DuPont 2005 Annual Report Download - page 73

E. I. du Pont de Nemours and Company
Notes to Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
4. Employee Separation Activities and Asset Impairment Charges
2005 ACTIVITIES
During 2005, the company did not institute any significant restructuring programs. In 2005, payments of $133 were made to
separated employees associated with the 2004 program.
Benefits of $13 were recorded in 2005 for changes in estimates related to restructuring initiatives undertaken in prior years.
The $13 benefits consisted of $9 to reflect lower estimated benefit settlements to separate employees related to the 2004
restructuring programs and $4 primarily for lower estimated employee separation settlements for prior year programs and are
not considered material to 2005 segment earnings.
2004 ACTIVITIES
During 2004, the company recorded a net charge of $411 for employee separation costs and asset impairment charges. This
charge included net expenses of $302 related to cost reduction initiatives taken to align resources and to adjust the company’s
infrastructure following the sale of INVISTA (see Note 5), asset impairment charges which totaled $121, and credits of $12
related to changes in estimates associated with restructuring activities for 2002 and prior year programs. The $302 net charge
consisted of accruals for termination payments primarily in North America and Western Europe for approximately 2,700
employees involved in manufacturing, marketing and sales, administrative and technical activities, which reduced 2004 segment
earnings as follows: Agriculture & Nutrition–$35; Coatings & Color Technologies–$60; Electronic & Communication Technolo-
gies–$41; Performance Materials–$44; Safety & Protection–$28; and Other–$94. At December 31, 2005, essentially all of the
2,700 employees identified as part of the company’s 2004 program have been removed from the company’s roles.
The 2004 charges also include $27 in Electronic & Communication Technologies related to the write-down to estimated fair
value of an investment, due to an other than temporary decline in its value. In addition, the company recorded a $23 charge in
Performance Materials associated with the shutdown of certain U.S. manufacturing assets in connection with the company’s
exit from the dimethyl terephthalate (DMT) business. This charge covers the net book value of the DMT assets.
The company also recorded a $42 charge in 2004 to reduce the carrying value of certain European manufacturing assets in
Safety & Protection to estimated fair value. As a result of ongoing competitive pressures and a shift in the company’s global
sourcing of product during the second quarter 2004, the company determined that expected cash flows were not sufficient to
recover the carrying value of these assets. Fair value of the assets was based on the assets’ expected discounted cash flows.
In addition, the company recorded a charge of $29 in Other to write off the net book value of certain patents and purchased
technology. Due to changes in the associated manufacturing process and executed supply agreements in 2004, these aban-
doned assets were determined to be of no future value to the company.
Account balances and activity for the 2004 restructuring program are summarized below:
Write- Employee
down Separation
of Assets Costs Total
Net charges to income in 2004 $ 121 $ 302 $ 423
Charges to accounts
Employee separation settlements (129) (129)
Facility shutdowns and asset write-offs (121) (121)
Balance at December 31, 2004 $ – $ 173 $ 173
Credits to income in 2005 (9) (9)
Employee separation settlements (133) (133)
Balance at December 31, 2005 $– $31 $31
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