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8-K - 8-K - DUPONT E I DE NEMOURS & COa13-10575_18k.htm

Exhibit 99.1

 

 

 

 

 

 

April 23, 2013

Media Contact:

Michael Hanretta

WILMINGTON, Del.

 

302-774-4005

 

 

michael.j.hanretta@dupont.com

 

Investor Contact:

302-774-4994

 

DuPont Reports 1Q 2013 Operating EPS of $1.56

Agriculture Segment Achieves Record Operating Earnings, Company Raises Dividend

 

WILMINGTON, Del., April 23, 2013 — DuPont today announced first quarter 2013 operating earnings per share (EPS) of $1.56 versus prior year earnings of $1.64.  GAAP1 EPS from continuing operations was $1.47 versus $1.48 in the prior year.  Primary drivers of results for the quarter were record Agriculture operating earnings offset by an expected decline in Performance Chemicals.  DuPont reaffirmed its full year 2013 EPS outlook and today announced a 5 percent dividend increase.

 

1Q 2013 Highlights

 

·                  Sales of $10.4 billion were up 2 percent, reflecting volume growth.  A one percent increase in local prices was offset by currency impact.

 

·                  Record Agriculture operating earnings of $1.5 billion were up 13 percent.  Sales increased 14 percent driven by strong volume growth, particularly in North America and Latin America, and higher pricing from new seed and crop protection products.

 

·                  Total segment operating earnings of $2.3 billion were down 8 percent, largely due to a $320 million decline (about $.26 EPS) in Performance Chemicals from last year’s high levels.

 

·                  The company completed the sale of the Performance Coatings segment, executed a $1 billion share buyback and reduced its net debt.

 

·                  Cost productivity gains and restructuring savings are on track to meet or exceed full year targets.

 

·                  The company reaffirms its outlook for full-year 2013 operating earnings of $3.85-$4.05 per share, an increase of 2-7 percent from $3.77 per share earned in 2012.

 

“The first quarter finished as expected, with the strong Agriculture performance and Performance Chemicals’ decline from peak levels last year,” said DuPont Chair and CEO Ellen Kullman. “Our strategies for growth and improved return on capital are working as we continue to focus on delivering science-powered innovation and industry-leading productivity improvement.  We remain committed to delivering value to our shareholders as demonstrated by executing our share buyback, strengthening our balance sheet and increasing our dividend.”

 


1Generally Accepted Accounting Principles (GAAP)

 

E. I. du Pont de Nemours and Company

 



 

Global Consolidated Sales — 1st Quarter

 

First quarter 2013 sales were $10.4 billion, up 2 percent versus last year, with 2 percent higher volume.  Negative currency impact offset higher local selling prices.  Volume was primarily driven by increases for Agriculture in North America and Latin America.  The table below shows first quarter regional sales and variances versus first quarter 2012.

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

March 31, 2013

 

Percentage Change Due to:

 

 

 

 

 

 

 

Local

 

Currency

 

 

 

(Dollars in millions)

 

$

 

% Change

 

Price

 

Effect

 

Volume

 

U.S. & Canada

 

$

4,848

 

8

 

4

 

 

4

 

EMEA*

 

2,727

 

(1

)

1

 

(1

)

(1

)

Asia Pacific

 

1,754

 

(8

)

(6

)

(2

)

 

Latin America

 

1,079

 

4

 

4

 

(4

)

4

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consolidated Sales

 

$

10,408

 

2

 

1

 

(1

)

2

 

 


* Europe, Middle East & Africa

 

Segment Sales — 1st Quarter

 

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

 

 

 

Three Months Ended

 

Percentage Change

 

 

 

March 31, 2013

 

Due to:

 

SEGMENT SALES

 

 

 

 

 

USD

 

 

 

Portfolio/

 

(Dollars in millions)

 

$

 

% Change

 

Price

 

Volume

 

Other

 

Agriculture

 

$

4,669

 

14

 

6

 

8

 

 

Electronics & Communications

 

616

 

(9

)

(3

)

(6

)

 

Industrial Biosciences

 

289

 

 

1

 

(1

)

 

Nutrition & Health

 

868

 

7

 

5

 

4

 

(2

)

Performance Chemicals

 

1,585

 

(17

)

(11

)

(6

)

 

Performance Materials

 

1,559

 

(3

)

(3

)

1

 

(1

)

Safety & Protection

 

907

 

(4

)

(2

)

(2

)

 

Other

 

1

 

nm

 

 

 

 

 

 

 

Total segment sales

 

10,494

 

 

 

 

 

 

 

 

 

Elimination of transfers

 

(86

)

 

 

 

 

 

 

 

 

Consolidated net sales

 

$

10,408

 

 

 

 

 

 

 

 

 

 

2



 

Operating Earnings — 1st Quarter

 

 

 

 

 

 

 

Change vs. 2012

 

(Dollars in millions)

 

1Q13

 

1Q12

 

$

 

%

 

Agriculture

 

$

1,516

 

$

1,338

 

$

178

 

13

%

Electronics & Communications

 

49

 

59

 

(10

)

-17

%

Industrial Biosciences

 

41

 

39

 

2

 

5

%

Nutrition & Health

 

76

 

79

 

(3

)

-4

%

Performance Chemicals

 

251

 

571

 

(320

)

-56

%

Performance Materials

 

292

 

277

 

15

 

5

%

Safety & Protection

 

138

 

159

 

(21

)

-13

%

Other

 

(91

)

(76

)

(15

)

nm

 

 

 

2,272

 

2,446

 

(174

)

-7

%

Pharmaceuticals

 

4

 

27

 

(23

)

-85

%

Total segment operating earnings (1)

 

2,276

 

2,473

 

(197

)

-8

%

 

 

 

 

 

 

 

 

 

 

Corporate expenses

 

(214

)

(251

)

37

 

-15

%

Interest expense

 

(117

)

(114

)

(3

)

3

%

Operating earnings before income taxes and exchange gains/losses

 

1,945

 

2,108

 

(163

)

-8

%

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

 

(456

)

(505

)

49

 

nm

 

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

 

(23

)

(44

)

21

 

nm

 

Net income attributable to noncontrolling interests

 

(7

)

(12

)

5

 

nm

 

Operating earnings

 

$

1,459

 

$

1,547

 

$

(88

)

-6

%

 

 

 

 

 

 

 

 

 

 

Operating earnings per share

 

$

1.56

 

$

1.64

 

$

(0.08

)

-5

%

 


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

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

 

3



 

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

 

Agriculture — Operating earnings of $1.5 billion improved 13 percent on higher volume and price, partially offset by higher seed input costs which pressured margin slightly.  Earnings improvement was driven by a 14 percent increase in sales reflecting strong corn seed sales in North America and Brazil and strong Crop Protection volumes in North America and Latin America.

 

Electronics & Communications — Operating earnings of $49 million declined $10 million driven largely by lower sales in photovoltaic markets, as share gains were more than offset by lower usage of materials per photovoltaic module.

 

Industrial Biosciences — Operating earnings of $41 million were up 5 percent on higher demand and lower input costs for Sorona® polymer for carpeting and growth in food enzymes, partially offset by lower enzyme demand for ethanol production.

 

Nutrition & Health — Operating earnings of $76 million decreased $3 million.  Pricing gains, strong demand for probiotics and specialty protein solution and the realization of integration synergies were offset by higher raw material costs, primarily in enablers.

 

Performance Chemicals — Operating earnings of $251 million were $320 million lower, due primarily to substantial price declines in the titanium dioxide market and weak demand for fluoropolymers, particularly in North America and Asia Pacific.  Titanium dioxide volume was essentially flat year-over-year, but increased 8 percent from fourth quarter 2012.

 

Performance Materials — Operating earnings of $292 million increased 5 percent due primarily to lower feedstock costs and higher sales volume in packaging markets, partially offset by weak demand in the European automotive market and continued softness in the industrial and electronics markets.

 

Safety & Protection — Operating earnings of $138 million decreased $21 million reflecting a weaker sales mix, as well as lower plant utilization.  Lower sales primarily reflect significantly reduced demand for military protection products and continued softness in certain industrial markets.

 

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

 

Outlook

 

The company reaffirms its outlook for full-year 2013 operating earnings of $3.85-$4.05 per share, an increase of 2-7 percent from $3.77 per share earned in 2012, based on continued strong growth in Agriculture and anticipated overall improvement in global industrial market demand.  For first-half 2013, the company expects operating earnings per share to be about 7-9 percent lower than the first half of 2012, primarily reflecting, as in the first quarter, lower Performance Chemicals earnings from peak levels in the prior year.

 

4



 

Use of Non-GAAP Measures

 

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

 

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

 

Forward-Looking Statements:  This news release contains forward-looking statements which may be identified by their use of words like “plans,” “expects,” “will,” “believes,” “intends,” “estimates,” “anticipates” or other words of similar meaning.  All statements that address expectations or projections about the future, including statements about the company’s growth strategy, product development, regulatory approval, market position, anticipated benefits of acquisitions, outcome of contingencies, such as litigation and environmental matters, expenditures and financial results, are forward-looking statements.  Forward-looking statements are not guarantees of future performance and are based on certain assumptions and expectations of future events which may not be realized.  Forward-looking statements also involve risks and uncertainties, many of which are beyond the company’s control.  Some of the important factors that could cause the company’s actual results to differ materially from those projected in any such forward-looking statements are: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; significant litigation and environmental matters; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, interest and currency exchange rates; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, weather events and natural disasters; 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.

 

#   #   #

 

4/23/13

 

5



 

E. I. du Pont de Nemours and Company

Consolidated Income Statements

(Dollars in millions, except per share amounts)

 

SCHEDULE A

 

 

 

Three Months Ended
March 31,

 

 

 

2013

 

2012

 

Net sales

 

$

10,408

 

$

10,180

 

Other income, net

 

92

 

14

 

Total

 

10,500

 

10,194

 

 

 

 

 

 

 

Cost of goods sold and other operating charges (a)

 

7,105

 

6,816

 

Selling, general and administrative expenses

 

983

 

955

 

Research and development expense

 

521

 

508

 

Interest expense

 

117

 

114

 

Total

 

8,726

 

8,393

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

1,774

 

1,801

 

Provision for income taxes on continuing operations (a)

 

387

 

392

 

Income from continuing operations after income taxes

 

1,387

 

1,409

 

Net income from discontinued operations after taxes

 

1,968

 

95

 

 

 

 

 

 

 

Net income

 

3,355

 

1,504

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

7

 

12

 

 

 

 

 

 

 

Net income attributable to DuPont

 

$

3,348

 

$

1,492

 

 

 

 

 

 

 

Basic earnings per share of common stock (b):

 

 

 

 

 

Basic earnings per share of common stock from continuing operations

 

$

1.48

 

$

1.49

 

Basic earnings per share of common stock from discontinued operations

 

2.12

 

0.10

 

Basic earnings per share of common stock

 

$

3.60

 

$

1.60

 

 

 

 

 

 

 

Diluted earnings per share of common stock (b):

 

 

 

 

 

Diluted earnings per share of common stock from continuing operations

 

$

1.47

 

$

1.48

 

Diluted earnings per share of common stock from discontinued operations

 

2.10

 

0.10

 

Diluted earnings per share of common stock

 

$

3.58

 

$

1.58

 

 

 

 

 

 

 

Dividends per share of common stock

 

$

0.43

 

$

0.41

 

 

 

 

 

 

 

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

 

 

 

 

 

Basic

 

928,348,000

 

933,910,000

 

Diluted

 

935,390,000

 

944,238,000

 

 


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

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

 

Reconciliation of Non-GAAP Measures

 

Summary of Earnings Comparison

 

 

 

Three Months Ended
March 31,

 

 

 

2013

 

2012

 

%
Change

 

Income from continuing operations after income taxes (GAAP)

 

$

1,387

 

$

1,409

 

-2

%

Less:

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

 

20

 

(32

)

 

 

 

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

 

(99

)

(118

)

 

 

 

Net income attributable to noncontrolling interest

 

7

 

12

 

 

 

Operating earnings

 

$

1,459

 

$

1,547

 

-6

%

 

 

 

 

 

 

 

 

EPS from continuing operations (GAAP)

 

$

1.47

 

$

1.48

 

-1

%

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

 

0.02

 

(0.04

)

 

 

Non-operating pension/OPEB costs included in EPS

 

(0.11

)

(0.12

)

 

 

Operating EPS

 

$

1.56

 

$

1.64

 

-5

%

 

6



 

E. I. du Pont de Nemours and Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share amounts)

 

SCHEDULE A (continued)

 

 

 

March 31,
2013

 

December 31,
2012

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

6,555

 

$

4,284

 

Marketable securities

 

26

 

123

 

Accounts and notes receivable, net

 

7,950

 

5,452

 

Inventories

 

6,916

 

7,565

 

Prepaid expenses

 

268

 

204

 

Deferred income taxes

 

699

 

613

 

Assets held for sale

 

 

3,076

 

Total current assets

 

22,414

 

21,317

 

Property, plant and equipment, net of accumulated depreciation (March 31, 2013 - $19,233; December 31, 2012 - $19,085)

 

12,590

 

12,741

 

Goodwill

 

4,543

 

4,616

 

Other intangible assets

 

4,970

 

5,126

 

Investment in affiliates

 

1,169

 

1,163

 

Deferred income taxes

 

3,957

 

3,936

 

Other assets

 

921

 

960

 

Total

 

$

50,564

 

$

49,859

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

3,957

 

$

4,853

 

Short-term borrowings and capital lease obligations

 

2,006

 

1,275

 

Income taxes

 

945

 

343

 

Other accrued liabilities

 

4,615

 

5,997

 

Liabilities related to assets held for sale

 

 

1,084

 

Total current liabilities

 

11,523

 

13,552

 

 

 

 

 

 

 

Long-term borrowings and capital lease obligations

 

11,279

 

10,465

 

Other liabilities

 

14,526

 

14,687

 

Deferred income taxes

 

921

 

856

 

Total liabilities

 

38,249

 

39,560

 

 

 

 

 

 

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Preferred stock

 

237

 

237

 

Common stock, $0.30 par value; 1,800,000,000 shares authorized; Issued at March 31, 2013 - 1,007,234,000 ; December 31, 2012 - 1,020,057,000

 

302

 

306

 

Additional paid-in capital

 

10,394

 

10,655

 

Reinvested earnings

 

16,709

 

14,383

 

Accumulated other comprehensive loss

 

(8,662

)

(8,646

)

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

 

(6,727

)

(6,727

)

Total DuPont stockholders’ equity

 

12,253

 

10,208

 

Noncontrolling interests

 

62

 

91

 

Total equity

 

12,315

 

10,299

 

Total

 

$

50,564

 

$

49,859

 

 

7



 

E. I. du Pont de Nemours and Company

Condensed Consolidated Statement of Cash Flows

(Dollars in millions)

 

SCHEDULE A (continued)

 

 

 

Three Months Ended
March 31,

 

Total Company

 

2013

 

2012

 

 

 

 

 

 

 

Net income

 

$

3,355

 

$

1,504

 

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

 

 

 

 

 

Depreciation

 

327

 

349

 

Amortization

 

106

 

106

 

Other noncash charges and credits - net

 

(23

)

311

 

Gain on sale of business

 

(2,683

)

 

Contributions to pension plans

 

(110

)

(614

)

Change in operating assets and liabilities - net

 

(3,639

)

(3,533

)

Cash provided by (used for) operating activities

 

(2,667

)

(1,877

)

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant and equipment

 

(321

)

(301

)

Proceeds from sale of business

 

4,815

 

 

Net (increase) decrease in short-term financial instruments

 

99

 

248

 

Forward exchange contract settlements

 

(47

)

(87

)

Other investing activities - net

 

62

 

(16

)

Cash provided by (used for) investing activities

 

4,608

 

(156

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Dividends paid to stockholders

 

(405

)

(386

)

Net increase (decrease) in borrowings

 

1,558

 

2,278

 

Prepayment for the repurchase of common stock

 

(1,000

)

(400

)

Proceeds from exercise of stock options

 

117

 

389

 

Other financing activities - net

 

61

 

(36

)

Cash provided by (used for) financing activities

 

331

 

1,845

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

(96

)

12

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

2,176

 

(176

)

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

4,379

 

3,586

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

6,555

 

$

3,410

 

 

Reconciliation of Non-GAAP Measure

 

Calculation of Free Cash Flow - Total Company

 

 

 

Three Months Ended
March 31,

 

 

 

2013

 

2012

 

Cash provided by (used for) operating activities

 

$

(2,667

)

$

(1,877

)

Purchases of property, plant and equipment

 

(321

)

(301

)

Free cash flow

 

$

(2,988

)

$

(2,178

)

 

8



 

E. I. du Pont de Nemours and Company

Schedule of Significant Items from Continuing Operations

(Dollars in millions, except per share amounts)

 

SCHEDULE B

 

SIGNIFICANT ITEMS FROM CONTINUING OPERATIONS

 

 

 

Pre-tax

 

After-tax

 

($ Per Share)

 

 

 

2013

 

2012

 

2013

 

2012

 

2013

 

2012

 

1st Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer claims charge (a)

 

$

(35

)

$

(50

)

$

(22

)

$

(32

)

$

(0.02

)

$

(0.04

)

Income tax items (b)

 

 

 

42

 

 

0.04

 

 

1st Quarter - Total

 

$

(35

)

$

(50

)

$

20

 

$

(32

)

$

0.02

 

$

(0.04

)

 


(a)              First quarter 2013 and first quarter 2012 included charges of $(35) and $(50), 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 $(785) at March 31, 2013.  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. The process of seeking insurance recovery is ongoing and the timing and outcome are uncertain. This matter relates to the Agriculture segment.

 

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

 

9



 

E. I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

 

SCHEDULE C

 

 

 

Three Months Ended
March 31,

 

 

 

2013

 

2012

 

SEGMENT SALES (1)

 

 

 

 

 

 

 

Agriculture

 

$

4,669

 

$

4,080

 

Electronics & Communications

 

616

 

677

 

Industrial Biosciences

 

289

 

288

 

Nutrition & Health

 

868

 

808

 

Performance Chemicals

 

1,585

 

1,900

 

Performance Materials

 

1,559

 

1,600

 

Safety & Protection

 

907

 

941

 

Other

 

1

 

1

 

Total Segment sales

 

10,494

 

10,295

 

 

 

 

 

 

 

Elimination of transfers

 

(86

)

(115

)

Consolidated net sales

 

$

10,408

 

$

10,180

 

 


(1)             Sales for the reporting segments include transfers.

 

10



 

E. I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

 

SCHEDULE C (continued)

 

 

 

Three Months Ended
March 31,

 

 

 

2013

 

2012

 

INCOME/(LOSS) FROM CONTINUING OPERATIONS (GAAP)

 

 

 

 

 

 

 

Agriculture

 

$

1,481

 

$

1,288

 

Electronics & Communications

 

49

 

59

 

Industrial Biosciences

 

41

 

39

 

Nutrition & Health

 

76

 

79

 

Performance Chemicals

 

251

 

571

 

Performance Materials

 

292

 

277

 

Safety & Protection

 

138

 

159

 

Pharmaceuticals

 

4

 

27

 

Other

 

(91

)

(76

)

Total Segment PTOI

 

2,241

 

2,423

 

 

 

 

 

 

 

Corporate expenses

 

(214

)

(251

)

Interest expense

 

(117

)

(114

)

Non-operating pension/OPEB costs

 

(147

)

(176

)

Net exchange gains (losses) (1)

 

11

 

(81

)

Income before income taxes from continuing operations

 

$

1,774

 

$

1,801

 

 

 

 

Three Months Ended
March 31,

 

 

 

2013

 

2012

 

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

 

 

 

 

 

 

 

Agriculture

 

$

(35

)

$

(50

)

Electronics & Communications

 

 

 

Industrial Biosciences

 

 

 

Nutrition & Health

 

 

 

Performance Chemicals

 

 

 

Performance Materials

 

 

 

Safety & Protection

 

 

 

Pharmaceuticals

 

 

 

Other

 

 

 

Total significant items by segment

 

(35

)

(50

)

Corporate expenses

 

 

 

Total significant items before income taxes

 

$

(35

)

$

(50

)

 

 

 

Three Months Ended
March 31,

 

 

 

2013

 

2012

 

OPERATING EARNINGS

 

 

 

 

 

 

 

Agriculture

 

$

1,516

 

$

1,338

 

Electronics & Communications

 

49

 

59

 

Industrial Biosciences

 

41

 

39

 

Nutrition & Health

 

76

 

79

 

Performance Chemicals

 

251

 

571

 

Performance Materials

 

292

 

277

 

Safety & Protection

 

138

 

159

 

Pharmaceuticals

 

4

 

27

 

Other

 

(91

)

(76

)

Total segment operating earnings

 

2,276

 

2,473

 

Corporate expenses

 

(214

)

(251

)

Interest expense

 

(117

)

(114

)

Operating earnings before income taxes and exchange gains (losses)

 

1,945

 

2,108

 

Net exchange gains (losses) (1)

 

11

 

(81

)

Operating earnings before income taxes

 

$

1,956

 

$

2,027

 

 


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

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

 

11



 

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
March 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

$

1,774

 

$

1,801

 

Less: Net income attributable to noncontrolling interests

 

7

 

12

 

Add: Interest expense

 

117

 

114

 

Adjusted EBIT from continuing operations

 

1,884

 

1,903

 

Add: Depreciation and amortization

 

433

 

427

 

Adjusted EBITDA from continuing operations

 

$

2,317

 

$

2,330

 

 

Reconciliation of Operating Earnings Per Share (EPS) Outlook

 

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

 

 

 

Year Ended December 31,

 

 

 

2013 Outlook

 

2012 Actual

 

Operating EPS

 

$3.85 - $4.05

 

$

3.77

 

 

 

 

 

 

 

Significant items

 

 

 

 

 

Tax items

 

0.04

 

 

Sale of an equity method investment

 

 

0.08

 

Customer claims charges

 

(0.02

)

(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

)

(0.46

)

 

 

 

 

 

 

Impact of LIFO accounting change

 

 

0.02

 

 

 

 

 

 

 

EPS from continuing operations (GAAP)

 

$3.45 - $3.65

 

$

2.61

 

 

12



 

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions)

 

SCHEDULE D (continued)

 

Exchange Gains/Losses on Operating Earnings

 

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

 

 

 

Three Months Ended
March 31,

 

 

 

2013

 

2012

 

Subsidiary/Affiliate Monetary Position Gain (Loss)

 

 

 

 

 

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

 

$

(95

)

$

47

 

Local tax benefits (expenses)

 

3

 

(7

)

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

 

$

(92

)

$

40

 

 

 

 

 

 

 

Hedging Program Gain (Loss)

 

 

 

 

 

Pre-tax exchange gains (losses)

 

$

106

 

$

(128

)

Tax benefits (expenses)

 

(37

)

44

 

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

 

$

69

 

$

(84

)

 

 

 

 

 

 

Total Exchange Gain (Loss)

 

 

 

 

 

Pre-tax exchange gains (losses)

 

$

11

 

$

(81

)

Tax benefits (expenses)

 

(34

)

37

 

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

 

$

(23

)

$

(44

)

 

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 ($5) and $0 for the three months ended March 31, 2013 and 2012, respectively.

 

Reconciliation of Base Income Tax Rate to Effective Income Tax Rate

 

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

 

 

 

Three Months Ended
March 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

$

1,774

 

$

1,801

 

Add:

Significant items - (benefit) charge (2)

 

35

 

50

 

 

Non-operating pension/OPEB costs

 

147

 

176

 

Less: Net exchange (losses) gains

 

11

 

(81

)

Income from continuing operations before income taxes, significant items, exchange gains (losses), and non-operating pension/OPEB costs

 

$

1,945

 

$

2,108

 

 

 

 

 

 

 

Provision for income taxes on continuing operations

 

$

387

 

$

392

 

Add:

Tax benefits (expenses) on significant items

 

55

 

18

 

 

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

 

48

 

58

 

 

Tax benefits (expenses) on exchange gains/losses

 

(34

)

37

 

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

 

$

456

 

$

505

 

 

 

 

 

 

 

Effective income tax rate

 

21.8

%

21.8

%

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

 

3.3

%

1.3

%

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

 

25.1

%

23.1

%

Exchange gains (losses) effect

 

(1.7

)%

0.9

%

Base income tax rate from continuing operations

 

23.4

%

24.0

%

 


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

 

13