DuPont 2008 Annual Report Download

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2008
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
¥ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
OR
nTRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-815
E. I. DU PONT DE NEMOURS
AND COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
51-0014090
(I.R.S. Employer Identification No.)
1007 Market Street
Wilmington, Delaware 19898
(Address of principal executive offices)
Registrant’s telephone number, including area code: 302-774-1000
Securities registered pursuant to Section 12(b) of the Act
(Each class is registered on the New York Stock Exchange, Inc.):
Title of Each Class
Common Stock ($.30 par value)
Preferred Stock
(without par value-cumulative)
$4.50 Series
$3.50 Series
No securities are registered pursuant to Section 12(g) of the Act.
Indicate by check mark whether the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities
Act). Yes ¥No n
Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes nNo ¥
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¥No n
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. n
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¥Accelerated filer nNon-accelerated filer nSmaller reporting company n
(Do not check if a smaller
reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes nNo ¥
The aggregate market value of voting stock held by nonaffiliates of the registrant (excludes outstanding shares beneficially
owned by directors and officers and treasury shares) as of June 30, 2008, was approximately $38.6 billion.
As of January 31, 2009, 902,530,000 shares (excludes 87,041,000 shares of treasury stock) of the company’s common stock,
$.30 par value, were outstanding.
Documents Incorporated by Reference
(Specific pages incorporated are indicated under the applicable Item herein):
Incorporated
By Reference
In Part No.
The company’s Proxy Statement in connection with the Annual Meeting of Stockholders to be held on April 29, 2009 . . . . III

Table of contents

  • Page 1
    ...smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes n No ¥ The aggregate market value of voting stock held by nonaffiliates of the registrant (excludes outstanding shares beneficially owned by directors and officers...

  • Page 2
    [This page intentionally left blank]

  • Page 3
    ... Data Changes In and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder...

  • Page 4
    ... priced supply contracts. Within Agriculture & Nutrition, the company's wholly-owned subsidiary, Pioneer Hi-Bred International, Inc. (Pioneer), operates in the seed industry and has seed production facilities located throughout the world. Seed production is performed directly by the company...

  • Page 5
    ... the company with global human resources transactional services including employee development, workforce planning, compensation management, benefits administration and payroll. As of December 31, 2008, some of the services associated with this contract are in place and are operating, including...

  • Page 6
    ...'s sales are not materially dependent on a single customer or small group of customers. However, collectively, Coatings & Color Technologies and Performance Materials have several large customers, primarily in the motor vehicle original equipment manufacturer (OEM) industry supply chain. The company...

  • Page 7
    ...Wuppertal, Germany; and Utsunomiya, Japan. A new research and development facility was opened in Hyderabad, India in 2008 to better serve the Asia Pacific market. The objectives of the company's research and development programs are to create new technologies, processes and business opportunities in...

  • Page 8
    ... current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. The public may read and copy any materials the company files with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC...

  • Page 9
    ...intellectual property protection, or gain market acceptance of new products and services. Because of the lengthy development process, technological challenges and intense competition, there can be no assurance that any of the products the company is currently developing, or could begin to develop in...

  • Page 10
    ... prices. Because the company has significant international operations, there are a large number of currency transactions that result from international sales, purchases, investments and borrowings. The company actively manages currency exposures that are associated with monetary asset positions...

  • Page 11
    ... precautions, it is possible that unauthorized parties may access and use such property. When misappropriation is discovered, the company reports such situations to the appropriate governmental authorities for investigation and takes measures to mitigate any potential impact. ITEM 1B. UNRESOLVED...

  • Page 12
    Part I ITEM 2. PROPERTIES The company's corporate headquarters are located in Wilmington, Delaware. The company's manufacturing, processing, marketing and research and development facilities, as well as regional purchasing offices and distribution centers are located throughout the world. ...

  • Page 13
    ... Environmental Protection On July 31, 2008, the West Virginia Department of Environmental Protection (WVDEP) notified DuPont that it was seeking a penalty for alleged violations of the Solid Waste Management and Water Pollution Control Acts from 2004 to present at DuPont's Washington Works site and...

  • Page 14
    Part I Item 3. Legal Proceedings, continued principle has been reached to settle this matter for a penalty of $1.1 million and Supplemental Environmental Projects involving expenditures of $500,000. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 12

  • Page 15
    ... was named Group Vice President and General Manager of several businesses and new business development. She became Group Vice President-DuPont Safety & Protection in 2002. In June 2006, Ms. Kullman was named Executive Vice President and assumed leadership of Marketing & Sales along with Safety and...

  • Page 16
    ...named Vice President and General Manager-DuPont Titanium Technologies. In January 2004, he was named Group Vice President-DuPont Performance Materials. In June 2006, he was named Executive Vice President-DuPont Finance and Chief Financial Officer. Thomas L. Sager joined DuPont in 1976 as an attorney...

  • Page 17
    ... AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Registrant's Common Equity and Related Stockholder Matters The company's common stock is listed on the New York Stock Exchange, Inc. (symbol DD) and certain non-U.S. exchanges. The number of record holders of common stock was 87,729 at January...

  • Page 18
    ... $109 $142 $166 $151 12/31/2008 $ 66 $ 90 $122 $ 82 The graph assumes that the value of DuPont Common Stock, the S&P 500 Stock Index and the peer group of companies was each $100 on December 31, 2003 and that all dividends were reinvested. The peer group is weighted by market capitalization. 16

  • Page 19
    ...year Purchases of property, plant & equipment and investments in affiliates Depreciation Research and development (R&D) expense Average number of common shares outstanding (millions) Basic Diluted Dividends per common share At year-end Employees (thousands) Closing stock price Common stockholders of...

  • Page 20
    ... employed to achieve the strategies are: #1 Grow in the areas of agriculture, biosciences, safety and protection and polymer science by delivering science-based solutions. #2 Expand the company's position in emerging markets. #3 Extend cost and capital productivity gains. Over the long term, DuPont...

  • Page 21
    ... for the company's products related to construction and motor vehicle production markets. Sales in Canada and Latin America increased 15 percent, primarily due to a 10 percent volume increase reflecting a substantial increase in sales of seed and crop protection products in South America. The table...

  • Page 22
    ...motor vehicle and construction markets, as well as the global economic recession. The program was established to reduce costs and improve profitability across the company's businesses. The program includes the elimination of approximately 2,500 positions principally located in Western Europe and the...

  • Page 23
    ...a 2006 benefit of $128 million in insurance recoveries. The 2006 restructuring programs included the elimination of approximately 3,200 positions and redeployment of about 650. The company recorded a net charge of $326 million in 2006 related to employee separation costs and asset impairment charges...

  • Page 24
    ... for the company's major polymer, chemical, material, and electronic product lines and the impact of currency are expected to limit the company's overall revenue growth. The company plans to continue its appropriate level of support for businesses expected to have above-average growth rates and...

  • Page 25
    ... company's accounting policies which could have a material effect on the company's financial position, liquidity or results of operations. Long-term Employee Benefits Accounting for employee benefit plans involves numerous assumptions and estimates. Discount rate and expected return on plan assets...

  • Page 26
    ... returns (net of inflation) for the asset classes covered by the investment policy and projections of inflation over the long-term period during which benefits are payable to plan participants. In determining annual expense for the principal U.S. pension plan, the company uses a market-related value...

  • Page 27
    ... of future site remediation costs. Legal Contingencies The company's results of operations could be affected by significant litigation adverse to the company, including product liability claims, patent infringement and antitrust claims, and claims for third party property damage or personal injury...

  • Page 28
    ... 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...

  • Page 29
    ... Europe and Brazil, record soybean seed sales in North America and Brazil due to market share gains and increased acreage shift from corn, and strong demand for corn and cereal herbicides and cereal fungicides in Europe. The higher USD selling prices reflect higher value product mix, pricing actions...

  • Page 30
    ...and seed treatments in the U.S. and Canada. Pioneer will continue to build on its North American product offerings with the addition of 26 new soybean varieties and 96 new Pioneer» brand corn hybrids. Pioneer anticipates price increases from higher value product mix and continued market share gains...

  • Page 31
    ... upon volume at specific plants the company services. Global motor vehicle industry builds in 2009 are expected to be down from 2008 with all regions showing declines. Lower raw material cost, fixed cost benefits from the company's 2008 restructuring program and productivity initiatives are expected...

  • Page 32
    ... polymer-based high performance materials in its product portfolio, including thermoplastic and thermoset engineering polymers and elastomers which are used by customers to fabricate components for mechanical, chemical and electrical systems, as well as specialized resins and films used in packaging...

  • Page 33
    ... factors, including adverse changes in market conditions and the rapid rise in oil-related raw material costs, which have had a negative impact on the profitability on the venture's operations in North America and Europe. Improvement in 2007 PTOI was driven by improved pricing, which reflected both...

  • Page 34
    ... care and industrial markets continue to create growth opportunities for the segment's clean and disinfect offerings. Additionally, the surfaces protection businesses continue to offer new products that meet demand for sustainable solutions. Safety & Protection continues to strengthen the building...

  • Page 35
    Part II Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued reflect pricing actions to offset the increases of raw materials costs and positive currency impact in Europe and Latin America. 2008 PTOI was $829 million compared to $1,199 million in ...

  • Page 36
    ... development of biotechnology solutions using biology, chemistry, materials science and engineering in an integrated fashion to serve our customers. Specific global growth projects across the company are consolidated within applied biosciences to capitalize on the market opportunities and technology...

  • Page 37
    ... to monitor the financial markets in order to respond to changing conditions. 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...

  • Page 38
    ...II Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, continued Purchases of property, plant and equipment totaled $2.0 billion, $1.6 billion and $1.5 billion in 2008, 2007 and 2006, respectively. This incremental spending is primarily based on the company...

  • Page 39
    ... the financial resources to satisfy these guarantees. Master Operating Leases At December 31, 2008, the company has one master operating lease program relating to miscellaneous short-lived equipment with an unamortized value of approximately $106 million. Lease payments for these assets totaled $55...

  • Page 40
    ... Utility obligations INVISTA-related obligations 3 Human resource services Other 4 Total purchase obligations Other liabilities 1,5 Workers' compensation Asset retirement obligations Environmental remediation Legal settlements License agreement 6 Other 7 Total other long-term liabilities Total...

  • Page 41
    ...to its employees and retirees. The company maintains retirement-related programs in many countries that have a long-term impact on the company's earnings and cash flows. These plans are typically defined benefit pension plans, as well as medical, dental and life insurance benefits for pensioners and...

  • Page 42
    ...-term employee benefit charges principally reflects changes in demographics, discount rates and higher than expected health care costs. The company's key assumptions used in calculating its pension and other long-term employee benefits are the expected return on plan assets, the rate of compensation...

  • Page 43
    ... required during product development. About 75 percent of total annual environmental expenses resulted from operations in the U.S. In 2008, DuPont spent approximately $104 million on environmental capital projects either required by law or necessary to meet the company's internal environmental goals...

  • Page 44
    ..., and international climate change policies could provide the business community with greater certainty for the regulatory future, help guide investment decisions, and drive growth in demand for low-carbon and energyefficient products, technologies, and services. The company actively manages the...

  • Page 45
    ... with process safety measures (including the use of inherently safer technology), administrative procedures and emergency response preparedness into an integrated security plan. The company has conducted vulnerability assessments at operating facilities in the U.S. and high priority sites worldwide...

  • Page 46
    ... Union, Canada, China and Japan about these activities and PFOA in general, including emissions reductions from DuPont's facilities, reformulation of the company's fluoropolymer dispersions and new manufacturing processes for fluorotelomers products. In February 2007, DuPont announced its planned...

  • Page 47
    ... the Washington Works site located in Parkersburg, West Virginia. In January 2009 the EPA issued a Provisional Health Advisory for PFOA of 0.4 ppb in drinking water. In February 2007, the New Jersey Department of Environmental Protection (NJDEP) identified a preliminary drinking-water guidance level...

  • Page 48
    ... assets and liabilities of its operations. The primary business objective of this hedging program is to maintain an approximately balanced position in foreign currencies so that exchange gains and losses resulting from exchange rate changes, net of related tax effects, are minimized. The company...

  • Page 49
    ... volatility and economic trends. Foreign currency exchange contracts are also used, from time to time, to manage near-term foreign currency cash requirements. Interest Rate Risk The company uses interest rate swaps to manage the interest rate mix of the total debt portfolio and related overall cost...

  • Page 50
    ... the SEC. These controls and procedures also give reasonable assurance that information required to be disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required disclosures. As of December 31, 2008, the company's Chief Executive Officer (CEO...

  • Page 51
    ... any material changes to the procedures by which security holders may recommend nominees to its Board of Directors since these procedures were communicated in the company's 2008 Proxy Statement for the Annual Meeting of Stockholders held on April 30, 2008. Information related to the Audit Committee...

  • Page 52
    Part III ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Information with respect to the company's policy and procedures for the review, approval or ratification of transactions with related persons is incorporated by reference herein to the Proxy and is included ...

  • Page 53
    ... Schedule II - Valuation and Qualifying Accounts (Dollars in millions) Balance at Beginning of Period Charged to Costs and Expenses Balance at End of Period Description Deductions For the Year Ended December 31, 2008 Allowance for Doubtful Receivables Total Allowances Deducted from Assets...

  • Page 54
    ... the rights of holders of long-term debt of the company and its subsidiaries. The DuPont Stock Accumulation and Deferred Compensation Plan for Directors, as last amended effective January 1, 2009. Form of Award Terms for time-vested restricted stock units granted to non-employee directors under the...

  • Page 55
    ...Long Term Incentive Awards and Deferred Variable Compensation Awards. Computation of the Ratio of Earnings to Fixed Charges. Subsidiaries of the Registrant. Consent of Independent Registered Public Accounting Firm. Rule 13a-14 (a)/15d-14 (a) Certification of the company's Principal Executive Officer...

  • Page 56
    ... DE NEMOURS AND COMPANY By: /s/ J. L. KEEFER J. L. Keefer Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of...

  • Page 57
    ... Statements: Management's Reports on Responsibility for Financial Statements and Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm Consolidated Income Statements for the years ended December 31, 2008, 2007 and 2006 Consolidated Balance Sheets as...

  • Page 58
    ... , an independent registered public accounting firm, has issued an audit report on the effectiveness of the company's internal control over financial reporting as of December 31, 2008, which is presented on the following page. Ellen J. Kullman Chief Executive Officer and Director February 12, 2009...

  • Page 59
    ... of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was...

  • Page 60
    ... and Company Consolidated Financial Statements CONSOLIDATED INCOME STATEMENTS (Dollars in millions, except per share) For The Year Ended December 31, 2008 2007 2006 Net sales Other income, net Total Cost of goods sold and other operating charges Selling, general and administrative expenses Research...

  • Page 61
    ...Total current assets Property, plant and equipment Less: Accumulated depreciation Net property, plant and equipment Goodwill Other intangible assets Investment in affiliates Other assets Total Liabilities and Stockholders' Equity Current liabilities Accounts payable Short-term borrowings and capital...

  • Page 62
    ... Pension benefit plans Other benefit plans Net unrealized gain on securities Total comprehensive income Common dividends ($1.52 per share) Preferred dividends Common stock Issued - compensation plans Repurchased Retired Adjustment to initially apply uncertainty in income taxes standard Balance...

  • Page 63
    ... by operating activities Investing activities Purchases of property, plant and equipment Investments in affiliates Payments for businesses - net of cash acquired Proceeds from sale of assets - net of cash sold Net decrease (increase) in short-term financial instruments Forward exchange contract...

  • Page 64
    ...owned entities for which the company does not consolidate because a minority investor holds substantive participating rights. Investments in affiliates over which the company does not have significant influence are accounted for by the cost method or as available-for-sale securities. Gains or losses...

  • Page 65
    ... per share) Other assets include long-term investments in securities, which comprise investments for which market values are not readily available (cost investments) and available-for-sale securities that are reported at fair value (see Note 13). Inventories The majority of the company's inventories...

  • Page 66
    ...most of the company's worldwide operations. For subsidiaries where the USD is the functional currency, all foreign currency asset and liability amounts are remeasured into USD at end-of-period exchange rates, except for inventories, prepaid expenses, property, plant and equipment, goodwill and other...

  • Page 67
    ... into USD at average exchange rates in effect during the period. Variable Interest Entities (VIEs) The company consolidates VIEs where DuPont is considered the primary beneficiary. At December 31, 2008, the assets, liabilities and operations of these entities are not material to the Consolidated...

  • Page 68
    ... for assets held by employer pension and other postretirement benefit plans. FSP FAS 132(R)-1 will not affect the company's financial position or results of operations. The new standard solely affects the disclosure of information. 2. IMPLEMENTATION OF FASB STATEMENT OF FINANCIAL ACCOUNTING...

  • Page 69
    ..., related to the foreign currencydenominated monetary assets and liabilities. The objective of this program is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes on net monetary asset positions...

  • Page 70
    ... to the challenging economic environment, the company initiated a global restructuring program during 2008 to reduce costs and improve profitability across its businesses. The program includes the elimination of approximately 2,500 positions principally located in Western Europe and the United...

  • Page 71
    ...1,300 employees involved in manufacturing, marketing, administrative and technical activities. In connection with this program, a $12 charge was also recorded related to exit costs of non-strategic assets. As of December 31, 2008, all positions identified as a part of the company's 2006 program have...

  • Page 72
    ...Stockholders' equity: Stock compensation 1 Net revaluation and clearance of cash flow hedges to earnings 2 Net unrealized (losses) gains on securities 2 Minimum pension liability 2 Pension benefits Net losses 3 Prior service cost 3 Other benefits Net losses 3 Net prior service benefit 3 1 2 3 $ 14...

  • Page 73
    ...taxes within current liabilities of the Consolidated Balance Sheets. An analysis of the company's effective income tax rate (EITR) follows: 2008 2007 2006 Statutory U.S. federal income tax rate Exchange gains/losses 1 Domestic operations Lower effective tax rates on international operations-net Tax...

  • Page 74
    ... position must meet for any part of the benefit of that position to be recognized in an enterprise's financial statements and provides guidance on measurement, derecognition, classification, accounting for interest in penalties, accounting in interim periods, disclosure and transition. The company...

  • Page 75
    ...000 928,601,000 The weighted-average number of common shares outstanding in 2008 declined as a result of the company's 2007 repurchase and retirement of its common stock in connection with its $5 billion share buyback plan, which was authorized by the Board of Directors in October 2005. See Note 20...

  • Page 76
    ..., were valued under the average cost method. 10. PROPERTY, PLANT AND EQUIPMENT December 31, 2008 2007 Buildings Equipment Land Construction $ 4,284 21,783 484 1,403 $27,954 $ 4,111 20,537 426 1,519 $26,593 Property, plant and equipment includes gross assets acquired under capital leases of...

  • Page 77
    ... Technologies Performance Materials Safety & Protection Other Total $ 466 821 177 421 250 $2,135 $ 5 (1) 68 (11) $ 61 $ 461 821 177 422 182 11 $2,074 Changes in goodwill in 2008 resulted from purchase accounting refinements and other acquisitions and divestitures. In 2008, the company performed...

  • Page 78
    ... the company's investment in a polyester films joint venture in the Performance Materials segment. As a result, at December 31, 2007, DuPont ceased using the equity method of accounting for three legal entities within the joint venture. 2008 2007 Financial position at December 31, Current assets...

  • Page 79
    .... The increase in interest rate for 2008 was due primarily to long-term debt maturing within one year. 16. OTHER ACCRUED LIABILITIES December 31, 2008 2007 Compensation and other employee-related costs Deferred revenue Employee benefits (Note 21) Discounts and rebates Derivative Instruments...

  • Page 80
    ...per share) expenses, accrued litigation costs, employee separation costs in connection with the company's restructuring programs, the estimated fair value of certain guarantees and accrued environmental remediation costs. 17. LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS December 31, 2008 2007...

  • Page 81
    ... with the extent and value of INVISTA's claims. DuPont has not changed its estimate of its total indemnification obligation under the Purchase and Sale Agreement as a result of the lawsuit. Obligations for Equity Affiliates & Others The company has directly guaranteed various debt obligations under...

  • Page 82
    ... guarantees. Operating Leases The company uses various leased facilities and equipment in its operations. The terms for these leased assets vary depending on the lease agreement. At December 31, 2008, the company has one master operating lease program relating to miscellaneous short-lived equipment...

  • Page 83
    ... drinking water. The relief sought included damages for medical monitoring, diminution of property values and punitive damages plus injunctive relief to stop releases of PFOA. DuPont and attorneys for the class reached a settlement agreement in 2004 and as a result, the company established accruals...

  • Page 84
    .... The suit claims that perfluorinated compounds, including PFOA, allegedly released from the Washington Works plant contaminated LHWA's well fields and underlying aquifer. LHWA's complaint seeks a variety of relief including compensatory and punitive damages, and an injunction requiring DuPont to...

  • Page 85
    ... between The Dow Chemical Company (Dow) and DuPont. In April 2004, DuPont and Dow entered into a series of agreements under which DuPont obtained complete control over directing DDE's response to these investigations and the related litigation and DuPont agreed to a disproportionate share of the...

  • Page 86
    ...Florida, plaintiffs allege damage to shrimping operations. These cases had been decided in DuPont's favor, but in September 2007, the judge granted plaintiffs' motion for new trial thus reinstating the cases. During the first half of 2008, three actions pending against the company were resolved. One...

  • Page 87
    ... claims. Management has noted a nationwide trend in purported class actions against chemical manufacturers generally seeking relief such as medical monitoring, property damages, off-site remediation and punitive damages arising from alleged environmental torts without claiming present personal...

  • Page 88
    ... with Goldman Sachs & Co. (Goldman Sachs) under which the company purchased and retired 75.7 million shares of DuPont's outstanding common stock from Goldman Sachs on October 27, 2005 at a price of $39.62 per share, with Goldman Sachs purchasing an equivalent number of shares in the open market over...

  • Page 89
    ...) are shown below: Pretax Tax After-tax 2008 Cumulative translation adjustment Net revaluation and clearance of cash flow hedges to earnings Pension benefits (Note 21) Other benefits (Note 21) Net unrealized losses on securities Other comprehensive loss 2007 Cumulative translation adjustment Net...

  • Page 90
    ... adjusted annually to achieve a 50/50 target sharing of cost increases between the company and pensioners and survivors. In addition, limits are applied to the company's portion of the retiree medical cost coverage. Employee life insurance and disability benefit plans are insured in many...

  • Page 91
    ... per share) Summarized information on the company's pension and other long-term employee benefit plans is as follows: Pension Benefits Obligations and Funded Status at December 31, 2008 2007 Other Benefits 2008 2007 Change in benefit obligation Benefit obligation at beginning of year Service cost...

  • Page 92
    ... Fair value of plan assets $20,231 18,646 15,027 Pension Benefits $2,463 2,256 737 Components of net periodic benefit cost (credit) and amounts recognized in other comprehensive income 2008 2007 2006 Net periodic benefit (credit) cost Service cost Interest cost Expected return on plan assets...

  • Page 93
    ...% 4.28% 6.25% 4.50% 6.25% 4.50% Pension Benefits Weighted-average assumptions used to determine net periodic benefit cost For The Years Ended December 31, 2008 2007 Other Benefits 2008 2007 Discount rate Expected return on plan assets Rate of compensation increase 6.01% 8.74% 4.28% 5.56% 8.74...

  • Page 94
    ...single master trust fund. The strategic asset allocation for this trust fund is selected by management, reflecting the results of comprehensive asset liability modeling. The general principles guiding investment of U.S. pension assets are those embodied in the Employee Retirement Income Security Act...

  • Page 95
    ... ranges approved by senior management of the company. Plans invest in securities from a variety of countries to take advantage of the investment opportunities that a global portfolio presents and to increase portfolio diversification. Additionally, pension trust funds are permitted to enter...

  • Page 96
    ... existing compensation plans. The company's Compensation Committee determines the long-term incentive mix, including stock options, RSUs and PSUs and may authorize new grants annually. Stock Options The purchase price of shares subject to option is equal to the market price of the company's stock on...

  • Page 97
    ...Includes 10.2 million options outstanding from the 2002 Corporate Sharing Program grants of 200 shares to all eligible employees at an option price of $44.50. These options are currently exercisable and expire 10 years from date of grant. The aggregate intrinsic values in the table above represent...

  • Page 98
    ... fair value of the PSUs, subject to the revenue metric, was based upon the market price of the underlying common stock as of the grant date. For PSUs granted prior to 2008, vesting occurs upon attainment of (i) corporate revenue growth relative to peer companies and (ii) return on invested capital...

  • Page 99
    ... the exchange of fixed for floating rate interest payments which allows the company to maintain a target range of floating rate debt. All interest rate swaps qualify for the shortcut method of hedge accounting, thus there is no ineffectiveness related to these hedges. Changes in the fair value of...

  • Page 100
    ... assets and liabilities of its operations that are denominated in currencies other than the designated functional currency. The primary business objective is to maintain an approximately balanced position in foreign currencies so that exchange gains and losses resulting from exchange rate changes...

  • Page 101
    ... Net Property 2 Net Sales 1 2006 Net Property 2 United States Europe Belgium Germany France Italy Luxembourg The Netherlands Spain United Kingdom Other Total Europe Asia Pacific China/Hong Kong India Japan Taiwan Korea Singapore Other Total Asia Pacific Canada & Latin America Brazil Canada Mexico...

  • Page 102
    ... effect of changes in accounting principles. Segment net assets includes net working capital, net permanent investment and other noncurrent operating assets and liabilities of the segment. Affiliate net assets (pro rata share) excludes borrowing and other long-term liabilities. Depreciation...

  • Page 103
    ... in millions, except per share) Coatings & Color Technologies Electronic & Communication Technologies Agriculture & Nutrition Performance Materials Safety & Protection Pharmaceuticals Other Total 2008 Segment sales Less transfers Net sales Pretax operating income (loss) Depreciation and...

  • Page 104
    ...724 5,874 6,179 $31,777 Pension assets are included in corporate assets. Segment Totals Adjustments Consolidated Totals Other items 2008 Depreciation and amortization Equity in earnings of affiliates Affiliate net assets Expenditures for long-lived assets 2007 Depreciation and amortization Equity...

  • Page 105
    ... Technologies - $10; Performance Materials - $12; and Safety & Protection - $13. Included a restructuring charge of $194 in the following segments: Agriculture & Nutrition - $122 and Performance Materials - $72. See Note 4 for more details. Included insurance recoveries relating to the damage...

  • Page 106
    ... Gustav. Includes a $535 charge for employee separation payments and asset-related charges associated with the 2008 global restructuring program. Includes a net $52 charge for existing litigation in the Performance Materials segment in connection with the elastomers antitrust matter. See Note 19 for...

  • Page 107
    ... Building, 1007 Market Street, Wilmington, Delaware. Stock Exchange Listings DuPont common stock (Symbol DD) is listed on the New York Stock Exchange, Inc. (NYSE) and on certain foreign exchanges. Quarterly high and low market prices are shown in Item 5 of the Form 10-K. On May 27, 2008, the company...