DuPont 2005 Annual Report Download - page 32

Part II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations–Continued
PTOI in 2005 of $564 million decreased from $718 million in the prior year. Higher raw material costs and lower sales volumes
negatively affected 2005 earnings. PTOI in 2005 includes a $116 million hurricane charge while 2004 included charges of
$96 million for employee separation costs and an automotive refinish litigation settlement.
2004 versus 2003 Sales of $6.0 billion increased 10 percent, principally reflecting a 5 percent benefit from the weaker dollar,
3 percent higher sales volumes, and 2 percent higher local prices. The increase in volumes is primarily related to titanium
dioxide as capacity utilization for global titanium dioxide producers grew throughout the year, with all major producers
essentially sold out beginning late in third quarter 2004. OEM coatings volume growth moderated in the second half as major
auto producers, particularly in the U.S., announced production cutbacks to reduce new car inventories.
PTOI was $718 million in 2004, down slightly from $735 million in 2003. Higher sales volumes and local selling price increases
essentially offset net charges totaling $60 million for employee separation costs and $36 million related to the automotive
refinishes litigation settlement (see Note 24 to the Consolidated Financial Statements). Higher raw material, energy, and product
distribution costs reduced PTOI by approximately $35 million. Higher fixed costs were largely driven by currency translation
rates in the coatings businesses, and by spending for growth initiatives in the titanium dioxide business.
Outlook The segment expects to increase sales modestly in 2006, while taking actions to improve profitability. Critical to
improving the segment’s profitability is the sustainability of price increases to offset higher raw materials and other costs and
the successful restoration of full operations at the DeLisle titanium dioxide plant. Industry demand for titanium dioxide is
expected to remain strong sustaining continued high capacity utilization. Competitive conditions in the global coatings industry
will continue to provide a challenging operating environment in 2006. Modest growth is expected for refinish markets on flat
volumes in mature economies while strong growth is expected to continue in emerging markets. Profitability of coatings sold to
OEM producers is highly dependent upon volume at specific plants the company services. U.S. and European 2006 automotive
builds are expected to be essentially flat with 2005 levels, with moderate growth in Asia Pacific.
Segment
Sales PTOI
(Dollars in billions) (Dollars in millions)
2005 $3.5 $532
2004 3.3 192
2003 2.9 183
Electronic & Communication Technologies provides a broad range of advanced materials for the electronics industry, flex-
ographic printing and color communication systems, and a wide range of fluoropolymer and fluorochemical products. The
segment also continues to pursue development activities related to displays and fuel cells.
In the electronics industry, markets served include display materials, integrated circuit fabrication materials and packaging
solutions, and printed wire board fabrication materials. The segment meets the rapidly changing market needs for smaller,
more portable and powerful electronic devices by building on its strength as a leading supplier of organic, flexible, and
ceramic circuit materials. Major product lines include DuPont Kapton polyimide film, Pyralux flexible laminates, Riston dry
film photoresists, Green Tape low temperature co-fired ceramics, Fodel photoimageable composites, and Posistrip
photoresist removers.
Electronic & Communication Technologies is the market leader in flexographic printing and color communication serving the
packaging and commercial printing industries. Its offerings include DuPont Cyrel and CyrelFAST flexographic printing
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ELECTRONIC & COMMUNICATION TECHNOLOGIES