0000030554-14-000056.txt : 20141028 0000030554-14-000056.hdr.sgml : 20141028 20141028084445 ACCESSION NUMBER: 0000030554-14-000056 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20141028 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20141028 DATE AS OF CHANGE: 20141028 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUPONT E I DE NEMOURS & CO CENTRAL INDEX KEY: 0000030554 STANDARD INDUSTRIAL CLASSIFICATION: PLASTIC MATERIAL, SYNTH RESIN/RUBBER, CELLULOS (NO GLASS) [2820] IRS NUMBER: 510014090 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-00815 FILM NUMBER: 141175824 BUSINESS ADDRESS: STREET 1: 1007 MARKET ST CITY: WILMINGTON STATE: DE ZIP: 19898 BUSINESS PHONE: 3027741000 MAIL ADDRESS: STREET 1: 1007 MARKET ST CITY: WILMINGTON STATE: DE ZIP: 19898 8-K 1 a930148kenr.htm 8-K 9.30.14 8K ENR
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of Earliest Event Reported) October 28, 2014
 
E. I. du Pont de Nemours and Company
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
 
1-815
 
51-0014090
(State or Other Jurisdiction
 
(Commission
 
(I.R.S. Employer
Of Incorporation)
 
File Number)
 
Identification No.)
 
1007 Market Street
Wilmington, Delaware 19898
(Address of principal executive offices)
 
Registrant’s telephone number, including area code:   (302) 774-1000
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



Item 2.02     Results of Operations and Financial Condition
On October 28, 2014, the Registrant announced its consolidated financial results for the quarter ended September 30, 2014. A copy of the Registrant’s earnings news release is furnished on Form 8-K. The information contained in Item 2.02, including Exhibit 99.1, of this report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and it will not be incorporated by reference into any registration statement or other document filed by the Registrant under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such a filing.

Item 9.01     Financial Statements and Exhibits
(d) Exhibits:
99.1     Press Release dated October 28, 2014




SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
E. I. DU PONT DE NEMOURS AND COMPANY
 
(Registrant)
 
 
 
 
 
/s/ Barry J. Niziolek
 
Barry J. Niziolek
 
Vice President and Controller
 
October 28, 2014


 EX-99.1 2 a93014enr.htm EX-99.1 9.30.14 ENR

 
 
 
 
 
Exhibit 99.1
 
 
 
 
 
 
 
 
 
 
October 28, 2014
 
 
 
Media Contact:
Dan Turner
WILMINGTON, Del.
 
 
 
 
302-774-4005
 
 
 
 
 
daniel.a.turner@dupont.com
 
 
 
 
Investor Contact:
302-774-4994

DuPont Reports 3Q Operating Earnings Per Share of $0.54; Up 20 Percent from Last Year

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. GAAP1 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.




WILMINGTON, Del., October 28, 2014 - 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. GAAP1 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."

1Generally Accepted Accounting Principles (GAAP)
E.I. du Pont de Nemours and Company

2

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
Percentage Change Due to:
(Dollars in millions)
 
$
 
% Change
 
Local Price
 
Currency Effect
 
Volume
 
Portfolio/ Other
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
 
Percentage Change
 
 
September 30, 2014
Due to:
(Dollars in millions)
 
$
 
% Change
 
USD Price
 
Volume
 
Portfolio/Other
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

 
 
 
 
 
 
 
 

3

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 and 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 operating earnings
 
(379
)
 
(53
)
 
(326
)
 


Net income attributable to noncontrolling interests
 
1

 
3

 
(2
)
 

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® 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.
    
    


























4

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.













5

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.

# # #
10/28/14



6
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,
 
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 operations
$
0.47

 
$
0.28

 
$
3.20

 
$
2.87

Basic earnings per share of common stock from discontinued operations
—

 
0.03

 
—

 
2.16

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 operations
$
0.47

 
$
0.28

 
$
3.17

 
$
2.85

Diluted earnings per share of common stock from discontinued operations
—

 
0.03

 
—

 
2.14

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
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
%
Change
 
2014
 
2013
 
%
Change
Income from continuing operations after income taxes (GAAP)
$
434

 
$
263

 
65
%
 
$
2,953

 
$
2,680

 
10
 %
Less: Significant items charge included in income from continuing
       operations after income taxes (per Schedule B)
(44
)
 
(71
)
 
 
 
(48
)
 
(129
)
 
 
Non-operating pension/OPEB costs included in income from continuing
    operations after income taxes
(20
)
 
(95
)
 
 
 
(64
)
 
(279
)
 
 
Net income attributable to noncontrolling interest
1

 
3

 
 
 
11

 
14

 
 
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 (per Schedule B)
(0.05
)
 
(0.08
)
 
 
 
(0.05
)
 
(0.14
)
 
 
Non-operating pension/OPEB costs included in EPS
(0.02
)
 
(0.09
)
 
 
 
(0.07
)
 
(0.30
)
 
 
Operating EPS
$
0.54

 
$
0.45

 
20
%
 
$
3.29

 
$
3.29

 
—
 %

7
E.I. du Pont de Nemours and Company
Condensed Consolidated Balance Sheets
(Dollars in millions, except per share amounts)

SCHEDULE A (continued)
 
 
 
 
September 30,
2014
 
December 31,
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
   (September 30, 2014- $19,765; December 31, 2013 - $19,438)
 
13,114

 
12,993

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;
   Issued at September 30, 2014 - 992,865,000; December 31, 2013 - 1,014,027,000
 
298

 
304

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 September 30, 2014 and December 31, 2013)
 
(6,727
)
 
(6,727
)
Total DuPont stockholders' equity
 
15,923

 
16,229

Noncontrolling interests
 
59

 
57

Total equity
 
15,982

 
16,286

Total
 
$
47,911

 
$
51,499


8
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
)


9
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 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® 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.



10
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,
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® product line from Performance Materials to Performance
     Chemicals.


11
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,
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
September 30,
 
Nine Months Ended
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
September 30,
 
Nine Months Ended
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® product line from Performance Materials to Performance Chemicals.


12
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
September 30,
 
Nine Months Ended
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® and Mankocide® copper fungicide business assets.










13
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
September 30,
 
Nine Months Ended
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
September 30,
 
Nine Months Ended
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 effect
 
(1.6
)%
 
26.4
 %
 
(0.3
)%
 
2.8
 %
Tax rate, from continuing operations, before significant items and non-operating pension/OPEB costs
43.2
 %
 
11.0
 %
 
26.4
 %
 
23.2
 %
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.

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