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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)
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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
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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
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Total investments 10,264,358 10,834,826
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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
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Total receivables 43,058 74,285
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Net assets available for benefits $10,307,416 $10,909,111
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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
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(972,732) (932,321)
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Contributions:
Participant 621,536 727,341
Employer 192,145 553,257
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813,681 1,280,598
Total additions (159,051) 348,277
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Deductions:
Benefits paid to participants 442,644 661,662
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Net decrease (601,695) (313,385)
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Net assets available for benefits:
Beginning of year 10,909,111 11,222,496
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End of year $10,307,416 $10,909,111
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The accompanying notes are an integral part of these financial statements.
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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.
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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.
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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.
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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.
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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,
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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
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Total $5,342,026,379 $ 5,191,000,557
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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,
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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.
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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
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Net depreciation $ (1,146,964) $ (1,504,881)
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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.
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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.
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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
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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
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$ 10,264,358
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* Party-in-interest
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