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Exhibit 99.1

 

 

October 22, 2013

Media Contact:

Patty Seif

WILMINGTON, Del.

 

302-774-4482

 

 

patricia.r.seif@dupont.com

 

Investor Contact:

302-774-4994

 

DuPont Delivers 3Q 2013 Operating Earnings of $.45 per Share

Sales Increase on Higher Volume

 

WILMINGTON, Del., October 22, 2013 — DuPont today announced third quarter 2013 operating earnings of $.45 per share compared to $.43 per share in the prior year.  GAAP1 earnings from continuing operations were $.28 per share versus a loss of $.05 per share for the third quarter 2012.  Third quarter results principally reflect overall top-line growth and earnings improvements for Performance Materials, Electronics & Communications and Safety & Protection, and a lower effective tax rate.  This was offset by expected lower earnings for Performance Chemicals.

 

Highlights

 

·                  Third quarter net sales of $7.7 billion increased 5 percent, with volume up 9 percent versus a weak prior year.  Sales also reflect 3 percent lower local prices and a 1 percent negative currency impact.

 

·                  Excluding Performance Chemicals, all operating segments posted increased operating earnings versus last year.  Performance Materials, Electronics & Communications, Safety & Protection and Industrial Biosciences had double-digit earnings growth reflecting higher volumes and improved margins.

 

·                  Agriculture sales grew 15 percent driven by increased insecticide volumes and higher seed prices in Latin America. The sales growth and the benefit of increased ownership in Pannar Seed (Pty) Ltd.  reduced the segment’s third quarter seasonal loss to $62 million.

 

·                  Cost productivity gains and restructuring savings are on track to meet or exceed full-year targets.

 

·                  The company continues to expect full-year operating earnings of about $3.85 per share.

 

“We executed well against our plans.  Third quarter sales volumes and operating earnings were stronger across most businesses compared to a soft quarter last year,” said DuPont Chair and CEO Ellen Kullman.  “While we expect overall sequential growth in industrial market demand will remain subdued, fourth quarter operating earnings will be up substantially from last year.  For the full year we are on track to deliver modest earnings growth, despite the significant decline in Performance Chemicals’ results.”

 

1Generally Accepted Accounting Principles (GAAP)

 



 

Global Consolidated Net Sales — 3rd Quarter

 

Third quarter 2013 net sales were $7.7 billion, up 5 percent versus last year, reflecting 9 percent higher volume, partly offset by 3 percent lower local selling prices and 1 percent negative currency impact.   The table below shows third quarter regional sales and variances versus third quarter 2012.

 

 

 

Three Months Ended
September 30, 2013

 

Percentage Change Due to:

 

(Dollars in millions)

 

$

 

% Change

 

Local
Price

 

Currency
Effect

 

Volume

 

Portfolio/
Other

 

U.S. & Canada

 

$

2,548

 

3

 

(1

)

 

5

 

(1

)

EMEA*

 

1,814

 

10

 

(5

)

2

 

10

 

3

 

Asia Pacific

 

1,944

 

3

 

(6

)

(3

)

12

 

 

Latin America

 

1,429

 

4

 

 

(4

)

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consolidated Sales

 

$

7,735

 

5

 

(3

)

(1

)

9

 

 

 

* Europe, Middle East & Africa

 

Segment Sales — 3rd Quarter

 

The table below shows third quarter 2013 segment sales with related variances versus the prior year.

 

 

 

Three Months Ended

 

Percentage Change

 

 

 

September 30, 2013

 

Due to:

 

SEGMENT SALES
(Dollars in millions)

 

$

 

% Change

 

USD
Price

 

Volume

 

Portfolio/
Other

 

Agriculture

 

$

1,633

 

15

 

1

 

10

 

4

 

Electronics & Communications

 

638

 

5

 

(9

)

14

 

 

Industrial Biosciences

 

305

 

4

 

 

4

 

 

Nutrition & Health

 

868

 

(1

)

1

 

(1

)

(1

)

Performance Chemicals

 

1,720

 

(1

)

(13

)

12

 

 

Performance Materials

 

1,663

 

3

 

(2

)

6

 

(1

)

Safety & Protection

 

985

 

5

 

 

5

 

 

Other

 

1

 

nm

 

 

 

 

 

 

 

Total segment sales

 

7,813

 

 

 

 

 

 

 

 

 

Elimination of transfers

 

(78

)

 

 

 

 

 

 

 

 

Consolidated net sales

 

$

7,735

 

 

 

 

 

 

 

 

 

 

2



 

Operating Earnings — 3rd Quarter

 

 

 

 

 

 

 

Change vs. 2012

 

(Dollars in millions)

 

3Q13

 

3Q12

 

$

 

%

 

Agriculture

 

$

(62

)

$

(70

)

$

8

 

11

%

Electronics & Communications

 

97

 

58

 

39

 

67

%

Industrial Biosciences

 

45

 

40

 

5

 

13

%

Nutrition & Health

 

81

 

77

 

4

 

5

%

Performance Chemicals

 

254

 

413

 

(159

)

-38

%

Performance Materials

 

374

 

331

 

43

 

13

%

Safety & Protection

 

171

 

147

 

24

 

16

%

Other

 

(112

)

(85

)

(27

)

nm

 

 

 

848

 

911

 

(63

)

-7

%

Pharmaceuticals

 

5

 

10

 

(5

)

-50

%

Total segment operating earnings (1)

 

853

 

921

 

(68

)

-7

%

 

 

 

 

 

 

 

 

 

 

Corporate expenses

 

(162

)

(174

)

12

 

nm

 

Interest expense

 

(108

)

(116

)

8

 

nm

 

Operating earnings before income taxes and exchange gains/losses

 

583

 

631

 

(48

)

-8

%

Provision for income taxes on operating earnings, excluding taxes on exchange gains/losses

 

(111

)

(164

)

53

 

nm

 

Net after-tax exchange gains (losses) (2)

 

(43

)

(59

)

16

 

nm

 

Net income attributable to noncontrolling interests

 

(3

)

(3

)

 

nm

 

Operating earnings

 

$

426

 

$

405

 

$

21

 

5

%

 

 

 

 

 

 

 

 

 

 

Operating earnings per share

 

$

0.45

 

$

0.43

 

$

0.02

 

5

%

 

(1)  See Schedules B and C for listing of significant items and their impact by segment.

(2)  See Schedule D for additional information on exchange gains and losses.

 

3



 

The following is a summary of business results for each of the company’s reportable segments in the third quarter comparing the current quarter with the prior year.  References to selling price are on a U.S. dollar basis, including the impact of currency.

 

Agriculture — A seasonal operating loss of $62 million improved $8 million. The improvement was driven by strong insecticide demand as growers anticipate heavy insect pressure in Latin America, price improvement in seeds, and a $26 million gain resulting from the acquisition of a controlling interest in Pannar.  These increases were offset by higher seed costs reflecting finalization of the northern hemisphere season, continued investment to drive future growth and a negative currency impact.

 

Electronics & Communications — Operating earnings of $97 million increased $39 million driven by higher sales volume, mainly in photovoltaic markets reflecting demand improvement and share gains. Higher volume was offset in part by reduced selling prices, mainly from pass-through of lower metals prices.

 

Industrial Biosciences — Operating earnings of $45 million were up 13 percent on higher sales of Sorona® polymer for carpeting and apparel and lower costs, partially offset by higher raw material costs.

 

Nutrition & Health — Operating earnings of $81 million increased 5 percent reflecting productivity improvements, partially offset by higher cost guar inventory and negative currency.

 

Performance Chemicals — Operating earnings of $254 million were $159 million lower as price declines for titanium dioxide, refrigerants and fluoropolymers, along with higher raw material inventory costs, principally ore costs, more than offset volume increases. Titanium dioxide volume was up 25 percent from third quarter 2012 and essentially flat on a sequential basis.

 

Performance Materials — Operating earnings of $374 million increased $43 million including a $30 million benefit from a joint venture.  Earnings improvement from higher volume reflecting increased demand in packaging, automotive, and electronics markets was partially offset by lower selling prices.

 

Safety & Protection — Operating earnings of $171 million increased $24 million due primarily to higher volume and productivity improvements, partially offset by weaker sales mix. Higher volume reflects increased demand for U.S. ballistics military protection, protective garments, and construction products that offset softness in global public sector spending.

 

Additional information is available on the DuPont Investor Center website at http://www.investors.dupont.com.

 

4



 

Outlook

 

The company continues to expect full-year operating earnings of about $3.85 per share, with some changes in underlying assumptions.  The company now anticipates slightly lower full-year growth rates for global GDP and industrial production, a larger negative currency impact and a lower base tax rate of about 22 percent.

 

Use of Non-GAAP Measures

 

Management believes that certain non-GAAP measurements are meaningful to investors because they provide insight with respect to ongoing operating results of the company.  Such measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance.  Reconciliations of non-GAAP measures to GAAP are provided in schedules A, C and D.

 

DuPont (NYSE: DD) has been bringing world-class science and engineering to the global marketplace in the form of innovative products, materials, and services since 1802.  The company believes that by collaborating with customers, governments, NGOs, and thought leaders we can help find solutions to such global challenges as providing enough healthy food for people everywhere, decreasing dependence on fossil fuels, and protecting life and the environment.  For additional information about DuPont and its commitment to inclusive innovation, please visit http://www.dupont.com.

 

Forward-Looking Statements:  This news release contains forward-looking statements which may be identified by their use of words like “plans,” “expects,” “will,” “believes,” “intends,” “estimates,” “anticipates” or other words of similar meaning.  All statements that address expectations or projections about the future, including statements about the company’s growth strategy, product development, regulatory approval, market position, anticipated benefits of acquisitions, outcome of contingencies, such as litigation and environmental matters, expenditures and financial results, are forward-looking statements.  Forward-looking statements are not guarantees of future performance and are based on certain assumptions and expectations of future events which may not be realized.  Forward-looking statements also involve risks and uncertainties, many of which are beyond the company’s control.  Some of the important factors that could cause the company’s actual results to differ materially from those projected in any such forward-looking statements are: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; significant litigation and environmental matters; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, interest and currency exchange rates; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, weather events and natural disasters; ability to protect and enforce the company’s intellectual property rights; and successful integration of acquired businesses and separation of underperforming or non-strategic assets or businesses.  The company undertakes no duty to update any forward-looking statements as a result of future developments or new information.

 

#   #   #

 

10/22/13

 

5



 

E. I. du Pont de Nemours and Company

Consolidated Income Statements

(Dollars in millions, except per share amounts)

 

SCHEDULE A

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Net sales

 

$

7,735

 

$

7,390

 

$

27,987

 

$

27,487

 

Other income (loss), net (a) 

 

70

 

(54

)

321

 

251

 

Total

 

7,805

 

7,336

 

28,308

 

27,738

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

5,165

 

4,779

 

17,415

 

16,558

 

Other operating charges (a)

 

990

 

937

 

2,843

 

3,064

 

Selling, general and administrative expenses

 

774

 

764

 

2,740

 

2,691

 

Research and development expense

 

540

 

521

 

1,603

 

1,562

 

Interest expense

 

108

 

116

 

340

 

347

 

Employee separation / asset related charges, net (a)

 

 

394

 

 

394

 

Total

 

7,577

 

7,511

 

24,941

 

24,616

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes

 

228

 

(175

)

3,367

 

3,122

 

(Benefit from) provision for income taxes on continuing operations (a)

 

(35

)

(135

)

687

 

654

 

Income from continuing operations after income taxes

 

263

 

(40

)

2,680

 

2,468

 

Income from discontinued operations after taxes

 

25

 

48

 

1,997

 

219

 

 

 

 

 

 

 

 

 

 

 

Net income

 

288

 

8

 

4,677

 

2,687

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

3

 

3

 

14

 

24

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to DuPont

 

$

285

 

$

5

 

$

4,663

 

$

2,663

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share of common stock (b):

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share of common stock from continuing operations

 

$

0.28

 

$

(0.05

)

$

2.87

 

$

2.61

 

Basic earnings per share of common stock from discontinued operations

 

0.03

 

0.05

 

2.16

 

0.24

 

Basic earnings per share of common stock

 

$

0.30

 

$

 

$

5.03

 

$

2.85

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share of common stock (b):

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share of common stock from continuing operations

 

$

0.28

 

$

(0.05

)

$

2.85

 

$

2.58

 

Diluted earnings per share of common stock from discontinued operations

 

0.03

 

0.05

 

2.14

 

0.23

 

Diluted earnings per share of common stock

 

$

0.30

 

$

 

$

4.99

 

$

2.82

 

 

 

 

 

 

 

 

 

 

 

Dividends per share of common stock

 

$

0.45

 

$

0.43

 

$

1.33

 

$

1.27

 

 

 

 

 

 

 

 

 

 

 

Average number of shares outstanding used in earnings per share (EPS) calculation:

 

 

 

 

 

 

 

 

 

Basic

 

925,645,000

 

931,737,000

 

925,548,000

 

933,227,000

 

Diluted

 

933,005,000

 

940,526,000

 

932,542,000

 

942,524,000

 

 

(a) See Schedule B for detail of significant items.

(b) The sum of the individual earnings per share amounts may not equal the total due to rounding.

 

Reconciliation of Non-GAAP Measures

 

Summary of Earnings Comparison

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

%
Change

 

2013

 

2012

 

%
Change

 

Income from continuing operations after income taxes (GAAP)

 

$

263

 

$

(40

)

758

%

$

2,680

 

$

2,468

 

9

%

Less: Significant items benefit (charge) included in income from continuing operations after income taxes (per Schedule B)

 

(71

)

(342

)

 

 

(129

)

(589

)

 

 

Non-operating pension/OPEB costs included in income from continuing operations after income taxes

 

(95

)

(106

)

 

 

(279

)

(340

)

 

 

Net income attributable to noncontrolling interest

 

3

 

3

 

 

 

14

 

24

 

 

 

Operating earnings

 

$

426

 

$

405

 

5

%

$

3,074

 

$

3,373

 

-9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS from continuing operations (GAAP)

 

$

0.28

 

$

(0.05

)

660

%

$

2.85

 

$

2.58

 

10

%

Significant items benefit (charge) included in EPS (per Schedule B)

 

(0.08

)

(0.37

)

 

 

(0.14

)

(0.63

)

 

 

Non-operating pension/OPEB costs included in EPS

 

(0.09

)

(0.11

)

 

 

(0.30

)

(0.36

)

 

 

Operating EPS

 

$

0.45

 

$

0.43

 

5

%

$

3.29

 

$

3.57

 

-8

%

 

6



 

E. I. du Pont de Nemours and Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share amounts)

 

SCHEDULE A (continued)

 

 

 

September 30,
2013

 

December 31,
2012

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

7,005

 

$

4,284

 

Marketable securities

 

184

 

123

 

Accounts and notes receivable, net

 

8,298

 

5,452

 

Inventories

 

7,031

 

7,565

 

Prepaid expenses

 

185

 

204

 

Deferred income taxes

 

840

 

613

 

Assets held for sale

 

 

3,076

 

Total current assets

 

23,543

 

21,317

 

Property, plant and equipment, net of accumulated depreciation (September 30, 2013 - $19,779; December 31, 2012 - $19,085)

 

12,908

 

12,741

 

Goodwill

 

4,718

 

4,616

 

Other intangible assets

 

5,135

 

5,126

 

Investment in affiliates

 

1,054

 

1,163

 

Deferred income taxes

 

3,739

 

3,936

 

Other assets

 

893

 

960

 

Total

 

$

51,990

 

$

49,859

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

3,876

 

$

4,853

 

Short-term borrowings and capital lease obligations

 

4,204

 

1,275

 

Income taxes

 

442

 

343

 

Other accrued liabilities

 

3,874

 

5,997

 

Liabilities related to assets held for sale

 

 

1,084

 

Total current liabilities

 

12,396

 

13,552

 

Long-term borrowings and capital lease obligations

 

10,755

 

10,465

 

Other liabilities

 

13,901

 

14,687

 

Deferred income taxes

 

973

 

856

 

Total liabilities

 

38,025

 

39,560

 

 

 

 

 

 

 

Commitments and contingent liabilities

 

 

 

 

 

Redeemable noncontrolling interest

 

65

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Preferred stock

 

237

 

237

 

Common stock, $0.30 par value; 1,800,000,000 shares authorized; Issued at September 30, 2013 - 1,013,111,000 ; December 31, 2012 - 1,020,057,000

 

304

 

306

 

Additional paid-in capital

 

11,007

 

10,655

 

Reinvested earnings

 

17,020

 

14,383

 

Accumulated other comprehensive loss

 

(8,000

)

(8,646

)

Common stock held in treasury, at cost (87,041,000 shares at September 30, 2013 and December 31, 2012)

 

(6,727

)

(6,727

)

Total DuPont stockholders’ equity

 

13,841

 

10,208

 

Noncontrolling interests

 

59

 

91

 

Total equity

 

13,900

 

10,299

 

Total

 

$

51,990

 

$

49,859

 

 

7



 

E. I. du Pont de Nemours and Company

Condensed Consolidated Statement of Cash Flows

(Dollars in millions)

 

SCHEDULE A (continued)

 

 

 

Nine Months Ended
September 30,

 

Total Company

 

2013

 

2012

 

 

 

 

 

 

 

Net income

 

$

4,677

 

$

2,687

 

Adjustments to reconcile net income to cash used for operating activities:

 

 

 

 

 

Depreciation

 

961

 

1,047

 

Amortization

 

255

 

266

 

Other operating charges and credits - net

 

447

 

907

 

Gain on sale of business

 

(2,689

)

 

Contributions to pension plans

 

(246

)

(762

)

Change in operating assets and liabilities - net

 

(5,738

)

(4,571

)

Cash used for operating activities

 

(2,333

)

(426

)

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant and equipment

 

(1,223

)

(1,139

)

Investments in affiliates

 

(43

)

(31

)

Payments for businesses - net of cash acquired

 

(133

)

(18

)

Proceeds from sale of business - net

 

4,816

 

 

Proceeds from sales of assets - net

 

126

 

175

 

Net (increase) decrease in short-term financial instruments

 

(78

)

336

 

Forward exchange contract settlements

 

82

 

23

 

Other investing activities - net

 

31

 

(13

)

Cash provided by (used for) investing activities

 

3,578

 

(667

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Dividends paid to stockholders

 

(1,242

)

(1,191

)

Net increase in borrowings

 

3,204

 

2,524

 

Repurchase of common stock

 

(1,000

)

(400

)

Proceeds from exercise of stock options

 

497

 

520

 

Payments for noncontrolling interest

 

 

(447

)

Other financing activities - net

 

3

 

38

 

Cash provided by financing activities

 

1,462

 

1,044

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

(81

)

(23

)

 

 

 

 

 

 

Cash classified as held for sale

 

 

(96

)

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

2,626

 

(168

)

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

4,379

 

3,586

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

7,005

 

$

3,418

 

 

Reconciliation of Non-GAAP Measure

 

Calculation of Free Cash Flow - Total Company

 

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

Cash used for operating activities

 

$

(2,333

)

$

(426

)

Purchases of property, plant and equipment

 

(1,223

)

(1,139

)

Free cash flow

 

$

(3,556

)

$

(1,565

)

 

8



 

E. I. du Pont de Nemours and Company

Schedule of Significant Items from Continuing Operations

(Dollars in millions, except per share amounts)

 

SCHEDULE B

 

SIGNIFICANT ITEMS FROM CONTINUING OPERATIONS

 

 

 

Pre-tax

 

After-tax

 

($ Per Share)

 

 

 

2013

 

2012

 

2013

 

2012

 

2013

 

2012

 

1st Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer claims charge (a)

 

$

(35

)

$

(50

)

$

(22

)

$

(32

)

$

(0.02

)

$

(0.04

)

Income tax items (b)

 

 

 

42

 

 

0.04

 

 

1st Quarter - Total

 

$

(35

)

$

(50

)

$

20

 

$

(32

)

$

0.02

 

$

(0.04

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2nd Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer claims charge (a)

 

$

(80

)

$

(265

)

$

(51

)

$

(169

)

$

(0.05

)

$

(0.18

)

Income tax items (c)

 

(11

)

 

(27

)

 

(0.03

)

 

Litigation settlement (d)

 

 

(137

)

 

(123

)

 

(0.13

)

Gain on sale of equity method investment (e)

 

 

122

 

 

77

 

 

0.08

 

2nd Quarter - Total

 

$

(91

)

$

(280

)

$

(78

)

$

(215

)

$

(0.08

)

$

(0.23

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3rd Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer claims charge (a)

 

$

(40

)

$

(125

)

$

(24

)

$

(80

)

$

(0.03

)

$

(0.09

)

Litigation settlement (f)

 

(72

)

 

(47

)

 

(0.05

)

 

Restructuring charge (g)

 

 

(152

)

 

(105

)

 

(0.11

)

Asset impairment charge (h)

 

 

(242

)

 

(157

)

 

(0.17

)

3rd Quarter - Total

 

$

(112

)

$

(519

)

$

(71

)

$

(342

)

$

(0.08

)

$

(0.37

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year-to-date - Total (i)

 

$

(238

)

$

(849

)

$

(129

)

$

(589

)

$

(0.14

)

$

(0.63

)

 

(a)    Third quarter 2013 includes a net charge of $(40) consisting of a $(65) charge associated with the company’s process to fairly resolve claims related to the use of Imprelis® herbicide offset by $25 of insurance recoveries.  At September 30, 2013, the company has recorded charges of $(930) to resolve these claims. The company will continue to evaluate reported claim damage as additional information becomes available. It is reasonably possible that additional charges could result related to this matter and the company currently estimates that total charges could be about $1,200. The company has an applicable insurance program with a deductible equal to the first $100 of costs and expenses. The insurance program limits are $725 for costs and expenses in excess of the $100. The company has submitted and will continue to submit requests for payment to its insurance carriers for costs associated with this matter. The company has begun to receive payment from its insurance carriers and continues to seek recovery although the timing and outcome remain uncertain. These charges are recorded in Other operating charges and relate to the Agriculture segment.

 

(b)    First quarter 2013 included a net tax benefit of $42 consisting of a $68 benefit for the 2013 extension of certain U.S business tax provisions offset by a ($26) charge related to the global distribution of Performance Coatings cash proceeds.

 

(c)     Second quarter 2013 included a charge of ($11) in Other income, net related to interest on a prior year tax position.  Second quarter 2013 also included a charge of ($49) associated with a change in accrual for a prior year tax position (inclusive of a benefit associated with interest on a prior year tax position) offset by a $33 benefit for an enacted tax law change.

 

(d)    Second quarter 2012 included a charge of ($137) recorded in Other operating charges primarily related to the company’s settlement of litigation with Invista.  This matter relates to Other.

 

(e)     Second quarter 2012 included a pre-tax gain of $122 recorded in Other income, net associated with the sale of an equity method investment in the Electronics & Communications segment.

 

(f)      Third quarter 2013 includes a charge of $(72) recorded in Other operating charges related to the company’s settlement of titanium dioxide antitrust litigation.  This matter relates to the Performance Chemicals segment.

 

(g)     Third quarter 2012 included a $152 restructuring charge recorded in Employee separation/asset related charges, net consisting of $133 of severance and related benefit costs and $19 of asset related charges as a result of the company’s plan to eliminate corporate costs previously allocated to Performance Coatings and cost-cutting actions to improve competitiveness.  Pre-tax charges by segment were: Agriculture - $(3), Nutrition & Health - $(13), Electronics & Communications - $(7), Performance Chemicals - $(3), Performance Materials - $(9), Safety & Protection - $(55), Industrial Biosciences - $(3), and Corporate expenses - $(59).

 

(h)    Third quarter 2012 included a $242 impairment charge recorded in Employee separation/asset related charges, net related to asset groupings within the Electronics & Communications and Performance Materials segments. The charge of $150 within Electronics & Communications was a result of conditions within the thin film photovoltaic market. The charge of $92 within Performance Materials was the result of deteriorating conditions in an industrial polymer market.

 

(i)        Earnings per share for the year may not equal the sum of quarterly earnings per share due to changes in average share calculations.

 

9



 

E. I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

 

SCHEDULE C

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

SEGMENT SALES (1)

 

 

 

 

 

 

 

 

 

Agriculture

 

$

1,633

 

$

1,423

 

$

9,933

 

$

8,891

 

Electronics & Communications

 

638

 

607

 

1,907

 

2,079

 

Industrial Biosciences

 

305

 

292

 

898

 

880

 

Nutrition & Health

 

868

 

876

 

2,601

 

2,569

 

Performance Chemicals

 

1,720

 

1,732

 

5,087

 

5,600

 

Performance Materials

 

1,663

 

1,614

 

4,892

 

4,913

 

Safety & Protection

 

985

 

934

 

2,909

 

2,861

 

Other

 

1

 

2

 

5

 

4

 

Total Segment sales

 

7,813

 

7,480

 

28,232

 

27,797

 

 

 

 

 

 

 

 

 

 

 

Elimination of transfers

 

(78

)

(90

)

(245

)

(310

)

Consolidated net sales

 

$

7,735

 

$

7,390

 

$

27,987

 

$

27,487

 

 

(1)   Sales for the reporting segments include transfers.

 

10



 

E. I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

 

SCHEDULE C (continued)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

INCOME/(LOSS) FROM CONTINUING OPERATIONS (GAAP)

 

 

 

 

 

 

 

 

 

Agriculture

 

$

(102

)

$

(198

)

$

2,240

 

$

1,772

 

Electronics & Communications

 

97

 

(99

)

241

 

181

 

Industrial Biosciences

 

45

 

37

 

129

 

118

 

Nutrition & Health

 

81

 

64

 

218

 

248

 

Performance Chemicals

 

182

 

410

 

697

 

1,575

 

Performance Materials

 

374

 

230

 

1,002

 

851

 

Safety & Protection

 

171

 

92

 

481

 

432

 

Pharmaceuticals

 

5

 

10

 

27

 

53

 

Other

 

(112

)

(85

)

(276

)

(385

)

Total Segment PTOI

 

741

 

461

 

4,759

 

4,845

 

 

 

 

 

 

 

 

 

 

 

Corporate expenses

 

(162

)

(233

)

(582

)

(708

)

Interest expense

 

(108

)

(116

)

(340

)

(347

)

Non-operating pension/OPEB costs

 

(142

)

(157

)

(415

)

(507

)

Net exchange gains (losses) (1)

 

(101

)

(130

)

(55

)

(161

)

Income before income taxes from continuing operations

 

$

228

 

$

(175

)

$

3,367

 

$

3,122

 

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) (2)

 

 

 

 

 

 

 

 

 

Agriculture

 

$

(40

)

$

(128

)

$

(155

)

$

(443

)

Electronics & Communications

 

 

(157

)

 

(35

)

Industrial Biosciences

 

 

(3

)

 

(3

)

Nutrition & Health

 

 

(13

)

 

(13

)

Performance Chemicals

 

(72

)

(3

)

(72

)

(3

)

Performance Materials

 

 

(101

)

 

(101

)

Safety & Protection

 

 

(55

)

 

(55

)

Pharmaceuticals

 

 

 

 

 

Other

 

 

 

 

(137

)

Total significant items by segment

 

(112

)

(460

)

(227

)

(790

)

Corporate expenses

 

 

(59

)

(11

)

(59

)

Total significant items before income taxes

 

$

(112

)

$

(519

)

$

(238

)

$

(849

)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

OPERATING EARNINGS

 

 

 

 

 

 

 

 

 

Agriculture

 

$

(62

)

$

(70

)

$

2,395

 

$

2,215

 

Electronics & Communications

 

97

 

58

 

241

 

216

 

Industrial Biosciences

 

45

 

40

 

129

 

121

 

Nutrition & Health

 

81

 

77

 

218

 

261

 

Performance Chemicals

 

254

 

413

 

769

 

1,578

 

Performance Materials

 

374

 

331

 

1,002

 

952

 

Safety & Protection

 

171

 

147

 

481

 

487

 

Pharmaceuticals

 

5

 

10

 

27

 

53

 

Other

 

(112

)

(85

)

(276

)

(248

)

Total segment operating earnings

 

853

 

921

 

4,986

 

5,635

 

Corporate expenses

 

(162

)

(174

)

(571

)

(649

)

Interest expense

 

(108

)

(116

)

(340

)

(347

)

Operating earnings before income taxes and exchange gains (losses)

 

583

 

631

 

4,075

 

4,639

 

Net exchange gains (losses) (1)

 

(101

)

(130

)

(55

)

(161

)

Operating earnings before income taxes

 

$

482

 

$

501

 

$

4,020

 

$

4,478

 

 

(1) See Schedule D for additional information on exchange gains and losses.

(2) See Schedule B for detail of significant items.

 

11



 

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions, except per share amounts)

 

SCHEDULE D

 

Reconciliations of Adjusted EBIT / EBITDA to Consolidated Income

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

$

228

 

$

(175

)

$

3,367

 

$

3,122

 

Add: Significant items before income taxes

 

112

 

519

 

238

 

849

 

Add: Non-operating pension/OPEB costs

 

142

 

157

 

415

 

507

 

Operating earnings before income taxes

 

$

482

 

$

501

 

$

4,020

 

$

4,478

 

Less: Net income attributable to noncontrolling interests

 

3

 

3

 

14

 

24

 

Add: Interest expense

 

108

 

116

 

340

 

347

 

Adjusted EBIT from operating earnings

 

587

 

614

 

4,346

 

4,801

 

Add: Depreciation and amortization

 

379

 

393

 

1,216

 

1,237

 

Adjusted EBITDA from operating earnings

 

$

966

 

$

1,007

 

$

5,562

 

$

6,038

 

 

Reconciliation of Operating Earnings Per Share (EPS) Outlook

 

The reconciliation below represents the company’s outlook on an operating earnings basis, defined as earnings from continuing operations excluding significant items and non-operating pension/OPEB costs.

 

 

 

Year Ended December 31,

 

 

 

 

 

 

 

2013 Outlook

 

2012 Actual

 

 

 

 

 

Operating EPS

 

$

3.85

 

$

3.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Significant items

 

 

 

 

 

 

 

 

 

Tax items

 

0.02

 

 

 

 

 

 

Sale of an equity method investment

 

 

0.08

 

 

 

 

 

Customer claims charges

 

(0.11

)

(0.39

)

 

 

 

 

Restructuring charge/adjustments

 

 

(0.17

)

 

 

 

 

Litigation settlement

 

(0.05

)

(0.13

)

 

 

 

 

Asset impairment charge

 

 

(0.19

)

 

 

 

 

Sale of business

 

 

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating pension/OPEB costs - estimate

 

(0.40

)

(0.46

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of LIFO accounting change

 

 

0.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS from continuing operations (GAAP)

 

$

3.31

 

$

2.61

 

 

 

 

 

 

12



 

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions)

 

SCHEDULE D (continued)

 

Exchange Gains/Losses on Operating Earnings

 

The company routinely uses forward exchange contracts to offset its net exposures, by currency, related to the foreign currency denominated monetary assets and liabilities of its operations. The objective of this program is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes. The net pre-tax exchange gains and losses are recorded in Other income, net and the related tax impact is recorded in Provision for (benefit from) income taxes on the Consolidated Income Statements.

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Subsidiary/Affiliate Monetary Position Gain (Loss)

 

 

 

 

 

 

 

 

 

Pre-tax exchange gains (losses) (includes equity affiliates)

 

$

29

 

$

91

 

$

(121

)

$

(50

)

Local tax benefits (expenses)

 

13

 

(6

)

32

 

10

 

Net after-tax impact from subsidiary exchange gains (losses)

 

$

42

 

$

85

 

$

(89

)

$

(40

)

 

 

 

 

 

 

 

 

 

 

Hedging Program Gain (Loss)

 

 

 

 

 

 

 

 

 

Pre-tax exchange gains (losses)

 

$

(130

)

$

(221

)

$

66

 

$

(111

)

Tax benefits (expenses)

 

45

 

77

 

(24

)

38

 

Net after-tax impact from hedging program exchange gains (losses)

 

$

(85

)

$

(144

)

$

42

 

$

(73

)

 

 

 

 

 

 

 

 

 

 

Total Exchange Gain (Loss)

 

 

 

 

 

 

 

 

 

Pre-tax exchange gains (losses)

 

$

(101

)

$

(130

)

$

(55

)

$

(161

)

Tax benefits (expenses)

 

58

 

71

 

8

 

48

 

Net after-tax exchange gains (losses) (1)

 

$

(43

)

$

(59

)

$

(47

)

$

(113

)

 

As shown above, the “Total Exchange Gain (Loss)” is the sum of the “Subsidiary/Affiliate Monetary Position Gain (Loss)” and the “Hedging Program Gain (Loss).”

 

(1)  The above Net after-tax exchange gains (losses) excludes gains (losses) attributable to discontinued operations of $0 and $9 for the three months ended September 30, 2013 and 2012, respectively, and $(5) and $(11) for the nine months ended September 30, 2013 and 2012, respectively.

 

Reconciliation of Base Income Tax Rate to Effective Income Tax Rate

 

Base income tax rate is defined as the effective income tax rate less the effect of exchange gains (losses), as defined above, significant items and non-operating pension/OPEB costs.

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

$

228

 

$

(175

)

$

3,367

 

$

3,122

 

Add: Significant items - (benefit) charge (2)

 

112

 

519

 

238

 

849

 

 Non-operating pension/OPEB costs

 

142

 

157

 

415

 

507

 

Less: Net exchange (losses) gains

 

(101

)

(130

)

(55

)

(161

)

Income from continuing operations before income taxes, significant items, exchange gains (losses), and non-operating pension/OPEB costs

 

$

583

 

$

631

 

$

4,075

 

$

4,639

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes on continuing operations

 

$

(35

)

$

(135

)

$

687

 

$

654

 

Add: Tax benefits (expenses) on significant items

 

41

 

177

 

109

 

260

 

 Tax benefits (expenses) on non-operating pension/OPEB costs

 

47

 

51

 

136

 

167

 

 Tax benefits (expenses) on exchange gains/losses

 

58

 

71

 

8

 

48

 

Provision for income taxes on operating earnings, excluding exchange gains (losses)

 

$

111

 

$

164

 

$

940

 

$

1,129

 

 

 

 

 

 

 

 

 

 

 

Effective income tax rate

 

(15.4

)%

77.1

%

20.4

%

20.9

%

Significant items effect and non-operating pension/OPEB costs effect

 

26.4

%

(58.5

)%

2.8

%

3.2

%

Tax rate, from continuing operations, before significant items and non-operating pension/OPEB costs

 

11.0

%

18.6

%

23.2

%

24.1

%

Exchange gains (losses) effect

 

8.0

%

7.4

%

(0.1

)%

0.2

%

Base income tax rate from continuing operations

 

19.0

%

26.0

%

23.1

%

24.3

%

 

(2)  See Schedule B for detail of significant items.

 

13