DuPont 2005 Annual Report Download - page 40

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Part II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations–Continued
The company’s Cash provided by operating activities was $3.2 billion in 2004, a $600 million increase from the $2.6 billion
generated in 2003. The year-over-year increase was primarily the result of higher earnings in 2004. Cash provided by operations
in 2003 was adversely impacted by an increase in accounts receivable primarily due to the termination of the company’s
accounts receivable securitization program.
(Dollars in millions) 2005 2004 2003
Cash (used for) provided by Investing Activities $(602) $1,936 $(3,375)
In 2005, cash was used for investing activities totaling $602 million compared to investing activities that provided cash of
$1.9 billion in 2004. The primary difference was related to proceeds from the sale of assets, which were $312 million in 2005
compared to $3,908 million in 2004, the latter related principally to the sale of INVISTA (see Notes 5 and 27 to the Consolidated
Financial Statements). In addition, in 2005, the settlement of forward exchange contracts issued to hedge the company’s net
exposure, by currency, related to monetary assets and liabilities resulted in the receipt of $653 million versus cash payments of
$509 million in 2004. The cash inflow in 2005 was primarily related to the stronger USD while the payments in 2004 were
primarily attributable to the weaker USD. These settlements were largely offset by revaluations of the items being hedged,
which are reflected in the appropriate categories in the Consolidated Statements of Cash Flows. Purchases of plant, property
and equipment in 2005 totaled $1.3 billion, including $70 million to replace plant assets destroyed by the hurricanes.
Cash flows totaling $1.9 billion were provided by investing activities in 2004 as compared to cash used for investing activities in
2003. In 2004, proceeds from the sale of INVISTA were $3,840 million. These proceeds were partly offset by cash payments
associated with the settlement of forward currency exchange contracts of $509 million and purchases of plant, property and
equipment of $1.2 billion. Payments for businesses acquired in 2003 totaled $1.5 billion, primarily consisting of two acquisitions.
In June and July 2003, the company acquired 66,704,465 shares in DuPont Canada from the minority owners for $1.1 billion. In
May 2003, The Solae Company, a majority-owned subsidiary of the company, acquired 82 percent of Bunge Limited’s Brazilian
ingredients operation for $256 million, with the additional 18 percent acquired in the fourth quarter of 2003 for $44 million. In
addition, in 2003, payments associated with the settlement of foreign exchange contracts were $631 million and purchases of
plant, property and equipment were $1.7 billion (including $334 million of synthetic leases.)
The company expects 2006 purchases of plant, property and equipment to be between $1.4 and $1.6 billion, which includes
$90 million for hurricane related capital expenditures.
(Dollars in millions) 2005 2004 2003
Cash (used for) provided by Financing Activities $(2,851) $(5,550) $31
Changes in cash flows related to financing activities are principally related to the company’s use of commercial paper and
debt, the payment of dividends and share repurchase activity. Total debt at December 31, 2005, was $8.2 billion, an increase of
$1.7 billion from December 31, 2004, primarily due to new borrowings to support the AJCA cash repatriation program and the
$1 billion contribution to the principal U.S. pension plan, partially offset by repayments.
Total debt at December 31, 2004 was $6.5 billion, a decrease of $3.7 billion from December 31, 2003, primarily due to the use of
proceeds from the sale of INVISTA to pay down commercial paper. Also, $255 million of the company’s debt was assumed by
Koch in the sale of INVISTA. At December 31, the company’s commercial paper balance was $0, $584 million, and $4.4 billion
for 2005, 2004 and 2003, respectively. In addition to changes in the level of debt, the mix of the company’s debt also changed.
Commercial paper decreased $3.8 billion in 2004 over 2003 and in 2004 the company issued $1.4 billion of six- and ten-year
notes. These notes essentially refinanced the $1.3 billion of maturing long-term notes due in 2004 and extended the company’s
maturity profile.
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