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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
QUALICON RETIREMENT AND SAVINGS PLAN
(FULL TITLE OF THE PLAN)
E. I. DU PONT DE NEMOURS AND COMPANY
1007 MARKET STREET
WILMINGTON, DELAWARE 19898
(NAME AND ADDRESS OF PRINCIPAL EXECUTIVE OFFICE OF ISSUER)
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1
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Administrative Committee formed under the Qualicon Retirement and
Savings Plan has duly caused this Annual Report to be signed by the undersigned
hereunto duly authorized.
QUALICON RETIREMENT
AND SAVINGS PLAN
Dated: June 20, 2000 By: /s/ Robert A. McMillen
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Robert A. McMillen
Manager, Finance and Chief
Financial Officer and Member of the
Administrative Committee formed under
the Qualicon Retirement and Savings Plan
2
Qualicon
Retirement and Savings Plan
Index to Financial Statements and Supplemental Schedules
- --------------------------------------------------------------------------------
INDEX
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Page(s)
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Report of Independent Accountants 4
Financial Statements
Statement of Net Assets Available for Benefits 5
Statement of Changes in Net Assets Available for Benefits 6
Notes to Financial Statements 7-14
Supplemental Schedules*
Schedule of Assets Held for Investment Purposes 15
EXHIBITS
--------
Exhibit
Number Description
- ------ -----------
24 Consent of Independent Accountants
* The Supplemental Schedules included are presented for purposes of additional
analysis and are not a required part of the basic financial statements but are
required by the Employee Retirement Income Security Act of 1974 ("ERISA").
Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
3
Report of Independent Accountants
To the Administrator and Participants
of the Qualicon Retirement and Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Qualicon Retirement and Savings Plan (the "Plan") at December 31, 1999
and 1998 and the changes in net assets available for benefits for the year ended
December 31, 1999 and the period from June 1, 1998 (inception) to December 31,
1998 in conformity with accounting principles generally accepted in the United
States. These financial statements are the responsibility of the Plan's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ PricewaterhouseCoopers LLP
- ------------------------------------
May 31, 2000
4
Qualicon
Retirement and Savings Plan
Statement of Net Assets Available for Benefits
December 31, 1999 and 1998
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December 31,
------------------------
1999 1998
Assets
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Investments $693,599 $192,318
Receivables:
Participants' Contributions 24,416 20,184
Employer's Contributions 7,592 5,727
Investment Income 98 32
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Total Receivables 32,106 25,943
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Net assets available for benefits $725,705 $218,261
======== ========
The accompanying notes are an integral part of these financial statements.
5
Qualicon
Retirement and Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1999 and
For the Period from June 1, 1998 (Plan Inception) to December 31, 1998
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Period from
Year Ended June 1, 1998 to
December 31, December 31,
1999 1998
Additions:
Investment income:
------------------
Net appreciation in fair value of
investments $ 79,464 $ 4,382
Interest and dividend income 23,271 4,006
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102,735 8,388
Contributions:
Participant 333,081 171,617
Employer 83,483 38,256
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416,564 209,873
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Total additions 519,299 218,261
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Deductions:
Benefits paid to participants 11,855 -
-------- --------
Net increase 507,444 218,261
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Net assets available for benefits:
Beginning of year 218,261 -
-------- --------
End of year $725,705 $218,261
======== ========
The accompanying notes are an integral part of these financial statements.
6
Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
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1. Description of the Plan
The following description of the Plan provides only general information.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
General
The Plan is a defined contribution plan covering substantially all employees
of Qualicon (the "Company"), a wholly-owned subsidiary of E.I. du Pont de
Nemours and Company ("DuPont"). The Plan is subject to the Employee
Retirement Income Security Act of 1974 ("ERISA") and is supervised,
administered, and interpreted by an administrative committee (the
"Committee"). The Committee is comprised of the Manager, Finance and
Chief Financial Officer, the Vice President - Operations and Chief
Technology Officer and such other individuals as the above-mentioned
officers shall appoint, who may be, but need not be, employees of the
Company. The designated trustee of the Plan is Merrill Lynch Trust Company
of America ("Merrill Lynch").
Contributions
Participants authorize payroll deductions which are contributed to the Plan
and credited to their individual accounts. The sum of the participant
contributions both pre-tax and post-tax are limited to a maximum of 16% of a
participant's earnings, as defined, in multiples of 1% and are credited to
the Plan on a monthly basis in accordance with the payroll cycle of the
Company. In accordance with the Internal Revenue Code (the "Code"), the
maximum amount of a participant's pre-tax contribution for calendar year
1999 was limited to $10,500 and $10,000 in 1998. Participants may also
contribute amounts representing rollovers from other eligible retirement
plans.
The Company makes matching contributions on a monthly basis in the amount of
50% of all participant contributions up to 6% of the participant's earnings,
as defined. Company contributions are invested in accordance with the
participant's investment elections. The Company, at its discretion, may also
make an additional discretionary contribution. The Company did not make any
discretionary contributions during the year ended December 31, 1999 and the
period from June 1, 1998 to December 31, 1998.
Participant Accounts
Each participant's account is credited with the participant's contributions
and allocations of the Company's contributions and Plan earnings.
Allocations are based on account balances as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
7
Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
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Eligibility and Vesting
Employees are eligible to participate in the plan on the first day of the
month coincident with or next following commencement of employment with the
Company. Employees who join the Company from DuPont are immediately
eligible to participate in the Plan. Participants are always 100% vested in
their contributions and the employer's matching contribution plus actual
earnings thereon.
Participant Loans
Participants may borrow from their accounts, a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50% of their vested account
balance. Loan transactions are treated as a transfer to/(from) the
investment fund from/(to) the Participant Loan Fund. Loan terms shall not
exceed 5 years, unless the loan is for the purchase of a primary residence,
then it shall not exceed 10 years. The loans are secured by the balance in
the participant's account and bear interest at the average rate for secured
personal loans then in effect at five banks selected by the Committee on
the last working day of the month preceding the date on which the loan
application was made. Principal and interest are paid ratably through
payroll deductions.
Payment of Benefits
A participant may make three withdrawals in a calendar year, withdrawing
all or a portion of his or her account balance, except the portion
attributable to pre-tax contributions or allocated to the participant's
loan account. If a participant is under age 59 1/2, a withdrawal may be
made from the participant's pre-tax contributions and earnings account
without penalty only if a financial hardship is demonstrated. Company
contributions will be suspended for six months if a participant withdraws,
while in-service, any matched before-tax or after-tax savings or Company
contributions held for less than two years.
If a participant's employment terminates due to the participant's death,
total and permanent disability or retirement, the participant or the
participant's beneficiary is entitled to receive the balance of all the
participant's accounts as determined as of the valuation date coinciding
with or immediately following the participant's termination of employment.
Expenses of the Plan
Reasonable expenses of administering the Plan, at the election of the
Committee, may be paid by the Plan. For the year ended December 31, 1999
and for the period ended December 31, 1998, the Company paid all
administrative expenses of the Plan. Brokerage fees, transfer taxes,
investment fees and other expenses incident to the purchase and sale of
securities and investments shall be included in the cost of such securities
or investments or deducted from the sales proceeds, as the case may be.
8
Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
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2. Significant Accounting Policies
Basis of accounting
The financial statements have been prepared on the accrual basis of
accounting.
Investment valuation and income recognition
The investments of the Plan are carried at fair value, except for the
Plan's interest in the DuPont and Related Companies Defined Contribution
Plan Master Trust ("Master Trust"), which is valued at contract value. The
Plan's interest in the Master Trust is based upon its beginning value plus
actual contributions and allocated investment income less actual
distributions (see Note 3). The Master Trust's guaranteed investment
contracts, separate account portfolios and synthetic guaranteed investment
contracts are fully benefit responsive and thus, are stated at cost plus
accrued interest, using the contracted interest rates applied to the daily
account balances. Shares of registered investment companies (mutual funds)
are valued at quoted market prices which represent the net asset value of
shares held by the Plan at year end. Shares of common and collective trust
funds are valued at net unit value as determined by the trustee at year
end. Shares of the asset allocation portfolios are valued at net unit value
as determined by the trustee at year end. DuPont Stock and Conoco Stock are
valued at quoted market prices as of year end. Participant loans are valued
at cost which approximates fair value.
Purchases and sales of investments are recorded on the trade-date. Dividend
income is recorded on the ex-dividend date. Interest income is accrued when
earned.
Payment of benefits
Benefits are recorded when paid.
Use of estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires the Plan's management to make
estimates and assumptions that affect the reported amounts in the financial
statements. Actual results could differ from those estimates.
Reclassifications
These financial statements reflect the reclassification of certain prior
year amounts in connection with the adoption of American Institute of
Certified Public Accountants Statement of Position 99-3, "Accounting for
and Reporting of Certain Employee Benefit Plan Investments and Other
Disclosure Matters" ("SOP 99-3"). SOP 99-3 is effective for financial
statements for plan years ending after December 15, 1999.
9
Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
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3. DuPont and Related Companies Defined Contribution Plan Master Trust
On April 1, 1999, the Company and certain affiliates ("employers") entered
into a Master Trust Agreement with Merrill Lynch Trust Company of America
("Trustee") to establish a master trust for the investment of the Stable
Value Fund investment option. Prior to April 1, 1999, the assets of the
Stable Value Fund investment option were held solely by the Plan. To
participate in the Master Trust, affiliates who sponsor qualified savings
plans and who have adopted the Master Trust Agreement are required to make
monthly payments to the Trustee of designated portions of employees'
savings and other payments to the Trustee of designated portions of
employees' savings and other contributions by the affiliate. The Plan's
undivided interest in the Master Trust was .00076% as of December 31, 1999.
Investment income relating to the Master Trust is allocated proportionately
to the plans within the Master Trust based on the plan's interest to the
total fair value of the Master Trust.
The Master Trust consists of guaranteed investment contracts ("GIC"),
separate account portfolios ("SAP"), synthetic guaranteed investment
contracts ("SYN") and money market funds. The crediting interest rates on
investment contracts ranged from 5.41% to 9.60% for the year ended December
31, 1999 and from 5.22% to 9.60% for the period ended December 31, 1998.
The Fund's blended rate of return was 7.05% in 1999 and 7.38% in 1998.
The crediting rates for SAP and SYN contracts are reset annually and are
based on the market value of the underlying portfolio of assets backing
these contracts. Inputs used to determine the crediting rate include each
contract's portfolio market value, current yield-to-maturity, duration
(i.e., weighted average life) and market value relative to contract value.
All contracts have a guaranteed rate of 0% or higher.
10
Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
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The contract values, which approximate the fair values of investment
contracts as of December 31, 1999 and 1998, are as follows:
1999 1998
Guaranteed investment contracts $ 242,874,912 $ 744,302,806
Synthetic guaranteed investment contracts 3,994,655,676 3,989,692,008
Separate account guaranteed investment contracts 1,331,751,976 812,408,951
-------------- --------------
5,569,282,564 5,546,403,765
Money market funds 45,408,849 41,156,671
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Total $5,614,691,413 $5,587,560,436
============== ==============
At December 31, 1999, the total assets of the Master Trust of
$5,614,691,413 include participant investments in the Stable Value Fund of
$40,760,989 and participant investments of $5,573,930,424 held by the
Conservative, Moderate and Aggressive Allocation Portfolios. At December
31, 1998, the total Stable Value Fund value of $5,587,560,436 included
participant investments in the Stable Value Fund of approximately
$40,564,024 and participant investments of approximately $5,546,996,412
held by the Conservative, Moderate and Aggressive Allocation Portfolios.
Included in the contract value of synthetic guaranteed investment contracts
is $(60,029,739) and $170,660,217 at December 31, 1999 and 1998,
respectively, related to wrapper contracts which guarantee the contract
value of the synthetic guaranteed investment contracts for participant-
initiated withdrawal events.
Total interest income for the year ended December 31, 1999 and the period
ended December 31, 1998 was $366,044,652 for the Master Trust and
approximately $364,275,900 for the Stable Value Fund, respectively.
11
Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
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4. Investments
Investments that represent more than 5% of the net assets available for
benefits as of December 31, 1999 and 1998 were as follows:
1999 1998
AIM Value Fund $ 39,507 $10,595
DuPont Common Stock Fund 130,141 36,784
Fidelity Growth: Income Fund Class A 64,789 23,938
Fidelity Magellan Fund 58,367 12,693
Janus Mercury Fund 44,708 -
Merrill Lynch Equity Index Tier 6 38,349 -
Stable Value Fund 39,203 17,663
During the years ended December 31, 1999 and 1998, the Plan's investments
appreciated (depreciated) (including realized gains and losses) in value as
follows:
1999 1998
Common Stock $15,111 $(4,502)
Mutual Funds 54,190 7,048
Common/Collective Trust Fund 10,163 1,836
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Net Unrealized Appreciation (Depreciation) $79,464 $ 4,382
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5. Realized and Unrealized Gains and Losses
Realized and unrealized gains and losses are calculated based upon historical
cost of assets. Such gains and losses are computed on a current value basis
for Form 5500. The difference may result in a differing classification
between realized and unrealized but the total gain or loss will not be
affected.
12
Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
- --------------------------------------------------------------------------------
6. Conoco, Inc. Class B Common Stock Fund
On September 28, 1998, DuPont announced that the Board of Directors had
approved a plan to divest DuPont's 100 percent-owned petroleum business,
Conoco, Inc. On August 6, 1999, DuPont completed the planned divestiture
through a tax-free split-off. DuPont exchanged its shares of Conoco, Inc.
Class B common stock for shares of DuPont common stock. Plan participants
had the option to exchange shares of DuPont common stock, which were held in
their participant accounts in the DuPont Common Stock Fund. For each share
of DuPont common stock exchanged, the participant received an appropriate
number of shares of Conoco Class B common stock. Accordingly, the Conoco
Class B Stock Fund was created as an investment fund of the Plan. No
additional shares of Conoco Class B common stock may be purchased by Plan
participants through payroll deductions, fund transfers, or the reinvestment
of dividends. Dividends earned on Conoco Class B common stock are
distributed pro rata to the investment options in participants' accounts
based upon their current investment elections.
7. Tax Status
The Retirement and Savings Plan is a qualified plan pursuant to Section
401(a) of the Internal Revenue Code (the "Code") and the related Trusts are
exempt from federal taxation under Section 501(a) of the Code. A favorable
tax determination letter from the Internal Revenue Service dated April 4,
2000 has been received by the Plan. This determination letter is applicable
for the Plan adopted on May 20, 1998 and all amendments through inception.
The Plan administrator believes that the Plan is currently designed and
operated in accordance with the applicable sections of the Code.
Accordingly, no provision has been made for federal income taxes in the
accompanying financial statements.
8. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500:
1999 1998
Net assets available for benefits per the financial statements $725,705 $218,261
Less: Amounts allocated to withdrawing participants (11,855) -
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Net assets available for benefits per the Form 5500 $713,850 $218,261
======== ========
13
Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
- --------------------------------------------------------------------------------
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year Ended
December 31, 1999
Benefits paid to participants per the financial statements $ -
Add: Amounts allocated to withdrawing participants at December 31, 1999 11,855
Less: Amounts allocated to withdrawing participants at December 31, 1998 -
-------
Benefits paid to participants per the Form 5500 $11,855
=======
Amounts allocated to withdrawing participants are recorded on the Form 5500
for benefit claims that have been processed and approved for payment prior
to December 31 but not yet paid as of that date.
9. Related Party Transactions
Certain Plan investments are shares of mutual funds and units of collective
trust funds managed by Merrill Lynch, and therefore, transactions in these
investments qualify as party-in-interest transactions which are exempt from
the prohibited transaction rules of ERISA.
10. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA.
14
Qualicon Exhibit I
Retirement and Savings Plan
Schedule of Assets Held for Investment Purposes
Form 5500, Schedule H, Part IV, Line I
As of December 31, 1999
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Identity of Issue Description of Investment Current
Value
Fidelity Low Priced Stock Fund Registered Investment Company $ 13,657
Franklin Small Cap Growth Fund Class I Registered Investment Company 24,374
Janus Enterprise Fund Registered Investment Company 31,852
Janus Mercury Fund Registered Investment Company 44,708
Hotchkis & Wiley International Fund Registered Investment Company 10,743
Templeton Growth Fund Registered Investment Company 12,230
AIM Value Fund Registered Investment Company 39,507
Fidelity Growth & Income Fund Class A Registered Investment Company 64,789
* Merrill Lynch Growth Fund Class A Registered Investment Company 21,777
MFS Total Return Fund Registered Investment Company 126
AIM Equity Constellation Fund Registered Investment Company 17,836
Franklin Balance Sheet Fund Registered Investment Company 15,241
Templeton Foreign Fund Registered Investment Company 10,261
Fidelity Magellan Fund Registered Investment Company 58,367
Fidelity Fund Registered Investment Company 14,326
Fidelity Equity Income Fund Registered Investment Company 3,800
Franklin Custody Fund Registered Investment Company 6,878
MFS Research Fund Registered Investment Company 3,109
* Merrill Lynch Capital Fund Class A Registered Investment Company 1,435
* Merrill Lynch Value Fund Class A Registered Investment Company 13,200
* Merrill Lynch International Stock Index Common/Collective Trusts 2,884
Barclays 3-Way Asset Allocation Fund Common/Collective Trusts 14,670
* Merrill Lynch Small Company Index Fund Common/Collective Trusts 1,330
* Merrill Lynch Equity Index Tier 6 Common/Collective Trusts 38,349
* DuPont Stock Company Stock 130,141
Conoco Class B Common Stock Company Stock 19,694
Plan interest in the DuPont and Related
Companies Defined Contribution Plan
Master Trust ("Master Trust") Stable Value Fund 39,203
* Aggressive Asset Allocation Portfolio Pooled Investment 13,056
* Conservative Asset Allocation Portfolio Pooled Investment 1,297
Participants Loans, 8.25% 24,759
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$693,599
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* Party-in-Interest
15