UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-815
E. I. du Pont de Nemours and Company
(Exact Name of Registrant as Specified in Its Charter)
Delaware 51-0014090
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1007 Market Street, Wilmington, Delaware 19898
(Address of Principal Executive Offices)
(302) 774-1000
(Registrant's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
526,594,241 shares of common stock, $0.60 par value, were outstanding at
April 24, 1995.
1
<PAGE>
Form 10-Q
E. I. DU PONT DE NEMOURS AND COMPANY
Table of Contents
Page(s)
-------
Part I
Item 1. Financial Statements
Consolidated Income Statement ............................... 3
Consolidated Statement of Cash Flows ........................ 4
Consolidated Balance Sheet .................................. 5
Notes to Financial Statements ............................... 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Results ........................................... 7-8
Industry Segment Performance ................................ 8-9
Consolidated Industry Segment Information ................... 10
Financial Condition ......................................... 11-12
Part II
Item 1. Legal Proceedings .................................... 13-15
Item 4. Submission of Matters to a Vote of Security Holders .. 15-16
Item 6. Exhibits and Reports on Form 8-K ..................... 16-17
Signature ....................................................... 18
Exhibit Index ................................................... 19
Exhibit 12 ...................................................... 20
Exhibit 18 ...................................................... 21
2
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<TABLE>
Form 10-Q
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
<CAPTION>
Three Months Ended
CONSOLIDATED INCOME STATEMENT<Fa><Fb> March 31
- ----------------------------------------------------------------------------
(Dollars in millions, except per share) 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
SALES ............................................ $10,502 $9,190
Other Income ..................................... 361 205
------- ------
Total ........................................ 10,863 9,395
------- ------
Cost of Goods Sold and Other Expenses ............ 7,603 6,675
Selling, General and Administrative Expenses ..... 740 664
Depreciation, Depletion and Amortization ......... 648<Fc> 703
Exploration Expenses, Including Dry Hole Costs
and Impairment of Unproved Properties .......... 54 59
Interest and Debt Expense ........................ 120 142
------- ------
Total ........................................ 9,165 8,243
------- ------
EARNINGS BEFORE INCOME TAXES ..................... 1,698 1,152
Provision for Income Taxes ....................... 739 510
------- ------
NET INCOME ....................................... $ 959 $ 642
======= ======
EARNINGS PER SHARE OF COMMON STOCK<Fd> ........... $ 1.40 $ .94
======= ======
DIVIDENDS PER SHARE OF COMMON STOCK .............. $ .47 $ .44
======= ======
See pages 6 and 7 for Notes to Financial Statements.
</TABLE>
3
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<TABLE>
Form 10-Q
<CAPTION>
Three Months Ended
CONSOLIDATED STATEMENT OF CASH FLOWS<Fa><Fb> March 31
- ---------------------------------------------------------------------------------------------
(Dollars in millions) 1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS
Net Income ........................................................ $ 959 $ 642
Adjustments to Reconcile Net Income to Cash
Provided by Operations:
Depreciation, Depletion and Amortization ...................... 648 703
Dry Hole Costs and Impairment of Unproved Properties .......... 12 18
Other Noncash Charges and Credits - Net ....................... (17) (72)
Change in Operating Assets and Liabilities - Net .............. (611) (200)
----- -------
Cash Provided by Operations ................................. 991 1,091
----- -------
INVESTMENT ACTIVITIES
Purchases of Property, Plant and Equipment ........................ (626) (662)
Investment in Affiliates .......................................... (62) (30)
Proceeds from Sales of Assets ..................................... 117 20
Investments in Short-Term Financial Instruments - Net ............. 204 (882)
Miscellaneous - Net ............................................... (36) 135
----- -------
Cash Used for Investment Activities ......................... (403) (1,419)
----- -------
FINANCING ACTIVITIES
Dividends Paid to Stockholders .................................... (323) (301)
Net Increase in Borrowings ........................................ 494 998
Common Stock Issued in Connection with Compensation Plans ......... 8 45
----- -------
Cash Provided By Financing Activities ....................... 179 742
----- -------
Effect of Exchange Rate Changes on Cash ............................. 58 23
----- -------
INCREASE IN CASH AND CASH EQUIVALENTS ............................... $ 825 $ 437
===== =======
See pages 6 and 7 for Notes to Financial Statements.
</TABLE>
4
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<TABLE>
Form 10-Q
<CAPTION>
CONSOLIDATED BALANCE SHEET<Fa><Fb> March 31 December 31
- ---------------------------------------------------------------------------------------------
(Dollars in millions, except per share) 1995 1994
- ---------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents .................................... $ 1,681 $ 856
Marketable Securities ........................................ 271 253
Accounts and Notes Receivable ................................ 5,810 5,213
Inventories<Fe> .............................................. 4,283 3,969
Prepaid Expenses ............................................. 343 259
Deferred Income Taxes ........................................ 446 558
------- -------
Total Current Assets ....................................... 12,834 11,108
PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation,
depletion and amortization (March 31, 1995 - $27,998;
December 31, 1994 - $27,718) ................................. 21,022 21,120
INVESTMENT IN AFFILIATES ....................................... 1,753 1,662
OTHER ASSETS ................................................... 3,082 3,002
------- -------
TOTAL ...................................................... $38,691 $36,892
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable ............................................. $ 2,688 $ 2,734
Short-Term Borrowings and Capital Lease Obligations .......... 1,897 1,292
Income Taxes ................................................. 720 409
Other Accrued Liabilities .................................... 3,218 3,130
------- -------
Total Current Liabilities .................................. 8,523 7,565
LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS ............. 6,277 6,376
OTHER LIABILITIES .............................................. 8,531 8,438
DEFERRED INCOME TAXES .......................................... 1,635 1,494
------- -------
Total Liabilities .......................................... 24,966 23,873
------- -------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES ................ 209 197
------- -------
STOCKHOLDERS' EQUITY
Preferred Stock .............................................. 237 237
Common Stock, $.60 par value; 900,000,000 shares authorized;
shares issued at March 31, 1995 - 682,222,510;
December 31, 1994 - 681,004,944 409 408
Additional Paid-In Capital ................................... 4,828 4,771
Reinvested Earnings .......................................... 8,042 7,406
------- -------
Total Stockholders' Equity ................................. 13,516 12,822
------- -------
TOTAL ...................................................... $38,691 $36,892
======= =======
See pages 6 and 7 for Notes to Financial Statements.
</TABLE>
5
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Form 10-Q
NOTES TO FINANCIAL STATEMENTS
(Dollars in millions, except per share)
[FN]
<Fa>These statements are unaudited, but reflect all adjustments that, in the
opinion of management, are necessary to provide a fair presentation of
the financial position, results of operations and cash flows for the
dates and periods covered. All such adjustments are of a normal
recurring nature. Certain reclassifications of 1994 data have been
made to conform to 1995 classifications.
<Fb>Subsequent Event - On April 6, 1995, the company acquired 156 million
shares of its common stock from Seagram for $56.25 per share.
Consideration consisted of (i) $1,000 in cash, (ii) 90-day promissory
notes totaling approximately $7,300 and (iii) warrants valued at $440
exercisable for 156 million shares of the company's common stock. In
general, the warrants issued in the transaction allow Seagram to
purchase 48 million DuPont shares for a 60-day period ending on
October 6, 1997 at a price of $89 per share; 54 million shares for a
60-day period ending on October 6, 1998 at a price of $101 per share;
and 54 million shares for a 60-day period ending on October 6, 1999 at
a price of $114 per share. The warrants are exercisable sooner in
connection with certain significant corporate events. The warrants
are subject to various conditions, including limitations on transfer
to third parties.
Subsequent to April 6, 1995, the notes issued to Seagram have been paid
and replaced by private-placement commercial paper borrowings of the
company. The weighted-average interest rate associated with such
borrowings was 6.17 percent at April 25, 1995.
On a pro forma basis, if this share redemption had occurred: (i) at
January 1, 1995 (assuming that the related indebtedness had been
outstanding throughout the first quarter of 1995), Interest and Debt
Expense would have been $235, Earnings Before Income Taxes would have
been $1,568, Net Income would have been $867,and Earnings Per Share of
Common Stock would have been $1.65 (on the basis of 525,352,598
average outstanding shares), and (ii) at March 31, 1995, Short-Term
Borrowings and Capital Lease Obligations would have been $9,233,
Stockholders' Equity would have been $5,165 and working capital would
have been ($4,040).
The company currently expects that the long-term funding for this
transaction will include: (i) cash flow from operations and selective
sales of assets; (ii) a Flexitrust program that will effect the sale
or distribution of up to 24,000,000 additional newly-issued shares of
DuPont common stock over the next several years to satisfy existing
employee compensation and benefit programs; and (iii) up to $2,000
6
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Form 10-Q
[FN]
from public and private offerings of equity securities. Accordingly,
pro forma data for the first quarter 1995 are not necessarily
indicative of results of operations or financial position in
subsequent periods.
<Fc>Effective with property, plant and equipment (PP&E) placed in service
beginning in 1995 for the company's nonpetroleum businesses, the
company changed from an accelerated method to a straight-line method
of depreciation. This change in accounting principle is being made to
reflect management's belief that the productivity of such PP&E will
not appreciably diminish in the early years of its useful life, and it
will not be subject to significant additional maintenance in the later
years of its useful life. In these circumstances, straight-line
depreciation is preferable in that it provides a better matching of
costs with revenues. Additionally, the change to the straight-line
method will conform to predominant industry practice. This change did
not have a material impact for first quarter 1995, and it is not
expected to have a material effect for full year 1995 results.
<Fd>Earnings per share are calculated on the basis of the following average
number of common shares outstanding:
Three Months Ended March 31:
1995 -- 681,352,598
1994 -- 678,476,595
<Fe>Inventories March 31 December 31
----------- 1995 1994
-------- -----------
Chemicals ................................. $ 262 $ 237
Fibers .................................... 696 677
Polymers .................................. 671 617
Petroleum ................................. 1,393 1,365
Diversified Businesses .................... 1,261 1,073
------ ------
Total ................................... $4,283 $3,969
====== ======
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(a) Results of Operations
(1) Financial Results:
The company reported net income for the first quarter of
1995 at a record $959 million, or $1.40 per share, up 49 percent
from the $642 million, or $.94 per share, earned in the first
quarter 1994.
7
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Form 10-Q
As previously announced, on April 6, 1995, DuPont redeemed
156 million shares of DuPont common stock from Seagram. This
transaction did not affect first quarter results, but will have a
positive effect on earnings per share in future quarters.
Strong financial performance and real market growth
produced an outstanding quarter, especially in Agricultural
Products and businesses in the company's Polymers and Chemicals
segments. The company continues to see strong demand in chemicals
and specialties and, more recently, higher selling prices, with an
added impetus from a weaker U.S dollar. Europe and Asia had
earnings more than double last year's first quarter. Petroleum,
although down from last year, also performed quite well given the
difficult industry conditions experienced during the quarter.
(2) Industry Segment Performance:
The following text and accompanying "Consolidated Industry
Segment Information" table compare business segment results for
the first quarter of 1995 with the same period last year.
Sales for the first quarter were $10.5 billion, up
$1.3 billion or 14 percent. For combined Chemicals and
Specialties segments, sales were up 17 percent with 11 percent
higher volume. Selling prices were up 6 percent, reflecting in
part the currency effect of a weaker dollar. For the Petroleum
segment, sales were up 10 percent versus last year, largely on
higher refined product volumes.
o Chemicals segment earnings were $167 million, up
$84 million, or 101 percent, principally attributable to
better results for white pigments and specialty chemicals.
Segment sales increased 22 percent with the most
significant increases occurring outside the United States.
Sales volume was up 14 percent, while selling prices
increased 8 percent.
o Fibers segment earnings of $205 million were up
$61 million, or 42 percent, principally reflecting
improvements in aramids, "Dacron" polyester, nylon, and
"Lycra" spandex. Segment sales were 13 percent higher, on
8 percent higher volume and 5 percent higher selling
prices.
o Polymers segment earnings were $235 million, up
$88 million, or 60 percent, from last year. Engineering
polymers, packaging and industrial polymers, and
elastomers continue to perform very well, primarily
reflecting higher sales. Segment sales improved
20 percent, reflecting 14 percent higher volume, and
6 percent higher selling prices.
8
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Form 10-Q
o Petroleum segment earnings were $186 million, down
$29 million, or 13 percent, due to the decline in
worldwide refined product margins. However, upstream
earnings were $169 million, up 27 percent due to higher
crude oil prices and lower costs more than offsetting
lower U.S. natural gas prices and lower international oil
and gas production. Downstream earnings were $17 million,
down from $82 million earned in the prior year, on
significantly lower margins.
o Diversified Businesses segment earnings totaled
$237 million, up $89 million or 60 percent. The earnings
improvement was largely attributable to better results
from agricultural products and films. Segment sales were
up 17 percent, largely reflecting higher sales of
agricultural products outside the United States. Segment
selling prices were up 4 percent, while sales volume
increased by 13 percent.
9
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<TABLE>
Form 10-Q
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
<CAPTION>
Three Months Ended
CONSOLIDATED INDUSTRY SEGMENT INFORMATION March 31
- ---------------------------------------------------------------------------
(Dollars in millions) 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C>
SALES
- -----
Chemicals ........................................ $ 1,035 $ 848
Fibers ........................................... 1,854 1,645
Polymers ......................................... 1,777 1,483
Petroleum ........................................ 4,253 3,862
Diversified Businesses ........................... 1,583 1,352
------- ------
Total ........................................ $10,502 $9,190
======= ======
AFTER-TAX OPERATING INCOME
- --------------------------
Chemicals ........................................ $ 167 $ 83
Fibers ........................................... 205 144
Polymers ......................................... 235 147
Petroleum ........................................ 186 215
Diversified Businesses ........................... 237 148
------- ------
Total ........................................ 1,030 737
Interest and Other Corporate
Expenses Net of Tax ............................ (71) (95)
------- ------
NET INCOME ....................................... $ 959 $ 642
- ---------- ======= ======
</TABLE>
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Form 10-Q
(b) Financial Condition at March 31, 1995
DuPont recorded a net cash inflow from operations of $991 million
in the first quarter of 1995, as compared with $1,091 million in the first
quarter of 1994. Inflows from higher net income were offset by outflows for
increased working capital, primarily accounts receivable-trade and inven-
tories. The first quarter increase in working capital reflects higher sales
overall, the seasonal pattern in certain businesses (principally crop pro-
tection chemicals), and a weakening of the U.S. dollar during the quarter.
Capital expenditures for plant, property and equipment and investments in
equity affiliates were $688 million for the quarter, essentially the same as
a year ago.
The company increased its common stock dividend by 10.6 percent
from $.47 to $.52 per share effective in the second quarter 1995.
Certain ratios are shown below:
At 3/31/95 At 12/31/94
---------- -----------
Debt Ratio (total debt to total
capitalization) 37% 37%
Current Ratio (current assets
to current liabilities) 1.5:1 1.5:1
Days' sales outstanding averaged 38 days in the first quarter, down
one day from the first quarter of 1994, but up two days from the prior
quarter. The ratio of earnings to fixed charges is 9.3 for the first three
months of 1995, up from 6.1 for the year 1994.
Subsequent Events
As indicated in Note (b) to the Financial Statements, on April 6,
1995, the company acquired 156 million shares of its common stock from
Seagram. On a pro forma basis as if the share redemption had occurred at
January 1, 1995, the ratio of earnings to fixed charges for the first three
months of 1995 would have been 5.9 and, at March 31, 1995, the Debt Ratio
would have been 74 percent.
During April 1995, the company's unused short-term bank credit
lines supporting its existing commercial paper program were raised to
$1,145 million. A credit line was also established for the company's new
private-placement commercial paper program instituted in connection with the
stock redemption from Seagram in the amount of $6,225 million. Total
company unused short-term bank credit lines outstanding as of April 25, 1995
were $7,370 million.
11
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Form 10-Q
Following this transaction, Moody's Investors Service (Moody's)
lowered its rating on the company's senior long-term debt to Aa3 from Aa2.
The company's commercial paper rating was not under review and was affirmed
at Prime-1 by Moody's. Standard & Poor's Corporation (S&P) lowered its
rating on the company's senior debt and preferred stock to AA- from AA and
affirmed its commercial paper rating of A-1+. The ratings outlook by S&P
remains negative. The company does not expect that these changes or any
prospective change in its credit ratings as a result of this transaction
will have a material impact on its interest and debt expenses or on its
access to borrowings.
Subsequent to April 6, 1995, the notes issued to Seagram have been
paid and replaced by private-placement commercial paper borrowings of the
company. The weighted-average interest rate associated with such borrowings
was 6.17 percent at April 25, 1995.
The company currently expects that the long-term funding for this
transaction will include: (i) cash flow from operations and selective sales
of assets; (ii) a Flexitrust program that will effect the sale or distri-
bution of up to 24 million additional newly-issued shares of DuPont common
stock over the next several years to satisfy existing employee compensation
and benefit programs; and (iii) up to $2 billion from public and private
offerings of equity securities. Such offerings also include the company's
offer to sell up to $500 million of common stock to the DuPont Pension Trust
Fund. It is unknown whether the DuPont Pension Trust Fund will accept any
such offer or the price and other terms of any such transaction. DuPont
expects its Debt Ratio to return to its target range of 35 to 40 percent by
year end 1996.
The company is currently planning to make a public offering of
17,000,000 shares (up to 19,550,000 shares under certain conditions) of its
common stock. The net proceeds from such offering will be used for the
repayment of a portion of the short-term debt associated with this
transaction.
The company currently expects capital expenditures to decrease from
a planned $3.6 billion to a total of $3.3 billion in 1995. In 1994, capital
expenditures were $3.1 billion.
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Form 10-Q
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In 1991, DuPont received claims by growers that use of "Benlate"
DF 50 fungicide had caused crop damages. Based on the belief that "Benlate"
DF 50 would be found to be a contributor to the claimed damage, DuPont paid
claims. In 1992, after 18 months of extensive research, DuPont scientists
concluded that "Benlate" DF 50 was not responsible for plant damage reports
received since March 1991. Concurrent with these research findings, DuPont
stopped paying claims relating to those reports. To date, DuPont has been
served with more than 660 lawsuits in several jurisdictions, principally
Florida, Hawaii, and Puerto Rico, by growers who allege plant damage from
using "Benlate" DF 50 fungicide. Over half of the lawsuits brought against
the company since 1991 have been disposed of by trial, dismissal or settle-
ment, including 330 in 1994 and 70 thus far in 1995. There were four jury
trials involving nine lawsuits completed in 1994. In the first three trials
in Florida and Alabama, the juries found no product defect and no damages
attributable to "Benlate" 50 DF fungicide. In the fourth trial involving
one lawsuit in South Carolina, the jury found against DuPont and awarded
damages of $17.2 million to the plaintiff. The trial judge, however, later
struck the punitive damages portion of the award reducing the jury verdict
to about $7.5 million. In January 1995, at the conclusion of a seven-month
trial in Kona, Hawaii, the jury awarded the plaintiff $23.9 million. DuPont
believes it has strong grounds for setting both of these adverse verdicts
aside on appeal. A second trial in Hawaii of nine consolidated cases
resulted, in March 1995, in a total award of $8.5 million in compensatory
damages. The plaintiffs' request for punitive damages was denied. DuPont
plans to appeal. Also in March 1995, a trial involving two growers in
Puerto Rico was resolved in accordance with the terms of a judgment agree-
ment negotiated with the plaintiffs before the jury verdict was returned.
With the conclusion of these trials, only three of the 125 cases involving
"Benlate" 50 DF filed in Puerto Rico and three of more than 100 filed in
Hawaii remain unresolved. Most recently, in April 1995, a jury in Federal
Court in Tallahassee, Florida, found that "Benlate" was not defective and
returned a verdict of no liability for DuPont. DuPont believes that
"Benlate" 50 DF fungicide did not cause the alleged damages and intends to
prove this in ongoing matters.
Since 1989 DuPont has been served with approximately 100 lawsuits
in several jurisdictions, principally Texas, Maryland, Arizona, Colorado and
New Jersey alleging damages as a result of leaks in certain polybutylene
plumbing systems. In most cases, DuPont is a codefendant with Shell,
Hoechst-Celanese, and parts manufacturers. The polybutylene plumbing
systems consist of flexible pipe extruded from polybutylene connected by
fittings made of acetal. Shell Chemical is the sole producer of
polybutylene; the acetals are provided by Hoechst-Celanese and DuPont. It
13
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Form 10-Q
is not known how many commercial and residential units nationwide have
plumbing systems containing acetals manufactured by DuPont. During 1994,
DuPont settled a majority of the Texas lawsuits in which it was a defendant.
In these cases DuPont will provide up to $34 million to cover approximately
64,000 claims. DuPont has not been to trial in any case. Class certifica-
tion was denied in February 1995 in a nationwide class action filed in state
court in Houston, Texas. The matter is now under appeal. Three nationwide
class actions are pending, and state and county class actions have been
filed in a number of other jurisdictions, as well. The total number of
potential plaintiffs included in all class actions filed has not been
determined at this time. Claims outside of litigation are handled by the
Plumbing Claims Group, a nonprofit corporation formed and funded by Shell,
Hoechst-Celanese and DuPont to carry out repairs to leaking polybutylene/
acetal plumbing systems.
The company's balance sheets reflect accruals for estimated costs
associated with the foregoing matters. Adverse changes in estimates of such
costs could result in additional future charges.
On October 18, 1991, the Environmental Protection Agency (EPA)
issued an Administrative Order under the Resource Conservation and Recovery
Act (RCRA) directing Conoco Pipeline Company (CPLC) to undertake specific
remedial measures related to a former oil reprocessing facility in Converse
County, Wyoming. CPLC contested the Administrative Order, and has taken
voluntary measures at the site together with other interested parties. On
February 19, 1993, the U.S. Department of Justice filed a lawsuit against 10
entities, including CPLC, to enforce the Order and collect penalties. CPLC
has settled this matter with the U.S. Government, and that settlement has
been approved by the Court. CPLC along with four other companies has agreed
to a cleanup of this site which is estimated to cost between $4.4 million
and $8.9 million and pay as a group $300,000 in civil penalties. CPLC's
share of this settlement is approximately 8 percent. Cleanup of the site is
proceeding pursuant to the settlement, and contribution has been obtained
from the majority of other potentially responsible parties. An action
against the site owner/operator is pending.
The EPA filed on October 7, 1994, an administrative complaint
against DuPont proposing to assess $1.9 million in civil penalties for
distributing triazine herbicides with product labels that the EPA alleges
were not in compliance with its new Worker Protection Standards. The labels
were submitted to the EPA for approval in July 1993 and accepted by the EPA
in November. However, in March of 1994, the EPA notified DuPont of alleged
errors in the labels after most of the products had been shipped and were in
the distribution chain. DuPont has cooperated with the EPA in making label
changes and has issued supplemental labeling for all products that had been
distributed. DuPont believes the proposed penalties are unwarranted and has
filed a motion for summary judgment in administrative court.
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Form 10-Q
On January 19, 1995, EPA, Region IV, issued a "Notice of Violation
and Opportunity to Show Cause" against the Wurtland, Kentucky, sulphuric
acid plant for 192 alleged violations of release reporting obligations under
the Emergency Planning and Community Right to Know Act. The EPA proposed a
civil penalty of $918,000 to resolve the matter, but thus far the parties
have been unable to informally resolve the dispute. The EPA is expected to
file a complaint in the matter.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Business transacted at the Annual Meeting:
A total of 447,048,961 shares of common stock were voted in person
or by proxy at the annual meeting of stockholders on April 26, or
85.1 percent of the shares entitled to be voted. Business was transacted as
follows:
1. ELECTION OF DIRECTORS: The 11 nominees were elected to serve on
the Board of Directors for the ensuing year. All nominees were
members of the Board. The vote tabulation with respect to each
nominee follows:
Votes Votes Cast Against
Director Cast For or Withheld
------------------ ----------- ------------------
P. N. Barnevik 430,509,945 16,538,016
A. F. Brimmer 445,047,562 2,000,399
L. C. Duemling 445,358,191 1,689,770
E. B. du Pont 445,512,784 1,535,177
C. M. Harper 445,357,380 1,690,581
J. A. Krol 445,006,034 2,041,927
C. S. Nicandros 445,041,937 2,006,024
W. K. Reilly 445,424,546 1,623,415
H. R. Sharp, III 445,043,869 2,004,092
C. M. Vest 445,360,208 1,687,753
E. S. Woolard, Jr. 444,232,092 2,815,869
2. RATIFICATION OF INDEPENDENT ACCOUNTANTS: The proposal to ratify
the appointment of Price Waterhouse LLP as independent accountants
for 1995 was approved by a vote of 444,186,540 shares for,
927,472 shares against and 1,934,949 abstentions and broker
nonvotes.
3. DIRECTORS' BOARD SERVICE: A stockholder proposal to limit the term
of outside directors' board service was defeated by a vote of
391,962,706 shares against, 9,177,776 shares for and 45,908,479
abstentions and broker nonvotes.
15
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Form 10-Q
4. CUMULATIVE VOTING: A stockholder proposal to provide for cumula-
tive voting in the election of directors was defeated by a vote of
314,755,328 shares against, 87,501,257 shares for and 44,792,376
abstentions and broker nonvotes.
5. SITE LISTING: A stockholder proposal to list in the company's
annual environmental progress report sites and other circum-
stances expected to cause environmental liabilities to accrue to
the company was defeated by a vote of 371,931,142 shares against,
20,459,286 shares for and 54,658,533 abstentions and broker
nonvotes.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibit index filed with this Form 10-Q is on page 19.
(b) Reports on Form 8-K
1. The company filed a Current Report on Form 8-K, dated
January 25, 1995, in connection with Debt Securities that
may be offered on a delayed or continuous basis under
Registration Statements on Form S-3 (No. 33-48128 and
No. 33-53327). Through this Form 8-K, a copy of the
Registrant's Earnings Press Release, dated January 25,
1995, was filed under Item 7.
2. The company filed a Current Report on Form 8-K, dated
April 7, 1995, in connection with Debt Securities that
may be offered on a delayed or continuous basis under
Registration Statements on Form S-3 (No. 33-48128 and
No. 33-53327). Through this Form 8-K, a copy of the
Registrant's Press Release, "DuPont Redeems 156 Million
Of Its Shares From Seagram For $8.8 Billion In Cash,
Notes, Warrants," dated April 6, 1995, was filed under
Item 2.
3. The company filed on April 13, 1995, a Current Report on
Form 8-K/A, Amendment No. 1, to its Form 8-K, dated
April 7, 1995. Through this Form 8-K/A, Amendment No.1,
the following documents were filed under Item 7:
(1) conformed copy of Agreement
(2) conformed copy of Warrant Agreement
(3) conformed copies of Warrant Certificates
(4) Form of Warrant Certificates
(5) conformed Registration Rights Agreement
(6) Form of Individual/Family Standstill Agreement
16
<PAGE>
Form 10-Q
4. The company filed a Current Report on Form 8-K, dated
April 24, 1995, in connection with Debt and/or Equity
Securities that may be offered on a delayed or continuous
basis under Registration Statements on Form S-3
(No. 33-48128, No. 33-53327 and No. 33-58599). Through
this Form 8-K, a copy of the Registrant's Earnings Press
Release, dated April 24, 1995, was filed under Item 7.
5. The company filed a Current Report on Form 8-K, dated
April 27, 1995, in connection with Debt Securities that
may be offered on a delayed or continuous basis under
Registration Statements on Form S-3 (No. 33-48128 and
No. 33-53327). Through this Form 8-K, a copy of the
Registrant's Press Release, dated April 26, 1995,
discussing a common stock dividend increase was filed
under Item 5.
17
<PAGE>
Form 10-Q
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
E. I. DU PONT DE NEMOURS AND COMPANY
(Registrant)
Date: May 1, 1995
--------------------------------------
By /s/C. L. Henry
--------------------------------------
C. L. Henry
Senior Vice President - DuPont Finance
(As Duly Authorized Officer
and Principal Financial
and Accounting Officer)
18
<PAGE>
Form 10-Q
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
12 Computation of Ratio of Earnings to Fixed Charges.
18 Letter of Independent Public Accountants regarding Change in
Accounting Principles.
19
<PAGE>
<TABLE>
Form 10-Q
Exhibit 12
E. I. DU PONT DE NEMOURS AND COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<CAPTION>
Three Months Ended Years Ended December 31
March 31, 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net Income .......................................... $ 959 $2,727 $ 566<Fa> $ 975<Fa> $1,403 $2,310
Provision for Income Taxes .......................... 739 1,655 392 836 1,415 1,844
Minority Interests in Earnings of Consolidated
Subsidiaries ...................................... 9 18 5 10 6 3
Adjustment for Companies Accounted for
by the Equity Method .............................. (4) 18 41 6 35 29
Capitalized Interest ................................ (38) (143) (194) (194) (197) (161)
Amortization of Capitalized Interest ................ 39 154 144 101 94 84
1,704 4,429 954 1,734 2,756 4,109
Fixed Charges:
Interest and Debt Expense - Borrowings ............ 120 559 594 643 752 773
Adjustment for Companies Accounted for by the
Equity Method - Interest and Debt Expense ....... 17 55 42 62 11 9
Capitalized Interest .............................. 38 143 194 194 197 161
Rental Expense Representative of Interest Factor .. 30 118 143 151 162 163
205 875 973 1,050 1,122 1,106
Total Adjusted Earnings Available for Payment of
Fixed Charges ..................................... $1,909 $5,304 $1,927 $2,784 $3,878 $5,215
====== ====== ====== ====== ====== ======
Number of Times Fixed Charges are Earned ............ 9.3<Fb> 6.1 2.0 2.7 3.5 4.7
====== ====== ====== ====== ====== ======
<FN>
<Fa>Income Before Extraordinary Item and Transition Effect of Accounting
Changes.
<Fb>On a pro forma basis as if the share redemption from Seagram had
occurred at January 1, 1995, the "Number of Times Fixed Charges are
Earned" would be 5.9.
</TABLE>
20
<PAGE>
Form 10-Q
Exhibit 18
LETTER OF INDEPENDENT PUBLIC ACCOUNTANTS
REGARDING CHANGE IN ACCOUNTING PRINCIPLES
April 26, 1995
To the Board of Directors of
E. I. du Pont de Nemours and Company
Dear Directors:
We have been furnished with a copy of the Company's
Form 10-Q for the quarter ended March 31, 1995. Note (c)
describes a change in the method of depreciation from an
accelerated method to the straight-line method for property,
plant and equipment placed in service beginning in 1995 for the
Company's nonpetroleum businesses. It should be understood that
the preferability of one acceptable method of depreciation over
another has not been addressed in any authoritative accounting
literature and in arriving at our opinion expressed below, we
have relied on management's business planning and judgment.
Based upon our discussion with management and the stated reasons
for the change, we believe that such change represents, in your
circumstances, the adoption of a preferable alternative account-
ing principle for depreciation in conformity with Accounting
Principles Board Opinion No. 20.
We have not made an audit in accordance with generally
accepted auditing standards of the financial statements of the
Company for the three-month period ended March 31, 1995 and,
accordingly, we express no opinion thereon or on the financial
information filed as part of the Form 10-Q of which this letter
is to be an exhibit.
Yours very truly,
Price Waterhouse LLP
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the Consolidated Balance Sheet and Consolidated Income Statement filed
as part of the Form 10-Q for the Quarter Period Ended March 31, 1995
and is qualified in its entirety by reference to such Financial
Statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,681
<SECURITIES> 271
<RECEIVABLES> 5,810<F1>
<ALLOWANCES> 0
<INVENTORY> 4,283
<CURRENT-ASSETS> 12,834
<PP&E> 49,020
<DEPRECIATION> 27,998
<TOTAL-ASSETS> 38,691
<CURRENT-LIABILITIES> 8,523
<BONDS> 6,277
<COMMON> 409
0
237
<OTHER-SE> 12,870
<TOTAL-LIABILITY-AND-EQUITY> 38,691
<SALES> 10,502
<TOTAL-REVENUES> 10,863
<CGS> 7,603<F2>
<TOTAL-COSTS> 9,045<F3>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 120
<INCOME-PRETAX> 1,698
<INCOME-TAX> 739
<INCOME-CONTINUING> 959
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 959
<EPS-PRIMARY> 1.40
<EPS-DILUTED> 0
<FN>
<F1>Includes Other Accounts In Addition To Notes and Accounts
Receivable-Trade.
<F2>Includes Other Expenses.
<F3>Cost of Goods Sold and Other Expenses; Selling, General and
Administrative Expenses; Depreciation, Depletion and
Amortization; Exploration Expenses, Including Dry Hole Costs
and Impairment of Unproved Properties.
</FN>
</TABLE>
