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, 1996
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
560,482,467 shares (excludes 18,560,257 shares held by DuPont's
Flexitrust) of common stock, $0.60 par value, were outstanding at
April 30, 1996.
1
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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
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Results ........................................... 7
Industry Segment Performance ................................ 7-8
Consolidated Industry Segment Information ................... 9
Financial Condition ......................................... 10
Part II
Item 1. Legal Proceedings .................................... 11-12
Item 4. Submission of Matters to a Vote of Security Holders .. 12-13
Item 6. Exhibits and Reports on Form 8-K ..................... 13-14
Signature ....................................................... 15
Exhibit Index ................................................... 16
Exhibit 10.12 - Stock Accumulation and Deferred Compensation
Plan for Directors ............................................ 17-23
Exhibit 11 - Computation of Earnings Per Share .................. 24
Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges ... 25
2
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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> March 31
- ----------------------------------------------------------------------
(Dollars in millions, except per share) 1996 1995
- ----------------------------------------------------------------------
<S> <C> <C>
SALES .......................................... $10,769 $10,502
Other Income ................................... 370 338
------- -------
Total ...................................... 11,139 10,840
------- -------
Cost of Goods Sold and Other Expenses .......... 7,993 7,603
Selling, General and Administrative Expenses ... 740 717
Depreciation, Depletion and Amortization ....... 653 648
Exploration Expenses, Including Dry Hole Costs
and Impairment of Unproved Properties ........ 79 54
Interest and Debt Expense ...................... 204 120
------- -------
Total ...................................... 9,669 9,142
------- -------
EARNINGS BEFORE INCOME TAXES ................... 1,470 1,698
Provision for Income Taxes ..................... 591 739
------- -------
NET INCOME ..................................... $ 879 $ 959
======= =======
EARNINGS PER SHARE OF COMMON STOCK<Fb> ......... $ 1.57 $ 1.40
======= =======
DIVIDENDS PER SHARE OF COMMON STOCK ............ $ .52 $ .47
======= =======
See page 6 for Notes to Financial Statements.
</TABLE>
3
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Form 10-Q
<CAPTION>
Three Months Ended
CONSOLIDATED STATEMENT OF CASH FLOWS<Fa> March 31
- ---------------------------------------------------------------------------------------------
(Dollars in millions) 1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS
Net Income ........................................................ $ 879 $ 959
Adjustments to Reconcile Net Income to Cash
Provided by Operations:
Depreciation, Depletion and Amortization ...................... 653 648
Dry Hole Costs and Impairment of Unproved Properties .......... 35 12
Other Noncash Charges and Credits - Net ....................... (242) (17)
Change in Operating Assets and Liabilities - Net .............. (564) (611)
----- -----
Cash Provided by Operations ................................. 761 991
----- -----
INVESTMENT ACTIVITIES
Purchases of Property, Plant and Equipment ........................ (701) (626)
Investment in Affiliates .......................................... (100) (62)
Proceeds from Sales of Assets ..................................... 228 117
Investments in Short-Term Financial Instruments - Net ............. (275) 204
Miscellaneous - Net ............................................... 63 (36)
----- -----
Cash Used for Investment Activities ......................... (785) (403)
----- -----
FINANCING ACTIVITIES
Dividends Paid to Stockholders .................................... (293) (323)
Net Increase (Decrease) in Borrowings ............................. (27) 494
Common Stock Issued in Connection with Compensation Plans ......... 159 8
Additions to Minority Interests ................................... 297 -
----- -----
Cash Provided by Financing Activities ....................... 136 179
----- -----
Effect of Exchange Rate Changes on Cash ............................. (23) 58
----- -----
INCREASE IN CASH AND CASH EQUIVALENTS ............................... $ 89 $ 825
===== =====
See page 6 for Notes to Financial Statements.
</TABLE>
4
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<TABLE>
<CAPTION>
Form 10-Q
CONSOLIDATED BALANCE SHEET<Fa> March 31 December 31
- -------------------------------------------------------------------------------------------------------------------
(Dollars in millions, except per share) 1996 1995
- -------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents .......................................................... $ 1,497 $ 1,408
Marketable Securities .............................................................. 311 47
Accounts and Notes Receivable ...................................................... 5,636 4,912
Inventories<Fc> .................................................................... 3,948 3,737
Prepaid Expenses ................................................................... 390 276
Deferred Income Taxes .............................................................. 532 575
------- -------
Total Current Assets ............................................................. 12,314 10,955
PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation, depletion and
amortization (March 31, 1996 - $28,657; December 31, 1995 - $29,044) ............... 21,039 21,341
INVESTMENT IN AFFILIATES ............................................................. 2,114 1,846
OTHER ASSETS ......................................................................... 3,184 3,170
------- -------
TOTAL ............................................................................ $38,651 $37,312
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable ................................................................... $ 2,650 $ 2,636
Short-Term Borrowings and Capital Lease Obligations ................................ 6,212 6,157
Income Taxes ....................................................................... 662 470
Other Accrued Liabilities ........................................................... 3,564 3,468
------- -------
Total Current Liabilities ........................................................ 13,088 12,731
LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS ................................... 5,586 5,678
OTHER LIABILITIES .................................................................... 8,481 8,454
DEFERRED INCOME TAXES ................................................................ 1,799 1,783
------- -------
Total Liabilities ................................................................ 28,954 28,646
------- -------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES ...................................... 537 230
------- -------
STOCKHOLDERS' EQUITY
Preferred Stock .................................................................... 237 237
Common Stock, $.60 par value; 900,000,000 shares authorized; shares issued
at March 31, 1996 - 735,042,724; December 31, 1995 - 735,042,724 ................. 441 441
Additional Paid-In Capital ......................................................... 8,841 8,689
Reinvested Earnings ................................................................ 10,090 9,503
Cumulative Translation Adjustment<Fd> .............................................. (75) -
Common Stock Held in Trust for Unearned Employee Compensation and Benefits, at
Market (Shares: March 31, 1996 - 19,091,105; December 31, 1995 - 23,546,176) .... (1,585) (1,645)
Common Stock Held in Treasury, at Cost (Shares: March 31, 1996 and
December 31, 1995 - 156,000,000) ................................................. (8,789) (8,789)
------- -------
Total Stockholders' Equity ....................................................... 9,160 8,436
------- -------
TOTAL ............................................................................ $38,651 $37,312
======= =======
See page 6 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 1995 data have been
made to conform to 1996 classifications.
<Fb>Earnings per share are calculated on the basis of the following average
number of common shares outstanding:
Three Months Ended
March 31
1996 -- 557,711,183
1995 -- 681,352,598
The 19,091,105 shares held by the Flexitrust at March 31, 1996 are not
considered outstanding in computing the foregoing average shares
outstanding. Earnings per share calculations that reflect the impact of
common stock equivalents in the periods presented are antidilutive.
<Fc>Inventories March 31 December 31
----------- 1996 1995
-------- -----------
Chemicals ................................ $ 278 $ 248
Fibers ................................... 579 569
Polymers ................................. 566 573
Petroleum ................................ 1,355 1,293
Diversified Businesses ................... 1,170 1,054
------ ------
Total .................................. $3,948 $3,737
====== ======
<Fd>Effective January 1, 1996, local currency was designated as functional
currency for the company's integrated European petroleum operations,
while the U.S. dollar continued as the functional currency for the
company's other worldwide operations. The amount of the cumulative
translation adjustment on January 1, 1996 was a reduction in stock-
holders' equity of $68.
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Form 10-Q
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(a) Results of Operations
(1) Financial Results:
The company reported first quarter earnings per share of
$1.57, compared to $1.40 per share in the first quarter of 1995.
Excluding nonrecurring items, first quarter results were $1.61, up
15 percent from 1995.
Net income totaled $879 million compared to 1995 first
quarter net income of $959 million. Excluding nonrecurring items
and interest expense associated with debt incurred to finance the
1995 redemption of stock from Seagram, earnings for the quarter are
about equal to last year. As a result of the redemption, average
shares outstanding were 18 percent lower than the first quarter
1995, generating higher per share earnings.
Nonrecurring items in the quarter include charges
associated with previously announced employee separations totaling
$53 million after-tax, or $.10 per share, partly offset by a
benefit of $33 million, or $.06 per share, related to sale of
stock received in connection with the previously sold connector
systems business. There were no nonrecurring items in the first
quarter 1995.
The first quarter results reflect higher earnings in
petroleum, but lower results in a number of the chemicals and
specialties businesses. Chemicals and specialties continue to face
a difficult business climate in most markets around the world.
Although volumes are up 2 percent from last quarter, they are about
5 percent below last year's record first quarter.
(2) Industry Segment Performance:
The following text compares first quarter 1996 results
with the prior year for each industry segment, excluding non-
recurring items and reflecting certain reclassifications as
described in the footnotes to the "Consolidated Industry Segment
Information" table.
Total company sales were $10.8 billion, up 3 percent from
$10.5 billion last year on higher petroleum revenues. Petroleum
segment sales were $4.7 billion, up $400 million or 9 percent,
reflecting higher crude oil prices and natural gas volumes.
Chemicals and specialties sales were $6.1 billion, down
$140 million or 2 percent, reflecting 3 percent higher average
7
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Form 10-Q
selling prices, which were more than offset by 5 percent lower
volume. Raw material costs on a volume-adjusted basis were up
about 5 percent in chemicals and specialties compared to last
year, while fixed costs were up less than one percent.
o Chemicals segment earnings were $143 million, down
13 percent from the $165 million earned last year, prin-
cipally reflecting lower earnings from white pigments and
fluorochemicals. Segment sales of $1.0 billion were
4 percent lower, reflecting 4 percent higher prices, more
than offset by 8 percent lower sales volume.
o Fibers segment earnings of $179 million were 11 percent
below the $200 million earned in 1995. This is princi-
pally attributable to lower earnings for nylon and
DACRON(R) polyester, largely due to weakness in U.S.
textile production. Sales of $1.7 billion were down
6 percent, reflecting 9 percent lower volume, partly
offset by 3 percent higher selling prices.
o Polymers segment earnings were $198 million, down
15 percent from $232 million in 1995. Segment earnings
were negatively affected by higher engineering and
preoperating costs for capacity expansions, investment
write-offs, and the General Motors strike. Segment sales
of $1.8 billion were essentially equal to 1995, reflecting
4 percent higher selling prices offset by 4 percent lower
volume.
o Petroleum segment earnings were $214 million, up
21 percent from the $177 million earned in 1995. Upstream
earnings were $191 million, up 18 percent, primarily on
higher crude oil prices and natural gas volumes, partly
offset by higher exploration costs. During the quarter,
U.S. Upstream did not significantly benefit from higher
east coast natural gas prices since a majority of
Petroleum's production is located in the west. Downstream
earnings were $23 million, up $8 million or 53 percent, on
higher worldwide refining margins, partly offset by higher
costs, primarily due to start up operations.
o Diversified Businesses segment earnings were $283 million,
up 20 percent from $235 million in 1995, reflecting higher
earnings from pharmaceuticals and coal. Pharmaceuticals
benefitted from higher operating earnings and the more
favorable allocation of DuPont Merck joint venture results
to DuPont. Agricultural Products earnings remain strong
but are somewhat below last year's levels reflecting
delayed crop plantings in North America due to adverse
weather conditions. Segment sales were $1.6 billion,
unchanged from 1995, reflecting 1 percent higher selling
prices, offset by 1 percent lower sales volume.
8
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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) 1996 1995
- ----------------------------------------------------------------------
<S> <C> <C>
SALES
- -----
Chemicals ..................................... $ 994 $ 1,035
Fibers ........................................ 1,744 1,854
Polymers ...................................... 1,784 1,777
Petroleum ..................................... 4,657 4,253
Diversified Businesses ........................ 1,590 1,583
------- -------
Total ..................................... $10,769 $10,502
======= =======
AFTER-TAX OPERATING INCOME<Fa>
- --------------------------
Chemicals ..................................... $ 122<Fb>$ 165
Fibers ........................................ 147<Fb> 200
Polymers ...................................... 198 232
Petroleum ..................................... 214 177
Diversified Businesses ........................ 316<Fc> 235
------- -------
Total ..................................... 997 1,009
Interest and Other Corporate
Expenses Net of Tax<Fa> ..................... (118) (50)
------- -------
NET INCOME .................................... $ 879 $ 959
- ---------- ======= =======
<FN>
<Fa>Effective in the first quarter of 1996, the amortization of
capitalized interest associated with property, plant and equipment
is included in After-Tax Operating Income versus the previous
practice of including such amortization in Interest and Other
Corporate Expenses Net of Tax. Prior period data have been
reclassified for comparative purposes. This change has no effect
on Net Income.
<Fb>The Chemicals and Fibers segments include a charge of $21 and $32,
respectively, principally for employee separation costs in the
United States.
<Fc>Includes a benefit of $33 related to sale of stock received in
connection with the previously sold connector systems business.
</TABLE>
9
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Form 10-Q
(b) Financial Condition at March 31, 1996
DuPont recorded a net cash inflow from operations of $761 million
for the first quarter of 1996, as compared with $991 million for the same
period in 1995. Lower net income and a higher amount of undistributed
earnings from affiliates included in net income versus last year were the
principal reasons for the decrease.
Year-to-date capital expenditures for plant, property and equipment
and investments in equity affiliates were $801 million, up 16 percent from
the same period last year. The increase includes new investment at two
jointly owned refineries in the Czech Republic. The company currently
expects capital expenditures for the year to equal about $3.8 billion.
Cash flows from financing activities for the first quarter included
$297 million from outside investors in certain upstream petroleum proper-
ties. This investment is reflected as minority interest on the company's
consolidated balance sheet. Also, $159 million was received through options
exercised by employees, principally under the company's corporate sharing
programs.
The company increased its common stock dividend by 9.6 percent from
$.52 to $.57 per share effective in the second quarter 1996.
Certain ratios are shown below:
At 3/31/96 At 12/31/95
---------- -----------
Debt Ratio (total debt to total
capitalization) 55% 58%
Current Ratio (current assets
to current liabilities) 0.9:1 0.9:1
Earnings to Fixed Charges
Ratio 6.4 5.9
Days' sales outstanding averaged 36 days in the first quarter, down
one day from the prior quarter and down two days from first quarter of 1995.
The company's goal is to reduce the debt ratio to about 45 percent
by year-end 1996 through a combination of internally generated funds and
about $2 billion in asset sales, including proceeds from the sales of the
Medical Products businesses and formation of an elastomers joint venture
with Dow Chemical Company.
10
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Form 10-Q
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In 1991, DuPont began receiving claims by growers that use of
"Benlate" 50 DF fungicide had caused crop damages. Based on the belief that
"Benlate" 50 DF would be found to be a contributor to the claimed damage,
DuPont began paying claims. In 1992, after 18 months of extensive research,
DuPont scientists concluded that "Benlate" 50 DF was not responsible for
plant damage reports received since March 1991. Concurrent with these
research findings, DuPont stopped paying claims relating to those reports.
To date, DuPont has been served with more than 700 lawsuits by growers who
allege plant damage from using "Benlate" 50 DF fungicide. About 80 of the
lawsuits brought against the company since 1991 remain, the rest having been
disposed of by trial, dismissal or settlement. Two appeals from adverse
jury verdicts are still pending as is the appeal of an order by a federal
district court in Georgia finding that DuPont had engaged in discovery abuse
during the first "Benlate" 50 DF case to go to trial. A shareholder
derivative action filed in the same court alleging that DuPont's Board of
Directors breached various duties in its role in the "Benlate" 50 DF
litigation has been stayed pending the resolution of DuPont's appeal of the
Georgia court's order. A putative class action filed by a shareholder in
Federal District Court for the Southern District of Florida against the
company and the Chairman in September 1995 is also still pending. DuPont
continues to believe 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 home-
owner lawsuits in numerous state and federal courts alleging damages as a
result of leaks in certain polybutylene plumbing systems. Class actions
alleging the same damages have also been filed in a number of jurisdictions.
In most cases, DuPont is a codefendant with Shell, Hoechst-Celanese, and
parts manufacturers. The polybutylene plumbing systems consist of flexible
pipe extruded from polybutylene connected by fittings made from acetal.
Shell Chemical is the sole producer of polybutylene; the acetals are
provided by Hoechst-Celanese and DuPont. DuPont, Shell and Hoechst-Celanese
continue to coordinate the terms of several class action settlements. Under
those settlements DuPont will contribute 10 percent of the cost of repairs
to plumbing systems up to a total DuPont contribution of $120 million.
The company's balance sheets reflect accruals for estimated costs
associated with both of these matters. Adverse changes in estimates of such
costs could result in additional future charges.
On October 24, 1988, the Louisiana Department of Environmental
Quality (LDEQ) issued a Compliance Order and Notice of Proposed Penalty to
Conoco Inc. for alleged violations of the Louisiana Hazardous Waste
Regulations. Following an inspection, LDEQ proposed a penalty of $165,000
for alleged violations related to the handling of by-product caustic and
other refinery waste management practices. Negotiations with LDEQ have now
11
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Form 10-Q
resulted in the settlement of the matter. Under the terms of the settlement
Conoco will donate to the LDEQ an emergency response vehicle with the
purchase price capped at $42,500. The settlement also favorably resolves
all allegations of violation and commits the LDEQ to refrain from taking
future enforcement actions related to by-product caustic pending the outcome
of EPA rulemaking on the subject.
On January 31, 1995, DuPont received a Notice of proposed
Assessment of Civil Penalty from the Region III office of the EPA alleging
various violations of the Clean Water Act at DuPont's Edge Moor Plant in
Edge Moor, Delaware. The Proposed Assessment sought a Class II administra-
tive penalty of $121,000. After negotiations, the parties have now agreed
that DuPont will pay a civil penalty of $20,000 and undertake two Supple-
mental Environmental Projects projected to cost a minimum of $260,000.
On March 6, 1996, the Department of Justice filed a complaint in
the United States District Court for the District of Montana against
Yellowstone Pipeline Company (YPL) and the Conoco Pipeline Company as a part
owner and operator of YPL. The complaint alleges discharges of oil from a
YPL pipeline in January 1993 and seeks civil penalties of up to $25,000 per
day for each violation or up to $1,000 for each barrel of oil discharged.
The duration of the alleged discharges is in dispute, and therefore the
penalty calculation is uncertain. It is expected, however, to exceed
$100,000.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Business transacted at the Annual Meeting:
A total of 505,596,274 shares of common stock were voted in person
or by proxy at the annual meeting of stockholders on April 24, or
87.3 percent of the shares entitled to be voted. Business was transacted as
follows:
1. ELECTION OF DIRECTORS: The 12 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 501,832,787 3,761,087
A. F. Brimmer 501,372,519 4,221,355
L. C. Duemling 501,675,656 3,918,218
A. W. Dunham 501,604,305 3,989,569
E. B. du Pont 502,080,915 3,511,959
C. M. Harper 501,583,219 4,010,655
L. D. Juliber 501,692,130 3,901,744
J. A. Krol 501,807,437 3,786,437
W. K. Reilly 501,884,753 3,709,121
H. R. Sharp, III 501,713,452 3,880,422
C. M. Vest 501,815,787 3,778,087
E. S. Woolard, Jr. 501,761,181 3,832,693
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Form 10-Q
2. RATIFICATION OF INDEPENDENT ACCOUNTANTS: The proposal to ratify
the appointment of Price Waterhouse LLP as independent accountants
for 1996 was approved by a vote of 502,615,128 shares for,
1,745,821 shares against, and 1,235,325 abstentions and broker
nonvotes.
3. DIRECTORS' STOCK PLAN: The proposal to approve the DuPont Stock
Accumulation and Deferred Compensation Plan for Directors, as
amended, was approved by a vote of 462,205,405 shares for and
43,384,289 against including abstentions.
4. ANNUAL MEETING DATE: A stockholder proposal to change the Annual
Meeting date to the first Wednesday of June was defeated by a vote
of 439,324,060 shares against, 11,120,380 shares for, and
55,151,834 abstentions and broker nonvotes.
5. CUMULATIVE VOTING: A stockholder proposal to provide for cumula-
tive voting in the election of directors was defeated by a vote of
351,988,366 shares against, 75,995,774 shares for, and 77,612,134
abstentions and broker nonvotes.
6. CONSIDERING POTENTIAL NOMINEES: A stockholder proposal to give
consideration to having a DuPont wage roll employee nominated for
election to the Board of Directors was defeated by a vote of
427,878,050 shares against, 22,092,656 shares for, and 55,625,568
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 16.
(b) Reports on Form 8-K
1. On January 5, 1996, a Current Report on Form 8-K was
filed in connection with Debt and/or Equity Securities
that may be offered on a delayed or continuous basis
under its Registration Statements on Form S-3
(No. 33-48128, No. 33-53327 and No. 33-61339). Under
Item 5, "Other Events," the Registrant announced two
nonrecurring charges against fourth quarter 1995
earnings totaling $.15 per share. The first charge
related to a recent settlement of a nationwide
class-action plumbing lawsuit ($.07 a share) and the
second to write-downs of certain petroleum assets ($.08
a share).
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Form 10-Q
2. On January 24, 1996, a Current Report on Form 8-K was
filed in connection with Debt and/or Equity Securities
that may be offered on a delayed or continuous basis
under its Registration Statements on Form S-3
(No. 33-48128, No. 33-53327 and No. 33-61339). Under
Item 7, "Financial Statements and Exhibits," the
Registrant's Earnings Press Release, dated January 24,
1996, was filed.
3. On April 24, 1996, a Current Report on Form 8-K was filed
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. 33-61339). Under Item 7, "Financial
Statements and Exhibits," the Registrant's Earnings Press
Release, dated April 24, 1996, was filed.
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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 3, 1996
-----------------------------------------
By /s/ C. L. Henry
-----------------------------------------
C. L. Henry
Executive Vice President - DuPont Finance
(As Duly Authorized Officer
and Principal Financial
and Accounting Officer)
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Form 10-Q
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
10.12* Company's 1996 DuPont Stock Accumulation and Deferred
Compensation Plan for Directors, effective January 1,
1996, approved by the Shareholders on April 24, 1996.
11 Computation of Earnings Per Share.
12 Computation of Ratio of Earnings to Fixed Charges.
*Management contract or compensatory plan or arrangement required
to be filed as an exhibit to this Form 10-K.
16
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Form 10-Q
EXHIBIT 10.12
The 1996 DuPont Stock Accumulation and Deferred Compensation Plan
for Directors, effective January 1, 1996, was approved by the shareholders of
E. I. du Pont de Nemours and Company on April 24, 1996.
E. I. DU PONT DE NEMOURS AND COMPANY
STOCK ACCUMULATION AND DEFERRED
COMPENSATION PLAN FOR DIRECTORS
1. PURPOSE OF THE PLAN
The purpose of the DuPont Stock Accumulation and Deferred
Compensation Plan for Directors (the "Plan") is (1) to further the identity
of interests of members of the Board of Directors of E. I. du Pont de Nemours
and Company (the "Company") with those of the Company's stockholders
generally through the grant of common stock of the Company (the "Stock");
(2) to permit Directors to defer the payment of all or a specified part of
their compensation, including any grant of Stock by the Company, for services
performed as Directors; and (3) to provide for a grant of stock options to
Edgar S. Woolard, Jr. in connection with his service as Chairman of the Board
of Directors.
2. ELIGIBILITY
Members of the Board of Directors of the Company who are not
employees of the Company or any of its subsidiaries or affiliates and who do
not receive a form of compensation for Board service in lieu of customary
Directors' fees shall be eligible to receive grants of Stock under the Plan.
Members of the Board of Directors of the Company who are not employees of the
Company or any of its subsidiaries or affiliates shall be eligible under this
Plan to defer compensation for services performed as Directors.
3. ADMINISTRATION AND AMENDMENT
The Plan shall be administered by the Compensation and Benefits
Committee of the Board of Directors (the "Committee"). The decision of the
Committee with respect to any questions arising as to the interpretation of
this Plan, including the severability of any and all of the provisions
thereof, shall be final, conclusive and binding. The Board of Directors of
the Company reserves the right to modify the Plan from time to time, or to
repeal the Plan entirely, provided, however, that (1) no modification of the
Plan shall operate to annul an election already in effect for the current
calendar year or any preceding calendar year; and (2) to the extent required
under Section 16 of the Securities Exchange Act of 1934 ("Exchange Act"),
Plan provisions relating to the amount, price and timing of stock grants and
options shall not be amended more than once every six months, except that the
foregoing shall not preclude any amendment necessary to conform to changes in
the Internal Revenue Code or the Employee Retirement Income Security Act.
17
<PAGE>
Form 10-Q
EXHIBIT 10.12
The Committee is authorized, subject to the provisions of the Plan,
from time to time to establish such rules and regulations as it deems
appropriate for the proper administration of the Plan, and to make such
determinations and take such steps in connection therewith as it deems
necessary or advisable.
4. COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT/CHANGE IN LAW
It is the Company's intent that the Plan comply in all respects
with Rule 16b-3 of the Exchange Act, or its successor, and any regulations
promulgated thereunder. If any provision of this Plan is found not to be in
compliance with such rule and regulations, the provision shall be deemed null
and void, and the remaining provisions of the Plan shall continue in full
force and effect. All transactions under this Plan shall be executed in
accordance with the requirements of Section 16 of the Exchange Act and
regulations promulgated thereunder.
The Board of Directors may, in its sole discretion, modify the
terms and conditions of this Plan in response to and consistent with any
changes in applicable law, rule or regulation.
5. ANNUAL STOCK GRANT
Effective with the 1996 Annual Meeting and annually thereafter,
each Director eligible under Article 2 hereof shall be awarded an annual
grant of two hundred (200) shares of Stock following his/her election to the
Board of Directors at the Annual Meeting of Stockholders. A Director elected
to the Board at a time other than at the Annual Meeting shall receive a
grant of two hundred (200) shares of Stock following his/her first attendance
at a Board Meeting, provided, however, that no Director shall receive more
than two hundred (200) shares of Stock in any calendar year. A Director may
use shares of Stock granted hereunder to satisfy withholding taxes related to
grants under this Plan in accordance with terms and conditions established by
the Committee.
6. ELECTION TO DEFER
On or before December 31 of any year, a Director may elect to
defer, until a specified year or retirement as a Director of the Company, the
receipt of the Stock granted under Article 5 or the payment of all or a
specified part of all fees payable to the Director for services as a Director
during the calendar year following the election and succeeding calendar
years in the form of cash or stock units, provided, however, that Stock may
only be deferred as stock units. Any person who shall become a Director
during any calendar year, and who was not a Director of the Company on the
preceding December 31, may elect, within thirty days after election to the
Board, to defer in the same manner the receipt of the Stock granted under
Article 5 or the payment of all or a specified part of fees not yet earned
for the remainder of that calendar year and for succeeding calendar years in
the form of cash or stock units. Elections shall be made by written notice
delivered to the Secretary of the Committee.
18
<PAGE>
Form 10-Q
EXHIBIT 10.12
7. DIRECTORS' ACCOUNTS
Fees deferred in the form of cash shall be held in the general
funds of the Company and shall be credited to an account in the name of the
Director. On the first day of each quarter, interest shall be credited to
each account calculated on the basis of the cash balance in each account on
the first day of each month of the preceding quarter at the Prime Rate of
Morgan Guaranty Trust Company of New York (or at such other rate as may be
specified by the Committee from time to time) in effect on the first day of
each month. Stock granted under Article 5 to be deferred in the form of
stock units, or fees to be deferred in the form of stock units, shall be
allocated to each Director's account based on the closing price of the
Company's common stock as reported on the Composite Tape of the New York
Stock Exchange ("Stock Price") on the effective date of the Stock grant or
the date the fees would otherwise have been paid. The Company shall not be
required to reserve or otherwise set aside shares of common stock for the
payment of its obligations hereunder, but shall make available as and when
required a sufficient number of shares of common stock to meet the needs of
the Plan. An amount equal to any cash dividends (or the fair market value of
dividends paid in property other than dividends payable in common stock of
the Company) payable on the number of shares represented by the number of
stock units in each Director's account will be allocated to each Director's
account in the form of stock units based upon the Stock Price on the dividend
payment date. Any stock dividends payable on such number of shares will be
allocated in the form of stock units. If adjustments are made to outstanding
shares of common stock as a result of split-ups, recapitalizations, mergers,
consolidations and the like, an appropriate adjustment will also be made in
the number of stock units in a Director's account. Stock units shall not
entitle any person to rights of a stockholder unless and until shares of
Company common stock have been issued to that person with respect to stock
units as provided in Article 8.
8. PAYMENT FROM DIRECTORS' ACCOUNTS
The aggregate amount of Stock granted under Article 5 which has
been deferred and deferred fees, together with interest and dividend
equivalents accrued thereon, shall be paid in the year specified or after a
Director ceases to be a Director of the Company. Amounts deferred to a
specified year shall only be paid in a lump sum and shall be paid promptly at
the beginning of that specified year. Amounts deferred to retirement shall
be paid in a lump sum or, if the Director elects, in substantially equal
annual installments over a period of years specified by the Director. The
delivery election must be made by written notice delivered to the Secretary
of the Committee prior to the date of retirement, and the first installment
(or lump sum payment) shall be paid promptly at the beginning of the
following calendar year. Subsequent installments shall be paid promptly at
the beginning of each succeeding calendar year until the entire amount
credited to the Director's account shall have been paid. Amounts credited to
19
<PAGE>
Form 10-Q
EXHIBIT 10.12
a Director's account in cash shall be paid in cash and amounts credited in
stock units shall be paid in one share of common stock of the Company for
each stock unit, except that a cash payment will be made with any final
installment for any fraction of a stock unit remaining in the Director's
account. Such fractional share will be valued at the closing Stock Price on
the date of settlement.
9. PAYMENT IN EVENT OF DEATH
A Director may file with the Secretary of the Committee a written
designation of a beneficiary for his or her account under the Plan on such
form as may be prescribed by the Committee, and may, from time to time, amend
or revoke such designation. If a Director should die before all deferred
amounts credited to the Director's account have been distributed, the balance
of any deferred Stock and fees and interest and dividend equivalents then in
the Director's account shall be paid promptly to the Director's designated
beneficiary. If the Director did not designate a beneficiary, or in the
event that the beneficiary designated by the Director shall have predeceased
the Director, the balance in the Director's account shall be paid promptly to
the Director's estate.
10. TERMINATION OF ELECTION
A Director may terminate his/her election to defer payment of fees
in cash or stock units by written notice delivered to the Secretary of the
Committee. Termination shall become effective as of the end of the calendar
year in which notice of termination is given with respect to fees payable for
services as a Director during subsequent calendar years. Amounts credited to
the account of a Director prior to the effective date of termination shall
not be affected thereby and shall be paid only in accordance with Articles 7
and 8.
11. NONASSIGNABILITY
During the Director's lifetime, the right to any deferred Stock or
fees including interest and dividend equivalents thereon shall not be
transferable or assignable.
12. OPTION GRANT
A. Grant
In recognition of his current and future contributions to the
Company as Chairman of the Board of Directors and subject to approval by the
stockholders at the Company's 1996 Annual Meeting, Edgar S. Woolard, Jr.
(Grantee) is granted one hundred thousand (100,000) nonqualified options to
purchase shares of Stock, effective January 1, 1996. The terms and
conditions of such options shall be determined by the Committee consistent
with the provisions of this Plan.
20
<PAGE>
Form 10-Q
EXHIBIT 10.12
B. Non-Transferability Of Options
During Grantee's lifetime, no stock options granted under this Plan
shall be transferable, and stock options may be exercised only by Grantee,
except as may otherwise be provided in rules established by the Committee to
permit transfers or to authorize a third party to act on behalf of Grantee
with respect to any such stock options.
C. Option Price
The price per share of Stock which may be purchased upon exercise
of a stock option granted hereunder shall be determined by the Committee, but
shall in no event be less than the fair market value of such share on the
date the stock option is granted, and in no event less than the par value
thereof. For purpose of this Plan, fair market value shall be the average of
the high and low prices of the stock as reported on the "NYSE-Composite
Transactions Tape" on the date of grant of a stock option or the date of
exercise of a stock option, or if no sales of such Stock were reported on
said Tape on such date, the average of the high and low prices of such Stock
on the next preceding day on which sales were reported on said Tape. Such
price shall be subject to adjustment as provided in paragraph 12(D) hereof.
D. Adjustment
(i) In the event of any stock dividend, split-up, reclassification
or other analogous change in capitalization, the Committee
shall make such adjustments, in the light of the change, as it
deems to be equitable, both to Grantee and to the Company, in
the number of shares and prices per share applicable to out-
standing stock options. Furthermore, in the event of a
distribution to common stockholders other than interim or
year-end dividends declared as such by the Board of Directors,
the Committee shall make such adjustments, in the light of the
distribution, as it deems to be equitable, both to Grantee and
to the Company, in respect to the item described herein.
(ii) Any fractional shares resulting from adjustments made pursuant
to this subparagraph shall be eliminated.
E. Option Term
The term of each stock option granted under this Plan shall be for
such period as the Committee shall determine, but not for more than ten (10)
years from the date of grant.
21
<PAGE>
Form 10-Q
EXHIBIT 10.12
F. Exercise of Options
(i) Subject to the provisions of this Plan, each stock option
granted hereunder shall be exercisable on such date or dates
and during such period and for such number of shares as the
Committee may determine. However, in no event shall a stock
option be exercisable prior to six months from the date of
grant. The Committee may fix from time to time a minimum
number of shares which must be purchased at the time a stock
option is exercised.
(ii) At the time he elects to exercise a stock option, Grantee
shall pay the Company the full purchase price of the shares he
has elected to purchase. Payment of the purchase price shall
be made in cash, Stock (valued at fair market value on the
date of exercise), or a combination thereof, as the Committee
may determine from time to time. With respect to Stock to be
delivered upon exercise of a stock option, the Committee shall
periodically determine whether, and to what extent, such Stock
shall be in the form of new common stock issued for such
purposes, or common stock acquired by the Company.
G. Tax Withholding
Grantee may use shares of Stock to satisfy withholding taxes
relating to the grants under this Plan to the extent provided in terms and
conditions established by the Committee.
H. Termination of Options
(i) The Committee shall, subject to the provisions of the Plan,
determine the rules relating to rights of Grantee in the event
Grantee ceases to be a director of the Company or in the event
of his death.
(ii) In the event the Committee establishes a period of time in
excess of six months from date of grant for the first date of
exercisability of options granted hereunder, the Board of
Directors, in its sole discretion, may waive such longer
period.
(iii) Grantee shall forfeit all rights under stock options granted
hereunder if the Committee, after a hearing at which Grantee
shall be entitled to be present, shall find that Grantee has
willfully engaged in any activity harmful to the interest of
the Company or any of its subsidiaries or affiliates provided,
however, that such stock options may continue in effect to
such extent and under such conditions as the Committee may
determine.
22
<PAGE>
Form 10-Q
EXHIBIT 10.12
13. GOVERNING LAW
The validity and construction of the Plan shall be governed by the
laws of the State of Delaware.
14. EFFECTIVE DATE
This Plan shall become effective as of January 1, 1996, provided it
is approved by stockholders at the Company's 1996 Annual Meeting, and shall
continue in full force and effect until terminated by the Board of Directors.
23
<PAGE>
<TABLE>
Form 10-Q
Exhibit 11
E. I. DU PONT DE NEMOURS AND COMPANY
CALCULATION OF EARNINGS PER SHARE<Fa>
(Dollars in millions, except per share)
Primary Fully Diluted
------------------ ------------------
Three Months Ended Three Months Ended
March 31, 1996 March 31, 1996
------------------ ------------------
<S> <C> <C>
Net income less dividends on preferred
stock .................................. $ 877 $ 877
Adjustment for interest, net of income
tax, determined under "Modified
Treasury Stock Method" ................ 144 138
------ ------
Earnings applicable to common stock ..... $1,021 $1,015
====== ======
Average number of common shares
outstanding (excludes treasury
stock and shares held by DuPont
Flexitrust) ........................... 557,711,183 557,711,183
Adjustments required for common share
equivalents:
(1) shares awarded but undelivered
under the Variable Compensation
Plan, (2) shares held by the
DuPont Flexitrust, and (3) shares
assumed to be issued due to stock
options and warrants, net of
shares acquired, as determined
under "Modified Treasury Stock
Method" ............................. 73,581,651 73,581,651
----------- -----------
Adjusted average number of common
shares ................................ 631,292,834 631,292,834
=========== ===========
Earnings per share<Fb> .................. $ 1.62 $ 1.61
====== ======
Earnings per share - as published ....... $ 1.57 $ 1.57
====== ======
<FN>
<Fa>There was no material change in common stock equivalents during the
first three months of 1995 versus that presented in Form 10-K for the
year ended December 31, 1994, which indicated no material dilution in
1994 earnings per share.
<Fb>Calculations are antidilutive.
</TABLE>
24
<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, 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net Income .......................................... $ 879 $3,293 $2,727 $ 566<Fa> $ 975<Fa> $1,403
Provision for Income Taxes .......................... 591 2,097 1,655 392 836 1,415
Minority Interests in Earnings of Consolidated
Subsidiaries ...................................... 10 30 18 5 10 6
Adjustment for Companies Accounted for
by the Equity Method .............................. 13 41 18 41 6 35
Capitalized Interest ................................ (31) (170) (143) (194) (194) (197)
Amortization of Capitalized Interest ................ 37 154 154 144 101 94
------ ------ ------ ------ ------ ------
1,499 5,445 4,429 954 1,734 2,756
------ ------ ------ ------ ------ ------
Fixed Charges:
Interest and Debt Expense - Borrowings ............ 204 758 559 594 643 752
Adjustment for Companies Accounted for by the
Equity Method - Interest and Debt Expense ....... 15 71 55 42 62 11
Capitalized Interest .............................. 31 170 143 194 194 197
Rental Expense Representative of Interest Factor .. 28 113 118 143 151 162
------ ------ ------ ------ ------ ------
278 1,112 875 973 1,050 1,122
------ ------ ------ ------ ------ ------
Total Adjusted Earnings Available for Payment of
Fixed Charges ..................................... $1,777 $6,557 $5,304 $1,927 $2,784 $3,878
====== ====== ====== ====== ====== ======
Number of Times Fixed Charges are Earned ............ 6.4 5.9 6.1 2.0 2.7 3.5
====== ====== ====== ====== ====== ======
<FN>
<Fa>Income Before Extraordinary Item and Transition Effect of Accounting
Changes.
</TABLE>
25
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary Financial Information Extracted
From Form 10-Q For The Quarterly Period Ended March 31, 1996,
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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,497
<SECURITIES> 311
<RECEIVABLES> 5,636<F1>
<ALLOWANCES> 0
<INVENTORY> 3,948
<CURRENT-ASSETS> 12,314
<PP&E> 49,696
<DEPRECIATION> 28,657
<TOTAL-ASSETS> 38,651
<CURRENT-LIABILITIES> 13,088
<BONDS> 5,586
0
237
<COMMON> 441
<OTHER-SE> 8,482
<TOTAL-LIABILITY-AND-EQUITY> 38,651
<SALES> 10,769
<TOTAL-REVENUES> 11,139
<CGS> 7,993<F2>
<TOTAL-COSTS> 9,465<F3>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 204
<INCOME-PRETAX> 1,470
<INCOME-TAX> 591
<INCOME-CONTINUING> 879
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 879
<EPS-PRIMARY> 0
<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; Depreciation, Depletion
and Amortization; Exploration Expenses, Including Dry Hole Costs
and Impairment of Unproved Properties; and Selling, General and
Administrative Expenses.
</FN>
</TABLE>
