-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KrVlf2IIK+YcSIOQ8vgy4Ts4wmxsiLpqbP563NIb+G3MisW6eLM/pJBGs3RB/ZT+ xHoqfNtDrgJbYc94WH83pA== 0000030554-98-000013.txt : 19980507 0000030554-98-000013.hdr.sgml : 19980507 ACCESSION NUMBER: 0000030554-98-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980506 FILED AS OF DATE: 19980506 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUPONT E I DE NEMOURS & CO CENTRAL INDEX KEY: 0000030554 STANDARD INDUSTRIAL CLASSIFICATION: PLASTIC MAIL, SYNTH RESIN/RUBBER, CELLULOS (NO GLASS) [2820] IRS NUMBER: 510014090 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00815 FILM NUMBER: 98611219 BUSINESS ADDRESS: STREET 1: 1007 MARKET ST CITY: WILMINGTON STATE: DE ZIP: 19898 BUSINESS PHONE: 3027741000 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 OR ( ) TRANSITION 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 51-0014090 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1007 Market Street, Wilmington, Delaware 19898 (Address of Principal Executive Offices) (302) 774-1000 (Registrant's Telephone Number) 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 X No 1,128,502,436 shares (excludes 18,330,365 shares held by DuPont's Flexitrust) of common stock, $0.30 par value, were outstanding at April 30, 1998. 1 Form 10-Q E. I. DU PONT DE NEMOURS AND COMPANY Table of Contents Page(s) ------- Part I Item 1. Financial Statements Consolidated Income Statement ............................... 3 Consolidated Statement of Cash Flows ........................ 4 Consolidated Balance Sheet .................................. 5 Notes to Financial Statements ............................... 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Results ........................................... 8 Industry Segment Performance ................................ 8-10 Consolidated Industry Segment Information ................... 11 Financial Condition ......................................... 12-13 Other Items ................................................. 13-14 Part II Item 1. Legal Proceedings .................................... 14-16 Item 4. Submission of Matters to a Vote of Security Holders .. 16-17 Item 6. Exhibits and Reports on Form 8-K ..................... 17-18 Signature ....................................................... 19 Exhibit Index ................................................... 20 Exhibit 3.2 Company's Bylaws, as last revised March 4, 1998 ..... 21 Exhibit 10.1 Company's Stock Performance Plan, as last amended effective January 28, 1998 ............................ 22 Exhibit 10.2 The DuPont Stock Accumulation and Deferred Compensation Plan, as last amended March 1, 1998 .............. 23 Exhibit 10.3 The DuPont Stock Accumulation and Deferred Compensation Plan, as last amended April 29, 1998 ............. 24 Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges .. 25 2 Form 10-Q E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
Three Months Ended CONSOLIDATED INCOME STATEMENT March 31 - ------------------------------------------------------------------------ (Dollars in millions, except per share) 1998 1997 - ----------------------------------------------------------------------- SALES ........................................... $10,965 $11,211 Other Income .................................... 413 339 ------- ------- Total ....................................... 11,378 11,550 ------- ------- Cost of Goods Sold and Other Expenses ........... 8,264 8,275 Selling, General and Administrative Expenses .... 650 632 Depreciation, Depletion and Amortization ........ 658 604 Exploration Expenses, Including Dry Hole Costs and Impairment of Unproved Properties ......... 67 91 Interest and Debt Expense ....................... 190 149 Purchased In-Process Research and Development 60 - ------- ------- Total ....................................... 9,889 9,751 ------- ------- EARNINGS BEFORE INCOME TAXES .................... 1,489 1,799 Provision for Income Taxes ...................... 583 779 ------- ------- NET INCOME ...................................... $ 906 $ 1,020 ======= ======= EARNINGS PER SHARE OF COMMON STOCK: Basic ......................................... $ .80 $ .90 Diluted ....................................... $ .79 $ .89 ======= ======= DIVIDENDS PER SHARE OF COMMON STOCK ............. $ .315 $ .285 ======= ======= See Notes to Financial Statements.
3 Form 10-Q
Three Months Ended CONSOLIDATED STATEMENT OF CASH FLOWS March 31 - --------------------------------------------------------------------------------------------- (Dollars in millions) 1998 1997 - --------------------------------------------------------------------------------------------- CASH PROVIDED BY OPERATIONS Net Income ...................................................... $ 906 $ 1,020 Adjustments to Reconcile Net Income to Cash Provided by Operations: Depreciation, Depletion and Amortization .................... 658 604 Dry Hole Costs and Impairment of Unproved Properties ........ 22 40 Purchased In-Process R&D .................................... 60 - Other Noncash Charges and Credits - Net ..................... (124) 41 Change in Operating Assets and Liabilities - Net ............ (1,389) (1,118) ------- ------- Cash Provided by Operations ............................... 133 587 ------- ------- INVESTMENT ACTIVITIES Purchases of Property, Plant and Equipment ...................... (840) (699) Investment in Affiliates ........................................ (57) (138) Payments for Businesses Acquired ................................ (694) - Proceeds from Sales of Assets ................................... 514 48 Net Decrease (Increase) in Short-Term Financial Instruments ..... (94) (329) Miscellaneous - Net ............................................. (38) (21) ------- ------- Cash Used for Investment Activities ....................... (1,209) (1,139) ------- ------- FINANCING ACTIVITIES Dividends Paid to Stockholders .................................. (358) (325) Net Increase in Borrowings ...................................... 2,731 1,423 Acquisition of Treasury Stock ................................... (309) (107) Proceeds from Exercise of Stock Options ......................... 36 64 ------- ------- Cash Provided by Financing Activities ..................... 2,100 1,055 ------- ------- Effect of Exchange Rate Changes on Cash ........................... (4) (91) ------- ------- INCREASE IN CASH AND CASH EQUIVALENTS ............................. $ 1,020 $ 412 ======= ======= See Notes to Financial Statements.
4 Form 10-Q CONSOLIDATED BALANCE SHEET March 31 December 31 - ------------------------------------------------------------------------------------------------------------------- (Dollars in millions, except per share) 1998 1997 - ------------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and Cash Equivalents ........................................................ $ 2,024 $ 1,004 Marketable Securities ............................................................ 236 142 Accounts and Notes Receivable .................................................... 5,963 5,740 Inventories .................................................................. 4,533 4,070 Prepaid Expenses ................................................................. 520 397 Deferred Income Taxes ............................................................ 520 521 ------- ------- Total Current Assets ........................................................... 13,796 11,874 PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation, depletion and amortization (March 31, 1998 - $30,439; December 31, 1997 - $30,701) ............. 24,075 23,583 INVESTMENT IN AFFILIATES ........................................................... 3,622 3,477 OTHER ASSETS ....................................................................... 4,134 4,008 ------- ------- TOTAL .......................................................................... $45,627 $42,942 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable ................................................................. $ 2,808 $ 3,007 Short-Term Borrowings and Capital Lease Obligations .............................. 8,391 6,154 Income Taxes ..................................................................... 707 593 Other Accrued Liabilities ........................................................ 3,917 4,316 ------- ------- Total Current Liabilities ...................................................... 15,823 14,070 LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS ................................. 6,434 5,929 OTHER LIABILITIES .................................................................. 8,905 8,919 DEFERRED INCOME TAXES .............................................................. 2,145 2,084 ------- ------- Total Liabilities .............................................................. 33,307 31,002 ------- ------- MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES .................................... 691 670 ------- ------- STOCKHOLDERS' EQUITY Preferred Stock .................................................................. 237 237 Common Stock, $.30 par value; 1,800,000,000 shares authorized; shares issued at March 31, 1998 - 1,146,832,801; December 31, 1997 - 1,152,762,128 ........... 344 346 Additional Paid-In Capital ....................................................... 8,068 7,991 Reinvested Earnings .............................................................. 4,671 4,389 Accumulated Other Comprehensive Income ........................................... (317) (297) Common Stock Held in Trust for Unearned Employee Compensation and Benefits (Flexitrust), at Market (Shares: March 31, 1998 - 20,198,694; December 31, 1997 - 23,245,747) ................................................ (1,374) (1,396) ------- ------- Total Stockholders' Equity ..................................................... 11,629 11,270 ------- ------- TOTAL .......................................................................... $45,627 $42,942 ======= ======= See Notes to Financial Statements.
5 Form 10-Q NOTES TO FINANCIAL STATEMENTS (Dollars in millions, except per share) [FN] These statements are unaudited, but reflect all adjustments that, in the opinion of management, are necessary to provide a fair presentation of the financial position, results of operations and cash flows for the dates and periods covered. All such adjustments are of a normal recurring nature. Includes a charge of $59 for asset write-downs related to the shutdown of certain nylon manufacturing facilities. Represents a charge for revision, based on independent appraisals, of the purchase price allocation in connection with the purchase of Protein Technologies International, related to the value assigned to research and development in progress at the time of purchase for which technological feasibility has not yet been established and no alternative future use is anticipated. The charge was not tax effected because this transaction was a stock acquisition rather than an asset purchase. Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares (the denominator) for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. The numerator in calculating both basic and diluted earnings per share for each period is reported net income less preferred dividends of $2.5. The denominator is based on the following weighted-average number of common shares: Three Months Ended --------------------------------- March 31, 1998 March 31, 1997 -------------- -------------- Basic 1,128,415,102 1,129,554,952 Diluted 1,145,674,145 1,148,190,360 The difference between basic and diluted weighted-average common shares results from the assumption that dilutive stock options outstanding were exercised. 6 Form 10-Q NOTES TO FINANCIAL STATEMENTS (Dollars in millions, except per share) (Continued) [FN] The following stock options are not included in the diluted earnings per share calculation since the exercise price is greater than the average market price: March 31 ----------------------- 1998 1997 --------- --------- Stock Options 4,998,517 4,848,300 Compensation expense recognized in income for stock-based employee compensation awards was $48 and $17 for the three months ended March 31, 1998 and 1997, respectively. Shares held by the Flexitrust are not considered outstanding in comput- ing the foregoing weighted-average number of common shares. Inventories March 31 December 31 ----------- 1998 1997 -------- ----------- Chemicals ........................... $ 324 $ 289 Fibers .............................. 834 744 Polymers ............................ 764 707 Petroleum ........................... 1,456 1,278 Life Sciences ....................... 774 676 Diversified Businesses .............. 381 376 ------ ------ Total ............................. $4,533 $4,070 ====== ====== The following sets forth the company's comprehensive income for the periods shown: Three Months Ended March 31 ------------------ 1998 1997 ----- ------- Net Income ................................... $906 $1,020 Other Comprehensive Income, Net of Tax ....... (20) (107) ---- ------ Comprehensive Income ......................... $886 $ 913 ==== ====== 7 Form 10-Q Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (a) Results of Operations (1) Financial Results: First quarter diluted earnings per share before nonrecur- ring charges were $.92 compared to $.89 per share in the first quarter last year, marking the sixteenth consecutive quarter of record earnings for comparable periods. Including nonrecurring charges, net income for the first three months of 1998 was $906 million, or $.79 diluted earnings per share, compared to $1,020 million, or $.89 diluted earnings per share, in the same period last year. Nonrecurring charges totaling $145 million after-tax or $.13 per share were recorded in the first quarter, $60 million to revise a prior estimate for the 1997 write-off of acquired in-process research and development related to the acquisition of Protein Technologies International, and $85 million related to the previously announced modernization program for global nylon operations. Net income for the quarter before nonrecurring items totaled $1,051 million, up 3 percent from the $1,020 million in 1997. Sales were $11.0 billion, down 2 percent, principally due to lower sales by Conoco. (2) Industry Segment Performance: The following text compares first quarter 1998 results with first quarter 1997, for each industry segment, excluding the earnings impact of nonrecurring items described in the footnotes to the "Consolidated Industry Segment Information" table. Chemicals and Specialties segments' after-tax income before nonrecurring charges was $867 million, up 11 percent. Sales for the quarter, including acquisitions, were up 8 percent on a con- tinuing business basis, reflecting 9 percent higher volume, partly offset by 1 percent lower selling prices. Regionally, volume was up 7 percent in the United States, up 18 percent in Europe and up 4 percent in Asia. Excluding negative currency effects, average worldwide selling prices would have been up 3 percent, with prices in the United States up 1 percent and prices outside the United States up 5 percent. In the Petroleum segment, Conoco, DuPont's energy subsid- iary, had earnings of $287 million, down 13 percent, reflecting significantly lower crude oil and natural gas prices partly offset by improved international downstream results, lower exploration 8 Form 10-Q costs, higher natural gas volumes, upstream asset sales, and increased oil production in countries with lower taxes. Down- stream operations earned $70 million, up 13 percent due to higher European refined product margins. Upstream operations earned $217 million, down 19 percent. Crude oil prices averaged $13.64 per barrel for the quarter, $6.88 per barrel or 34 percent less than last year. Worldwide natural gas prices averaged 18 percent lower than last year, partly offset by 5 percent higher volumes. o Chemicals segment earnings were $177 million compared to $143 million earned last year, up 24 percent, principally due to higher earnings from white pigments. Both periods include comparable gains from asset sales. Segment sales of $1.0 billion were 2 percent higher, reflecting 6 percent higher selling prices and 4 percent lower volume. o Fibers segment earnings of $229 million were essentially flat compared with the $233 million earned in 1997. Earnings from specialty fibers ("Lycra" spandex, advanced fibers, and non- wovens) increased 9 percent, but were offset by lower earnings from "Dacron" polyester as a result of intense competitive pressure from Asian imports. Sales of $1.9 billion were down 1 percent as selling prices averaged 2 percent lower and sales volumes were 1 percent higher. o Earnings for the Polymers segment were $230 million, up 11 percent from $208 million in 1997, principally reflecting improved results from engineering polymers and fluoropolymers. Segment sales of $1.7 billion were 6 percent above 1997, reflecting 6 percent higher volume and flat selling prices. o Petroleum segment earnings were $287 million, down $44 million or 13 percent from a record first quarter 1997. U.S. upstream earnings totaled $78 million, down 49 percent principally due to lower crude oil and natural gas prices, partly offset by higher natural gas volumes from increasing production in the South Texas fields acquired in 1997. Outside the United States, upstream earnings were $139 million, up 19 percent due to North Sea asset sales and lower taxes that more than offset the effect of lower crude oil prices. U.S. downstream earn- ings of $18 million were 25 percent lower, principally due the loss of production from scheduled maintenance turnarounds. Downstream earnings outside the United States of $52 million were up 37 percent reflecting better refining and marketing margins. o Life Sciences segment earnings were $150 million, up 6 percent from $141 million in 1997. Pharmaceuticals earnings were up 40 percent, largely due to improved results for "Cozaar" and higher DuPont Merck venture sales of "Coumadin." Agricultural 9 Form 10-Q products earnings were modestly lower, principally due to the stronger U.S. dollar. Segment sales including acquisitions were $701 million, up 12 percent, reflecting 15 percent higher volume partly offset by 3 percent lower prices. o Diversified Businesses earnings were $81 million, up 45 percent from $56 million in 1997. This reflects higher earnings from photopolymers and electronic materials and coal, and lower operating losses from the printing and publishing businesses divested in early March of this year. Segment sales were $845 million, up 25 percent, including sales from acquisitions. Average selling prices were 7 percent lower. 10 Form 10-Q E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
Three Months Ended CONSOLIDATED INDUSTRY SEGMENT INFORMATION March 31 - ------------------------------------------------------------------------ (Dollars in millions) 1998 1997 - ----------------------------------------------------------------------- SALES - ----- Chemicals ..................................... $ 1,023 $ 1,006 Fibers ........................................ 1,896 1,913 Polymers ...................................... 1,729 1,630 Petroleum ..................................... 4,771 5,360 Life Sciences ................................. 701 625 Diversified Businesses ........................ 845 677 ------- ------- Total ..................................... $10,965 $11,211 ======= ======= AFTER-TAX OPERATING INCOME - -------------------------- Chemicals ..................................... $ 177 $ 143 Fibers ........................................ 144 233 Polymers ...................................... 230 208 Petroleum ..................................... 287 331 Life Sciences ................................. 90 141 Diversified Businesses ........................ 81 56 ------- ------- Total ..................................... 1,009 1,112 Interest and Other Corporate Expenses Net of Tax ......................... (103) (92) ------- ------- NET INCOME .................................... $ 906 $ 1,020 - ---------- ======= ======= Includes a charge of $85 related to rationalization of global Nylon operations, principally shutdown of certain manufacturing facilities and employee separation costs. Includes a charge of $60 for revision, based on independent appraisals, of the purchase price allocation in connection with the purchase of Protein Technologies International, related to the value assigned to research and development in progress at the time of purchase for which technological feasibility has not yet been established and no alternative future use is anticipated.
11 Form 10-Q (b) Financial Condition at March 31, 1998 DuPont recorded a net cash inflow from operations of $133 million for the first quarter of 1998, as compared with $587 million for the same period in 1997. The decrease in cash provided by operations for the period primarily reflects a larger change in net operating assets and liabilities, a $1.4 billion increase in the first quarter 1998 compared to a $1.1 billion increase in first quarter 1997. The change is due to moderately higher inventories and generally lower levels of current liabilities, excluding short-term borrowings, for the current period. Significant first quarter increases in net operating assets and liabilities are a typical pattern driven by seasonal working capital builds in a number of business units, particularly Agricultural Products. These increases are primarily due to higher trade receivables, higher inventories, and the timing of certain liability payments, including the first quarter payout of annual variable compensation. Increases in working capital during the first quarter are usually reversed by year-end. Year-to-date capital expenditures for plant, property and equipment, investments in equity affiliates, and payments for businesses acquired, were $1.6 billion, up $754 million from the same period last year. First quarter 1998 capital expenditures included $653 million for acquisi- tion of ICI's polyester films business. This acquisition was part of the total $3.0 billion planned acquisitions from ICI announced in July 1997. The final acquisitions are expected in third and fourth quarter 1998 with anticipated capital expenditures of $700 million for ICI's titanium dioxide business and $200 million for ICI's Pakistan polyester resins business. Asset sale proceeds in the first quarter of 1998 totaled $514 million. Included was the sale of certain hydrogen peroxide properties for $150 million and proceeds related to the sale of the Printing and Publishing business totaling $86 million. The remaining proceeds consisted primarily of sales of various petroleum properties, including the collection of a $156 million note for certain properties sold in December 1997. During the quarter, the company spent $374 million to repurchase and retire 6 million shares of DuPont common stock in a private placement transaction. This purchase is part of the program initiated in 1997 to purchase and retire up to 20 million shares of DuPont common stock to offset dilution from shares issued under compensation programs. Not related to the buyback program previously mentioned, the company received $65 million as a final settlement payment associated with 16 million shares repurchased in a private placement transaction in December 1997. Total debt, including capital lease obligations, at March 31, 1998, was $14.8 billion versus $12.1 billion at year-end 1997. The $2.7 billion increase in total debt reflects primarily the issuance of commercial paper. These funds were used to finance the increase in working capital, the ICI acquisition, and the $1.0 billion increase in cash and cash equivalents. 12 Form 10-Q Certain Statistics ------------------ At 3/31/98 At 12/31/97 ---------- ----------- Cash Flow to Debt (previous 12 months cash provided by operations to total debt) 44% 58% Current Ratio (current assets to current liabilities) 0.9 0.8 Earnings to Fixed Charges 5.9 6.4 The Cash Flow to Debt ratio was down in first quarter 1998 versus year-end primarily due to the $2.7 billion increase in total debt in the quarter. Days' sales outstanding averaged 37 days in the first quarter, up three days from the prior quarter, and up four days from the first quarter of 1997. On April 29, the company increased the common stock dividend by 11 percent from $.315 to $.35 effective in the second quarter 1998. (c) Other Items Recent Accounting Standards --------------------------- In June 1997, the Financial Accounting Standards Board issued Statement No. 130, "Reporting Comprehensive Income," and Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information." In the first quarter of 1998, the company adopted Statement No. 130 and displays in the first quarter 1998 financial statements at Note (f) compre- hensive income and its components. Statement No. 130 has no financial impact on the company. The company is required to adopt Statement No. 131 for the 1998 annual report and disclose segment information on the same basis used internally for evaluating segment performance and deciding how to allocate resources to segments. The company is currently assessing the effect of the new disclosure; however, adoption of Statement No. 131 will have no financial impact on the company. In the first quarter of 1998, the company adopted Statement of Position (SOP) 98-1 issued in March 1998 by the American Institute of Certified Public Accountants, which requires capitalization of the costs of computer software for internal use. Adoption of SOP 98-1 has no material financial impact on the company. Redefining the Chemicals and Specialties Businesses --------------------------------------------------- On April 7, 1998, DuPont announced an organizational alignment to allow the company's chemicals and specialties businesses to aggressively implement differentiated strategies for long-term profitable growth. The company placed its chemicals and specialties businesses into three group- ings, each with a distinct mission and financial goals. 13 Form 10-Q o LIFE SCIENCES businesses, which include agricultural products, pharmaceuticals and biotechnology, will be the centerpiece of DuPont in the future. This group is the company's long-term growth engine and is to receive the bulk of the company's investment funding. o DIFFERENTIATED businesses, which include such segments as "Lycra" brand spandex and "Tyvek" spunbonded olefin, are DuPont's growth businesses with market leadership. The company will do whatever is necessary to ensure continued growth and earnings contribution of this group. o FOUNDATION businesses, such as nylon, polyester and engineering polymers, are very strong businesses that have evolved from DuPont's core technological strengths. The value of these busi- nesses to DuPont is their ability to provide the cash flow and growth necessary to fund overall corporate objectives. The goals for these businesses include an intense focus on capital and cost productivity. In the area of staff functions, DuPont is forming a global services business to offer high quality, demand driven and variable services at low unit cost to DuPont businesses. Reorganization -------------- On April 23, 1998, the company announced the reorganization of its nylon business aimed at solidifying its position as the global market leader, with the most efficient, lowest cost, highest quality nylon produc- tion worldwide. As a result of the reorganization, nylon will eliminate approximately 500 jobs worldwide. These are in addition to the position eliminations announced in 1996 as part of the nylon renewal effort. About 65% of the positions eliminated will be in North America, 25% in Europe, with the remainder split between Asia and South America. The company expects to take a second quarter charge to earnings for employee separation costs. An estimate is not currently available. PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS In 1991, DuPont began receiving claims by growers that use of "Benlate" 50 DF fungicide had caused crop damage. Based on the belief that "Benlate" 50 DF would be found to be a contributor to the claimed damage, DuPont began paying crop damage claims. In 1992, however, after 18 months of extensive research, DuPont scientists concluded that "Benlate" 50 DF was not responsible for plant damage reports received since March 1991, and concurrent with these research findings, DuPont stopped paying claims. To date, DuPont has been served with more than 700 lawsuits, most by growers who allege plant damage from using "Benlate" 50 DF fungicide. Approximately 60 crop damage lawsuits are still pending against the company. In addition 14 Form 10-Q there are approximately 65 "Benlate" 50 DF cases pending which allege personal injury, securities violations, discovery abuse and fraud, and damage to shrimp farming operations. The latter includes twenty-eight cases which were recently filed in Florida. The plaintiffs in these cases allege that the runoff from Ecuadoran banana plantations contained "Benlate" 50 DF as well as other chemicals and that the runoff hurt production at commercial shrimp farms. The plaintiffs separately sued DuPont and the manufacturers of the other chemicals. Among the remaining personal injury cases is the pending appeal of a June 1996 verdict of $3,980,000 against DuPont. Also pending are four personal injury cases in West Virginia and three in Delaware, representing the claims of twelve families. The same plaintiffs' attorney who filed these Delaware and West Virginia cases has indicated that he intends to file additional personal injury cases. In 1997, three putative "Benlate" 50 DF class actions alleging crop damage and asserting fraud claims were filed: one in Florida state court on behalf of growers of ornamental plants in Florida; another in Hawaii state court on behalf of Hawaii growers; and a third in Alabama state court seeking a nationwide class. All three were removed to federal court. The Florida class action has been remanded back to state court, and motions to remand the remaining cases back to state court have been or are expected to be filed. The Alabama case received conditional class certification by the state court prior to its removal. In another crop damage case, Kawamata/Tomono, the Hawaii Supreme Court in December 1997 affirmed the judgment and all trial court orders in an action in which a jury had returned a verdict for the plaintiffs in excess of $23 million. DuPont recently settled this lawsuit; terms are confidential. The United States Court of Appeals for the Eleventh Circuit reversed and remanded a sanctions order by a federal district court in Georgia which had found that DuPont has engaged in discovery abuse during the first "Benlate" 50 DF crop case to go to trial. A different district court judge is now presiding over the matter on remand. A shareholder derivative action pending in the same Georgia federal district court, alleging that DuPont's Board of Directors breached various duties in its role in the "Benlate" 50 DF litigation, remains stayed. A securities fraud class action filed in September 1995 by a shareholder in federal district court in Florida against the company and the then-Chairman is also still pending. The plaintiff in this case alleges that DuPont made false and misleading statements and omissions about "Benlate" 50 DF, with the alleged effect of inflating the price of DuPont's stock between June 19, 1993, and January 27, 1995. The district court has certified the case as a class action. Discovery is proceeding. Certain plaintiffs who have previously settled have filed cases alleging fraud and other misconduct relating to the litigation of settlement of "Benlate" 50 DF claims. One such lawsuit was filed in federal district court in Georgia by five growers alleging fraud (including civil racketeering claims) based generally on the assertion that, at the time of their settlements with DuPont, these plaintiffs were unaware of alleged discovery abuse by DuPont. The Georgia district court has granted DuPont's motion to dismiss, holding that the releases plaintiffs executed when they originally settled barred their attempt to seek additional amounts from DuPont. The court also granted a similar DuPont motion with respect to another case that had been transferred from Hawaii federal court. Plaintiffs have appealed the granting of DuPont's motions in both of these cases. Five cases based on similar allegations were filed in Hawaii; the state court class action case mentioned above, two individual 15 Form 10-Q state court actions and two actions in Hawaii federal court. In both Hawaii federal cases, the court granted DuPont's motions to enforce prior settle- ment releases. One of the Hawaii state court cases has been voluntarily dismissed by the plaintiff. Seven additional such cases, filed in Florida, have been dismissed on the grounds that pre-litigation settlements barred their claims. Plaintiffs have appealed the dismissals. DuPont continues to believe that "Benlate" 50 DF fungicide did not cause the damages alleged in these cases and intends to defend against such allegations in ongoing matters. The company's balance sheets reflect accruals for estimated costs associated with this matter. Adverse changes in these estimated costs could result in additional future charges. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Business transacted at the Annual Meeting: A total of 964,716,548 shares of common stock were voted in person or by proxy at the annual meeting of stockholders on April 29, or 84.1 percent of the shares entitled to be voted. Business was transacted as follows: 1. ELECTION OF DIRECTORS: The 13 nominees listed below were elected to serve on the Board of Directors for the ensuing year. The vote tabulation with respect to each nominee follows: Votes Votes Cast Against Director Cast for or Withheld ------------------- ----------- ------------------ P. N. Barnevik 957,492,205 7,224,343 C. J. Crawford 957,014,798 7,701,750 L. C. Duemling 957,406,034 7,310,514 A. W. Dunham 957,166,418 7,550,130 E. B. du Pont 957,719,961 6,996,587 C. O. Holliday, Jr. 957,289,418 7,427,130 L. D. Juliber 957,674,591 7,041,957 J. A. Krol 957,165,806 7,550,742 W. K. Reilly 957,638,682 7,077,866 H. R. Sharp, III 957,331,563 7,384,985 C. M. Vest 957,598,862 7,117,686 G. Watanabe 957,287,675 7,428,873 E. S. Woolard, Jr. 957,314,233 7,402,315 2. RATIFICATION OF INDEPENDENT ACCOUNTANTS: The proposal to ratify the appointment of Price Waterhouse LLP as independent accountants for 1998 was approved by a vote of 959,351,829 shares for, 2,342,693 shares against, and 3,022,026 abstentions and broker nonvotes. 16 Form 10-Q 3. EXECUTIVE OFFICERS: The stockholder proposal to identify in the proxy statement executive officers contractually entitled to receive in excess of $250,000 annually in base salary plus bonuses and other cash payments was defeated by a vote of 811,884,171 shares against, 24,492,688 shares for, and 128,339,689 abstentions and broker nonvotes. 4. CUMULATIVE VOTING: A stockholder proposal to provide for cumulative voting in the election of directors was defeated by a vote of 656,130,188 shares against, 168,750,469 shares for, and 139,835,891 abstentions and broker nonvotes. 5. BOARD COMPOSITION: A stockholder proposal to commit to a more diverse board was defeated by a vote of 782,723,723 shares against, 50,284,063 shares for, and 131,708,762 abstentions and broker nonvotes. 6. EXECUTIVE COMPENSATION: A stockholder proposal to limit increases in cash compensation of executive officers was defeated by a vote of 801,275,582 shares against, 35,074,454 shares for, and 128,366,512 abstentions and broker nonvotes. 7. MINING RIGHTS: A stockholder proposal that DuPont permanently retire all mining rights along the Okefenokee was defeated by a vote of 781,862,789 shares against, 26,384,801 shares for, and 156,468,958 abstentions and broker nonvotes. 8. COMMITTEE MEMBERSHIP: A shareholder proposal that DuPont adopt a policy that Compensation Committee members be independent was defeated by a vote of 655,724,795 shares against, 178,898,627 shares for, and 130,093,126 abstentions and broker nonvotes. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The exhibit index filed with this Form 10-Q is on page 20. (b) Reports on Form 8-K 1. On January 28, 1998, a Current Report on Form 8-K was filed in connection with Debt and/or Equity Securities that may be offered on a delayed or continuous basis under Registration Statements on Form S-3 (No. 33-53327, No. 33-61339 and No. 33-60069). Under Item 7. "Financial Statements and Exhibits," the Registrant's Earnings Press Release dated January 28, 1998, was filed. 17 Form 10-Q 2. On April 22, 1998, a Current Report on Form 8-K was filed in connection with Debt and/or Equity Securities that may be offered on a delayed or continuous basis under Registration Statements on Form S-3 (No. 33-53327, No. 33-61339 and No. 33-60069). Under Item 7. "Financial Statements and Exhibits," the Registrant's Earnings Press Release dated April 22, 1998, was filed. 18 Form 10-Q SIGNATURE Pursuant to the requirements 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. E. I. DU PONT DE NEMOURS AND COMPANY (Registrant) Date: May 6, 1998 ----------------------------------------- By /s/G. M. Pfeiffer ----------------------------------------- G. M. Pfeiffer Senior Vice President - DuPont Finance (As Duly Authorized Officer and Principal Financial and Accounting Officer) 19 Form 10-Q EXHIBIT INDEX Exhibit Number Description - ------- ----------- 3.2 Company's Bylaws, as last revised March 4, 1998. 10.1* Company's Stock Performance Plan, as last amended effective January 28, 1998. 10.2* The DuPont Stock Accumulation and Deferred Compensation Plan, as last amended March 1, 1998. 10.3* The DuPont Stock Accumulation and Deferred Compensation Plan, as last amended April 29, 1998. 12 Computation of Ratio of Earnings to Fixed Charges. - ------------------------- *Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-Q. 20 Form 10-Q Exhibit 3.2 BYLAWS OF E. I. DU PONT DE NEMOURS AND COMPANY Incorporated Under The Laws of Delaware AS REVISED March 4, 1998 21 Form 10-Q Exhibit 3.2 BYLAWS Page ---- ARTICLE I. MEETING OF STOCKHOLDERS: Section 1. Annual 1 Section 2. Special 1 Section 3. Notice 1 Section 4. Quorum 1 Section 5. Organization 1 Section 6. Voting 2 Section 7. Inspectors 2 ARTICLE II. BOARD OF DIRECTORS: Section 1. Number 2 Section 2. Term 2 Section 3. Increase of Number 2 Section 4. Resignation 2 Section 5. Vacancies 3 Section 6. Regular Meetings 3 Section 7. Special Meetings 3 Section 8. Quorum 3 Section 9. Place of Meeting, Etc. 3 Section 10. Interested Directors; Quorum 3 ARTICLE III. COMMITTEES OF THE BOARD: Section 1. Committees 4 Section 2. Procedure 4 Section 3. Reports to the Board 5 Section 4. Strategic Direction Committee 5 Section 5. Audit Committee 5 Section 6 Environmental Policy Committee 5 Section 7. Compensation Committee 5 Section 8. Corporate Governance Committee 5 ARTICLE IV. OFFICE OF THE CHIEF EXECUTIVE 5 Form 10-Q Exhibit 3.2 Page ---- ARTICLE V. OFFICERS: Section 1. Officers 6 Section 2. Chairman of the Board 6 Section 3. President 6 Section 4. Executive Vice Presidents 6 Section 5. Vice Presidents 6 Section 6. Senior Vice President - Finance 7 Section 7. Treasurer 7 Section 8. Assistant Treasurer 7 Section 9. Controller 7 Section 10. Assistant Controller 7 Section 11. Secretary 7 Section 12. Assistant Secretary 7 Section 13. Removal 8 Section 14. Resignation 8 Section 15. Vacancies 8 ARTICLE VI. MISCELLANEOUS: Section 1. Indemnification of Directors or Officers 8 Section 2. Certificate for Shares 9 Section 3. Transfer of Shares 9 Section 4. Regulations 9 Section 5. Record Date of Stockholders 10 Section 6. Corporate Seal 10 ARTICLE VII. AMENDMENTS 10 Form 10-Q Exhibit 3.2 BYLAWS OF E. I. DU PONT DE NEMOURS AND COMPANY ARTICLE I. MEETING OF STOCKHOLDERS SECTION 1. Annual. Meetings of the stockholders for the purpose of electing Directors, and transacting such other proper business as may be brought before the meeting, shall be held annually at such date, time and place, within or without the State of Delaware as may be designated by the Board of Directors ("Board"). SECTION 2. Special. Special meetings of the stockholders may be called by the Board and shall be called by the Secretary at the request in writing of the holders of record of at least twenty-five percent of the outstanding stock of the corporation entitled to vote. Special meetings shall be held within or without the State of Delaware, as the Board shall designate. SECTION 3. Notice. Written notice of each meeting of stockholders, stating the place, date and hour of the meeting, and the purpose or purposes thereof, shall be mailed not less than ten nor more than sixty days before the date of such meeting to each stockholder entitled to vote thereat. SECTION 4. Quorum. Unless otherwise provided by statute, the holders of shares of stock entitled to cast a majority of votes at a meeting, present either in person or by proxy, shall constitute a quorum at such meeting. Absence of a quorum of the holders of Common Stock or Preferred Stock at any meeting or adjournment thereof, at which under the Certificate of Incorporation the holders of Preferred Stock have the right to elect any Directors, shall not prevent the election of Directors by the other class of stockholders entitled to elect Directors as a class if the necessary quorum of stockholders of such other class shall be present in person or by proxy. SECTION 5. Organization. The Chairman of the Board or, in the Chairman's absence, the President shall preside at meetings of stockholders. The Secretary of the Company shall act as Secretary of all meetings of the stockholders, but in the absence of the Secretary the presiding officer may appoint a Secretary of the meeting. The order of business for such meetings shall be determined by the Chairman of the Board, or, in the Chairman's absence, by the President. 1 Form 10-Q Exhibit 3.2 SECTION 6. Voting. Each stockholder entitled to vote at any meeting shall be entitled to one vote for each share held of record, in person, by written proxy or by any permissible means of electronic transmission, provided that such electronic trans- mission must either contain, or be submitted with, information from which it can be determined that it was authorized by the stockholder. Upon the demand of any stockholder, such stock- holder shall be entitled to vote by ballot. All elections and questions shall be decided by plurality vote, except as other- wise required by statute. SECTION 7. Inspector(s). At each meeting of the stock- holders the Inspector(s) shall, among other things, ascertain the number of shares outstanding and the voting power of each; determine the shares represented at the meeting and the validity of proxies and ballots; count all votes and ballots; and certify their determination of the number of shares represented and their count of all votes and ballots. If three or more Inspectors are appointed, a majority of those appointed shall have power to make a decision. Each such Inspector shall be appointed by the Board before the meeting, or in default thereof, by the presiding officer at the meeting, and shall be sworn to the faithful performance of their duties. If any Inspector previously appointed shall fail to attend or refuse or be unable to serve, a substitute shall be appointed by the presiding officer. ARTICLE II. BOARD OF DIRECTORS SECTION 1. Number. The business and affairs of the Company shall be under the direction of the Board. The number of Directors, which shall not be less than ten, shall be determined from time to time by the vote of two-thirds of the whole Board. SECTION 2. Term. Each Director shall hold office until the next annual election of Directors and until the Director's successor is elected and qualified. SECTION 3. Increase of Number. In case of any increase in the number of Directors between Annual Meetings of Stockholders, each additional Director shall be elected by the vote of two-thirds of the whole Board. SECTION 4. Resignation. A Director may resign at any time by giving written notice to the Chairman of the Board or the Secretary. The acceptance thereof shall not be necessary to make it effective; and such resignation shall take effect at the time specified therein or, in the absence of such specification, it shall take effect upon the receipt thereof. 2 Form 10-Q Exhibit 3.2 SECTION 5. Vacancies. In case of any vacancy in the Board for any cause, the remaining Directors, by vote of majority of the whole Board, may elect a successor to hold office for the unexpired term of the Director whose place is vacant. SECTION 6. Regular Meetings. Regular meetings of the Board shall be held at such times as the Board may designate. A notice of each regular meeting shall not be required. SECTION 7. Special Meetings. Special meetings of the Board shall be held whenever called by the direction of the Chairman of the Board, or of one-third of the Directors. The Secretary shall give notice of such special meetings by mailing the same at least two days before the meeting, or by telegraphing the same at least one day before the meeting to each Director; but such notice may be waived by any Director. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting. At any meeting at which every Director shall be present, any business may be transacted, irrespective of notice. SECTION 8. Quorum. One-third of the Board shall constitute a quorum. If there be less than a quorum present at any meeting, a majority of those present may adjourn the meeting from time to time. Except as otherwise provided by law, the Certificate of Incorporation, or by these Bylaws, the affirmative vote of a majority of the Directors present at any meeting at which there is a quorum shall be necessary for the passage of any resolution. SECTION 9. Place of Meeting, Etc. The Directors shall hold the meetings, and may have an office or offices in such place or places within or outside the State of Delaware as the Board from time to time may determine. SECTION 10. Interested Directors; Quorum 1) No contract or other transaction between the Company and one or more of its Directors, or between the Company and any other corporation, partnership, association, or other organization in which one or more of the Directors of the Company is a Director or officer, or has a financial interest, shall be void or voidable, because the Director is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because such Director's vote is counted for such purpose, if: 3 Form 10-Q Exhibit 3.2 (a) the material facts as to such Director's relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested Directors, even though the disinterested Directors be less than a quorum; or (b) the material facts as to such Director's relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) the contract or transaction is fair as to the Company as of the time it is authorized, approved or ratified, by the Board, a committee thereof, or the stockholders; and 2) Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction. ARTICLE III. COMMITTEES OF THE BOARD SECTION 1. Committees. The Board shall by the affirmative vote of a majority of the whole Board, elect from the Directors a Strategic Direction Committee, an Audit Committee, an Environmental Policy Committee, a Compensation Committee, and a Corporate Governance Committee and may, by resolution passed by a majority of the whole Board, designate one or more additional committees, each committee to consist of one or more Directors. The Board shall designate for each of these committees a Chairman, and, if desired, a Vice Chairman, who shall continue as such during the pleasure of the Board. The number of members of each committee shall be determined from time to time by the Board. SECTION 2. Procedure. Each Committee shall fix its own rules of procedure and shall meet where and as provided by such rules. A majority of a committee shall constitute a quorum. In the absence or disqualification of a member of any committee, the members of such committee present at any meeting, and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. 4 Form 10-Q Exhibit 3.2 SECTION 3. Reports To The Board. Each Committee shall keep regular minutes of its proceedings and shall periodically report to the Board summaries of the Committee's significant completed actions and such other matters as requested by the Board. SECTION 4. Strategic Direction Committee. The Strategic Direction Committee shall review the Company's strategic direction and overall objectives and shall have such powers and perform such duties as may be assigned to it from time to time by the Board. SECTION 5. Audit Committee. The Audit Committee shall employ independent public accountants, subject to stockholder ratification at each annual meeting, review the adequacy of internal controls and the accounting principles employed in financial reporting, and shall have such power and perform such duties as may be assigned to it from time to time by the Board. None of the Members of the Audit Committee shall be an officer or employee of the Company or its subsidiaries. SECTION 6. Environmental Policy Committee. The Environmental Policy Committee shall review the Company's environmental policies and practices and shall have such powers and perform such duties as may be assigned to it from time to time by the Board. SECTION 7. Compensation Committee. The Compensation Committee shall have the power and authority vested in it by the Compensation Plans of the Company and shall have such powers and perform such duties as may be assigned to it from time to time by the Board. None of the members of the Compensation Committee shall be an officer or employee of the Company or its subsidiaries. SECTION 8. Corporate Governance Committee. The Corporate Governance Committee shall recommend to the Board nominees for election as directors of the Company. The Committee shall also have responsibility for reviewing and making recommendations to the Board related to matters on corporate governance and shall have such powers and perform such duties as may be assigned to it from time to time by the Board. None of the members of the Corporate Governance Committee shall be an officer or employee of the Company or its subsidiaries. ARTICLE IV. OFFICE OF THE CHIEF EXECUTIVE The Board shall elect an Office of the Chief Executive whose members shall include the President and such other officers as may be designated by the Board. The Office of the Chief 5 Form 10-Q Exhibit 3.2 Executive shall have responsibility for the strategic direction and operations of all the businesses of the Company and shall have such powers and perform such duties as may be assigned to it from time to time by the Board. All significant completed actions by the Office of the Chief Executive shall be reported to the Board at the next succeeding Board meeting, or at its meeting held in the month following the taking of such action. ARTICLE V. OFFICERS SECTION 1. Officers. The officers of the Company shall be a Chairman of the Board, a President, one or more Executive Vice Presidents, a Senior Vice President - Finance and a Secretary. The Board and the Office of the Chief Executive, may appoint such other officers as they deem necessary, who shall have such authority and shall perform such duties as may be prescribed, respectively, by the Board or the Office of the Chief Executive. SECTION 2. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board. The Chairman may sign and execute all authorized bonds, contracts or other obligations, in the name of the Company, and with the Treasurer may sign all certificates of the shares in the capital stock of the Company. SECTION 3. President. The President shall be the chief executive officer of the Company and, subject to the Board and the Office of the Chief Executive, shall have general charge of the business and affairs of the Company and perform such other duties as may be assigned to the President by the Board or the Chairman of the Board. In the absence or inability to act of the Chairman of the Board, the President shall perform the duties of the Chairman of the Board. SECTION 4. Executive Vice Presidents. Each Executive Vice President shall have such powers and perform such duties as may be assigned to such Executive Vice President by the Board or the Office of the Chief Executive. SECTION 5. Vice Presidents. The Board or the Office of the Chief Executive may appoint one or more Vice Presidents. Each Vice President shall have such title, powers and duties as may be assigned to such Vice President by the Board or the Office of the Chief Executive. 6 Form 10-Q Exhibit 3.2 SECTION 6. Senior Vice President - Finance. The Senior Vice President - Finance shall be the chief financial officer of the Company, and shall have such powers and perform such duties as may be assigned to such Senior Vice President - Finance by the Board or the Office of the Chief Executive. SECTION 7. Treasurer. The Board shall appoint a Treasurer. Under the general direction of the Senior Vice President - Finance, the Treasurer shall have such powers and perform such duties as may be assigned to such Treasurer by the Board or the Office of the Chief Executive. SECTION 8. Assistant Treasurer. The Board or the Office of the Chief Executive may appoint one or more Assistant Treasurers. Each Assistant Treasurer shall have such powers and shall perform such duties as may be assigned to such Assistant Treasurer by the Board or the Office of the Chief Executive. SECTION 9. Controller. The Board may appoint a Controller. Under the general direction of the Senior Vice President - Finance, the Controller shall have such powers and perform such duties as may be assigned to such Controller by the Board or the Office of the Chief Executive. SECTION 10. Assistant Controller. The Board or the Office of the Chief Executive may appoint one or more Assistant Controllers. Each Assistant Controller shall have such powers and shall perform such duties as may be assigned to such Assistant Controller by the Board or the Office of the Chief Executive. SECTION 11. Secretary. The Secretary shall keep the minutes of all the meetings of the Board and the minutes of all the meetings of the stockholders; the Secretary shall attend to the giving and serving of all notices of meetings as required by law or these Bylaws; the Secretary shall affix the seal of the Company to any instruments when so required; and the Secretary shall in general perform all the corporate duties incident to the office of Secretary, subject to the control of the Board or the Chairman of the Board, and such other duties as may be assigned to the Secretary by the Board or the Chairman of the Board. SECTION 12. Assistant Secretary. The Board or the Office of the Chief Executive may appoint one or more Assistant Secretaries. Each Assistant Secretary shall have such powers and shall perform such duties as may be assigned to such Assistant Secretary by the Board or the Chairman of the Board or the President; and such Assistant Secretary shall affix the seal of the Company to any instruments when so required. 7 Form 10-Q Exhibit 3.2 SECTION 13. Removal. All officers may be removed or suspended at any time by the vote of the majority of the whole Board. All officers, agents and employees, other than officers elected or appointed by the Board, may be suspended or removed by the committee or by the officer appointing them. SECTION 14. Resignation. Any officer may resign at any time by giving written notice to the Chairman of the Board, the President or the Secretary. Unless otherwise stated in such notice of resignation, the acceptance thereof shall not be necessary to make it effective; and such resignation shall take effect at the time specified therein or, in the absence of such specification, it shall take effect upon the receipt thereof. SECTION 15. Vacancies. A vacancy in any office shall be filled in the same manner as provided for election or appointment to such office. ARTICLE VI. MISCELLANEOUS SECTION 1. Indemnification of Directors or Officers. Each person who is or was a Director or officer of the Company (including the heirs, executors, administrators or estate of such person) shall be indemnified by the Company as of right to the full extent permitted by the General Corporation Law of Delaware against any liability, cost or expense asserted against such Director or officer and incurred by such Director or officer by reason of the fact that such person is or was a Director or officer. The right to indemnification conferred by this Section shall include the right to be paid by the Company the expenses incurred in defending in any action, suit or proceeding in advance of its final disposition, subject to the receipt by the Company of such undertakings as might be required of an indemnitee by the General Corporation Law of Delaware. In any action by an indemnitee to enforce a right to indemnification hereunder or by the Company to recover advances made hereunder, the burden of proving that the indemnitee is not entitled to be indemnified shall be on the Company. In such an action, neither the failure of the Company (including its Board, independent legal counsel or stockholders) to have made a determination that indemnification is proper, nor a determination by the Company that indemnification is improper, shall create a presumption that the indemnitee is not entitled to be indemnified or, in the case of such an action brought by the indemnitee, be a defense thereto. If successful in whole or in part in such an 8 Form 10-Q Exhibit 3.2 action, an indemnitee shall be entitled to be paid also the expense of prosecuting or defending same. The Company may, but shall not be obligated to, maintain insurance at its expense, to protect itself and any such person against any such liability, cost or expense. SECTION 2. Certificate for Shares. The shares of the capital stock of the Company shall be represented by certificates unless the Company provides by appropriate action that some or all of any or all classes or series of the Company's stock shall be uncertificated. Notwithstanding the Company's taking such action, to the extent required by law, every holder of stock represented by certificates and, upon request, every holder of uncertificated shares, shall be entitled to a certificate representing the number of shares in the Company owned by such stockholder in such form, not inconsistent with the Certificate of Incorporation, as shall be prescribed by the Board. Certificates representing shares of the capital stock of the Company shall be signed by the Chairman of the Board, President or an Executive Vice President and the Treasurer, Secretary or an Assistant Secretary. Any or all signatures on the certificate, including those of the Transfer Agent and Registrar, may be facsimile. The name of the person owning the shares represented thereby, with the number of such shares and the date of issue, shall be entered on the Company's books. All certificates surrendered to the Company shall be cancelled, and no new certificates shall be issued until the former certificate for the same number of shares of the same class shall have been surrendered and cancelled, except that the Board may determine, from time to time, the conditions and provisions on which new certificates may be used in substitution of any certificates that may have been lost, stolen or destroyed. SECTION 3. Transfer of Shares. Shares in the capital stock of the Company shall be transferred by the record holder thereof, in person, or by any such person's attorney upon surrender and cancellation of certificates for a like number of shares. SECTION 4. Regulations. The Board also may make rules and regulations concerning the issue, transfer and registration of certificates for shares of the capital stock of the Company. The Board may appoint one or more transfer agents and one or more registrars of transfers, and may require all stock certificates to bear the signature of a transfer agent and a registrar of transfer. 9 Form 10-Q Exhibit 3.2 SECTION 5. Record Date of Stockholders. The Board may fix in advance a date, not exceeding sixty days preceding the date of any meeting of stockholders, or the date for the payment of any dividend or other distribution, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividend or other distribution, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive any such dividend or other distribution, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Company after such record date fixed as aforesaid. SECTION 6. Corporate Seal. The seal of the Company shall be circular in form, containing the words "E. I. DU PONT DE NEMOURS AND CO." and "DELAWARE" on the circumference, surrounding the words "FOUNDED" and "SEAL," and the date "1802." The seal shall be in the custody of the Secretary. A duplicate of the seal may be kept and used by the Senior Vice President - Finance, any Vice President - DuPont Finance, the Treasurer, or by any Assistant Secretary or Assistant Treasurer. ARTICLE VII. AMENDMENTS The Board shall have the power to adopt, amend and repeal the Bylaws of the Company, by a vote of the majority of the whole Board, at any regular or special meeting of the Board, provided that notice of intention to adopt, amend or repeal the Bylaws in whole or in part shall have been given at the next preceding meeting, or, without any such notice, by the vote of two-thirds of the whole Board. 10 Form 10-Q Exhibit 3.2 I hereby certify that the foregoing is a true and correct copy of the Bylaws of E. I. du Pont de Nemours and Company. Witness my hand and the corporate seal of the Company this day of 199 . - ------------ ------------------ -- ---------------------------- Secretary 11 Form 10-Q Exhibit 10.1 E. I. DU PONT DE NEMOURS AND COMPANY STOCK PERFORMANCE PLAN Originally Adopted - November 12, 1957 Last Amended - January 28, 1998 22 Form 10-Q Exhibit 10.1 STOCK PERFORMANCE PLAN I. PURPOSES The purposes of this Stock Performance Plan (the "Plan") are: (a) to provide greater incentive for employees who are or will be primarily responsible for the growth and success of the business to exert their best efforts on behalf of E. I. du Pont de Nemours and Company ("the Company"); and (b) to further the identity of interests of such employees with those of the Company's stockholders generally by encouraging them to acquire stock ownership in the Company. II. FORM OF GRANTS 1. Grants under this Plan may be made in the form of stock options, stock options accompanied by stock appreciation rights, restricted shares or units ("restricted stock") or a combination of any of these forms and may be made in replace- ment of or as alternatives to salary or grants under any other plan or program of a plan company. 2. Stock options to purchase shares of the Company's common stock granted under this Plan may be either incentive, performance or other stock options qualified under the Internal Revenue Code as in effect from time to time ("qualified stock options") or stock options that are not qualified under the Internal Revenue Code ("nonqualified stock options"), or a combination of qualified and nonqualified stock options. 3. Stock appreciation rights may be granted by the Company under this Plan upon such terms and conditions as the Compensation Committee may determine. Such rights may be granted only when they accompany the concurrent grant of stock options. Each stock appreciation right shall give the grantee the right to receive a payment equal to the excess of the fair market value of a share of the Company's common stock on the date when such right is exercised over the option price provided for in the accompanying stock option. Such rights may be exercised only if the grantee exercises the accompanying stock option by purchasing one share of the Company's common stock for each stock appreciation right exercised. The number of shares subject to exercise under an accompanying stock option shall be automatically reduced by one share for each stock appreciation right exercised. 4. Restricted stock granted under this Plan shall be subject to restriction, such as forfeiture and a minimum vesting period. A grantee of restricted shares shall generally have all 1 Form 10-Q Exhibit 10.1 incidents of ownership in the restricted shares, including the right to dividends and to vote (unless otherwise restricted). Restricted shares may be evidenced by book-entry registration, a stock certificate registered in the grantee's name but held in the Company's custody or issuance of an appropriate legended stock certificate, as determined by the Compensation Committee. III. LIMITATIONS ON GRANTS 1. The aggregate number of shares of the Company's stock which may be made subject to stock options granted under this Plan shall not exceed 72,000,000, or 5% of such number for any optionee, during any five consecutive years, of which only 12,000,000 shares may be subject to restricted stock grants. The number of stock appreciation rights which may be granted to any optionee under this Plan shall not exceed 50% of the number of shares made subject to an accompanying stock option. 2. If any stock option or restricted stock (without benefit of dividends) granted under this Plan shall terminate or expire for any reason without having been exercised or vested in full, the shares not acquired under such grant shall become available again for further grants under this Plan; provided also, that shares withheld by or tendered to the Company as payment of exercise price or other consideration or satisfaction of withholding taxes shall become available again for further grants to employees who are not executive officers; provided, however, that the shares which become so available for further grants shall not include any shares as to which a stock option has been reduced by reason of receiving payments under accompanying stock appreciation rights. The limitations set forth above shall be subject to adjustment as provided in Article XII hereof. IV. ADMINISTRATION 1. Except as otherwise specifically provided, the Plan shall be administered by the Compensation Committee of the Company's Board of Directors. The Compensation Committee shall be elected pursuant to the Bylaws of the Company, and the members thereof shall be ineligible for grants while serving on said Committee. 2 Form 10-Q Exhibit 10.1 2. The Compensation Committee is authorized, subject to the provisions of the Plan, from time to time to establish such rules and regulations as it deems appropriate for the proper administration of the Plan, and to make such determinations and take such steps in connection therewith as it deems necessary or advisable. 3. The Compensation Committee shall, subject to the provisions of the Plan, determine the time or times when stock options will be granted, which employees, if any, shall be granted stock options, the types of stock options to be granted, whether they shall be granted singly or in combination, when they shall be exercisable, the number of shares to be covered by each stock option or options, and the terms and conditions of such stock options; which employees, if any, shall also be granted accompanying stock appreciation rights, the number of stock appreciation rights which shall be granted to each of them, and the terms and conditions of such rights; and the time or times when restricted stock will be granted, which employees, if any, shall be granted restricted stock, the number of restricted shares to be granted, the restrictions or conditions on the right to transfer or dispose of such shares, and the terms and conditions of such restricted stock, including the number, amount, and timing of vesting increments. 4. The decision of the Compensation Committee with respect to any questions arising as to interpretation of this Plan, including the severability of any and all of the provisions thereof, shall be final, conclusive and binding. 5. The Company's Board of Directors may elect a Special Stock Performance Committee pursuant to the Bylaws of the Company which shall have and may exercise all the rights, powers and duties of the Compensation Committee specified in this Plan for purposes of making grants for significant achievements by employees who are not directors or executive officers of the Company. The Special Stock Performance Committee may also be authorized by the Compensation Committee to assume certain administrative responsibilities under this Plan. V. ELIGIBILITY FOR GRANTS 1. Grants under this Plan may be made to employees (including those who are directors or executive officers of the Company) as determined by the Compensation Committee (or Board of Directors, if the grantee is a director of the Company). In 3 Form 10-Q Exhibit 10.1 determining those employees to whom grants are to be made, the Compensation Committee (or Board of Directors, if the grantee is a director of the Company) may take into consideration present and potential contributions to the Company's success by such employees, and any other factors which the Compensation Committee (or Board of Directors, if the grantee is a director of the Company) may deem relevant in connection with accomplishing the purposes of the Plan. 2. The term "employee" may include an employee of a corporation or other business entity in which the Company shall directly or indirectly own fifty percent or more of the outstanding voting stock or other ownership interest, but shall exclude any director who is not also an officer or a full-time employee of a plan company. The term "plan company" as used in this Plan shall mean a business entity whose employees are eligible for grants under this Plan. The term "grantee" as used in this Plan means an employee to whom a grant has been made under this Plan or, where appropriate, his or her successor in interest upon death. VI. RECOMMENDATIONS AND GRANTS 1. Recommendations for grants to members of the Board of Directors shall be made by the Compensation Committee. Recommendations for grants to employees who are not members of the Board of Directors shall be made to the Compensation Committee by the Office of the Chief Executive. 2. Any grant to a director shall be made in the sole discretion of the Board of Directors, a majority of whose members taking final action on any such grant shall be ineligible for grants under Article V. Any grant to an employee who is not a member of the Board of Directors shall be made by the Compensation Committee which shall take final action on any such grant. 3. Grants may be made at any time under this Plan and in any of the forms or combinations thereof provided in Article II hereof. A grantee may receive and may hold more than one grant under this Plan. 4. The date on which a grant shall be deemed to have been made under this Plan shall be the date of the Compensation Committee (or Board of Directors, if the grantee is a director) authori- zation of the grant or such later date as may be determined by the Compensation Committee (or Board of Directors, if the grantee is a director) at the time the grant is authorized. 4 Form 10-Q Exhibit 10.1 Each grantee shall be advised in writing by the Company of a grant and the terms and conditions thereof, which terms and conditions, as the Compensation Committee from time to time shall determine, shall not be inconsistent with the provisions of this Plan. VII. OPTION PRICE The price per share of the Company's common stock which may be purchased upon exercise of a stock option granted under this Plan shall be determined by the Compensation Committee, but shall in no event be less than the fair market value of such share on the date the stock option is granted, and in no event less than the par value thereof. The price so determined also shall be applicable to any accompanying stock appreciation right. For purposes of this Plan, fair market value shall be the average of the high and low prices of the Company's common stock as reported on the "NYSE-Composite Transactions Tape" on the date of grant of a stock option or the date of exercise of a stock option or stock appreciation right, or if no sales of such stock were reported on said Tape on such date, the average of the high and low prices of such stock on the next preceding day on which sales were reported on said Tape. Such price shall be subject to adjustment as provided in Article XII hereof. VIII. OPTION TERM The term of each stock option and each stock appreciation right granted under this Plan shall be for such period as the Compensation Committee shall determine, but not for more than ten years from date of grant. IX. EXERCISE OF OPTIONS 1. Subject to the provisions of this Plan, each stock option and each stock appreciation right granted hereunder shall be exercisable on such date or dates and during such period and for such number of shares or stock appreciation rights as the Compensation Committee may determine. However, in no event shall a stock option or stock appreciation right be exercisable prior to six months from date of grant. The Compensation Committee may fix from time to time a minimum number of shares which must be purchased at the time a stock option is exercised. 2. A grantee electing to exercise a stock option shall at the time of exercise pay the Company the full purchase price of the shares he or she has elected to purchase. Payment of the 5 Form 10-Q Exhibit 10.1 purchase price shall be made in cash, the Company's common stock (valued at fair market value on the date of exercise), or a combination thereof, as the Compensation Committee may determine from time to time. A grantee electing to exercise a stock appreciation right granted under this Plan shall so notify the Company at the same time he or she elects to exercise an accompanying stock option. Payment by the Company for such stock appreciation right may be in cash, common stock (valued at fair market value on date of exercise), or a combination thereof, as the Compensation Committee may determine from time to time, but no fractional share of common stock shall be delivered. With respect to shares of the Company's common stock to be delivered upon exercise of a stock option or a stock appreciation right, the Compensation Committee shall periodically determine whether, and to what extent, such stock shall be in the form of new common stock issued for such purposes, or common stock acquired by the Company. 3. Notwithstanding any other provision of this Plan, when the fair market value of a share of the Company's common stock on the date a grantee elects to exercise a stock option is less than such amount per share as may be determined by the Compensation Committee from time to time, the Company may at its election pay the grantee in cash for each share he or she elected to purchase an amount equal to the excess of such fair market value over the option price provided for in the stock option. The Compensation Committee shall periodically determine whether the Company shall make such cash payment upon exercise of a stock option. When the Company makes a payment to the grantee under this paragraph 3 of Article IX, it shall not require the grantee to tender the full purchase price of the shares he or she has elected to purchase, the Company's obligation to issue or deliver such shares shall be null and void, and the right to purchase such number of shares subject to option shall be terminated. Such payment by the Company shall be deemed to be an exercise of a stock option and the purchase of shares thereunder for purposes of paragraph 3 of Article II and Article III. X. NONTRANSFERABILITY OF GRANTS During a grantee's lifetime no stock option or stock appreciation right granted under this Plan shall be transferable, and stock options and stock appreciation rights may be exercised only by the grantee, except as may otherwise be provided in rules established by the Compensation Committee to permit transfers or to authorize a third party to act on behalf of the grantee with respect to any stock options or stock appreciation rights. 6 Form 10-Q Exhibit 10.1 XI. TERMINATION OF EMPLOYMENT 1. The Compensation Committee shall, subject to the provisions of the Plan, determine the rules relating to rights under stock options, stock appreciation rights and restricted grants upon a grantee's termination of employment. 2. A grantee shall forfeit all rights under stock options, stock appreciation rights and restricted stock grants - (a) if the grantee is dismissed or leaves the service of the plan companies for any reason other than his or her death, or retirement pursuant to the provisions of the pension or retirement plan or policy of a plan company, or (b) if the grantee retires pursuant to the provisions of the pension or retirement plan or policy of a plan company, and if thereafter the Compensation Committee, after a hearing at which the grantee shall be entitled to be present, shall find that he or she has willfully engaged in any activity which is harmful to the interest of any of such companies; provided, however, that such stock options, stock appreciation rights and restricted stock grants may continue in effect to such extent and under such conditions as the Compensation Committee may determine; and provided, further, that the Compensation Committee may accelerate or waive any restrictions or conditions applicable to restricted stock grants, in whole or in part, based on such factors and criteria as the Compensation Committee may determine. 3. Upon the death of the grantee or his or her retirement pursuant to the provisions of the pension or retirement plan or policy of a plan company, whichever shall first occur, the number of shares subject to option and the number of stock appreciation rights shall be limited to that number of shares and rights which the grantee could have acquired or exercised under the terms of his or her grant or grants on the date of such death or retirement, and the options or rights representing the remainder of the grant or grants shall terminate. 7 Form 10-Q Exhibit 10.1 XII. ADJUSTMENTS 1. In the event of any stock dividend, split-up, reclassification or other analogous change in capitalization, the Compensation Committee shall make such adjustments, in the light of the change, as it deems to be equitable, both to the grantees and to the Company, in - (a) the number of shares and prices per share applicable to outstanding stock options, (b) the number of outstanding stock appreciation rights and their price, (c) the number of shares applicable to outstanding restricted stock grants, (d) the aggregate limitation set forth in Article III with respect to the number of shares which may be made subject to options and restricted stock grants. Furthermore, in the event of a distribution to common stockholders other than interim or year-end dividends declared as such by the Board of Directors, the Compensation Committee shall make such adjustments, in the light of the distribution, as it deems to be equitable, both to the grantees and to the Company, in respect of the items described in (a), (b) and (c) above. 2. Any fractional shares or fractional stock appreciation rights resulting from adjustments made pursuant to this Article shall be eliminated. XIII. AMENDMENTS The Board of Directors reserves the right to modify this Plan from time to time or to repeal the Plan entirely, or to direct the discontinuance of grants either temporarily or permanently; provided, however, that no modification of this Plan shall operate to annul, without the consent of the grantee, a grant already made hereunder; provided, also, that no modification without approval of the stockholders shall - (a) increase the number of shares which may be made subject to stock options or restricted stock grants, or the number of stock appreciation rights which may be granted under this Plan in the aggregate, except by way of adjustments as provided in Article XII, 8 Form 10-Q Exhibit 10.1 (b) permit grant of stock options and stock appreciation rights at a price less than fair market value, (c) extend the maximum term of stock options and stock appreciation rights, or (d) permit a grant under this Plan to a member of the Compensation Committee; except that the Board of Directors may take any action it deems advisable to ensure that qualified stock options may be granted under this Plan in accordance with the provisions of the Internal Revenue Code, as it may be amended. XIV. MISCELLANEOUS 1. The Compensation Committee may adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of countries other than the United States in which the Company or a plan company may operate to assure the viability of the benefits of grants made to employees in such countries and to meet the purposes of the Plan. 2. Grantees may use shares of the Company's common stock to satisfy withholding taxes relating to grants under this Plan to the extent provided in terms and conditions established by the Compensation Committee. 9 Form 10-Q Exhibit 10.2 DUPONT STOCK ACCUMULATION AND DEFERRED COMPENSATION PLAN FOR DIRECTORS Originally Adopted - November 12, 1957 Last Amended - March 1, 1998 23 Form 10-Q Exhibit 10.2 DUPONT STOCK ACCUMULATION AND DEFERRED COMPENSATION PLAN FOR DIRECTORS 1. PURPOSE OF THE PLAN The purpose of the DuPont Stock Accumulation and Deferred Compensation Plan for Directors (the "Plan") is (1) to further the identity of interests of members of the Board of Directors of E. I. du Pont de Nemours and Company (the "Company") with those of the Company's stockholders generally through the grant of common stock of the Company (the "Stock"); (2) to permit Directors to defer the payment of all or a specified part of their compensation, including any grant of Stock by the Company, for services performed as Directors; and (3) to provide for a grant of stock options to John A. Krol in connection with his service as Chairman of the Board of Directors. 2. ELIGIBILITY Members of the Board of Directors of the Company who are not employees of the Company or any of its subsidiaries or affiliates and who do not receive a form of compensation for Board service in lieu of customary Directors' fees shall be eligible to receive grants of Stock under the Plan. Members of the Board of Directors of the Company who are not employees of the Company or any of its subsidiaries or affiliates shall be eligible under this Plan to defer compensation for services performed as Directors. 3. ADMINISTRATION AND AMENDMENT The Plan shall be administered by the Compensation Committee of the Board of Directors (the "Committee"). The decision of the Committee with respect to any questions arising as to the interpretation of this Plan, including the severability of any and all of the provisions thereof, shall be final, conclusive and binding. The Board of Directors of the Company reserves the right to modify the Plan from time to time, or to repeal the Plan entirely, provided, however, that (1) no modification of the Plan shall operate to annul an election already in effect for the current calendar year or any preceding calendar year; and (2) to the extent required under Section 16 of the Securities Exchange Act of 1934 ("Exchange Act"), Plan provisions relating to the amount, price and timing of stock grants and options shall not be amended more than once every six months, except that the foregoing shall not preclude any amendment necessary to conform to changes in the Internal Revenue Code or the Employee Retirement Income Security Act. The Committee is authorized, subject to the provisions of the Plan, from time to time to establish such rules and regulations as it deems appro- priate for the proper administration of the Plan, and to make such deter- minations and take such steps in connection therewith as it deems necessary or advisable. 1 Form 10-Q Exhibit 10.2 4. COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT/CHANGE IN LAW It is the Company's intent that the Plan comply in all respects with Rule 16b-3 of the Exchange Act, or its successor, and any regulations promulgated thereunder. If any provision of this Plan is found not to be in compliance with such rule and regulations, the provision shall be deemed null and void, and the remaining provisions of the Plan shall continue in full force and effect. All transactions under this Plan shall be executed in accordance with the requirements of Section 16 of the Exchange Act and regulations promulgated thereunder. The Board of Directors may, in its sole discretion, modify the terms and conditions of this Plan in response to and consistent with any changes in applicable law, rule or regulation. 5. ANNUAL STOCK GRANT Effective with the 1996 Annual Meeting and annually thereafter, each Director eligible under Article 2 hereof shall be awarded an annual grant of four hundred (400) shares of Stock following his/her election to the Board of Directors at the Annual Meeting of Stockholders. A Director elected to the Board at a time other than at the Annual Meeting shall receive a grant of four hundred (400) shares of Stock following his/her first attendance at a Board Meeting, provided, however, that no Director shall receive more than four hundred (400) shares of Stock in any calendar year. A Director may use shares of Stock granted hereunder to satisfy withholding taxes related to grants under this Plan in accordance with terms and conditions established by the Committee. 6. ELECTION TO DEFER On or before December 31 of any year, a Director may elect to defer, until a specified year or retirement as a Director of the Company, the receipt of the Stock granted under Article 5 or the payment of all or a specified part of all fees payable to the Director for services as a Director during the calendar year following the election and succeeding calendar years in the form of cash or stock units, provided, however, that Stock may only be deferred as stock units. An person who shall become a Director during any calendar year, and who was not a Director of the Company on the preceding December 31, may elect, within thirty days after election to the Board, to defer in the same manner the receipt of the Stock granted under Article 5 of the payment of all or a specified part of fees not yet earned for the remainder of that calendar year and for succeeding calendar years in the form of cash or stock units. Elections shall be made by written notice delivered to the Secretary of the Committee. 2 Form 10-Q Exhibit 10.2 7. DIRECTORS' ACCOUNTS Fees deferred in the form of cash shall be held in the general funds of the Company and shall be credited to an account in the name of the Director. On the first day of each quarter, interest shall be credited to each account calculated on the basis of the cash balance in each account on the first day of each month of the preceding quarter at the Prime Rate of Morgan Guaranty Trust Company of New York (or at such other rate as may be specified by the Committee from time to time) in effect on the first day of each month. Stock granted under Article 5 to be deferred in the form of stock units, or fees to be deferred in the form of stock units, shall be allocated to each Director's account based on the closing price of the Company's common stock as reported on the Composite Tape of the New York Stock Exchange ("Stock Price") on the effective date of the Stock grant or the date the fees would otherwise have been paid. The Company shall not be required to reserve or otherwise set aside shares of common stock for the payment of its obligations hereunder, but shall make available as and when required a sufficient number of shares of common stock to meet the needs of the Plan. An amount equal to any cash dividends (or the fair market value of dividends paid in property other than dividends payable in common stock of the Company) payable on the number of shares represented by the number of stock units in each Director's account will be allocated to each Director's account in the form of stock units based upon the Stock Price on the dividend payment date. Any stock dividends payable on such number of shares will be allocated in the form of stock units. If adjustments are made to outstanding shares of common stock as a result of split-ups, recapitalizations, mergers, consolidations and the like, an appropriate adjustment will also be made in the number of stock units in a Director's account. Stock units shall not entitle any person to rights of a stockholder unless and until shares of Company common stock have been issued to that person with respect to stock units as provided in Article 8. 8. PAYMENT FROM DIRECTORS' ACCOUNTS The aggregate amount of Stock granted under Article 5 which has been deferred and deferred fees, together with interest and dividend equivalents accrued thereon, shall be paid in the year specified or after a Director ceases to be a Director of the Company. Amounts deferred to a specified year shall only be paid in a lump sum and shall be paid promptly at the beginning of that specified year. Amounts deferred to retirement shall be paid in a lump sum or, if the Director elects, in substantially equal annual install- ments over a period of years specified by the Director. The delivery election must be made by written notice delivered to the Secretary of the Committee prior to the date of retirement, and the first installment (or lump sum payment) shall be paid promptly at the beginning of the following calendar year. Subsequent installments shall be paid promptly at the beginning of each succeeding calendar year until the entire amount credited to the Director's account shall have been paid. Amounts credited to a 3 Form 10-Q Exhibit 10.2 Director's account in cash shall be paid in cash and amounts credited in stock units shall be paid in one share of common stock of the Company for each stock unit, except that a cash payment will be made with any final installment for any fraction of a stock unit remaining in the Director's account. Such fractional share will be valued at the closing Stock Price on the date of settlement. 9. PAYMENT IN EVENT OF DEATH A Director may file with the Secretary of the Committee a written designation of a beneficiary for his or her account under the Plan on such form as may be prescribed by the Committee, and may, from time to time, amend or revoke such designation. If a Director should die before all deferred amounts credited to the Director's account have been distributed, the balance of any deferred Stock and fees and interest and dividend equivalents then in the Director's account shall be paid promptly to the Director's designated beneficiary. If the Director did not designate a beneficiary, or in the event that the beneficiary designated by the Director shall have predeceased the Director, the balance in the Director's account shall be paid promptly to the Director's estate. 10. TERMINATION OF ELECTION A Director may terminate his/her election to defer payment of fees in cash or stock units by written notice delivered to the Secretary of the Committee. Termination shall become effective as of the end of the calendar year in which notice of termination is given with respect to fees payable for services as a Director during subsequent calendar years. Amounts credited to the account of a Director prior to the effective date of termination shall not be affected thereby and shall be paid only in accordance with Articles 7 and 8. 11. NONASSIGNABILITY During the Director's lifetime, the right to any deferred Stock or fees including interest and dividend equivalents thereon shall not be transferable or assignable. 12. OPTION GRANT A. Grant In recognition of his current and future contributions to the Company as Chairman of the Board of Directors, John A. Krol (Grantee) is granted sixty thousand (60,000) nonqualified options to purchase shares of Stock, effective March 1, 1998. The terms and conditions of such options shall be determined by the Committee consistent with the provisions of this Plan. 4 Form 10-Q Exhibit 10.2 B. Nontransferability of Options During Grantee's lifetime, no stock options granted under this Plan shall be transferable, and stock options may be exercised only by Grantee, except as may otherwise be provided in rules established by the Committee to permit transfers or to authorize a third party to act on behalf of Grantee with respect to any such stock options. C. Option Price The price per share of Stock which may be purchased upon exercise of a stock option granted hereunder shall be determined by the Committee, but shall in no event be less than the fair market value of such share on the date the stock option is granted, and in no event less than the par value thereof. For purposes of this Plan, fair market value shall be the average of the high and low prices of the Stock as reported on the "NYSE-Composite Transactions Tape" on the date of grant of a stock option or the date of exercise of a stock option, or if no sales of such Stock were reported on said Tape on such date, the average of the high and low prices of such Stock on the next preceding day on which sales were reported on said Tape. Such price shall be subject to adjustment as provided in paragraph 12(D) hereof. D. Adjustment (i) In the event of any stock dividend, split-up, reclassification or other analogous change in capitalization, the Committee shall make such adjustments, in the light of the change, as it deems to be equitable, both to Grantee and to the Company, in the number of shares and prices per share applicable to outstanding stock options. Furthermore, in the event of a distribution to common stockholders other than interim or year-end dividends declared as such by the Board of Directors, the Committee shall make such adjustments, in the light of the distribution, as it deems to be equitable, both to Grantee and to the Company, in respect to the item described herein. (ii) Any fractional shares resulting from adjustments made pursuant to this subparagraph shall be eliminated. E. Option Term The term of each stock option granted under this Plan shall be for such period as the Committee shall determine, but not for more than ten (10) years from the date of grant. F. Exercise of Options (i) Subject to the provisions of this Plan, each stock option granted hereunder shall be exercisable on such date or dates and during such period and for such number of shares as the Committee may determine. 5 Form 10-Q Exhibit 10.2 However, in no event shall a stock option be exercisable prior to six months from the date of grant. The Committee may fix from time to time a minimum number of shares which must be purchased at the time a stock option is exercised. (ii) At the time he elects to exercise a stock option, Grantee shall pay the Company the full purchase price of the shares he has elected to purchase. Payment of the purchase price shall be made in cash, Stock (valued at fair market on the date of exercise), or a combination thereof, as the Committee may determine from time to time. With respect to Stock to be delivered upon exercise of a stock option, the Committee shall periodically determine whether, and to what extent, such Stock shall be in the form of new common stock issued for such purposes, or common stock acquired by the Company. G. Tax Withholding Grantee may use shares of Stock to satisfy withholding taxes relating to the grants under this Plan to the extent provided in terms and conditions established by the Committee. H. Termination of Options (i) The Committee shall, subject to the provisions of the Plan, determine the rules relating to rights of Grantee in the event Grantee ceases to be a director of the Company or in the event of his death. (ii) In the event the Committee establishes a period of time in excess of six months from date of grant for the first date of exercisability of options granted hereunder, the Board of Directors, in its sole discretion, may waive such longer period. (iii) Grantee shall forfeit all rights under stock options granted hereunder if the Committee, after a hearing at which Grantee shall be entitled to be present, shall find that Grantee has willfully engaged in any activity harmful to the interest of the Company or any of its subsidiaries or affiliates provided, however, that such stock options may continue in effect to such extent and under such conditions as the Committee may determine. 13. GOVERNING LAW The validity and construction of the Plan shall be governed by the laws of the State of Delaware. 14. EFFECTIVE DATE This Plan shall become effective as of January 1, 1996, provided it is approved by stockholders at the Company's 1996 Annual Meeting, and shall continue in full force and effect until terminated by the Board of Directors. 6 Form 10-Q Exhibit 10.3 DUPONT STOCK ACCUMULATION AND DEFERRED COMPENSATION PLAN FOR DIRECTORS Originally Adopted - November 12, 1957 Last Amended - April 29, 1998 24 Form 10-Q Exhibit 10.3 DUPONT STOCK ACCUMULATION AND DEFERRED COMPENSATION PLAN FOR DIRECTORS 1. PURPOSE OF THE PLAN The purpose of the DuPont Stock Accumulation and Deferred Compensation Plan for Directors (the "Plan") is (1) to further the identity of interests of members of the Board of Directors of E. I. du Pont de Nemours and Company (the "Company") with those of the Company's stockholders generally through the grant of common stock of the Company (the "Stock"); (2) to permit Directors to defer the payment of all or a specified part of their compensation, including any grant of Stock by the Company, for services performed as Directors; and (3) to provide for a grant of stock options to John A. Krol in connection with his service as Chairman of the Board of Directors. 2. ELIGIBILITY Members of the Board of Directors of the Company who are not employees of the Company or any of its subsidiaries or affiliates and who do not receive a form of compensation for Board service in lieu of customary Directors' fees shall be eligible to receive grants of Stock under the Plan. Members of the Board of Directors of the Company who are not employees of the Company or any of its subsidiaries or affiliates shall be eligible under this Plan to defer compensation for services performed as Directors. 3. ADMINISTRATION AND AMENDMENT The Plan shall be administered by the Compensation Committee of the Board of Directors (the "Committee"). The decision of the Committee with respect to any questions arising as to the interpretation of this Plan, including the severability of any and all of the provisions thereof, shall be final, conclusive and binding. The Board of Directors of the Company reserves the right to modify the Plan from time to time, or to repeal the Plan entirely, provided, however, that (1) no modification of the Plan shall operate to annul an election already in effect for the current calendar year or any preceding calendar year; and (2) to the extent required under Section 16 of the Securities Exchange Act of 1934 ("Exchange Act"), Plan provisions relating to the amount, price and timing of stock grants and options shall not be amended more than once every six months, except that the foregoing shall not preclude any amendment necessary to conform to changes in the Internal Revenue Code or the Employee Retirement Income Security Act. The Committee is authorized, subject to the provisions of the Plan, from time to time to establish such rules and regulations as it deems appro- priate for the proper administration of the Plan, and to make such deter- minations and take such steps in connection therewith as it deems necessary or advisable. 1 Form 10-Q Exhibit 10.3 4. COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT/CHANGE IN LAW It is the Company's intent that the Plan comply in all respects with Rule 16b-3 of the Exchange Act, or its successor, and any regulations promulgated thereunder. If any provision of this Plan is found not to be in compliance with such rule and regulations, the provision shall be deemed null and void, and the remaining provisions of the Plan shall continue in full force and effect. All transactions under this Plan shall be executed in accordance with the requirements of Section 16 of the Exchange Act and regulations promulgated thereunder. The Board of Directors may, in its sole discretion, modify the terms and conditions of this Plan in response to and consistent with any changes in applicable law, rule or regulation. 5. ANNUAL STOCK GRANT Effective with the 1996 Annual Meeting and annually thereafter, each Director eligible under Article 2 hereof shall be awarded an annual grant of four hundred (400) shares of Stock following his/her election to the Board of Directors at the Annual Meeting of Stockholders. A Director elected to the Board at a time other than at the Annual Meeting shall receive a grant of four hundred (400) shares of Stock following his/her first attendance at a Board Meeting, provided, however, that no Director shall receive more than four hundred (400) shares of Stock in any calendar year. A Director may use shares of Stock granted hereunder to satisfy withholding taxes related to grants under this Plan in accordance with terms and conditions established by the Committee. 6. ELECTION TO DEFER On or before December 31 of any year, a Director may elect to defer, until a specified year or retirement as a Director of the Company, the receipt of the Stock granted under Article 5 or the payment of all or a specified part of all fees payable to the Director for services as a Director during the calendar year following the election and succeeding calendar years in the form of cash or stock units, provided, however, that Stock may only be deferred as stock units. An person who shall become a Director during any calendar year, and who was not a Director of the Company on the preceding December 31, may elect, within thirty days after election to the Board, to defer in the same manner the receipt of the Stock granted under Article 5 of the payment of all or a specified part of fees not yet earned for the remainder of that calendar year and for succeeding calendar years in the form of cash or stock units. Elections shall be made by written notice delivered to the Secretary of the Committee. 2 Form 10-Q Exhibit 10.3 7. DIRECTORS' ACCOUNTS Fees deferred in the form of cash shall be held in the general funds of the Company and shall be credited to an account in the name of the Director. On the first day of each quarter, interest shall be credited to each account calculated on the basis of the cash balance in each account on the first day of each month of the preceding quarter at the Prime Rate of Morgan Guaranty Trust Company of New York (or at such other rate as may be specified by the Committee from time to time) in effect on the first day of each month. Stock granted under Article 5 to be deferred in the form of stock units, or fees to be deferred in the form of stock units, shall be allocated to each Director's account based on the closing price of the Company's common stock as reported on the Composite Tape of the New York Stock Exchange ("Stock Price") on the effective date of the Stock grant or the date the fees would otherwise have been paid. The Company shall not be required to reserve or otherwise set aside shares of common stock for the payment of its obligations hereunder, but shall make available as and when required a sufficient number of shares of common stock to meet the needs of the Plan. An amount equal to any cash dividends (or the fair market value of dividends paid in property other than dividends payable in common stock of the Company) payable on the number of shares represented by the number of stock units in each Director's account will be allocated to each Director's account in the form of stock units based upon the Stock Price on the dividend payment date. Any stock dividends payable on such number of shares will be allocated in the form of stock units. If adjustments are made to outstanding shares of common stock as a result of split-ups, recapitalizations, mergers, consolidations and the like, an appropriate adjustment will also be made in the number of stock units in a Director's account. Stock units shall not entitle any person to rights of a stockholder unless and until shares of Company common stock have been issued to that person with respect to stock units as provided in Article 8. 8. PAYMENT FROM DIRECTORS' ACCOUNTS The aggregate amount of Stock granted under Article 5 which has been deferred and deferred fees, together with interest and dividend equivalents accrued thereon, shall be paid in the year specified or after a Director ceases to be a Director of the Company. Amounts deferred to a specified year shall only be paid in a lump sum and shall be paid promptly at the beginning of that specified year. Amounts deferred to retirement shall be paid in a lump sum or, if the Director elects prior to retirement, either (1) in a lump sum in a specified year after retirement; (2) in substantially equal annual installments over a period of years specified by the Director; or (3) in a lump sum upon the Director's death. The delivery election must be made by written notice delivered to the Secretary of the Committee prior to the date of retirement, and the first installment (or lump sum payment upon retirement or in a specified year thereafter) shall be paid promptly at the beginning of the following calendar year. Subsequent installments shall be paid promptly at the beginning of each succeeding calendar year until the entire amount credited to the Director's account shall have been paid. Amounts credited 3 Form 10-Q Exhibit 10.3 to a Director's account in cash shall be paid in cash and amounts credited in stock units shall be paid in one share of common stock of the Company for each stock unit, except that a cash payment will be made with any final installment for any fraction of a stock unit remaining in the Director's account. Such fractional share will be valued at the closing Stock Price on the date of settlement. 9. PAYMENT IN EVENT OF DEATH A Director may file with the Secretary of the Committee a written designation of a beneficiary for his or her account under the Plan on such form as may be prescribed by the Committee, and may, from time to time, amend or revoke such designation. If a Director should die before all deferred amounts credited to the Director's account have been distributed, the balance of any deferred Stock and fees and interest and dividend equivalents then in the Director's account shall be paid promptly to the Director's designated beneficiary. If the Director did not designate a beneficiary, or in the event that the beneficiary designated by the Director shall have predeceased the Director, the balance in the Director's account shall be paid promptly to the Director's estate. 10. TERMINATION OF ELECTION A Director may terminate his/her election to defer payment of fees in cash or stock units by written notice delivered to the Secretary of the Committee. Termination shall become effective as of the end of the calendar year in which notice of termination is given with respect to fees payable for services as a Director during subsequent calendar years. Amounts credited to the account of a Director prior to the effective date of termination shall not be affected thereby and shall be paid only in accordance with Articles 7 and 8. 11. NONASSIGNABILITY During the Director's lifetime, the right to any deferred Stock or fees including interest and dividend equivalents thereon shall not be transferable or assignable. 12. OPTION GRANT A. Grant In recognition of his current and future contributions to the Company as Chairman of the Board of Directors, John A. Krol (Grantee) is granted sixty thousand (60,000) nonqualified options to purchase shares of Stock, effective March 1, 1998. The terms and conditions of such options shall be determined by the Committee consistent with the provisions of this Plan. 4 Form 10-Q Exhibit 10.3 B. Nontransferability of Options During Grantee's lifetime, no stock options granted under this Plan shall be transferable, and stock options may be exercised only by Grantee, except as may otherwise be provided in rules established by the Committee to permit transfers or to authorize a third party to act on behalf of Grantee with respect to any such stock options. C. Option Price The price per share of Stock which may be purchased upon exercise of a stock option granted hereunder shall be determined by the Committee, but shall in no event be less than the fair market value of such share on the date the stock option is granted, and in no event less than the par value thereof. For purposes of this Plan, fair market value shall be the average of the high and low prices of the Stock as reported on the "NYSE-Composite Transactions Tape" on the date of grant of a stock option or the date of exercise of a stock option, or if no sales of such Stock were reported on said Tape on such date, the average of the high and low prices of such Stock on the next preceding day on which sales were reported on said Tape. Such price shall be subject to adjustment as provided in paragraph 12(D) hereof. D. Adjustment (i) In the event of any stock dividend, split-up, reclassification or other analogous change in capitalization, the Committee shall make such adjustments, in the light of the change, as it deems to be equitable, both to Grantee and to the Company, in the number of shares and prices per share applicable to outstanding stock options. Furthermore, in the event of a distribution to common stockholders other than interim or year-end dividends declared as such by the Board of Directors, the Committee shall make such adjustments, in the light of the distribution, as it deems to be equitable, both to Grantee and to the Company, in respect to the item described herein. (ii) Any fractional shares resulting from adjustments made pursuant to this subparagraph shall be eliminated. E. Option Term The term of each stock option granted under this Plan shall be for such period as the Committee shall determine, but not for more than ten (10) years from the date of grant. F. Exercise of Options (i) Subject to the provisions of this Plan, each stock option granted hereunder shall be exercisable on such date or dates and during such period and for such number of shares as the Committee may determine. 5 Form 10-Q Exhibit 10.3 However, in no event shall a stock option be exercisable prior to six months from the date of grant. The Committee may fix from time to time a minimum number of shares which must be purchased at the time a stock option is exercised. (ii) At the time he elects to exercise a stock option, Grantee shall pay the Company the full purchase price of the shares he has elected to purchase. Payment of the purchase price shall be made in cash, Stock (valued at fair market on the date of exercise), or a combination thereof, as the Committee may determine from time to time. With respect to Stock to be delivered upon exercise of a stock option, the Committee shall periodically determine whether, and to what extent, such Stock shall be in the form of new common stock issued for such purposes, or common stock acquired by the Company. G. Tax Withholding Grantee may use shares of Stock to satisfy withholding taxes relating to the grants under this Plan to the extent provided in terms and conditions established by the Committee. H. Termination of Options (i) The Committee shall, subject to the provisions of the Plan, determine the rules relating to rights of Grantee in the event Grantee ceases to be a director of the Company or in the event of his death. (ii) In the event the Committee establishes a period of time in excess of six months from date of grant for the first date of exercisability of options granted hereunder, the Board of Directors, in its sole discretion, may waive such longer period. (iii) Grantee shall forfeit all rights under stock options granted hereunder if the Committee, after a hearing at which Grantee shall be entitled to be present, shall find that Grantee has willfully engaged in any activity harmful to the interest of the Company or any of its subsidiaries or affiliates provided, however, that such stock options may continue in effect to such extent and under such conditions as the Committee may determine. 13. GOVERNING LAW The validity and construction of the Plan shall be governed by the laws of the State of Delaware. 14. EFFECTIVE DATE This Plan shall become effective as of January 1, 1996, provided it is approved by stockholders at the Company's 1996 Annual Meeting, and shall continue in full force and effect until terminated by the Board of Directors. 6 Form 10-Q Exhibit 12 E. I. DU PONT DE NEMOURS AND COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollars in millions)
Years Ended December 31 Three Months Ended ------------------------------------------------- March 31, 1998 1997 1996 1995 1994 1993 ------------------ --------- --------- ------- ------- --------- Net Income ....................................... $ 906 $2,405 $3,636 $3,293 $2,727 $ 566 Provision for Income Taxes ....................... 583 2,275 2,345 2,097 1,655 392 Minority Interests in Earnings of Consolidated Subsidiaries ................................... 13 67 59 30 18 5 Adjustment for Companies Accounted for by the Equity Method ........................... 47 982 81 41 18 41 Capitalized Interest ............................. (53) (169) (144) (170) (143) (194) Amortization of Capitalized Interest ............. 29 138 191 154 154 144 ------ ------ ------ ------ ------ ------ 1,525 5,698 6,168 5,445 4,429 954 ------ ------ ------ ------ ------ ------ Fixed Charges: Interest and Debt Expense ...................... 195 662 729 758 559 594 Adjustment for Companies Accounted for by the Equity Method - Interest and Debt Expense .... 34 97 70 71 55 42 Capitalized Interest ........................... 53 169 144 170 143 194 Rental Expense Representative of Interest Factor ....................................... 32 127 118 113 118 143 ------ ------ ------ ------ ------ ------ 314 1,055 1,061 1,112 875 973 ------ ------ ------ ------ ------ ------ Total Adjusted Earnings Available for Payment of Fixed Charges .................................... $1,839 $6,753 $7,229 $6,557 $5,304 $1,927 ====== ====== ====== ====== ====== ====== Number of Times Fixed Charges are Earned ........... 5.9 6.4 6.8 5.9 6.1 2.0 ====== ====== ====== ====== ====== ====== Income Before Extraordinary Item and Transition Effect of Accounting Changes. Includes write-off of Purchased In-Process Research and Development associated with acquisition of 20% interest in Pioneer Hi-Bred International, Inc. Includes write-off of capitalized interest associated with divested businesses.
25 EX-27 2
5 This Schedule Contains Summary Financial Information Extracted From Form 10-Q For The Quarterly Period Ended March 31, 1998, And Is Qualified In Its Entirety By Reference To Such Financial Statements 1,000,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 2,024 236 5963 0 4,533 13,796 54,514 30,439 45,627 15,823 6,434 0 237 344 11,048 45,627 10,965 11,378 8,264 9,699 0 0 190 1,489 583 906 0 0 0 906 .80 .79 Includes Other Accounts In Addition To Notes and Accounts Receivable-Trade. Includes Other Expenses. Cost of Goods Sold and Other Expenses; Depreciation, Depletion and Amortization; Exploration Expenses, Including Dry Hole Costs and Impairment of Unproved Properties; Selling, General and Administrative Expenses; Purchased In-Process Research and Development. Basic earnings per share.
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