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E. I. du Pont de Nemours and Company
Notes to Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
Accounting Standards Issued Not Yet Adopted
In December 2004, the FASB issued SFAS No. 123R, which replaces SFAS No. 123, ‘‘Accounting for Stock-Based Compensa-
tion.’’ DuPont voluntarily adopted the SFAS No. 123 fair value based method of accounting on January 1, 2003, for share-based
payment transactions with employees. SFAS No. 123R amends some aspects of the fair value measurement of the equity
instruments granted to employees. This statement becomes effective for the company beginning in the first quarter of 2006.
The company will use the modified prospective method and will continue to use the Black-Scholes option-pricing model as the
most appropriate fair-value method for its awards. Based on the company’s evaluation, the adoption of SFAS No. 123R is not
expected to have a material effect on the company’s financial position, liquidity or results of operations.
2. Other Income, net
2005 2004 2003
Cozaar/Hyzaarincome $ 747 $ 675 $ 573
Royalty income 130 151 141
Interest income, net of miscellaneous interest expense 244 188 70
Equity in earnings (losses) of affiliates (Note 16) 108 (39) 10
Net gains on sales of assets 82 28 17
Net exchange gains (losses) 423 (391) (134)
Miscellaneous income and expenses–net 118 43 57
$1,852 $ 655 $ 734
The company routinely uses forward exchange contracts to offset its net exposures, by currency, related to the foreign
currency-denominated monetary assets and liabilities of its operations. The objective of this program is to maintain an
approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate
changes. 2005 included net pretax exchange gains of $423, 2004 and 2003 include net pretax exchange losses of $391 and $164,
respectively, which resulted from hedging an increased net monetary asset position and a weakening USD. These pretax gains
and losses are largely offset by associated tax benefits. 2003 also includes an exchange gain of $30 from a currency contract
purchased to offset movement in the Canadian dollar in connection with the company’s acquisition of the minority sharehold-
ers’ interest in DuPont Canada (see Note 27).
3. Interest Expense
2005 2004 2003
Interest incurred $ 541 $ 379 $ 376
Interest capitalized (23) (17) (29)
$ 518 $ 362 $ 347
F-13