DuPont 2008 Annual Report Download - page 37

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Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations, continued
the ongoing credit market instability. The company will continue 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 cash
equivalents and marketable securities balances of $3.7 billion as of December 31, 2008, provide primary liquidity to
support all short-term obligations. The company has access to approximately $2.7 billion in credit lines with several
major financial institutions, as additional support to meet short term liquidity needs. These credit lines are primarily
multi-year facilities. The $1.6 billion decrease from the $4.3 billion in credit lines at December 31, 2007 is primarily
due to the expiration of credit lines obtained to support the company’s cash repatriation program under the American
Jobs Creation Act of 2004 (AJCA).
The company continually reviews its debt portfolio and occasionally may rebalance it to ensure adequate liquidity
and an optimum maturity debt schedule.
The company’s long term and short term credit ratings are as follows:
Long term Short term Outlook
Standard & Poor A A-1 Negative
Moody’s Investors Service A2 P-1 Negative
Fitch Ratings A F1 Stable
Moody’s Investors Service and Standard & Poor’s recently affirmed the company’s A2/A long term and P-1/A-1 short
term ratings, respectively. Additionally, they revised their outlooks to negative from stable. The company does not
expect these actions to impact liquidity or cost of debt.
(Dollars in millions) 2008 2007 2006
Cash provided by operating activities $3,129 $4,290 $3,736
The company’s cash provided by operating activities was $3.1 billion in 2008, a $1.2 billion decrease from the
$4.3 billion generated in 2007. The decrease is primarily due to lower earnings and the impact of the stronger dollar
on working capital items, which was hedged by forward exchange contracts in investing activities.
The company’s cash provided by operating activities was $4.3 billion in 2007, a $554 million increase from the
$3.7 billion generated in 2006. The increase is primarily due to higher earnings after adjusting for noncash items. Net
income for 2006 included noncash tax benefits totaling $615 million (see Note 6 to the Consolidated Financial
Statements).
(Dollars in millions) 2008 2007 2006
Cash used for investing activities $(1,610) $(1,750) $(1,345)
In 2008, cash used for investing activities totaled $1.6 billion compared to $1.8 billion used in 2007. The $140 million
decrease was mainly due to higher proceeds from forward exchange contract settlements, partially offset by
increased capital expenditures, lower proceeds from asset sales and higher expenditures for businesses acquired.
In 2007, cash used for investing activities totaled $1.8 billion compared to $1.3 billion used in 2006. The $405 million
increase was mainly due to the settlement of forward exchange contracts and a slight increase in capital spending,
partially offset by higher proceeds from sales of assets. Due to the impact of a weakening USD, the settlement of
forward exchange contracts issued to hedge the company’s net exposure, by currency, related to monetary assets
and liabilities resulted in the payment of $285 million in 2007 versus the receipt of $45 million in 2006. The forward
exchange contract settlements were largely offset by the revaluation of the items being hedged, which are reflected
in the appropriate categories in the Consolidated Statements of Cash Flows.
35
Part II