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

Sales Increase on Higher Volume

Oct 22, 2013, 06:00 ET from DuPont

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