for 1994 and prior years.
24. INVESTMENT ACTIVITIES
Payments for businesses acquired in 1993 include $380 as part of the third
quarter acquisition of Imperial Chemical Industries P.L.C.'s worldwide nylon
business. In addition to the cash payment, a deferred payment
F-21
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
of $93 was reflected in Other Liabilities. Of the total purchase price, $259
and $170 were reflected in property, plant and equipment and inventories,
respectively.
In 1994, there were no individually material items included in Proceeds from
Sales of Assets. Proceeds from sales in 1993 principally include $270 from the
sale of the connector systems business, $280 from the sale of the acrylics
business and $300 from the sale of the Remington Arms Company. Assets sold in
connection with these sales amounted to $656, of which $336 was property,
plant and equipment with the remainder divided about equally between
inventories and other current assets.
25. OTHER POSTRETIREMENT BENEFITS
The parent company and certain subsidiaries provide medical, dental and life
insurance benefits to pensioners and survivors. The associated plans are
unfunded, and approved claims are paid from company funds. Under the terms of
the benefit plans, the company reserves the right to change, modify or
discontinue the plans.
In 1992, the company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." Medical, dental and life
insurance costs for these plans and related disclosures are determined under
the provisions of SFAS No. 106. Cash expenditures are not affected by this
accounting change. At January 1, 1992, the accumulated postretirement benefit
obligation was $5,990, and related accrued liabilities were $68, resulting in
a transition charge of $5,922. Other postretirement benefits cost includes the
following components:
<TABLE>
<CAPTION>
HEALTH LIFE
CARE INSURANCE TOTAL
------ --------- -----
<S> <C> <C> <C>
1994
Service cost--benefits allocated to current period... $ 56 $ 17 $ 73
Interest cost on accumulated postretirement benefit
obligation.......................................... 288 77 365
Amortization of net gains and prior service credit... (78) 8 (70)
---- ---- ----
Other postretirement benefits cost................... $266 $102 $368
==== ==== ====
1993
Service cost--benefits allocated to current period... $ 55 $ 12 $ 67
Interest cost on accumulated postretirement benefit
obligation.......................................... 305 69 374
Amortization of net gains and prior service credit... (94) -- (94)
---- ---- ----
Other postretirement benefits cost................... $266 $ 81 $347
==== ==== ====
1992
Service cost--benefits allocated to current period... $ 82 $ 11 $ 93
Interest cost on accumulated postretirement benefit
obligation.......................................... 431 67 498
---- ---- ----
Other postretirement benefits cost................... $513 $ 78 $591
==== ==== ====
</TABLE>
The lower health care costs in 1994 and 1993 versus 1992 were due to changes
in the company's health care benefits programs in the United States, which
were announced on December 31, 1992. These changes provide for increased cost
control through prevention and managed care, and for increased cost sharing by
employees and pensioners. The impact of these changes resulted in an
unrecognized prior service credit of $1,219 at the beginning of 1993; the
accumulated postretirement benefit obligation was reduced by a similar amount.
F-22
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
The following provides a reconciliation of the accumulated postretirement
benefit obligation to the liabilities reflected in the balance sheet at
December 31, 1994 and 1993.
<TABLE>
<CAPTION>
HEALTH LIFE
CARE INSURANCE TOTAL
------- --------- -------
<S> <C> <C> <C>
1994
Accumulated postretirement benefit obligation
for:
Current pensioners and survivors............... $(2,366) $ (570) $(2,936)
Fully eligible employees....................... (139) -- (139)
Other employees................................ (674) (319) (993)
------- ------- -------
(3,179) (889) (4,068)
Unrecognized net loss/(gain).................... (1,267) 3 (1,264)
Unrecognized prior service credit............... (1,059) -- (1,059)
------- ------- -------
Accrued postretirement benefits cost............ $(5,505) $ (886) $(6,391)
======= ======= =======
Amount included in Other Accrued Liabilities
(see Note 18).................................. $ 333
=======
Amount included in Other Liabilities (see Note
21)............................................ $ 6,058
=======
1993
Accumulated postretirement benefit obligation
for:
Current pensioners and survivors............... $(2,993) $ (692) $(3,685)
Fully eligible employees....................... (146) -- (146)
Other employees................................ (934) (404) (1,338)
------- ------- -------
(4,073) (1,096) (5,169)
Unrecognized net loss/(gain).................... (285) 252 (33)
Unrecognized prior service credit............... (1,139) -- (1,139)
------- ------- -------
Accrued postretirement benefits cost............ $(5,497) $ (844) $(6,341)
======= ======= =======
Amount included in Other Accrued Liabilities
(see Note 18).................................. $ 343
=======
Amount included in Other Liabilities (see Note
21)............................................ $ 5,998
=======
</TABLE>
The health care accumulated postretirement benefit obligation was determined
at December 31, 1994 using a health care cost escalation rate of 8 percent
decreasing to 5 percent over 8 years and at December 31, 1993 using a health
care escalation rate of 10 percent decreasing to 5 percent over 10 years. The
assumed long-term rate of compensation increase used for life insurance was 5
percent. The discount rate was 9 percent at December 31, 1994 and 7.25 percent
at December 31, 1993. A one-percentage-point increase in the health care cost
escalation rate would have increased the accumulated postretirement benefit
obligation by $251 at December 31, 1994, and the 1994 other postretirement
benefit cost would have increased by $44.
26. PENSIONS
The company has noncontributory defined benefit plans covering substantially
all U.S. employees. The benefits for these plans are based primarily on years
of service and employees' pay near retirement. The company's funding policy is
consistent with the funding requirements of federal law and regulations.
Pension coverage for employees of the company's non-U.S. consolidated
subsidiaries is provided, to the extent deemed appropriate, through separate
plans. Obligations under such plans are systematically provided for by
depositing funds with trustees, under insurance policies or by book reserves.
F-23
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Net pension cost/(credit) for defined benefit plans includes the following
components:
<TABLE>
<CAPTION>
1994 1993 1992
---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Service cost--benefits
earned during the peri-
od...................... $ 380 $ 301 $ 283
Interest cost on pro-
jected benefit obliga-
tion.................... 1,079 1,038 980
Return on assets:
Actual (gain)/loss...... $ 214 $(1,880) $(1,055)
Deferred gain/(loss).... (1,540) (1,326) 617 (1,263) (164) (1,219)
------- ------- -------
Amortization of net gains
and prior service cost.. (91) (123) (127)
------- ------- -------
Net pension
cost/(credit)........... $ 42 $ (47) $ (83)
======= ======= =======
</TABLE>
The change in the annual pension cost/(credit) was primarily due to the
discount rate used to determine the present value of future benefits and the
return on pension trust assets.
The funded status of these plans was as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------------
1994 1993
------------------ ------------------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation......... $(10,342) $(11,681)
-------- --------
Accumulated benefit obligation.... $(10,744) $(12,177)
-------- --------
Projected benefit obligation...... $(12,303) $(14,195)
Plan assets at fair value.......... 14,223 15,250
-------- --------
Excess of assets over projected
benefit obligation................ 1,920 1,055
Unrecognized net (gains)(1)........ (877) (35)
Unrecognized prior service cost.... 459 364
-------- --------
Prepaid pension cost(2)............ $ 1,502 $ 1,384
======== ========
</TABLE>
- --------
(1) Includes the unamortized balance of $(1,339) and $(1,513) at December 31,
1994 and 1993, respectively, of unrecognized net gain at January 1, 1985,
the initial application date of Statement of Financial Accounting Standards
No. 87, "Employers' Accounting for Pensions."
(2) Excludes the pension liability for unfunded plans of $820 and $744 and the
related projected benefit obligation of $1,213 and $1,228 at December 31,
1994 and 1993, respectively.
For U.S. plans, the projected benefit obligation was determined using a
discount rate of 9 percent at December 31, 1994 and 7.25 percent at December
31, 1993, and an assumed long-term rate of compensation increase of 5 percent.
The assumed long-term rate of return on plan assets is 9 percent. Plan assets
consist principally of common stocks and U.S. government obligations. For non-
U.S. plans, no one of which was material, similar economic assumptions were
used.
The Omnibus Budget Reconciliation Act of 1990 permits employers to transfer
some of the excess funds from an overfunded pension trust to pay the company
portion of certain postretirement health care benefits. The company transferred
$260 during 1993 to a special retiree health care account to be used toward the
payment of these benefits. This transfer had no impact on earnings (see Note
25).
F-24
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
27. DERIVATIVES AND OTHER HEDGING INSTRUMENTS
The company enters into contractual arrangements (derivatives) in the
ordinary course of business to hedge its exposure to foreign currency, interest
rate and commodity price risks. The counterparties to these contractual
arrangements are major financial institutions. The company is exposed to credit
loss in the event of nonperformance by these counterparties. The company
manages this exposure to credit loss through credit approvals, limits and
monitoring procedures and, to the extent possible, by restricting the period
over which unpaid balances are allowed to accumulate. The company does not
anticipate nonperformance by counterparties to these contracts, and no material
loss would be expected from any such nonperformance. Procedures are in place to
regularly monitor and report to management the market and counterparty credit
risks associated with these instruments. The company's accounting policies with
respect to these financial instrument transactions are set forth in Note 1.
Foreign Currency
The company routinely uses forward exchange contracts to hedge its net
exposures, by currency, related to the foreign currency-denominated monetary
assets and liabilities of its operations. The primary business objective of
this hedging program is to maintain an approximately balanced position in
foreign currencies so that exchange gains and losses resulting from exchange
rate changes, net of related tax effects, are minimized.
Principal foreign currency exposures and related hedge positions at December
31, 1994 were as follows:
<TABLE>
<CAPTION>
OPEN CONTRACTS TO
BUY/(SELL)
FOREIGN CURRENCY NET
NET MONETARY ------------------ AFTER-
ASSET/(LIABILITY) AFTER- TAX
CURRENCY EXPOSURE PRETAX TAX EXPOSURE
-------- ----------------- -------- -------- --------
<S> <C> <C> <C> <C>
British Pound................... $(1,428) $ 2,306 $ 1,427 $(1)
German Mark..................... $ (593) $ 955 $ 595 $ 2
Norwegian Krone................. $ (564) $ 914 $ 567 $ 3
French Franc.................... $ 451 $ (620) $ (453) $(2)
Italian Lira.................... $ 205 $ (333) $ (206) $(1)
Dutch Guilder................... $ 273 $ (355) $ (271) $ 2
Japanese Yen.................... $ (205) $ 285 $ 204 $(1)
</TABLE>
In addition, the company from time to time will enter into forward exchange
contracts to establish with certainty the U.S. dollar amount of future firm
commitments denominated in a foreign currency. Decisions regarding whether or
not to hedge a given commitment are made on a case-by-case basis, taking into
consideration the amount and duration of the exposure, market volatility and
economic trends. At December 31, 1994, no such commitments were hedged. Forward
exchange contracts are also used to manage near-term foreign currency cash
requirements and to place foreign currency deposits and marketable securities
investments into currencies offering favorable returns. Net cash
inflow/(outflow) from settlement of forward exchange contracts was $139, $(84)
and $146 for the years 1994, 1993 and 1992, respectively.
Interest Rates
The company uses a combination of financial instruments, including interest
rate swaps, interest and principal currency swaps and structured medium-term
financings, as part of its program to manage the fixed and floating interest
rate mix of the total debt portfolio and related overall cost of borrowing.
F-25
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Interest rate swaps involve the exchange of fixed for floating rate interest
payments that are fully integrated with underlying fixed rate bonds or notes to
effectively convert fixed rate debt into floating rate debt based on LIBOR or
commercial paper rates. Interest rate swaps also involve the exchange of
floating for fixed rate interest payments that are fully integrated with
commercial paper or other floating rate borrowings to effectively convert
floating rate debt into fixed rate debt. Both types of interest rate swaps are
denominated in U.S. dollars. Interest rate swaps allow the company to maintain
a target range of floating rate debt. Notional amounts do not represent the
amounts exchanged by the counterparties, and thus are not a measure of market
or credit exposure to the company. The amounts exchanged by the counterparties
are calculated on the basis of the notional amounts and the fixed and floating
interest rates.
The following interest rate swaps were outstanding at December 31, 1994:
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
NOTIONAL AVERAGE RATE
TYPE OF SWAP AMOUNT RATE PAID RECEIVED
------------ -------- --------- --------
<S> <C> <C> <C>
Pay Fixed, Receive Floating...................... $ 50 8.3% 4.5%
Pay Floating, Receive Fixed...................... $775 5.4% 5.8%
</TABLE>
These interest rate swaps mature in 1 to 3 years, with a weighted average
maturity of 2.1 years.
Under interest and principal currency swaps, the company receives
predetermined foreign currency-denominated payments corresponding, both as to
timing and amount, to the fixed or floating interest rate and fixed principal
amount to be paid by the company under concurrently issued foreign currency-
denominated bonds. In return, the company pays a U.S. dollar-denominated fixed
or floating interest rate and a U.S. dollar-denominated fixed principal amount
to the counterparty, thereby effectively converting the foreign currency-
denominated bonds into U.S. dollar-denominated obligations for both interest
and principal. Interest and principal currency swaps allow the company to be
fully hedged against fluctuations in currency exchange rates and foreign
interest rates and to achieve U.S. dollar fixed or floating interest rate
payments below the market interest rate, at the date of issuance, for
borrowings of comparable maturity.
One interest and principal currency swap was outstanding at December 31, 1994
that effectively converted a 150 million Swiss franc borrowing with a 6.25
percent Swiss franc fixed interest rate and a maturity of 2000 to a U.S. dollar
fixed principal amount of $103 with a 6.9 percent U.S. dollar fixed interest
rate.
Structured medium-term financings consist of:
a) A structured medium-term note with interest and/or principal payments
(denominated in either U.S. dollars or foreign currencies) determined using
a specified calculation incorporating changes in currency exchange rates or
other financial indices; and
b) A concurrently executed structured medium-term swap that, for any and all
calculations of the note's interest and/or principal payments over the term
of the note, provides a fully hedged transaction such that the note is
effectively converted to a U.S. dollar-denominated fixed or floating
interest rate with a U.S. dollar-denominated fixed principal amount.
Structured medium-term swaps allow the company to be fully hedged against
fluctuations in exchange rates and interest rates and to achieve U.S. dollar
fixed or floating interest rate payments below the market interest rate, at
the date of issuance, for borrowings of comparable maturity.
F-26
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
The face amount of these structured medium-term financings outstanding at
December 31, 1994 was $522, with a weighted average interest rate of 6.1
percent, and a weighted average maturity of 1.9 years.
In addition, the company's majority-owned Canadian subsidiary had a
structured medium-term financing outstanding at December 31, 1994 that
effectively converted a 160 million Australian dollar borrowing, with a
16.5 percent Australian dollar fixed interest rate and a maturity of 1996,
to a Canadian dollar borrowing with an implicit 12.43 percent Canadian
dollar fixed interest rate.
It is the company's policy that foreign currency bonds and structured medium-
term notes will not be issued unless a hedge of the market risks inherent in
such borrowings is executed simultaneously with a management-approved, highly
credit-worthy counterparty to provide a fully hedged transaction.
Interest rate financial instruments did not have a material effect on the
company's overall cost of borrowing at December 31, 1994 and 1993.
See also Notes 17 and 19 for additional descriptions of interest rate
financial instruments.
Summary of Outstanding Derivative Financial Instruments
Set forth below is a summary of the notional amounts, estimated fair values
and carrying amounts of outstanding financial instruments at December 31, 1994
and 1993.
Notional amounts represent the face amount of the contractual arrangements
and are not a measure of market or credit exposure. Estimated fair values
represent a reasonable approximation of amounts the company would have received
from/(paid to) a counterparty at December 31 to unwind the positions prior to
maturity. Estimated fair value of forward exchange contracts is based on market
prices for contracts of comparable time to maturity. Estimated fair value of
swaps represents the present value of remaining net cash flows to maturity
under swap agreements, discounted using market-implied future interest rates
existing at December 31, 1994 and 1993, respectively. At December 31, 1994, the
company had no plans to unwind these positions prior to maturity. Carrying
amounts represent the receivable/(payable) recorded in the Consolidated Balance
Sheet. See also Notes 10, 11, 15, 16, 17 and 19 for fair values and carrying
amounts of other financial instruments.
Notional Amount, Estimated Fair Value and Carrying Amount of Outstanding
Derivative Financial Instruments
<TABLE>
<CAPTION>
NOTIONAL ESTIMATED CARRYING
TYPE OF INSTRUMENT AMOUNT FAIR VALUE AMOUNT
------------------ -------- ---------- --------
<S> <C> <C> <C>
Forward Exchange Contracts
December 31, 1994.............................. $7,978 $ 62 $ 73
1993........................................... 9,181 7 10
Interest Rate Swaps
December 31, 1994.............................. $ 825 $(47) $ (1)
1993........................................... 775 (3) 2
Interest and Principal Currency Swaps
December 31, 1994.............................. $ 103 $ 21 $ 11
1993........................................... 204 (24) (31)
Structured Medium-Term Swaps
December 31, 1994.............................. $ 646 $ 23 $ 36
1993........................................... 1,172 30 38
</TABLE>
F-27
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
Estimated fair values shown above only represent the value of the hedge or
swap component of these transactions, and thus are not indicative of the fair
value of the company's overall hedged position. The estimated fair value of the
company's total debt portfolio, based on quoted market prices for the same or
similar issues or on current rates offered to the company for debt of the same
remaining maturities, was $7,900 and $10,400 at December 31, 1994 and 1993,
respectively. The improvement in fair value of $2,500 in 1994 was primarily due
to lower borrowing levels and the change in the interest rate environment. As
fully hedged transactions, the estimated fair values of the integrated debt and
interest rate financial instruments do not affect income and are not recorded
in the financial statements, but rather only represent the amount to unwind the
debt and financial instruments at a specific point in time prior to maturity.
Commodity Hedges and Trading
The company enters into exchange-traded and over-the-counter commodity
futures contracts to hedge its exposure to price fluctuations on anticipated
crude oil, refined products and natural gas transactions and certain raw
material purchases.
Commodity trading in petroleum futures contracts is a natural extension of
cash market trading and is used to physically acquire about 15 percent of North
America refining crude supply requirements. The commodity futures market has
underlying principles of increased liquidity and longer trading periods than
the cash market and is one method of reducing exposure to the price risk
inherent in the petroleum business. Typically, trading is conducted to manage
price risk around near-term (30-60 days) supply requirements. Occasionally, as
market views and conditions allow, longer-term positions will be taken to
manage price risk for the company's equity production (crude and natural gas)
or net supply requirements. These positions may not exceed anticipated equity
production or net supply requirements for the hedge period. The company's use
of futures contracts reduces the effects of price volatility, thereby
protecting against adverse short-term price movements, while limiting,
somewhat, the benefits of favorable short-term price movements. Open hedge
positions and deferred gains/losses for petroleum futures contracts were
immaterial at December 31, 1994 and 1993.
From time to time, on a limited basis, the company also purchases and sells
petroleum-based futures contracts for trading purposes. After-tax gain/loss
from such trading has not been material.
28. COMMITMENTS AND CONTINGENT LIABILITIES
The company has various purchase commitments for materials, supplies and
items of permanent investment incident to the ordinary conduct of business. In
the aggregate, such commitments are not at prices in excess of current market.
The company is subject to various lawsuits and claims with respect to such
matters as product liabilities, governmental regulations and other actions
arising out of the normal course of business. While the effect on future
financial results is not subject to reasonable estimation because considerable
uncertainty exists, in the opinion of company counsel, the ultimate liabilities
resulting from such lawsuits and claims will not materially affect the
consolidated financial position of the company.
The company is also subject to contingencies pursuant to environmental laws
and regulations that in the future may require the company to take action to
correct the effects on the environment of prior disposal practices or releases
of chemical or petroleum substances by the company or other parties. The
company has accrued for certain environmental remediation activities consistent
with the policy set forth in Note 1. At
F-28
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
December 31, 1994, such accrual amounted to $616 and, in management's opinion,
was appropriate based on existing facts and circumstances. Under the most
adverse circumstances, however, this potential liability could be significantly
higher. In the event that future remediation expenditures are in excess of
amounts accrued, management does not anticipate that they will have a material
adverse effect on the consolidated financial position of the company.
The company has indirectly guaranteed various debt obligations under
agreements with certain affiliated and other companies to provide specified
minimum revenues from shipments or purchases of products. At December 31, 1994,
these indirect guarantees totaled $13. In addition, at December 31, 1994, the
company had directly guaranteed $832 of the obligations of certain affiliated
companies and others. No material loss is anticipated by reason of such
agreements and guarantees.
29. GEOGRAPHIC INFORMATION
<TABLE>
<CAPTION>
UNITED OTHER
STATES EUROPE REGIONS CONSOLIDATED
------- ------- ------- ------------
<S> <C> <C> <C> <C>
1994
Sales to Unaffiliated Customers(1)......... $20,769 $14,216 $4,348 $39,333
Transfers Between Geographic Areas(2)...... 2,044 673 507 --
------- ------- ------ -------
Total..................................... $22,813 $14,889 $4,855 $39,333
------- ------- ------ -------
After-Tax Operating Income................. $ 1,993 $ 874 $ 240 $ 3,107
Identifiable Assets at December 31......... $16,933 $10,232 $3,857 $31,022
1993
Sales to Unaffiliated Customers(1)......... $20,342 $12,639 $4,117 $37,098
Transfers Between Geographic Areas(2)...... 2,260 395 522 --
------- ------- ------ -------
Total..................................... $22,602 $13,034 $4,639 $37,098
------- ------- ------ -------
After-Tax Operating Income................. $ 133 $ 721 $ 63 $ 917
Identifiable Assets at December 31......... $17,117 $ 9,995 $3,812 $30,924
1992
Sales to Unaffiliated Customers(1)......... $20,331 $13,571 $3,897 $37,799
Transfers Between Geographic Areas(2)...... 2,477 298 469 --
------- ------- ------ -------
Total..................................... $22,808 $13,869 $4,366 $37,799
------- ------- ------ -------
After-Tax Operating Income................. $ 528 $ 624 $ 89 $ 1,241
Identifiable Assets at December 31......... $19,197 $ 9,667 $3,827 $32,691
</TABLE>
- --------
(1) Sales outside the United States of products manufactured in and exported
from the United States totaled $3,625 in 1994, $3,500 in 1993 and $3,509 in
1992.
(2) Products are transferred between geographic areas on a basis intended to
reflect as nearly as practicable the "market value" of the products.
30. INDUSTRY SEGMENT INFORMATION
The company has five principal business segments that manufacture and sell a
wide range of products to many different markets, including the energy,
transportation, textile, construction, automotive, electronics, printing,
health care, packaging and agricultural markets. The company's sales are not
materially dependent
F-29
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
on a single customer or small group of customers. The Fibers and Polymers
segments, however, have several large customers in their respective industries
that are important to these segments' operating results.
<TABLE>
<CAPTION>
DIVERSIFIED
CHEMICALS FIBERS POLYMERS PETROLEUM BUSINESSES CONSOLIDATED
--------- ------ -------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
1994
Sales to Unaffiliated
Customers(1)........... $3,760 $6,767 $6,318 $16,815(2) $5,673 $39,333
Transfers Between Seg-
ments.................. 208 44 181 388 36 --
------ ------ ------ ------- ------ -------
Total.................. $3,968 $6,811 $6,499 $17,203 $5,709 $39,333
------ ------ ------ ------- ------ -------
Operating Profit........ $ 536 $1,083 $1,084 $ 1,141 $ 595 $ 4,439
Provision for Income
Taxes.................. (208) (412) (423) (486) (191) (1,720)
Equity in Earnings of
Affiliates............. 58 30 56 25 219 388
------ ------ ------ ------- ------ -------
After-Tax Operating In-
come(3)................ $ 386 $ 701 $ 717 $ 680 $ 623 $ 3,107(4)
------ ------ ------ ------- ------ -------
Identifiable Assets at
December 31............ $2,880 $6,020 $5,160 $11,961 $5,001 $31,022(5)
------ ------ ------ ------- ------ -------
Depreciation, Depletion
and Amortization....... $ 412 $ 512 $ 403 $ 1,191 $ 434 $ 3,106(6)
Capital Expenditures.... $ 298 $ 541 $ 310 $ 1,576 $ 283 $ 3,151(7)
<CAPTION>
DIVERSIFIED
CHEMICALS FIBERS POLYMERS PETROLEUM BUSINESSES CONSOLIDATED
--------- ------ -------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
1993
Sales to Unaffiliated
Customers(1)........... $3,546 $6,188 $5,869 $15,771(2) $5,724 $37,098
Transfers Between Seg-
ments.................. 475 14 23 428 1 --
------ ------ ------ ------- ------ -------
Total.................. $4,021 $6,202 $5,892 $16,199 $5,725 $37,098
------ ------ ------ ------- ------ -------
Operating Profit........ $ 237 $ 258 $ 255 $ 1,195 $ (495) $ 1,450
Provision for Income
Taxes.................. (99) (144) (108) (428) 162 (617)
Equity in Earnings of
Affiliates............. 28 55 30 45 (74) 84
------ ------ ------ ------- ------ -------
After-Tax Operating In-
come(8)(9)(10)......... $ 166 $ 169 $ 177 $ 812(11) $ (407)(12) $ 917(4)
------ ------ ------ ------- ------ -------
Identifiable Assets at
December 31............ $2,960 $5,771 $5,226 $11,938 $5,029 $30,924(5)
------ ------ ------ ------- ------ -------
Depreciation, Depletion
and Amortization....... $ 303 $ 658 $ 527 $ 1,379 $ 460 $ 3,451(6)
Capital Expenditures.... $ 294 $ 751 $ 428 $ 1,659 $ 329 $ 3,655(7)
<CAPTION>
DIVERSIFIED
CHEMICALS FIBERS POLYMERS PETROLEUM BUSINESSES CONSOLIDATED
--------- ------ -------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
1992
Sales to Unaffiliated
Customers(1)........... $3,617 $6,074 $5,856 $16,065(2) $6,187 $37,799
Transfers Between Seg-
ments.................. 187 6 51 414 5 --
------ ------ ------ ------- ------ -------
Total.................. $3,804 $6,080 $5,907 $16,479 $6,192 $37,799
------ ------ ------ ------- ------ -------
Operating Profit........ $ 324 $ 591 $ 471 $ 1,008 $ (182) $ 2,212
Provision for Income
Taxes.................. (128) (246) (185) (707) 101 (1,165)
Equity in Earnings of
Affiliates............. 30 64 32 36 32 194
------ ------ ------ ------- ------ -------
After-Tax Operating In-
come(13)............... $ 226 $ 409 $ 318 $ 337 $ (49)(14) $ 1,241(4)
------ ------ ------ ------- ------ -------
Identifiable Assets at
December 31............ $3,201 $5,738 $5,412 $12,307 $6,033 $32,691(5)
------ ------ ------ ------- ------ -------
Depreciation, Depletion
and Amortization....... $ 317 $ 592 $ 409 $ 1,006 $ 410 $ 2,839(6)
Capital Expenditures.... $ 366 $ 856 $ 642 $ 1,781 $ 558 $ 4,397(7)
</TABLE>
- --------
(1) Sales of refined petroleum products of $12,853 in 1994, $12,403 in 1993
and $12,681 in 1992 exceeded 10 percent of consolidated sales.
(2) Excludes crude oil and refined product exchanges and trading transactions
totaling $2,254 in 1994, $3,808 in 1993 and $3,881 in 1992.
F-30
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
(3) Includes the following (charges)/benefits (a):
<TABLE>
<S> <C>
Chemicals(b)......................................................... $ (5)
Fibers............................................................... 25
Polymers............................................................. 11
Petroleum(c)......................................................... (26)
Diversified Businesses(d)............................................ (53)
----
$(48)
====
</TABLE>
--------
(a) Reflects a net benefit of $112 from adjustments in estimates
associated with the third quarter 1993 restructuring charge of which
$88 relates to adjustments for other than employee separation costs.
The $112 is reflected in Chemicals $22; Fibers $25; Polymers $11; and
Diversified Businesses $54.
(b) Includes a charge of $27 associated with the discontinuation of
certain products, asset sales and write-downs.
(c) Includes a charge of $58 for employee separation costs, a loss of $95
from the write-down of certain North Sea oil properties to be sold and
a benefit of $127 principally related to a favorable change in tax
status resulting from a transfer of properties among certain North Sea
affiliates.
(d) Includes charges of $110 associated with the "Benlate" DF 50 fungicide
recall and $27 for the write-down of assets and discontinuation of
certain products, and a benefit of $30 from an adjustment of prior-
year tax provisions.
(4) The following reconciles After-Tax Operating Income to Net Income:
<TABLE>
<CAPTION>
1994 1993 1992
------ ----- ------
<S> <C> <C> <C>
After-Tax Operating In-
come................... $3,107 $ 917 $1,241
Interest and Other Cor-
porate Expenses Net of
Tax(a)................. (380) (351) (266)
------ ----- ------
Net Income(b)........... $2,727 $ 566 $ 975
====== ===== ======
</TABLE>
--------
(a) Includes interest and debt expense and other corporate expenses such
as exchange gains and losses (including the company's share of equity
affiliates' exchange gains and losses), minority interests in earnings
of consolidated subsidiaries and amortization of capitalized interest.
The year 1992 includes an exchange gain of $97 related to unhedged
non-U.S. deferred tax liabilities, which were established on the
adoption of SFAS No. 109.
(b) Before extraordinary item and transition effect of accounting changes.
See the Consolidated Income Statement.
(5) The following reconciles Identifiable Assets to Total Assets:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Identifiable Assets at December 31.................. $31,022 $30,924 $32,691
Investment in Affiliates............................ 1,662 1,607 1,746
Corporate Assets.................................... 4,208 4,522 4,433
------- ------- -------
Total Assets at December 31......................... $36,892 $37,053 $38,870
======= ======= =======
</TABLE>
(6) Includes depreciation on research and development facilities, impairment
of unproved properties and depreciation reflected in 1993 and 1992
restructuring charges.
(7) Excludes investments in affiliates.
F-31
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
(8) Includes the following third-quarter charges for asset write-downs,
employee separation costs, facility shutdowns and other restructuring
costs (see Note 6):
<TABLE>
<S> <C>
Chemicals(a)........................................................ $ 112
Fibers(b)........................................................... 266
Polymers(c)......................................................... 148
Petroleum(d)........................................................ 172
Diversified Businesses(e)........................................... 413
------
$1,111
======
</TABLE>
--------
(a) Includes $59 for asset write-downs and facility shutdowns for the
fluorochemicals and specialty chemicals businesses.
(b) Includes $46 for facility shutdowns and asset write-downs, primarily
for the nylon business.
(c) Includes $64 for shutdown of a portion of a polymers plant in LaPorte,
Texas.
(d) Includes $147 for asset write-downs, primarily for certain North
American petroleum-producing properties sold in the fourth quarter.
(e) Includes $264 for asset write-downs, principally facilities for the
printing and publishing business.
(9) Includes a net benefit of $265 resulting from tax law changes. The
Petroleum segment reflects $230, primarily due to a reduction in deferred
U.K. petroleum revenue taxes, and $35 is reflected in the remaining
segments (Chemicals $6; Fibers $10; Polymers $10; and Diversified
Businesses $9).
(10) Includes a net charge of $92 related to certain product liability claims
and litigation costs ($144, of which $126 is associated with the "Benlate"
DF 50 fungicide recall) and a loss on the sale of a polyethylene business
($17), partly offset by a gain from the sale of the Remington Arms Company
($69). The foregoing amounts are reflected in the Chemicals ($10),
Polymers ($25) and Diversified Businesses ($57) segments.
(11) Includes a $21 loss from sale of petroleum-producing properties and a $32
gain from exchange of several proved and unproved North Sea petroleum
properties for an interest in a Norwegian offshore pipeline and cash;
since these are not "similar productive assets" as defined under
Accounting Principles Board Opinion No. 29, a gain was recognized on the
exchange.
(12) Includes a charge of $184 for the write-down of intangible assets
(technology and goodwill) associated with the printing and publishing
business.
(13) Includes the following fourth-quarter charges for termination incentives
and payments, as well as other charges, related to business restructurings
(see Note 6):
<TABLE>
<S> <C>
Chemicals(a).......................................................... $ 51
Fibers(b)............................................................. 69
Polymers.............................................................. 22
Petroleum(c).......................................................... 96
Diversified Businesses(d)............................................. 91
----
$329
====
</TABLE>
--------
(a) Includes $38 charge for project and facility shutdowns.
(b) Includes $38 charge principally for shutdown of fire-damaged
facilities.
(c) Includes $17 charge for shutdown of refinery facilities.
(d) Includes $42 charge principally for withdrawal from certain printing
and publishing business lines.
F-32
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
(14) Includes charge of $134 associated with "Benlate" DF 50 fungicide recall.
Products are transferred between segments on a basis intended to reflect as
nearly as practicable the "market value" of the products.
----------------
UNAUDITED SUBSEQUENT EVENT--EFFECT OF SEAGRAM REDEMPTION
On April 6, 1995, the Company acquired 156 million shares of its Common Stock
beneficially owned by Seagram for $56.25 per share. The consideration for the
acquired shares consisted of (i) $1 billion in cash, (ii) 90-day promissory
notes of the Company in an aggregate principal amount of $7.3 billion and (iii)
warrants of the Company valued at approximately $440 million exercisable for
156 million shares of Common Stock.
The notes issued to Seagram bear interest at market rates and, are prepayable
at any time without penalty.
The warrants issued to Seagram expire on October 6, 1997, October 6, 1998,
and October 6, 1999 with respect to 48 million shares at $89.33 per share, 54
million shares at $101.14 per share and 54 million shares at $113.63 per share,
respectively. In general, as long as the warrants are held by Seagram, the
warrants are exercisable only during the 60 day periods immediately preceding
their respective expiration dates. However, the warrants would become
exercisable sooner in connection with certain significant corporate events. The
warrants are not transferable until May 15, 1996. Following such date, the
Company would have the right to buy the warrants from Seagram before Seagram
would be permitted to transfer the warrants to a third party. Any warrants that
are transferred to non-affiliates of Seagram would be exercisable at any time
prior to their expiration. The warrants contain standard anti-dilution
adjustments.
On a pro forma basis if the Seagram Redemption had occurred: (i) at January
1, 1994 (assuming the related indebtedness had been outstanding throughout
1994), Interest and Debt Expense would have been $994, Earnings Before Income
Taxes would have been $3,907, Net Income would have been $2,352, Net Income Per
Share of Common Stock would have been $4.47 (on the basis of 523,999,916
average outstanding shares) and the Fixed Charge Coverage Ratio would have been
4.0x; and (ii) at December 31, 1994, Short-Term Borrowings and Capital Lease
Obligations would have been $8,628, Stockholders' Equity would have been
$4,471, and Working Capital would have been ($4,808).
F-33
<PAGE>
SUPPLEMENTAL PETROLEUM DATA
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN MILLIONS)
OIL AND GAS PRODUCING ACTIVITIES
The disclosures on pages F-34 to F-39 are presented in accordance with the
provisions of Statement of Financial Accounting Standards No. 69. Accordingly,
volumes of reserves and production exclude royalty interests of others, and
royalty payments are reflected as reductions in revenues.
In January 1989, the U.S. Treasury Department was authorized by the President
to modify the sanctions levied against Libya in 1986. In June 1989, Conoco was
granted a license by the Treasury Department to resume its activities in Libya,
and commenced negotiations with the Libyan government's national oil company.
Although negotiations are continuing, Conoco has not resumed its participation
in Libyan operations. Accordingly, disclosures for 1994 continue to exclude
petroleum reserve data applicable to the company's petroleum assets in Libya.
RESULTS OF OPERATIONS FOR OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
TOTAL WORLDWIDE UNITED STATES EUROPE OTHER REGIONS(1)
------------------------- ---------------------- ----------------------------- -------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
------- ------- ------- ----- ----- ----- ------- ------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED COMPANIES
Revenues:
Sales to unaffiliated
customers.............. $ 2,196 $ 2,177 $ 1,990 $ 552 $ 538 $ 535 $ 1,015 $ 1,000 $ 874 $ 629 $ 639 $ 581
Transfers to other
company operations..... 733 930 1,003 401 558 583 332 372 407 -- -- 13
Exploration, including
dry hole costs.......... (323) (329) (347) (130) (107) (82) (110) (109) (165) (83) (113) (100)
Production............... (786) (868) (1,039) (327) (424) (492) (377) (363) (473) (82) (81) (74)
Depreciation, depletion,
amortization and
valuation provisions.... (957) (1,140) (786) (334) (591)(2) (433) (533)(3) (468) (296) (90) (81) (57)
Other(4)................. 67 (20) (55) 38 (17) (8) 25 9 (28) 4 (12) (19)
Income taxes............. (463) (281) (626) 7 84 2 (122)(5) (16)(6) (219) (348) (349) (409)
------- ------- ------- ----- ----- ----- ------- ------- ----- ----- ----- -----
Total consolidated
companies............... 467 469 140 207 41 105 230 425 100 30 3 (65)
------- ------- ------- ----- ----- ----- ------- ------- ----- ----- ----- -----
EQUITY AFFILIATES
Results of operations of
equity affiliates....... (16) (13) (13) 1 (1) (1) (17) (12) (12) -- -- --
------- ------- ------- ----- ----- ----- ------- ------- ----- ----- ----- -----
Total.................... $ 451 $ 456 $ 127 $ 208 $ 40 $ 104 $ 213 $ 413 $ 88 $ 30 $ 3 $ (65)
======= ======= ======= ===== ===== ===== ======= ======= ===== ===== ===== =====
</TABLE>
- --------
(1) Comprises exploration costs in all areas outside the United States and
Europe and production operations primarily in Canada, Dubai and Indonesia.
(2) Includes a charge of $219 ($137 after taxes) for impairment of certain U.S.
petroleum-producing properties to be sold.
(3) Includes a charge of $115 ($95 after taxes) for impairment of certain North
Sea oil properties to be sold.
(4) Includes gain/(loss) on disposal of fixed assets and other miscellaneous
revenues and expenses.
(5) Includes a tax benefit of $127 principally related to a favorable change in
tax status resulting from a transfer of properties among certain North Sea
affiliates.
(6) Includes a benefit of $241 resulting from tax law changes in the United
Kingdom.
F-34
<PAGE>
SUPPLEMENTAL PETROLEUM DATA
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN MILLIONS)
Costs Incurred in Oil and Gas Property Acquisition, Exploration and
Development Activities(1)
<TABLE>
<CAPTION>
TOTAL WORLDWIDE UNITED STATES EUROPE OTHER REGIONS(2)
-------------------- -------------- -------------- -----------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
------ ------ ------ ---- ---- ---- ---- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED COMPANIES
Property acquisitions:
Proved(3).............. $ 139 $ 111 $ 16 $ 14 $ 93 $ 16 $115 $ 5 $-- $ 10 $ 13 $ --
Unproved............... 36 11 23 18 8 7 5 -- -- 13 3 16
Exploration............. 403 352 432 151 83 99 136 158 221 116 111 112
Development............. 713 864 806 174 195 206 466 567 498 73 102 102
------ ------ ------ ---- ---- ---- ---- ---- ---- ----- ----- -----
Total consolidated
companies.............. 1,291 1,338 1,277 357 379 328 722 730 719 212 229 230
------ ------ ------ ---- ---- ---- ---- ---- ---- ----- ----- -----
EQUITY AFFILIATES
Property acquisitions:
Proved................. -- 43 -- -- 43 -- -- -- -- -- -- --
Development............. 75 70 38 12 16 19 63 54 19 -- -- --
------ ------ ------ ---- ---- ---- ---- ---- ---- ----- ----- -----
Total equity affiliates. 75 113 38 12 59 19 63 54 19 -- -- --
------ ------ ------ ---- ---- ---- ---- ---- ---- ----- ----- -----
Total................... $1,366 $1,451 $1,315 $369 $438 $347 $785 $784 $738 $ 212 $ 229 $ 230
====== ====== ====== ==== ==== ==== ==== ==== ==== ===== ===== =====
</TABLE>
- --------
(1) These data comprise all costs incurred in the activities shown, whether
capitalized or charged to expense at the time they were incurred.
(2) Includes Canada, Dubai and Indonesia.
(3) Does not include properties acquired through property exchanges.
CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
TOTAL WORLDWIDE UNITED STATES EUROPE OTHER REGIONS*
----------------------- -------------------- -------------------- --------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED COMPANIES
Gross costs:
Proved properties...... $11,057 $11,663 $11,356 $4,806 $4,934 $5,587 $4,950 $5,582 $4,732 $1,301 $1,147 $1,037
Unproved properties.... 790 701 1,152 291 321 471 323 218 461 176 162 220
Accumulated
depreciation,
depletion, amortization
and valuation
allowances:
Proved properties...... 6,173 6,467 6,171 3,073 3,023 3,244 2,122 2,604 2,169 978 840 758
Unproved properties.... 185 261 347 110 162 235 6 13 13 69 86 99
------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total net costs of
consolidated companies. 5,489 5,636 5,990 1,914 2,070 2,579 3,145 3,183 3,011 430 383 400
------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
EQUITY AFFILIATES
Net costs of equity
affiliates:
Proved properties...... 253 177 66 93 92 36 160 85 30 -- -- --
------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total................... $ 5,742 $ 5,813 $ 6,056 $2,007 $2,162 $2,615 $3,305 $3,268 $3,041 $ 430 $ 383 $ 400
======= ======= ======= ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
- --------
* Includes Canada, Dubai and Indonesia.
F-35
<PAGE>
SUPPLEMENTAL PETROLEUM DATA
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(IN MILLIONS OF BARRELS)
ESTIMATED PROVED RESERVES OF OIL(1)
<TABLE>
<CAPTION>
TOTAL WORLDWIDE UNITED STATES EUROPE OTHER REGIONS(2)
------------------ ---------------- ---------------- ---------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
---- ----- ----- ---- ---- ---- ---- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PROVED DEVELOPED AND
UNDEVELOPED RESERVES OF
CONSOLIDATED COMPANIES
Beginning of year....... 964 1,034 1,112 344 421 470 390 391 392 230 222 250
Revisions and other
changes............... 51 14 26 14 (6) (13) 26 13 37 11 7 2
Extensions and
discoveries........... 50 83 23 8 19 9 21 41 10 21 23 4
Improved recovery...... 10 7 3 9 5 3 -- -- -- 1 2 --
Purchase of
reserves(3)........... 43 25 5 14 7 5 29 2 -- -- 16 --
Sale of reserves(4).... (33) (64) (12) (20) (62) (12) (13) (2) -- -- -- --
Production............. (132) (135) (123) (33) (40) (41) (59) (55) (48) (40) (40) (34)
---- ----- ----- --- --- --- --- --- --- ----- ----- -----
End of year............. 953 964 1,034 336 344 421 394 390 391 223 230 222
---- ----- ----- --- --- --- --- --- --- ----- ----- -----
PROVED DEVELOPED AND
UNDEVELOPED RESERVES OF
EQUITY AFFILIATES
Beginning of year....... 19 19 -- -- -- -- 19 19 -- -- -- --
Revisions and other
changes............... 6 -- -- -- -- -- 6 -- -- -- -- --
Extensions and
discoveries........... 11 -- 19 -- -- -- 11 -- 19 -- -- --
Production............. (1) -- -- -- -- -- (1) -- -- -- -- --
---- ----- ----- --- --- --- --- --- --- ----- ----- -----
End of year............. 35 19 19 -- -- -- 35 19 19 -- -- --
---- ----- ----- --- --- --- --- --- --- ----- ----- -----
Total................... 988 983 1,053 336 344 421 429 409 410 223 230 222
---- ----- ----- --- --- --- --- --- --- ----- ----- -----
PROVED DEVELOPED
RESERVES OF
CONSOLIDATED COMPANIES
Beginning of year....... 708 750 778 332 397 441 160 153 118 216 200 219
End of year............. 706 708 750 324 332 397 171 160 153 211 216 200
==== ===== ===== === === === === === === ===== ===== =====
</TABLE>
- --------
(1) Oil reserves comprise crude oil and condensate and natural gas liquids
(NGL) expected to be removed for the company's account from its natural gas
deliveries.
(2) Includes Canada, Dubai and Indonesia.
(3) Includes reserves acquired through property exchanges.
(4) Includes reserves disposed of through property exchanges.
F-36
<PAGE>
SUPPLEMENTAL PETROLEUM DATA
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(IN BILLION CUBIC FEET)
ESTIMATED PROVED RESERVES OF GAS
<TABLE>
<CAPTION>
TOTAL WORLDWIDE UNITED STATES EUROPE OTHER REGIONS(1)
------------------- ------------------- ------------------- ---------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PROVED DEVELOPED AND
UNDEVELOPED RESERVES OF
CONSOLIDATED COMPANIES
Beginning of year....... 3,680 3,445 3,619 1,802 1,928 2,149 1,752 1,417 1,321 126 100 149
Revisions and other
changes............... 317 72 (36) 121 (22) (55) 187 54 56 9 40 (37)
Extensions and
discoveries........... 514 712 307 139 196 127 356 507 172 19 9 8
Improved recovery...... -- 1 -- -- 1 -- -- -- -- -- -- --
Purchase of
reserves(2)........... 375 53 37 42 53 37 321 -- -- 12 -- --
Sale of reserves(3).... (71) (122) (51) (37) (49) (51) (34) (68) -- -- (5) --
Production............. (485) (481) (431) (318) (305) (279) (151) (158) (132) (16) (18) (20)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
End of year............. 4,330 3,680 3,445 1,749 1,802 1,928 2,431 1,752 1,417 150 126 100
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
PROVED DEVELOPED AND
UNDEVELOPED RESERVES OF
EQUITY AFFILIATES
Beginning of year....... 586 368 128 586 368 128 -- -- -- -- -- --
Revisions and other
changes............... 255 72 167 255 72 167 -- -- -- -- -- --
Extensions and
discoveries........... -- -- 75 -- -- 75 -- -- -- -- -- --
Purchase of reserves... 2 151 -- 2 151 -- -- -- -- -- -- --
Production............. (13) (5) (2) (13) (5) (2) -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
End of year............. 830 586 368 830 586 368 -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total................... 5,160 4,266 3,813 2,579 2,388 2,296 2,431 1,752 1,417 150 126 100
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
PROVED DEVELOPED
RESERVES OF
CONSOLIDATED COMPANIES
Beginning of year....... 2,570 2,539 2,750 1,717 1,837 2,013 738 618 602 115 84 135
End of year............. 2,496 2,570 2,539 1,687 1,717 1,837 683 738 618 126 115 84
===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
- --------
(1) Includes Canada, Dubai and Indonesia.
(2) Includes reserves acquired through property exchanges.
(3) Includes reserves disposed of through property exchanges.
F-37
<PAGE>
SUPPLEMENTAL PETROLEUM DATA
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED
OIL AND GAS RESERVES
The information on the following page has been prepared in accordance with
Statement of Financial Accounting Standards No. 69, which requires the
standardized measure of discounted future net cash flows to be based on year-
end sales prices, costs and statutory income tax rates and a 10 percent annual
discount rate. Specifically, the per-barrel oil sales prices used to calculate
the December 31, 1994 data averaged $14.38 for the United States, $15.81 for
Europe and $16.08 for Other Regions, and the gas prices per thousand cubic
feet averaged approximately $1.59 for the United States, $2.87 for Europe and
$1.34 for Other Regions. Because prices used in the calculation are as of
December 31, the standardized measure could vary significantly from year to
year based on market conditions at that specific date.
The projections should not be viewed as realistic estimates of future cash
flows nor should the "standardized measure" be interpreted as representing
current value to the company. Material revisions to estimates of proved
reserves may occur in the future, development and production of the reserves
may not occur in the periods assumed, actual prices realized are expected to
vary significantly from those used and actual costs may also vary. The
company's investment and operating decisions are not based on the information
presented on the following page, but on a wide range of reserve estimates that
includes probable as well as proved reserves, and on different price and cost
assumptions from those reflected in this information.
Beyond the above considerations, the "standardized measure" is also not
directly comparable with asset balances appearing elsewhere in the financial
statements because any such comparison would require reconciling adjustments,
including reduction of the asset balances for related deferred income taxes.
F-38
<PAGE>
SUPPLEMENTAL PETROLEUM DATA
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN MILLIONS)
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL
AND GAS RESERVES
<TABLE>
<CAPTION>
TOTAL WORLDWIDE UNITED STATES EUROPE OTHER REGIONS*
------------------------- ------------------------- ------------------------- ----------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED
COMPANIES Future
cash flows:
Revenues........... $23,836 $19,558 $24,439 $ 7,201 $ 7,199 $10,027 $12,945 $ 9,380 $10,785 $3,690 $2,979 $3,627
Production costs... (8,967) (9,117) (10,011) (3,411) (4,361) (5,228) (4,719) (4,005) (4,119) (837) (751) (664)
Development costs.. (1,693) (1,802) (1,719) (184) (515) (534) (1,439) (1,143) (1,001) (70) (144) (184)
Income tax expense. (6,084) (3,607) (6,022) (873) (414) (1,060) (2,893) (1,514) (2,585) (2,318) (1,679) (2,377)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
Future net cash
flows.............. 7,092 5,032 6,687 2,733 1,909 3,205 3,894 2,718 3,080 465 405 402
Discounted to
present value at a
10% annual rate.... (2,817) (1,818) (2,379) (1,154) (655) (1,239) (1,522) (1,021) (1,000) (141) (142) (140)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
Total consolidated
companies.......... 4,275 3,214 4,308 1,579 1,254 1,966 2,372 1,697 2,080 324 263 262
------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
EQUITY AFFILIATES
Standardized measure
of discounted
future net cash
flows of equity
affiliates......... 211 99 70 102 96 55 109 3 15 -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
Total............... $ 4,486 $ 3,313 $ 4,378 $ 1,681 $ 1,350 $ 2,021 $ 2,481 $ 1,700 $ 2,095 $ 324 $ 263 $ 262
======= ======= ======= ======= ======= ======= ======= ======= ======= ====== ====== ======
</TABLE>
- --------
* Includes Canada, Dubai and Indonesia.
SUMMARY OF CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
RELATING TO PROVED OIL AND GAS RESERVES FOR FULLY CONSOLIDATED COMPANIES
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Balance at January 1................................ $ 3,214 $ 4,308 $ 3,558
Sales and transfers of oil and gas produced, net of
production costs................................... (2,143) (2,239) (2,053)
Development costs incurred during the period........ 713 864 833
Net changes in prices and in development and produc-
tion costs......................................... 1,275 (3,017) 765
Extensions, discoveries and improved recovery, less
related costs...................................... 775 915 453
Revisions of previous quantity estimates............ 796 130 178
Purchases (sales) of reserves in place--net......... 333 (120) (42)
Accretion of discount............................... 529 791 689
Net change in income taxes.......................... (1,174) 1,493 (369)
Other............................................... (43) 89 296
------- ------- -------
Balance at December 31.............................. $ 4,275 $ 3,214 $ 4,308
======= ======= =======
</TABLE>
F-39
<PAGE>
QUARTERLY FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
1994
Sales..................... $9,190 $10,161 $ 9,845 $10,137
Cost of Goods Sold and
Other Expenses(1)........ 8,101 8,924 8,958 9,335
Net Income................ 642 792(2) 647(3) 646(4)
Earnings Per Share of
Common Stock............. .94 1.16 .95 .95
Dividends Per Share of
Common Stock............. .44 .44 .47 .47
Market Price of Common
Stock(5):
High..................... 59 7/8 62 3/8 61 3/8 60 1/2
Low...................... 48 1/4 51 1/2 56 7/8 50 3/4
1993
Sales..................... $9,070 $ 9,546 $ 9,231 $ 9,251
Cost of Goods Sold and
Other Expenses(1)........ 8,247 8,684 10,375 8,983
Net Income (Loss)......... 493(6) 516(7) (680)(8) 237(9)(10)
Earnings (Loss) Per Share
of Common Stock.......... .73 .76 (1.01) .35(9)
Dividends Per Share of
Common Stock............. .44 .44 .44 .44
Market Price of Common
Stock(5):
High..................... 50 53 7/8 49 5/8 50 1/2
Low...................... 44 1/2 46 1/2 45 7/8 44 1/2
</TABLE>
- --------
(1) Excludes interest and debt expense and provision for income taxes.
(2) Includes a charge of $47 ($.07 per share) associated with "Benlate" DF 50
fungicide recall.
(3) Includes a net charge of $3 reflecting: a benefit of $50 from adjustments
in estimates associated with the third quarter 1993 restructuring charge;
a charge of $58 for employee separation costs; a loss of $95 from the
write-down of certain North Sea oil properties to be sold; a charge of $27
associated with the discontinuation of certain products, assets sales and
write-downs and a benefit of $127 principally related to a favorable
change in tax status resulting from a transfer of properties among certain
North Sea affiliates.
(4) Includes a net benefit of $2 reflecting: a benefit of $62 from adjustments
in estimates associated with the third quarter 1993 restructuring charge;
a charge of $63 associated with the "Benlate" DF 50 fungicide recall; a
charge of $27 for the write-down of assets and discontinuation of certain
products; and a benefit of $30 from an adjustment of prior-year tax
provisions.
(5) As reported on the New York Stock Exchange, Inc. Composite Transactions
Tape.
(6) Includes a gain of $32 ($.05 per share) from exchange of North Sea
properties (see footnote 11 to Note 30).
(7) Includes a loss of $21 ($.03 per share) from sale of petroleum-producing
properties.
(8) Includes restructuring charges of $1,111 ($1.64 per share) and write-down
of intangible assets of $184 ($.27 per share), partially offset by a net
tax benefit of $265 ($.39 per share).
(9) Before extraordinary item.
(10) Includes net charge of $92 ($.13 per share) related to certain product
liability claims and litigation costs ($144, of which $126 is associated
with the "Benlate" DF 50 fungicide recall) and a loss on the sale of a
polyethylene business ($17), partly offset by a gain from the sale of the
Remington Arms Company ($69). Also includes a benefit of about $50 ($.07
per share) as a result of the liquidation of certain LIFO inventory
quantities.
F-40
<PAGE>
CONSOLIDATED GEOGRAPHIC DATA
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
CAPITAL TOTAL ASSETS AVERAGE
EXPENDITURES DECEMBER 31 EMPLOYMENT
------------- --------------- ---------------
1994 1993 1994 1993 1994 1993
------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
United States..................... $1,520 $1,842 $19,857 $20,610 73,507 81,587
Europe............................ 1,317 1,277 11,957 11,315 22,624 22,427
Other Regions..................... 404 606 5,078 5,128 14,376 15,395
------ ------ ------- ------- ------- -------
Total............................. $3,241 $3,725 $36,892 $37,053 110,507 119,409
====== ====== ======= ======= ======= =======
</TABLE>
Capital expenditures, total assets and average employment are assigned to
geographic areas, generally based on physical location.
F-41
<PAGE>
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY U.S. UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE SUCH DATE.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 3
Prospectus Summary........................................................ 4
The Company............................................................... 6
Redemption of DuPont Common Stock from Seagram............................ 7
Use of Proceeds........................................................... 8
Price Range of Common Stock and Dividends................................. 8
Capitalization............................................................ 9
Selected Consolidated Financial Information............................... 10
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 11
Description of Capital Stock.............................................. 19
Certain United States Federal Tax Consequences to Non-United States
Holders.................................................................. 21
Underwriting.............................................................. 23
Notice to Canadian Residents.............................................. 25
Experts................................................................... 25
Legal Matters............................................................. 26
Index to Consolidated Financial Statements................................ F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[LOGO OF DUPONT APPEARS HERE]
17,000,000 Shares
Common Stock
($.60 par value)
PROSPECTUS
CS First Boston
Merrill Lynch & Co.
Morgan Stanley & Co.
Incorporated
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED APRIL 17, 1995
17,000,000 Shares
E.I. du Pont de Nemours and Company
Common Stock
($.60 par value)
--------
Of the 17,000,000 shares being offered, 13,600,000 shares are initially being
offered in the United States and Canada (the "U.S. Shares") by the U.S.
Underwriters (the "U.S. Offering") and 3,400,000 shares are initially being
concurrently offered outside the United States and Canada (the "International
Shares") by the Managers (the "International Offering" and, together with the
U.S. Offering, the "Offerings"). The offering price and underwriting discounts
and commissions of the U.S. Offering and the International Offering are
identical. On April 12, 1995, the reported last sale price of the Common Stock
on the New York Stock Exchange Composite Tape was $61 7/8 per share.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-TIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Company (1)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share.................................. $ $ $
Total (2).................................. $ $ $
</TABLE>
(1) Before deduction of expenses payable by the Company estimated at $903,000.
(2) The Company has granted the U.S. Underwriters and the Managers an option,
exercisable by CS First Boston Corporation for 30 days from the date of
this Prospectus, to purchase a maximum of 2,550,000 additional shares
solely to cover over-allotments of shares. If the option is exercised in
full, the total Price to Public will be $ . Underwriting Discounts and
Commissions will be $ and Proceeds to Company will be $ . See
"Subscription and Sale."
--------
Global Coordinator
CS First Boston
--------
The International Shares are offered by the several Managers when, as and if
issued by the Company, delivered to and accepted by the Managers and subject to
their right to reject orders in whole or in part. It is expected that the
International Shares will be ready for delivery on or about May , 1995.
CS First Boston
Merrill Lynch International Limited Morgan Stanley & Co.
International
The date of this Prospectus is , 1995.
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY MANAGER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE SUCH DATE.
In this Prospectus, references to "dollars" and "$" are to United States
dollars.
IN CONNECTION WITH THE OFFERINGS, CS FIRST BOSTON CORPORATION ON BEHALF OF
THE U.S. UNDERWRITERS AND THE MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... I-3
Incorporation of Certain Documents by Reference........................... I-3
Prospectus Summary........................................................ 4
The Company............................................................... 6
Redemption of DuPont Common Stock from Seagram............................ 7
Use of Proceeds........................................................... 8
Price Range of Common Stock and Dividends................................. 8
Capitalization............................................................ 9
Selected Consolidated Financial Information............................... 10
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 11
Description of Capital Stock.............................................. 19
Certain United States Federal Tax Consequences to Non-United States Hold-
ers...................................................................... 21
Subscription and Sale..................................................... I-4
Experts................................................................... 25
Legal Matters............................................................. 26
Index to Consolidated Financial Statements................................ F-1
</TABLE>
I-2
<PAGE>
AVAILABLE INFORMATION
E.I. du Pont de Nemours and Company ("DuPont" or the "Company") is subject to
the informational requirements of the Securities Exchange Act of 1934 (the
"Exchange Act"), and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). These reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at its principal offices at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials also can be obtained from the Public Reference Section of the
Commission at prescribed rates at the principal offices of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Common
Stock is listed on the New York Stock Exchange (Symbol: DD), and reports and
information concerning the Company can be inspected at such exchange, 20 Broad
Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form S-
3 under the Securities Act of 1933 (the "Act") with respect to the shares of
Common Stock offered hereby (including all amendments and supplements thereto,
the "Registration Statement"). This Prospectus, which forms a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement and the exhibits filed therewith, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. Statements contained herein concerning the provisions of such
documents are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference. The Registration Statement and the exhibits thereto
can be inspected and copied at the public reference facilities and regional
offices referred to above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the following
documents heretofore filed with the Commission pursuant to the Exchange Act:
(i) the Company's Annual Report on Form 10-K for the year ended December 31,
1994, including the 1995 Proxy Statement for the Annual Meeting of Shareholders
dated March 17, 1995, as amended by the Proxy Supplement dated April 13, 1995;
(ii) the Company's Current Reports on Form 8-K dated April 7, 1995 (as amended)
and January 25, 1995; and (iii) the Company's Registration of Common Stock on
Form 8-A.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to termination of the Offerings shall be deemed to be incorporated in this
Prospectus by reference and to be a part hereof from the respective dates of
the filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed document which also
is, or is deemed to be, incorporated by reference herein, modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of any and all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents which are not specifically incorporated
by reference into such documents. Requests for such copies should be directed
to Capital Markets, DuPont Finance, E. I. du Pont de Nemours and Company, 1007
Market Street, Wilmington, Delaware 19898, or telephone (302) 774-1000.
I-3
<PAGE>
SUBSCRIPTION AND SALE
The institutions named below (the "Managers") have, pursuant to a
Subscription Agreement dated , 1995 (the "Subscription Agreement"),
severally and not jointly, agreed with the Company to subscribe and pay for the
following respective numbers of International Shares as set forth opposite
their names:
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL
MANAGER SHARES
------- -------------
<S> <C>
CS First Boston Limited..........................................
Merrill Lynch International Limited..............................
Morgan Stanley & Co. International...............................
---------
Total.................................................... 3,400,000
=========
</TABLE>
The Subscription Agreement provides that the obligations of the Managers are
such that, subject to certain conditions precedent, the Managers will be
obligated to purchase all the International Shares offered hereby if any are
purchased. The Subscription Agreement provides that, in the event of a default
by a Manager, in certain circumstances the purchase commitments of non-
defaulting Managers may be increased or the Subscription Agreement may be
terminated.
The Company has entered into an Underwriting Agreement (the "Underwriting
Agreement") with the U.S. Underwriters of the U.S. Offering (the "U.S.
Underwriters") providing for the concurrent offer and sale of the U.S. Shares
in the United States and Canada. The closing of the U.S. Offering is a
condition to the closing of the International Offering and vice versa.
The Company has granted to the Managers and the U.S. Underwriters an option,
exercisable by CS First Boston Corporation, expiring at the close of business
on the 30th day after the date of this Prospectus, to purchase up to 2,550,000
additional shares at the public offering price, less the underwriting discounts
and commission, all as set forth on the cover page of this Prospectus. The
Managers and the U.S Underwriters may exercise such option only to cover over-
allotments in the sale of the shares of Common Stock offered in the Offerings.
To the extent that this option to purchase is exercised, each Manager and each
U.S. Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same
I-4
<PAGE>
percentage of additional shares being sold to the Managers and the U.S.
Underwriters as the number of International Shares set forth next to such
Manager's name in the preceding table bears to the total number of
International Shares in such table and as the number set forth next to such
U.S. Underwriter's name in the corresponding table in the prospectus relating
to the U.S. Offering bears to the total number of U.S. Shares in such table.
The Company has been advised by CS First Boston Limited, on behalf of the
Managers, that the Managers propose to offer the International Shares outside
the United States and Canada initially at the public offering price set forth
on the cover page of this Prospectus and, through the Managers, to certain
dealers at such price less a commission of $ per share, and the Managers may
reallow a commission of $ per share on sales to certain other dealers. After
the initial public offering, the public offering price and commission and
reallowance may be changed.
The public offering price and the aggregate underwriting discounts and
commission per share for the International Offering and the concurrent U.S.
Offering will be identical. Pursuant to an Agreement Between the U.S.
Underwriters and Managers (the "Intersyndicate Agreement") relating to the
Offerings, changes in the offering price, the aggregate underwriting discounts
and commissions per share and per share commission and reallowance to dealers
will be made only upon the mutual agreement of CS First Boston Limited, on
behalf of the Managers, and CS First Boston Corporation, as representative of
the U.S. Underwriters, on behalf of the U.S. Underwriters.
Pursuant to the Intersyndicate Agreement, each of the Managers has agreed
that, as part of the distribution of International Shares and subject to
certain exceptions, it has not offered or sold, and will not offer or sell,
directly or indirectly, any shares of Common Stock or distribute any prospectus
relating to the Common Stock in the United States or Canada or to any other
dealer who does not so agree. Each of the U.S. Underwriters has agreed that, as
part of the distribution of the U.S. Shares and subject to certain exceptions,
it has not offered or sold and will not offer or sell, directly or indirectly,
any shares of Common Stock or distribute any prospectus relating to the Common
Stock to any person outside the United States and Canada or to any other dealer
who does not so agree. The foregoing limitations do not apply to stabilization
transactions or to transactions between the Managers and the U.S. Underwriters
pursuant to the Intersyndicate Agreement. As used herein "United States" means
the United States of America (including the States and the District of
Columbia), its territories, possessions and other areas subject to its
jurisdiction, "Canada" means Canada, its provinces, territories, possessions
and other areas subject to its jurisdiction, and an offer or sale shall be in
the United States or Canada if it is made to (i) any individual resident in the
United States or Canada or (ii) any corporation, partnership, pension, profit-
sharing or other trust or other entity (including any such entity acting as an
investment adviser with discretionary authority) whose office most directly
involved with the purchase is located in the United States or Canada.
Pursuant to the Intersyndicate Agreement, sales may be made between the
Managers and the U.S. Underwriters of such number of shares of Common Stock as
may be mutually agreed upon. The price of any shares so sold will be the public
offering price less such amount agreed upon by CS First Boston Limited, on
behalf of the Managers, and CS First Boston Corporation, as representative of
the U.S. Underwriters, but not exceeding the selling concession applicable to
such shares. To the extent there are sales between the Managers and the U.S.
Underwriters pursuant to the Intersyndicate Agreement, the number of shares of
Common Stock initially available for sale by the Managers or by the U.S.
Underwriters may be more or less than the amount appearing on the cover page of
this Prospectus. Neither the Managers nor the U.S. Underwriters are obligated
to purchase from the other any unsold shares of Common Stock.
Each of the Managers and the U.S. Underwriters severally represents and
agrees that (i) it has not offered or sold, and will not offer or sell, in the
United Kingdom, by means of any document, any shares of Common Stock other than
to persons whose ordinary business it is to buy or sell shares or debentures,
either as a principal or agent, or in circumstances which do not constitute an
offer to the public within the meaning of the Companies Act 1985, (ii) it has
complied and will comply with all applicable provisions of the Financial
I-5
<PAGE>
Services Act of 1986 with respect to anything done by it in relation to any
shares of Common Stock in, from or otherwise involving the United Kingdom, and
(iii) it has only issued or passed on and will only issue or pass on to any
person in the United Kingdom any document received by it in connection with the
issue of any shares of Common Stock if the person is of a kind described in
Article 9(3) of the Financial Services Act of 1986 (Investment Advertisements)
(Exemptions) Order 1988 (as amended by Article 6(c) of the Financial Services
Act of 1986 (Investment Advertisements) Order 1992) or is a person to whom the
document may otherwise lawfully be issued or passed on.
The Company has agreed not to offer, sell, contract to sell, pledge or
otherwise dispose of, or cause to be filed with the Commission a registration
statement under the Securities Act relating to, or announce any offering of,
any shares of Common Stock or any securities convertible into, or exchangeable
or exercisable for, shares of Common Stock, except the shares of Common Stock
offered in the Offerings, for a period of 180 days from the date hereof without
the prior written consent of CS First Boston Corporation, as a representative
of the U.S. Underwriters; provided however, that the Company may (i) issue
Common Stock or any securities convertible into, or exchangeable or exercisable
for, shares of Common Stock pursuant to the terms of any securities outstanding
on the date hereof or other obligations binding upon the Company and in effect
on the date hereof, (ii) sell shares of Common Stock to the Flexitrust Program
and register such Common Stock and, beginning no sooner than 60 days after the
closing of the Offerings, distribute or sell such Common Stock from the
Flexitrust Program, and (iii) sell such shares of Common Stock to the DuPont
Pension Trust Fund and register such Common Stock. Such restrictions would not
apply to shares of DuPont's Common Stock offered by the Company as
consideration for a merger or other stock-based acquisition, should such a
transaction occur.
The Company has agreed to indemnify the Managers and the U.S. Underwriters
against certain liabilities, including civil liabilities under the Securities
Act, or to contribute to payments that the Managers and the US. Underwriters
may be required to make in respect thereof.
I-6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized statement of the expenses (all but the SEC
Registration fees are estimates) in connection with the issuance of the shares
of Common Stock being registered hereunder.
<TABLE>
<S> <C>
SEC Registration fees............................................ $417,547
Blue Sky fees and expenses....................................... $ 25,000
Printing and engraving expenses.................................. $100,000
Accounting fees and expenses..................................... $ 50,000
Stock exchange listing fees...................................... $ 35,000
Miscellaneous.................................................... $275,453
--------
Total.......................................................... $903,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation and Bylaws of DuPont provide for the
indemnification of each director and officer of DuPont in connection with any
claim, action, suit or proceeding brought or threatened by reason of his or her
position with DuPont. In addition, the General Corporation Law of the State of
Delaware ("Delaware Law") permits DuPont to indemnify its directors, officers
and others against judgments, fines, amounts paid in settlement and attorneys'
fees resulting from various types of legal actions or proceedings if the
actions of the party being indemnified meet the standards of conduct specified
in the Delaware Law.
The Company's directors and officers, are, in addition, insured against loss
arising from any claim against them or a wrongful act or omission with certain
exceptions and limitations.
ITEM 16. EXHIBITS.
Each of the following Exhibits is filed or incorporated by reference in this
Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1 Form of U.S. Underwriting Agreement*
1.2 Form of Subscription Agreement*
3.1 Certificate of Incorporation of the Registrant, filed as an exhibit
to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994, and incorporated herein by reference
3.2 By-laws of the Registrant, filed as an exhibit to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1993, and
incorporated herein by reference
12 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Price Waterhouse LLP
</TABLE>
- --------
* To be filed by amendment.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Act"), each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes that: (1) For purposes of
determining any liability under the Act, the information omitted from the form
of prospectus filed as part of this Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be
part of this Registration Statement as of the time it was declared effective;
and (2) For the purpose of determining any liability under the Act, each post-
effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON A FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF WILMINGTON, STATE OF DELAWARE ON THE 17TH DAY OF
APRIL, 1995.
E. I. du Pont de Nemours and Company
/s/ Charles L. Henry
By: _________________________________
CHARLES L. HENRY
SENIOR VICE-PRESIDENT--DUPONT
FINANCE
PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW ON APRIL 17, 1995 BY THE FOLLOWING PERSONS IN
THE CAPACITIES INDICATED.
++++++
E. S. Woolard, Jr. Chairman and +
Director +
(Principal +
Executive +
Officer) +
+
J. A. Krol Vice Chairman and + /s/ C. L. Henry
Director + By: _______________________
+ C. L. HENRY
C. S. Nicandros Vice Chairman and + SENIOR VICE PRESIDENT--
Director + DUPONT FINANCE
+ (PRINCIPAL FINANCIAL
P. N. Barnevik Director ++ AND ACCOUNTING OFFICER
A. F. Brimmer Director + AND ATTORNEY-IN-FACT
L. C. Duemling Director + FOR BRACKETED INDIVIDUALS)
E. B. du Pont Director +
M. P. MacKimm Director +
H. R. Sharp, III Director +
C. M. Vest Director +
+
+ /s/ H. J. Rudge
Original powers of attorney authorizing + By: ______________________
C. L. Henry and H. J. Rudge, jointly, to + H. J. RUDGE
sign the registration statement and + SENIOR VICE PRESIDENT
amendments thereto on behalf of the above- + AND GENERAL COUNSEL
named directors and officers are filed with + (ATTORNEY-IN-FACT FOR
the Registration Statement. + BRACKETED INDIVIDUALS)
++++++
II-3
<PAGE>
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,
------------------------------------------------------
PRO FORMA
1994(C) 1994 1993 1992 1991 1990
--------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net Income.............. $2,352 $2,727 $ 566 (a) $ 975 (a) $1,403 $2,310
Provision for Income
Taxes.................. 1,555 1,655 392 836 1,415 1,844
Minority Interests in
Earnings of
Consolidated
Subsidiaries........... 18 18 5 10 6 3
Adjustment for Companies
Accounted for by the
Equity Method.......... 18 18 41 6 35 29
Capitalized Interest.... (143) (143) (194) (194) (197) (161)
Amortization of
Capitalized Interest... 154 154 144 101 94 84
------ ------ ------ ------ ------ ------
3,954 4,429 954 1,734 2,756 4,109
------ ------ ------ ------ ------ ------
FIXED CHARGES:
Interest and Debt
Expense-Borrowings(b). 994 559 594 643 752 773
Adjustment for
Companies Accounted
for by the Equity
Method-Interest and
Debt Expense.......... 55 55 42 62 11 9
Capitalized Interest... 143 143 194 194 197 161
Rental Expense
Representative of
Interest Factor....... 118 118 143 151 162 163
------ ------ ------ ------ ------ ------
1,310 875 973 1,050 1,122 1,106
------ ------ ------ ------ ------ ------
Total Adjusted Earnings
Available for Payment
of Fixed Charges....... $5,264 $5,304 $1,927 $2,784 $3,878 $5,215
====== ====== ====== ====== ====== ======
Number of Times Fixed
Charges Are Earned..... 4.0 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 balances during this period, and the average interest rate for
such borrowings was 7.24%, 6.56%, and 7.37%, respectively.
(c) On a pro forma basis, if the Seagram Redemption had occurred at January 1,
1994 (assuming that the related indebtedness had been outstanding
throughout 1994).
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 of our report dated February 16, 1995,
relating to the financial statements of E. I. du Pont de Nemours and Company,
which appears in such Prospectus. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
April 12, 1995
