UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-815
E. I. du Pont de Nemours and Company
(Exact Name of Registrant as Specified in Its Charter)
Delaware 51-0014090
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1007 Market Street, Wilmington, Delaware 19898
(Address of Principal Executive Offices)
(302) 774-1000
(Registrant's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
1,047,311,925 shares (excludes 5,160,802 shares held by DuPont's Flexitrust
and 87,041,427 shares of treasury stock) of common stock, $0.30 par value,
were outstanding at April 30, 2000.
1
Form 10-Q
E. I. DU PONT DE NEMOURS AND COMPANY
Table of Contents
Page(s)
-------
Part I Financial Information
Item 1. Financial Statements
Consolidated Income Statement ............................... 3
Consolidated Statement of Cash Flows ........................ 4
Consolidated Balance Sheet .................................. 5
Notes to Financial Statements ............................... 6-11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Forward-Looking Statements .................................. 12-13
Results of Operations:
Financial Results ......................................... 14-15
Segment Performance ....................................... 15-17
Financial Condition ......................................... 17-18
Other Items:
"Cozaar" Equalization ..................................... 19
Performance Coatings - Expanded Restructuring ............. 19
Polyester Enterprise ...................................... 19-20
Purchased In-Process Research and Development ............. 20
Staff Accounting Bulletin No. 101 ......................... 20
Year 2000 Readiness Disclosure ............................ 21
Part II Other Information
Item 1. Legal Proceedings .................................... 21-23
Item 4. Submission of Matters to a Vote of
Security Holders ................................... 23-24
Item 5. Other Information .................................... 24
Item 6. Exhibits and Reports on Form 8-K ..................... 24-25
Signature ....................................................... 26
Exhibit Index ................................................... 27-28
Exhibit 12 - Computation of Ratio of Earnings to
Fixed Charges ................................................. 29
2
Form 10-Q
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
Three Months Ended
CONSOLIDATED INCOME STATEMENT<Fa> March 31
- --------------------------------------------------------------------------------------
(Dollars in millions, except per share) 2000 1999
- -------------------------------------------------------------------------------------
SALES<Fb> ................................................ $7,593 $6,295
Other Income<Fc> ......................................... 348 18
------ ------
Total ................................................ 7,941 6,313
------ ------
Cost of Goods Sold and Other Expenses<Fd> ................ 4,856 3,840
Selling, General and Administrative Expenses ............. 757 535
Depreciation ............................................. 351 335
Amortization of Goodwill and Other Intangible Assets<Fe> . 107 33
Research and Development Expense ......................... 421 358
Interest and Debt Expense ................................ 201 96
Purchased In-Process Research and Development<Ff> ........ (11) 40
------ ------
Total ................................................ 6,682 5,237
------ ------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
AND MINORITY INTERESTS ................................. 1,259 1,076
Provision for Income Tax Expenses ........................ 439 432
Minority Interests in Earnings of Consolidated
Subsidiaries ........................................... 17 16
------ ------
INCOME FROM CONTINUING OPERATIONS<Fb> .................... 803 628
DISCONTINUED OPERATIONS
Gain on Disposal of Discontinued Business,
Net of Income Taxes .................................. - 35<Fg>
------ ------
NET INCOME ............................................... $ 803 $ 663
====== ======
BASIC EARNINGS PER SHARE OF COMMON STOCK<Fh>
Continuing Operations .................................. $ .76 $ .55
Discontinued Operations ................................ - .04
------ ------
Net Income ............................................. $ .76 $ .59
====== ======
DILUTED EARNINGS PER SHARE OF COMMON STOCK<Fh>
Continuing Operations .................................. $ .76 $ .55
Discontinued Operations ................................ - .03
------ ------
Net Income ............................................. $ .76 $ .58
====== ======
DIVIDENDS PER SHARE OF COMMON STOCK ...................... $ .35 $ .35
====== ======
See Notes to Financial Statements.
3
Form 10-Q
Three Months Ended
CONSOLIDATED STATEMENT OF CASH FLOWS<Fa> March 31
- ------------------------------------------------------------------------------------------------
(Dollars in millions) 2000 1999
- ------------------------------------------------------------------------------------------------
CASH PROVIDED BY CONTINUING OPERATIONS
Net Income ......................................................... $ 803 $ 663
Adjustments to Reconcile Net Income to Cash
Provided by Continuing Operations:
Net Income from Discontinued Operations ........................ - (35)
Depreciation ................................................... 351 335
Amortization of Goodwill and Other Intangible Assets ........... 107 33
Purchased In-Process Research and Development .................. (11) 40
Other Noncash Charges and Credits - Net ........................ 199 88
Change in Operating Assets and Liabilities - Net ............... (1,114) (977)
------- -------
Cash Provided by Continuing Operations ....................... 335 147
------- -------
INVESTMENT ACTIVITIES OF CONTINUING OPERATIONS
Purchases of Property, Plant and Equipment ......................... (434) (473)
Investment in Affiliates ........................................... (9) (7)
Payments for Businesses Acquired (Net of Cash Acquired) ............ (23) (1,656)
Proceeds from Sales of Assets ...................................... 191 59
Net Decrease (Increase) in Short-Term Financial Instruments ........ (118) (2)
Miscellaneous - Net ................................................ (28) (7)
------- -------
Cash Used for Investment Activities of Continuing
Operations ................................................. (421) (2,086)
------- -------
FINANCING ACTIVITIES
Dividends Paid to Stockholders ..................................... (369) (397)
Net Increase in Borrowings ......................................... 1,871 2,590
Acquisition of Treasury Stock ...................................... - (44)
Proceeds from Exercise of Stock Options ............................ 34 14
Increase in Minority Interests ..................................... - 79
------- -------
Cash Provided by Financing Activities ........................ 1,536 2,242
------- -------
Net Cash Flow from Discontinued Operations ........................... - (255)
------- -------
Effect of Exchange Rate Changes on Cash .............................. (72) (68)
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ..................... $ 1,378 $ (20)
======= =======
See Notes to Financial Statements.
4
Form 10-Q
CONSOLIDATED BALANCE SHEET<Fa> March 31 December 31
- -----------------------------------------------------------------------------------------------------------------
(Dollars in millions, except per share) 2000 1999
- -----------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents ........................................................ $ 2,844 $ 1,466
Marketable Securities ............................................................ 225 116
Accounts and Notes Receivable .................................................... 6,203 5,318
Inventories<Fi> .................................................................. 4,545 5,057
Prepaid Expenses ................................................................. 267 202
Deferred Income Taxes ............................................................ 421 494
------- -------
Total Current Assets ........................................................... 14,505 12,653
PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation (March 31, 2000 -
$20,432; December 31, 1999 - $20,545) ............................................ 14,544 14,871
INVESTMENT IN AFFILIATES ........................................................... 1,895 1,459
OTHER ASSETS ....................................................................... 11,540 11,794
------- -------
TOTAL .......................................................................... 42,484 40,777
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable ................................................................. 2,310 2,780
Short-Term Borrowings and Capital Lease Obligations .............................. 6,709 4,941
Income Taxes ..................................................................... 428 359
Other Accrued Liabilities ........................................................ 3,227 3,148
------- -------
Total Current Liabilities ...................................................... 12,674 11,228
LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS ................................. 6,677 6,625
OTHER LIABILITIES .................................................................. 7,826 7,872
DEFERRED INCOME TAXES .............................................................. 1,564 1,660
------- -------
Total Liabilities .............................................................. 28,741 27,385
------- -------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES .................................... 533 517
------- -------
STOCKHOLDERS' EQUITY<Fj>
Preferred Stock .................................................................. 237 237
Common Stock, $.30 par value; 1,800,000,000 shares authorized; shares issued
at March 31, 2000 - 1,139,514,154; December 31, 1999 - 1,139,514,154............ 342 342
Additional Paid-In Capital ....................................................... 7,788 7,941
Reinvested Earnings .............................................................. 12,121 11,699
Accumulated Other Comprehensive Loss ............................................. (269) (133)
Common Stock Held in Treasury at Cost (Shares: March 31, 2000 - 87,041,427);
December 31, 1999 - 87,041,427) ................................................ (6,727) (6,727)
Common Stock Held in Trust for Unearned Employee Compensation and Benefits
(Flexitrust), at Market (Shares: March 31, 2000 - 5,324,135; December 31,
1999 - 7,342,245) .............................................................. (282) (484)
------- -------
Total Stockholders' Equity ..................................................... 13,210 12,875
------- -------
TOTAL .......................................................................... $42,484 $40,777
======= =======
See Notes to Financial Statements.
5
Form 10-Q
NOTES TO FINANCIAL STATEMENTS
(Dollars in millions, except per share)
[FN]
<Fa> These statements are unaudited, but reflect all adjustments that, in the
opinion of management, are necessary to provide a fair presentation of
the financial position, results of operations and cash flows for
the dates and periods covered. All such adjustments are of a normal
recurring nature.
<Fb> SEGMENT INFORMATION - Three Months Ended
CONTINUING OPERATIONS<F1> March 31
-------------------------------------------------------------------------
(Dollars in millions) 2000 1999
-------------------------------------------------------------------------
SEGMENT SALES<F2>
-------------
Agriculture & Nutrition .................... $ 626 $ 720
Nylon Enterprise ........................... 1,123 1,103
Performance Coatings & Polymers ............ 1,653 1,150
Pharmaceuticals ............................ 389 409
Pigments & Chemicals ....................... 960 866
Pioneer .................................... 921 60
Polyester Enterprise ....................... 589 624
Specialty Fibers ........................... 905 863
Specialty Polymers ......................... 1,091 989
Other ...................................... 125 115
------ ------
Total Segment Sales .................... 8,382 6,899
Elimination of Intersegment Transfers ...... (159) (174)
Elimination of Equity Affiliate Sales ...... (632) (431)
Miscellaneous .............................. 2 1
------ ------
SALES .................................. $7,593 $6,295
====== ======
AFTER-TAX OPERATING INCOME (LOSS)
---------------------------------
Agriculture & Nutrition .................... $ 63 $ 98
Nylon Enterprise ........................... 87 102
Performance Coatings & Polymers ............ 179 100 <F3>
Pharmaceuticals ............................ 54 75
Pigments & Chemicals ....................... 163 146
Pioneer .................................... 77<F4> (7)
Polyester Enterprise ....................... 9 (6)
Specialty Fibers ........................... 201 181
Specialty Polymers ......................... 165 164
Other ...................................... 2 10
------ ------
Total Segment ATOI ..................... 1,000 863
Interest & Exchange Gains and Losses ....... (123) (163)<F5>
Corporate Expenses ......................... (74) (72)
------ ------
INCOME FROM CONTINUING OPERATIONS ...... $ 803 $ 628
====== ======
6
Form 10-Q
NOTES TO FINANCIAL STATEMENTS
(Dollars in millions, except per share)
(continued)
[FN]
FOOTNOTES TO NOTE (b)
- ---------------------
<F1> Certain reclassifications of segment data have been made to reflect
changes in organizational structure.
<F2> Includes pro rata equity affiliate sales and intersegment transfers.
<F3> Includes an estimated charge of $40 based on preliminary purchase price
allocations in conjunction with the purchase of Herberts related to the
value assigned to purchased in-process research and development. Pur-
chased in-process research and development represents the value assigned
to research and development projects of the acquired business that were
commenced but not yet completed at the date of acquisition, for which
technological feasibility has not yet been established, and which have
no alternative future use in research and development activities or
otherwise.
<F4> Includes a noncash charge of $215 resulting from the sale of acquired
Pioneer inventories which, in accordance with purchase accounting rules,
were recorded at fair value on October 1, 1999, partly offset by a $109
gain resulting from the sale of certain equity securities classified as
available for sale, and a credit of $11 to reduce the preliminary pur-
chase price allocated to purchased in-process research and development.
<F5> Includes an exchange loss of $81 on forward exchange contracts purchased
in 1998 to lock in the U.S. dollar cost of the acquisition of Herberts.
The purchase price for Herberts was negotiated in German marks.
7
Form 10-Q
NOTES TO FINANCIAL STATEMENTS
(Dollars in millions, except per share)
(Continued)
[FN]
<Fc> First quarter 2000 includes a $176 gain resulting from the sale by
Pioneer of certain equity securities classified as available for sale.
First quarter 1999 includes an exchange loss of $131 on forward
exchange contracts purchased in 1998 to lock in the U.S. dollar cost of
the acquisition of Herberts, the automotive coatings business of
Hoechst AG. The purchase price for Herberts was negotiated in German
marks.
<Fd> In accordance with purchase accounting rules applied to the acquisition
of the remaining 80 percent ownership interest in Pioneer on October 1,
1999, Pioneer inventory was increased to fair value. This inventory
step-up generates noncash charges to cost of goods sold as the
inventory on hand at the acquisition date is sold. The charge in first
quarter 2000 was $347.
<Fe> 2000 includes amortization expense associated with acquisitions of
Herberts and Pioneer. Prior to October 1, 1999, the Company's 20
percent ownership in Pioneer was accounted for under the equity method
and results (including amortization expense) were reported as Other
Income.
<Ff> During first quarter 2000, a credit of $11 was recorded based on
revisions of preliminary purchase price allocations associated with the
October 1, 1999, purchase of the remaining 80 percent ownership interest
in Pioneer. During first quarter 1999, an estimated charge of $40 was
recorded in conjunction with the purchase of Herberts, based on
preliminary allocations of purchase price.
<Fg> Includes operating results of the company's interest in Conoco.
<Fh> Basic earnings per share is computed by dividing income available to
common stockholders (the numerator) by the weighted-average number of
common shares (the denominator) for the period. The numerator for both
income from continuing operations and net income is reduced by preferred
dividends of $2.5. For diluted earnings per share, the denominator is
based on the following weighted-average number of common shares and
includes the additional common shares that would have been outstanding if
potentially dilutive common shares had been issued:
Three Months Ended
March 31
------------------------------
Basic Diluted
------------- -------------
2000 1,047,036,515 1,057,077,345
1999 1,127,086,632 1,138,090,171
8
Form 10-Q
NOTES TO FINANCIAL STATEMENTS
(Dollars in millions, except per share)
(continued)
[FN]
The difference between basic and diluted weighted-average common shares
outstanding results from the assumption that dilutive stock options
outstanding were exercised.
The following stock options are antidilutive, and therefore are not
included in the diluted earnings per share calculation since the exercise
price is greater than the average market price:
Three Months Ended
March 31, 2000
-----------------------
2000 1999
---------- ---------
Stock Options 13,382,037 8,576,345
Compensation expense (benefit) recognized in income for stock-based
employee compensation awards was $(25) and $7 for the three months ended
March 31, 2000, and 1999, respectively.
Shares held by the Flexitrust and treasury stock are not considered
outstanding in computing the foregoing weighted-average number of common
shares.
March 31 December 31
<Fi> Inventories 2000 1999
----------- -------- -----------
Finished Products .......................... $3,004 $3,322
Semifinished Products ...................... 1,281 1,518
Raw Materials and Supplies ................. 872 823
------ ------
5,157 5,663
Less: Adjustment of Inventories to a
Last-In, First-Out (LIFO) Basis .......... 612 606
------ ------
Total .................................. $4,545 $5,057
====== ======
At October 1, 1999, Pioneer inventories were stepped up to fair value in
accordance with purchase accounting rules. At March 31, 2000, and
December 31, 1999, these inventories include the remaining balance of the
step-up of $410 and $757, respectively.
9
Form 10-Q
NOTES TO FINANCIAL STATEMENTS
(Dollars in millions, except per share)
(Continued)
[FN]
<Fj> The following sets forth the company's Total Comprehensive Income for the
periods shown:
Three Months Ended
March 31
------------------
2000 1999
------- -----
Net Income ........................... $ 803 $663
Cumulative Translation Adjustment .... (7) (94)
Unrealized Gains (Losses) on
Securities ......................... (129)* -
----- ----
Total Comprehensive Income ........... $ 667 $569
===== ====
----------------
* Primarily reflects unrealized holding losses of $85 associ-
ated with the company's investment in Healtheon/WebMD and a
$35 adjustment related to the sale of an equity security.
<Fk> During the first quarter 2000, no new restructuring activities were
initiated. Also in the first quarter there were no changes in estimates
related to reserves established for restructuring initiatives contained
in Item 8 of the company's Annual Report on Form 10-K for the period
ended December 31, 1999, at Note 5 "Employee Separation Costs and Write-
Down of Assets." An update of these initiatives is discussed below under
the respective prior years' activities.
1999 Activities
---------------
During 1999, the company recorded restructuring charges in three
segments -- Agriculture & Nutrition, Nylon Enterprise and Polyester
Enterprise.
In Agriculture & Nutrition, by March 31, 2000, approximately $28 of
employee termination payments had been settled and charged against the
related liability. Approximately 640 employees have been terminated and
another 70 employees have accepted other work assignments within the
company. Total remaining reserve balances for employee termination
payments and dismantlement and removal of facilities that were shutdown
are approximately $31 at March 31, 2000.
10
Form 10-Q
NOTES TO FINANCIAL STATEMENTS
(Dollars in millions, except per share)
(Continued)
[FN]
In the Nylon Enterprise, by March 31, 2000, approximately 25
employees had been terminated, and settlement charges against the
reserve have begun. Accordingly, the remaining reserve balance is
$14 at March 31, 2000.
In the Polyester Enterprise, by March 31, 2000, $40 related to employee
separation costs has been settled and charged against the related
liability. Approximately 700 employees have been terminated and about 65
employees have accepted other work assignments within the company. Total
remaining reserve balances are approximately $20 at March 31, 2000.
1998 Activities
---------------
During 1998, the company recorded charges directly related to management
decisions to implement company-wide productivity improvement initiatives.
By March 31, 2000, about $267 in severance benefits have been charged
against the related liability and approximately $32 in dismantlement and
removal costs have been paid. The remaining balances are approximately
$24 at March 31, 2000.
<Fl> During the first quarter of 2000, the company finalized purchase account-
ing related to the Herberts acquisition. There were no significant
changes to the preliminary purchase price allocations. In connection
with the acquisition, the company is implementing a restructuring plan
that it began to formulate as of acquisition date. Under this plan,
nearly 1,300 employees will be terminated as manufacturing facilities are
shut down and other business activities are reorganized. Through
March 31, 2000, approximately 1,100 employees have been terminated and
about $27 in employee separation costs have been charged against the
related liability. The total remaining reserve balances for terminations
and other exit costs are approximately $24 and $5, respectively, at
March 31, 2000.
11
Form 10-Q
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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" or other words of
similar meaning. All statements that address expectations or pro-
jections about the future, including statements about the company's
strategy for growth, product development, market position,
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 are accurate or will be realized.
In addition to the factors discussed in this report, the following
are 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:
o The company operates in approximately 70 countries world-
wide and derives about half of its revenues from sales
outside the United States. Changes in the laws or policies
of other governmental and quasi-governmental activities in
the countries in which the company operates could affect
its business in the country and the company's results of
operations. In addition, economic factors (including
inflation and fluctuations in interest rates and foreign
currency exchange rates) and competitive factors (such as
greater price competition or a decline in U.S. or European
industry sales from slowing economic growth) in those
countries could affect the company's revenues, expenses and
results.
o The company's growth objectives are largely dependent on its
ability to renew its pipeline of new products and to bring
those products to market. This ability may be adversely
affected by difficulties or delays in product development
such as the inability to: identify viable new products;
successfully complete clinical trials of new pharmaceuticals;
obtain relevant regulatory approvals, which may include
approval from the U.S. Food and Drug Administration; obtain
adequate intellectual property protection; or gain market
acceptance of the new products.
12
Form 10-Q
o As part of its strategy for growth, the company has made and
may continue to make acquisitions and divestitures and form
strategic alliances. There can be no assurance that these
will be completed or beneficial to the company.
o To a significant degree, results in the company's Agriculture
& Nutrition and Pioneer segments reflect changes in agricul-
tural conditions, including weather and government programs.
These results also reflect the seasonality of sales of
agricultural products; highest sales in the United States
occur in the first half of the year. In addition, demand for
products produced in these segments may be affected by market
acceptance of genetically enhanced products.
o The company has undertaken and may continue to undertake pro-
ductivity initiatives, including organizational restructur-
ings, to improve performance and generate cost savings.
There can be no assurance that these will be completed or
beneficial to the company. Also there can be no assurance
that any estimated cost savings from such activities will be
realized.
o The company's facilities are subject to a broad array of
environmental laws and regulations. The costs of complying
with complex environmental laws and regulations, as well as
internal voluntary programs, are significant and will con-
tinue to be so for the foreseeable future. The company's
accruals for such costs and liabilities may not be adequate
since the estimates on which the accruals are based depend
on a number of factors including the nature of the allega-
tion, the complexity of the site, the nature of the 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.
o The company's results of operations could be affected by
significant litigation adverse to the company including
product liability claims, patent infringement claims and
antitrust claims.
The foregoing list of important factors is not inclusive, or
necessarily presents them in order of importance.
13
Form 10-Q
(a) Results of Operations
(1) Financial Results:
Including one-time items in both periods and discontinued
operations in 1999, diluted earnings per share were $.76 compared to
$.58 in 1999. First quarter 2000 diluted earnings per share from
continuing operations before one-time items was $.85 per share,
29 percent higher than the $.66 per share earned in the first quarter
of 1999.
Results From Continuing Operations
----------------------------------
First quarter 2000 sales were a record $7.6 billion,
21 percent over the first quarter 1999. This increase is the result
of 6 percent higher volume from comparable businesses, 18 percent
growth from the Herberts and Pioneer acquisitions and flat local
currency prices. Sales were reduced 3 percent due to the currency
effect from the stronger U.S. dollar. Regional results, including
acquisitions, are summarized below:
o Sales in the Asia Pacific Region increased 33 percent,
31 percent from volume growth plus a 2 percent currency
benefit, principally the stronger yen.
o In Europe, sales were up 30 percent with 40 percent higher
volume offset by 10 percent lower prices due to currency
effect, principally the weaker euro.
o U.S. sales were up 15 percent reflecting 16 percent higher
volume and 1 percent lower prices.
o Canada, Mexico and South America sales were up 23 percent.
Income from continuing operations for first quarter 2000 was
$803 million compared to $628 million in 1999. Excluding one-time
items, income from continuing operations for the first quarter 2000
was $898 million, compared to $749 million in the first quarter 1999,
up $149 million or 20 percent. Acquisitions and benefits from lower
pension costs added about $200 million to first quarter net income.
Key offsetting factors were significantly higher raw material costs
and a stronger U.S. dollar that together reduced earnings by
$110 million. The remaining improvement in net income largely
reflects higher volumes.
One-time items totaled $95 million and $121 million in 2000
and 1999, respectively. The current quarter's one-time items princi-
pally include a noncash charge reflected in higher cost of goods sold
due to the step-up to fair value, made in accordance with purchase
14
Form 10-Q
accounting rules, for Pioneer inventories acquired October 1, 1999.
This was partly offset by a gain by Pioneer from the sale of certain
equity securities. First quarter 1999 included one-time charges
related to the Herberts acquisition.
(2) Segment Performance:
The following text compares first quarter 2000 results with
first quarter 1999, for sales and earnings of each segment, excluding
the earnings impact of one-time items described in the footnotes to
the "Segment Information - Continuing Operations" table at Note (b) on
pages 6 and 7. Segment results include intersegment transfers and a
pro rata ownership share of the sales and earnings of equity affili-
ates. Total segment sales and transfers were $8.4 billion in the
first quarter compared to $6.9 billion last year, up 21 percent.
Total segment after-tax operating income of $1.1 billion was
21 percent higher than last year.
o Agriculture & Nutrition segment earnings declined 36 percent
due to significant weakness in the U.S. crop protection
products business. While U.S. sales of crop protection
products fell 41 percent, business in Asia and South America
continues to grow with combined sales up 11 percent.
Nutrition and Health businesses had double-digit revenue
growth. Total segment sales dropped 13 percent on 11 percent
lower volume and 2 percent lower prices.
o Nylon Enterprise segment earnings were 15 percent lower on
slightly higher sales, reflecting lower variable margins as
revenue from selling price increases are lagging sharp run-up
in raw material costs. Volumes including intermediates
remain strong.
o Performance Coatings & Polymers segment earnings were up
28 percent, reflecting increases in all business units.
Sales were up 44 percent, 36 percent of which reflects the
addition of Herberts. Herberts also contributed about half
of the segment's earnings growth. Engineering Polymers
earnings growth continued with strong worldwide volumes
offsetting a negative currency impact, principally in Europe.
o Pharmaceuticals segment earnings were down 28 percent as
significant earnings growth from SustivaTM efavirenz was more
than offset by planned higher R&D expense, supply-limited
15
Form 10-Q
sales in "Sinemet Brand"; and as expected, lower sales of
"Coumadin" (warfarin sodium tablets, USP).
Major product sales for the current quarter, comparable
quarter and prior year are shown below:
1Q 2000 1Q 1999 YR 1999
------- ------- -------
($ in millions)
"Coumadin" ............... $100 $160 $464
SustivaTM ................ 96 15 211
"Sinemet Brand" .......... 64 93 331
"Cardiolite"/MiralumaTM .. 40 41 210
o Pigments & Chemicals segment earnings were up 12 percent,
reflecting increased earnings for White Pigment & Mineral
Products (WPMP) and Fluorochemicals. Fluorochemicals
continued to benefit from increased sales of CFC alternative
products, and WPMP from higher worldwide volumes with
particularly strong growth in Europe and Asia. For the
segment, currency decline was offset by higher local prices.
o Pioneer segment selling season is off to a good start with
first quarter sales of $921 million and underlying ATOI of
$172 million (versus a loss of $7 million last year). This
reflects the increase in ownership from 20 percent in the
first quarter of 1999 to full ownership this year. In
addition, the quarter ending month was shifted from February,
as used in last year's first quarter reporting, to the
seasonally stronger month of March for current year report-
ing. On a calendar-year comparable basis, Pioneer sales are
expected to be modestly above 1999 levels.
o Polyester Enterprise segment earnings improved to $9 million
versus a loss of $6 million last year, principally due to
lower costs from restructuring. Improved results occurred in
Polyester Resins & Intermediates and Polyester Films. Posi-
tive pricing actions have helped to dampen the negative
impact of higher raw material costs. Segment sales for the
quarter were down 6 percent, primarily as a result of exten-
sive restructuring via formation of joint ventures which
effectively sold down the company's ownership interest.
Current results reflect 50 percent ownership in three joint
ventures that were formed since the first quarter of last
year.
16
Form 10-Q
o Specialty Fibers segment earnings increased 11 percent
reflecting significantly higher sales volumes for "Lycra"
spandex and Advanced Fiber Systems, particularly "Kevlar"
fiber, that more than offset price weakness in Europe due to
currency.
o Specialty Polymers segment earnings were up 1 percent as
sales increased 10 percent. Excluding the Packaging &
Industrial Polymers (P&IP) business, segment earnings growth
was 14 percent. P&IP earnings were adversely affected by
significantly higher ethane and other raw material costs.
o The Other segment earnings for the quarter were $2 million
versus $10 million in 1999, principally reflecting the
absence of a gain recorded last year on the sale of shares of
DuPont Photomasks, Inc.
(b) Financial Condition
Three Months Ended
March 31
------------------
2000 1999
------ --------
($ in millions)
Cash Provided by Continuing Operations ..... $ 335 $ 147
Purchases of Property, Plant and
Equipment and Investment in Affiliates ... (443) (480)
Payments for Businesses Acquired ........... (23) (1,656)
Proceeds from Sales of Assets .............. 191 59
Cash provided by continuing operations was $335 million for the first
quarter of 2000, as compared with $147 million for the same period in 1999.
Net income plus noncash charges included in net income was higher this year as
compared to last year primarily reflecting the contribution of the Herberts
and Pioneer acquisitions. Cash provided by increased income was partially
offset by higher seasonal increases in working capital. Pioneer contributed
to the higher quarter-over-quarter working capital increase; it is reflected
in first quarter 2000 on a 100 percent ownership basis as compared to
20 percent ownership in first quarter 1999. Strong first quarter 2000 results
by Pioneer contributed to higher trade receivables which were only partially
offset by reductions in Pioneer inventory and other net working capital items.
Year-to-date capital investments for purchases of property, plant,
and equipment and investments in affiliates were $443 million in 2000, as
compared to $480 million spent in 1999. The current spending level reflects
management's intention to limit capital spending to about $2 billion for the
year. Payments for businesses acquired in the first quarter of 2000 totaled
$23 million as compared to $1.7 billion spent in 1999 which primarily reflects
the acquisition of Herberts in February 1999.
17
Form 10-Q
Proceeds from the sale of assets in the first quarter of 2000 totaled
$191 million primarily reflecting sale of available for sale securities held
by Pioneer. Proceeds from the sale of assets in the first quarter 1999
totaled $59 million, and included the sale of several small operating assets
as well as office real estate assets.
The per share dividend paid to stockholders in first quarter 2000 was
$.35 per share, the same as in 1999. The lower gross dollar dividends paid in
first quarter 2000 as compared to 1999 reflects lower shares outstanding this
year due to the third quarter 1999 Conoco divestiture.
Debt, including capital lease obligations, net of cash and cash
equivalents and marketable securities at March 31, 2000, was $10.3 billion, as
compared to $10.0 billion at year-end 1999. Management's intent is to reduce
net debt from the current level over the course of the year to increase the
company's financial flexibility.
Management believes that the company's ability to generate cash from
operations and its capacity to issue short-term and long-term debt will be
adequate to meet anticipated future cash requirements to fund working capital,
capital spending, dividend payments and other cash needs in the foreseeable
future.
Certain Statistics - Continuing Operations
------------------------------------------
At 3/31/00 At 12/31/99
---------- -----------
Current Ratio (current assets
to current liabilities) ...... 1.1:1 1.1:1
Earnings to Fixed Charges ...... 6.3 2.9
Pioneer's days' sales outstanding reflects significant programs in
the segment to provide farmers with extended harvest terms, which increase
days' sales outstanding; or with discounts for cash sales, which decrease
days' sales outstanding. Days' sales outstanding excluding Pioneer averaged
58 days in the first quarter, an increase of one day from fourth quarter 1999,
and a decrease of one day from the first quarter of 1999. Including Pioneer,
days' sales outstanding averaged 57 days in first quarter 2000 reflecting
strong seasonal Pioneer sales in the quarter, particularly in March, as well
as the impact of cash sales. Days' sales outstanding including Pioneer
averaged 67 days in fourth quarter 1999 reflecting low seasonal Pioneer sales
in the quarter, as well as the impact of extended terms.
18
Form 10-Q
(c) Other Items
"COZAAR" EQUALIZATION
---------------------
The company developed and now manufactures "Cozaar" and "Hyzaar"
losartan potassium tablets used in the treatment of high blood pressure.
These pharmaceuticals are owned by the company and are marketed by Merck &
Co., Inc., via a contractual arrangement which specifies a formula for the
sharing of profits, commonly referred to as "Cozaar" equalization. The
company expects to receive increased earnings under the equalization agreement
at some future time. Based on the profit sharing formula and on its most
recent projections, the company now estimates that this will occur on or about
the end of the calendar year 2000. As such, it is most likely that any
material additional earnings benefit from "Cozaar" equalization will not be
realized until 2001.
PERFORMANCE COATINGS - EXPANDED RESTRUCTURING
---------------------------------------------
As part of its strategy to maintain a leading position in the highly
competitive global coatings industry, the company announced plans in April
2000 to further restructure its global performance coatings business to
consolidate business assets and eliminate redundancies associated with the
acquisition of Herberts in 1999.
The business intends to further consolidate manufacturing capacity,
research and development, marketing and administrative activities located
largely in Europe. These actions will result in the elimination of about 900
positions mainly through the consolidation of five more manufacturing
facilities into regional, industry-focused "centers of excellence."
The company estimates it will realize annual pretax savings of about
$80 million as a result of these actions. Savings will begin to occur in the
second quarter of 2000. DuPont expects to take a one-time charge in the
second quarter principally for employee separation costs.
POLYESTER ENTERPRISE
--------------------
In April 2000, the company announced that DuPont and Akra-Teijin,
S.A. de C.V. (Akra-Teijin), the subsidiary company of Alpek, S.A. de C.V.
(Alpek, part of the Alfa Group) and Teijin, have discontinued talks on a joint
venture to make and sell polyester filament yarn in the Americas. The com-
panies had signed a letter of intent in April 1999 to combine their polyester
filament operations in the Americas in a 50-50 joint venture.
In April 2000, DuPont and Unifi, Inc., signed a letter of intent to
form a manufacturing alliance in the U.S. to produce polyester filament yarn.
The alliance will optimize their partially oriented yarn (POY) manufacturing
facilities, increase productivity and improve product quality. Current plans
are for the alliance to become effective on June 1, 2000. The alliance will
19
Form 10-Q
involve production only. Under its terms, DuPont and Unifi will cooperatively
run their polyester filament manufacturing facilities, with a combined
capacity of 800 million pounds, as a single unit, with DuPont managing the
production planning and scheduling. Production will be realigned among
DuPont's "Dacron" polyester filament plants in Wilmington, N.C., and Kinston,
N.C., and Unifi's plant in Yadkinville, N.C., to take advantage of the unique
capabilities at each site.
PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT
---------------------------------------------
Herberts
--------
In February 1999, the company purchased the global Herberts coatings
business from Hoechst AG for $1,588 million cash and acquisition related costs
of $10 million. The allocation of purchase price to the identifiable assets
acquired and liabilities assumed, based on their estimated fair values, has
been finalized as follows (dollars in millions):
Current Assets .................................. $ 720
Property, Plant and Equipment ................... 526
Other Assets .................................... 203
In-Process Research and Development ............. 64
Liabilities (including assumed debt of $113) .... (690)
-----
Total Identifiable Assets Less Liabilities ...... $ 823
The $775 million excess of the cost of the acquisition over the
estimated fair value of the identifiable assets less liabilities was recorded
as goodwill.
At the date of the acquisition, the business had 29 research and
development projects meeting the criteria for purchased in-process research
and development. The final fair value of these projects was $64 million. As
of March 31, 2000, one of the projects has achieved technical feasibility;
five have been terminated and the remaining projects are still in process.
Other Acquisitions
------------------
No significant changes occurred during the first quarter 2000 with
respect to in-process research and development projects related to the
company's other acquisitions.
STAFF ACCOUNTING BULLETIN NO. 101
---------------------------------
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101 - Revenue Recognition in Financial State-
ments. A review of the company's revenue recognition policies and procedures
indicates that the company is in compliance with the guildelines contained in
this SAB in all material respects.
20
Form 10-Q
YEAR 2000 READINESS DISCLOSURE
------------------------------
The company accomplished its goal of maintaining business continuity
and having zero safety and environmental incidents while transitioning to the
new year. Across DuPont's businesses and functional areas throughout the
world, the DuPont Year 2000 Project Team successfully prevented and managed
all Year 2000-related issues that could have interrupted business continuity
or adversely impacted the company's safety and environmental performance. The
company spent approximately $320 million in total to fully implement its plan
to become Year 2000-capable, about 25 percent of which reflects internal
costs. Expenditures to become Year 2000-capable were funded from cash flow
from operations.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In 1991, DuPont began receiving claims by growers that use of
"Benlate" 50 DF fungicide had caused crop damage. Based on the belief that
"Benlate" 50 DF would be found to be a contributor to the claimed damage,
DuPont began paying crop damage claims. In 1992, after 18 months of extensive
research, DuPont scientists concluded that "Benlate" 50 DF was not responsible
for plant damage reports received since March 1991. Concurrent with these
research findings, DuPont stopped paying claims. DuPont since has been served
with several hundred lawsuits most of which were disposed of by trial, dis-
missal or settlement. Approximately 150 cases are pending. Most of these
lawsuits were filed by growers who allege plant damage from using "Benlate"
50 DF although some include claims for alleged damage to shrimping operations
and a smaller number of cases include claims for alleged personal injuries.
Also, many of these cases include general allegations of fraud and misconduct.
In addition, a securities fraud class action was filed in September 1995 by a
shareholder in federal district court in Florida against the company and the
then-Chairman. This action is still pending. The plaintiff in this case
alleges that DuPont made false and misleading statements and omissions about
"Benlate" 50 DF, with the alleged effect of inflating the price of DuPont's
stock between June 19, 1993, and January 27, 1995. The district court has
certified the case as a class action. Discovery is proceeding. Also pending
is a shareholder derivative action filed in Georgia federal district court
which alleges that DuPont's Board of Directors breached various duties in
connection with the "Benlate" 50 DF litigation. A motion to dismiss the
complaint was filed. Certain plaintiffs who previously settled with the
company have filed cases alleging fraud and other misconduct relating to the
litigation and settlement of "Benlate" 50 DF claims. Approximately 40 such
cases are pending. These cases are in various stages of proceedings in trial
and appellate courts in Florida and Hawaii. In April 2000, a jury in Texas
state court awarded compensatory damages and fees of approximately $9 million,
prejudgment interest, and punitive or exemplary damages of approximately
21
Form 10-Q
$60 million to three pecan growers who claimed that "Benlate" DF 50 had
damaged their pecan trees. Because the punitive or exemplary damages awarded
were not in compliance with Texas law, the total award will be reduced.
DuPont expects it to be reduced from approximately $69 million to approxi-
mately $23 million. DuPont plans to appeal. DuPont continues to believe that
"Benlate" 50 DF did not cause the damages alleged in these cases and denies
the allegations of fraud and misconduct. DuPont intends to defend itself in
ongoing matters and in any additional cases that may be filed or reopened.
The ultimate liabilities from "Benlate" 50 DF lawsuits may be significant to
the company's results of operations, particularly in the Crop Protection
business, in the period recognized, but management does not anticipate that
they will have a material adverse effect on the company's consolidated
financial position or liquidity.
The company's balance sheet reflects accruals for estimated costs
associated with this matter. Adverse changes in these estimated costs could
result in additional future charges.
On October 7, 1994, Environmental Protection Agency (EPA) filed an
administrative complaint against DuPont proposing to assess $1.9 million in
civil penalties for distributing triazine herbicides with product labels EPA
alleged were in error because the labels allegedly were not in compliance with
the Agency's newly promulgated Worker Protection Standards. The labels were
submitted to the EPA for approval in July 1993 and accepted by the EPA in
November. However, in March of 1994, the EPA notified DuPont of alleged
errors in the labels. Although DuPont disputes the allegation these labels
are in error, it nevertheless has cooperated with the EPA in making label
changes requested by the Agency, and has issued supplemental labeling for all
products that had been distributed. In 1998, an EPA administrative law judge
issued an initial determination affirming the proposed penalties. The EPA
Environmental Appeals Board overturned this initial determination on April 3,
2000, remanding the case for consideration of evidence to determine whether
the subject labels were in error. DuPont continues to believe the proposed
penalties are unwarranted and intends to continue to contest the complaint and
proposed civil penalty.
On September 2, 1997, the U.S. Department of Justice (DOJ) filed suit
against DuPont related to an August 1995 oleum release from DuPont's plant in
Wurtland, Kentucky. DuPont previously paid a $125,000 fine and agreed to
undertake supplemental environmental projects, related to the oleum release,
valued at $460,000. In its complaint, the DOJ alleges violations under
Section 112(r) of the Clean Air Act, Section 103(a) of the Comprehensive
Environmental Response, Compensation and Liability Act and Section 304(a)(1)
of the Emergency Planning and Community Right-to-Know Act. DOJ offered to
settle this action for $2,700,000. DuPont and the DOJ have reached a settle-
ment in principle to resolve this matter. DuPont has agreed to pay $650,000
for an emergency planning computer system for 10 counties in Kentucky and to
pay a penalty of $850,000. A Consent Decree formalizing the settlement is
being negotiated.
22
Form 10-Q
By letter dated July 13, 1999, the U.S. Department of Justice (DOJ)
provided "formal notice" to DuPont that, due to the May 1997 HF release, DOJ
intended to bring a "federal court action" against DuPont under the Clean Air
Act (CAA) Section 112(r) -- General Duty Clause. On May 19, 1997, approxi-
mately 11,500 pounds of a hydrogen fluoride (HF)/tar mixture was released from
DuPont's Louisville, Kentucky, fluoroproducts facility. This release lasted
about 40 minutes. There were no on-site injuries, and only one off-site
person reported any exposure. No toxic tort suits were filed as a result of
this release. DuPont's incident investigation concluded that an inadequate
valve stem design was a key factor contributing to the release (the valve stem
twisted and the valve indicated it was in a closed position, when it was
actually open). DuPont's process isolation procedures were also reviewed and
modified as a result of this incident. DOJ proposed a settlement prior to
filing its action for $1.7 million. DuPont sought and received a meeting with
EPA and DOJ in September 1999. DuPont has heard nothing substantive from the
DOJ since the meeting. DuPont will contest the proposed $1.7 million fine as
excessive and unreasonable because there was no environmental harm or human
health impacts associated with the May 1997 incident.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Business transacted at the Annual Meeting:
A total of 871,071,080 shares of common stock were voted in person or
by proxy at the annual meeting of stockholders on April 26, or 82.8 percent of
the shares entitled to be voted. The following are the voting results on
proposals considered and voted upon at the meeting, all of which are described
in the proxy statement.
1. ELECTION OF DIRECTORS: The 13 nominees listed below were elected to
serve on the Board of Directors for the ensuring year. The vote
tabulation with respect to each nominee follows:
Votes Votes Cast Against
Director Cast For or Withheld
-------------------- ----------- ------------------
A. J. P. Belda 858,366,280 12,704,800
C. J. Crawford 858,564,628 12,506,452
L. C. Duemling 858,434,693 12,636,387
E. B. du Pont 858,552,772 12,518,308
C. O. Holliday, Jr. 857,959,223 13,111,857
D. C. Hopkins 858,402,478 12,668,602
L. D. Juliber 858,495,673 12,575,407
G. Lindahl 850,974,069 20,097,011
M. Naitoh 858,360,363 12,710,717
W. K. Reilly 858,557,182 12,513,898
H. R. Sharp, III 858,339,920 12,731,160
C. M. Vest 858,671,196 12,399,884
S. I. Weill 858,226,722 12,844,358
23
Form 10-Q
2. RATIFICATION OF INDEPENDENT ACCOUNTANTS: The proposal to ratify the
appointment of PricewaterhouseCoopers LLP as independent accountants
for 2000 was approved by a vote of 862,083,330 shares for, 1,726,221
shares against, and 7,261,529 abstentions and broker nonvotes.
3. POLITICAL NONPARTISANSHIP: A stockholder proposal recommending that
DuPont affirm its political nonpartisanship was defeated by a vote of
621,406,207 shares against, 36,952,400 for, and 212,712,473 absten-
tions and broker nonvotes.
4. EMPLOYMENT MATTERS: A stockholder proposal requesting the Board of
Directors prepare a report in response to the Glass Ceiling
Commission's business recommendations was defeated by a vote of
605,063,406 shares against, 55,804,847 shares for, and 210,202,827
abstentions and broker nonvotes.
5. PLANT CLOSURE: A stockholder proposal that DuPont create a committee
to report to the Board of Directors regarding the impact to communi-
ties as a result of the closure of DuPont plants and alternatives
that can be developed to help mitigate the impact of such closures in
the future was defeated by a vote of 642,110,620 shares against,
28,142,673 shares for, and 200,817,787 abstentions and broker
nonvotes.
Item 5. OTHER INFORMATION
Organization:
Kurt M. Landgraf, chairman and chief executive officer of DuPont
Pharmaceuticals Company, will resign effective May 15, 2000. Nicholas L.
Teti, president of DuPont Pharmaceuticals Company, was named president and
chief executive officer effective May 3, 2000.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibit index filed with this Form 10-Q is on pages 27 and 28.
(b) Reports on Form 8-K
1. On January 6, 2000, a Current Report on Form 8-K was filed
in connection with Debt and/or Equity Securities that may
be offered on a delayed or continuous basis under
Registration Statements on Form S-3 (No. 33-53327,
No. 33-61339, No. 33-60069, and No. 333-86363). Under
Item 5. "Other Events," the Registrant filed a press
release entitled "Landgraf Named CEO of DuPont
Pharmaceuticals Company."
24
Form 10-Q
2. On January 26, 2000, a Current Report on Form 8-K was filed
in connection with Debt and/or Equity Securities that may
be offered on a delayed or continuous basis under
Registration Statements on Form S-3 (No. 33-53327,
No. 33-61339, No. 33-60069, and No. 333-86363). Under
Item 7, "Financial Statements and Exhibits," the
Registrant's Earnings Press Release, dated January 26,
2000, was filed.
3. On February 22, 2000, a Current Report on Form 8-K was
filed in connection with Debt and/or Equity securities that
may be offered on a delayed or continuous basis under
Registration Statements on Form S-3 (No. 33-53327,
No. 33-61339, No. 33-60069, and No. 333-86363). Under
Item 5, "Other Events," the Registrant filed a press
release, dated February 18, 2000, entitled "DuPont and
Internet Capital Group Partner to Accelerate E-Commerce
Development in Major Industrial Markets."
4. On February 23, 2000, a Current Report on Form 8-K was
filed in connection with Debt and/or Equity securities that
may be offered on a delayed or continuous basis under
Registration Statements on Form S-3 (No. 33-53327,
No. 33-61339, No. 33-60069, and No. 333-8636-3). Under
Item 5, "Other Events," the Registrant filed a press
release, dated February 22, 2000, entitled "DuPont Reviews
Progress Toward Double-Digit Earnings Growth."
5. On April 25, 2000, a Current Report on Form 8-K was filed
in connection with Debt Securities that may be offered on a
delayed or continuous basis under its Registration State-
ments on Form S-3 (No. 33-53327, No. 33-61339,
No. 33-60069, and No. 333-86363). Under Item 7, "Financial
Statements and Exhibits," the Registrant's Earnings Press
Release, dated April 25, 2000, was filed.
6. On April 26, 2000, a Current Report on Form 8-K was filed
in connection with Debt and/or Equity securities that may
be offered on a delayed or continuous basis under
Registration Statements on Form S-3 (No. 33-53327,
No. 33-61339, No. 33-60069, and No. 333-86363). Under
Item 5, "Other Events," the Registrant filed a press
release, dated April 26, 2000, entitled "DuPont Commits To
Specific Earnings Growth Target For 2000."
25
Form 10-Q
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
E. I. DU PONT DE NEMOURS AND COMPANY
(Registrant)
Date: May 5, 2000
-----------------------------------------
By /s/ G. M. Pfeiffer
-----------------------------------------
G. M. Pfeiffer
Senior Vice President - DuPont Finance
(As Duly Authorized Officer and Principal
Financial and Accounting Officer)
26
Form 10-Q
EXHIBIT INDEX
Exhibit
Number Description
- ------- ------------------------------------------------------------
10.1* Company's Corporate Sharing Plan, as last amended August 28,
1991 (incorporated by reference to Exhibit 10.1 of the
company's Annual Report on Form 10-K for the year ended
December 31, 1996).
10.2* The DuPont Stock Accumulation and Deferred Compensation
Plan, as last amended April 29, 1998 (incorporated by
reference to Exhibit 10.3 of the company's Quarterly Report
on Form 10-Q for the period ended March 31, 1998).
10.3* Company's Supplemental Retirement Income Plan, as last
amended effective June 4, 1996 (incorporated by reference to
Exhibit 10.3 of the company's Annual Report on Form 10-K
for the year ended December 31, 1996).
10.4* Company's Pension Restoration Plan, as last amended
effective June 4, 1996 (incorporated by reference to
Exhibit 10.4 of the company's Annual Report on Form 10-K for
the year ended December 31, 1996).
10.5* Company's Stock Performance Plan, as last amended effective
January 28, 1998 (incorporated by reference to Exhibit 10.1
of the company's Quarterly Report on Form 10-Q for the
period ended March 31, 1998).
10.6* Company's Variable Compensation Plan, as last amended
effective April 30, 1997 (incorporated by reference to
Exhibit 10.7 of the company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997).
10.7* Company's Salary Deferral & Savings Restoration Plan
effective April 26, 1994 (incorporated by reference to
Exhibit 10.7 of the company's Annual Report on Form 10-K for
the year ended December 31, 1999).
10.8* Company's 1995 Corporate Sharing Plan, adopted by the Board
of Directors on January 25, 1995 (incorporated by reference
to Exhibit 10.8 of the company's Annual Report on Form 10-K
for the year ended December 31, 1999).
- ------------------------
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this Form 10-Q.
27
Form 10-Q
EXHIBIT INDEX
(continued)
Exhibit
Number Description
- ------- ------------------------------------------------------------
10.9* Company's 1997 Corporate Sharing Plan, adopted by the Board
of Directors on January 29, 1997 (incorporated by reference
to Exhibit 10.11 of the company's Annual Report on Form 10-K
for the year ended December 31, 1996).
10.10* Company's Retirement Income Plan for Directors, as last
amended August 1995 (incorporated by reference to
Exhibit 10.12 of the company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997).
10.11* Letter Agreement and Employee Agreement, dated as of
April 22, 1999, between the company and R. R. Goodmanson
(incorporated by reference to Exhibit 10.11 of the company's
Annual Report on Form 10-K for the year ended December 31,
1999).
10.12 Company's Tax Sharing Agreement dated October 27, 1998, by
and among the company and Conoco Inc., formerly known as
Conoco Energy Company (incorporated by reference to
Exhibit 10.13 of the company's Annual Report on Form 10-K
for the year ended December 31, 1998).
12 Computation of Ratio of Earnings to Fixed Charges.
27** Financial Data Schedule - quarter ended March 31, 2000.
- -------------------------
* Management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-Q.
** Filed electronically only.
28
Form 10-Q
Exhibit 12
E. I. DU PONT DE NEMOURS AND COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
Years Ended December 31
Three Months Ended -------------------------------------------------------
March 31, 2000 1999 1998 1997 1996 1995
------------------ --------- --------- --------- --------- -------
Income from Continuing Operations Before
Extraordinary Item ............................ $ 803 $ 219 $1,648 $1,432 $2,931 $2,858
Provision for Income Taxes ...................... 439 1,410 941 1,354 1,416 1,432
Minority Interests in Earnings of Consolidated
Subsidiaries .................................. 17 61 24 43 40 29
Adjustment for Companies Accounted for
by the Equity Method .......................... (12) 33 (39) 936<Fa> 82 126
Capitalized Interest ............................ (18) (107) (120) (80) (70) (76)
Amortization of Capitalized Interest ............ 18 88<Fb> 65<Fb> 82<Fb> 127<Fb> 81
------ ------ ------ ------ ------ ------
1,247 1,704 2,519 3,767 4,526 4,450
------ ------ ------ ------ ------ ------
Fixed Charges:
Interest and Debt Expense - Continuing
Operations .................................. 201 535 520 389 409 449
Interest and Debt Expense - Discontinued
Operations<Fc> .............................. - 180 304 252 304 308
Capitalized Interest - Continuing Operations .. 18 107 120 80 70 76
Capitalized Interest - Discontinued
Operations<Fc> .............................. - 3 78 90 73 95
Rental Expense Representative of Interest
Factor ...................................... 17 66 71 83 80 80
------ ------ ------ ------ ------ ------
236 891 1,093 894 936 1,008
------ ------ ------ ------ ------ ------
Total Adjusted Earnings Available for Payment of
Fixed Charges ................................. $1,483 $2,595 $3,612 $4,661 $5,462 $5,458
====== ====== ====== ====== ====== ======
Number of Times Fixed Charges are Earned ........ 6.3 2.9 3.3 5.2 5.8 5.4
====== ====== ====== ====== ====== ======
<FN>
- --------------------------------
<Fa> Includes write-off of Purchased In-Process Research and Development
associated with acquisition of 20% interest in Pioneer Hi-Bred
International, Inc.
<Fb> Includes write-off of capitalized interest associated with divested
businesses.
<Fc> Divestiture of Conoco Inc. was completed August 6, 1999.
29