20102013


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

ý

 

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20102013

OR

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Commission file number 1-815

E. I. DU PONT DE NEMOURS AND COMPANY
(Exact name of registrant as specified in its charter)

DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
 
51-0014090
(I.R.S. Employer Identification No.)

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 ($.30 par value)
Preferred Stock
(without par value-cumulative)
$4.50 Series
$3.50 Series
No securities are registered pursuant to Section 12(g) of the Act.



Indicate by check mark whether the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act).    

Yes ý       No o

        Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes o       No ý

        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 ý No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ý        No o

        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.  ýo

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes o No ý

        The aggregate market value of voting stock held by nonaffiliates of the registrant (excludes outstanding shares beneficially owned by directors and officers and treasury shares) as of June 30, 2010,2013, was approximately $31.3 billion.

$48.4 billion.

        As of January 31, 2011, 921,634,0002014, 927,717,000 shares (excludes 87,041,000 shares of treasury stock) of the company's common stock, $.30$0.30 par value, were outstanding.

Documents Incorporated by Reference
(Specific pages incorporated are indicated under the applicable Item herein):


Incorporated
By Reference
In Part No.

The company's Proxy Statement in connection with the Annual Meeting of Stockholders to be held on April 27, 2011

23, 2014.
 III



Table of Contents


E. I. du Pont de Nemours and Company

Form 10-K

Table of Contents

The terms "DuPont" or the "company" as used herein refer to E. I. du Pont de Nemours and Company and its consolidated subsidiaries, or to E. I. du Pont de Nemours and Company, as the context may indicate.



Page

PART I

 Page
  
 

Item 1.

Business

 

Item 1A.

Risk Factors

 

Item 1B.

Unresolved Staff Comments

 

Item 2.

11

Properties

10
 

Item 3.

Legal Proceedings

 

Removed and Reserved

PART II

  
 

Item 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Item 6.

Selected Financial Data

 

Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

 

Item 8.

Financial Statements and Supplementary Data

 

Item 9.

Changes Inin and Disagreements With Accountants on Accounting and Financial Disclosure

 

Item 9A.

Controls and Procedures

 

Item 9B.

Other Information

PART III

  
 

Item 10.

Directors, Executive Officers and Corporate Governance

 

Item 11.

Executive Compensation

 

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

Item 13.

Certain Relationships and Related Transactions, and Director Independence

 

Item 14.

Principal Accountant Fees and Services

PART IV

  
 

Item 15.

Exhibits and Financial Statement Schedules

 

Signatures


58


Note on Incorporation by Reference

Information pertaining to certain Items in Part III of this report is incorporated by reference to portions of the company's definitive 20112014 Annual Meeting Proxy Statement to be filed within 120 days after the end of the year covered by this Annual Report on Form 10-K, pursuant to Regulation 14A (the Proxy).


1


Table of Contents


Part I

ITEM 1.  BUSINESS


DuPont was founded in 1802 and was incorporated in Delaware in 1915. DuPont is a world leader inbrings world-class science and innovation across a range of disciplines, including agriculture and industrial biotechnology, chemistry, biology, materials science and manufacturing. The company operates globally and offers a wide rangeengineering to the global marketplace in the form of innovative products, materials and servicesservices. The company believes that by collaborating with customers, governments, non-governmental organizations and thought leaders it can help find solutions to such global challenges as providing healthy food for markets including agriculturepeople everywhere, decreasing dependence on fossil fuels, and food, buildingprotecting life and construction, electronics and communications, general industrial, and transportation.the environment. Total worldwide employment at December 31, 2010,2013, was approximately 60,000about 64,000 people.

The company consists of 13 businesses which are aggregated into seven reportable segments based on similar economic characteristics, the nature of the products and production processes, end-use markets, channels of distribution and regulatory environment. The company's reportable segments are Agriculture & Nutrition, Electronics & Communications, Performance Chemicals, Performance Coatings, Performance Materials, Safety & Protection, and Pharmaceuticals. The company includes certain embryonic businesses not included in the reportable segments, such as Applied BioSciences, and nonaligned businesses in Other.

Information describing the business of the company can be found on the indicated pages of this report:

Item
Page

Segment Reviews

Introduction

25

Agriculture & Nutrition

26

Electronics & Communications

28

Performance Chemicals

29

Performance Coatings

30

Performance Materials

31

Safety & Protection

32

Pharmaceuticals

33

Other

34

Geographic Information – Net Sales and Net Property

F-47

Segment Sales, Net Sales, Pre-tax Operating Income and Segment Net Assets

F-48

The company has operations in more than 90 countries worldwide and about 6560 percent of consolidated net sales are made to customers outside the United States of America (U.S.). See Note 21 to the Consolidated Financial Statements for additional details on the location of the company's sales and property.


Subsidiaries and affiliates of DuPont conduct manufacturing, seed production or selling activities and some are distributors of products manufactured by the company.

Acquisition As a science and technology based company, DuPont competes on a variety of Danisco

In January 2011, DuPontfactors such as product quality and its wholly owned subsidiary, DuPont Denmark Holding ApS, entered into a definitive agreement forperformance or specifications, continuity of supply, price, customer service and breadth of product line, depending on the acquisitioncharacteristics of Danisco A/S (Danisco) for $6.3 billion, which includes $5.8 billion in cashthe particular market involved and the assumption of $500 million of Danisco's net debt. The transactionproduct or service provided. Most products are marketed primarily through the company's sales force, although in some regions, more emphasis is subject to customary closing conditions, including certain regulatory approvals and the tender of more than 90 percent of Danisco's shares in the tender offer. DuPont has the right to waive such tender offer conditions and accept a lesser number of shares in certain cases. The transaction is expected to close in the second quarter 2011.

Danisco is a leading technology-driven organization, with outstanding research and application development capabilities in biotechnology. Danisco has specialty food ingredients, including enablers, cultures and sweeteners, which generate about 65 percent of its total sales. Genencor, its enzymes division, represents about 35 percent of its total sales. DuPont and Danisco are joint venture partners in the development of cellulosic ethanol technology. (See Applied BioSciences business discussionplaced on page 34 for more information.) Danisco has nearly 7,000 employees globally with operations in 23 countries. Upon completion, the transaction would establish DuPont as a clear leader in industrial biotechnology with science-intensive innovations that address global challenges in food production and reduced fossil fuel consumption.


Table of Contents


Part I

ITEM 1.  BUSINESS,continued

Sources of Supply

sales through distributors. The company utilizes numerous suppliers as well as internal sources to supply a wide range of raw materials, energy, supplies, services and equipment. To ensure availability, the company maintains multiple sources for fuels and many raw materials, including hydrocarbon feedstocks. Large volume purchases are generally procured under competitively priced supply contracts.


On October 24, 2013, DuPont announced that it intends to separate its Performance Chemicals segment through a U.S. tax-free spin-off to shareholders, subject to customary closing conditions.  The company expects to complete the separation about mid-2015. 

In third quarter 2012, the company entered into a definitive agreement to sell its Performance Coatings business (which represented a reportable segment). In accordance with generally accepted accounting principles in the U.S. (GAAP), the results of Performance Coatings are presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. On February 1, 2013, the sale of Performance Coatings was completed.

Business Segments
The company consists of 13 businesses which are aggregated into eight reportable segments based on similar economic characteristics, the nature of the products and production processes, end-use markets, channels of distribution and regulatory environment. The company's wholly owned subsidiary, Pioneer Hi-Bred International, Inc. (Pioneer), operatesreportable segments are Agriculture, Electronics & Communications, Industrial Biosciences, Nutrition & Health, Performance Chemicals, Performance Materials, Safety & Protection and Pharmaceuticals. The company includes certain embryonic businesses not included in the reportable segments, such as pre-commercial programs, and nonaligned businesses in Other. Additional information with respect to business segment results is included in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, on page 21 of this report and Note 22 to the Consolidated Financial Statements.

Agriculture
Agriculture businesses, DuPont Pioneer and DuPont Crop Protection, leverage the company's technology, customer relationships and industry knowledge to improve the quantity, quality and safety of the global food supply and the global production agriculture industry. Land available for worldwide agricultural production is increasingly limited so production growth will need to be achieved principally through improving crop yields and productivity rather than through increases in planted area. The segment's businesses deliver a broad portfolio of products and services that are specifically targeted to achieve gains in crop yields and productivity, including Pioneer® brand seed industryproducts and well-established brands of insecticides, fungicides and herbicides. Research and development focuses on leveraging technology to increase grower productivity and enhance the value of grains and soy through improved seed traits, superior seed germplasm and effective use of insecticides, herbicides and fungicides. Agriculture accounted for approximately 50 percent of the company's total research and development expense in 2013.

Sales of the company's products in this segment are affected by the seasonality of global agriculture markets and weather patterns. Sales and earnings performance in the Agriculture segment are significantly stronger in the first versus second half of the year reflecting the northern hemisphere planting season. As a result of the seasonal nature of its business, Agriculture's inventory is at its highest level at the end of the calendar year and is sold down in the first and second quarters. Trade receivables in the Agriculture segment are at a low point at year-end and increase through the northern hemisphere selling season to peak at the end of the second quarter.

Pioneer is a world leader in developing, producing and marketing corn hybrid and soybean varieties which improve the productivity and profitability of its customers. Additionally, Pioneer develops, produces and markets canola, sunflower, sorghum, inoculants,

2


Part I
ITEM 1.  BUSINESS,continued

wheat and rice. As the world's population grows and the middle class expands, the need for crops for animal feed, food, biofuels and industrial uses continues to increase. The business competes with other seed and plant biotechnology companies. Pioneer seed sales amounted to 23 percent, 21 percent and 19 percent of the company's total consolidated net sales for the years ended December 31, 2013, 2012 and 2011, respectively.

Pioneer's research and development focuses on integrating high yielding germplasm with value added proprietary and/or licensed native and biotechnology traits with local environment and service expertise. Pioneer uniquely develops integrated products for specific regional application based on local product advancement and testing of the product concepts. Research and development in this arena requires long-term commitment of resources, extensive regulatory efforts and collaborations, partnerships and business arrangements to successfully bring products to market. To protect its investment, the business employs the use of patents covering germplasm and native and biotechnology traits in accordance with country laws. Pioneer holds multiple long-term biotechnology trait licenses from third parties as a normal course of business. The biotechnology traits licensed by Pioneer from third parties are contained in a variety of Pioneer crops, including corn hybrids and soybean varieties. The majority of Pioneer’s corn hybrids and soybean varieties sold to customers contain biotechnology traits licensed from third parties under these long term licenses.
Pioneer is actively pursuing the development of innovations for corn hybrid, soybean varieties, canola, sunflower, wheat and rice based on market assessments of the most valuable opportunities. In corn hybrids, programs include innovations for drought and nitrogen efficiency, insect protection and herbicide tolerance. In soybean varieties, programs include products with high oleic content, multiple herbicide tolerance and insect protection.

Pioneer has seed production facilities located throughout the world. Seed production is performed directly by the companybusiness or contracted with independent growers and conditioners. The company'sPioneer's ability to produce seeds primarily depends upon weather conditions and availability of reliable contract growers.


Pioneer markets and sells seed product primarily under the Pioneer® brand but also sells and distributes products utilizing additional brand names. Pioneer promotes its products through multiple marketing channels around the world. In the corn and soybean markets of the U.S. Corn Belt, Pioneer® brand products are sold primarily through a specialized force of independent sales representatives. Outside of North America, Pioneer's products are marketed through a network of subsidiaries, joint ventures and independent producer-distributors.

DuPont Crop Protection serves the global production agriculture industry with crop protection products for field crops such as wheat, corn, soybean and rice; specialty crops such as fruit, nut, vine and vegetables; and non-crop segments, including forestry and land management. Principle crop protection products are weed control, disease control and insect control offerings. Crop Protection products are marketed and sold to growers and other end users through a network of wholesale distributors and crop input retailers. The sales growth of the business' insect control portfolio is led by DuPontTM Rynaxypyr® insecticide, a product that is used across a broad range of core agricultural crops.

The major commodities, raw materials and supplies for the company's reportable segments in 2010 include the following:

Agriculture & Nutrition:

insect control products, natural gas and seed treatments.


Agriculture segment sales outside the U.S. accounted for 54 percent of the segment's total sales in 2013.

Electronics & Communications:Communications
Electronics & Communications (E&C) is a leading supplier of differentiated materials and systems for photovoltaics (PV), consumer electronics, displays and advanced printing that enable superior performance and lower total cost of ownership for customers. The segment leverages the company's strong materials and technology base to target attractive growth opportunities in PV materials, circuit and semiconductor fabrication and packaging materials, display materials, packaging graphics, and ink-jet printing. In the growing PV market, E&C continues to be an industry-leading innovator and supplier of metallization pastes and backsheet materials that improve the efficiency and lifetime of solar cells and solar modules. Solar modules, which are made up of solar cells and other materials, are installed to generate power. DuPont is a leading global supplier of materials to the PV industry.

In the displays market, E&C has developed solution-process technology, which it licenses, and a growing range of materials for active matrix organic light emitting diode (AMOLED) television displays. The segment has a portfolio of materials for semiconductor fabrication and packaging, as well as innovative materials for circuit applications, to address critical needs of electronic component and device manufacturers. In consumer electronics, E&C materials add value in the high growth hand-held

3


Part I
ITEM 1.  BUSINESS,

    continued


device market of tablets and smart phones. In packaging graphics, E&C is a leading supplier of flexographic printing systems, including Cyrel® photopolymer plates and platemaking systems. The segment is investing in new products to strengthen its market leadership position in advanced printing markets. The segment holds a leadership position in black-pigmented inks and is developing new color-pigmented inks for network printing applications.

The major commodities, raw materials and supplies for E&C include: block co-polymers; copper; hydroxylamine; oxydianiline;co-polymers, copper, difluoroethane, hydroxylamine, oxydianiline, polyester film;film, precious metals;metals and pyromellitic dianhydride

dianhydride.


E&C segment sales outside the U.S. accounted for 82 percent of the segment's total sales in 2013.

Industrial Biosciences
Performance Chemicals:

    ammonia; benzene; chlorine; chloroform; fluorspar; hydrofluoric acid;Industrial Biosciences is a leader in developing and manufacturing a broad portfolio of bio-based products. The segment's enzymes add value and functionality to processes and products across a broad range of markets such as animal nutrition, detergents, food manufacturing, ethanol production and industrial gases; methanol; natural gas; perchloroethylene; sulfur; titanium ore

applications. The result is cost and process benefits, better product performance and improved environmental outcomes. Industrial Biosciences also makes DuPontPerformance Coatings:TM

Performance Materials:Sorona

The segment includes a joint venture with Tate & Lyle PLC, DuPont Tate and Lyle Bio Products LLC, to produce BioPDOTM 1,3 propanediol using a proprietary fermentation and purification process. BioPDOTM is the key building block for DuPontTM Sorona® PTT polymer.
The major commodities, raw materials and supplies for the Industrial Biosciences segment include: glucoamylase, glycols, grain products, such as dextrose and glucose, and purified terephthalic acid.
Industrial Biosciences segment sales outside the U.S. accounted for 56 percent of the segment's total sales in 2013.

Nutrition & Health
Nutrition & Health offers a wide range of sustainable, bio-based ingredients and advanced molecular diagnostic solutions, providing innovative solutions for specialty food ingredients, food nutrition, health and safety. The segment's product solutions include the wide-range of DuPont™ Danisco® food ingredients such as cultures and notably Howaru® probiotics, emulsifiers, texturants, natural sweeteners such as Xivia® and Supro® soy-based food ingredients. These ingredients hold leading market positions based on industry leading innovation, knowledge and experience, relevant product portfolios and close-partnering with the world's food manufacturers. Nutrition & Health serves various end markets within the food industry including meat, dairy, beverages and bakery segments. Nutrition & Health has research, production and distribution operations around the world.
Nutrition & Health products are marketed and sold under a variety of brand names and are distributed primarily through its direct route to market. The direct route to market focuses on strong customer collaborations and insights with multinational customers and regional customers alike.
The major commodities, raw materials and supplies for the Nutrition & Health segment include: acetyls, citrus peels, glycerin, grain products, guar, locust bean gum, oils and fats, seaweed, soybean, soy flake, sugar and yeast.

Nutrition & Health segment sales outside the U.S. accounted for 68 percent of the segment's total sales in 2013.

Performance Chemicals
Performance Chemicals businesses, DuPont Titanium Technologies and DuPont Chemicals and Fluoroproducts, deliver customized solutions with a wide range of industrial and specialty chemical products for markets including plastics and coatings, textiles, mining, pulp and paper, water treatment and healthcare.

DuPont Titanium Technologies is the world's largest manufacturer of titanium dioxide, and is dedicated to creating greater value for the coatings, paper, plastics, specialties and minerals markets through service, brand and product. The business' main products include its broad line of DuPontTM Ti-Pure® titanium dioxide products. In 2011, the business announced a global expansion to support increased customer demand for titanium dioxide, including a $500 million investment in new production facilities at the company's Altamira, Mexico site scheduled for completion in 2015. In addition, the business continues to invest in facility upgrades to improve productivity at its other global manufacturing sites.


4


Part I
ITEM 1.  BUSINESS,continued

DuPont Chemicals and Fluoroproducts is a leading global manufacturer of industrial and specialty fluorochemicals, fluoropolymers and performance chemicals. The business' broad line of products include refrigerants, lubricants, propellants, solvents, fire extinguishants and electronic gases, which cover a wide range of industries and markets. Key brands include DuPontTM Teflon®, Capstone®, Dymel®, OpteonTM yf, Isceon®, Suva®, Vertrel®, Zyron®, Vazo® and Virkon®.

The major commodities, raw materials and supplies for the Performance Chemicals segment include: ammonia, benzene, chlorine, chloroform, fluorspar, hydrofluoric acid,

industrial gases, methanol, natural gas, perchloroethylene, petroleum coke, sodium hydroxide, sulfur and titanium ore.


Performance Chemicals segment sales outside the U.S. accounted for 55 percent of the segment's total sales in 2013.

Performance Materials
Performance Materials businesses, Performance Polymers and Packaging & Industrial Polymers, provide productive, higher performance polymers, elastomers, films, parts, and systems and solutions which improve the uniqueness, functionality and profitability of its customers' offerings. The key markets served by the segment include the automotive original equipment manufacturers (OEMs) and associated after-market industries, as well as electrical, packaging, construction, oil, electronics, photovoltaics, aerospace, chemical processing and consumer durable goods. The segment has several large customers, primarily in the motor vehicle OEM industry supply chain. The company has long-standing relationships with these customers and they are considered to be important to the segment's operating results.

Performance Polymers delivers a broad range of polymer-based high performance materials in its product portfolio, including elastomers and thermoplastic and thermoset engineering polymers which are used by customers to fabricate components for mechanical, chemical and electrical systems. The main products include: DuPontTM Zytel® nylon resins, Delrin® acetal resins, Hytrel® polyester thermoplastic elastomer resins, Tynex® filaments, Vespel® parts and shapes, Vamac® ethylene acrylic elastomer, Kalrez® perfluoroelastomer and Viton® fluoroelastomers. Performance Polymers also includes the DuPont Teijin Films joint venture, whose primary products are Mylar® and Melinex® polyester films.

Packaging & Industrial Polymers specializes in resins and films used in packaging and industrial polymer applications, sealants and adhesives, sporting goods, and interlayers for laminated safety glass. Key brands include: DuPontTM Surlyn® ionomer resins, Bynel® coextrudable adhesive resins, Elvax® EVA resins, SentryGlas®, Butacite® laminate interlayers and Elvaloy® copolymer resins.

In November 2013, DuPont entered into a definitive agreement to sell Glass Laminating Solutions/Vinyls (GLS/Vinyls), a part of Packaging & Industrial Polymers, to Kuraray Co. Ltd. for $543 million, plus the value of the inventories. GLS/Vinyls specializes in interlayers for laminated safety glass and its key brands include SentryGlas® and Butacite® laminate interlayers. The sale is expected to close about mid-2014 pending customary closing conditions, including timing of antitrust clearance.

The major commodities, raw materials and supplies for the Performance Materials segment include: acrylic monomers, adipic acid, butadiene, butanediol, dimethyl terephthalate, ethane, fiberglass, hexamethylenediamine, methanol, natural gas and purified terephthalic acid.

Performance Materials segment sales outside the U.S. accounted for 69 percent of the segment's total sales in 2013.

Safety & Protection:Protection
Safety & Protection businesses, Protection Technologies, Sustainable Solutions and Building Innovations, satisfy the growing global needs of businesses, governments and consumers for solutions that make life safer, healthier and more secure. By uniting market-driven science with the strength of highly regarded brands, the segment delivers products and services to a large number of markets, including construction, transportation, communications, industrial chemicals, oil and gas, electric utilities, automotive, manufacturing, defense, homeland security and safety consulting.

Protection Technologies is focused on finding solutions to protect people and the environment. With products like DuPont™ Kevlar



5


Part I
ITEM 1.  BUSINESS,continued

Sustainable Solutions continues to help organizations worldwide reduce workplace injuries and fatalities while improving operating costs, productivity and quality. Sustainable Solutions is a leader in the safety consulting field, selling training products, as well as consulting services. Additionally, Sustainable Solutions is dedicated to clean air, clean fuel and clean water with offerings that help reduce sulfur and other emissions, formulate cleaner fuels, or dispose of liquid waste. Its goal is to help maintain business continuity and environmental compliance for companies in the refining and petrochemical industries, as well as for government entities. In addition, the business is a leading global provider of process technology, proprietary specialty equipment and technical services to the sulfuric acid industry.

Building Innovations is committed to the building science behind increasing the performance of building systems, helping reduce operating costs and creating more sustainable structures. The business is a market leader of solid surfaces through its DuPontTM Corian® and Montelli® lines of products which offer durable and versatile materials for residential and commercial purposes. DuPont™ Tyvek® offers industry leading solutions for the protection and energy efficiency of buildings and the business also offers Geotextiles for Professional Landscaping applications.

The major commodities, raw materials and supplies for the Safety & Protection segment include: aluminum trihydrate, benzene, high density polyethylene;polyethylene, isophthaloyl chloride; metaphenylenediamine;chloride, metaphenylenediamine, methyl methacrylate; paraphenylenediamine;methacrylate, paraphenylenediamine, polyester fiber;fiber, terephthaloyl chloride;chloride and wood pulp

No commodities or raw materials are purchasedpulp.


Safety & Protection segment sales outside the U.S. accounted for 62 percent of the Pharmaceutical segment. This segment receives net proceedssegment's total sales in 2013.

Pharmaceuticals
On October 1, 2001, DuPont Pharmaceuticals was sold to the Bristol-Myers Squibb Company. DuPont retained its interest in Cozaar® (losartan potassium) and royalties from licensing arrangements for Cozaar® and Hyzaar® antihypertensive drugs,Hyzaar® (losartan potassium with hydrochlorothiazide), which are manufacturedused in the treatment of hypertension. DuPont has exclusively licensed worldwide marketing and distributed by Merck Sharp & Dohme Corp., a subsidiary ofmanufacturing rights for Cozaar® and Hyzaar® to Merck & Co., Inc. (Merck).


Pharmaceuticals' Cozaar®/Hyzaar® income is the sum of two parts: income related to a share of the profits from North American sales and certain markets in Europe, and royalty income derived from worldwide contract net sales linked to the exclusivity term in a particular country. Patents and exclusivity started to expire in prior years and the U.S. exclusivity for Cozaar® ended in April 2010. The worldwide agreement with Merck expired December 31, 2012. The company expects 2014 earnings to be insignificant and will be reported within the Other segment.

Backlog

In general, the company does not manufacture its products against a backlog of orders and does not consider backlog to be a significant indicator of the level of future sales activity. Production and inventory levels are based on the level of incoming orders as well as projections of future demand. Therefore, the company believes that backlog information is not material to understanding its overall business and should not be considered a reliable indicator of the company's ability to achieve any particular level of revenue or financial performance.


Intellectual Property

As a science and technology based company, DuPont believes that securing intellectual property is an important part of protecting its research. Some DuPont businesses operate in environments in which the availability and protection of intellectual property rights affect competition. (Information on the importance of intellectual property rights to Pioneer is included in Item 1 Agriculture business discussion beginning on page 2 of this report.)

Trade secrets are an important element of the company's intellectual property. Many of the processes used to make DuPont products are kept as trade secrets which, from time to time, may be licensed to third parties. DuPont vigilantly protects all of its intellectual property estate providesincluding its trade secrets. When the company discovers that its trade secrets have been unlawfully taken, it with an important competitive advantage. Itreports the matter to governmental authorities for investigation and potential criminal action, as appropriate. In addition, the company takes measures to mitigate any potential impact, which may include civil actions seeking redress, restitution and/or damages based on loss to the company and/or unjust enrichment.

Patents & Trademarks: DuPontcontinually applies for and obtains U.S. and foreign patents and has an established global network of attorneys, as well as branding, advertising and licensing professionals,access to procure, maintain, protect, enhance and gain value from this estate.


Table of Contents


Part I

ITEM 1.  BUSINESS,continued

The company has a large patent portfolio, ofboth owned and is licensed under various patents. These definite-lived patents cover many products, processes and product uses. These patents protect many aspects of the company's significant research programs and the goods and services it sells. The actual protection afforded by these patents varies from country to country and depends upon the scope of coverage of each individual patent as well as the availability of legal remedies in each country. DuPont owns about 17,600 worldwide patents and 17,300 worldwide patent applications. In 2010, the company was granted about 700 U.S. patents and about 1,400 international patents. DuPont'slicensed. DuPont’s rights under itsthese patents and licenses, as well as the products made and sold under them, are important to the company in the aggregate. The protection afforded by these patents varies based on country, scope of individual patent coverage, as a whole,well as the availability of legal remedies in each country. This significant patent estate may be


6


Part I
ITEM 1.  BUSINESS,continued

leveraged to align with the company’s strategic priorities within and across segments. At December 31, 2013, the company owned over 24,000 patents with various expiration dates over the next twenty years. In addition to varying degrees, important to each reportable segment.

The environment in which Pioneer competes has been characterized byits owned patents, the use among competitors of new patents,company owns over 20,000 patent positions and patent lawsuits to gain advantage in commercial markets. Ownership of and access to intellectual property rights, particularly those relating to biotechnology and germplasm, will continue to be important to Pioneer and its competitors. Pioneer has a large collection of patents related to biotechnology and germplasm and also licenses technology from others. Pioneer will continue to address the dynamic environment in which it competes through a variety of means that includes protecting and enforcing its own intellectual property rights, challenging claims made by others and, where appropriate, obtaining licenses to important technologies on commercially reasonable terms. During 2007, Pioneer entered into a business agreement on corn herbicide tolerance and insect control trait technologies with Monsanto Company (Monsanto). Among other provisions, modifications were made to the existing corn license agreements; both parties agreed to exchange certain non-assert and other intellectual property rights; and both parties obtained rights to reference and access certain regulatory data and approvals in which the other has certain interests. For additional information, see Pioneer business discussion beginning on page 26 and the Contractual Obligations table on page 39.

applications.


The company has about 2,0002,140 unique trademarks for its products and services and approximately 19,00021,130 registrations for these trademarks worldwide. Ownership rights in trademarks do not expire if the trademarks are continued in use and properly protected. The company has many trademarks that have significant recognition at the consumer retail level and/or business to business level. Significant trademarks at the consumer retail level include the DuPont Oval and DuPont™ (the "DuPont Brand Trademarks"); Pioneer® brand seeds; Teflon® fluoropolymers, films, fabric protectors, fibers and dispersions; Corian® surfaces; Kevlar® high strength material; Nomex® thermal resistant material and Tyvek® protective material. The company actively pursues licensing opportunities for selected trademarks at the retail level.

Seasonality

Sales of the company's products in the Agriculture & Nutrition segment are affected by seasonal cropping and weather patterns. Sales and earnings performance in the Agriculture & Nutrition segment is strongest in the first half of the year. The segment generally operates at a loss during the third and fourth quarters of the year. As a result of the seasonal nature of its business, Agriculture & Nutrition's inventory is at its highest level at the end of the calendar year and is sold down in the first and second quarters. Trade receivables in the Agriculture & Nutrition segment are at a low point at year-end and increase through the selling season to peak at the end of the second quarter.

In general, businesses in the remaining segments are not significantly affected by seasonal factors.

Marketing

With the exception of certain products in the Agriculture & Nutrition segment, most products are marketed primarily through DuPont's sales force, although in some regions, more emphasis is placed on sales through distributors. Pioneer owns or uses a number of brands for its products and promotes them through multiple marketing channels around the world. In the corn and soybean markets of the U.S. Corn Belt, Pioneer® brand products are sold through a specialized force of independent sales representatives. Products that are co-branded or marketed under other Pioneer owned brands are distributed in this region by select seed companies. (See page 27 for a discussion of Pioneer's PROaccessSM business strategy.) In other North American markets, Pioneer® products are marketed through distributors and crop input retailers. Pioneer® products outside of North America are marketed through a network of subsidiaries, joint ventures and independent producer-distributors. Similarly, Crop Protection products are marketed and sold to growers and other end users through a network of wholesale distributors and crop input retailers. Solae®


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ITEM 1.  BUSINESS,continued

isolated and functional soy proteins are marketed using a combination of outside distributors, joint ventures and direct sales.

Major Customers

The company's sales are not materially dependent on a single customer or small group of customers. However, collectively, Performance Coatings and Performance Materials have several large customers, primarily in the motor vehicle original equipment manufacturer (OEM) industry supply chain. The company has long-standing relationships with these customers and they are considered to be important to the segments' operating results.

Competition

As a science and technology based company, DuPont competes on a variety of factors such as product quality and performance or specifications, continuity of supply, price, customer service and breadth of product line, depending on the characteristics of the particular market involved and the product or service provided.

Major competitors include diversified industrial companies principally based in the U.S., Western Europe, Japan, China, Korea and India. In the aggregate, these competitors offer a wide range of products from agricultural, commodity and specialty chemicals to plastics, fibers and advanced materials. The company also competes in certain markets with smaller, more specialized firms who offer a narrow range of products or converted products that functionally compete with the company's offerings.

Pioneer sells advanced plant genetics, principally for the global production of corn and soybeans and thus directly competes with other seed and plant biotechnology companies. The Nutrition & Health business also provides food safety equipment and soy-based food ingredients in competition with other major grain and food processors.

Research and Development

The company conducts research in the U.S.and development (R&D) at either dedicated research facilities or manufacturing plants. The highest concentration of research is in the Wilmington, Delaware area at several large research centers. Among these, the Experimental Station laboratories engage in investigative and applied research, the Chestnut Run laboratories focus on applied research and the Stine-Haskell Research Center conducts agricultural product research and toxicological research to assure the safe manufacture, handling and use of products and raw materials.

OtherThere are eleven major research locations in the U.S. include& Canada, with the highest concentration of facilities dedicated to coatingsat our corporate headquarters in the Wilmington, Delaware area. In addition, DuPont has five major research centers in Mount Clemens, Michigan; Pioneer research facilitiesthe Asia Pacific region, four major locations in Johnston, Iowa; the Europe, Middle East and Africa (EMEA) region and one major location is located in Latin America.


The Solae Company facilities in St. Louis, Missouri; polymer research facilities in Richmond, Virginia, and Parkersburg, West Virginia; and electronic materials research facilities in Research Triangle Park, North Carolina, and Santa Barbara, California.

DuPont, reflecting the company's global interests, also operates additionalcompany’s research and development facilities at locations outsideobjectives are to leverage its unique integrated science capabilities to drive revenue and profit growth. DuPont's R&D organization is fully focused on the U.S., with major facilities located in Sao Paulo, Brazil; Kingston, Canada; Shanghai, China; Wuppertal, Germany; Hyderabad, India; Kanagawa, Japan; Utsunomiya, Japan; Seoul, Korea; and Meyrin, Switzerland.

The objectivescompany's strategic priorities: extending its leadership across the high-value, science-driven segments of the company's researchagriculture and development programsfood value chains, strengthening its lead as provider of differentiated, high-value advanced industrial materials, and building transformational new bio-based industrial businesses. The company believes that its unique breadth of science, proven R&D engine, broad global reach and deep market penetration are distinctive, competitive advantages that position it to create new technologies, processesaddress demands for more and healthier food, decreasing our dependence on fossil fuel, and protecting people and the environment. Each business opportunities in relevant fields, as well as to improve existing products and processes. Each segment of the company funds research and development activities that support its business mission. Recently, the company has broadened its sustainability commitments beyond environmental footprint reduction to include market-driven targets formission, and a central research and development investment.organization supports cross-business and cross-functional growth opportunities. The companyR&D portfolio is expanding its offerings addressing safety, environment, energy and climate challenges in the global marketplace by developing and commercializing renewable, bio-based materials; advanced biofuels; energy-efficient technologies; enhanced safety and protection products; and alternative energy products and technologies. The goals are tied directly to business growth, including increasing food production, increasing renewable sources for energy and raw materials, and providing greater safety and protection for people and the environment.

The corporate research laboratories are responsible for conducting research programs aligned with corporate strategy. All research and development activities are administeredmanaged by senior research and development management


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ITEM 1.  BUSINESS,continued


personnel to ensure consistency with the business and corporate strategy and to capitalize on the application of emerging science.


The company continues to protect its R&D investment through its intellectual property strategy. The future of the company is not dependent upon the outcome of any single research program.

See discussion under "Intellectual Property".


Additional information with respect to research and development, including the amount incurred during each of the last three fiscal years, is included in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, on page  19 of this report.

Facility Security

See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, on page 45 for a discussion of facility security.


Environmental Matters

Information related to environmental matters is included in several areas of this report: (1) Environmental Proceedings beginning on page 12, (2) Management's Discussion and Analysis of Financial Condition and Results of Operations beginning on pages 23, 41-4531, 35-37 and (3) Notes 1 and 1916 to the Consolidated Financial Statements.


Available Information

The company is subject to the reporting requirements under the Securities Exchange Act of 1934. Consequently, the company is required to file reports and information with the Securities and Exchange Commission (SEC), including reports on the following forms: annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.


The public may read and copy any materials the company files with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.


The company's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are also accessible on the company's website at http://www.dupont.com by clicking on the tabsection labeled "Investor Center""Investors", then on "Key Financials & Filings" and then on "SEC filings.Filings." These reports are made available, without charge, as soon as is reasonably practicable after the company files or furnishes them electronically with the Securities and Exchange Commission.

SEC.


Executive Officers of the Registrant

Information related to the company's Executive Officers is included in Item 10, Directors, Executive Officers and Corporate Governance, beginning on page 5140 of this report.

7


Part I
ITEM 1A.  RISK FACTORS


The company's operations could be affected by various risks, many of which are beyond its control. Based on current information, the company believes that the following identifies the most significant risk factors that could affect its businesses. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.


Conditions in the global economy and global capital markets may adversely affect the company's results of operations, financial condition, and cash flows.
The company's business and operating results may in the future be adversely affected by global economic conditions, including instability in credit markets, declining consumer and business confidence, fluctuating commodity prices and interest rates, volatile exchange rates, and other challenges such as the changing financial regulatory environment that could affect the global economy. The company's customers may experience deterioration of their businesses, cash flow shortages, and difficulty obtaining financing. As a result, existing or potential customers may delay or cancel plans to purchase products and may not be able to fulfill their obligations in a timely fashion. Further, suppliers could experience similar conditions, which could impact their ability to fulfill their obligations to the company. Adversity within capital markets may impact future return on pension assets, thus resulting in greater future pension costs that impact the company's results. Because the company has significant international operations, there are a large number of currency transactions that result from international sales, purchases, investments and borrowings. The company actively manages currency exposures that are associated with net monetary asset positions, committed currency purchases and sales, foreign currency-denominated revenues and other assets and liabilities created in the normal course of business. Future weakness in the global economy and failure to manage these risks could adversely affect the company's results of operations, financial condition and cash flows in future periods.

Changes in government policies and laws could adversely affect the company's financial results.
Sales to customers outside the U.S. constitute about 60 percent of the company's 2013 revenue. The company anticipates that international sales will continue to represent a substantial portion of its total sales and that continued growth and profitability will require further international expansion, particularly in developing markets. Sales from developing markets represent 33 percent of the company's revenue in 2013 and the company's growth plans include focusing on expanding its presence in developing markets. The company's financial results could be affected by changes in trade, monetary and fiscal policies, laws and regulations, or other activities of U.S. and non-U.S. governments, agencies and similar organizations. These conditions include, but are not limited to, changes in a country's or region's economic or political conditions, trade regulations affecting production, pricing and marketing of products, local labor conditions and regulations, reduced protection of intellectual property rights in some countries, changes in the regulatory or legal environment, restrictions on currency exchange activities, burdensome taxes and tariffs and other trade barriers. International risks and uncertainties, including changing social and economic conditions as well as terrorism, political hostilities and war, could lead to reduced sales and profitability.

Price increases for energy and raw materials could have a significant impact on the company's ability to sustain and grow earnings.

The company's manufacturing processes consume significant amounts of energy and raw materials, the costs of which are subject to worldwide supply and demand as well as other factors beyond the control of the company. Significant variations in the cost of energy, which primarily reflect market prices for oil, and natural gas and raw materials, affect the company's operating results from period to period. In 2013, price increases for energy and raw materials were about $500 million as compared to 2012. Price increases for energy and raw materials were not significant to earnings in 2012 as compared to 2011. Legislation to address climate change by reducing greenhouse gas emissions and establishing a price on carbon could create increases in energy costs and price


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ITEM 1A.  RISK FACTORS,continued

volatility. When possible, the company purchases raw materials through negotiated long-term contracts to minimize the impact of price fluctuations. Additionally, the company enters into over-the-counter and exchange traded derivative commodity instruments to hedge its exposure to price fluctuations on certain raw material purchases. The company takes actions to offset the effects of higher energy and raw material costs through selling price increases, productivity improvements and cost reduction programs. Success in offsetting higher raw material costs with price increases is largely influenced by competitive and economic conditions and could vary significantly depending on the market served. If the company is not able to fully offset the effects of higher energy and raw material costs, it could have a significant impact on the company's financial results.


The company's results of operations and financial condition could be seriously impacted by business disruptions and security breaches, including cybersecurity incidents.
Business and/or supply chain disruptions, plant and/or power outages and information technology system and/or network disruptions, regardless of cause including acts of sabotage, employee error or other actions, geo-political activity, weather events and natural disasters could seriously harm the company's operations as well as the operations of its customers and suppliers. Failure to developeffectively prevent, detect and market new productsrecover from security breaches, including attacks on information technology and manage product life cyclesinfrastructure

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Part I
ITEM 1A.  RISK FACTORS,continued

by hackers; viruses; breaches due to employee error or actions; or other disruptions could impactresult in misuse of the company's assets, business disruptions, loss of property including trade secrets and confidential business information, legal claims or proceedings, reporting errors, processing inefficiencies, negative media attention, loss of sales and interference with regulatory compliance. Like most major corporations, DuPont is the target of industrial espionage, including cyber-attacks, from time to time. DuPont has determined that these attacks have resulted, and could result in the future, in unauthorized parties gaining access to at least certain confidential business information. However, to date, the company has not experienced any material financial impact, changes in the competitive position and have an adverse effect onenvironment or business operations that it attributes to these attacks. Although management does not believe that the company's financial results.

Operating results are largely dependent on the company's assessment and management of its portfolio of current, new and developing products and services and its abilitycompany has experienced any material losses to bring those products and servicesdate related to market. The company plans to grow earnings by focusing on developing markets and solutions to meet increasing demand for food productivity, decrease dependency on fossil fuels and protect people, assets and the environment. This ability could be adversely affected by difficulties or delays in product development such as the inability to identify viable new products, successfully complete research and development, obtain relevant regulatory approvals, obtain intellectual property protection, or gain market acceptance of new products and services. Because of the lengthy development process, technological challenges and intense competition,security breaches, including cybersecurity incidents, there can be no assurance that it will not suffer such losses in the future. The company actively manages the risks within its control that could lead to business disruptions and security breaches. As these threats continue to evolve, particularly around cybersecurity, the company may be required to expend significant resources to enhance its control environment, processes, practices and other protective measures. Despite these efforts, such events could materially adversely affect the company's business, financial condition or results of operations.


Inability to protect and enforce the company's intellectual property rights could adversely affect the company's financial results.
Intellectual property rights, including patents, plant variety protection, trade secrets, confidential information, trademarks, tradenames and other forms of trade dress, are important to the company's business. The company endeavors to protect its intellectual property rights in jurisdictions in which its products are produced or used and in jurisdictions into which its products are imported. However, the company may be unable to obtain protection for its intellectual property in key jurisdictions. The company has designed and implemented internal controls to restrict access to and distribution of its intellectual property. Despite these precautions, the company's intellectual property is vulnerable to unauthorized access through employee error or actions, theft and cybersecurity incidents, and other security breaches. When unauthorized access and use or counterfeit products are discovered, the company reports such situations to governmental authorities for investigation, as appropriate, and takes measures to mitigate
any potential impact.

Failure to effectively manage acquisitions, divestitures, alliances and other portfolio actions could adversely impact our future results.
From time to time, the company evaluates acquisition candidates that may strategically fit its business and/or growth objectives. If DuPont is unable to successfully integrate and develop acquired businesses, the company could fail to achieve anticipated synergies and cost savings, including any expected increases in revenues and operating results, which could materially and adversely affect the company’s financial results. DuPont continually reviews its diverse portfolio of assets for contributions to the company’s objectives and alignment with its growth strategy. However, the company may not be successful in separating underperforming or non-strategic assets and gains or losses on the divestiture of, or lost operating income from, such assets may affect the company’s earnings. Moreover, DuPont might incur asset impairment charges related to acquisitions or divestitures that reduce its earnings.

In October 2013, DuPont announced its intention to separate its Performance Chemicals segment through a U.S. tax-free spin-off to shareholders. The proposed spin-off is subject to various conditions, complex in nature and may be affected by unanticipated developments or changes in market conditions. Completion of the spin-off will be contingent upon customary closing conditions, including receipt of regulatory approvals.

Market acceptance, government policies, rules or regulations and competition could affect the company's ability to generate sales from products based on biotechnology.
The company is using biotechnology to create and improve products, particularly in its Agriculture and Industrial Biosciences segments. These products enable cost and process benefits, better product performance and improve environmental outcomes to a broad range of products and processes such as seeds, animal nutrition, detergents, food manufacturing, ethanol production and industrial applications. The company's ability to generate sales from such products could be impacted by market acceptance as well as governmental policies, laws and regulations that affect the development, manufacture and distribution of products, including the testing and planting of seeds containing biotechnology traits and the import of commodity grain grown from those seeds. The regulatory environment is lengthy and complex with requirements that can vary by industry and by country. The regulatory environment may be impacted by the activities of non-governmental organizations and special interest groups and stakeholder reaction to actual or perceived impacts of new technology on safety, health and the environment. Obtaining and maintaining regulatory approvals requires submitting a significant amount of information and data, which may require participation from technology providers. The ability to satisfy the requirements of regulatory agencies is essential to be able to continue to sell existing products or commercialize new products containing biotechnology traits.


9


Part I
ITEM 1A.  RISK FACTORS,continued

The company competes with major global companies that have strong intellectual property estates supporting the use of biotechnology to enhance products, particularly agricultural and bio-based products. Speed in discovering, developing and protecting new technologies and bringing related products to market is a significant competitive advantage. Failure to predict and respond effectively to this competition could cause the company's existing or candidate products to become less competitive, adversely affecting sales. Competitors are increasingly challenging intellectual property positions and the outcomes can be highly uncertain. If challenges are resolved adversely, it could negatively impact the company's ability to commercialize new products and generate sales from existing products.

The company's business, including its results of operations and reputation, could be adversely affected by process safety and product stewardship issues.
Failure to appropriately manage safety, human health, product liability and environmental risks associated with the company's products, product life cycles and production processes could adversely impact employees, communities, stakeholders, the environment, the company's reputation and its results of operations. Public perception of the risks associated with the company's products and production processes could impact product acceptance and influence the regulatory environment in which the company is currently developing, oroperates. While the company has procedures and controls to manage process safety risks, issues could begin to develop inbe created by events outside of its control including natural disasters, severe weather events, acts of sabotage and substandard performance by the future, will achieve substantial commercial success. Salescompany's external partners.

As a result of the company's new productscurrent and past operations, including operations related to divested businesses, the company could replace salesincur significant environmental liabilities.
The company is subject to various laws and regulations around the world governing the environment, including the discharge of somepollutants and the management and disposal of hazardous substances. As a result of its current products, offsettingoperations, including its past operations and operations of divested businesses, the benefitcompany could incur substantial costs, including remediation and restoration costs. The costs of evencomplying with complex environmental laws and regulations, as well as internal voluntary programs, are significant and will continue to be so for the foreseeable future. The ultimate costs under environmental laws and the timing of these costs are difficult to predict. The company's accruals for such costs and liabilities may not be adequate because the estimates on which the accruals are based depend on a successful product introduction.

number of factors including the nature of the matter, the complexity of the site, site geology, the nature and extent of contamination, the type of remedy, the outcome of discussions with regulatory agencies and other Potentially Responsible Parties (PRPs) at multi-party sites and the number and financial viability of other PRPs.


The company's results of operations could be adversely affected by litigation and other commitments and contingencies.

The company faces risks arising from various unasserted and asserted litigation matters, including, but not limited to, product liability, patent infringement, antitrust claims, and claims for third party property damage or personal injury stemming from alleged environmental torts. The company has noted a nationwide trend in purported class actions against chemical manufacturers generally seeking relief such as medical monitoring, property damages, off-site remediation and punitive damages arising from alleged environmental torts without claiming present personal injuries. The company also has noted a trend in public and private nuisance suits being filed on behalf of states, counties, cities and utilities alleging harm to the general public. Various factors or developments can lead to changes in current estimates of liabilities such as a final adverse judgment, significant settlement or changes in applicable law. A future adverse ruling or unfavorable development could result in future charges that could have a material adverse effect on the company. An adverse outcome in any one or more of these matters could be material to the company's financial results.


In the ordinary course of business, the company may make certain commitments, including representations, warranties and indemnities relating to current and past operations, including those related to divested businesses and issue guarantees of third party obligations. If the company were required to make payments as a result, they could exceed the amounts accrued, thereby adversely affecting the company's results of operations.

The company's business, including its results of operations and reputation, could be adversely affected by process safety and product stewardship issues.

Failure to appropriately manage safety, human health, product liability and environmental risks associated with the company's products, product life cycles and production processes could adversely impact employees, communities, stakeholders, the company's reputation and its results of operations. Public perception of the risks associated with the company's products and production processes could impact product acceptance and influence the regulatory environment in which the company operates. While the company has procedures and controls to manage process safety risks, issues could be created by events outside of its control including natural disasters, severe weather events and acts of sabotage.



10

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ITEM 1A.  RISK FACTORS,continued

As a result of the company's current and past operations, including operations related to divested businesses, the company could incur significant environmental liabilities.

The company is subject to various laws and regulations around the world governing the environment, including the discharge of pollutants and the management and disposal of hazardous substances. As a result of its operations, including its past operations and operations of divested businesses, the company could incur substantial costs, including cleanup costs. 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. The ultimate costs under environmental laws and the timing of these costs are difficult to predict. The company's accruals for such costs and liabilities may not be adequate because the estimates on which the accruals are based depend on a number of factors including the nature of the matter, the complexity of the site, site geology, the nature and extent of contamination, the type of remedy, the outcome of discussions with regulatory agencies and other Potentially Responsible Parties (PRPs) at multi-party sites and the number and financial viability of other PRPs.

The company's ability to generate sales from genetically modified products, particularly seeds and other agricultural products, could be adversely affected by market acceptance, government policies, rules or regulations and competition.

The company is using biotechnology to create and improve products, particularly in its Agriculture & Nutrition segment. The use of biotechnology to characterize the genetic and performance characteristics of Pioneer seeds provides Pioneer with competitive advantages in the development of new products, and in the most effective placement of those products on customer acres. In addition, the company uses biotechnology to enhance the performance of its seed products through the addition of specific transgenes. The company's ability to generate sales from such products could be affected by market acceptance of genetically modified products as well as governmental policies, laws and regulations that affect the development, manufacture and distribution of products, including the testing and planting of seeds containing biotechnology traits and the import of commodity grain grown from those seeds.

The company competes with major global companies that have strong intellectual property estates supporting the use of biotechnology to enhance products, particularly in the agricultural products and production markets. Speed in discovering and protecting new technologies and bringing products based on them to market is a significant competitive advantage. Failure to predict and respond effectively to this competition could cause the company's existing or candidate products to become less competitive, adversely affecting sales.

Changes in government policies and laws could adversely affect the company's financial results.

Sales outside the U.S. constitute approximately 65 percent of the company's 2010 revenue. The company anticipates that international sales will continue to represent a substantial portion of its total sales and that continued growth and profitability will require further international expansion, particularly in developing markets. Sales from developing markets represent approximately 30 percent of the company's revenue in 2010 and the company's growth plans include focusing on expanding its presence in developing markets. The company's financial results could be affected by changes in trade, monetary and fiscal policies, laws and regulations, or other activities of U.S. and non-U.S. governments, agencies and similar organizations. These conditions include, but are not limited to, changes in a country's or region's economic or political conditions, trade regulations affecting production, pricing and marketing of products, local labor conditions and regulations, reduced protection of intellectual property rights in some countries, changes in the regulatory or legal environment, restrictions on currency exchange activities, burdensome taxes and tariffs and other trade barriers. International risks and uncertainties, including changing social and economic conditions as well as terrorism, political hostilities and war, could lead to reduced sales and profitability.

Economic factors, including inflation, deflation and fluctuations in currency exchange rates, interest rates and commodity prices could affect the company's financial results.

The company is exposed to fluctuations in currency exchange rates, interest rates and commodity prices. Because the company has significant international operations, there are a large number of currency transactions that result from international sales, purchases, investments and borrowings. The company actively manages currency exposures that are associated with net monetary asset positions, committed currency purchases and sales, foreign currency-


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ITEM 1A.  RISK FACTORS,continued

denominated revenues and other assets and liabilities created in the normal course of business. Failure to successfully manage these risks could have an adverse impact on the company's financial position, results of operations and cash flows.

Conditions in the global economy and global capital markets may adversely affect the company's results of operations, financial condition, and cash flows.

The company's business and operating results may in the future be adversely affected by global economic conditions, including instability in credit markets, declining consumer and business confidence, fluctuating commodity prices, volatile exchange rates, and other challenges that could affect the global economy. The company's customers may experience deterioration of their businesses, cash flow shortages, and difficulty obtaining financing. As a result, existing or potential customers may delay or cancel plans to purchase products and may not be able to fulfill their obligations in a timely fashion. Further, suppliers could experience similar conditions, which could impact their ability to fulfill their obligations to the company. Adversity within capital markets may impact future return on pension assets, thus resulting in greater future pension costs that impact the company's results. Future weakness in the global economy could adversely affect the company's results of operations, financial condition and cash flows in future periods.

The company's results of operations and financial condition could be seriously impacted by business disruptions and security threats.

Business disruptions, including supply disruptions, increasing costs for energy, temporary plant and/or power outages and information technology system and network disruptions, could seriously harm the company's operations as well as the operations of its customers and suppliers. Like many other multinational organizations, the company faces security threats to its facilities, data and information technology infrastructure. Although it is impossible to predict the occurrences or consequences of business disruptions or security threats, they could result in reduced demand for the company's products, make it difficult or impossible for the company to deliver products to its customers or to receive raw materials from suppliers, and create delays and inefficiencies in the supply chain. The company actively manages the risks within its control that could lead to business disruptions or security breaches in order to mitigate any potential impact from business disruptions regardless of cause including acts of sabotage, terrorism or war, weather events and natural disasters. Despite these efforts, the impact from business disruptions and security breaches could significantly increase the cost of doing business or otherwise adversely impact the company's financial performance.

Inability to protect and enforce the company's intellectual property rights could adversely affect the company's financial results.

Intellectual property rights are important to the company's business. The company endeavors to protect its intellectual property rights in jurisdictions in which its products are produced or used and in jurisdictions into which its products are imported. However, the company may be unable to obtain protection for its intellectual property in key jurisdictions. Additionally, the company has designed and implemented internal controls to restrict access to and distribution of its intellectual property, including confidential information and trade secrets. Despite these precautions, it is possible that unauthorized parties may access and use such property. When misappropriation is discovered, the company reports such situations to the appropriate governmental authorities for investigation and takes measures to mitigate any potential impact.

ITEM 1B.  UNRESOLVED STAFF COMMENTS


None.


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Part I

ITEM 2.  PROPERTIES


The company's corporate headquarters are located in Wilmington, Delaware. The company's manufacturing, processing, marketing and research and development facilities, as well as regional purchasing offices and distribution centers are located throughout the world.

Information regarding research and development facilities is incorporated by reference to Item 1, Business-Research and Development. Additional information with respect to the company's property, plant and equipment and leases is contained in Notes 10, 1916 and 2421 to the Consolidated Financial Statements.

The company has investments in property, plant and equipment related to global manufacturing operations. Collectively there are over 300 principal sites in total. The more significantnumber of sites are listedused by their applicable segment(s) by major geographic area around the world is as set forth below:

follows:

 Number of Sites
 AgricultureElectronics & CommunicationsIndustrial BiosciencesNutrition & HealthPerformance ChemicalsPerformance MaterialsSafety & Protection
Total 1
Asia Pacific22
10
1
9
6
19
6
73
EMEA48
3
7
19
4
11
4
96
Latin America20

1
7
1
1

30
U.S. & Canada57
18
7
12
29
19
11
153
 147
31
16
47
40
50
21
352



Agriculture & Nutrition1.
Asia PacificShanghai, China; Savli, India
EuropeIeper, Belgium; Aarhus, Denmark; Cernay, France; Szarvas, Hungary; Asturias, Spain
Latin AmericaBarra Mansa, Brazil; Camacari, Brazil; Esteio, Brazil; Lerma, Mexico
U.S.Mobile, AL; Valdosta, GA; Johnston, IA; El Paso, IL; Pryor, OK; Manati, Puerto Rico; Memphis, TN; LaPorte, TX

Electronics & Communications
Asia PacificDongguan, China; Shenzhen, China; Hitachi, Japan; Tokai, Japan; Hsinchu, Taiwan; Taoyuan, Taiwan
EuropeNeu Isenburg, Germany; Bristol, UK; Ruabon, UK
U.S.Hayward, CA; Santa Barbara, CA; Torrance, CA; Fort Madison, IA; Louisville, KY; Fayetteville, NC; Research Triangle Park, NC; Parlin, NJ; Buffalo, NY; Rochester, NY; Circleville, OH; Dayton, OH; Towanda, PA; Manati, Puerto Rico; Bayport, TX; Logan, UT

Performance Chemicals
Asia PacificChangshu, China; Shenzhen, China; Madurai, India; Chiba, Japan; Shimizu, Japan; Kuan Yin, Taiwan
EuropeMechelen, Belgium; Villers-St. Paul, France; Dordrecht, The Netherlands; Sudbury, UK
Latin AmericaAltamira, Mexico
U.S.El Dorado, AR; Edge Moor, DE; Red Lion, DE; Starke, FL; Louisville, KY; Wurtland, KY; Burnside, LA; La Place, LA; De Lisle, MS; Pascagoula, MS; Fayetteville, NC; Chambers Works, NJ; Deepwater, NJ; Linden, NJ; Parlin, NJ; Buffalo, NY; Niagara Falls, NY; Circleville, OH; Fort Hill, OH; Towanda, PA; North Kingstown, RI; Memphis, TN; New Johnsonville, TN; Baytown, TX; Beaumont, TX; Corpus Christi, TX; El Paso, TX; LaPorte, TX; James River, VA; Belle, WV; Parkersburg, WV

Performance Coatings
Asia PacificChangchun, China; Jiading, China
EuropeMechelen, Belgium; Wuppertal, Germany
Latin AmericaSao Paulo, Brazil
U.S.Mount Clemens, MI; Houston, TX; Front Royal, VASites that are used by multiple segments are included more than once in the figures above.

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ITEM 2.  PROPERTIES,continued




Performance Materials
Asia PacificBeijing, China; Shenzhen, China; Wuxi, China; Zhangjigang, China; Madurai, India; Savli, India; Chiba, Japan; Gifu, Japan; Ibaraki, Japan; Otake, Japan; Utsunomiya, Japan; Ulsan, Korea; Singapore
CanadaMaitland, Canada; Sarnia, Canada
EuropeAntwerp, Belgium; Mechelen, Belgium; Uentrop, Germany; Luxembourg; Dordrecht, The Netherlands; Landgraaf, The Netherlands; Dumfries, UK
Latin AmericaBerazategui, Argentina
U.S.Newark, DE; La Place, LA; Fayetteville, NC; Deepwater, NJ; Ashland, OH; Circleville, OH; Cleveland, OH; Upper Sandusky, OH; Copper River, SC; Chattanooga, TN; La Porte, TX; Orange, TX; Victoria, TX; Hopewell, VA; Richmond, VA; Parkersburg, WV

Safety & Protection
Asia PacificGuangzhou, China; Ulsan, Korea
CanadaThetford Mines, Canada
EuropeLuxembourg; Maydown, UK; Asturias, Spain
U.S.Martinez, CA; Leawood, KS; Parsippany, NJ; Buffalo, NY; Cooper River, SC; Richmond, VA; Virgina Beach, VA

The company's plants and equipment are well maintained and in good operating condition. Sales as a percent ofThe company believes it has sufficient production capacity were 81, 70 and 78 percentto meet demand in 2010, 2009 and 2008, respectively.2014. Properties are primarily owned by the company; however, certain properties are leased. No title examination of the properties has been made for the purpose of this report and certain properties are shared with other tenants under long-term leases.


DuPont recognizes that the security and safety of its operations are critical to its employees, community and to the future of the company. As such, the company has merged chemical site security into its safety core value where it serves as an integral part of its long standing safety culture. Physical security measures have been combined with process safety measures (including the use of inherently safer technology), administrative procedures and emergency response preparedness into an integrated security plan. The company has conducted vulnerability assessments at operating facilities in the U.S. and high priority sites worldwide and identified and implemented appropriate measures to protect these facilities from physical and cyber attacks. DuPont is partnering with carriers, including railroad, shipping and trucking companies, to secure chemicals in transit.


11

Table of Contents


Part I

ITEM 3.  LEGAL PROCEEDINGS


The company is subject to various litigation matters, including, but not limited to, product liability, patent infringement, antitrust claims, and claims for third party property damage or personal injury stemming from alleged environmental torts. Information regarding certain of these matters is set forth below and in Note 1916 to the Consolidated Financial Statements.


Litigation
LitigationImprelis

® Herbicide Claims Process

Information related to this matter is included in Note 16 to the Consolidated Financial Statements under the heading Imprelis®.

PFOA: Environmental and Litigation Proceedings

For purposes of this report, the term PFOA means collectively perfluorooctanoic acid and its salts, including the ammonium salt and does not distinguish between the two forms. Information related to this matter is included in Note 1916 to the Consolidated Financial Statements under the heading PFOA.


Environmental Proceedings

Belle Plant, West Virginia

In August 2013, the U.S. government initiated an enforcement action alleging that the facility violated certain regulatory provisions of the Clean Air Act (CAA), Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and Emergency Planning and Community Right to Know Act (EPCRA). The U.S. Environmental Protection Agency (EPA) is investigating threealleged non-compliance relates to chemical releases at DuPont's Belle facility in West Virginiabetween 2006 and 2010, including one release which occurred in January 2010. One of the releases involved the death of a DuPont employee after exposure to phosgene.

  DuPont is in settlement negotiations with the U.S. Environmental Protection Agency (EPA) and the Department of Justice (DOJ).


Chambers Works Plant, Deepwater, New Jersey

In January 2010, EPA and the U.S. Attorney's Office for New Jersey, informed DuPont that the government was initiatinginitiated an enforcement action arising from alleged environmental non-compliance at the Chambers Works facility. The government allegesalleging that the facility violated recordkeeping requirements of certain provisions of the Clean Air ActCAA and the Federal Clean Air Act Regulations (FCAR) governing Leak Detection and Reporting (LDAR) and that it failed to report emissions of a compound from Chambers Works' waste water treatment facility under the Emergency Planning and Community Right-to-Know Act.EPCRA. The alleged non-compliance was identified by EPA in 2007 and 2009 following separate environmental audits. DuPont is in settlement negotiations with EPA and DOJ.

LaPorte Plant, LaPorte, Texas
EPA conducted a multimedia inspection at the DepartmentLaPorte facility in January 2008. DuPont, EPA and DOJ began discussions in the fall 2011 relating to the management of Justice (DOJ).

Chambers Works Plant, Deepwater, New Jersey

On September 29, 2010, DuPont received a draft Administrative Consent Order fromcertain materials in the New Jersey Department of Environmental Protection (NJDEP) seeking a penalty for alleged violations of New Jerseyfacility's waste water treatment system, hazardous waste regulations dating backmanagement, flare and air emissions. These negotiations continue.


Sabine Plant, Orange, Texas
In June 2012, DuPont began discussions with DOJ and EPA related to April 2009 based on a facility-widemultimedia inspection that EPA conducted at the Sabine facility in March 2009. The discussions involve the management of materials in the facility's waste water treatment system, hazardous waste audit conductedmanagement, flare and air emissions.

Yerkes Plant, Buffalo, New York
The government alleges that the facility violated recordkeeping requirements of certain provisions of the CAA and the FCAR governing LDAR and that it failed to accurately report emissions under EPCRA. The alleged non-compliance was identified by EPA in May 2010. DuPont is in negotiations with NJDEP.

Chambers Works Plant, Deepwater, New Jersey

2006 and 2010 following separate environmental audits. DuPont is in settlement negotiations with EPA and DOJ concerning allegationsDOJ.


Federal Insecticide, Fungicide and Rodenticide Act (FIFRA)
In July 2012, DuPont received a “notice of noncompliance and show cause” letter from EPA Region III for alleged violations of FIFRA related to product labeling and adverse effects reporting for Imprelis®. DuPont and EPA are in discussions.

Washington Works Plant, West Virginia
In 2011, the U.S. government initiated an enforcement action alleging that the Washington Works plant violated certain regulatory provisions of the CAA governing LDAR. The alleged non-compliance was identified between 2007 and 2010, following an environmental non-complianceaudit conducted in 2007 and the submission of responses to an information request received in 2009. DuPont is in settlement negotiations with the EPA and DOJ.




12


ITEM 4.  MINE SAFETY DISCLOSURES

Information regarding mine safety and other regulatory actions at the Chambers Works facility. The allegations arose from an ongoing investigation into DuPont's management of hazardous wastecompany's surface mine in rail cars.

TSCA Voluntary Audit

DuPont voluntarily undertook a self-audit concerning reporting of inhalation studies pursuantStarke, Florida is included in Exhibit 95 to Toxic Substances Control Act (TSCA) section 8(e). DuPont voluntarily reported the results of that audit to EPA. The EPA has reviewed the information submitted under this self-audit and has indicated potential violations exist with respect to some of the submitted studies. In December 2010, the agreement to settle this matter for a penalty of $3.3 million was approved by EPA's Environmental Appeals Board.

report.


Table of Contents


Part II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


Market for 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 approximately 81,00070,000 at January 31, 2011.

2014.


Holders of the company's common stock are entitled to receive dividends when they are declared by the Board of Directors. While it is not a guarantee of future conduct, the company has continuously paid a quarterly dividend since the fourth quarter 1904. Dividends on common stock and preferred stock are usually declared in January, April, July and October. When dividends on common stock are declared, they are usually paid mid March, June, September and December. Preferred dividends are paid on or about the 25th of January, April, July and October. The Stock Transfer Agent and Registrar is Computershare Trust Company, N.A.


The company's quarterly high and low trading stock prices and dividends per common share for 20102013 and 20092012 are shown below.

   Market Prices    Market Prices 
2010
  
 High
  
 Low
  
 Per Share
Dividend
Declared

  

Fourth Quarter

   $50.17   $44.21   $0.41  

Third Quarter

   45.87   33.73   0.41  

Second Quarter

   41.45   33.66   0.41  

First Quarter

   39.04   31.88   0.41  

2009

              
2013HighLow
Per Share
Dividend
Declared

Fourth Quarter

   $35.62   $30.06   $0.41  $65.00
$56.46
$0.45

Third Quarter

   34.59   23.91   0.41  60.86
52.04
0.45

Second Quarter

   30.23   21.62   0.41  57.25
48.21
0.45

First Quarter

   27.98   16.05   0.41  50.20
45.11
0.43
   
2012 
 
 
Fourth Quarter$50.96
$41.67
$0.43
Third Quarter52.33
46.15
0.43
Second Quarter53.98
46.44
0.43
First Quarter53.95
45.84
0.41


Issuer Purchases of Equity Securities

In June 2001, the Board of Directors authorized up to $2 billion for repurchases

There were no purchases of the company's common stock. During the fourth quarter 2010, the company paid $250 million to purchase and retire 5.4 million shares at an average price of $46.34 per share under this plan. As of December 31, 2010, cumulative purchases of common stock under this plan are 25.9 million shares at a cost of $1.2 billion. There is no expiration date on the current authorization and no determination has been made by the company to suspend or cancel purchases under the plan.

The following table summarizes information with respect to the company's purchases of its common stock during the fourth quarter 2010:

three months ended
December 31, 2013.

13

      
Month
  
 Total Number
of Shares
Purchased

  
 Average Price
Paid per Share

  
 Total Number of
Shares Purchased
as Part of Publicly
Announced
Program

  
 Approximate Value
of Shares that May
Yet Be Purchased
Under the Program
(Dollars in millions)

  

November

    5,395,024   $46.34    5,395,024   $788  

Total

    5,395,024         5,395,024       
                       

Table of Contents


Part II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES,continued


Stock Performance Graph

The following graph presents the cumulative five-year total shareholder return for the company's common stock compared with the S&P 500 Stock Index and a self-constructed peer group of companies. The peer group companies for the year ended December 31, 2010 are 3M Company; Abbott Laboratories; Air Products & Chemicals, Inc.; Baxter International Inc.; The Boeing Company; Caterpillar Inc.; Eastman Kodak Company; Emerson Electric Co.; Hewlett-Packard Company; Honeywell International Inc.; Ingersoll-Rand Company Limited; Johnson & Johnson; Johnson Controls, Inc.; Kimberly-Clark Corporation; Merck & Co. Inc.; Monsanto Company; Motorola Inc.; The Procter & Gamble Company; and United Technologies Corporation.

Dow Jones Industrial Average.


Stock Performance Graph

 

   12/31/2005   12/31/2006    12/31/2007    12/31/2008    12/31/2009    12/31/2010  12/31/200812/31/200912/31/201012/31/201112/31/201212/31/2013

DuPont

   $100   $119   $111   $66   $94   $145  $100
$141
$218
$207
$211
$314

S&P 500 Index

   $100   $116   $122   $77   $97   $112  100
126
146
149
172
228

Peer Group

   $100   $119   $140   $103   $124   $132  
 
Dow Jones Industrial Average100
123
140
152
167
217

The graph assumes that the valuevalues of DuPont Common Stock,common stock, the S&P 500 Stock Index and the peer group of companies wasDow Jones Industrial Average were each $100 on December 31, 20052008 and that all dividends were reinvested. The peer group is weighted by market capitalization.



14

Table of Contents


Part II

ITEM 6.  SELECTED FINANCIAL DATA




 

(Dollars in millions, except per share)

    2010    2009    2008    2007    2006  

Summary of operations

                           

Net sales

   $31,505   $26,109   $30,529   $29,378   $27,421  

Income before income taxes

   $3,711   $2,184   $2,391   $3,743   $3,329  

Provision for income taxes

   $659   $415   $381   $748   $196  

Net income attributable to DuPont

   $3,031   $1,755   $2,007   $2,988   $3,148  

Basic earnings per share of common stock

   $3.32   $1.93   $2.21   $3.25   $3.41  

Diluted earnings per share of common stock

   $3.28   $1.92   $2.20   $3.22   $3.38  

Financial position at year-end

                           

Working capital

   $9,670   $7,898   $5,601   $4,619   $4,930  

Total assets

   $40,410   $38,185   $36,209   $34,131   $31,777  

Borrowings and capital lease obligations

                           
 

Short-term

   $133   $1,506   $2,012   $1,370   $1,517  
 

Long-term

   $10,137   $9,528   $7,638   $5,955   $6,013  

Total equity

   $9,743   $7,651   $7,552   $11,578   $9,863  

General

                           

For the year

                           
 

Purchases of property, plant & equipment and investments in affiliates

   $1,608   $1,432   $2,033   $1,698   $1,563  
 

Depreciation

   $1,204   $1,251   $1,169   $1,158   $1,157  
 

Research and development expense

   $1,651   $1,378   $1,393   $1,338   $1,302  

Average number of common shares
    outstanding (millions)

                           
 

Basic

    909    904    902    917    921  
 

Diluted

    922    909    907    925    929  

Dividends per common share

   $1.64   $1.64   $1.64   $1.52   $1.48  

At year-end

                           
 

Employees (thousands)

    60    58    60    60    59  
 

Closing stock price

   $49.88   $33.67   $25.30   $44.09   $48.71  
 

Common stockholders of record (thousands)

    81    85    88    92    84  
                            
(Dollars in millions, except per share)20132012201120102009
Summary of operations1
    
 
Net sales$35,734
$34,812
$33,681
$27,700
$22,681
Employee separation / asset related charges, net$114
$493
$53
$(40)$195
Income from continuing operations before income taxes$3,489
$3,088
$3,879
$3,259
$1,870
Provision for income taxes on continuing operations$626
$616
$647
$518
$298
Net income attributable to DuPont$4,848
$2,755
$3,559
$3,022
$1,690
Basic earnings per share of common stock from continuing operations$3.07
$2.61
$3.43
$2.98
$1.71
Diluted earnings per share of common stock from continuing operations$3.04
$2.59
$3.38
$2.94
$1.70
Financial position at year-end1
    
 
Working capital2
$11,017
$7,765
$7,030
$9,733
$7,973
Total assets3
$51,499
$49,859
$48,643
$40,470
$38,256
Borrowings and capital lease obligations    
 
Short-term$1,721
$1,275
$817
$133
$1,506
Long-term$10,741
$10,465
$11,736
$10,137
$9,528
Total equity$16,286
$10,299
$9,208
$9,800
$7,719
General1
    
 
For the year    
 
Purchases of property, plant & equipment and investments in
    affiliates
$1,940
$1,890
$1,910
$1,608
$1,432
Depreciation$1,280
$1,319
$1,199
$1,118
$1,144
Research and development expense$2,153
$2,123
$1,960
$1,650
$1,370
Average number of common shares outstanding (millions)    
 
Basic926
933
928
909
904
Diluted933
942
941
922
909
Dividends per common share$1.78
$1.70
$1.64
$1.64
$1.64
At year-end    
 
Employees (thousands)64
70
70
60
58
Closing stock price$64.97
$44.98
$45.78
$49.88
$33.67
Common stockholders of record (thousands)70
74
78
81
85

1.
Information has been restated to reflect the impact of discontinued operations and change in accounting principle, as applicable. See Note 1, Basis of Presentation and Inventories, to the Consolidated Financial Statements for further information.
2.
At December 31, 2012, working capital included approximately $2.0 billion of net assets related to the Performance Coatings business, of which approximately $1.3 billion was previously considered to be noncurrent and was classified as held for sale as of December 31, 2012. See Note 2 to the Consolidated Financial Statements for further information.
3.
During 2011, the company acquired approximately $8.8 billion of assets in connection with the Danisco acquisition.





15

Table of Contents


Part II


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



CAUTIONARY STATEMENTS ABOUT FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements which may be identified by their use of words like "plans," "expects," "will," "anticipates," "intends," "projects," "estimates"“plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or other words of similar meaning. All statements that address expectations or projections about the future, including statements about the company's strategy for growth, product development, regulatory approval, market position, anticipated benefits of recent acquisitions, outcome of contingencies, such as litigation and environmental matters, expenditures and financial results, are forward-looking statements.


Forward-looking statements are based on certain assumptions and expectations of future events. The company cannot guarantee that these assumptions and expectations areevents which may not be accurate or will be realized. Forward-looking statements also involve risks and uncertainties, many of which are beyond the company's control. Some of the important factors that could cause the company's actual results to differ materially from those projected in any such forward-looking statements are:

Fluctuations in energy and raw material prices;
Failure to develop and market new products and optimally manage product life cycles;
Outcome of significant litigation and environmental matters, including those related to divested businesses;
Failure to appropriately manage process safety and product stewardship issues;
Effect of changes in tax, environmental and other laws and regulations or political conditions in the U.S. and other countries in which the company operates;
Conditions in the global economy and global capital markets, including economic factors, such as inflation, deflation and fluctuations in currency exchange rates, interest rates and commodity prices, as well as regulatory requirements;
Impact of business disruptions, including supply disruptions, and security threats, regardless of cause, including acts of sabotage, cyber-attacks, terrorism or war, weather events and natural disasters;
Ability to protect and enforce the company's intellectual property rights; and
Successful integration of acquired businesses and separation of underperforming or non-strategic assets or businesses, including proposed spin-off of the Performance Chemicals segment.

For some of the important factors that could cause the company's actual results to differ materially from those projected in any such forward-looking statements, see the Risk Factors discussion set forth under Part I, Item 1A beginning on page 6.

8.


Overview
Overview

VisionPurpose     DuPont's vision is to beDuPont’s businesses serve markets where the world's most dynamic science company, creating sustainable solutions essentialincreasing demand for a better, safermore and healthier life for people everywhere. food, renewably sourced materials and fuels, and advanced industrial materials is creating substantial growth opportunities. The company’s unique combination of sciences, proven R&D engine, broad global reach, and deep market penetration are distinctive competitive advantages that position the company to continue capitalizing on this enormous potential.


Strategy Position DuPont as a higher growth, higher value company, well equipped to drive revenue and profit growth through science-based innovation and the company’s significant competitive advantages with three priorities:

Agriculture & Nutrition - extend DuPont’s leadership across the high-value, science-driven segments of the Agriculture and Food value chain;
Advanced Materials - strengthen the company’s lead as a provider of differentiated, high-value advanced industrial materials;
Industrial Biosciences - build transformational new bio-based businesses by combining DuPont’s world leading science with expertise and resources from the Advanced Materials and Agriculture & Nutrition businesses.
The company is committed to growing shareholdermaintain a strong balance sheet and societal value while reducing its environmental footprint over the long term.

to return excess cash to shareholders unless there is a compelling opportunity to invest for growth.


StrategyResults    The company's strategy for growth isIncome from continuing operations after taxes increased 16 percent to use science-based solutions to address four fundamental global trends –Increasing Food Production,Decreasing Dependency on Fossil Fuels,Protecting People and the Environment, andGrowth in Developing Markets. The company believes it best serves its shareholders$2.9 billion. Net sales of $35.7 billion increased 3 percent driven by increasing its global presence in meeting challenges, including increasing food production, increasing renewable sources for energy and raw materials, and providing greater safety and protection for people and the environment. For these strategic areas, the company has set differentiated targets for growth and future funding for capital expenditures, research and development, and marketing programs.

Acquisition of Danisco    The financial goals discussed below exclude the impact of the intended acquisition of Danisco. The acquisition is aligned with the company's growth strategy and complimentary to the company's existing businesses and research and development pipelines. The transaction is expected to be cash and earnings accretive in 2012, the first full year of the combined entity. Upon completion, the transaction would establish DuPont as a clear leader in industrial biotechnology with science-intensive innovations that address global challenges in food production and reduced fossil fuel consumption.

Goals    By aggressively pursuing top line growth opportunities in key markets and improving productivity, the company met or surpassed its 2010 financial goals for sales growth, earnings per share, cash flow and working capital reductions. Consistent with its strong 2010 performance, the company announced a new five-year plan which includes compound annual growth targets of 75 percent for sales and 12higher volume. Sales grew 6 percent for earnings per share from 2010 through 2015. Sales in developing markets, which include China, India, and the countries located in Latin America, Eastern and Central Europe, Middle East, Africa, and Southeast Asia, are targetedAsia. Sales of new products introduced in the last four years also contributed to make up 36 percent of the company's sales by 2015, a 4 percentage point increase from 2010. Additionally, the company continues to execute its three-year 2010-2012 plan announced in 2009, which includes $1 billion fixed cost productivity actions and $1 billion working capital productivity programs. The company also reaffirmed its commitment to maintain a strong balance sheet and to return excess cash to shareholders unless there is a compelling opportunity to invest for growth.


16


Table of Contents


Part II

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued


Analysis of Operations
Separation of Performance Chemicals

On October 24, 2013, DuPont announced that it intends to separate its Performance Chemicals segment through a U.S. tax-free spin-off to shareholders, subject to customary closing conditions.  The company expects to complete the separation about mid-2015. 


Divestiture of Performance Coatings On August 30, 2012, the company entered into a definitive agreement with Flash Bermuda Co. Ltd., a Bermuda exempted limited liability company formed by affiliates of The Carlyle Group (collectively referred to as "Carlyle") in which Carlyle agreed to purchase certain subsidiaries and assets comprising the company's Performance Coatings business. In February 2013, the sale was completed resulting in a pre-tax gain of approximately $2.7 billion ($2.0 billion net of tax). The gain was recorded in income from discontinued operations after income taxes in the Consolidated Income Statement for the year ended December 31, 2013.

In accordance with GAAP, the results of Performance Coatings are presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. See Note 2 to the Consolidated Financial Statements for additional information.

Acquisition of DaniscoIn 2011, the company acquired Danisco in a transaction valued at $6.4 billion, plus net debt assumed of $0.6 billion. As part of this acquisition, DuPont incurred $85 million in transaction related costs during 2011, which were recorded in other operating charges. In 2011, the businesses acquired from Danisco contributed net sales of $1.7 billion and net income attributable to DuPont of $(7) million, which excludes $30 million after-tax ($39 million pre-tax) of additional interest expense related to the debt issued to finance the acquisition. Danisco's contributions included a $125 million after-tax ($175 million pre-tax) charge related to the fair value step-up of inventories acquired and sold during 2011. See Note 4 to the Consolidated Financial Statements for additional information.

(Dollars in millions)

   2010   2009   2008  201320122011

NET SALES

   $31,505   $26,109   $30,529  $35,734
$34,812
$33,681


20102013 versus 20092012   ConsolidatedThe table below shows a regional breakdown of 2013 consolidated net sales for 2010 were $31.5 billion, up 21 percent. This increase reflects 17based on location of customers and percentage variances from prior year:

 Percent Change Due to:
(Dollars in billions)
2013
Net Sales
Percent
Change vs.
2012
Local
Price
Currency
Effect
VolumePortfolio / Other
Worldwide$35.7
3
(1)(1)5

U.S. & Canada14.8
4
1

3

EMEA8.4
4
(2)1
4
1
Asia Pacific7.7
(3)(6)(3)6

Latin America4.8
6

(3)9


Sales increased 3 percent, higher sales volume,reflecting a 5 percent increase in local sellingworldwide sales volume with growth in all segments. Local prices were 1 percent lower principally due to a 12 percent decline in Performance Chemicals prices and a 1 percent net reduction from portfolio changes. Sales volume was higher across all segments with volume improving 13 percent in the United Statespass through of lower precious metals prices for Electronics & Communications. Negative currency impact reflects a weaker Brazilian Real and 19 percent outside the United States.Indian Rupee, partly offset by a stronger Euro. Sales in developing markets of $10.2$11.9 billion improved 277 percent on 10 percent higher volume, and the percentage of total company sales in these markets increased to 33 percent from 2009,32 percent in 2012.



17


Part II

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued

2012 versus 2011 The table below shows a regional breakdown of 2012 consolidated net sales based on location of customers and percentage variances from 2011:

 Percent Change Due to:
(Dollars in billions)
2012
Net Sales
Percent
Change vs.
2011
Local
Price
Currency
Effect
VolumePortfolio / Other
Worldwide$34.8
3
4
(2)(2)3
U.S. & Canada14.2
8
6


2
EMEA8.1
(1)3
(6)(4)6
Asia Pacific8.0
(4)(1)(1)(5)3
Latin America4.5
11
9
(5)5
2

Sales increased 3 percent, reflecting a 3 percent net increase from portfolio changes, principally the Danisco acquisition, and 4 percent higher local prices, partly offset by 2 percent lower volume and a 2 percent negative currency impact. The 2 percent decline in worldwide sales volume principally reflects higher Agriculture, Nutrition & Health, and Industrial Biosciences volume, more than offset by lower volume for the other segments combined, particularly Performance Chemicals. Higher local prices were driven principally by increases for seeds, titanium dioxide, and specialty polymers. Currency effect primarily reflects the weaker Euro and Brazilian Real. Sales in developing markets of $11.1 billion improved 6 percent from 2011, and the percentage of total company sales in these markets increased to 32 percent from 31 percent.percent in 2011.

(Dollars in millions)201320122011
OTHER INCOME, NET$410
$498
$742

2013 versus 2012

The table below shows$88 million decrease was largely attributable to the absence of a regional breakdown$122 million gain related to the 2012 sale of 2010 consolidatedthe company's interest in an equity method investment, the absence of a $117 million gain related to the 2012 sale of a business within the Agriculture segment, partially offset by $87 million lower net pre-tax exchange losses, $27 million increase in interest income, and a $26 million re-measurement gain on an equity investment.


2012 versus 2011   The $244 million decrease was largely attributable to a $228 million reduction of Cozaar®/Hyzaar® income, a decrease of $92 million in equity in earnings of affiliates, and an increase of $69 million in net pre-tax exchange losses, partially offset by a $122 million gain related to the sale of the company's interest in an equity method investment.

Additional information related to the company's other income, net is included in Note 5 to the Consolidated Financial Statements.

(Dollars in millions)201320122011
COST OF GOODS SOLD$22,548
$21,538
$21,264
As a percent of net sales63%62%63%

2013 versus 2012    Cost of goods sold (COGS) increased 5 percent to $22.5 billion, with 4 percent driven by higher sales volume and 1 percent driven by higher product costs. COGS as a percentage of net sales based on location of customers and percentage variances from prior year:

 
  
  
  
  
  
 Percent Change Due to:
  

(Dollars in billions)

 
  
2010
Net Sales
 
  
Percent
Change vs.
2009
 
  
Local
Price
 
  
Currency
Effect
 
  Volume 
  Portfolio 

Worldwide

   $31.5    21    5    -    17    (1) 
 

United States

    11.5    17    5    -    13    (1) 
 

Europe, Middle East, and Africa (EMEA)

    8.1    14    4    (3)   13    -  
 

Asia Pacific

    7.3    40    6    2    33    (1) 
 

Latin America

    3.7    17    4    2    13    (2) 
 

Canada

    0.9    20    3    9    9    (1) 

2009 versus 2008    Consolidated net sales for 2009 were $26.1 billion, down 14 percent. This reflects 12was 63 percent, lower volume, a 1 percent increase from 2012. The increase in localCOGS as a percentage of net sales principally reflects the impact of increased costs for raw materials and agriculture inputs versus lower selling prices, and 3coupled with adverse currency impact.


2012 versus 2011    COGS increased 1 percent unfavorable currency exchange. The full year worldwideto $21.5 billion. COGS as a percentage of net sales volume decline reflects decreases in every region for the first 9 months of the year, partly offset by year over year volumewas 62 percent, a 1 percent decrease from 2011, principally reflecting selling price increases in certain markets during the fourth quarter. Sales in developing marketsexcess of $8 billion declined 9 percent from 2008, while the percentage of total company sales in these markets increased to 31 percent.raw material cost increases.


(Dollars in millions)201320122011
OTHER OPERATING CHARGES$3,838
$4,077
$3,510
As a percent of net sales11%12%10%

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The table below shows a regional breakdown of 2009 consolidated net sales based on location of customers and percentage variances from 2008:


 
  
  
  
  
  
 Percent Change Due to:
  

(Dollars in billions)

 
  
2009
Net Sales
 
  
Percent
Change vs.
2008
 
  
Local
Price
 
  
Currency
Effect
 
  Volume 
  Portfolio 

Worldwide

   $26.1    (14)   1    (3)   (12)   -  
 

United States

    9.8    (11)   2    -    (11)   (2) 
 

EMEA

    7.2    (25)   1    (8)   (18)   -  
 

Asia Pacific

    5.2    (5)   (1)   -    (4)   -  
 

Latin America

    3.2    (11)   2    (4)   (9)   -  
 

Canada

    0.7    (16)   5    (8)   (13)   -  



(Dollars in millions)

    2010    2009    2008  

OTHER INCOME, NET

   $1,228   $1,219   $1,307  

20102013 versus 20092012    Other income, net, was essentially flat comparedoperating charges decreased 6 percent to 2009, despite a decrease of $549 million of Cozaar®/Hyzaar® income$3.8 billion, principally due to the expirationlower Imprelis® herbicide claims, net of certain patents. Offsetting the reduction of Cozaar®/Hyzaar® income was a decrease in net pre-tax exchange losses of $192 million combined with higher income from equity affiliates of $93 million, an increase in net gains on sales of assets of $64 million, a benefit of $59 million in 2010insurance recoveries, and other litigation charges. See Note 16 for additional information related to accrued interest associated with settlementsthe Imprelis® matter.


2012 versus 2011    Other operating charges increased 16 percent to $4.1 billion. This reflects increased charges of $537 million related to Imprelis® and other litigation matters, partly offset by the absence of prior year income tax contingencies, ancharges related to the acquisition of Danisco . See Note 16 for additional information related to the Imprelis® matter.

(Dollars in millions)201320122011
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES$3,554
$3,527
$3,310
As a percent of net sales10%10%10%

2013 versus 2012    The 2013 increase of $27 million was largely attributable to increased global commissions and selling and marketing investments, primarily in insurance recoveriesthe Agriculture segment, partially offset by cost savings in administrative functions as a result of $41the 2012 restructuring program.

2012 versus 2011    The 2012 increase of $217 million was due to increased global commissions and selling and marketing investments, primarily in the Agriculture segment, and a $31full year of selling expense of acquired companies.

(Dollars in millions)201320122011
RESEARCH AND DEVELOPMENT EXPENSE$2,153
$2,123
$1,960
As a percent of net sales6%6%6%

2013 versus 2012    The $30 million combined benefit from an acquisitionincrease was primarily attributable to continued growth investments in the Agriculture segment and an early termination of a supply agreement.increases in pre-commercial investment.


20092012 versus 20082011    Other income, net, decreased $88The $163 million versus 2008. The decreaseincrease was primarily attributable to a $47 million reductionfull year of research and development expense from acquired companies and continued growth investments in interest income due to lower interest rates in 2009 partiallythe Agriculture segment offset by higher interest from increased cash and customer deferred receivables, and the absence of a $51$50 million favorable litigation settlementcharge for a payment related to a Pioneer licensing agreement in 2008. 2011.

(Dollars in millions)201320122011
INTEREST EXPENSE$448
$464
$447

The $16 million decrease in 2013 was due to lower average borrowings. The $17 million increase in 2012 was due primarily to higher average borrowings and lower capitalized interest partially offset by an increase of $23a lower average borrowing rate.

(Dollars in millions)201320122011
EMPLOYEE SEPARATION/ASSET RELATED CHARGES, NET$114
$493
$53

The $114 million in charges recorded during 2013 in employee separation / asset sales.

Additional informationrelated charges, net consisted of a a net $15 million restructuring benefit and a $129 million asset impairment charge discussed below. The net $15 million restructuring benefit consisted of a $24 million benefit associated with prior year restructuring programs offset by a $9 million charge resulting from restructuring actions related to a joint venture within the company's other income, net is included in Note 2Performance Materials segment. The majority of the $24 million benefit was due to the Consolidated Financial Statements.

(Dollars in millions)

    2010    2009    2008  

COST OF GOODS SOLD AND OTHER OPERATING CHARGES

   $23,146   $19,708   $23,548  

As a percent of net sales

    73%   75%   77% 

2010 versus 2009    Costachievement of goods sold and other operating charges (COGS) forwork force reductions through non-severance programs associated with the year 2010 was $23.1 billion, versus $19.7 billion in 2009, an increase of 17 percent. COGS was 73 percent of net sales, a 2 percentage point decrease from prior year. The improvement principally reflects increased manufacturing utilization and higher selling prices that more than offset increases in raw material costs. Higher selling prices increased sales $1.3 billion, while raw material, energy and freight costs, adjusted for volume and currency, were up 6 percent, or $0.7 billion.

2012 restructuring program.





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2009 versus 2008    COGS for the year 2009 was $19.7 billion, versus $23.5 billion in 2008, a decrease of 16 percent. COGS was 75 percent of net sales for 2009 versus 77 percent for the year 2008.


The 2 percentage point decrease principally reflects a $1.1 billion decrease in the combined costs for raw materials, energy and freight and the absence of a $227 million charge for hurricane-related cleanup and repair in 2008, partially offset by significantly lower capacity utilization and an unfavorable currency impact.

(Dollars in millions)

    2010    2009    2008  

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

   $3,669   $3,440   $3,593  

As a percent of net sales

    12%   13%   12% 

2010 versus 2009    Selling, general and administrative expenses (SG&A) increased $229$493 million in 2010 as compared to 2009. The 2010 increase was due to higher selling expenses, primarilycharges recorded during 2012 in the Agriculture & Nutrition segment as a resultemployee separation / asset related charges, net consisted of increased global commissions and selling and marketing investments$234 million in charges related to the company's seed products,2012 restructuring program, a $16 million net reduction in the estimated costs associated with 2011 and higher non-cash pension expenses.

2009 versus 2008    SG&A decreased $153prior years restructuring programs, and $275 million in 2009asset impairment charges, as compareddiscussed below.


2012 Restructuring Program
In 2012, the company commenced a restructuring plan to 2008.increase productivity, enhance competitiveness and accelerate growth. The 2009 decrease was principally dueplan is designed to stricteliminate corporate costs previously allocated to the Performance Coatings business as well as utilize additional cost-cutting actions to improve competitiveness. As a result, pre-tax charges of $234 million were recorded in employee separation / asset related charges, net. The 2012 restructuring program charges consist of $157 million of employee separation costs, $8 million of other non-personnel charges, and $69 million of asset related charges, which includes $30 million of asset impairments and $39 million of asset shut downs.

The actions related to this plan achieved pre-tax cost controlssavings of more than $300 million in 2013, and was partially offset by higher SG&Ais expected to increase to approximately $450 million per year in subsequent years.
2011 Restructuring Program
In 2011, the company initiated a series of actions to achieve the expected cost synergies associated with the Danisco acquisition. As a result, the company recorded a $53 million charge in employee separation/asset related charges, net, primarily for employee separation costs in the Agriculture & Nutrition segment asU.S. and Europe.

In the fourth quarter 2012, the company recorded a resultnet reduction of increased global commissions and selling and marketing investments related to the company's seed products.

(Dollars in millions)

    2010    2009    2008  

RESEARCH AND DEVELOPMENT EXPENSE

   $1,651   $1,378   $1,393  

As a percent of net sales

    5%   5%   5% 

2010 versus 2009    Research and development expense (R&D) increased $273$15 million in 2010 as compared to 2009 due to continued growth investment alignedthe estimated costs associated with the company's global trends, including resources to support agriculture productivity, alternative fuels and energy efficient materials, and safety and protection. In addition, R&D increased due to higher non-cash pension expenses and a $50 million charge for an upfront payment related to a Pioneer licensing agreement for corn seed trait technology. See Pioneer business discussion beginning on page 26 for additional information.

2009 versus 2008    R&D was down in 2009 versus 2008, excluding the Agriculture & Nutrition segment, due to strict cost controls. Higher R&D expense in the Agriculture & Nutrition segment in 2009 related to accelerated biotechnology trait research and development activity.

(Dollars in millions)

    2010    2009    2008  

INTEREST EXPENSE

   $590   $408   $376  

Interest expense increased $182 million in 2010 compared to 2009. The increase in interest expense2011 restructuring program. This net reduction was primarily due to the $179 pre-tax charge on the early extinguishment of debt in the fourth quarter 2010. The $32 increase in 2009 compared to 2008 was due to higher average borrowings, partially offset by slightlyworkforce reductions through non-severance programs and lower average interest rates.

than estimated individual severance costs.

Asset Impairments
During 2013, the company recorded an asset impairment charge of $129 million to write-down the carrying value of an asset group, within the Electronics & Communications segment, to fair value.

During 2012, the company recorded asset impairment charges of $275 million to write-down the carrying value of certain asset groups to fair value. These asset impairment charges resulted in a $150 million charge within the Electronics & Communications segment, a $92 million charge within the Performance Materials segment and a $33 million charge within the Performance Chemicals segment.

Additional details related to the restructuring programs and asset impairments discussed above can be found in Note 3 to the Consolidated Financial Statements.

Below is a summary of the net impact related to items recorded in employee separation / asset related charges, net:
 (Dollars in millions)2013 (Charges) and Credits2012 (Charges) and Credits2011 (Charges) and Credits
Agriculture$1
$(11)$
Electronics & Communications(131)(159)
Industrial Biosciences1
(3)(9)
Nutrition & Health6
(49)(14)
Performance Chemicals(2)(36)
Performance Materials(6)(104)(2)
Safety & Protection4
(58)
Other5
11
(28)
Corporate expenses8
(84)
Total (Charges) Credits$(114)$(493)$(53)


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(Dollars in millions)

   2010   2009   2008  201320122011

EMPLOYEE SEPARATION/ASSET RELATED CHARGES, NET

   $(34)1  $2102  $535  
PROVISION FOR INCOME TAXES ON CONTINUING OPERATIONS$626
$616
$647
Effective income tax rate17.9%19.9%16.7%
1
Represents a $34 million net reduction in the estimated costs for the 2008 and 2009 restructuring programs. See below for further details on these programs.

2
Represents a charge of $340 million for the 2009 restructuring program and a $130 million net reduction in the estimated costs for the 2008 and 2009 restructuring programs. See below for further details on these programs.

2009 Restructuring Program

In second quarter 2009, in response to the global economic recession, the company committed to an initiative to address the steep and extended downturn in motor vehicle and construction markets, and the extension of the downturn into industrial markets. The plan was designed to restructure asset and fixed cost bases in order to improve long-term competitiveness, simplify business processes, and maximize pre-tax operating income. The plan included the elimination of about 2,000 positions by severance principally located in the U.S. As a result, a charge of $340 million was recorded in employee separation/asset related charges, net which pertains to the following financial statement line items: COGS – 60 percent, SG&A – 30 percent, and R&D – 10 percent. This charge included $212 million of severance and related benefits costs, $24 million of other non-personnel charges and $104 million of asset-related charges, including $77 million for asset shut downs and write-offs, $11 million for asset impairments and $16 million for accelerated depreciation.

In the fourth quarter 2009, the company recorded a $30 million net reduction in the estimated costs associated with the 2009 restructuring program. Additionally, the company recorded a $20 million net reduction in the estimated costs associated with the 2009 restructuring program in the fourth quarter 2010. These reductions primarily related to lower than estimated individual severance costs and work force reductions through non-severance programs.

The actions related to the 2009 restructuring program were substantially completed by the end of 2010 with payments continuing into 2011, primarily in Europe.

2008 Restructuring Program

During 2008, in response to the challenging economic environment, the company initiated a global restructuring program to reduce costs and improve profitability across its businesses. The 2008 restructuring program included the elimination of approximately 2,500 positions principally located in Western Europe and the U.S. primarily supporting the motor vehicle and construction markets.

In 2008, the company recorded a charge of $535 million, which included $287 million related to employee severance costs and $248 million attributable to asset shut-downs, asset impairments and other non-personnel charges.

In 2009, the company recorded a $100 million net reduction in the estimated costs associated with the 2008 restructuring program. Additionally, the company recorded a $14 million net reduction in the estimated costs associated with the 2008 restructuring program in the fourth quarter 2010. These reductions primarily related to lower than estimated individual severance costs and workforce reductions through non-severance programs.

The program and payments related to the 2008 restructuring program were substantially completed by the end of 2010.

Additional details related to these programs are contained in the individual segment reviews and in Note 4 to the Consolidated Financial Statements.


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued

(Dollars in millions)

    2010    2009    2008  

PROVISION FOR INCOME TAXES

   $659   $415   $381  

Effective income tax rate

    17.8%   19.0%   15.9% 

In 2010,2013, the company recorded a tax provision on continuing operations of $659 million, reflecting an increase from 2009, largely due to an increase in pre-tax earnings and the impact associated with the company's policy of hedging the foreign currency-denominated monetary assets and liabilities of its operations. These are partially offset by net tax benefits of $49 million related to the adjustment of income tax accruals associated with settlements of prior year tax contingencies and $39 million for reversal of tax valuation allowance related to the net deferred tax assets of a foreign subsidiary. The decrease in the 2010 effective tax rate compared to 2009 was primarily due to favorable geographic mix of pre-tax earnings in low tax rate jurisdictions and the net tax benefits noted above.

In 2009, the company recorded a tax provision of $415$626 million, reflecting a marginal increase from 2008.2012. The increasedecrease in the 20092013 effective tax rate compared to 20082012 was primarily due to geographic mix of earnings.

earnings, in addition to benefits associated with certain U.S. business tax provisions in 2013.


In 2012, the company recorded a tax provision on continuing operations of $616 million, reflecting a marginal decrease from 2011. The company's current estimate ofincrease in the 20112012 effective income tax rate is about 20-21 percent, excludingcompared to 2011 was primarily due to geographic mix of earnings, in addition to benefits associated with certain U.S. business tax effects of exchange gains and losses which cannot be reasonably estimated at this time.

provisions in 2011.


See Note 56 to the Consolidated Financial Statements for additional details related to the provision for income taxes on continuing operations, as well as items that significantly impact the company's effective income tax rate.


(Dollars in millions)

   2010   2009   2008  201320122011

NET INCOME ATTRIBUTABLE TO DUPONT

   $3,031   $1,755   $2,007  
INCOME FROM CONTINUING OPERATIONS AFTER INCOME TAXES$2,863
$2,472
$3,232

2010 versus 2009    Net


Income from continuing operations after income attributabletaxes for 2013 was $2.9 billion compared to DuPont ("earnings") for 2010 increased $1.3$2.5 billion or 73 percent versus 2009.in 2012 and $3.2 billion in 2011. The increase principally reflects higherchanges between periods were due to the reasons noted above.

Corporate Outlook
The company expects 2014 sales volume and selling prices and the absence of a prior year restructuring charge, partly offset by higher non-cash pensionearnings will reflect continuing improvement in global industrial production, lower agricultural input costs, and lower Pharmaceuticals income. See additional information above relateda slightly stronger average exchange value for the U.S. dollar. In addition, the company’s market position and results will continue to changes in earnings.

2009 versus 2008    Earnings for 2009 decreased $252 million, or 13 percent versus 2008. The decrease in earnings was principally attributablebenefit from market driven innovation and productivity.


Segment Reviews
Segment sales include transfers to lower sales volume, unfavorable currency impacts,another business segment. Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products. Effective January 1, 2013, to better indicate operating performance, the company eliminated the allocation of non-operating pension and higher non-cashother postretirement employee benefit costs from segment pre-tax operating income (loss) (PTOI). Segment PTOI is defined as income (loss) from continuing operations before income taxes excluding non-operating pension costs. Partly offsetting these factors were lowerand other postretirement employee benefit costs, for raw materials, energy,exchange gains (losses), corporate expenses and freight, benefits from cost reductions and productivity actions, lower restructuring charges, and the absenceinterest. Certain reclassifications of prior year hurricane-related charges. See additional information above related to changes in earnings.

Corporate Outlook

For the year 2011, the company's earnings outlook is a range of $3.45 to $3.75 per share with expected sales between $33 billion to $34 billion, reflecting the expectation for continued steady global economic growth with increasing industrial production, favorable North American agricultural conditions and the company's further penetration of developing markets. Earnings from Pharmaceuticals are expected to decline about $290 million pre-tax, reflecting the expiration of certain patents for Cozaar®/Hyzaar®. The company expects higher operating costs from an estimated four to five percent increase in raw material, energy and freight costs, and approximately $60 million higher pre-tax non-cash pension costs. The company plans to partly offset these increases by fixed cost productivity programs totaling about $300 million.

The company plans to continue a differential level of capital expenditures and funding for research & development for businesses expected to have above-average growth rates and margins. For 2011, targetsdata have been set for capital expenditures totaling about $1.8 billion, and working capital productivity improvements totaling $300 million.

The outlook above excludesmade to conform to current year classifications. All references to prices are on a U.S. dollar (USD) basis, including the impact of the planned Danisco acquisition which could reduce 2011 earnings by $0.30 to $0.45 per share.

currency.

A reconciliation of segment sales to consolidated net sales and segment PTOI to income from continuing operations before income taxes for 2013, 2012 and 2011 is included in Note 22 to the Consolidated Financial Statements. Segment PTOI and PTOI margins include certain items which management believes are significant to understanding the segment results discussed below.  See Note 22 to the Consolidated Financial Statements for details related to these items.

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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued


AGRICULTURE
(Dollars in millions)201320122011
Segment sales$11,739
$10,426
$9,166
PTOI$2,132
$1,669
$1,566
PTOI margin18%16%17%
 20132012
Change in segment sales from prior period due to:  
Price5%6%
Volume7%8%
Portfolio / Other1%%
Total change13%14%

2013 versus 2012Sales growth was principally driven by higher global seed prices and volumes, increased global insecticide and fungicide volumes, and the benefit of increased ownership in Pannar Seed (Pty) Ltd, slightly offset by negative currency. Growth in seeds reflects strong corn sales in North America and Brazil. Increased insecticide volumes were driven by demand for Rynaxypyr®, particularly in Latin America to combat heavy insect pressure, while fungicide volume increases were led by demand for picoxytstrobin in North America and Latin America.

2013 PTOI and PTOI margin increased on sales growth, lower charges incurred related to Imprelis® herbicide claims, and earlier seed shipments, partially offset by higher seed input costs of about $350 million, $108 million of negative currency impact, and the absence of a $117 million gain on the sale of a business recorded in 2012. As a result of the earlier timing of seed shipments, representing earlier seed shipments for the Brazil safrinha corn season enabled by recent investments and earlier direct seed shipments to North American farmers, approximately $100 million of PTOI was realized in 2013 versus 2014.

2013 PTOI included net charges of $352 million ($425 million in charges offset by $73 million of insurance recoveries) related to Imprelis® herbicide claims compared charges of $575 million in 2012. See Note 16 to the Consolidated Financial Statements for more information related to the Imprelis® matter.
2012 versus 2011Pioneer seed sales reflect growth primarily in corn and soybean seeds. Volume increases in all regions reflect increased planted area. Global pricing gains reflect continued penetration of new genetics and trait packages, including the Optimum® AcreMax® Family of integrated and reduced refuge corn hybrids and Optimum® AQUAmaxTM products for improved drought tolerance. Crop Protection sales grew in all regions reflecting volume and price gains from herbicides, insect control products and fungicides, particularly continued strong demand for Rynaxypyr®.

2012 PTOI increased as strong sales and a $117 million gain on the sale of a business more than offset $575 million of charges related to Imprelis®, higher input costs in seeds of about $275 million, $156 million of negative currency, and higher investments in commercial and R&D activities to support growth. 2012 PTOI margin decreased due to increased charges related to Imprelis®. See Note 16 to the Consolidated Financial Statements for more information related to the Imprelis® matter.

Outlook    Sales are expected to be up modestly driven by continued demand and pricing gains. Growth in seeds is anticipated to be driven by pricing gains, largely in North America, and higher global volumes, offset slightly by the earlier timing of seed shipments discussed above. In Crop Protection, the company anticipates demand for Rynaxypyr® to continue, along with launches of Cyazypyr® insecticide and the continued expansion and growth of the fungicide portfolio. Along with sales growth, PTOI and margins are expected to improve benefiting from lower seed input costs compared to 2013 while continuing to make targeted investments for growth.







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ELECTRONICS & COMMUNICATIONS
(Dollars in millions)201320122011
Segment sales$2,549
$2,701
$3,173
PTOI$203
$222
$438
PTOI margin8%8%14%
 20132012
Change in segment sales from prior period due to:  
Price(8)%(4)%
Volume2 %(11)%
Portfolio / Other % %
Total change(6)%(15)%

2013 versus 2012   Sales declined as share gains and improving photovoltaics demand, offset in part by lower usage of materials per photovoltaic module, were more than offset by lower price. The decline in price largely reflects pass-through of lower metals prices.

2013 PTOI declined as the absence of a $122 million gain related to the sale of an equity method investment recorded in 2012 more than offset volume gains, improved plant utilization, and $20 million of income from an OLED technology licensing agreement realized during 2013. In addition, 2013 PTOI includes a $129 million asset impairment charge compared to a $150 million asset impairment charge recorded in 2012 (see Note 3 to the Consolidated Financial Statements for additional information).

2012 versus 2011    Sales declined on lower volume in PV materials, partially offset by increased demand for smart phones and tablets. Lower price primarily reflects pass-through of lower metals prices.

2012 PTOI decreased on lower volume and a $150 million asset impairment charge, partially offset by a $122 million gain related to the sale of an equity method investment. PTOI margin decreased primarily reflecting lower volume.

Outlook   Sales are expected to be up slightly in 2014 on volume gains largely offset by lower selling prices resulting from lower metals prices. Global installations of photovoltaic modules are expected to increase with mid-teen growth rates compared to 2013, driven by demand for solar energy in China, U.S., and developing markets. Sales into consumer electronics markets will continue to be driven by demand for smartphones and tablets. Earnings are expected to increase moderately as continued volume growth will be offset in part by the impact of lower metals prices.


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued

INDUSTRIAL BIOSCIENCES
(Dollars in millions)201320122011
Segment sales$1,224
$1,180
$705
PTOI$170
$159
$2
PTOI margin14%13%%
 20132012
Change in segment sales from prior period due to:  
Price2%(4)%
Volume2%8 %
Portfolio / Other%63 %
Total change4%67 %

2013 versus 2012    The sales increase represents higher prices and demand for Sorona® polymer for carpeting and increased demand for enzymes for food, partially offset by lower enzyme demand for U.S. ethanol production.

2013 PTOI and PTOI margin increased slightly reflecting pricing gains and increased demand for Sorona® polymer for carpeting.

2012 versus 2011    Sales were up primarily due to the Danisco enzyme business acquisition. Volume growth reflected strong sales of Sorona® polymer for carpeting, while lower price related to unfavorable currency impact.

2012 PTOI and PTOI margin increased reflecting benefits of the acquisition and the absence of a $70 million charge recorded in 2011 for the fair value step-up of inventories acquired.

Outlook    Sales are expected to increase moderately in 2014, driven by the introduction of new products. Earnings are expected to increase substantially on volume growth, as well as pricing gains.

NUTRITION & HEALTH
(Dollars in millions)201320122011
Segment sales$3,473
$3,422
$2,460
PTOI$305
$270
$76
PTOI margin9%8%3%
 20132012
Change in segment sales from prior period due to:  
Price3 %1%
Volume %3%
Portfolio / Other(2)%35%
Total change1 %39%

2013 versus 2012    Sales were up reflecting global pricing gains and increased demand in specialty proteins, probiotics, and cultures, partially offset by the impact of manufacturing site closures in fourth quarter 2012, lower volume in enablers, and negative currency impact.

2013 PTOI and PTOI margin increased as favorable mix, productivity improvements, and the absence of $49 million in restructuring charges recorded in 2012 more than offset higher cost guar inventory.


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued

2012 versus 2011    Sales were up primarily due to the Danisco specialty food ingredients business acquisition. Higher volume reflected strong demand for enablers, probiotics and cultures, particularly in North America. Higher local prices more than offset unfavorable currency impact.

2012 PTOI and PTOI margin increased reflecting benefits of the acquisition and the absence of a $112 million charge recorded in 2011 for transaction related costs and the fair value step-up of inventories acquired, partially offset by increased restructuring charges in 2012 as described above.

Outlook   For 2014, sales are expected to increase modestly on volume growth across all product lines. Volume gains, mix enrichment, and productivity improvement, partially offset by growth investments are expected to contribute to earnings improvement.

PERFORMANCE CHEMICALS
(Dollars in millions)201320122011
Segment sales$6,703
$7,188
$7,794
PTOI$924
$1,778
$2,114
PTOI margin14%25%27%
 20132012
Change in segment sales from prior period due to:  
Price(12)%4 %
Volume5 %(12)%
Portfolio / Other % %
Total change(7)%(8)%

2013 versus 2012    The change in sales due to price was driven principally by price declines for titanium dioxide in all regions, coupled with lower prices for fluoropolymers and refrigerants. Volume growth reflects increased demand for titanium dioxide, which was up 14 percent from 2012.

2013 PTOI and PTOI margin decreased principally on lower selling prices. Volume gains were offset by higher raw material inventory costs, mainly ore costs. 2013 PTOI includes a $72 million charge related to titanium dioxide antitrust litigation (see Note 16 to the Consolidated Financial Statements for additional information) while 2012 PTOI included a $33 million asset impairment charge (see Note 3 to the Consolidated Financial Statements for additional information).

2012 versus 2011    Lower sales volume primarily reflects softness in titanium dioxide in all regions and weak demand in fluoropolymers. Higher local price primarily reflects favorable pricing for titanium dioxide in the first half 2012, which more than offset unfavorable currency impact.

2012 PTOI and PTOI margin decreased as higher local prices were more than offset by lower volume, lower plant utilization and a $33 million asset impairment charge noted above.

Outlook    Sales are expected to be essentially flat with modest improvement in titanium dioxide and fluoropolymer demand offset by the impact of portfolio changes within industrial chemicals. Earnings are expected to improve slightly on higher volume and productivity improvements, partially offset by higher raw material inventory costs, principally ore costs.



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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued

PERFORMANCE MATERIALS
(Dollars in millions)201320122011
Segment sales$6,468
$6,447
$6,815
PTOI$1,281
$1,121
$1,079
PTOI margin20%17%16%
 20132012
Change in segment sales from prior period due to:  
Price(3)%(2)%
Volume4 % %
Portfolio / Other(1)%(3)%
Total change %(5)%

2013 versus 2012    Sales were essentially flat as increased demand in packaging and automotive markets was offset by lower selling prices.

2013 PTOI and PTOI margin increased as lower feedstock costs, higher volumes, and the absence of a $92 million asset impairment charge recorded in 2012 (see Note 3 to the Consolidated Financial Statements for additional information) more than offset lower selling prices and negative currency impact.

2012 versus 2011    Lower sales reflected a 3 percent reduction from a portfolio change and lower prices due to unfavorable currency impact. Stable packaging markets and demand improvement in automotive were offset by continued softness in the industrial and electronics markets.

2012 PTOI and PTOI margin increased as lower feedstock costs more than offset a $92 million asset impairment charge noted above, unfavorable currency impact and the absence of a $49 million benefit from the gain on the sale of a business recorded in 2011.

Outlook    Sales and earnings are expected to be essentially flat as modest volume growth is offset by the impact of portfolio changes, principally the expected GLS / Vinyls divestiture (see Note 2 to the Consolidated Financial Statements for additional information), and lower capacity due to a major scheduled maintenance outage at the Orange, Texas ethylene plant.



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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued

SAFETY & PROTECTION
(Dollars in millions)201320122011
Segment sales$3,884
$3,825
$3,934
PTOI$694
$562
$661
PTOI margin18%15%17%
 20132012
Change in segment sales from prior period due to:  
Price(1)% %
Volume3 %(3)%
Portfolio / Other % %
Total change2 %(3)%

2013 versus 2012    The sales increase was driven by higher volume reflecting improved demand in industrial markets, protective garments, and construction products which offset softness in global public sector spending.

2013 PTOI and PTOI margin increased on higher volume, primarily in industrial markets, productivity improvements, and the absence of $58 million of restructuring charges recorded in 2012, partially offset by weaker sales mix.

2012 versus 2011    Lower U.S. public sector demand and softness in certain industrial markets, including stalled infrastructure projects in China, was partially offset by higher demand for Sustainable Solutions offerings. Higher local prices were offset by the impact of unfavorable currency.

2012 PTOI and PTOI margin decreased primarily due to $58 million of restructuring charges noted above, unfavorable currency and lower volume.
Outlook    Sales are expected to be up modestly reflecting continued improvement in industrial markets across all businesses. Favorable construction and housing demand will temper anticipated public sector weakness. Earnings are expected to be up moderately, reflecting improving demand, favorable sales mix, and continued productivity gains.

PHARMACEUTICALS
(Dollars in millions)201320122011
Segment sales$
$
$
PTOI$32
$62
$289

Decreases in PTOI reflect the expiration of certain patents related to Cozaar®/Hyzaar®.

Outlook   Earnings contributions to the company from the collaboration with Merck are expected to be insignificant in 2014 and will be reported within the Other segment.



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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued

Liquidity & Capital Resources
 December 31,
(Dollars in millions)20132012
Cash, cash equivalents and marketable securities$9,086
$4,407
Total debt12,462
11,740

Pursuant to its cash discipline policy, the company seeks first to maintain a strong balance sheet and second, to return excess cash to shareholders unless the opportunity to invest for growth is compelling. The company believes its ability to generate cash from operations and access to capital markets will be adequate to meet anticipated cash requirements to fund working capital, capital spending, dividend payments, share repurchases, debt maturities and other cash needs. The company's liquidity needs can be met through a variety of sources, including: cash provided by operating activities, cash and cash equivalents, marketable securities, commercial paper, syndicated credit lines, bilateral credit lines, equity and long-term debt markets and asset sales. The company's current strong financial position, liquidity and credit ratings provide excellent access to the capital markets. The company has access to approximately $4.4 billion in unused credit lines with several major financial institutions as additional support to meet short-term liquidity needs and general corporate purposes, including letters of credit.

The company's cash, cash equivalents and marketable securities at December 31, 2013 and 2012 are $9,086 million and $4,407 million, respectively. Cash and cash equivalents at December 31, 2013 include the proceeds received from the sale of the Performance Coatings business. Cash, cash equivalents and marketable securities held outside of the U.S. of $3,889 million and $4,118 million at December 31, 2013 and 2012, respectively, are generally utilized to fund local operating activities and capital expenditure requirements and are expected to support non-U.S. liquidity needs for the next twelve months and the foreseeable future thereafter. The company expects domestic liquidity needs, for at least the next twelve months and the foreseeable future thereafter, will be met through existing cash, cash equivalents and marketable securities held in the U.S. and other funding sources, including cash generated from U.S. operations, asset sales, the ability to access the capital markets, and the company's credit lines. Therefore, the company believes that it has sufficient sources of domestic liquidity to support its assumption that undistributed earnings at December 31, 2013 can be considered reinvested indefinitely.

The company continually reviews its debt portfolio and occasionally may rebalance it to ensure adequate liquidity and an optimum debt maturity schedule. In 2013, the company issued $1,250 million of 2.80% Notes due February 15, 2023 and $750 million of 4.15% Notes due February 15, 2043.

The company's credit ratings impact its access to the debt capital markets and cost of capital. The company remains committed to a strong financial position and strong investment-grade rating. The company's long-term and short-term credit ratings are as follows:
Long-termShort-termOutlook
Standard & Poor'sAA-1Stable
Moody’s Investors ServiceA2P-1Stable
Fitch RatingsAF1Stable

(Dollars in millions)201320122011
Cash provided by operating activities$3,179
$4,849
$5,152

Cash provided by operating activities decreased $1.7 billion in 2013 compared to 2012 due to lower cash from earnings and higher working capital in the Agriculture segment.  Lower earnings were driven by the absence of 11 months of results from the Performance Coatings business as well as a decline in the Performance Chemicals segment.  Higher working capital in the Agriculture segment was a result of higher trade receivables due to an increase in sales in the fourth quarter 2013 as well as an increase in customer credit sales in Latin America.  In addition the Agriculture segment's working capital was negatively impacted in 2013 as a result of timing differences in when customer prepayments for the 2012 and 2013 growing seasons were collected.


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued

Cash provided by operating activities decreased $303 million in 2012 compared to 2011 due mainly to lower cash from earnings and a $500 million contribution to its principal US pension plan, partially offset by changes in operating assets and liabilities, primarily related to working capital within the Agriculture segment.

Other operating charges and credits primarily consists of expenses related to pension plans as well as reclassifications of items whose cash effects are included in investing or financing activities.

The change in other operating charges and credits, net for 2013 totaled $0.9 billion, a decrease of $0.3 billion from 2012. The decrease is primarily due to lower pension plan charges.

The change in other operating charges and credits, net for 2012 totaled $1.2 billion, an increase of $0.2 billion from 2011. The increase is primarily due to increased pension plan charges.
(Dollars in millions)201320122011
Cash provided by (used for) investing activities$2,945
$(1,346)$(6,238)

Cash provided by investing activities in 2013 increased $4.3 billion compared to 2012. The change was primarily due to the proceeds received from the sale of the Performance Coatings business. See Note 2 to the Consolidated Financial Statements for additional information.

Cash used for investing activities decreased $4.9 billion in 2012 compared to 2011. The decrease was due mainly to the absence in 2012 of the company's Danisco acquisition in 2011.

Purchases of property, plant and equipment totaled $1.9 billion in 2013 and $1.8 billion in 2012 and 2011. The company expects 2014 purchases of property, plant and equipment to be about the same as 2013.
(Dollars in millions)201320122011
Cash (used for) provided by financing activities$(1,474)$(2,697)$403

The $1.2 billion decrease in cash used for financing activities in 2013 was due primarily to higher borrowings and lower payments for noncontrolling interests, partially offset by higher repurchases of common stock.

The $3.1 billion increase in cash used for financing activities in 2012 was due mainly to a decrease in borrowings in 2012 versus an increase in 2011, less cash received from options exercised and the company's increased investment in Solae, LLC in 2012, partially offset by reduced purchases of common stock in 2012 versus 2011.

Dividends paid to common and preferred shareholders were $1.7 billion, $1.6 billion, and $1.5 billion in 2013, 2012, and 2011, respectively. Dividends per share of common stock were $1.78, $1.70, and $1.64 in 2013, 2012, and 2011, respectively. With the first quarter 2014 dividend, the company has paid quarterly consecutive dividends since the company’s first dividend in the fourth quarter 1904.

In January 2014, the company’s Board of Directors authorized a $5 billion share buyback plan, with $2 billion expected to occur in 2014. This plan will replace the company’s 2011 plan. There is no required completion date for purchases under the 2014 plan.

In December 2012, the company's Board of Directors authorized a $1 billion share buyback plan. In February 2013, the company entered into an accelerated share repurchase (ASR) agreement with a financial institution under which the company used $1 billion of the proceeds from the sale of Performance Coatings for the purchase of shares of common stock. The 2012 $1 billion share buyback plan was completed in the second quarter 2013 through the ASR agreement, under which the company purchased and retired 20.4 million shares.

During 2012, the company purchased and retired 7.8 million shares at a total cost of $400 million. These purchases completed the 2001 $2 billion share buyback plan and began purchases under a $2 billion share buyback plan authorized by the company's Board of Directors in April 2011. Under the completed 2001 plan, the company purchased a total of 42.0 million shares. Under the 2011 plan, the company has purchased 5.5 million shares at a total cost of $284 million as of December 31, 2013.


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued

See Note 17 Consolidated Financial Statements for additional information relating to the above share buyback plans.

During 2011, the company purchased and retired 13.8 million shares at a total cost of $672 million, under the 2001 plan.
(Dollars in millions)201320122011
Cash provided by operating activities$3,179
$4,849
$5,152
Purchases of property, plant and equipment(1,882)(1,793)(1,843)
Free cash flow$1,297
$3,056
$3,309

Free cash flow is a measurement not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. All companies do not calculate non-GAAP financial measures in the same manner and, accordingly, the company's free cash flow definition may not be consistent with the methodologies used by other companies. The company defines free cash flow as cash provided by operating activities less purchases of property, plant and equipment, and therefore indicates operating cash flow available for payment of dividends, other investing activities and other financing activities. Free cash flow is useful to investors and management to evaluate the company's cash flow and financial performance, and is an integral financial measure used in the company's financial planning process.

For further information relating to the change in cash provided by operating activities, see discussion above under cash provided by operating activities.

Critical Accounting Estimates

The company's significant accounting policies are more fully described in Note 1 to the Consolidated Financial Statements. Management believes that the application of these policies on a consistent basis enables the company to provide the users of the financial statements with useful and reliable information about the company's operating results and financial condition.


The preparation of the Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States of America (GAAP)GAAP requires management to make estimates and assumptions that affect the reported amounts, including, but not limited to, receivable and inventory valuations, impairment of tangible and intangible assets, long-term employee benefit obligations, income taxes, restructuring liabilities, environmental matters and litigation. Management's estimates are based on historical experience, facts and circumstances available at the time and various other assumptions that are believed to be reasonable. The company reviews these matters and reflects changes in estimates as appropriate. Management believes that the following represents some of the more critical judgment areas in the application of the company's accounting policies which could have a material effect on the company's financial position, liquidity or results of operations.


Long-term Employee Benefits

Accounting for employee benefit plans involves numerous assumptions and estimates. Discount rate and expected return on plan assets are two critical assumptions in measuring the cost and benefit obligation of the company's pension and other long-term employee benefit plans. Management reviews these two key assumptions annually as of December 31st. These and other assumptions are updated periodically to reflect the actual experience and expectations on a plan specific basis as appropriate. As permitted by GAAP, actual results that differ from the assumptions are accumulated on a plan by plan basis and to the extent that such differences exceed 10 percent of the greater of the plan obligationsplan's benefit obligation or the applicable plan assets, the excess is amortized over the average remaining service period of active employees.


About 8077 percent of the company's benefit obligation for pensions and essentially all of the company's other long-term employee benefit obligations are attributable to the benefit plans in the U.S. TheIn the U.S. the discount rate is developed by matching the expected cash flow of the benefit plans to a yield curve constructed from a portfolio of high quality fixed-income instruments provided by the plan's actuary as of the measurement date. For non-U.S. benefit plans, the company utilizes publishedprevailing long-term high quality corporate bond indices to determine the discount rate, applicable to each country, at the measurement date. Where commonly available, the company considers indices of various durations to reflect the timing of future benefit payments.


Within the U.S., the company establishes strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes with the aim of achieving a prudent balance between return and risk. Strategic asset allocations in other countries are selected in accordance with the laws and practices of those countries. Where appropriate, asset-liability studies are also taken into consideration.consideration. The long-term expected return on plan assets in the U.S. is based upon historical real returns (net of inflation) for the asset classes covered by the investment policy, expected performance, and projections of inflation over the long-term period

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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued

during which benefits are payable to plan participants. Consistent with prior years, the long-term expected returnreturn on plan assets in the U.S. reflects the asset allocation of the plan and the effect of the company's active management of the plans' assets.


In determining annual expense for the principal U.S. pension plan, the company uses a market-related value of assets rather than its fair value. The market-related value of assets is calculated by averaging market returns over 36 months. Accordingly, there may be a lag in recognition of changes in market valuation. As a result, changes in the fair value of assets are not immediately reflected in the company's calculation of net periodic pension cost. The following table shows the market-related value and fair value of plan assets for the principal U.S. pension plan:

Principal U.S. Pension Plan
(Dollars in billions)

   2010   2009   2008  
(Dollars in billions)201320122011

Market-related value of assets

   $13.9   $14.0   $16.2  $15.5
$14.8
$13.9

Fair value of plan assets

   $14.8   $13.9   $13.5  16.1
15.1
13.9
 

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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued

For plans other than the principal U.S. pension plan, pension expense is typically determined using the fair value of assets. The fair value of assets in all pension plans was $18.4 billion at December 31, 2010, and the related projected benefit obligations were $23.9 billion. In addition, obligations under the company's unfunded other long-term employee benefit plans were $4.0 billion at December 31, 2010.


The following table highlights the potential impact on the company's pre-tax earnings due to changes in certain key assumptions with respect to the company's pension and other long-term employee benefit plans, based on assets and liabilities at December 31, 2010:

2013
:

 

Pre-tax Earnings Benefit (Charge)
(Dollars in millions)

   1/2 Percentage
Point
Increase
   1/2 Percentage
Point
Decrease
  
1/2 Percentage
Point
Increase
1/2 Percentage
Point
Decrease

Discount Rate

   $81   $(88) 
Discount rate$89
$94

Expected rate of return on plan assets

   84   (84) 97
(97)
 


Additional information with respect to pension and other long-term employee benefits expenses, liabilities and assumptions is discussed under "Long-Term"Long-term Employee Benefits" beginning on page 4034 and in Note 2118 to the Consolidated Financial Statements.


Environmental Matters

DuPont accrues for remediation activities when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made. The company has recorded a liability of $458 million as of December 31, 2013; these accrued liabilities exclude claims against third parties and are not discounted. As remediation activities vary substantially in duration and cost from site to site, it is difficult to develop precise estimates of future site remediation costs. The company's estimates are based on a number of factors, including the complexity of the geology, the nature and extent of contamination, the type of remedy, the outcome of discussions with regulatory agencies and other PRPs Potentially Responsible Parties (PRPs) at multipartymulti-party sites and the number of and financial viability of other PRPs. The company has recorded a liability of $407 million on the Consolidated Balance Sheet as of December 31, 2010; these accrued liabilities exclude claims against third parties and are not discounted.

ConsiderableTherefore, considerable uncertainty exists with respect to environmental remediation costs and, under adverse changes in circumstances, the potential liability may range up to two to three times the amount accrued. Much of this liability results from the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, often referred to as the Superfund), the Resource Conservation and Recovery Act (RCRA) and similar state and global laws. These laws 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 for which it is probable that environmental remediation will be required, but which are not currently the subject of enforcement activities. Federal and state authorities may seek fines and penalties for violation of the various laws and governmental regulations and could, among other things, impose liability on the company for cleaning up the damage resulting from company-generated waste disposal. Over the next two decades, the company could incur significant costs under both CERCLA and RCRA.

Remediation activities vary substantially in duration and cost from site to site. These activities and their associated costs, depend on the mix of unique site characteristics, evolving remediation technologies, diverse regulatory agencies and enforcement policies, as well as the presence or absence of PRPs. Therefore, it is difficult to develop precise estimates of future site remediation costs.


Legal Contingencies

The company's results of operations could be affected by significant litigation adverse to the company, including product liability claims, patent infringement and antitrust claims, and claims for third party property damage or personal injury stemming from alleged environmental torts. The company records accruals for legal matters when the information available indicates that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Management makes adjustments to these accruals to reflect the impact and status of


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued

negotiations, settlements, rulings, advice of counsel and other information and events that may pertain to a particular matter. Predicting the outcome of claims and lawsuits and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates. In making determinations of likely outcomes of litigation matters, management considers many factors. These factors include, but are not limited to, the nature of specific claims including unasserted claims, the company's experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of resolving the matter through alternative dispute resolution mechanisms and the matter's current status. Considerable judgment is required in determining whether to establish a litigation accrual when an adverse judgment is rendered against the company in a court proceeding. In such situations, the company will not recognize a loss if, based upon a thorough review of all relevant facts and information, management believes that it is probable that the pending judgment will be successfully overturned on appeal. A detailed discussion of significant litigation matters is contained in Note 1916 to the Consolidated Financial Statements.



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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued

Income Taxes

The breadth of the company's operations and the global complexity of tax regulations require assessments of uncertainties and judgments in estimating taxes the company will ultimately pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation and resolution of disputes arising from federal, state and international tax audits in the normal course of business. The resolution of these uncertainties may result in adjustments to the company's tax assets and tax liabilities. It is reasonably possible that changes to the company's global unrecognized tax benefits could be significant, however, due to the uncertainty regarding the timing of completion of audits and possible outcomes, a current estimate of the range of increases or decreases that may occur within the next twelve months cannot be made.


Deferred income taxes result from differences between the financial and tax basis 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. Significant judgment is required in evaluating the need for and magnitude of appropriate valuation allowances against deferred tax assets. The realization of these assets is dependent on generating future taxable income, as well as successful implementation of various tax planning strategies. For example, changes in facts and circumstances that alter the probability that the company will realize deferred tax assets could result in recording a valuation allowance, thereby reducing the deferred tax asset and generating a deferred tax expense in the relevant period. In some situations these changes could be material.


At December 31, 2010,2013, the company had a deferred tax asset balance of $6.4 billion, net of valuation allowance of $1.7$1.8 billion. Realization of these assets is expected to occur over an extended period of time. As a result, changes in tax laws, assumptions with respect to future taxable income, and tax planning strategies could result in adjustments to these assets.

See Note 6 to the Consolidated Financial Statements for additional details related to the deferred tax asset balance.


Valuation of Assets

The assets and liabilities of acquired businesses are measured at their estimated fair values at the dates of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired, including identified intangibles, is recorded as goodwill. The determination and allocation of fair value to the assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable management judgment, including estimates based on historical information, current market data and future expectations. The principal assumptions utilized in the company's valuation methodologies include revenue growth rates, operating margin estimates, royalty rates, and discount rates. Although the estimates were deemed reasonable by management based on information available at the dates of acquisition, those estimates are inherently uncertain.

Assessment of the potential impairment of property, plant and equipment, goodwill, other intangible assets and investments in affiliates is an integral part of the company's normal ongoing review of operations. Testing for potential impairment of these assets is significantly dependent on numerous assumptions and reflects management's best estimates at a particular point in time. The dynamic economic environments in which the company's diversified businesses operate, and key economic and business assumptions with respect to projected selling prices, market growth and inflation rates, can significantly affect the outcome of impairment tests. Estimates based on these assumptions may differ significantly from actual results. Changes in factors and assumptions used in assessing potential impairments can have a significant impact on the existence and magnitude of impairments, as well as the time in which such impairments are recognized.

In addition, the company continually reviews its diverse portfolio of assets to ensure they are achieving their greatest potential and are aligned with the company's growth strategy. Strategic decisions involving a particular group of assets may trigger an assessment of the recoverability of the related assets. Such an assessment could result in impairment losses. During 2013, the company recorded an asset impairment charge of $129 million to write-down the carrying value of an asset group to fair value. See Note 3 to the Consolidated Financial Statements for additional details related to this charge.

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Based on the results of the company's annual goodwill impairment test in 2010,2013, no impairments exist at this time. The company's methodology for estimating the fair value of its businessesreporting units is using the income approach based on the present value of future cash flows. The income approach has been generally supported by additional market transaction analyses. There can be no assurance that the company's estimates and assumptions regarding forecasted cash flow and revenue and operating income growth rates made for purposes of the annual goodwill impairment test will prove to be accurate predictions of the future. The company believes the current assumptions and estimates utilized are both reasonable and appropriate. Information with respect to the company's significant accounting policies on long-lived assets is included in Note 1 to the Consolidated Financial Statements.

Segment Reviews

Segment sales include transfers to another business segment. Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products. Segment pre-tax operating income (loss) (PTOI) is defined as operating income before income taxes, exchange gains (losses), corporate expenses and interest. A reconciliation of segment sales to consolidated net sales and segment PTOI to income before income taxes for 2010, 2009 and 2008 is included in Note 25 to the Consolidated Financial Statements.

As described in Note 4 to the Consolidated Financial Statements, the company initiated global restructuring programs during 2009 and 2008. The 2009 and 2008 program charges reduced total segment PTOI for 2009 and 2008 by $340 million and $535 million, respectively.

In 2009, the company recorded a $30 million and $100 million net reduction in the estimated costs associated with the 2009 program and 2008 programs, respectively. In 2010, the company recorded a $20 million and $14 million net reduction in the estimated costs associated with the 2009 program and 2008 programs, respectively.

Below is a summary of the net impact to each segment related to the activities described above:

 
  
 2010 (Charges)
and Credits

  
  
 2009 (Charges) and Credits
  
  
  
  
  
 2008
(Charge)

  

(Dollars in millions)

    2009 and 2008
Net Program
Reductions
        2009
Program
    2009 Net
Program
Reductions
    2008 Net
Program
Reductions
    2009 Net
Impact
        2008
Program
  

Agriculture & Nutrition

   $-       $-   $-   $1   $1       $(18) 

Electronics & Communications

    8        (43)   6    -    (37)       (37) 

Performance Chemicals

    10        (66)   9    3    (54)       (50) 

Performance Coatings

    (6)       (65)   (11)   61    (15)       (209) 

Performance Materials

    16        (110)   23    29    (58)       (94) 

Safety & Protection

    5        (55)   8    2    (45)       (96) 

Other

    1        (1)   (5)   4    (2)       (31) 

Total (Charge) Credit

   $34       $(340)  $30   $100   $(210)      $(535) 
                                         


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued

  AGRICULTURE & NUTRITION


             
 
                                                                                                                                                    
 Segment Sales
(Dollars in billions)
  
 PTOI
(Dollars in millions)
  

2010

   $9.1   $1,355  

2009

   $8.3   $1,224  

2008

   $8.0   $1,087  
             

Agriculture & Nutrition's businesses leverage the company's technology, customer relationships, and industry knowledge to improve the quantity, quality and safety of the global food supply and the global production agriculture industry. Land available for worldwide agricultural production is increasingly limited so production growth will need to be achieved principally through improving crop yields and productivity rather than through increases in planted area. The segment's businesses deliver a broad portfolio of products and services that are specifically targeted to achieve gains in crop yields and productivity, including Pioneer® brand seed products and well-established brands of insecticides, fungicides and herbicides. The segment's businesses operate across the food value chain from inputs for producing agriculture products to global production and distribution of soy-based food ingredients to food quality diagnostic testing equipment. Research and development focuses on leveraging technology to increase grower productivity and enhance the value of grains and soy through improved seed traits, superior seed germplasm and effective use of insecticides, herbicides and fungicides. The following are Agriculture & Nutrition's operating businesses:

Pioneer is the world's leading seed brand and a world leader in improving crop yields with hybrid and varietal seeds that improve grower yields and provide effective plant insect protection and herbicide tolerance. The principal products of Pioneer are hybrid seed corn and varietal soybean seed, as well as sunflower, canola, sorghum and rice. Crops grown from Pioneer seed are used to meet the global demand for animal feed, food, biofuels, and fiber. Sales of Pioneer seeds amounted to 17 percent, 18 percent and 13 percent of the company's total consolidated net sales for the years ended December 31, 2010, 2009 and 2008, respectively. Agricultural seed research requires long-term commitment, investment and innovation. Pioneer research is focused on results that deliver higher crop yields and a consistent per acre income advantage for its customers. New product innovation is accomplished through an effective integration of superior germplasm and value added native and biotechnology traits. In 2010, Pioneer benefited from the North America launch of new soybean varieties and new Pioneer® brand corn hybrids. In April 2010, Pioneer received EPA cultivation approval of Optimum® AcreMax™ 1 products, the first product with reduced and integrated corn rootworm refuge with 2011 commercialization in North America. In October 2010, Pioneer received EPA cultivation approval of Optimum® Intrasect™ insect protection products offering that will allow U.S. corn growers to reduce their structured above ground refuge to a level of 5 percent in the Corn Belt. Optimum® Intrasect™ insect protection products will be demonstrated to growers in 2011. Pioneer expects EPA cultivation approval for its next generation integrated refuge insect control products in the second half 2011. These innovative and convenient products would feature single-bag reduced refuge for both corn rootworm and corn borer. Upon EPA cultivation approval, multiple product versions would be available for grower choice including but not limited to: Optimum® AcreMaxTM products for above-ground protection and Optimum® AcreMaxTM Xtra products for above- and below-ground protection.

In December 2010, Pioneer and Syngenta AG (Syngenta) entered into an agreement to grant Pioneer a non-exclusive, global license to Syngenta's corn rootworm trait MIR604 (Agrisure™ RW) for corn seed. The trait provides protection from below-ground coleopteran insects, including corn rootworm, a major corn pest in the U.S. and around the world. The license gives Pioneer the right to commercialize corn seed containing MIR604, including the right to stack MIR604 with other traits through the expiration of the relevant patents. As part of the agreement, Pioneer is obligated to make milestone and royalty payments assuming certain contingencies, including regulatory approvals, are met. The contingencies related to the first milestone payment are expected to be met in 2011. Minimum payments under the agreement are expected to total about $400 million over the next several years.

In September 2010, as part of the company's strategy to deliver innovations that address the need for increased food production to feed the world's growing population, Pioneer announced that it had entered into an agreement to acquire


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a majority share of Pannar Seed Limited, a South African-based seed company. This investment would allow each business to access additional crop areas, reach more customers and deliver improved seed products quicker than either can do on its own. In December 2010, the South African Competition Commission rejected the acquisition. The company has appealed this decision and expects to receive a final decision in 2011.

As announced in December 2008, Pioneer is expanding its reach in North America through its PROaccessSM business strategy in order to bring its seed genetics to more customers. Under the PROaccessSM business strategy, nine companies distribute products on behalf of Pioneer that are co-branded using Pioneer-owned brands together with one of the nine companies' brands. Since launching PROaccessSM, six of the nine PROaccessSM partners have become wholly owned subsidiaries of the company.

In the spring 2009, Monsanto sued the company in U.S. District Court claiming that stacking seed with Pioneer's Optimum® GAT® trait and Monsanto's Roundup Ready®1 herbicide tolerance trait violates its Roundup Ready® license agreements with Monsanto. Monsanto also alleges that sales of Pioneer stacked seeds would infringe a Monsanto patent that expires in 2014. Monsanto seeks declaratory relief, unspecified damages and a permanent injunction to prevent sales of Optimum® GAT®/ Roundup Ready® stacked seeds. DuPont filed an answer and counterclaims, including patent misuse and antitrust claims. In January 2010, the Court ruled that the license agreements between the companies contain an unwritten ("implied") term that prohibits stacking these traits. The Court vacated its ruling regarding the "implied term" in the third quarter 2010, and concluded that the license neither expressly prohibits nor expressly grants the right to stack a second glyphosate tolerance trait with Monsanto's Roundup Ready® trait. The company's separate antitrust and patent fraud claims were not impacted by either ruling and are proceeding. Pioneer continues to develop soybean seed in which these traits are stacked and sales could occur between 2013-2014, subject to regulatory approvals. Neither ruling changes Pioneer's commercialization plans for products with the Optimum® GAT® trait. Furthermore, management believes that the Monsanto lawsuit is unlikely to adversely affect the company's commercial results for soybean and corn seed because Pioneer can continue to sell seed with Roundup Ready® traits that are not stacked with Optimum® GAT® traits.

1
Registered Trademark of Monsanto

DuPont Crop Protection serves the global production agriculture industry with crop protection products for field crops such as wheat, corn, soybean and rice; specialty crops such as fruit, nut, vine and vegetables; and non-crop segments, including forestry and land management. Principal crop protection products are weed control, disease control, and insect control products. The sales growth of the business' insect control portfolio is led by Rynaxypyr®, a product registered for sale in over 60 countries and sold under four key brands for use across a broad range of core agricultural crops. The business continues to expand its product offerings in the professional pest control, lawn care, golf course, animal health and seed treatment markets.

Nutrition & Health operates principally within the specialty food ingredients market, including soy proteins and lecithins through the Solae Company, a majority-owned venture with Bunge Limited. Nutrition & Health global production and distribution capabilities serves various areas within the food industries including meat and poultry products, consumer food products, dairy-alternative products and nutritional products. Nutrition & Health anticipates improved volume growth through offerings in its specialty food ingredients.

2010 versus 2009    Sales were $9.1 billion, a 10 percent increase versus the prior year, reflecting a 7 percent increase in volume and 4 percent higher United States dollar (USD) selling prices, which were partially offset by portfolio changes of 1 percent. Higher volume was primarily due to higher seed sales in North America with market share gains for corn and soybeans. Higher global sales of Crop Protection products were led by broad-based recovery across most regions and strong demand for Rynaxypyr® in Asia Pacific and Latin America. The higher USD selling prices reflect higher value product mix and pricing actions to offset the increase in raw material costs.

PTOI for 2010 was $1.4 billion, an increase of 11 percent versus the prior year, principally due to the higher sales volume, partially offset by higher spending for growth investments and a $50 million charge in R&D expense for an upfront payment related to a Pioneer licensing agreement for corn seed trait technology, as described above.


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2009 versus 2008    Sales were $8.3 billion, a 4 percent increase when compared to 2008, reflecting 5 percent higher USD selling prices, partially offset by a 1 percent decrease in volume. The higher USD selling prices is related to Pioneer seeds and Crop Protection proprietary insect, weed and disease control products, partially offset by unfavorable currency impacts in Europe, Canada and Latin America, as well as the impact of significantly lower market-driven pricing for glyphosate resale. The decrease in volume was primarily due to lower sales of Crop Protection disease and insect control products, and lower sales of Nutrition & Health products largely offset by higher Pioneer corn and soybean seed sales market share gains in North America.

PTOI was $1.2 billion, an increase of 13 percent versus 2008, principally due to the higher sales and higher value product mix, partially offset by unfavorable currency impacts globally.

Outlook    The segment anticipates sales and earnings growth in 2011. Segment earnings are expected to benefit in particular from continued strong momentum in the Pioneer corn and soybean business. Pioneer anticipates continued growth in volume in key corn and soybean markets including the U.S., Canada and Latin America, as well as value-based pricing gains. The 2011 product line up will include new corn hybrids and soybean varieties as well as Optimum® AcreMax™ 1 products, the industry's first product with reduced and integrated corn rootworm refuge.

In the Crop Protection business, volume driven sales growth combined with continued productivity and business improvement actions are expected to contribute to earnings in 2011. Volume growth is underpinned by a favorable industry outlook, continued regional expansion and new market segment penetration of products such as Rynxypyr® as well as new product introductions such as Streamline® herbicide for land management. In the Nutrition & Health business, volume growth reflecting soy protein penetration and expansion of health and wellness products coupled with continued and intensified productivity actions are anticipated to support earnings and margin expansion.

  ELECTRONICS & COMMUNICATIONS

             
 
                                                                                                                                                    
 Segment Sales
(Dollars in billions)
  
 PTOI
(Dollars in millions)
  

2010

   $2.8   $445  

2009

   $1.9   $87  

2008

   $2.2   $251  
             

Electronics & Communications is a leading supplier of differentiated materials and systems for photovoltaics, consumer electronics, displays and advanced printing that enable superior performance and lower total cost of ownership for customers. The segment leverages DuPont's strong materials and technology base to target attractive growth opportunities in photovoltaic materials, materials for circuit and semiconductor fabrication and packaging, display materials, packaging graphics, and ink-jet printing. In the fast growing photovoltaics market, the company continues to be a leading supplier of metallization pastes and backsheet materials for use in solar cells and modules. In 2010, DuPont Apollo Ltd., a wholly owned subsidiary of the company, started providing total system solutions and production of high-efficiency tandem thin-film photovoltaic modules to meet the needs of this fast growing segment of the solar energy market. Beyond photovoltaics, the segment is investing in its broad portfolio of materials for semiconductor fabrication and packaging, as well as innovative materials for circuit applications, to address critical needs of electronic component and device manufacturers. In the displays market, the segment continues to be a leading materials supplier for plasma displays. In addition, the segment continues to invest in developing a solution-process technology and material set to enable lower cost organic light-emitting diode (OLED) displays. In packaging graphics, DuPont is a leading supplier of flexographic printing systems, including Cyrel® photopolymer plates. The segment is investing in new products such as Cyrel® FAST Round to strengthen its market leadership position in advanced printing markets. DuPont is also expanding its leadership position in black-pigmented inks and developing new color-pigmented inks for network printing applications.


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The segment is on track to complete a $295 million expansion to support the DuPont Tedlar® polyvinyl fluoride films business. This includes a $120 million investment in capacity expansion to produce the raw materials that make the film, which was completed in 2010. A multi-phase $175 million investment of high-performance Tedlar® PV2001 series oriented film production is scheduled for completion in 2011. Tedlar® films serve as the critical component of photovoltaic module backsheets, providing long-term durability and performance in all weather conditions.

2010 versus 2009    Sales of $2.8 billion were up 44 percent, reflecting 37 percent higher volume and 7 percent higher USD selling prices. Higher volume was driven by strong growth in all regions, particularly in Asia Pacific and Europe, and strong demand across most market segments, particularly in photovoltaics. Higher USD selling prices were primarily due to pass-through of higher precious metals prices.

PTOI was $445 million compared to $87 million in the prior year. The increase in PTOI was driven by substantially higher volume, improved productivity and the absence of a net $37 million restructuring charge in the prior year.

2009 versus 2008    Sales of $1.9 billion were down 13 percent, reflecting 11 percent volume decline and 2 percent lower USD selling prices. The lower volume reflects the impact of the global economic recession which affected sales for products across all key markets. Sales volume improved throughout 2009, most significantly in Asia Pacific, where sales were essentially flat when compared to 2008. The lower USD selling prices were mainly due to contractual pass-through of lower precious metal prices.

PTOI was $87 million compared to $251 million in 2008. The decline in PTOI was primarily due to the impact of lower sales, lower income from affiliates, and higher charges associated with low capacity utilization of production lines.

Outlook    For 2011, sales of products into photovoltaics, consumer electronics, displays, and advanced printing markets are expected to increase moderately. The segment continues to make productivity and supply chain improvements, as well as capacity investments to meet global demand. Segment earnings are expected to increase reflecting the impact of higher volume and productivity initiatives, as well as investments for growth.

  PERFORMANCE CHEMICALS

             
 
                                                                                                                                                    
 Segment Sales
(Dollars in billions)
  
 PTOI
(Dollars in millions)
  

2010

   $6.3   $1,081  

2009

   $5.0   $547  

2008

   $6.0   $687  
             

Performance Chemicals businesses deliver customized solutions with a wide range of industrial and specialty chemical products for markets including plastics & coatings, textiles, mining, pulp and paper, water treatment and healthcare. The following are Performance Chemicals' operating businesses:

DuPont Titanium Technologies is the world's largest manufacturer of titanium dioxide, and is dedicated to creating greater, more rewarding value for the coatings, paper, plastics, specialties and minerals markets through service, brand, and product. The business' main products include its broad line of DuPont™ Ti-Pure® titanium dioxide products.

DuPont Chemicals and Fluoroproducts is a leading global manufacturer of industrial and specialty fluorochemicals, fluoropolymers, and performance chemicals. The business' broad line of products that include refrigerants, lubricants, propellants, solvents, fire extinguishants and electronic gases, cover a wide range of industries and markets. Key brands include DuPontTM Teflon®, Dymel®, Isceon®, Suva®, Vertrel®, Zyron®, Vazo® and Virkon®.

2010 versus 2009    Sales of $6.3 billion were 27 percent higher than last year, reflecting 18 percent higher volume and 10 percent higher USD selling prices, which were partially offset by portfolio changes of 1 percent. Broad-based market recovery led to sales increases in all markets and all regions, most significant in Asia Pacific, reflecting strong demand for titanium dioxide, fluoropolymers and refrigerants, with continuing adoption of ISCEON® as a preferred retrofit to R22


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refrigerant. Higher USD selling prices reflect favorable pricing for titanium dioxide and pass-through of higher raw material costs for industrial chemicals and fluoroproducts.

PTOI was $1,081 million as compared to $547 million in the prior year. The increase in PTOI was driven by higher volume, higher USD selling prices that more than offset increases in raw material costs, improved productivity and the absence of a net $54 million restructuring charge in the prior year.

2009 versus 2008    Sales of $5.0 billion were 18 percent lower than 2008, due to a 12 percent decline in volume and 6 percent lower USD selling prices. The lower volume principally reflects decreased demand for industrial chemicals and fluoroproducts across all regions reflecting the impact of the economic downturn. Sales of titanium dioxide products recovered during the second half 2009, and were higher than the pre-recession levels in the second half 2007. The lower USD selling prices were mainly due to contractual pass-through of lower raw material prices and unfavorable currency impact in Europe and Asia Pacific.

PTOI was $547 million as compared to $687 million in 2008. The decrease in earnings was primarily due to the impact of lower volume, partially offset by fixed costs reductions.

Outlook    Performance Chemicals' sales are expected to increase in 2011 as a result of the continued global economic recovery, higher global demand for titanium dioxide and specialty chemicals, and higher USD selling prices. Total segment earnings are also expected to increase consistent with the higher sales volume, higher USD selling prices and improved fixed cost productivity. This segment manufactures products that could be affected by uncertainties associated with PFOA matters. See the discussion on page 46 under the subheading PFOA for further information.

  PERFORMANCE COATINGS

             
 
                                                                                                                                                    
 Segment Sales
(Dollars in billions)
  
 PTOI
(Dollars in millions)
  

2010

   $3.8   $249  

2009

   $3.4   $69  

2008

   $4.4   $(8) 
             

Performance Coatings is one of the world's leading motor vehicle coatings suppliers. Products offered include high performance liquid and powder coatings for motor vehicle original equipment manufacturers (OEMs), the motor vehicle after-market, and general industrial applications, such as coatings for heavy equipment, pipes and appliances and electrical insulation. After-market coatings products are marketed using the DuPont™ Standox®, Spies Hecker® and Nason® brand names. Standox® and Spies Hecker® are focused on the high-end motor vehicle after-markets, while Nason® is primarily focused on economy coating applications.

In 2009 and 2008, the segment experienced a significant decline in sales, mainly in the OEMs markets, due to the impact of the global economic recession in the automotive industry. In addition, the North American automotive industry continued to experience structural changes, including the loss of U.S. market share by U.S. automakers. In 2009, the global production of automobiles and light trucks declined by 14 percent reflecting declines of 33 percent in North America, and 10 percent in the rest of the world, which was partially offset by an increase in production of 44 percent in Greater China.

In 2010, the segment experienced strong recovery from the economic downturn across most markets and regions. Global automotive markets experienced increased production levels due to improved OEM auto builds as a result of higher demand, most significant in North America and Europe. Automotive builds across the globe increased 22 percent, reflecting an improvement of 37 percent in North America and 20 percent in the rest of the world. The industry production forecast for 2011 projects a global increase of 5 percent, reflecting continued recovery in North America and continued growth in Asia Pacific.


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2010 versus 2009    Sales of $3.8 billion were up 11 percent when compared to prior year, reflecting 9 percent higher volume and a 2 percent increase in USD selling prices. Higher volume reflects recovery in global automotive OEM markets as a result of higher global motor vehicle builds and strong demand in industrial coatings, particularly in the North American and European heavy duty truck markets. Higher USD selling prices primarily reflect pricing actions taken to offset the increase in raw material costs.

PTOI was $249 million as compared to $69 million in 2009. The increase in PTOI primarily reflects the impact of higher volume, improved productivity and higher USD selling prices, which were partially offset by higher raw material costs.

2009 versus 2008    Sales of $3.4 billion were down 21 percent when compared to 2008, reflecting a 20 percent decline in volume and 1 percent lower USD selling prices. The decline in volume reflects the impact of fewer motor vehicle and industrial truck builds of motor vehicle OEMs, and lower sales of industrial and after-market products in all regions. Sales to OEMs improved substantially during the second half 2009, mostly due to the impact of government incentives programs and higher sales in Asia Pacific. Sales of after-market and industrial coatings experienced a slower recovery from the inventory destocking experienced in the industry during the fourth quarter 2008 and first quarter 2009. The lower USD selling prices reflect unfavorable currency impacts, partially offset by higher local selling prices.

PTOI was $69 million as compared to a loss of $8 million in 2008. The improvement in PTOI was primarily due to lower fixed costs, and the net year-over-year impact of the 2008 and 2009 restructuring activities, partially offset by the effect of lower volume.

Outlook    For 2011, the segment expects sales to increase modestly with continued recovery in the global automotive and heavy duty truck markets and market growth in the developing regions. PTOI is expected to improve due to continued productivity efforts and higher sales in all regions.

  PERFORMANCE MATERIALS

             
 
                                                                                                                                                    
 Segment Sales
(Dollars in billions)
  
 PTOI
(Dollars in millions)
  

2010

   $6.3   $994  

2009

   $4.8   $287  

2008

   $6.4   $128  
             

Performance Materials' businesses provide productive, higher performance polymers, elastomers, films, parts, and systems and solutions which improve the uniqueness, functionality and profitability of its customers' offerings. The key markets served by the segment include the automotive OEM and associated after-market industries, as well as electrical, electronics, packaging, construction, oil, photovoltaics, aerospace, chemical processing and consumer durable goods. The following are Performance Materials' operating businesses:

Performance Polymers delivers a broad range of polymer-based high performance materials in its product portfolio, including elastomers and thermoplastic and thermoset engineering polymers which are used by customers to fabricate components for mechanical, chemical and electrical systems. The main products include: DuPont™ Zytel® nylon resins, Delrin® acetal resins, Hytrel® polyester thermoplastic elastomer resins, Tynex® filaments, Vespel® parts and shapes, Vamac® ethylene acrylic elastomer, Kalrez® perfluoroelastomer and Viton® fluoroelastomers. Performance Polymers also includes the DuPont Teijin Films joint venture, whose primary products are Mylar® and Melinex® polyester films.

Packaging & Industrial Polymers specializes in resins and films used in packaging and industrial polymer applications, sealants and adhesives, sporting goods, and interlayers for laminated safety glass. Key brands include: DuPont™ Surlyn® ionomer resins, Bynel® coextrudable adhesive resins, Elvax® EVA resins, SentryGlas®, Butacite® laminate interlayers and Elvaloy® copolymer resins.


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2010 versus 2009    Sales of $6.3 billion were 32 percent higher than prior year, reflecting 27 percent higher volume and a 7 percent increase in USD selling prices, which were partially offset by portfolio changes of 2 percent. The higher volume was led by broad-based demand across all markets, particularly in automotive and electronic markets, with strong volume recovery in all regions, led by Asia Pacific. Higher USD selling prices were a combination of stronger product sales mix and higher USD selling prices in response to higher feedstock costs.

2010 PTOI was $994 million compared to $287 million in 2009. The increase in PTOI was primarily driven by higher sales volume, higher USD selling prices and improved productivity.

2009 versus 2008    Sales of $4.8 billion were 26 percent lower reflecting 18 percent lower volume, 6 percent decrease in USD selling prices, and a 2 percent reduction related to portfolio changes. The decrease in volume mainly reflects the effect of the global economic recession and the inventory destocking experienced during the first half 2009. However, sales continuously improved during the second half 2009, both sequentially and when compared to 2008, mainly due to overall economic recovery and higher sales to the motor vehicle industry. The lower USD selling prices were a combination of significantly weaker product sales mix, unfavorable currency impacts, and for certain products, lower USD selling prices in response to lower feedstock costs.

2009 PTOI was $287 million compared to $128 million in 2008. The improvement in PTOI reflects the impact of lower raw material, energy and freight costs, lower fixed costs, the absence of a $216 million hurricane-related charge in 2008, an $82 million benefit in 2009 from hurricane-related insurance recoveries and a reduction in the hurricane-related accrual, and the net year over year impact of the 2008 and 2009 restructuring activities. As of December 31, 2010, the company is aggressively pursuing additional insurance recoveries in the range of $50 – $100 million.

Outlook    2011 sales are expected to grow due to anticipated increases in global motor vehicle OEMs builds and continued strength, particularly in Asia Pacific, for most of the markets served by the segment. PTOI is also expected to improve due to the impact of higher sales, improved fixed cost productivity and market-driven innovations for products and processes.

  SAFETY & PROTECTION

             
 
                                                                                                                                                              
 Segment Sales
(Dollars in billions)
  
 PTOI
(Dollars in millions)
  

2010

   $3.4   $454  

2009

   $2.8   $260  

2008

   $3.7   $661  
             

Safety & Protection's businesses satisfy the growing global needs of businesses, governments and consumers for solutions that make life safer, healthier and more secure. By uniting market-driven science with the strength of highly regarded brands, the segment delivers products and services to a large number of markets including, construction, transportation, communications, industrial chemicals, oil and gas, electric utilities, automotive, manufacturing, defense, homeland security and safety consulting. The following are Safety & Protection's operating businesses:

Protection Technologies is focused on finding solutions to protect people and the environment. With products like DuPontTM Kevlar®, Nomex® and Tyvek®, the business continues to hold strong positions in life protection markets and meet the continued demand for body armor and personal protective gear for the military, law enforcement personnel, firefighters and other first responders, as well as for workers in the oil and gas industry around the world.

Building Innovations is committed to the building science behind increasing the performance of building systems, helping reduce operating costs and creating more sustainable structures. The business is a market leader of solid surfaces through its Corian® and Montelli® lines of products which offer durable and versatile materials for residential and commercial purposes. Other products such as Tyvek® and Typar® offer leading solutions for the protection and energy efficiency of buildings.


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Sustainable Solutions continues to help organizations worldwide reduce workplace injuries and fatalities while improving operating costs, productivity and quality. Sustainable Solutions is a leader in the safety consulting field, selling training products, as well as consulting services. Additionally, Sustainable Solutions is dedicated to clean air, clean fuel and clean water with offerings that help reduce sulfur and other emissions, formulate cleaner fuels, or dispose of liquid waste. Its goal is to help maintain business continuity and environmental compliance for companies in the refining and petrochemical industries, as well as for government entities. In 2010, the business completed the acquisition of MECS, Inc., which is a leading global provider of process technology, proprietary specialty equipment and technical services to the sulfuric acid industry. The acquisition allows the business to expand its clean technologies portfolio by strengthening the business' clean air and clean fuel offerings and provide the company with further access to high-growth market segments, particularly in developing regions like Asia Pacific.

2010 versus 2009    Sales of $3.4 billion were 20 percent higher than last year, due to higher volume. The increase in volume reflects strong recovery and increased demand across all regions, led by Europe and Asia Pacific, and markets, particularly in aramid and nonwoven products. Further penetration in the U.S. commercial construction markets led to higher sales as recovery in global construction markets remained weak. Sales for consulting and training services improved modestly across most regions, led by Asia Pacific.

PTOI was $454 million compared to $260 million in the prior year. The increase in earnings was primarily due to higher volume and the absence of a net $45 million restructuring charge in prior year, partially offset by higher spending for growth initiatives and higher raw material costs.

2009 versus 2008    Sales of $2.8 billion were 25 percent lower than 2008, due to a 23 percent decline in volume and 3 percent lower USD selling prices, partially offset by a 1 percent increase from portfolio changes. The lower volume reflects decreased demand for products across all markets and regions due to the impact of the economic downturn. The lower USD selling prices were mainly due to unfavorable currency impact in Europe and Asia Pacific.

PTOI was $260 million compared to $661 million in 2008. The decrease in earnings was primarily due to the impact of lower volume and charges associated with low capacity utilization of production units, partially offset by fixed costs reductions.

Outlook    For 2011, sales are expected to benefit from improved global market conditions. Demand for Kevlar®, Nomex® and Tyvek® products is expected to increase across all regions with continued strength in industrial, consumer and automotive markets. Sales related to the Building Innovations business are expected to increase due to forecasted improvements in construction markets across most regions. Sales related to the Sustainable Solutions business are expected to increase modestly due to the completion of the MECS, Inc. acquisition in 2010. PTOI is expected to improve due to higher sales.

  PHARMACEUTICALS

             
 
                                                                                                                                                              
 Segment Sales
(Dollars in billions)
  
 PTOI
(Dollars in millions)
  

2010

   $-   $489  

2009

   $-   $1,037  

2008

   $-   $1,025  
             

On October 1, 2001, DuPont Pharmaceuticals was sold to the Bristol-Myers Squibb Company. DuPont retained its interest in Cozaar® (losartan potassium) and Hyzaar® (losartan potassium with hydrochlorothiazide). These drugs were developed in collaboration with Merck and are used in the treatment of hypertension. The U.S. patents covering the compounds, pharmaceutical formulation and use for the treatment of hypertension, including approval for pediatric use, expired in 2010. DuPont has exclusively licensed worldwide marketing and manufacturing rights for Cozaar® and Hyzaar® to Merck. Pharmaceuticals receive net proceeds and royalties as outlined below. Merck is responsible for manufacturing, marketing and selling Cozaar® and Hyzaar®.


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Pharmaceuticals' Cozaar®/Hyzaar® income is the sum of two parts: income related to a share of the profits from North American sales and certain markets in EMEA, and royalty income derived from worldwide contract net sales linked to the exclusivity term in a particular country. Patents and exclusivity started to expire in prior years and the U.S. exclusivity for Cozaar® ended in April 2010. The worldwide agreement terminates when the following conditions are met: (i) the Canadian exclusivity ends, and (ii) North American sales fall below a certain level. The company experienced its first significant step-down in income from Cozaar®/Hyzaar® in 2010 and expects a continued step-down each subsequent year to zero when the contract ends. In general, management expects a traditional sales, earnings and cash decline for a drug going off patent in the pharmaceutical industry.

In the fourth quarter 2009, the company recorded a $63 million charge to other income, net and a reduction to accounts and notes receivable, net in the Pharmaceuticals segment to reflect increased rebates and other sales deductions related to the Cozaar®/Hyzaar® licensing agreement.

Outlook    Cozaar®/Hyzaar® income is expected to continue to substantially decrease due to the expiration of a majority of the worldwide patents which occurred in 2010. Earnings contributions to the company from the collaboration with Merck are expected to decline in 2011 about $290 million pre-tax from earnings generated in 2010.

  OTHER

The company includes certain embryonic businesses not included in the reportable segments, such as Applied BioSciences and nonaligned businesses in Other. The potential viability of each embryonic business depends on a number of factors including successful product development, market acceptance and production ramp up capabilities. Using these factors and others, management periodically assesses the potential and fit of these businesses and may make investment adjustments based on such assessments. Applied BioSciences is focused on delivering cost advantaged products with superior performance and a smaller environmental footprint that are based on a unique combination of biological, chemical and material science capabilities. Specific global growth projects across the company are consolidated within Applied BioSciences to capitalize on the market opportunities and technology needs in this high-growth industry, including biomaterials and advanced biofuels products and technologies.

Applied BioSciences is developing two biofuels businesses: one to commercialize non-food, cellulosic ethanol and the second to commercialize biobutanol. DuPont is pursuing commercialization through two joint ventures: DuPont Danisco Cellulosic Ethanol LLC (DDCE) and Butamax™ Advanced Biofuels LLC, respectively. DDCE now operates a demonstration scale facility in Vonore, Tennessee and Butamax™ now operates a demonstration scale facility in Hull, United Kingdom. Both joint ventures are aggressively pursuing commercialization capabilities.

DuPont continues its joint venture with Tate & Lyle PLC, DuPont Tate and Lyle Bio Products LLC, to produce 1,3-propanediol (Bio-PDO™) using a proprietary fermentation and purification process. Bio-PDO™ is the key building block for DuPont™ Sorona® renewably sourced polymer. The joint venture also markets direct sale of Bio-PDO™ under the Zemea® propanediol and Susterra® propanediol brands as a key renewable ingredient in products ranging from industrial to personal care uses. DuPont Tate & Lyle Bio Products LLC is currently expanding capacity to support the production of Bio-PDO™, which is scheduled for completion in 2011.

In 2010, the Applied BioSciences business announced the formation, pending European Union approvals, of Actamax™ Surgical Materials LLC, a joint venture with Royal DSM N.V. Actamax™ will bring to market next-generation biomedical materials.

Nonaligned businesses include activities and costs associated with Benlate® fungicide and other discontinued businesses.

In the aggregate, sales in Other for 2010, 2009 and 2008 represent less than 1 percent of total segment sales.

2010 pre-tax loss of $205 million compared to a loss of $171 million in 2009, primarily reflecting an increase in litigation charges related to discontinued businesses.


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2009 pre-tax loss of $171 million compared to a loss of $181 million in 2008. The lower pre-tax loss for the year was mainly due to the net year over year impact of the 2008 and 2009 restructuring activities, and lower pre-tax loss for Applied BioSciences.

Liquidity & Capital Resources

Management believes the company's ability to generate cash from operations and access to capital markets will be adequate to meet anticipated cash requirements to fund working capital, capital spending, dividend payments, debt maturities and other cash needs. The company's liquidity needs can be met through a variety of sources, including: cash provided by operating activities, cash and cash equivalents, marketable securities, commercial paper, syndicated credit lines, bilateral credit lines, equity and long-term debt markets and asset sales. The company's current strong financial position, liquidity and credit ratings provide excellent access to the capital markets. In addition, cash generating actions have been implemented including spending and working capital reductions and restructuring to better align expenditures and costs. The company will continue to monitor the financial markets in order to respond to changing conditions.

Pursuant to its cash discipline policy, the company seeks first to maintain a strong balance sheet and second, to return excess cash to shareholders unless the opportunity to invest for growth is compelling. Cash and cash equivalents and marketable securities balances of $6.8 billion as of December 31, 2010, provide primary liquidity to support all short-term obligations. The company has access to approximately $2.6 billion in unused credit lines with several major financial institutions, as additional support to meet short-term liquidity needs.

The company continually reviews its debt portfolio and occasionally may rebalance it to ensure adequate liquidity and an optimum debt maturity schedule. In 2010, the company issued $0.5 billion of 1.95% Senior Notes due January 15, 2016, $1.0 billion of 3.625% Senior Notes due January 15, 2021 and $0.5 billion of 4.90% Senior Notes due January 15, 2041. The company elected to use the net proceeds to redeem $0.5 billion of its 5.00% Senior Notes due January 15, 2013 and $0.8 billion of its 5.875% Senior Notes due January 15, 2014 and pay down commercial paper issued to fund the $0.5 billion voluntary contribution to its principal U.S. pension plan.

The company expects to finance the acquisition of Danisco with about $3.0 billion in existing cash and the remainder in new debt. The completion of the transaction is expected in the second quarter 2011 and is subject to customary closing conditions, including certain regulatory approvals and the tender of more than 90 percent of Danisco shares in the tender offer. In connection with this transaction, the company entered into a $4 billion bridge loan facility and a $2 billion bridge loan facility. The latter requires the company have cash, cash equivalents and marketable securities at least equal to $2 billion on hand at all times and readily available for use to purchase Danisco's shares. The bridge loan facilities terminate when the company completes the financing for the acquisition.

During 2010, Standard & Poor's and Moody's Investors Service revised the company's credit outlook to "Stable" from "Negative". After the announcement of the potential acquisition of Danisco, Moody's Investors Service placed all of the company's credit ratings under review for possible downgrade. Standard & Poor's has responded to the acquisition announcement by placing the company on credit watch with negative implications. Fitch Ratings announced it will take no immediate action with regard to the company's ratings.


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued

The company remains committed to a strong financial position and strong investment-grade rating. The company's credit ratings impact its access to the debt capital market and cost of capital. The company's long-term and short-term credit ratings are as follows:



Long term

Short term

Outlook

Standard & Poor'sAA-1Watch negative

Moody's Investors Service

A2

P-1
Under review for
possible downgrade
Fitch RatingsAF1Negative


 

(Dollars in millions)

    2010    2009    2008  

Cash provided by operating activities

   $4,559   $4,741   $3,129  
                  

The company's cash provided by operating activities was $4.6 billion in 2010, a $0.2 billion decrease compared to 2009. Higher earnings were offset by changes in operating assets and liabilities, mainly due to higher sales and inventory; the stronger dollar, which was hedged with forward exchange contracts reflected in investing activities; and the voluntary contribution to the principal U.S. pension plan.

The company's cash provided by operating activities was $4.7 billion in 2009, a $1.6��billion increase from the $3.1 billion generated in 2008. The increase was primarily due to the benefit of the weaker dollar, which was hedged by forward exchange contracts in investing activities.

 

(Dollars in millions)

    2010    2009    2008  

Cash used for investing activities

   $(2,439)  $(4,298)  $(1,610) 
                  

In 2010, cash used for investing activities totaled $2.4 billion compared to $4.3 billion used in 2009. The $1.9 billion decrease was mainly due to changes in investments in short-term financial instruments and a net increase in proceeds from forward exchange contract settlements, partially offset by an increase in payments for businesses and higher expenditures for the purchases of property, plant and equipment.

In 2009, cash used for investing activities totaled $4.3 billion compared to $1.6 billion used in 2008. The $2.7 billion increase was mainly due to the increase in investments in short-term financial instruments and the change in forward exchange contract settlements, partially offset by decreased capital expenditures.

Purchases of property, plant and equipment totaled $1.5 billion, $1.3 billion and $2.0 billion in 2010, 2009 and 2008, respectively. Spending in 2010 reflects the company's continued investment in capacity expansion to support areas of growth. The company expects 2011 purchases of plant, property and equipment to be $1.8 billion, an increase of $0.3 billion over 2010, driven by continued growth investments aligned with the company's global trends.

 

(Dollars in millions)

    2010    2009    2008  

Cash (used for) provided by financing activities

   $(1,829)  $(97)  $878  
                  

The $1.7 billion increase in cash used for financing activities in 2010 was primarily due to a decrease in borrowings in 2010 as compared to an increase in borrowings in 2009. This was partially offset by an increase in the proceeds from the exercise of stock options net of cash used to repurchase common stock.


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued

The $1.0 billion decrease in cash provided for financing activities in 2009 compared to 2008 was primarily due to changes in net borrowings. Net borrowings increased $1.4 billion in 2009 as compared to $2.1 billion in 2008.

 

(Dollars in millions)

    2010    2009    2008  

Cash provided by operating activities

   $4,559   $4,741   $3,129  

Purchases of property, plant and equipment

    (1,508)   (1,308)   (1,978) 

Free cash flow

   $3,051   $3,433   $1,151  
                  

Free cash flow is a measurement not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance. All companies do not calculate non-GAAP financial measures in the same manner and, accordingly, the company's free cash flow definition may not be consistent with the methodologies used by other companies. The company defines free cash flow as cash provided by operating activities less purchases of property, plant and equipment, and therefore indicates operating cash flow available for payment of dividends, other investing activities, and other financing activities. Free cash flow is useful to investors and management to evaluate the company's cash flow and financial performance, and is an integral financial measure used in the company's financial planning process.

2010 free cash flow of $3.1 billion exceeded the company's target of greater than $1.7 billion primarily due to higher earnings and working capital productivity.

Total debt at December 31, 2010 was $10.3 billion, a $0.7 billion decrease from December 31, 2009. The decrease in debt reflects the company's positive cash flow generated from general business activities.

Total debt at December 31, 2009 was $11.0 billion, a $1.4 billion increase from December 31, 2008. The proceeds from the increased borrowings were primarily invested in short-term financial instruments.

Dividends paid to common and preferred shareholders were $1.5 billion in 2010, 2009 and 2008. Dividends per share of common stock were $1.64 in 2010, 2009 and 2008. The common dividend declared in the first quarter 2011 was the company's 426th consecutive dividend since the company's first dividend in the fourth quarter 1904.

The company's Board of Directors authorized a $2 billion share buyback plan in June 2001. During 2010, the company purchased and retired 5.4 million shares at a total cost of $250 million under this plan. During 2009 and 2008, there were no purchases of stock under this plan. As of December 31, 2010, the company has purchased 25.9 million shares at a total cost of $1.2 billion. Management has not established a timeline for the buyback of the remaining shares of stock under this plan.

Cash, Cash Equivalents and Marketable Securities

Cash and cash equivalents and marketable securities totaled $6.8 billion at December 31, 2010, $6.1 billion at December 31, 2009 and $3.7 billion at December 31, 2008. The $0.7 billion increase from 2009 to 2010 was primarily due to the company's positive cash flow generated from general business activities. The $2.4 increase from 2008 to 2009 was primarily due to cash proceeds from increased borrowings and cash generated from general business activities.

Off-Balance Sheet Arrangements

Certain Guarantee Contracts

Indemnifications

In connection with acquisitions and divestitures, the company has indemnified respective parties against certain liabilities that may arise in connection with acquisitions and divestitures and related business activities prior to the completion of the transaction. The term of these indemnifications, which typically pertain to environmental, tax and product liabilities, is generally indefinite. In addition, the company indemnifies its duly elected or appointed directors and officers to the fullest extent permitted by Delaware law, against liabilities incurred as a result of their activities for the


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued

company, such as adverse judgments relating to litigation matters. If the indemnified party were to incur a liability or have a liability increase as a result of a successful claim, pursuant to the terms of the indemnification, the company would be required to reimburse the indemnified party. The maximum amount of potential future payments is generally unlimited. The carrying amounts recorded for all indemnifications as of December 31, 2010 and 2009 were $100 million. Although it is reasonably possible that future payments may exceed amounts accrued, due to the nature of indemnified items, it is not possible to make a reasonable estimate of the maximum potential loss or range of loss. No assets are held as collateral and no specific recourse provisions exist.

In connection with the 2004 sale of the majority of the net assets of Textiles and Interiors, the company indemnified the purchasers, subsidiaries of Koch Industries, Inc. (INVISTA), against certain liabilities primarily related to taxes, legal and environmental matters and other representations and warranties under the Purchase and Sale Agreement. The estimated fair value of the indemnity obligations under the Purchase and Sale Agreement was $70 million and was included in the indemnifications balance of $100 million at December 31, 2010. Under the Purchase and Sale Agreement, the company's total indemnification obligation for the majority of the representations and warranties cannot exceed $1.4 billion. The other indemnities are not subject to this limit. In March 2008, INVISTA filed suit in the Southern District of New York alleging that certain representations and warranties in the Purchase and Sale Agreement were breached and, therefore, that DuPont is obligated to indemnify it. DuPont disagrees with the extent and value of INVISTA's claims. DuPont has not changed its estimate of its total indemnification obligation under the Purchase and Sale Agreement as a result of the lawsuit.

Obligations for Equity Affiliates and Others

The company has directly guaranteed various debt obligations under agreements with third parties related to equity affiliates, customers, suppliers and other affiliated companies. At December 31, 2010, the company had directly guaranteed $544 million of such obligations, and $16 million relating to guarantees of obligations for divested subsidiaries. This represents the maximum potential amount of future (undiscounted) payments that the company could be required to make under the guarantees. The company would be required to perform on these guarantees in the event of default by the guaranteed party. At December 31, 2010 and 2009, a liability of $109 million and $146 million, respectively, was recorded for these obligations, representing the amount of payment/performance risk which the company deems probable. This liability is principally related to obligations of the company's polyester films joint venture which are guaranteed by the company.

Existing guarantees for customers and suppliers arose as part of contractual agreements. Existing guarantees for equity affiliates and other affiliated companies arose for liquidity needs in normal operations. In certain cases, the company has recourse to assets held as collateral as well as personal guarantees from customers and suppliers.

The company has guaranteed certain obligations and liabilities related to a divested subsidiary, Conoco, which has indemnified the company for any liabilities the company may incur pursuant to these guarantees. No material loss is anticipated by reason of such agreements and guarantees. At December 31, 2010 and 2009, the company had no liabilities recorded for these obligations.

Additional informationInformation with respect to the company's guarantees is included in Note 1916 to the Consolidated Financial Statements. Historically, the company has not had to make significant payments to satisfy guarantee obligations; however, the company believes it has the financial resources to satisfy these guarantees.


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued

Contractual Obligations

Information related to the company's significant contractual obligations is summarized in the following table:



  
  
  
 Payments Due In
  
 Payments Due In

(Dollars in millions)

(Dollars in millions)

 

 Total at
December 31,
2010
 

 


2011
 

 
2012 –
2013
 

 
2014 –
2015
 

 
2016 and
beyond
 
Total at
December 31,
2013
2014
2015 –
2016
2017 –
2018
2019 and
beyond

Long-term debt obligations1

Long-term debt obligations1

   $10,137   $4   $1,647   $2,106   $6,380  $12,392
$1,674
$3,026
$1,361
$6,331

Expected cumulative cash requirements for interest payments through maturity

Expected cumulative cash requirements for interest payments through maturity

   3,858   431   803   623   2,001  4,047
429
776
648
2,194

Capital leases1

Capital leases1

   5   1   -   1   3  26
3
6
3
14

Operating leases

Operating leases

   982   227   357   219   179  1,524
288
501
388
347

Purchase obligations2

Purchase obligations2

                       
 
 
 
 

Information technology infrastructure & services

   246   114   116   16   -  

Raw material obligations

   282   125   106   40   11  

Utility obligations

   241   99   67   22   53  

INVISTA-related obligations3

   1,537   124   284   329   800  

Human resource services

   72   36   36   -   -  

Other4

   23   18   5   -   -  
Information technology infrastructure &
services
174
108
62
4

Raw material obligations740
512
140
65
23
Utility obligations295
69
98
39
89
INVISTA-related obligations3
1,533
117
282
328
806
Human resource services62
31
30
1

Other220
153
58
7
2

Total purchase obligations

Total purchase obligations

   2,401   516   614   407   864  3,024
990
670
444
920

Other liabilities1,5

                      

Workers' compensation

   83   14   36   15   18  

Asset retirement obligations

   59   2   3   19   35  

Environmental remediation

   407   90   154   83   80  

Legal settlements

   87   85   2   -   -  

License agreement6

   413   90   174   149   -  

Other7

   147   34   24   25   64  
Other liabilities1,4
 
 
 
 
 
Workers' compensation96
14
43
18
21
Asset retirement obligations63
2
10
4
47
Environmental remediation458
84
168
67
139
Legal settlements89
76
5
4
4
License agreements5
2,159
326
541
572
720
Other6
193
65
29
17
82

Total other long-term liabilities

Total other long-term liabilities

   1,196   315   393   291   197  3,058
567
796
682
1,013

Total contractual obligations8

   $18,579   $1,494   $3,814   $3,647   $9,624  
 
Total contractual obligations7
$24,071
$3,951
$5,775
$3,526
$10,819
1
Included in the Consolidated Financial Statements.
1.
Included in the Consolidated Financial Statements.
2.
Represents enforceable and legally binding agreements in excess of $1 million to purchase goods or services that specify fixed or minimum quantities; fixed, minimum or variable price provisions; and the approximate timing of the agreement.
3.
Primarily represents raw material supply obligations.
4.
Pension and other long-term employee benefit obligations have been excluded from the table as they are discussed below within Long-term Employee Benefits.
5.
Primarily represents remaining minimum payments under Pioneer license agreements.
6.
Primarily represents employee-related benefits other than pensions and other long-term employee benefits.
7.
Due to uncertainty regarding the completion of tax audits and possible outcomes, the estimate of obligations related to unrecognized tax benefits cannot be made. See Note 6 to the Consolidated Financial Statements for additional detail.

2
Represents enforceable and legally binding agreements in excess of $1 million to purchase goods or services that specify fixed or minimum quantities; fixed, minimum or variable price provisions; and the approximate timing of the agreement.

3
Primarily represents raw material supply obligations.

4
Primarily represents obligations associated with distribution, health care/benefit administration, research and development and other professional and consulting contracts.

5
Pension and other long-term employee benefit obligations have been excluded from the table as they are discussed below within Long-Term Employee Benefits.

6
Represents remaining expected payments under a license agreement between Pioneer and Monsanto.

7
Primarily represents employee-related benefits other than pensions and other long-term employee benefits.

8
Due to uncertainty regarding the completion of tax audits and possible outcomes, the estimate of obligations related to unrecognized tax benefits cannot be made. See Note 5 to the Consolidated Financial Statements for additional detail.

The company expects to meet its contractual obligations through its normal sources of liquidity and believes it has the financial resources to satisfy these contractual obligations.



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Long-Term


Long-term Employee Benefits

The company has various obligations to its employees and retirees. The company maintains retirement-related programs in many countries that have a long-term impact on the company's earnings and cash flows. These plans are typically defined benefit pension plans, as well as medical, dental and life insurance benefits for pensioners and survivors and disability and life insurance protectionbenefits for employees (other long-term employee benefits). Approximately 8077 percent of the company's worldwide benefit obligation for pensions and essentially all of the company's worldwide other long-term employee benefit obligations are attributable to the U.S. benefit plans. Pension coverage for employees of the company's non-U.S. consolidated subsidiaries is provided, to the extent deemed appropriate, through separate plans. The company regularly explores alternative solutions to meet its global pension obligations in the most cost effective manner possible as demographics, life expectancy and country-specific pension funding rules change. Where permitted by applicable law, the company reserves the right to change, modify or discontinue its plans that provide pension, medical, dental, life insurance and disability benefits.

In 2006, the company announced major changes to the pension and defined contribution benefits that cover the


The majority of its U.S. employees. Such employees hired in the U.S. on or after December 31, 2006January 1, 2007 are not eligible to participate in the pension and post-retirement medical, dental and life insurance plans, but receive benefits in the defined contribution plans.


Benefits under defined benefit pension plans are based primarily on years of service and employees' pay near retirement. Pension benefits are paid primarily from trust funds established to comply with applicable laws and regulations. Unless required by law, the company does not make contributions that are in excess of tax deductible limits. The actuarial assumptions and procedures utilized are reviewed periodically by the plans' actuaries to provide reasonable assurance that there will be adequate funds for the payment of benefits. TheIn January 2012, the company made a voluntary contribution ofcontributed $500 million in 2010 to its principal U.S. pension plan.plan and no contributions
were made in 2011 or 2013. No contributions are required or currently anticipatedexpected to be made to the principal U.S. pension plan in 2011. Contributions2014. The company expects to make contributions to its principal U.S. pension plan beyond 2011 are not determinable since2014; however, the amount of any contributioncontributions is heavily dependent on the future economic environment and investment returns on pension trust assets. U.S. pension benefits that exceed federal limitations are covered by separate unfunded plans and these benefits are paid to pensioners and survivors from operating cash flows.

Funding for each pension plan is governed by the rules of the sovereign country in which it operates. Thus, there is not necessarily a direct correlation between pension funding and pension expense. In general, however, improvements in plans funded status tends to moderate subsequent funding needs. The company contributed $782$313 million to its pension plans in 20102013 and anticipates that it will make approximately $305$344 million in contributions in 20112014 to pension plans other than the principal U.S. pension plan.


The company's other long-term employee benefits are unfunded and the cost of the approved claims is paid from operating cash flows. Pre-tax cash requirements to cover actual net claims costs and related administrative expenses were $321$207 million, $323$261 million and $326$312 million for 2010, 20092013, 2012 and 2008,2011, respectively. This amount is expected to be about $320$224 million in 2011.2014. Changes in cash requirements reflect the net impact of higher per capita health care costs, demographic changes, plan amendments and changes in participant premiums, co-pays and deductibles.


During the third quarter 2012, the company amended its U.S. parent company retiree medical and dental plans for Medicare-eligible pensioners and survivors. Beginning in 2013, the company replaced the coverage for Medicare-eligible plan participants in the company sponsored plans with a new company-funded Health Reimbursement Arrangement (HRA). Medicare-eligible plan participants enrolled in individual health plans in the open market and the company will reimburse their health care expenses with an HRA based on the provisions of the amended plans. As a result of this change, the company's other long-term employee benefit expense was reduced by approximately $120 million and $46 million in 2013 and 2012, respectively. For 2014, the plan amendment is expected to reduce other long-term employee benefit expense by approximately $104 million. Additional information related to these changes in the plans noted above is included in Note 18 to the Consolidated Financial Statements.


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The company's income can be significantly affected by pension and defined contribution benefits as well as other long-term employee benefits. The following table summarizes the extent to which the company's income over each of the last 3 years was affected by pre-tax charges and credits related to long-term employee benefits.

benefits:

 

(Dollars in millions)

    2010    2009    2008  

Defined benefit plan charges (benefits)

   $557   $155   $(362) 

Defined contribution plan charges

    254    245    2501 

Other long-term employee benefit plan charges

    219    220    181  

Net amount

   $1,030   $620   $69  
                  
(Dollars in millions)201320122011
Long-term employee benefit plan charges 1
$1,153
$1,321
$1,134
1
Includes an accrual of $16 million for company match and contribution based on compensation paid in 2009 for 2008 service.

1.
The long-term employee benefit plan charges relating to discontinued operations was $5, $74 and $72 for 2013, 2012 and 2011, respectively.


The above (benefits) charges for pension and other long-term employee benefits are determined as of the beginning of each year. The increasesdecrease in pensionlong-term employee benefit expense in 2010 and 20092013 is primarily related to decreasesthe retiree medical and dental plan amendment in 2012 and the market-related value of the assets in the principal U.S. pension plan.Performance Coatings sale, partially offset by lower discount rates. See "Long-Term"Long-term Employee Benefits" under the Critical Accounting Estimates section beginning on page 2230 of this report for additional information on determining annual expense for the principal U.S. pension plan.


The company's key assumptions used in calculating its pension and other long-term employee benefits are the expected return on plan assets, the rate of compensation increases and the discount rate (see Note 2118 to the Consolidated Financial Statements). For 2011,2014, long-term employee benefits expense from continuing operations is expected to increasedecrease by about $60$440 million primarily due to lowerhigher discount rates.

Other Employee-Related Benefits

In October 2009, the company announced revisions to its vacation benefits policy covering all U.S. employees. Effectiverates at December 31, 2010, entitled vacation for the following year will no longer vest at the end of each preceding year. In addition, vacation will be earned monthly2013 and accrued on the first day of each calendar monthbetter than expected pension asset returns during the year beginning in 2011. These revisions to the company's vacation benefits policy provided a one-time benefit of $148 million in 2010.

2013.


Environmental Matters

The company operates global manufacturing, product handling and distribution facilities that are subject to a broad array of environmental laws and regulations. Such rules are subject to change by the implementing governmental agency, and the company monitors these changes closely. Company policy requires that all operations fully meet or exceed legal and regulatory requirements. In addition, the company implements voluntary programs to reduce air emissions, minimize the generation of hazardous waste, decrease the volume of water use and discharges, increase the efficiency of energy use and reduce the generation of persistent, bioaccumulative and toxic materials. Management has noted a global upward trend in the amount and complexity of proposed chemicals regulation. The costs to comply with complex environmental laws and regulations, as well as internal voluntary programs and goals, are significant and will continue to be significant for the foreseeable future.

Pre-tax environmental expenses charged to current operations are summarized below:
(Dollars in millions)201320122011
Environmental operating costs$602
$595
$562
Increase in remediation accrual90
110
92
            $692
$705
$654

About 75 percent of total pre-tax environmental expenses charged to current operations in 2013 resulted from operations in the U.S. The increases in total pre-tax environmental expenses charged to operations were due primarily to increased environmental research activities and acquired businesses. Based on existing facts and circumstances, management does not believe that year over year changes, if any, in environmental expenses charged to current operations will have a material impact on the company's financial position, liquidity or results of operations.

Environmental Operating Costs

As a result of its operations, the company incurs costs for pollution abatement activities including waste collection and disposal, installation and maintenance of air pollution controls and wastewater treatment, emissions testing and monitoring, and obtaining permits. The company also incurs costs related to environmental related research and development activities including environmental field and treatment studies as well as toxicity and degradation testing to evaluate the environmental impact of products and raw materials. Related to these activities, the company incurred environmental operating costs of $501 million, $483 million and $525 million in 2010, 2009 and 2008, respectively.


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued


Remediation Expenditures

RCRA, which extensively regulatesAccrual

Changes in the treatment, storage and disposal of hazardous waste, requires that permitted facilities undertake an assessment of environmental contamination. If conditions warrant, companies may be required to remediate contamination caused by prior operations. In contrast to CERCLA, the costs of the RCRA corrective action programremediation accrual balance are 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. summarized below:
(Dollars in millions) 
Balance at December 31, 2011$416
Remediation payments(90)
Increase in remediation accrual110
Balance at December 31, 2012$436
Remediation payments(68)
Increase in remediation accrual90
Balance at December 31, 2013$458

Annual expenditures forare expected to continue to increase in the near term,future; however, they are not expected to vary significantly from the range of such expenditures experienced in 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 $52 million, $49 million and $51 million in 2010, 2009 and 2008, respectively.

From time to time, the company receives requests for information or notices of potential liability from EPA and state environmental agencies alleging that the company is a PRP under CERCLA or similar state statutes. CERCLA is often referred to as the Superfund and requires companies to undertake certain investigative and research activities at sites where it conducts or once conducted operations or where company generated waste has been disposed. The company has also, on occasion, been engaged in cost recovery litigation initiated 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, 2010,2013, the company has been notified of potential liability under CERCLAthe Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund) or similar state laws at about 405420 sites around the U.S., with active remediation under way at approximately 160165 of these sites. In addition, the company has resolved its liability at approximately 170175 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 10five new sites during 20102013 compared with threefive and fivesix similar notices in 20092012 and 2008,2011, respectively. The company's expenditures associated

Considerable uncertainty exists with CERCLArespect to environmental remediation costs, and, similar stateunder adverse changes in circumstances, potential liability may range up to three times the amount accrued as of December 31, 2013. However, based on existing facts and circumstances, management does not believe that any loss, in excess of amounts accrued, related to remediation activities were approximately $21 million, $18 million and $17 million in 2010, 2009 and 2008, respectively.

For nearly all 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 at any givenindividual site is typically 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 PRPs cannot be located or have declared bankruptcy, the company's own share of liability has not materially increased. There are relatively few sites where the company is a major participant and the cost to the company of remediation at those sites and at all CERCLA sites in the aggregate, is not expected towill have a material impact on the financial position, liquidity or results of operations of the company.

Total payments for previously accrued remediation activities under RCRA, CERCLA and similar state and global laws were $82 million, $72 million and $81 million in 2010, 2009 and 2008, respectively.

Remediation Accruals

At December 31, 2010, the Consolidated Balance Sheets included an accrued liability of $407 million related to activities under RCRA, CERCLA and similar state and global laws compared to $396 million at December 31, 2009. Considerable uncertainty exists with respect to environmental remediation costs, particularly those related to RCRA, and, under adverse changes in circumstances, potential liability may range up to two to three times the amount accrued as of December 31, 2010. Of the $407 million accrued liability, approximately nine percent was reserved for non-U.S. facilities. Approximately 68 percent of the reserve balance was attributable to RCRA and similar remediation liabilities, while about 23 percent was attributable to CERCLA liabilities. Increases to remediation accruals were $93 million, $89 million and $103 million for 2010, 2009 and 2008, respectively. Based on existing facts and circumstances, management does not believe that a material loss, in excess of amounts accrued, related to remediation activities at any individual site or location is reasonably possible.


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued

Changes in the remediation accruals balance at December 31, 2010, 2009 and 2008 are summarized below:

   

(Dollars in millions)

       

Balance at December 31, 2008

   $379  

Remediation Payments

    (72) 

Increase in Accrual

    89  

Balance at December 31, 2009

   $396  

Remediation Payments

    (82) 

Increase in Accrual

    93  

Balance at December 31, 2010

   $407  
        

Pre-Tax Environmental Expenses

Pre-tax environmental expenses charged to current operations in 2010, 2009 and 2008 are summarized below:

 
 
  
 At December 31,
  

(Dollars in millions)

    2010    2009    2008  

Environmental Operating Costs

   $501   $483   $525  

Increase in Remediation Accruals

    93    89    103  

            

   $594   $572   $628  
                  

About 75 percent of total pre-tax environmental expenses charged to current operations in 2010 resulted from operations in the U.S. Total pre-tax environmental expenses charged to operations in 2010 increased $22 million versus 2009 due primarily to increased environmental research activities. Based on existing facts and circumstances, management does not believe that year over year changes, if any, in environmental expenses charged to current operations will have a material impact on the company's financial position, liquidity or results of operations.

Environmental Capital Expenditures

In 2010,2013, the company spent approximately $75$70 million on environmental capital projects either required by law or necessary to meet the company's internal environmental goals. The company currently estimates expenditures for environmental-related capital projects to be approximately $100$115 million in 2011.2014. In the U.S., significantadditional capital expenditures are expected to 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). Until all CAA regulatory requirements are established and known, considerable uncertainty will remain regarding future estimates for future capital expenditures. Total CAA capitalHowever, management does not believe that the costs overto comply with these requirements will have a material impact on the next two years are currently estimated to range from $40 million to $70 million.

financial position or liquidity of the company.


Climate Change

The company believes that climate change is an important global issue that will presentpresents risks and opportunities to businessopportunities. Expanding upon significant global greenhouse gas (GHG) emissions and society at large. Sinceother environmental footprint reductions made in the early 1990s whenperiod 1990-2004, the company began taking action to reduce greenhouse gasreduced its environmental footprint achieving in 2012 reductions of 25 percent in GHG emissions and 12 percent in water consumption versus our 2004 baselines. In addition, in 2012 the company has achieved major global reductionsa one percent reduction in emissions. Voluntary emissions reductions implemented byenergy intensity from non-renewable resources versus a 2010 baseline. The company continuously evaluates opportunities for existing and new product and service offerings in light of the companyanticipated demands of a low-carbon economy. About $2 billion of the company's 2012 revenue was generated from sales of products that help direct and other companies are valuable but alone will not be sufficient to effectively address a problem of this scale. downstream customers reduce GHG emissions.

The company is actively engaged in the effort to develop constructive public policies to reduce greenhouse gasGHG emissions and encourage lower carbon forms of energy.

The Kyoto Protocol to the United Nations Framework Convention on Climate Change entered into force in February 2005 Such policies may bring higher operating costs as well as greater revenue and while not ratified by the U.S., has spurred policy action by many other countries and regions around the world, including the European Union. Considerable international attention is now focused on development of a post-2012 international policy framework to guide international action to address climate change when the Kyoto

margin opportunities.

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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued

Protocol expires in 2012. Proposed and existing legislativeLegislative efforts to control or limit greenhouse gasGHG emissions could affect the company's energy source and supply choices as well as increase the cost of energy and raw materials derived from fossil fuels. Such efforts are also anticipated to provide the business community with greater certainty for the regulatory future, help guide investment decisions, and drive growth in demand for low-carbon and energy-efficient products, technologies, and services.

Similarly, demand is expected to grow for products that facilitate adaptation to a changing climate.

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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, continued

At the national and regional level, there are existing efforts to address climate change.GHG emissions. Several of the company's facilities in the European Union (EU) are regulated under the EU Emissions Trading Scheme. China has begun pilot programs for trading of GHG emissions in selected areas and South Korea will begin to implement its emission trading scheme in 2015. In other countries, including the EU, U.S., and Japan, policy debate continues. efforts to reduce the GHG emissions associated with gases used in refrigeration and air conditioning create market opportunities for lower GHG solutions. The current unsettled policy environment in the U.S. adds an element of uncertainty to business decisions particularly those relating to long-term capital investments. If in the absence of federal legislation, states were to implement programs mandating greenhouse gas (GHG)GHG emissions reductions, the company, its suppliers and customers could be competitively disadvantaged by the added administrative costs and burden of complying with a variety of state-specific requirements.

A 2007 U.S. Supreme Court ruling directed EPA to determine whether carbon dioxide endangers human health and, if so, to take steps to regulate it under the CAA. In December 2009, EPA made a determination that carbon dioxide emissions endanger human health and the environment requiring EPA to pursue regulation of carbon dioxide emissions under the CAA.


In 2010, EPA launched a phased inphased-in scheme to regulate GHG emissions first from large stationary sources under CAA regulations known as the Prevention of Significant Deterioration (PSD) rules. The PSD rules require thatexisting Clean Air Act permitting requirements administered by state and local authorities. As a result, large capital investments may be required to install Best Available Control Technology (BACT) be installed on major new or modified sources of GHG emissions. BACT controls for GHG emissions can require very large capital investments. EPA has not provided final guidance regarding BACT requirements. In addition, EPA in 2010 put in place operating permit requirements for major new or modified sources of GHG emissions. EPA will not require permits for smaller sources until 2016 or later. Both Congressional and litigation efforts are underway to delay or remove EPA's authority to regulate GHG emissions and to enforce GHG reporting and permitting regulations.

This type of GHG emissions regulation by EPA, in the absence of or in addition to federal legislation, could result in more costly, less efficient facility-by-facility controls versus a federal market-based cap and trade program.program that incorporates policies that provide an economic balance that does not severely distort markets. Differences in regional or national legislation could present challenges in a global marketplace highlighting the need for coordinated global policy action.

In the fourth quarter 2009,2013 EPA issued the Final Mandatory Reporting of Greenhouse Gases Rule which requires reporting of GHG emissions in the United States beginning in 2010. The rule requires suppliers of fossil fuels or industrial greenhouse gases, manufacturers of vehicles and engines, and facilities that emit 25,000 metric tons orproposed more per year of GHG emissions to submit annual reports to EPA. The company has approximately 25 sites that have a stake in one or more of the covered gases, including several at which emissions monitoring equipment must be installed. Costs incurred in 2010 to comply with the rule were not material to the company. Based on the current state of rulemaking related to this rule, management does not expect future costs to comply with the rule will be material to the company's operations and consolidated financial position.

The company assesses the potential risks that climate change could present, and looks for opportunities to make its overall portfolio less energy and emissions intensive. The company weighs energy use when investments or divestitures are considered. The company continuously evaluates opportunities for existing and new product and service offerings in light of the anticipated demands of a low-carbon economy.

Registration

The goal of the U.S. Toxic Substances Control Act (TSCA) is to prevent unreasonable risks of injury to health or the environment associated with the manufacture, processing, distribution in commerce, use, or disposal of chemical substances. Under TSCA, the EPA has established reporting, record-keeping, testing and control-related requirementsstringent regulations for new Electric Generating Units (EGU's) that may affect the long term price and existing chemicals. In September 2009, EPA announced its comprehensive approach to enhance the Agency's current chemicals management program under TSCA, including developmentsupply of action plans.electricity. The Agency's actions on chemicals may include initiating regulatory action to label, restrict, or ban a chemical, or to require the

precise impact is uncertain.

PFOA
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Part II

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,The Performance Chcontinued

submission of additional data needed to determine the riskemicals segment used a chemical may pose. Also in 2009, EPA announced its "Essential Principle for Reform of Chemicals Management Legislation." The company is monitoring these developments under TSCA.

In December 2006, the European Union adopted a new regulatory framework concerning the Registration, Evaluation and Authorization of Chemicals. This regulatory framework known as REACH entered into force on June 1, 2007. One of its main objectives is the protection of human health and the environment. REACH requires manufacturers and importers to gather information on the properties of their substances that meet certain volume or toxicological criteria and register the information in a central database to be maintained by the European Chemicals Agency. The Regulation also contains a mechanism for the progressive substitution of the most dangerous chemicals when suitable alternatives have been identified. Complete registrations containing extensive data on the characteristics of the chemical will be required in three phases, depending on production usage or tonnage imported per year, and the toxicological criteria of the chemical. The first registrations for substances that were preregistered in 2008 were required in 2010; subsequent registrations are due in 2013 and 2018. New substances that will be manufactured or imported need to be registered prior to being placed on the market (also known as non-phase-in substances). The company successfully completed the 2010 registrations and is working on the non-phase-in registrations. By June 1, 2011, companies must notify the European Chemicals Agency of products containing above 0.1 percent of substances of very high concern on the candidate list for authorization. There are now 46 such substances and the notice process may create pressure for substitution away from these substances. By June 1, 2013, the Commission will review whether substances with endocrine disruptive properties should be authorized if safer alternatives exist. Management does not expect that the costs to comply with REACH will be material to its operations and consolidated financial position.

Facility Security

DuPont recognizes that the security and safety of its operations are critical to its employees, neighbors and, indeed, to the future of the company. As such, the company has merged chemical site security into its safety core value where it serves as an integral part of its long standing safety culture. Physical security measures have been combined with process safety measures (including the use of inherently safer technology), administrative procedures and emergency response preparedness into an integrated security plan. The company has conducted vulnerability assessments at operating facilities in the U.S. and high priority sites worldwide and identified and implemented appropriate measures to protect these facilities from physical and cyber attacks. DuPont is partnering with carriers, including railroad, shipping and trucking companies, to secure chemicals in transit.

In April 2007, the Department of Homeland Security (DHS) issued an interim final rule (Rule) that establishes risk-based performance standards for the security of U.S. chemical facilities. Covered chemical facilities are required to prepare Security Vulnerability Assessments that identify facility security vulnerabilities and to develop and implement Site Security Plans that include measures satisfying the identified risk-based performance standards. The Rule contains associated provisions addressing inspections and audits, recordkeeping, and the protection of information that constitutes Chemical-terrorism Vulnerability Information. DHS can seek compliance through the issuance of Orders, including Orders Assessing Civil Penalty and Orders for the Cessation of Operations.

In June 2008, DHS notified those facilities that were preliminarily determined to be covered by the Rule's security requirements. DuPont facilities that were preliminarily determined to be covered conducted and submitted security vulnerability assessments to DHS. Based on its review of these assessments, DHS made final determinations as to which facilities were covered and the risk-base tier into which each falls. These facilities are submitting site security plans to DHS. Once DHS has reviewed and provided preliminary approval of the plans, it will meet with facilities before providing final approval. DuPont has already devoted substantial effort and resources in assessing security vulnerabilities and taking steps to reinforce security at its chemical manufacturing facilities. Until each facility develops and receives DHS approval for its site security plan, specific requirements cannot be determined and considerable uncertainty exists regarding estimates for future capital expenditures. However, based on guidance issued by DHS regarding its risk-based performance standards, it is expected that new security measures will need to be implemented


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued


at the regulated facilities and that total capital costs to implement such measures over the next 5 years will be about $50 million.

PFOA

DuPont manufactures fluoropolymer resins and dispersions as well as fluorotelomers, marketing many of them under the Teflon® and Zonyl® brands. All of these products are part of the Performance Chemicals segment.

Fluoropolymer resins and dispersions are high-performance materials with many end uses including architectural fabrics, telecommunications and electronic wiring insulation, automotive fuel systems, computer chip processing equipment, weather-resistant/breathable apparel and non-stick cookware. Fluorotelomers are used to make soil, stain and grease repellants for paper, apparel, upholstery and carpets as well as firefighting foams and coatings.

A form of PFOA (collectively, perfluorooctanoic acid and its salts, including the ammonium salt) is used as a processing agentaid to manufacture some fluoropolymer resins and dispersions. For over 50 years, DuPont purchased itsresins. The Performance Materials segment used PFOA needs from a third party, but beginning in the manufacture of certain raw materials for perfluoroelastomer parts (and some fluoroelastomers). In the fall of 2002, itDuPont began producing rather than purchasing PFOA to support the manufacture of fluoropolymer resins and dispersions.these manufacturing processes. PFOA is not used in the manufacture of fluorotelomers; however, it is an unintended by-product present at trace levels in some fluorotelomer-based products.

DuPont Performance Elastomers, LLC (DPE) uses PFOA in the manufacture of raw materials to manufacture Kalrez® perfluoroelastomer parts. PFOA is also used in the manufacture of some fluoroelastomers marketed by DPE under the Viton® trademark. The wholly owned subsidiary is a part of the Performance Materials segment.

PFOA is bio-persistent and has been detected at very low levels in the blood of the general population. As a result, EPA initiated a process to enhance its understanding of the sources of PFOA in the environmentSignificant scientific research has been and the pathways through which human exposure to PFOA is occurring. In 2005, EPA issued a draft risk assessment on PFOA stating that the cancer data for PFOA may be best described as "suggestive evidence of carcinogenicity, but not sufficient to assess human carcinogenic potential" under EPA's Guidelines for Carcinogen Risk Assessment. At EPA's request, the Science Advisory Board (SAB) reviewed and commented on the scientific soundness of this assessment. In its May 2006 report, the SAB set forth the view, based on laboratory studies in rats, that the human carcinogenic potential of PFOA is more consistent with the Guidelines' descriptor of "likelycontinues to be carcinogenic." However,conducted to understand the report stated that additional data should be considered before EPA finalizes its risk assessment of PFOA. EPA has acknowledged that it will consider additional data, including new research and testing, and has indicated that another SAB review will be sought after EPA makes its risk assessment. DuPont disputes the cancer classification recommended in the SAB report. Although EPA has stated that there remains considerable scientific uncertainty regarding potential risks associated with PFOA, it also stated that it does not believe that there is any reason for consumers to stop using any products because of concerns about PFOA.

DuPont respects EPA's position raising questions about exposure routes and the potential toxicityhazards of PFOA and DuPont and other companies have outlined plansPFOA. Regulatory agencies continue to continue research, emission reduction and product stewardship activitiesreview these studies to help address EPA's questions. evaluate potential regulation.


In January 2006, DuPont pledged its commitment to EPA's 2010/15 PFOA Stewardship Program. The EPA program asks participants (1) to commit to achieve, no later than 2010, a 95 percent reduction in both facility emissions and product content levels of PFOA, PFOA precursors and related higher homologue chemicals and (2) to commit to working toward the elimination of PFOA, PFOA precursors and related higher homologue chemicals from emissions and products by no later than 2015. In October 2010, (forDuPont has exceeded the year 2009), DuPont reported to EPA that it had achieved about a 99 percent reduction of PFOA emissions in U.S. manufacturing facilities. The company achieved about a 98 percent reduction in global manufacturing emissions, exceeding EPA's 2010 objective. In February 2007, DuPont announced its commitment to no longer make, use or buy PFOA by 2015, or sooner if possible. To achieve this goal, DuPont developed PFOA replacement technology and is converting customers to fluoropolymer resins and dispersions manufactured using the replacement technology. In addition since 2008, DuPont has been introducing its next generation fluorotelomers products and converting customers to their use.

In


As of the fourth quarter 2009, EPA announced2013, DuPont had already ceased the startmanufacture of a comprehensive approach to enhancing EPA's current chemicals management program under TSCA. As part of this enhancement, EPA released four Existing Chemical


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Part II

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,continued

Action Plans (the Plans) in December 2009 of which one covers long-chain perfluorinated chemicals (PFCs) including PFOA. The Plans outline the risks thatPFOA and discontinued the use of the specified chemicals may present and the specific steps that EPA will take to address concerns. EPA indicated that it intends to propose regulatory actions in 2012 to address the potential risks from PFCs, but the specific steps notedPFOA for production of fluoropolymer resins as well as for raw materials used in the PFCs Plan are generally consistent with the requirementsproduction of the 2010/2015 PFOA Stewardship Program.

perfluoroelastomer parts and fluoroelastomers. In January 2009, EPA issued a national Provisional Health Advisory for PFOA of 0.4 parts per billion (ppb) in drinking water. In February 2007, NJDEP identified a preliminary drinking-water guidance level for PFOA of 0.04 ppb as part of the first phase of an ongoing process to establish a state drinking-water standard. During the first quarter 2009, NJDEP began the process to establish a permanent Maximum Contaminant Level (MCL) for PFOA in drinking water. The process is estimated to take 1 to 2 years. While NJDEP will continue sampling and evaluation of data from all sources, it has not recommended a change in consumption patterns.

Based on extensive health and toxicological studies, DuPont believes that PFOA exposure does not pose a health risk to the general public. Human studies have evaluated many health endpoints across a wide range of exposed populations. While some associations have been reported, no human health effects are known to be caused by PFOA. A considerable number of human health studies are ongoing and results will be available over the next several years.

There have not been any regulatory or government actions that prohibit the production or use of PFOA. However, there can be no assurance that there will not be in the future. Products currently manufactured byaddition, the company representing approximately $1 billion of 2010 revenues could be affected by any such regulation or prohibition. DuPont has established reservescontinues to make progress in connectionreplacing fluorotelomer-based products with certainalternative products.


For additional information regarding PFOA environmental and litigation matters, (seesee Note 1916 to the Consolidated Financial Statements).

Statements.



37


Part II
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Financial Instruments




Derivatives and Other Hedging Instruments

In the ordinary course of business, the company enters into contractual arrangements (derivatives) to hedge its exposure to foreign currency, interest rate and commodity price risks under established procedures and controls. Derivative instruments utilized include forwards, options, futures and swaps. The counterparties toFor additional information on these contractual arrangements are major financial institutions and major commodity exchanges.

The company hedges certain foreign currency-denominated revenues, monetary assets and liabilities, certain business-specific foreign currency exposures and certain energy and agricultural feedstock purchases.

Concentration of Credit Risk

Financial instruments that potentially subject the company to significant concentrations of credit risk consist principally of cash, investments, accounts receivable and derivatives.

As part of the company's financial risk management processes, it continuously evaluates the relative credit standing of all of the financial institutions that service DuPont and monitors actual exposures versus established limits. The company has not sustained credit losses from instruments held at financial institutions.

The company maintains cash and cash equivalents, marketable securities, derivatives and certain other financial instruments with various financial institutions. These financial institutions are generally highly rated and geographically dispersed and the company has a policy to limit the dollar amount of credit exposure with any one institution.

The company's sales are not materially dependent on a single customer or small group of customers. As of December 31, 2010, no one individual customer balance represented more than 5 percent of the company's total outstanding receivables balance. Credit risk associated with its receivables balance is representative of the geographic, industry and customer diversity associated with the company's global businesses.


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ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK,continued

The company also maintains strong credit controls in evaluating and granting customer credit. As a result, it may require that customers provide some type of financial guarantee in certain circumstances. Length of terms for customer credit varies by industry and region.

Foreign Currency Risk

The company's objective in managing exposure to foreign currency fluctuations is to reduce earnings and cash flow volatility associated with foreign currency rate changes. Accordingly, the company enters into various contracts that change in value as foreign exchange rates change to protect the U.S. dollar value of its existing foreign currency-denominated assets, liabilities, commitments, and cash flows.

The company uses foreign currency exchange contracts to offset its netrelated exposures, by currency, relatedsee Note 20 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. The company also uses foreign currency exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on these contracts offset changes in the U.S. dollar value of the related foreign currency-denominated revenues. The objective of the hedge program is to reduce earnings and cash flow volatility related to changes in foreign currency exchange rates.

Consolidated Financial Statements.


The following table summarizes the impacts of thisthe company's foreign currency hedging program on the company's results of operations for the years ended December 31, 2010, 20092013, 2012, and 2008,2011, and includes the company's pro rata share of its equity affiliates' exchange gains and losses and corresponding gains and losses on foreign currency exchange contracts.

contracts:

(Dollars in millions)

   2010   2009   2008  201320122011

Pre-tax exchange loss

   $(13)  $(205)  $(255) $(128)$(215)$(146)

Tax (expense) benefit

   (71)  91   83  

After-tax loss

   $(84)  $(114)  $(172) 
 
Tax benefit42
73
81
After-tax exchange loss$(86)$(142)$(65)

From


In addition to the contracts disclosed in Note 20 to the Consolidated Financial Statements, from time to time, the company will enter into foreign currency exchange contracts to establish with certainty the USD 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. Foreign currency exchange contracts are also used, from time to time, to manage near-term foreign currency cash requirements.

Interest Rate Risk

The company uses interest rate swaps to manage the interest rate mix of the total debt portfolio and related overall cost of borrowing.

Interest rate swaps involve the exchange of fixed or floating rate interest payments to effectively convert fixed rate debt into floating rate debt based on USD LIBOR. Interest rate swaps allow the company to maintain a target range of floating rate debt.

Commodity Price Risk

The company enters into over-the-counter and exchange-traded derivative commodity instruments to hedge its exposure to price fluctuations on certain raw material purchases.

A portion of certain energy feedstock purchases are hedged to reduce price volatility using fixed price swaps and options.

The company contracts with independent growers to produce finished seed inventory. Under these contracts, growers are compensated with bushel equivalents that are marketed to the company for the market price of grain during the


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ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK,continued


contract period. Derivative instruments having a high correlation to the underlying commodity are used to hedge the commodity price risk involved in compensating growers.

The company utilizes derivatives to manage the price volatility of soybean meal. These derivative instruments have a high correlation to the underlying commodity exposure and are deemed effective in offsetting soybean meal feedstock price risk.

Additional details on these and other financial instruments are set forth in Note 23 to the Consolidated Financial Statements.

Sensitivity Analysis

The following table illustrates the fair values of outstanding derivative contracts at December 31, 20102013 and 2009,2012, and the effect on fair values of a hypothetical adverse change in the market prices or rates that existed at December 31, 20102013 and 2009.2012. The sensitivity for interest rate swaps is based on a one percent change in the market interest rate. Foreign currency and energy derivativecommodity contracts sensitivities are based on a 10 percent change in market rates.


  
 Fair Value
Asset/(Liability)

  
 Fair Value
Sensitivity

  
Fair Value
Asset/(Liability)
Fair Value
Sensitivity

(Dollars in millions)

   2010   2009   2010   2009  2013201220132012

Interest rate swaps

   $40   $-   $(51)  $(60) $29
$55
$(18)$(29)

Foreign currency contracts

   53   97   (697)  (752) 18
9
(1,000)(659)

Energy feedstocks

   (72)  (101)  (79)  (119) 
 
Commodity contracts(1)(1)(2)(3)


Since the company's risk management programs are highly effective, the potential loss in value for each risk management portfolio described above would be largely offset by changes in the value of the underlying exposure.

Concentration of Credit Risk
The company maintains cash and cash equivalents, marketable securities, derivatives and certain other financial instruments with various financial institutions. These financial institutions are generally highly rated and geographically dispersed and the company has a policy to limit the dollar amount of credit exposure with any one institution.

As part of the company's financial risk management processes, it continuously evaluates the relative credit standing of all of the financial institutions that service DuPont and monitors actual exposures versus established limits. The company has not sustained credit losses from instruments held at financial institutions.

The company's sales are not materially dependent on any single customer. As of December 31, 2013, no one individual customer balance represented more than 5 percent of the company's total outstanding receivables balance. Credit risk associated with its receivables balance is representative of the geographic, industry and customer diversity associated with the company's global businesses.

The company also maintains strong credit controls in evaluating and granting customer credit. As a result, it may require that customers provide some type of financial guarantee in certain circumstances. Length of terms for customer credit varies by industry and region.

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Part II
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


The financial statements and supplementary data required by this Item are included herein, commencing on page F-1 of this report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.


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Part II

ITEM 9A.  CONTROLS AND PROCEDURES


The company maintains a system of disclosure controls and procedures to give reasonable assurance that information required to be disclosed in the company's reports filed or submitted under the Securities Exchange Act of 1934 (Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. These controls and procedures also give reasonable assurance that information required to be disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required disclosures.


As of December 31, 2010,2013, the company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), together with management, conducted an evaluation of the effectiveness of the company's disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the CEO and CFO concluded that these disclosure controls and procedures are effective.


There has been no change in the company's internal control over financial reporting that occurred during the fourth quarter of 20102013 that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting. The company has completed its evaluation of its internal controls and has concluded that the company's system of internal controls over financial reporting was effective as of December 31, 20102013 (see page F-2).

The company continues to take appropriate steps to enhance the reliability of its internal control over financial reporting. Management has identified areas for improvement and discussed them with the company's Audit Committee and independent registered public accounting firm.


ITEM 9B.  OTHER INFORMATION

The company owns and operates a surface mine near Starke, Florida. The Mine Safety and Health Administration proposed and DuPont paid total penalties of one thousand six hundred and fifty-eight dollars for all citations issued in 2010, including two violations that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard under the Mine Safety and Health Act of 1977. No citations were received in the fourth quarter 2010.


None.

39

Table of Contents


Part III


ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information with respect to this Item is incorporated herein by reference to the Proxy. Information related to directors is included within the section entitled, "Election of Directors." The company has not made any material changes to the procedures by which security holders may recommend nominees to its Board of Directors since these procedures were communicated in the company's 2010 Proxy, Statement for the Annual Meeting of Stockholders held on April 28, 2010. Information related to the Audit Committee is incorporated herein by reference to the Proxy and is includedincluding information within the sections entitled, "Committees"Election of Directors," "Governance of the Board" and "Committee Membership.Company-Committees of the Board," Information regarding executive officers is contained in"Governance of the Proxy section entitledCompany-Committee Membership," "Section 16(a) Beneficial Ownership Reporting Compliance"Compliance," and as set forth below.

“Stockholder Nominations for Election of Directors.”


The company has adopted a Code of Ethics for its CEO, CFO, and Controller that may be accessed from the company's website at www.dupont.com by clicking on Investor Center"Investors" and then Corporate"Corporate Governance." Any amendments to, or waiver from, any provision of the code will be posted on the company's website at the above address.


Executive Officers of the Registrant

The following is a list, as of February 8, 2011,5, 2014, of the company's Executive Officers:

 


  
 Age
  
 Executive
Officer
Since

  
Age
Executive
Officer
Since

Chair of the Board of Directors and Chief Executive Officer:

Chair of the Board of Directors and Chief Executive Officer:

           

Ellen J. Kullman

Ellen J. Kullman

   55   2006  582006

Other Executive Officers:

Other Executive Officers:

           

James C. Borel

James C. Borel

   55   2004  582004

Executive Vice President

          

Thomas M. Connelly, Jr.

   58   2000  

Executive Vice President and Chief Innovation Officer

          
Executive Vice President 
Benito Cachinero-Sánchez552011
Senior Vice President - Human Resources  
Thomas M. Connelly, Jr.612000
Executive Vice President and Chief Innovation Officer 

Nicholas C. Fanandakis

Nicholas C. Fanandakis

   54   2009  572009

Executive Vice President and Chief Financial Officer

          
Executive Vice President and Chief Financial Officer 

Thomas L. Sager

Thomas L. Sager

   60   2008  632008

Senior Vice President and General Counsel

          
Senior Vice President and General Counsel 

Mark P. Vergnano

Mark P. Vergnano

   53   2009  562009

Executive Vice President

          
Executive Vice President 


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.


Ellen J. Kullman joined DuPont in 1988 as marketing manager and progressed through various roles as global business director and was named Vice President and General Manager of White Pigment & Mineral Products in 1995. In 2000, Mrs. Kullman was named Group Vice President and General Manager of several businesses and new business development. She became Group Vice President-DuPont Safety & Protection in 2002. In June 2006, Mrs. Kullman was named Executive Vice President and assumed leadership of Marketing & Sales along with Safety and Sustainability. She was appointed President on October 1, 2008 and became Chief Executive Officer on January 1, 2009. On December 31, 2009, she became Chair of the Board of Directors.


James C. Borel joined DuPont in 1978, and held a variety of product and sales management positions for Agricultural Products. In 1993, he transferred to Tokyo, Japan with Agricultural Products as regional manager, North Asia and was appointed regional director, Asia Pacific in 1994. In 1997, he was appointed regional director, North America and was appointed Vice President and General Manager-DuPont Crop Protection later that year. In January 2004, he was named Senior Vice President-DuPont Global Human Resources. He became Group Vice President in 2008 and was named Executive Vice President with responsibility for DuPont Crop Protection and Pioneer in October 2009. In 2011, he assumed responsibility for DuPont Nutrition & Health

and in 2014, he assumed responsibility for the company’s sustainability function.

TableBenito Cachinero-Sánchez joined DuPont in April 2011 as Senior Vice President - Human Resources. Prior to joining DuPont, he was Corporate Vice President of ContentsHuman Resources at Automatic Data Processing (ADP). Prior to ADP, he was Vice President, Human Resources for the Medical Devices & Diagnostics Group of Johnson & Johnson.



40


Part III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE,continued


Thomas M. Connelly, Jr.joined DuPont in 1977 as a research engineer. Since then, Mr. Connelly has served in various research and plant technical leadership roles, as well as product management and business director roles. Mr. Connelly served as Vice President and General Manager-DuPont Fluoroproducts from 1999 until September 2000, when he was named Senior Vice President and Chief Science and Technology Officer. In June 2006, Mr. Connelly was named Executive Vice President and Chief Innovation Officer. In October 2009, he added responsibility for DuPont Performance Polymers, Packaging & Industrial Polymers, Applied BioSciences, Nutrition & Health as well as integrated operations.His current responsibilities include Integrated Operations, Science and Technology and leadership of the regions outside of the United States.


Nicholas C. Fanandakis joined DuPont in 1979 as an accounting and business analyst. Since then, Mr. Fanandakis served in a variety of plant, marketing, and product management and business director roles. Mr. Fanandakis served as Vice President and General Manager—DuPont Chemical Solutions Enterprise from 2003 until February 2007 when he was named Vice President—Corporate Plans. In January 2008, Mr. Fanandakis was named Group Vice President—DuPont Applied BioSciences. In November 2009, he was named Senior Vice President and Chief Financial Officer. In August 2010, he was named Executive Vice President and Chief Financial Officer.


Thomas L. Sager joined DuPont in 1976 as an attorney in the labor and security group. In 1998, he was named Chief Litigation Counsel and assumed oversight responsibility for all company litigation matters. He was named Vice President and Assistant General Counsel in 1999. In July 2008, he was appointed Senior Vice President and General Counsel.


Mark P. Vergnano joined DuPont in 1980 as a process engineer. He has had several assignments in manufacturing, technology, marketing, sales and business strategy. He has held assignments in various DuPont locations including Geneva, Switzerland. In February 2003 he was named Vice President and General Manager—Nonwovens and Vice President and General Manager—Surfaces and Building Innovations in October 2005. In June 2006, he was named Group Vice President of DuPont Safety & Protection. In October 2009, Mr. Vergnano was appointed Executive Vice President withPresident. Mr. Vergnano has responsibility for businesses in the Performance Chemicals segment: DuPont Protection Technologies, Building Innovations, Sustainable Solutions, Chemicals & Fluoroproducts and Titanium Technologies and Electronics & Communications. HeTechnologies. In January 2014, DuPont announced that Mr. Vergnano would focus on activities related to the company’s announced intention to separate Performance Chemicals; DuPont also leadsannounced that Mr. Vergnano will become the company's sustainability, safety, communications, and sales and marketing functions.chief executive officer of the new Performance Chemicals company after separation, which is expected to occur about mid-2015.

ITEM 11.  EXECUTIVE COMPENSATION


Information with respect to this Item is incorporated herein by reference to the Proxy, and is included inincluding information within the sections entitled, "Compensation Discussion and Analysis," "2010 Summary"Compensation of Executive Officers," "Directors' Compensation, Table," " 2010 Grants of Plan-Based Awards," "Outstanding Equity Awards," "2010 Option Exercises and Stock Vested," "Pension Benefits," "Nonqualified Deferred Compensation," "Potential Payments Upon Termination or Change in Control," and "Directors' Compensation." Information related to the Compensation Committee is included within the sections entitled "Compensation Committee Interlocks and Insider Participation" and "Compensation Committee Report."






41

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Part III


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information with respect to Beneficial Owners is incorporated herein by reference to the Proxy and is included in the section entitled "Ownership of Company Stock."

Securities authorized for issuance under equity compensation plans as of December 31, 2010

(Shares in thousands, except per share)


 
Plan Category
  
 Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights

  
 Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights2

  
 Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans3

  

Equity compensation plans approved by security holders

    58,7971  $37.71    22,529  

Equity compensation plans not approved by security holders

    10,3354  $44.47    5 

Total

    69,132   $38.82    22,529  
1
Includes stock-settled time-vested and performance-based restricted stock units granted and stock units deferred under the company's Equity and Incentive Plan, Stock Performance Plan, Variable Compensation Plan and the Stock Accumulation and Deferred Compensation Plan for Directors. Performance-based restricted stock units reflect the maximum number of shares to be awarded at the conclusion of the performance cycle (200 percent of the original grant). The actual award payouts can range from zero to 200 percent of the original grant.

2
Represents the weighted-average exercise price of the outstanding stock options only; the outstanding stock-settled time-vested and performance-based restricted stock units and deferred stock units are not included in this calculation.

3
Reflects shares available pursuant to the issuance of stock options, restricted stock, restricted stock units or other stock-based awards under the Equity and Incentive Plan approved by the shareholders on April 25, 2007 (see Note 22 to the company's Consolidated Financial Statements). The maximum number of shares of stock reserved for the grant or settlement of awards under the Equity and Incentive Plan (the "Share Limit") shall be 60,000 and shall be subject to adjustment as provided therein; provided that each share in excess of 20,000 issued under the Equity and Incentive Plan pursuant to any award settled in stock, other than a stock option or stock appreciation right, shall be counted against the foregoing Share Limit as four shares for every one share actually issued in connection with such award. (For example, if 22,000 shares of restricted stock are granted under the Equity and Incentive Plan, 28,000 shall be charged against the Share Limit in connection with that award.)

4
Includes 9 deferred stock units resulting from base salary and short-term incentive ("STIP") deferrals under the Management Deferred Compensation Plan ("MDCP"). Under the MDCP, a select group of management or highly compensated employees can elect to defer the receipt of their base salary, STIP or Long Term Incentive (LTI) award. LTI deferrals are included in footnote 1 to the above chart. The company does not match deferrals under the MDCP. There are seven core investment options under the MDCP for base salary and STIP deferrals, including deferred stock units with dividend equivalents credited as additional stock units. In general, deferred stock units are distributed in the form of DuPont common stock and may be made in the form of lump sum at a specified future date prior to retirement or a lump sum or annual installments after separation from service. Shareholder approval of the MDCP was not required under the rules of the New York Stock Exchange. This column also includes the following: (i) options totaling 9,811 granted under the company's 2002 Corporate Sharing Program (see Note 22 to the Consolidated Financial Statements); and (ii) 515 options from the conversion of DuPont Canada options to DuPont options in connection with the company's acquisition of the minority interest in DuPont Canada.

5
There is no limit on the number of shares that can be issued under the MDCP and no further shares are available for issuance under the other equity compensation arrangements described in footnote 4 to the above chart.

Table of Contents


Part III

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Information with respect to the company's policy and procedures for the review, approval or ratification of transactions with related persons is incorporated by reference herein to the Proxy and is included in the section entitled "Review and Approval of Transactions with Related Persons." Information with respect to director independence is incorporated by reference herein to the Proxy and is included in the sections entitled "DuPont Board of Directors—Corporate Governance Guidelines," "Guidelines for Determining the Independence of DuPont Directors," "Committees of the Board" and "Committee Membership."

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information with respect to this Item is incorporated herein by reference to the Proxy, including information within the section entitled "Ownership of Company Stock."


Securities authorized for issuance under equity compensation plans as of December 31, 2013
(Shares in thousands, except per share)
Plan Category
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
  
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights2
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans3
  
Equity compensation plans approved by
    security holders
27,171
1 
$41.58
51,252
  
Equity compensation plans not
    approved by security holders
15
4 


5 
Total27,186
  
$41.58
51,252
  

1.
Includes stock-settled time-vested and performance-based restricted stock units granted and stock units deferred under the company's Equity and Incentive Plan, Stock Performance Plan, Variable Compensation Plan and the Stock Accumulation and Deferred Compensation Plan for Directors. Performance-based restricted stock units reflect the maximum number of shares to be awarded at the conclusion of the performance cycle (200 percent of the original grant). The actual award payouts can range from zero to 200 percent of the original grant.
2.
Represents the weighted-average exercise price of the outstanding stock options only; the outstanding stock-settled time-vested and performance-based restricted stock units and deferred stock units are not included in this calculation.
3.
Reflects shares available pursuant to the issuance of stock options, restricted stock, restricted stock units or other stock-based awards under the amended Equity and Incentive Plan approved by the shareholders in April 2011 (see Note 19 to the company's Consolidated Financial Statements). The maximum number of shares of stock reserved for the grant or settlement of awards under the Equity and Incentive Plan (Share Limit) shall be 110,000 and shall be subject to adjustment as provided therein; provided that each share in excess of 30,000 issued under the Equity and Incentive Plan pursuant to any award settled in stock, other than a stock option or stock appreciation right, shall be counted against the foregoing Share Limit as four and one-half shares for every one share actually issued in connection with such award. (For example, if 32,000 shares of restricted stock are granted under the Equity and Incentive Plan, 39,000 shall be charged against the Share Limit in connection with that award.)
4.
Includes 15 deferred stock units resulting from base salary and short-term incentive (STIP) deferrals under the Management Deferred Compensation Plan (MDCP). Under the MDCP, a select group of management or highly compensated employees can elect to defer the receipt of their base salary, STIP or Long Term Incentive (LTI) award. LTI deferrals are included in footnote 1 to the above chart. The company does not match deferrals under the MDCP. There are seven core investment options under the MDCP for base salary and STIP deferrals, including deferred stock units with dividend equivalents credited as additional stock units. In general, deferred stock units are distributed in the form of DuPont common stock and may be made in the form of lump sum at a specified future date prior to retirement or a lump sum or annual installments after separation from service. Shareholder approval of the MDCP was not required under the rules of the New York Stock Exchange.
5.
There is no limit on the number of shares that can be issued under the MDCP and no further shares are available for issuance under the other equity compensation arrangements described in footnote 4 to the above chart.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information with respect to this Item is included inincorporated herein by reference to the Proxy, including information within the sections entitled, "Governance of the Company-Review and Approval of Transactions with Related Persons" and "Governance of the Company-Corporate Governance Guidelines," "Governance of the Company-Committees of the Board," "Governance of the Company-Committee Membership" and "Election of Directors".


ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information with respect to this Item is incorporated herein by reference to the Proxy, including information within the section entitled "Ratification of Independent Registered Public Accounting Firm."




42

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Part IV


ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)
Financial Statements, Financial Statement Schedules and Exhibits:


1.
Financial Statements (See the Index to the Consolidated Financial Statements on page F-1 of this report).

2.
Financial Statement Schedules

(a)Financial Statements, Financial Statement Schedules and Exhibits:
1.Financial Statements (See the Index to the Consolidated Financial Statements on page F-1 of this report).
2.Financial Statement Schedules
Schedule II—Valuation and Qualifying Accounts

(Dollars in millions)

Year Ended December 31,
  
 2010
  
 2009
  
 2008
  
201320122011

Accounts Receivable—Allowance for Doubtful Receivables

               
 
 

Balance at beginning of period

   $322   $238   $261  $243
$292
$326

Additions charged to cost and expenses

   75   112   41  72
33
73

Deductions from reserves

   (71)  (28)  (64) (46)(64)(107)
Amounts related to the Performance Coatings business
(18)

Balance at end of period

   $326   $322   $238  $269
$243
$292

Deferred Tax Assets—Valuation Allowance

               
 
 

Balance at beginning of period

   $1,759   $1,693   $1,424  $1,914
$1,971
$1,666

Net (benefits) charges to income tax expense

   (19)  55   (43) 
Net charges (benefits) to income tax expense29
(77)73

Additions charged to other comprehensive income (loss)

         328  (205)10
236

Currency translation

   (74)  11   (16) 26
10
(4)

Balance at end of period

   $1,666   $1,759   $1,693  $1,764
$1,914
$1,971

The following should be read in conjunction with the previously referenced Consolidated 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 Consolidated 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 percent 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 percent of consolidated net assets at December 31, 2010.

Separate financial statements of affiliated companies accounted for by the equity method are omitted because no such affiliate individually constitutes a 20 percent significant subsidiary.



43

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Part IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES,continued


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:

Exhibit
Number
Description
3.1 Company's Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the company'scompany’s Annual Report on Form 10-K for the year ended December 31, 2007)2012).

3.2

 

Company's
3.2Company’s Bylaws, as last amended effective November 1, 2009August 12, 2013 (incorporated by reference to Exhibit 3.2 to the company's Annualcompany’s Quarterly Report on Form 10-K10-Q for the yearperiod ended December 31, 2009)September 30, 2013).

4

 

4The 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*

 

10.1*The DuPont Stock Accumulation and Deferred Compensation Plan for Directors, as last amended effective January 1, 2009 (incorporated by reference to Exhibit 10.1 to the company's Annual Report on Form 10-K for the year ended December 31, 2008).2009.

10.2*

 

Company's
10.2*Company’s Supplemental Retirement Income Plan, as last amended effective June 4, 1996 (incorporated by reference to Exhibit 10.310.2 to the company's Annual Report on Form 10-K for the year ended December 31, 2006)2011).

10.3*

 

Company's
10.3*Company’s Pension Restoration Plan, as restated effective July 17, 2006 (incorporated by reference to Exhibit 99.110.3 to the company's Currentcompany’s Quarterly Report on Form 8-K filed on July 20, 2006)10-Q for the period ended June 30, 2011).

10.4*

 

Company's
10.4*Company’s Rules for Lump Sum Payments, adopted July 17, 2006as last amended effective December 20, 2007 (incorporated by reference to Exhibit 99.210.4 to the company's Currentcompany’s Quarterly Report on Form 8-K filed on July 20, 2006)10-Q for the period ended June 30, 2011).

10.5*

 

Company's
10.5*Company’s Stock Performance Plan, as last amended effective January 25, 2007 (incorporated by reference to Exhibit 10.5 to the company's Annual Report on Form 10-K for the year ended December 31, 2011).
10.6*Company’s Equity and Incentive Plan as amended October 23, 2013.
10.7*Form of Award Terms under the company’s Equity and Incentive Plan (incorporated by reference to Exhibit 10.7 to the company’s Quarterly Report on Form 10-Q for the period ended June 30, 2013).
10.8*Company’s Retirement Savings Restoration Plan, as last amended effective January 1, 2013 (incorporated by reference to Exhibit 10.8 to the company’s Annual Report on Form 10-K for the year ended December 31, 2012).
10.9*Company’s Retirement Income Plan for Directors, as last amended January 2011 (incorporated by reference to Exhibit 10.9 to the company's Quarterly Report on Form 10-Q for the period ended March 31, 2007)2012).

10.6*

 

Company's Equity and Incentive Plan as approved by the company's shareholders on April 25, 2007 (incorporated by reference to pages C1-C13 of the company's Annual Meeting Proxy Statement dated March 19, 2007).

10.7*10.10*

 

Form of Award Terms under the company's Equity and Incentive Plan (incorporated by reference to Exhibit 10.8 to the company's Quarterly Report on Form 10-Q for the period ended March 31, 2009).

10.8*


Company's Retirement Savings Restoration Plan, as last amended effective January 1, 2009 (incorporated by reference to Exhibit 10.16 to the company's Quarterly Report on Form 10-Q for the period ended June 30, 2008).

10.9*


Company's Retirement Income Plan for Directors, as last amended August 1995 (incorporated by reference to Exhibit 10.17 to the company's Annual Report on Form 10-K for the year ended December 31, 2007).

10.10*


Company's Bicentennial Corporate Sharing Plan, adopted by the Board of Directors on December 12, 2001 and effective January 9, 2002 (incorporated by reference to Exhibit 10.19 to the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2007).

10.11*


Company's Management Deferred Compensation Plan, adopted on May 2, 2008, as last amended May 12, 2010 (incorporated by reference to Exhibit 10.11 to the company's Quarterly Report on Form 10-Q for the period ended June 30, 2010).

Table of Contents


Part IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES,continued

10.11 to the company's Quarterly Report on Form 10-Q for the period ended September 30, 2013). The company agrees to furnish supplementally a copy of any omitted schedules to the Commission upon request.
10.11*Company's Senior Executive Severance Plan, adopted on August 12, 2013 (incorporated by reference to Exhibit
Number
Description
10.12* Supplemental Deferral Terms for Deferred Long Term Incentive Awards and Deferred Variable Compensation AwardsAwards.
12Computation of Ratio of Earnings to Fixed Charges.
18.1Preferability Letter of Independent Registered Public Accounting Firm (incorporated by reference to Exhibit 10.1518.1 to the company's Annualcompany’s Quarterly Report on Form 10-K10-Q for the yearperiod ended DecemberMarch 31, 2008)2013).

10.13

 

Announcement Agreement dated January 9, 2011, among Danisco A/S, the company and Denmark Holding ApS. (incorporated by reference to Exhibit 2.1 to the company's Current Report on Form 8-K filed on January 12, 2011.) The company agrees to furnish supplementally a copy of any omitted schedule to the Commission upon request.

1221

 

Computation of the Ratio of Earnings to Fixed Charges.

21


Subsidiaries of the Registrant.

23

 

23Consent of Independent Registered Public Accounting Firm.

31.1

 

31.1Rule 13a-14 (a)13a-14(a)/15d-14 (a)15d-14(a) Certification of the company'scompany’s Principal Executive Officer.

31.2

 

44


Part IV
ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES,continued

31.2Rule 13a-14 (a)13a-14(a)/15d-14 (a)15d-14(a) Certification of the company'scompany’s Principal Financial Officer.

32.1

 

32.1Section 1350 Certification of the company'scompany’s Principal Executive Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.

32.2

 

32.2Section 1350 Certification of the company'scompany’s Principal Financial Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.

101.INS

 

95Mine Safety Disclosures.
101.INSXBRL Instance Document

101.SCH

 

101.SCHXBRL Taxonomy Extension Schema Document

101.CAL

 

101.CALXBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

101.DEFXBRL Taxonomy Extension Definition Linkbase Document

101.LAB

 

101.LABXBRL Taxonomy Extension Label Linkbase Document

101.PRE

 

101.PREXBRL Taxonomy Extension Presentation Linkbase Document

*
Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.
*Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.


45

Table of Contents


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.

February 8, 20115, 2014  
 E. I. DU PONT DE NEMOURS AND COMPANY

 

By:

By:


/s/ NICHOLAS C. FANANDAKIS

Nicholas C. Fanandakis
Nicholas C. Fanandakis
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated:

Signature
Title(s)
Date





/s/ E. J. KULLMAN

E. J. Kullman
 Chair of the Board of Directors and
Chief Executive Officer and Director
(Principal Executive Officer)Title(s)
 February 8, 2011Date

/s/ S. W. BODMAN

S. W. Bodman


Director


February 8, 2011

/s/ R. H. BROWN

R. H. Brown


Director


February 8, 2011

/s/ R. A. BROWN

R. A. Brown


Director


February 8, 2011

/s/ B. P. COLLOMB

B. P. Collomb


Director


February 8, 2011

/s/ C. J. CRAWFORD

C. J. Crawford


Director


February 8, 2011

/s/ A. M. CUTLER

A. M. Cutler


Director


February 8, 2011

/s/ J. T. DILLON

J. T. Dillon


Director


February 8, 2011

/s/ E. I. DU PONT, II

E. I. du Pont, II


Director


February 8, 2011

/s/ M. A. HEWSON

M. A. Hewson


Director


February 8, 2011

/s/ L. D. JULIBER

L. D. Juliber


Director


February 8, 2011

/s/ W. K. REILLY

W. K. Reilly


Director


February 8, 2011

Table of Contents


E.I. du Pont de Nemours and Company

Index to the Consolidated Financial Statements



Page(s)

Consolidated Financial Statements:

     
/s/ E.J. Kullman
Chair of the Board of Directors and
Chief Executive Officer and Director
(Principal Executive Officer)
February 5, 2014
E. J. Kullman
/s/ L. AndreottiDirectorFebruary 5, 2014
L. Andreotti
/s/ R.H. BrownDirectorFebruary 5, 2014
R. H. Brown
/s/ R.A. BrownDirectorFebruary 5, 2014
R. A. Brown
/s/ B.P. CollombDirectorFebruary 5, 2014
B. P. Collomb
/s/ C.J. CrawfordDirectorFebruary 5, 2014
C. J. Crawford
/s/ A.M. CutlerDirectorFebruary 5, 2014
A. M. Cutler
/s/ E.I. du Pont, IIDirectorFebruary 5, 2014
E. I. du Pont, II
/s/ M.A. HewsonDirectorFebruary 5, 2014
M. A. Hewson
/s/ L.D. JuliberDirectorFebruary 5, 2014
L. D. Juliber
/s/ L.M. ThomasDirectorFebruary 5, 2014
L. M. Thomas
/s/ P.J. WardDirectorFebruary 5, 2014
P. J. Ward

46


E.I. du Pont de Nemours and Company
Index to the Consolidated Financial Statements

Page(s)
Consolidated Financial Statements:

Management's Reports on Responsibility for Financial Statements and Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Income Statements for the years ended December 31, 2010, 20092013, 2012 and 2008

2011

Consolidated Statements of Stockholders' Equity for the years ended December 31, 2010, 20092013, 2012 and 2008

2011

Consolidated Statements of Cash Flows for the years ended December 31, 2010, 20092013, 2012 and 2008

2011

Notes to the Consolidated Financial Statements



F-1


Table of Contents


Management's Reports on Responsibility for Financial Statements and
Internal Control over Financial Reporting

Management's Report on Responsibility for Financial Statements

Management is responsible for the Consolidated Financial Statements and the other financial information contained in this Annual Report on Form 10-K. The financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) and are 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 financial statements have been audited by the company's independent registered public accounting firm, PricewaterhouseCoopers LLP. The purpose of their audit is to express an opinion as to whether the Consolidated Financial Statements included in this Annual Report on Form 10-K present fairly, in all material respects, the company's financial position, results of operations and cash flows in conformity with GAAP. Their report is presented on the following page.

Management's Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The company's internal control over financial reporting includes those policies and procedures that:

i.pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
ii.provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorization of management and directors of the company; and
iii.provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the company's assets that could have a material effect on the financial statements.
Internal control over financial reporting has certain inherent limitations which may not prevent or detect misstatements. In addition, changes in conditions and business practices may cause variation in the effectiveness of internal controls.

Management assessed the effectiveness of the company's internal control over financial reporting as of December 31, 2010,2013, based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control-Integrated Framework (1992). Based on its assessment and those criteria, management concluded that the company maintained effective internal control over financial reporting as of December 31, 2010.2013.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of the company's internal control over financial reporting as of, December 31, 2010, as stated in their report, which is presented on the following page.


 
Ellen J. Kullman
Chair of the Board and
Chief Executive Officer
 
Nicholas C. Fanandakis
Executive Vice President
and Chief Financial Officer

February 8, 2011

5, 2014


F-2


Table of Contents


Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of
E. I. du Pont de Nemours and Company:


In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, stockholders'comprehensive income, equity and cash flows present fairly, in all material respects, the financial position of E. I. du Pont de Nemours and Company and its subsidiaries at December 31, 20102013 and 2009,2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 20102013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a) (2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010,2013, based on criteria established inInternal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in "Management's Report on Internal Control over Financial Reporting" appearing on page F-2. Our responsibility is to express opinions on these financial statements, on the financial statement schedule and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe our audits provide a reasonable basis for our opinions.


As discussed in Note 1 to the Consolidated Financial Statements, effective January 1, 2013, the Company changed its method of valuing inventory held at a majority of its foreign and certain U.S. locations from the last-in, first-out (LIFO) method to the average cost method.

A company'scompany’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company'scompany’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company'scompany’s assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 8, 2011

5, 2014


F-3

Table of Contents



E. I. du Pont de Nemours and Company
Consolidated Financial Statements

CONSOLIDATED INCOME STATEMENTS
(Dollars in millions, except per share)

 
For the year ended December 31,
For the year ended December 31,
  
 2010
  
 2009
  
 2008
  
201320122011

Net sales

Net sales

   $31,505   $26,109   $30,529  $35,734
$34,812
$33,681

Other income, net

Other income, net

   1,228   1,219   1,307  410
498
742

Total

   32,733   27,328   31,836  

Cost of goods sold and other operating charges

   23,146   19,708   23,548  
Total36,144
35,310
34,423
Cost of goods sold22,548
21,538
21,264
Other operating charges3,838
4,077
3,510

Selling, general and administrative expenses

Selling, general and administrative expenses

   3,669   3,440   3,593  3,554
3,527
3,310

Research and development expense

Research and development expense

   1,651   1,378   1,393  2,153
2,123
1,960

Interest expense

Interest expense

   590   408   376  448
464
447

Employee separation/asset related charges, net

   (34)  210   535  

Total

   29,022   25,144   29,445  

Income before income taxes

   3,711   2,184   2,391  

Provision for income taxes

   659   415   381  
Employee separation / asset related charges, net114
493
53
Total32,655
32,222
30,544
Income from continuing operations before income taxes3,489
3,088
3,879
Provision for income taxes on continuing operations626
616
647
Income from continuing operations after income taxes2,863
2,472
3,232
Income from discontinued operations after income taxes1,999
308
367

Net income

Net income

   3,052   1,769   2,010  4,862
2,780
3,599

Less: Net income attributable to noncontrolling interests

Less: Net income attributable to noncontrolling interests

   21   14   3  14
25
40

Net income attributable to DuPont

Net income attributable to DuPont

   $3,031   $1,755   $2,007  $4,848
$2,755
$3,559
Basic earnings per share of common stock: 
Basic earnings per share of common stock from continuing operations$3.07
$2.61
$3.43
Basic earnings per share of common stock from discontinued operations2.16
0.33
0.40

Basic earnings per share of common stock

Basic earnings per share of common stock

   $3.32   $1.93   $2.21  $5.22
$2.94
$3.82
Diluted earnings per share of common stock: 
Diluted earnings per share of common stock from continuing operations$3.04
$2.59
$3.38
Diluted earnings per share of common stock from discontinued operations2.14
0.33
0.39

Diluted earnings per share of common stock

Diluted earnings per share of common stock

   $3.28   $1.92   $2.20  $5.18
$2.91
$3.77
Dividends per share of common stock$1.78
$1.70
$1.64


See Notes to the Consolidated Financial Statements beginning on page F-8.

F-9.


F-4

Table of Contents


E. I. du Pont de Nemours and Company
Consolidated Financial Statements

CONSOLIDATED BALANCE SHEETS
STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in millions, except per share)

        
December 31,
  
 2010
  
 2009
  

Assets

            

Current assets

            

Cash and cash equivalents

   $4,263   $4,021  

Marketable securities

    2,538    2,116  

Accounts and notes receivable, net

    5,635    5,030  

Inventories

    5,967    5,380  

Prepaid expenses

    122    129  

Deferred income taxes

    534    612  
 

Total current assets

    19,059    17,288  

Property, plant and equipment

    29,967    28,915  

Less: Accumulated depreciation

    18,628    17,821  

Net property, plant and equipment

    11,339    11,094  

Goodwill

    2,617    2,137  

Other intangible assets

    2,704    2,552  

Investment in affiliates

    1,041    1,014  

Other assets

    3,650    4,100  

Total

   $40,410   $38,185  

Liabilities and Stockholders' Equity

            

Current liabilities

            

Accounts payable

   $4,360   $3,542  

Short-term borrowings and capital lease obligations

    133    1,506  

Income taxes

    225    154  

Other accrued liabilities

    4,671    4,188  
 

Total current liabilities

    9,389    9,390  

Long-term borrowings and capital lease obligations

    10,137    9,528  

Other liabilities

    11,026    11,490  

Deferred income taxes

    115    126  

Total liabilities

    30,667    30,534  

Commitments and contingent liabilities

            

Stockholders' Equity

            

Preferred stock, without par value – cumulative; 23,000,000 shares authorized; issued at December 31, 2010 and 2009:

            
 

$4.50 Series – 1,673,000 shares (callable at $120)

    167    167  
 

$3.50 Series – 700,000 shares (callable at $102)

    70    70  

Common stock, $.30 par value; 1,800,000,000 shares authorized;

            
 

Issued at December 31, 2010 – 1,004,351,000; 2009 – 990,855,000

    301    297  

Additional paid-in capital

    9,227    8,469  

Reinvested earnings

    12,030    10,710  

Accumulated other comprehensive loss

    (5,790)   (5,771) 

Common stock held in treasury, at cost

            
 

(Shares: December 31, 2010 and 2009 – 87,041,000)

    (6,727)   (6,727) 
 

Total DuPont stockholders' equity

    9,278    7,215  

Noncontrolling interests

    465    436  
 

Total equity

    9,743    7,651  

Total

   $40,410   $38,185  
For the year ended December 31,201320122011
Net income$4,862
$2,780
$3,599
Other comprehensive income (loss), before tax:   
      Cumulative translation adjustment25
77
(457)
      Net revaluation and clearance of cash flow hedges to earnings:


      Additions and revaluations of derivatives designated as cash flow hedges(58)8
10
      Clearance of hedge results to earnings(25)(65)96
      Net revaluation and clearance of cash flow hedges to earnings(83)(57)106
      Pension benefit plans:   
      Net gain (loss)3,293
(1,433)(4,069)
      Prior service benefit (cost)62
22
(2)
      Reclassifications to net income:





                Amortization of prior service cost8
13
16
                Amortization of loss957
887
613
                Curtailment / settlement loss153
7

      Pension benefit plans, net4,473
(504)(3,442)
      Other benefit plans:   
      Net gain (loss)513
(60)(437)
      Prior service benefit (cost)211
857
(11)
      Reclassifications to net income:





                Amortization of prior service benefit(195)(155)(121)
                Amortization of loss76
94
60
                Curtailment / settlement (gain) loss(153)3

      Other benefit plans, net452
739
(509)
      Net unrealized gain (loss) on securities1
(2)2
Other comprehensive income (loss), before tax4,868
253
(4,300)
      Income tax (expense) benefit related to items of other comprehensive income(1,665)(121)1,322
Other comprehensive income (loss), net of tax3,203
132
(2,978)
Comprehensive income8,065
2,912
621
      Less: Comprehensive income attributable to noncontrolling interests12
53
22
Comprehensive income attributable to DuPont$8,053
$2,859
$599


See Notes to the Consolidated Financial Statements beginning on page F-8.

F-9.


F-5


Table of Contents


E. I. du Pont de Nemours and Company
Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
BALANCE SHEETS
(Dollars in millions, except per share)

                               
 
  
 Preferred
Stock

  
 Common
Stock

  
 Additional
Paid-in
Capital

  
 Reinvested
Earnings

  
 Accumu-
lated
Other
Compre-
hensive
Loss

  
 Treasury
Stock

  
 Non-
controlling
Interests

  
 Total Stock-
holders'
Equity

  
 Compre-
hensive
Income

  

2008

                                               

Balance January 1, 2008

   $237   $296   $8,179   $9,945   $(794)  $(6,727)  $442   $11,578       

Net income

                   2,007              3    2,010   $2,010  

Cumulative translation adjustment

                        (120)        (1)   (121)   (121) 

Net revaluation and clearance of cash flow hedges to earnings

                        (199)        (2)   (201)   (201) 

Pension benefit plans

                        (4,122)        (8)   (4,130)   (4,130) 

Other benefit plans

                        (272)             (272)   (272) 

Net unrealized loss on securities

                        (11)             (11)   (11) 

Total comprehensive loss

                                           $(2,725) 

Common dividends ($1.64 per share)

                   (1,486)             (7)   (1,493)      

Preferred dividends

                   (10)                  (10)      

Common stock

                                               
 

Issued – compensation plans

         1    201                        202       

Balance December 31, 2008

   $237   $297   $8,380   $10,456   $(5,518)  $(6,727)  $427   $7,552       

2009

                                               

Acquisition of a majority interest in a consolidated subsidiary

                                  1    1       

Purchase of subsidiary shares from noncontrolling interest

                                  (1)   (1)      

Net income

                   1,755              14    1,769   $1,769  

Cumulative translation adjustment

                        89              89    89  

Net revaluation and clearance of cash flow hedges to earnings

                        93         2    95    95  

Pension benefit plans

                        (333)        (4)   (337)   (337) 

Other benefit plans

                        (106)             (106)   (106) 

Net unrealized gain on securities

                        4              4    4  

Total comprehensive income

                                           $1,514  

Common dividends ($1.64 per share)

                   (1,491)             (3)   (1,494)      

Preferred dividends

                   (10)                  (10)      

Common stock

                                               
 

Issued – compensation plans

              89                        89       

Balance December 31, 2009

   $237   $297   $8,469   $10,710   $(5,771)  $(6,727)  $436   $7,651       

2010

                                               

Acquisition of a majority interest in a consolidated subsidiary

                                  9    9       

Net income

                   3,031              21    3,052   $3,052  

Cumulative translation adjustment

                        (6)             (6)   (6) 

Net revaluation and clearance of cash flow hedges to earnings

                        34         3    37    37  

Pension benefit plans

                        (65)        (1)   (66)   (66) 

Other benefit plans

                        17              17    17  

Net unrealized gain on securities

                        1              1    1  

Total comprehensive income

                                           $3,035  

Common dividends ($1.64 per share)

                   (1,500)             (3)   (1,503)      

Preferred dividends

                   (10)                  (10)      

Common stock

                                               
 

Issued – compensation plans

         6    805                        811       
 

Repurchased

                             (250)        (250)      
 

Retired

         (2)   (47)   (201)        250                

Balance December 31, 2010

   $237   $301   $9,227   $12,030   $(5,790)  $(6,727)  $465   $9,743       
December 31,20132012
Assets 
 
Current assets 
 
Cash and cash equivalents$8,941
$4,284
Marketable securities145
123
Accounts and notes receivable, net6,047
5,452
Inventories8,042
7,565
Prepaid expenses206
204
Deferred income taxes775
613
Assets held for sale228
3,076
Total current assets24,384
21,317
Property, plant and equipment32,431
31,826
Less: Accumulated depreciation19,438
19,085
Net property, plant and equipment12,993
12,741
Goodwill4,713
4,616
Other intangible assets5,096
5,126
Investment in affiliates1,011
1,163
Deferred income taxes2,353
3,936
Other assets949
960
Total$51,499
$49,859
Liabilities and Equity 
 
Current liabilities 
 
Accounts payable$5,180
$4,853
Short-term borrowings and capital lease obligations1,721
1,275
Income taxes247
343
Other accrued liabilities6,219
5,997
Liabilities related to assets held for sale
1,084
Total current liabilities13,367
13,552
Long-term borrowings and capital lease obligations10,741
10,465
Other liabilities10,179
14,687
Deferred income taxes926
856
Total liabilities35,213
39,560
Commitments and contingent liabilities



Stockholders' Equity 
 
Preferred stock, without par value – cumulative; 23,000,000 shares authorized;
     issued at December 31, 2013 and 2012:
 
 
$4.50 Series – 1,673,000 shares (callable at $120)167
167
$3.50 Series – 700,000 shares (callable at $102)70
70
Common stock, $.30 par value; 1,800,000,000 shares authorized;
     issued at December 31, 2013 – 1,014,027,000; 2012 – 1,020,057,000
304
306
Additional paid-in capital11,072
10,655
Reinvested earnings16,784
14,383
Accumulated other comprehensive loss(5,441)(8,646)
Common stock held in treasury, at cost
     (Shares: December 31, 2013 and 2012 – 87,041,000)
(6,727)(6,727)
Total DuPont stockholders' equity16,229
10,208
Noncontrolling interests57
91
Total equity16,286
10,299
Total$51,499
$49,859


See Notes to the Consolidated Financial Statements beginning on page F-8.

F-9.


F-6

Table of Contents


E. I. du Pont de Nemours and Company
Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF CASH FLOWS
EQUITY
(Dollars in millions)millions, except per share)

           
For the year ended December 31,
  
 2010
  
 2009
  
 2008
  

Operating activities

                 

Net income

   $3,052   $1,769   $2,010  

Adjustments to reconcile net income to cash provided by operating activities:

                 
 

Depreciation

    1,204    1,251    1,169  
 

Amortization of intangible assets

    176    252    275  
 

Other noncash charges and credits – net

    809    976    814  
 

Contributions to pension plans

    (782)   (306)   (252) 
 

(Increase) decrease in operating assets:

                 
  

Accounts and notes receivable

    (481)   69    488  
  

Inventories and other operating assets

    (512)   481    (663) 
 

Increase (decrease) in operating liabilities:

                 
  

Accounts payable and other operating liabilities

    1,010    (115)   (515) 
  

Accrued interest and income taxes

    83    364    (197) 
   

Cash provided by operating activities

    4,559    4,741    3,129  

Investing activities

                 

Purchases of property, plant and equipment

    (1,508)   (1,308)   (1,978) 

Investments in affiliates

    (100)   (124)   (55) 

Payments for businesses – net of cash acquired

    (637)   (13)   (144) 

Proceeds from sale of assets – net of cash sold

    195    91    50  

Net (increase) decrease in short-term financial instruments

    (457)   (2,016)   40  

Forward exchange contract settlements

    176    (927)   508  

Other investing activities – net

    (108)   (1)   (31) 
   

Cash used for investing activities

    (2,439)   (4,298)   (1,610) 

Financing activities

                 

Dividends paid to stockholders

    (1,501)   (1,492)   (1,496) 

Net increase (decrease) in short-term (less than 90 days) borrowings

    20    (317)   (891) 

Long-term and other borrowings:

                 
 

Receipts

    2,061    3,685    3,527  
 

Payments

    (2,859)   (1,977)   (547) 

Repurchase of common stock

    (250)         

Proceeds from exercise of stock options

    708    1    94  

Proceeds from termination of interest rate swap

            226  

Other financing activities – net

    (8)   3    (35) 
   

Cash (used for) provided by financing activities

    (1,829)   (97)   878  

Effect of exchange rate changes on cash

    (49)   30    (57) 

Increase in cash and cash equivalents

    242    376    2,340  

Cash and cash equivalents at beginning of year

    4,021    3,645    1,305  

Cash and cash equivalents at end of year

   $4,263   $4,021   $3,645  

Supplemental cash flow information:

                 

Cash paid during the year for

                 
 

Interest, net of amounts capitalized

   $623   $403   $336  
 

Taxes

    416    63    609  
 
Preferred
Stock
Common
Stock
Additional
Paid-in
Capital
Reinvested
Earnings
Accumulated
Other
Compre-
hensive
Loss
Treasury
Stock
Non-
controlling
Interests
Total
Equity
2011 
 
 
 
 
 
 
 
Balance January 1, 2011$237
$301
$9,227
$12,075
$(5,790)$(6,727)$477
$9,800
Sale of a majority interest in a consolidated subsidiary  
  
  
  
  
  
(3)(3)
Net income  
  
  
3,559
  
  
40
3,599
Other comprehensive income (loss)  
  
  
  
(2,960)  
(18)(2,978)
Common dividends ($1.64 per share)  
  
  
(1,531)  
  
(11)(1,542)
Preferred dividends  
  
  
(10)  
  
  
(10)
Common stock issued - compensation plans  
7
1,007
  
  
  
  
1,014
Common stock repurchased  
  
  
  
  
(672)  
(672)
Common stock retired 
(4)(127)(541)  
672
 

Balance December 31, 2011$237
$304
$10,107
$13,552
$(8,750)$(6,727)$485
$9,208
2012 
 
 
 
 
 
 
 
Acquisitions of a noncontrolling interest in consolidated subsidiaries  
  
(2)  
  
  
(386)(388)
Net income  
  
  
2,755
  
  
25
2,780
Other comprehensive income (loss)  
  
  
  
104
  
28
132
Common dividends ($1.70 per share)  
  
  
(1,593)  
  
(61)(1,654)
Preferred dividends  
  
  
(10)  
  
  
(10)
Common stock issued - compensation plans  
4
627
  
  
  
  
631
Common stock repurchased  
  
  
  
  
(400)  
(400)
Common stock retired 
(2)(77)(321)  
400
 

Balance December 31, 2012$237
$306
$10,655
$14,383
$(8,646)$(6,727)$91
$10,299
2013 
 
 
 
 
 
 
 
Sale of a majority interest in a consolidated subsidiary  
  


  
  
  
(34)(34)
Acquisitions of a noncontrolling interest in consolidated subsidiaries



4








4
Net income  
  
  
4,848
  
  
14
4,862
Other comprehensive income (loss)  
  
  
  
3,205
  
(2)3,203
Common dividends ($1.78 per share)  
  
  
(1,658)  
  
(12)(1,670)
Preferred dividends  
  
  
(10)  
  
  
(10)
Common stock issued - compensation plans  
4
628
  
  
  
  
632
Common stock repurchased  
  


  
  
(1,000)  
(1,000)
Common stock retired 
(6)(215)(779)  
1,000
 

Balance December 31, 2013$237
$304
$11,072
$16,784
$(5,441)$(6,727)$57
$16,286


See Notes to the Consolidated Financial Statements beginning on page F-8.

F-9.


F-7


Table of Contents


E. I. du Pont de Nemours and Company
Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
For the year ended December 31,201320122011
Operating activities 
 
 
Net income$4,862
$2,780
$3,599
Adjustments to reconcile net income to cash provided by operating activities: 



Depreciation1,280
1,376
1,283
Amortization of intangible assets323
337
277
Other operating charges and credits – net859
1,185
991
Contributions to pension plans(313)(848)(341)
Gain on sale of business(2,687)

(Increase) decrease in operating assets: 

 
Accounts and notes receivable(883)114
(360)
Inventories and other operating assets(526)(812)(1,018)
Increase (decrease) in operating liabilities: 

 
Accounts payable and other operating liabilities418
1,037
528
Accrued interest and income taxes(154)(320)193
Cash provided by operating activities3,179
4,849
5,152
Investing activities 
 
 
Purchases of property, plant and equipment(1,882)(1,793)(1,843)
Investments in affiliates(58)(97)(67)
Payments for businesses – net of cash acquired(133)(18)(6,459)
Proceeds from sale of business - net4,841


Proceeds from sale of assets – net142
302
214
Net (increase) decrease in short-term financial instruments(45)315
2,149
Forward exchange contract settlements40
(40)(227)
Other investing activities – net40
(15)(5)
Cash provided by (used for) investing activities2,945
(1,346)(6,238)
Financing activities 
 
 
Dividends paid to stockholders(1,661)(1,594)(1,533)
Net increase (decrease) in short-term (less than 90 days) borrowings16
(200)185
Long-term and other borrowings: 
 
 
Receipts2,013
323
2,539
Payments(1,312)(916)(1,163)
Repurchase of common stock(1,000)(400)(672)
Proceeds from exercise of stock options536
550
952
Payments for noncontrolling interest(65)(470)
Other financing activities – net(1)10
95
Cash (used for) provided by financing activities(1,474)(2,697)403
Effect of exchange rate changes on cash(88)(13)6
Cash classified as held for sale
(95)
Increase (decrease) in cash and cash equivalents4,562
698
(677)
Cash and cash equivalents at beginning of year4,379
3,586
4,263
Cash and cash equivalents at end of year$8,941
$4,284
$3,586
Supplemental cash flow information: 
 
 
Cash paid during the year for 
 
 
Interest, net of amounts capitalized$489
$501
$455
Income taxes1,323
1,054
527
See Notes to the Consolidated Financial Statements beginning on page F-9.

F-8


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The company follows generally accepted accounting principles in the United States of America (GAAP). The significant accounting policies described below, together with the other notes that follow, are an integral part of the Consolidated Financial Statements.


Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP 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.


Basis of Consolidation

The Consolidated Financial Statements include the accounts of the company, subsidiaries in which a controlling interest is maintained and variable interest entities (VIEs) for which DuPont is the primary beneficiary. At December 31, 2010, the assets, liabilities and operations of VIEs for which DuPont is the primary beneficiary were not material to the Consolidated Financial Statements of the company. The company is also involved with other entities that are VIEs for which the company is not currently the primary beneficiary. Future events may require these VIEs to be consolidated if the company becomes the primary beneficiary. At December 31, 2010, the assets and liabilities of the other VIEs were not material to the Consolidated Financial Statements of the company. The company's share of the net income (loss) of these VIEs is included in other income, net, in the Consolidated Income Statements and is not material.

For those consolidated subsidiaries in which the company's ownership is less than 100 percent, the outside stockholders' interests are shown as noncontrolling interests. Investments in affiliates over which the company has significant influence but not a controlling interest are carried on the equity basis. This includes majority-owned entitiesmethod. At December 31, 2013, the assets, liabilities and operations of VIEs for which DuPont is the primary beneficiary were not material to the Consolidated Financial Statements of the company.


The company is also involved with certain joint ventures accounted for under the equity method of accounting that are VIEs. The company is not the primary beneficiary, as the nature of the company's involvement with the VIEs does not provide it the power to direct the VIEs significant activities. Future events may require these VIEs to be consolidated if the company becomes the primary beneficiary. At December 31, 2013, the maximum exposure to loss related to the unconsolidated VIEs is not considered material to the Consolidated Financial Statements of the company.

Basis of Presentation
Certain reclassifications of prior year's data have been made to conform to current year's presentation, including separately stating cost of goods sold and other operating charges on the Consolidated Income Statements. In the third quarter 2012, the company signed a definitive agreement to sell its Performance Coatings business (which represented a reportable segment). In accordance with GAAP, the results of Performance Coatings are presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. The sum of the individual earnings per share amounts from continuing and discontinued operations may not equal the total company earnings per share amounts due to rounding. The assets and liabilities of Performance Coatings at December 31, 2012 are presented as held for sale in the Consolidated Balance Sheet. The cash flows and comprehensive income related to Performance Coatings have not been segregated and are included in the Consolidated Statements of Cash Flows and Comprehensive Income, respectively, for all periods presented. Amounts related to Performance Coatings are consistently included in or excluded from the Notes to the Consolidated Financial Statements based on the financial statement line item and period of each disclosure.

In November 2013, DuPont entered into a definitive agreement to sell Glass Laminating Solutions/Vinyls (GLS/Vinyls). The assets related to GLS/Vinyls at December 31, 2013 are presented as held for sale in the Consolidated Balance Sheet. The sale of GLS/Vinyls does not consolidate because a minority investor holds substantive participating rights. Investmentsmeet the criteria for discontinued operations and as such, earnings are included in affiliates over which the company does not have significant influence are accountedcompany’s income from continuing operations.

See Note 2 to the Consolidated Financial Statements for byfurther information relating to the cost method or as available-for-sale securities.

above matters.



F-9


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Revenue Recognition

The company recognizes revenue when the earnings process is complete. The company's revenues are from the sale of a wide range of products to a diversified base of customers around the world. Revenue for product sales is recognized upon delivery, when title and risk of loss have been transferred, collectability is reasonably assured and pricing is fixed or determinable. Substantially all product sales are sold FOB (free on board) shipping point or, with respect to non-U.S.non United States of America (U.S.) customers, an equivalent basis. Accruals are made for sales returns and other allowances based on the company's experience. The company accounts for cash sales incentives as a reduction in sales and noncash sales incentives as a charge to cost of goods sold or selling expense, depending on the nature of the incentive. Amounts billed to customers for shipping and handling fees are included in net sales and costs incurred by the company for the delivery of goods are classified as cost of goods sold and other operating charges in the Consolidated Income Statements. Taxes on revenue-producing transactions are excluded from net sales.


The company periodically enters into prepayment contracts with customers in the Agriculture & Nutrition segment and receives advance payments for product to be delivered in future periods. These advance payments are recorded as deferred revenue and are included in(classified as other accrued liabilitiesliabilities) or debt, depending on the Consolidated Balance Sheets.nature of the program. Revenue associated with advance payments is recognized as shipments are made and title, ownership and risk of loss pass to the customer.

customer.


Licensing and royalty income is recognized in accordance with agreed upon terms, when performance obligations are satisfied, the amount is fixed or determinable and collectability is reasonably assured.


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Cash and Cash Equivalents

Cash equivalents represent investments with maturities of three months or less from time of purchase. They are carried at cost plus accrued interest, which approximatesinterest. The estimated fair value because of the short-termcompany's cash equivalents was determined using level 1 and level 2 inputs within the fair value hierarchy, as described below. The company held $5,116 and $0 of money market funds (level 1 measurements) as of December 31, 2013 and 2012, respectively.  The company held $2,256 and $2,026 of other cash equivalents (level 2 measurements) as of December 31, 2013 and 2012, respectively. 

Based on observed net asset values and current interest rates for similar investments with comparable credit risk and time to maturity, the fair value of these instruments.

the company's cash equivalents approximates its stated value as of December 31, 2013 and 2012.

Marketable Securities
Investments in Securities

Marketable securities represent investments in fixed and floating rate financial instruments with maturities greater than three months and up to twelve months at time of purchase. They are classified as held-to-maturity and recorded at amortized cost. The carrying value approximates fair value due to the short-term nature of the investments.

Other assets include long-term investments in securities, which comprise investments for which market values are not readily available (cost investments) and available-for-sale securities that are reported at fair value (see Note 13).


Fair Value Measurements

Under the accounting for fair value measurements and disclosures, a fair value hierarchy was established that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.


The company uses the following valuation techniques to measure fair value for its assets and liabilities:

Level 1Quoted market prices in active markets for identical assets or liabilities;

Level 2



Significant other observable inputs (e.g. quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs);

Level 3



Unobservable inputs for the asset or liability, which are valued based on management's estimates of assumptions that market participants would use in pricing the asset or liability.


Inventories

The majority of the company's 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. Seed inventories are valued at the lower of cost as determined by the first-in, first-out (FIFO) method, or 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.


F-10


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

As of December 31, 2013 and 2012 approximately 50 percent, 25 percent and 25 percent of the company’s inventories were accounted for under the first-in first out (FIFO), last-in first out (LIFO) and average cost methods, respectively. Inventories accounted for under the FIFO method are primarily comprised of products with shorter shelf lives such as seeds, certain food-ingredients and enzymes.

Change in Accounting Policy
Effective January 1, 2013, the company changed its method of valuing inventory held at a majority of its foreign and certain U.S. locations from the LIFO method to the average cost method. The company believes that the average cost method is preferable to the LIFO method as it more clearly aligns with how the company actually manages its inventory and will improve financial reporting by better matching revenues and expenses, for these inventories. In addition, the change from LIFO to average cost will enhance the comparability of our financial results with our peer companies. As described in the guidance for accounting changes, the comparative Consolidated Financial Statements of prior periods are adjusted to apply the new accounting method retrospectively.

The following line items within the Consolidated Income Statements were affected by the change in accounting policy for the years ended December 31, 2013, 2012 and 2011:
 201320122011
 As reportedAs reported under LIFO
Change:
(Decrease)/Increase
As reportedAs reported under LIFO
Change:
(Decrease)/Increase
As reportedAs reported under LIFOChange:
(Decrease)/Increase
Cost of goods sold$22,548
$22,578
$(30)$21,538
$21,511
$27
$21,264
$21,362
$(98)
Income from continuing operations before income taxes3,489
3,459
30
3,088
3,115
(27)3,879
3,781
98
Provision for income taxes on continuing operations626
617
9
616
622
(6)647
626
21
Income from continuing operations after income taxes2,863
2,842
21
2,472
2,493
(21)3,232
3,155
77
Income from discontinued operations after income taxes1,999
1,999

308
320
(12)367
355
12
Net income$4,862
$4,841
$21
$2,780
$2,813
$(33)$3,599
$3,510
$89
Income from noncontrolling interest increased by $4 for the year ended December 31, 2011, as a result of the above accounting policy change.

Basic earnings per share from continuing operations increased/(decreased) by $0.02, $(0.02) and $0.08 for the years ended December 31, 2013, 2012 and 2011 respectively, as a result of the above accounting policy change.

Diluted earnings per share from continuing operations increased/(decreased) by $0.02, $(0.02) and $0.08 for the years ended December 31, 2013, 2012 and 2011 respectively, as a result of the above accounting policy change.

Inventory and Stockholder's Equity increased by $91 and $45, respectively, as of January 1, 2011, as a result of the above accounting policy change.

There was no impact on cash provided by operating activities as a result of the above change.

Property, Plant and Equipment

Property, plant and equipment is carried at cost and is depreciated using the straight-line method. Property, plant and equipment placed in service prior to 1995 is depreciated under the sum-of-the-years' digits method or other substantially similar methods. Substantially all equipment and buildings are depreciated over useful lives ranging from 15 to 25 years. Capitalizable costs associated with computer software for internal use are amortized on a straight-line basis over 5 to 7 years. When assets are surrendered, retired, sold or otherwise disposed of, their gross carrying values and related accumulated depreciation are removed from the accounts and included in determining gain or loss on such disposals.


Maintenance and repairs are charged to operations; replacements and improvements are capitalized.


Table of Contents


F-11


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


Goodwill and Other Intangible Assets

Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill and indefinite-lived intangible assets are tested for impairment at least annually; however, these tests are performed more frequently when events or changes in circumstances indicate that the asset may be impaired. Impairment exists when carrying value may not be recoverable.exceeds fair value. The company's fair value methodology is based on prices of similar assets or other valuation methodologies including present valuediscounted cash flow techniques. Impairment losses are included in cost of goods sold and other operating charges.


Definite-lived intangible assets, such as purchased and licensed technology, patents and customer lists are amortized over their estimated useful lives, generally for periods ranging from 51 to 20 years. The company continually evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the Consolidated Balance Sheets.


Impairment of Long-Lived Assets

The company evaluates the carrying value of long-lived assets to be held and used when events or changes in circumstances indicate the carrying value may not be recoverable. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from the asset are separately identifiable and are less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. The company's fair value methodology is an estimate of fair market value which is made based on prices of similar assets or other valuation methodologies including present value techniques. Long-lived assets to be disposed of other than by sale are classified as held for use until their disposal. Long-lived assets to be disposed of by sale are classified as held for sale and are reported at the lower of carrying amount or fair market value less cost to sell. Depreciation is discontinued for long-lived assets classified as held for sale.


Research and Development

Research and development costs are expensed as incurred.

Research and development expenses include costs (primarily consisting of employee costs, materials, contract services, research agreements, and other external spend) relating to the discovery and development of new products, enhancement of existing products and regulatory approval of new and existing products.


Environmental

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 do not include claims against third parties and are not discounted.


Costs related to environmental remediation and restoration are charged to expense. Other environmental costs are also charged to expense unless they increase the value of the property or reduce or prevent contamination from future operations, in which case, they are capitalized.


Asset Retirement Obligations

The company records asset retirement obligations at fair value at the time the liability is incurred. Accretion expense is recognized as an operating expense using the credit-adjusted risk-free interest rate in effect when the liability was recognized. The associated asset retirement obligations are capitalized as part of the carrying amount of the long-lived asset and depreciated over the estimated remaining useful life of the asset, generally for periods ranging from 1 to 2025 years.


Litigation

The company accrues for liabilities related to litigation matters when the information available indicates that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Legal costs such as outside counsel fees and expenses are charged to expense in the period incurred.


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Insurance/Self-Insurance

The company self-insures certain risks where permitted by law or regulation, including workers' compensation, vehicle liability and employee related benefits. Liabilities associated with these risks are estimated in part by considering historical claims experience, demographic factors and other actuarial assumptions. For other risks, the company uses a combination of insurance and self-insurance, reflecting comprehensive reviews of relevant risks.

A receivable for an insurance recovery is generally recognized when the loss has occurred and collection is considered probable.






F-12


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Income Taxes

The provision for income taxes is 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 basis 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 for subsidiaries in which earnings are deemed to be indefinitely invested. Investment tax credits or grants are accounted for in the period earned (the flow-through method). Interest accrued related to unrecognized tax benefits is included in miscellaneous income and expenses, net, under other income, net. Income tax related penalties are included in the provision for income taxes.


Foreign Currency Translation

The company's worldwide operations utilize the U.S. dollar (USD) isor local currency as the functional currency, of most of the company's worldwide operations.where applicable. For subsidiaries where the USDU.S. dollar (USD) is the functional currency, all foreign currency asset and liability amounts are remeasured into USD at end-of-period exchange rates, except for inventories, prepaid expenses, property, plant and equipment, goodwill and other intangible assets, which are remeasured at historical rates. Foreign currency income and expenses are 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 are included in income in the period in which they occur.


For subsidiaries where the local currency is the functional currency, assets and liabilities denominated in local currencies are translated into USD at end-of-period exchange rates and the resultant translation adjustments are reported, net of their related tax effects, as a component of accumulated other comprehensive income (loss) in stockholders' equity. Assets and liabilities denominated in other than the local currency are remeasured into the local currency prior to translation into USD and the resultant exchange gains or losses are included in income in the period in which they occur. Income and expenses are translated into USD at average exchange rates in effect during the period.


Hedging and Trading Activities

Derivative instruments are reported onin the Consolidated Balance Sheets at their fair values. For derivative instruments designated as fair value hedges, changes in the fair values of the derivative instruments will generally be offset onin the income statement by changes in the fair value of the hedged items. For derivative instruments designated as cash flow hedges, the effective portion of any hedge is reported in accumulated other comprehensive income (loss) until it is cleared to earnings during the same period in which the hedged item affects earnings. The ineffective portion of all hedges is recognized in current period earnings. Changes in the fair values of derivative instruments that are not designated as hedges are recorded in current period earnings.


In the event that a derivative designated as a hedge of a firm commitment or an anticipated transaction is terminated prior to the maturation of the hedged transaction, gains or losses realized at termination are deferred and included in the measurement of the hedged transaction. If a hedged transaction matures, or is sold, extinguished, or terminated prior to the maturity of a derivative designated as a hedge of such transaction, gains or losses associated with the derivative through the date the transaction matured are included in the measurement of the hedged transaction and the derivative is reclassified as for trading purposes. Derivatives designated as a hedge of an anticipated transaction are reclassified as for trading purposes if the anticipated transaction is no longer probable.


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Cash flows from derivative instruments accounted for as either fair value hedges or cash flow hedges are reported in the same category as the cash flows from the items being hedged. Cash flows from all other derivative instruments are generally reported as investing activities in the Consolidated Statements of Cash Flows. See Note 2320 for additional discussion regarding the company's objectives and strategies for derivative instruments.

Reclassifications

Certain reclassifications of prior years' data have been made to conform to 2010 classifications.

2.  OTHER INCOME, NET

 
 
  
 2010
  
 2009
  
 2008
  

Cozaar®/Hyzaar® income

   $483   $1,032   $1,019  

Royalty income

    146    127    111  

Interest income

    93    91    138  

Equity in earnings of affiliates, excluding exchange gains/losses1

    179    86    117  

Net gains on sales of assets

    127    63    40  

Net exchange gains (losses)1

    (13)   (205)   (255) 

Miscellaneous income and expenses, net2

    213    25    137  

   $1,228   $1,219   $1,307  
1
The company routinely uses foreign currency exchange contracts to offset its net exposures, by currency, related to the foreign currency-denominated monetary assets and liabilities. The objective of this program is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes on net monetary asset positions. The net pre-tax exchange gains and losses are partially offset by the associated tax impact. Exchange gains (losses) related to earnings of affiliates was $(2), $13 and $(36) for 2010, 2009 and 2008, respectively.

2
Miscellaneous income and expenses, net, includes interest items, insurance recoveries, litigation settlements, and other items.

3.  INTEREST EXPENSE

 
 
  
 2010
  
 2009
  
 2008
  

Interest incurred

   $628   $455   $425  

Interest capitalized

    (38)   (47)   (49) 

            

   $590   $408   $376  

Interest expense increased in 2010 as a result of the $179 pre-tax charge on the early extinguishment of debt in the fourth quarter 2010 (see Note 17).



F-13

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

2.  DIVESTITURES
Glass Laminating Solutions/Vinyls
In November 2013, DuPont entered into a definitive agreement to sell GLS/Vinyls, a part of Packaging & Industrial Polymers, to Kuraray Co. Ltd. for

4.  EMPLOYEE SEPARATION/ASSET RELATED CHARGES, NET$543

At, plus the value of the inventories. The sale is expected to close about mid-2014 pending customary closing conditions, including timing of antitrust clearance.


The assets classified as held for sale at December 31, 2010, total liabilities relating2013 related to prior restructuring activities were $63.

GLS/Vinyls primarily consist of inventory and property, plant and equipment.


Performance Coatings
2009 Restructuring Program

In the second quarter 2009, in response to the global economic recession,February 2013, the company committedsold its Performance Coatings business to an initiativeFlash Bermuda Co. Ltd., a Bermuda exempted limited liability company formed by affiliates of The Carlyle Group (collectively referred to address the steepas "Carlyle"). The sale resulted in approximately $4,200 in after-tax proceeds and extended downturn in motor vehicle and construction markets, and the extensiona pre-tax gain of the downturn into industrial markets.$2,687 ($1,962 net of tax). The plan was designed to restructure asset and fixed cost bases in order to improve long-term competitiveness, simplify business processes, and maximize pre-tax operating income. The plan included the elimination of about 2,000 positions by severance principally located in the United States of America (U.S.). As a result, a charge of $340gain was recorded in employee separation/asset related charges, net, which pertains to the following financial statement line items; cost of goods sold and other operating charges – 60 percent, selling, general and administrative expenses – 30 percent, and research and development expense – 10 percent. This charge includes $212 of severance and related benefits costs, $24 of other non-personnel charges and $104 of asset related charges, including $77 for asset shut downs and write-offs, $11 for asset impairments and $16 for accelerated depreciation.

The 2009 restructuring program charge of $340 reduced segment earnings as follows: Electronics & Communications – $43; Performance Chemicals – $66; Performance Coatings – $65; Performance Materials – $110; Safety & Protection – $55; and Other – $1.

In the fourth quarter 2009, the company recorded a net reduction of $30income from discontinued operations after income taxes in the estimated costs associated with the 2009 restructuring program. This net reduction was primarily due to lower than estimated individual severance costs and work force reductions through non-severance programs. The net reduction of $30 impacted segment earningscompany's Consolidated Income Statements for the twelve monthsyear ended December 31, 20092013. The results of discontinued operations are summarized below:

For the year ended December 31,201320122011
Net sales$331
$4,218
$4,280
Income before income taxes$2,717
$551
$518
Provision for income taxes1
718
243
151
Income from discontinued operations after income taxes$1,999
$308
$367

1.
Full year 2012 includes expense of $70 to accrue taxes associated with earnings of certain Performance Coatings subsidiaries that were previously considered permanently reinvested as these entities have been reclassified as held for sale.

The key components of the assets and liabilities classified as follows: Electronics & Communications – $6; Performance Chemicals – $9;held for sale at December 31, 2012 related to Performance Coatings – $(11); Performance Materials – $23; Safety & Protection – $8; and Other – $(5).

Inconsisted of the fourth quarter 2010, the company recorded a net reduction of $20 in the estimated costs associated with the 2009 restructuring program. This net reduction was primarily due to lower than estimated individual severance costs and work force reductions through non-severance programs. The net reduction of $20 impacted segment earnings for the twelve months ended December 31, 2010 as follows: Electronics & Communications – $8; Performance Chemicals – $10; Performance Coatings – $(16); Performance Materials – $13; and Safety & Protection – $5.

There were $81 of employee separation cash payments related to the 2009 restructuring program during 2010. The actions related to the 2009 restructuring program were substantially completed by the end of 2010 with payments continuing into 2011, primarily in Europe.

following:
 December 31,
2012
Cash and cash equivalents$95
Accounts and notes receivable, net783
Inventories488
Prepaid expenses6
Deferred income taxes - current32
Property, plant and equipment, net of accumulated depreciation749
Goodwill808
Other intangible assets67
Deferred income taxes - noncurrent14
Other assets - noncurrent34
Total assets held for sale$3,076
Accounts payable$408
Income taxes17
Other accrued liabilities237
Other liabilities - noncurrent388
Deferred income taxes - noncurrent34
Total liabilities related to assets held for sale$1,084


F-14

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

3.  EMPLOYEE SEPARATION/ASSET RELATED CHARGES, NET
At

Account balances and activity for the 2009December 31, 2013, total liabilities related to restructuring program are summarized below:

      
 
  
 Asset
Related

  
 Employee
Separation
Costs

  
 Other
Non-personnel
Charges1

  
 Total
  

Net charges to income in 2009

   $104   $212   $24   $340  

Charges to accounts

                      
 

Payments

    -    (33)   -    (33) 
 

Net translation adjustment

    -    1    -    1  
 

Net credits to income

    -    (30)   -    (30) 
 

Asset write-offs and adjustments

    (104)   -    -    (104) 

Balance at December 31, 2009

   $-   $150   $24   $174  
 

Payments

    -    (81)   (20)   (101) 
 

Net translation adjustment

    -    (6)   -    (6) 
 

Net credits to income

    -    (17)   (3)   (20) 

Balance at December 31, 2010

   $-   $46   $1   $47  
1
Other non-personnel charges consist of contractual obligation costs.

activities were 2008 Restructuring Program$57

During 2008, in response, primarily relating to the challenging economic environment,2012 restructuring program. In addition to the company initiated a global restructuring program to reduce costs and improve profitability across its businesses. The program included the elimination of approximately 2,500 positions principally located in Western Europe and the U.S. primarily supporting the motor vehicle and construction markets. As a result,programs discussed below, a charge of $535 was$19, which included $9 recorded in employee separation / asset related charges, net which pertainsand $10 recorded in other income, net, was taken in the fourth quarter 2013. This charge was a result of restructuring actions including employee separation and asset related costs related to a joint venture in the Performance Materials segment.


2012 Restructuring Program
In 2012, the company commenced a restructuring plan to increase productivity, enhance competitiveness and accelerate growth. The plan was designed to eliminate corporate costs previously allocated to the costPerformance Coatings business as well as utilize additional cost-cutting actions to improve competitiveness. As a result, pre-tax charges of goods sold and other operating$234 were recorded in employee separation / asset related charges, financial statement line item. This charge included $287 related tonet. The 2012 charges consisted of $157 of employee severanceseparation costs, $18$8 of other non-personnel charges, and $230$69 of asset related charges, including $111 forwhich included $30 of asset shut-downsimpairments and $119 for$39 of asset impairments.

shut downs.


The 20082012 restructuring program charge of $535 reduced 2008charges impacted segment earnings as follows: Agriculture & Nutrition – $18;- $11, Electronics & Communications – $37;- $9, Industrial Biosciences - $3, Nutrition & Health - $53, Performance Chemicals – $50; Performance Coatings – $209;- $3, Performance Materials – $94;- $13, and Safety & Protection – $96; and Other – $31.

- $58, as well as Corporate expenses - $84.


In 2009,the fourth quarter 2013, the company recorded a $100 net reduction of $(17) in the estimated costs associated with the 20082012 restructuring program. This net reduction was primarily due to lower than estimated individual severance costs and workforce reductions through non-severance programs. The $100 net reduction impacted segment earnings for the year ended December 31, 20092013 as follows: Agriculture - $(2), Electronics & Communications - $2, Industrial Biosciences - $(1), Nutrition – $1;& Health - $(3), Performance Chemicals – $3; Performance Coatings – $61;- $1, Performance Materials – $29;- $(1), and Safety & Protection – $2; and- $(2), Other – $4.

In the fourth quarter 2010, the company recorded a net reduction of $14 in the estimated costs associated with the 2008 restructuring program. This net reduction was primarily due to lower than estimated individual severance costs and work force reductions through non-severance programs. - (2), as well as Corporate expenses - $(9).


The net reduction of $14 impacted segment earnings for the twelve months ended December 31, 2010 as follows: Performance Coatings – $10; and Performance Materials – $3; and Other – $1.

There were $78 of employee separation cash payments related to the 2008 restructuring program during 2010. The programactions and payments related to the 20082012 restructuring program were substantially completedcomplete as of December 31, 2010.

2013.

Account balances and activity for the 2012 restructuring program are summarized below:
 Asset RelatedEmployee Separation Costs
Other Non-Personnel Charges1
Total
Charges to income in 2012$69
$157
$8
$234
Charges to accounts:    
Payments
(4)(1)(5)
Net translation adjustment
1

1
Asset write-offs and adjustments(69)

(69)
Balance as of December 31, 2012$
$154
$7
$161
Payments
(82)(5)(87)
Net translation adjustment
(1)
(1)
Asset write-offs and adjustments
(19)2
(17)
Balance as of December 31, 2013$
$52
$4
$56

1.    Other non-personnel charges consist of contractual obligation costs.

Asset Impairments
In the fourth quarter 2013, as a result of strategic decisions related to the thin film photovoltaic market, and during 2012, as a result of deteriorating conditions in the thin film photovoltaic market, the company determined that impairment triggering events had occurred and that assessments of the asset group related to its thin film photovoltaic modules and systems were warranted. These assessments determined that the carrying value of the asset group exceeded its fair value. As a result of the impairment tests, $129 and $150 of pre-tax impairment charges were recorded during 2013 and 2012, respectively, within the Electronics & Communications segment.


F-15

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Account balances


During 2012, as a result of strategic decisions related to deteriorating conditions within a specific industrial chemicals market, the company determined that an impairment triggering event had occurred and activitythat an assessment of the asset group related to this industrial chemical was warranted. This assessment determined that the carrying value of the asset group exceeded its fair value. As a result of the impairment test, a $33 pre-tax impairment charge was recorded within the Performance Chemicals segment.

During 2012, as a result of deteriorating conditions in an industrial polymer market, the company determined that an impairment triggering event had occurred and that an assessment of the asset group related to this polymer product was warranted. This assessment determined that the carrying value of the asset group exceeded its fair value. As a result of the impairment test, a $92 pre-tax impairment charge was recorded within the Performance Materials segment.

The bases of the fair value for the 2008 restructuring program are summarized below:

      
 
  
 Asset
Related

  
 Employee
Separation
Costs

  
 Other
Non-personnel
Charges1

  
 Total
  

Net charges to income in 2008

   $230   $287   $18   $535  

Charges to accounts

                      
 

Net translation adjustment

    -    19    1    20  
 

Asset write-offs

    (230)   -    (2)   (232) 
 

Other

    -    3    -    3  

Balance at December 31, 2008

   $-   $309   $17   $326  
 

Payments

    -    (110)   (9)   (119) 
 

Net translation adjustment

    -    6    1    7  
 

Net credits to income

    -    (100)   -    (100) 

Balance at December 31, 2009

   $-   $105   $9   $114  
 

Payments

    -    (78)   (5)   (83) 
 

Net translation adjustment

    -    (6)   -    (6) 
 

Net credits to income

    -    (11)   (3)   (14) 

Balance at December 31, 2010

   $-   $10   $1   $11  
1
Other non-personnel charges consistabove were calculated utilizing a discounted cash flow approach which included assumptions concerning future operating performance and economic conditions that may differ from actual cash flows. In connection with the matters discussed above, as of contractual obligation costs.

December 31, 2013 and 2012, the company had long-lived assets with a remaining net book value of approximately $90 and 5.  PROVISION FOR INCOME TAXES$150

 
 
  
 2010
  
 2009
  
 2008
  

Current tax expense (benefit):

                 
 

U.S. federal

   $(109)  $23   $14  
 

U.S. state and local

    -    (9)   (3) 
 

International

    454    328    327  
  

Total current tax expense

    345    342    338  

Deferred tax expense (benefit):

                 
 

U.S. federal

    245    57    210  
 

U.S. state and local

    3    1    -  
 

International

    66    15    (167) 
  

Total deferred tax expense

    314    73    43  

Provision for income taxes

   $659   $415   $381  
, respectively, accounted for at fair value on a nonrecurring basis after initial recognition. These nonrecurring fair value measurements were determined using level 3 inputs within the fair value hierarchy, as described in Note 1 to the Consolidated Financial Statements.




5.  OTHER INCOME, NET
 201320122011
Cozaar®/Hyzaar® income
$14
$54
$282
Royalty income187
177
189
Interest income136
109
110
Equity in earnings of affiliates, excluding exchange gains/losses1
37
99
191
Gain on sale of equity method investment9
122

Net gains on sales of other assets25
130
89
Net exchange losses1
(128)(215)(146)
Miscellaneous income and expenses, net2
130
22
27
Other income, net

$410
$498
$742

1.
The company routinely uses foreign currency exchange contracts to offset its net exposures, by currency, related to the foreign currency-denominated monetary assets and liabilities. The objective of this program is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes on net monetary asset positions. The net pre-tax exchange gains and losses are recorded in other income, net and the related tax impact is recorded in provision for income taxes on continuing operations on the Consolidated Income Statements. Exchange gains (losses) related to earnings of affiliates was $4, $3 and $1 for 2013, 2012 and 2011, respectively. The $(128) net exchange loss for the year ended December 31, 2013, includes a $(33) exchange loss, associated with the devaluation of the Venezuelan bolivar.
2.
Miscellaneous income and expenses, net, generally includes interest items, certain insurance recoveries and litigation settlements, and other items.


F-16


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


6.  PROVISION FOR INCOME TAXES
 201320122011
Current tax expense (benefit) on continuing operations: 
 
 
U.S. federal$160
$121
$353
U.S. state and local23
16
(20)
International677
663
482
Total current tax expense on continuing operations860
800
815
Deferred tax expense (benefit) on continuing operations:



 
U.S. federal(193)(105)(143)
U.S. state and local(65)(46)(4)
International24
(33)(21)
Total deferred tax (benefit) expense on continuing operations(234)(184)(168)
Provision for income taxes on continuing operations$626
$616
$647

The significant components of deferred tax assets and liabilities at December 31, 20102013 and 2009,2012, are as follows:

 
 
  
 2010
  
 2009
  
 
  
 Asset
  
 Liability
  
 Asset
  
 Liability
  

Depreciation

   $-   $1,614   $-   $1,515  

Accrued employee benefits

    3,731    81    3,899    98  

Other accrued expenses

    928    369    1,029    366  

Inventories

    273    154    197    148  

Unrealized exchange gains

    34    -    5    -  

Tax loss/tax credit carryforwards/backs

    2,680    -    3,023    -  

Investment in subsidiaries and affiliates

    41    279    45    275  

Amortization of intangibles

    53    636    80    558  

Other

    314    144    291    152  

Valuation allowance

    (1,666)   -    (1,759)   -  

          

   $6,388   $3,277   $6,810   $3,112  

Net deferred tax asset

   $3,111        $3,698       

Deferred taxes are presented in the Consolidated Balance Sheets as of December 31, 2010 and 2009 as follows:

 20132012
 AssetLiabilityAssetLiability
Depreciation$
$1,707
$
$1,696
Accrued employee benefits3,754
512
5,198
167
Other accrued expenses818
87
723
65
Inventories275
151
231
105
Unrealized exchange gains/losses65


37
Tax loss/tax credit carryforwards/backs2,615

2,733

Investment in subsidiaries and affiliates189
245
78
92
Amortization of intangibles109
1,372
58
1,335
Other316
159
244
265
Valuation allowance(1,764)
(1,914)
          $6,377
$4,233
$7,351
$3,762
Net deferred tax asset$2,144
 
$3,589
 
 
 
  
 Location on the
Balance Sheet

  
 2010
  
 2009
  

Current deferred tax asset

   Deferred income taxes   $534   $612  

Non-current deferred tax asset1

   Other assets    2,772    3,240  

Current deferred tax liability

   Income taxes    (80)   (28) 

Non-current deferred tax liability

   Deferred income taxes    (115)   (126) 

Net deferred tax asset

                  $3,111   $3,698  

1
See Note 13.

An analysis of the company's effective income tax rate (EITR) on continuing operations is as follows:

 
 
  
 2010
  
 2009
  
 2008
  

Statutory U.S. federal income tax rate

    35.0%   35.0%   35.0% 

Exchange gains/losses1

    0.2    (2.6)   (0.2) 

Domestic operations

    (2.0)   (1.4)   (2.8) 

Lower effective tax rates on international operations-net

    (13.6)   (11.8)   (14.3) 

Tax settlements

    (1.8)   (0.2)   (1.8) 

          

    17.8%   19.0%   15.9% 
1
Principally reflects the impact of non-taxable exchange gains and losses resulting from remeasurement of foreign currency-denominated monetary assets and liabilities. Further information about the company's foreign currency hedging program is included in Note 23 under the heading Foreign Currency Risk.
 201320122011
Statutory U.S. federal income tax rate35.0 %35.0 %35.0 %
Exchange gains/losses1
0.8
0.1
(0.8)
Domestic operations(3.2)(2.3)(2.5)
Lower effective tax rates on international operations-net2
(12.3)(10.9)(11.6)
Tax settlements(0.2)(2.0)(0.2)
Sale of a business

(2.3)
U.S. research & development credit 2
(2.2)
(0.9)
          17.9 %19.9 %16.7 %

1.
Principally reflects the impact of non-taxable exchange gains and losses resulting from remeasurement of foreign currency-denominated monetary assets and liabilities. Further information about the company's foreign currency hedging program is included in Note 20 under the heading Foreign Currency Risk.
2.
On January 2, 2013, U.S. tax law was enacted which extended through 2013 (and retroactive to 2012) several expired or expiring temporary business tax provisions. In accordance with GAAP, this extension was taken into account in the quarter in which the legislation was enacted (i.e. first quarter 2013).


F-17

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


Consolidated income from continuing operations before income taxes for U.S. and international operations was as follows:


  
 2010
  
 2009
  
 2008
  
201320122011

United States (including exports)

   $949   $171   $992  
U.S. (including exports)$962
$640
$718

International

   2,762   2,013   1,399  2,527
2,448
3,161


   $3,711   $2,184   $2,391  $3,489
$3,088
$3,879


The increase in U.S. pre-tax earnings from 2009continuing operations from 2013 to 20102012 is primarily driven by two factors, the resultshigher worldwide sales volume, lower Imprelis® herbicide claims, net of the company's hedging program combined with the improvementinsurance recoveries, and lower employee separation/asset related charges in the U.S. economy.2013, partly offset by lower local selling prices and negative currency impact. See Note 16 and Note 3 for additional information relating to Imprelis® claims and employee separation/asset related charges, respectively. In 2009,2013 and 2012, the U.S. recorded $485 of exchange lossesgain (loss) associated with the hedging program. However, in 2010, the program resulted in the company recording $117 of exchange gains. This swing in the exchange gains$35 and losses year over year combined with the underlying recovery in the U.S. economy accounts for the increase in the U.S. earnings per the chart above.$(157), respectively. While the taxation of the amounts reflected on the chart above does not correspond precisely to the jurisdiction of taxation (due to taxation in multiple countries, exchange gains (losses),gains/losses, etc.), it represents a reasonable approximation of the income before income taxes split between U.S. and international jurisdictions. See Note 2320 for additional information regarding the company's hedging program.


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 or back, subject to statutory limitations, to reduce taxable income or taxes payable in future or prior years. At December 31, 2010,2013, the tax effect of such carryforwards/backs, net of valuation allowance approximated $1,379.$1,199. Of this amount, $1,205$1,009 has no expiration date, $38$19 expires after 20102013 but before the end of 20152018 and $136$171 expires after 2015.

2018.


At December 31, 2010,2013, unremitted earnings of subsidiaries outside the U.S. totaling $12,631$15,978 were deemed to be indefinitely reinvested. No deferred tax liability has been recognized with regard to the remittance of such earnings. It is not practical to estimate the income tax liability that might be incurred if such earnings were remitted to the U.S.


Each year the company files hundreds of tax returns in the various national, state and local income taxing jurisdictions in which it operates. These tax returns are subject to examination and possible challenge by the taxing authorities. Positions challenged by the taxing authorities may be settled or appealed by the company. As a result, there is an uncertainty in income taxes recognized in the company's financial statements in accordance with accounting for income taxes and accounting for uncertainty in income taxes. It is reasonably possible that changes to the company's global unrecognized tax benefits could be significant, however, due to the uncertainty regarding the timing of completion of audits and possible outcomes, a current estimate of the range of increases or decreases that may occur within the next twelve months cannot be made.
























F-18


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

The company and/or its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and non-U.S. jurisdictions. With few exceptions, the company is no longer subject to U.S. federal, state and local, or


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


non-U.S. income tax examinations by tax authorities for years before 1999.2004. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

 
 
  
 2010
  
 2009
  
 2008
  

Total Unrecognized Tax Benefits as of January 1

   $739   $677   $825  

Gross amounts of decreases in unrecognized tax benefits as a result of tax positions taken during the prior period

    (155)   (60)   (49) 

Gross amounts of increases in unrecognized tax benefits as a result of tax positions taken during the prior period

    169    68    51  

Gross amounts of increases in unrecognized tax benefits as a result of tax positions taken during the current period

    51    42    59  

Amount of decreases in the unrecognized tax benefits relating to settlements with taxing authorities

    (90)   (9)   (157) 

Reduction to unrecognized tax benefits as a result of a lapse of the applicable statue of limitations

    (24)   (10)   (14) 

Exchange gain (loss)

    3    31    (38) 

Total Unrecognized Tax Benefits as of December 31

   $693   $739   $677  

Total unrecognized tax benefits that, if recognized, would impact the effective tax rate

   $545   $566   $467  

Total amount of interest and penalties recognized in the Consolidated Income Statement

   $(70)  $12   $7  

Total amount of interest and penalties recognized in the Consolidated Balance Sheet

   $99   $125   $115  
 201320122011
Total unrecognized tax benefits as of January 1$805
$800
$693
Gross amounts of decreases in unrecognized tax benefits as a result of tax positions
     taken during the prior period
(28)(94)(82)
Gross amounts of increases in unrecognized tax benefits as a result of tax positions
     taken during the prior period
76
73
170
Gross amounts of increases in unrecognized tax benefits as a result of tax positions
     taken during the current period
92
78
79
Amount of decreases in the unrecognized tax benefits relating to settlements with taxing
     authorities
(19)(29)(6)
Reduction to unrecognized tax benefits as a result of a lapse of the applicable statute of
     limitations
(6)(10)(32)
Exchange gain (loss)(19)(13)(22)
Total unrecognized tax benefits as of December 31$901
$805
$800
Total unrecognized tax benefits that, if recognized, would impact the effective tax rate$778
$693
$683
Total amount of interest and penalties recognized in the Consolidated Income Statements$16
$4
$7
Total amount of interest and penalties recognized in the Consolidated Balance Sheets$122
$116
$113

6.



F-19


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

7.  EARNINGS PER SHARE OF COMMON STOCK

Set forth below is a reconciliation of the numerator and denominator for basic and diluted earnings per share calculations for the periods indicated:


  
 2010
  
 2009
  
 2008
  
201320122011

Numerator:

               
 
 

Net income attributable to DuPont

   $3,031   $1,755   $2,007  
Income from continuing operations after income taxes attributable to DuPont$2,849
$2,447
$3,192

Preferred dividends

   (10)  (10)  (10) (10)(10)(10)
Income from continuing operations after income taxes available to DuPont common stockholders$2,839
$2,437
$3,182






Income from discontinued operations after income taxes$1,999
$308
$367






Net income available to common stockholders

   $3,021   $1,745   $1,997  $4,838
$2,745
$3,549






Denominator:

              



 

Weighted-average number of common shares outstanding – Basic

   908,860,000   904,395,000   902,415,000  925,984,000
933,275,000
928,417,000

Dilutive effect of the company's employee compensation plans and accelerated share repurchase agreement

   12,795,000   4,317,000   4,956,000  
Dilutive effect of the company's employee compensation plans7,163,000
8,922,000
12,612,000

Weighted average number of common shares outstanding – Diluted

   921,655,000   908,712,000   907,371,000  933,147,000
942,197,000
941,029,000


The weighted-average number of common shares outstanding in 20102013 decreased as a result of the company's repurchase and retirement of its common stock, partially offset by the issuance of new shares from the company's equity compensation plans. The weighted-average number of common shares outstanding in 2012 increased as a result of the issuance of new shares from the company's equity compensation plans, partially offset by the company's repurchase and retirement of its common stock (see Note 20)Notes 19 and 17, respectively). The weighted-average number of common shares outstanding in 2009 increased as a result of the issuance of new shares from the company's equity compensation plans.


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

The following average number of stock options are antidilutive and therefore, are not included in the diluted earnings per share calculation:

 
 
  
 2010
  
 2009
  
 2008
  

Average number of stock options

    45,508,000    72,899,000    40,831,000  
 201320122011
Average number of stock options2,596,000
12,158,000
4,361,000


The change in the average number of stock options that were antidilutive in 20102013 and 20092012 was primarily due to changes in the company's average stock price.

7.  FAIR VALUE MEASUREMENTS

The company has determined that its financial assets and liabilities are level 1 and level 2 in the fair value hierarchy. See Note 21 for a schedule of pension assets measured at fair value on a recurring basis. At December 31, 2010, the following financial assets and financial liabilities were measured at fair value on a recurring basis using the type of inputs shown:

 
  
  
  
 Fair Value Measurements at
December 31, 2010 Using

  

    December 31,
2010
    Level 1 Inputs    Level 2 Inputs  

Financial assets

                 

Derivatives

   $153   $-   $153  

Available-for-sale securities

    17    17    -  

            

   $170   $17   $153  

Financial liabilities

                 

Derivatives

   $132   $-   $132  

At December 31, 2009, the following financial assets and financial liabilities were measured at fair value on a recurring basis using the type of inputs shown:

 
  
  
  
 Fair Value Measurements at
December 31, 2009 Using

  

    December 31,
2009
    Level 1 Inputs    Level 2 Inputs  

Financial assets

                 

Derivatives

   $128   $-   $128  

Available-for-sale securities

    27    27    -  

            

   $155   $27   $128  

Financial liabilities

                 

Derivatives

   $132   $-   $132  

Refer to Note 23 for further discussions regarding the company's derivative instruments.



F-20

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


8.  ACCOUNTS AND NOTES RECEIVABLE,

NET

December 31,
  
 2010
  
 2009
  
20132012

Accounts receivable – trade1

   $4,124   $3,795  $4,575
$4,069

Notes receivable – trade1,2

   219   137  195
131

Other3

   1,292   1,098  1,277
1,252


   $5,635   $5,030  $6,047
$5,452
1
Accounts and notes receivable – trade are net of allowances of $326 in 2010 and $322 in 2009. Allowances are equal to the estimated uncollectible amounts. That estimate is based on historical collection experience, current economic and market conditions, and review of the current status of customer's accounts.
1.
Accounts and notes receivable – trade are net of allowances of $269 in 2013 and $243 in 2012. Allowances are equal to the estimated uncollectible amounts. That estimate is based on historical collection experience, current economic and market conditions, and review of the current status of customers' accounts.
2.
Notes receivable – trade primarily consists of receivables within the Agriculture segment for deferred payment loan programs for the sale of seed products to customers. These loans have terms of one year or less and are primarily concentrated in North America. The company maintains a rigid pre-approval process for extending credit to customers in order to manage overall risk and exposure associated with credit losses. As of December 31, 2013 and 2012, there were no significant past due notes receivable, nor were there any significant impairments related to current loan agreements.
3.
Other includes receivables in relation to Cozaar®/Hyzaar® interests, fair value of derivative instruments, value added tax, general sales tax and other taxes.

2
Notes receivable – trade primarily consists of receivables within the Agriculture & Nutrition segment for deferred payment loan programs for the sale of seed products to customers. These loans have terms of one year or less and are primarily concentrated in North America. The company maintains a rigid pre-approval process for extending credit to customers in order to manage overall risk and exposure associated with credit losses. As of December 31, 2010 and 2009, there were no significant past due notes receivable, nor were there any significant impairments related to current loan agreements.

3
Other includes receivables in relation to Cozaar®/Hyzaar® interests, fair value of derivative instruments, value added tax, general sales tax and other taxes.

Accounts and notes receivable are carried at amounts that approximate fair value and include amounts due from equity affiliates of $51 and $35 for 2010 and 2009, respectively.

9.  INVENTORIES

value.
December 31,
  
 2010
  
 2009
  

Finished products

   $3,191   $2,893  

Semifinished products

    2,564    2,231  

Raw materials, stores and supplies

    855    872  

    6,610    5,996  

Adjustment of inventories to a LIFO basis

    (643)   (616) 

         

   $5,967   $5,380  

Inventory values, before LIFO adjustment, are generally determined by the average cost method, which approximates current cost. Excluding seeds, stores and supplies, inventories valued under the LIFO method comprised 78 percent and 79 percent of consolidated inventories before LIFO adjustment for the periods ended December 31, 2010 and 2009, respectively. Seed inventories of $2,581 and $2,380 at December 31, 2010 and 2009, respectively, were valued under the FIFO method. Stores and supplies inventories of $248 and $239 at December 31, 2010 and 2009, respectively, were valued under the average cost method.


9.  INVENTORIES
December 31,20132012
Finished products$4,645
$4,449
Semifinished products2,576
2,407
Raw materials, stores and supplies1,360
1,313
 8,581
8,169
Adjustment of inventories to a LIFO basis(539)(604)
         $8,042
$7,565


Table of Contents

10.  PROPERTY, PLANT AND EQUIPMENT
December 31,20132012
Buildings$5,283
$5,490
Equipment24,714
24,090
Land671
691
Construction1,763
1,555
          $32,431
$31,826


F-21


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

10.  PROPERTY, PLANT AND EQUIPMENT


December 31,
  
 2010
  
 2009
  

Buildings

   $4,492   $4,460  

Equipment

    23,384    22,809  

Land

    544    520  

Construction

    1,547    1,126  

          

   $29,967   $28,915  

Property, plant and equipment includes gross assets acquired under capital leases of $30 and $36 at December 31, 2010 and 2009, respectively. Related amounts included in accumulated depreciation were $21 and $24 at December 31, 2010 and 2009, respectively.

11.  GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill
Goodwill

The following table summarizes changes in the carrying amount of goodwill for the years ended December 31, 20102013 and 2009,2012, by reportable segment:


  
 Balance
as of
December 31,
2010

  
 Goodwill
Adjustments
and
Acquisitions

  
 Balance
as of
December 31,
2009

  
 Goodwill
Adjustments
and
Acquisitions

  
 Balance
as of
December 31,
2008

  
Balance as of December 31, 2013
Goodwill
Adjustments
and
Acquisitions
Balance as of December 31, 2012
Goodwill
Adjustments
and
Acquisitions
Balance as of December 31, 2011

Agriculture & Nutrition

   $652   $176   $476   $10   $466  
Agriculture$330
$99
$231
$(1)$232

Electronics & Communications

   117   (2)  119   (1)  120  149

149

149
Industrial Biosciences898
8
890
24
866
Nutrition & Health2,315
1
2,314
(8)2,322

Performance Chemicals

   185   2   183   (1)  184  185

185

185

Performance Coatings

   809   -   809   -   809  


(809)809

Performance Materials

   410   (3)  413   (7)  420  388
(13)401
(3)404

Safety & Protection

   444   307   137   1   136  448
2
446

446

Total

   $2,617   $480   $2,137   $2   $2,135  $4,713
$97
$4,616
$(797)$5,413


Changes in goodwill in 20102013 primarily relatedrelate to acquisitionsgoodwill associated with an acquisition in the Agriculture & Nutrition and Safety & Protection segments.segment. Changes in goodwill in 2012 primarily relate to goodwill in 2009 resulted from acquisition accounting refinementsassociated with the Performance Coatings business that was reclassified as held for sale (see Note 2). In 2013 and other acquisitions and divestitures. In 2010 and 2009,2012, the company performed impairment tests for goodwill and determined that no goodwill impairments existed.



F-22

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


Other Intangible Assets

The following table summarizes the gross carrying amounts and accumulated amortization of other intangible assets by major class:

 
 
  
 December 31, 2010
  
 December 31, 2009
  
 
  
 Gross
  
 Accumulated
Amortization

  
 Net
  
 Gross
  
 Accumulated
Amortization

  
 Net
  

Intangible assets subject to amortization (Definite-lived)1

                                
 

Purchased and licensed technology

   $1,557   $(765)  $792   $1,622   $(716)  $906  
 

Patents

    118    (44)   74    169    (57)   112  
 

Trademarks

    57    (22)   35    62    (22)   40  
 

Other2

    918    (323)   595    642    (302)   340  

    2,650    (1,154)   1,496    2,495    (1,097)   1,398  

Intangible assets not subject to amortization (Indefinite-lived)

                                
 

Trademarks/tradenames

    233    -    233    179    -    179  
 

Pioneer germplasm3

    975    -    975    975    -    975  

    1,208    -    1,208    1,154    -    1,154  

   $3,858   $(1,154)  $2,704   $3,649   $(1,097)  $2,552  
                                 
 December 31, 2013December 31, 2012
 Gross
Accumulated
Amortization
NetGross
Accumulated
Amortization
Net
Intangible assets subject to amortization
     (Definite-lived)
      
Customer lists$1,818
$(393)$1,425
$1,847
$(330)$1,517
Patents519
(160)359
525
(127)398
Purchased and licensed technology1,999
(1,129)870
1,929
(1,016)913
Trademarks43
(17)26
57
(29)28
Other1
242
(106)136
206
(98)108
 4,621
(1,805)2,816
4,564
(1,600)2,964
Intangible assets not subject to amortization
     (Indefinite-lived)
      
In-process research and development43

43
62

62
Microbial cell factories2
306

306
306

306
Pioneer germplasm3
1,050

1,050
975

975
Trademarks/tradenames881

881
819

819
 2,280

2,280
2,162

2,162
Total$6,901
$(1,805)$5,096
$6,726
$(1,600)$5,126
1
Changes in the gross carrying amount of intangible assets subject to amortization in 2010 primarily related to acquisitions in the Agriculture & Nutrition and Safety & Protection segments, which were partially offset by the write-off of fully amortized definite-lived intangible assets in the Agriculture & Nutrition segment.
2
Primarily consists of sales and grower networks, customer lists, marketing and manufacturing alliances and noncompetition agreements.
3
Pioneer germplasm is the pool of genetic source material and body of knowledge gained from the development and delivery stage of plant breeding. The company recognized germplasm as an intangible asset upon the acquisition of Pioneer. This intangible asset is expected to contribute to cash flows beyond the foreseeable future and there are no legal, regulatory, contractual, or other factors which limit its useful life.

1.
Primarily consists of sales and grower networks, marketing and manufacturing alliances and noncompetition agreements.
2.
Microbial cell factories, derived from natural microbes, are used to sustainably produce enzymes, peptides and chemicals using natural metabolic processes. The company recognized the microbial cell factories as an intangible asset upon the acquisition of Danisco. This intangible asset is expected to contribute to cash flows beyond the foreseeable future and there are no legal, regulatory, contractual, or other factors which limit its useful life.
3.
Pioneer germplasm is the pool of genetic source material and body of knowledge gained from the development and delivery stage of plant breeding. The company recognized germplasm as an intangible asset upon the acquisition of Pioneer. This intangible asset is expected to contribute to cash flows beyond the foreseeable future and there are no legal, regulatory, contractual, or other factors which limit its useful life.


The aggregate pre-tax amortization expense from continuing operations for definite-lived intangible assets was $176, $252$323, $312 and $275$253 for 2010, 20092013, 2012 and 2008,2011, respectively. The estimated aggregate pre-tax amortization expense from continuing operations for 2011, 2012, 2013, 2014, 2015, 2016, 2017 and 20152018 is $215, $213, $213, $202$371, $377, $339, $212 and $170,$209, respectively, which are primarily reported in cost of goods sold and other operating charges.

12.  SUMMARIZED FINANCIAL INFORMATION FOR AFFILIATED COMPANIESsold.

Summarized combined financial information for affiliated companies for which the equity method of accounting is used (see Note 1) is shown on a 100 percent basis. The most significant of these affiliates at December 31, 2010, are DuPont Teijin Films, DuPont-Toray Company Ltd. and DuPont-Mitsui, all of which are owned 50 percent by the company. Dividends received from equity affiliates were $103, $49 and $87 in 2010, 2009 and 2008, respectively.

 
 
  
 Year Ended December 31,
  
Results of operations
  
 2010
  
 2009
  
 2008
  

Net sales1

   $4,073   $2,924   $3,064  

Earnings before income taxes

    543    235    281  

Net income

    393    210    190  

DuPont's equity in (losses) earnings of affiliates:

                 
 

Partnerships-pre-tax2

    (12)   (22)   (4) 
 

Corporate joint ventures-after-tax

    189    121    85  

   $177   $99   $81  
                  
1
Includes sales to DuPont of $652, $412 and $390 in 2010, 2009 and 2008, respectively.

2
Income taxes are reflected in the company's provision for income tax.

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Financial position at December 31,
  
 2010
  
 2009
  

Current assets

   $1,972   $1,710  

Noncurrent assets

    1,397    1,416  
 

Total assets

    3,369    3,126  

Short-term borrowings1

    381    375  

Other current liabilities

    841    768  

Long-term borrowings1

    144    178  

Other long-term liabilities

    119    111  
 

Total liabilities

    1,485    1,432  

DuPont's investment in affiliates (includes advances)

   $1,041   $1,014  
             
1
The company's pro rata interest in total borrowings was $236 in 2010 and $253 in 2009, of which $45 in 2010 and $32 in 2009 were guaranteed by the company. These amounts are included in the guarantees disclosed in Note 19.

13.  OTHER ASSETS

December 31,
  
 2010
  
 2009
  

Long-term investments in securities

   $104   $112  

Deferred income taxes (Note 5)

    2,772    3,240  

Miscellaneous

    774    748  

   $3,650   $4,100  
             

Included within long-term investments in securities are securities for which market values are not readily available (cost investments) and securities classified as available-for-sale. The company's cost investments totaled $87 and $85 at December 31, 2010 and 2009, respectively. The company's available for sale securities totaled $17 and $27 at December 31, 2010 and 2009, respectively.

14.  ACCOUNTS PAYABLE

December 31,
  
 2010
  
 2009
  

Trade payables

   $3,795   $3,020  

Payables to banks

    61    54  

Miscellaneous

    504    468  

   $4,360   $3,542  
             

Trade payables includes $119 in 2010 and $71 for 2009 due to equity affiliates. Payables to banks represent checks issued on certain disbursement accounts but not presented to the banks for payment. The reported amounts shown above approximate fair value because of the short-term maturity of these obligations.


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

15.12.  SHORT-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS

December 31,
  
 2010
  
 2009
  
20132012

Commercial paper

   $-   $444  

Other loans-various currencies

   128   80  44
20

Long-term debt payable within one year

   4   981  1,674
1,252

Capital lease obligations

   1   1  3
3

   $133   $1,506  $1,721
$1,275
 


The estimated fair value of the company's short-term borrowings, including interest rate financial instruments, basedwas determined using level 2 inputs within the fair value hierarchy, as described in Note 1 to the Consolidated Financial Statements. 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, the fair value of the company's short-term borrowings was $130$1,730 and $1,500$1,300 at December 31, 20102013 and 2009,2012, respectively.



F-23


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Unused bank credit lines were approximately $2,600$4,400 and $4,300 at December 31, 20102013 and 2009.2012, respectively. These lines are available to support short-term liquidity needs and general corporate purposes including letters of credit. Outstanding letters of credit were approximately $424$352 and $350$503 at December 31, 20102013 and 2009,2012, respectively. These letters of credit support commitments made in the ordinary course of business.


The weighted-average interest rate on short-term borrowings outstanding at December 31, 20102013 and 20092012 was 5.43.0% and 0.6 percent,4.8%, respectively. The increasedecrease in the interest rate reflects the reduction in commercial paper and the maturity offor 2013 was primarily due to long-term debt in 2010, which both had low interest rates in 2009.

16.maturing within one year.


13.  OTHER ACCRUED LIABILITIES

December 31,
  
 2010
  
 2009
  
20132012

Compensation and other employee-related costs

   $978   $885  $1,045
$1,092

Deferred revenue

   1,700   1,174  2,839
2,706

Employee benefits (Note 21)

   443   456  
Employee benefits (Note 18)335
367

Discounts and rebates

   332   302  328
318

Derivative instruments

   132   71  105
131

Miscellaneous

   1,086   1,300  1,567
1,383

   $4,671   $4,188  $6,219
$5,997
 


Deferred revenue principally includes advance customer payments related to businesses within the Agriculture & Nutrition segment. Miscellaneous other accrued liabilities principally includes accrued plant and operating expenses, accrued litigation costs, employee separation costs in connection with the company's restructuring programs, the estimated fair value of certain guarantees and accrued environmental remediation costs.



F-24

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

17.


14.  LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS

December 31,
December 31,
  
 2010
  
 2009
  
20132012

U.S. dollar:

U.S. dollar:

       

Industrial development bonds due 2026, 20291

   $-   $50  

Medium-term notes due 2013 – 20412

   420   426  

4.125% notes due 20103,4

   -   911  

4.75% notes due 2012

   400   400  

5.00% notes due 2013

   250   749  

5.00% notes due 2013

   746   744  

5.875% notes due 2014

   170   996  

4.875% notes due 2014

   498   498  

3.25% notes due 20154

   1,038   986  

4.75% notes due 2015

   399   399  

1.95% notes due 2016

   495   -  

5.25% notes due 2016

   599   598  

6.00% notes due 20185

   1,425   1,445  

5.75% notes due 2019

   498   498  

4.625% notes due 2020

   996   996  

3.625% notes due 2021

   999   -  

6.50% debentures due 2028

   299   299  

5.60% notes due 2036

   395   395  

4.90% notes due 2041

   493   -  

Other loans (average interest rate of 2.0 percent)3

   9   37  

Foreign currency denominated loans:

      

Euro loans (average interest rate of 2.3 percent)3

   2   3  

Other loans (various currencies)3

   6   72  
Medium-term notes due 2013 – 20411,2
$121
$374
5.00% notes due 20132

250
5.00% notes due 20132

749
5.875% notes due 20142
170
170
1.75% notes due 20142
400
400
Floating rate notes due 20142,3
600
600
4.875% notes due 20142
500
499
3.25% notes due 20154
1,028
1,054
4.75% notes due 2015400
400
1.95% notes due 2016498
497
2.75% notes due 2016500
499
5.25% notes due 2016599
599
6.00% notes due 20185
1,361
1,383
5.75% notes due 2019499
499
4.625% notes due 2020997
997
3.625% notes due 2021999
999
4.25% notes due 2021499
499
2.80% notes due 20231,250

6.50% debentures due 2028299
299
5.60% notes due 2036395
395
4.90% notes due 2041494
493
4.15% notes due 2043749

Other loans (average interest rate of 4.2 percent)2
33
36
Other loans-various currencies2
1
2

   10,137   10,502  12,392
11,693

Less short-term portion of long-term debt

Less short-term portion of long-term debt

   4   981  1,674
1,252

   10,133   9,521  10,718
10,441

Capital lease obligations

Capital lease obligations

   4   7  23
24

Total

Total

   $10,137   $9,528  $10,741
$10,465
 
1
Average interest rates on fixed rate industrial development bonds at December 31, 2009 were 6.0 percent.
1.
Average interest rates on medium-term notes at December 31, 2013 and 2012 were 0.0% and 4.0%, respectively.
2.
Includes long-term debt due within one year.
3.
Interest rate on floating rate notes at December 31, 2013 and 2012 was 0.7%.
4.
At December 31, 2013 and 2012, the company had outstanding interest rate swap agreements with gross notional amounts of $1,000. Over the remaining terms of the notes, the company will receive fixed payments equivalent to the underlying debt and pay floating payments based on USD LIBOR (London Interbank Offered Rate). The fair value of outstanding swaps was an asset of $29 and $55 at December 31, 2013 and 2012, respectively.
5.
During 2008, the interest rate swap agreement associated with these notes was terminated. The gain will be amortized over the remaining life of the bond, resulting in an effective yield of 3.85%.

2
Average interest rates on medium-term notes at December 31, 2010 and 2009, were 3.4 percent and 3.3 percent, respectively.

3
Includes long-term debt due within one year.

4
At December 31, 2010 and 2009, the company had outstanding interest rate swap agreements with gross notional amounts of $1,000 and $1,900, respectively. Over the remaining terms of the notes, the company will receive fixed payments equivalent to the underlying debt and pay floating payments based on USD LIBOR. The fair value of outstanding swaps was an asset of $40 and $0 at December 31, 2010 and 2009, respectively.

5
During 2008, the interest rate swap agreement associated with these notes was terminated. The gain will be amortized over the remaining life of the bond, resulting in an effective yield of 3.85 percent.

In 2010,2013, the company issued $500$1,250 of 1.95% Senior2.80% Notes due JanuaryFebruary 15, 2016, $1,0002023 and $750 of 3.625% Senior4.15% Notes due JanuaryFebruary 15, 2021 and $500 of 4.90% Senior Notes due January 15, 2041. The company elected to use a portion of the net proceeds to redeem $500 of its 5.00% Senior Notes due January 15, 2013 and $830 of its 5.875% Senior Notes due January 15, 2014. The partial redemption of the outstanding 5.00% and 5.875% Senior Notes resulted in a $179 pre-tax charge on the early extinguishment of debt. In addition, $900 of 4.125% Senior Notes matured in April 2010.

2043.


Maturities of long-term borrowings are $408, $1,239, $668$1,429, $1,597, $0 and $1,438$1,361 for the years 2012, 2013, 20142015, 2016, 2017 and 2015,2018, respectively, and $6,380$6,331 thereafter.



F-25

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


The estimated fair value of the company's long-term borrowings, including interest rate financial instruments, basedwas determined using level 2 inputs within the fair value hierarchy, as described in Note 1 to the Consolidated Financial Statements. 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, the fair value of the company's long-term borrowings was $10,800$11,130 and $10,100$11,715 at December 31, 20102013 and 2009,2012, respectively.

18.


15.  OTHER LIABILITIES

December 31,
December 31,
  
 2010
  
 2009
  
20132012

Employee benefits:

Employee benefits:

           
 

Accrued other long-term benefit costs (Note 21)

   $3,670   $3,791  

Accrued pension benefit costs (Note 21)

   5,401   5,514  
Accrued other long-term benefit costs (Note 18)$2,530
$3,271
Accrued pension benefit costs (Note 18)5,575
9,303

Accrued environmental remediation costs

Accrued environmental remediation costs

   317   326  374
353

Miscellaneous

Miscellaneous

   1,638   1,859  1,700
1,760

   $11,026   $11,490  $10,179
$14,687
 


Miscellaneous includes asset retirement obligations, litigation accruals, tax contingencies, royalty payables and certain obligations related to divested businesses.

19.


16.  COMMITMENTS AND CONTINGENT LIABILITIES

Guarantees

Product Warranty Liability

The company warrants that its products meet standard specifications. The company's product warranty liability as of December 31, 2010 and 2009 was $20 and $17, respectively. Estimates for warranty costs are based on historical claims experience.

Indemnifications

In connection with acquisitions and divestitures, the company has indemnified respective parties against certain liabilities that may arise in connection with these transactions and business activities prior to the completion of the transaction. The term of these indemnifications, which typically pertain to environmental, tax and product liabilities, is generally indefinite. In addition, the company indemnifies its duly elected or appointed directors and officers to the fullest extent permitted by Delaware law, against liabilities incurred as a result of their activities for the company, such as adverse judgments relating to litigation matters. If the indemnified party were to incur a liability or have a liability increase as a result of a successful claim, pursuant to the terms of the indemnification, the company would be required to reimburse the indemnified party. The maximum amount of potential future payments is generally unlimited. The carrying amounts recorded for all indemnifications as of December 31, 2010 and 2009 were $100. Although it is reasonably possible that future payments may exceed amounts accrued, due to the nature of indemnified items, it is not possible to make a reasonable estimate of the maximum potential loss or range of loss. No assets are held as collateral and no specific recourse provisions exist.

In connection with the 2004 sale of the majority of the net assets of Textiles and Interiors, the company indemnified the purchasers, subsidiaries of Koch Industries, Inc. (INVISTA), against certain liabilities primarily related to taxes, legal and environmental matters and other representations and warranties under the Purchase and Sale Agreement. The estimated fair value of the indemnity obligations under the Purchase and Sale Agreement was $70 and was included in the indemnifications balance of $100 at December 31, 2010. Under the Purchase and Sale Agreement, the company's total indemnification obligation for the majority of the representations and warranties cannot exceed $1,400. The other indemnities are not subject to this limit. In March 2008, INVISTA filed suit in the Southern District of New York alleging that certain representations and warranties in the Purchase and Sale Agreement were breached and, therefore, that DuPont is obligated to indemnify it. DuPont disagrees with the extent and value of INVISTA's claims. DuPont has not changed its estimate of its total indemnification obligation under the Purchase and Sale Agreement as a result of the lawsuit.


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Obligations for Equity Affiliates & Others

The company has directly guaranteed various debt obligations under agreements with third parties related to equity affiliates, customers suppliers and other affiliated companies.suppliers. At December 31, 2010,2013, the company had directly guaranteed $544$561 of such obligations, and $16 relating to guarantees of historical obligations for divested subsidiaries.obligations. This amount represents the maximum potential amount of future (undiscounted) payments that the company could be required to make under the guarantees. The company would be required to perform on these guarantees in the event of default by the guaranteed party.


The company assesses the payment/performance risk by assigning default rates based on the duration of the guarantees. These default rates are assigned based on the external credit rating of the counterparty or through internal credit analysis and historical default history for counterparties that do not have published credit ratings. For counterparties without an external rating or available credit history, a cumulative average default rate is used.

At December 31, 2010



F-26


E. I. du Pont de Nemours and 2009, a liability of $109 and $146, respectively, was recorded for these obligations, representingCompany
Notes to the amount of payment/performance risk for which the company deems probable. This liability is principally related to obligations of the company's polyester films joint venture, which are guaranteed by the company.

Consolidated Financial Statements (continued)

(Dollars in millions, except per share)

In certain cases, the company has recourse to assets held as collateral, as well as personal guarantees from customers and suppliers. Assuming liquidation, these assets are estimated to cover approximately 45 percent54% of the $288$376 of guaranteed obligations of customers and suppliers. Set forth below are the company's guaranteed obligations at December 31, 2010:

2013
:

 
  
 Short-Term
  
 Long-Term
  
 Total
  

Obligations for customers and suppliers1:

                 
 

Bank borrowings (terms up to 5 years)

   $189   $99   $288  

Obligations for other affiliated companies2:

                 
 

Bank borrowings (terms up to 1 year)

    211        211  

Obligations for equity affiliates2:

                 
 

Bank borrowings (terms up to 2 years)

    6    16    22  
 

Revenue bonds (terms up to 5 years)

        23    23  

Total obligations for customers, suppliers, other affiliated companies, and equity affiliates

    406    138    544  

Obligations for divested subsidiaries3:

                 
 

Conoco (terms up to 16 years)

        16    16  

Total obligations for divested subsidiaries

        16    16  

   $406   $154   $560  
                  
 Short-TermLong-TermTotal
Obligations for customers and suppliers1:
 
 
 
Bank borrowings (terms up to 7 years)$309
$66
$375
Leases on equipment and facilities (terms up to 5 years)
1
1
Obligations for equity affiliates2:
 
 
 
Bank borrowings (terms up to 1 year)185

185
Total$494
$67
$561
1
Existing guarantees for customers and suppliers arose as part of contractual agreements.
1
Existing guarantees for customers and suppliers, as part of contractual agreements.
2
Existing guarantees for equity affiliates' liquidity needs in normal operations.

2
Existing guarantees for equity affiliates and other affiliated companies arose for liquidity needs in normal operations.

3
The company has guaranteed certain obligations and liabilities related to a divested subsidiary, Conoco, which has indemnified the company for any liabilities the company may incur pursuant to these guarantees.

Operating Leases

The company uses various leased facilities and equipment in its operations. The terms for these leased assets vary depending on the lease agreement.


Future minimum lease payments (including residual value guarantee amounts) under non-cancelable operating leases are $227, $197, $160, $123$288, $262, $239, $208 and $96$180 for the years 2011, 2012, 2013, 2014, 2015, 2016, 2017 and 2015,2018, respectively, and $179$347 for subsequent years and are not reduced by non-cancelable minimum sublease rentals due in the future in the amount of $6.$1. Net rental expense under operating leases was $268, $302$303, $316 and $320$268 in 2010, 20092013, 2012 and 2008,2011, respectively.


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Asset Retirement Obligations

The company has recorded asset retirement obligations primarily associated with closure, reclamation and removal costs for mining operations related to the production of titanium dioxide in Performance Chemicals. The company's asset retirement obligation liabilities were $59$63 and $56$64 at December 31, 20102013 and 2009,2012.

Imprelis®
The company has received claims and has been served with multiple lawsuits alleging that the use of Imprelis® herbicide caused damage to certain trees. Sales of Imprelis® were suspended in August 2011 and the product was last applied during the 2011 spring application season. The lawsuits seeking class action status have been consolidated in multidistrict litigation in federal court in Philadelphia, Pennsylvania.

In February 2013, the court granted preliminary approval of a class action settlement. The settlement incorporates the company's existing claims process and provides certain additional relief. The proposed settlement class includes affected property owners and lawn care companies who do not "opt out" of the settlement. As part of the settlement, DuPont has paid $7 in plaintiffs' attorney fees and expenses. In addition, DuPont is providing a warranty against new damage, if any, caused by the use of Imprelis® on class members' properties through May 2015. The settlement notification process began on March 25, 2013 and ended on June 28, 2013 which was also the last day to “opt out” of the settlement or file a new claim. The final approval hearing was held on September 27, 2013 and on October 17, 2013, the court issued an order approving the settlement. One class member has appealed the order. In addition, about 125 individual actions encompassing about 400 claims for property damage have been filed in state court in various jurisdictions. DuPont has removed most of these cases to federal court in Philadelphia, Pennsylvania. Once removed to federal court, the individual actions remain stayed pending further action by the court.

The company has established review processes to verify and evaluate damage claims. There are several variables that impact the evaluation process including the number of trees on a property, the species of tree with reported damage, the height of the tree, the extent of damage and the possibility for trees to naturally recover over time. Upon receiving claims, DuPont verifies their accuracy and validity which often requires physical review of the property.


F-27


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

At December 31, 2013, DuPont had recorded charges of $1,175, within other operating charges, which represents the company's best estimate of the loss associated with resolving these claims. The year ended December 31, 2013, included net charges of $352, consisting of a $425 charge offset by $73 of insurance recoveries. The years ended December 31, 2012 and 2011, included charges of $575 and $175, respectively.

Litigation

PFOA

At December 31, 2013, DuPont useshad accruals of $489 related to these claims. The company has an applicable insurance program with a deductible equal to the first $100 of costs and expenses. The insurance program limits are $725 for costs and expenses in excess of the $100. DuPont has submitted and will continue to submit requests for payment to its insurance carriers for costs associated with this matter. The company has begun to receive payment from its insurance carriers and continues to seek recovery although the timing and outcome remain uncertain.


Litigation
The company is subject to various legal proceedings arising out of the normal course of its business including product liability, intellectual property, commercial, environmental and antitrust lawsuits. It is not possible to predict the outcome of these various proceedings. Except as otherwise noted, management does not anticipate their resolution will have a materially adverse effect on the company's consolidated financial position or liquidity.  However, the ultimate liabilities could be significant to results of operations in the period recognized.  

PFOA
DuPont used PFOA (collectively, perfluorooctanoic acids and its salts, including the ammonium salt), as a processing aid to manufacture some fluoropolymer resins and dispersions at various sites around the world including its Washington Works plant in West Virginia. At December 31, 2010,2013, DuPont has accruals of $18$15 related to the PFOA matters discussed below.

Leach v DuPont


The accrual includes charges related to DuPont's obligations under agreements with the U.S. Environmental Protection Agency and voluntary commitments to the New Jersey Department of Environmental Protection.  These obligations include surveying, sampling and testing drinking water in and around certain company sites and offering treatment or an alternative supply of drinking water if tests indicate the presence of PFOA in drinking water at or greater than the national Provisional Health Advisory.

Drinking Water Actions
In August 2001, a class action, captioned Leach v DuPont, was filed in West Virginia state court against DuPont and the Lubeck Public Service District. The complaint allegedalleging that residents living near the Washington Works facility had suffered, or may suffer, deleterious health effects from exposure to PFOA in drinking water. The relief sought included damages for medical monitoring, diminution of property values and punitive damages plus injunctive relief to stop releases of PFOA.

DuPont and attorneys for the class reached a settlement agreement in 2004 and as a result, the company established accruals of $108 in 2004. The settlementthat binds a class of approximately about 80,000 residents. As defined by the court, the class includes those individuals who have consumed, for at least one year, water containing 0.05 parts per billion (ppb) or greater of PFOA from any of six designated public water sources or from sole source private wells.

In July 2005, the companyDuPont paid the plaintiffs' attorneys'plaintiffs’ attorneys’ fees and expenses of $23$23 and made a payment of $70,$70, which class counsel has designated to fund a community health project.  The company is also fundingfunded a series of health studies which were completed in October 2012 by an independent science panel of experts (the “C8 Science Panel”). The studies were conducted in the communities exposed to PFOA to evaluate available scientific evidence on whether any probable link exists, as defined in the settlement agreement, between exposure to PFOA and human disease.


The C8 Science Panel found probable links, as defined in the settlement agreement, between exposure to PFOA and pregnancy-induced hypertension, including preeclampsia; kidney cancer; testicular cancer; thyroid disease; ulcerative colitis; and diagnosed high cholesterol.

In May 2013, a panel of three independent medical doctors released its initial recommendations for screening and diagnostic testing of eligible class members. The medical panel is expected to address monitoring and may make additional recommendations in a subsequent report. The medical panel has not communicated its anticipated schedule for completion. The company expectsis obligated to fund up to $235 for a medical monitoring program for eligible class members.  In January 2012, the independent science panelcompany put $1 in an escrow account to complete these health studies between 2009fund medical monitoring as required by the settlement agreement.  The court has appointed a Medical Monitoring Director to implement the medical panel's recommendations who is in the process of setting up a program.  Testing has not yet begun and year-end 2011 at a totalno money has been disbursed from the fund.  While it is probable that the company will incur losses related to funding the medical monitoring program, such losses cannot be reasonably estimated cost of $32. due to uncertainties surrounding implementation.

In addition, the company is providing state-of-the artmust continue to provide water treatment systems designed to reduce the level of PFOA in water to six area water districts, including the Little Hocking Water Association (LHWA), untiland private well users.


F-28


E. I. du Pont de Nemours and Company
Notes to the science panel determines that PFOA does not cause disease or until applicable water standards can be met without such treatment. All of the water treatment systems are operating.

The settlement resultedConsolidated Financial Statements (continued)

(Dollars in the dismissal of all claims asserted in the lawsuitmillions, except for personal injury claims. If the independent science panel concludes that no probable link exists between exposure to PFOA and any diseases, then the settlement would also resolve personal injury claims. If it concludes that a probable link does exist between exposure to PFOA and any diseases, then DuPont would also fund up to $235 for a medical monitoring program to pay for such medical testing. In this event, plaintiffs would retain their right to pursue personal injury claims. All other claims in the lawsuit would remain dismissed by the settlement. DuPont believes that it is remote that the panel will find a probable link. Therefore, at December 31, 2010, the company has not established any accruals related to medical monitoring or personal injury claims. However, there can be no assurance as to what the independent science panel will conclude.

Civil Actions: Drinking Water

At December 31, 2010, there were four additional actions pending brought by or on behalf of water district customers in New Jersey, Ohio and West Virginia. The cases generally claim PFOA contamination of drinking water and seek a variety of relief including compensatory and punitive damages, testing, treatment, remediation and monitoring. In addition, the two New Jersey class actions and theper share)


Additional Actions
An Ohio action brought by the LHWA claim "imminentis ongoing. In addition to general claims of PFOA contamination of drinking water, the action claims “imminent and substantial endangerment to health and or the environment"environment” under the Resource Conservation and Recovery Act (RCRA). In December 2010, the company reached an agreement in principle to settle the two New Jersey class actions subject to court approval. Approval was denied and the parties are considering revised settlement terms for potential resubmission to the court. If a revised settlement is not reached and approved, litigation will resume. Discovery has just


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

begun in the Ohio class action. In the West Virginia class action, the court entered judgment for DuPont in the first quarter 2010. Plaintiffs' appeal of the matter was heard by the Fourth Circuit Court of Appeals in late January 2011.

DuPont denies thethese claims alleged in these civil drinking water actions and is defending itself vigorously.


Environmental Actions

OfClass members may pursue personal injury claims against DuPont only for those human diseases for which the total accrual, $4 isC8 Science Panel determined a probable link exists. At December 31, 2013, eighty-three lawsuits alleging personal injury including five lawsuits alleging wrongful death from exposure to fund DuPont's obligations under agreements with the U. S. Environmental Protection Agency (EPA) and the New Jersey Department of Environmental Protection. In 2005, the company and EPA entered an agreement settling allegations that DuPont failed to comply with technical reporting requirements under the Toxic Substances Control Act and RCRA. Under the settlement, DuPont paid a fine of $10.25 and is undertaking two Supplemental Environmental Projects. In 2009, EPA and DuPont entered a Consent Order under the Safe Drinking Water Act which obligates DuPont to survey, sample and test drinking water in and around the company's Washington Works site. If tests indicate the presence of PFOA in drinking water atare pending in federal court in Ohio and West Virginia. This is an increase in pending cases of fifty-seven over year end 2012. These cases have been consolidated for discovery purposes in multi-district litigation in Ohio federal court. DuPont denies the national Provisional Health Advisory for PFOA of 0.40 ppb or greater, the company will offer treatment or an alternative supply of drinking water.

allegations in these lawsuits and is defending itself vigorously.


While DuPont believes that it is reasonably possible that it could incur losses related to PFOA matters in addition to those matters discussed above for which it has established accruals,these additional actions, a range of such losses, if any, cannot be reasonably estimated at this time.


Monsanto Patent Dispute
Benlate®On August 1, 2012, a St. Louis, Missouri jury awarded

$1,000 in damages to Monsanto on its claims that the company willfully infringed Monsanto's RE 39,247 patent directed to Roundup® Ready® 1 glyphosate herbicide tolerancesoybean seed technology.


Monsanto alleged that by combining Pioneer's Optimum® GAT® trait with Monsanto's patented Roundup® Ready® trait, Pioneer violated its 2002 Amended and Restated Roundup® Ready® Soybean License Agreement and, in doing so, infringed Monsanto's RE 39,247 patent. The company has never sold soybeans containing a combination of the Optimum® GAT® and Roundup® Ready® traits and discontinued in 2011 its commercialization efforts for such soybeans.

In 1991, DuPont began receiving claims by growers that useMarch 2013, Pioneer and Monsanto entered into technology license agreements. As part of Benlate® 50 DF fungicide had caused crop damage. DuPont has since been served with thousands of lawsuits, most of which have been disposed of through trial, dismissal or settlement.

At December 31, 2010, there were nine cases in Florida courts alleging that Benlate® caused crop damage. Atthose agreements, the 2006 trial of two cases involving twenty-seven Costa Rican fern growers, the plaintiffs sought damagescompany received, among other things, a non-exclusive royalty bearing license in the rangeUnited States and Canada for Monsanto's Genuity® Roundup Ready 2 Yield® glyphosate tolerance trait and its dicamba tolerance trait for soybeans, post-patent regulatory access and maintenance support for RoundupReady® 1 glyphosate tolerance trait for soybeans, Genuity® Roundup Ready 2 glyphosate tolerance trait for corn and YieldGard® corn borer insect resistance trait. The agreements require the company to make a series of $270up-front and variable payments subject to $400. A $56 judgmentMonsanto delivering enabling soybean genetic material.Total annual fixed royalty payments of $802 contemplated under the arrangement for trait technology, associated data and soybean lines to support commercial introduction are expected to come due in years 2014 - 2017. Additionally, beginning in 2018, DuPont will pay royalties on a per unit basis related to the Genuity® Roundup Ready 2 Yield® and dicamba tolerance traits for the life of the license, subject to annual minimum payments through 2023 totaling $950.


In a separate agreement, the company agreed to dismiss with prejudice its antitrust claims against Monsanto in exchange for a dismissal with prejudice of Monsanto's patent infringement claims and the related damages verdict. Accordingly, as of the first quarter 2013 this matter was renderedresolved, but for the court-ordered sanctions against the company but was reducedfor “fraud against the court.” The court unsealed the order in November 2012. The parties agreed to $24present the sanctions and related rulings for immediate appeal and those matters are presently on DuPont's motion. appeal.

Titanium Dioxide Antitrust Litigation
In February 2010, two suits were filed in Maryland federal district court alleging conspiracy among DuPont, Huntsman International LLC, Kronos Worldwide Inc., Millenium Inorganics Chemicals Inc. and others to fix prices of titanium dioxide sold in the fourth quarter 2009, on DuPont's motion, the judgment was reversed, vacatedUnited States between March 2002 and the present. The cases were remanded to be tried separately orsubsequently consolidated and in small related groups. Plaintiffs sought appellate review of the decision. In December 2010, the appellate court upheld the decision to try the cases separately. The appellate court also affirmed dismissal of the verdicts for seven of the twenty-seven fern growers on grounds that their claims were barred by the statute of limitations. Plaintiffs are seeking review by the Florida Supreme Court. One other crop case is scheduled for trial in June 2011. On January 19, 2011,August 2012, the court entered an order in fivecertified a class consisting of U.S. customers that have directly purchased titanium dioxide since February 1, 2003.

During the remaining crop cases striking DuPont's pleadings. The order essentially enters judgment againstthird quarter 2013, DuPont asand plaintiffs agreed to liability. DuPont will appeal, but cannot do so until a damages trial results in a monetary judgment against it.

Two cases alleging damagesettle this matter, subject to shrimping operations were resolved in a single binding arbitration during the fourth quarter 2010. The arbiter awarded plaintiffs a total of $19 in compensatory damages plus attorneys' fees and expenses. DuPont paid the compensatory damages in December 2010 and will pay $8.5 in attorneys' fees and expenses.

court approval. In January 2009, a case was filed in Florida state court claiming that plaintiff's exposure to Benlate® allegedly contaminated with other fungicides and herbicides, caused plaintiff's kidney cancer and pancreatic and brain tumors. The case was tried to a verdict in September 2010 in federal court, to which it had been removed on DuPont's motion, and the jury unanimously rejected allegations that exposure to Benlate® caused plaintiff's diseases. In December 2010, the court denied plaintiff's post trial motions. Plaintiff has appealed.

The company does not believe that Benlate® caused the damages alleged in each of these cases and denies the allegations of fraud and misconduct. The company continues to defend itself in ongoing matters. As of December 31, 2010,connection therewith, the company has incurred costsrecorded charges of $72, within other operating charges, at December 31, 2013. The settlement explicitly acknowledges that DuPont denies all allegations and expenses of approximately $2,000 associated with these matters, but does not expect additional significant costs or expenses associated withadmit liability. The court entered the remaining twelve cases. Atorder granting final approval to the settlement on December 31, 2010, the company has accruals of about $9 related to Benlate®.13, 2013. The company does not expect lossessettlement was paid in excess of the accruals, if any, to be material.

January 2014.

F-29


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Environmental

Spelter, West Virginia

In September 2006, a West Virginia state court certified a class action captioned Perrine v DuPont, against DuPont that seeks relief including the provision of remediation services and property value diminution damages for 7,000 residential properties in the vicinity of a closed zinc smelter in Spelter, West Virginia. The action also seeks medical monitoring for an undetermined number of residents in the class area. The smelter was owned and operated by at least three companies between 1910 and 2001, including DuPont between 1928 and 1950. DuPont performed remedial measures at the request of EPA in the late 1990s and in 2001 repurchased the site to facilitate and complete the remediation. The fall 2007 trial was conducted in four phases: liability, medical monitoring, property and punitive damages. The jury found against DuPont in all four phases awarding $55.5 for property remediation and $196.2 in punitive damages. In post trial motions, the court adopted the plaintiffs' forty-year medical monitoring plan estimated by plaintiffs to cost $130 and granted plaintiffs' attorneys legal fees of $127 plus $8 in expenses based on and included in the total jury award. DuPont appealed to the West Virginia Supreme Court (the Court) seeking review of a number of issues. The Court issued its decision on March 26, 2010, affirming in part and reversing in part the trial court's decision.

The Court conditionally affirmed the verdict, but reduced punitive damages to $97.7. The Court reversed the trial court's order granting summary judgment to the adult plaintiffs on the issue of statute of limitations and ordered a new jury trial on the sole issue of when the plaintiffs possessed requisite knowledge to trigger the running of the statute.

In November 2010, plaintiffs and DuPont reached an agreement to settle this matter for $70. In addition, the agreement requires DuPont to fund a medical monitoring program. The initial set-up costs associated with the program are included in the $70. The company will reassess its liability related to funding the medical monitoring program as eligible members of the class elect to participate and enroll in the program. Enrollment in the program is expected to be complete in the third quarter 2011. As of December 31, 2010, the company has recorded accruals of $70 related this matter.

General

The company is subject to various lawsuits and claims arising out of the normal course of its business. These lawsuits and claims include actions based on alleged exposures to products, intellectual property and environmental matters and contract and antitrust claims. Management has noted a nationwide trend in purported class actions against chemical manufacturers generally seeking relief such as medical monitoring, property damages, off-site remediation and punitive damages arising from alleged environmental torts without claiming present personal injuries. Such cases may allege contamination from unregulated substances or remediated sites. The company also has noted a trend in public and private nuisance suits being filed on behalf of states, counties, cities and utilities alleging harm to the general public. Although it is not possible to predict the outcome of these various lawsuits and claims, management does not anticipate they will have a materially adverse effect on the company's consolidated financial position or liquidity. However, the ultimate liabilities may be significant to results of operations in the period recognized. The company accrues for contingencies when the information available indicates that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated.

Environmental

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 accrues for environmental remediation activities consistent with the policy set forth in Note 1. Much of this liability results from the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, often referred to as Superfund), RCRA and similar state and global laws. These laws require the company to undertake certain investigative, remediation and remedialrestoration activities at sites where the company conducts or once conducted operations or at sites where company-generated waste was disposed. The accrual also includes estimated costs related to a number of sites identified by the company for which it is probable that environmental remediation will be required, but which are not currently the subject of enforcement activities.


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Remediation activities vary substantially in duration and cost from site to site. These activities, and their associated costs, depend on the mix of unique site characteristics, evolving remediation technologies, diverse regulatory agencies and enforcement policies, as well as the presence or absence of potentially responsible parties. At December 31, 2010,2013, the Condensed Consolidated Balance SheetsSheet included a liability of $407,$458, relating to these matters and, in management's opinion, is appropriate based on existing facts and circumstances. The average time frame, over which the accrued or presently unrecognized amounts may be paid, based on past history, is estimated to be 15-2015-20 years. Considerable uncertainty exists with respect to these costs and, under adverse changes in circumstances, potential liability may range up to two to three times the amount accrued as of December 31, 2010.

2013Other.

The company has various purchase commitments incident to


17.  STOCKHOLDERS' EQUITY
Share Repurchase Program
In January 2014, the ordinary conductcompany’s Board of business. Directors authorized a $5,000 share buyback plan that will replace the company’s 2011 plan. There is no required completion date for purchases under the 2014 plan.

In December 2012, the aggregate, such commitments are not at prices in excess of current market.

20. STOCKHOLDERS' EQUITY

The company's Board of Directors authorized a $2,000$1,000 share buyback plan. In February 2013, the company entered into an accelerated share repurchase (ASR) agreement with a financial institution under which the company used $1,000 of the proceeds from the sale of Performance Coatings for the purchase of shares of common stock. The 2012 $1,000 share buyback plan was completed in June 2001. During 2010,the second quarter 2013 through the ASR agreement, under which the company purchased and retired 5.420.4 million shares.


During 2012, the company purchased and retired 7.8 million shares at a total cost of $250$400. These purchases completed the 2001 $2,000 share buyback plan and began purchases under this plan. During 2009 and 2008, there were no purchasesa $2,000 share buyback plan authorized by the company's Board of stock under this plan. AsDirectors in April 2011. Under the completed 2001 plan, the company purchased a total of December 31, 2010,42.0 million shares. Under the 2011 plan, the company has purchased 25.95.5 million shares at a total cost of $1,212. Management has not established a timeline for the buyback$284 as of the remaining stock under this plan.

December 31, 2013.


Common stock held in treasury is recorded at cost. When retired, the excess of the cost of treasury stock over its par value is allocated between reinvested earnings and additional paid-in capital.



F-30


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Set forth below is a reconciliation of common stock share activity for the years ended December 31, 2010, 20092013, 2012 and 2008:

2011:

Shares of common stock
  
 Issued
  
 Held In Treasury
  
IssuedHeld In Treasury

Balance January 1, 2008

   986,330,000   (87,041,000) 

Issued

   3,085,000   -  

Balance December 31, 2008

   989,415,000   (87,041,000) 

Issued

   1,440,000   -  

Balance December 31, 2009

   990,855,000   (87,041,000) 
Balance January 1, 20111,004,351,000
(87,041,000)

Issued

   18,891,000   -  22,650,000

Repurchased

   -   (5,395,000) 
(13,837,000)

Retired

   (5,395,000)  5,395,000  (13,837,000)13,837,000

Balance December 31, 2010

   1,004,351,000   (87,041,000) 
Balance December 31, 20111,013,164,000
(87,041,000)
Issued14,671,000

Repurchased
(7,778,000)
Retired(7,778,000)7,778,000
Balance December 31, 20121,020,057,000
(87,041,000)
Issued14,370,000

Repurchased
(20,400,000)
Retired(20,400,000)20,400,000
Balance December 31, 20131,014,027,000
(87,041,000)

Noncontrolling Interest
TableIn May 2012, the company completed the acquisition of Contentsthe remaining

28 percent interest in the Solae, LLC joint venture from Bunge Limited for $447. As the purchase of the remaining interest did not result in a change of control, the difference between the carrying value of the noncontrolling interest of $378 and the consideration paid, net of taxes of $78, was recorded as a $9 increase to additional paid-in capital.



F-31


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

The


Other Comprehensive Income
A summary of the pre-tax, tax, and after-tax effects of the components of other comprehensive income (loss) are shown below:

for the years ended December 31, 2013, 2012, and 2011 is provided as follows:

 
  
 Pre-tax
  
 Tax
  
 After-tax
  

2010

                 

Cumulative translation adjustment

   $(6)  $-   $(6) 

Net revaluation and clearance of cash flow hedges to earnings

    54    (20)   34  

Pension benefits (Note 21)

    (111)   46    (65) 

Other benefits (Note 21)

    47    (30)   17  

Net unrealized gains on securities

    2    (1)   1  

Other comprehensive income attributable to noncontrolling interest

    2    -    2  

Other comprehensive loss attributable to DuPont

   $(12)  $(5)  $(17) 

2009

                 

Cumulative translation adjustment

   $89   $-   $89  

Net revaluation and clearance of cash flow hedges to earnings

    145    (52)   93  

Pension benefits (Note 21)

    (485)   152    (333) 

Other benefits (Note 21)

    (162)   56    (106) 

Net unrealized gains on securities

    6    (2)   4  

Other comprehensive loss attributable to noncontrolling interest

    (2)   -    (2) 

Other comprehensive loss attributable to DuPont

   $(409)  $154   $(255) 

2008

                 

Cumulative translation adjustment

   $(120)  $-   $(120) 

Net revaluation and clearance of cash flow hedges to earnings

    (312)   113    (199) 

Pension benefits (Note 21)

    (6,326)   2,204    (4,122) 

Other benefits (Note 21)

    (423)   151    (272) 

Net unrealized losses on securities

    (16)   5    (11) 

Other comprehensive loss attributable to noncontrolling interest

    (11)   -    (11) 

Other comprehensive loss attributable to DuPont

   $(7,208)  $2,473   $(4,735) 
For the year ended December 31,201320122011
Affected Line Item in Consolidated Income Statements1
 Pre-TaxTaxAfter-TaxPre-TaxTaxAfter-TaxPre-TaxTaxAfter-Tax
Cumulative translation adjustment$25
$
$25
$77
$
$77
$(457)$
$(457) 
Net revaluation and clearance of cash flow hedges to earnings:








 
Additions and revaluations of derivatives designated as cash flow hedges(58)22
(36)8
(6)2
10
(5)5
See (2) below
Clearance of hedge results to earnings:          
Foreign currency contracts(1)
(1)(21)8
(13)15
(5)10
Net sales
Commodity contracts(24)10
(14)(44)20
(24)81
(31)50
Cost of goods sold
Net revaluation and clearance of cash flow hedges to earnings(83)32
(51)(57)22
(35)106
(41)65
 
Pension benefit plans:








 
Net gain (loss)3,293
(1,136)2,157
(1,433)437
(996)(4,069)1,402
(2,667)See (2) below
Prior service benefit (cost)62
(22)40
22
(8)14
(2)
(2)See (2) below
Reclassifications to net income:          
Amortization of prior service cost8
(2)6
13
(4)9
16
(5)11
See (3) below
Amortization of loss957
(331)626
887
(305)582
613
(210)403
See (3) below
Curtailment loss1

1
2

2



See (3) below
Settlement loss152
(45)107
5
(2)3



See (3) below
Pension benefit plans, net4,473
(1,536)2,937
(504)118
(386)(3,442)1,187
(2,255) 
Other benefit plans:








 
Net gain (loss)513
(184)329
(60)17
(43)(437)151
(286)See (2) below
Prior service benefit (cost)211
(72)139
857
(299)558
(11)4
(7)See (2) below
Reclassifications to net income:          
Amortization of prior service benefit(195)69
(126)(155)54
(101)(121)43
(78)See (3) below
Amortization of loss76
(27)49
94
(33)61
60
(21)39
See (3) below
Curtailment (gain) loss(154)54
(100)3
(1)2



See (3) below
Settlement loss1

1






See (3) below
Other benefit plans, net452
(160)292
739
(262)477
(509)177
(332) 
Net unrealized (loss) gain on securities1
(1)
(2)1
(1)2
(1)1
 
Other comprehensive income (loss)$4,868
$(1,665)$3,203
$253
$(121)$132
$(4,300)$1,322
$(2,978) 


1
Represents the income statement line item within the Consolidated Income Statement affected by the pre-tax reclassification out of other comprehensive income (loss).
2
These amounts represent changes in accumulated other comprehensive income excluding changes due to reclassifying amounts to the Consolidated Income Statements.
3
These accumulated other comprehensive income components are included in the computation of net periodic benefit cost of the company's pension and other long-term employee benefit plans. See Note 18 for additional information.

Tax (expense) benefit (expense) recorded in Stockholders' Equity was $12, $144$(1,617), $(70) and $2,476$1,365 for the years 2010, 20092013, 2012 and 2008,2011, respectively. Included in these amounts were tax (expense) benefits of $17, $(10)$48, $51 and $3$43 for the years 2010, 20092013, 2012 and 2008,2011, respectively, associated with stock compensation programs. The remainder consists of amounts recorded within other comprehensive income (loss) as shown in the table above.

Balances of related after-tax components comprising accumulated other comprehensive loss are summarized below:

December 31,
  
 2010
  
 2009
  
 2008
  

Cumulative translation adjustment

   $213   $219   $130  

Net revaluation and clearance of cash flow hedges to earnings

    (31)   (65)   (158) 

Net unrealized gain (loss) on securities

    2    1    (3) 

Pension benefits

                 
 

Net losses

    (5,950)   (5,873)   (5,527) 
 

Net prior service cost

    (82)   (94)   (107) 

Other benefits

                 
 

Net losses

    (577)   (551)   (511) 
 

Net prior service benefit

    635    592    658  

   $(5,790)  $(5,771)  $(5,518) 
                  

Table of Contents


F-32


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

21.


The changes and after-tax balances of components comprising accumulated other comprehensive income (loss) are summarized below:
 Cumulative Translation AdjustmentNet Revaluation and Clearance of Cash Flow Hedges to EarningsPension Benefit PlansOther Benefit PlansUnrealized Gain (Loss) on SecuritiesTotal
2011 
 
 
 
 
 
Balance January 1, 2011$213
$(31)$(6,032)$58
$2
$(5,790)
Other comprehensive income (loss) before reclassifications(457)12
(2,658)(293)1
(3,395)
Amounts reclassified from accumulated other comprehensive income (loss)
60
414
(39)
435
Balance December 31, 2011$(244)$41
$(8,276)$(274)$3
$(8,750)
2012 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications77
(1)(1,006)514
(1)(417)
Amounts reclassified from accumulated other comprehensive income (loss)
(37)596
(38)
521
Balance December 31, 2012$(167)$3
$(8,686)$202
$2
$(8,646)
2013 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications27
(36)2,197
468

2,656
Amounts reclassified from accumulated other comprehensive income (loss)
(15)740
(176)
549
Balance December 31, 2013$(140)$(48)$(5,749)$494
$2
$(5,441)

18.  LONG-TERM EMPLOYEE BENEFITS

The company offers various long-term benefits to its employees. Where permitted by applicable law, the company reserves the right to change, modify or discontinue the plans.

In 2006, the company announced major changes to the pension and defined contribution benefits that cover the majority of its U.S. employees. Such employees hired in the U.S. after December 31, 2006 are not eligible to participate in the pension and post-retirement medical, dental and life insurance plans but receive benefits in the defined contribution plans.


Defined Benefit Pensions

The company has both funded and unfunded noncontributory defined benefit pension plans covering a majority of the U.S. employees.employees hired prior to January 1, 2007. The benefits under 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 laws 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 funded by depositing funds with trustees, covered by insurance contracts, or remain unfunded.


Other Long-term Employee Benefits

The parent company and certain subsidiaries provide medical, dental and life insurance benefits to pensioners and survivors, and disability and life insurance protection to employees.survivors. The associated plans for retiree benefits are unfunded and the cost of the approved claims is paid from company funds. Essentially all of the cost and liabilities for these retiree benefit plans are attributable to the U.S. parent company plans. The non-Medicare eligible retiree medical plan is contributory with pensioners and survivors' contributions adjusted annually to achieve a 50/50 target sharing of cost increases between the company and pensioners and survivors. In addition, limits are applied to the company's portion of the retiree medical cost coverage.

Employee For Medicare eligible pensioners and survivors the company provides a company-funded Health Reimbursement Arrangement (HRA). Beginning January 1, 2015, eligible employees who retire on and after that date will receive the same one-time life insurance benefit payment, regardless of age. The majority of U.S. employees hired on or after January 1, 2007 are not eligible to participate in the post retirement medical, dental and life insurance plans.


The company also provides disability benefits to employees. Employee disability benefit plans are insured in many countries. However, primarily in the U.S., such plans are generally self-insured or are fully experience-rated.self-insured. Obligations and expenses for self-insured and fully experience-rated plans are reflected in the figures below.


F-33


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


Summarized information on the company's pension and other long-term employee benefit plans is as follows:



  
 Pension Benefits
  
 Other Benefits
  
Pension BenefitsOther Benefits

Obligations and Funded Status at December 31,

Obligations and Funded Status at December 31,

   2010   2009   2010   2009  2013201220132012

Change in benefit obligation

Change in benefit obligation

                  

Benefit obligation at beginning of year

Benefit obligation at beginning of year

   $22,770   $21,506   $4,132   $4,072  $29,179
 $27,083
 $3,532
 $4,379
 

Service cost

Service cost

   207   192   29   31  271
 277
 29
 37
 

Interest cost

Interest cost

   1,262   1,270   238   245  1,088
 1,165
 130
 174
 

Plan participants' contributions

Plan participants' contributions

   18   17   114   138  23
 24
 33
 110
 

Actuarial loss

   1,218   1,392   96   111  
Actuarial (gain) loss(2,104) 2,245
 (515) 60
 

Benefits paid

Benefits paid

   (1,584)  (1,608)  (435)  (461) (1,626) (1,593) (240) (371) 

Amendments

Amendments

         (189)1  (4) (62) (22) (211)
1 
(857)
2 

Net effects of acquisitions/divestitures

Net effects of acquisitions/divestitures

   33   1   4     (480) 
 (4) 
 

Benefit obligation at end of year

Benefit obligation at end of year

   $23,924   $22,770   $3,989   $4,132  $26,289
 $29,179
 $2,754
 $3,532
 

Change in plan assets

Change in plan assets

                  

Fair value of plan assets at beginning of year

Fair value of plan assets at beginning of year

   $17,143   $16,209   $   $  $19,399
 $17,794
 $
 $
 

Actual gain on plan assets

Actual gain on plan assets

   2,015   2,219        2,714
 2,326
 
 
 

Employer contributions

Employer contributions

   782   306   321   323  313
 848
 207
 261
 

Plan participants' contributions

Plan participants' contributions

   18   17   114   138  23
 24
 33
 110
 

Benefits paid

Benefits paid

   (1,584)  (1,608)  (435)  (461) (1,626) (1,593) (240) (371) 

Net effects of acquisitions/divestitures

Net effects of acquisitions/divestitures

   29           (209) 
 
 
 

Fair value of plan assets at end of year

Fair value of plan assets at end of year

   $18,403   $17,143   $   $  $20,614
 $19,399
 $
 $
 

Funded status

Funded status

                  

U.S. plans with plan assets

U.S. plans with plan assets

   $(3,408)  $(3,594)  $   $  $(3,546) $(6,625) $
 $
 

Non-U.S. plans with plan assets

Non-U.S. plans with plan assets

   (652)  (543)       (686) (1,443) 
 
 

All other plans

All other plans

   (1,461)2  (1,490)2  (3,989)  (4,132) (1,443)
3 

(1,712)
3 

(2,754) (3,532) 

Total

   $(5,521)  $(5,627)  $(3,989)  $(4,132) 

Amounts recognized in the Consolidated Balance Sheet consist of:

          

Other assets (Note 13)

   4   2        

Other accrued liabilities (Note 16)

   (124)  (115)  (319)  (341) 

Other liabilities (Note 18)

   (5,401)  (5,514)  (3,670)  (3,791) 
Total$(5,675) $(9,780) $(2,754) $(3,532) 
Amounts recognized in the Consolidated Balance
Sheets consist of:
        
Other assets$11
 $5
 $
 $
 
Other accrued liabilities (Note 13)(111) (110) (224) (257) 
Other liabilities (Note 15)(5,575) (9,303) (2,530) (3,271) 
Liabilities related to assets held for sale
 (372) 
 (4) 

Net amount recognized

Net amount recognized

   $(5,521)  $(5,627)  $(3,989)  $(4,132) $(5,675) $(9,780) $(2,754) $(3,532) 
1
Change is primarily due to an amendment in 2010
1.
Primarily due to amendments in 2013 to the company's U.S. parent company retiree life insurance plan for employees retiring on and after January 1, 2015 and subsidiaries retiree health care plans.
2.
Primarily due to an amendment in 2012 to the company's U.S. parent company retiree medical and dental plans for Medicare eligible pensioners and survivors from the company sponsored group plans to a company-funded Health Reimbursement Arrangement (HRA).
3.
Includes pension plans maintained around the world where funding is not customary.




F-34


E. I. du Pont de Nemours and Company
Notes to the company's U.S. parent company retiree medical plan to take advantage of a 50 percent discount from brand name drug manufacturersConsolidated Financial Statements (continued)
(Dollars in the "coverage gap" portion of the Medicare Part D plan. The plan amendment has no effect on current or future retirees' coverage.millions, except per share)


2
Includes pension plans maintained around the world where funding is not customary.

The pre-tax amounts recognized in accumulated other comprehensive loss are summarized below:


  
 Pension Benefits
  
 Other Benefits
  
Pension BenefitsOther Benefits

December 31,

   2010   2009   2010   2009  2013201220132012

Net loss

   $(9,032)  $(8,904)  $(889)  $(853) $(8,640)$(13,042)$(647)$(1,233)

Prior service (cost) benefit

   (114)  (130)  994   911  
Prior service benefit (cost)9
(62)1,433
1,567

   $(9,146)  $(9,034)  $105   $58  $(8,631)$(13,104)$786
$334
 


The accumulated benefit obligation for all pension plans was $22,165$24,685 and $21,042$27,243 at December 31, 20102013 and 2009,2012, respectively.

Information for pension plans with projected benefit obligation in excess of plan assets20132012
Projected benefit obligation$26,158
$29,043
Accumulated benefit obligation24,574
27,130
Fair value of plan assets20,472
19,258

Table of Contents

Information for pension plans with accumulated benefit obligations in excess of plan assets20132012
Projected benefit obligation$25,350
$28,925
Accumulated benefit obligation23,906
27,064
Fair value of plan assets19,744
19,179

 Pension Benefits
Components of net periodic benefit cost (credit) and amounts recognized in other
     comprehensive income
201320122011
Net periodic benefit cost   
Service cost$271
$277
$249
Interest cost1,088
1,165
1,253
Expected return on plan assets(1,524)(1,517)(1,475)
Amortization of loss957
887
613
Amortization of prior service cost8
13
16
Curtailment loss1
2

Settlement loss152
5

Net periodic benefit cost1
$953
$832
$656
Changes in plan assets and benefit obligations recognized in other
     comprehensive income
   
Net (gain) loss$(3,293)$1,433
$4,069
Amortization of loss(957)(887)(613)
Prior service (benefit) cost(62)(22)2
Amortization of prior service cost(8)(13)(16)
Curtailment loss(1)(2)
Settlement loss(152)(5)
Total (benefit) loss recognized in other comprehensive income$(4,473)$504
$3,442
Noncontrolling interest
(1)(11)
Accumulated other comprehensive income assumed from purchase of noncontrolling interest
25

Total (benefit) loss recognized in other comprehensive income, attributable to DuPont$(4,473)$528
$3,431
Total recognized in net periodic benefit cost and other comprehensive income$(3,520)$1,360
$4,087

1.
The above amounts include net periodic benefit cost relating to discontinued operations for 2013, 2012 and 2011 of $3, $42 and $41, respectively.

F-35


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


Information for pension plans with projected benefit obligation in excess of plan assets
  
 2010
  
 2009
  

Projected benefit obligation

   $23,707   $22,688  

Accumulated benefit obligation

    21,962    20,971  

Fair value of plan assets

    18,183    17,059  


Information for pension plans with accumulated benefit obligations in excess of plan assets
  
 2010
  
 2009
  

Projected benefit obligation

   $23,481   $21,276  

Accumulated benefit obligation

    21,807    19,709  

Fair value of plan assets

    18,017    15,763  


 
  
 Pension Benefits
  

Components of net periodic benefit cost (credit) and amounts recognized in other comprehensive income

    2010    2009    2008  

Net periodic benefit (credit) cost

                 

Service cost

   $207   $192   $209  

Interest cost

    1,262    1,270    1,286  

Expected return on plan assets

    (1,435)   (1,603)   (1,932) 

Amortization of loss

    507    278    56  

Amortization of prior service cost

    16    18    18  

Curtailment/settlement loss

            1  

Net periodic benefit (credit) cost

   $557   $155   $(362) 

Changes in plan assets and benefit obligations recognized in other comprehensive income

                 

Net loss (gain)

    634    781    6,397  

Amortization of loss

    (507)   (278)   (56) 

Prior service cost

            4  

Amortization of prior service cost

    (16)   (18)   (18) 

Curtailment/settlement loss

            (1) 

Total recognized in other comprehensive income

   $111   $485   $6,326  

Total recognized in net periodic benefit cost and other comprehensive income

   $668   $640   $5,964  

The estimated pre-tax net loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost during 20112014 are $612$597 and $16,$3, respectively.


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


  
 Other Benefits
  

Components of net periodic benefit cost and amounts recognized in other comprehensive income

   2010    2009    2008  
Other Benefits
Components of net periodic benefit cost (credit) and amounts recognized in other
comprehensive income
201320122011

Net periodic benefit cost

         

Service cost

   $29   $31   $29  $29
$37
$33

Interest cost

   238   245   226  130
174
212

Amortization of loss

   58   50   32  76
94
60

Amortization of prior service benefit

   (106)  (106)  (106) (195)(155)(121)

Net periodic benefit cost

   $219   $220   $181  
Curtailment (gain) loss(154)3

Settlement loss1


Net periodic benefit (credit) cost1
$(113)$153
$184

Changes in plan assets and benefit obligations recognized in other comprehensive income

         

Net (gain) loss

   $94   $110   $349  $(513)$60
$437

Amortization of loss

   (58)  (50)  (32) (76)(94)(60)

Prior service cost

   (189)  (4)  -  
Prior service (benefit) cost(211)(857)11

Amortization of prior service benefit

   106   106   106  195
155
121

Total recognized in other comprehensive income

   $(47)  $162   $423  
Curtailment gain (loss)154
(3)
Settlement loss(1)

Total (benefit) loss recognized in other comprehensive income$(452)$(739)$509
Accumulated other comprehensive income assumed from purchase of noncontrolling interest
1

Total (benefit) loss recognized in other comprehensive income, attributable to DuPont$(452)$(738)$509

Total recognized in net periodic benefit cost and other comprehensive income

   $172   $382   $604  $(565)$(585)$693


1.
The above amounts include net periodic benefit cost relating to discontinued operations for 2013, 2012 and 2011 of $0, $2 and $2, respectively.

The estimated pre-tax net loss and prior service creditbenefit for the other long-term employee benefit plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost during 20112014 are $60$55 and $(122)$(212), respectively.


  
 Pension Benefits
  
 Other Benefits
  
Pension BenefitsOther Benefits

Weighted-average assumptions used to determine benefit obligations at December 31,

   2010    2009    2010    2009  2013201220132012

Discount rate

   5.32%   5.80%   5.50%   6.00%  4.58%3.89%4.60%3.85%

Rate of compensation increase

   4.24%   4.24%   4.50%   4.50%  
Rate of compensation increase1
4.22%4.13%%4.40%


1.
The rate of compensation increase represents the single annual effective salary increase that an average plan participant would receive during the participant's entire career at the company.


  
 Pension Benefits
  
  
 Other Benefits
  
Pension BenefitsOther Benefits

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31,

   2010    2009    2008    2010    2009    2008  201320122011201320122011

Discount rate

   5.80%   6.14%   6.01%   6.00%   6.25%   6.25%  3.90%4.32%5.32%3.85%4.49%5.50%

Expected return on plan assets

   8.64%   8.75%   8.74%   -   -   -  8.39%8.61%8.73%%%%

Rate of compensation increase

   4.24%   4.30%   4.28%   4.50%   4.50%   4.50%  4.14%4.18%4.24%4.40%4.40%4.50%





F-36


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

For determining U.S. pension plans' net periodic benefit costs, the discount rate, expected return on plan assets and the rate of compensation increase were 6.004.10 percent, 8.75 percent and 4.40 percent for 2013.

In connection with the planned sale of the Performance Coatings business (See Note 2), the company updated the discount rate and expected return on plan assets for the U.S. pension plans during 2012. For determining the U.S. pension plans' net periodic benefit costs, the weighted discount rate, weighted expected return on plan assets and the rate of compensation increase were 4.38 percent, 8.96 percent and 4.40 percent for 2012. With the continuing challenges in the global economy, the company lowered its long-term expected return on plan assets during 2012.

For determining U.S. pension plans' net periodic benefit costs, the discount rate, expected return on plan assets and the rate of compensation increase were5.50 percent, 9.00 percent and 4.50 percent for 2010, 6.25 percent, 9.00 percent and 4.50 percent for 2009 and 6.25 percent, 9.00 percent and 4.50 percent for 2008.

The2011.

In the U.S., the discount rate is developed by matching the expected cash flow of the benefit plans to a yield curve constructed from a portfolio of high quality fixed-income instruments provided by the plan's actuary as of the measurement date. For non-U.S. benefit plans, the company utilizes publishedprevailing long-term high quality corporate bond indices to determine the discount rate applicable to each country at the measurement date. Where commonly available, the company considers indices of various durations to reflect the timing of future benefit payments.


The long-term rate of return on assets in the U.S. was selected from within the reasonable range of rates determined by historical real returns (net of inflation) for the asset classes covered by the investment policy, expected performance, and projections of inflation over the long-term period during which benefits are payable to plan participants. Consistent with prior years, the long-term rate of return on plan assets in the U.S. reflects the asset allocation of the plan and the


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


effect of the company's active management of the plans' assets. For non-U.S. plans, assumptions reflect economic assumptions applicable to each country.


Assumed health care cost trend rates at December 31,
  
 2010
  
 2009
  
20132012

Health care cost trend rate assumed for next year

   8%  8% 7%8%

Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)

   5%  5% 5%5%

Year that the rate reaches the ultimate trend rate

   2014   2013  2022
2016
 


Assumed health care cost trend rates have a modest effect on the amount reported for the health care plan. A one-percentage point change in assumed health care cost trend rates would have the following effects:


  
 1-Percentage
Point Increase

  
 1-Percentage
Point Decrease

  
1-Percentage
Point Increase
1-Percentage
Point Decrease

Increase (decrease) on total of service and interest cost

   $6   $(5) $7
$(6)

Increase (decrease) on post-retirement benefit obligation

   72   (76) 87
(75)
 



F-37


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Plan Assets

All pension plan assets in the U.S. are invested through a single master trust fund. The strategic asset allocation for this trust fund is selected by management, reflecting the results of comprehensive asset liability modeling. The general principles guiding U.S. pension asset investment policies are those embodied in the Employee Retirement Income Security Act of 1974 (ERISA). These principles include discharging the company's investment responsibilities for the exclusive benefit of plan participants and in accordance with the "prudent expert" standard and other ERISA rules and regulations. The company establishes strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes with the aim of achieving a prudent balance between return and risk. Strategic asset allocations in other countries are selected in accordance with the laws and practices of those countries. Where appropriate, asset liability studies are utilized in this process. U.S. plan assets and a portion of non-U.S. plan assets are managed by investment professionals employed by the company. The remaining assets are managed by professional investment firms unrelated to the company. The company's pension investment professionals have discretion to manage the assets within established asset allocation ranges approved by senior management of the company. Additionally, pension trust funds are permitted to enter into certain contractual arrangements generally described as "derivatives." Derivatives are primarily used to reduce specific market risks, hedge currency and adjust portfolio duration and asset allocation in a cost-effective manner.


The weighted-average target allocation for plan assets of the company's U.S. and non-U.S. pension plan is summarized as follows:

Target allocation for plan assets at December 31,
  
 2010
  
 2009
  
20132012

U.S. equity securities

   30%  30% 27%28%

Non-U.S. equity securities

   22%  22% 21
21

Fixed income securities

   29%  31% 32
29
Hedge funds2
2

Private market securities

   12%  10% 11
13

Real estate

   7%  7% 7
7

Total

   100%  100% 100%100%
 


Equity securities include varying market capitalization levels. U.S. equity investments are primarily large-cap companies. Fixed income investments include corporate-issued, government-issued and asset-backed securities. Corporate debt investments include a range of credit risk and industry diversification. U.S. fixed income investments are weighted heavier than non-U.S fixed income securities. Other investments include hedge funds, real estate and private market securities such as interests in private equity and venture capital partnerships.


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Fair value calculations may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.



F-38


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

The tabletables below presents the fair values of the company's pension assets by level within the fair value hierarchy, as described in Note 1, as of December 31, 20102013 and 2009,2012, respectively.


 Fair Value Measurements at December 31, 2010
Fair Value Measurements at December 31, 2013
Asset Category
  
 Total
  
 Level 1
  
 Level 2
  
 Level 3
  
TotalLevel 1Level 2Level 3

Cash and cash equivalents

   $2,603   $2,535   $68   $-  $3,076
$3,073
$3
$

U.S. equity securities1

   4,016   3,964   32   20  4,432
4,383
22
27

Non-U.S. equity securities

   3,663   3,602   61   -  4,005
3,965
37
3

Debt – government issued

   1,514   195   1,319   -  

Debt – corporate issued

   1,813   151   1,628   34  
Debt – government-issued1,970
396
1,574

Debt – corporate-issued1,961
376
1,566
19

Debt – asset-backed

   970   43   923   4  925
51
870
4
Hedge funds435

1
434

Private market securities

   2,931   -   -   2,931  2,882

5
2,877

Real estate

   1,049   118   -   931  1,179
73

1,106

Derivatives – asset position

   95   6   89   -  97
18
79

Derivatives – liability position

   (75)  (1)  (74)  -  (78)(7)(71)

Other

   1   1   -   -  

   $18,580   $10,614   $4,046   $3,920  $20,884
$12,328
$4,086
$4,470

Pension trust receivables2

   471          200
 
 
 

Pension trust payables3

   (648)         (470) 
 
 

Total

   $18,403          $20,614
 
 
 
 


 
 
 Fair Value Measurements at December 31, 2009
Asset Category
  
 Total
  
 Level 1
  
 Level 2
  
 Level 3
  

Cash and cash equivalents

   $2,789   $2,734   $55   $-  

U.S. equity securities1

    3,735    3,720    11    4  

Non-U.S. equity securities

    3,672    3,661    11    -  

Debt – government issued

    1,487    112    1,375    -  

Debt – corporate issued

    1,985    284    1,650    51  

Debt – asset-backed

    919    -    911    8  

Private market securities

    1,998    18    -    1,980  

Real estate

    970    84    1    885  

Derivatives – asset position

    46    1    45    -  

Derivatives – liability position

    (38)   -    (38)   -  

Other

    30    11    19    -  

   $17,593   $10,625   $4,040   $2,928  

Pension trust receivables2

    752                 

Pension trust payables3

    (1,202)                

Total

   $17,143                 
                       
1
The company's pension plans directly held $498 (3 percent of total plan assets) and $336 (2 percent of total plan assets) of DuPont common stock at December 31, 2010 and 2009, respectively.

2
Primarily receivables for investment securities sold.

3
Primarily payables for investment securities purchased.
 Fair Value Measurements at December 31, 2012
Asset CategoryTotalLevel 1Level 2Level 3
Cash and cash equivalents$2,613
$2,584
$29
$
U.S. equity securities1
3,647
3,604
25
18
Non-U.S. equity securities3,928
3,842
86

Debt – government-issued1,714
443
1,271

Debt – corporate-issued2,236
378
1,831
27
Debt – asset-backed1,059
40
1,017
2
Hedge funds389

2
387
Private market securities2,926

4
2,922
Real estate1,236
82

1,154
Derivatives – asset position129
6
123

Derivatives – liability position(80)(1)(79)
 $19,797
$10,978
$4,309
$4,510
Pension trust receivables2
312
 
 
 
Pension trust payables3
(710) 
 
 
Total$19,399
 
 
 

Table of Contents

1.
The company's pension plans directly held $648 (3 percent of total plan assets) and $449 (2 percent of total plan assets) of DuPont common stock at December 31, 2013 and 2012, respectively.
2.
Primarily receivables for investment securities sold.
3.
Primarily payables for investment securities purchased.



F-39


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


The company's pension plans hold Level 3 assets which are primarily ownership interests in investment partnerships and trusts that own private market securities and real estate. Fair value is generally based on the company's units of ownership and net asset value of the investment entity or the company's share of the investment entity's total equity. The table below presents a rollforward of activity for these assets for the years ended December 31, 20102013 and 2009:

2012:

                          

    

    Level 3 Assets  

    

    Total    U.S. Equity
Securities
    Debt-
Corporate
Issued
    Debt-
Asset-
Backed
    Private
Market
Securities
    Real
Estate
  

Beginning balance at December 31, 2008

   $3,431   $12   $127   $13   $3,166   $113  

Realized gain (loss)

    24    -    (1)   1    24    -  

Change in unrealized gain (loss)

    (606)   (8)   (32)   -    (428)   (138) 

Purchases, sales and settlements

    92    -    (34)   (2)   (782)   910  

Transfers out of Level 3

    (13)   -    (9)   (4)   -    -  

Ending balance at December 31, 2009

   $2,928   $4   $51   $8   $1,980   $885  

Realized gain (loss)

    (9)   -    (53)   5    39    -  

Change in unrealized gain (loss)

    206    3    48    (5)   229    (69) 

Purchases, sales and settlements

    884    13    (11)   (4)   683    203  

Transfers out of Level 3

    (89)   -    (1)   -    -    (88) 

Ending balance at December 31, 2010

   $3,920   $20   $34   $4   $2,931   $931  
                                 
    Level 3 Assets
    Total
U.S. Equity
Securities
Non-U.S. Equity
Securities
Debt-
Corporate
Issued
Debt-
Asset-
Backed
Hedge Funds
Private
Market
Securities
Real
Estate
Beginning balance at December 31, 2011$4,500
$28
$
$30
$4
$392
$2,959
$1,087
Realized gain (loss)14
(3)


(6)23

Change in unrealized gain (loss)253
(8)
(10)
17
179
75
Purchases, sales and settlements, net(134)(1)
7
(2)(16)(114)(8)
Transfers (out) in of Level 3(123)2




(125)
Ending balance at December 31, 2012$4,510
$18
$
$27
$2
$387
$2,922
$1,154
Realized gain (loss)42




3
39

Change in unrealized gain (loss)192
5
1
(8)
22
95
77
Purchases, sales and settlements, net(278)6
1
(1)
22
(181)(125)
Transfers in (out) of Level 34
(2)1
1
2

2

Ending balance at December 31, 2013$4,470
$27
$3
$19
$4
$434
$2,877
$1,106


Cash Flow

Contributions

The following table shows the company's pre-tax cash contributions to its pension plans and other long-term employee benefit plans:

 
    
  
 2010
  
 2009
  
 2008
  

Pension plans

   $782   $306   $252  

Other long-term employee benefit plans

    321    323    326  
                  
Contributions

The company made a voluntary contribution of $500 to its principal U.S. pension plan in the third quarter 2010.             No2012 and no contributions were requiredmade in2011 or 2013. No contributions are expected to be made to the principal U.S. pension plan trust fund in 2009 and 2008 and no contributions are required or expected to be made to this plan in 2011.2014. The company expects to contribute approximately $305 in 2011contributed $313 and $207 to its pension plans other than the principal U.S. pension plan and also expects to make cash payments of approximately $320 in 2011 under its other long-term employee benefit plans.

plans, respectively, in 2013. The company expects to contribute approximately $344 and $224 to its pension plans other than the principal U.S. pension plan and its other long-term employee benefit plans, respectively, in 2014.

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Estimated Future Benefit Payments

The following benefit payments, which reflect future service, as appropriate, are expected to be paid:

 
    
  
 Pension
Benefits

  
 Other Benefits
  

2011

   $1,593   $319  

2012

    1,528    315  

2013

    1,521    315  

2014

    1,527    313  

2015

    1,544    312  

Years 2016-2020

    8,002    1,548  
             
    
Pension
Benefits
Other Benefits
2014$1,620
$224
20151,611
219
20161,618
214
20171,639
209
20181,648
205
Years 2019-20238,482
937


Defined Contribution Plan

The company sponsors several defined contribution plans, which cover substantially all U.S. employees. The most significant is the U.S. parent company's Retirement Savings Plan (the Plan), which reflects the 2009 merger of the Retirement Savings Plan and the Savings and Investment Plan. This Plan includes a non-leveraged Employee Stock Ownership Plan (ESOP). Employees are not required to participate in the ESOP and those who do are free to diversify out of the ESOP. The purpose of the Plan is to provide retirement savings benefits for employees and to provide employees an opportunity to become stockholders of the company. The Plan is a tax qualified contributory profit sharing plan, with cash or deferred arrangement and any eligible employee of the company may participate. The company contributes 100 percent of the first 6 percent of the employee's contribution election and also contributes 3 percent of each eligible employee's eligible compensation regardless of the employee's contribution.



F-40


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

The company's contributions to the U.S. parent company's defined contribution plans were $195, $191$208, $212 and $189$210 for the years ended December 31, 2010, 20092013, 2012 and 2008,2011, respectively. The company's matching contributions vest immediately upon contribution. The 3 percent nonmatching company contribution vests for employees with at least three years of service. In addition, the company made contributions to other defined contribution plans of $59, $54$105, $124 and $45$84 for the years ended December 31, 2010, 20092013, 2012 and 2008,2011, respectively. Included in the company's contributions are amounts related to discontinued operations of $2, $30 and $29 for the years ended December 31, 2013, 2012 and 2011, respectively. The company expects to contribute about $265$320 to its defined contribution plans in 2011.

22.2014.


19.  COMPENSATION PLANS

The total stock-based compensation cost included in the Consolidated Income Statements was $108, $115$129, $105 and $112$113 for 2010, 20092013, 2012 and 2008,2011, respectively. The income tax benefits related to stock-based compensation arrangements were $36, $38$43, $35 and $37$37 for 2010, 20092013, 2012 and 2008,2011, respectively.


In April 2007,2011, the shareholders approved amendments to the DuPont Equity and Incentive Plan (EIP). The EIP consolidated several of the company's existing compensation plans (the Stock Performance Plan, Variable Compensation Plan, and equity awards of the Stock Accumulation and Deferred Compensation Plan for Directors) into one plan providingprovides for equity-based and cash incentive awards to certain employees, directors, and consultants. Currently, equity-based compensation awards consist of stock options, time-vested restricted stock units (RSUs), performance-based restricted stock units (PSUs) and stock appreciation rights.

The company satisfies stock option exercises and vesting of RSUs and PSUs with newly issued shares of DuPont common stock. Under the amended EIP, the maximum number of shares reserved for the grant or settlement of awards is 60110 million shares, provided that each share in excess of 2030 million that is issued with respect to any award that is not an option or stock appreciation right will be counted against the 60110 million share limit as four and one-half shares. At December 31, 2010,2013, approximately 2351 million shares were authorized for future grants under the company's EIP. Awards or grants made in 2007, prior to shareholder approvalThe company satisfies stock option exercises and vesting of the EIP, weretime-vested restricted stock units (RSUs) and performance-based restricted stock units (PSUs) with newly issued under the company's previously existing compensation plans. Awards outstanding under eachshares of these plans have not been terminated. These awards remain outstanding and are administered under the terms of the applicable existing plan. No further awards will be made under the company's previously existing compensation plans.

DuPont common stock.

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

The company's Compensation Committee determines the long-term incentive mix, including stock options, RSUs and PSUs and may authorize new grants annually.


Stock Options

The purchaseexercise price of shares subject to option is equal to the market price of the company's stock on the date of grant. Options granted prior to 2004 expire 10 years from date of grant; options granted between 2004 and 2008 serially vested over a three-year period and carry a six-yearsix-year option term. Stock option awards granted inbetween 2009 and 20102013 expire seven years after the grant date. The plan allows retirement eligible employees to retain any granted awards upon retirement provided the employee has rendered at least six months of service following grant date.


For purposes of determining the fair value of stock options awards, the company uses the Black-Scholes option pricing model and the assumptions set forth in the table below. The weighted-average grant-date fair value of options granted in 2010, 20092013, 2012 and 20082011 was $6.44, $2.68$10.40, $11.81 and $5.30,$12.32, respectively.


  
 2010
  
 2009
  
 2008
  
201320122011

Dividend yield

   4.9%  7.0%  3.7% 3.6%3.2%3.2%

Volatility

   32.44%  27.61%  18.86% 34.86%34.87%33.26%

Risk-free interest rate

   2.6%  2.5%  2.6% 1.0%0.9%2.3%

Expected life (years)

   5.3   5.3   4.5  5.3
5.3
5.3
 


The company determines the dividend yield by dividing the current annual dividend on the company's stock by the option exercise price. A historical daily measurement of volatility is determined based on the expected life of the option granted. The risk-free interest rate is determined by reference to the yield on an outstanding U.S. Treasury note with a term equal to the expected life of the option granted. Expected life is determined by reference to the company's historical experience.



F-41


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Stock option awards as of December 31, 2010,2013, and changes during the year then ended were as follows:


  
 Number of
Shares
(in thousands)

  
 Weighted
Average
Exercise Price
(per share)

  
 Weighted
Average
Remaining
Contractual
Term (years)

  
 Aggregate
Intrinsic
Value
(in thousands)

  

Outstanding, December 31, 2009

   85,416   $41.06          
Number of
Shares
(in thousands)
Weighted
Average
Exercise Price
(per share)
Weighted
Average
Remaining
Contractual
Term (years)
Aggregate
Intrinsic
Value
(in thousands)
Outstanding, December 31, 201233,359
$39.70
  

Granted

   6,378   $33.51          5,758
$47.68
  

Exercised

   (18,101)  $39.95          (13,012)$36.31
  

Forfeited

   (225)  $30.78          (253)$50.10
  

Cancelled

   (10,581)  $51.89          (4,281)$50.64
  

Outstanding, December 31, 20101

   62,887   $38.83   2.74   $702,445  

Exercisable, December 31, 2010

   43,252   $42.90   1.68   $308,494  
Outstanding, December 31, 201321,571
$41.58
4.14$505,136
Exercisable, December 31, 201311,765
$35.02
2.95$352,427
1
Includes 9.8 million options outstanding from the 2002 Corporate Sharing Program grants of 200 shares to all eligible employees at an option price of $44.50. These options are currently exercisable and expire 10 years from date of grant.

The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value (the difference between the company's closing stock price on the last trading day of 20102013 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options at year end. The amount changes based on the fair market value of the company's stock. Total intrinsic value of options exercised for 2010, 20092013, 2012 and 20082011 were $109, $0$230, $147 and $18,$216, respectively. In 2010,2013, the company realized a tax benefit of $35$74 from options exercised.


As of December 31, 2010, $142013, $34 of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 1.711.73 years.


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

RSUs and PSUs

The company issues RSUs that serially vest over a three-year period and, upon vesting, convert one-for-one to DuPont common stock. A retirement eligible employee retains any granted awards upon retirement provided the employee has rendered at least six months of service following the grant date. Additional RSUs are also granted periodically to key senior management employees. These RSUs generally vest over periods ranging from two to five years. The fair value of all stock-settled RSUs is based upon the market price of the underlying common stock as of the grant date.


The company also grants PSUs to senior leadership. In 2010,2013, there were 310,917313,324 PSUs granted. Vesting for PSUs granted in 2008, 20092011, 2012 and 20102013 is equally based upon corporate revenue growth relative to peer companies and total shareholder return (TSR) relative to peer companies. Performance and payouts are determined independently for each metric. The actual award, delivered as DuPont common stock, can range from zero percent to 200 percent of the original grant. The grant-date fair value of the PSUs granted in 2010,2013, subject to the TSR metric, was $44.86,$59.05, estimated using a Monte Carlo simulation. The grant-date fair value of the PSUs, subject to the revenue metric, was based upon the market price of the underlying common stock as of the grant date.

For PSUs granted prior to 2008, vesting occurs upon attainment of (i) corporate revenue growth relative to peer companies and (ii) return on invested capital objectives (relative to peer companies for periods prior to 2008 and relative to internal targets for periods beginning in 2008). The actual award, delivered as DuPont common stock, can range from zero percent to 200 percent of the original grant. The fair value of PSUs granted prior to 2008 is based upon the market price of the underlying common stock as of the grant date.


Non-vested awards of RSUs and PSUs as of December 31, 20102013 and 20092012 are shown below. The weighted-average grant-date fair value of RSUs and PSUs granted during 2010, 20092013, 2012 and 20082011 was $34.60, $23.72$48.06, $47.17 and $45.70,$53.19, respectively. The table also includes Board of Directors' cash-settled RSUs granted prior to 2008.



  
 Number of
Shares
(in thousands)

  
 Weighted
Average
Grant Date
Fair Value
(per share)

  

Nonvested, December 31, 2009

   4,502   $34.56  
Number of
Shares
(in thousands)
Weighted
Average
Grant Date
Fair Value
(per share)
Nonvested, December 31, 20123,120
$49.42

Granted

   1,628   $34.60  2,439
$48.06

Vested

   (1,742)  $36.93  (1,744)$43.22

Forfeited

   (270)  $47.86  (50)$43.69

Nonvested, December 31, 2010

   4,118   $32.27  
 
Nonvested, December 31, 20133,765
$52.41


As of December 31, 2010,2013, there was $25$73 of unrecognized stock-based compensation expense related to nonvested awards. That cost is expected to be recognized over a weighted-average period of 1.672.14 years. The total fair value of stock units vested during 2010, 20092013, 2012 and 20082011 was $64, $74$75, $68 and $60,$74, respectively.


F-42


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Other Cash-based Awards

Cash awards under the EIP plan may be granted to employees who have contributed most to the company's success, with consideration being given to the ability to succeed to more important managerial responsibility. Such awards were $233, $141$60, $60 and $140$85 for 2010, 20092013, 2012 and 2008,2011, respectively. The amounts of the awards are dependent on company earnings and are subject to maximum limits as defined under the governing plans.


In addition, the company has other variable compensation plans under which cash awards may be granted. These plans include Pioneer's Annual Reward Program and the company's regional and local variable compensation plans.plans and Pioneer's Annual Reward Program. Such awards were $301, $213$317, $379 and $196$386 for 2010, 20092013, 2012 and 2008,2011, respectively.


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

23.

20.  DERIVATIVES AND OTHER HEDGING INSTRUMENTS

Objectives and Strategies for Holding Derivative Instruments

In the ordinary course of business, the company enters into contractual arrangements (derivatives) to reduce its exposure to foreign currency, interest rate and commodity price risks under established procedures and controls.risks. The company has established a variety of approved derivative instrumentsprograms to be utilized in eachfor financial risk management program, as well asmanagement. These programs reflect varying levels of exposure coverage and time horizons based on an assessment of risk.

Derivative programs have procedures and controls and are approved by the Corporate Financial Risk Management Committee, consistent with the company's financial risk factors related to each hedging program.management policies and guidelines. Derivative instruments utilized during the period includeused are forwards, options, futures and swaps. The company has not designated any nonderivatives as hedging instruments.

The company established acompany's financial risk management framework that incorporated the Corporate Financial Risk Management Committee and established financial risk management policies and guidelines that authorize the use of specific derivative instruments and further establishes procedures for control and valuation,also address counterparty credit approval, limits and routine exposure monitoring and reporting. The counterparties to these contractual arrangements are major financial institutions and major commodity exchanges. The company is exposed to credit loss in the event of nonperformance by these counterparties. The company manages thisutilizes collateral support annex agreements with certain counterparties to limit its exposure to credit loss throughlosses. The company's derivative assets and liabilities are reported on a gross basis in 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.Consolidated Balance Sheets. The company anticipates performance by counterparties to these contracts and therefore no material loss is expected. Market and counterparty credit risks associated with these instruments are regularly reported to management.


The company hedges foreign currency-denominated revenue and monetary assets and liabilities, certain business specific foreign currency exposures and certain energy feedstock purchases. In addition,notional amounts of the company enters into agricultural commodity derivatives to hedge exposures relevant to agricultural feedstocks.

company's derivative instruments were as follows:

December 31,20132012
Derivatives designated as hedging instruments:  
Interest rate swaps$1,000
$1,000
Foreign currency contracts1,107
1,083
Commodity contracts606
753
Derivatives not designated as hedging instruments: 
Foreign currency contracts9,553
6,733
Commodity contracts281
242

Foreign Currency Risk

The company's objective in managing exposure to foreign currency fluctuations is to reduce earnings and cash flow volatility associated with foreign currency rate changes. Accordingly, the company enters into various contracts that change in value as foreign exchange rates change to protect the value of its existing foreign currency-denominated assets, liabilities, commitments and cash flows.


The company routinely uses forward exchange contracts to offset 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.

The company also uses foreign currency exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on these contracts offset changes in the USD value of the related foreign currency-denominated revenues. The objective of the hedge program is to reduce earnings and cash flow volatility related to changes in foreign currency exchange rates.


F-43


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Interest Rate Risk

The company uses interest rate swaps to manage the 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 USD LIBOR. Interest rate swaps allow the company to achieve a target range of floating rate debt.


Commodity Price Risk

Commodity price risk management programs serve to reduce exposure to price fluctuations on purchases of inventory such as natural gas, copper, corn, soybeans and soybean meal.

The company enters into over-the-counter and exchange-traded derivative commodity instruments to hedge the commodity price risk associated with energy feedstock and agricultural commodity exposures.


Fair Value Hedges

Interest Rate Swaps
At December 31, 2010,2013, the company maintained a number of interest rate swaps, which were implemented at the time the debt instruments were issued, that involve the exchange of fixed for floating rate interest payments. These swaps allow the


Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

company to achieve a target range of floating rate debt.issued. All interest rate swaps qualify for the shortcut method of hedge accounting, thus there is no ineffectiveness related to these hedges. The company maintains no other significant fair value hedges. At December 31, 2010 and 2009, the company had interest rate swap agreements with gross notional amounts of approximately $1,000 and $1,900, respectively.


Cash Flow Hedges

The company maintains a number of cash flow hedging programs to reduce risks related to foreign currency and commodity price risk. While each risk management program has a different time maturity period, most programs currently do not extend beyond the next two-year period.

Foreign Currency Contracts
The company uses foreign currency exchange contractsinstruments such as forwards and options to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on these contracts offset changes in the USD value of the related foreign currency-denominated revenues. At December 31, 2010 and 2009, the company had foreign currency exchange contracts with gross notional amounts of approximately $1,220 and $293, respectively.

A portion of natural gas purchases are hedged to reduce price volatility using fixed price swaps and options. At December 31, 2010 and 2009, the company had energy feedstock and other contracts with gross notional amounts of approximately $151 and $277, respectively.


Commodity Contracts
The company contracts with independent growers to produce seed inventory. Under these contracts, growers are compensated with bushel equivalents that are sold to the company for the market price of grain for a period of time. Derivativeenters into over-the-counter and exchange-traded derivative commodity instruments, such as commodityincluding options, futures and options that have a high correlation to the underlying commodity, are usedswaps, to hedge the commodity price risk involved in compensating growers.

The company utilizes agriculturalassociated with energy feedstock and agriculture commodity futures to manageexposures.


While each risk management program has a different time maturity period, most programs currently do not extend beyond the price volatility of soybean meal. These derivative instruments have a high correlation to the underlying commodity exposure and are deemed effective in offsetting soybean meal feedstock price risk.

At December 31, 2010 and 2009, the company had agricultural commodity contracts with gross notional amounts of approximately $297 and $332, respectively.

During 2010 and 2009, the company entered into treasury rate contracts to hedge the company's exposure to treasury rates on a portion of planned bond issuances. The contracts were terminated at the time the bonds were issued prior to year end.

next two-year period. Cash flow hedge results are reclassified into earnings during the same period in which the related exposure impacts earnings. Reclassifications are made sooner if it appears that a forecasted transaction will not materialize. The following table summarizes the after-tax effect of cash flow hedges on accumulated other comprehensive income (loss) for the years endedDecember 31, 20102013 and 2009:

2012:


  
 2010
  
 2009
  

  
 Pre-tax
  
 Tax
  
 After-tax
  
 Pre-tax
  
 Tax
  
 After-tax
  
December 31,20132012

Beginning balance

   $(101)  $36   $(65)  $(246)  $88   $(158) $3
$41

Additions and revaluations of derivatives designated as cash flow hedges

   (36)  14   (22)  (48)  17   (31) (36)(1)

Clearance of hedge results to earnings

   90   (34)  56   193   (69)  124  (15)(37)

Ending balance

   $(47)  $16   $(31)  $(101)  $36   $(65) $(48)$3

Portion of ending balance expected to be reclassified into earnings over the next twelve months

   $(69)  $24   $(45)  $(54)  $19   $(35) 

Table of ContentsDuring the next 12 months, the after-tax amount expected to be reclassified from accumulated other comprehensive income (loss) into earnings is

$(36).



F-44


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

Hedges of Net Investment in a Foreign Operation

At December 31, 2010 and 2009, the company did not maintain any hedges of net investment in a foreign operation.


Derivatives not Designated in Hedging Relationships

Foreign Currency Contracts
The company routinely uses forward exchange contracts to reduce its net exposure, by currency, related to foreign currency-denominated monetary assets and liabilities.liabilities of its operations so that exchange gains and losses resulting from exchange rate changes are minimized. The netting of such exposures precludes the use of hedge accounting. However,accounting; however, the required revaluation of the forward contracts and the associated foreign currency-denominated monetary assets and liabilities results inintends to achieve a minimal earnings impact, after taxes. At December 31, 2010 and 2009,Additionally, the company hadutilized cross-currency swaps to hedge foreign currency fluctuations on long-term intercompany loans. These swaps matured during 2013.

In 2012, the company initiated a program to utilize forward exchange contracts with gross notional amountsto reduce the net exposure related to foreign currency-denominated monetary assets and liabilities of approximately $7,449its discontinued operations.

Commodity Contracts
The company utilizes options, futures and $7,634, respectively.

In addition, the company has risk management programs for agricultural commoditiesswaps that doare not qualify for hedge accounting treatment. At December 31, 2010designated as hedging instruments to reduce exposure to commodity price fluctuations on purchases of inventory such as corn, soybeans and 2009, the company had agricultural commodities contracts with gross notional amounts of approximately $310 and $206, respectively.

Contingent Features

At December 31, 2010 and 2009, the company did not maintain any derivative contracts with credit-risk-related contingent features.

The following tables provide information on the location and amounts of derivative fair values in the Consolidated Balance Sheets and derivative gains and losses in the Consolidated Income Statements:

soybean meal.


Fair Values of Derivative Instruments
The table below presents the fair values of the company's derivative assets and liabilities within the fair value hierarchy, as described in Note 1, as of

December 31, 2013 and 2012.

 
 
  
 Asset Derivatives
  
 Liability Derivatives
  
December 31,
  
 2010
  
 2009
  
 2010
  
 2009
  

Derivatives designated as hedging instruments

                      
 

Interest rate swaps

   $   $121  $   $124 
 

Interest rate swaps

    402             
 

Foreign currency contracts

    201   31   33     
 

Energy feedstocks

    31   21   753   543 
 

Energy feedstocks

                494 

Total derivatives designated as hedging instruments

   $63   $17   $78   $115  

Derivatives not designated as hedging instruments

                      
 

Foreign currency contracts

    901   1111   543   173 

Total derivatives not designated as hedging instruments

   $90   $111   $54   $17  

Total derivatives

   $153   $128   $132   $132  
1
Current portion recorded in accounts and notes receivable, net.

2
Long-term portion recorded in other assets.

3
Current portion recorded in other accrued liabilities.

4
Long-term portion recorded in other liabilities.
  
Fair Value at December 31
Using Level 2 Inputs
 Balance Sheet Location20132012
Asset derivatives:   
Derivatives designated as hedging instruments:   
Interest rate swaps1
Other assets$29
$55
Foreign currency contractsAccounts and notes receivable, net6
7
  35
62
Derivatives not designated as hedging instruments:   
Foreign currency contracts2
Accounts and notes receivable, net86
88
    
Total asset derivatives3
 $121
$150
Cash collateral1,2
Other accrued liabilities$30
$44
    
Liability derivatives:   
Derivatives designated as hedging instruments:   
Foreign currency contractsOther accrued liabilities$4
$10
    
Derivatives not designated as hedging instruments:   
Foreign currency contractsOther accrued liabilities70
76
Commodity contractsOther accrued liabilities1
1
  71
77
Total liability derivatives3
 $75
$87

Table of Contents

1.
Cash collateral held as of December 31, 2013 and 2012 represents $17 and $13, respectively, related to interest rate swap derivatives designated as hedging instruments.
2
Cash collateral held as of December 31, 2013 and 2012 represents $13 and $31, respectively, related to foreign currency derivatives not designated as hedging instruments.
3
The company's derivative assets and liabilities subject to enforceable master netting arrangements totaled $54 at December 31, 2013 and $40 at December 31, 2012.

F-45


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

The


Effect of Derivative Instruments on the Consolidated Income Statement

Fair Value Hedging

 
  
 Amount of Gain or
(Loss) Recognized
in Income of
Derivative

  
 Amount of Gain or
(Loss) Recognized
in Income on
Hedged Item

  
 Amount of Gain or
(Loss) Recognized
in Income of
Derivative

  
 Amount of Gain or
(Loss) Recognized
in Income on
Hedged Item

  
Derivatives in Fair Value Hedging
    Relationships

  
 2010
  
 2010
  
 2009
  
 2009
  
 

Interest rate swaps

   $     401   $     (40)1   $    (43)1   $    431  

Total

   $     40   $     (40)   $    (43)   $    43  
1
Gain (loss) was recognized in interest expense, which offset to $0.

Cash Flow Hedging

                  
Derivatives in Cash Flow Hedging
    Relationships

  
 Amount of Gain or
(Loss) Recognized in
OCI1 on Derivative
(Effective Portion)

  
 Amount of Gain or (Loss)
Reclassified from
Accumulated OCI1 into
Income (Effective Portion)

  
 Amount of Gain or
(Loss) Recognized in
Income on Derivative
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing)

  

2010

                 
 

Treasury rate contracts

   $(3)  $-   $-  
 

Foreign currency contracts

    2    (1)2   -  
 

Agricultural feedstocks

    6    (18)3   33 
 

Energy feedstocks

    (41)   (71)3   -  

Total

   $(36)  $(90)  $3  
                  

2009

                 
 

Treasury rate contracts

   $4   $-   $-  
 

Foreign currency contracts

    (7)   (32)2   -  
 

Agricultural feedstocks

    13    (44)3   (2)3 
 

Energy feedstocks

    (58)   (117)3   -  

Total

   $(48)  $(193)  $(2) 
                  
1
OCI is defined as other comprehensive income (loss).

2
Loss was reclassified from accumulated other comprehensive income into net sales.

3
Loss was recognized in cost of goods sold and other operating charges.

Derivatives not Designated in Hedging Instruments

             
 
  
 Amount of Gain or (Loss)
Recognized in Income on Derivative

  
Derivatives Not Designated in Hedging Instruments
  
 2010
  
 2009
  
 

Foreign currency contracts

   $1171  $(485)1 
 

Agricultural feedstocks

    (18)2   (6)2 

Total

   $99   $(491) 
             
1
Gain (loss) recognized in other income, net, was partially offset by the related gain (loss) on the foreign currency-denominated monetary assets and liabilities of the company's operations, which were $(130) and $280 for 2010 and 2009, respectively.

2
Loss was recognized in cost of goods sold and other operating charges.
 
Amount of Gain (Loss)
Recognized in OCI1
(Effective Portion)
Amount of Gain (Loss)
Recognized in Income2
 
 201320122011201320122011Income Statement Classification
Derivatives designated as hedging instruments:       
Fair value hedges:       
Interest rate swaps$
$
$
$(26)$(11)$26
Interest expense3
Cash flow hedges:

 
 
  
 
 
Foreign currency contracts9
(2)(6)1
21
(15)Net sales
Commodity contracts(67)7
23
24
44
(81)Cost of goods sold
 (58)5
17
(1)54
(70) 
Derivatives not designated as hedging instruments:  
 
  
 
 
Foreign currency contracts


35
(157)(133)
Other income, net4
Commodity contracts


(10)(22)3
Cost of goods sold
Interest rate swaps




(1)Interest expense
 


25
(179)(131) 
Total derivatives$(58)$5
$17
$24
$(125)$(201) 

1.
OCI is defined as other comprehensive income (loss).
2.
For cash flow hedges, this represents the effective portion of the gain (loss) reclassified from accumulated OCI into income during the period. For the years ended December 31, 2013, 2012 and 2011, there was no material ineffectiveness with regard to the company's cash flow hedges.
3.
Gain (loss) recognized in income of derivative is offset to $0 by gain (loss) recognized in income of the hedged item.
4.
Gain (loss) recognized in other income, net, was partially offset by the related gain (loss) on the foreign currency-denominated monetary assets and liabilities of the company's operations, which were $(163), $(58) and $(13) for 2013, 2012 and 2011, respectively.


F-46

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


24.21.  GEOGRAPHIC INFORMATION

 
 
  
 2010
  
 2009
  
 2008
  
 
  
 Net Sales1
  
 Net Property2
  
 Net Sales1
  
 Net Property2
  
 Net Sales1
  
 Net Property2
  

United States

   $11,451   $7,835   $9,814   $7,641   $11,091   $7,784  

EMEA3

                                
 

Belgium

   $298   $139   $240   $146   $350   $157  
 

France

    777    102    837    100    1,072    115  
 

Germany

    1,939    289    1,645    294    2,220    309  
 

Italy

    767    36    684    39    912    28  
 

Luxembourg

    67    244    50    243    88    247  
 

Russia

    306    7    253    7    359    7  
 

Spain

    427    259    389    291    521    297  
 

The Netherlands

    264    216    215    220    240    229  
 

United Kingdom

    503    116    452    126    605    138  
 

Other

    2,769    327    2,400    329    3,119    325  
  

Total EMEA

   $8,117   $1,735   $7,165   $1,795   $9,486   $1,852  

Asia Pacific

                                
 

Australia

   $236   $9   $178   $8   $255   $9  
 

China/Hong Kong

    2,759    494    1,827    427    1,656    309  
 

India

    695    81    492    65    485    60  
 

Japan

    1,464    102    1,096    97    1,302    102  
 

Korea

    614    65    482    74    534    78  
 

Singapore

    179    31    135    32    153    42  
 

Taiwan

    534    129    362    129    420    132  
 

Thailand

    266    3    190    3    236    4  
 

Other

    562    69    427    47    442    26  
  

Total Asia Pacific

   $7,309   $983   $5,189   $882   $5,483   $762  

Latin America

                                
 

Argentina

   $321   $26   $282   $27   $335   $28  
 

Brazil

    1,892    317    1,584    316    1,775    300  
 

Mexico

    915    215    757    215    843    225  
 

Other

    592    58    559    53    609    46  
  

Total Latin America

   $3,720   $616   $3,182   $611   $3,562   $599  

Canada

   $908   $170   $759   $165   $907   $157  

Total

   $31,505   $11,339   $26,109   $11,094   $30,529   $11,154  
                                 
1
Net sales are attributed to countries based on the location of the customer.

2
Includes property, plant and equipment less accumulated depreciation.

3
Europe, Middle East, and Africa (EMEA).
 
Net Sales1
Net Property2
 201320122011201320122011
United States$13,763
$13,284
$12,234
$8,598
$8,512
$8,668
Canada$1,025
$921
$880
$142
$149
$173
EMEA3
     
 
Belgium$257
$257
$304
$136
$133
$190
Denmark88
83
83
280
320
323
Finland72
69
65
166
170
176
France749
765
774
269
243
252
Germany1,502
1,557
1,736
152
161
337
Italy728
764
824
38
33
35
Luxembourg86
75
74
250
252
250
Russia365
355
357
7
7
8
Spain369
331
390
270
269
266
Switzerland105
111
116
129
79
69
The Netherlands278
290
277
308
289
237
United Kingdom506
516
493
87
96
110
Other3,274
2,867
2,624
290
251
349
Total EMEA$8,379
$8,040
$8,117
$2,382
$2,303
$2,602
Asia Pacific 
 
 
  
 
Australia$251
$269
$247
$16
$20
$19
China/Hong Kong2,987
2,944
2,996
356
423
628
India740
745
815
131
111
97
Japan1,292
1,577
1,749
85
101
106
Korea623
662
694
49
61
64
Malaysia143
108
99
52
53
52
Singapore184
154
186
74
55
42
Taiwan579
594
654
135
135
133
Thailand299
324
309
30
26
24
Other677
650
599
66
62
63
Total Asia Pacific$7,775
$8,027
$8,348
$994
$1,047
$1,228
Latin America 
 
 
  
 
Argentina$435
$406
$403
$45
$43
$40
Brazil2,565
2,363
2,072
394
348
394
Mexico1,070
1,044
972
421
307
276
Other722
727
655
17
32
31
Total Latin America$4,792
$4,540
$4,102
$877
$730
$741
Total$35,734
$34,812
$33,681
$12,993
$12,741
$13,412

1.
Net sales are attributed to countries based on the location of the customer.
2.
Includes property, plant and equipment less accumulated depreciation.
3.
Europe, Middle East, and Africa (EMEA).


F-47

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

25.


22.  SEGMENT INFORMATION

The company consists of 13 businesses which are aggregated into seveneight reportable segments based on similar economic characteristics, the nature of the products and production processes, end-use markets, channels of distribution and regulatory environment. The company's reportable segments are Agriculture, & Nutrition, Electronics & Communications, Industrial Biosciences, Nutrition & Health, Performance Chemicals, Performance Coatings, Performance Materials, Safety & Protection and Pharmaceuticals. The company includes certain embryonic businesses not included in the reportable segments, such as Applied BioSciences,pre-commercial programs, and nonaligned businesses in Other.


Major products by segment include: Agriculture & Nutrition (hybrid seed corn(corn hybrids and soybean seed,varieties, herbicides, fungicides insecticides, value enhanced grains and soy protein)insecticides); Electronics & Communications (photopolymers and electronic materials); Industrial Biosciences (enzymes and bio-based materials); Nutrition & Health (cultures, emulsifiers, texturants, natural sweeteners and soy-based food ingredients); Performance Chemicals (fluorochemicals, fluoropolymers, specialty and industrial chemicals, and white pigments); Performance Coatings (automotive finishes, and industrial coatings); Performance Materials (engineering polymers, packaging and industrial polymers, films and elastomers); Safety & Protection (nonwovens, aramids and solid surfaces); and Pharmaceuticals (representing the company's interest in the collaboration relating to Cozaar®Cozaar®/Hyzaar®Hyzaar® antihypertensive drugs, which is reported as other income). The company operates globally in substantially all of its product lines.


In general, the accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies.Note 1. Exceptions are noted as follows and are shown in the reconciliations below. Segment sales include transfers to another business segment. Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products. Segment pre-tax operating income (loss) (PTOI) is defined as operating income (loss) before income taxes, exchange gains (losses), corporate expenses and interest. Segment net assets includes net working capital, net property, plant and equipment, and other noncurrent operating assets and liabilities of the segment. Affiliate net assets (pro rata share) excludes borrowing and other long-term liabilities. Depreciation and amortization includes depreciation on research and development facilities and amortization of other intangible assets, excluding write-down of assets whichassets. Prior years' data have been reclassified to reflect the current organizational structure.

Effective January 1, 2013, to better indicate operating performance, the company eliminated the allocation of non-operating pension and other postretirement employee benefit costs from segment pre-tax operating income (loss) (PTOI). Segment PTOI is discussed in Note 4.

defined as income (loss) from continuing operations before income taxes excluding non-operating pension and other postretirement employee benefit costs, exchange gains (losses), corporate expenses and interest. Certain reclassifications of prior year data have been made to conform to current year classifications.


F-48

Table of Contents


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


 
 
  
 Agriculture &
Nutrition

 Electronics &
Communications

 Performance
Chemicals

 Performance
Coatings

 Performance
Materials

 Safety &
Protection

 Pharma-
ceuticals

 Other
 Total
  

2010

                               

Segment sales

   $9,085 $2,764 $6,322 $3,806 $6,287 $3,364 $- $194 $31,822  

Less transfers

    (1) (17) (216) (1) (69) (12) -  (1) (317) 

Net sales

    9,084  2,747  6,106  3,805  6,218  3,352  -  193  31,505  

Pre-tax operating income (loss)

    1,355  445  1,081  249  994  454  489  (205) 4,862  

Depreciation and amortization

    374  94  266  105  205  151  -  4  1,199  

Equity in earnings of affiliates

    59  26  24  2  77  37  -  (45) 180  

Segment net assets

    5,877  1,656  3,317  2,047  3,545  2,967  40  235  19,684  

Affiliate net assets

    291  195  184  16  485  103  -  90  1,364  

Purchases of property, plant and equipment

    399  260  225  74  190  215  -  11  1,374  

2009

                               

Segment sales

   $8,287 $1,918 $4,964 $3,429 $4,768 $2,811 $- $158 $26,335  

Less transfers

    -  (20) (145) (1) (40) (11) -  (9) (226) 

Net sales

    8,287  1,898  4,819  3,428  4,728  2,800  -  149  26,109  

Pre-tax operating income (loss)

    1,224  87  547  69  287  260  1,037  (171) 3,340  

Depreciation and amortization

    439  88  267  123  249  147  -  4  1,317  

Equity in earnings of affiliates

    47  1  9  1  37  26  -  (32) 89  

Segment net assets

    6,212  1,439  3,297  2,018  3,286  2,217  105  172  18,746  

Affiliate net assets

    312  190  152  15  430  84  39  71  1,293  

Purchases of property, plant and equipment

    340  237  192  55  122  228  -  5  1,179  

2008

                               

Segment sales

   $7,952 $2,194 $6,035 $4,361 $6,425 $3,733 $- $160 $30,860  

Less transfers

    -  (30) (229) (1) (39) (14) -  (18) (331) 

Net sales

    7,952  2,164  5,806  4,360  6,386  3,719  -  142  30,529  

Pre-tax operating income (loss)

    1,087  251  687  (8) 128  661  1,025  (181) 3,650  

Depreciation and amortization

    460  86  261  111  219  130  -  4  1,271  

Equity in earnings of affiliates

    25  20  16  1  44  29  -  (18) 117  

Segment net assets

    6,016  1,389  3,673  2,226  3,595  2,335  201  134  19,569  

Affiliate net assets

    184  210  137  15  437  96  41  50  1,170  

Purchases of property, plant and equipment

    376  157  349  91  271  468  -  27  1,739  
                                
 Agriculture
Electronics &
Communications
Industrial BiosciencesNutrition & Health
Performance
Chemicals
Performance
Materials
 
Safety &
Protection
Pharma-
ceuticals
OtherTotal
2013           
Segment sales$11,739
$2,549
$1,224
$3,473
$6,703
$6,468
 $3,884
$
$6
$36,046
Less: Transfers11
15
13

196
73
 4


312
Net sales11,728
2,534
1,211
3,473
6,507
6,395
 3,880

6
35,734
PTOI2,132
203
170
305
924
1,281
 694
32
(372)5,369
Depreciation and
    amortization
358
105
81
271
242
173
 198

1
1,429
Equity in earnings of
    affiliates
36
22
2

19
(16) 23

(49)37
Segment net assets5,883
1,435
2,640
6,455
3,933
3,724
1 
3,138
(3)156
27,361
Affiliate net assets281
145
48
7
169
492
 106

21
1,269
Purchases of property,
    plant and equipment
485
73
77
138
424
184
 109

112
1,602
2012  

       
Segment sales$10,426
$2,701
$1,180
$3,422
$7,188
$6,447
 $3,825
$
$5
$35,194
Less: Transfers5
17
11

247
91
 11


382
Net sales10,421
2,684
1,169
3,422
6,941
6,356
 3,814

5
34,812
PTOI1,669
222
159
270
1,778
1,121
 562
62
(474)5,369
Depreciation and
    amortization
337
113
79
288
245
182
 197

1
1,442
Equity in earnings of
    affiliates
30
19
1

28
42
 32

(53)99
Segment net assets4,756
1,622
2,602
6,641
3,910
3,770
 3,153
(18)77
26,513
Affiliate net assets389
151
53
8
180
567
 106

14
1,468
Purchases of property,
    plant and equipment
432
71
80
148
389
186
 118

7
1,431
2011           
Segment sales$9,166
$3,173
$705
$2,460
$7,794
$6,815
 $3,934
$
$40
$34,087
Less: Transfers1
19
7

257
109
 13


406
Net sales9,165
3,154
698
2,460
7,537
6,706
 3,921

40
33,681
PTOI1,566
438
2
76
2,114
1,079
 661
289
(344)5,881
Depreciation and
    amortization
295
99
47
207
252
199
 172

2
1,273
Equity in earnings of
    affiliates
58
19
(3)
43
74
 47

(47)191
Segment net assets4,975
1,954
2,542
6,279
3,812
3,757
 3,239
35
75
26,668
Affiliate net assets330
197
52
1
201
445
 111

34
1,371
Purchases of property,
    plant and equipment
420
198
61
115
326
197
 208

5
1,530

1.
Includes assets held for sale related to GLS/Vinyls of $228 as of December 31, 2013. See Note 2 for additional information.



F-49


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


Reconciliation to Consolidated Financial Statements

 
PTOI to income before income taxes
  
 2010
  
 2009
  
 2008
  

Total segment PTOI

   $4,862   $3,340   $3,650  

Net exchange (losses) gains, including affiliates

    (13)   (205)   (255) 

Corporate expenses and net interest

    (1,138)   (951)   (1,004) 

Income before income taxes

   $3,711   $2,184   $2,391  
                  
PTOI to income from continuing operations before income taxes201320122011
Total segment PTOI$5,369
$5,369
$5,881
Non-operating pension and other postretirement employee benefit costs(539)(654)(540)
Net exchange losses, including affiliates(128)(215)(146)
Corporate expenses(765)(948)(869)
Interest expense(448)(464)(447)
Income from continuing operations before income taxes$3,489
$3,088
$3,879


Segment net assets to total assets
  
 2010
  
 2009
  
 2008
  
Segment net assets to total assets at December 31,201320122011

Total segment net assets

   $19,684   $18,746   $19,569  $27,361
$26,513
$26,668

Corporate assets1

   11,312   10,975   8,836  13,498
10,261
9,637

Liabilities included in net assets

   9,414   8,464   7,804  
Liabilities included in segment net assets10,640
10,009
9,250
Assets related to discontinued operations2

3,076
3,088

Total assets

   $40,410   $38,185   $36,209  $51,499
$49,859
$48,643
 
1
Pension assets are included in corporate assets.

1.
Pension assets are included in corporate assets.
2.
See Note 1 for additional information on the presentation of the Performance Coatings which met the criteria for discontinued operations during 2012.


Other items
  
 Segment
Totals

  
 Adjustments
  
 Consolidated
Totals

  

2010

              
Other items1
Segment
Totals
Adjustments
Consolidated
Totals
2013 
 
 

Depreciation and amortization

   $1,199   $181   $1,380  $1,429
$174
$1,603

Equity in earnings of affiliates

   180   (3)  177  37
4
41

Affiliate net assets

   1,364   (323)  1,041  1,269
(258)1,011

Purchases of property, plant and equipment

   1,374   134   1,508  1,602
280
1,882

2009

              
2012 
 
 

Depreciation and amortization

   $1,317   $186   $1,503  $1,442
$271
$1,713

Equity in earnings of affiliates

   89   10   99  99
3
102

Affiliate net assets

   1,293   (279)  1,014  1,468
(305)1,163

Purchases of property, plant and equipment

   1,179   129   1,308  1,431
362
1,793

2008

              
2011 
 
 

Depreciation and amortization

   $1,271   $173   $1,444  $1,273
$287
$1,560

Equity in earnings of affiliates

   117   (36)  81  191
1
192

Affiliate net assets

   1,170   (326)  844  1,371
(254)1,117

Purchases of property, plant and equipment

   1,739   239   1,978  1,530
313
1,843
 

1.
See Note 1 for additional information on the presentation of the Performance Coatings business which met the criteria for discontinued operations during 2012.


F-50


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)


Additional Segment Details
2013

2010 included the following pre-tax benefits (charges):

2010

       

Agriculture & Nutrition1

   $(50) 

Electronics & Communications2

    8  

Performance Chemicals2

    10  

Performance Coatings2

    (6) 

Performance Materials2

    16  

Safety & Protection2

    5  

Other2

    1  

    

   $(16) 
        
Agriculture1,3
$(351)
Electronics & Communications3,4
(131)
Industrial Biosciences3
1
Nutrition & Health3
6
Performance Chemicals2,3
(74)
Performance Materials3
(16)
Safety & Protection3
4
Other3
5
    $(556)
1

1.
Included charges of $(425), offset by $73 of insurance recoveries, recorded in Other operating charges associated with the company's process to fairly resolve claims related to the use of Imprelis®. See Note 16 for additional information.
2.
Included a $(72) charge recorded in Other operating charges related to the titanium dioxide antitrust litigation. See Note 16 for additional information.
3.
Included a net $(3) restructuring adjustment consisting of a $16 benefit associated with prior year restructuring programs and a $(19) charge associated with restructuring actions related to a joint venture. The majority of the $16 net reduction recorded in Employee separation/asset related charges, net was due to the achievement of work force reductions through non-severance programs associated with the 2012 restructuring program. The charge of $(19) included $(9) recorded in Employee separation/asset related charges, net and $(10) recorded in Other income, net and was the result of restructuring actions related to a joint venture within the Performance Materials segment. Pre-tax amounts by segment were: Agriculture - $1, Electronics & Communications - $(2), Industrial Biosciences - $1, Nutrition & Health - $6, Performance Chemicals - $(2), Performance Materials - $(16), Safety & Protection - $4; and Other - $5. See Note 3 for additional information.
4.
Included a $(129) impairment charge recorded in Employee separation/asset related charges, net related to an asset grouping within the Electronics & Communications segment. See Note 3 for additional information.

Includes a $(50) charge in research and development expense for an upfront payment related to a Pioneer licensing agreement with Syngenta AG for MIR604 (Agrisure2012TM RW) for corn seed trait technology. Since this payment is being made before regulatory approval is secured by Pioneer, it was charged to research and development expense.

2
Includes a $34 net reduction (increase) in estimated restructuring costs related to the 2008 and 2009 programs impacting the segments as follows: Electronics & Communications – $8; Performance Chemicals – $10; Performance Coatings – $(6); Performance Materials – $16; Safety & Protection – $5; and Other – $1.

2009 included the following pre-tax benefits (charges):

2009

       

Agriculture & Nutrition1

   $1  

Electronics & Communications1,2

    (37) 

Performance Chemicals1,2

    (54) 

Performance Coatings1,2

    (15) 

Performance Materials1,2,3

    24  

Safety & Protection1,2

    (45) 

Pharmaceuticals4

    (63) 

Other1,2

    (2) 

    

   $(191) 
        
1
Includes a $130 net reduction (increase) in estimated restructuring costs related to the 2008 and 2009 programs impacting the segments as follows: Agriculture & Nutrition – $1; Electronics & Communications – $6; Performance Chemicals – $12; Performance Coatings – $50; Performance Materials – $52; Safety & Protection – $10; and Other – $(1).

2
Includes a $(340) restructuring charge impacting the segments as follows: Electronics & Communications – $(43); Performance Chemicals – $(66); Performance Coatings – $(65); Performance Materials – $(110); Safety & Protection – $(55); and Other – $(1).

3
Includes an $82 benefit from proceeds and adjustments related to hurricanes impacting the Performance Materials segment.

4
Includes $(63) charge to other income, net and reduction to accounts and notes receivable, net in the Pharmaceuticals segment to reflect increased rebates and other sales deductions related to the Cozaar®/Hyzaar® licensing agreement with Merck Sharp & Dohme Corp. This adjustment in 2009 is the result of overstatements to other income, net in prior periods which accumulated over the life of the contract. The company determined the impact of this adjustment was not material to the results of operations in 2009 or for prior periods.
Agriculture1,2,3
$(469)
Electronics & Communications3,4,5
(37)
Industrial Biosciences3
(3)
Nutrition & Health3
(49)
Performance Chemicals3,5
(36)
Performance Materials3,5
(104)
Safety & Protection3
(58)
Other3,6
(126)
    $(882)

1.
Included a $(575) charge recorded in Other operating charges associated with the company's process to fairly resolve claims related to the use of Imprelis®. See Note 16 for additional information.
2.
Included a $117 gain recorded in Other income, net associated with the sale of a business.
3.
Included a $(134) restructuring charge recorded in Employee separation/asset related charges, net primarily as a result of the company's plan to eliminate corporate costs previously allocated to Performance Coatings and cost-cutting actions to improve competitiveness, partially offset by a reversal of prior year restructuring accruals. Charges by segment were: Agriculture - $(11); Electronics & Communications - $(9); Industrial Biosciences - $(3); Nutrition & Health - $(49); Performance Chemicals - $(3); Performance Materials - $(12); Safety & Protection - $(58); and Other - $11. See Note 3 for additional information.
4.
Included a $122 gain recorded in Other income, net associated with the sale of an equity method investment.
5.
Included a $(275) impairment charge recorded in Employee separation/asset related charges, net related to asset groupings, which impacted the segments as follows: Electronics & Communications - $(150); Performance Chemicals - $(33); and Performance Materials - $(92). See Note 3 for additional information.
6.
Included a $(137) charge in Other operating charges primarily related to the company's settlement of litigation with INVISTA.


F-51


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

2011

2008 included the following pre-tax benefits (charges):

2008

       

Agriculture & Nutrition1,2

   $(22) 

Electronics & Communications1

    (37) 

Performance Chemicals1,2

    (56) 

Performance Coatings1

    (209) 

Performance Materials1,2

    (310) 

Safety & Protection1,2

    (97) 

Other1,3

    20  

    

   $(711) 
        
1
Includes a $(535) restructuring charge impacting the segments as follows: Agriculture & Nutrition – $(18); Electronics & Communications – $(37); Performance Chemicals – $(50); Performance Coatings – $(209); Performance Materials – $(94); Safety & Protection – $(96); and Other – $(31).

2
Includes a $(227) charge for damaged facilities, inventory write-offs, clean-up costs, and other costs related to the hurricanes, in the following segments: Agriculture & Nutrition��– $(4); Performance Chemicals – $(6); Performance Materials – $(216); and Safety & Protection – $(1).

3
Includes a $51 benefit from a litigation settlement.
Agriculture1,2
$(225)
Industrial Biosciences3,4
(79)
Nutrition & Health3,4
(126)
Performance Materials4,5
47
Other4
(28)
    $(411)

1.
Included a $(50) charge recorded in Research and development expense in connection with a milestone payment associated with a Pioneer licensing agreement. Since this milestone was reached before regulatory approval was secured by Pioneer, it was charged to Research and development expense.
2.
Included a $(175) charge recorded in Other operating charges associated with the company's process to fairly resolve claims associated with the use of Imprelis®. See Note 16 for additional information.
3.
Included a $(182) charge for transaction related costs and the fair value step-up of inventories that were acquired as part of the Danisco transaction, which impacted the segments as follows: Industrial Biosciences - $(70) and Nutrition & Health - $(112).
4.
Included a $(53) restructuring charge primarily related to severance and related benefit costs associated with the Danisco acquisition impacting the segments as follows: Industrial Biosciences - $(9); Nutrition & Health - $(14); Performance Materials - $(2); and Other - $(28).
5.
Included a $49 benefit recorded in Other income, net associated with the sale of a business.



F-52


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)

26.


23.  QUARTERLY FINANCIAL DATA

 
Unaudited
  
 For the quarter ended
  
 
  
 March 31,
  
 June 30,
  
 September 30,
  
 December 31,
  

2010

                      

Net sales

   $8,484   $8,616   $7,001   $7,404  

Cost of goods sold and other expenses1

    7,154    7,409    6,634    7,2354,5 

Income before income taxes

    1,587    1,5683   330    2266 

Net income

    1,137    1,1683   369    3787 

Basic earnings per share of common stock2

    1.24    1.27    0.40    0.41  

Diluted earnings per share of common stock2

    1.24    1.26    0.40    0.40  

2009

                      

Net sales

   $6,871   $6,858   $5,961   $6,419  

Cost of goods sold and other expenses1

    6,415    6,5108,9,10   5,665    6,14611 

Income before income taxes

    749    472    391    57212 

Net income

    489    421    414    445  

Basic earnings per share of common stock2

    0.54    0.46    0.45    0.48  

Diluted earnings per share of common stock2

    0.54    0.46    0.45    0.48  
                       
UnauditedFor the quarter ended
 March 31,June 30,September 30,December 31,
2013 
  
  
 
  
  
Net sales$10,408
 $9,844
  
$7,735
 $7,747
  
Cost of goods sold6,193
 6,057
 5,165
 5,133
 
Income from continuing operations before
income taxes
1,774
3 

1,365
3,4 
228
3,6 
122
3,7,8 
Net income3,355
2 

1,034
5 
288
 185
 
Basic earnings per share of common stock from continuing operations1
1.48
 1.11
  
0.28
 0.19
 
Diluted earnings per share of common stock from continuing operations1
1.47
 1.10
  
0.28
 0.19
  
2012 
  
  
 
  
  
Net sales$10,180
 $9,917
  
$7,390
 $7,325
  
Cost of goods sold5,935
 5,844
 4,779
 4,980
 
Income (loss) from continuing operations before income taxes1,801
9 

1,496
9,10,11 
(175)
9,12,13 
(34)
9, 12, 13,14 
Net income1,504
 1,175
 8
 93
 
Basic earnings (loss) per share of common stock from continuing operations1
1.49
 1.16
  
(0.05) 
  
Diluted earnings (loss) per share of common stock from continuing operations1
1.48
 1.15
  
(0.05) 
 
1
Excludes interest expense and non-operating items.

2
Earnings per share for the year may not equal the sum of quarterly earnings per share due to changes in average share calculations.

3
Includes benefits for the adjustment of accrued interest of $59 ($38 after-tax) in other income, net and the adjustment of income tax accruals of $49 associated with settlements of prior year tax contingencies.

4
Includes a $50 charge in research and development expense for an upfront payment related to a Pioneer licensing agreement with Syngenta AG for MIR604 (AgrisureTM RW) for corn seed trait technology. See description in Note 25 for further details.

5
Includes a $34 net reduction in estimated costs recorded in employee separation / asset related charges, net related to the 2008 and 2009 restructuring program primarily due to overall workforce reductions through lower than estimated individual severance costs and workforce reductions through non-severance programs.

6
Includes a $179 charge in interest expense associated with the early extinguishment of debt.

7
Includes a $39 benefit for the reversal of a tax valuation allowance related to the net deferred tax assets of a foreign subsidiary.

8
Includes a $340 charge for employee separation payments and asset related charges associated with the 2009 restructuring program.

9
Includes a $75 net reduction in estimated costs recorded in employee separation / asset related charges, net related to the 2008 restructuring program primarily due to overall workforce reductions through lower than estimated individual severance costs and workforce reductions through non-severance programs.

10
Includes a $50 benefit resulting from a reduction of $26 from lower than estimated inventory and permanent investment write-offs, and $24 in insurance recoveries relating to the damage from Hurricane Ike in 2008.

11
Includes a $55 net reduction in estimated costs recorded in employee separation / asset related charges, net related to the 2008 and 2009 restructuring program primarily due to overall workforce reductions through lower than estimated individual severance costs and workforce reductions through non-severance programs.

12
Includes a $63 charge for increased rebates and other sales deductions related to the Cozaar®/Hyzaar® licensing agreement. See description in Note 25 for further details.

27. SUBSEQUENT EVENT

In January 2011, DuPont and its wholly owned subsidiary, DuPont Denmark Holding ApS, entered into a definitive agreement for the acquisition of Danisco A/S (Danisco), a global enzyme and specialty food ingredients company, for $6,300 which includes $5,800 in cash and the assumption of $500 of Danisco's net debt. The transaction is subject to customary closing conditions, including certain regulatory approvals and the tender of more than 90 percent of Danisco's shares in the tender offer. DuPont has the right to waive such tender offer conditions and accept a lesser number of shares in certain cases.

The acquisition is expected to be financed with about $3,000 in existing cash and the remainder in new debt. In connection with this transaction, the company entered into a $4,000 bridge loan facility and a $2,000 bridge loan facility. The latter requires the company have cash, cash equivalents and marketable securities at least equal to $2,000 on hand at all times and readily available for use to purchase Danisco's shares. The bridge loan facilities terminate when the company completes the financing for the acquisition. The transaction is expected to close early in the second quarter 2011.


Table of Contents

1.
Earnings per share for the year may not equal the sum of quarterly earnings per share due to changes in average share calculations.
2.
First quarter 2013 included a net tax benefit of $42 consisting of a $68 benefit for the 2013 extension of certain U.S business tax provisions offset by a $(26) charge related to the global distribution of Performance Coatings cash proceeds.
3.
First and second quarter 2013 included charges of $(35) and $(80), respectively, recorded in Other operating charges associated with the company's process to fairly resolve claims related to the use of Imprelis®. Third and fourth quarter 2013 included charges of $(65) and $(245), respectively, offset by $25 and $48 of insurance recoveries, respectively. See description in Note 16 for further details.
4.
Second quarter 2013 included a charge of $(11) in Other income, net related to interest on a prior year tax position.
5.
Second quarter 2013 included a charge of $(49) associated with a change in accrual for a prior year tax position (inclusive of a benefit associated with interest on a prior year tax position) offset by a $33 benefit for an enacted tax law change.
6.
Third quarter 2013 included a $(72) charge recorded in Other operating charges related to the titanium dioxide antitrust litigation. See description in Note 16 for further details.
7.
Fourth quarter 2013 included a net $5 restructuring adjustment consisting of a $24 benefit associated with prior year restructuring programs and a $(19) charge associated with restructuring actions related to a joint venture. The majority of the $24 net reduction recorded in Employee separation/asset related charges, net was due to the achievement of work force reductions through non-severance programs associated with the 2012 restructuring program. The charge of $(19) included $(9) recorded in Employee separation/asset related charges, net and $(10) recorded in Other income, net and was the result of restructuring actions related to a joint venture within the Performance Materials segment. See Note 3 for additional information.
8.
Fourth quarter 2013 included a $(129) impairment charge recorded in Employee separation/asset related charges, net related to an asset grouping within the Electronics & Communications segment. See Note 3 for additional information.
9.
First quarter, second quarter, third quarter, and fourth quarter 2012 included charges of $(50), $(265), $(125), and $(135), respectively, recorded in Other operating charges associated with the company's process to fairly resolve claims related to the use of Imprelis®. See description in Note 16 for further details.
10.
Second quarter 2012 included a $(137) charge recorded in Other operating charges primarily related to the company's settlement of litigation with INVISTA.
11.
Second quarter 2012 included a pre-tax gain of $122 recorded in Other income, net associated with the sale of an equity method investment in the Electronics & Communications segment.
12.
Third quarter 2012 included a $(152) restructuring charge recorded in Employee separation/asset related charges, net related to the 2012 restructuring program. Fourth quarter 2012 included a net $(66) charge recorded in Employee separation/asset related charges, net related to costs associated with the 2012 restructuring program partially offset by a reversal of prior years restructuring accruals. See description in Note 3 for further details.
13.
Third and fourth quarter 2012 included asset impairment charges of $(242) and $(33), respectively, recorded in Employee separation/asset related charges, net related to certain asset groupings. See descriptions in Note 3 for further details.
14.
Fourth quarter 2012 included a pre-tax gain of $117 recorded in Other income, net associated with the sale of a business within the Agriculture segment.





F-53


Information for Investors

Corporate Headquarters

    E. I. du Pont de Nemours and Company
    1007 Market Street
    Wilmington, DE 19898
    Telephone: 302 774-1000
    E-mail:
    find.info@usa.dupont.com

2011 Annual Meeting

The annual meeting of

Notes to the shareholders will be held at 10:30 a.m., Wednesday, April 27,Consolidated Financial Statements (continued)
(Dollars in The DuPont Theatre inmillions, except per share)

24. SUBSEQUENT EVENTS
In January 2014, the DuPont Building, 1007 Market Street, Wilmington, Delaware.

Stock Exchange Listings

DuPont common stock (Symbol DD) is listed on the New York Stock Exchange, Inc. (NYSE) and on certain foreign exchanges. Quarterly high and low market prices are shown in Item 5 of the Form 10-K.

DuPont preferred stock is listed on the New York Stock Exchange, Inc. (Symbol DDPrA for $3.50 series and Symbol DDPrB for $4.50 series).

Dividends

Holders of the company's common stock are entitled to receive dividends when they are declared by thecompany’s Board of Directors. While it is notDirectors authorized a guarantee of future conduct, the company has continuously paid a quarterly dividend since the fourth quarter 1904. Dividends on common stock and preferred stock are usually declared in January, April, July and October. When dividends on common stock are declared, they are usually paid mid March, June, September and December. Preferred dividends are paid on or about the 25th$5,000 of January, April, July and October.

Shareholder Services

Inquiries from shareholders about stock accounts, transfers, certificates, dividends (including direct deposit and reinvestment), name or address changes and electronic receipt of proxy materials may be directed to DuPont's stock transfer agent:

Independent Registered Public Accounting Firm


2001 Market Street
F-54


Philadelphia, PA 19103

Investor Relations

Institutional investors and other representatives of financial institutions should contact:

Bondholder Relations

DuPont on the Internet

Financial results, news and other information about DuPont can be accessed from the company's website athttp://www.dupont.com. This site includes important information on products and services, financial reports, news releases, environmental information and career opportunities. The company's periodic and current reports filed with the SEC are available on its website, free of charge, as soon as reasonably practicable after being filed.

Product Information/Referral

From the United States and Canada:

From other locations: 302 774-1000
E-mail: find.info@usa.dupont.com
On the Internet: http://www.dupont.com

Printed Reports Available to Shareholders

The following company reports may be obtained, without charge:

Requests should be addressed to:

Information for Investors
Corporate Headquarters
E. I. du Pont de Nemours and Company
1007 Market Street
Wilmington, DE 19898
Telephone: 302 774-1000
E-mail: http://www.dupont.com (click on Contact)

2014 Annual Meeting
The annual meeting of the shareholders will be held at 10:30 a.m., on Wednesday, April 23, in The DuPont Theatre in the DuPont Building, 1007 Market Street, Wilmington, Delaware.

Stock Exchange Listings
DuPont common stock (Symbol DD) is listed on the New York Stock Exchange, Inc. (NYSE) and on certain foreign exchanges. Quarterly high and low market prices are shown in Item 5 of the Form 10-K.
DuPont preferred stock is listed on the New York Stock Exchange, Inc. (Symbol DDPrA for $3.50 series and Symbol DDPrB for $4.50 series).

Dividends
Holders of the company's common stock are entitled to receive dividends when they are declared by the Board of Directors. While it is not a guarantee of future conduct, the company has continuously paid a quarterly dividend since the fourth quarter 1904. Dividends on common stock and preferred stock are usually declared in January, April, July and October. When dividends on common stock are declared, they are usually paid mid March, June, September and December. Preferred dividends are paid on or about the 25th of January, April, July and October.

Shareholder Services
Inquiries from shareholders about stock accounts, transfers, certificates, dividends (including direct deposit and reinvestment), name or address changes and electronic receipt of proxy materials may be directed to DuPont's stock transfer agent:
Computershare Trust Company, N.A.
P.O. Box 30170
College Station, TX, 77842-3170
or call: in the United States and Canada
888 983-8766 (toll-free)
other locations-781 575-2724
for the hearing impaired-
TDD: 800 952-9245 (toll-free)
or visit Computershare's home page at
http://www.computershare.com/investor
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103

Investor Relations
Institutional investors and other representatives of financial institutions should contact:
E. I. du Pont de Nemours and Company
DuPont Investor Relations
1007 Market Street-D-11020
Wilmington, DE 19898
or call 302 774-4994

Bondholder Relations
E. I. du Pont de Nemours and Company
DuPont Finance
1007 Market Street-D-8028
Wilmington, DE 19898
or call 302 774-0564
or 302 774-8802

DuPont on the Internet
Financial results, news and other information about DuPont can be accessed from the company's website athttp://www.dupont.com. This site includes important information on products and services, financial reports, news releases, environmental information and career opportunities. The company's periodic and current reports filed with the SEC are available on its website, free of charge, as soon as reasonably practicable after being filed.

Product Information/Referral
From the United States and Canada:
800 441-7515 (toll-free)
From other locations: 302 774-1000
On the Internet: http://www.dupont.com (click on Contact)

Printed Reports Available to Shareholders
The following company reports may be obtained, without charge:
1. 2013 Annual Report to the Securities and Exchange Commission,
    filed on Form 10-K;
2. Proxy Statement for 2014 Annual Meeting of Stockholders; and
3. Quarterly reports to the Securities and Exchange Commission,
    filed on Form 10-Q
Requests should be addressed to:
DuPont Inquiry Management Center
CRP-735 (second floor)
974 Centre Road
Wilmington, DE 19805
or call 302 774-1000
E-mail: http://www.dupont.com (click on Contact)
Services for Shareholders
Online Account Access
Registered shareholders may access their accounts and obtain online answers to stock transfer questions by signing up for Internet access by visiting http://www.computershare.com/investor. Shareholders have the option to request direct deposit of stock dividends, and electronic delivery of account statements and 1099-DIV tax forms.


Dividend Reinvestment Plan
An automatic dividend reinvestment plan is available to all registered shareholders. Common or preferred dividends can be automatically reinvested in DuPont common stock. Participants also may add cash for the purchase of additional shares. A detailed account statement is mailed after each investment. Your account can also be viewed over the Internet if you have Online Account Access (see above). To enroll in the plan, please contact Computershare (listed above).
Online Delivery of Proxy Materials
Shareholders may request their proxy materials electronically in 2014 by visitinghttp://enroll.icsdelivery.com/dd.

Direct Deposit of Dividends
Registered shareholders who would like their dividends directly deposited in a U.S. bank account should contact Computershare (listed above).


Services for Shareholders

Online Account Access

Registered shareholders may access their accounts and obtain online answers to stock transfer questions by signing up for Internet account access. Call toll-free 888 983-8766 (outside the United States and Canada, call 781 575-2724) to obtain by mail a temporary personal identification number and information on viewing your account over the Internet.

Dividend Reinvestment Plan

An automatic dividend reinvestment plan is available to all registered shareholders. Common or preferred dividends can be automatically reinvested in DuPont common stock. Participants also may add cash for the purchase of additional

shares. A detailed account statement is mailed after each investment. Your account can also be viewed over the Internet if you have Online Account Access (see above). To enroll in the plan, please contact Computershare (listed above).

Online Delivery of Proxy Materials

Stockholders may request their proxy materials electronically in 2011 by visitinghttp://enroll.icsdelivery.com/dd.

Direct Deposit of Dividends

Registered shareholders who would like their dividends directly deposited in a U.S. bank account should contact Computershare (listed above).