DuPont 2005 Annual Report Download - page 29

Download and view the complete annual report

Please find page 29 of the 2005 DuPont annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 117

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117

Part II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations–Continued
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 signifi-
cantly 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 both the
existence and magnitude of impairments, as well as the time at 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 2005, 2004 and 2003 is included in Note 31 to the
Consolidated Financial Statements.
Segment
Sales PTOI
(Dollars in billions) (Dollars in millions)
2005 $6.4 $862
2004 6.2 769
2003 5.5 671
Agriculture & Nutrition leverages DuPont 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 Pioneerbrand 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 technol-
ogy to increase grower productivity and enhance the value of grains and soy through improved seed traits, superior germ-
plasm, and the effective use of insecticides, herbicides and fungicides.
Agriculture & Nutrition includes the company’s wholly owned subsidiary, Pioneer, which is the world’s leading seed brand and
the world leader in improving crop yields with hybrid and varietal seeds that improve grower yields and provide insect
protection and herbicide tolerance. The principal products of Pioneer are hybrid seed corn and soybean seed. In 2005, farmers
in North America demonstrated a preference for corn hybrids containing biotechnology traits and Pioneer had limited supplies
of these products. As a result, corn market share in North America declined. In soybeans, Pioneer increased market share in
29
AGRICULTURE & NUTRITION