DuPont 2006 Annual Report Download - page 30

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued
At December 31, 2006, the company had a net deferred tax asset balance of $1,778 million, net of valuation
allowance of $1,259 million. Realization of these assets is expected to occur over an extended period of time.
As a result, changes in tax laws, assumptions with respect to future taxable income and tax planning strategies
could result in adjustments to these assets.
Valuation of Assets
Assessment of the potential impairment of property, plant and equipment, goodwill, other purchased intangible
assets and investments in affiliates is an integral part of the company’s normal ongoing review of operations.
Testing for potential impairment of long-lived assets is significantly dependent on numerous assumptions and
reflects management’s best estimates at a particular point in time. The dynamic economic environments in
which the company’s businesses operate and key economic and business assumptions with respect to projected
selling prices, market growth and inflation rates, can significantly affect the outcome of impairment tests.
Estimates based on these assumptions may differ significantly from actual results. Changes in factors and
assumptions used in assessing potential impairments can have a significant impact on the existence and
magnitude of impairments, as well as the time in which such impairments are recognized. Future changes in
the environment and the economic outlook for the assets being evaluated could also result in additional
impairment charges. Information with respect to the company’s significant accounting policies on long-lived
assets is included in Note 1 to the Consolidated Financial Statements.
Segment Reviews
Segment sales include transfers and a pro rata share of equity affiliates’ sales. Segment pretax operating
income (PTOI) is defined as operating income before income taxes, minority interests, exchange gains
(losses), corporate expenses, interest and the cumulative effect of changes in accounting principles. A
reconciliation of segment sales to consolidated Net sales and segment PTOI to Income before income taxes
and minority interests for 2006, 2005 and 2004 is included in Note 27 to the Consolidated Financial
Statements.
AGRICULTURE & NUTRITION
Segment Sales
(Dollars in billions)
PTOI
(Dollars in millions)
2006 $6.3 $507
2005 6.4 862
2004 6.2 769
Agriculture & Nutrition leverages the company’s technology, customer relationships and industry knowledge to
improve the quantity, quality and safety of the global food supply. Global land area that can be used in
agricultural production is increasingly limited. Therefore, increases in production will need to be achieved
principally through improving crop yields and productivity rather than through increases in planted acreage.
Agriculture & Nutrition delivers a broad portfolio of products and services that are specifically targeted to
achieve gains in crop yields and productivity, including Pioneer»brand seed products and well-established
brands of insecticides, fungicides and herbicides. The segment operates across the food value chain from
inputs for production agriculture to global production and distribution of soy-based food ingredients, food
quality diagnostic testing equipment and services and liquid food packaging systems. Research and
development focuses on leveraging technology to increase grower productivity and enhance the value of grains
and soy through improved seed traits, superior germplasm and the effective use of insecticides, herbicides and
fungicides.
30
Part II