8-KRegulation FD

EIDP, Inc. 8-K Report, Regulation FD Disclosure (Sep 13, 2007)

Filed September 13, 2007For Securities:CTA-PBCTA-PA

Summary

E. I. du Pont de Nemours and Company (DuPont), through its subsidiary Pioneer Hi-Bred International, Inc., has entered into a significant business agreement with Monsanto Company concerning corn herbicide tolerance and insect control trait technologies. This agreement involves modifications to existing license agreements, the exchange of intellectual property rights, and access to regulatory data. Investors should note the specific changes to the YieldGard® MON810 Corn and Roundup Ready® Corn 2 license agreements. The most impactful financial aspect for investors relates to the modification of the Roundup Ready® Corn 2 license. DuPont anticipates recording an intangible asset and a corresponding liability with a net present value of $573 million in the quarter ending September 30, 2007. This change from per-unit royalties to fixed annual payments, totaling approximately $725 million over eight years (2008-2015), will impact the company's balance sheet and future expense recognition through amortization.

Key Highlights

  • 1Pioneer Hi-Bred International, Inc. (DuPont's subsidiary) entered into a business agreement with Monsanto Company.
  • 2The agreement modifies existing corn herbicide tolerance and insect control trait technology license agreements.
  • 3Both companies will exchange certain non-assert and other intellectual property rights.
  • 4Parties gain rights to reference and access regulatory data and approvals held by the other.
  • 5The YieldGard® MON810 Corn license is modified for Pioneer with more favorable royalty terms and broader regulatory data access.
  • 6The Roundup Ready® Corn 2 license is modified to switch from per-unit royalties to specified annual royalty payments from 2008-2015.
  • 7DuPont expects to record a $573 million net present value intangible asset and liability due to the Roundup Ready® Corn 2 license change.

Frequently Asked Questions

The agreement's main purpose is to modify existing license agreements related to corn herbicide tolerance and insect control trait technologies. It involves exchanging intellectual property rights and granting access to regulatory data and approvals, aiming to provide more favorable terms and broader rights for both parties concerning specific corn technologies.

DuPont expects to record an intangible asset and a related liability with a net present value of $573 million in the third quarter of 2007. This reflects the shift from variable per-unit royalties to fixed annual payments. The intangible asset will be amortized over the contract's life, impacting future earnings.

DuPont anticipates cumulative cash payments of approximately $725 million over the eight-year period from 2008 through 2015, corresponding to the new specified annual royalty payments.

While the filing specifically details impacts on Pioneer Hi-Bred International, Inc. and its dealings with Monsanto regarding corn traits (YieldGard® MON810 and Roundup Ready® Corn 2), it does not explicitly mention implications for other DuPont subsidiaries or product lines beyond those covered by these specific license agreements.