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8-K - 8-K - DUPONT E I DE NEMOURS & COa13-3379_18k.htm

Exhibit 99.1

 

 

 

January 22, 2013

 

Media Contact:

Michael Hanretta

WILMINGTON, Del.

 

 

302-774-4005

 

 

 

michael.j.hanretta@usa.dupont.com

 

 

Investor Contact:

302-774-4994

 

DuPont Reports 4Q and Full-Year 2012 EPS of $.11 and $3.33 Ex-items

 

Expects Modest Growth in 2013 Operating Earnings

 

Fourth Quarter:

 

·                  Fourth quarter 2012 earnings per share (EPS) from continuing operations, excluding significant items, was $.11 versus prior year earnings of $.26.  Reported fourth quarter 2012 EPS from continuing operations was $.02 versus $.31 in the prior year.

 

·                  Sales of $7.3 billion equaled the prior year.  Three percent higher volume was offset by 2 percent negative currency impact and a 1 percent reduction from portfolio changes.

 

·                  Segment pre-tax operating income (PTOI) was down, primarily reflecting lower price and volume in Performance Chemicals.  Titanium dioxide pricing led the decline.

 

Full Year:

 

·                  2012 EPS from continuing operations, excluding significant items, was $3.33 versus $3.55 in 2011.  Currency was a $.27 per share headwind for the year.  Reported EPS from continuing operations was $2.61 versus $3.30 in 2011 (see Schedule B.)

 

·                  Sales were $34.8 billion, up 3 percent with a 6 percent increase in developing markets.

 

·                  Segment PTOI increased 3 percent to $5.7 billion, excluding Pharmaceuticals and significant items.  Agriculture PTOI increased 18 percent driven by volume and pricing growth for seed and crop protection businesses in North America and Latin America.  Performance Chemicals PTOI decreased 16 percent from lower sales across the segment.

 

·                  Free cash flow was $3.1 billion versus $3.3 billion in the prior year.  2012 includes a $0.5 billion contribution to the principal U.S. pension plan and lower net income, partly offset by improved working capital productivity.

 

·                  Fixed cost and working capital productivity benefits were each about $400 million, surpassing their $300 million targets.

 

·                  Reflecting the change in reporting for the cost of non-operating pension and other post-employment benefits and excluding significant items, 2012 operating earnings were $3.77 per share.  On the same basis, the 2013 outlook for operating earnings is $3.85 to $4.05 per share, an increase of 2 to 7 percent over the prior year.

 

“DuPont stands stronger today than it did a year ago.  Our segments delivered innovation, productivity and integration cost synergies.  This, coupled with a record year in new product introductions, has strengthened our market position,” said DuPont Chair and CEO Ellen Kullman.  “However, weakness in markets served by Performance Chemicals and Electronics & Communications provided significant challenges in 2012.  We’ve adjusted our plans to meet the changing market environment and grow our businesses in a slow-growth world economy.”

 



 

Global Consolidated Sales - 4th Quarter

 

Fourth quarter 2012 sales were $7.3 billion, flat versus the prior year.  Currency impact and portfolio changes offset 3 percent volume growth.  Volume was driven by Agriculture, with robust sales in Latin America and a strong start to the North American selling season, and increases in Asia Pacific for Performance Materials, Electronics & Communications and Performance Chemicals.  The table below shows fourth quarter regional sales and variances versus fourth quarter 2011.

 

 

 

Three Months Ended

 

Percentage Change Due to:

 

 

 

December 31, 2012

 

Local

 

Currency

 

 

 

Portfolio/

 

(Dollars in billions)

 

$

 

% Change

 

Price

 

Effect

 

Volume

 

Other

 

U.S. & Canada

 

$

2.5

 

 

2

 

 

 

(2

)

EMEA*

 

1.6

 

(8

)

(1

)

(4

)

(2

)

(1

)

Asia Pacific

 

1.9

 

 

(5

)

(1

)

6

 

 

Latin America

 

1.3

 

10

 

7

 

(4

)

8

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consolidated Sales

 

$

7.3

 

 

 

(2

)

3

 

(1

)

 

Global Consolidated Sales - Full-Year

 

Full-year 2012 sales were $34.8 billion, up 3 percent versus 2011, reflecting 4 percent higher local prices, 2 percent adverse currency impact, 2 percent lower volume, and a 3 percent net increase from portfolio changes.  Local prices increased for all segments except Electronics & Communications which had lower pass-through of metals prices.  Lower global volume principally reflects decreases for Performance Chemicals and Electronics & Communications, partly offset by higher Agriculture volumes.  The table below shows regional sales and variances versus 2011.

 

 

 

Year Ended

 

Percentage Change Due to:

 

 

 

December 31, 2012

 

Local

 

Currency

 

 

 

Portfolio/

 

(Dollars in billions)

 

$

 

% Change

 

Price

 

Effect

 

Volume

 

Other

 

U.S. & Canada

 

$

14.2

 

8

 

6

 

 

 

2

 

EMEA*

 

8.1

 

(1

)

3

 

(6

)

(4

)

6

 

Asia Pacific

 

8.0

 

(4

)

(1

)

(1

)

(5

)

3

 

Latin America

 

4.5

 

11

 

9

 

(5

)

5

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consolidated Sales

 

$

34.8

 

3

 

4

 

(2

)

(2

)

3

 

 


* Europe, Middle East & Africa

 

2



 

Income from Continuing Operations - 4th Quarter

 

Excluding significant items, fourth quarter 2012 income from continuing operations was $110 million versus $246 million in the prior year.  The decrease principally reflects lower income from Performance Chemicals and Pharmaceuticals, increased spending for growth initiatives and adverse currency impact.  Reported fourth quarter 2012 income from continuing operations was $19 million versus $293 million in the fourth quarter 2011.

 

Earnings Per Share - 4th Quarter

 

The table below shows year-over-year earnings per share (EPS) variances for the fourth quarter.

 

EPS ANALYSIS

 

 

 

4Q

 

 

 

 

 

EPS 2011

 

$

.31

 

Less: Significant items - (schedule B)

 

.05

 

 

 

 

 

EPS 2011 —Excluding significant items

 

.26

 

 

 

 

 

Local prices

 

(.01

)

Variable cost*

 

.12

 

Volume

 

(.03

)

Fixed cost*

 

(.12

)

Currency

 

(.04

)

Income tax

 

.04

 

Pharmaceuticals income

 

(.06

)

Other**

 

(.05

)

 

 

 

 

EPS 2012 — Excluding significant items

 

$

.11

 

Add: Significant items - (schedule B)

 

(.09

)

 

 

 

 

EPS 2012

 

$

.02

 

 


*                       Excludes volume and currency impacts

**                Includes interest expense, net exchange gains/losses, and other income

 

3



 

Business Segment Performance - 4th Quarter

 

The tables below show fourth quarter 2012 segment sales with related variances versus the prior year and fourth quarter PTOI excluding significant items.

 

SEGMENT SALES*

 

 

 

 

 

Percentage Change

 

 

 

Three Months Ended

 

Due to:

 

 

 

December 31, 2012

 

USD

 

 

 

Portfolio

 

(Dollars in billions)

 

$

 

% Change

 

Price

 

Volume

 

and Other

 

Agriculture

 

$

1.5

 

18

 

7

 

11

 

 

Electronics & Communications

 

0.6

 

(1

)

(3

)

2

 

 

Industrial Biosciences

 

0.3

 

4

 

1

 

3

 

 

Nutrition & Health

 

0.9

 

6

 

3

 

3

 

 

Performance Chemicals

 

1.6

 

(15

)

(7

)

(8

)

 

Performance Materials

 

1.5

 

(5

)

(5

)

3

 

(3

)

Safety & Protection

 

1.0

 

2

 

(1

)

3

 

 

 


* Segment sales include transfers

 

SEGMENT PTOI excluding Significant Items*

 

 

 

 

 

 

 

Change versus 2011

 

(Dollars in millions)

 

4Q 2012

 

4Q 2011

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

Agriculture

 

$

(92

)

$

(116

)

$

24

 

21

%

Electronics & Communications

 

24

 

42

 

(18

)

-43

%

Industrial Biosciences

 

44

 

34

 

10

 

29

%

Nutrition & Health

 

66

 

52

 

14

 

27

%

Performance Chemicals

 

200

 

433

 

(233

)

-54

%

Performance Materials

 

254

 

151

 

103

 

68

%

Safety & Protection

 

88

 

94

 

(6

)

-6

%

Other

 

(71

)

(74

)

3

 

nm

 

 

 

$

513

 

$

616

 

$

(103

)

-17

%

Pharmaceuticals

 

9

 

89

 

(80

)

-90

%

Total Segment PTOI

 

$

522

 

$

705

 

$

(183

)

-26

%

 


* See Schedules B and C for listing of significant items and their impact by segment.

 

4



 

Business Segment Performance - Full Year

 

The tables below show full-year 2012 segment sales with related variances versus the prior year, and full-year PTOI excluding significant items.

 

SEGMENT SALES*

 

 

 

 

 

Percentage Change

 

 

 

12 Months Ended

 

Due to:

 

 

 

December 31, 2012

 

USD

 

 

 

Portfolio and

 

(Dollars in billions)

 

$

 

% Change

 

Price

 

Volume

 

Other

 

Agriculture

 

$

10.4

 

14

 

6

 

8

 

 

Electronics & Communications

 

2.7

 

(15

)

(4

)

(11

)

 

Industrial Biosciences

 

1.2

 

67

 

(4

)

8

 

63

 

Nutrition & Health

 

3.4

 

39

 

1

 

3

 

35

 

Performance Chemicals

 

7.2

 

(8

)

4

 

(12

)

 

Performance Materials

 

6.4

 

(5

)

(2

)

 

(3

)

Safety & Protection

 

3.8

 

(3

)

 

(3

)

 

 


*                 Segment sales include transfers

 

SEGMENT PTOI excluding Significant Items*

 

 

 

 

 

 

 

Change versus 2011

 

(Dollars in millions)

 

FY 2012

 

FY 2011

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

Agriculture

 

$

2,063

 

$

1,752

 

$

311

 

18

%

Electronics & Communications

 

172

 

355

 

(183

)

-52

%

Industrial Biosciences

 

171

 

78

 

93

 

119

%

Nutrition & Health

 

348

 

170

 

178

 

105

%

Performance Chemicals

 

1,622

 

1,923

 

(301

)

-16

%

Performance Materials

 

1,117

 

924

 

193

 

21

%

Safety & Protection

 

418

 

500

 

(82

)

-16

%

Other

 

(259

)

(235

)

(24

)

nm

 

 

 

$

5,652

 

$

5,467

 

$

185

 

3

%

Pharmaceuticals

 

62

 

289

 

(227

)

-79

%

Total Segment PTOI

 

$

5,714

 

$

5,756

 

$

(42

)

-1

%

 


* See Schedules B and C for listing of significant items and their impact by segment.

 

5



 

 The following is a summary of business results for each of the company’s reportable segments in the fourth quarter (unless otherwise noted), comparing current period with the prior year, for sales and PTOI (loss) excluding significant items.  References to selling price are on a U.S. dollar basis, including the impact of currency.

 

Agriculture — Sales of $1.5 billion were up 18 percent on 11 percent higher volume and 7 percent higher prices despite the negative impact of currency.  PTOI seasonal loss of ($92) million improved $24 million on higher volume in Latin America and stronger than expected pricing gains, partially offset by continued investment in commercial and R&D activities.

 

Full-year sales of $10.4 billion grew 14 percent on 8 percent higher volume and 6 percent higher prices.  Pioneer seed sales increased from higher global volume and pricing gains in corn and soybeans.  Crop Protection sales grew on strong demand for insecticides and herbicides in all regions.  Full-year PTOI increased 18 percent as strong sales more than offset unfavorable currency and higher investments in commercial and R&D activities to support growth.

 

Electronics & Communications — Sales of $622 million were down 1 percent, with 2 percent higher volume offset by 3 percent lower prices, primarily pass-through of lower metals prices.  Volume growth from increased demand for materials in smart phones and tablets was partly offset by continued softness in photovoltaic materials.  PTOI declined $18 million as the prior year included OLED technology licensing income of $20 million.

 

Industrial Biosciences — Sales of $300 million were up 4 percent on 3 percent higher volume and 1 percent higher prices.  Volume growth reflects strong sales of Sorona® polymer for carpeting, and continued growth in food enzymes in Europe.  PTOI of $44 million was up $10 million on higher volume and the benefit of synergies realized from the integration of the Danisco enzyme business.

 

Nutrition & Health Sales of $853 million were up 6 percent on 3 percent higher volume and 3 percent higher prices.  Volume growth reflects strong demand for probiotics, cultures and enablers.  Higher local prices in all regions were partly offset by unfavorable currency.  PTOI of $66 million was up $14 million on higher sales and the benefit of synergies realized from the integration of the Danisco specialty food ingredients business, partly offset by higher raw material costs.

 

Performance Chemicals — Sales of $1.6 billion were down 15 percent, with 8 percent lower volume and 7 percent lower prices.  Lower volume resulted primarily from weak demand for fluoropolymers in U.S. and Europe.  Lower prices reflect cyclical pressure in the titanium dioxide market.  PTOI of $200 million decreased $233 million on lower sales and plant utilization in both businesses.

 

Performance Materials — Sales of $1.5 billion were down 5 percent, with 5 percent lower prices and a 3 percent reduction from a portfolio change, partly offset by 3 percent higher volume.  Stable packaging markets and strong demand in the North American automotive market were partially offset by softness in the industrial and electronics markets and a weak Europe.  PTOI of $254 million increased $103 million due to lower feedstock costs, higher volume and mix enrichment, partly offset by unfavorable currency.

 

Safety & Protection — Sales of $964 million were up 2 percent on 3 percent higher volume, partly offset by 1 percent lower prices due to unfavorable currency.  Volume increased on higher demand for Sustainable Solutions offerings and U.S. residential and commercial construction products.  PTOI of $88 million decreased $6 million primarily due to lower plant utilization related to softness in certain industrial markets and U.S. public sector markets.

 

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

 

6



 

Outlook

 

Reflecting the change in reporting for the cost of non-operating pension and other post-employment benefits and excluding significant items, 2012 operating earnings were $3.77 per share.  On the same basis, the 2013 outlook for operating earnings is $3.85 to $4.05 per share, an increase of 2 to 7 percent over the prior year. First half 2013 operating earnings are expected to decline modestly on a year-over-year basis.  Additionally, full-year 2013 sales are expected to be about $36 billion.

 

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 generally accepted accounting principles (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 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” 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; inability to protect and enforce the company’s intellectual property rights; and integration of acquired businesses and completion of divestitures 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.

 

#   #   #

 

7



 

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,

 

Year Ended
December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

Net sales

 

$

7,325

 

$

7,343

 

$

34,812

 

$

33,681

 

Other income, net (a)

 

247

 

338

 

498

 

742

 

Total

 

7,572

 

7,681

 

35,310

 

34,423

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold and other operating charges (a)

 

5,983

 

5,927

 

25,604

 

24,874

 

Selling, general and administrative expenses

 

842

 

791

 

3,567

 

3,358

 

Research and development expense (a)

 

547

 

527

 

2,067

 

1,910

 

Interest expense

 

117

 

116

 

464

 

447

 

Employee separation / asset related charges, net (a)

 

99

 

17

 

493

 

53

 

Total

 

7,588

 

7,378

 

32,195

 

30,642

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations before income taxes

 

(16

)

303

 

3,115

 

3,781

 

(Benefit from) provision for income taxes on continuing operations

 

(35

)

10

 

622

 

626

 

Income from continuing operations after income taxes

 

19

 

293

 

2,493

 

3,155

 

Net income from discontinued operations after taxes

 

93

 

84

 

320

 

355

 

 

 

 

 

 

 

 

 

 

 

Net income

 

112

 

377

 

2,813

 

3,510

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

1

 

4

 

25

 

36

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to DuPont

 

$

111

 

$

373

 

$

2,788

 

$

3,474

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share of common stock (b):

 

 

 

 

 

 

 

 

 

Basic earnings per share of common stock from continuing operations

 

$

0.02

 

$

0.31

 

$

2.63

 

$

3.35

 

Basic earnings per share of common stock from discontinued operations

 

0.10

 

0.09

 

0.34

 

0.38

 

Basic earnings per share of common stock

 

$

0.12

 

$

0.40

 

$

2.98

 

$

3.73

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share of common stock (b):

 

 

 

 

 

 

 

 

 

Diluted earnings per share of common stock from continuing operations

 

$

0.02

 

$

0.31

 

$

2.61

 

$

3.30

 

Diluted earnings per share of common stock from discontinued operations

 

0.10

 

0.09

 

0.34

 

0.38

 

Diluted earnings per share of common stock

 

$

0.12

 

$

0.40

 

$

2.95

 

$

3.68

 

 

 

 

 

 

 

 

 

 

 

Dividends per share of common stock

 

$

0.43

 

$

0.41

 

$

1.70

 

$

1.64

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

933,420,000

 

925,588,000

 

933,275,000

 

928,417,000

 

Diluted

 

941,219,000

 

935,709,000

 

942,197,000

 

941,029,000

 

 


(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.

 

8



 

E. I. du Pont de Nemours and Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share amounts)

 

SCHEDULE A (continued)

 

 

 

December 31,
2012

 

December 31,
2011

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

4,284

 

$

3,586

 

Marketable securities

 

123

 

433

 

Accounts and notes receivable, net

 

5,452

 

6,022

 

Inventories

 

7,422

 

7,195

 

Prepaid expenses

 

204

 

151

 

Deferred income taxes

 

650

 

671

 

Assets held for sale

 

3,056

 

 

Total current assets

 

21,191

 

18,058

 

Property, plant and equipment, net of accumulated depreciation (December 31, 2012 - $19,085; December 31, 2011 - $19,349)

 

12,741

 

13,412

 

Goodwill

 

4,616

 

5,413

 

Other intangible assets

 

5,126

 

5,413

 

Investment in affiliates

 

1,163

 

1,117

 

Deferred income taxes

 

3,939

 

4,067

 

Other assets

 

960

 

1,012

 

Total

 

$

49,736

 

$

48,492

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

4,853

 

$

4,816

 

Short-term borrowings and capital lease obligations

 

1,275

 

817

 

Income taxes

 

340

 

255

 

Other accrued liabilities

 

5,997

 

5,297

 

Liabilities related to assets held for sale

 

1,084

 

 

Total current liabilities

 

13,549

 

11,185

 

Long-term borrowings and capital lease obligations

 

10,465

 

11,736

 

Other liabilities

 

14,687

 

15,508

 

Deferred income taxes

 

856

 

1,001

 

Total liabilities

 

39,557

 

39,430

 

 

 

 

 

 

 

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, 2012 - 1,020,057,000; December 31, 2011 - 1,013,164,000

 

306

 

304

 

Additional paid-in capital

 

10,632

 

10,107

 

Reinvested earnings

 

14,286

 

13,422

 

Accumulated other comprehensive loss

 

(8,646

)

(8,750

)

Common stock held in treasury, at cost (87,041,000 shares at December 31, 2012 and 2011)

 

(6,727

)

(6,727

)

Total DuPont stockholders’ equity

 

10,088

 

8,593

 

Noncontrolling interests

 

91

 

469

 

Total equity

 

10,179

 

9,062

 

Total

 

$

49,736

 

$

48,492

 

 

9



 

E. I. du Pont de Nemours and Company

Condensed Consolidated Statement of Cash Flows

(Dollars in millions)

 

SCHEDULE A (continued)

 

 

 

Year Ended
December 31,

 

 

 

2012

 

2011

 

Total Company

 

 

 

 

 

 

 

 

 

 

 

Cash provided by (used for) operating activities

 

$

4,849

 

$

5,152

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant and equipment

 

(1,793

)

(1,843

)

Investments in affiliates

 

(97

)

(67

)

Payments for businesses (net of cash acquired)

 

(18

)

(6,459

)

Net (increase) decrease in short-term financial instruments

 

315

 

2,149

 

Proceeds from sales of assets - net of cash sold

 

302

 

214

 

Other investing activities - net

 

(55

)

(232

)

Cash provided by (used for) investing activities

 

(1,346

)

(6,238

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Dividends paid to stockholders

 

(1,594

)

(1,533

)

Net increase (decrease) in borrowings

 

(793

)

1,561

 

Repurchase of common stock

 

(400

)

(672

)

Proceeds from exercise of stock options

 

550

 

952

 

Payments for noncontrolling interest

 

(470

)

 

Other financing activities - net

 

10

 

95

 

Cash provided by (used for) financing activities

 

(2,697

)

403

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

(13

)

6

 

 

 

 

 

 

 

Cash classified as held for sale

 

(95

)

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

698

 

(677

)

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

3,586

 

4,263

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

4,284

 

$

3,586

 

 

10



 

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)

 

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

2011

 

1st Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer claims charge (a)

 

$

(50

)

$

 

$

(32

)

$

 

$

(0.04

)

$

 

1st Quarter - Total

 

$

(50

)

$

 

$

(32

)

$

 

$

(0.04

)

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2nd Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer claims charge (a)

 

$

(265

)

$

 

$

(169

)

$

 

$

(0.18

)

$

 

Litigation settlement (b)

 

(137

)

 

(123

)

 

(0.13

)

 

Gain on the sale of equity method investment (c)

 

122

 

 

77

 

 

0.08

 

 

Transition costs related to the acquisition of Danisco (d)

 

 

(103

)

 

(81

)

 

(0.08

)

2nd Quarter - Total

 

$

(280

)

$

(103

)

$

(215

)

$

(81

)

$

(0.23

)

$

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3rd Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer claims charge (a)

 

$

(125

)

$

(75

)

$

(80

)

$

(48

)

$

(0.09

)

$

(0.05

)

Restructuring charge (e)

 

(152

)

 

(105

)

 

(0.11

)

 

Asset impairment charge (f)

 

(242

)

 

(157

)

 

(0.17

)

 

Transition costs and restructuring charge related to the acquisition of Danisco (g)

 

 

(171

)

 

(122

)

 

(0.13

)

Charge related to milestone payment for licensing agreement (h)

 

 

(50

)

 

(33

)

 

(0.03

)

3rd Quarter - Total

 

$

(519

)

$

(296

)

$

(342

)

$

(203

)

$

(0.37

)

$

(0.21

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4th Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer claims charge (a)

 

$

(135

)

$

(100

)

$

(89

)

$

(64

)

$

(0.09

)

$

(0.07

)

Restructuring charge/adjustments (i)

 

(66

)

(17

)

(56

)

(11

)

(0.06

)

(0.01

)

Asset impairment charge (j)

 

(33

)

 

(21

)

 

(0.02

)

 

Gain on sale of business (k)

 

117

 

 

75

 

 

0.08

 

 

Sale of a business (l)

 

 

49

 

 

122

 

 

0.13

 

4th Quarter - Total

 

$

(117

)

$

(68

)

$

(91

)

$

47

 

$

(0.09

)

$

0.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year - Total (m)

 

$

(966

)

$

(467

)

$

(680

)

$

(237

)

$

(0.72

)

$

(0.25

)

 

11



 

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)

 

SIGNIFICANT ITEMS FROM CONTINUING OPERATIONS

 


(a)         Fourth quarter 2012, third quarter 2012, second quarter 2012, first quarter 2012, fourth quarter 2011, and third quarter 2011 included charges of $(135), $(125), $(265), $(50), $(100), and $(75), respectively, recorded in Cost of goods sold and other operating charges associated with the company’s process to fairly resolve claims related to the use of Imprelis® herbicide, bringing the total charges to $(750) at December 31, 2012.  The company will continue to evaluate reported claim damage as additional information becomes available. It is reasonably possible that additional charges could result from this evaluation. While there is a high degree of uncertainty, total charges could range as high as $(900). 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.  This matter relates to the Agriculture segment.

 

(b)         Second quarter 2012 included a charge of $(137) recorded in Cost of goods sold and other operating charges primarily related to the company’s settlement of litigation with Invista.  This matter is included in Other.

 

(c)          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.

 

(d)         Second quarter 2011 included charges related to the Danisco acquisition of $(103) recorded in Cost of goods sold and other operating charges.  These charges included $(60) of transaction costs and a $(43) charge related to the fair value step-up of inventories that were acquired from Danisco and sold in the second quarter 2011. Pre-tax charges by segment were: Industrial Biosciences - $(17), Nutrition & Health - $(33), and Corporate expenses - $(53).

 

(e)          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).

 

(f)           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.

 

(g)          Third quarter 2011 included charges related to the Danisco acquisition of $(171).  These charges included $(135) recorded in Cost of goods sold and other operating charges for $(3) of transaction costs and a $(132) charge related to the fair value step-up of inventories that were acquired from Danisco and sold in the third quarter 2011.  These charges also included a $(36) restructuring charge recorded in Employee separation / asset related charges, net related to severance and related benefit costs.  Pre-tax charges by segment were: Industrial Biosciences - $(61), Nutrition & Health - $(89), Other - $(18), and Corporate expenses - $(3).

 

(h)         Third quarter 2011 included a ($50) charge recorded in Research and development expense in connection with a milestone payment associated with a Pioneer licensing agreement.

 

(i)             Fourth quarter 2012 included a $(66) restructuring charge recorded in Employee separation/asset related charges, net primarily as a result of the company’s plans to eliminate corporate costs previously allocated to Performance Coatings and cost-cutting actions to improve competitiveness, partially offset by a reversal of prior year restructuring accruals. Pre-tax charges by segment are: Agriculture - $(8), Electronics & Communications - $(2), Nutrition & Health - $(36), Performance Materials - $(3), Safety & Protection - $(3), Other - $11, and Corporate expenses - $(25). Fourth quarter 2011 included a $(17) restructuring charge recorded in Employee separation/asset related charges, net primarily related to severance and related benefit costs associated with the Danisco acquisition, partially offset by a reversal of prior year restructuring accruals.  Pre-tax charges by segment were: Industrial Biosciences - $(1), Nutrition & Health - $(4), Performance Materials - $(2), and Other - $(10).

 

(j)            Fourth quarter 2012 included a $(33) impairment charge recorded in Employee separation/asset related charges, net related to an asset group within the Performance Chemicals segment.  The charge was a result of strategic decisions related to deteriorating conditions within a specific industrial chemicals market.

 

(k)         Fourth quarter 2012 included a pre-tax gain of $117 recorded in Other income, net associated with the sale of a business within the Agriculture segment.

 

(l)             Fourth quarter 2011 included a pre-tax gain of $49 recorded in Other income, net associated with the sale of a business in the Performance Materials segment and a related tax benefit of $73.

 

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

 

See Schedule C for detail by segment.

 

12



 

E. I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

 

SCHEDULE C

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

SEGMENT SALES (1)

 

2012

 

2011

 

2012

 

2011

 

Agriculture

 

$

1,535

 

$

1,297

 

$

10,426

 

$

9,166

 

Electronics & Communications

 

622

 

630

 

2,701

 

3,173

 

Industrial Biosciences

 

300

 

289

 

1,180

 

705

 

Nutrition & Health

 

853

 

806

 

3,422

 

2,460

 

Performance Chemicals

 

1,588

 

1,860

 

7,188

 

7,794

 

Performance Materials

 

1,534

 

1,618

 

6,447

 

6,815

 

Safety & Protection

 

964

 

943

 

3,825

 

3,934

 

Other

 

1

 

1

 

5

 

40

 

Total Segment sales

 

7,397

 

7,444

 

35,194

 

34,087

 

 

 

 

 

 

 

 

 

 

 

Elimination of transfers

 

(72

)

(101

)

(382

)

(406

)

Consolidated net sales

 

$

7,325

 

$

7,343

 

$

34,812

 

$

33,681

 

 


(1)   Sales for the reporting segments include transfers.

 

13



 

E. I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

 

SCHEDULE C (continued)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

PRE-TAX OPERATING INCOME/(LOSS) (PTOI) FROM CONTINUING OPERATIONS

 

2012

 

2011

 

2012

 

2011

 

Agriculture

 

$

(118

)

$

(216

)

$

1,594

 

$

1,527

 

Electronics & Communications

 

22

 

42

 

135

 

355

 

Industrial Biosciences

 

44

 

33

 

168

 

(1

)

Nutrition & Health

 

30

 

48

 

299

 

44

 

Performance Chemicals

 

167

 

433

 

1,586

 

1,923

 

Performance Materials

 

251

 

198

 

1,013

 

971

 

Safety & Protection

 

85

 

94

 

360

 

500

 

Pharmaceuticals

 

9

 

89

 

62

 

289

 

Other

 

(60

)

(84

)

(385

)

(263

)

Total Segment PTOI

 

430

 

637

 

4,832

 

5,345

 

 

 

 

 

 

 

 

 

 

 

Net exchange gains (losses) (1)

 

(54

)

(14

)

(215

)

(146

)

Corporate expenses & net interest

 

(392

)

(320

)

(1,502

)

(1,418

)

(Loss) income before income taxes from continuing operations

 

$

(16

)

$

303

 

$

3,115

 

$

3,781

 

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

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

 

2012

 

2011

 

2012

 

2011

 

Agriculture

 

$

(26

)

$

(100

)

$

(469

)

$

(225

)

Electronics & Communications

 

(2

)

 

(37

)

 

Industrial Biosciences

 

 

(1

)

(3

)

(79

)

Nutrition & Health

 

(36

)

(4

)

(49

)

(126

)

Performance Chemicals

 

(33

)

 

(36

)

 

Performance Materials

 

(3

)

47

 

(104

)

47

 

Safety & Protection

 

(3

)

 

(58

)

 

Pharmaceuticals

 

 

 

 

 

Other

 

11

 

(10

)

(126

)

(28

)

Total significant items by segment

 

$

(92

)

$

(68

)

$

(882

)

$

(411

)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

PTOI EXCLUDING SIGNIFICANT ITEMS

 

2012

 

2011

 

2012

 

2011

 

Agriculture

 

$

(92

)

$

(116

)

$

2,063

 

$

1,752

 

Electronics & Communications

 

24

 

42

 

172

 

355

 

Industrial Biosciences

 

44

 

34

 

171

 

78

 

Nutrition & Health

 

66

 

52

 

348

 

170

 

Performance Chemicals

 

200

 

433

 

1,622

 

1,923

 

Performance Materials

 

254

 

151

 

1,117

 

924

 

Safety & Protection

 

88

 

94

 

418

 

500

 

Pharmaceuticals

 

9

 

89

 

62

 

289

 

Other

 

(71

)

(74

)

(259

)

(235

)

Total Segment PTOI excluding significant items

 

$

522

 

$

705

 

$

5,714

 

$

5,756

 

 


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

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

 

14



 

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions, except per share amounts)

 

SCHEDULE D

 

Summary of Earnings Comparisons

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2012

 

2011

 

%
Change

 

2012

 

2011

 

%
Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment PTOI

 

$

430

 

$

637

 

-32

%

$

4,832

 

$

5,345

 

-10

%

Significant items (benefit) charge included in PTOI (per Schedule C)

 

92

 

68

 

 

 

882

 

411

 

 

 

Segment PTOI excluding significant items

 

$

522

 

$

705

 

-26

%

$

5,714

 

$

5,756

 

-1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations after income taxes

 

$

19

 

$

293

 

-94

%

$

2,493

 

$

3,155

 

-21

%

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

 

91

 

(47

)

 

 

680

 

237

 

 

 

Income from continuing operations after income taxes, excluding significant items

 

$

110

 

$

246

 

-55

%

$

3,173

 

$

3,392

 

-6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS from continuing operations

 

$

0.02

 

$

0.31

 

-94

%

$

2.61

 

$

3.30

 

-21

%

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

 

0.09

 

(0.05

)

 

 

0.72

 

0.25

 

 

 

EPS from continuing operations, excluding significant items

 

$

0.11

 

$

0.26

 

-58

%

$

3.33

 

$

3.55

 

-6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average number of diluted shares outstanding

 

941,219,000

 

935,709,000

 

1

%

942,197,000

 

941,029,000

 

0

%

 

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, as presented on December 13, 2012.

 

 

 

Year Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

2013 Outlook

 

2012 Actual

 

 

 

 

 

 

 

 

 

Operating EPS

 

$3.85 - $4.05

 

$

3.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Significant items

 

 

 

 

 

 

 

 

 

 

 

 

 

1Q 2013 U.S. tax law items retroactive to 2012 - estimate

 

0.07

 

 

 

 

 

 

 

 

 

 

Sale of an equity method investment

 

 

 

0.08

 

 

 

 

 

 

 

 

 

Customer claims charges

 

 

 

(0.39

)

 

 

 

 

 

 

 

 

Restructuring charge/adjustments

 

 

 

(0.17

)

 

 

 

 

 

 

 

 

Litigation settlement

 

 

 

(0.13

)

 

 

 

 

 

 

 

 

Asset impairment charge

 

 

 

(0.19

)

 

 

 

 

 

 

 

 

Sale of business

 

 

 

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating pension/OPEB costs - estimate

 

(0.42

)

(0.47

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of LIFO accounting change

 

 

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported EPS from continuing operations

 

$3.50 - $3.70

 

$

2.61

 

 

 

 

 

 

 

 

 

 

15



 

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions)

 

SCHEDULE D

 

Reconciliations of Adjusted EBIT / EBITDA to Consolidated Income Statements

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations before income taxes

 

$

(16

)

$

303

 

$

3,115

 

$

3,781

 

Less: Net income attributable to noncontrolling interests

 

1

 

4

 

25

 

36

 

Add: Interest expense

 

117

 

116

 

464

 

447

 

Adjusted EBIT from continuing operations

 

100

 

415

 

3,554

 

4,192

 

Add: Depreciation and amortization

 

394

 

393

 

1,631

 

1,451

 

Adjusted EBITDA from continuing operations

 

$

494

 

$

808

 

$

5,185

 

$

5,643

 

 

Calculation of Free Cash Flow - Total Company

 

 

 

Year Ended
December 31,

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

 

Cash provided by (used for) operating activities

 

$

4,849

 

$

5,152

 

 

 

 

 

 

 

Less: Purchases of property, plant and equipment

 

1,793

 

1,843

 

 

 

 

 

Free cash flow

 

$

3,056

 

$

3,309

 

 

 

 

 

 

16



 

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions)

 

SCHEDULE D (continued)

 

Exchange Gains/Losses

 

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,

 

Year Ended
December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

Subsidiary/Affiliate Monetary Position Gain (Loss)

 

 

 

 

 

 

 

 

 

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

 

$

(8

)

$

(83

)

$

(58

)

$

(13

)

Local tax benefits (expenses)

 

9

 

4

 

19

 

35

 

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

 

$

1

 

$

(79

)

$

(39

)

$

22

 

 

 

 

 

 

 

 

 

 

 

Hedging Program Gain (Loss)

 

 

 

 

 

 

 

 

 

Pre-tax exchange gains (losses)

 

$

(46

)

$

69

 

$

(157

)

$

(133

)

Tax benefits (expenses)

 

16

 

(24

)

54

 

46

 

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

 

$

(30

)

$

45

 

$

(103

)

$

(87

)

 

 

 

 

 

 

 

 

 

 

Total Exchange Gain (Loss)

 

 

 

 

 

 

 

 

 

Pre-tax exchange gains (losses)

 

$

(54

)

$

(14

)

$

(215

)

$

(146

)

Tax benefits (expenses)

 

25

 

(20

)

73

 

81

 

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

 

$

(29

)

$

(34

)

$

(142

)

$

(65

)

 

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 $(3) and $(5) for the three months ended December 31, 2012 and 2011, respectively, and $(14) and $(17) for the year ended December 31, 2012 and 2011, 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, and significant items.

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations before income taxes

 

$

(16

)

$

303

 

$

3,115

 

$

3,781

 

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

 

117

 

68

 

966

 

467

 

Less: Net exchange (losses) gains

 

(54

)

(14

)

(215

)

(146

)

Income from continuing operations before income taxes, significant items and exchange gains/losses

 

$

155

 

$

385

 

$

4,296

 

$

4,394

 

 

 

 

 

 

 

 

 

 

 

(Benefit from) provision for income taxes on continuing operations

 

$

(35

)

$

10

 

$

622

 

$

626

 

Add: Tax benefit (expenses) on significant items

 

26

 

115

 

286

 

230

 

         Tax benefits (expenses) on exchange gains/losses

 

25

 

(20

)

73

 

81

 

Provision for income taxes on continuing operations, excluding taxes on significant items and exchange gains/losses

 

$

16

 

$

105

 

$

981

 

$

937

 

 

 

 

 

 

 

 

 

 

 

Effective income tax rate

 

218.8

%

3.3

%

20.0

%

16.6

%

Significant items effect

 

(227.7

)%

30.4

%

2.2

%

3.6

%

Tax rate, from continuing operations, before significant items

 

(8.9

)%

33.7

%

22.2

%

20.2

%

Exchange gains (losses) effect

 

19.2

%

(6.4

)%

0.6

%

1.1

%

Base income tax rate from continuing operations

 

10.3

%

27.3

%

22.8

%

21.3

%

 


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

 

17



 

E. I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

 

SCHEDULE E

 

Below represents the company’s estimated 4Q and Full Year 2012 segment operating earnings reflecting the change in reporting for the cost of non-operating pension and other post-employment benefits and excluding significant items.

 

 

 

Three Months Ended

 

Year Ended

 

SEGMENT OPERATING EARNINGS

 

December 31, 2012

 

December 31, 2012

 

Agriculture

 

$

(78

)

$

2,138

 

Electronics & Communications

 

43

 

259

 

Industrial Biosciences

 

42

 

162

 

Nutrition & Health

 

58

 

326

 

Performance Chemicals

 

237

 

1,814

 

Performance Materials

 

273

 

1,225

 

Safety & Protection

 

133

 

620

 

Pharmaceuticals

 

9

 

62

 

Other

 

(101

)

(355

)

Total Segment Operating Earnings

 

616

 

6,251

 

 

 

 

 

 

 

Significant items benefit (charge)(1)

 

(92

)

(882

)

Non-operating pension/OPEB costs

 

(144

)

(615

)

LIFO/Other reporting changes

 

50

 

78

 

Total Segment PTOI

 

$

430

 

$

4,832

 

 


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

 

18