EX-99.1 2 a63015enr.htm EX-99.1 6.30.15 ENR

 
 
 
 
 
Exhibit 99.1
 
 
 
 
 
 
 
 
 
 
July 28, 2015
 
 
 
Media Contact:
Dan Turner
WILMINGTON, Del.
 
 
 
 
302-996-8372
 
 
 
 
 
daniel.a.turner@dupont.com
 
 
 
 
Investor Contact:
302-774-4994

DuPont Reports 2Q Operating EPS of $1.18

Operating Margins for Ongoing Segments Improved 180 Basis Points

Declares Third Quarter Dividend, $2 Billion Share Buyback to be Completed in Second Half 2015

Second Quarter Highlights

•
Delivered second-quarter operating earnings per share of $1.18 versus $1.17 in prior year. Performance Chemicals operating earnings were down $0.11 per share from prior year. GAAP earnings per share were $1.03 versus $1.15 in prior year.

•
Segment pre-tax operating earnings of $1,586 million included about $210 million, or $0.17 per share, of negative impact from currency. Excluding the impact of currency, operating EPS would have increased about 15 percent versus prior year.

•
Operating margins improved in 5 of the 6 ongoing operating segments which comprise the next generation DuPont including Performance Materials, Electronics & Communications, Agriculture, Nutrition & Health, and Safety & Protection. Margin improvement was primarily driven by increased productivity.

•
Cost reductions from operational redesign contributed $0.10 per share to second-quarter operating earnings; on track to deliver approximately $0.40 per share in savings in 2015.

•
On a continuing operations basis, DuPont expects full-year 2015 operating earnings to be about $3.10 per share, excluding $0.80 per share in previously anticipated full year earnings from Performance Chemicals. Estimated negative currency impact expected to be approximately $0.60 per share. Prior-year operating earnings were $3.36 per share on a comparable basis.

WILMINGTON, Del., July 28, 2015 - DuPont (NYSE: DD), a science company that brings world-class, innovative products, materials, and services to the global marketplace, today announced second quarter 2015 operating earnings of $1.18 per share compared to $1.17 per share in the prior year. GAAP1 earnings were $1.03 per share, compared to $1.15 per share in the prior year.
Second quarter sales were $8.6 billion, down 11 percent versus prior year due to negative impacts from currency (5 percent), portfolio changes (2 percent), volume (2 percent) and local price and product mix (2 percent). Segment pre-tax operating earnings of $1,586 million included about $210 million, or $0.17 per share, of negative impact from currency. Operating earnings included $0.09 per share of benefit related to exchange gains and taxes, attributable to prior periods. Performance Chemicals segment operating earnings were $113 million, or $0.10 per share, a 55 percent reduction versus prior year.

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

2

DuPont’s board of directors approved a third quarter dividend of 38 cents per share, the 444th consecutive quarterly dividend since the company's first dividend in the fourth quarter of 1904. The third quarter dividend of 38 cents per share of common stock is payable on Sept. 11, 2015, to stockholders of record at the close of business on Aug. 14, 2015. Regular quarterly dividends of $1.125 per share on the $4.50 series preferred stock and $0.875 cents per share on the $3.50 series preferred stock also were declared, both payable on Oct. 23, 2015, to stockholders of record as of Oct. 9, 2015.
The separation of Chemours was completed on July 1, 2015. In the first quarter 2015, DuPont announced its intention to buy back shares using the approximately $4 billion of distribution proceeds received from Chemours. In connection with the completion of the spin, DuPont’s board has authorized the company to purchase and retire $2 billion of common stock by Dec. 31, 2015 with the remainder to be purchased and retired by Dec.31, 2016. The company expects to use an accelerated share repurchase plan in connection with the $2 billion buyback by year end.
“We continued to improve margins across most of our ongoing businesses through our constant focus on productivity, even as we address industry-wide challenges in agriculture and ongoing currency headwinds,” said Ellen Kullman, DuPont Chair and CEO.  “With the separation of our Performance Chemicals segment now complete, the next generation DuPont is leveraging our innovation platform to drive greater growth and value, with a continued emphasis on cost productivity, actively managing our portfolio, and the disciplined return of capital.”

Global Consolidated Net Sales - 2nd Quarter
 
 
Three Months Ended
 
 
 
 
 
 
June 30, 2015
Percentage Change Due to:
(Dollars in millions)
 
$
 
% Change
 
Local Price and Product Mix
 
Currency
 
Volume
 
Portfolio/Other
U.S. & Canada
 
$
4,247

 
(8
)
 
(2
)
 
(1
)
 
(3
)
 
(2
)
EMEA*
 
1,732

 
(18
)
 
—

 
(17
)
 
2

 
(3
)
Asia Pacific
 
1,883

 
(10
)
 
(2
)
 
(2
)
 
(3
)
 
(3
)
Latin America
 
733

 
(18
)
 
—

 
(9
)
 
(7
)
 
(2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Consolidated Sales
 
$
8,595

 
(11
)
 
(2
)
 
(5
)
 
(2
)
 
(2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
* Europe, Middle East & Africa
 
 
 
 
 
 
 
 
 
 
 
 











3

Segment Sales - 2nd Quarter
 
 
Three Months Ended
 
 
 
 
June 30, 2015
Percentage Change Due to:
(Dollars in millions)
 
$
 
% Change
 
Local Price and Product Mix
 
Currency
 
Volume
 
Portfolio/Other
Agriculture
 
$
3,218

 
(11
)
 
1

 
(5
)
 
(6
)
 
(1
)
Electronics & Communications
 
534

 
(13
)
 
(4
)
 
(2
)
 
(7
)
 
—

Industrial Biosciences
 
288

 
(9
)
 
(3
)
 
(8
)
 
2

 
—

Nutrition & Health
 
826

 
(11
)
 
(1
)
 
(9
)
 
—

 
(1
)
Performance Chemicals
 
1,502

 
(11
)
 
(6
)
 
(4
)
 
—

 
(1
)
Performance Materials
 
1,365

 
(14
)
 
(4
)
 
(7
)
 
3

 
(6
)
Safety & Protection
 
925

 
(10
)
 
—

 
(5
)
 
—

 
(5
)
Other
 
2

 
 
 
 
 
 
 
 
 
 
Total segment sales
 
8,660

 
(11
)
 
(2
)
 
(5
)
 
(2
)
 
(2
)
Elimination of transfers
 
(65
)
 
 
 
 
 
 
 
 
 
 
Consolidated net sales
 
$
8,595

 
 
 
 
 
 
 
 
 
 

Operating Earnings - 2nd Quarter
 
 
 
 
 
 
 Change vs. 2014
(Dollars in millions)
 
2Q15
 
2Q14
 
$
 
%
Agriculture
 
$
778

 
$
836

 
$
(58
)
 
-7
 %
Electronics & Communications
 
93

 
89

 
4

 
4
 %
Industrial Biosciences
 
50

 
59

 
(9
)
 
-15
 %
Nutrition & Health
 
103

 
105

 
(2
)
 
-2
 %
Performance Chemicals
 
113

 
251

 
(138
)
 
-55
 %
Performance Materials
 
311

 
303

 
8

 
3
 %
Safety & Protection
 
195

 
209

 
(14
)
 
-7
 %
Other
 
(57
)
 
(82
)
 
25

 
30
 %
Total segment operating earnings (1)
 
1,586

 
1,770

 
(184
)
 
-10
 %
 
 
 
 
 
 
 
 

Exchange gains (losses) (1), (2)
 
26

 
(51
)
 
77

 
nm

Corporate expenses (1)
 
(164
)
 
(186
)
 
22

 
-12
 %
Interest expense (1)
 
(107
)
 
(94
)
 
(13
)
 
14
 %
Operating earnings before income taxes
 
1,341

 
1,439

 
(98
)
 
-7
 %
 
 
 
 
 
 
 
 

Provision for income taxes on operating earnings
 
(261
)
 
(350
)
 
89

 


Less: Net income attributable to noncontrolling interests
 
5

 
4

 
1

 

Operating earnings
 
$
1,075

 
$
1,085

 
$
(10
)
 
-1
 %
 
 
 
 
 
 
 
 

Operating earnings per share
 
$
1.18

 
$
1.17

 
$
0.01

 
1
 %
 
 
 
 
 
 
 
 
 
(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.



4

The following is a summary of business results for each of the company’s reportable segments comparing second quarter with the prior year, unless otherwise noted.
Agriculture - Operating earnings of $778 million decreased $58 million, or 7 percent, as improved productivity and increases in price from new products were more than offset by lower volumes and an $84 million negative currency impact. Decreased volumes are due to reduced soybean sales, lower crop protection volumes and reductions in global corn planted area. Excluding the impact of currency, operating earnings would have increased by about 3 percent.
Electronics & Communications - Operating earnings of $93 million increased $4 million, or 4 percent, as productivity gains more than offset volume decreases and a $3 million negative impact from currency. Volume growth in Tedlar® film in photovoltaics and consumer electronics was more than offset by competitive pressures impacting Solamet® paste. Excluding the impact of currency, operating earnings would have increased by about 8 percent.
Industrial Biosciences - Operating earnings of $50 million decreased $9 million, or 15 percent, as increased demand for bioactives was more than offset by lower pricing and a $6 million negative impact of currency. Increased enzyme demand, principally in animal nutrition, health and personal care, and food markets, was offset by lower biomaterial sales. Excluding the impact of currency, operating earnings would have been about 5 percent lower than prior year.
Nutrition & Health - Operating earnings of $103 million decreased $2 million, or 2 percent, as productivity gains were more than offset by a $12 million negative impact of currency. Volume growth in probiotics, texturants, cultures, and ingredient systems were offset by a decline in specialty proteins. Excluding the impact of currency, operating earnings would have increased by about 10 percent.
Performance Chemicals - Operating earnings of $113 million decreased $138 million, or 55 percent, driven primarily by lower prices for titanium dioxide, and $43 million from the negative impact of currency. Excluding the impact of currency, operating earnings would have declined by about 38 percent.
Performance Materials - Operating earnings of $311 million increased $8 million, or 3 percent, driven by broad based improved product mix, productivity and volume growth for ethylene as prior year ethylene sales were constrained due to the scheduled outage at the Orange, Texas ethylene unit. This was offset by $42 million of negative impact of currency, the portfolio change from the sale of Glass Laminating Solutions/Vinyls, and a negative impact from an unplanned ethylene outage. Excluding the impact of currency, operating earnings would have increased by about 17 percent.
Safety & Protection - Operating earnings of $195 million decreased $14 million, or 7 percent, as productivity improvements and volume growth in medical packaging and protective garments were more than offset by $20 million of negative currency impact, the portfolio impact of the Sontara® divestiture, and lower demand, particularly from the oil & gas industry, for Nomex® thermal resistant fiber and Sustainable Solutions offerings. Excluding the impact of currency, operating earnings would have increased by about 3 percent.

Outlook
Consistent with continuing weakness in global agricultural markets, the company is reducing expectations for the year in its Agriculture segment due to weaker demand in global crop protection markets, reduced expectations for corn area in Latin America, and lower than expected soybean volumes in North America. The company continues to anticipate that the operational redesign will deliver savings of approximately $0.40 per share in 2015. As a result, the company expects operating earnings per share for 2015 to be about $3.10 per share for the full year, excluding $0.80 per share of anticipated full-year earnings from the Performance Chemicals segment. This represents a $0.10 per share reduction from the prior outlook of $4.00 per share, which included the Performance Chemicals segment.


5

DuPont will hold a conference call and webcast on Tuesday, July 28, 2015, 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. 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; ability to respond to market acceptance, rules, regulations and policies affecting products based on biotechnology; 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, including timely realization of the expected benefits from the separation of Performance Chemicals. The company undertakes no duty to update any forward-looking statements as a result of future developments or new information.


# # #
07/28/15


6
E.I. du Pont de Nemours and Company
Consolidated Income Statements
(Dollars in millions, except per share amounts)



SCHEDULE A
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2015
 
2014
 
2015
 
2014
Net sales
$
8,595

 
$
9,706

 
$
17,767

 
$
19,834

Other income, net (1)
283

 
408

 
481

 
425

Total
8,878

 
10,114

 
18,248

 
20,259

 
 
 
 
 
 
 
 
Cost of goods sold
5,280

 
5,999

 
10,833

 
11,999

Other operating charges (1)
349

 
300

 
632

 
586

Selling, general and administrative expenses
1,371

 
1,473

 
2,683

 
2,909

Research and development expense
515

 
545

 
1,014

 
1,063

Interest expense (1)
127

 
94

 
211

 
197

Employee separation / asset related charges, net (1)
61

 
263

 
99

 
263

Total
7,703

 
8,674

 
15,472

 
17,017

 
 
 
 
 
 
 
 
Income before income taxes
1,175

 
1,440

 
2,776

 
3,242

Provision for income taxes (1)
230

 
366

 
796

 
723

Net income
945

 
1,074

 
1,980

 
2,519

 
 
 
 
 
 
 
 
Less: Net income attributable to noncontrolling interests
5

 
4

 
9

 
10

 
 
 
 
 
 
 
 
Net income attributable to DuPont
$
940

 
$
1,070

 
$
1,971

 
$
2,509

 
 
 
 
 
 
 
 
Basic earnings per share of common stock
$
1.04

 
$
1.16

 
$
2.17

 
$
2.72

 
 
 
 
 
 
 
 
Diluted earnings per share of common stock
$
1.03

 
$
1.15

 
$
2.15

 
$
2.70

 
 
 
 
 
 
 
 
Dividends per share of common stock
$
0.49

 
$
0.45

 
$
0.96

 
$
0.90

 
 
 
 
 
 
 
 
Average number of shares outstanding used in earnings per share (EPS) calculation:
 
 
 
 
 
 
 
  Basic
905,761,000

 
918,684,000

 
906,296,000

 
921,058,000

  Diluted
911,681,000

 
925,587,000

 
912,748,000

 
928,145,000

 
 
 
 
 
 
 
 
Reconciliation of Non-GAAP Measures
 
 
 
 
 
 
 
 
 
 
 
Summary of Earnings Comparison
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2015
 
2014
 
% Change
 
2015
 
2014
 
% Change
Net income (GAAP)
$
945

 
$
1,074

 
(12
)%
 
$
1,980

 
$
2,519

 
(21
)%
Less: Significant items (benefit) charge, after-tax, included in net income (per Schedule B)
(85
)
 
8

 
 
 
(211
)
 
(4
)
 
 
Non-operating pension/OPEB costs, after-tax, included in net income (2)
(50
)
 
(23
)
 
 
 
(121
)
 
(44
)
 
 
Net income attributable to noncontrolling interest
5

 
4

 
 
 
9

 
10

 
 
Operating earnings (Non-GAAP)
$
1,075

 
$
1,085

 
(1
)%
 
$
2,303

 
$
2,557

 
(10
)%
 
 
 
 
 
 
 
 
 
 
 
 
EPS attributable to DuPont (GAAP)
$
1.03

 
$
1.15

 
(10
)%
 
$
2.15

 
$
2.70

 
(20
)%
Less: Significant items (benefit) charge included in EPS (per Schedule B)
(0.09
)
 
0.01

 
 
 
(0.23
)
 
—

 
 
Non-operating pension/OPEB costs included in EPS (2)
(0.06
)
 
(0.03
)
 
 
 
(0.14
)
 
(0.05
)
 
 
Operating EPS (Non-GAAP)
$
1.18

 
$
1.17

 
1
 %
 
$
2.52

 
$
2.75

 
(8
)%
 
 
 
 
 
 
 
 
 
 
 
 

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

SCHEDULE A (continued)
 
 
 
 
June 30,
2015
 
December 31,
2014
Assets
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
4,746

 
$
6,910

Marketable securities
 
556

 
124

Accounts and notes receivable, net
 
8,308

 
6,005

Inventories
 
6,514

 
7,841

Prepaid expenses
 
296

 
279

Deferred income taxes
 
625

 
589

Total current assets
 
21,045

 
21,748

Property, plant and equipment, net of accumulated depreciation
   (June 30, 2015 - $20,256; December 31, 2014 - $19,942)
 
13,061

 
13,386

Goodwill
 
4,455

 
4,529

Other intangible assets
 
4,286

 
4,580

Investment in affiliates
 
895

 
886

Deferred income taxes
 
3,223

 
3,349

Other assets
 
1,141

 
1,058

Total
 
$
48,106

 
$
49,536

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Current liabilities
 
 
 
 
Accounts payable
 
$
3,399

 
$
4,822

Short-term borrowings and capital lease obligations
 
647

 
1,423

Income taxes
 
613

 
547

Other accrued liabilities
 
4,046

 
5,848

Total current liabilities
 
8,705

 
12,640

Long-term borrowings and capital lease obligations
 
12,088

 
9,233

Other liabilities
 
13,188

 
13,819

Deferred income taxes
 
472

 
466

Total liabilities
 
34,453

 
36,158

 
 
 
 
 
Commitments and contingent liabilities
 
 
 
 
 
 
 
 
 
Stockholders' equity
 
 
 
 
Preferred stock
 
237

 
237

Common stock, $0.30 par value; 1,800,000,000 shares authorized;
   Issued at June 30, 2015 - 991,875,000; December 31, 2014 - 992,020,000
 
298

 
298

Additional paid-in capital
 
11,389

 
11,174

Reinvested earnings
 
17,838

 
17,045

Accumulated other comprehensive loss
 
(9,446
)
 
(8,707
)
Common stock held in treasury, at cost (87,041,000 shares at June 30, 2015 and December 31, 2014)
 
(6,727
)
 
(6,727
)
Total DuPont stockholders' equity
 
13,589

 
13,320

Noncontrolling interests
 
64

 
58

Total equity
 
13,653

 
13,378

Total
 
$
48,106

 
$
49,536


8
E.I. du Pont de Nemours and Company
Condensed Consolidated Statement of Cash Flows
(Dollars in millions)


SCHEDULE A (continued)
 
 
Six Months Ended
June 30,
 
2015
 
2014
Total Company
 
 
 
Net income
$
1,980

 
$
2,519

Adjustments to reconcile net income to cash used for operating activities:
 
 
 
Depreciation
615

 
635

Amortization of intangible assets
257

 
245

Net periodic pension benefit cost
294

 
205

Contributions to pension plans
(204
)
 
(168
)
Gain on sale of businesses
(22
)
 
(398
)
Other operating activities - net
59

 
430

Change in operating assets and liabilities - net
(5,024
)
 
(5,539
)
Cash used for operating activities
(2,045
)
 
(2,071
)
 
 
 
 
Investing activities
 
 
 
Purchases of property, plant and equipment
(938
)
 
(781
)
Investments in affiliates
(50
)
 
(23
)
Payments for businesses - net of cash acquired
(77
)
 
—

Proceeds from sales of businesses - net
34

 
639

Proceeds from sales of assets - net
14

 
10

Net increase in short-term financial instruments
(422
)
 
(22
)
Foreign currency exchange contract settlements
443

 
(63
)
Other investing activities - net
13

 
8

Cash used for investing activities
(983
)
 
(232
)
 
 
 
 
Financing activities
 
 
 
Dividends paid to stockholders
(875
)
 
(836
)
Net increase (decrease) in borrowings
2,110

 
(631
)
Repurchase of common stock
(353
)
 
(1,061
)
Proceeds from exercise of stock options
201

 
214

Other financing activities - net
(81
)
 
(76
)
Cash provided by (used for) financing activities
1,002

 
(2,390
)
 
 
 
 
Effect of exchange rate changes on cash
(138
)
 
(74
)
 
 
 
 
Decrease in cash and cash equivalents
(2,164
)
 
(4,767
)
 
 
 
 
Cash and cash equivalents at beginning of period
6,910

 
8,941

 
 
 
 
Cash and cash equivalents at end of period
$
4,746

 
$
4,174

 
 
 
 
Reconciliation of Non-GAAP Measure
 
 
 
Calculation of Free Cash Flow
 
 
 
 
Six Months Ended
June 30,
 
2015
 
2014
Cash used for operating activities
$
(2,045
)
 
$
(2,071
)
Purchases of property, plant and equipment
(938
)
 
(781
)
Free cash flow
$
(2,983
)
 
$
(2,852
)
 
 
 
 
(1) See Schedule B for detail of significant items.
(2) Year to date June 30, 2015 includes a $23 after-tax exchange loss on foreign pension balances.

9
E.I. du Pont de Nemours and Company
Schedule of Significant Items
(Dollars in millions, except per share amounts)


SCHEDULE B
 
 
 
 
 
 
 
 
 
 
SIGNIFICANT ITEMS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax
 
After-tax
 
($ Per Share)
 
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
1st Quarter
 
 
 
 
 
 
 
 
 
 
 
Separation transaction costs (1)
$
(81
)
 
$
(16
)
 
$
(80
)
 
$
(12
)
 
$
(0.09
)
 
$
(0.01
)
Customer claims recovery (4)
35

 
—

 
22

 
—

 
0.02

 
—

Asset impairment charge (5)
(37
)
 
—

 
(30
)
 
—

 
(0.03
)
 
—

Ukraine devaluation (6)
(40
)
 
—

 
(38
)
 
—

 
(0.04
)
 
—

1st Quarter - Total
$
(123
)
 
$
(16
)
 
$
(126
)
 
$
(12
)
 
$
(0.14
)
 
$
(0.01
)
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter
 
 
 
 
 
 
 
 
 
 
 
Separation transaction costs (1)
$
(139
)
 
$
(35
)
 
$
(115
)
 
$
(26
)
 
$
(0.13
)
 
$
(0.03
)
Restructuring charges, net (2)
(61
)
 
(263
)
 
(42
)
 
(182
)
 
(0.04
)
 
(0.20
)
Litigation settlement (3)
112

 
—

 
72

 
—

 
0.08

 
—

Venezuela devaluation(7)
—

 
(58
)
 
—

 
(57
)
 
—

 
(0.06
)
Gain on sale of business (8)
—

 
391

 
—

 
273

 
—

 
0.30

2nd Quarter - Total
$
(88
)
 
$
35

 
$
(85
)
 
$
8

 
$
(0.09
)
 
$
0.01

 
 
 
 
 
 
 
 
 
 
 
 
 
Year-to-date Total(9)
$
(211
)
 
$
19

 
$
(211
)
 
$
(4
)
 
$
(0.23
)
 
$
—


















10
E.I. du Pont de Nemours and Company
Schedule of Significant Items
(Dollars in millions, except per share amounts)



SCHEDULE B (continued)
 
(1)
Second quarter 2015 included charges of $(139) associated with transaction costs related to the separation of the Performance Chemicals segment consisting of $(119) recorded in other operating charges and $(20) recorded in interest expense. First quarter 2015 included charges of $(81) recorded in other operating charges associated with transaction costs related to the separation of the Performance Chemicals segment.
 
Second and first quarter 2014 included charges of $(35) and $(16), respectively, recorded in other operating charges associated with transaction costs related to the separation of the Performance Chemicals segment.

 
 
(2)
Second quarter 2015 included a $(61) restructuring charge recorded in employee separation/asset related charges, net consisting entirely of severance and related benefit costs in the Performance Chemicals segment to achieve fixed cost and operational productivity improvements for Chemours post-separation.
 
Second quarter 2015 included adjustments recorded in employee separation/asset related charges, net, associated with the 2014 restructuring program. These adjustments were primarily due to lower than estimated individual severance costs and workforce reductions achieved through non-severance programs, partially offset by identification of additional projects in certain segments. There was no impact of these adjustments to the company's interim Consolidated Income Statements. The net reduction impacted segment earnings for the three months ended as follows: Agriculture - $(4), Electronics & Communications - $11, Industrial Biosciences - $(1), Nutrition & Health - $(4), Performance Chemicals - $2, Performance Materials - $(2), Safety & Protection $1, and Other - $(3).
 
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).
 
 
(3)
Second quarter 2015 included a gain of $112, net of legal expenses, recorded in other income, net related to the company’s settlement of a legal claim. This matter relates to the Safety & Protection segment.

 
 
(4)
The company recorded insurance recoveries of $35 in other operating charges, net, in the first quarter 2015, in the Agriculture segment, for recovery of costs for customer claims related to the use of the Imprelis® herbicide. The company had accruals of $216 related to these customer claims at June 30, 2015.
 
 
(5)
During first quarter of 2015, a $(37) pre-tax impairment charge was recorded in employee separation / asset related charges, net for a cost basis investment within the Other segment. The assessment resulted from the venture's revised operating plan reflecting underperformance of its European wheat based ethanol facility and deteriorating European ethanol market conditions. One of the primary investors has communicated they would not fund the revised operating plan of the investee. As a result, the carrying value of our 6% equity investment in this venture exceeds its fair value.

 
 
(6)
First quarter 2015 included a charge of $(40) in other income, net associated with remeasuring the company’s Ukrainian hryvnia net monetary assets. Ukraine’s central bank adopted a decision to no longer set the indicative hryvnia exchange rate. The hryvnia became a free-floating exchange rate and lost approximately a third of its value through the quarter.

 
 
(7)
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.
 
 
(8)
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.
 
 
(9)
Earnings per share for the year may not equal the sum of quarterly earnings per share due to the changes in average share calculations.



11
E.I. du Pont de Nemours and Company
Consolidated Segment Information
(Dollars in millions)

SCHEDULE C
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
SEGMENT SALES (1)
2015
 
2014
 
2015
 
2014
Agriculture
$
3,218

 
$
3,615

 
$
7,155

 
$
8,009

Electronics & Communications
534

 
617

 
1,055

 
1,197

Industrial Biosciences
288

 
317

 
573

 
618

Nutrition & Health
826

 
926

 
1,639

 
1,787

Performance Chemicals
1,502

 
1,696

 
2,866

 
3,287

Performance Materials
1,365

 
1,582

 
2,776

 
3,116

Safety & Protection
925

 
1,029

 
1,834

 
1,976

Other
2

 
1

 
3

 
2

Total Segment sales
8,660

 
9,783

 
17,901

 
19,992

 
 
 
 
 
 
 
 
Elimination of transfers
(65
)
 
(77
)
 
(134
)
 
(158
)
Consolidated net sales
$
8,595

 
$
9,706

 
$
17,767

 
$
19,834

 
 
 
 
 
 
 
 


12
E.I. du Pont de Nemours and Company
Consolidated Segment Information
(Dollars in millions)

SCHEDULE C (continued)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
INCOME BEFORE INCOME TAXES (GAAP)
2015
 
2014
 
2015
 
2014
Agriculture
 
$
774

 
$
789

 
$
1,948

 
$
2,231

Electronics & Communications
 
104

 
21

 
189

 
96

Industrial Biosciences
 
49

 
57

 
105

 
113

Nutrition & Health
 
99

 
97

 
188

 
190

Performance Chemicals
 
54

 
232

 
183

 
438

Performance Materials
 
309

 
665

 
636

 
958

Safety & Protection
 
308

 
178

 
492

 
353

Other
 
(60
)
 
(84
)
 
(163
)
 
(176
)
Total Segment PTOI
 
1,637

 
1,955

 
3,578

 
4,203

Corporate expenses
 
(283
)
 
(278
)
 
(528
)
 
(495
)
Interest expense
 
(127
)
 
(94
)
 
(211
)
 
(197
)
Non-operating pension/OPEB costs
 
(78
)
 
(34
)
 
(153
)
 
(64
)
Net exchange gains (losses)
 
26

 
(109
)
 
90

 
(205
)
Income before income taxes
 
$
1,175

 
$
1,440

 
$
2,776

 
$
3,242

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) (2)
 
2015
 
2014
 
2015
 
2014
Agriculture
 
$
(4
)
 
$
(47
)
 
$
31

 
$
(47
)
Electronics & Communications
 
11

 
(68
)
 
11

 
(68
)
Industrial Biosciences
 
(1
)
 
(2
)
 
(1
)
 
(2
)
Nutrition & Health
 
(4
)
 
(8
)
 
(4
)
 
(8
)
Performance Chemicals
 
(59
)
 
(19
)
 
(59
)
 
(19
)
Performance Materials
 
(2
)
 
362

 
(2
)
 
362

Safety & Protection
 
113

 
(31
)
 
113

 
(31
)
Other
 
(3
)
 
(2
)
 
(40
)
 
(2
)
Total significant items by segment
 
51

 
185

 
49

 
185

Corporate expenses
 
(119
)
 
(92
)
 
(200
)
 
(108
)
Interest expense
 
(20
)
 
—

 
(20
)
 
—

Net exchange gains (losses)
 
—

 
(58
)
 
(40
)
 
(58
)
Total significant items before income taxes
 
$
(88
)
 
$
35

 
$
(211
)
 
$
19

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
OPERATING EARNINGS (NON-GAAP)
 
2015
 
2014
 
2015
 
2014
Agriculture
 
$
778

 
$
836

 
$
1,917

 
$
2,278

Electronics & Communications
 
93

 
89

 
178

 
164

Industrial Biosciences
 
50

 
59

 
106

 
115

Nutrition & Health
 
103

 
105

 
192

 
198

Performance Chemicals
 
113

 
251

 
242

 
457

Performance Materials
 
311

 
303

 
638

 
596

Safety & Protection
 
195

 
209

 
379

 
384

Other
 
(57
)
 
(82
)
 
(123
)
 
(174
)
Total segment operating earnings
 
1,586

 
1,770

 
3,529

 
4,018

Corporate expenses
 
(164
)
 
(186
)
 
(328
)
 
(387
)
Interest expense
 
(107
)
 
(94
)
 
(191
)
 
(197
)
Operating earnings before income taxes and exchange gains (losses)
 
1,315

 
1,490

 
3,010

 
3,434

Net exchange gains (losses) (3)
 
26

 
(51
)
 
153

 
(147
)
Operating earnings before income taxes
 
$
1,341

 
$
1,439

 
$
3,163

 
$
3,287

 
 
 
 
 
 
 
 
 
 
 
 
 
 

13
E.I. du Pont de Nemours and Company
Consolidated Segment Information
(Dollars in millions)


SCHEDULE C (continued)
 
 
 
 
 
 
 
 
 
 
Reconciliation of Segment Operating Earnings excluding the impact of currency (Non-GAAP)
 
 
 
 
Segment operating earnings excluding the impact of currency assumes current operating earnings results using foreign currency exchange rates in effect for the comparable prior-year period.

 
 
 
 
 
 
 
 
Three Months Ended
June 30, 2014

 
Three Months Ended
June 30, 2015

 
 
Segment Operating Earnings
 
Segment Operating Earnings
 
Impact of Currency
 
Segment Operating Earnings Excluding Currency
 
% Change
Agriculture
 
$
836

 
$
778

 
$
(84
)
 
$
862

 
3
 %
Electronics & Communications
 
89

 
93

 
(3
)
 
96

 
8

Industrial Biosciences
 
59

 
50

 
(6
)
 
56

 
(5
)
Nutrition & Health
 
105

 
103

 
(12
)
 
115

 
10

Performance Chemicals
 
251

 
113

 
(43
)
 
156

 
(38
)
Performance Materials
 
303

 
311

 
(42
)
 
353

 
17

Safety & Protection
 
209

 
195

 
(20
)
 
215

 
3

Other
 
(82
)
 
(57
)
 
—

 
(57
)
 
(30
)
Total segment operating earnings
 
$
1,770

 
$
1,586

 
$
(210
)
 
$
1,796

 
1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  Segment sales include transfers.
 
 
 
 
 
 
(2)  See Schedule B for detail of significant items.
 
 
 
 
 
 
(3)  See Schedule D for additional information on exchange gains and losses.  Year to date June 30, 2015 exchange gains, on an operating earnings basis (Non-GAAP), excludes the impact of a $23 exchange loss on non-operating pension.
 
 
 
 
 
 
 
 
 
 
 


14
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
June 30,
 
Six Months Ended
June 30,
 
 
 
2015
 
2014
 
2015
 
2014
Income before income taxes
 
$
1,175

 
$
1,440

 
$
2,776

 
$
3,242

Add: Significant items benefit (charge) before income taxes
 
88

 
(35
)
 
211

 
(19
)
Add: Non-operating pension/OPEB costs (1)
 
78

 
34

 
176

 
64

Operating earnings before income taxes
 
$
1,341

 
$
1,439

 
$
3,163

 
$
3,287

Less: Net income attributable to noncontrolling interests
 
5

 
4

 
9

 
10

Add: Interest expense
 
 
107

 
94

 
191

 
197

Adjusted EBIT from operating earnings
 
1,443

 
1,529

 
3,345

 
3,474

Add: Depreciation and amortization
 
426

 
443

 
872

 
880

Adjusted EBITDA from operating earnings
 
$
1,869

 
$
1,972

 
$
4,217

 
$
4,354

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Operating Earnings Per Share (EPS) Outlook
 
 
 
 
The reconciliation below represents the company's outlook on an operating earnings basis, defined as earnings excluding significant items and non-operating pension/OPEB costs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
 
 
 
 
 
 
2015 Outlook (2) 
 
2014 Actual (2) 
Operating EPS (Non-GAAP)
 
 
 
 
 
 
$
3.10

 
$
3.36

 
 
 
 
 
 
 
 
 
 
Significant items
 
 
 
 
 
 
 
 
 
Separation transaction costs
 
 
 
 


 
(0.04
)
 
(0.03
)
Gain on sale of business
 
 
 
 
 
 
—

 
0.47

Restructuring charge, net
 
 
 
 


 
—

 
(0.40
)
Venezuela devaluation
 
 
 
 
 
 
—

 
(0.06
)
Tax items
 
 
 
 
 
 
—

 
—

Customer claims recovery
 
 
 
 
 
 
0.02

 
0.14

Litigation settlement
 
 
 
 
 
 
0.08

 
—

Asset impairment charge
 
 
 
 
 
 
(0.03
)
 
—

Ukraine devaluation
 
 
 
 
 
 
(0.04
)
 
—

 
 
 
 
 
 
 
 
 
 
Non-operating pension/OPEB costs - estimate
 
 
 
 
 
 
(0.28
)
 
(0.09
)
 
 
 
 
 
 
 
 
 
 
EPS (GAAP)
 
 
 
 
 
 
$
2.81

 
$
3.39

 
 
 
 
 
 
 
 
 
 











15
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(3)
 
 
 
 
 
 
 
 
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
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
Subsidiary Monetary Position Gain (Loss)
 
 
 
 
 
 
 
 
Pre-tax exchange gains (losses)
 
$
33

 
$
19

 
$
(87
)
 
$
(31
)
Local tax benefits (expenses)
 
28

 
(28
)
 
(95
)
 
(16
)
Net after-tax impact from subsidiary exchange gains (losses)
 
$
61

 
$
(9
)
 
$
(182
)
 
$
(47
)
 
 
 
 
 
 
 
 
 
Hedging Program Gain (Loss)
 
 
 
 
 
 
 
 
Pre-tax exchange (losses) gains
 
$
(7
)
 
$
(70
)
 
$
240

 
$
(116
)
Tax benefits (expenses)
 
2

 
25

 
(87
)
 
41

Net after-tax impact from hedging program exchange (losses) gains
 
$
(5
)
 
$
(45
)
 
$
153

 
$
(75
)
 
 
 
 
 
 
 
 
 
Total Exchange Gain (Loss)
 
 
 
 
 
 
 
 
Pre-tax exchange gains (losses) (4)
 
$
26

 
$
(51
)
 
$
153

 
$
(147
)
Tax benefits (expenses)
 
30

 
(3
)
 
(182
)
 
25

Net after-tax exchange gains (losses)
 
$
56

 
$
(54
)
 
$
(29
)
 
$
(122
)
 
 
 
 
 
 
 
 
 
As shown above, the "Total Exchange Gain (Loss)" is the sum of the "Subsidiary Monetary Position Gain (Loss)" and the "Hedging Program Gain (Loss)."
 
 
 
 
 
 
 
 
 
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
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
Income before income taxes
 
$
1,175

 
$
1,440

 
$
2,776

 
$
3,242

Add: Significant items - charge (benefit) (3)
 
88

 
(35
)
 
211

 
(19
)
           Non-operating pension/OPEB costs (1)
 
78

 
34

 
176

 
64

Less: Net exchange gains (losses) (4)
 
26

 
(51
)
 
153

 
(147
)
Income before income taxes, significant items,
 
 
 
 
 
 
 
    exchange gains (losses), and non-operating pension/OPEB costs
 
$
1,315

 
$
1,490

 
$
3,010

 
$
3,434

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
$
230

 
$
366

 
$
796

 
$
723

Add: Tax benefits (expenses) on significant items
 
3

 
(27
)
 
—

 
(23
)
          Tax benefits on non-operating pension/OPEB costs
28

 
11

 
55

 
20

          Tax benefits (expenses) on exchange gains/losses
30

 
(3
)
 
(182
)
 
25

Provision for income taxes on operating earnings, excluding exchange gains (losses)
$
291

 
$
347

 
$
669

 
$
745

 
 
 
 
 
 
 
 
 
Effective income tax rate
 
19.6
 %
 
25.4
 %
 
28.7
 %
 
22.3
 %
Significant items effect and non-operating pension/OPEB costs effect
 
(0.1
)%
 
(1.1
)%
 
(1.8
)%
 
(0.4
)%
Tax rate, before significant items and non-operating pension/OPEB costs
19.5
 %
 
24.3
 %
 
26.9
 %
 
21.9
 %
Exchange gains (losses) effect
 
2.6
 %
 
(1.0
)%
 
(4.7
)%
 
(0.2
)%
Base income tax rate
 
22.1
 %
 
23.3
 %
 
22.2
 %
 
21.7
 %
 
 
 
 
 
 
 
 
 

16
E.I. du Pont de Nemours and Company
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)


SCHEDULE D (continued)
 
 
 
 
 
 
 
 
 
Reconciliation of Performance Chemicals Segment Pre-tax Operating Income (PTOI) (GAAP) to Operating Earnings and Operating Earnings per Share (Non-GAAP)
 
 
 
 
 
 
 
Three Months Ended
June 30,
Performance Chemicals Segment
 
2015
 
2014
PTOI (GAAP)
 
$
54

 
$
232

Less: Segment significant items benefit (expense) (3)
 
(59
)
 
(19
)
Performance Chemicals Segment Operating Earnings (Non-GAAP)
 
$
113

 
$
251

 
 
 
 
 
Performance Chemicals Segment Operating Earnings - After-tax (Non-GAAP) (5)
 
88

 
193

Quarter-to-date weighted average diluted shares
 
912

 
926

 
 
 
 
 
Performance Chemicals Segment Operating Earnings per share - After-tax (Non-GAAP)
 
$
0.10

 
$
0.21

 
 
 
 
 
(1) Year to date June 30, 2015, non-operating pension/OPEB costs includes a $23 exchange loss on foreign pension balances.
 
 
(2) Restated on a continuing operations basis after Performance Chemicals has been reflected as a discontinued operation.

(3)  See Schedule B for detail of significant items.
(4) Year to date June 30, 2015 exchange gains, on an operating earnings basis (Non-GAAP), excludes a $23 exchange loss on non-operating pension.
(5) Performance Chemicals operating earnings assumes a base income tax rate from continuing operations of 22.1% and 23.3% for the three months ended June 30, 2015 and June 30, 2014, respectively.