DuPont 2010 Annual Report Download - page 20

Download and view the complete annual report

Please find page 20 of the 2010 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
2009 versus 2008 COGS for the year 2009 was $19.7 billion, versus $23.5 billion in 2008, a decrease of 16 percent.
COGS was 75 percent of net sales for 2009 versus 77 percent for the year 2008. The 2 percentage point decrease
principally reflects a $1.1 billion decrease in the combined costs for raw materials, energy and freight and the absence
of a $227 million charge for hurricane-related cleanup and repair in 2008, partially offset by significantly lower capacity
utilization and an unfavorable currency impact.
(Dollars in millions) 2010 2009 2008
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES $3,669 $3,440 $3,593
As a percent of net sales 12% 13% 12%
2010 versus 2009 Selling, general and administrative expenses (SG&A) increased $229 million in 2010 as compared
to 2009. The 2010 increase was due to higher selling expenses, primarily in the Agriculture & Nutrition segment as a
result of increased global commissions and selling and marketing investments related to the company’s seed
products, and higher non-cash pension expenses.
2009 versus 2008 SG&A decreased $153 million in 2009 as compared to 2008. The 2009 decrease was principally
due to strict cost controls and was partially offset by higher SG&A in the Agriculture & Nutrition segment as a result of
increased global commissions and selling and marketing investments related to the company’s seed products.
(Dollars in millions) 2010 2009 2008
RESEARCH AND DEVELOPMENT EXPENSE $1,651 $1,378 $1,393
As a percent of net sales 5% 5% 5%
2010 versus 2009 Research and development expense (R&D) increased $273 million in 2010 as compared to 2009
due to continued growth investment aligned with the company’s global trends, including resources to support
agriculture productivity, alternative fuels and energy efficient materials, and safety and protection. In addition, R&D
increased due to higher non-cash pension expenses and a $50 million charge for an upfront payment related to a
Pioneer licensing agreement for corn seed trait technology. See Pioneer business discussion beginning on page 26 for
additional information.
2009 versus 2008 R&D was down in 2009 versus 2008, excluding the Agriculture & Nutrition segment, due to strict
cost controls. Higher R&D expense in the Agriculture & Nutrition segment in 2009 related to accelerated biotechnology
trait research and development activity.
(Dollars in millions) 2010 2009 2008
INTEREST EXPENSE $590 $408 $376
Interest expense increased $182 million in 2010 compared to 2009. The increase in interest expense was primarily due
to the $179 pre-tax charge on the early extinguishment of debt in the fourth quarter 2010. The $32 increase in 2009
compared to 2008 was due to higher average borrowings, partially offset by slightly lower average interest rates.
19