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E. I. du Pont de Nemours and Company
Notes to Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
12. Inventories
December 31, 2005 2004
Finished products $2,875 $2,773
Semifinished products 1,534 1,355
Raw materials and supplies 819 743
5,228 4,871
Adjustment of inventories to a LIFO basis (485) (382)
$4,743 $4,489
Inventory values, before LIFO adjustment, are generally determined by the average cost method, which approximates current
cost. Excluding Pioneer, inventories valued under the LIFO method comprised 80 percent and 77 percent of consolidated
inventories before LIFO adjustment at December 31, 2005 and 2004, respectively. Pioneer inventories of $1,088 and $1,060 at
December 31, 2005 and 2004, respectively, were valued under the FIFO method.
13. Assets and Liabilities Held for Sale and Elastomers Related Activities
In 1996, DuPont and The Dow Chemical Company (Dow) formed a 50/50 joint venture, DuPont Dow Elastomers, LLC (DDE) to
participate in various synthetic rubber markets. DuPont entered into a series of agreements in 2004 with Dow related to DDE.
The agreements gave DuPont complete control over directing DDE’s response to synthetic rubber market antitrust investiga-
tions and litigation matters and DuPont agreed to a disproportionate share of DDE’s liabilities and costs with respect to these
matters (See Note 24 for a discussion of the antitrust and litigation matters). As a result of these agreements, DuPont became
the primary beneficiary of the venture and accounted for DDE as a consolidated VIE beginning on April 1, 2004. The agree-
ments further gave Dow the option to acquire from DDE, certain assets related to the Engage, Nordeland Tyrinbusi-
nesses. Dow exercised its option on December 31, 2004 to acquire the agreed upon assets from DDE. Upon the exercise of
this option by Dow, all criteria were met to report the Engage, Nordeland Tyrinnet assets as assets and liabilities held for
sale in the Consolidated Balance Sheet at December 31, 2004 as follows:
Accounts and notes receivable $96
Inventories 136
Property, plant and equipment (net) 298
Prepaid expense and other assets 1
Assets held for sale $531
Accounts payable $69
Borrowings and capital lease obligations 1
Deferred tax liability 2
Other liabilities 24
Liabilities held for sale $96
The transaction to acquire Dow’s equity interest and to transfer the agreed upon assets was completed on June 30, 2005.
Upon closing, the remaining elastomers business was renamed DuPont Performance Elastomers L.L.C. (DPE) and became a
wholly owned subsidiary of DuPont, continuing to operate the Neoprene, Hypalon, Kalrezand Vitonbusinesses. The asset
transfer to Dow resulted in a gain of $25 as the fair value of those assets exceeded their carrying value.
For those periods in which DDE was a consolidated VIE, net sales were $386 and $467 and net income was $17 and $0 in 2005
and 2004, respectively.
F-21