E I DU PONT DE NEMOURS AND CO WILMINGTON, Del., Oct. 28, 2014 /PRNewswire/ --
Third Quarter Highlights
-- Operating earnings per share of $0.54 were up 20 percent from $0.45 per
share last year, in-line with the company's expectations communicated
with 2Q earnings. GAAP(1) earnings per share were $0.47 versus $0.28
last year.
-- Sales were $7.5 billion versus $7.7 billion in the same period last
year, down 3 percent due to portfolio changes.
-- Volume grew across most segments with decline limited to Agriculture,
where higher crop protection volume was more than offset by lower seed
volume.
-- Strong operating earnings growth was delivered by Nutrition & Health
(+23 percent) and Safety & Protection (+18 percent).
-- The Performance Chemicals separation remains on track for mid-2015.
Today DuPont (NYSE: DD) announced third quarter 2014 operating earnings of $0.54 per share compared to $0.45 per share in the prior year. GAAP(1) earnings per share were $0.47 versus $0.28 last year. Consolidated sales were $7.5 billion, 3 percent below last year, reflecting portfolio changes, as price, volume and currency were in line with the prior year period.
"In the third quarter, we improved our operating margins in five of seven segments and grew operating earnings per share 20 percent, despite a weaker Ag environment and sluggish economic growth in most of the world," said DuPont Chair and CEO Ellen Kullman. "Our increase in margins in a slow growth environment reflects the momentum we are building as we execute our plan, which is driving new products, portfolio enhancements and a broad initiative to redesign our operating model with a smaller cost base and a simplified support structure. We are positioning DuPont for our next stage of growth, while increasing returns to our shareholders."
(1)Generally Accepted
Accounting Principles (GAAP)
Global Consolidated Net Sales - 3rd Quarter
Third quarter 2014 net sales of $7.5 billion were 3 percent below last year due to portfolio changes. Increased volumes were offset by a decrease in local selling prices. The table below shows third quarter regional sales and variances versus third quarter 2013.
Three Months Ended
September 30, 2014 Percent Change Due to:
------------------ ----------------------
% Local Currency Portfolio /
$ Change Price Effect Volume Other
--- ------ ----- ------ ------ -----
(Dollars in millions)
U.S. & Canada $2,415 (5) (1) - 1 (5)
EMEA * 1,740 (4) - 1 (3) (2)
Asia Pacific 1,955 1 - - 3 (2)
Latin America 1,401 (2) (1) (2) 2 (1)
-----
Total
Consolidated
Sales $7,511 (3) (1) - 1 (3)
* Europe, Middle East & Africa
Segment Sales - 3rd Quarter
The table below shows third quarter 2014 segment sales with related variances versus the third quarter 2013.
Three Months Ended Percent Change
September 30, 2014 Due to:
------------------ -------
USD Portfolio /
$ % Change Price Volume Other
--- -------- ----- ------ -----
(Dollars in millions)
Agriculture $1,563 (4) (2) (2) -
Electronics &
Communications 623 (2) (4) 2 -
Industrial Biosciences 318 4 1 3 -
Nutrition & Health 899 4 - 4 -
Performance Chemicals 1,646 (8) (3) - (5)
Performance Materials 1,552 (3) 2 2 (7)
Safety & Protection 977 (1) - 1 (2)
Other 2
---
Total segment sales 7,580
Elimination of transfers (69)
Consolidated net sales $7,511
------
Operating Earnings - 3rd Quarter
Change vs. 2013
---------------
(Dollars in millions) 3Q14 3Q13 $ %
---- ---- --- ---
Agriculture $(55) $(62) $7 11%
Electronics &
Communications 94 97 (3) -3%
Industrial Biosciences 47 45 2 4%
Nutrition & Health 100 81 19 23%
Performance Chemicals
(1) 249 261 (12) -5%
Performance Materials
(1) 370 367 3 1%
Safety & Protection 201 171 30 18%
Other (83) (107) 24 22%
--- ---- ---
Total segment operating
earnings (2) 923 853 70 8%
Exchange gains (losses)
(3) 218 (101) 319
Corporate expenses (171) (162) (9)
Interest expense (93) (108) 15
--- ---- ---
Operating earnings
before income taxes 877 482 395 82%
Provision for income
taxes on (379) (53) (326)
operating earnings
Net income attributable
to 1 3 (2)
noncontrolling interests
Operating earnings $497 $426 $71 17%
==== ==== ===
Operating earnings per
share $0.54 $0.45 $0.09 20%
===== ===== =====
(1) Prior period reflects the reclassifications of the Viton(R) fluoroelastomer product line from Performance Materials to Performance Chemicals.
(2) See Schedules B and C for listing of significant items and their impact by segment.
(3) See Schedule D for additional information on exchange gains and losses.
The following is a summary of business results for each of the company's reportable segments in the third quarter, which compares the current period 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 $55 million improved $7 million, or 11 percent, due primarily to lower seed input costs and operating cost improvements, partially offset by lower sales and the absence of the prior year $26 million gain from the acquisition of a controlling interest in Pannar. Increases in insecticide and fungicide volumes, mainly in Latin America, were more than offset by lower corn seed and herbicide volumes and lower corn seed price.
Electronics & Communications - Operating earnings of $94 million decreased $3 million, or 3 percent, due to competitive pressures impacting Solamet(®) paste, and a decrease in other income, partially offset by stronger volume and productivity gains.
Industrial Biosciences - Operating earnings of $47 million increased $2 million, or 4 percent, from increased enzyme demand principally for ethanol production, partially offset by higher product costs.
Nutrition & Health - Operating earnings of $100 million increased $19 million, or 23 percent, from volume growth, mix enrichment, productivity actions and lower raw material costs.
Performance Chemicals - Operating earnings of $249 million decreased $12 million, or 5 percent, due primarily to lower prices and portfolio changes, partially offset by productivity improvements.
Performance Materials - Operating earnings of $370 million increased $3 million. Increased ethylene and polymer volumes were partially offset by the impact of portfolio changes, principally the Glass Laminating/Vinyls sale. A prior year $30 million benefit from a joint venture was partially offset by a $23 million gain on sale of a majority interest in a joint venture during the third quarter 2014.
Safety & Protection - Operating earnings of $201 million increased $30 million, or 18 percent, primarily due to lower product costs and productivity improvements, resulting in over a 300 basis point increase in operating margins.
Outlook
For the fourth quarter, the company expects sluggish growth in the global economy, along with continuing headwinds in agriculture and from currency. However, the company remains confident in its ability to create higher value from its portfolio while continuing to deliver against cost productivity and corporate initiatives. Overall, the company expects fourth quarter operating earnings per share to grow about 20 percent from last year's $0.59 per share, matching the growth rate the company achieved in the third quarter, and bringing full year 2014 operating earnings within its previously communicated outlook range of $4.00 - $4.10 per share.
DuPont will hold a conference call and webcast on Tuesday, October 28, 2014, at 9:00 AM EDT to discuss this news release. The webcast and additional presentation materials can be accessed by visiting the company's investor website (Events & Presentations) at www.investors.dupont.com. A replay of the conference call webcast will be available for 90 days by calling 1-630-652-3042, Passcode 38251527#. For additional information see the investor center at http://www.dupont.com.
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. Furthermore, these measures may not be consistent with similar measures provided by other companies. Reconciliations of non-GAAP measures to GAAP are provided in schedules A, C and D.
About DuPont
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 document 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 strategy for growth, product development, regulatory approval, market position, anticipated benefits of recent acquisitions, timing of anticipated benefits from restructuring actions, 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; successful integration of acquired businesses and separation of underperforming or non-strategic assets or businesses and successful completion of the proposed spinoff of the Performance Chemicals segment including ability to fully realize the expected benefits of the proposed spinoff. The company undertakes no duty to update any forward-looking statements as a result of future developments or new information.
E.I. du Pont de Nemours and Company
Consolidated Income Statements
(Dollars in millions, except per share amounts)
SCHEDULE A
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
Net sales $7,511 $7,735 $27,345 $27,987
Other income, net (a) 357 70 782 321
--- --- --- ---
Total 7,868 7,805 28,127 28,308
Cost of goods sold 4,880 5,166 16,879 17,415
Other operating charges (a) 839 989 2,461 2,843
Selling, general and administrative expenses 756 774 2,629 2,740
Research and development expense 514 540 1,577 1,603
Interest expense 93 108 290 340
Employee separation / asset related charges, net (a) - - 263 -
--- --- --- ---
Total 7,082 7,577 24,099 24,941
Income from continuing operations before income taxes 786 228 4,028 3,367
Provision for (benefit from) income taxes on continuing operations (a) 352 (35) 1,075 687
--- --- ----- ---
Income from continuing operations after income taxes 434 263 2,953 2,680
Income from discontinued operations after taxes - 25 - 1,997
--- --- --- -----
Net income 434 288 2,953 4,677
Less: Net income attributable to noncontrolling interests 1 3 11 14
--- --- --- ---
Net income attributable to DuPont $433 $285 $2,942 $4,663
==== ==== ====== ======
Basic earnings per share of common stock (b):
Basic earnings per share of common stock from continuing $0.47 $0.28 $3.20 $2.87
operations
Basic earnings per share of common stock from discontinued - 0.03 - 2.16
operations
Basic earnings per share of common stock $0.47 $0.30 $3.20 $5.03
===== ===== ===== =====
Diluted earnings per share of common stock (b):
Diluted earnings per share of common stock from continuing $0.47 $0.28 $3.17 $2.85
operations
Diluted earnings per share of common stock from discontinued - 0.03 - 2.14
operations
Diluted earnings per share of common stock $0.47 $0.30 $3.17 $4.99
===== ===== ===== =====
Dividends per share of common stock $0.47 $0.45 $1.37 $1.33
Average number of shares outstanding used in earnings per share
(EPS) calculation:
Basic 910,764,000 925,645,000 917,589,000 925,548,000
Diluted 917,761,000 933,005,000 924,646,000 932,542,000
(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 Nine Months Ended
September 30, September 30,
------------- -------------
2014 2013 % 2014 2013 %
Change Change
Income from continuing operations after $434 $263 65% $2,953 $2,680 10%
income taxes (GAAP)
Less: Significant items charge included (44) (71) (48) (129)
in income from continuing operations
after income taxes (per Schedule B)
Non-operating pension/OPEB costs (20) (95) (64) (279)
included in income from continuing
operations after income taxes
Net income attributable to 1 3 11 14
noncontrolling interest
Operating earnings $497 $426 17% $3,054 $3,074 (1)%
==== ==== ====== ======
EPS from continuing operations (GAAP) $0.47 $0.28 68% $3.17 $2.85 11%
Significant items charge included in EPS (0.05) (0.08) (0.05) (0.14)
(per Schedule B)
Non-operating pension/OPEB costs (0.02) (0.09) (0.07) (0.30)
included in EPS
Operating EPS $0.54 $0.45 20% $3.29 $3.29 -%
===== ===== ===== =====
E.I. du Pont de Nemours and Company
Condensed Consolidated Balance Sheets
(Dollars in millions, except per share amounts)
SCHEDULE A (continued)
September 30, December 31,
2014 2013
---- ----
Assets
Current assets
Cash and cash equivalents $3,982 $8,941
Marketable securities 566 145
Accounts and notes receivable, net 8,347 6,047
Inventories 7,295 8,042
Prepaid expenses 239 206
Deferred income taxes 739 775
Assets held for sale - 228
Total current assets 21,168 24,384
Property, plant and equipment, net of accumulated depreciation 13,114 12,993
(September 30, 2014- $19,765; December 31, 2013 - $19,438)
Goodwill 4,602 4,713
Other intangible assets 4,730 5,096
Investment in affiliates 998 1,011
Deferred income taxes 2,263 2,353
Other assets 1,036 949
----- ---
Total $47,911 $51,499
======= =======
Liabilities and Equity
Current liabilities
Accounts payable $3,757 $5,180
Short-term borrowings and capital lease obligations 3,889 1,721
Income taxes 528 247
Other accrued liabilities 3,963 6,219
----- -----
Total current liabilities 12,137 13,367
Long-term borrowings and capital lease obligations 9,279 10,741
Other liabilities 9,636 10,179
Deferred income taxes 877 926
--- ---
Total liabilities 31,929 35,213
------ ------
Commitments and contingent liabilities
Stockholders' equity
Preferred stock 237 237
Common stock, $0.30 par value; 1,800,000,000 shares authorized; 298 304
Issued at September 30, 2014 - 992,865,000; December 31, 2013 - 1,014,027,000
Additional paid-in capital 10,991 11,072
Reinvested earnings 16,913 16,784
Accumulated other comprehensive loss (5,789) (5,441)
Common stock held in treasury, at cost (87,041,000 shares at (6,727) (6,727)
September 30, 2014 and December 31, 2013)
Total DuPont stockholders' equity 15,923 16,229
------ ------
Noncontrolling interests 59 57
--- ---
Total equity 15,982 16,286
Total $47,911 $51,499
======= =======
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,
-------------
2014 2013
---- ----
Total Company
Net income $2,953 $4,677
Adjustments to reconcile
net income to cash used
for operating
activities:
Depreciation 944 961
Amortization
of
intangible
assets 294 255
Other
operating
charges
and
credits -
net 563 447
Gain on
sales of
businesses (418) (2,689)
Contributions
to pension
plans (231) (246)
Change in
operating
assets and
liabilities
-net (5,907) (5,738)
------ ------
Cash used
for
operating
activities (1,802) (2,333)
Investing activities
Purchases
of
property,
plant and
equipment (1,311) (1,223)
Investments
in
affiliates (37) (43)
Payments
for
businesses
-net of
cash
acquired - (133)
Proceeds
from sales
of
businesses
-net 727 4,816
Proceeds
from sales
of assets
-net 29 126
Net
increase
in short-
term
financial
instruments (422) (78)
Forward
exchange
contract
settlements 97 82
Other
investing
activities
-net 197 31
--- ---
Cash (used
for)
provided
by
investing
activities (720) 3,578
Financing activities
Dividends
paid to
stockholders (1,268) (1,242)
Net
increase
in
borrowings 749 3,204
Prepayments
/
repurchase
of common
stock (2,000) (1,000)
Proceeds
from
exercise
of stock
options 285 497
Other
financing
activities
-net 1 3
--- ---
Cash (used
for)
provided
by
financing
activities (2,233) 1,462
Effect of
exchange
rate
changes on
cash (204) (81)
---- ---
(Decrease)
increase
in cash
and cash
equivalents (4,959) 2,626
Cash and
cash
equivalents
at
beginning
of period 8,941 4,379
----- -----
Cash and
cash
equivalents
at end of
period $3,982 $7,005
====== ======
Reconciliation of Non-
GAAP Measure
----------------------
Calculation of Free Cash
Flow -Total Company
Nine Months Ended
September 30,
-------------
2014 2013
---- ----
Cash used
for
operating
activities $(1,802) $(2,333)
Purchases
of
property,
plant and
equipment (1,311) (1,223)
Free cash
flow $(3,113) $(3,556)
======= =======
E.I. du Pont de Nemours and Company
Schedule of Significant Items from Continuing Operations
(Dollars in millions, except per share amounts)
SCHEDULE B
SIGNIFICANT ITEMS FROM CONTINUING OPERATIONS
Pre-tax After-tax ($ Per Share)
------- --------- ------------
2014 2013 2014 2013 2014 2013
---- ---- ---- ---- ---- ----
1st Quarter
-----------
Separation transaction costs (a) $(16) $ - $(12) $ - $(0.01) $ -
Customer claims charge (e) - (35) - (22) - (0.02)
Income tax items (f) - - - 42 - 0.04
1st Quarter - Total $(16) $(35) $(12) $20 $(0.01) $0.02
==== ==== ==== === ====== =====
2nd Quarter
-----------
Separation transaction costs (a) $(35) $ - $(26) $ - $(0.03) $ -
Gain on sale of business (b) 391 - 273 - 0.30 -
Restructuring charge (c) (263) - (182) - (0.20) -
Venezuela devaluation (d) (58) - (57) - (0.06) -
Customer claims charge (e) - (80) - (51) - (0.05)
Income tax items (g) - (11) - (27) - (0.03)
2nd Quarter - Total $35 $(91) $8 $(78) $0.01 $(0.08)
=== ==== === ==== ===== ======
3rd Quarter
-----------
Separation transaction costs (a) $(61) $ - $(44) $ - $(0.05) $ -
Customer claims charge (e) - (40) - (24) - (0.03)
Litigation settlement (h) - (72) - (47) - (0.05)
3rd Quarter - Total $(61) $(112) $(44) $(71) $(0.05) $(0.08)
==== ===== ==== ==== ====== ======
Year-to-date Total $(42) $(238) $(48) $(129) $(0.05) $(0.14)
==== ===== ==== ===== ====== ======
(a) Third, second and first quarter 2014 included a charge of
$(61), $(35) and $(16), respectively, recorded in other
operating charges associated with transaction costs
related to the separation of the Performance Chemicals
segment. For full-year 2014, costs associated with the
separation are expected to be approximately $(210),
$(0.16) per share.
(b) Second quarter 2014 included a gain of $391 recorded in
other income, net associated with the sale of Glass
Laminating Solutions/Vinyls in the Performance
Materials segment.
(c) Second quarter 2014 included a $(263) restructuring
charge recorded in employee separation/asset related
charges, net, consisting of $(166) of severance and
related benefit costs, $(94) of asset shut downs, and
$(3) of other non-personnel charges as a result of the
company's plan to reduce residual costs associated with
the separation of the Performance Chemicals segment and
to improve productivity across all businesses and
functions. Pre-tax charges by segment are: Agriculture
- $(47), Electronics & Communications - $(68),
Industrial Biosciences - $(2), Nutrition & Health -
$(8), Performance Chemicals - $(19), Performance
Materials - $(29), Safety & Protection - $(31), Other
- $(2), and Corporate expenses - $(57).
(d) Second quarter 2014 included a charge of $(58) recorded
in other income, net associated with remeasuring the
company's Venezuelan net monetary assets from the
official exchange rate to the SICAD II exchange system.
(e) Third, second and first quarter 2013 included charges of
$(40), $(80) and $(35), respectively, recorded in other
operating charges associated with resolving claims
related to the use of the Imprelis(R) herbicide. 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. To date, the company has recognized
and received $73 of insurance recoveries from its
insurance carriers and continues to seek recovery
although the timing and outcome remain uncertain. The
company had accruals of $312 related to these claims at
September 30, 2014. These charges relate to the
Agriculture segment.
(f) 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.
(g) Second quarter 2013 includes a charge of $(11) in other
income, net related to interest on a prior year tax
position. Second quarter 2013 also includes a charge of
$(49) associated with a change in accrual for a prior
year tax position offset by a $33 benefit for an enacted
tax law change.
(h) Third quarter 2013 included 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.
E.I. du Pont de Nemours and Company
Consolidated Segment Information
(Dollars in millions)
SCHEDULE C
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
SEGMENT SALES (1) 2014 2013 2014 2013
---------------- ---- ---- ---- ----
Agriculture $1,563 $1,633 $9,572 $9,933
Electronics & Communications 623 638 1,820 1,907
Industrial Biosciences 318 305 936 898
Nutrition & Health 899 868 2,686 2,601
Performance Chemicals (2) 1,646 1,781 4,933 5,261
Performance Materials (2) 1,552 1,602 4,668 4,718
Safety & Protection 977 985 2,953 2,909
Other 2 1 4 5
Total Segment sales 7,580 7,813 27,572 28,232
Elimination of transfers (69) (78) (227) (245)
Consolidated net sales $7,511 $7,735 $27,345 $27,987
====== ====== ======= =======
(1) Segment sales include transfers.
(2) Prior periods reflect the reclassifications of the Viton(R) product line from Performance Materials to Performance Chemicals.
E.I. du Pont de Nemours and Company
Consolidated Segment Information
(Dollars in millions)
SCHEDULE C (continued)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
INCOME FROM CONTINUING OPERATIONS (GAAP) 2014 2013 2014 2013
--------------------------------------- ---- ---- ---- ----
Agriculture $(55) $(102) $2,176 $2,240
Electronics & Communications 94 97 190 241
Industrial Biosciences 47 45 160 129
Nutrition & Health 100 81 290 218
Performance Chemicals (3) 249 189 687 713
Performance Materials (3) 370 367 1,328 986
Safety & Protection 201 171 554 481
Other (83) (107) (259) (249)
--- ---- ---- ----
Total Segment PTOI 923 741 5,126 4,759
Corporate expenses (232) (162) (727) (582)
Interest expense (93) (108) (290) (340)
Non-operating pension/OPEB costs (30) (142) (94) (415)
Net exchange gains (losses) (1) 218 (101) 13 (55)
--- ---- --- ---
Income before income taxes from continuing operations $786 $228 $4,028 $3,367
==== ==== ====== ======
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) (2) 2014 2013 2014 2013
---- ---- ---- ----
Agriculture $ - $(40) $(47) $(155)
Electronics & Communications - - (68) -
Industrial Biosciences - - (2) -
Nutrition & Health - - (8) -
Performance Chemicals (3) - (72) (19) (72)
Performance Materials (3) - - 362 -
Safety & Protection - - (31) -
Other - - (2) -
--- --- --- ---
Total significant items by segment - (112) 185 (227)
Corporate expenses (61) - (169) (11)
Net exchange gains (losses) (1) - - (58) -
--- --- --- ---
Total significant items before income taxes $(61) $(112) $(42) $(238)
==== ===== ==== =====
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
OPERATING EARNINGS 2014 2013 2014 2013
------------------ ---- ---- ---- ----
Agriculture $(55) $(62) $2,223 $2,395
Electronics & Communications 94 97 258 241
Industrial Biosciences 47 45 162 129
Nutrition & Health 100 81 298 218
Performance Chemicals (3) 249 261 706 785
Performance Materials (3) 370 367 966 986
Safety & Protection 201 171 585 481
Other (83) (107) (257) (249)
--- ---- ---- ----
Total segment operating earnings 923 853 4,941 4,986
Corporate expenses (171) (162) (558) (571)
Interest expense (93) (108) (290) (340)
--- ---- ---- ----
Operating earnings before income taxes and exchange gains (losses) 659 583 4,093 4,075
Net exchange gains (losses) (1) 218 (101) 71 (55)
---- ---
Operating earnings before income taxes $877 $482 $4,164 $4,020
==== ==== ====== ======
(1) See Schedule D for additional information on exchange gains and losses.
(2) See Schedule B for detail of significant items.
(3) Prior periods reflect the reclassifications of the Viton(R) product line from Performance Materials to Performance Chemicals.
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 Statements
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
Income from continuing operations before income taxes $786 $228 $4,028 $3,367
Add: Significant items before income taxes 61 112 42 238
Add: Non-operating pension/OPEB costs 30 142 94 415
--- --- --- ---
Operating earnings before income taxes $877 $482 $4,164 $4,020
Less: Net income attributable to noncontrolling interests 1 3 11 14
Add: Interest expense 93 108 290 340
--- --- --- ---
Adjusted EBIT from operating earnings 969 587 4,443 4,346
Add: Depreciation and amortization 358 379 1,238 1,216
--- --- ----- -----
Adjusted EBITDA from operating earnings $1,327 $966 $5,681 $5,562
====== ==== ====== ======
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,
-----------------------
2014 Outlook 2013 Actual
------------ -----------
Operating EPS $4.00 - $4.10 $3.88
Significant items
-----------------
Separation transaction costs (0.16)
Gain on sale of business 0.30
Restructuring charge (0.20)
Venezuela devaluation (0.06)
Tax items 0.02
Customer claims charges (0.24)
Restructuring charge/adjustments -
Litigation settlement (0.05)
Asset impairment charge (0.18)
Non-operating pension/OPEB costs - estimate (0.10) (0.39)
EPS from continuing operations (GAAP) $3.78 - $3.88 $3.04
------------- -----
2014 Operating EPS excludes the potential gain on sale of the Kocide(R) and Mankocide(R) copper fungicide business assets.
E.I. du Pont de Nemours and Company
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
SCHEDULE D (continued)
Exchange Gains/Losses on Operating Earnings(2)
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 Nine Months Ended
September 30, September 30,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
Subsidiary/Affiliate Monetary Position Gain (Loss)
--------------------------------------------------
Pre-tax exchange (losses) gains (includes equity affiliates) $(185) $29 $(216) $(121)
Local tax (expenses) benefits (116) 13 (132) 32
---- --- ---- ---
Net after-tax impact from subsidiary exchange (losses) gains $(301) $42 $(348) $(89)
===== === ===== ====
Hedging Program Gain (Loss)
--------------------------
Pre-tax exchange gains (losses) $403 $(130) $287 $66
Tax (expenses) benefits (141) 45 (100) (24)
---- --- ---- ---
Net after-tax impact from hedging program exchange gains (losses) $262 $(85) $187 $42
==== ==== ==== ===
Total Exchange Gain (Loss)
-------------------------
Pre-tax exchange gains (losses) $218 $(101) $71 $(55)
Tax (expenses) benefits (257) 58 (232) 8
---- --- ---- ---
Net after-tax exchange losses (1) $(39) $(43) $(161) $(47)
==== ==== ===== ====
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 losses excludes losses attributable to discontinued operations of $(5) for the nine months ended September 30, 2013.
(2) See Schedule B for detail of significant items
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 Nine Months Ended
September 30, September 30,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
Income from continuing operations before income taxes $786 $228 $4,028 $3,367
Add: Significant items - charge (2) 61 112 42 238
Non-operating pension/OPEB costs 30 142 94 415
Less: Net exchange gains (losses) 218 (101) 71 (55)
--- ---- --- ---
Income from continuing operations before income taxes, significant items,
exchange gains (losses), and non-operating pension/OPEB costs $659 $583 $4,093 $4,075
==== ==== ====== ======
Provision for (benefit from) income taxes on continuing operations $352 $(35) $1,075 $687
Add: Tax benefits (expenses) on significant items 17 41 (6) 109
Tax benefits (expenses) on non-operating pension/OPEB costs 10 47 30 136
Tax (expenses) benefits on exchange gains/losses (257) 58 (232) 8
---- --- ---- ---
Provision for income taxes on operating earnings, excluding exchange gains (losses) $122 $111 $867 $940
==== ==== ==== ====
Effective income tax rate 44.8% (15.4)% 26.7% 20.4%
Significant items effect and non-operating pension/OPEB costs (1.6)% 26.4% (0.3)% 2.8%
effect
Tax rate, from continuing operations, before significant items and non- 43.2% 11.0% 26.4% 23.2%
operating pension/OPEB costs
Exchange gains (losses) effect (24.7)% 8.0% (5.2)% (0.1)%
------ --- ----- -----
Base income tax rate from continuing operations 18.5% 19.0% 21.2% 23.1%
==== ==== ==== ====
(2) See Schedule B for detail of significant items.
SOURCE DuPont
