11-K 1 d11k.txt DUPONT SPECIALTY GRAINS, LLC FORM 11-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001 DUPONT SPECIALTY GRAINS, LLC RETIREMENT AND SAVINGS PLAN (FULL TITLE OF THE PLAN) E. I. DU PONT DE NEMOURS AND COMPANY 1007 MARKET STREET WILMINGTON, DELAWARE 19898 (NAME AND ADDRESS OF PRINCIPAL EXECUTIVE OFFICE OF ISSUER) ================================================================================ Signatures Pursuant to the requirements of the Securities and Exchange Act of 1934, the Administrative Committee formed under the DuPont Specialty Grains, LLC Retirement and Savings Plan has duly caused the Annual Report to be signed by the undersigned hereunto duly authorized. Qptimum Quality Grains LLC Retirement and Savings Plan Dated: June 27, 2002 By: /s/ Nancy Betz ------------------- Nancy Betz Director of Human Resources DuPont Specialty Grains, LLC Retirement and Savings Plan Index to Financial Statements and Supplemental Schedule
Page(s) Report of Independent Accountants 1 Financial Statements: Statements of Net Assets Available for Benefits at December 31, 2001 and 2000 2 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2001 and 2000 3 Notes to Financial Statements 4-11 Supplemental Schedule*: Schedule of Assets (Held at End of Year) 12
* Other schedules required by Section 2520.103-10 of the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable. Report of Independent Accountants To the Administrator and Participants of the DuPont Specialty Grains, LLC Retirement and Savings Plan In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the DuPont Specialty Grains, LLC Retirement and Savings Plan (the "Plan") at December 31, 2001 and 2000 and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ PricewaterhouseCoopers Philadelphia, Pennsylvania June 25, 2002 DuPont Specialty Grains, LLC Retirement and Savings Plan Statement of Net Assets Available for Benefits December 31, 2001 and 2000 2001 2000 Assets: Investments: Plan interest in DuPont and Related Companies Defined Contribution Plan Master Trust $2,524,156 $2,624,076 Company stock funds 781,129 818,533 Mutual funds 5,569,198 5,961,891 Common/collective trust funds 1,263,403 1,295,340 Cash 26 10 Participant loans 126,446 134,976 ------------- ------------- Total investments 10,264,358 10,834,826 ------------- ------------- Receivables: Participants' contributions 27,947 32,896 Employer's contributions 8,564 10,922 Investment income 6,547 5,851 Investment securities sold - 24,616 ------------- ------------- Total receivables 43,058 74,285 ------------- ------------- Net assets available for benefits $10,307,416 $10,909,111 ============= ============= The accompanying notes are an integral part of these financial statements. -2- DuPont Specialty Grains, LLC Retirement and Savings Plan Statement of Net Assets Available for Benefits December 31, 2001 and 2000 2001 2000 Additions: Investment income: Net depreciation in fair value of investments $(1,146,964) $(1,504,881) Interest and dividend income 174,232 572,560 ------------- ------------- (972,732) (932,321) ------------- ------------- Contributions: Participant 621,536 727,341 Employer 192,145 553,257 ------------- ------------- 813,681 1,280,598 Total additions (159,051) 348,277 ------------- ------------- Deductions: Benefits paid to participants 442,644 661,662 ------------- ------------- Net decrease (601,695) (313,385) ------------- ------------- Net assets available for benefits: Beginning of year 10,909,111 11,222,496 ------------- ------------- End of year $10,307,416 $10,909,111 ------------- ------------- The accompanying notes are an integral part of these financial statements. -3- DuPont Specialty Grains, LLC Retirement and Savings Plan Notes to Financial Statements December 31, 2001 and 2000 1. Description of the Plan The following description of the DuPont Specialty Grains, LLC Retirement and Savings Plan (the "Plan") provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. General The Plan is a defined contribution plan covering substantially all employees of DuPont Specialty Grains, LLC (the "Company"), a wholly-owned subsidiary of E. I. du Pont de Nemours and Company ("DuPont"). The Plan was established on January 1, 1998. The Plan is subject to the Employee Retirement Income Security Act of 1974 ("ERISA") and the Internal Revenue Code ("IRC"). The designated trustee of the Plan is Merrill Lynch Trust Company of America ("Merrill Lynch"). Contributions Participants authorize payroll deductions which are contributed to the Plan and credited to their individual accounts. Participant contributions are limited to a maximum of 16% of a participant's earnings, as defined. Participants may also contribute amounts representing rollovers from other qualified retirement plans. The Company makes matching contributions in the amount of 50% of all participant contributions up to 6% of the participant's earnings, as defined. Company contributions are invested in accordance with the participant's investment elections. The Company may also make a discretionary monthly profit sharing contribution to participants in an amount equal to 6% of a participant's earnings, as defined. Discretionary profit sharing contributions were $386,188 for the year ended December 31, 2000. There were no discretionary profit sharing contributions for the year ended December 31, 2001. Participant Accounts Each participant's account is credited with the participant's contributions and allocations of the Company's contributions and Plan earnings. Allocations are based on account balances as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. -4- DuPont Specialty Grains, LLC Retirement and Savings Plan Notes to Financial Statements December 31, 2001 and 2000 Eligibility and Vesting Employees are eligible to participate in the plan on the first day of the month following the date on which they have completed at least 1,000 hours of service in a 12-consecutive-month period and are qualified employees, as defined. Participants are 100% vested in their contributions. Participants are 100% vested in all of their accounts, including Company contributions and profit sharing contributions, if they retire from DuPont Specialty Grains, LLC after reaching age 65 or if their employment terminates because of death or disability. If participants leave DuPont Specialty Grains, LLC under any other circumstances, they are entitled to the vested percentage of their Company contributions, profit sharing contributions and earnings on those contributions as follows: Vested Years of Service Percent 1 - 2 20% 2 - 3 40% 3 - 4 60% 4 - 5 80% 5 or more 100% Participant Loans Participants may borrow from their accounts, a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Loan terms shall not exceed 5 years, unless the loan is for the purchase of a primary residence, then it shall not exceed 10 years. The loans are collateralized by the balance in the participant's account and bear interest at the average rate for secured personal loans in effect at five banks on the last working day of the month preceding the date on which the loan application was made. Principal and interest are paid ratably through payroll deductions. Payment of Benefits A participant may make three withdrawals in a calendar year, withdrawing all or a portion of his or her account balance, except the portion attributable to pre-tax contributions allocated to the participant's loan account. If a participant is under age 59 1/2, a withdrawal may be made from the participant's pre-tax contributions and earnings account without penalty only if a financial hardship is demonstrated. If a participant's employment terminates due to the participant's death, total and permanent disability, retirement or separation from service, the participant or the participant's beneficiary is entitled to receive the vested balance of the participant's accounts in a single lump-sum distribution. -5- DuPont Specialty Grains, LLC Retirement and Savings Plan Notes to Financial Statements December 31, 2001 and 2000 Administrative Expenses Reasonable expenses of administering the Plan, at the election of the Company, may be paid by the Plan. For the years ended December 31, 2001 and 2000, the Company paid all administrative expenses of the Plan. Brokerage fees, transfer taxes, investment fees and other expenses incident to the purchase and sale of securities and investment shall be included in the cost of such securities or investments or deducted from the sales proceeds. Forfeited Accounts At December 31, 2001 and 2000, forfeited nonvested accounts totaled $12,707 and $19,377, respectively. These accounts can be used to reduce future employer contributions. Forfeitures of $14,882 and $30,832 were used to offset Company contributions during the years ended December 31, 2001 and 2000, respectively. 2. Significant Accounting Policies The following accounting policies which conform to accounting principles generally accepted in the United States of America, have been used consistently in the preparation of the Plan's financial statements. Basis of Accounting The financial statements have been prepared on the accrual basis of accounting. Investment Valuation and Income Recognition The investments of the Plan are carried at fair value, except for the Plan's interest in the DuPont and Related Companies Defined Contribution Plan Master Trust ("Master Trust"). The Plan's interest in the Master Trust relating to investment contracts is based upon its beginning value plus actual contributions and allocated investment income less actual distributions (see Note 3). The Master Trust's investment contracts are fully benefit responsive and thus, are stated at contract value. Shares of registered investment companies (mutual funds) are valued at quoted market prices which represent the net asset value of shares held by the Plan at year end. Shares of common and collective trust funds are valued at net unit value as determined by the trustee at year end. The Company stock funds are valued at their year-end unit closing price (defined as the year-end market price of common stock plus the uninvested cash position). Participant loans and short-term investments are valued at cost which approximates fair value. Dividend income is recorded on the ex-dividend date and interest income is accrued when earned. Realized gains and losses on the sale of the Company Stock Fund securities are based on average cost on the securities sold. Purchases and sales of investments are recorded on a trade-date basis. Capital gain distributions are included in dividend income. Payment of Benefits Benefits are recorded when paid. -6- DuPont Specialty Grains, LLC Retirement and Savings Plan Notes to Financial Statements December 31, 2001 and 2000 Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the Plan's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. 3. DuPont and Related Companies Defined Contribution Plan Master Trust On April 1, 1999, the Company and certain affiliates ("employers") entered into a Master Trust Agreement with Merrill Lynch ("Trustee") to establish a master trust to allow participants from affiliated plans to invest in a Stable Value Fund and three different Asset Allocation Funds: the Conservative, Moderate, and Aggressive portfolios. Prior to April 1, 1999, the Stable Value Fund and Asset Allocation Funds were separate investment options of the Plan. To participate in the Master Trust, affiliates who sponsor qualified savings plans and who have adopted the Master Trust Agreement are required to make monthly payments to the Trustee of designated portions of employees' savings and other contributions by the affiliate. Investment income relating to the Master Trust is allocated proportionately by investment fund to the plans within the Master Trust based on the plan's interest to the total fair value of the Master Trust investment funds. The Stable Value Fund is invested in guaranteed investment contracts, separate account portfolios, synthetic guaranteed investment contracts and money market funds. The crediting interest rates on investment contracts ranged from 5.02% to 7.24% for the year ended December 31, 2001 and from 5.83% to 8.50% for the year ended December 31, 2000. The blended rate of return was 6.39% in 2001 and 6.72% in 2000. The crediting rates for certain investment contracts are reset annually and are based on the market value of the portfolio of assets underlying these contracts. Inputs used to determine the crediting rate include each contract's portfolio market value, current yield-to-maturity, duration (i.e., weighted average life) and market value relative to contract value. All contracts have a guaranteed rate of 0% or higher with respect to determining interest rate resets. A synthetic guaranteed investment contract provides for a guaranteed return on principle over a specified period of time through the use of underlying assets and a benefit responsive wrapper contract issued by a third party. Included in the contract value of synthetic guaranteed investment contracts is $(122,037,312) and $(61,031,076) at December 31, 2001 and 2000, respectively, attributable to wrapper contract providers representing the amounts by which the value of contracts is less than the value of the underlying assets. -7- DuPont Specialty Grains, LLC Retirement and Savings Plan Notes to Financial Statements December 31, 2001 and 2000 Total Assets of the Master Trust include: December 31, ----------------------------------------- 2001 2000 Investment Contracts $5,294,842,052 $ 5,134,555,882 Common/Collective Trust Funds 20,450,633 25,007,540 Money Market Funds 26,733,694 31,437,135 ------------------ -------------------- Total $5,342,026,379 $ 5,191,000,557 ------------------ -------------------- The Plan's undivided interest in the Master Trust was .047% and .051% as of December 31, 2001 and 2000, respectively. Investments of the Master Trust that represent more than 5% of the assets of the Master Trust were as follows: December 31, ------------------------------------- 2001 2000 Investment Contracts: Connecticut General Life Ins. $439,624,619 $ - Aetna Life and Annuity 519,942,538 356,648,682 Peoples Security - 301,118,125 CDC Financial - 336,220,628 Deutsche Bank (DUP-1) 519,076,651 330,341,799 Deutsche Bank (PIM-DUP-1) - 273,816,467 Deutsche Bank (PIM-DUP-2) - 347,269,727 JP Morgan (95-04) 519,142,395 320,535,834 JP Morgan (95-12) - 353,745,646 JP Morgan (ADUPONT03) 528,060,590 - Metropolitan Life - 412,600,954 Union Bank of Switzerland 518,377,156 416,151,942 Principal Life 296,750,377 280,402,889 Monumental Life Insurance Co. 516,903,184 356,840,431 At December 31, 2001, the total assets of the Master Trust of $5,342,026,379 included participant investments in the Stable Value Fund of $5,305,008,040 and $37,018,339 in the Conservative, Moderate and Aggressive Allocation Funds. At December 31, 2000, the total Master Trust value of $5,191,000,557 included participant investments in the Stable Value Fund of $5,144,944,410 and $46,056,147 in the Conservative, Moderate and Aggressive Allocation Funds. -8- DuPont Specialty Grains, LLC Retirement and Savings Plan Notes to Financial Statements December 31, 2001 and 2000 Total investment income of the Master Trust for the years ended December 31, 2001 and 2000 was $341,975,725 and $353,329,080, respectively. Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 requires that an entity recognize all derivatives and measure those instruments at fair value. SFAS No. 133 is effective for fiscal years beginning after June 15, 2000. Pursuant to SFAS No. 137, the Plan adopted SFAS No. 133 effective January 1, 2001. There was an inconsistency in accounting literature between SFAS No. 133, requiring derivatives to be measured at fair value, and the AICPA Audit and Accounting Guide on "Audits of Employee Benefit Plans" and Statement of Position 94-4, "Reporting of Investment Contracts Held by Health and Welfare Benefits Plans and Defined Contribution Pension Plans," requiring benefit responsive investment contracts (including synthetic guaranteed investment contracts) to be measured at contract value. This inconsistency has been tentatively resolved by the Financial Accounting Standards Board. The tentative guidance provides that contracts accounted for under SOP 94-4 are not subject to the requirements of SFAS 133. Therefore, the Master Trust continues to account for synthetic guaranteed investment contracts at contract value. Accordingly, the adoption of SFAS 133 did not have a material impact on the financial statements. The carrying value of Synthetic Guaranteed Investment contracts held by the Master Trust is $3,858,061,618 and $4,001,503,657 at December 31, 2001 and 2000, respectively. 4. Investments Investments that represent more than 5% of the net assets available for benefits as of December 31, 2001 and 2000 were as follows: 2001 2000 DuPont Company Stock Fund $ 752,985 $ 789,756 Franklin Small Cap Growth Fund Class I - 624,512 Janus Mercury Fund 584,515 849,061 Merrill Lynch Equity Index Trust Tier 6 850,487 892,143 Fidelity Low Priced Stock 642,824 - Plan interest in DuPont and Related Companies Defined Contribution Plan Master Trust 2,524,156 2,624,076 -9- DuPont Specialty Grains, LLC Retirement and Savings Plan Notes to Financial Statements December 31, 2001 and 2000 During the years ended December 31, 2001 and 2000, the Plan's investments depreciated (including realized gains and losses) in value as follows: 2001 2000 Company stock funds $ (93,484) $ (196,689) Mutual funds (993,099) (1,276,269) Common/collective trust funds (135,874) (104,033) Master Trust 75,493 72,110 ------------- --------------- Net depreciation $ (1,146,964) $ (1,504,881) ============= =============== 5. Conoco, Inc. Class B Common Stock Fund On September 28, 1998, DuPont announced that the Board of Directors had approved a plan to divest DuPont's 100 percent-owned petroleum business, Conoco, Inc. On August 6, 1999, DuPont completed the planned divestiture through a tax-free split-off. DuPont exchanged its shares of Conoco, Inc. Class B common stock for shares of DuPont common stock. Plan participants had the option to exchange shares of DuPont Company stock, which were held in their participant accounts in the DuPont Common Stock Fund. For each share of DuPont common stock exchanged, the participant received an appropriate number of shares of Conoco Class B common stock. Accordingly, the Conoco Class B Stock Fund was created as an investment fund of the Plan. No additional shares of Conoco Class B common stock may be purchased by Plan participants through payroll deductions, fund transfers, or the reinvestment of dividends. Dividends earned on Conoco Class B common stock are distributed pro rata to the investment options in participants' accounts based upon their current investment elections. The balance of the Conoco Stock Fund was $28,144 and $28,777 at December 31, 2001 and 2000, respectively. 6. Tax Status The Plan is currently in the process of applying for a tax determination letter from the Internal Revenue Service. The Plan's administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in accordance with the applicable requirements of the Internal Revenue Code. Accordingly, no provision has been made for federal income taxes in the accompanying financial statements. 7. Related Party Transactions Certain Plan investments are shares of mutual funds and units of common/collective trust funds managed by Merrill Lynch, the Trustee. In addition, the Plan offers the DuPont Company Stock Fund investment option. The Master Trust is managed by DuPont Capital Management, a wholly-owned subsidiary of DuPont, and the Trustee. Transactions in these investments qualify as party-in-interest transactions which are exempt from the prohibited transaction rules. -10- DuPont Specialty Grains, LLC Retirement and Savings Plan Notes to Financial Statements December 31, 2001 and 2000 8. Plan Termination Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100 percent vested in the employer contributions. 9. Subsequent Events Effective January 1, 2002, all participants of the DuPont Specialty Grains, LLC Retirement and Savings Plan became participants of the Savings and Investment Plan of E. I. du Pont de Nemours and Company. All contributions made on or after this date will be invested in the Savings and Investment Plan of E. I. du Pont de Nemours and Company. Management expects to merge the DuPont Specialty Grains, LLC Retirement and Savings Plan with and into the Savings and Investment Plan of E. I. du Pont de Nemours and Company during 2002. -11- DuPont Specialty Grains, LLC Exhibit I Retirement and Savings Plan Schedule of Assets (Held at End of Year) Form 5500, Schedule H, Part IV, 4, i At December 31, 2001 --------------------------------------------------------------------------------
Current Identity of Issue Description of Investment Value Franklin Small Capital Growth Fund Class I Registered Investment Company $ 423,339 Janus Enterprise Fund Registered Investment Company 207,424 Janus Mercury Fund Registered Investment Company 584,515 Mercury HW International Value Fund Class I Registered Investment Company 182,967 Fidelity Low Priced Stock Registered Investment Company 642,824 MFS Total Return Fund Registered Investment Company 146,080 Mercury Global Holdings Fund Class I Registered Investment Company 30,509 Templeton Growth Fund Registered Investment Company 139,766 AIM Value Fund Registered Investment Company 420,919 Fidelity Growth & Income Fund Class A Registered Investment Company 481,899 *Merrill Lynch Growth Fund Class A Registered Investment Company 148,491 AIM Equity Constellation Fund Registered Investment Company 270,156 Franklin Balance Sheet Registered Investment Company 368,008 Templeton Foreign Fund Registered Investment Company 126,355 Fidelity Magellan Fund Registered Investment Company 395,596 Fidelity Fund PV1 Registered Investment Company 131,350 Fidelity Equity Income Fund Registered Investment Company 307,571 Franklin Custom Fund Income Growth Registered Investment Company 206,306 MFS Total Return Fund Registered Investment Company 91,613 *Merrill Lynch Balanced Capital Fund Class A Registered Investment Company 44,674 *Merrill Lynch Basic Value Fund Class A Registered Investment Company 218,836 Barclays 3-Way Common/Collective Trusts 253,513 *Merrill Lynch SM Capital Index CT Tier 2 Common/Collective Trusts 100,886 *Merrill Lynch Equity Index Trust Tier 6 Common/Collective Trusts 850,487 *Merrill Lynch International Index CT Tier 2 Common/Collective Trusts 58,517 Conoco Stock Company Stock 28,144 *DuPont Stock Company Stock 752,985 Plan interest in the DuPont and Related Companies Defined Contribution Plan Master Trust ("Master Trust") Master Trust 2,524,156 Participant loans 8.5% to 9.0% 126,446 Cash 26 -------------- $ 10,264,358 =============
* Party-in-interest -12-