DuPont 2005 Annual Report Download - page 33

Download and view the complete annual report

Please find page 33 of the 2005 DuPont annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 117

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117

Part II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations–Continued
systems, as well as color communication systems, including DuPontWaterProof, Cromalin, and Dylux. CyrelFAST is
the only solvent-free thermal flexographic platemaking technology commercially available. This technology is helping to offset
the continuing decline in the analog proofing technology market.
The segment also includes a portfolio of industrial and specialty fluorochemicals and fluoropolymers which are sold into the
refrigeration, insulation, aerosol packaging, telecommunications, aerospace, automotive, electronics, chemical processing, and
housewares industries. As the largest global manufacturer of fluoroproducts, the company’s offerings include DuPontSuva
refrigerants, Teflonand Tefzelfluoropolymer resins, Autographand Teflonnon-stick finishes, and Teflonand Tedlar
fluoropolymer films.
Electronic & Communication Technologies leverages DuPont’s strong materials and technology base to target growth opportuni-
ties in electronics, fluoropolymers, fluorochemicals, packaging graphics, and color communication. In semiconductor
fabrication, packaging, and interconnect, the segment is extending and broadening its portfolio of materials to address critical
needs in the industry, e.g., chemical mechanical planarization and embedded passives. In the rapidly growing market for flat
panel displays, the segment continues to be a leading materials supplier for plasma displays. In addition, the segment is
developing new innovative technologies for liquid crystal displays, such as thermal color filters, while continuing to invest in
developing materials technologies for organic light-emitting diode (OLED) displays and field emission displays. In packaging
graphics, products such as CyrelFAST have rapidly grown, solidifying the segment’s market leadership position. In fluoro-
polymers and fluorochemicals, the segment continues to pursue product renewal innovations such as next generation refriger-
ants, while broadening the scope of applications into high growth areas such as limited combustible cable and photovoltaics.
The company’s research efforts on long-term growth opportunities such as fuel cells are showing solid technical progress,
although commercial applications are not expected to advance for several years.
2005 versus 2004 Sales of $3.5 billion increased about 7 percent, on 6 percent higher USD prices, and a 1 percent improve-
ment in volume. Price improvements reflect higher prices, primarily for fluorochemicals. Higher volumes reflect increased
demand primarily for fluoroproducts and electronic materials partly offset by the divestiture of the remaining interest in DuPont
Photomasks, Inc. Sales growth was strongest outside the U.S. During the year, approximately 220 new products and product
applications were introduced.
PTOI in 2005 was $532 million, which included a gain of $48 million on the sale of the company’s remaining interest in DuPont
Photomasks, Inc. versus $192 million last year. 2004 included net charges of $108 million for PFOA litigation (see Note 24 to the
Consolidated Financial Statements) and $67 million for employee separation costs and asset impairment charges. Earnings
growth in 2005 also resulted from improved pricing, modest demand improvement and continued productivity gains.
2004 versus 2003 Sales of $3.3 billion increased 13 percent on 10 percent higher volumes and 3 percent higher USD selling
prices. Higher volumes reflect a significant increase in demand for electronic materials, fluoropolymers, and refrigerants. Sales
outside the U.S. grew 24 percent with sales in Asia Pacific up 36 percent.
PTOI in 2004 was $192 million versus $183 million in 2003. In 2004, PTOI includes net charges of $67 million for employee
separation costs and asset impairment charges, and $108 million for PFOA litigation. These charges were offset by earnings
improvements resulting principally from higher volumes, productivity improvements, and targeted pricing actions throughout
2004.
Outlook In 2006, modest revenue and earnings growth is expected for the segment. Earnings in 2006 will benefit from new
product introductions, targeted pricing actions to offset energy related raw material cost increases, and continued focus on
fixed cost control. This segment manufactures products that could be affected by uncertainties associated with PFOA. See the
discussion on Page 49 under the subheading PFOA.
33