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

Sales Increase on Higher Volume

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

Highlights

  • Third quarter net sales of $7.7 billion increased 5 percent, with volume up 9 percent versus a weak prior year.  Sales also reflect 3 percent lower local prices and a 1 percent negative currency impact.
  • Excluding Performance Chemicals, all operating segments posted increased operating earnings versus last year.  Performance Materials, Electronics & Communications, Safety & Protection and Industrial Biosciences had double-digit earnings growth reflecting higher volumes and improved margins.
  • Agriculture sales grew 15 percent driven by increased insecticide volumes and higher seed prices in Latin America. The sales growth and the benefit of increased ownership in Pannar Seed (Pty) Ltd. reduced the segment's third quarter seasonal loss to $62 million.
  • Cost productivity gains and restructuring savings are on track to meet or exceed full-year targets.
  • The company continues to expect full-year operating earnings of about $3.85 per share.

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

1Generally Accepted Accounting Principles (GAAP)

Global Consolidated Net Sales – 3rd Quarter

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

 



Three Months Ended

September 30, 2013


Percentage Change Due to:


(Dollars in millions)


$


% Change


Local  Price


Currency Effect


Volume


Portfolio/ Other

U.S. & Canada


$      2,548


3


(1)


-


5


(1)

EMEA*


1,814


10


(5)


2


10


3

Asia Pacific


1,944


3


(6)


(3)


12


-

Latin America


1,429


4


-


(4)


8


-



























Total Consolidated Sales


$      7,735


5


(3)


(1)


9


-



























* Europe, Middle East & Africa







 

Segment Sales – 3rd Quarter

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

 

SEGMENT SALES

Three Months Ended


Percentage Change 

(Dollars in millions)

September 30, 2013

Due to:


$


% Change


USD

Price


Volume


Portfolio/

Other

Agriculture

$     1,633


15


1


10


4

Electronics & Communications 

638


5


(9)


14


-

Industrial Biosciences

305


4


-


4


-

Nutrition & Health

868


(1)


1


(1)


(1)

Performance Chemicals

1,720


(1)


(13)


12


-

Performance Materials

1,663


3


(2)


6


(1)

Safety & Protection

985


5


-


5


-

Other

1


 nm 







Total segment sales

7,813









Elimination of transfers

(78)









Consolidated net sales

$     7,735









 

Operating Earnings – 3rd Quarter

 







 Change vs. 2012 

(Dollars in millions)


3Q13


3Q12


$


%

Agriculture 


$       (62)


$      (70)


$           8


11%

Electronics & Communications


97


58


39


67%

Industrial Biosciences


45


40


5


13%

Nutrition & Health


81


77


4


5%

Performance Chemicals


254


413


(159)


-38%

Performance Materials


374


331


43


13%

Safety & Protection


171


147


24


16%

Other


(112)


(85)


(27)


nm



848


911


(63)


-7%

Pharmaceuticals 


5


10


(5)


-50%

Total segment operating earnings (1)


853


921


(68)


-7%










Corporate expenses


(162)


(174)


12


nm

Interest expense


(108)


(116)


8


nm

Operating earnings before income taxes and exchange gains/losses


583


631


(48)


-8%

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


(111)


(164)


53


nm

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


(43)


(59)


16


nm

Net income attributable to noncontrolling interests


(3)


(3)


-


nm

Operating earnings  


$       426


$      405


$         21


5%










Operating earnings per share


$      0.45


$     0.43


$      0.02


5%










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

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

 

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

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

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

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

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

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

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

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

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

Outlook 

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

Use of Non-GAAP Measures

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

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

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

 

 E. I. du Pont de Nemours and Company

Consolidated Income Statements

(Dollars in millions, except per share amounts)


SCHEDULE A










Three Months Ended
September 30,


Nine Months Ended
September 30,






2013


2012


2013


2012





Net sales

$           7,735


$            7,390


$         27,987


$          27,487





Other income (loss), net(a)

70


(54)


321


251





Total

7,805


7,336


28,308


27,738

















Cost of goods sold 

5,165


4,779


17,415


16,558





Other operating charges (a)

990


937


2,843


3,064





Selling, general and administrative expenses

774


764


2,740


2,691





Research and development expense 

540


521


1,603


1,562





Interest expense 

108


116


340


347





Employee separation / asset related charges, net (a)

-


394


-


394





Total

7,577


7,511


24,941


24,616

















Income (loss) from continuing operations before income taxes

228


(175)


3,367


3,122





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

(35)


(135)


687


654





Income from continuing operations after income taxes

263


(40)


2,680


2,468





Income from discontinued operations after taxes

25


48


1,997


219

















Net income 

288


8


4,677


2,687

















Less:  Net income attributable to noncontrolling interests

3


3


14


24

















Net income attributable to DuPont   

$              285


$                   5


$           4,663


$            2,663

















Basic earnings per share of common stock (b):












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

$             0.28


$            (0.05)


$             2.87


$              2.61





Basic earnings per share of common stock from discontinued operations

0.03


0.05


2.16


0.24





Basic earnings per share of common stock

$             0.30


$                   -


$             5.03


$              2.85

















Diluted earnings per share of common stock (b):












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

$             0.28


$            (0.05)


$             2.85


$              2.58





Diluted earnings per share of common stock from discontinued operations

0.03


0.05


2.14


0.23





Diluted earnings per share of common stock

$             0.30


$                   -


$             4.99


$              2.82





























Dividends per share of common stock   

$             0.45


$              0.43


$             1.33


$              1.27

















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












  Basic

925,645,000


931,737,000


925,548,000


933,227,000





  Diluted

933,005,000


940,526,000


932,542,000


942,524,000

















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












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




































Reconciliation of Non-GAAP Measures
























Summary of Earnings Comparison













Three Months Ended
September 30,


Nine Months Ended
September 30,


2013


2012


%
Change


2013


2012


%
Change

Income from continuing operations after income taxes (GAAP)

$              263


$               (40)


758%


$            2,680


$      2,468


9%

Less:  Significant items benefit (charge) included in income from












continuing operations after income taxes (per Schedule B)

(71)


(342)




(129)


(589)



  Non-operating pension/OPEB costs included in income from 












continuing operations after income taxes 

(95)


(106)




(279)


(340)



  Net income attributable to noncontrolling interest

3


3




14


24



Operating earnings 

$              426


$               405


5%


$            3,074


$      3,373


-9%













EPS from continuing operations (GAAP)

$             0.28


$            (0.05)


660%


$              2.85


$        2.58


10%

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

(0.08)


(0.37)




(0.14)


(0.63)



Non-operating pension/OPEB costs included in EPS

(0.09)


(0.11)




(0.30)


(0.36)



Operating EPS

$             0.45


$              0.43


5%


$              3.29


$        3.57


-8%

 

 E. I. du Pont de Nemours and Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share amounts)


SCHEDULE A (continued)



September 30, 

2013


December 31,

2012


Assets





Current assets





Cash and cash equivalents

$           7,005


$           4,284


Marketable securities

184


123


Accounts and notes receivable, net 

8,298


5,452


Inventories 

7,031


7,565


Prepaid expenses

185


204


Deferred income taxes 

840


613


Assets held for sale

-


3,076


Total current assets

23,543


21,317


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

12,908


12,741


Goodwill

4,718


4,616


Other intangible assets 

5,135


5,126


Investment in affiliates

1,054


1,163


Deferred income taxes 

3,739


3,936


Other assets

893


960


Total

$         51,990


$         49,859







Liabilities and Equity





Current liabilities





Accounts payable

$           3,876


$           4,853


Short-term borrowings and capital lease obligations 

4,204


1,275


Income taxes 

442


343


Other accrued liabilities

3,874


5,997


Liabilities related to assets held for sale

-


1,084


Total current liabilities

12,396


13,552


Long-term borrowings and capital lease obligations 

10,755


10,465


Other liabilities

13,901


14,687


Deferred income taxes

973


856


Total liabilities

38,025


39,560







Commitments and contingent liabilities 





Redeemable noncontrolling interest

65


-







Stockholders' equity





Preferred stock

237


237


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

304


306


Additional paid-in capital

11,007


10,655


Reinvested earnings

17,020


14,383


Accumulated other comprehensive loss 

(8,000)


(8,646)


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

(6,727)


(6,727)


Total DuPont stockholders' equity

13,841


10,208


Noncontrolling interests

59


91


Total equity

13,900


10,299


Total

$         51,990


$         49,859


 

 E. I. du Pont de Nemours and Company

Condensed Consolidated Statement of Cash Flows

(Dollars in millions)



SCHEDULE A (continued)



Nine Months Ended

September 30,


Total Company

2013


2012







Net income

$          4,677


$          2,687


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





Depreciation

961


1,047


Amortization

255


266


Other operating charges and credits - net

447


907


Gain on sale of business

(2,689)


-


Contributions to pension plans

(246)


(762)


Change in operating assets and liabilities - net

(5,738)


(4,571)


Cash used for operating activities

(2,333)


(426)







Investing activities





Purchases of property, plant and equipment

(1,223)


(1,139)


Investments in affiliates

(43)


(31)


Payments for businesses - net of cash acquired

(133)


(18)


Proceeds from sale of business - net

4,816


-


Proceeds from sales of assets - net 

126


175


Net (increase) decrease in short-term financial instruments

(78)


336


Forward exchange contract settlements

82


23


Other investing activities - net

31


(13)


Cash provided by (used for) investing activities

3,578


(667)







Financing activities





Dividends paid to stockholders

(1,242)


(1,191)


Net increase in borrowings

3,204


2,524


Repurchase of common stock

(1,000)


(400)


Proceeds from exercise of stock options

497


520


Payments for noncontrolling interest

-


(447)


Other financing activities - net

3


38


Cash provided by financing activities

1,462


1,044







Effect of exchange rate changes on cash

(81)


(23)







Cash classified as held for sale

-


(96)







Increase (decrease) in cash and cash equivalents

2,626


(168)







Cash and cash equivalents at beginning of period

4,379


3,586







Cash and cash equivalents at end of period

$          7,005


$          3,418












Reconciliation of Non-GAAP Measure










Calculation of Free Cash Flow - Total Company






Nine Months Ended
September 30,





2013


2012


Cash used for operating activities

$        (2,333)


$           (426)


Purchases of property, plant and equipment

(1,223)


(1,139)


Free cash flow

$        (3,556)


$        (1,565)


 


 E. I. du Pont de Nemours and Company

Schedule of Significant Items from Continuing Operations

(Dollars in millions, except per share amounts)


SCHEDULE B

SIGNIFICANT ITEMS FROM CONTINUING OPERATIONS
















Pre-tax


After-tax


($ Per Share)



2013


2012


2013


2012


2013


2012

1st Quarter












Customer claims charge (a)

$      (35)


$      (50)


$      (22)


$      (32)


$      (0.02)


$       (0.04)

Income tax items (b)

-


-


42


-


0.04


-

1st Quarter - Total

$      (35)


$      (50)


$        20


$      (32)


$        0.02


$       (0.04)














2nd Quarter












Customer claims charge (a)

$      (80)


$    (265)


$      (51)


$    (169)


$      (0.05)


$       (0.18)

Income tax items (c)

(11)


-


(27)


-


(0.03)


-

Litigation settlement (d)

-


(137)


-


(123)


-


(0.13)

Gain on sale of equity method investment (e)

-


122


-


77


-


0.08

2nd Quarter - Total

$      (91)


$    (280)


$      (78)


$    (215)


$      (0.08)


$       (0.23)














3rd Quarter












Customer claims charge (a)

$      (40)


$    (125)


$      (24)


$      (80)


$      (0.03)


$       (0.09)

Litigation settlement (f)

(72)


-


(47)


-


(0.05)


-

Restructuring charge (g)

-


(152)


-


(105)


-


(0.11)

Asset impairment charge (h)

-


(242)


-


(157)


-


(0.17)

3rd Quarter - Total

$    (112)


$    (519)


$      (71)


$    (342)


$      (0.08)


$       (0.37)














Year-to-date - Total (i)

$    (238)


$    (849)


$    (129)


$    (589)


$      (0.14)


$       (0.63)



(a)

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














(b)

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














(c)

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














(d)

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



(e)

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














(f)

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














(g)

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














(h)

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














(i)

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

 

 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)

2013


2012


2013


2012

Agriculture

$    1,633


$    1,423


$      9,933


$      8,891

Electronics & Communications

638


607


1,907


2,079

Industrial Biosciences

305


292


898


880

Nutrition & Health

868


876


2,601


2,569

Performance Chemicals

1,720


1,732


5,087


5,600

Performance Materials

1,663


1,614


4,892


4,913

Safety & Protection

985


934


2,909


2,861

Other

1


2


5


4

Total Segment sales

7,813


7,480


28,232


27,797









Elimination of transfers

(78)


(90)


(245)


(310)

Consolidated net sales

$    7,735


$    7,390


$    27,987


$    27,487

















(1)   Sales for the reporting segments include transfers.

 

 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/(LOSS) FROM CONTINUING OPERATIONS (GAAP)

2013


2012


2013


2012

Agriculture 

$     (102)


$    (198)


$    2,240


$   1,772

Electronics & Communications

97


(99)


241


181

Industrial Biosciences

45


37


129


118

Nutrition & Health

81


64


218


248

Performance Chemicals

182


410


697


1,575

Performance Materials

374


230


1,002


851

Safety & Protection

171


92


481


432

Pharmaceuticals 

5


10


27


53

Other

(112)


(85)


(276)


(385)

Total Segment PTOI

741


461


4,759


4,845









Corporate expenses

(162)


(233)


(582)


(708)

Interest expense

(108)


(116)


(340)


(347)

Non-operating pension/OPEB costs

(142)


(157)


(415)


(507)

Net exchange gains (losses) (1)

(101)


(130)


(55)


(161)

Income before income taxes from continuing operations  

$       228


$    (175)


$    3,367


$   3,122


















Three Months Ended
September 30,


Nine Months Ended
September 30,

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

2013


2012


2013


2012

Agriculture 

$       (40)


$    (128)


$     (155)


$    (443)

Electronics & Communications

-


(157)


-


(35)

Industrial Biosciences

-


(3)


-


(3)

Nutrition & Health

-


(13)


-


(13)

Performance Chemicals

(72)


(3)


(72)


(3)

Performance Materials

-


(101)


-


(101)

Safety & Protection

-


(55)


-


(55)

Pharmaceuticals 

-


-


-


-

Other

-


-


-


(137)

Total significant items by segment

(112)


(460)


(227)


(790)

Corporate expenses

-


(59)


(11)


(59)

Total significant items before income taxes

$     (112)


$    (519)


$     (238)


$    (849)










Three Months Ended
September 30,


Nine Months Ended
September 30,

OPERATING EARNINGS

2013


2012


2013


2012

Agriculture 

$       (62)


$      (70)


$    2,395


$   2,215

Electronics & Communications

97


58


241


216

Industrial Biosciences

45


40


129


121

Nutrition & Health

81


77


218


261

Performance Chemicals

254


413


769


1,578

Performance Materials

374


331


1,002


952

Safety & Protection

171


147


481


487

Pharmaceuticals 

5


10


27


53

Other

(112)


(85)


(276)


(248)

Total segment operating earnings

853


921


4,986


5,635

Corporate expenses

(162)


(174)


(571)


(649)

Interest expense

(108)


(116)


(340)


(347)

Operating earnings before income taxes and exchange gains (losses)

583


631


4,075


4,639

Net exchange gains (losses) (1)

(101)


(130)


(55)


(161)

Operating earnings before income taxes

$       482


$      501


$    4,020


$   4,478









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

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

 

 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,


2013


2012


2013


2012









Income from continuing operations before income taxes

$              228


$           (175)


$           3,367


$           3,122

Add: Significant items before income taxes

112


519


238


849

Add: Non-operating pension/OPEB costs

142


157


415


507

Operating earnings before income taxes

$              482


$            501


$           4,020


$           4,478

Less: Net income attributable to noncontrolling interests

3


3


14


24

Add:  Interest expense 

108


116


340


347

Adjusted EBIT from operating earnings

587


614


4,346


4,801

Add: Depreciation and amortization 

379


393


1,216


1,237

Adjusted EBITDA from operating earnings

$              966


$         1,007


$           5,562


$           6,038

















Reconciliation of Operating Earnings Per Share (EPS) Outlook

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








Year Ended December 31,






2013 Outlook


2012 Actual





Operating EPS

$             3.85


$           3.77













Significant items








Tax items

0.02


-





Sale of an equity method investment

-


0.08





Customer claims charges

(0.11)


(0.39)





Restructuring charge/adjustments

-


(0.17)





Litigation settlement

(0.05)


(0.13)





Asset impairment charge

-


(0.19)





Sale of business

-


0.08













Non-operating pension/OPEB costs - estimate

(0.40)


(0.46)













Impact of LIFO accounting change

-


0.02













EPS from continuing operations (GAAP)

$             3.31


$           2.61





 

 E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions)


SCHEDULE D (continued)

Exchange Gains/Losses on Operating Earnings

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



Three Months Ended

September 30,


Nine Months Ended 

September 30,


2013


2012


2013


2012

Subsidiary/Affiliate Monetary Position Gain (Loss)








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

$         29


$          91


$     (121)


$        (50)

Local tax benefits (expenses)

13


(6)


32


10

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

$         42


$          85


$       (89)


$        (40)









Hedging Program Gain (Loss)








Pre-tax exchange gains (losses)

$     (130)


$      (221)


$         66


$      (111)

Tax benefits (expenses)

45


77


(24)


38

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

$       (85)


$      (144)


$         42


$        (73)









Total Exchange Gain (Loss)








Pre-tax exchange gains (losses)

$     (101)


$      (130)


$       (55)


$      (161)

Tax benefits (expenses)

58


71


8


48

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

$       (43)


$        (59)


$       (47)


$      (113)














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


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

 

Reconciliation of Base Income Tax Rate to Effective Income Tax Rate





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










Three Months Ended

September 30,


Nine Months Ended   

September 30,


2013


2012


2013


2012









Income from continuing operations before income taxes 

$       228


$      (175)


$    3,367


$     3,122

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

112


519


238


849

Non-operating pension/OPEB costs

142


157


415


507

Less:  Net exchange (losses) gains

(101)


(130)


(55)


(161)

Income from continuing operations before income taxes, significant items, exchange 








gains (losses), and non-operating pension/OPEB costs

$       583


$        631


$    4,075


$     4,639














Provision for income taxes on continuing operations

$       (35)


$      (135)


$       687


$        654

Add:  Tax benefits (expenses) on significant items

41


177


109


260

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

47


51


136


167

          Tax benefits (expenses) on exchange gains/losses

58


71


8


48

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

$       111


$        164


$       940


$     1,129














Effective income tax rate

(15.4%)


77.1%


20.4%


20.9%

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

26.4%


(58.5%)


2.8%


3.2%

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

11.0%


18.6%


23.2%


24.1%

Exchange gains (losses) effect

8.0%


7.4%


(0.1%)


0.2%

Base income tax rate from continuing operations

19.0%


26.0%


23.1%


24.3%














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





 

SOURCE DuPont



RELATED LINKS
http://www.dupont.com

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