ITEM 1. BUSINESS
DuPont was founded in 1802 and was incorporated in Delaware in 1915. The company is the largest United States chemical producer and is one of the leading chemical producers worldwide. The company conducts fully integrated petroleum operations primarily through its wholly owned subsidiary Conoco Inc. and, in 1993, ranked eighth in the worldwide production of petroleum liquids by U.S.-based companies, ninth in the production of natural gas, and seventh in refining capacity. Conoco Inc. and other subsidiaries and affiliates of DuPont conduct exploration, production, mining, manufacturing or selling activities, and some are distributors of products manufactured by the company.
The company operates globally through approximately twenty strategic business units. Within the strategic business units approximately 85 businesses manufacture and sell a wide range of products to many different markets, including the energy, transportation, textile, construction, automotive, agricultural, printing, health care, packaging and electronics markets.
The company and its subsidiaries have operations in about 70 nations worldwide and, as a result, about 47% of consolidated sales are derived from sales outside the United States, based on the location of the corporate unit making the sale. Total worldwide employment at year-end 1994 was about 107,000 people.
The company is organized for financial reporting purposes into five principal industry segments--Chemicals, Fibers, Polymers, Petroleum, and Diversified Businesses.
The following information describing the businesses of the company can be found on the indicated pages of Exhibit 13:
- -------- * Includes text of letter except for inserts and for chart on page 3 and references thereto. ** Each review starts with paragraph describing segment products and principal markets; information above such paragraph is excluded.
SOURCES OF SUPPLY
The company utilizes numerous firms as well as internal sources to supply a wide range of raw materials, energy, supplies, services and equipment. To assure availability, the company maintains multiple sources for most raw materials, including hydrocarbon feedstocks, and for fuels. Large volume purchases are generally procured under competitively priced supply contracts.
A majority of sales in the Chemicals, Fibers, and Polymers segments' businesses is dependent on hydrocarbon feedstocks derived from crude oil and natural gas. Current hydrocarbon feedstock requirements are met by Conoco and other major oil companies. A joint venture with OxyChem, a subsidiary of Occidental Petroleum Corporation, manufactures and supplies a significant portion of the company's requirements for ethylene glycol. A joint venture with subsidiaries of RWE AG supplies the company's requirements for coal. A significant portion of the company's caustic/chlorine needs is supplied by a joint venture with Olin Corporation.
The major purchased commodities, raw materials, and supplies for the following industry segments in 1994 are listed below:
In the Petroleum segment, the major commodities and raw materials purchased are the same as those produced. Approximately 58% of the crude oil processed in the company's U.S. refineries in 1994 came from U.S. sources. In 1994, the company's refineries outside the United States processed principally North Sea and Middle East crude oils.
In addition, during 1994, the company consumed substantial amounts of electricity and natural gas.
PATENTS AND TRADEMARKS
The company owns and is licensed under various patents, which expire from time to time, covering many products, processes and product uses. No individual patent is of material importance to any of the industry segments, although taken as a whole, the rights of the company and the products made and sold under patents and licenses are important to the company's business. During 1994, the company was granted 491 U.S. and 1,933 non-U.S. patents.
The company also has about 900 registered trademarks for its products. Ownership rights in trademarks continue indefinitely if the trademarks are continued in use and properly protected.
SEASONALITY
In general, sales of the company's products are not substantially affected by seasonality. However, the Diversified Businesses segment is impacted by seasonality of sales of agricultural products with highest sales in the first half of the year, particularly the second quarter. Within the Petroleum segment, the mix of refined products, natural gas and natural gas liquids produced and sold varies because of increased demand for gasoline in the summer months and natural gas, heating oil and propane during the winter months.
MAJOR CUSTOMERS
The company's sales are not materially dependent on a single customer or small group of customers. The Fibers and Polymers segments, however, have several large customers in their respective industries that are important to these segments' operating results.
COMPETITION
Principal competitors in the chemical industry include major chemical companies based in the United States, Europe, Japan, People's Republic of China and other Asian nations. Competitors offer a comparable range of products from agricultural, commodity and specialty chemicals to plastics, fibers and medical products. The company also competes in certain product markets with smaller, more specialized firms. Principal competitors in the petroleum industry are integrated oil companies (including national oil companies), many of which also have substantial petrochemical operations, and a variety of other firms including independent oil and gas producers, pipeline companies, and large and small refiners and marketers. In addition, the company competes with the growing petrochemical operations in oil-producing countries.
Businesses in the Chemicals, Fibers, Polymers, and Diversified Businesses segments compete on a variety of factors such as price, product quality or specifications, customer service and breadth of product line, depending on the characteristics of the particular market involved. The Petroleum segment business is highly price-competitive and competes as well on quality and reliability of supply.
Further information relating to competition is included in two areas of Exhibit 13 (1) the "Letter to Stockholders" on pages 1-4 and (2) Industry Segment Reviews on pages 16-28.
RESEARCH AND DEVELOPMENT
The company's substantial research and development activities are primarily funded with internal resources and conducted at over 60 domestic sites in 21 states at both dedicated research facilities and manufacturing plants. DuPont operates several large research centers near Wilmington, Delaware, supporting strategic business units in its Chemicals, Fibers, Polymers and Diversified Businesses segments. Among these, the Experimental Station laboratories engage in fundamental, exploratory and applied research, and the Stine-Haskell Research Center conducts agricultural product research and toxicological research of company products to assure they are safe for manufacture and use. At its facility in Ponca City, Oklahoma, the company conducts research for new products and technologies for petroleum operations as well as other segments of the business. DuPont also operates research facilities at a number of locations outside the United States in Belgium, Canada, France, Germany, Japan, Luxembourg, Mexico, The Netherlands, Switzerland and the United Kingdom reflecting the company's growing global business interests.
Research and development activities include exploratory studies to advance scientific knowledge in fields of interest to the company; basic and applied work to support and improve existing products and processes; and scouting work to identify and develop new business opportunities in relevant fields. Each strategic business unit of the company funds research and development activities to support its business mission. The corporate laboratories are responsible for assuring that leading edge science and engineering concepts are identified and diffused throughout the DuPont technical community. All R&D activities are coordinated by senior R&D management to insure that business and corporate technical activities are integrated and that the core technical competencies underlying DuPont's current and future businesses remain healthy and continue to provide competitive advantages.
Further information regarding research and development is in Exhibit 13 on pages 3 and 4 of the "Letter to Stockholders." Annual research and development expense and such expense shown "As Percent of Combined Segment Sales" for the five years 1990 through 1994 are included under the heading "General" of the Five-Year Financial Review on page 73 of Exhibit 13.
ENVIRONMENTAL MATTERS
Information relating to environmental matters is included in two areas of Exhibit 13: (1) "Management's Discussion and Analysis" on pages 34-36; and (2) Note 28 to the Financial Statements on page 59.
RISKS ATTENDANT TO FOREIGN OPERATIONS
The company's petroleum exploration and production operations outside the United States are exposed to risks due to possible actions by host governments such as increases or variations in tax and royalty payments, participation in the company's concessions, limited or embargoed production, mandatory exploration or production controls, nationalization and export controls. Civil unrest and changes in government are also potential hazards. In certain circumstances the company has attempted to minimize its exposure by carrying political risk insurance.
The profitability of the company's exploration and production operations is similarly exposed to risks due to actions of the United States government through tax legislation, executive order, and commercial restrictions. Actions by both the United States and host governments have affected operations significantly in the past and may continue to impact operations in the future.
ITEM 2.
ITEM 2. PROPERTIES
The company owns and operates manufacturing, processing, production, refining, marketing, research and development facilities worldwide. In addition, the company owns and leases petroleum properties worldwide.
DuPont's corporate headquarters is located in Wilmington, Delaware, and the company's petroleum businesses are headquartered in Houston, Texas. In addition, the company operates sales offices, regional purchasing offices, distribution centers and various other specialized service locations.
Further information regarding properties is included in Exhibit 13 in the Industry Segment Reviews on pages 16-28. Information regarding research and development facilities is incorporated by reference to Item 1, Business-- Research and Development on page 5 of this report. Additional information with respect to the company's property, plant and equipment, and leases is contained in Notes 13 and 20 to the company's consolidated financial statements on pages 49 and 52 of Exhibit 13.
CHEMICALS, FIBERS, POLYMERS, AND DIVERSIFIED BUSINESSES
Approximately 75% of the property, plant and equipment related to operations in the Chemicals, Fibers, Polymers, and Diversified Businesses is located in the United States and Puerto Rico. This investment is located at some 85 sites, principally in Texas, Delaware, Virginia, North Carolina, Tennessee, West Virginia, South Carolina, and New Jersey. The principal locations within these states are as follows:
Property, plant and equipment outside the United States and Puerto Rico is located at about 70 sites, principally in Canada, the United Kingdom, Germany, The Netherlands, Luxembourg, Singapore, Mexico, Taiwan, Spain, France, Brazil, Japan, Republic of Korea, Belgium and Argentina. Products from more than one business are frequently produced at the same location.
The company's plants and equipment are well maintained and in good operating condition. Sales as a percent of capacity were 87% in 1994, 85% in 1993, and 88% in 1992. These properties are directly owned by the company except for some auxiliary facilities and miscellaneous properties, such as certain buildings and transportation equipment, which are leased. Although no title examination of the properties has been made for the purpose of this report, the company knows of no material defects in title to any of these properties.
PETROLEUM BUSINESSES
The company owns and leases oil and gas properties worldwide. Exploration, production, and natural gas and gas products properties are described generally on pages 22-25 and 64-70 of Exhibit 13. Estimated proved reserves of oil and gas are found on pages 66 and 67 of Exhibit 13. Information regarding the company's refining, marketing, supply, and transportation properties is also provided on pages 22-25 of Exhibit 13.
PETROLEUM PRODUCTION
The following tables show the company's interests in petroleum liquids production and natural gas deliveries. Petroleum liquids production comprises crude oil and condensate produced for the company's account plus its share of natural gas liquids (NGL's) removed from natural gas deliveries from owned leases and NGL's acquired through gas plant ownership. Natural gas deliveries represent Conoco's share of deliveries from leases in which the company has an ownership interest.
AVERAGE PRODUCTION COSTS AND SALES PRICES
The following table presents data as prescribed by the Securities and Exchange Commission (SEC). Accordingly, the unit costs do not include income taxes and exploration, development and general overhead costs. Since these excluded costs are material, the following data should not be interpreted as measures of profitability or relative profitability. See Results of Operations for Oil and Gas Producing Activities on page 64 of Exhibit 13 for a more complete disclosure of revenues and expenses. See also the references to crude oil and natural gas prices and volumes in business review of the Petroleum segment on pages 22-25 of Exhibit 13.
- -------- (a) Average production costs per barrel of equivalent liquids, with natural gas converted to liquids at a ratio of 6 MCF of gas to one barrel of liquids. (b) Excludes proceeds from sales of interest in oil and gas properties.
PRESENT ACTIVITIES
- -------- * Includes wells being completed. ** Approximately 165 gross (77 net) oil wells and 722 gross (229 net) gas wells, all in the United States, have multiple completions.
DEVELOPED AND UNDEVELOPED PETROLEUM ACREAGE
NET EXPLORATORY AND DEVELOPMENT WELLS DRILLED
ESTIMATES OF TOTAL PROVED RESERVES FILED WITH OTHER FEDERAL AGENCIES COVERING THE YEAR 1994
The company is not required to file, and has not filed on a recurring basis, estimates of its total proved net oil and gas reserves with any U.S. or non- U.S. governmental regulatory authority or agency other than the Department of Energy (DOE) and the SEC. The estimates furnished to the DOE have been consistent with those furnished to the SEC. They are not necessarily directly comparable, however, due to special DOE reporting requirements such as requirements to report in some instances on a gross, net or total operator basis, and requirements to report in terms of smaller units. In no instance have the estimates for the DOE differed by more than 5% from the corresponding estimates reflected in total reserves reported to the SEC.
NATURAL GAS AND GAS PRODUCTS
Upstream operations in the United States include consolidated interests in 30 natural gas processing plants located in Colorado, Louisiana, New Mexico, Oklahoma and Texas. Sixteen of the plants are operated by the company. The company's share of total natural gas liquids production (NGL) from the 30 plants averaged 71,881 barrels per day in 1994 and 68,631 barrels per day in 1993, of which 14,537 barrels per day in 1994 and 13,937 barrels per day in 1993 came from produced natural gas. Conoco's 50% owned equity affiliate, C&L Processors Partnership, has an additional 12 natural gas processing plants in Oklahoma and Texas, and the company's pro rata share of NGL production was 7,908 in 1994 and 7,885 in 1993. Other natural gas and gas products facilities in the United States include an 800-mile intrastate natural gas pipeline system in Louisiana operated by Conoco's 100% owned subsidiary Louisiana Gas System, Inc., natural gas
and natural gas liquids pipelines in several states, and a 22.5% equity interest in a 104,000-barrel-per-day natural gas liquids fractionating plant in Mt. Belvieu, Texas, owned by affiliated Gulf Coast Fractionators.
Outside the United States, the company's Conoco (U.K.) Limited subsidiary operates a 50% owned gas processing facility at Theddlethorpe, England. Kinetica, a 50% joint venture between Conoco (U.K.) and electricity generator PowerGen, transports and markets natural gas in England. Phoenix Park Gas Processors, a 40% owned equity affiliate, operates a natural gas plant at Point Lisas, Trinidad.
REFINING
The company currently owns and operates four refineries in the United States located at Lake Charles, Louisiana; Ponca City, Oklahoma; Billings, Montana; and Denver, Colorado. The company also owns and operates the Humber refinery in England and has a 25% interest in a refinery at Karlsruhe in Germany. In November 1994, Conoco and Petronas each acquired a 50% interest in a company that will build a 100,000-barrel-per-day refinery near the city of Melaka, Malaysia, with completion in late 1997. Conoco and Petronas are evaluating potential third partners that would acquire a 15% interest in the joint venture and would lower Conoco's ownership to 40% and Petronas' ownership to 45%.
Capacities at year-end 1994 as well as inputs processed during 1994 are summarized in the following table:
- -------- * Represents 25% interest in the Karlsruhe refinery.
Utilization of refinery capacity depends on the market demand for petroleum products, availability of crude oil and other feedstocks, and the economics of converting crude oil into refined products.
The company announced in August 1994 the formation of Excel Paralubes, a company owned 50% each by Conoco and Atlas Processing Company (a Pennzoil subsidiary), to construct a lube oil hydrocracker facility at Lake Charles, Louisiana, to produce more than 15,000 barrels per day of high-quality base oils to be used in finished lubricants.
MARKETING
In the United States, the company sells refined products at retail in 39 states, principally under the "Conoco" brand. In addition, the company markets a wide range of products other than at retail in all 50 states and the District of Columbia. Refined products are also sold in Austria, Germany and the United Kingdom under the "Jet" and "Conoco" brands; in Belgium, France and Luxembourg under the "Seca" brand; and in Switzerland under the "OK Coop" brand. The "Jet" brand is used for marketing in the Czech Republic, Denmark, Finland, Hungary, Ireland, Norway, Poland, Spain, Sweden and Thailand.
SUPPLY AND TRANSPORTATION
The company has an extensive pipeline system for crude oil and refined products. Information concerning daily pipeline shipments is presented below:
Conoco Pipe Line Company (CPL), a wholly owned subsidiary and operator of the company's U.S. petroleum pipeline system, transported approximately 820 thousand barrels per day of crude oil and refined products in 1994. In addition to pipeline facilities, CPL operates, under a management contract, four marine terminals, one coke-exporting facility and 52 product terminals located throughout the United States. These facilities are wholly or jointly owned by the company. Crude oil is gathered in the Rocky Mountain, mid-continent and southern Louisiana areas primarily for delivery to local refiners. Refined products pipelines are located in the Rocky Mountain and mid-continent areas to serve regional demand centers. Other U.S. transportation assets include numerous tank cars, barges, tank trucks and other motor vehicles.
The company also operates a fleet of seagoing crude oil tankers. These vessels, principally of Liberian registry, are described as follows:
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
In 1991, DuPont received claims by growers that use of "Benlate" 50 DF fungicide had caused crop damages. Based on the belief that "Benlate" 50 DF would be found to be a contributor to the claimed damage, DuPont paid claims. In 1992, after 18 months of extensive research, DuPont scientists concluded that "Benlate" 50 DF was not responsible for plant damage reports received since March 1991. Concurrent with these research findings, DuPont stopped paying claims relating to those reports. To date, DuPont has been served with more than 660 lawsuits in several jurisdictions, principally Florida, Hawaii, and Puerto Rico, by growers who allege plant damage from using "Benlate" 50 DF fungicide. Over half of the lawsuits brought against the company since 1991 have been disposed of by trial, dismissal or settlement, including 330 in 1994 and 45 thus far in 1995. There were four jury trials involving nine lawsuits completed in 1994. In the first three trials in Florida and Alabama, the juries found no product defect and no damages attributable to "Benlate" 50 DF fungicide. In the fourth trial involving one lawsuit in South Carolina, the jury found against DuPont and awarded damages of $17.2 million to the plaintiff. The trial judge, however, later struck the punitive damages portion of the award reducing the jury verdict to about $7.5 million. In January 1995, at the conclusion of a seven-month trial in Kona, Hawaii, the jury awarded the plaintiff $23.9 million. DuPont believes it has strong grounds for setting both of these adverse verdicts aside on appeal. A second trial in Hawaii of nine consolidated cases resulted, in March 1995, in a total award of $8.5 million in compensatory damages. The plaintiffs' request for punitive damages was denied. DuPont plans to appeal. Also in March 1995, a trial involving two growers in Puerto Rico was resolved in accordance with the terms of a judgment agreement negotiated with the plaintiffs before the jury verdict was returned. With the conclusion of these most recent trials, only three of the 125 cases involving "Benlate" 50 DF filed in Puerto Rico and three of more than 100 filed in Hawaii remain unresolved. DuPont believes that "Benlate" 50 DF fungicide did not cause the alleged damages and intends to prove this in ongoing matters.
Since 1989, DuPont has been served with about 100 lawsuits in several jurisdictions, principally in Texas, Maryland, Arizona, Colorado and New Jersey alleging damages as a result of leaks in certain polybutylene
plumbing systems. In most cases, DuPont is a codefendant with Shell, Hoechst- Celanese, and parts manufacturers. The polybutylene plumbing systems consist of flexible pipe extruded from polybutylene connected by fittings made from acetal. Shell Chemical is the sole producer of polybutylene; the acetals are provided by Hoechst-Celanese and DuPont. It is not known how many commercial and residential units nationwide have plumbing systems containing acetals manufactured by DuPont. During 1994, DuPont settled a majority of the Texas lawsuits in which it was a defendant. In these cases DuPont will provide up to $34 million to cover approximately 64,000 claims. DuPont has not been to trial in any case. Class certification was denied in February 1995 in a nationwide class action filed in state court in Houston, Texas. Other class actions have been filed in Arizona, New Jersey, Colorado and San Diego County, California. The total number of potential plaintiffs included in all class actions filed has not been determined at this time. Claims outside of litigation are handled by the Plumbing Claims Group, a nonprofit corporation formed and funded by Shell, Hoechst-Celanese and DuPont to carry out repairs to leaking polybutylene/acetal plumbing systems.
The company's balance sheets reflect accruals for estimated costs associated with these matters. Adverse changes in estimates of such costs could result in additional future charges.
On October 24, 1988, the Louisiana Department of Environmental Quality (LDEQ) issued a Compliance Order and Notice of Proposed Penalty to Conoco Inc. for alleged violations of the Louisiana Hazardous Waste Regulations. Following an inspection, LDEQ proposed a penalty of $165,000 for alleged violations related to the handling of by-product caustic and other refinery waste management practices. The company's legal counsel believes that the allegations are generally without factual basis, and that the penalty will be significantly reduced.
On April 3, 1991, the Environmental Protection Agency (EPA) assessed a civil penalty of $1.3 million pursuant to a Complaint and Notice of Hearing alleging violations of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) in connection with the distribution of a company fungicide. The allegations arise out of the discovery that a herbicide may have been introduced inadvertently into some batches of the fungicide during formulation at contractor sites in 1988 and 1989. The company was made aware of the potential problem by complaints from growers and notified EPA in August 1989 that it was undertaking a voluntary recall of suspect batches. EPA issued a stop sale order in September 1989 accompanied by a formal request for a product recall. The company has reviewed its recall with EPA and they have expressed satisfaction with the company's efforts. DuPont has agreed to settle the EPA civil complaint on behalf of itself and two of its contractors for $1 million. The EPA has agreed to terminate its stop sale order and recall request with respect to the product.
On June 28, 1991, DuPont entered into a voluntary agreement with the EPA to conduct an audit of the U.S. sites under the Toxic Substance Control Act (TSCA). Agreement participation is not an admission of TSCA noncompliance. Maximum stipulated penalties that DuPont could pay under the agreement are capped at $1 million. The first phase of the audit was completed, but no findings have been issued. Subject to the EPA's issuance of new reporting criteria (delayed since 1991), a second phase of the audit will begin.
On October 18, 1991, the EPA issued an Administrative Order under the Resource Conservation and Recovery Act (RCRA) directing Conoco Pipeline Company (CPLC) to undertake specific remedial measures related to a former oil reprocessing facility in Converse County, Wyoming. CPLC contested the Administrative Order, and has taken voluntary measures at the site together with other interested parties. On February 19, 1993, the U.S. Department of Justice filed a lawsuit against 10 entities, including CPLC, to enforce the Order and collect penalties. CPLC has settled this matter with the U.S. Government, and that settlement has been approved by the Court. CPLC along with four other companies has agreed to a cleanup of this site which is estimated to cost between $4.4 million and $8.9 million and pay as a group $300,000 in civil penalties. CPLC's share of this settlement is approximately 8%. CPLC has proceeded against other parties to reduce its share of the settlement.
On October 15, 1993, the EPA filed a complaint in the U.S. District Court, Eastern District of Texas (Beaumont), against DuPont alleging various violations of the Clean Water Act at the Sabine River Works. Included were alleged unauthorized discharges, effluent limitation violations and monitoring and reporting violations under the plant's wastewater permit. On April 20, 1994, the government and DuPont reached a settlement in this action under the terms of which DuPont agreed to pay a civil penalty of $516,430 and to implement a Supplemental Environmental Project with an estimated cost to DuPont of $3.2 million. A Consent Order resolving the matter was entered by the District Court October 7, 1994.
On December 21, 1993, Conoco's Denver refinery received a Notice of Violation from the EPA, Region VIII, and the Colorado Department of Health requesting a civil penalty of $169,500 in a dispute over proper scope and scheduling of certain RCRA on-site investigation activities. The investigation activities have previously been the subject of a settlement with the EPA and the Colorado Department of Health, and the work performed has been in compliance with such agreement in the opinion of company counsel. As such, it is anticipated that the fine will be significantly reduced pursuant to negotiations between the parties.
On April 11, 1994, the Texas Natural Resource Conservation Commission (TNRCC) issued a Notice of Executive Director's Preliminary Report and Petition for a TNRCC Order assessing penalties of $122,640 for alleged violations at DuPont's Beaumont Works Plant of the Texas Solid Waste Disposal Act, the Texas Water Code and the applicable regulations. The matter has been resolved at the staff level through settlement. DuPont, without admitting the truth of any allegation, has agreed to pay a penalty of $90,000.
On May 13, 1994, the EPA, Region II, filed an Administration Complaint seeking a $143,000 penalty alleging that DuPont's Deepwater, New Jersey, facility failed to file Emergency Planning Community Right-To-Know Act/Toxic Release Inventory report forms for two chemical substances. The parties settled the Administrative Complaint on December 5, 1994. Under the terms of the settlement the EPA withdrew one allegation and agreed to clarify the regulation supporting its remaining allegation. DuPont paid a penalty of $56,250 and agreed to conduct a Supplemental Environmental Project.
On June 30, 1994, the California Department of Toxic Substances Control issued to DuPont's Antioch Works in Antioch, California, an Enforcement Order alleging violations of state hazardous waste regulations. The alleged violations center principally on the status of several tanks at the site. The Order would require DuPont to undertake certain remedial activities around the tanks and pay a fine of $200,000. DuPont has filed a Notice of Defense in the matter for a hearing before the Office of Administrative Hearings of the California Department of General Services.
On July 1, 1994, the EPA issued a proposed Administrative Penalty Assessment to Conoco Inc. for alleged violations of the Clean Water Act related to wastewater discharges from Conoco's Lake Charles, Louisiana, refinery. The proposed Penalty Assessment sought a civil penalty of $125,000 for alleged discharge permit exceedences that occurred during the past five years. The company has reached agreement with the EPA on the wording of the Consent Agreement and Order assessing administrative penalties and has now resolved the matter with payment of a fine of $125,000.
On July 15, 1994, Conoco's Denver, Colorado, refinery received a Notice of Violation (NOV) and Cease and Desist Order from the State of Colorado for violations of its state clean water permit. The NOV alleges twenty-one violations of effluent parameters and other permit conditions from January 1993 to the present. Although the State had indicated previously it would seek a penalty in excess of $100,000, Conoco has reached an agreement with the State to settle the alleged permit variances for payment of a fine of $30,000 and performance of two supplemental environmental projects (SEP). The estimated cost of the SEPs is around $150,000.
On August 26, 1994, DuPont was advised by the Delaware Attorney General's office that it was seeking a civil penalty of $100,000 in connection with the accidental release on March 13, 1994, of low pH wastewater from a landfill waste pond containing waste from DuPont's Edge Moor, Delaware, titanium dioxide pigment
plant. DuPont and the State of Delaware have agreed to settle the matter for a payment of an Administrative Penalty of $50,000 and the donation of $25,000 worth of equipment to the Delaware State Emergency Response Team.
The EPA filed on October 7, 1994, an administrative complaint against DuPont proposing to assess $1.9 million in civil penalties for distributing triazine herbicides with product labels that the EPA alleges were not in compliance with its new Worker Protection Standards. The labels were submitted to the EPA for approval in July 1993 and accepted by the EPA in November. However, in March of 1994, the EPA notified DuPont of alleged errors in the labels after most of the products had been shipped and were in the distribution chain. DuPont has cooperated with the EPA in making label changes and has issued supplemental labeling for all products that had been distributed. DuPont believes the proposed penalties are unwarranted and excessive and plans to contest or seek a substantial reduction of them.
On January 31, 1995, DuPont received a Notice of Proposed Assessment of Civil Penalty from the Region III office of the EPA alleging various violations of the Clean Water Act at DuPont's Edge Moor Plant in Edge Moor, Delaware. The Proposed Assessment seeks a Class II administrative penalty of $121,000. The matter is under negotiation with the EPA.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list, as of March 7, 1995, of the company's executive officers.
- -------- (1) Member of the Board of Directors.
The Company's executive officers are elected or appointed for the ensuing year or for an indefinite term, and until their successors are elected or appointed. Each officer named above has been an officer or an executive of DuPont or its subsidiaries during the past five years.
PART II
Information with respect to the following Items can be found on the indicated pages of Exhibit 13 if not otherwise included herein.
ITEM 5.
ITEM 5. MARKET FOR THE 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 172,244 at December 31, 1994 and 171,207 at March 7, 1995.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- -------- * Includes text of letter except for inserts and for chart on page 3 and references thereto. ** Each review starts with paragraph describing segment products and principal markets; information above such paragraph is excluded.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Information with respect to the following Items is incorporated by reference to the pages indicated in the company's 1995 Annual Meeting Proxy Statement dated March 17, 1995, filed in connection with the Annual Meeting of Stockholders to be held April 26, 1995. However, information regarding executive officers is contained in Part I of this report (page 14) pursuant to General Instruction G of this form.
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules and Exhibits
1. Financial Statements (See listing at Part II, Item 8 of this report regarding financial statements, which are incorporated by reference to Exhibit 13.) 2. Financial Statement Schedules
The following should be read in conjunction with the previously referenced Financial Statements:
Financial Statement Schedules listed under SEC rules but not included in this report are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto incorporated by reference.
Condensed financial information of the parent company is omitted because restricted net assets of consolidated subsidiaries do not exceed 25% of consolidated net assets. Footnote disclosure of restrictions on the ability of subsidiaries and affiliates to transfer funds is omitted because the restricted net assets of subsidiaries combined with the company's equity in the undistributed earnings of affiliated companies does not exceed 25% of consolidated net assets at December 31, 1994.
Separate financial statements of affiliated companies accounted for by the equity method are omitted because no such affiliate individually constitutes a 20% significant subsidiary.
3. Exhibits
The following list of exhibits includes both exhibits submitted with this Form 10-K as filed with the SEC and those incorporated by reference to other filings:
- -------- * Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.
- -------- * Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.
(b) Reports on Form 8-K
The following Current Report on Form 8-K was filed during the quarter ended December 31, 1994.
(1) On October 26, 1994, a Current Report on Form 8-K was filed in connection with Debt Securities that may be offered on a delayed or continuous basis under its Registration Statements on Form S-3 (No. 33- 48128 and No. 33-53327). Under Item 7, "Financial Statements and Exhibits," the Registrant's Earnings Press Release, dated October 26, 1994 was filed.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED AND IN THE CAPACITIES INDICATED, ON THE 20TH DAY OF MARCH, 1995.
E. I. DU PONT DE NEMOURS AND COMPANY (Registrant)
C. L. Henry By______________________________________ C. L. HENRY SENIOR VICE PRESIDENT-- DUPONT FINANCE (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED ON THE 20TH DAY OF MARCH 1995, BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT IN THE CAPACITIES INDICATED:
CHAIRMAN AND DIRECTOR (PRINCIPAL EXECUTIVE OFFICER):
E. S. Woolard, Jr. - ------------------------- E. S. WOOLARD, JR.
VICE CHAIRMAN AND VICE CHAIRMAN AND DIRECTOR: DIRECTOR:
J. A. Krol C. S. Nicandros - ------------------------- ------------------------- J. A. KROL C. S. NICANDROS
DIRECTORS:
P. N. Barnevik L. C. Duemling H. R. Sharp, III - ------------------------- ------------------------- ------------------------- P. N. BARNEVIK L. C. DUEMLING H. R. SHARP, III
A. F. Brimmer E. B. Du Pont C. M. Vest - ------------------------- ------------------------- ------------------------- A. F. BRIMMER E. B. DU PONT C. M. VEST
C. R. Bronfman C. M. Harper J. L. Weinberg - ------------------------- ------------------------- ------------------------- C. R. BRONFMAN C. M. HARPER J. L. WEINBERG
E. M. Bronfman M. P. MacKimm - ------------------------- ------------------------- E. M. BRONFMAN M. P. MACKIMM
E. Bronfman, Jr. W. K. Reilly - ------------------------- ------------------------- E. BRONFMAN, JR. W. K. REILLY
E. I. DU PONT DE NEMOURS AND COMPANY
INDEX OF EXHIBITS
- -------- * Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.