DuPont 2007 Annual Report Download - page 37

Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations, continued
opportunities and technology needs in this high-growth industry, including crop-based products and technologies,
the biorefinery initiative with the U.S. Department of Energy and the development of advanced biofuels technologies
through a collaboration with BP p.l.c. The first advanced biofuels product from this partnership will be biobutanol.
DuPont partnered with Tate & Lyle PLC to produce 1,3-propanediol (Bio-PDO
TM
) using a proprietary fermentation
and purification process based on corn sugar. Bio-PDO
TM
is the key building block for DuPont
TM
Sorona»polymer and
DuPont
TM
Cerenol
TM
polyols, two new families of renewably sourced products. It is also being marketed for use as an
ingredient in nearly a dozen direct applications ranging from industrial to personal care uses. The first commercial-
scale plant to manufacture Bio-PDO
TM
began production in November 2006, marking the beginning of commercial
availability of the company’s bio-based pipeline.
A life cycle assessment of the production of nylon-6 polymer versus the production of renewably sourced Sorona»
with Bio-PDO
TM
shows significant environmental benefits. The Sorona»process uses 30 percent less energy than
nylon-6 manufacturing. Greenhouse gas emissions from the Sorona»operations are 63 percent lower than nylon-6
manufacturing including bio-based content stored in the product.
Nonaligned businesses include activities and costs associated with Benlate»fungicide and other discontinued
businesses and, since January 2005, activities related to the remaining assets of Textiles & Interiors. In 2005, the
company completed the transfer of three equity affiliates to Koch and sold its interest in another equity affiliate. In
January 2006, the company completed the sale of its interest in an equity affiliate to its equity partner for proceeds of
$14 million thereby completing the sale of all the net assets of Textiles & Interiors.
In the aggregate, sales in Other for 2007, 2006 and 2005 represent less than 1 percent of total segment sales.
PTOI in 2007 was a loss of $224 million compared to a loss of $173 million in 2006. The 29 percent increase in the
pretax loss was primarily due to higher inventory, freight and business development costs. PTOI in 2007 included
litigation charges for former businesses of $69 million. PTOI in 2006 included a charge of $27 million to write down
certain specialty resins manufacturing assets to estimated fair value.
PTOI in 2006 was a loss of $173 million compared to a loss of $90 million in 2005. The losses in 2006 are reflective of
the concentration of activities in applied biosciences and include the $27 million charge to write down certain
specialty resins manufacturing assets to estimated fair value. PTOI in 2005 included a net gain of $62 million related
to the disposition of equity affiliates, primarily associated with the Textiles & Interiors separation.
Liquidity & Capital Resources
Management believes that the company’s ability to generate cash and access the capital markets will be adequate to
meet anticipated future cash requirements to fund working capital, capital spending, dividend payments and other
cash needs for the foreseeable future. The company’s liquidity needs can be met through a variety of sources,
including: Cash provided by operating activities, Cash and cash equivalents, Marketable securities, commercial
paper, syndicated credit lines, bilateral credit lines, equity and long-term debt markets and asset sales. The
company’s current strong financial position, liquidity and credit ratings provide excellent access to the capital
markets.
Pursuant to its cash discipline policy, the company seeks first to maintain a strong balance sheet and second, to
return excess cash to shareholders unless the opportunity to invest for growth is compelling. Cash and cash
equivalents and Marketable securities balances of $1.4 billion as of December 31, 2007, provide primary liquidity to
support all short-term obligations. In the unlikely event that the company would not be able to meet its short-term
liquidity needs, the company has access to approximately $4.3 billion in credit lines with several major financial
institutions. These credit lines are primarily multi-year facilities.
The company continually reviews its debt portfolio for appropriateness and occasionally may rebalance it to ensure
adequate liquidity and an optimum maturity debt schedule.
35
Part II