DuPont Reports 4Q and Full-Year Operating EPS of $0.27 and $2.77

Increasing 2016 Cost Savings to Annual Run Rate of $1.0 Billion

Company Expects 2016 Full-Year Operating Earnings of $2.95 - $3.10 Per Share

Jan 26, 2016, 06:18 ET from DuPont

WILMINGTON, Del., Jan. 26, 2016 /PRNewswire/ --

Fourth-Quarter Highlights

  • Fourth-quarter operating earnings per share were $0.27, in line with expectations, versus $0.57 in prior year. GAAP1 (losses) earnings per share were ($0.26) versus $0.63 in prior year.
  • Excluding currency, sales declined 1 percent. Currency negatively impacted sales by an additional 8 percent.
  • Segment pre-tax operating earnings of $553 million included $170 million, or $0.17 per share, of negative impact from currency. Growth in Industrial Biosciences and Nutrition & Health was more than offset by declines in Agriculture, Performance Materials, Safety & Protection and Electronics & Communications.
  • Cost reductions from operational redesign contributed an incremental $0.10 per share to fourth-quarter operating earnings.
  • Actions underway for 2016 global cost savings and restructuring plan, expected to reduce operating costs2 by about $1.0 billion on run-rate basis by end of 2016, which represents about $730 million in cost reductions in 2016 versus prior year.
  • Completed $2 billion accelerated share repurchase program; announces first quarter dividend of $0.38 per share.

Full-Year Highlights

  • Reported full-year operating earnings per share of $2.77 versus $3.36 in prior year. Operating earnings, excluding negative currency impact of $0.71 per share, increased 4 percent. GAAP1 earnings per share were $2.09 versus $3.39 in prior year.
  • Excluding currency and portfolio, sales declined 3 percent. Currency and portfolio negatively impacted sales by an additional 7 percent and 2 percent, respectively.
  • Segment pre-tax operating earnings of $4.2 billion included approximately $785 million of negative impact from currency. Operating margins expanded in each segment, except Agriculture, on cost reductions and productivity.
  • Cost reductions from 2014 operational redesign are essentially complete and contributed an incremental $0.40 per share to full-year operating earnings.

DuPont (NYSE: DD), a science company that brings world-class, innovative products, materials, and services to the global marketplace, today announced fourth-quarter 2015 operating earnings of $0.27 per share compared with $0.57 per share in the prior year.  GAAP1 (losses) earnings were ($0.26) per share, compared with $0.63 per share in the prior year.  Refer to Schedule B for details of significant items.

For the full-year 2015, DuPont delivered operating earnings of $2.77 per share, compared with $3.36 per share in the prior year.  GAAP1 earnings were $2.09 per share, compared with $3.39 per share in the prior year.

Fourth-quarter sales were $5.3 billion, down 9 percent versus prior year due to negative impacts from currency (8 percent) and volume (1 percent).  Full-year sales were $25.1 billion, down 12 percent versus prior year due to negative impacts from currency (7 percent), portfolio (2 percent) and volume (3 percent).

DuPont's board of directors approved a first-quarter dividend of 38 cents per share, the 446th consecutive quarterly dividend since the company's first dividend in the fourth quarter of 1904. The first-quarter dividend of 38 cents per share of common stock is payable on March 14, 2016, to stockholders of record at the close of business on Feb. 12, 2016. 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 April 25, 2016, to stockholders of record as of April 8, 2016.

On Dec. 11, 2015, DuPont and The Dow Chemical Company announced that their boards of directors unanimously approved a definitive agreement under which the companies will combine in an all-stock merger of equals.  The combined company will be named DowDuPont.  The merger is expected to close in the second half of 2016, subject to customary closing conditions, including regulatory approvals, and approval by both Dow and DuPont shareholders. The parties intend to subsequently pursue a separation of DowDuPont into three independent, publicly traded companies through tax-free spin-offs. These separations would occur as soon as feasible, subject to regulatory and board approval.  

"We are making progress on key initiatives, including further improving our cost structure and restructuring our organization to enhance our competitiveness," said Ed Breen, Chair and CEO of DuPont. "In this pivotal year for DuPont we have three priorities: deliver operating earnings growth while positioning our businesses to compete successfully over the long term; continue to improve our capital allocation and working capital performance; and complete the proposed merger of equals with Dow.  Our merger process is on track. We are meeting key milestones and have begun our planning to create three strong, highly focused, independent businesses in agriculture, material science and specialty products."

 

Global Consolidated Net Sales – 4th Quarter and Full Year




December 31, 2015


Percent Change Due to:



 

$


%

Change


Local Price and





Portfolio /





Product Mix

Currency


Volume


Other













(Dollars in millions)












     U.S. & Canada


$ 1,884


(4)


(2)

-


(1)


(1)

     EMEA *


1,193


(16)


(1)

(12)


(2)


(1)

     Asia Pacific


1,417


(5)


(3)

(4)


-


2

     Latin America


805


(18)


5

(23)


-


-













Total Consolidated Net Sales

$ 5,299


(9)


-

(8)


(1)


-













* Europe, Middle East & Africa

 



Twelve Months Ended











December 31, 2015


Percent Change Due to:



 

$


%

Change


Local Price and






Portfolio /





Product Mix


Currency


Volume


Other














(Dollars in millions)













     U.S. & Canada


$  10,755


(6)


(2)


(1)


(2)


(1)

     EMEA *


6,043


(17)


2


(15)


(2)


(2)

     Asia Pacific 


5,617


(9)


(2)


(3)


(2)


(2)

     Latin America


2,715


(23)


2


(15)


(9)


(1)














Total Consolidated Net Sales

$  25,130


(12)


-


(7)


(3)


(2)














*  Europe, Middle East & Africa

 

Segment Net Sales – 4th Quarter and Full Year




Three Months Ended











December 31, 2015


Percent Change Due to:



 

$


 

% Change


Local Price and






Portfolio /





Product Mix


Currency


Volume


Other

(Dollars in millions)













Agriculture


$    1,550


(11)


6


(16)


-


(1)

Electronics & Communications

493


(14)


(4)


(2)


(8)


-

Industrial Biosciences


301


(6)


(1)


(5)


-


-

Nutrition & Health


807


(4)


-


(8)


4


-

Performance Materials


1,284


(11)


(6)


(5)


(1)


1

Safety & Protection


864


(8)


(1)


(3)


(4)


-

Other


-











Consolidated Net Sales


5,299


(9)


-


(8)


(1)


-

 



Twelve Months Ended











December 31, 2015


Percent Change Due to:







Local Price and






Portfolio /



$


% Change


Product Mix


Currency


Volume


Other

(Dollars in millions)













Agriculture


$ 9,798


(13)


3


(9)


(6)


(1)

Electronics & Communications

2,070


(13)


(4)


(2)


(7)


-

Industrial Biosciences

1,171


(6)


(3)


(6)


3


-

Nutrition & Health


3,256


(8)


-


(9)


2


(1)

Performance Materials

5,305


(12)


(4)


(6)


1


(3)

Safety & Protection


3,527


(9)


-


(4)


(1)


(4)

Other


3











Consolidated Net Sales

25,130


(12)


-


(7)


(3)


(2)

 

Operating Earnings – 4th Quarter and Full Year












Change vs. 2014

(Dollars in millions)

4Q15


4Q14


$


%

Agriculture

$        (54)


$        134


$        (188)


-140%

Electronics & Communications

87


92


(5)


-5%

Industrial Biosciences

55


44


11


25%

Nutrition & Health

85


79


6


8%

Performance Materials

281


326


(45)


-14%

Safety & Protection

182


205


(23)


-11%

Other

(83)


(92)


9


10%

Total segment operating earnings (1) 

553


788


(235)


-30%









Exchange gains (losses) (2)

(24)


152


(176)


nm

Corporate expenses (1) 

(160)


(134)


(26)


19%

Interest expense

(82)


(87)


5


-6%

Operating earnings before income taxes 

287


719


(432)


-60%

Provision for income taxes on operating earnings 

(51)


(200)


149



Less: Net (loss) attributable to noncontrolling interests 

(3)


-


(3)



Operating earnings

$        239


$        519


$        (280)


-54%









Operating earnings per share 

$       0.27


$       0.57


$       (0.30)


-53%

 






Change vs. 2014

(Dollars in millions)

YTD 2015


YTD 2014


$


%

Agriculture

$      1,646


$      2,352


$        (706)


-30%

Electronics & Communications

359


336


23


7%

Industrial Biosciences

203


192


11


6%

Nutrition & Health

373


369


4


1%

Performance Materials

1,216


1,267


(51)


-4%

Safety & Protection

704


772


(68)


-9%

Other

(258)


(256)


(2)


-1%

Total segment operating earnings (1) 

4,243


5,032


(789)


-16%









Exchange gains (losses) (1), (2)

93


254


(161)


nm

Corporate expenses (1) 

(573)


(677)


104


-15%

Interest expense(1)

(322)


(377)


55


-15%

Operating earnings before income taxes 

3,441


4,232


(791)


-19%

Provision for income taxes on operating earnings 

(932)


(1,112)


180



Less: Net income attributable to noncontrolling interests 

6


10


(4)



Operating earnings

$      2,503


$      3,110


$        (607)


-20%









Operating earnings per share 

$       2.77


$       3.36


$       (0.59)


-18%

















(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 comparing fourth quarter with the prior year, unless otherwise noted.

Agriculture – An operating loss of $54 million resulted in $188 million lower operating earnings as increases in local price and cost reductions and continued productivity improvements were more than offset by a $139 million negative currency impact and about a $30 million negative impact from the continued shutdown of the LaPorte manufacturing facility.  Prior year results benefitted from a timing impact from performance-based compensation adjustments and $36 million in gains from portfolio actions. Excluding the impact of currency, the segment would have reported operating earnings of $85 million.

Electronics & Communications – Operating earnings of $87 million decreased $5 million, or 5 percent, as cost reductions and continued productivity improvements were more than offset by competitive pressures impacting Solamet® paste. Excluding the impact of currency, operating earnings would have decreased by about 10 percent.

Industrial Biosciences – Operating earnings of $55 million increased $11 million, or 25 percent, as benefits from cost reductions and continued productivity improvements were partially offset by a $2 million negative impact from currency and slightly lower pricing. Operating margins improved 450 basis points. Excluding the impact of currency, operating earnings would have increased 30 percent.

Nutrition & Health – Operating earnings of $85 million increased $6 million, or 8 percent, as cost reductions, continued productivity improvements and broad-based volume growth led by probiotics, cultures, and ingredient systems, more than offset the absence of an $18 million gain on termination of a distribution agreement in the prior year and a $12 million negative currency impact.  Excluding the impact of currency, operating earnings would have increased by about 23 percent.

Performance Materials – Operating earnings of $281 million decreased $45 million, or 14 percent. Cost reductions, continued productivity improvements and increased demand for Performance Polymers in global automotive markets, were more than offset by lower ethylene price and volume and $19 million of negative currency impact. Operating earnings included a $33 million benefit from the sale of a business and tax benefits associated with a manufacturing site.  Excluding the impact of currency, operating earnings would have decreased by about 8 percent.

Safety & Protection – Operating earnings of $182 million decreased $23 million, or 11 percent. Cost reductions and productivity improvements were more than offset by lower demand and a $2 million negative currency impact. Volume declines in Nomex® thermal-resistant fiber, Kevlar® high-strength material and Sustainable Solutions offerings were driven by weakness in the oil and gas industry and in military spending.  Excluding the impact of currency, operating earnings would have decreased by about 10 percent.

2016 Outlook
Current difficult global economic conditions in agriculture and slower growth in emerging markets are expected to continue, challenging the company's sales growth in 2016. The company expects 2016 operating earnings of $2.95 to $3.10 per share, including an expected benefit of $0.64 per share from the 2016 global cost savings and restructuring plan.  The increase in the expected benefit results from identification of additional savings that will be delivered from the existing plans, including previously announced employee reduction estimates. The benefit from the 2016 global cost savings and restructuring plan will be weighted toward the second half of 2016 as specific actions continue to be implemented in the first and second quarters.  2016 operating earnings also includes approximately $0.30 per share of estimated negative currency impact due to the continued strengthening of the U.S. dollar, pressuring both the top and bottom line.   A higher base tax rate, reflecting the expected geographic mix of earnings, is expected to negatively impact operating earnings by $0.05 - $0.10 per share.  The currency impact is expected to be most significant in the first half of the year due to a further strengthening of the U.S dollar.  Given the seasonality of the company's operating earnings from Agriculture in the northern hemisphere, the company anticipates approximately two-thirds of the expected currency impact to occur in the first half of 2016. Excluding the impact of currency, the guidance for full-year operating earnings per share, including expected benefits from cost savings and share repurchases, represents a 17-23 percent increase year over year.

DuPont will hold a conference call and webcast on Tuesday, Jan. 26, 2016, at 8:00 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 9594983#.  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, and timing of, as well as expected benefits, including synergies, from proposed merger with The Dow Chemical Company and intended post-merger separations, 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 and, in general, for  products for the agriculture industry; outcome of significant litigation and environmental matters, including realization of associated indemnification assets, if any; 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, natural disasters and weather events and patterns which could affect demand as well as availability of products for the agriculture industry; ability to protect and enforce the company's intellectual property rights; successful integration of acquired businesses and separation of underperforming or non-strategic assets or businesses; and risks related to the agreement entered on December 11, 2015,  with The Dow Chemical Company pursuant to which the companies  have agreed to effect an all-stock merger of equals, including the completion of the proposed transaction on anticipated terms and timing, the ability to fully and timely realize the expected benefits of the proposed transaction and risks related to the intended business separations contemplated to occur after the completion of the proposed transaction.  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

December 31,


Twelve Months Ended

December 31,


2015


2014


2015


2014

Net sales

$

5,299



$

5,849



$

25,130



$

28,406


Cost of goods sold

3,409



3,673



15,112



17,023


Other operating charges (1)

46



36



459



645


Selling, general and administrative expenses (1)

1,075



1,058



4,615



4,891


Research and development expense

483



467



1,898



1,958


Other income, net (1)

(145)



(528)



(697)



(1,277)


Interest expense (1)

82



87



342



377


Employee separation / asset related charges, net (1)

770



232



810



476










(Loss) Income from continuing operations before income taxes

(421)



824



2,591



4,313


(Benefit from) Provision for income taxes on continuing operations (1)

(190)



247



696



1,168


(Loss) Income from continuing operations after income taxes

 

(231)



577



1,895



3,145


(Loss) Income from discontinued operations after income taxes

 

(25)



106



64



491










Net (loss) income

(256)



683



1,959



3,636










Less:  Net (loss) income attributable to noncontrolling interests

(3)





6



11










Net (loss) income attributable to DuPont

$

(253)



$

683



$

1,953



$

3,625










Basic (loss) earnings per share of common stock:








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

 

$

(0.26)



$

0.63



$

2.10



$

3.42


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

 

(0.03)



0.12


0.07


0.54

Basic (loss) earnings per share of common stock

 

$

(0.29)



$

0.75



$

2.17



$

3.95










Diluted (loss) earnings per share of common stock:








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

 

$

(0.26)



$

0.63



$

2.09



$

3.39


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

 

(0.03)



0.12


0.07


0.53

Diluted (loss) earnings per share of common stock (2)

 

$

(0.29)



$

0.74



$

2.16



$

3.92










Dividends per share of common stock

$

0.38



$

0.47



$

1.72



$

1.84










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








  Basic

876,500,000



906,339,000



893,992,000



914,752,000


  Diluted

881,727,000



913,650,000



899,527,000



921,873,000










 

Reconciliation of Non-GAAP Measures












Summary of Earnings Comparison













Three Months Ended

December 31,


Twelve Months Ended

December 31,


2015


2014


% Change


2015


2014


% Change

(Loss) Income from continuing operations after income taxes (GAAP)

$

(231)



$

577



(140)%



$

1,895



$

3,145



(40)%


Less: Significant items (charge) benefit included in income from continuing operations after income taxes (per Schedule B)

(411)



79





(348)



112




Non-operating pension/OPEB costs included in income from continuing operations after income taxes (3)

(56)



(21)





(266)



(87)




Net (loss) income attributable to noncontrolling interest from continuing operations

(3)







6



10




Operating earnings (Non-GAAP)

$

239



$

519



(54)%



$

2,503



$

3,110



(20)%














(Loss) Earnings per share from continuing operations (GAAP)

$

(0.26)



$

0.63



(141)%



$

2.09



$

3.39



(38)%


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

(0.47)



0.09





(0.39)



0.12




Non-operating pension/OPEB costs included in EPS (3)

(0.06)



(0.03)





(0.29)



(0.09)




Operating EPS (Non-GAAP)

$

0.27



$

0.57



(53)%



$

2.77



$

3.36



(18)%














 

 

 

E.I. du Pont de Nemours and Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share amounts)

 

 

SCHEDULE A (continued)





December 31,

2015


December 31,

2014

Assets





Current assets





Cash and cash equivalents


$

5,300



$

6,910


Marketable securities


906



124


Accounts and notes receivable, net


4,643



5,238


Inventories


6,140



6,787


Prepaid expenses


248



264


Deferred income taxes


518



532


Assets of discontinued operations




6,227


Total current assets


17,755



26,082


Property, plant and equipment, net of accumulated depreciation

   (December 31, 2015 - $14,346; December 31, 2014 - $13,765)


9,784



10,008


Goodwill


4,248



4,332


Other intangible assets


4,144



4,569


Investment in affiliates


688



762


Deferred income taxes


3,431



3,734


Other assets


1,116



1,003


Total


$

41,166



$

50,490







Liabilities and Equity





Current liabilities





Accounts payable


$

3,398



$

3,786


Short-term borrowings and capital lease obligations


1,165



1,422


Income taxes


210



534


Other accrued liabilities


5,580



5,596


Liabilities of discontinued operations




2,467


Total current liabilities


10,353



13,805


Long-term borrowings and capital lease obligations


7,642



9,233


Other liabilities


12,591



13,615


Deferred income taxes


380



459


Total liabilities


30,966



37,112







Commitments and contingent liabilities










Stockholders' equity





Preferred stock


237



237


Common stock, $0.30 par value; 1,800,000,000 shares authorized;

   Issued at December 31, 2015 - 958,388,000; December 31, 2014 - 992,020,000


288



298


Additional paid-in capital


11,081



11,174


Reinvested earnings


14,510



16,894


Accumulated other comprehensive loss


(9,396)



(8,556)


Common stock held in treasury, at cost (87,041,000 shares at December 31, 2015 and December 31, 2014)


(6,727)



(6,727)


Total DuPont stockholders' equity


9,993



13,320


Noncontrolling interests


207



58


Total equity


10,200



13,378


Total


$

41,166



$

50,490


 

 

 

E.I. du Pont de Nemours and Company

Condensed Consolidated Statement of Cash Flows

(Dollars in millions)

 

 

SCHEDULE A (continued)



Twelve Months Ended

December 31,


2015


2014

Total Company




Net income

$

1,959



$

3,636


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




Depreciation

1,104



1,254


Amortization of intangible assets

362



363


Net periodic pension benefit cost

591



406


Contributions to pension plans

(308)



(311)


Gain on sale of businesses

(59)



(726)


Other operating activities - net

253



366


Change in operating assets and liabilities - net

(1,586)



(1,276)


Cash provided by operating activities

2,316



3,712






Investing activities




Purchases of property, plant and equipment

(1,629)



(2,020)


Investments in affiliates

(76)



(42)


Payments for businesses - net of cash acquired

(152)




Proceeds from sales of businesses - net

139



1,058


Proceeds from sales of assets - net

17



34


Net (increase) decrease in short-term financial instruments

(776)



14


Foreign currency exchange contract settlements

615



430


Other investing activities - net

34



189


Cash used for investing activities

(1,828)



(337)






Financing activities




Dividends paid to stockholders

(1,546)



(1,696)


Net increase (decrease) in borrowings

2,141



(1,701)


Prepayments / repurchase of common stock

(2,353)



(2,000)


Proceeds from exercise of stock options

274



327


Payment for noncontrolling interests

(1)




Cash transferred to Chemours at spin-off

(250)




Other financing activities - net

(88)



(4)


Cash used for financing activities

(1,823)



(5,074)






Effect of exchange rate changes on cash

(275)



(332)






Decrease in cash and cash equivalents

(1,610)



(2,031)






Cash and cash equivalents at beginning of period

6,910



8,941






Cash and cash equivalents at end of period

$

5,300



$

6,910






Reconciliation of Non-GAAP Measure




Calculation of Free Cash Flow





Twelve Months Ended

December 31,


2015


2014

Cash provided by operating activities

$

2,316



$

3,712


Purchases of property, plant and equipment

(1,629)



(2,020)


Free cash flow

$

687



$

1,692






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

(2) The sum of the individual earnings per share amounts from continuing operations and discontinued operations may not equal the total company earnings per share amounts due to rounding.

(3) Year to date December 31, 2015 includes a $23 after-tax exchange loss on foreign pension balances.

 

 

 

 

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




















Pre-tax


After-tax


($ Per Share)



2015


2014


2015


2014


2015


2014

1st Quarter












Separation transaction costs (1)

$

(12)



$

(3)



$

(11)



$

(2)



$

(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

$

(54)



$

(3)



$

(57)



$

(2)



$

(0.06)



$















2nd Quarter












Separation transaction costs (1)

$

(25)



$

(4)



$

(38)



$

(4)



$

(0.04)



$

(0.01)


Restructuring charges, net (2)

(2)



(244)



(2)



(168)





(0.18)


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

$

85



$

85



$

32



$

44



$

0.04



$

0.05















3rd Quarter












Separation transaction costs (1)

$

(9)



$

(10)



$

(6)



$

(9)



$

(0.01)



$

(0.01)


Customer claims recovery (4)

147





94





0.11




3rd Quarter - Total

$

138



$

(10)



$

88



$

(9)



$

0.10



$

(0.01)














4th Quarter












Merger related costs(9)

$

(10)





$

(7)





$

(0.01)




Separation transaction costs (1)

$



$

(16)



$



$

(10)



$



$

(0.01)


Restructuring charges, net (2)

$

(775)



(297)



$

(508)



(199)



$

(0.58)



(0.21)


Litigation settlement (3)

$

33





$

21





$

0.02




Customer claims adjustment/recovery (4)

$

130



210



$

83



134



$

0.10



0.14


Gain on sale of business (8)

$



240



$



154



$



0.17


4th Quarter - Total

$

(622)



$

137



$

(411)



$

79



$

(0.47)



$

0.09














Year-to-date Total(10)

$

(453)



$

209



$

(348)



$

112



$

(0.39)



$

0.12


 

 

 

 

 

 

E.I. du Pont de Nemours and Company

Schedule of Significant Items from Continuing Operations

(Dollars in millions, except per share amounts)

 

 

SCHEDULE B (continued)


(1)

Third quarter and first quarter 2015 included charges of $(9) and $(12), respectively, recorded in other operating charges associated with transaction costs related to the separation of the Performance Chemicals segment.  Second quarter 2015 included charges of $(25) associated with transaction costs related to the separation of the Performance Chemicals segment consisting of $(5) recorded in other operating charges and $(20) recorded in interest expense.  Second quarter 2015 also includes a tax charge of $(17) due to a state tax rate change associated with the separation.


Fourth, third, second and first quarter 2014 included charges of $(16), $(10), $(4) and $(3), respectively, recorded in other operating charges associated with transaction costs related to the separation of the Performance Chemicals segment.

 



(2)

Fourth quarter 2015 included a $(798) restructuring charge consisting of $(793) recorded in employee separation/asset related charges, net and $(5) recorded in other income, net associated with structural actions across all businesses and staff functions globally to operate more efficiently by further consolidating businesses and aligning staff functions more closely with them. The charge included $(656) of severance and related benefit costs, $(109) of asset related charges, and $(33) of contract termination costs.  Pre-tax charges by segment are: Agriculture - $(161), Electronics & Communications - $(93), Industrial Biosciences - $(51), Nutrition & Health - $(47), Performance Materials - $(61), Safety & Protection - $(53), Other - $(2), and Corporate expenses - $(330).

 

 


Fourth and Second quarter 2015 included a $23 and $(2) restructuring benefit (charge) recorded in employee separation/asset related charges, net, respectively, associated with the 2014 restructuring program. These adjustments were primarily due to the identification of additional projects in certain segments, offset by lower than estimated individual severance costs and workforce reductions achieved through non-severance programs. The net reduction impacted segment earnings as follows: Agriculture - $(3), Electronics & Communications - $15, Industrial Biosciences - $(1), Nutrition & Health - $(3), Performance Materials - $(1), Safety & Protection $4, Other - $(1), and Corporate expenses - $11.


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, fourth quarter and second quarter 2014 included $(297) and $(244) restructuring charges, respectively.  The charges include $(301) of severance and related benefit costs, $(17) of other non-personnel charges, and $(223) of asset related charges, including $(65) of charges associated with the restructuring actions of a joint venture.  The fourth quarter charge consisted of $(232) recorded in employee separation/asset related charges, net, and $(65) recorded in other income, net.  The second quarter charge was recored to employee separation/asset related charges, net. Fourth quarter 2014 pre-tax charges by segment were: Agriculture - $(87), Electronics & Communications - $(16), Industrial Biosciences - $(11), Nutrition & Health - $(7), Performance Materials - $(70), Safety & Protection - $(21), Other - $(8), and Corporate expenses - $(77).  Second quarter pre-tax charges by segment are: Agriculture - $(47), Electronics & Communications - $(68), Industrial Biosciences - $(2), Nutrition & Health - $(8), Performance Materials - $(29), Safety & Protection - $(31), Other - $(2), and Corporate expenses - $(57).



(3)

Fourth quarter and second quarter 2015 included gains of $33 and $112, respectively, 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)

Fourth quarter 2015 included a benefit of $130 in other operating charges for reduction in accrual for customer claims related to the use of the Agriculture segment's Imprelis® herbicide.  At December 31, 2015, the company had an accrual balance of $41 which represents the company's best estimate associated with resolving the remaining claims for this matter.

The company recorded net insurance recoveries of $147 and $35 in other operating charges in the third and first quarter 2015, respectively, and $210 in the fourth quarter of 2014 for recovery of costs for customer claims related to the use of the Imprelis® herbicide.

 

 



(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)

Fourth quarter 2014 included a gain of $240 recorded in other income, net associated with the sale of copper fungicides and land management businesses, both within the Agriculture segment. 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)

Fourth quarter 2015 included charges of $(10) recorded in selling, general and administrative expenses related to transaction costs associated with the planned merger with the Dow Chemical Company announced on December 11, 2015.



(10)

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

 

 

 

E.I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

 

 

SCHEDULE C











Three Months Ended

December 31,


Twelve Months Ended

December 31,

SEGMENT NET SALES


2015


2014


2015


2014

Agriculture


$

1,550



$

1,732



$

9,798



$

11,296


Electronics & Communications


493



571



2,070



2,381


Industrial Biosciences


301



319



1,171



1,244


Nutrition & Health


807



843



3,256



3,529


Performance Materials


1,284



1,441



5,305



6,059


Safety & Protection


864



942



3,527



3,892


Other




1



3



5


Consolidated net sales


$

5,299



$

5,849



$

25,130



$

28,406













Three Months Ended

December 31,


Twelve Months Ended

December 31,

SEGMENT OPERATING EARNINGS


2015


2014


2015


2014

Agriculture


$

(54)



$

134



$

1,646



$

2,352


Electronics & Communications


87



92



359



336


Industrial Biosciences


55



44



203



192


Nutrition & Health


85



79



373



369


Performance Materials


281



326



1,216



1,267


Safety & Protection


182



205



704



772


Other


(83)



(92)



(258)



(256)


Total segment operating earnings


553



788



4,243



5,032


Corporate expenses


(160)



(134)



(573)



(677)


Interest expense


(82)



(87)



(322)



(377)


Operating earnings before income taxes and exchange gains (losses)


311



567



3,348



3,978


Net exchange gains (losses) (1)


(24)



152



93



254


Operating earnings before income taxes (Non-GAAP)


$

287



$

719



$

3,441



$

4,232


Non-operating pension/OPEB costs


(86)



(32)



(397)



(128)


Total significant items before income taxes


(622)



137



(453)



209


(Loss) Income from continuing operations before income taxes


$

(421)



$

824



$

2,591



$

4,313













Three Months Ended

December 31,


Twelve Months Ended

December 31,

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


2015


2014


2015


2014

Agriculture


$

(30)



$

363



$

148



$

316


Electronics & Communications


(89)



(16)



(78)



(84)


Industrial Biosciences


(51)



(11)



(52)



(13)


Nutrition & Health


(46)



(7)



(50)



(15)


Performance Materials


(60)



(70)



(62)



292


Safety & Protection


(17)



(21)



96



(52)


Other




(8)



(40)



(10)


Total significant items by segment


(293)



230



(38)



434


Corporate expenses


(329)



(93)



(355)



(167)


Interest expense






(20)




Net exchange gains (losses)






(40)



(58)


Total significant items before income taxes


$

(622)



$

137



$

(453)



$

209


 

 

 

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

December 31, 2014

 


Three Months Ended

December 31, 2015

 



Segment Operating Earnings


Segment Operating Earnings


Impact of Currency


Segment Operating Earnings Excluding Currency


% Change

Agriculture


$

134



$

(54)



$

(139)



$

85



(37)%


Electronics & Communications


92



87



4



83



(10)


Industrial Biosciences


44



55



(2)



57



30


Nutrition & Health


79



85



(12)



97



23


Performance Materials


326



281



(19)



300



(8)


Safety & Protection


205



182



(2)



184



(10)


Other


(92)



(83)





(83)



10


Total segment operating earnings


$

788



$

553



$

(170)



$

723



(8)%













(1)  See Schedule D for additional information on exchange gains and losses.  Year to date December 31, 2015 exchange gains, on an operating earnings basis (Non-GAAP), excludes the impact of a $23 exchange loss on non-operating pension.

(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

December 31,


Twelve Months Ended

December 31,




2015


2014


2015


2014

(Loss) Income from continuing operations before income taxes


$

(421)



$

824



$

2,591



$

4,313


Add: Significant items charge (benefit) before income taxes


622



(137)



453



(209)


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


86



32



397



128


Operating earnings before income taxes


$

287



$

719



$

3,441



$

4,232


Less: Net (loss) income attributable to noncontrolling interests from continuing operations


(3)





6



10


Add:  Interest expense



82



87



322



377


Adjusted EBIT from operating earnings


372



806



3,757



4,599


Add: Depreciation and amortization


303



316



1,338



1,366


Adjusted EBITDA from operating earnings


$

675



$

1,122



$

5,095



$

5,965






















Reconciliation of Operating Earnings Per Share (EPS) Outlook





The reconciliation below represents the company's outlook on an operating earnings basis, defined as income from continuing operations excluding significant items and non-operating pension/OPEB costs.  The 2016 Operating EPS excludes merger related costs.


















Year Ended December 31,








2016 Outlook


2015 Actual

Operating EPS (Non-GAAP)







$  2.95 - 3.10


$

2.77












Significant items










Separation transaction costs









(0.06)


Merger related costs









(0.01)


Gain on sale of business










Restructuring charge, net









(0.58)


Venezuela devaluation










Customer claims recovery









0.23


Litigation settlement









0.10


Asset impairment charge









(0.03)


Ukraine devaluation









(0.04)












Non-operating pension/OPEB costs - estimate(2)







(0.15)



(0.29)












EPS from continuing operations (GAAP)







$  2.80 - 2.95


$

2.09












 

 

 

 

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

December 31,


Twelve Months Ended

December 31,



2015


2014


2015


2014

Subsidiary Monetary Position Gain (Loss)









Pre-tax exchange losses


$

(23)



$

(168)



$

(320)



$

(353)


Local tax expenses


(44)



(75)



(70)



(208)


Net after-tax impact from subsidiary exchange losses


$

(67)



$

(243)



$

(390)



$

(561)











Hedging Program Gain (Loss)









Pre-tax exchange (losses) gains


$

(1)



$

320



$

413



$

607


Tax expenses




(112)



(150)



(212)


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


$

(1)



$

208



$

263



$

395











Total Exchange Gain (Loss)









Pre-tax exchange (losses) gains (4)


$

(24)



$

152



$

93



$

254


Tax expenses


(44)



(187)



(220)



(420)


Net after-tax exchange losses


$

(68)



$

(35)



$

(127)



$

(166)











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

December 31,


Twelve Months Ended

December 31,



2015


2014


2015


2014

(Loss) Income from continuing operations before income taxes


$

(421)



$

824



$

2,591



$

4,313


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


622



(137)



453



(209)


           Non-operating pension/OPEB costs (1)


86



32



397



128


Less:  Net exchange (losses) gains (4)


(24)



152



93



254


Income from continuing operations before income taxes, significant items,

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

 

$

311



$

567



$

3,348



$

3,978











(Benefit) Provision for income taxes on continuing operations


$

(190)



$

247



$

696



$

1,168


Add:  Tax benefits (expenses) on significant items


211



(58)



105



(97)


          Tax benefits on non-operating pension/OPEB costs


30



11



131



41


          Tax expenses on exchange gains/losses


(44)



(187)



(220)



(420)


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

$

7



$

13



$

712



$

692











Effective income tax rate


45.1

%


30.0

%


26.9

%


27.1

%

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


(27.3)%



(2.2)%



0.2

%


(0.8)%


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

17.8

%


27.8

%


27.1

%


26.3

%

Exchange gains (losses) effect


(15.5)%



(25.5)%



(5.8)%



(8.9)%


Base income tax rate from continuing operations


2.3

%


2.3

%


21.3

%


17.4

%










(1) Year to date December 31, 2015, non-operating pension/OPEB costs includes a $23 exchange loss on foreign pension balances.

 

(2)  The 2016 estimate for non-operating pension/OPEB costs does not include expected settlement losses and curtailment gains as a result of actions associated with the 2016 global cost savings and restructuring plan.

.

 

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

 

(4) Year to date December 31, 2015 exchange gains, on an operating earnings basis (Non-GAAP), excludes a $23 exchange loss on non-operating pension.

 

 

 

 

SOURCE DuPont



RELATED LINKS

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