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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 PERIOD FROM JANUARY 1, 2001 - DECEMBER 28, 2001
QUALICON 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 Qualicon Retirement and Savings Plan
has duly caused this Annual Report to be signed by the undersigned hereunto duly
authorized.
QUALICON RETIREMENT
AND SAVINGS PLAN
Dated: June 26, 2002
By: /s/ Helen Wagner
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Helen Wagner
Manager, Finance and Chief
Financial Officer and Member of the
Administrative Committee formed under the
Qualicon Retirement and Savings Plan
Qualicon
Retirement and Savings Plan
Index to Financial Statements
Page(s)
Report of Independent Accountants 1
Financial Statements
Statements of Net Assets Available for Benefits as of
December 28, 2001 and December 31, 2000 2
Statements of Changes in Net Assets Available for Benefits
for the Period from January 1, 2001 to December 28, 2001
and for the Year Ended December 31, 2000 3
Notes to Financial Statements 4 - 10
Supplemental schedules required by Section 2520.103-10 of the Department of
Labor Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
Report of Independent Accountants
To the Administrator and Participants
of the Qualicon 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 Qualicon Retirement and Savings Plan (the "Plan") at December 28, 2001
and December 31, 2000, and the changes in net assets available for benefits for
the period from January 1, 2001 to December 28, 2001 and for the year ended
December 31, 2000 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
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.
As discussed in Note 1, effective December 28, 2001, the Plan was merged with
and into the Savings and Investment Plan of E. I. du Pont de Nemours and
Company.
/s/ PricewaterhouseCoopers, LLP
Philadelphia, Pennsylvania
June 25, 2002
Qualicon
Retirement and Savings Plan
Statements of Net Assets Available for Benefits
December 28, 2001 and December 31, 2000
2001 2000
Assets:
Investments:
Plan interest in DuPont and Related Companies
Defined Contribution Plan Master Trust $ - $ 98,753
Company Stock Funds - 166,269
Mutual Funds - 701,842
Common/Collective Funds - 96,551
Participant Loans - 61,022
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Total investments - 1,124,437
Receivables: -
Participants' contributions - 23,545
Employer's contributions - 7,971
Investment income - 184
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Total receivables - 31,700
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Net assets available for benefits $ - $1,156,137
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The accompanying notes are an integral part of these financial statements.
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Qualicon
Retirement and Savings Plan
Statements of Changes in Net Assets Available for Benefits
For the Period from January 1, 2001 to December 28, 2001 and
For the Year Ended December 31, 2000
2001 2000
Additions:
Investment income:
Net depreciation in fair value of investments $ (157,087) $ (178,486)
Interest and dividend income 27,176 57,569
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(129,911) (120,917)
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Contributions:
Participant 304,355 452,093
Employer 94,358 103,170
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398,713 555,263
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Total additions 268,802 434,346
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Deductions:
Benefits paid to participants 11,152 3,914
Assets transferred out 1,413,787 -
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Total deductions 1,424,939 3,914
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Net (decrease) increase (1,156,137) 430,432
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Net assets available for benefits:
Beginning of year 1,156,137 725,705
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End of year $ - $ 1,156,137
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The accompanying notes are an integral part of these financial statements.
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Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 28, 2001 and December 31, 2000
1. Plan Merger
Effective December 28, 2001, the Qualicon Retirement and Savings Plan (the
"Plan") merged with and into the Savings and Investment Plan of E. I. du
Pont de Nemours and Company. Pursuant to the merger, participants with
assets having a fair market value of $1,413,787 at the time of the merger,
became part of the Savings and Investment Plan of E. I. du Pont de Nemours
and Company. The Plan's participants were subject to changes in their
benefits under the Savings and Investment Plan of E. I. du Pont de Nemours
and Company. For additional information regarding these changes,
participants should refer to the Plan document for the Savings and
Investment Plan of E. I. du Pont de Nemours and Company.
2. Description of the Plan
The following description of 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 Qualicon (the "Company"), a wholly-owned subsidiary of E. I.
du Pont de Nemours and Company ("DuPont"). The Plan is subject to the
Employee Retirement Income Security Act of 1974 ("ERISA"). 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. The sum of the participant
contributions both pre-tax and post-tax are limited to a maximum of 16% of
a participant's earnings, as defined, in multiples of 1% and are credited
to the Plan on a monthly basis in accordance with the payroll cycle of the
Company. Participants may also contribute amounts representing rollovers
from other eligible retirement plans. Contributions are subject to certain
limitations.
The Company makes matching contributions on a monthly basis 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, at its discretion, may
also make an additional discretionary contribution. The Company did not
make any discretionary contributions during the period from January 1, 2001
to December 28, 2001 and the year ended December 31, 2000.
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 participant earnings or 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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Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 28, 2001 and December 31, 2000
Eligibility and Vesting
Employees are eligible to participate in the Plan on the first day of their
first full month of employment with the Company. Employees who join the
Company from DuPont are immediately eligible to participate in the Plan.
Participants are always 100% vested in their contributions and the
employer's matching contribution plus actual earnings thereon.
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 transactions are treated as a transfer to/(from) the
investment fund from/(to) the Participant Loan Fund. 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 secured by the balance in
the participant's account and bear interest at the average rate for secured
personal loans then in effect at five banks selected by the Committee 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 or 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. Company
contributions will be suspended for six months if a participant withdraws,
while in-service, any matched before-tax or after-tax savings or Company
contributions held for less than two years.
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
balance of all the participant's accounts as determined as of the valuation
date coinciding with or immediately following the participant's termination
of employment.
Expenses of the Plan
Reasonable expenses of administering the Plan, at the election of the
Committee, may be paid by the Plan. For the period from January 1, 2001 to
December 28, 2001 and the year ended December 31, 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 investments shall be included in the cost of such securities
or investments or deducted from the sales proceeds, as the case may be.
3. 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.
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Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 28, 2001 and December 31, 2000
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 4). 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 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 Company Stock
Fund securities are based on average cost of 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.
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
disclosures of contingent assets and liabilities. Actual results could
differ from those estimates.
4. 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.
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Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 28, 2001 and December 31, 2000
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 principal 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.
Total assets of the Master Trust include:
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 .0019% as of December
31, 2000.
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Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 28, 2001 and December 31, 2000
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 (ADOPONTO3) 528,060,590 -
Metropolitan Life - 412,600,984
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.
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 Benefit 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
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Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 28, 2001 and December 31, 2000
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.
5. Investments
Investments that represent more than 5% of the net assets available for
benefits as of December 28, 2001 and December 31, 2000 were as follows:
2001 2000
DuPont Company Stock Fund $ - $155,892
Fidelity Magellan Fund - 119,265
Janus Mercury Fund - 93,284
Janus Enterprise Fund - 91,133
Fidelity Growth & Income Fund Class A - 78,224
AIM Value Fund - 59,765
Merrill Lynch Equity Index TR Tier 6 - 58,010
Master Trust - 98,753
During the period from January 1, 2001 to December 28, 2001 and the year
ended December 31, 2000, the Plan's investments depreciated (including
realized gains and losses) in value as follows:
2001 2000
Company Stock Funds $ (19,445) $ (26,834)
Mutual Funds (131,476) (147,267)
Common/Collective Trust Fund (10,703) (6,418)
Master Trust 4,537 2,033
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Net Depreciation $(157,087) $(178,486)
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6. 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
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Qualicon
Retirement and Savings Plan
Notes to Financial Statements
December 28, 2001 and December 31, 2000
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 $10,377 at December 31, 2000.
7. Tax Status
The Plan is a qualified plan pursuant to Section 401(a) of the Internal
Revenue Code (the "Code") and the related Trusts are exempt from federal
taxation under Section 501(a) of the Code. A favorable tax determination
letter from the Internal Revenue Service dated April 4, 2001 has been
received by the Plan. This determination letter is applicable for the Plan
adopted on May 20, 1998 and all amendments through inception. The Plan
administrator and the Plan's ERISA counsel believe that the Plan is
currently designed and operated in accordance with the applicable sections
of the Code. Accordingly, no provision has been made for federal income
taxes in the accompanying financial statements.
8. 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 prohibited
transaction rules.
9. 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 be 100 percent vested in the employer
contributions.
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