<PAGE>
1996
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1996 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 IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1007 MARKET STREET
WILMINGTON, DELAWARE 19898
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 302-774-1000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT
(EACH CLASS IS REGISTERED ON THE NEW YORK STOCK EXCHANGE, INC.):
TITLE OF EACH CLASS
COMMON STOCK ($.60 PAR VALUE)
PREFERRED STOCK
(WITHOUT PAR VALUE-CUMULATIVE)
$4.50 SERIES
$3.50 SERIES
6% DEBENTURES DUE 2001
NO SECURITIES ARE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT.
----------------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 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 [_].
Aggregate market value of voting stock held by nonaffiliates of the
registrant (excludes outstanding shares beneficially owned by directors and
officers; and shares held by DuPont's Flexitrust) as of March 7, 1997, was
approximately $63.2 billion. As of such date, 565,696,946 shares (excludes
13,345,779 shares held by DuPont's Flexitrust) of the company's common stock,
$.60 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
(SPECIFIC PAGES INCORPORATED ARE INDICATED UNDER THE APPLICABLE ITEM HEREIN):
<TABLE>
<CAPTION>
INCORPORATED BY
REFERENCE IN PART NO.
---------------------
<S> <C>
The company's 1996 Annual Report to Stockholders........ I, II, and IV
The company's Proxy Statement, dated March 21, 1997, in
connection with the Annual Meeting of Stockholders to
be held on April 30, 1997.............................. III
</TABLE>
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<PAGE>
E. I. DU PONT DE NEMOURS AND COMPANY
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The terms "DuPont" or the "company" as used herein refer to E. I. du Pont de
Nemours and Company and its consolidated subsidiaries (which are wholly owned
or majority-owned), or to E. I. du Pont de Nemours and Company, as the context
may indicate.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
PART I
Item 1. Business................................................... 3
Item 2. Properties................................................. 6
Item 3. Legal Proceedings.......................................... 12
Item 4. Submission of Matters to a Vote of Security Holders........ 15
Executive Officers of the Registrant....................... 15
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters........................................ 16
Item 6. Selected Financial Data.................................... 16
Item 7. Management's Discussion and Analysis of Financial Condition
Results of Operations...................................... 16
Item 8. Financial Statements and Supplementary Data................ 17
Item 9. Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure................................... 17
PART III
Item 10. Directors and Executive Officers of the Registrant......... 17
Item 11. Executive Compensation..................................... 17
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................. 17
Item 13. Certain Relationships and Related Transactions............. 17
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K................................................... 18
Signatures............................................................ 20
</TABLE>
NOTE ON INCORPORATION BY REFERENCE
Throughout this report, various information and data are incorporated by
reference to portions of the company's 1996 Annual Report to Stockholders
(those portions are hereinafter referred to as Exhibit 13). Any reference in
this report to disclosures in Exhibit 13 shall constitute incorporation by
reference of that specific material into this Form 10-K.
2
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PART I
ITEM 1. BUSINESS
DuPont was founded in 1802 and was incorporated in Delaware in 1915. DuPont
is the largest chemical company in the world. The company conducts fully
integrated petroleum operations primarily through its wholly owned subsidiary
Conoco Inc. and, in 1996, ranked ninth in the worldwide production of
petroleum liquids by U.S.-based companies, tenth in the production of natural
gas, and seventh in refining capacity. Conoco Inc. and other subsidiaries and
affiliates of DuPont conduct exploration, production, mining, manufacturing or
selling activities, and some are distributors of products manufactured by the
company.
The company operates globally through approximately 20 strategic business
units. Within the strategic business units approximately 80 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.
During 1996, the company essentially completed repayment of the $8.3 billion
of debt incurred to fund the 1995 redemption of 156 million DuPont common
shares beneficially owned by The Seagram Company Ltd., and it repurchased for
$504 million the 156 million warrants issued to Seagram. Also in 1996, the
company divested essentially all of its medical products businesses, sold 30%
of its photomasks business through an initial public offering, and entered
into a 50-50 joint venture for its elastomers business with The Dow Chemical
Company.
The company and its subsidiaries have operations in about 70 nations
worldwide and, as a result, about 50% of consolidated sales are derived from
sales outside the United States, based on the location of the customer. Total
worldwide employment at year-end 1996 was about 97,000 people.
The company is organized for financial reporting purposes into six principal
industry segments--Chemicals, Fibers, Life Sciences, Polymers, Petroleum, and
Diversified Businesses.
The following information describing the businesses of the company can be
found on the indicated pages of Exhibit 13:
<TABLE>
<CAPTION>
ITEM PAGE(S)
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Discussion of Business Developments in 1996:
Letter to Stockholders............................................... 1-3*
Industry Segment Reviews:
Business Discussions, Principal Products and Principal Markets:
Chemicals........................................................... 14
Fibers.............................................................. 15
Life Sciences....................................................... 16-17
Polymers............................................................ 17-18
Petroleum........................................................... 18-19
Diversified Businesses.............................................. 20
Sales, Transfers, Operating Profit, After-Tax Operating Income, and
Identifiable Assets for 1996, 1995, and 1994........................ 49-50
Geographic Information:
Sales, Transfers, After-Tax Operating Income, Identifiable Assets,
and U.S. Export Sales for 1996, 1995, and 1994...................... 48
Revenues by Product Class (See footnote 1 on page 50 of Exhibit 13).... 50
</TABLE>
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* Includes text of letter except for photograph and related caption on page 2
and the chart on page 3.
3
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SOURCES OF SUPPLY
The company utilizes numerous firms as well as internal sources to supply a
wide range of raw materials, energy, supplies, services and equipment. To
assure availability, the company maintains multiple sources for most raw
materials, including hydrocarbon feedstocks, and for fuels. Large volume
purchases are generally procured under competitively priced supply contracts.
A majority of sales in the Chemicals, Fibers, and Polymers segments'
businesses is dependent on hydrocarbon feedstocks derived from crude oil and
natural gas. Current hydrocarbon feedstock requirements are met by Conoco and
other major oil companies. A joint venture with OxyChem, a subsidiary of
Occidental Petroleum Corporation, manufactures and supplies a significant
portion of the company's requirements for ethylene glycol. A joint venture
with subsidiaries of RWE AG supplies a majority of the company's requirements
for coal.
The major purchased commodities, raw materials, and supplies for the
following industry segments in 1996 are listed below:
<TABLE>
<CAPTION>
DIVERSIFIED
CHEMICALS FIBERS BUSINESSES POLYMERS
- ------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
acetylene adipic acid aluminum acetic acid
benzene ammonia ethylene glycol butadiene
caustic soda butadiene gold caustic soda
chlorine cyclohexane palladium/platinum chlorine
chloroform ethylene glycol paraxylene ethane
cyclohexane isophthalic acid silver fiberglass
fluorspar natural gas packaging materials methanol
hydrofluoric acid nitrogen methacrylates
methanol packaging materials nitrogen
oxygen/nitrogen paraxylene packaging materials
packaging materials polyethylene LIFE SCIENCES pigments
perchloroethylene ------------------- polyethylene
propylene bromacil
sulfur cyanuric chloride
titanium ores metribuzin
packaging materials
</TABLE>
In the Petroleum segment, the major commodities and raw materials purchased
are the same as those produced. Approximately 57% of the crude oil processed
in the company's U.S. refineries in 1996 came from U.S. sources. In 1996, the
company's refineries outside the United States processed principally North
Sea, Russian, and Middle East crude oils.
In addition, during 1996, the company consumed substantial amounts of
electricity and natural gas for energy.
PATENTS AND TRADEMARKS
The company owns and is licensed under various patents, which expire from
time to time, covering many products, processes and product uses. No
individual patent is of material importance to any of the industry segments,
although taken as a whole, the rights of the company and the products made and
sold under patents and licenses are important to the company's business.
During 1996, the company was granted 414 U.S. and 2,100 non-U.S. patents.
The company also has approximately 2,000 individual trademarks and brands
for its products and services which are registered in various countries
throughout the world. Ownership rights in trademarks continue indefinitely if
the trademarks are continued in use and properly protected.
4
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SEASONALITY
In general, sales of the company's products are not substantially affected
by seasonality. However, the Life Sciences segment is impacted by seasonality
of sales of agricultural products with highest sales in the first half of the
year, particularly the second quarter. Within the Petroleum segment, the mix
of refined products, natural gas and natural gas liquids produced and sold
varies because of increased demand for gasoline in the summer months and
natural gas, heating oil and propane during the winter months.
MAJOR CUSTOMERS
The company's sales are not materially dependent on a single customer or
small group of customers. The Fibers and Polymers segments, however, have
several large customers in their respective industries that are important to
these segments' operating results.
COMPETITION
Principal competitors in the chemical industry include major chemical
companies based in the United States, Europe, Japan, China and other Asian
nations. Competitors offer a comparable range of products from agricultural,
commodity and specialty chemicals to plastics and fibers products. The company
also competes in certain product markets with smaller, more specialized firms.
Principal competitors in the petroleum industry are integrated oil companies
(including national oil companies), many of which also have substantial
petrochemical operations, and a variety of other firms including independent
oil and gas producers, pipeline companies, and large and small refiners and
marketers. In addition, the company competes with the growing petrochemical
operations in oil-producing countries.
Businesses in the Chemicals, Fibers, Life Sciences, Polymers, and
Diversified Businesses segments compete on a variety of factors such as price,
product quality or specifications, customer service and breadth of product
line, depending on the characteristics of the particular market involved. The
Petroleum segment business is highly price-competitive and competes on quality
and reliability of supply as well.
Further information relating to competition is included in two areas of
Exhibit 13: (1) the "Letter to Stockholders" (under "Growth Will Be Global")
on page 2 and (2) Industry Segment Reviews on pages 14-20.
RESEARCH AND DEVELOPMENT
The company performs research and development at more than 75 sites
worldwide. In the United States, research is conducted at over 40 sites in 18
states at either dedicated research facilities or manufacturing plants. The
highest concentration of research is carried out at several large research
centers in and around Wilmington, Delaware, which supports strategic business
units in the Chemicals, Fibers, Life Sciences, Polymers, and Diversified
Businesses segments. Among these, the Experimental Station laboratories engage
in exploratory and applied research, the Chestnut Run laboratories focus on
applications research, and the Stine-Haskell Research Center conducts
agricultural product research and toxicological research on company products
to assure they are safe for manufacture and use. The company conducts research
related to petroleum operations as well as other segments of the business at
its Ponca City, Oklahoma, facility. DuPont also operates an increasing number
of research facilities at locations outside the United States in countries
such as Belgium, Canada, France, Germany, Japan, Luxembourg, Mexico, The
Netherlands, Spain, Switzerland and the United Kingdom, reflecting the
company's growing global interests.
Research and development activities include studies to advance scientific
knowledge in fields of interest to the company, basic and applied work both to
support and improve existing products and processes and identify new products
and processes, and scouting works to identify and develop new business
opportunities in relevant fields. Each strategic business unit of the company
funds research and development activities to support its
5
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business mission. The corporate laboratories are responsible for assuring that
leading edge science and engineering concepts are identified and diffused
throughout the DuPont technical community. All R&D activities are coordinated
by senior R&D management through a corporate technology council to ensure that
technical activities are consistent with business and corporate plans, and
that the core technical competencies underlying DuPont's current and future
businesses remain healthy and continue to provide competitive advantages.
Further information regarding research and development is in Exhibit 13 on
page 2 of the "Letter to Stockholders" (under "Innovation: Research is Key").
Annual research and development expense and such expense shown "As Percent of
Sales" for the five years 1992 through 1996 are included under the heading
"General" of the Five-Year Financial Review on page 58 of Exhibit 13.
ENVIRONMENTAL MATTERS
Information relating to environmental matters is included in three areas of
Exhibit 13: (1) the "Letter to Stockholders" (under "Results On All Fronts")
on page 3, (2) "Management's Discussion and Analysis" on pages 25-27; and (3)
Notes 1 and 25 to the Financial Statements on pages 33-34 and 47.
RISKS ATTENDANT TO FOREIGN OPERATIONS
The company's petroleum exploration and production operations outside the
United States are exposed to risks due to possible actions by host governments
such as increases or variations in tax and royalty payments, participation in
the company's concessions, limited or embargoed production, mandatory
exploration or production controls, nationalization and export controls. Civil
unrest and changes in government are also potential hazards.
The profitability of the company's exploration and production operations is
similarly exposed to risks due to actions of the United States government
through tax legislation, executive order, and commercial restrictions. Actions
by both the United States and host governments have affected operations
significantly in the past and may continue to impact operations in the future.
ITEM 2. PROPERTIES
The company owns and operates manufacturing, processing, production,
refining, marketing, and research and development facilities worldwide. In
addition, the company owns and leases petroleum properties worldwide.
DuPont's corporate headquarters is located in Wilmington, Delaware, and the
company's petroleum businesses are headquartered in Houston, Texas. In
addition, the company operates sales offices, regional purchasing offices,
distribution centers, and various other specialized service locations.
Further information regarding properties is included in Exhibit 13 in the
Industry Segment Reviews on pages 14-20. Information regarding research and
development facilities is incorporated by reference to Item 1, Business--
Research and Development on pages 5 and 6 of this report. Additional
information with respect to the company's property, plant and equipment, and
leases is contained in Notes 10 and 25 to the company's consolidated financial
statements on pages 37 and 47 of Exhibit 13.
CHEMICALS, FIBERS, LIFE SCIENCES, POLYMERS, AND DIVERSIFIED BUSINESSES
Approximately 75% of the property, plant and equipment related to operations
in the Chemicals, Fibers, Life Sciences, Polymers, and Diversified Businesses
is located in the United States and Puerto Rico. This
6
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investment is located at some 70 sites, principally in Texas, Delaware,
Virginia, North Carolina, Tennessee, West Virginia, South Carolina, and New
Jersey. The principal locations within these states are as follows:
<TABLE>
<CAPTION>
TEXAS DELAWARE VIRGINIA NORTH CAROLINA
- ---------------- ------------------ ------------------ ----------------------
<S> <C> <C> <C>
Beaumont, Edge Moor, Newark Front Royal, Fayetteville, Kinston,
Corpus Christi, and Seaford James River, Raleigh and Wilmington
LaPorte, Orange Martinsville,
and Victoria Richmond and
Waynesboro
<CAPTION>
TENNESSEE WEST VIRGINIA SOUTH CAROLINA NEW JERSEY
- ---------------- ------------------ ------------------ ----------------------
<S> <C> <C> <C>
Chattanooga, Belle, Martinsburg Camden, Charleston Deepwater and
Memphis, and Parkersburg and Florence Parlin
New Johnsonville
and Old Hickory
</TABLE>
Property, plant and equipment outside the United States and Puerto Rico is
located at about 70 sites, principally in Canada, Germany, the United Kingdom,
The Netherlands, Luxembourg, Singapore, Spain, Mexico, Taiwan, France, Brazil,
Japan, China, Belgium, Argentina and Republic of Korea. Products from more
than one business are frequently produced at the same location.
The company's plants and equipment are well maintained and in good operating
condition. Sales as a percent of capacity were 88% in 1996, 86% in 1995, and
87% in 1994. These properties are directly owned by the company except for
some auxiliary facilities and miscellaneous properties, such as certain
buildings and transportation equipment, which are leased. Although no title
examination of the properties has been made for the purpose of this report,
the company knows of no material defects in title to any of these properties.
PETROLEUM BUSINESSES
The company owns and leases oil and gas properties worldwide. Exploration,
production, and natural gas and gas products properties are described
generally on pages 18-19 and 51-56 of Exhibit 13. Estimated proved reserves of
oil and gas are found on pages 53 and 54 of Exhibit 13. Information regarding
the company's refining, marketing, supply, and transportation properties is
also provided on pages 18-19 of Exhibit 13.
7
<PAGE>
PETROLEUM PRODUCTION
The following tables show the company's interests in petroleum liquids
production and natural gas deliveries. Petroleum liquids production comprises
crude oil and condensate produced for the company's account plus its share of
natural gas liquids (NGL's) removed from natural gas deliveries from owned
leases and NGL's acquired through gas plant ownership. Natural gas deliveries
represent Conoco's share of deliveries from leases in which the company has an
ownership interest.
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
(THOUSANDS OF BARRELS DAILY)
<S> <C> <C> <C>
Petroleum Liquids Production
Consolidated Companies
Crude Oil, Condensate, and Natural Gas Liquids
from Owned Reserves:
United States................................. 82 83 94
Europe........................................ 182 143 160
Other Regions................................. 88 98 109
--------- --------- ---------
Subtotal.................................... 352 324 363
Natural Gas Liquids from Gas Plant Ownership:
United States................................. 67 65 57
--------- --------- ---------
Total Production--Consolidated Operations... 419 389 420
Share of Equity Affiliates
Crude Oil, Condensate, and Natural Gas Liquids
from Owned Reserves............................ 13 12 4
Natural Gas Liquids from Gas Plant Ownership.... 13 13 12
--------- --------- ---------
Total Production--Equity Affiliates......... 26 25 16
--------- --------- ---------
Total Petroleum Liquids Production.......... 445 414 436
========= ========= =========
<CAPTION>
(MILLION CUBIC FEET DAILY)
<S> <C> <C> <C>
Natural Gas Deliveries
Consolidated Companies
Natural Gas Deliveries from Owned Reserves:
United States................................. 828 832 871
Europe........................................ 416 341 398
Other Regions................................. 41 31 44
--------- --------- ---------
Total Deliveries--Consolidated Operations... 1,285 1,204 1,313
Share of Equity Affiliates
Natural Gas Deliveries from Owned Reserves:
United States................................. 24 38 34
--------- --------- ---------
Total Natural Gas Deliveries................ 1,309 1,242 1,347
========= ========= =========
</TABLE>
8
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AVERAGE PRODUCTION COSTS AND SALES PRICES
The following table presents data as prescribed by the Securities and
Exchange Commission (SEC). Accordingly, the unit costs do not include income
taxes and exploration, development, and general overhead costs. Since these
excluded costs are material, the following data should not be interpreted as
measures of profitability or relative profitability. See Results of Operations
for Oil and Gas Producing Activities on page 51 of Exhibit 13 for a more
complete disclosure of revenues and expenses. See also the references to crude
oil and natural gas prices and volumes in business review of the Petroleum
segment on pages 18-19 of Exhibit 13.
<TABLE>
<CAPTION>
UNITED OTHER
STATES EUROPE REGIONS
------ ------ -------
(U.S. DOLLARS)
<S> <C> <C> <C>
For the year ended December 31, 1996
Average production costs per barrel equivalent of
petroleum produced(a)................................. $ 4.11 $ 3.95 $ 2.08
Average sales prices of produced petroleum(b)
Per barrel of crude oil and condensate sold........... 18.68 20.94 19.47
Per thousand cubic feet (MCF) of natural gas sold..... 1.90 2.92 1.24
For the year ended December 31, 1995
Average production costs per barrel equivalent of
petroleum produced(a)................................. 3.78 4.55 2.08
Average sales prices of produced petroleum(b)
Per barrel of crude oil and condensate sold........... 15.53 16.95 16.56
Per MCF of natural gas sold........................... 1.44 2.96 1.13
For the year ended December 31, 1994
Average production costs per barrel equivalent of
petroleum produced(a)................................. 3.99 4.37 1.62
Average sales prices of produced petroleum(b)
Per barrel of crude oil and condensate sold........... 13.36 15.65 15.18
Per MCF of natural gas sold........................... 1.78 2.90 1.61
</TABLE>
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(a) Average production costs per barrel of equivalent liquids, with natural
gas converted to liquids at a ratio of 6 MCF of gas to one barrel of
liquids.
(b) Excludes proceeds from sales of interest in oil and gas properties.
PRESENT ACTIVITIES
<TABLE>
<CAPTION>
TOTAL UNITED OTHER
WORLDWIDE STATES EUROPE REGIONS
--------- ------ ------ -------
(NUMBER OF WELLS)
<S> <C> <C> <C> <C>
At December 31, 1996
Number of wells drilling*
Gross........................................ 24 9 12 3
Net.......................................... 8 5 2 1
Number of productive wells**
Oil wells--gross............................. 9,013 8,453 238 322
--net.................................... 3,004 2,853 21 130
Gas wells--gross............................. 7,601 7,433 122 46
--net.................................... 3,207 3,116 27 64
</TABLE>
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* Includes wells being completed.
** Approximately 92 gross (31 net) oil wells and 689 gross (226 net) gas
wells, all in the United States, have multiple completions.
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DEVELOPED AND UNDEVELOPED PETROLEUM ACREAGE
<TABLE>
<CAPTION>
TOTAL UNITED OTHER
WORLDWIDE STATES EUROPE REGIONS
--------- ------ ------ -------
(THOUSANDS OF ACRES)
<S> <C> <C> <C> <C>
At December 31, 1996
Developed acreage
Gross........................................ 7,578 2,729 1,084 3,765
Net.......................................... 3,390 1,610 313 1,467
Undeveloped acreage
Gross........................................ 100,106 2,704 5,505 91,897
Net.......................................... 61,226 1,998 2,317 56,911
</TABLE>
NET EXPLORATORY AND DEVELOPMENT WELLS DRILLED
<TABLE>
<CAPTION>
TOTAL UNITED OTHER
WORLDWIDE STATES EUROPE REGIONS
--------- ------ ------ -------
(NUMBER OF NET WELLS COMPLETED)
<S> <C> <C> <C> <C>
For the year ended December 31, 1996
Exploratory--productive...................... 42.8 1.6 2.0 39.2
--dry................................... 20.5 10.3 4.0 6.2
Development--productive...................... 89.9 73.1 6.1 10.7
--dry................................... 17.3 13.5 0.3 3.5
For the year ended December 31, 1995
Exploratory--productive...................... 34.2 12.8 1.4 20.0
--dry................................... 38.2 22.1 4.9 11.2
Development--productive...................... 109.5 94.3 8.0 7.2
--dry................................... 13.7 10.7 0.0 3.0
For the year ended December 31, 1994
Exploratory--productive...................... 23.8 16.2 2.8 4.8
--dry................................... 39.3 30.0 1.7 7.6
Development--productive...................... 116.4 88.7 5.5 22.2
--dry................................... 14.3 13.3 0.0 1.0
</TABLE>
ESTIMATES OF TOTAL PROVED RESERVES FILED WITH OTHER
FEDERAL AGENCIES COVERING THE YEAR 1996
The company is not required to file, and has not filed on a recurring basis,
estimates of its total proved net oil and gas reserves with any U.S. or non-
U.S. governmental regulatory authority or agency other than the Department of
Energy (DOE) and the SEC. The estimates furnished to the DOE have been
consistent with those furnished to the SEC. They are not necessarily directly
comparable, however, due to special DOE reporting requirements such as
requirements to report in some instances on a gross, net or total operator
basis, and requirements to report in terms of smaller units. In no instance
have the estimates for the DOE differed by more than 5% from the corresponding
estimates reflected in total reserves reported to the SEC.
NATURAL GAS AND GAS PRODUCTS
Upstream operations in the United States include consolidated interests in
27 natural gas processing plants located in Colorado, Louisiana, New Mexico,
Oklahoma and Texas. Eighteen of the plants are operated by the company. The
company's share of total natural gas liquids production (NGL) from the 27
plants averaged 67,489 barrels per day (BPD) in 1996 and 65,875 BPD in 1995.
Additional NGL production volumes of 19,279 BPD in 1996 and 13,079 BPD in 1995
are attributable to Conoco equity gas processed in third-party-operated
plants. Conoco's 50% owned equity affiliate, C&L Processors Partnership, has
seven natural gas processing plants in
10
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Oklahoma and Texas, and the company's pro rata share of NGL production was
7,926 BPD in 1996 and 8,102 BPD in 1995. Other natural gas and gas products
facilities in the United States include an 800-mile intrastate natural gas
pipeline system in Louisiana operated by Conoco's 100% owned subsidiary
Louisiana Gas System, Inc., natural gas and natural gas liquids pipelines in
several states, two underground NGL storage facilities, a 19,000 BPD natural
gas liquids fractionating plant in Gallup, New Mexico, a 22.5% equity interest
in a 104,000 BPD natural gas liquids fractionating plant in Mt. Belvieu,
Texas, owned by affiliated Gulf Coast Fractionators, and a 75% equity interest
in the Pocahontas Gas Partnership that gathers, treats, and markets coal bed
methane associated with coal mines in Virginia.
Outside the United States, the company's Conoco (U.K.) Limited subsidiary
operates a 50% owned gas processing facility at Theddlethorpe, England.
Kinetica, a 50% joint venture between Conoco (U.K.) and electricity generator
PowerGen, transports and markets natural gas in England. Phoenix Park Gas
Processors, a 41% owned equity affiliate, operates a natural gas plant at
Point Lisas, Trinidad, of which Conoco's share of production was 4,936 BPD in
1996 and 4,185 BPD in 1995.
REFINING
The company currently owns and operates four refineries in the United States
located at Lake Charles, Louisiana; Ponca City, Oklahoma; Billings, Montana;
and Denver, Colorado. The company also owns and operates the Humber refinery
in England and owns a 16.33% interest in two refineries in the Czech Republic.
Conoco also owns a 40% interest in a company that is constructing a 100,000
barrel-per-day refinery near the city of Melaka, Malaysia, with completion
scheduled for 1997.
During 1996, a refinery in Karlsruhe, Germany, in which Conoco has a 25%
interest, reached an agreement to integrate its operations with an adjacent
refinery. Conoco's interest in the combined refining complex will be 18.75%
upon completion of the integration. It is anticipated the integration will be
completed in 1997.
Capacities at year-end 1996 as well as inputs processed during 1996 are
summarized in the following table:
<TABLE>
<CAPTION>
TOTAL UNITED UNITED CZECH
WORLDWIDE STATES KINGDOM GERMANY* REPUBLIC**
--------- ------ ------- -------- ----------
(THOUSANDS OF BARRELS DAILY)
<S> <C> <C> <C> <C> <C>
At December 31, 1996
Refinery crude oil and
condensate distillation
capacity (excluding additional
feedstocks input to other
refinery units)................ 708 491 146 43 28
For the year ended
December 31, 1996 Inputs proc-
essed
Crude oil and condensate....... 615 425 121 47 22
Additional feedstocks input to
other refinery units.......... 117 26 76 14 1
</TABLE>
- --------
* Represents 25% interest in the Karlsruhe refinery.
** Represents 16.33% interest in two Czech Republic refineries.
Utilization of refinery capacity depends on the market demand for petroleum
products, availability of crude oil and other feedstocks, and the economics of
converting crude oil into refined products.
MARKETING
In the United States, the company sells refined products at retail in 34
states, principally under the "Conoco" brand. In addition, the company markets
a wide range of products other than at retail in all 50 states and the
District of Columbia. Refined products are also sold in Austria, Germany and
the United Kingdom under the "Jet" and "Conoco" brands; in Belgium, France and
Luxembourg under the "Seca" brand; and in Switzerland under the "OK Coop"
brand. The "Jet" brand is used for marketing in the Czech Republic,
11
<PAGE>
Denmark, Finland, Hungary, Norway, Poland, Slovakia, Spain, Sweden and
Thailand. A joint venture in Turkey markets under the "TABAS" brand.
During 1996, Conoco sold its marketing subsidiary in Ireland to Statoil.
SUPPLY AND TRANSPORTATION
The company has an extensive pipeline system for crude oil and refined
products. Information concerning daily pipeline shipments is presented below:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(THOUSANDS OF BARRELS)
<S> <C> <C> <C>
Average Daily Pipeline Shipments
Pipeline shipments of consolidated companies....... 845 873 849
Equity in shipments of nonconsolidated affiliates.. 360 358 365
</TABLE>
Conoco Pipe Line Company (CPL), a wholly owned subsidiary and operator of
the company's U.S. petroleum pipeline system, transported approximately 814
thousand barrels per day of crude oil and refined products in 1996. In
addition to pipeline facilities, CPL operates, under a management contract,
three marine terminals, one coke-exporting facility, and 43 product terminals
located throughout the United States. These facilities are wholly or jointly
owned by the company. Crude oil is gathered in the Rocky Mountain, mid-
continent, and southern Louisiana areas primarily for delivery to local
refiners. Refined products pipelines are located in the Rocky Mountain and
mid-continent areas to serve regional demand centers. Other U.S.
transportation assets include numerous tank cars, barges, tank trucks, and
other motor vehicles.
The company also operates a fleet of seagoing crude oil tankers. These
vessels, principally of Liberian registry, are described as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ---------- ----------
(THOUSANDS OF DEADWEIGHT TONS)
<S> <C> <C> <C>
Controlled Seagoing Vessel Capacity Owned or
Leased...................................... 1,006 881 881
=========== ========= =========
Number of Vessels 80,000 DWT and Above (NUMBER OF VESSELS)
Single Hull................................ 3 3 3
Double Hull................................ 5 4 4
----------- --------- ---------
Total Vessels............................ 8 7 7
=========== ========= =========
</TABLE>
ITEM 3. 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
fungicide would be found to be a contributor to the claimed damage, DuPont
began paying crop-damage claims. In 1992, however, after 18 months of
extensive research, DuPont scientists concluded that "Benlate" 50 DF fungicide
was not responsible for plant damage reports received since March 1991, and
concurrent with these research findings, DuPont stopped paying claims. To
date, DuPont has been served with more than 700 lawsuits by growers who allege
plant damage from using "Benlate" 50 DF fungicide. About 60 of the lawsuits
brought against the company since 1991 remain, the rest having been disposed
of by trial, dismissal or settlement. The remaining cases include both alleged
personal injury and crop damage cases. Four cases recently filed in West
Virginia contain allegations that "Benlate" 50 DF fungicide caused personal
injuries. The appeal of a June 1996 verdict of $3,980,000 against DuPont in a
personal injury action involving "Benlate" 50 DF fungicide brought in Florida
is still pending. Two appeals from adverse jury verdicts in crop damage cases
are also still pending. The United States Court of Appeals for the Eleventh
Circuit has reversed and remanded an order of a federal district court in
Georgia which had found
12
<PAGE>
that DuPont had engaged in discovery abuse during the first "Benlate" 50 DF
fungicide case to go to trial. The Eleventh Circuit ordered that a different
judge shall preside over the matter on remand; DuPont awaits further
proceedings. A shareholder derivative action filed in the same Georgia federal
district court alleging that DuPont's Board of Directors breached various
duties in its role in the "Benlate" 50 DF fungicide litigation has been stayed
pending resolution of DuPont's appeal of the sanctions order mentioned above.
A putative securities fraud class action filed by a shareholder in federal
district court in Florida against the company and the Chairman in September
1995 is also still pending, in which it is alleged that DuPont made false and
misleading statements and omissions about the "Benlate" 50 DF fungicide
litigation with the alleged effect of inflating the price of DuPont's stock
between June 19, 1993, and January 27, 1995. A lawsuit has been filed in a
separate Georgia federal court (the Northern District) by five growers
alleging fraud based on, among other things, the assertion that at the time of
their settlements with DuPont they were unaware of alleged discovery abuse by
DuPont. Two similar cases have been filed in Hawaii, one of which was recently
transferred to the Northern District federal court in Georgia. DuPont
continues to believe that "Benlate" 50 DF fungicide did not cause the alleged
damages and intends to defend against those allegations in ongoing matters.
Since 1989, DuPont has been named as a defendant in numerous homeowner
lawsuits in various state and federal courts alleging property damage
resulting from 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 sections of flexible pipe
extruded from polybutylene connected with fittings made from acetal. Shell
Chemical is the sole producer of polybutylene; the acetals are provided by
Hoechst-Celanese and DuPont. In 1995 DuPont settled a national class action
lawsuit involving the plumbing systems by agreeing to contribute up to 10% of
the cost of repair and replacement of the plumbing systems. DuPont's total
contribution under the settlement is capped at $120 million. Several dozen
cases involving individual or groups of homeowners who have opted out of the
settlement remain pending.
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 June 28, 1991, DuPont entered into a voluntary agreement with the U.S.
Environmental Protection Agency (EPA) to conduct an audit of the U.S. sites
under the Toxic Substance Control Act (TSCA). Participation in the audit
agreement was not an admission of TSCA noncompliance. Maximum stipulated
penalties under the agreement were capped at $1 million. The first phase of
the audit was completed, but a second phase of the audit, set to begin after
EPA's issuance of new reporting criteria (delayed since 1991), was cancelled
in June 1996 by the EPA. The EPA has now issued a consent order/agreement
assessing a $1 million dollar penalty against DuPont. The penalty has been
paid and the matter is closed.
On December 21, 1993, Conoco's Denver refinery received a Notice of
Violation from the EPA, Region VIII, and the Colorado Department of Health
requesting a civil penalty of $169,500 in a dispute over proper scope and
scheduling of certain RCRA on-site investigation activities. The investigation
activities have previously been the subject of a settlement with the EPA and
the Colorado Department of Health, and the work performed has been in
compliance with such agreement in the opinion of company counsel. As such, it
is anticipated that the fine will be significantly reduced pursuant to
negotiations between the parties.
On June 30, 1994, the California Department of Toxic Substances Control
issued to DuPont's Antioch Works in Antioch, California, an Enforcement Order
alleging violations of state hazardous waste regulations. The alleged
violations center principally on the status of several tanks at the site. The
Order would require DuPont to undertake certain remedial activities around the
tanks and pay a fine of $200,000. DuPont has filed a Notice of Defense in the
matter for a hearing before the Office of Administrative Hearings of the
California Department of General Services.
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
13
<PAGE>
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.
On April 12, 1995, the EPA Region V served on DuPont an Administrative
Complaint alleging the company's Circleville, Ohio, plant had failed to
provide timely notice of a release of chlorine from the plant on January 30,
1993. The complaint sought civil penalties of $125,000. DuPont has reached
agreement in principle with the EPA to settle the matter for a cash payment of
$10,000 and a Supplemental Environmental Project valued at $27,000.
On May 30, 1995, DuPont received a complaint from the EPA alleging that in
24 instances between 1990 and 1991, DuPont distributed or sold certain benomyl
fungicide products in violation of the Federal Insecticide, Fungicide and
Rodenticide Act (FIFRA). The EPA has proposed a civil penalty of $120,000. The
EPA's allegations are based on the contention that an analysis by EPA in 1994
indicated that an impurity, which is part of DuPont's statement of formula,
had slightly exceeded an upper certified limit established by EPA. On January
6, 1997, the Administrative Law Judge issued an Order ruling in DuPont's favor
on its motion for an accelerated decision. The Administrative Law Judge's
Order is before the Environmental Appeals Board for review.
On July 26, 1995, the Region V office of the EPA filed an Administrative
Complaint/Assessment of Penalty against DuPont's East Chicago plant alleging
nineteen recordkeeping and reporting violations of sections 311 and 312 of the
Emergency Planning and Community Right to Know Act (EPCRA) between 1987 and
1991. The complaint seeks penalties of $262,260 for alleged failures to file
or for the filing of incomplete Tier II Chemical Inventory forms. Settlement
discussions with the EPA are underway.
On December 5, 1995, the Kentucky Natural Resources and Environmental
Protection Cabinet filed an administrative complaint against DuPont as a
result of an oleum release at DuPont's Wurtland, Kentucky, facility on August
20, 1995. The complaint alleged the release was above statutorily reportable
quantities, was not reported in a timely fashion, caused an environmental
emergency and presented an imminent and substantial danger to public health
and welfare. The State of Kentucky sought penalties of a least $600,000 as
well as reimbursement for response costs. DuPont has reached an agreement in
principle with the State to settle the matter. Under the settlement, DuPont
would pay a penalty of $125,000 and expend $460,000 to implement supplemental
environmental projects. The settlement is subject to final agreement and
issuance of an Agreed Order.
In January of 1996, the Department of Justice (DOJ) notified Conoco Pipe
Line Company (CPL) of its intention to file a lawsuit under the Clean Water
Act and the Oil Pollution Act for damages allegedly caused by releases from
CPL's pipeline between 1991 and 1994. The DOJ sought the maximum civil penalty
of $594,000. In December 1996, CPL reached a settlement with the DOJ and EPA
under which CPL will pay a penalty of $112,500 and replace certain parts of
the pipeline. It is anticipated that the penalty will be paid during the first
quarter of 1997.
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 Pipe Line 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. Since the duration of the
discharge is in dispute, the penalty calculation is uncertain although it is
expected to exceed $100,000. The parties are attempting to negotiate a
settlement of the matter.
On July 17, 1996, DuPont's Belle, West Virginia, plant entered into a Final
Order with the West Virginia Department of Environmental Protection (WVDEP),
resolving certain alleged violations at the Belle Plant noted by the WVDEP
during a series of audits. The violations cited centered on certain training
and recordkeeping
14
<PAGE>
practices as well as the handling of a solvent characterized by the WVDEP as a
hazardous waste. Under the terms of the Order, DuPont will pay a fine of
$274,075 and undertake several supplemental environmental projects with an
expected cost of $174,500.
In August 1996, the EPA and the Colorado Department of Health (CDH) notified
Conoco and the Colorado Refining Company (CRC) that they intended to seek a
penalty of $1,273,651 from the two companies in connection with faulty
analytical work performed by an outside contractor as part of certain remedial
activities undertaken at Conoco and CRC's Denver Refinery. On December 20,
1996, Conoco entered into a Compliance Order on Consent with the State of
Colorado and the EPA. The total settlement amount is $475,000 of which 80%
will be offset by two supplemental environmental projects. Conoco will pay the
remaining 20% in the form of a cash payment of $95,000. CRC has been unable to
reach agreement on the terms of a settlement with the state and the EPA.
On October 17, 1996, the West Virginia Department of Environmental
Protection (WVDEP) notified DuPont that it intended to seek damages and
penalties for alleged violations of state regulations concerning operation of
a landfill and permitted discharge limits at DuPont's Dry Run Landfill which
supports DuPont's Washington Works facility in Parkersburg, West Virginia. The
WVDEP entered an Administrative Order on December 31, 1996, to resolve this
matter. The Order required DuPont to undertake certain remedial action and
make certain improvements at the Dry Run Landfill. In addition, DuPont was
required to pay a civil penalty of $200,000 and to undertake a supplemental
environmental project valued at $50,000. All required actions have been taken
and the penalty paid. The matter is closed.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list, as of March 7, 1997, of the company's executive
officers.
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
AGE SINCE
--- ---------
<S> <C> <C>
President and Chief Executive Officer
John A. Krol(1)................................................ 60 1987
Other Executive Officers:
Jerald A. Blumberg, Executive Vice President................... 57 1990
Archie W. Dunham, Executive Vice President(1).................. 58 1985
Gary W. Edwards, Senior Vice President......................... 55 1991
Kurt M. Landgraf, Senior Vice President and Chief Financial
Officer....................................................... 50 1996
Charles O. Holliday, Jr., Executive Vice President............. 48 1992
Robert E. McKee, III, Senior Vice President.................... 51 1992
Joseph A. Miller, Jr., Senior Vice President and Chief
Technology Officer............................................ 55 1994
Stacey J. Mobley, Senior Vice President........................ 51 1992
Howard J. Rudge, Senior Vice President and General Counsel..... 61 1994
</TABLE>
- --------
(1) Member of the Board of Directors.
The company's executive officers are elected or appointed for the ensuing
year or for an indefinite term, and until their successors are elected or
appointed. Each officer named above has been an officer or an executive of
DuPont, its subsidiaries, or an affiliate during the past five years.
15
<PAGE>
PART II
Information with respect to the following Items can be found on the
indicated pages of Exhibit 13 if not otherwise included herein.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The company's common stock is listed on the New York Stock Exchange, Inc.
(symbol DD) and certain non-U.S. exchanges. The number of record holders of
common stock was 158,121 at December 31, 1996 and 156,479 at March 7, 1997.
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Quarterly Financial Data:
Dividends Per Share of Common Stock................................... 57
Market Price of Common Stock (High/Low)............................... 57
ITEM 6. SELECTED FINANCIAL DATA
Five-Year Financial Review:
Summary of Operations................................................. 58
Financial Position at Year End........................................ 58
Ratios................................................................ 58
General............................................................... 58
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Letter to Stockholders.................................................. 1-3*
Industry Segment Reviews:
Chemicals............................................................. 14
Fibers................................................................ 15
Life Sciences......................................................... 16-17
Polymers.............................................................. 17-18
Petroleum............................................................. 18-19
Diversified Businesses................................................ 20
Management's Discussion and Analysis:
Analysis of Operations................................................ 21-22
Financial Condition and Cash Flows.................................... 22-24
Financial Instruments................................................. 24-25
Environmental Matters................................................. 25-27
</TABLE>
DuPont's Board of Directors has approved a two-for-one split of DuPont
common stock and the resulting increase in the number of authorized shares of
common stock from 900 million to 1.8 billion shares in order to effectuate the
split. This action is subject to the approval by DuPont's stockholders at the
Annual Meeting on April 30, 1997, in Wilmington, Delaware. The split would
apply to shareholders of record on May 15, 1997.
- --------
* Includes text of letter except for photograph and related caption on page 2
and the chart on page 3.
16
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Financial Statements:
Report of Independent Accountants................................... 28
Consolidated Income Statement for 1996, 1995 and 1994............... 29
Consolidated Balance Sheet as of December 31, 1996 and December 31,
1995............................................................... 30
Consolidated Statement of Stockholders' Equity for 1996, 1995 and
1994............................................................... 31
Consolidated Statement of Cash Flows for 1996, 1995 and 1994........ 32
Notes to Financial Statements....................................... 33-50
Supplemental Financial Information:
Supplemental Petroleum Data:
Oil and Gas Producing Activities................................... 51-56
Quarterly Financial Data and related notes for the following items for
the two years 1996 and 1995:
Sales............................................................... 57
Cost of Goods Sold and Other Expenses............................... 57
Net Income.......................................................... 57
Earnings Per Share of Common Stock.................................. 57
Dividends Per Share of Common Stock................................. 57
Market Price of Common Stock........................................ 57
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Information with respect to the following Items is incorporated by reference
to the pages indicated in the company's 1997 Annual Meeting Proxy Statement
dated March 21, 1997, filed in connection with the Annual Meeting of
Stockholders to be held April 30, 1997. However, information regarding
executive officers is contained in Part I of this report (page 15) pursuant to
General Instruction G of this form.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Election of Directors................................................... 4-7
Compliance With the Securities Exchange Act............................. 9
ITEM 11. EXECUTIVE COMPENSATION
Compensation of Directors............................................... 2-3
Compensation and Stock Option Information............................... 9-15
Retirement Benefits..................................................... 16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Beneficial Ownership of Securities...................................... 8-9
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Election of Directors................................................... 4-7
</TABLE>
17
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules and Exhibits
1. Financial Statements (See listing at Part II, Item 8 of this report
regarding financial statements, which are incorporated by reference to
Exhibit 13.)
2. Financial Statement Schedules--none required.
The following should be read in conjunction with the previously referenced
Financial Statements:
Financial Statement Schedules listed under SEC rules but not included in
this report are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto
incorporated by reference.
Condensed financial information of the parent company is omitted because
restricted net assets of consolidated subsidiaries do not exceed 25% of
consolidated net assets. Footnote disclosure of restrictions on the ability
of subsidiaries and affiliates to transfer funds is omitted because the
restricted net assets of subsidiaries combined with the company's equity in
the undistributed earnings of affiliated companies does not exceed 25% of
consolidated net assets at December 31, 1996.
Separate financial statements of affiliated companies accounted for by
the equity method are omitted because no such affiliate individually
constitutes a 20% significant subsidiary.
3. Exhibits
The following list of exhibits includes both exhibits submitted with this
Form 10-K as filed with the SEC and those incorporated by reference to other
filings:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 Company's Certificate of Incorporation, as last amended December 22,
1989 (incorporated by reference to Exhibit 3.1 of the company's
Annual Report on Form 10-K for the year ended December 31, 1994).
3.2 Company's Bylaws, as last revised January 29, 1997.
3.3 Company's Bylaws, as last revised December 1, 1996.
3.4 Company's Bylaws, as last revised January 1, 1996 (incorporated by
reference to Exhibit 3.2 of the company's Annual Report on Form 10-K
for the year ended December 31, 1995).
4 The company agrees to provide the Commission, on request, copies of
instruments defining the rights of holders of long-term debt of the
company and its subsidiaries.
10.1* Company's Corporate Sharing Plan, as last amended August 28, 1991.
10.2* The DuPont Stock Accumulation and Deferred Compensation Plan for
Directors, (formerly the Deferred Compensation Plan For Directors),
as last amended effective January 1, 1996, and approved by
shareholders at the company's 1996 Annual Meeting of Shareholders
(incorporated by reference to Exhibit 10.12 of the company's
Quarterly Report on Form 10-Q for the period ended March 31, 1996).
10.3* Company's Supplemental Retirement Income Plan, as last amended
effective June 4, 1996.
10.4* Company's Pension Restoration Plan, as last amended effective June 4,
1996.
10.5.1* Retirement Restoration Plan I of Conoco Inc., adopted by the Board of
Directors on December 18, 1995 (incorporated by reference to Exhibit
10.6.1 of the company's Annual Report on Form 10-K for the year ended
December 31, 1995).
</TABLE>
- --------
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this Form 10-K.
18
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.5.2* Retirement Restoration Plan II of Conoco Inc., adopted by the Board
of Directors on December 18, 1995 (incorporated by reference to
Exhibit 10.6.2 of the company's Annual Report on Form 10-K for the
year ended December 31, 1995).
10.6* Company's Stock Performance Plan, as last amended effective September
28, 1994 (incorporated by reference to Exhibit 10.7 of the company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.7* Company's Variable Compensation Plan, as last amended effective
November 24, 1993, reflecting changes approved by the Board on that
date for Shareholder approval on April 27, 1994 (incorporated by
reference to Exhibit 10.8 of the company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1994).
10.8* Company's Salary Deferral & Savings Restoration Plan effective April
26, 1994 (incorporated by reference to Exhibit 10.9 of the company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.9* Company's 1995 Corporate Sharing Plan, adopted by the Board of
Directors on January 25, 1995 (incorporated by reference to Exhibit
10.10 of the company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995).
10.10* Letter Agreement and Consulting Agreement, dated as of October 9,
1995, between the company and C. S. Nicandros (incorporated by
reference to Exhibit 10.11 of the company's Annual Report on Form 10-
K for the year ended December 31, 1995).
10.11* Company's 1997 Corporate Sharing Plan, adopted by the Board of
Directors on January 29, 1997.
11 Statement re calculation of earnings per share.
12 Statement re computation of the ratio of earnings to fixed charges.
13 The 1996 "Letter to Stockholders," Industry Segment Reviews, and
Financial Information Section of the Annual Report to Shareholders
for the year ended December 31, 1996, which are furnished to the
Commission for information only, and not filed except as expressly
incorporated by reference in this Report.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
</TABLE>
- --------
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this Form 10-K.
(b) Reports on Form 8-K
Reports on Form 8-K:
(1) On October 23, 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.
33-53327, No. 33-61339, and No. 33-60069). Under Item 7, "Financial
Statements and Exhibits," the Registrant's Earnings Press Release, dated
October 23, 1996, was filed.
(2) On January 29, 1997, a Current Report on Form 8-K was filed in
connection with Debt Securities that may be offered on a delayed or
continuous basis under its Registration Statements on Form S-3
(No. 33-53327, No. 33-61339, and No. 33-60069). Under Item 7, "Financial
Statements and Exhibits," the Registrant's Earnings Press Release, dated
January 29, 1997, was filed.
(3) On March 7, 1997, a Current Report on Form 8-K was filed in
connection with Debt Securities that may be offered on a delayed or
continuous basis under its Registration Statements on Form S-3
(No. 33-53327, No. 33-61339, and No. 33-60069). Under Item 5, "Other
Events," the Registrant's Press Release, dated March 3, 1997, was filed
announcing a two-for-one common stock split.
19
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED AND IN THE CAPACITIES INDICATED, AS
OF THE 24TH DAY OF MARCH 1997.
E. I. DU PONT DE NEMOURS AND COMPANY
(Registrant)
K. M. Landgraf
By:
---------------------------------
K. M. LANDGRAF
SENIOR VICE PRESIDENT--DUPONT
FINANCE
(PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED AS OF THE 24TH DAY OF MARCH 1997, BY THE FOLLOWING
PERSONS ON BEHALF OF THE REGISTRANT IN THE CAPACITIES INDICATED:
CHAIRMAN OF THE BOARD:
E. S. Woolard, Jr.
---------------------
E. S. WOOLARD, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER AND DIRECTOR:
(PRINCIPAL EXECUTIVE OFFICER):
J. A. Krol
- -------------------------------------
J. A. KROL
EXECUTIVE VICE PRESIDENT AND
DIRECTOR:
A. W. Dunham
- -------------------------------------
A. W. DUNHAM
DIRECTORS:
P. N. Barnevik L. D. Juliber
- ------------------------------------- -------------------------------------
P. N. BARNEVIK L. D. JULIBER
A. F. Brimmer W. K. Reilly
- ------------------------------------- -------------------------------------
A. F. BRIMMER W. K. REILLY
L. C. Duemling H. R. Sharp, III
- ------------------------------------- -------------------------------------
L. C. DUEMLING H. R. SHARP, III
E. B. Du Pont C. M. Vest
- ------------------------------------- -------------------------------------
E. B. DU PONT C. M. VEST
C. M. Harper G. Watanabe
- ------------------------------------- -------------------------------------
C. M. HARPER G. WATANABE
20
<PAGE>
E. I. DU PONT DE NEMOURS AND COMPANY
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
3.1 Company's Certificate of Incorporation, as last amended December 22,
1989 (incorporated by reference to Exhibit 3.1 of the company's
Annual Report on Form 10-K for the year ended December 31, 1994).
3.2 Company's Bylaws, as last revised January 29, 1997.
3.3 Company's Bylaws, as last revised December 1, 1996.
3.4 Company's Bylaws, as last revised January 1, 1996 (incorporated by
reference to Exhibit 3.2 of the company's Annual Report on Form 10-K
for the year ended December 31, 1995).
4 The company agrees to provide the Commission, on request, copies of
instruments defining the rights of holders of long-term debt of the
company and its subsidiaries.
10.1* Company's Corporate Sharing Plan, as last amended August 28, 1991.
10.2* The DuPont Stock Accumulation and Deferred Compensation Plan for
Directors, (formerly the Deferred Compensation Plan For Directors),
as last amended effective January 1, 1996, and approved by
shareholders at the company's 1996 Annual Meeting of Shareholders
(incorporated by reference to Exhibit 10.12 of the company's
Quarterly Report on Form 10-Q for the period ended March 31, 1996).
10.3* Company's Supplemental Retirement Income Plan, as last amended
effective June 4, 1996.
10.4* Company's Pension Restoration Plan, as last amended effective
June 4, 1996.
10.5.1* Retirement Restoration Plan I of Conoco Inc., adopted by the Board of
Directors on December 18, 1995 (incorporated by reference to Exhibit
10.6.1 of the company's Annual Report on Form 10-K for the year ended
December 31, 1995).
10.5.2* Retirement Restoration Plan II of Conoco Inc., adopted by the Board
of Directors on December 18, 1995 (incorporated by reference to
Exhibit 10.6.2 of the company's Annual Report on Form 10-K for the
year ended December 31, 1995).
</TABLE>
- ------------------
*Management contract or compensatory plan or arrangement required to be filed as
an exhibit to this Form 10-K.
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -----------
<S> <C>
10.6* Company's Stock Performance Plan, as last amended effective
September 28, 1994 (incorporated by reference to Exhibit 10.7 of the
company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994).
10.7* Company's Variable Compensation Plan, as last amended effective
November 24, 1993, reflecting changes approved by the Board on that
date for Shareholder approval on April 27, 1994 (incorporated by
reference to Exhibit 10.8 of the company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994).
10.8* Company's Salary Deferral & Savings Restoration Plan effective
April 26, 1994 (incorporated by reference to Exhibit 10.9 of the
company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994).
10.9* Company's 1995 Corporate Sharing Plan, adopted by the Board of
Directors on January 25, 1995 (incorporated by reference to
Exhibit 10.10 of the company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995).
10.10* Letter Agreement and Consulting Agreement, dated as of October 9,
1995, between the company and C. S. Nicandros (incorporated by
reference to Exhibit 10.11 of the company's Annual Report on
Form 10-K for the year ended December 31, 1995).
10.11* Company's 1997 Corporate Sharing Plan, adopted by the Board of
Directors on January 29, 1997.
11 Statement re calculation of earnings per share.
12 Statement re computation of the ratio of earnings to fixed charges.
13 The 1996 "Letter to Stockholders," Industry Segment Reviews, and
Financial Information Section of the Annual Report to Shareholders
for the year ended December 31, 1996, which are furnished to the
Commission for information only, and not filed except as expressly
incorporated by reference in this Report.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
</TABLE>
- -----------------
*Management contract or compensatory plan or arrangement required to be filed as
an exhibit to this Form 10-K.
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
E. I. DU PONT DE NEMOURS AND COMPANY
------------------------------------
Incorporated Under The Laws of Delaware
AS REVISED January 29, 1997
<PAGE>
EXHIBIT 3.2
BYLAWS
<TABLE>
<CAPTION>
Page
ARTICLE I.
<S> <C>
MEETING OF STOCKHOLDERS:
Section 1. Annual 1
Section 2. Special 1
Section 3. Notice 1
Section 4. Quorum 1
Section 5. Organization 1
Section 6. Voting 2
Section 7. Inspectors 2
ARTICLE II.
BOARD OF DIRECTORS:
Section 1. Number 2
Section 2. Term 2
Section 3. Increase of Number 2
Section 4. Resignation 2
Section 5. Vacancies 2
Section 6. Regular Meetings 2
Section 7. Special Meetings 3
Section 8. Quorum 3
Section 9. Place of Meeting, Etc. 3
Section 10. Interested Directors; Quorum 3
ARTICLE III.
COMMITTEES OF THE BOARD:
Section 1. Committees 4
Section 2. Procedure 4
Section 3. Reports to the Board 4
Section 4. Strategic Direction Committee 4
Section 5. Audit Committee 5
Section 6 Environmental Policy Committee 5
Section 7. Compensation Committee 5
Section 8. Corporate Governance Committee 5
ARTICLE IV.
OFFICE OF THE CHIEF EXECUTIVE 5
</TABLE>
<PAGE>
EXHIBIT 3.2
<TABLE>
<CAPTION>
Page
ARTICLE V.
<S> <C>
OFFICERS:
Section 1. Officers 6
Section 2. Chairman of the Board 6
Section 3. President 6
Section 4. Executive Vice Presidents 6
Section 5. Vice Presidents 6
Section 6. Senior Vice President - Finance 6
Section 7. Treasurer 6
Section 8. Assistant Treasurer 7
Section 9. Controller 7
Section 10. Assistant Controller 7
Section 11. Secretary 7
Section 12. Assistant Secretary 7
Section 13. Removal 7
Section 14. Resignation 7
Section 15. Vacancies 7
ARTICLE VI.
MISCELLANEOUS:
Section 1. Indemnification of Directors or Officers 8
Section 2. Certificate for Shares 8
Section 3. Transfer of Shares 9
Section 4. Regulations 9
Section 5. Record Date of Stockholders 9
Section 6. Corporate Seal 9
ARTICLE VII.
AMENDMENTS 10
</TABLE>
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
E. I. DU PONT DE NEMOURS AND COMPANY
ARTICLE I.
MEETING OF STOCKHOLDERS
SECTION 1. Annual. Meetings of the stockholders for the purpose of
electing Directors, and transacting such other proper business as may be brought
before the meeting, shall be held annually at such date, time and place, within
or without the State of Delaware as may be designated by the Board of Directors
("Board").
SECTION 2. Special. Special meetings of the stockholders may be called
by the Board and shall be called by the Secretary at the request in writing of
the holders of record of at least twenty-five percent of the outstanding stock
of the corporation entitled to vote. Special meetings shall be held within or
without the State of Delaware, as the Board shall designate.
SECTION 3. Notice. Written notice of each meeting of stockholders,
stating the place, date and hour of the meeting, and the purpose or purposes
thereof, shall be mailed not less than ten nor more than sixty days before the
date of such meeting to each stockholder entitled to vote thereat.
SECTION 4. Quorum. Unless otherwise provided by statute, the holders
of shares of stock entitled to cast a majority of votes at a meeting, present
either in person or by proxy, shall constitute a quorum at such meeting.
Absence of a quorum of the holders of Common Stock or Preferred Stock
at any meeting or adjournment thereof, at which under the Certificate of
Incorporation the holders of Preferred Stock have the right to elect any
Directors, shall not prevent the election of Directors by the other class of
stockholders entitled to elect Directors as a class if the necessary quorum of
stockholders of such other class shall be present in person or by proxy.
SECTION 5. Organization. The Chairman of the Board or, in the
Chairman's absence, the President shall preside at meetings of stockholders. The
Secretary of the Company shall act as Secretary of all meetings of the
stockholders, but in the absence of the Secretary the presiding officer may
appoint a Secretary of the meeting. The order of business for such meetings
shall be determined by the Chairman of the Board, or, in the Chairman's absence,
by the President.
1
<PAGE>
EXHIBIT 3.2
SECTION 6. Voting. Each stockholder entitled to vote at any meeting
shall be entitled to one vote, in person or by written proxy, for each share
held of record. Upon the demand of any stockholder, such stockholder shall be
entitled to vote by ballot. All elections and questions shall be decided by
plurality vote, except as otherwise required by statute.
SECTION 7. Inspectors. At each meeting of the stockholders the polls
shall be opened and closed; the proxies and ballots shall be received and be
taken in charge, and all questions touching the qualification of voters and the
validity of proxies, and the acceptance or rejection of votes shall be decided
by three Inspectors, two of whom shall have power to make a decision. Such
Inspectors shall be appointed by the Board before the meeting, or in default
thereof, by the presiding officer at the meeting, and shall be sworn to the
faithful performance of their duties. If any of the Inspectors previously
appointed shall fail to attend or refuse or be unable to serve, substitutes
shall be appointed by the presiding officer.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 1. Number. The business and affairs of the Company shall be
under the direction of the Board. The number of Directors, which shall not be
less than ten, shall be determined from time to time by the vote of two-thirds
of the whole Board.
SECTION 2. Term. Each Director shall hold office until the next annual
election of Directors and until the Director's successor is elected and
qualified.
SECTION 3. Increase of Number. In case of any increase in the number
of Directors between Annual Meetings of Stockholders, each additional Director
shall be elected by the vote of two-thirds of the whole Board.
SECTION 4. Resignation. A Director may resign at any time by giving
written notice to the Chairman of the Board or the Secretary. The acceptance
thereof shall not be necessary to make it effective; and such resignation shall
take effect at the time specified therein or, in the absence of such
specification, it shall take effect upon the receipt thereof.
SECTION 5. Vacancies. In case of any vacancy in the Board for any
cause, the remaining Directors, by vote of majority of the whole Board, may
elect a successor to hold office for the unexpired term of the Director whose
place is vacant.
SECTION 6. Regular Meetings. Regular meetings of the Board shall be
held at such times as the Board may designate. A notice of each regular meeting
shall not be required.
2
<PAGE>
EXHIBIT 3.2
SECTION 7. Special Meetings. Special meetings of the Board shall be
held whenever called by the direction of the Chairman of the Board, or of one-
third of the Directors.
The Secretary shall give notice of such special meetings by mailing
the same at least two days before the meeting, or by telegraphing the same at
least one day before the meeting to each Director; but such notice may be waived
by any Director. Unless otherwise indicated in the notice thereof, any and all
business may be transacted at a special meeting. At any meeting at which every
Director shall be present, any business may be transacted, irrespective of
notice.
SECTION 8. Quorum. One-third of the Board shall constitute a quorum.
If there be less than a quorum present at any meeting, a majority of those
present may adjourn the meeting from time to time.
Except as otherwise provided by law, the Certificate of Incorporation,
or by these Bylaws, the affirmative vote of a majority of the Directors present
at any meeting at which there is a quorum shall be necessary for the passage of
any resolution.
SECTION 9. Place of Meeting, Etc. The Directors shall hold the
meetings, and may have an office or offices in such place or places within or
outside the State of Delaware as the Board from time to time may determine.
SECTION 10. Interested Directors; Quorum
1) No contract or other transaction between the Company and one or more
of its Directors, or between the Company and any other corporation, partnership,
association, or other organization in which one or more of the Directors of the
Company is a Director or officer, or has a financial interest, shall be void or
voidable, because the Director is present at or participates in the meeting of
the Board or committee thereof which authorizes the contract or transaction, or
solely because such Director's vote is counted for such purpose, if:
(a) the material facts as to such Director's relationship or interest
and as to the contract or transaction are disclosed or are known to the Board or
the committee, and the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
Directors, even though the disinterested Directors be less than a quorum; or
(b) the material facts as to such Director's relationship or interest
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or
3
<PAGE>
EXHIBIT 3.2
(c) the contract or transaction is fair as to the Company as of the
time it is authorized, approved or ratified, by the Board, a committee thereof,
or the stockholders; and
2) Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which
authorizes the contract or transaction.
ARTICLE III.
COMMITTEES OF THE BOARD
SECTION 1. Committees. The Board shall by the affirmative vote of a
majority of the whole Board, elect from the Directors a Strategic Direction
Committee, an Audit Committee, an Environmental Policy Committee, and a
Compensation and Benefits Committee, and may, by resolution passed by a majority
of the whole Board, designate one or more additional committees, each committee
to consist of one or more Directors. The Board shall designate for each of these
committees a Chairman, and, if desired, a Vice Chairman, who shall continue as
such during the pleasure of the Board. The number of members of each committee
shall be determined from time to time by the Board.
SECTION 2. Procedure. Each Committee shall fix its own rules of
procedure and shall meet where and as provided by such rules. A majority of a
committee shall constitute a quorum. In the absence or disqualification of a
member of any committee, the members of such committee present at any meeting,
and not disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in the
place of any such absent or disqualified member.
SECTION 3. Reports To The Board. Each Committee shall keep regular
minutes of its proceedings and shall periodically report to the Board summaries
of the Committee's significant completed actions and such other matters as
requested by the Board.
SECTION 4. Strategic Direction Committee. The Strategic Direction
Committee shall review the Company's strategic direction and overall objectives
and shall have such powers and perform such duties as may be assigned to it from
time to time by the Board.
4
<PAGE>
EXHIBIT 3.2
SECTION 5. Audit Committee. The Audit Committee shall employ
independent public accountants, subject to stockholder ratification at each
annual meeting, review the adequacy of internal controls and the accounting
principles employed in financial reporting, and shall have such power and
perform such duties as may be assigned to it from time to time by the Board.
None of the Members of the Audit Committee shall be an officer or employee of
the Company or its subsidiaries.
SECTION 6. Environmental Policy Committee. The Environmental Policy
Committee shall review the Company's environmental policies and practices and
shall have such powers and perform such duties as may be assigned to it from
time to time by the Board.
SECTION 7. Compensation Committee. The Compensation Committee shall
have the power and authority vested in it by the Compensation Plans of the
Company and shall have such powers and perform such duties as may be assigned to
it from time to time by the Board. None of the members of the Compensation
Committee shall be an officer or employee of the Company or its subsidiaries.
SECTION 8. Corporate Governance Committee. The Corporate Governance
Committee shall recommend to the Board nominees for election as directors of the
Company. The Committee shall also have responsibility for reviewing and making
recommendations to the Board related to matters on corporate governance and
shall have such powers and perform such duties as may be assigned to it from
time to time by the Board. None of the members of the Corporate Governance
Committee shall be an officer or employee of the Company or its subsidiaries.
ARTICLE IV.
OFFICE OF THE CHIEF EXECUTIVE
The Board shall elect an Office of the Chief Executive whose members
shall include the President and such other officers as may be designated by the
Board. The Office of the Chief Executive shall have responsibility for the
strategic direction and operations of all the businesses of the Company and
shall have such powers and perform such duties as may be assigned to it from
time to time by the Board.
All significant completed actions by the Office of the Chief Executive
shall be reported to the Board at the next succeeding Board meeting, or at its
meeting held in the month following the taking of such action.
5
<PAGE>
EXHIBIT 3.2
ARTICLE V.
OFFICERS
SECTION 1. Officers. The officers of the Company shall be a Chairman
of the Board, a President, one or more Executive Vice Presidents, Senior Vice
President - Finance and a Secretary.
The Board and the Office of the Chief Executive, may appoint such
other officers as they deem necessary, who shall have such authority and shall
perform such duties as may be prescribed, respectively, by the Board or the
Office of the Chief Executive.
SECTION 2. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board. The Chairman may
sign and execute all authorized bonds, contracts or other obligations, in the
name of the Company, and with the Treasurer may sign all certificates of the
shares in the capital stock of the Company.
SECTION 3. President. The President shall be the chief executive
officer of the Company and, subject to the Board and the Office of the Chief
Executive, shall have general charge of the business and affairs of the Company
and shall perform such other duties as may be assigned to the President by the
Board or the Chairman of the Board. In the absence or inability to act of the
Chairman of the Board, the President shall perform the duties of the Chairman of
the Board.
SECTION 4. Executive Vice Presidents. Each Executive Vice President
shall have such powers and perform such duties as may be assigned to such
Executive Vice President by the Board or the Office of the Chief Executive.
SECTION 5. Vice Presidents. The Board or the Office of the Chief
Executive may appoint one or more Vice Presidents. Each Vice President shall
have such title, powers and duties as may be assigned to such Vice President by
the Board or the Office of the Chief Executive.
SECTION 6. Senior Vice President - Finance. The Senior Vice
President - Finance shall be the chief financial officer of the Company, and
shall have such powers and perform such duties as may be assigned to such Senior
Vice President - Finance by the Board or the Office of the Chief Executive.
SECTION 7. Treasurer. The Board shall appoint a Treasurer. Under the
general direction of the Senior Vice President - Finance, the Treasurer shall
have such powers and perform such duties as may be assigned to such Treasurer by
the Board or the Office of the Chief Executive.
6
<PAGE>
EXHIBIT 3.2
SECTION 8. Assistant Treasurer. The Board or the Office of the Chief
Executive may appoint one or more Assistant Treasurers. Each Assistant Treasurer
shall have such powers and shall perform such duties as may be assigned to such
Assistant Treasurer by the Board or the Office of the Chief Executive.
SECTION 9. Controller. The Board may appoint a Controller. Under the
general direction of the Senior Vice President - Finance, the Controller shall
have such powers and perform such duties as may be assigned to such Controller
by the Board or the Office of the Chief Executive.
SECTION 10. Assistant Controller. The Board or the Office of the Chief
Executive may appoint one or more Assistant Controllers. Each Assistant
Controller shall have such powers and shall perform such duties as may be
assigned to such Assistant Controller by the Board or the Office of the Chief
Executive.
SECTION 11. Secretary. The Secretary shall keep the minutes of all the
meetings of the Board and the minutes of all the meetings of the stockholders;
the Secretary shall attend to the giving and serving of all notices of meetings
as required by law or these Bylaws; the Secretary shall affix the seal of the
Company to any instruments when so required; and the Secretary shall in general
perform all the corporate duties incident to the office of Secretary, subject to
the control of the Board or the Chairman of the Board, and such other duties as
may be assigned to the Secretary by the Board or the Chairman of the Board.
SECTION 12. Assistant Secretary. The Board or the Office of the Chief
Executive may appoint one or more Assistant Secretaries. Each Assistant
Secretary shall have such powers and shall perform such duties as may be
assigned to such Assistant Secretary by the Board or the Chairman of the Board
or the President; and such Assistant Secretary shall affix the seal of the
Company to any instruments when so required.
SECTION 13. Removal. All officers may be removed or suspended at any
time by the vote of the majority of the whole Board. All officers, agents and
employees, other than officers elected or appointed by the Board, may be
suspended or removed by the committee or by the officer appointing them.
SECTION 14. Resignation. Any officer may resign at any time by giving
written notice to the Chairman of the Board, the President or the Secretary.
Unless otherwise stated in such notice of resignation, the acceptance thereof
shall not be necessary to make it effective; and such resignation shall take
effect at the time specified therein or, in the absence of such specification,
it shall take effect upon the receipt thereof.
SECTION 15. Vacancies. A vacancy in any office shall be filled in the
same manner as provided for election or appointment to such office.
7
<PAGE>
EXHIBIT 3.2
ARTICLE VI.
MISCELLANEOUS
SECTION 1. Indemnification of Directors or Officers. Each person who
is or was a Director or officer of the Company (including the heirs, executors,
administrators or estate of such person) shall be indemnified by the Company as
of right to the full extent permitted by the General Corporation Law of Delaware
against any liability, cost or expense asserted against such Director or officer
and incurred by such Director or officer by reason of the fact that such person
is or was a Director or officer. The right to indemnification conferred by this
Section shall include the right to be paid by the Company the expenses incurred
in defending in any action, suit or proceeding in advance of its final
disposition, subject to the receipt by the Company of such undertakings as might
be required of an indemnitee by the General Corporation Law of Delaware.
In any action by an indemnitee to enforce a right to indemnification
hereunder or by the Company to recover advances made hereunder, the burden of
proving that the indemnitee is not entitled to be indemnified shall be on the
Company. In such an action, neither the failure of the Company (including its
Board, independent legal counsel or stockholders) to have made a determination
that indemnification is proper, nor a determination by the Company that
indemnification is improper, shall create a presumption that the indemnitee is
not entitled to be indemnified or, in the case of such an action brought by the
indemnitee, be a defense thereto. If successful in whole or in part in such an
action, an indemnitee shall be entitled to be paid also the expense of
prosecuting or defending same. The Company may, but shall not be obligated to,
maintain insurance at its expense, to protect itself and any such person against
any such liability, cost or expense.
SECTION 2. Certificate for Shares. The certificate for shares of the
capital stock of the Company shall be in such form, not inconsistent with the
Certificate of Incorporation as shall be prescribed by the Board. Every
stockholder shall have a certificate signed by the Chairman of the Board, the
President or an Executive Vice President, and the Treasurer, certifying the
number of shares owned by such stockholder in the Company, provided that if any
such certificate is countersigned by a transfer agent or registrar other than
the Company or its employee, then and other signature on the certificate may be
a facsimile.
The name of the person owning the shares represented thereby, with the
number of such shares and the date of issue, shall be entered on the Company's
books.
8
<PAGE>
EXHIBIT 3.2
All certificates surrendered to the Company shall be cancelled, and no
new certificates shall be issued until the former certificate for the same
number of shares of the same class shall have been surrendered and cancelled,
except that the Board may determine, from time to time, the conditions and
provisions on which new certificates may be used in substitution of any
certificates that may have been lost, stolen or destroyed.
SECTION 3. Transfer of Shares. Shares in the capital stock of the
Company shall be transferred by the record holder thereof, in person, or by any
such person's attorney upon surrender and cancellation of certificates for a
like number of shares.
SECTION 4. Regulations. The Board also may make rules and regulations
concerning the issue, transfer and registration of certificates for shares of
the capital stock of the Company.
The Board may appoint one or more transfer agents and one or more
registrars of transfers, and may require all stock certificates to bear the
signature of a transfer agent and a registrar of transfer.
SECTION 5. Record Date of Stockholders. The Board may fix in advance a
date, not exceeding sixty days preceding the date of any meeting of
stockholders, or the date for the payment of any dividend or other distribution,
or the date for the allotment of rights, or the date when any change or
conversion or exchange of capital stock shall go into effect, as a record date
for the determination of the stockholders entitled to notice of, and to vote at,
any such meeting, or entitled to receive payment of any such dividend or other
distribution, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, and in such
case only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, such meeting, or to
receive any such dividend or other distribution, or to receive such allotment of
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any stock on the books of the Company after such record date fixed
as aforesaid.
SECTION 6. Corporate Seal. The seal of the Company shall be circular
in form, containing the words "E. I. DU PONT DE NEMOURS AND CO." and "DELAWARE"
on the circumference, surrounding the words "FOUNDED" and "SEAL," and the date
"1802."
The seal shall be in the custody of the Secretary. A duplicate of the
seal may be kept and used by the Senior Vice President - Finance, any Vice
President - DuPont Finance, the Treasurer, or by any Assistant Secretary or
Assistant Treasurer.
9
<PAGE>
EXHIBIT 3.2
ARTICLE VII.
AMENDMENTS
The Board shall have the power to adopt, amend and repeal the Bylaws
of the Company, by a vote of the majority of the whole Board, at any regular or
special meeting of the Board, provided that notice of intention to adopt, amend
or repeal the Bylaws in whole or in part shall have been given at the next
preceding meeting, or, without any such notice, by the vote of two-thirds of the
whole Board.
I hereby certify that the foregoing is a true and correct copy of the Bylaws of
E. I. du Pont de Nemours and Company.
Witness my hand and the corporate seal of the Company this day of
---------
199 .
- ------------------ --
----------------------------
Secretary
10
<PAGE>
EXHIBIT 3.3
BYLAWS
OF
E. I. DU PONT DE NEMOURS AND COMPANY
------------------------------------
Incorporated Under The Laws of Delaware
AS REVISED December 1, 1996
<PAGE>
EXHIBIT 3.3
BYLAWS
Page
ARTICLE I.
MEETING OF STOCKHOLDERS:
Section 1. Annual 1
Section 2. Special 1
Section 3. Notice 1
Section 4. Quorum 1
Section 5. Organization 1
Section 6. Voting 2
Section 7. Inspectors 2
ARTICLE II.
BOARD OF DIRECTORS:
Section 1. Number 2
Section 2. Term 2
Section 3. Increase of Number 2
Section 4. Resignation 2
Section 5. Vacancies 2
Section 6. Regular Meetings 2
Section 7. Special Meetings 3
Section 8. Quorum 3
Section 9. Place of Meeting, Etc. 3
Section 10. Interested Directors; Quorum 3
ARTICLE III.
COMMITTEES OF THE BOARD:
Section 1. Committees 4
Section 2. Procedure 4
Section 3. Reports to the Board 4
Section 4. Strategic Direction Committee 4
Section 5. Audit Committee 5
Section 6 Environmental Policy Committee 5
Section 7. Compensation and Benefits Committee 5
ARTICLE IV.
OFFICE OF THE CHIEF EXECUTIVE 5
<PAGE>
EXHIBIT 3.3
Page
ARTICLE V.
OFFICERS:
Section 1. Officers 5
Section 2. Chairman of the Board 6
Section 3. President 6
Section 4. Executive Vice Presidents 6
Section 5. Vice Presidents 6
Section 6. Senior Vice President - Finance 6
Section 7. Treasurer 6
Section 8. Assistant Treasurer 6
Section 9. Controller 7
Section 10. Assistant Controller 7
Section 11. Secretary 7
Section 12. Assistant Secretary 7
Section 13. Removal 7
Section 14. Resignation 7
Section 15. Vacancies 7
ARTICLE VI.
MISCELLANEOUS:
Section 1. Indemnification of Directors or Officers 8
Section 2. Certificate for Shares 8
Section 3. Transfer of Shares 9
Section 4. Regulations 9
Section 5. Record Date of Stockholders 9
Section 6. Corporate Seal 9
ARTICLE VII.
AMENDMENTS 10
<PAGE>
EXHIBIT 3.3
BYLAWS
OF
E. I. DU PONT DE NEMOURS AND COMPANY
ARTICLE I.
MEETING OF STOCKHOLDERS
SECTION 1. Annual. Meetings of the stockholders for the purpose of
electing Directors, and transacting such other proper business as may be brought
before the meeting, shall be held annually at such date, time and place, within
or without the State of Delaware as may be designated by the Board of Directors
("Board").
SECTION 2. Special. Special meetings of the stockholders may be called
by the Board and shall be called by the Secretary at the request in writing of
the holders of record of at least twenty-five percent of the outstanding stock
of the corporation entitled to vote. Special meetings shall be held within or
without the State of Delaware, as the Board shall designate.
SECTION 3. Notice. Written notice of each meeting of stockholders,
stating the place, date and hour of the meeting, and the purpose or purposes
thereof, shall be mailed not less than ten nor more than sixty days before the
date of such meeting to each stockholder entitled to vote thereat.
SECTION 4. Quorum. Unless otherwise provided by statute, the holders
of shares of stock entitled to cast a majority of votes at a meeting, present
either in person or by proxy, shall constitute a quorum at such meeting.
Absence of a quorum of the holders of Common Stock or Preferred Stock
at any meeting or adjournment thereof, at which under the Certificate of
Incorporation the holders of Preferred Stock have the right to elect any
Directors, shall not prevent the election of Directors by the other class of
stockholders entitled to elect Directors as a class if the necessary quorum of
stockholders of such other class shall be present in person or by proxy.
SECTION 5. Organization. The Chairman of the Board or, in the
Chairman's absence, the President shall preside at meetings of stockholders. The
Secretary of the Company shall act as Secretary of all meetings of the
stockholders, but in the absence of the Secretary the presiding officer may
appoint a Secretary of the meeting. The order of business for such meetings
shall be determined by the Chairman of the Board, or, in the Chairman's absence,
by the President.
1
<PAGE>
EXHIBIT 3.3
SECTION 6. Voting. Each stockholder entitled to vote at any meeting
shall be entitled to one vote, in person or by written proxy, for each share
held of record. Upon the demand of any stockholder, such stockholder shall be
entitled to vote by ballot. All elections and questions shall be decided by
plurality vote, except as otherwise required by statute.
SECTION 7. Inspectors. At each meeting of the stockholders the polls
shall be opened and closed; the proxies and ballots shall be received and be
taken in charge, and all questions touching the qualification of voters and the
validity of proxies, and the acceptance or rejection of votes shall be decided
by three Inspectors, two of whom shall have power to make a decision. Such
Inspectors shall be appointed by the Board before the meeting, or in default
thereof, by the presiding officer at the meeting, and shall be sworn to the
faithful performance of their duties. If any of the Inspectors previously
appointed shall fail to attend or refuse or be unable to serve, substitutes
shall be appointed by the presiding officer.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 1. Number. The business and affairs of the Company shall be
under the direction of the Board. The number of Directors, which shall not be
less than ten, shall be determined from time to time by the vote of two-thirds
of the whole Board.
SECTION 2. Term. Each Director shall hold office until the next annual
election of Directors and until the Director's successor is elected and
qualified.
SECTION 3. Increase of Number. In case of any increase in the number
of Directors between Annual Meetings of Stockholders, each additional Director
shall be elected by the vote of two-thirds of the whole Board.
SECTION 4. Resignation. A Director may resign at any time by giving
written notice to the Chairman of the Board or the Secretary. The acceptance
thereof shall not be necessary to make it effective; and such resignation shall
take effect at the time specified therein or, in the absence of such
specification, it shall take effect upon the receipt thereof.
SECTION 5. Vacancies. In case of any vacancy in the Board for any
cause, the remaining Directors, by vote of majority of the whole Board, may
elect a successor to hold office for the unexpired term of the Director whose
place is vacant.
SECTION 6. Regular Meetings. Regular meetings of the Board shall be
held at such times as the Board may designate. A notice of each regular meeting
shall not be required.
2
<PAGE>
EXHIBIT 3.3
SECTION 7. Special Meetings. Special meetings of the Board shall be
held whenever called by the direction of the Chairman of the Board, or of one-
third of the Directors.
The Secretary shall give notice of such special meetings by mailing
the same at least two days before the meeting, or by telegraphing the same at
least one day before the meeting to each Director; but such notice may be waived
by any Director. Unless otherwise indicated in the notice thereof, any and all
business may be transacted at a special meeting. At any meeting at which every
Director shall be present, any business may be transacted, irrespective of
notice.
SECTION 8. Quorum. One-third of the Board shall constitute a quorum.
If there be less than a quorum present at any meeting, a majority of those
present may adjourn the meeting from time to time.
Except as otherwise provided by law, the Certificate of Incorporation,
or by these Bylaws, the affirmative vote of a majority of the Directors present
at any meeting at which there is a quorum shall be necessary for the passage of
any resolution.
SECTION 9. Place of Meeting, Etc. The Directors shall hold the
meetings, and may have an office or offices in such place or places within or
outside the State of Delaware as the Board from time to time may determine.
SECTION 10. Interested Directors; Quorum
1) No contract or other transaction between the Company and one or more
of its Directors, or between the Company and any other corporation, partnership,
association, or other organization in which one or more of the Directors of the
Company is a Director or officer, or has a financial interest, shall be void or
voidable, because the Director is present at or participates in the meeting of
the Board or committee thereof which authorizes the contract or transaction, or
solely because such Director's vote is counted for such purpose, if:
(a) the material facts as to such Director's relationship or interest
and as to the contract or transaction are disclosed or are known to the Board or
the committee, and the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
Directors, even though the disinterested Directors be less than a quorum; or
(b) the material facts as to such Director's relationship or interest
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or
3
<PAGE>
EXHIBIT 3.3
(c) the contract or transaction is fair as to the Company as of the time
it is authorized, approved or ratified, by the Board, a committee thereof, or
the stockholders; and
2) Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board or of a committee which
authorizes the contract or transaction.
ARTICLE III.
COMMITTEES OF THE BOARD
SECTION 1. Committees. The Board shall by the affirmative vote of a
majority of the whole Board, elect from the Directors a Strategic Direction
Committee, an Audit Committee, an Environmental Policy Committee, and a
Compensation and Benefits Committee, and may, by resolution passed by a majority
of the whole Board, designate one or more additional committees, each committee
to consist of one or more Directors. The Board shall designate for each of these
committees a Chairman, and, if desired, a Vice Chairman, who shall continue as
such during the pleasure of the Board. The number of members of each committee
shall be determined from time to time by the Board.
SECTION 2. Procedure. Each Committee shall fix its own rules of
procedure and shall meet where and as provided by such rules. A majority of a
committee shall constitute a quorum. In the absence or disqualification of a
member of any committee, the members of such committee present at any meeting,
and not disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in the
place of any such absent or disqualified member.
SECTION 3. Reports To The Board. Each Committee shall keep regular
minutes of its proceedings and shall periodically report to the Board summaries
of the Committee's significant completed actions and such other matters as
requested by the Board.
SECTION 4. Strategic Direction Committee. The Strategic Direction
Committee shall review the Company's strategic direction and overall objectives
and shall have such powers and perform such duties as may be assigned to it from
time to time by the Board.
4
<PAGE>
EXHIBIT 3.3
SECTION 5. Audit Committee. The Audit Committee shall employ
independent public accountants, subject to stockholder ratification at each
annual meeting, review the adequacy of internal accounting controls and the
accounting principles employed in financial reporting, and shall have such power
and perform such duties as may be assigned to it from time to time by the Board.
None of the Members of the Audit Committee shall be an officer or employee of
the Company or its subsidiaries.
SECTION 6. Environmental Policy Committee. The Environmental Policy
Committee shall review the Company's environmental policies and practices and
shall have such powers and perform such duties as may be assigned to it from
time to time by the Board.
SECTION 7. Compensation and Benefits Committee. The Compensation and
Benefits Committee shall have the power and authority vested in it by the
Compensation Plans of the Company and shall have such powers and perform such
duties as may be assigned to it from time to time by the Board. None of the
members of the Compensation and Benefits Committee shall be an officer or
employee of the Company or its subsidiaries.
ARTICLE IV.
OFFICE OF THE CHIEF EXECUTIVE
The Board shall elect an Office of the Chief Executive whose members
shall include the President and such other officers as may be designated by the
Board. The Office of the Chief Executive shall have responsibility for the
strategic direction and operations of all the businesses of the Company and
shall have such powers and perform such duties as may be assigned to it from
time to time by the Board.
All significant completed actions by the Office of the Chief
Executive shall be reported to the Board at the next succeeding Board meeting,
or at its meeting held in the month following the taking of such action.
ARTICLE V.
OFFICERS
SECTION 1. Officers. The officers of the Company shall be a Chairman
of the Board, a President, one or more Executive Vice Presidents, Senior Vice
President - Finance and a Secretary.
5
<PAGE>
EXHIBIT 3.3
The Board and the Office of the Chief Executive, may appoint such
other officers as they deem necessary, who shall have such authority and shall
perform such duties as may be prescribed, respectively, by the Board or the
Office of the Chief Executive.
SECTION 2. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board. The Chairman may
sign and execute all authorized bonds, contracts or other obligations, in the
name of the Company, and with the Treasurer may sign all certificates of the
shares in the capital stock of the Company.
SECTION 3. President. The President shall be the chief executive
officer of the Company and, subject to the Board and the Office of the Chief
Executive, shall have general charge of the business and affairs of the Company
and shall perform such other duties as may be assigned to the President by the
Board or the Chairman of the Board. In the absence or inability to act of the
Chairman of the Board, the President shall perform the duties of the Chairman of
the Board.
SECTION 4. Executive Vice Presidents. Each Executive Vice President
shall have such powers and perform such duties as may be assigned to such
Executive Vice President by the Board or the Office of the Chief Executive.
SECTION 5. Vice Presidents. The Board or the Office of the Chief
Executive may appoint one or more Vice Presidents. Each Vice President shall
have such title, powers and duties as may be assigned to such Vice President by
the Board or the Office of the Chief Executive.
SECTION 6. Senior Vice President - Finance. The Senior Vice
President - Finance shall be the chief financial officer of the Company, and
shall have such powers and perform such duties as may be assigned to such
Senior Vice President - Finance by the Board or the Office of the Chief
Executive.
SECTION 7. Treasurer. The Board shall appoint a Treasurer. Under the
general direction of the Senior Vice President - Finance, the Treasurer shall
have such powers and perform such duties as may be assigned to such Treasurer by
the Board or the Office of the Chief Executive.
SECTION 8. Assistant Treasurer. The Board or the Office of the Chief
Executive may appoint one or more Assistant Treasurers. Each Assistant Treasurer
shall have such powers and shall perform such duties as may be assigned to such
Assistant Treasurer by the Board or the Office of the Chief Executive.
6
<PAGE>
EXHIBIT 3.3
SECTION 9. Controller. The Board may appoint a Controller. Under the
general direction of the Senior Vice President - Finance, the Controller shall
have such powers and perform such duties as may be assigned to such Controller
by the Board or the Office of the Chief Executive.
SECTION 10. Assistant Controller. The Board or the Office of the
Chief Executive may appoint one or more Assistant Controllers. Each Assistant
Controller shall have such powers and shall perform such duties as may be
assigned to such Assistant Controller by the Board or the Office of the Chief
Executive.
SECTION 11. Secretary. The Secretary shall keep the minutes of all
the meetings of the Board and the minutes of all the meetings of the
stockholders; the Secretary shall attend to the giving and serving of all
notices of meetings as required by law or these Bylaws; the Secretary shall
affix the seal of the Company to any instruments when so required; and the
Secretary shall in general perform all the corporate duties incident to the
office of Secretary, subject to the control of the Board or the Chairman of the
Board, and such other duties as may be assigned to the Secretary by the Board or
the Chairman of the Board.
SECTION 12. Assistant Secretary. The Board or the Office of the Chief
Executive may appoint one or more Assistant Secretaries. Each Assistant
Secretary shall have such powers and shall perform such duties as may be
assigned to such Assistant Secretary by the Board or the Chairman of the Board
or the President; and such Assistant Secretary shall affix the seal of the
Company to any instruments when so required.
SECTION 13. Removal. All officers may be removed or suspended at any
time by the vote of the majority of the whole Board. All officers, agents and
employees, other than officers elected or appointed by the Board, may be
suspended or removed by the committee or by the officer appointing them.
SECTION 14. Resignation. Any officer may resign at any time by giving
written notice to the Chairman of the Board, the President or the Secretary.
Unless otherwise stated in such notice of resignation, the acceptance thereof
shall not be necessary to make it effective; and such resignation shall take
effect at the time specified therein or, in the absence of such specification,
it shall take effect upon the receipt thereof.
SECTION 15. Vacancies. A vacancy in any office shall be filled in the
same manner as provided for election or appointment to such office.
7
<PAGE>
EXHIBIT 3.3
ARTICLE VI.
MISCELLANEOUS
SECTION 1. Indemnification of Directors or Officers. Each person who
is or was a Director or officer of the Company (including the heirs, executors,
administrators or estate of such person) shall be indemnified by the Company as
of right to the full extent permitted by the General Corporation Law of Delaware
against any liability, cost or expense asserted against such Director or officer
and incurred by such Director or officer by reason of the fact that such person
is or was a Director or officer. The right to indemnification conferred by this
Section shall include the right to be paid by the Company the expenses incurred
in defending in any action, suit or proceeding in advance of its final
disposition, subject to the receipt by the Company of such undertakings as might
be required of an indemnitee by the General Corporation Law of Delaware.
In any action by an indemnitee to enforce a right to indemnification
hereunder or by the Company to recover advances made hereunder, the burden of
proving that the indemnitee is not entitled to be indemnified shall be on the
Company. In such an action, neither the failure of the Company (including its
Board, independent legal counsel or stockholders) to have made a determination
that indemnification is proper, nor a determination by the Company that
indemnification is improper, shall create a presumption that the indemnitee is
not entitled to be indemnified or, in the case of such an action brought by the
indemnitee, be a defense thereto. If successful in whole or in part in such an
action, an indemnitee shall be entitled to be paid also the expense of
prosecuting or defending same. The Company may, but shall not be obligated to,
maintain insurance at its expense, to protect itself and any such person against
any such liability, cost or expense.
SECTION 2. Certificate for Shares. The certificate for shares of the
capital stock of the Company shall be in such form, not inconsistent with the
Certificate of Incorporation as shall be prescribed by the Board. Every
stockholder shall have a certificate signed by the Chairman of the Board, the
President or an Executive Vice President, and the Treasurer, certifying the
number of shares owned by such stockholder in the Company, provided that if any
such certificate is countersigned by a transfer agent or registrar other than
the Company or its employee, then and other signature on the certificate may be
a facsimile.
The name of the person owning the shares represented thereby, with
the number of such shares and the date of issue, shall be entered on the
Company's books.
8
<PAGE>
EXHIBIT 3.3
All certificates surrendered to the Company shall be cancelled, and
no new certificates shall be issued until the former certificate for the same
number of shares of the same class shall have been surrendered and cancelled,
except that the Board may determine, from time to time, the conditions and
provisions on which new certificates may be used in substitution of any
certificates that may have been lost, stolen or destroyed.
SECTION 3. Transfer of Shares. Shares in the capital stock of the
Company shall be transferred by the record holder thereof, in person, or by any
such person's attorney upon surrender and cancellation of certificates for a
like number of shares.
SECTION 4. Regulations. The Board also may make rules and regulations
concerning the issue, transfer and registration of certificates for shares of
the capital stock of the Company.
The Board may appoint one or more transfer agents and one or more
registrars of transfers, and may require all stock certificates to bear the
signature of a transfer agent and a registrar of transfer.
SECTION 5. Record Date of Stockholders. The Board may fix in advance
a date, not exceeding sixty days preceding the date of any meeting of
stockholders, or the date for the payment of any dividend or other distribution,
or the date for the allotment of rights, or the date when any change or
conversion or exchange of capital stock shall go into effect, as a record date
for the determination of the stockholders entitled to notice of, and to vote at,
any such meeting, or entitled to receive payment of any such dividend or other
distribution, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, and in such
case only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, such meeting, or to
receive any such dividend or other distribution, or to receive such allotment of
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any stock on the books of the Company after such record date fixed
as aforesaid.
SECTION 6. Corporate Seal. The seal of the Company shall be circular
in form, containing the words "E. I. DU PONT DE NEMOURS AND CO." and "DELAWARE"
on the circumference, surrounding the words "FOUNDED" and "SEAL," and the date
"1802."
The seal shall be in the custody of the Secretary. A duplicate of the
seal may be kept and used by the Senior Vice President - Finance, any Vice
President - DuPont Finance, the Treasurer, or by any Assistant Secretary or
Assistant Treasurer.
9
<PAGE>
EXHIBIT 3.3
ARTICLE VII.
AMENDMENTS
The Board shall have the power to adopt, amend and repeal the Bylaws
of the Company, by a vote of the majority of the whole Board, at any regular or
special meeting of the Board, provided that notice of intention to adopt, amend
or repeal the Bylaws in whole or in part shall have been given at the next
preceding meeting, or, without any such notice, by the vote of two-thirds of the
whole Board.
I hereby certify that the foregoing is a true and correct copy of the Bylaws of
E. I. du Pont de Nemours and Company.
Witness my hand and the corporate seal of the Company this
day of 199 .
- ------------ ------------------ --
-------------------------------------
Secretary
10
<PAGE>
EXHIBIT 10.1
CORPORATE SHARING PLAN
Originally Adopted - November 28, 1990
Last Amended - August 28, 1991
E. I. du Pont de Nemours and Company
<PAGE>
EXHIBIT 10.1
CORPORATE SHARING PLAN
I. PURPOSE
The purpose of this Corporate Sharing Plan (the "Plan") is to offer
employees a favorable opportunity to share in the success of E. I. du Pont de
Nemours and Company (the "Company") through stock options, thereby giving them a
stake in the growth and prosperity of the Company and benefiting the Company.
II. FORM OF AWARDS
1. Awards under this Plan may be granted in the form of stock options.
2. Stock options to purchase shares of the Company's common stock granted
under this Plan will be stock options that are not incentive stock
options qualified under the Internal Revenue Code ("nonqualified stock
options").
III. LIMITATIONS ON AWARDS
1. The aggregate number of shares of the Company's stock which may be
made subject to stock options granted under this Plan shall not exceed
15,000,000. The limitations set forth above shall be subject to
adjustment as provided in Article XII thereof.
2. No awards may be granted under this Plan after December 31, 1991.
IV. ADMINISTRATION
1. Except as otherwise specifically provided, the Plan shall be
administered by the Compensation Committee of the Company's Board of
Directors. The Compensation Committee shall be elected pursuant to the
Bylaws of the Company, and the members thereof shall be ineligible for
awards while serving on said Committee.
2. The Compensation 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.
3. The Compensation Committee shall, subject to the provisions of the
Plan, determine the time when stock options will be granted, which
employees of the Company, if any, shall be granted stock options, when
they shall be exercisable, the number of shares to be covered by each
stock option, and the terms and conditions of such stock options.
1
<PAGE>
EXHIBIT 10.1
4. The decision of the Compensation Committee with respect to any
questions arising as to interpretation of this Plan, including the
severability of any or all of the provisions thereof, shall be final,
conclusive and binding.
5. Nothing in this Plan shall be deemed to give any employee, or any
employee's legal representatives or assigns, any right to participate
in the Plan except to such extent, if any, as the Committee may have
determined or approved pursuant to the provisions of this Plan.
V. ELIGIBILITY FOR AWARDS
1. Awards under this Plan may be granted to employees of the Company as
determined by the Compensation Committee.
2. The term "employee" may include an employee of a corporation or other
business entity in which this Company shall directly or indirectly own
fifty percent or more of the outstanding voting stock or other
ownership interest (the term "sharing plan company" as used in this
Plan shall mean a business entity whose employees are eligible for
awards under this Plan), but shall exclude any director who is not
also an officer or a full-time employee of a sharing plan company. The
term "optionee" as used in this Plan means an employee to whom a stock
option award has been granted under this Plan or, where appropriate,
his or her successor in interest upon death.
VI. GRANTING OF AWARDS
1. Any award granted to an employee shall be made by the Compensation
Committee which shall take final action on any such award.
2. Awards may be granted at any time under this Plan and in the form
provided in Article II hereof.
3. The date on which an award shall be deemed to have been granted under
this Plan shall be the date of the Compensation Committee
authorization of the award or such later date as may be determined by
the Compensation Committee at the time the award is authorized. Each
optionee shall be advised in writing by the Company of an award and
the terms and conditions thereof, which terms and conditions, as the
Compensation Committee from time to time shall determine, shall not be
inconsistent with the provisions of this Plan.
VII. GRANT PRICE
The price per share of the Company's common stock which may be
purchased upon exercise of a stock option granted under this Plan shall be
determined by the Compensation Committee, but shall in no event be less than the
fair market value of
2
<PAGE>
EXHIBIT 10.1
such share on the date the stock option is granted, and in no event less than
the par value thereof. For purposes of the grant price, fair market value shall
be the average of the high and low prices of the Company's common stock as
reported on the "NYSE-Composite Transactions Tape" on the date of grant 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 Article XII hereof.
VIII. OPTION TERM
The term of each stock option granted under this Plan shall be for
such period as the Compensation Committee shall determine, but not for more than
ten years from date of grant.
IX. EXERCISE OF OPTIONS
1. 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 Compensation Committee may
determine. However, in no event shall a stock option be exercisable
prior to one year from date of grant, except for death or retirement
pursuant to the provisions of the pension or retirement plan or policy
of a sharing plan company or termination of employment by such company
pursuant to a designated company initiated program or due to
divestiture or lack of work, in which event the minimum period for
exercise from date of grant shall be nine months. The Compensation
Committee may fix from time to time a minimum number of shares which
must be purchased at the time a stock option is exercised.
2. At optionee electing to exercise a stock option shall at the time of
exercise pay the Company the full purchase price of the shares he or
she has elected to purchase. Payment of the purchase price shall be
made in cash. With respect to shares of the Company's common stock to
be delivered upon exercise of a stock option, the Finance Committee of
the Company's Board of Directors 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.
X. NONTRANSFERABILITY OF AWARDS
During an optionee's lifetime no stock option granted under this Plan
shall be transferable and stock options may be exercised only by the optionee.
XI. TERMINATION OF EMPLOYMENT
The Compensation Committee shall determine the rules relating to
rights under stock options upon termination of employment.
3
<PAGE>
EXHIBIT 10.1
XII. ADJUSTMENTS
1. In the event of any stock dividend, split-up, reclassification or
other analogous change in capitalization, the Compensation Committee
shall make such adjustments, in the light of the change, as it deems
to be equitable, both to the optionees and to the Company, in -
(a) the number of shares and prices per share applicable to
outstanding stock options,
(b) the aggregate limitation set forth in Article III with respect to
the number of shares which may be made subject to 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 Compensation Committee shall make such adjustments,
in the light of the distribution, as it deems to be equitable, both to
the optionees and to the Company, in respect of the items described in
(a) above.
2. Any fractional shares resulting from adjustments made pursuant to
this Article shall be eliminated.
XIII. AMENDMENTS
The Company reserves the right to change this Plan in its discretion
by action of the Compensation Committee or discontinue this Plan in its
discretion by action of the Board of Directors.
4
<PAGE>
EXHIBIT 10.3
SUPPLEMENTAL RETIREMENT INCOME PLAN
Originally Adopted - August 21, 1978
Last Amended - June 4, 1996
E. I. du Pont de Nemours and Company
<PAGE>
EXHIBIT 10.3
SUPPLEMENTAL RETIREMENT INCOME PLAN
-----------------------------------
I. PURPOSE
The purpose of this Plan is to supplement an employee's pension
payable under the Company's Pension and Retirement Plan to provide Monthly
Retirement Income which represents an appropriate percentage of Average total
Monthly Pay. Supplemental retirement income generally will be provided under the
Plan to those eligible employees for whom awards under the Variable Compensation
Plan, the Incentive Compensation Plan or the former Dividend Unit Plan of the
Company are a significant part of Average Total Monthly Pay.
II. ELIGIBILITY
An employee whose effective date of retirement is after August 1, 1977
will participate in this Plan.
1. To the extent of the benefits provided herein if he is eligible for an
unreduced monthly pension payable under Section IV (the Normal,
Incapability, Early or Optional Retirement provisions) of the
Company's Pension and Retirement Plan; or
2. To the extent deemed appropriate by the Compensation and Benefits
Committee or its delegate if he is eligible for a reduced monthly
pension payable under Section IV (the Early or Optional Retirement
provisions) of the Company's Pension and Retirement Plan.
III. AMOUNT OF SUPPLEMENTAL RETIREMENT INCOME
A. The amount of monthly supplemental retirement income payable to an
employee will be the excess, if any, of (1) the employee's Monthly
Retirement Income, as determined under paragraph B of this Section,
over (2) the employee's monthly pension under the Company's Pension
and Retirement Plan, as determined under paragraph C of this Section.
B. The amount of an employee's Monthly Retirement Income will be Average
Total Monthly Pay multiplied by the applicable percentage factor from
the following table, minus 50% of Primary Social Security Benefit.
1
<PAGE>
EXHIBIT 10.3
<TABLE>
<CAPTION>
Average Years of Service
Total ------------------------------------------------------------
Monthly Pay 40 &
(in thousands) 15 20 25 30 35 Over
- -------------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
$15 & Under 20.8% 27.6% 34.4% 41.2% 48.0% 54.8%
20 19.5 26.3 33.1 39.9 46.7 53.5
30 19.2 25.9 32.5 39.1 45.7 52.3
40 19.1 25.5 32.0 38.5 44.9 51.4
50 19.0 25.4 31.8 38.3 44.7 51.2
80 & Over 18.9 25.2 31.6 37.9 44.3 50.7
</TABLE>
For intermediate Average Total Monthly Pay and Service combinations,
the percentage factor will be interpolated from the above.
================================================================================
The amount determined above may not be greater than 50% of Average
Total Monthly Pay.
C. The amount of an employee's monthly pension taken into account under
paragraph A of this Section will be the benefit, exclusive of any
supplement for Incapability Retirement, determined without regard to
the limitations imposed under paragraphs A(2)(b)(iii) and A(2)(b)(v)
and D of Section IX of the Company's Pension and Retirement Plan and
prior to any adjustment on account of (1) Early or Optional
Retirement, (2) the Income-Leveling option, (3) any spouse or survivor
benefit provision, or (4) benefits to which an employee is entitled
from any other private organization or from, or under the law of, any
foreign government.
D. If an employee's monthly pension under the Company's Pension and
Retirement Plan is reduced in accordance with the Early or Optional
Retirement provisions of that Plan, the same percentage reduction
factor used in that Plan will be applied to the monthly supplemental
retirement income determined under paragraph A of this Section.
2
<PAGE>
EXHIBIT 10.3
E. If the limitation set forth in Section IX.A(2)(b)(iii) of the
Company's Pension and Retirement Plan relating to any deferred
Variable Compensation Award has been applied, effective January 1,
1996, the amount of monthly supplemental retirement income payable to
an employee under this Plan will include the amount of pension benefit
attributable to the deferred Variable Compensation Award.
IV. PAYMENTS OF BENEFITS
A. Subject to paragraphs B and C below, an eligible employee will be
entitled to monthly supplemental retirement income payments for the
period beginning on the day after he retires under the Company's
Pension and Retirement Plan and ending on the last day of the month in
which he dies.
B. If the monthly supplemental retirement income is or becomes less than
or equal to the minimum monthly payment amount fixed by the Board of
Benefits and Pensions, the actuarial equivalent of all such remaining
monthly payments shall be paid in a lump sum.
C. An eligible employee may irrevocably elect under rules prescribed by
the Board of Benefits and Pensions to receive the actuarial equivalent
of all or part of the monthly supplemental retirement income in a lump
sum.
D. Except as otherwise provided, benefits under this Plan are determined
based on the Plan in effect at the time of retirement.
V. DEFINITIONS AND GENERAL CONDITIONS
A. Definitions
1. All terms used in this Plan which are defined in the Company's
Pension and Retirement Plan will have the same meaning for
purposes of this Plan except as expressly provided herein.
2. (a) The term "Average Total Monthly Pay" means the higher of
(i) total pay for the thirty-six consecutive calendar months
for which the employee's pay is the highest, divided by
36; or
3
<PAGE>
EXHIBIT 10.3
(ii) average pay per month based on total pay over a number of
calendar years, and a fraction of total pay for a
calendar year if necessary, sufficient to obtain an
aggregate amount of service equivalent to three full
years. Such calendar years shall be selected beginning
with the calendar year in which average pay per month was
the highest and taking in turn calendar years of
successively lower average pay per month. A fraction of
total pay for a calendar year shall be calculated by
multiplying average pay per month for that year by the
number of months needed to yield an aggregate amount of
service equivalent to three full years. Only pay for the
120 calendar months up to and including the calendar
month in which the employee retires under the Company's
Pension and Retirement Plan will be taken into account in
computing Average Total Monthly Pay.
(b) The term "pay" includes variable pay and awards under the
Variable Compensation Plan, the Incentive Compensation Plan
and former Dividend Unit Plan of the company or similar plans
of any of its affiliated companies, which are not forfeited,
but does not include (i) allowances in connection with
transfer of employment or termination of employment and other
special payments, or (ii) awards, pay under a gain sharing
program or payments under the Special Compensation Plan or
Stock Option Plan of the Company or similar plans of the
Company or any of its affiliated companies.
(c) The value of an award under the Company's Variable
Compensation Plan, the Incentive Compensation Plan or former
Dividend Unit Plan for any calendar year will be prorated over
the length of an employee's service for that year which is
used in computing his benefit under this Plan to the extent
the award is attributable to such service. The value of an
award under the Variable Compensation Plan, or the Incentive
Compensation Plan will be the total award value approved by
the Compensation and Benefits Committee. The value of an award
under the former Dividend Unit Plan will be the value used by
the Compensation and Benefits Committee in determining the
number of dividend units awarded to an employee.
4
<PAGE>
EXHIBIT 10.3
(d) Where a retired employee is granted an award under the
Variable Compensation Plan, the Incentive Compensation Plan or
the former Dividend Unit Plan for the calendar year in which
his retirement is effective, his Average Total Monthly Pay
will be recomputed and, if applicable, his monthly
supplemental retirement income will be increased beginning the
month following that in which such award is granted.
3. The term "Service" means the length, in years and fractions of a
year, of an employee's period of "continuous service" as
determined under the Company's Continuity of Service Rules for
computing the amount of a pension and, to the extent prescribed in
such Rules, recognition will be given for service which the
employee has rendered to an affiliated company or to a company
whose assets have been acquired in whole or in part, by the
Company.
4. The term "Company" means E. I. du Pont de Nemours and Company, any
wholly owned subsidiary or part thereof and any partnership or
joint venture in which E. I. du Pont de Nemours and Company is
joined which adopts this Plan with the approval of the Company, or
such person or persons as the Company may designate.
B. Payments Rounded to Next Higher Full Dollar
Each monthly payment which is computed in accordance with this Plan
will, if not in whole dollars, be increased to the next higher whole
dollar. Such rounding shall be made after applying any applicable
reduction factors.
C. Nonassignment
No assignment of the rights and interests under this Plan will be
permitted or recognized under any circumstances, nor shall such rights
and interests be subject to attachment or other legal processes for
debt.
D. Forfeiture of Benefits
If an employee forfeits all or part of an award under the Company's
variable Compensation Plan, the Incentive Compensation Plan or former
Dividend Unit Plan, all rights and interests of the employee under
this Plan will be forfeited.
E. Administration
1. The administration of this Plan is vested in the Board of Benefits
and Pensions appointed by the Company, except that the
Compensation and Benefits Committee shall determine the discount
rate to be used in
5
<PAGE>
Exhibit 10.3
calculating the lump sum payment described in Section IV. The
Board shall have the discretionary right to determine eligibility
for benefits hereunder and to construe the terms and conditions of
this Plan. The Board may adopt, subject to the approval of the
Compensation and Benefits Committee, or its delegate, such rules
as it may deem necessary for the proper administration of the
Plan, and its decision in all matters involving the interpretation
and application of the Plan shall be final, conclusive and
binding.
2. All expenses and costs in connection with the operation of this
Plan shall be borne by the Company out of its general assets.
F. Amendment
The Company reserves the right to change this Plan in its discretion
by action of the Compensation and Benefits Committee or its delegate,
or to discontinue this Plan in its discretion by action of the Board
of Directors.
6
<PAGE>
EXHIBIT 10.4
PENSION RESTORATION PLAN
Originally Adopted - January 1, 1976
Last Amended - June 4, 1996
E. I. du Pont de Nemours and Company
<PAGE>
EXHIBIT 10.4
PENSION RESTORATION PLAN
------------------------
I. PURPOSE
The purpose of this Plan is to provide an employee or pensioner or
his survivor or survivors eligible to receive payments pursuant to the Company's
Pension and Retirement Plan the portion of his pension or survivor benefit that
would have been paid to him or his survivor or survivors under the Pension and
Retirement Plan if the limitations established in paragraphs A(2)(b)(iii)
relating to deferred Variable Compensation Awards, A(2)(b)(v) and D of Section
IX of such Plan had not been applied, or, effective with payments made after
January 1, 1996, if the limitations established in paragraphs A(2)(b)(v) and D
of Section IX of such Plan not been applied. Notwithstanding the above, an
employee or the survivor(s) of an employee who retires in accordance with the
Incapability Retirement provision of Section IV of the Pension and Retirement
Plan will not be eligible for participation in this Plan.
II. ADMINISTRATION
The administration of this Plan is vested in the Board of Benefits
and Pensions appointed by the Company, except that the Compensation and Benefits
Committee shall determine the discount rate to be used in calculating the lump
sum payment described in Section V. The Board may adopt such rules as it may
deem necessary for the proper administration of the Plan, and its decision in
all matters involving the interpretation and application of this Plan shall be
final. The Board shall have the discretionary right to determine eligibility for
benefits hereunder and to construe the terms and conditions of this Plan.
III. ELIGIBILITY
An employee or pensioner who is entitled to pension payments, or a
person entitled to survivor benefits, pursuant to the Company's Pension and
Retirement Plan, but excluding an employee or the survivor(s) of an employee who
retires under the Incapability Retirement provision of Section IV of the Plan,
will be eligible for payments under this Plan provided payments that would have
been made under the Pension and Retirement Plan have been reduced by the
limitations on such payments set forth in paragraphs A(2)(b)(iii) relating to
deferred Variable Compensation Awards, A(2)(b)(v) and D of Section IX of such
Plan, or, effective with payments made after January 1, 1996, the limitations on
such payments set forth in paragraphs A(2)(b)(v) and D of Section IX of such
Plan.
1
<PAGE>
EXHIBIT 10.4
For purposes of this Plan, the term "Company" means E. I. du Pont de
Nemours and Company, any wholly owned subsidiary or part thereof and any
partnership or joint venture in which E. I. du Pont de Nemours and Company is
joined which adopts this Plan with the approval of the Company, or such person
or persons as the Company may designate.
IV. AMOUNT PAYABLE
The monthly amount payable to a person eligible to receive payments
under this Plan will be equal to his monthly pension or survivor benefit under
the Pension and Retirement Plan calculated without application of the
limitations on such payment set forth in paragraphs A(2)(b)(iii) relating to
deferred Variable Compensation Awards, A(2)(b)(v) and D of Section IX of such
Plan, or effective with payments made after January 1, 1996, the limitations on
such payments set forth in paragraphs A(2)(b)(v) and D of Section IX of such
Plan, less the amount of the actual monthly pension or survivor benefit paid
under such Plan.
V. PAYMENTS OF BENEFITS
The amount payable under this Plan will be paid coincident with the
monthly pension or survivor benefit paid under the Pension and Retirement Plan,
unless (1) the amount payable is or becomes less than or equal to the minimum
monthly payment amount fixed by the Board of Benefits and Pensions, in which
case the actuarial equivalent of all such remaining payments shall be paid in a
lump sum, or (2) the employee irrevocably elects under rules prescribed by the
Board of Benefits and Pensions to receive all or part of the actuarial
equivalent of such monthly payments in a lump sum. A lump sum payment shall be
delivered as of the end of the month following that in which the employee
retires or at such future times and under such terms and conditions as the
Compensation Committee may determine. All payments under this Plan shall be made
by, and all expenses of administering this Plan shall be borne by, the Company.
VI. RIGHT TO MODIFY
The Company reserves the right to change this Plan in its discretion
by action of the Compensation and Benefits Committee or its delegate or to
discontinue this Plan in its discretion by action of the Board of Directors.
VII. NONASSIGNMENT
No assignment of the rights and interests under this Plan will be
permitted or recognized under any circumstances, nor shall such rights and
interests be subject to attachment or other legal processes for debt.
2
<PAGE>
EXHIBIT 10.11
1997 CORPORATE SHARING PLAN
Adopted - January 29,1997
E. I. du Pont de Nemours and Company
<PAGE>
EXHIBIT 10.11
1997 CORPORATE SHARING PLAN
I. PURPOSE
The purpose of this 1997 Corporate Sharing Plan (the "Plan") is to
offer employees a favorable opportunity to share in the success of E. I. du Pont
de Nemours and Company (the "Company") through stock options, thereby giving
them a stake in the growth and prosperity of the Company and benefiting the
Company.
II. FORM OF GRANTS
Grants under this Plan will be in the form of nonqualified stock
options to purchase shares of the Company's common stock.
III. LIMITATIONS ON GRANTS
1. The aggregate number of shares of the Company's stock which may be
made subject to stock options granted under this Plan shall not
exceed 9,500,000. The limitations set forth above shall be subject to
adjustment as provided in Article XII hereof.
2. No grants may be made under this Plan after December 31, 1997.
IV. ADMINISTRATION
1. Except as otherwise specifically provided, the Plan shall be
administered by the Compensation and Benefits Committee of the
Company's Board of Directors.
2. The Compensation and Benefits 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, including
amending the Terms and Conditions.
3. The decision of the Compensation and Benefits Committee with respect
to any questions arising as to interpretation of this Plan, including
the severability of any or all of the provisions thereof, shall be
final, conclusive and binding.
4. Nothing in this Plan shall be deemed to give any employee, or any
employee's legal representatives or assigns, any right to participate
in the Plan except to such extent, if any, as the Compensation and
Benefits Committee may have determined or approved pursuant to the
provisions of this Plan.
1
<PAGE>
EXHIBIT 10.11
V. ELIGIBILITY FOR GRANTS
1. Grants under this Plan may be made to employees of the Company as
determined by the Board of Directors.
2. The term "employee" may include an employee of a corporation or other
business entity in which this Company shall directly or indirectly
own fifty percent or more of the outstanding voting stock or other
ownership interest (the term "sharing plan company" as used in this
Plan shall mean a business entity whose employees are eligible for
grants under this Plan), but shall exclude any director who is not
also an officer or a full-time employee of a sharing plan company.
The term "optionee" as used in this Plan means an employee to whom a
stock option award has been granted under this Plan or, where
appropriate, his or her successor in interest upon death.
VI. GRANTS
1. Any grant made to an employee shall be made by the Board of Directors
which shall take final action on any such grant.
2. Grants may be made at any time under this Plan and in the form
provided in Article II hereof.
3. The date on which a grant shall be deemed to have been made under
this Plan shall be the date of the Board of Directors authorization
of the grant or such later date as may be determined by the Board of
Directors at the time the grant is authorized. Each optionee shall be
advised in writing by the Company of a grant and the terms and
conditions thereof, which terms and conditions, as the Board of
Directors from time to time shall determine, shall not be
inconsistent with the provisions of this Plan.
VII. GRANT PRICE
The price per share of the Company's common stock which may be
purchased upon exercise of a stock option granted under this Plan shall be
determined by the Board of Directors, 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 purposes of the grant price, fair
market value shall be the average of the high and low prices of the Company's
common stock as reported on the "NYSE-Composite Transactions Tape" on the date
of grant 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 Article XI hereof.
2
<PAGE>
EXHIBIT 10.11
VIII. OPTION TERM
The term of each stock option granted under this Plan shall be for
such period as the Board of Directors shall determine, but not for more than ten
years from date of grant.
IX. EXERCISE OF OPTIONS
1. 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 Board of Directors may
determine. However, in no event shall a stock option be exercisable
prior to six months from date of grant. The Board of Directors may
fix from time to time a minimum number of shares which must be
purchased at the time a stock option is exercised.
2. An optionee electing to exercise a stock option shall at the time of
exercise pay the Company the full purchase price of the shares he or
she has elected to purchase. Payment of the purchase price shall be
made in cash. With respect to shares of the Company's common stock to
be delivered upon exercise of a stock option, the Compensation and
Benefits 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.
X. NONTRANSFERABILITY OF GRANTS
Except as provided under conditions defined by the Compensation and
Benefits Committee, during an optionee's lifetime no stock option granted under
this Plan shall be transferable and stock options may be exercised only by the
optionee.
XI. TERMINATION OF EMPLOYMENT
The Board of Directors shall determine the rules relating to rights
under stock options upon termination of employment.
XII. ADJUSTMENTS
1. In the event of any stock dividend, split-up, reclassification or
other analogous change in capitalization, the Compensation and
Benefits Committee shall make such adjustments, in the light of the
change, as it deems to be equitable, both to the optionees and to the
Company, in
(a) the number of shares and prices per share applicable to
outstanding stock options,
(b) the aggregate limitation set forth in Article III which respect
to the number of shares which may be made subject to options.
3
<PAGE>
EXHIBIT 10.11
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 Compensation and Benefits Committee shall make such adjustments,
in the light of the distribution, as it deems to be equitable, both to the
optionees and to the Company, in respect of the items described in (a) above.
2. Any fractional shares resulting from adjustments made pursuant to
this Article shall be eliminated.
XIII. AMENDMENTS
The Company reserves the right to change this Plan in its discretion
by action of the Compensation and Benefits Committee or discontinue this Plan in
its discretion by action of the Board of Directors.
4
<PAGE>
Exhibit 11
E. I. DU PONT DE NEMOURS AND COMPANY
CALCULATION OF EARNINGS PER SHARE
(Dollars in millions, except per share)
<TABLE>
<CAPTION>
Years Ended December 31
-----------------------------------------------------------------------------------------------
1995
------------------------------
1996 Primary Fully Diluted 1994 1993 1992
-------------- -------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) less dividends
on preferred stock ............ $3,626 $3,283 $3,283 $2,717 $545 $(3,937)
Adjustment for interest, net of
income tax, determined under
"Modified Treasury Stock
Method" ........................ -- 467 447 -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Earnings (loss) applicable to
common stock ................... $3,626 $3,750 $3,730 $2,717 $545 $(3,937)
=========== =========== =========== =========== =========== ===========
Average number of common shares
outstanding (excludes treasury
stock and the shares held by
DuPont Flexitrust) ............. 560,675,296 585,107,476 585,107,476 679,999,916 676,622,115 673,454,935
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" for 1995) ............ 9,923,630 73,678,138 73,955,886 4,542,903 3,785,582 4,575,929
----------- ----------- ----------- ----------- ----------- -----------
Adjusted average number of common
shares and share equivalents ... 570,598,926 658,785,614 659,063,362 684,542,819 680,407,697 678,030,864
=========== =========== =========== =========== =========== ===========
Earnings (loss) per share
and share equivalents .......... $6.35(a) $ 5.69(b) $ 5.66(b) $ 3.97(a) $.80(a) $ (5.81)(b)
=========== =========== =========== =========== =========== ===========
Earnings (loss) per share - as
published ...................... $6.47 $ 5.61 $ 5.61 $ 4.00 $.81 $ (5.85)
=========== =========== =========== =========== =========== ===========
</TABLE>
- --------------------
(a) Fully diluted.
(b) Calculations are antidilutive.
<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
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Income ........................................... $3,636 $3,293 $2,727 $ 566(a) $ 975(a)
Provision for Income Taxes ........................... 2,345 2,097 1,655 392 836
Minority Interests in Earnings of Consolidated
Subsidiaries ....................................... 59 30 18 5 10
Adjustment for Companies Accounted for
by the Equity Method ............................... 81 41 18 41 6
Capitalized Interest ................................. (144) (170) (143) (194) (194)
Amortization of Capitalized Interest ................. 191(b) 154 154 144 101
------ ------ ------ ------ ------
6,168 5,445 4,429 954 1,734
------ ------ ------ ------ ------
Fixed Charges:
Interest and Debt Expense .......................... 729 758 559 594 643
Adjustment for Companies Accounted for by
the Equity Method - Interest and Debt Expense .... 70 71 55 42 62
Capitalized Interest ............................... 144 170 143 194 194
Rental Expense Representative of Interest Factor ... 118 113 118 143 151
------ ------ ------ ------ ------
1,061 1,112 875 973 1,050
------ ------ ------ ------ ------
Total Adjusted Earnings Available for Payment of
Fixed Charges ...................................... $7,229 $6,557 $5,304 $1,927 $2,784
====== ====== ====== ====== ======
Number of Times Fixed Charges Are Earned ............. 6.8 5.9 6.1 2.0 2.7
====== ====== ====== ====== ======
</TABLE>
- -----------------------
(a) Income Before Extraordinary Item and Transition Effect of Accounting
Changes.
(b) Includes write-off of capitalized interest associated with divested
businesses.
<PAGE>
To Our Shareholders
- -------------------
DuPont had a stand-out year in 1996. We posted record earnings for the third
year in a row. Our shareholders benefited from outstanding share price
appreciation. And, very importantly, we articulated a fundamental strategy aimed
at value creation -- DuPont's critical path to future success.
Net income for the year was $3.6 billion or $6.47 per share compared to $3.3
billion or $5.61 per share in 1995. Total shareholder return was 38 percent,
some 15 percentage points higher than the return for the S&P 500 index. Our
energy business showed particular strength from both improved prices and higher
volumes and provided the most significant portion of our increase in earnings.
In our chemicals businesses, the largest contribution to earnings growth came
from our newly reported Life Sciences segment which includes agricultural
products and pharmaceuticals and also from the Lycra/(R)/ brand spandex
business.
DuPont's direction is clear
- ---------------------------
Underlying our performance is a clear understanding of our corporate direction
and a well-articulated strategy to implement our goals. We want to be the most
successful energy and chemistry-based company in the world, dedicated to
creating materials that make people's lives better and easier. We believe that
over the long haul, superior profitability comes from a leading global
competitive position. We have a unique set of businesses that derive their
superior competitive advantage from strong core technology platforms, product
brand franchises and engineering capability. All of this is aimed at delivering
at least 15 percent annual total shareholder return which will require 10-12
percent earnings growth.
We are determined to build our company profitably with a clear focus on
providing both superior value for our shareholders and personal growth and
benefit for employees. We depend on 97,000 dedicated people around the world to
accomplish this. Our success is the result of their creative efforts to improve
the business continuously and to provide superior value for our customers.
Value liberation to value creation
- ----------------------------------
The past few years marked one of the greatest transformations in DuPont's
history. We liberated value through productivity and efficiency improvements
while reorganizing to speed decision
1996
1
CONTINUED
<PAGE>
making and implementation. Cost reduction and increased capital efficiency
revitalized our competitiveness, enabling our businesses to compete and grow
profitably in world markets. Our aim now is to create value by at least doubling
the rate of revenue growth while we maintain our emphasis on productivity
improvements.
Growth will be global
- ---------------------
We have aggressive strategies for growth. One strategy is pursuing emerging
markets. Today, markets outside the United States provide 50 percent of total
revenue and that percentage is growing. Our fastest growth is coming from Asia
Pacific and South America. We are also focused on capturing growth in the
developed markets of North America and Western Europe where we have a large
revenue base.
Achieving sustained, profitable growth in today's global marketplace requires
clear competitive advantage. We've defined that advantage as being number one or
two in both market position and technology in our chemicals and specialties
businesses that are global in scope. About two-thirds of our businesses are
already positioned as global leaders by this measure. Among them are nylon,
Lycra/(R)/, titanium dioxide, agricultural products, fluoroproducts, nonwovens,
aramids and photopolymers. We have some others such as polyester, finishes and
ethylene copolymers that are very strong regionally. For these, we are pursuing
creative ways to achieve a strong global position.
Conoco's global strategy includes a strong focus on growth in the upstream
business, targeting undeveloped reserves in Venezuela, the Middle East, Russia,
and Asia Pacific as well as deep water in the Gulf of Mexico. Our Polar Lights
joint venture in Russia is the acknowledged model for petroleum development
there and has become a showcase for the industry. Downstream we are building new
refining capacity in Malaysia to participate in the region with the fastest
growing energy demand in the world.
Innovation: research is key
- ---------------------------
Research and development is essential to our growth strategy and we intend to
use our technological strength to add superior competitiveness. We expect R&D to
revolutionize the productivity of our manufacturing assets. A third of our
revenue growth is targeted to come from new products. Research programs balance
near- and long-term opportunities. Our agricultural products pipeline includes
14 new crop protection chemicals. In pharmaceuticals, Cozaar/(R)/ is the fastest
growing antihypertension drug introduced in the last decade. Two other promising
drugs are in the DuPont Merck research pipeline. Other development programs are
focusing on the commercialization of new products and processes from a radical
new catalyst system for polyolefins and a series of new technologies for
polyester. Both polyesters and polyolefins are large markets that are growing
rapidly and represent potential for DuPont based on new technologies.
Alliances and acquisitions for speed and flexibility
- ----------------------------------------------------
Doing things on our own is not the only route to success. We selectively use
acquisitions and alliances to enter new markets,
2
<PAGE>
secure technology advantages, or quickly establish regional market presence. We
currently have some 120 joint venture companies worldwide, and 30 in the process
of being formed. Many are in Asia and are essential to establishing our presence
in that high-growth region of the world.
Grow, fix, or divest
- --------------------
Profitable growth is our aim. But sometimes portfolio adjustments are
necessary to better focus on core businesses and strengthen the company. In
1996, we sold most of the medical products business, divested 30 percent of the
photomasks business through an initial public offering and made agreements to
exit businesses in electronic imaging, caustic chlorine and advanced composites.
We gave new life to our elastomers business by entering into a joint venture
with The Dow Chemical Company, combining DuPont's global market position with
Dow's new technology. The recently announced nylon modernization program will
enable us to maintain a leadership position globally. Some businesses such as
Conoco's U.S. downstream operations and parts of printing and publishing remain
challenges for 1997.
Results on all fronts
- ---------------------
Committed as we are to getting financial results, we are equally determined to
achieve them in harmony with DuPont's core values. In performance areas such as
safety and the environment we continue to demonstrate leadership that directly
benefits our shareholders as well as our employees. A major survey by BTI
Consulting Group of Boston identified DuPont as the best U.S. company for
environmental management. Actual environmental releases for the latest U.S. EPA
Toxic Release Inventory report dropped 28 percent. Since 1988, we have reduced
total land-filled waste by 45 percent. That represents a reduction of nearly 1
billion pounds per year. Safety performance continues to improve, while our
overall safety record remains the best in industry. But although our accidents
are few in number, we still have too many serious ones. Our goal remains zero
for all accidents and environmental incidents.
Leadership and accountability
- -----------------------------
Our business leaders are focused on value creation for our customers and our
shareholders. We are raising expectations for results and for maintaining an
environment in which all employees contribute to their full potential. Our
compensation plans were recently aligned with these goals and our desire to
increase employee ownership in our company.
Our future
- ----------
Overall, we are well on our way to establishing ourselves as one of the great
global competitors of the 21st century. We remain committed to generating a
strong total shareholder return, and we will accomplish that by doing the things
DuPont does best. Customers can count on DuPont research and technology to
provide innovative products and services that meet their needs better than
anyone else. Employees can count on DuPont to provide opportunities for them to
contribute and to benefit from the company's success. Communities around the
world know that DuPont is a company they can count on to live its core values.
Those values include respect for people, a commitment to safety and the
environment, and an insistence on ethics and integrity. Our future can only be
realized if we achieve our objectives every step along the way. We're committed
to making 1997 another record year of profitable growth.
/s/ Edgar S. Woolard, Jr. /s/ John A. Krol
Edgar S. Woolard, Jr. John A. Krol
Chairman of the Board President
and Chief Executive Officer
February 28, 1997
3
<PAGE>
- --------------------------------------------------------------------------------
chemicals
----------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales
($ in Billions)
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C>
4.1 4.2 3.8
</TABLE>
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
ATOI
($ in Millions)
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C>
563 651 378
</TABLE>
See Industry Segment Information (Note 27 to Financial Statements).
- --------------------------------------------------------------------------------
The Chemicals segment includes a wide range of commodity and specialty products
such as titanium dioxide, fluorochemicals and polymer intermediates used in the
paper, plastics, chemical processing, refrigeration, textile and environmental
management industries.
Specialty Chemicals began operation of a new plant in Asturias, Spain,
to produce tetrahydrofuran (THF) using a new technology. This lowest-
cost, butane-based route to THF incorporates reactor and catalyst
techniques developed by DuPont and Conoco scientists. A second new
technology process, to convert THF into Terathane/(R)/
polytetramethylene ether glycol, is being incorporated in a plant under
construction at LaPorte, Texas, scheduled for start up in 1997. This
process has capital, cost and environmental advantages. Terathane/(R)/
is an ingredient of several DuPont products, including Lycra/(R)/ brand
spandex. In other developments, a joint venture agreement was signed
with Ticor Ltd. for production of sodium cyanide in Queensland,
Australia. The joint venture is expected to increase Ticor's plant
capacity by approximately one-third to more than 40,000 tons by 1998.
In Fluorochemicals, the refrigerant business focused on improving
efficiency and customer service while benefiting from growing demand
for non-ozone depleting products. In Fluorochemicals specialty
products, growth was led by a significant volume increase in the
electronics gas business, which was fueled by a strong demand for
semiconductors.
The titanium dioxide market experienced slow growth and continued
downward pressure on world prices. DuPont Ti-Pure/(R)/ titanium dioxide
was helped in these difficult conditions by its position as the market
leader with innovative products and low-cost capacity options. In
regional markets, U.S. demand showed improvement at mid-year and some
pickup was experienced in Europe toward the end of the year.
1996 versus 1995 Sales of $4.1 billion were 1 percent lower,
----------------
reflecting 4 percent higher sales volume more than offset by 5 percent
lower prices. After-Tax Operating Income (ATOI) was $563 million, down
14 percent from $651 million in 1995. Excluding nonrecurring items from
both years, earnings were $584 million, down 9 percent from the $641
million earned last year, principally reflecting lower earnings from
titanium dioxide resulting from significantly lower selling prices.
Partly offsetting this were higher earnings from chemical
intermediates. Segment results were also negatively affected by
investment write-offs in the fourth quarter.
1995 versus 1994 Sales of $4.2 billion were up 11 percent,
----------------
reflecting 9 percent higher prices and 2 percent higher volumes. ATOI
was $651 million, up 72 percent from the $378 million earned in 1994,
principally due to improvement in titanium dioxide and specialty
chemicals. Excluding nonrecurring items, ATOI was $641 million, up 67
percent.
Perspective Successful initiatives in new technologies and
-----------
processes such as those in Specialty Chemicals should help the
Chemicals segment maintain a healthy competitive position. In
Fluorochemicals, the long-awaited increase in demand for alternatives
to chlorofluorocarbons (CFCs) should boost sales of DuPont
refrigerants, propellants, and cleaning solvents. As the low-cost
producer in titanium dioxide, the company is in a good position to ride
out market downturns and position itself for growth in new markets in
Europe and Asia Pacific.
14
<PAGE>
- --------------------------------------------------------------------------------
fibers
-----------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales
($ in Billions)
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C>
7.2 7.2 6.8
</TABLE>
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
ATOI
($ in Millions)
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C>
802 805 680
</TABLE>
See Industry Segment Information (Note 27 to Financial Statements).
- --------------------------------------------------------------------------------
A diversified mix of specialty fibers is produced to serve end uses
ranging from protective apparel, active sportswear and packaging to
high-strength composites in aerospace. High-volume fibers are produced
for apparel and home fabrics, carpeting and industrial applications and
sold directly to the textile and other industries for processing into
products used in consumer and industrial markets.
DuPont Nylon continued its strategy to improve revenue and earnings through two
key thrusts. The first is a major renewal program focused on spinning
technology, operating efficiencies and consolidation of production. The second
is to build the unit's global leadership, including its position in the
production and marketing of nylon chemical intermediates. As part of the global
program, DuPont in 1996 signed a letter of intent to form a joint venture with
BASF to produce and sell nylon intermediates in Asia. Integrated with DuPont's
adipic acid and nylon resin plants in Singapore, the joint venture will expand
the company's position as a major nylon intermediates, polymer and fiber
producer in Asia Pacific. Investments are also being made at nylon intermediates
sites in the United Kingdom and Texas.
Lycra/(R)/ brand spandex continued to reach new markets in men's wear,
woven fabrics and footwear and in combination with other fibers for use in
ready-to-wear, swimwear, intimate apparel, legwear and activewear. A new
specialty product, Lycra/(R)/ Power, was developed in 1996 for retail launch in
1997. The product is designed to enhance sports performance and is based on the
results of a five-year sports physiology study conducted at The Pennsylvania
State University Center for Sports Medicine.
Dacron/(R)/ polyester benefited from the company's strong position in
polyester intermediates, continuing aggressive cost control and a decrease in
paraxylene prices which began in the second quarter of 1996. The filament plant
at Cooper River, South Carolina, was upgraded and construction began on new
capacity at Suzhou, China, in a new joint venture to supply the Chinese
polyester market.
In Nonwovens, the DuPont-Asahi Flash Spun Products joint venture in Japan
contributed to global growth with market penetration in construction membranes,
medical packaging and agriculture. Typar/(R)/ spunbonded polypropylene grew in
rooflining markets in Europe and as a carpet backing material. A new line of
Sontara/(R)/ branded industrial wipes was launched in Asia, Europe and North
America. Tyvek/(R)/ HomeWrap/TM/ was introduced as the first of a series of
weather membranes for specialized building needs.
Advanced Fibers Systems continued to build on its Kevlar/(R)/ and
Nomex/(R)/ brands of high-performance aramid fibers. Innovative new uses were
developed for low-friction fibers in sportswear, incorporating Teflon/(R)/
fluoropolymers. A shift in resource allocation is aimed at growth in new markets
in South America, Eastern Europe and Asia Pacific.
1996 versus 1995 Sales of $7.2 billion were flat as average selling prices
----------------
and sales volumes were essentially unchanged versus 1995. After-Tax Operating
Income (ATOI) was $802 million, essentially even with the $805 million earned in
1995. Excluding nonrecurring items, earnings were $834 million, 8 percent above
the $774 million earned in 1995. This is principally attributable to improved
results for Lycra/(R)/ brand spandex, nonwovens and Dacron/(R)/ polyester.
1995 versus 1994 Fibers segment sales of $7.2 billion were up 7 percent.
----------------
The increase was driven by 5 percent higher selling prices and 2 percent higher
volume. Sales volume increases, principally in Asia Pacific and Europe, were
partly offset by 1 percent lower volume in the United States. ATOI was $805
million versus $680 million in the prior year. Excluding nonrecurring items,
ATOI was $774 million, an increase of 18 percent, mainly on improvements in
aramids and Dacron/(R)/ polyester.
Perspective Development of new markets and uses for established products,
-----------
along with a strong brand portfolio, are positive factors for the fibers
businesses. The renewal program for nylon should help global growth. New
technology and new products that combine the characteristics of several DuPont
products also hold promise.
15
<PAGE>
- --------------------------------------------------------------------------------
life sciences
-----------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales
($ in Billions)
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C>
2.5 2.3 2.1
</TABLE>
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
ATOI
($ in Millions)
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C>
679 588 360
</TABLE>
See Industry Segment Information (Note 27 to Financial Statements).
- --------------------------------------------------------------------------------
The Life Sciences businesses consist of Agricultural Products, with a focus on
crop protection chemicals and an increasing role in biotechnology, and
Pharmaceuticals. The pharmaceuticals business consists primarily of DuPont's 50
percent interest in The DuPont Merck Pharmaceutical Co.
The Agricultural Products business continued its strong performance in
1996 with profitable growth in Latin America, particularly Brazil, and
in Asia and Europe.
DuPont is well-established as a leader in crop protection
chemicals in the Americas, Europe, Japan and Australia and in newer
growth markets in Southeast Asia. Further pursuing global expansion in
1996, the company continued building marketing organizations in China
and India. DuPont also significantly increased its discovery research
in 1996. During the year, DuPont introduced Staple/(R)/, a low-rate
herbicide for cotton, Upbeet/(R)/ herbicide for sugarbeet, Matrix/(R)/
herbicide for potatoes and Fortress/(R)/ insecticide for corn.
While expanding its base in crop protection chemicals, DuPont's
strategy is to work toward a leading position in biotechnology-based
businesses. DuPont Quality Grains, the biotechnology unit within
Agricultural Products that improves the quality and functionality of
corn and soybeans, strengthened its position as supplier of enhanced
grains to the livestock industry worldwide. The unit's principal
products are Optimum/(R)/ high oil corn seed and high oleic soybeans.
Approximately 350,000 acres were planted in the high oil corn in 1996
and a 30,000-acre introduction was initiated for the high oleic
soybeans for the 1997 season.
The DuPont Merck Pharmaceutical Co. joint venture had another
highly successful year with continued earnings growth and entry into
new markets. Coumadin/(R)/, the anticoagulant drug, continued to be an
important contributor. Also, Cozaar/(R)/ antihypertensive had strong
sales in its first full year of commercialization. Cozaar/(R)/ was
developed by DuPont and is marketed by Merck under a shared earnings
agreement.
In new developments during 1996, DuPont Merck entered into a
marketing agreement with Boehringer Mannheim Corp. for RetavaseTM, a
thrombolic agent for treatment of acute myocardial infarction. Also,
the company is co-promoting Prinivil/(R)/ and Prinzide/(R)/, for
control of hypertension, with Merck in North America. The U.S. Federal
Drug Administration (FDA) cleared for marketing the radiopharmaceutical
VerlumaTM for staging small-cell lung cancer. Verluma/TM/, licensed
from NeoRx Corp., is the first nuclear oncology product to be marketed
by DuPont Merck. The FDA is also reviewing a radiopharmaceutical agent
for the treatment of bone pain and one for breast cancer imaging.
Two promising pharmaceutical compounds entered clinical
development. DMP 266 has shown significant results in HIV virus
reduction when studied in combination with other antiviral agents. A
new class of antiplatelet compounds is being developed for the
prevention of blood clots that cause heart attacks and strokes.
1996 versus 1995 Segment sales of $2.5 billion were up 6 percent
----------------
reflecting 9 percent higher volume, partly offset by 3 percent lower
prices. After-Tax Operating Income (ATOI) was $679 million, up 15
percent from $588 million. Excluding nonrecurring items from both
years, ATOI was $789 million, up 21 percent from $651 million in 1995.
This reflects earnings improvement from both pharmaceuticals and
agricultural products. The increase in pharmaceuticals earnings was
largely due to a more favorable allocation of operating income to
DuPont from the DuPont Merck joint venture to recognize the performance
of assets contributed to the venture by DuPont. These allocations
totaled $186 million after tax in 1996, compared to $111 million after
tax in 1995, and are now completed in accordance with the venture
agreement. Segment sales reflect only the agricultural products
business. Results related to the DuPont Merck joint venture and
Agricultural Products affiliates are accounted for using the equity
method.
16
<PAGE>
1995 versus 1994 Segment sales were $2.3 billion, up 9 percent from 1994.
----------------
ATOI of $588 million was 63 percent higher than $360 million in 1994. Excluding
nonrecurring items, 1995 earnings were $651 million, up 48 percent from $440
million in 1994. This reflects both higher agricultural products and
pharmaceuticals earnings. The latter was due in part to a more favorable
allocation ($111 million after tax) of operating income to DuPont from the
DuPont Merck joint venture.
Perspective Agricultural Products is pursuing global growth through entry
-----------
into new markets and development of a range of new crop protection products,
many of which are currently in the pipeline. The business expects to
commercialize 14 new products by 2003. Initiatives in biotechnology are also
viewed as important contributors to future growth of the agricultural business.
New products continue to flow into the DuPont Merck pipeline as compounds for
treatment of cystic fibrosis, AIDS and dementia enter development. Ongoing
success of Coumadin/(R)/ and Cozaar/(R)/ and development of new products should
benefit the pharmaceuticals business.
- --------------------------------------------------------------------------------
polymers
----------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales
($ in Billions)
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C>
6.7 7.0 6.3
<CAPTION>
ATOI
[CHART APPEARS HERE] ($ in Millions)
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C>
909 829 705
</TABLE>
See Industry Segment Information (Note 27 to Financial Statements).
- --------------------------------------------------------------------------------
The Polymers group of businesses includes engineering polymers,
elastomers, fluoropolymers, ethylene polymers, finishes and
performance films serving industries such as packaging, construction,
chemical processing, electrical, paper, textiles and transportation.
This group includes the automotive businesses, which are engaged in
manufacturing and marketing more than 100 DuPont product lines used by
the automotive industry. It includes DuPont Dow Elastomers L.L.C., a
50 percent-owned joint venture.
Packaging and Industrial Polymers sales grew in all major markets. Growth in
specialty ethylene copolymer volume was fueled by new uses, rising global demand
for modern food packaging and demand in industrial applications. Sales also
increased in the films and vinyls businesses. DuPont launched a $15 million
expansion of shrink film manufacturing facilities in France and also announced
plans to increase global ethylene copolymer capacity by 25 percent over the next
five years.
The Fluoropolymers business, which includes Teflon/(R)/ and Tefzel/(R)/
fluoropolymer resins, Teflon/(R)/ and SilverStone/(R)/ non-stick finishes,
Tedlar/(R)/ polyvinyl fluoride film and Nafion/(R)/ perfluorinated membranes,
continued to grow and found new applications in industrial uses requiring high
temperature and chemical resistance.
Engineering Polymers' sales gains were aided by customer commercialization
of recently introduced products based on Zytel/(R)/ high temperature nylon
(automotive air intake manifolds), Crastin/(R)/ PBT polyester (electronic
connectors) and Zenite/TM/ liquid crystal polymers (miniaturized computer
circuit boards). The first DuPont manufacturing site in China for engineering
polymer products was opened in 1996 to produce Delrin/(R)/ acetal resins.
Investments in new capacity for several other products were also made in North
and South America, Europe and Asia; these include capacity for manufacturing
Zytel(R) nylon resin in Argentina to serve automotive, electronics and appliance
customers in South America.
DuPont Dow Elastomers began operating on April 1. The 50-50 joint venture
had revenues of over $750 million in its first nine months of operation. This
represents an increase of 10 percent versus the same period in 1995 for the
combined product lines of both the DuPont and Dow components. During 1997 the
new company will commercialize new grades of hydrocarbon rubber made using
Insite/TM/, Dow's innovative new process and catalyst technology.
Automotive, which includes original equipment and after-market coatings,
specialties and industrial maintenance finishes and Butacite/(R)/ polyvinyl
butyral safety glass interlayer, continued to expand Butacite/(R)/ into
architectural markets. The business agreed to acquire the automotive finishes
business of Carrs Paints, Ltd. of the United Kingdom and divested the automotive
fascia parts paint-
17
<PAGE>
ing operation in Kansas City, Kansas. SentryGlas(R) intrusion-resistant
composite for glass windows passed tests to meet hurricane protection
building codes in south Florida.
1996 versus 1995 Segment sales of $6.7 billion were 4 percent
----------------
above 1995, after adjusting for the reduction in sales resulting from
formation of the DuPont Dow Elastomers joint venture. This reflects 4
percent higher volume and flat selling prices. After-Tax Operating
Income (ATOI) was $909 million, up 10 percent from $829 million last
year. Excluding nonrecurring items from both years, earnings were $854
million, down 1 percent from $864 million in 1995. Increased earnings
from automotive products, engineering polymers, and Corian/R/ surfaces
were offset by a reduction in elastomers earnings due to formation of
the DuPont Dow Elastomers joint venture.
1995 versus 1994 Polymers segment sales of $7.0 billion were 11
----------------
percent above 1994, reflecting 6 percent higher selling prices and 5
percent higher volume. ATOI was $829 million, up 18 percent from $705
million in 1994, reflecting improvement in most businesses. Elastomers
and Packaging & Industrial Polymers had the greatest year-over-year
gains. Excluding nonrecurring items, Polymers full-year earnings were
$864 million, up 24 percent.
Perspective The Polymers group of businesses is well-positioned
-----------
for profitable growth. Packaging and Industrial Polymers and Automotive
are strong, regional businesses seeking new growth through
globalization and new product applications. Fluoropolymers and
Engineering Polymers are capitalizing on growing demand for ingredients
for high-performance, cost-efficient products. In DuPont Dow
Elastomers, the combination of DuPont's strong worldwide market
position and Dow's innovative Insite/TM/ catalyst technology should
allow for significant growth in the business.
- --------------------------------------------------------------------------------
petroleum
-----------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales
($ in Billions)
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C>
20.2 17.7 16.8
<CAPTION>
ATOI
[CHART APPEARS HERE] ($ in Millions)
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C>
860 619 658
</TABLE>
See Industry Segment Information (Note 27 to Financial Statements).
- --------------------------------------------------------------------------------
Petroleum operations are carried out by Conoco. The "upstream" part of the
business finds, develops and produces crude oil and natural gas, and processes
natural gas to recover higher-value liquids. The "downstream" part of the
business transports and refines crude oil and other feedstocks to produce high-
quality fuels, lubricants and other products, including petroleum coke and
intermediates for use in making petrochemicals.
Conoco is successfully pursuing a strategy of expanding into new areas
of the world with high growth potential while continuing to improve
efficiency and grow selectively in its established core areas in North
America and Europe.
In South America, Conoco is participating in a $2.2 billion joint
venture to produce extra-heavy oil in Venezuela's Orinoco region and
upgrade it to a synthetic crude oil, most of which will be processed at
the company's U.S. refineries. Crude oil production is scheduled to
begin in 1998 and continue for at least 35 years. Conoco also acquired
highly promising exploration acreage in Venezuela and neighboring
Colombia during 1996.
In Asia Pacific, downstream growth centers on a 100,000-barrel-
per-day joint venture refinery under construction at Melaka, Malaysia.
Due to start up in late 1997, the refinery will supply Conoco's retail
network in Thailand and planned marketing activities elsewhere in the
region. The company also has several promising upstream prospects in
Asia Pacific, including exploration acreage in the Taiwan Straits. In
Indonesia, the company hopes to establish a market for gas discovered
in Block B in the South China Sea, and is exploring for oil in the
jungles of Irian Jaya. Other projects are under way in Queensland,
Australia, and offshore New Zealand.
18
<PAGE>
Exploration and production in ultra-deep water is one of the cornerstones
of Conoco's strategy for long-term growth. The company's deepwater exploration
interests cover more than 15 million acres in the Gulf of Mexico, the North Sea,
Nigeria and southeast Asia.
In partnership with Reading & Bates, one of the world's leading drilling
companies, Conoco is constructing a state-of-the-art drillship that will be
capable of operating in water depths of up to 10,000 feet. The ship is scheduled
for delivery in 1998. It will be employed initially in a five-year program in
the Gulf of Mexico.
During 1996, Conoco began work on the Ukpokiti field, its first offshore
development project in Nigeria, with production scheduled to begin this year. In
northern Russia, the company is continuing efforts to expand its position in the
region, building on its success with the Polar Lights joint venture. Polar
Lights was the first western/Russian partnership to develop a new oil field in
Russia.
The company is expanding rapidly in downstream operations in Central
Europe, based on newly acquired refining capacity in the Czech Republic, and is
also expanding marketing operations in Turkey. In the Middle East, Conoco's
long-established upstream presence in Dubai provides a foundation for pursuing
other ventures in the Gulf region. In 1996, the company signed a technical
services agreement with the Kuwait National Petroleum Co. to assist in upgrading
Kuwait's refineries.
Conoco is undertaking numerous growth activities in existing core areas,
focusing on selected geographic areas, niche markets and new business
activities. For example, building on its strong acreage position in the Lobo
Trend of South Texas, the company is expanding the drilling program, leasing
more acreage and acquiring existing natural gas production. It is also stepping
up natural gas activity in other locations in the United States and Canada. In
Europe, the giant Britannia gas field -- the largest undeveloped gas reservoir
in the U.K. North Sea -- is scheduled to come on stream in 1998. Other oil and
gas exploration opportunities and discoveries offshore Britain and Norway are
also being evaluated or advanced toward development.
In established areas downstream, Conoco is concentrating its marketing
activities in those areas of the United States and Europe where it can take
advantage of logistical or market strengths. A major step forward was taken at
the end of 1996 with completion of a $500 million hydrocracker at Lake Charles,
Louisiana, in a joint venture between Conoco and Pennzoil. The high-quality
hydrocracked base oils produced at this facility should make Conoco a top
competitor in the base oil business and ultimately put it in a leading position
in the finished lubricants markets. Conoco Mineraloel continued to expand its
marketing retail network in Germany and also in Austria.
Conoco Global Power (CGP), a wholly owned subsidiary of Conoco, is pursuing
new projects in Europe, Latin America, Asia Pacific and the United States. Late
in 1996, CGP announced a joint venture to build, own and operate a 160-megawatt
natural gas-fired power plant in Barrancabermeja, Colombia. CGP also announced
it will form a joint venture with a Dutch electric utility to supply electricity
and steam to a major DuPont chemicals plant in The Netherlands and sell surplus
power to the Dutch grid.
1996 versus 1995 Sales for the year were $20.2 billion, up 14 percent from
----------------
last year. The increase resulted from higher crude oil and natural gas prices
and higher volumes outside the United States. Earnings of $860 million were up
39 percent from $619 million the previous year. Excluding nonrecurring items
from both years, 1996 earnings were $901 million versus $664 million in 1995, a
36 percent increase.
Upstream earnings of $632 million were up 43 percent from $443 million in
1995. Excluding nonrecurring charges, earnings of $706 million were up 46
percent from $482 million in the prior year. Higher crude oil and natural gas
prices and improved volumes outside the United States, partly offset by
increased exploration costs, contributed to the improvement.
Worldwide crude oil and natural gas liquids production of 445,000 barrels
per day (bpd) was up 7 percent from 414,000 bpd in 1995. The net realized crude
oil price averaged $20.11 per barrel, up 21 percent from $16.57 in 1995.
Worldwide natural gas deliveries were 1,309 million cubic feet per day (mmcfd)
compared to 1,242 mmcfd in 1995. Natural gas prices averaged $2.21 per thousand
cubic feet, up from $1.85 in the prior year.
Downstream earnings of $228 million were up 30 percent from $176 million in
1995. Excluding nonrecurring items, earnings of $195 million were up 7 percent
from $182 million in the prior year due to gradually improving margins, despite
higher crude oil prices and one-time startup costs for new units in refining.
Total feedstocks processed were 732,000 bpd in 1996 versus 721,000 bpd in 1995.
1995 versus 1994 Sales of $17.7 billion were up 5 percent compared to 1994.
----------------
Higher crude oil prices and increased refined product volumes were partly offset
by lower natural gas prices in the United States and lower worldwide oil and gas
volumes. Earnings of $619 million were down 6 percent from $658 million.
Excluding nonrecurring items from both years, earnings were $664 million in
1995, down 3 percent from $684 million in 1994.
Perspective The global energy industry is changing rapidly, creating
-----------
unprecedented challenges and opportunities. Conoco's efforts in recent years to
reduce costs, raise productivity and upgrade its asset portfolio have greatly
increased the company's competitiveness. Now one of the leading companies in
terms of upstream performance, Conoco is committed to pursuing improvement in
its downstream operations, focusing on areas of strength.
19
<PAGE>
- --------------------------------------------------------------------------------
diversified
----------------------------------------------------------------------
<TABLE>
<CAPTION>
Sales
($ in Billions)
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C>
3.1 3.7 3.5
<CAPTION>
[CHART APPEARS HERE]
ATOI
($ in Millions)
------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C>
205 252 254
</TABLE>
See Industry Segment Information (Note 27 to Financial Statements).
- -------------------------------------------------------------------------------
Diversified Businesses include Films, Photopolymer and Electronic Materials,
Printing and Publishing, and CONSOL, a coal operation owned 50 percent by
DuPont.
Films The Films business continued to grow in 1996. Softness in
-----
major polyester markets, primarily Mylar/(R)/ film and Crystar/(R)/
resins, was more than offset by productivity gains and a strong
performance in Kapton/(R)/ polyimide film. In response to growth from
new applications, polyimide capacity will be doubled by 2000, including
a phased expansion at the Bayport facility in Texas, and a new line at
Films' joint venture with Toray Industries Inc. in Japan. A polyester
joint venture in China and completion of new polyester capacity in
Luxembourg in 1997 will further strengthen DuPont's market position. In
1996, the business successfully undertook commercial trials of its
Petretec/SM/ polyester regeneration technology.
Medical Products Sale of the Diagnostic Imaging business was
----------------
finalized with The Sterling Group Inc. and the In-Vitro Diagnostics
business was sold to Dade International Inc. The DuPont Sorvall/(R)/
centrifuge business was sold to First Chicago Equity Capital.
Photopolymer and Electronic Materials An internal reorganization
-------------------------------------
in 1996 brought together into one unit the research and development and
manufacturing resources devoted to film-based photopolymer products for
the electronics and printing industries and the emerging market for
holographic materials. Expansion continued in Asia with the start up of
a joint venture with Mitsubishi Rayon Co. to produce Riston/(R)/ dry
film for the Japanese market. A plant for microcircuit film materials
opened in China, in a joint venture with Dongguan South Electronic
Corp.
Printing and Publishing DuPont experienced growing acceptance of
-----------------------
the Cyrel/(R)/ digital imaging products and the widely used
Silverlith/TM/ plates, and is now the only company to offer computer-
to-plate systems for both flexographic and offset printing. A new
manufacturing line started up in Leeds, United Kingdom, to meet demand
for Silverlith/TM/ and other DuPont Howson/TM/ printing plates. Digital
WaterProof/TM/ and PreView/TM/ are gaining popularity among printers.
As a result of restructuring the Crosfield joint venture with Fujifilm,
the business will shift emphasis from manufacture of its own digital
systems to working with specialized original equipment manufacturers.
CONSOL CONSOL Energy Inc., a coal operations joint venture owned
------
50 percent by DuPont, recorded increased sales and earnings. Improved
demand for steam coal used for power generation stimulated higher sales
volumes, and productivity gains at mining operations resulted in lower
costs.
1996 versus 1995 Segment sales were $3.1 billion, up 2 percent,
----------------
after adjusting for the divested Medical Products businesses. This
reflects flat selling prices and 2 percent higher sales volume. After-
Tax Operating Income (ATOI) was $205 million, down 19 percent from $252
million in 1995. Excluding nonrecurring items from both years, earnings
were $157 million, down 41 percent. This is principally due to the
absence of earnings from Medical Products businesses that were divested
during the year, and lower Printing and Publishing earnings. Partly
offsetting were higher earnings from electronic materials and coal.
1995 versus 1994 Segment sales were $3.7 billion, up 6 percent
----------------
from $3.5 billion in 1994, reflecting higher sales in most businesses.
ATOI was $252 million compared to $254 million in 1994. Excluding
nonrecurring items from both years, earnings were $264 million versus
$227 million in 1994, up 16 percent, reflecting higher electronic
materials and Printing and Publishing results.
Perspective New applications for products and growth in new
-----------
markets such as China should help the Films business. A new
polymerization process (NG3) should improve competitive advantage in
polyester resin production. Synergies created in the Photopolymer and
Electronic Materials reorganization, plus opportunities in the emerging
market for holographic materials offer potential for profitable growth.
The focus on an integrated product line should help Printing and
Publishing.
20
<PAGE>
Management's Discussion and Analysis
This review and discussion of financial performance should be read in
conjunction with the letter to stockholders (pages 1-3),
segment reviews (pages 14-20) and consolidated financial statements
(pages 29-50).
Analysis of Operations
SALES
Sales in 1996 were a record $43.8 billion, up 4 percent from 1995. Petroleum
segment sales were $20.2 billion, compared to $17.7 billion in 1995, up 14
percent. This reflects higher worldwide prices for crude oil and natural gas and
increased crude oil production and natural gas deliveries. Crude oil and natural
gas average prices were higher than those in 1995 by 21 percent and 19 percent,
respectively. Sales for the combined chemicals and specialties segments
(Chemicals, Fibers, Polymers, Life Sciences, and Diversified Businesses) were
$23.6 billion, 4 percent lower than the prior year. This reflects a reduction in
sales resulting from the divestiture of certain Medical Products businesses and
formation of the DuPont Dow elastomers joint venture. After adjusting for these
changes in business composition, sales were 2 percent higher than 1995,
reflecting 3 percent higher sales volume, partly offset by 1 percent lower
average selling prices. U.S. selling prices were flat, while prices outside the
United States averaged 3 percent lower, mostly attributable to a stronger U.S.
dollar. U.S. sales volume was up 3 percent. Volume outside the United States was
up 4 percent. Sales in Mexico and South America combined were up 13 percent,
reflecting a recovery from the 1995 devaluation in the Mexican peso and the
continuing growth in South America. Sales volume growth in Asia was 9 percent
but was substantially offset by 7 percent lower prices. European sales were down
1 percent, as slightly higher volume was more than offset by lower selling
prices.
Sales in 1995 were $42.2 billion, up 7 percent from 1994. Petroleum segment
sales increased 5 percent to $17.7 billion. Sales for the combined chemicals and
specialties segments increased 9 percent to $24.5 billion. This reflects, on
average, 5 percent higher selling prices and 4 percent higher sales volume
versus 1994. It is estimated that about 40 percent of the revenue benefit from
higher selling prices was attributable to the currency effect of a weaker U.S.
dollar. Sales gains were greatest in Europe and Asia, up 19 percent and 18
percent, respectively. In North America, revenue growth was below the worldwide
average as sales in the United States and Canada grew 4 percent and 8 percent,
respectively, while sales in Mexico decreased 25 percent due to a substantial
devaluation in the Mexican peso.
EARNINGS
Net income in 1996 was a record $3,636 million versus $3,293 million in 1995, up
10 percent. This principally reflects a 39 percent improvement in after-tax
operating income for the Petroleum segment and lower after-tax interest expense.
Upstream petroleum had record earnings, primarily resulting from higher oil and
gas prices. In addition, Life Sciences earnings increased 15 percent. In 1996,
net nonrecurring charges were $101 million versus $114 million in 1995.
Excluding these charges, earnings were $3,737 million, up $330 million from
1995.
Earnings per share were $6.47 versus $5.61 in 1995. Excluding nonrecurring items
from both years, 1996 earnings per share were $6.65, up 14 percent from $5.81
earned in 1995. One-half of this improvement was from higher Petroleum segment
earnings with the balance attributable to higher results from the DuPont Merck
pharmaceutical venture largely due to a more favorable allocation of operating
income to DuPont, benefit from lower average shares outstanding and lower
interest expense. Petroleum benefited from higher oil and gas prices and higher
volumes. Earnings from the chemicals and specialties segments were up 1 percent
as gains from higher sales volume were offset by lower selling prices and by
reduction in earnings resulting from businesses that were divested or are now
operated through a joint venture arrangement.
Net income in 1995 was $3,293 million versus $2,727 million in 1994, as record
results were achieved across a broad span of businesses, most significantly in
white pigments, agricultural products, aramid fiber products, pharmaceuticals,
and specialty chemicals. 1995 net income included net nonrecurring charges of
$114 million, principally from costs associated with product liability
litigation, and about $190 million of interest expense related to the stock
redemption from Seagram. 1994 included net nonrecurring charges of $48 million.
Excluding these items, earnings increased 30 percent.
Earnings per share in 1995 totaled $5.61 versus $4.00 in 1994. Excluding
nonrecurring items from both years, 1995 earnings per share were $5.81 up 43
percent from $4.07 earned in 1994. Approximately one-third of this improvement
resulted from the stock redemption from Seagram. The remaining two-thirds
principally reflects higher volumes and selling prices in the chemicals and
specialties segments, partly offset by higher costs. Higher other income from
joint ventures and insurance recoveries
21
DuPont
<PAGE>
Management's Discussion and Analysis
related to environmental remediation also contributed to the earnings
improvement. Petroleum earnings before nonrecurring charges were essentially
unchanged as higher oil prices and lower costs were offset by lower U.S. gas
prices and weaker worldwide downstream margins.
<TABLE>
<CAPTION>
TAXES ($ in millions)
- --------------------------------------------------------------------
1996 1995 1994
<S> <C> <C> <C>
- --------------------------------------------------------------------
Income tax expense $ 2,345 $ 2,097 $ 1,655
Effective income tax rate (EITR) 39.2% 38.9% 37.8%
- --------------------------------------------------------------------
</TABLE>
Over the last three years, the company's EITR exceeded the U.S. statutory rate
of 35 percent, principally because a significant proportion of company earnings
were derived from petroleum operations outside the United States which are taxed
at higher rates. The 1996 EITR of 39 percent was essentially equal to 1995,
reflecting insignificant changes in the effective tax rates for both chemicals
and specialties and petroleum compared to 1995. The 1995 EITR increased about 1
percentage point from the prior year that reflected a 1994 tax benefit related
to a change in the tax status resulting from a transfer of properties among
certain North Sea affiliates; no such benefit is reflected in 1995. The 1995
EITR reflects a lower effective tax rate for the chemicals and specialties
segments versus prior year, principally due to a lower effective tax rate on
foreign earnings.
The company paid total taxes of $8.4 billion in 1996, compared to $8.3 billion
in 1995 and $7.5 billion in 1994. 1996 total tax payments were slightly higher
than in 1995 due principally to higher income taxes and higher U.S. petroleum
excise taxes, partly offset by lower petroleum excise taxes outside the United
States. 1995 taxes were higher than in 1994 because of increased taxes on income
and higher petroleum excise taxes outside the United States.
Financial Condition and Cash Flows
FINANCIAL CONDITION
Borrowings at year-end 1996 of $8.9 billion were $2.8 billion below the $11.7
billion at the end of 1995. This reduction was accomplished through a
combination of internally generated funds and $1.3 billion of asset sales,
including proceeds from sales of essentially all of the Medical Products
businesses and certain Petroleum properties, plus proceeds from the formation of
the elastomers joint venture with Dow. With this reduction in debt, the ratio of
cash provided by operations to debt improved from 57 percent in 1995 to 71
percent at the end of 1996. Also, the company's goal to reduce the debt ratio*
to about 45 percent by year-end 1996 was achieved. The ratio was 44 percent at
the end of 1996 as compared with 58 percent in 1995.
Borrowings at year-end 1995 were $11.7 billion, as compared to $7.6 billion in
1994. During 1995, borrowings reached a high of $16.2 billion when the company
borrowed $8.3 billion through sales of commercial paper to finance the April
1995 stock redemption from Seagram. Borrowings were subsequently reduced with
funds from operations and $1.7 billion of proceeds from equity offerings.
Subsequent to the stock redemption in 1995, Moody's Investor Service (Moody's)
lowered its rating on the company's senior long-term debt from Aa2 to Aa3. The
company's commercial paper rating was affirmed at Prime-1 by Moody's. Standard &
Poor's (S&P) lowered its rating on senior debt and preferred stock from AA to
AA- and affirmed its commercial paper rating of A-1+. The ratings outlook by S&P
remains negative. These changes have not had any material impact on the
company's interest and debt expense or on its access to borrowings.
In January 1997, the company approved the purchase and retirement of up to 10
million shares of its common stock to offset dilution resulting from the
issuance of shares under the company's compensation programs. Shares will be
purchased from time to time in the open market. The company expects to use
internally generated funds for these stock purchases. (See Note 20,
"Compensation Plans," to the financial statements.)
CASH PROVIDED BY OPERATIONS
Cash provided by operations totaled $6.4 billion in 1996; this was $373 million
below the $6.8 billion inflow in 1995. Excluding
- --------------------------------------------------------------------------------
* 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.
22
DuPont
<PAGE>
Management's Discussion and Analysis
changes in working capital due to divestitures and the formation of a joint
venture with Dow, which are reported in Investment Activities, this reduction is
primarily due to higher working capital investment in support of increased
business activity in the latter part of 1996 and tax payments related to gains
on divestitures and joint venture formation.
In 1995, cash provided by operations of $6.8 billion was $1.1 billion higher
than the $5.7 billion generated the previous year. This increase was largely the
result of reductions in net operating investment during 1995, principally lower
inventories and higher deferred income taxes, combined with higher net income.
As shown on the Consolidated Statement of Cash Flows, net income was up about
$350 million after adjusting for noncash charges and credits. This includes
charges for depreciation, depletion and amortization which were $250 million
lower in 1995 due to reduced write-downs of assets and generally lower petroleum
production volumes.
CAPITAL EXPENDITURES
Capital expenditures, including investments in affiliates, were $3.7 billion in
1996. This is an increase of $227 million, or 7 percent, from the $3.5 billion
spent in 1995. Expenditures in 1995 were up $349 million, or 11 percent, from
the $3.1 billion spent in 1994.
In the Petroleum segment, capital expenditures were $1.9 billion, up 12 percent
from the $1.7 billion spent in 1995. The most significant petroleum expenditures
in 1996 were similar to 1995 expenditures and included continuing the
development of the Britannia field, installing a vacuum unit in the Humber
refinery in the United Kingdom, constructing the Melaka refinery in Malaysia,
and modifying the Lake Charles, Louisiana refinery in support of the
hydrocracker joint venture with Pennzoil.
For the chemicals and specialties businesses, capital spending was $1.8 billion,
about the same as in 1995. In the United States, significant capital
expenditures were made to increase manufacturing capacity for Lycra(R) brand
spandex, Terathane(R) polyether glycol, Teflon(R) fluoropolymers, Suva(R)
refrigerants, Fortress(R) insecticide, and Zytel(R) engineering polymers.
Outside the United States, construction projects to strengthen and grow
strategic businesses included Delrin(R) acetal resins, Crastin(R) polyester
resins and thin films in Europe, polyester film in China, and nylon apparel
fiber in South America, Mexico and Asia. Significant expenditures were also made
to replace or improve existing facilities and for environmental activities.
The company currently expects to increase capital expenditures to about $4.1
billion in 1997. Most of the increase is planned in the chemicals and
specialties businesses to further increase global manufacturing capacity.
Expenditures in the Petroleum segment are expected to be slightly higher than in
1996 and include funding for upstream development projects in Venezuela, the
North Sea and the Gulf of Mexico.
PROCEEDS FROM SALES OF ASSETS
Proceeds from asset sales were $1,271 million in 1996. Most of the proceeds were
from the sale of two Medical Products businesses (Diagnostic Imaging and In-
Vitro Diagnostics), the formation of the elastomers joint venture with Dow and
sales of various petroleum properties.
In 1995, proceeds were $337 million. Proceeds from sales of petroleum properties
accounted for $244 million of the total, and most of the balance came from the
sale of the company's interest in a Specialty Chemicals joint venture in Japan
and sale of excess real estate. Proceeds from asset sales in 1994 were $432
million. Petroleum property sales were $212 million, with the balance coming
principally from sales of the Sclair(R), petroleum additives and Selar(R)
businesses.
DIVIDENDS
Dividends per share of common stock were $2.23 in 1996, $2.03 in 1995 and $1.82
in 1994. The quarterly dividend was increased from $.52 to $.57 per share in the
second quarter of 1996 and from $.47 to $.52 per share in the second quarter of
1995. The company's objective is to pay dividends that are 15 to 25 percent of
cash provided by operations. For 1996, dividends paid in relation to cash
provided by operations was 20 percent, as compared with 18 percent in 1995 and
22 percent in 1994.
FINANCING ACTIVITIES
In March 1996, the company received $297 million from the formation of a
partnership, Conoco Oil & Gas Associates L.P., in which it has a general
partnership interest of 67 percent. The remaining 33 percent is owned by
Vanguard Energy Investors L.P. (See Note 18, "Minority Interests," to the
financial statements.) In July 1996, the company paid $504 million to repurchase
warrants from Seagram. The warrants were issued to Seagram as part of the 1995
transaction to redeem 156 million shares of the company's common stock.
23
DuPont
<PAGE>
Management's Discussion and Analysis
WORKING CAPITAL INVESTMENT
At the end of 1996, the company's investment in working capital (excluding cash
and cash equivalents, marketable securities, and short-term borrowing and
capital lease obligations) was $2.7 billion, a decrease of $219 million from the
$2.9 billion in 1995. Accounts and notes receivable increased $281 million,
primarily due to a $175 million note received in connection with the sale of the
Diagnostic Imaging business. This increase was more than offset by a $503
million increase in current liabilities primarily due to increased business
activity at the end of 1996 compared to 1995 as well as higher crude oil prices.
Decreases in working capital due to sale of the Medical Products businesses and
formation of the joint venture with Dow were essentially offset by increases in
working capital required in support of increases in sales volumes experienced
over the last half of the year.
In 1995, working capital investment decreased about $800 million, largely as a
result of lower inventories and miscellaneous notes receivable, increases in
liabilities for hedging activities (see "Foreign Currency Risk") and higher
interest payable on borrowings required to fund the redemption of common stock
from Seagram.
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 1996 was 1.0:1, as compared with 0.9:1 in 1995 and
1.5:1 in 1994. The lower ratio in 1995 and 1996 as compared with 1994, results
primarily from the commercial paper borrowings made in 1995 to finance the stock
redemption from Seagram. This transaction caused short-term borrowings to
increase nearly $4.9 billion in 1995; in 1996 short-term borrowings were reduced
$2.2 billion.
Financial Instruments
DERIVATIVES AND OTHER HEDGING INSTRUMENTS
Under procedures and controls established by the company's Financial Risk
Management Framework, 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. Although the
company is exposed to credit loss in the event of nonperformance by these
counterparties, this exposure is managed 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.
FOREIGN CURRENCY RISK
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 RATE RISK
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
24
DuPont
<PAGE>
Management's Discussion and Analysis
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 which, for any and all
calculations of the note's interest and/or principal payments over the term of
the note, provide a fully hedged transaction such that the note is effectively
converted to a U.S. dollar-denominated fixed or floating interest rate payment.
Structured medium-term swaps allow the company to be fully hedged against
fluctuations in exchange rates and interest rates and to achieve U.S. dollar
fixed or floating interest rate payments below the market interest rate, at the
date of issuance, for borrowings of comparable maturity.
COMMODITY PRICE RISK AND TRADING
The company enters into exchange-traded and over-the-counter derivative
commodity instruments 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 a portion 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 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 derivative
commodity instruments reduces the effects of price volatility, thereby
protecting against adverse price movements, while limiting, somewhat, the
benefits of favorable price movements.
On a limited basis, the company also purchases and sells petroleum- and other
energy-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 24 to the financial statements.
Environmental Matters
DuPont operates manufacturing facilities, petroleum refineries, natural gas
processing plants and product-handling and distribution facilities around the
world. Each facility is significantly affected by a broad array of environmental
laws and regulations. It is company policy to fully meet or exceed legal and
regulatory requirements wherever it operates. DuPont facilities worldwide are
run in accordance with the highest standards of safe operation, even where those
standards exceed the requirements of local law. DuPont has also implemented
voluntary programs to reduce air emissions, curtail the generation of hazardous
waste, decrease the volume of wastewater discharges and improve the efficiency
of energy use. The costs of complying with complex environmental laws and
regulations, as well as internal voluntary programs, are significant and will
continue to be so for the foreseeable future. These costs may increase in the
future, but are not expected to have a material impact on the company's
competitive or financial position.
In 1996 DuPont spent about $300 million for environmental capital projects
either required by the law or necessary to meet the company's internal waste
elimination and pollution prevention goals. The company currently estimates
expenditures for environmental-related capital projects will total $400 million
in 1997. 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 Clean Air Act (CAA) and its 1990 Amendments. Until all
new CAA regulatory requirements are known, considerable uncertainty will remain
regarding future estimates of capital expenditures. Total CAA capital costs over
the next two years are currently estimated to range from $15-30 million.
Estimated pretax environmental expenses charged to current operations totaled
about $800 million, before insurance recoveries, in 1996 as compared to about
$800 million in 1995 and $950 million in 1994. These expenses include the
remediation accruals discussed below, operating, maintenance and
25
DuPont
<PAGE>
Management's Discussion and Analysis
depreciation costs for solid waste, air and water pollution control facilities
and the costs of environmental research activities. The largest of these
expenses resulted from the operation of wastewater treatment facilities and
solid waste management facilities, each of which accounted for about $180
million. About two-thirds of total annual expenses resulted from the operations
of the company's Chemicals, Fibers, Polymers, Life Sciences and Diversified
Businesses segments in the United States.
REMEDIATION ACCRUALS
DuPont accrues for remediation activities when it is probable that a liability
has been incurred and reasonable estimates of the liability can be made. These
accrued liabilities exclude claims against third parties and are not discounted.
Much of this liability results from the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA, often referred to as Superfund), the
Resource Conservation and Recovery Act (RCRA) and similar state laws that
require the company to undertake certain investigative and remedial activities
at sites where the company conducts or once conducted operations or at sites
where company-generated waste was disposed. The accrual also includes a number
of sites identified by the company that may require environmental remediation
but which are not currently the subject of CERCLA, RCRA or state enforcement
activities. Over the next one to two decades the company may incur significant
costs under both CERCLA and RCRA. Considerable uncertainty exists with respect
to these costs and under adverse changes in circumstances, potential liability
may exceed amounts accrued as of December 31, 1996.
Remediation activities vary substantially in duration and cost from site to site
depending on the mix of unique site characteristics, evolving remediation
technologies, diverse regulatory agencies and enforcement policies and the
presence or absence of potentially liable third parties. Therefore, it is
difficult to develop reasonable estimates of future site remediation costs.
Nevertheless, the company's assessment of such costs is a continuous process
that takes into account the relevant factors affecting each specific site. At
December 31, 1996, the company's balance sheet included an accrued liability of
$586 million as compared to $602 million and $616 million at year-end 1995 and
1994, respectively. The moderate decline in the accrued liability reflects the
completion of remediation programs at several sites. Approximately 78 percent of
the company's environmental reserve at December 31, 1996 was attributable to
RCRA and similar remediation liabilities and 22 percent to CERCLA liabilities.
During 1996, remediation accruals of $91 million, offset by $100 million in
insurance proceeds, resulted in a credit to income of $9 million, compared to a
credit of $79 million in 1995, also resulting from insurance recoveries, and an
accrual of $185 million in 1994.
REMEDIATION EXPENDITURES
RCRA extensively regulates the treatment, storage and disposal of hazardous
waste and requires a permit to conduct such activities. The law requires that
permitted facilities undertake an assessment of environmental conditions at the
facility. If conditions warrant, the company may be required to remediate
contamination caused by prior operations. As contrasted by CERCLA, the RCRA
corrective action program results in the cost of corrective action activities
being typically borne solely by the company. The company anticipates that
significant ongoing expenditures for RCRA remediation activities may be required
over the next two decades, although 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. The company's expenditures
associated with RCRA and similar remediation activities were approximately $79
million in 1996, $94 million in 1995 and $70 million in 1994.
The company from time to time receives requests for information or notices of
potential liability from the Environmental Protection Agency (EPA) and state
environmental agencies alleging that the company is a "potentially responsible
party" (PRP) under CERCLA or an equivalent state statute. The company has also
on occasion been made a party to cost recovery litigation by those agencies or
by private parties. These requests, notices and lawsuits assert potential
liability for remediation costs at various sites that typically are not company
owned but allegedly contain wastes attributable to the company's past
operations. As of December 31, 1996, the company had been notified of potential
liability under CERCLA or state law at about 335 sites around the United States,
with active remediation under way at 152 of those sites. In addition, the
company has resolved its liability at 80 sites, either by completing remedial
actions with other PRPs or by participating in "de minimis buyouts" with other
PRPs whose waste, like the company's, represented only a small fraction of the
total waste present at a site. The company received notice of potential
liability at 7 new sites during 1996 compared with 16 similar notices in 1995
and 17 in 1994. The company's expenditures
26
DuPont
<PAGE>
Management's Discussion and Analysis
associated with CERCLA and similar state remediation activities
were approximately $28 million in 1996, $25 million in 1995 and $21 million in
1994.
For most Superfund sites, the company's potential liability will be
significantly less than the total site remediation costs because the percentage
of waste attributable to the company versus that attributable to all other PRPs
is relatively low. 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. There are relatively few sites where the company is a
major participant, and 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.
Total expenditures for previously accrued remediation activities under CERCLA,
RCRA and similar state laws were $107 million in 1996, $119 million in 1995 and
$91 million in 1994. Although future remediation expenditures in excess of
current reserves is possible, the effect on future financial results is not
subject to reasonable estimation because of the considerable uncertainty
regarding the cost and timing of expenditures. The company is actively pursuing
claims against various parties with respect to remediation liabilities.
27
DuPont
<PAGE>
Responsibilities for Financial Reporting
Management is responsible for the consolidated financial statements and the
other financial information contained in this Annual Report. The financial
statements have been prepared in accordance with generally accepted accounting
principles considered by management to present fairly the company's financial
position, results of operations and cash flows. The financial statements include
some amounts that are based on management's best estimates and judgments.
The company's system of internal controls is designed to provide reasonable
assurance as to the protection of assets against loss from unauthorized use or
disposition, and the reliability of financial records for preparing financial
statements and maintaining accountability for assets. The company's business
ethics policy is the cornerstone of our internal control system. This policy
sets forth management's commitment to conduct business worldwide with the
highest ethical standards and in conformity with applicable laws. The business
ethics policy also requires that the documents supporting all transactions
clearly describe their true nature and that all transactions be properly
reported and classified in the financial records. The system is monitored by an
extensive program of internal audit, and management believes that the system of
internal controls at December 31, 1996 meets the objectives noted above.
The financial statements have been audited by the company's independent
accountants, Price Waterhouse LLP. The purpose of their audit is to
independently affirm the fairness of management's reporting of financial
position, results of operations and cash flows. To express the opinion set forth
in their report, they study and evaluate the internal controls to the extent
they deem necessary. Their report is shown on this page. The adequacy of the
company's internal controls and the accounting principles employed in financial
reporting are under the general oversight of the Audit Committee of the Board of
Directors. This Committee also has responsibility for employing the independent
accountants, subject to stockholder ratification. No member of this Committee
may be an officer or employee of the company or any subsidiary or affiliated
company. The independent accountants and the internal auditors have direct
access to the Audit Committee, and they meet with the Committee from time to
time, with and without management present, to discuss accounting, auditing and
financial reporting matters.
/s/ John A. Krol /s/ Kurt M. Landgraf
John A. Krol Kurt M. Landgraf
President Senior Vice President
and Chief Executive Officer and Chief Financial Officer
February 14, 1997
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 29-50
of this Annual Report present fairly, in all material respects, the financial
position of E. I. du Pont de Nemours and Company and its subsidiaries at
December 31, 1996 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1996, 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.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
February 14, 1997
28
DuPont
<PAGE>
Financial Statements
E.I. du Pont de Nemours and Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
Consolidated Income Statement
(Dollars in millions, except per share)
- --------------------------------------------------------------------------------
1996 1995 1994
<S> <C> <C> <C>
Sales* $43,810 $42,163 $39,333
Other Income (Note 2) 1,340 1,059 888
--------------------------
Total 45,150 43,222 40,221
--------------------------
Cost of Goods Sold and Other Operating Charges 25,144 23,363 21,810
Selling, General and Administrative Expenses 2,856 2,995 2,875
Depreciation, Depletion and Amortization 2,621 2,722 2,976
Exploration Expenses, Including Dry Hole Costs and
Impairment of Unproved Properties 404 331 357
Research and Development Expense 1,032 1,067 1,047
Interest and Debt Expense (Note 3) 713 758 559
Taxes Other Than on Income* (Note 4) 6,399 6,596 6,215
--------------------------
Total 39,169 37,832 35,839
--------------------------
Earnings Before Income Taxes 5,981 5,390 4,382
Provision for Income Taxes (Note 5) 2,345 2,097 1,655
--------------------------
Net Income $ 3,636 $ 3,293 $ 2,727
- --------------------------------------------------------------------------------
Earnings Per Share of Common Stock (Note 6) $ 6.47 $ 5.61 $ 4.00
================================================================================
</TABLE>
* Includes petroleum excise taxes of $5,461, $5,655, and $5,291 in 1996, 1995
and 1994, respectively.
See pages 33-50 for Notes to Financial Statements.
29
DuPont
<PAGE>
Financial Statements
E.I. du Pont de Nemours and Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
Consolidated Balance Sheet
(Dollars in millions, except per share)
- ------------------------------------------------------------------------------
December 31 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and Cash Equivalents (Note 7) $ 1,066 $ 1,408
Marketable Securities (Note 7) 253 47
Accounts and Notes Receivable (Note 8) 5,193 4,912
Inventories (Note 9) 3,706 3,737
Prepaid Expenses 297 276
Deferred Income Taxes (Note 5) 588 575
-----------------
Total Current Assets 11,103 10,955
-----------------
Property, Plant and Equipment (Note 10) 50,549 50,385
Less: Accumulated Depreciation, Depletion and Amortization 29,336 29,044
-----------------
21,213 21,341
Investment in Affiliates (Note 11) 2,278 1,846
Other Assets (Notes 5 and 12) 3,393 3,170
-----------------
Total $37,987 $37,312
- ------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable (Note 13) $ 2,757 $ 2,636
Short-Term Borrowings and Capital Lease Obligations
(Note 14) 3,910 6,157
Income Taxes (Note 5) 526 470
Other Accrued Liabilities (Note 15) 3,794 3,468
-----------------
Total Current Liabilities 10,987 12,731
Long-Term Borrowings and Capital Lease Obligations
(Note 16) 5,087 5,678
Other Liabilities (Note 17) 8,451 8,454
Deferred Income Taxes (Note 5) 2,133 1,783
-----------------
Total Liabilities 26,658 28,646
-----------------
Minority Interests (Note 18) 620 230
-----------------
Stockholders' Equity (next page)
Preferred Stock 237 237
Common Stock, $.60 par value; 900,000,000 shares authorized;
Issued at December 31, 1996--579,042,725;
1995--735,042,724 347 441
Additional Paid-In Capital 6,676 8,689
Reinvested Earnings 4,931 9,503
Cumulative Translation Adjustments (23) -
Common Stock Held in Trust for Unearned Employee
Compensation and Benefits (Flexitrust), at Market
(Shares: December 31, 1996--15,495,795; December 31,
1995--23,546,176) (1,459) (1,645)
Common Stock Held in Treasury, at Cost
(Shares: December 31, 1995--156,000,000) - (8,789)
-----------------
Total Stockholders' Equity 10,709 8,436
-----------------
Total $37,987 $37,312
==============================================================================
</TABLE>
See pages 33-50 for Notes to Financial Statements.
30
DuPont
<PAGE>
Financial Statements
E.I. du Pont de Nemours and Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
Consolidated Statement of Stockholders' Equity (Notes 19 and 20)
(Dollars in millions, except per share)
- -------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <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 $.60 par value;
900,000,000 shares authorized; issued:
Balance January 1 735,042,724 441 681,004,944 408 677,577,437 407
Issuance of Shares in Connection with:
Public and Private Offerings 1 - 27,339,375 16 - -
Establishment of Flexitrust - - 24,000,000 14 - -
Compensation Plans - - 2,698,405 3 3,427,507 1
Retirement of Treasury Stock (156,000,000) (94) - - - -
----------------------------------------------------------------------
Balance December 31 579,042,725 347 735,042,724 441 681,004,944 408
----------------------------------------------------------------------
Additional Paid-In Capital
Balance January 1 8,689 4,771 4,660
Changes due to:
Public and Private Offerings - 1,731 -
Common Stock Held by Flexitrust 458 1,662 -
Shares Issued by Flexitrust (289) (19) -
Issuance (Repurchase) of Warrants (504) 439 -
Compensation Plans 70 105 111
Retirement of Treasury Stock (1,748) - -
----------------------------------------------------------------------
Balance December 31 6,676 8,689 4,771
----------------------------------------------------------------------
Reinvested Earnings
Balance January 1 9,503 7,406 5,926
Net Income 3,636 3,293 2,727
Preferred Dividends (10) (10) (10)
Common Dividends (1996--$2.23; 1995--$2.03;
1994--$1.82) (1,251) (1,186) (1,237)
Retirement of Treasury Stock (6,947) - -
----------------------------------------------------------------------
Balance December 31 4,931 9,503 7,406
----------------------------------------------------------------------
Cumulative Translation Adjustments
Balance January 1 - - -
Translation Adjustments During Year (23) - -
----------------------------------------------------------------------
Balance December 31 (23) - -
----------------------------------------------------------------------
Less: Common Stock Held in Flexitrust
Balance January 1 23,546,176 1,645 - - - -
Establishment of Flexitrust - - 24,000,000 1,626 - -
Shares Issued (8,050,381) (644) (453,824) (31) - -
Adjustments to Market Value 458 50 -
----------------------------------------------------------------------
Balance December 31 15,495,795 1,459 23,546,176 1,645 - -
----------------------------------------------------------------------
Less: Common Stock Held in Treasury, at Cost
Balance January 1 156,000,000 8,789 - - - -
Acquisition (Retirement) of Treasury Stock (156,000,000) (8,789) 156,000,000 8,789 - -
----------------------------------------------------------------------
Balance December 31 - - 156,000,000 8,789 - -
----------------------------------------------------------------------
Total Stockholders' Equity $ 10,709 $ 8,436 $12,822
===============================================================================================================================
</TABLE>
See pages 33-50 for Notes to Financial Statements.
31
DuPont
<PAGE>
Financial Statements
E.I. du Pont de Nemours and Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
(Dollars in millions)
- ------------------------------------------------------------------------------------------------------
1996 1995 1994
----------------------------------
<S> <C> <C> <C>
Cash and Cash Equivalents at Beginning of Year $ 1,408 $ 856 $ 1,109
----------------------------------
Cash Provided by Operations
Net Income 3,636 3,293 2,727
Adjustments to Reconcile Net Income to Cash Provided by Operations:
Depreciation, Depletion and Amortization 2,621 2,722 2,976
Dry Hole Costs and Impairment of Unproved Properties 137 121 152
Other Noncash Charges and Credits--Net (244) (67) (140)
Decrease (Increase) in Operating Assets:
Accounts and Notes Receivable (359) 151 30
Inventories and Other Operating Assets (253) 21 19
Increase (Decrease) in Operating Liabilities:
Accounts Payable and Other Operating Liabilities 531 (8) (432)
Accrued Interest and Income Taxes (Notes 3 and 5) 319 528 332
----------------------------------
Cash Provided by Operations 6,388 6,761 5,664
----------------------------------
Investment Activities (Note 21)
Purchases of Property, Plant and Equipment (3,303) (3,240) (3,050)
Investments in Affiliates (413) (249) (90)
Payments for Businesses Acquired (75) (5) (5)
Proceeds from Sales of Assets 1,271 337 432
Net Decrease (Increase) in Short-Term Financial Instruments (197) 500 (379)
Miscellaneous--Net 57 (56) (41)
----------------------------------
Cash Used for Investment Activities (2,660) (2,713) (3,133)
----------------------------------
Financing Activities
Dividends Paid to Stockholders (1,261) (1,196) (1,247)
Net Increase (Decrease) in Short-Term Borrowings (954) 2,172 (517)
Long-Term and Other Borrowings:
Receipts 3,194 7,640 824
Payments (5,171) (5,642) (2,032)
Acquisition of Treasury Stock (Note 19) - (8,350) -
Repurchase of Warrants (Note 19) (504) - -
Net Proceeds from Issuance of Common Stock
through Public and Private Offerings (Note 19) - 1,747 -
Proceeds from Exercise of Stock Options 315 58 94
Additions to Minority Interests (Note 18) 363 - -
----------------------------------
Cash Used for Financing Activities (4,018) (3,571) (2,878)
----------------------------------
Effect of Exchange Rate Changes on Cash (52) 75 94
Cash and Cash Equivalents at End of Year $ 1,066 $ 1,408 $ 856
----------------------------------
Increase (Decrease) in Cash and Cash Equivalents $ (342) $ 552 $ (253)
======================================================================================================
</TABLE>
See pages 33-50 for Notes to Financial Statements.
32
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
1. Summary of Significant Accounting Policies
DuPont observes the generally accepted accounting principles described below.
These, together with the other notes that follow, are an integral part of the
consolidated financial statements.
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, PP&E placed in service prior to 1995 is depreciated under the
sum-of-the-years' digits method and other substantially similar methods. PP&E
placed in service after 1994 is depreciated using the straight-line method. This
change in accounting was 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
conforms to predominant industry practice. The effect of this change on net
income is dependent on the level of future capital spending; it did not have a
material effect in 1995. Depreciation rates are based on estimated useful lives
ranging from 3 to 25 years. 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.
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 if 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 using the straight-line method over their estimated useful lives.
Goodwill is amortized over periods up to 40 years using the straight-line
method. The company continually evaluates the reasonableness of its amortization
of 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.
33
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
Costs related to environmental remediation are charged to expense. Other
environmental costs are also charged to expense unless they increase the value
of the property and/or mitigate or prevent contamination from future operations,
in which event they are capitalized.
Income Taxes
The provision for income taxes has been determined using the asset and liability
approach of accounting for income taxes. Under this 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 are deemed to be permanently
invested. Investment tax credits or grants are accounted for in the period
earned (the flow-through method).
Foreign Currency Translation
Through December 31, 1995, the company had determined that the U.S. dollar was
the "functional currency" of its worldwide operations. All foreign currency
asset and liability amounts were remeasured into U.S. dollars at end-of-period
exchange rates, except for inventories, prepaid expenses and property, plant and
equipment, which were remeasured at historical rates. Foreign currency income
and expenses were remeasured at average exchange rates in effect during the
year, except for expenses related to balance sheet amounts remeasured at
historical exchange rates. Exchange gains and losses arising from remeasurement
of foreign currency-denominated monetary assets and liabilities were included in
income in the period in which they occurred.
Effective January 1, 1996, management determined that the local currency should
be designated as functional currency for the company's integrated European
petroleum operations to properly reflect changed circumstances in the primary
economic environment in which these subsidiaries operate. For subsidiaries whose
functional currency is local currency, assets and liabilities denominated in
local currency are translated into U.S. dollars at end-of-period exchange rates,
and resultant translation adjustments are reported as a separate component of
stockholders' equity. Assets and liabilities denominated in other than the local
currency are remeasured into the local currency prior to translation into U.S.
dollars, and the resultant exchange gains or losses, net of their related tax
effects, are included in income in the period in which they occur. Income and
expenses are translated into U.S. dollars at average exchange rates in effect
during the period.
The company routinely uses forward exchange contracts to hedge its net exposure,
by currency, related to monetary assets and liabilities denominated in
currencies other than the functional currency of the reporting unit. Exchange
gains and losses associated with these contracts are included in income in the
period in which they occur.
The company selectively enters into forward exchange contracts and similar
agreements to effectively convert firm foreign currency commitments to
functional currency-denominated transactions. Gains and losses on these firm
commitment hedges are deferred and included in the functional currency
measurement of the related foreign currency-denominated transactions.
Exchange gains and losses, net of their related tax effects, are not material in
amount.
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
34
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
transaction. On a limited basis, the company also purchases and sells petroleum-
and other energy-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.
Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications
Certain reclassifications of prior years' data have been made to conform to 1996
classifications.
2. Other Income
<TABLE>
<CAPTION>
- --------------------------------------------------------------
1996 1995 1994
---------------------
<S> <C> <C> <C>
Royalty income $ 74 $ 70 $ 58
Interest income, net of miscellaneous
interest expense 211 178 111
Equity in earnings of affiliates
(see Note 11) 669 545 348
Sales of assets 279 102 104
Pipeline tariff revenue 81 71 75
Miscellaneous income and
expenses--net 26 93 192
---------------------
$1,340 $1,059 $ 888
- --------------------------------------------------------------
</TABLE>
3. Interest and Debt Expense
<TABLE>
<CAPTION>
- --------------------------------------------------------------
1996 1995 1994
---------------------
<S> <C> <C> <C>
Interest and debt cost incurred $ 857 $ 928 $ 702
Less: Interest and debt cost capitalized 144 170 143
---------------------
$ 713 $ 758 $ 559
- --------------------------------------------------------------
</TABLE>
Interest paid (net of amounts capitalized) was $755 in 1996, $688 in 1995 and
$598 in 1994.
4. Taxes Other Than on Income
<TABLE>
<CAPTION>
- --------------------------------------------------------------
1996 1995 1994
---------------------
<S> <C> <C> <C>
Petroleum excise taxes
(also included in Sales):
U.S. $1,145 $1,060 $1,049
Non-U.S. 4,316 4,595 4,242
Payroll taxes 439 433 424
Property taxes 205 214 202
Import duties 168 166 159
Production and other taxes 126 128 139
---------------------
$6,399 $6,596 $6,215
- --------------------------------------------------------------
</TABLE>
5. Provision for Income Taxes
<TABLE>
<CAPTION>
- --------------------------------------------------------------
1996 1995 1994
---------------------
Current tax expense:
<S> <C> <C> <C>
U.S. federal $ 869 $ 617 $ 337
U.S. state and local 40 36 47
Non-U.S. 1,248 1,077 1,023
---------------------
Total 2,157 1,730 1,407
---------------------
Deferred tax expense:
U.S. federal 135 379 497
U.S. state and local 4 22 (55)
Non-U.S. 49 (25) (136)
---------------------
Total 188 376 306
---------------------
Other/1/ - (9) (58)
---------------------
Provision for Income Taxes 2,345 2,097 1,655
Stockholders' Equity/2/ (69) (30) (26)
---------------------
Total Provision $2,276 $2,067 $1,629
- --------------------------------------------------------------
</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.
2 Represents tax benefit of certain stock compensation amounts that are
deductible for income tax purposes but do not affect net income.
Total income taxes paid worldwide were $1,984 in 1996, $1,649 in 1995 and $1,344
in 1994.
35
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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 are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------
1996 1995 1994
---------------------
<S> <C> <C> <C>
Depreciation $ 68 $ 152 $ 144
Accrued employee benefits 99 62 (19)
Other accrued expenses (91) 118 185
Intangible drilling costs (15) (23) (48)
Inventories (52) (71) (87)
Unrealized exchange gains/(losses) 5 (1) 103
Investment in subsidiaries and
affiliates (19) - (7)
Other temporary differences 107 40 33
Tax loss/tax credit
carryforwards 210 18 90
Valuation allowance change--net (124) 81 17
Tax status changes - - (105)
---------------------
$ 188 $ 376 $ 306
- --------------------------------------------------------------
</TABLE>
The significant components of deferred tax assets and liabilities at December
31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
1996 1995
- ----------------------------------------------------------------
Deferred Tax Asset Liability Asset Liability
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Depreciation $ 3 $3,220 $ - $3,120
Accrued employee benefits 2,852 811 2,920 738
Other accrued expenses 773 24 668 8
Intangible drilling costs - 251 - 266
Inventories 267 285 236 303
Unrealized exchange gains 7 37 21 41
Tax loss/tax credit
carryforwards 236 - 446 -
Investment in subsidiaries
and affiliates 60 129 43 131
Other 453 1,066 376 880
----------------------------------
Total $4,651 $5,823 $4,710 $5,487
------ ------
Less: Valuation
allowance 298 422
------ ------
Net $4,353 $4,288
- ----------------------------------------------------------------
</TABLE>
Current deferred tax liabilities (included in the Consolidated Balance Sheet
caption "Income Taxes") were $48 and $66 at December 31, 1996 and 1995,
respectively. In addition, deferred tax assets of $123 and $75 were included in
Other Assets at December 31, 1996 and 1995, respectively (see Note 12).
An analysis of the company's effective income tax rate follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------
1996 1995 1994
---------------------
<S> <C> <C> <C>
Statutory U.S. federal
income tax rate 35.0% 35.0% 35.0%
Higher effective tax rate
on non-U.S. operations
(principally Petroleum) 6.7 6.8 9.9
Lower effective tax rate
on operations within U.S.
possessions (0.3) (1.0) (1.1)
Alternative fuels credit (1.1) (1.1) (2.1)
Tax status changes - - (2.4)*
Other--net (1.1) (0.8) (1.5)
---------------------
Effective income tax rate 39.2% 38.9% 37.8%
- --------------------------------------------------------------
</TABLE>
* 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>
- --------------------------------------------------------------
1996 1995 1994
---------------------
<S> <C> <C> <C>
United States (including exports) $3,633 $3,066 $2,651
Other regions 2,348 2,324 1,731
---------------------
$5,981 $5,390 $4,382
- --------------------------------------------------------------
</TABLE>
At December 31, 1996, unremitted earnings of non-U.S. subsidiaries totaling
$5,928 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, 1996, the tax
effect of such carryforwards approximated $236. Of this amount, $133 has no
expiration date, $30 expires in 1997, $13 expires after 1997 but before 2003 and
$60 expires between 2003 and 2012.
6. Earnings Per Share of Common Stock
Earnings per share are calculated on the basis of the following average number
of common shares outstanding: 1996--560,675,296; 1995--585,107,476; and 1994--
679,999,916.
36
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
Shares held by the Flexitrust are not considered outstanding in computing
average shares outstanding. Earnings per share calculations that reflect the
effect of common stock equivalents in the periods presented either are anti-
dilutive or result in no material dilution of earnings per share. See Notes 19
and 20.
7. 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 floating rate financial
instruments classified as available-for-sale securities and reported at fair
value.
8. Accounts and Notes Receivable
<TABLE>
<CAPTION>
- ------------------------------------------------------------
December 31 1996 1995
- ------------------------------------------------------------
<S> <C> <C>
Trade--net of allowances of $66 in 1996
and $78 in 1995 $4,216 $4,292
Miscellaneous 977* 620
-----------------
$5,193 $4,912
- ------------------------------------------------------------
</TABLE>
* Includes $137 from equity affiliates.
Accounts and notes receivable are carried at amounts which approximate fair
value.
See Note 27 for a description of business segment markets and associated
concentrations of credit risk.
9. Inventories
<TABLE>
<CAPTION>
- -----------------------------------------
December 31 1996 1995
- -----------------------------------------
<S> <C> <C>
Chemicals $ 281 $ 262
Fibers 692 598
Polymers 620 637
Petroleum 1,270 1,293
Life Sciences 561 572
Diversified Businesses 282 375
---------------
$3,706 $3,737
- -----------------------------------------
</TABLE>
The excess of replacement or current cost over stated value of inventories for
which cost has been determined under the LIFO method approximated $785 and $885
at December 31, 1996 and 1995, 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 of
consolidated inventories before LIFO adjustment at December 31, 1996 and 1995.
10. Property, Plant and Equipment
<TABLE>
<CAPTION>
- ------------------------------------------------------
December 31 1996 1995
- ------------------------------------------------------
<S> <C> <C>
Chemicals $ 6,074 $ 6,055
Fibers 12,325 11,745
Polymers 6,813 7,247
Petroleum 20,070 19,390
Life Sciences 1,271 1,185
Diversified Businesses 3,996 4,763
----------------
$50,549 $50,385
- ------------------------------------------------------
</TABLE>
Property, plant and equipment includes gross assets acquired under capital
leases of $209 and $208 at December 31, 1996 and 1995, respectively; related
amounts included in accumulated depreciation, depletion and amortization were
$99 and $95 at December 31, 1996 and 1995, respectively.
11. 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., DuPont Dow Elastomers L.L.C. and The
DuPont Merck Pharmaceutical Company; DuPont has a 50 percent equity ownership in
each of these companies. Dividends received from equity affiliates were $860 in
1996, $671 in 1995 and $326 in 1994.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended December 31
------------------------------------------
Results of operations 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales/1/ $13,374 $10,447 $ 9,161
Earnings before income taxes 1,108 1,084 947
Net Income 822 828 732
DuPont's equity in earnings
of affiliates
(see Note 2) 669/2/ 545/2/ 348
- --------------------------------------------------------------------------------
</TABLE>
1 Includes sales to DuPont of $804 in 1996, $802 in 1995 and $828 in 1994.
2 Reflects a more favorable allocation of DuPont Merck operating income to
recognize the performance of assets originally contributed to the venture
by DuPont.
37
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
Financial position at December 31 1996 1995
- -----------------------------------------------------------------
<S> <C> <C>
Current assets $ 4,715 $ 3,744
Noncurrent assets 10,936 8,852
----------------------
Total assets $15,651 $12,596
----------------------
Short-term borrowings* $ 830 $ 935
Other current liabilities 2,630 2,434
Long-term borrowings* 3,802 2,652
Other long-term liabilities 3,250 2,847
----------------------
Total liabilities $10,512 $ 8,868
----------------------
DuPont's investment in
affiliates
(includes advances) $ 2,278 $ 1,846
- -----------------------------------------------------------------
</TABLE>
* DuPont's pro rata interest in total borrowings was $1,565 in 1996 and $1,401
in 1995, of which $789 in 1996 and $700 in 1995 was guaranteed by the company.
These amounts are included in the guarantees disclosed in Note 25.
12. Other Assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
December 31 1996 1995
- -----------------------------------------------------------------
<S> <C> <C>
Prepaid pension cost (see Note 23) $1,760 $1,724
Intangible assets 221 200
Other securities and investments 586 554
Deferred income taxes (see Note 5) 123 75
Miscellaneous 703 617
---------------------
$3,393 $3,170
- -----------------------------------------------------------------
</TABLE>
Other securities and investments includes $478 and $435 at December 31, 1996 and
1995, 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.
13. Accounts Payable
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
December 31 1996 1995
- -----------------------------------------------------------------
<S> <C> <C>
Trade $1,926 $1,761
Payables to banks 264 281
Compensation awards 231 242
Miscellaneous 336 352
---------------------
$2,757 $2,636
- -----------------------------------------------------------------
</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.
14. Short-Term Borrowings and Capital Lease Obligations
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
December 31 1996 1995
- -----------------------------------------------------------------
<S> <C> <C>
Commercial paper/1/ $1,663 $1,247
Private placement
commercial paper 1,318 3,686
Bank borrowings:
U.S. dollars 61 9
Other currencies/2/ 136 290
Medium-term notes payable
within one year 372 316
Long-term borrowings
payable within one year 300 551
Industrial development
bonds payable on demand 51 51
Capital lease obligations 9 7
---------------------
$3,910 $6,157
- -----------------------------------------------------------------
</TABLE>
/1/ 1995 includes an interest rate swap that converted $50 of floating rate
borrowings to a fixed rate obligation of 8.3 percent, as part of the
program to manage the fixed and floating rate mix of total borrowings.
/2/ 1995 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.
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 $3,900 and $6,200 at December 31, 1996 and 1995,
respectively. The decrease in estimated fair value in 1996 was primarily due to
lower short-term borrowing levels.
Unused short-term bank credit lines were approximately $4,500 and $5,400 at
December 31, 1996 and 1995, 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, 1996 and 1995 was 6.0 percent and 6.1 percent, respectively.
DuPont
38
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
15. Other Accrued Liabilities
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
December 31 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Payroll and other employee
benefits $ 688 $ 687
Taxes other than on income 395 399
Accrued postretirement
benefits cost
(see Note 22) 356 345
Miscellaneous 2,355 2,037
--------------------------
$3,794 $3,468
- --------------------------------------------------------------------------
</TABLE>
16. Long-Term Borrowings and Capital Lease Obligations
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
December 31 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
U.S. dollar:
Industrial development
bonds due 2007-2026 $ 334 $ 294
Medium-term notes due
1997-2005/1/ 516 838
8.65% notes due 1997 - 300
8.50% notes due 1998 301 301
7.50% notes due 1999 302 303
9.15% notes due 2000/2/ 304 305
6.00% debentures due 2001
($660 face value,
13.95% yield to maturity) 475 451
6.75% notes due 2002 299 299
8.00% notes due 2002 253 253
8.50% notes due 2003/2/ 300 300
8.13% notes due 2004 330 331
8.25% notes due 2006 282 282
8.25% debentures due 2022 372 372
7.95% debentures due 2023 299 299
7.50% debentures due 2033 247 247
6.25% Swiss franc notes
due 2000/3/ 103 103
Other loans (various
currencies)
due 1997-2008 266 294
Capital lease obligations 104 106
--------------------------
$5,087 $5,678
- --------------------------------------------------------------------------
</TABLE>
/1/ Average interest rates at December 31, 1996 and 1995 were 7.0 percent and
6.8 percent, respectively.
/2/ The company entered into an interest rate swaption agreement for each of
these notes as part of the program to manage the fixed and floating
interest rate mix of total borrowings. Each agreement gives the swaption
counterparty the one-time option to put the company into an interest rate
swap with a notional amount of $300, whereby the company would, over the
remaining term of the notes, receive fixed rate payments essentially
equivalent to the fixed interest rate of the underlying notes, and pay the
counterparty a floating rate of interest essentially equivalent to the rate
the company pays on its commercial paper. If exercised, the swaptions would
effectively convert the notes to a floating rate obligation over the
remaining maturity of the notes. The premium received from the
counterparties for these swaptions is being amortized to income, using the
effective interest method, over the remaining maturity of the notes. The
fair value and carrying value of these swaptions at December 31, 1996 and
1995 were not material.
/3/ 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.
Average interest rates on industrial development bonds and on other loans
(various currencies) were 6.1 percent and 6.9 percent at December 31, 1996, and
6.1 percent and 6.5 percent at December 31, 1995.
Maturities of long-term borrowings, together with sinking fund requirements for
years ending after December 31, 1997 are $446, $409, $523, and $784 for the
years 1998, 1999, 2000 and 2001, respectively.
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 $5,700 and $6,500 at December 31, 1996 and 1995,
respectively.
17. Other Liabilities
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
December 31 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Accrued postretirement benefits cost (see Note 22) $5,847 $6,022
Reserves for employee-related costs 1,159 1,080
Miscellaneous 1,445 1,352
--------------------
$8,451 $8,454
- --------------------------------------------------------------------------
</TABLE>
18. Minority Interests
In March 1996, certain petroleum subsidiaries contributed assets with an
aggregate fair value of $613 to Conoco Oil & Gas Associates L.P. (COGA) for a
general partnership interest of 67 percent. The remaining 33 percent was
purchased by Vanguard Energy Investors L.P. (Vanguard) as a limited partner. The
net result of this transaction was to increase minority interests by $297.
Vanguard is entitled to a cumulative annual priority return on its investment
and participation in residual earnings at rates established in the partnership
agreement. The priority return rate, currently 6.52 percent, is negotiated every
four years. Vanguard's share of COGA's 1996 earnings was $18, or 17 percent.
DuPont
39
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
19. Stockholders' Equity
In April 1995, the company redeemed 156 million shares of its common stock from
Seagram for $8,775 ($56.25 per share), including warrants valued at $439. In
addition, related costs of $14 were incurred. In July 1996, DuPont repurchased
the warrants for $504. Coincident with the repurchase, the company retired 156
million shares of common stock held as treasury stock.
In the second quarter of 1995, the company sold through public and private
offerings 27,339,375 shares of newly issued common stock for $1,747, including
7,789,375 shares that were sold to the DuPont Pension Trust Fund for $500
($64.19 a share). The company also established a Flexitrust that will effect the
sale or distribution of common stock to satisfy existing employee compensation
and benefit programs. In May 1995, DuPont issued 24 million shares of common
stock to the Flexitrust in return for a $1,612 promissory note and $14 in cash.
In January 1997, the company approved plans to purchase and retire up to 10
million shares of common stock to offset dilution resulting from shares issued
under its compensation programs.
20. Compensation Plans
The company has two stock option programs - the Corporate Sharing Program and
the DuPont Stock Performance Plan.
In 1990 and 1995, the Board of Directors approved the adoption of worldwide
Corporate Sharing Programs. Under each of these two programs, essentially all
employees each received a one-time grant to acquire 100 shares of DuPont common
stock at the fair market value at date of grant. Option terms are "fixed and
determinable." Also, options generally are exercisable one year after date of
grant and expire 10 years from date of grant.
Stock option awards under the DuPont Stock Performance Plan may be granted to
key employees of the company. Except for certain options granted in 1997, as
discussed below, option terms are "fixed and determinable." The purchase price
of shares subject to option is the fair value of the company's stock on the date
of grant. Generally, options are exercisable one year after date of grant and
expire 10 years from date of grant. The maximum number of shares that may be
subject to option for any consecutive five-year period is 36 million shares.
Subject to this limit, additional shares that may have been made subject to
options for the years 1996, 1995 and 1994 were 29,539,463, 28,385,230 and
27,527,631, respectively.
Common shares subject to option under both of these programs are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1996 1995 1994
-------------------------------------------
<S> <C> <C> <C>
Outstanding at January 1 30,769,589 21,364,847 23,470,630
Options granted 2,846,733 13,260,861 2,324,720
Weighted average price $78.82 $56.78 $52.50
Options exercised 8,877,026 3,558,624 4,153,206
Weighted average price $47.12 $36.05 $35.53
Options expired or terminated 47,182 297,495 277,297
Weighted average price $51.58 $45.52 $28.68
At December 31:
Options outstanding 24,692,114 30,769,589 21,364,847
Weighted average price $51.46 $47.66 $40.03
Options exercisable 21,869,201 17,709,638 19,054,727
Weighted average price $47.93 $40.93 $38.52
- --------------------------------------------------------------------------------
</TABLE>
The following table summarizes information concerning currently outstanding and
exercisable options:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Exercise Exercise Exercise
Price Price Price
$26.34-$39.25 $44.50-$62.75 $67.25-$94.25
-------------------------------------------
<S> <C> <C> <C>
Options outstanding
at 12/31/96 7,610,919 14,214,282 2,866,913
Weighted average remaining
contractual life (years) 3.5 7.4 9.1
Weighted average price $36.63 $53.92 $78.64
Options exercisable
at 12/31/96 7,610,919 14,214,282 44,000
Weighted average price $36.63 $53.92 $67.53
- --------------------------------------------------------------------------------
</TABLE>
In January 1997, the Board of Directors approved a worldwide 1997 Corporate
Sharing Program and awarded to essentially all employees a one-time "fixed and
determinable" grant to acquire 100 shares of DuPont common stock at the fair
market value ($105 per share) on the date of grant. During all but the last six
months of the ten-year option term, these options cannot be exercised until a
market price of $150 per share of DuPont common stock is achieved.
Awards for 1996 under the DuPont Stock Performance Plan (granted to key
employees in 1997) consisted of 4,468,813 options to acquire DuPont common stock
at the fair market value ($105 per share) on the date of grant. Two types of
options were granted: 2,023,663 "fixed and determinable" options and 2,445,150
"variable" options. During all but the last six months of the ten-year option
term, the "fixed and determinable" options cannot be exercised until a market
price of $150 per share is
DuPont
40
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
achieved. "Variable" options were granted to certain senior management. These
options are subject to forfeiture if, within five years from the date of grant,
the market price of DuPont common stock does not achieve a price of $150 per
share for 50 percent of the options and $180 per share for the remaining 50
percent. Also, in January 1997, a reload feature was added to the Stock
Performance Plan to accelerate stock ownership by more effectively using stock
options granted prior to 1997. For a one-year period, optionees are eligible for
reload options upon the exercise of previously granted stock options with the
condition that shares received from that exercise are held for at least five
years. Reload options will be granted at the fair market value on the date of
grant and have a term equal to the remaining term of the original option. The
maximum number of reload options granted is limited to the number of shares
subject to option in the original option times the original option price divided
by the option price of the reload option.
The company applies APB Opinion No. 25,"Accounting for Stock Issued to
Employees," and related interpretations in accounting for its stock option
plans. Accordingly, no compensation expense has been recognized for the fixed
option plans. Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation," was issued in 1995. The company has
elected not to adopt the optional recognition provisions of SFAS No. 123. The
table below sets forth pro forma information as if the company had adopted these
recognition provisions.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
1996 1995
-----------------
<S> <C> <C>
Weighted average fair value of options granted -
per share subject to option* $17.89 $11.88
Reduction of:
Net income $ 34 $ 100
Earnings per share $ .06 $ .17
Assumptions:
Dividend yield 2.6% 3.4%
Volatility 21.0% 20.6%
Risk-free interest rate 5.4% 7.6%
Expected life (years) 6.0 4.5
- ---------------------------------------------------------------------
</TABLE>
* Calculated using Black-Scholes option-pricing model.
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 $233 for 1996, $240 for 1995 and
$208 for 1994. 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 $230 in 1996, $240 in 1995 and $220 in
1994. In accordance with the terms of the Variable Compensation Plan and similar
plans of subsidiaries, 914,036 shares of common stock were awaiting delivery
from awards for 1996 and prior years.
21. Investment Activities
Proceeds from sales of assets in 1996 principally include $570 from the sales of
Medical Products businesses, $390 from the formation of the elastomers joint
venture, and $275 from the sales of various petroleum properties. Also, a note
for $175 was received as part of the consideration for the sale of one of the
Medical Products businesses. Assets sold in connection with these sales amounted
to $1,163, of which $644 was for property, plant and equipment with the
remainder being primarily working capital. In 1995 and 1994, there were no
individually material items included in sales of assets.
Payments for businesses acquired in 1996 principally relate to the purchase of
commercial floorcovering distribution and installation companies.
22. 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
these plans, the company reserves the right to change, modify or discontinue the
plans.
41
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
Other postretirement benefits cost include the following components:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
Health Life
Care Insurance Total
--------------------------
<S> <C> <C> <C>
1996
Service cost--benefits allocated
to current period $ 51 $ 17 $ 68
Interest cost on accumulated
postretirement benefit obligation 259 74 333
Amortization of net gains and prior
service credit (102) (1) (103)
--------------------------
Other postretirement benefits cost $ 208 $ 90 $ 298
--------------------------
1995
Service cost--benefits allocated
to current period $ 39 $ 13 $ 52
Interest cost on accumulated
postretirement benefit obligation 274 78 352
Amortization of net gains and prior
service credit (133) (1) (134)
--------------------------
Other postretirement benefits cost $ 180 $ 90 $ 270
--------------------------
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
=================================================================
</TABLE>
The lower health care costs in 1996 and 1995 versus 1994 were due to the
discount rate and health care trends used to determine the accumulated
postretirement benefit obligation. In 1996, the company recorded a curtailment
gain of $115 related to business divestitures, joint venture activity and other
business restructurings.
The following provides a reconciliation of the accumulated postretirement
benefit obligation to the liabilities reflected in the balance sheet at December
31, 1996 and 1995:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Health Life
Care Insurance Total
-----------------------------
<S> <C> <C> <C>
1996
Accumulated postretirement benefit
obligation for:
Current pensioners and survivors $(2,661) $ (676) $(3,337)
Fully eligible employees (195) - (195)
Other employees (908) (287) (1,195)
-----------------------------
(3,764) (963) (4,727)
Unrecognized net loss/(gain) (714) 13 (701)
Unrecognized prior service credit (775) - (775)
-----------------------------
Accrued postretirement benefits cost $(5,253) $ (950) $(6,203)
-----------------------------
Amount included in Other
Accrued Liabilities (see Note 15) $ 356
-------
Amount included in Other Liabilities
(see Note 17) $ 5,847
-------
1995
Accumulated postretirement benefit
obligation for:
Current pensioners and survivors $(2,535) $ (660) $(3,195)
Fully eligible employees (196) - (196)
Other employees (981) (381) (1,362)
-----------------------------
(3,712) (1,041) (4,753)
Unrecognized net loss/(gain) (756) 116 (640)
Unrecognized prior service credit (974) - (974)
-----------------------------
Accrued postretirement benefits cost $(5,442) $ (925) $(6,367)
-----------------------------
Amount included in Other
Accrued Liabilities (see Note 15) $ 345
-------
Amount included in Other Liabilities
(see Note 17) $ 6,022
=====================================================================
</TABLE>
The health care accumulated postretirement benefit obligation was determined at
December 31, 1996 and 1995 using a health care escalation rate of 8 percent
decreasing to 5 percent over 8 years. The assumed long-term rate of compensation
increase used for life insurance was 5 percent. The discount rate was 7.75
percent at December 31, 1996 and 7.25 percent at December 31, 1995. A one-
percentage-point increase in the health care cost escalation rate would have
increased the accumulated postretirement benefit obligation by $295 at December
31, 1996, and the 1996 other postretirement benefit cost would have increased by
$30.
42
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
23. Pensions
The company has noncontributory defined benefit plans covering substantially all
U.S. employees. The benefits for these plans are based primarily on years of
service and employees' pay near retirement. The company's funding policy is
consistent with the funding requirements of federal law and regulations.
Pension coverage for employees of the company's non-U.S. consolidated
subsidiaries is provided, to the extent deemed appropriate, through separate
plans. Obligations under such plans are systematically provided for by
depositing funds with trustees, under insurance policies or by book reserves.
Net pension cost/(credit) for defined benefit plans includes the following
components:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
1996 1995 1994
----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Service cost--benefits
earned during the period $ 382 $ 292 $ 380
Interest cost on projected
benefit obligation 1,173 1,140 1,079
Return on assets:
Actual (gain)/loss $(2,477) $(3,417) $ 214
Deferred gain/(loss) 1,017 (1,460) 2,082 (1,335) (1,540) (1,326)
------- ------- -------
Amortization of net gains
and prior service cost (72) (108) (91)
------- ------- -------
Net pension cost/(credit) $ 23 $ (11) $ 42
=======================================================================================
</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. In 1996, the company recorded a curtailment loss of $88
related to business divestitures, joint venture activity and other business
restructurings.
The funded status of these plans was as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
December 31 1996 1995
- ----------------------------------------------------------------- ---------------------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $(12,584) $(12,543)
-------- --------
Accumulated benefit
obligation $(13,073) $(13,128)
-------- --------
Projected benefit
obligation $(15,085) $(15,404)
Plan assets at fair value 17,654 16,691
-------- --------
Excess of assets over
projected benefit
obligation 2,569 1,287
Unrecognized net (gains)/1/ (1,493) (73)
Unrecognized prior service
cost 684 510
-------- --------
Prepaid pension cost/2/ $ 1,760 $ 1,724
===========================================================================================
</TABLE>
1 Includes the unamortized balance of $(1,000) and $(1,168) at December 31,
1996 and 1995, 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 $1,014 and $966 and the
related projected benefit obligation of $1,597 and $1,474 at December 31,
1996 and 1995, respectively.
43
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
For U.S. plans, the projected benefit obligation was determined using a discount
rate of 7.75 percent at December 31, 1996 and 7.25 percent at December 31, 1995,
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, including 8,068,948 shares of DuPont at December
31, 1996, and U.S. government obligations. For non-U.S. plans, no one of which
was material, similar economic assumptions were used.
24. Derivatives and Other Hedging Instruments
The company enters into contractual arrangements (derivatives) in the ordinary
course of business to hedge its exposure to currency, interest rate and
commodity price risks. The company has established an overlying Financial Risk
Management Framework for risk management and derivative activities. The
Framework sets forth senior management's financial risk management philosophy
and objectives through a Corporate Financial Risk Management Policy. In
addition, it establishes oversight committees and risk management guidelines
that authorize the use of specific derivative instruments and further
establishes procedures for control and valuation, counterparty credit approval,
and routine monitoring and reporting. 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 the aforementioned 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 such nonperformance. Market and counterparty credit
risks associated with these instruments are regularly reported to management.
The company's accounting policies with respect to these financial instrument
transactions are set forth in Note 1.
Currency Risk
The company routinely uses forward exchange contracts to hedge its net
exposures, by currency, related to monetary assets and liabilities of its
operations that are denominated in currencies other than the designated
functional currency. 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 currency exposures and related hedge positions at December 31, 1996
were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Open Contracts To
Net Monetary Buy/(Sell) Currency Net
Asset/(Liability) -------------------- After-Tax
Currency Exposure Pretax After-Tax Exposure
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
British Pound $ 568 $(923) $(572) $(4)
Canadian Dollar $ 315 $(507) $(314) $ 1
German Mark $(344) $ 552 $ 342 $(2)
Norwegian Krone $ 570 $(921) $(571) $(1)
French Franc $ 288 $(463) $(287) $ 1
Italian Lira $ 235 $(379) $(235) $ -
========================================================================
</TABLE>
44
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
In addition, the company from time to time will enter into forward exchange
contracts to establish with certainty the functional currency amount of future
firm commitments denominated in another 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, 1996, 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 $(192), $195
and $139 for the years 1996, 1995 and 1994, respectively.
Interest Rate Risk
The company uses a combination of financial instruments, including interest rate
swaps, interest and principal currency swaps and structured medium-term
financings, as part of its program to manage the fixed and floating interest
rate mix of the total debt portfolio and related overall cost of borrowing.
Interest rate swaps involve the exchange of fixed for floating rate interest
payments that are fully integrated with underlying fixed-rate bonds or notes to
effectively convert fixed rate debt into floating rate debt based on LIBOR or
commercial paper rates. Interest rate swaps also involve the exchange of
floating for fixed rate interest payments that are fully integrated with
commercial paper or other floating rate borrowings to effectively convert
floating rate debt into fixed rate debt. Both types of interest rate swaps are
denominated in U.S. dollars. Interest rate swaps allow the company to maintain a
target range of floating rate debt. Notional amounts do not represent the
amounts exchanged by the counterparties, and thus are not a measure of market or
credit exposure to the company. The amounts exchanged by the counterparties are
calculated on the basis of the notional amounts and the fixed and floating
interest rates.
An interest rate swap was outstanding at December 31, 1995, which matured in
1996, that had a notional amount of $50, and a fixed rate of 8.3 percent in
exchange for a floating rate.
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.
An interest and principal currency swap was outstanding at December 31, 1996 and
1995, 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 indexes; 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.
The face amount of these structured medium-term financings outstanding was $135
and $230 at December 31, 1996 and 1995, respectively. The weighted average
interest rate and weighted average maturity was 5.8 and 6.3 percent, and 3.8
years and 3.0 years, at December 31, 1996 and 1995, respectively. In addition,
the company's majority-owned Canadian subsidiary had a structured medium-term
financing outstanding at December 31, 1995, which matured in 1996, that
effectively converted a 160 million Australian dollar borrowing, with a 16.5
percent Australian dollar fixed interest rate, to a Canadian dollar borrowing
with an implicit 12.43 percent Canadian dollar fixed interest rate.
45
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
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
creditworthy 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, 1996 and 1995.
See also Notes 14 and 16 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, 1996 and
1995.
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, 1996 and 1995, respectively. At December 31, 1996, 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 7, 8, 12, 13, 14 and 16 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, 1996 $ 7,597 $ (30) $ (52)
1995 14,818 (108) (144)
Interest Rate Swaps
December 31, 1996 $ - $ - $ -
1995 50 (1) -
Interest and Principal Currency Swaps
December 31, 1996 $ 103 $ 18 $ 8
1995 103 38 27
Structured Medium-Term Swaps
December 31, 1996 $ 135 $ (1) $ 5
1995 349 73 71
==============================================================================
</TABLE>
Estimated fair values shown above only represent the value of the hedge or swap
component of these transactions, and thus are not indicative of the fair value
of the company's overall hedged position. The estimated fair value of the
company's total debt portfolio, based on quoted market prices for the same or
similar issues or on current rates offered to the company for debt of the same
remaining maturities, was $9,600 and $12,800 at December 31, 1996 and 1995,
respectively. The decrease in fair value in 1996 was primarily due to reduced
borrowing levels. 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 Price Risk
The company enters into exchange-traded and over-the-counter derivative
commodity instruments 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 a portion 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 supply requirements.
46
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, exept per share)
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 derivative commodity instruments reduces the effects of
price volatility, thereby protecting against adverse price movements, while
limiting, somewhat, the benefits of favorable price movements. Open hedge
positions and deferred gains/losses for derivative commodity instruments were
not material at December 31, 1996 and 1995.
On a limited basis, the company also purchases and sells petroleum- and other
energy-based futures contracts for trading purposes. After-tax gain/loss from
such trading has not been material.
25. Commitments and Contingent Liabilities
The company uses various leased facilities and equipment in its operations.
Future minimum lease payments under noncancelable operating leases are $344,
$276, $191, $148 and $122 for the years 1997, 1998, 1999, 2000 and 2001,
respectively, and $620 for subsequent years, and are not reduced by
noncancelable minimum sublease rentals due in the future in the amount of $149.
Rental expense under operating leases was $354 in 1996, $339 in 1995 and $355 in
1994.
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.
During 1991, the company initiated a stop-sale and recall of Benlate(R) 50 DF
fungicide. About 60 of the more than 700 cases filed against the company in
connection with the recall remain, the rest having been disposed of by trial,
dismissal or settlement. In the fourth quarter of 1995, DuPont and the other
major defendants in litigation concerning allegedly defective plumbing systems
made with polybutylene pipe and acetal fittings settled two of several national
class actions. The company's liability in the settled actions is limited to 10
percent of the cost of repairing plumbing systems up to a total company payout
of $120. The related liability for each of these matters 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.
The company is also subject to contingencies pursuant to environmental laws and
regulations that in the future may require the company to take further action to
correct the effects on the environment of prior disposal practices or releases
of chemical or petroleum substances by the company or other parties. The company
has accrued for certain environmental remediation activities consistent with the
policy set forth in Note 1. At December 31, 1996, such accrual amounted to $586
and, in management's opinion, was appropriate based on existing facts and
circumstances. Under adverse changes in circumstances, potential liability may
exceed amounts accrued. 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, 1996, these
indirect guarantees totaled $73, and the company had directly guaranteed $1,262
of the obligations of certain affiliated companies and others. No material loss
is anticipated by reason of such agreements and guarantees. In addition, at
December 31, 1996, the company had directly guaranteed the commitment by an
equity affilate to purchase natural gas at prices that were in excess of
year-end 1996 market prices. No material annual loss is expected from this
commitment.
47
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
26. Geographic Information
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
United Other
States Europe Regions Consolidated
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
Sales to Unaffiliated Customers/1/ $22,969 $16,045 $4,796 $43,810
Transfers Between
Geographic Areas/2/ 2,699 753 671 -
-----------------------------------------------------
Total $25,668 $16,798 $5,467 $43,810
-----------------------------------------------------
After-Tax Operating Income $ 2,688 $ 1,144 $ 186 $ 4,018
Identifiable Assets at December 31 $17,230 $10,973 $4,462 $32,665
-----------------------------------------------------
1995
Sales to Unaffiliated Customers/1/ $21,534 $15,859 $4,770 $42,163
Transfers Between
Geographic Areas/2/ 2,406 755 605 -
-----------------------------------------------------
Total $23,940 $16,614 $5,375 $42,163
-----------------------------------------------------
After-Tax Operating Income $ 2,414 $ 1,161 $ 169 $ 3,744
Identifiable Assets at December 31 $17,387 $10,879 $4,149 $32,415
-----------------------------------------------------
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 $ 1,955 $ 850 $ 230 $ 3,035
Identifiable Assets at December 31 $17,479 $10,708 $4,007 $32,194
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
1 Sales outside the United States of products manufactured in and exported
from the United States totaled $3,826 in 1996, $4,289 in 1995 and $3,625 in
1994.
2 Products are transferred between geographic areas on a basis intended to
reflect as nearly as practicable the "market value" of the products.
48
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
27. Industry Segment Information
The company has six principal segments that manufacture and sell a wide range of
products to many different markets, including energy, transportation, textile,
construction, automotive, electronics, printing, health care, packaging and
agricultural products. The company sells its products worldwide, however, about
50 percent and 36 percent of sales are made in the United States and Europe,
respectively. Major products by segment include: Chemicals (specialty chemicals,
white pigment and mineral products, fluorochemicals and nylon intermediates);
Fibers (textile, industrial and carpet nylon, Dacron(R) polyester, Lycra/(R)/
spandex, nonwovens and aramids); Polymers (automotive finishes, elastomers,
fluoropolymers, packaging and industrial polymers, and engineering polymers);
Petroleum (crude oil, natural gas and refined products), Life Sciences
(agricultural products and pharmaceuticals), and Diversified Businesses
(photopolymers and electronic materials, printing industry products, films and
coal). The Life Sciences and Diversified Businesses segments were previously
reported as one segment, Diversified Businesses; prior years' data have been
restated for comparative purposes. The company's sales are not materially
dependent on a single customer or small group of customers. The Fibers and
Polymers segments, however, have several large customers in their respective
industries that are important to these segments' operating results.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Life Diversified
Chemicals Fibers Polymers Petroleum Sciences Businesses Consolidated
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996
Sales to Unaffiliated Customers/1/ $4,141 $7,204 $6,699 $ 20,166/2/ $2,472 $3,128 $ 43,810
Transfers Between Segments 190 22 213 413 - 52 -
----------------------------------------------------------------------------------------
Total $4,331 $7,226 $6,912 $ 20,579 $2,472 $3,180 $ 43,810
----------------------------------------------------------------------------------------
Operating Profit $ 808 $1,247 $1,306 $ 1,818 $ 436 $ 257 $ 5,872
Provision for Income Taxes (301) (455) (489) (933) (254) (90) (2,522)
Equity in Earnings of Affiliates 56 10 92 (25) 497 38 668
----------------------------------------------------------------------------------------
After-Tax Operating Income/3/ $ 563 $ 802 $ 909 $ 860 $ 679 $ 205 $ 4,018/4/
----------------------------------------------------------------------------------------
Identifiable Assets at December 31 $3,723 $6,805 $4,535 $ 13,018 $1,749 $2,835 $ 32,665/5/
----------------------------------------------------------------------------------------
Depreciation, Depletion
and Amortization $ 330 $ 609 $ 350 $ 1,128 $ 70 $ 232 $ 2,719/6/
Capital Expenditures $ 338 $ 611 $ 446 $ 1,616 $ 93 $ 213 $ 3,317/7/
- --------------------------------------------------------------------------------------------------------------------------------
1995
Sales to Unaffiliated Customers/1/ $4,181 $7,215 $7,037 $ 17,660/2/ $2,322 $3,748 $ 42,163
Transfers Between Segments 248 31 208 298 - 46 -
----------------------------------------------------------------------------------------
Total $4,429 $7,246 $7,245 $ 17,958 $2,322 $3,794 $ 42,163
----------------------------------------------------------------------------------------
Operating Profit $ 947 $1,199 $1,244 $ 1,257 $ 468 $ 283 $ 5,398
Provision for Income Taxes (360) (435) (465) (660) (202) (82) (2,204)
Equity in Earnings of Affiliates 64 41 50 22 322 51 550
----------------------------------------------------------------------------------------
After-Tax Operating Income/8/ $ 651 $ 805 $ 829 $ 619 $ 588 $ 252 $ 3,744/4/
Identifiable Assets at December 31 $3,643 $6,305 $4,678 $ 12,634 $1,651 $3,504 $ 32,415/5/
Depreciation, Depletion
and Amortization $ 352 $ 626 $ 362 $ 1,111 $ 78 $ 294 $ 2,823/6/
Capital Expenditures $ 417 $ 593 $ 399 $ 1,714 $ 73 $ 198 $ 3,394/7/
- --------------------------------------------------------------------------------------------------------------------------------
1994
Sales to Unaffiliated Customers/1/ $3,760 $6,767 $6,318 $ 16,815/2/ $2,132 $3,541 $ 39,333
Transfers Between Segments 208 44 181 388 - 36 -
----------------------------------------------------------------------------------------
Total $3,968 $6,811 $6,499 $ 17,203 $2,132 $3,577 $ 39,333
----------------------------------------------------------------------------------------
Operating Profit $ 523 $1,051 $1,066 $ 1,096 $ 324 $ 268 $ 4,328
Provision for Income Taxes (203) (401) (417) (463) (102) (82) (1,668)
Equity in Earnings of Affiliates 58 30 56 25 138 68 375
----------------------------------------------------------------------------------------
After-Tax Operating Income/9/ $ 378 $ 680 $ 705 $ 658 $ 360 $ 254 $ 3,035/4/
----------------------------------------------------------------------------------------
Identifiable Assets at December 31 $3,556 $6,380 $4,462 $ 12,484 $1,637 $3,675 $ 32,194/5/
----------------------------------------------------------------------------------------
Depreciation, Depletion
and Amortization $ 405 $ 686 $ 386 $ 1,266 $ 79 $ 284 $ 3,106/6/
Capital Expenditures $ 258 $ 640 $ 356 $ 1,635 $ 47 $ 215 $ 3,151/7/
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
49
DuPont
<PAGE>
Notes to Financial Statements
(Dollars in millions, except per share)
1 Sales of refined petroleum products of $15,169 in 1996, $13,938 in 1995 and
$12,853 in 1994 exceeded 10 percent of consolidated sales.
2 Excludes crude oil and refined product exchanges and trading transactions
totaling $3,549 in 1996, $2,299 in 1995 and $2,254 in 1994.
3 Includes the following (charges)/benefits:
<TABLE>
- ------------------------------------------------------------------------------
<S> <C>
Chemicals/a/ $ (21)
Fibers/a/ (32)
Polymers/b/ 55
Petroleum/c/ (41)
Life Sciences/d/ (110)
Diversified Businesses/e/ 48
------
$ (101)
- ------------------------------------------------------------------------------
</TABLE>
a Charges associated principally with employee separation costs in the United
States.
b Benefit associated with formation of the DuPont Dow elastomers joint
venture.
c Includes charges of $63 for write-down of investment in a European natural
gas marketing joint venture and $22, principally, for employee separation
costs in the United States partly offset by a net benefit of $44 related to
environmental insurance recoveries.
d Charge associated with the Benlate/(R)/ 50 DF fungicide recall.
e Includes gains of $41 from the sale of certain medical products businesses
and $33 related to sale of stock received in connection with the previously
sold connector systems business, and a charge of $26, principally employee
separation costs outside the United States, associated with the printing and
publishing business.
4 The following reconciles After-Tax Operating Income to Net Income:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1996 1995 1994
----------------------------------------
<S> <C> <C> <C>
After-Tax Operating Income/a/ $4,018 $3,744 $3,035
Interest and Other Corporate
Expenses Net of Tax/a/,/b/ (382) (451) (308)
---------------------------------------
Net Income $3,636 $3,293 $2,727
- -----------------------------------------------------------------------------
</TABLE>
a 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 years' data have been reclassified for comparative
purposes.
b 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).
5 The following reconciles Identifiable Assets to Total Assets:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1996 1995 1994
-------------------------
<S> <C> <C> <C>
Identifiable Assets at December 31* $32,665 $32,415 $32,194
Investment in Affiliates 2,278 1,846 1,662
Corporate Assets* 3,044 3,051 3,036
-------------------------
Total Assets at December 31 $37,987 $37,312 $36,892
- -----------------------------------------------------------------------------
</TABLE>
* Capitalized interest, net of amortization, is included in Identifiable Assets
versus Corporate Assets.
6 Includes depreciation on research and development facilities and impairment
of unproved properties.
7 Excludes investments in affiliates and payments for businesses acquired.
8 Includes the following (charges)/benefits/a/:
<TABLE>
- --------------------------------------------------------------------------
<S> <C>
Chemicals $ 10
Fibers 31
Polymers/b/ (35)
Petroleum/c/ (45)
Life Sciences/d/ (63)
Diversified Businesses/e/ (12)
-----
$(114)
- --------------------------------------------------------------------------
</TABLE>
a Includes a benefit of $69 principally from adjustments in estimates
associated with the third quarter 1993 restructuring charge. The $69 is
reflected in Chemicals $10; Fibers $31; Polymers $3; and Diversified
Businesses $25.
b Includes a charge of $38 for costs to settle certain plumbing systems
litigation.
c Charge for write-down of certain North American and European assets
consistent with the provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of," which was adopted by the company
in 1995.
d Charge associated with the Benlate/(R)/ 50 DF fungicide recall.
e Includes a charge of $24 for printing and publishing operations, principally
for employee separation costs in Europe, and a litigation provision of $13
related to a previously sold business.
9 Includes the following (charges)/benefits/a/:
<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
Chemicals/b/ $ (5)
Fibers 25
Polymers 11
Petroleum/c/ (26)
Life Sciences/d/ (80)
Diversified Businesses/e/ 27
-----
$ (48)
- -------------------------------------------------------------------------------
</TABLE>
a Includes 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 a charge of $110 associated with the Benlate/(R)/ 50 DF fungicide
recall and a benefit of $30 from an adjustment of prior-year tax
provisions.
e Includes a charge of $27 for the write-down of assets and discontinuation
of certain products.
See segment discussions on pages 14-20 for a description of each industry
segment. Products are transferred between segments on a basis intended to
reflect as nearly as practicable the "market value" of the products.
50
DuPont
<PAGE>
Supplemental Petroleum Data
(Dollars in millions)
Oil and Gas Producing Activities
The disclosures on pages 51-56 are presented in accordance with the provisions
of Statement of Financial Accounting Standards No. 69, "Disclosures About Oil
and Gas Producing Activities." Accordingly, volumes of reserves and production
exclude royalty interests of others, and royalty payments are reflected as
reductions in revenues.
Results of Operations for Oil and Gas Producing Activities
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Total Worldwide United States
--------------------------------------------------------
1996 1995 1994 1996 1995 1994
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Companies
Revenues:
Sales to unaffiliated customers $ 2,479 $ 1,863 $ 2,196 $ 621 $ 443 $ 552
Transfers to other company operations 927 862 733 363 386 401
Exploration, including dry hole costs (374) (275) (323) (131) (80) (130)
Production (755) (727) (786) (297) (287) (327)
Depreciation, depletion, amortization and
valuation provisions (800) (727) (957) (302) (290) (334)
Other/2/ 69 82 67 48 48 38
Income taxes (912) (626) (463) (47) (24) 7
--------------------------------------------------------
Total consolidated companies 634 452 467 255 196 207
--------------------------------------------------------
Equity Affiliates
Results of operations of equity affiliates 36 12 (16) 11 -- 1
--------------------------------------------------------
Total $ 670 $ 464 $ 451 $ 266 $ 196 $ 208
- -----------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Europe Other Regions
--------------------------------------------------------
1996 1995 1994 1996 1995 1994
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Companies
Revenues:
Sales to unaffiliated customers $ 1,204 $ 817 $ 1,015 $ 654 $ 603 $ 629
Transfers to other company operations 566 477 332 (2) (1) --
Exploration, including dry hole costs (156) (134) (110) (87) (61) (83)
Production (372) (347) (377) (86) (93) (82)
Depreciation, depletion, amortization and
valuation provisions (443) (362) (533)/1/ (55) (75) (90)
Other/2/ (1) 31 25 22 3 4
Income taxes (436) (242) (122)/3/ (429) (360) (348)
--------------------------------------------------------
Total consolidated companies 362 240 230 17 16 30
--------------------------------------------------------
Equity Affiliates
Results of operations of equity affiliates 25 12 (17) -- -- --
--------------------------------------------------------
Total $ 387 $ 252 $ 213 $ 17 $ 16 $ 30
- -----------------------------------------------------------------------------------------------------
</TABLE>
1 Includes a charge of $115 ($95 after taxes) for impairment of certain North
Sea oil properties to be sold.
2 Includes gain/(loss) on disposal of fixed assets and other miscellaneous
revenues and expenses.
3 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.
51
DuPont
<PAGE>
Supplemental Petroleum Data
(Dollars in millions)
Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development
Activities/1/
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Total Worldwide United States Europe Other Regions
--------------------------------------------------------------------------------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994 1996 1995 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated Companies
Property acquisitions:
Proved/2/ $ 21 $ 96 $ 139 $ 14 $ 95 $ 14 $ - $ - $ 115 $ 7 $ 1 $ 10
Unproved 42 58 36 41 29 18 - 1 5 1 28 13
Exploration 445 358 403 144 128 151 169 159 136 132 71 116
Development 828 745 713 203 242 174 543 463 466 82 40 73
--------------------------------------------------------------------------------------------------
Total consolidated companies 1,336 1,257 1,291 402 494 357 712 623 722 222 140 212
--------------------------------------------------------------------------------------------------
Equity Affiliates
Property acquisitions:
Proved - - - - - - - - - - - -
Development 22 29 75 8 19 12 14 10 63 - - -
--------------------------------------------------------------------------------------------------
Total equity affiliates 22 29 75 8 19 12 14 10 63 - - -
--------------------------------------------------------------------------------------------------
Total $1,358 $1,286 $1,366 $ 410 $ 513 $ 369 $ 726 $ 633 $ 785 $ 222 $ 140 $ 212
- ------------------------------------------------------------------------------------------------------------------------------------
</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/ 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
--------------------------------------------------------------------------------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994 1996 1995 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated Companies
Gross costs:
Proved properties $11,914 $11,023 $11,057 $4,255 $4,440 $4,806 $6,268 $5,220 $4,950 $1,391 $1,363 $1,301
Unproved properties 913 883 790 262 251 291 444 439 323 207 193 176
Accumulated depreciation,
depletion, amortization and
valuation allowances:
Proved properties 6,729 6,290 6,173 2,739 2,822 3,073 2,947 2,425 2,122 1,043 1,043 978
Unproved properties 157 156 185 77 76 110 7 7 6 73 73 69
--------------------------------------------------------------------------------------------------
Total net costs of consolidated
companies 5,941 5,460 5,489 1,701 1,793 1,914 3,758 3,227 3,145 482 440 430
--------------------------------------------------------------------------------------------------
Equity Affiliates
Net costs of equity affiliates:
Proved properties 217 223 253 55 60 93 162 163 160 - - -
--------------------------------------------------------------------------------------------------
Total $ 6,158 $ 5,683 $ 5,742 $1,756 $1,853 $2,007 $3,920 $3,390 $3,305 $ 482 $ 440 $ 430
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DuPont
52
<PAGE>
S u p p l e m e n t a l P e t r o l e u m D a t a
(In millions of barrels)
Estimated Proved Reserves of Oil/1/
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Total Worldwide United States Europe Other Regions/2/
----------------------------------------------------------------------------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994 1996 1995 1994
----------------------------------------------------------------------------------------------
Proved Developed and Undeveloped
Reserves of Consolidated Companies
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of year 933 953 964 294 336 344 408 394 390 231 223 230
Revisions and other changes 55 (1) 51 11 (8) 14 36 (9) 26 8 16 11
Extensions and discoveries 75 122 50 31 25 8 35 72 21 9 25 21
Improved recovery 4 4 10 4 1 9 - 3 - - - 1
Purchase of reserves/3/ (1) 5 43 (1) 3 14 - - 29 - 2 -
Sale of reserves/4/ (12) (33) (33) (10) (33) (20) - - (13) (2) - -
Production (128) (117) (132) (30) (30) (33) (66) (52) (59) (32) (35) (40)
----------------------------------------------------------------------------------------------
End of year/5/ 926 933 953 299 294 336 413 408 394 214 231 223
----------------------------------------------------------------------------------------------
Proved Developed and Undeveloped
Reserves of Equity Affiliates
Beginning of year 44 35 19 - - - 44 35 19 - - -
Revisions and other changes 8 5 6 - - - 8 5 6 - - -
Extensions and discoveries - 8 11 - - - - 8 11 - - -
Production (5) (4) (1) - - - (5) (4) (1) - - -
----------------------------------------------------------------------------------------------
End of year 47 44 35 - - - 47 44 35 - - -
----------------------------------------------------------------------------------------------
Total 973 977 988 299 294 336 460 452 429 214 231 223
----------------------------------------------------------------------------------------------
Proved Developed Reserves
of Consolidated Companies
Beginning of year 684 706 708 265 324 332 217 171 160 202 211 216
End of year 630 684 706 258 265 324 185 217 171 187 202 211
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Oil reserves comprise crude oil and condensate and natural gas liquids
expected to be removed for the company's account from its natural gas
deliveries.
2 Excludes reserve data applicable to Conoco's petroleum assets in Libya.
Although negotiations with the Libyan government's national oil company
continue and Conoco believes recovery of the carrying value of assets is
probable, Conoco has not resumed its participation in Libyan operations. Also
excludes reserve data applicable to Conoco's interest in the heavy oil
project in Venezuela's Orinoco's region, pending completion of financing
arrangements.
3 Includes reserves acquired through property exchanges.
4 Includes reserves disposed of through property exchanges.
5 Includes reserves of 89 at year-end 1996 attributable to Conoco Oil & Gas
Associates L.P. in which there is a minority interest with an approximate 17
percent revenue share at year-end 1996.
See Note 18.
53
DuPont
<PAGE>
Supplemental Petroleum Data
(In billion cubic feet)
<TABLE>
<CAPTION>
Estimated Proved Reserves of Gas
Total Worldwide United States Europe Other Regions
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994 1996 1995 1994
--------------------------------------------------------------------------------------------
Proved Developed and Undeveloped
Reserves of Consolidated Companies
Beginning of year 4,709 4,330 3,680 1,891 1,749 1,802 2,649 2,431 1,752 169 150 126
Revisions and other changes 74 328 317 112 131 121 (39) 195 187 1 2 9
Extensions and discoveries 780 400 514 176 225 139 574 147 356 30 28 19
Improved recovery - 1 - - 1 - - - - - - -
Purchase of reserves/1/ 41 167 375 3 167 42 36 - 321 2 - 12
Sales of reserves/2/ (71) (78) (71) (57) (78) (37) - - (34) (14) - -
Production (470) (439) (485) (303) (304) (318) (152) (124) (151) (15) (11) (16)
------------------------------------------------------------------------------------------
End of year/3/ 5,063 4,709 4,330 1,822 1,891 1,749 3,068 2,649 2,431 173 169 150
-------------------------------------------------------------------------------------------
Proved Developed and Undeveloped
Reserves of Equity Affiliates
Beginning of year 627 830 586 627 830 586 - - - - - -
Revisions and other changes 1 - 255 1 - 255 - - - - - -
Purchase of reserves - - 2 - - 2 - - - - - -
Sale of Reserves - (189) - - (189) - - - - - - -
Production (15) (14) (13) (15) (14) (13) - - - - - -
------------------------------------------------------------------------------------------
End of year 613 627 830 613 627 830 - - - - - -
------------------------------------------------------------------------------------------
Total 5,676 5,336 5,160 2,435 2,518 2,579 3,068 2,649 2,431 173 169 150
-----------------------------------------------------------------------------------------
Proved Developed Reserves of
Consolidated Companies
Beginning of year 2,933 2,496 2,570 1,733 1,687 1,717 1,071 683 738 129 126 115
End of year 2,843 2,933 2,496 1,672 1,733 1,687 1,041 1,071 683 130 129 126
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Includes reserves acquired through property exchanges.
2 Includes reserves disposed of through property exchanges.
3 Includes reserves of 104 at year-end 1996 attributable to Conoco Oil & Gas
Associates L.P. in which there is a minority interest with an approximate 17
percent revenue share at year-end 1996. See Note 18.
54 DuPont
<PAGE>
Supplemental Petroleum Data
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil
and Gas Reserves
The information on the following page has been prepared in accordance with
Statement of Financial Accounting Standards No. 69, which requires the
standardized measure of discounted future net cash flows to be based on year-end
sales prices, costs and statutory income tax rates and a 10 percent annual
discount rate. Specifically, the per-barrel oil sales prices used to calculate
the December 31, 1996 data averaged $22.96 for the United States, $20.99 for
Europe and $22.10 for Other Regions, and the gas prices per thousand cubic feet
averaged approximately $2.40 for the United States, $3.09 for Europe and $1.39
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.
55
DUPONT
<PAGE>
Supplemental Petroleum Data
(Dollars in millions)
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil
and Gas Reserves
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Total Worldwide United States Europe
- ----------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated Companies
Future cash flows:
Revenues $34,366 $26,766 $23,836 $10,044 $ 7,631 $ 7,201 $19,364 $14,995 $12,945
Production costs (10,406) (9,152) (8,967) (3,085) (3,038) (3,411) (6,378) (5,154) (4,719)
Development costs (1,669) (1,583) (1,693) (283) (218) (184) (1,294) (1,234) (1,439)
Income tax expense (10,364) (7,404) (6,084) (2,041) (1,169) (873) (5,179) (3,758) (2,893)
---------------------------------------------------------------------------------------
Future net cash flows 11,927 8,627 7,092 4,635 3,206 2,733 6,513 4,849 3,894
Discounted to present value at a
10% annual rate (4,638) (3,469) (2,817) (2,088) (1,456) (1,154) (2,317) (1,813) (1,522)
---------------------------------------------------------------------------------------
Total consolidated companies* 7,289 5,158 4,275 2,547 1,750 1,579 4,196 3,036 2,372
---------------------------------------------------------------------------------------
Equity Affiliates
Standardized measure of discounted
future net cash flows of equity
affiliates 357 166 211 156 44 102 201 122 109
---------------------------------------------------------------------------------------
Total $ 7,646 $ 5,324 $ 4,486 $ 2,703 $ 1,794 $ 1,681 $ 4,937 $ 3,158 $ 2,481
============================================================================================================================
<CAPTION>
--------------------------
Other Regions
--------------------------
1996 1995 1994
--------------------------
<S> <C> <C> <C>
Consolidated Companies
Future cash flows:
Revenues $ 4,958 $ 4,140 $ 3,690
Production costs (943) (960) (837)
Development costs (92) (131) (70)
Income tax expense (3,144) (2,477) (2,318)
--------------------------
Future net cash flows 779 572 465
Discounted to present value at a
10% annual rate (233) (200) (141)
--------------------------
Total consolidated companies* 546 372 324
--------------------------
Equity Affiliates
Standardized measure of discounted
future net cash flows of equity
affiliates - - -
--------------------------
Total $ 546 $ 372 $ 324
==========================
</TABLE>
* Includes $686 at year-end 1996 attributable to Conoco Oil & Gas Associates
L.P. in which there is a minority interest with an approximate 17 percent
revenue share at year-end 1996. See Note 18.
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>
- --------------------------------------------------------------------------------
1996 1995 1994
-----------------------------
<S> <C> <C> <C>
Balance at January 1 $5,158 $4,275 $3,214
Sales and transfers of oil and gas produced,
net of production costs (2,647) (1,998) (2,143)
Development costs incurred during the period 828 745 713
Net changes in prices and in development and
production costs 2,525 675 1,275
Extensions, discoveries and improved recovery,
less related costs 1,630 1,219 775
Revisions of previous quantity estimates 553 375 796
Purchases (sales) of reserves in place--net (54) (62) 333
Accretion of discount 931 753 529
Net change in income taxes (1,676) (897) (1,174)
Other 41 73 (43)
-----------------------------
Balance at December 31 $7,289 $5,158 $4,275
================================================================================
</TABLE>
56
<PAGE>
Quarterly Financial Data
(Dollars in millions, except per share)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Quarter Ended March 31 June 30 September 30 December 31
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
Sales $10,769 $11,148 $10,486 $11,407
Cost of Goods Sold and Other Expenses/1/ 9,457 9,673 9,131 10,195
Net Income 879/2/ 1,001/3/ 898/4/ 858
Earnings Per Share of Common Stock 1.57 1.78 1.60 1.52
Dividends Per Share of Common Stock .52 .57 .57 .57
Market Price of Common Stock/5/
High 84 3/8 84 7/8 89 7/8 99 3/8
Low 69 5/8 76 3/4 72 7/8 87 3/4
- --------------------------------------------------------------------------------------------------------------
1995
Sales $10,502 $11,076 $10,200 $10,385
Cost of Goods Sold and Other Expenses/1/ 9,014 9,555 8,941 9,564
Net Income 959 938/6/ 769/7/ 627/8/
Earnings Per Share of Common Stock 1.40 1.70 1.38 1.13
Dividends Per Share of Common Stock .47 .52 .52 .52
Market Price of Common Stock/5/
High 61 3/4 69 3/8 73 70 1/4
Low 52 5/8 60 1/4 63 3/4 60 1/8
- --------------------------------------------------------------------------------------------------------------
</TABLE>
1 Excludes interest and debt expense and provision for income taxes.
2 Includes a net charge of $20 ($.04 per share) reflecting: a charge of $53
principally for employee separation costs; and a benefit of $33 for sale of
stock received in connection with a previously sold business.
3 Includes a net charge of $34 ($.06 per share) reflecting: a charge of $63 for
write-down of investment in a European national gas marketing joint venture;
a charge of $48 principally for employee separation costs; a charge of $63
associated with Benlate/(R)/ 50 DF fungicide recall; a gain of $55 associated
with the formation of the DuPont Dow elastomers joint venture; a benefit of
$44 related to environmental insurance recoveries; and a gain of $41 from the
sale of certain medical products businesses.
4 Includes a charge of $47 ($.08 per share) associated with Benlate/(R)/ 50 DF
fungicide recall.
5 As reported on the New York Stock Exchange, Inc. Composite Transactions Tape.
6 Includes a net charge of $29 ($.05 per share) related to a charge of $63
associated with Benlate/(R)/ 50 DF fungicide recall and a benefit of $34,
principally due to adjustment of estimates associated with the third quarter
1993 restructuring charge.
7 Includes a net charge of $2 reflecting: a benefit of $38 from adjustments in
estimates associated with the third quarter 1993 restructuring charge; a
charge of $27 principally for employee separation costs; and a litigation
provision of $13 related to a previously sold business.
8 Includes charges of $45 ($.08 per share) for the write-down of certain North
American and European petroleum assets and $38 ($.07 per share) for costs to
settle certain plumbing systems litigation.
Consolidated Geographic Data
(Dollars in millions)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Capital Total Assets Average
Expenditures December 31 Employment
---------------------------------------------------
1996 1995 1996 1995 1996 1995
---------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United States $1,723 $1,889 $19,601 $19,490 67,119 71,121
Europe 1,418 1,268 12,043 12,166 19,796 20,765
Other Regions 589 486 6,343 5,656 14,556 14,255
---------------------------------------------------
Total $3,730 $3,643 $37,987 $37,312 101,471 106,141
- --------------------------------------------------------------------
</TABLE>
Capital expenditures, total assets and average employment are assigned to
geographic areas, generally based on physical location.
57
DuPont
<PAGE>
Five-Year Financial Review/1/
(Dollars in millions, except per share)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Summary of Operations
Sales $43,810 $42,163 $39,333 $37,098 $37,799
Earnings Before Income Taxes $ 5,981 $ 5,390 $ 4,382 $ 958 $ 1,811
Provision for Income Taxes $ 2,345 $ 2,097 $ 1,655 $ 392 $ 836
Net Income $ 3,636 $ 3,293 $ 2,727 $ 566/2/ $ 975/3/
Earnings Per Share of Common Stock $ 6.47 $ 5.61 $ 4.00 $ .83 $ 1.43
---------------------------------------------------------------------
Financial Position at Year End
Working Capital $ 116 $(1,776) $ 3,543 $ 1,460 $ 2,002
Total Assets $37,987 $37,312 $36,892 $37,053 $38,870
Borrowings and Capital Lease Obligations:
Short Term $ 3,910 $ 6,157 $ 1,292 $ 2,796 $ 3,799
Long Term $ 5,087 $ 5,678 $ 6,376 $ 6,531 $ 7,193
Stockholders' Equity $10,709 $ 8,436 $12,822 $11,230 $11,765
---------------------------------------------------------------------
Ratios
Dividends as Percent of Cash Provided by
Operations 20% 18% 22% 22% 27%
Cash Provided by Operations as Percent of
Total Debt 71% 57% 74% 58% 40%
Total Debt as Percent of Total Capitalization 44% 58% 37% 45% 48%
Return on Average Investors' Capital 19.9% 17.9% 14.6% 4.0% 5.9%
Net Income As Percent of Average Stockholders'
Equity 37.8% 32.7% 22.6% 4.8% 8.1%
---------------------------------------------------------------------
General
For the Year:
Capital Expenditures $ 3,730 $ 3,643 $ 3,241 $ 3,725 $ 4,524
Depreciation, Depletion and Amortization $ 2,621 $ 2,722 $ 2,976 $ 2,833 $ 2,655
Research and Development Expense $ 1,032 $ 1,067 $ 1,047 $ 1,132 $ 1,277
As Percent of Sales for:
Chemicals and Specialties Businesses 4.2% 4.2% 4.5% 5.1% 5.6%
Petroleum 0.2% 0.2% 0.3% 0.3% 0.4%
Average Number of Shares Outstanding (millions) 561 585 680 677 673
Dividends Per Common Share $ 2.23 $ 2.03 $ 1.82 $ 1.76 $ 1.74
Common Stock Prices:
High $ 99 3/8 $ 73 $ 62 3/8 $ 53 7/8 $ 54 7/8
Low $ 69 5/8 $ 52 5/8 $ 48 1/4 $ 44 1/2 $ 43 1/2
Year-End Close $ 94 1/8 $ 69 7/8 $ 56 1/8 $ 48 1/4 $ 47 1/8
At Year End:
Employees (thousands) 97 105 107 114 125
Common Stockholders of Record (thousands) 158 166 172 181 188
Book Value Per Common Share $ 18.58 $ 14.76 $ 18.48 $ 16.22 $ 17.08
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
1 See Management's Discussion and Analysis on pages 21-27, Consolidated Income
Statement on page 29, Notes to Financial Statements on pages 33-50 and
Quarterly Financial Data on page 57 for information relating to significant
items affecting the results of operations and financial position.
2 Before effect on income of extraordinary item.
3 Before transition effect of accounting changes adopted in 1992 for Statement
of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" and SFAS No. 109, "Accounting
for Income Taxes." Charges to net income of $3,788 ($5.63 per share) and
$1,045 ($1.55 per share), respectively, were recorded for the effects of
transition to these two new standards. Also, before extraordinary charge of
$69 ($.10 per share) from early extinguishment of debt.
58
DuPont
<PAGE>
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Name Organized Under Laws of
- --------------------------------------------------- -----------------------
<S> <C>
Conoco Asia Ltd. .................................. Bermuda
Conoco Canada Limited ............................. Canada
Conoco Developments Limited ....................... England
Conoco Inc. ....................................... Delaware
Conoco Indonesia Inc. ............................. Delaware
Conoco International, Inc. ........................ Delaware
Conoco Investments Norge A/S ...................... Norway
Conoco Limited .................................... England
Conoco Mineraloel GmbH ............................ Germany
Conoco Norway Inc. ................................ Delaware
Conoco Petroleum Limited .......................... England
Conoco Petroleum Norge AS ......................... Norway
Conoco Pipe Line Company .......................... Delaware
Conoco Specialty Products Inc. .................... Delaware
Conoco Timan-Pechora Ltd. ......................... Bermuda
Conoco (U.K.) Limited ............................. England
Consol Energy Inc. (50% owned) .................... Delaware
Continental Oil Company of Libya .................. Delaware
Danube Insurance Ltd. ............................. Bermuda
Douglas Oil Company of California ................. California
Dubai Petroleum Company ........................... Delaware
DuPont Agrichemicals Caribe, Inc. ................. Delaware
DuPont Argentina S.A. ............................. Argentina
DuPont Asia Pacific, Ltd. ......................... Delaware
DuPont (Australia) Limited ........................ Australia
DuPont Canada Inc. (76.8% owned) .................. Canada
DuPont Chemical and Energy Operations, Inc. ....... Delaware
DuPont Coordination Center N.V. ................... Belgium
DuPont Conoco Nordic A.B. ......................... Sweden
DuPont Delaware, Inc. ............................. Delaware
DuPont Diagnostics, Inc. .......................... Delaware
DuPont de Colombia, S.A. .......................... Colombia
DuPont de Nemours (Belgium) N.V. .................. Belgium
DuPont de Nemours (Deutschland) GmbH .............. Germany
DuPont de Nemours (Flandre), S.A. ................. France
DuPont de Nemours (France) S.A. ................... France
DuPont de Nemours International S.A. .............. Switzerland
DuPont de Nemours Italiana S.p.A. ................. Italy
DuPont de Nemours (Luxembourg) S.A. ............... Luxembourg
DuPont de Nemours (Nederland) B.V. ................ The Netherlands
DuPont do Brasil S.A. ............................. Brazil
DuPont Dow Elastomers, L.L.C. (50% owned) ......... Delaware
DuPont Electronic Materials, Inc. ................. Delaware
DuPont Energy Company ............................. Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name Organized Under Laws of
- --------------------------------------------------- -----------------------
<S> <C>
DuPont Engineering Products, S.A. ................. Luxembourg
DuPont Feedstocks Company ......................... Delaware
DuPont Foreign Sales Corporation .................. Virgin Islands
DuPont Iberica, S.A. .............................. Spain
DuPont Kabushiki Kaisha ........................... Delaware
DuPont Korea, Ltd. ................................ Republic of Korea
DuPont Merck Pharmaceutical Company (Delaware
Partnership) (50% owned) ........................ Delaware
DuPont Merck Pharma (Puerto Rico Partnership)
(50% owned) ..................................... Puerto Rico
DuPont (New Zealand) Ltd. ......................... New Zealand
DuPont Photomasks, Inc. (69.5% owned) ............. Texas
DuPont, S.A. de C.V. .............................. Mexico
DuPont (Singapore) Pte. Ltd. ...................... Singapore
DuPont (Singapore) Fibres Pte. Ltd. (90% owned) ... Singapore
DuPont Taiwan Ltd. ................................ Taiwan
DuPont (Thailand) Co. Ltd. ........................ Thailand
DuPont Treasury Ltd. .............................. England
DuPont (U.K.) Limited ............................. England
Kayo Oil Company .................................. Delaware
Norske Conoco A/S ................................. Norway
Societe Europeene Des Carburants .................. Belgium
World Wide Transport, Inc. ........................ Liberia
</TABLE>
Subsidiaries not listed would not, if considered in the aggregate as a
single subsidiary, constitute a significant subsidiary.
2
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (No. 33-53327,
No. 33-61339, and No. 33-60069) and Form S-8 (No. 2-74004, No. 33-43918, No. 33-
51817, No. 33-51821, No. 33-60037, and No. 33-61703) of E. I. du Pont de Nemours
and Company of our report dated February 14, 1997, appearing on page 28 of the
Annual Report to Stockholders which is incorporated in this Annual Report on
Form 10-K.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
March 24, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,066
<SECURITIES> 253
<RECEIVABLES> 5,193<F1>
<ALLOWANCES> 66
<INVENTORY> 3,706
<CURRENT-ASSETS> 11,103
<PP&E> 50,549
<DEPRECIATION> 29,336
<TOTAL-ASSETS> 37,987
<CURRENT-LIABILITIES> 10,987
<BONDS> 5,087
0
237
<COMMON> 347
<OTHER-SE> 10,125
<TOTAL-LIABILITY-AND-EQUITY> 37,987
<SALES> 43,810
<TOTAL-REVENUES> 45,150
<CGS> 25,144<F2>
<TOTAL-COSTS> 38,456<F3>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 713
<INCOME-PRETAX> 5,981
<INCOME-TAX> 2,345
<INCOME-CONTINUING> 3,636
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,636
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes Other Accounts In Addition to Notes and Accounts Receivable -
Trade.
<F2>Includes Other Operating Charges.
<F3>Cost of Goods Sold and Other Operating Charges; Selling, General and
Administrative Expenses; Depreciation, Depletion and Amortization;
Exploration Expenses, Including Dry Hole Costs and Impairment of Unproved
Properties; Research and Development Expense; Taxes Other Than On Income.
</FN>
</TABLE>
