DuPont 2005 Annual Report Download - page 95

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E. I. du Pont de Nemours and Company
Notes to Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
Under the October 24, 2005 agreement, the company purchased and retired 75.7 million shares of DuPont’s common stock on
October 27, 2005 at a price per share of $39.62 with Goldman Sachs purchasing an equivalent number of shares in the open
market over the nine-month period ending July 27, 2006.
On August 1, 2006, the company may receive from, or be required to pay to, Goldman Sachs a price adjustment that may be
settled, at the company’s option, in cash or shares of its common stock. The price adjustment is based upon the difference
between the volume weighted average price (VWAP) of DuPont common stock during the nine-month purchase period and
$39.62, multiplied by the number of shares purchased by Goldman Sachs. If the VWAP is less than $39.62, then Goldman Sachs
will owe an adjustment to the company; conversely if the VWAP exceeds $39.62, the company will owe Goldman Sachs.
Through December 31, 2005, Goldman had purchased 18.1 million shares with a VWAP of $42.77. If Goldman Sachs purchased
the remaining 57.6 million shares at the December 30, 2005 closing price of $42.50, then the company would owe Goldman
Sachs a price adjustment of $223 million upon settlement, payable in cash or shares of the company’s common stock. The
repurchase agreement caps the number of shares that could be required to be issued at 75 million. The number of shares that
would be required to satisfy the obligations must be treated as outstanding for purposes of calculating diluted earnings per
share. Therefore, 5.2 million shares of the company’s common stock attributable to the accelerated repurchase agreement
were treated as outstanding for purposes of calculating diluted earnings per share.
The forward contract for the price adjustment is accounted for as an equity instrument and changes in its fair value are not
recorded during the contract period. Upon settlement in cash or shares, the price adjustment will be recorded as equity.
Set forth below is a reconciliation of common stock share activity for the three years ended December 31, 2005:
Held In
Shares of common stock Issued Treasury
Balance January 1, 2003 1,080,981,877 (87,041,427)
Issued 3,343,890
Treasury stock
Acquisition (215)
Retirement (215) 215
Balance December 31, 2003 1,084,325,552 (87,041,427)
Issued 7,656,496
Treasury stock
Acquisition (10,600,000)
Retirement (10,600,000) 10,600,000
Balance December 31, 2004 1,081,382,048 (87,041,427)
Issued 10,933,652
Treasury stock
Acquisition (85,664,134)
Retirement (85,664,134) 85,664,134
Balance December 31, 2005 1,006,651,566 (87,041,427)
F-36