WILMINGTON, Del., Jan. 24, 2017 /PRNewswire/ --
Fourth-Quarter
Highlights
|
- GAAP1
earnings per share totaled $0.29 versus a loss of $(0.26) per share
in prior year. Operating earnings2 per share nearly
doubled to $0.51 from $0.27 in prior year.
- Sales of $5.2
billion decreased 2 percent. Local price declined by 2 percent
while currency benefited sales by 1 percent. Volume declined 1
percent as growth in Performance Materials, Electronics &
Communications and Industrial Biosciences was more than offset by
declines in Agriculture, due to timing of fourth-quarter seed sales
primarily due to the southern U.S. route-to-market change.
Excluding this timing change, sales would have increased 2
percent.
- Segment
operating margins expanded by 305 basis points.
- GAAP operating
costs3 decreased by 5 percent. Operating
costs2, excluding significant items and non-operating
pension/OPEB benefits, declined by 9 percent versus prior
year.
|
Full-Year
Highlights
|
- GAAP1
earnings per share increased 36 percent to $2.85 from $2.09 in
prior year. Operating earnings2 per share increased 21
percent to $3.35 from $2.77 in prior year.
- Sales of $24.6
billion decreased 2 percent. Local price and currency each lowered
sales by 1 percent. Volume was flat as growth in Performance
Materials, Nutrition & Health and Industrial Biosciences was
offset by declines in the other segments. Excluding the change in
timing of fourth-quarter seed sales in Agriculture, sales decreased
1 percent.
- Total company
gross margin expanded 60 basis points, excluding a 70-basis-point
benefit from a non-operating pension/OPEB curtailment gain. Segment
operating margins expanded about 200 basis points, with increases
in all reportable segments.
- GAAP operating
costs3 decreased by 5 percent. Operating
costs2, excluding significant items and non-operating
pension/OPEB costs, declined 11 percent, exceeding the 2016 cost
savings commitment.
- Free cash
flow4 improved $1.6 billion primarily due to higher
earnings, lower capital expenditures, lower tax payments, and
working capital improvements.
- DuPont expects
first-quarter 2017 GAAP1 earnings per share to decrease
about 18 percent versus prior year. First-quarter 2017 operating
earnings2 per share are expected to
increase about 8 percent versus prior year.
|
|
|
1
|
Generally Accepted
Accounting Principles (GAAP)
|
2
|
See schedules A, C,
and D for definitions and reconciliations of non-GAAP
measures.
|
3
|
GAAP operating costs
defined as other operating charges, selling, general &
administrative, and research & development costs.
|
4
|
Free cash flow is
defined as cash used for operating activities less purchases of
property, plant and equipment. See schedule A for
reconciliation of non-GAAP measure.
|
|
|
|
E. I. du Pont de
Nemours and Company
|
DuPont (NYSE: DD), a science company that brings world-class,
innovative products, materials, and services to the global
marketplace, today announced fourth-quarter 2016 GAAP earnings of
$0.29 per share and operating
earnings2 of $0.51 per
share. Prior year GAAP and operating earnings2
were a loss of $(0.26) and earnings
of $0.27 per share,
respectively. GAAP income from continuing operations before
taxes was $353 million, including
charges of $(599) million related to
an asset impairment charge and transaction costs offset by a
$382 million non-operating
pension/OPEB gain. Prior year GAAP loss from continuing
operations before taxes was $(421)
million, including a $(775)
million charge for restructuring costs. Refer to
Schedule B for details of significant items excluded from operating
earnings per share.
For the full-year 2016, DuPont delivered GAAP earnings of
$2.85 per share and operating
earnings2 of $3.35 per
share. Prior-year GAAP and operating earnings2
were $2.09 and $2.77 per share, respectively.
Fourth-quarter sales were $5.2
billion, down 2 percent versus prior year as a 1-percent
benefit from currency was offset by a 2-percent decline in local
price and a 1-percent decline in volume. Volume declined as
growth in Performance Materials, Electronics & Communications
and Industrial Biosciences was more than offset by declines in
Agriculture, due to timing of fourth-quarter seed sales primarily
due to the southern U.S. route-to-market change. Excluding
this timing change, sales would have increased 2 percent. Full-year
sales totaled $24.6 billion, down 2
percent versus prior year due to a 1-percent negative impact from
currency and a 1-percent decline in local price. Volume was
flat as growth in Performance Materials, Nutrition & Health and
Industrial Biosciences was offset by declines in the other
segments. Excluding the change in timing of fourth-quarter
seed sales in Agriculture, sales decreased 1 percent.
Free cash flow4 improvement of $1.6 billion for the year reflected higher
earnings, lower capital expenditures, lower tax payments, working
capital improvements, and the absence of Chemours cash
outflows.
"2016 was an important year for DuPont as we exceeded our
expectations for earnings, cost savings, operating margin expansion
and free cash flow improvement," said Ed
Breen, chairman and CEO of DuPont. "We made excellent
progress on our strategic priorities in 2016 to increase
shareholder value, and we will build on this groundwork as we move
into 2017. We look forward to closing the merger with Dow and are
continuing to have constructive discussions with regulators in key
jurisdictions. We now expect the merger to close in the first half
of 2017, pending regulatory approval."
Global Consolidated Net Sales – 4th Quarter and Full
Year
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
Percent Change Due
to:
|
|
|
|
|
%
|
|
Local Price
and
|
|
|
|
|
|
Portfolio
/
|
|
|
$
|
|
Change
|
|
Product
Mix
|
|
Currency
|
|
Volume
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. & Canada
|
|
$
1,676
|
|
(11)
|
|
(7)
|
|
-
|
|
(4)
|
|
-
|
EMEA *
|
|
1,183
|
|
(1)
|
|
-
|
|
(1)
|
|
-
|
|
-
|
Asia
Pacific
|
|
1,543
|
|
9
|
|
-
|
|
1
|
|
9
|
|
(1)
|
Latin America
|
|
809
|
|
-
|
|
2
|
|
7
|
|
(9)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consolidated
Sales
|
$
5,211
|
|
(2)
|
|
(2)
|
|
1
|
|
(1)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
Percent Change Due
to:
|
|
|
|
|
%
|
|
Local Price
and
|
|
|
|
|
|
Portfolio
/
|
|
|
$
|
|
Change
|
|
Product
Mix
|
|
Currency
|
|
Volume
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. & Canada
|
|
$
10,413
|
|
(3)
|
|
(2)
|
|
-
|
|
-
|
|
(1)
|
EMEA *
|
|
5,739
|
|
(5)
|
|
1
|
|
(3)
|
|
(2)
|
|
(1)
|
Asia
Pacific
|
|
5,801
|
|
3
|
|
(1)
|
|
(1)
|
|
4
|
|
1
|
Latin America
|
|
2,641
|
|
(3)
|
|
2
|
|
(2)
|
|
(2)
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consolidated
Sales
|
$
24,594
|
|
(2)
|
|
(1)
|
|
(1)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Europe,
Middle East & Africa
|
|
|
|
|
|
|
|
|
|
|
Segment Net Sales – 4th Quarter and Full Year
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
Percent Change Due
to:
|
|
|
|
|
|
|
Local Price
and
|
|
|
|
|
|
Portfolio
/
|
|
|
$
|
|
% Change
|
|
Product
Mix
|
|
Currency
|
|
Volume
|
|
Other
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
$
1,393
|
|
(10)
|
|
(4)
|
|
4
|
|
(9)
|
|
(1)
|
Electronics &
Communications
|
521
|
|
6
|
|
-
|
|
-
|
|
6
|
|
-
|
Industrial
Biosciences
|
|
401
|
|
1
|
|
(1)
|
|
(1)
|
|
2
|
|
1
|
Nutrition &
Health
|
|
809
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Performance
Materials
|
|
1,331
|
|
4
|
|
(2)
|
|
-
|
|
7
|
|
(1)
|
Protection
Solutions
|
|
717
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Other
|
|
39
|
|
|
|
|
|
|
|
|
|
|
Consolidated Net
Sales
|
|
5,211
|
|
(2)
|
|
(2)
|
|
1
|
|
(1)
|
|
-
|
Segment Net Sales – 4th Quarter and Full Year,
Continued
|
|
Twelve Months
Ended
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
Percent Change Due
to:
|
|
|
|
|
|
|
Local Price
and
|
|
|
|
|
|
Portfolio
/
|
|
|
$
|
|
% Change
|
|
Product
Mix
|
|
Currency
|
|
Volume
|
|
Other
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
$
9,516
|
|
(3)
|
|
-
|
|
(2)
|
|
(1)
|
|
-
|
Electronics &
Communications
|
1,960
|
|
(5)
|
|
(2)
|
|
-
|
|
(3)
|
|
-
|
Industrial
Biosciences
|
|
1,500
|
|
1
|
|
-
|
|
(2)
|
|
2
|
|
1
|
Nutrition &
Health
|
|
3,268
|
|
-
|
|
-
|
|
(2)
|
|
2
|
|
-
|
Performance
Materials
|
|
5,249
|
|
(1)
|
|
(3)
|
|
(1)
|
|
3
|
|
-
|
Protection
Solutions
|
|
2,954
|
|
(3)
|
|
(1)
|
|
-
|
|
(2)
|
|
-
|
Other
|
|
147
|
|
|
|
|
|
|
|
|
|
|
Consolidated Net
Sales
|
|
24,594
|
|
(2)
|
|
(1)
|
|
(1)
|
|
-
|
|
-
|
Operating Earnings – 4th Quarter and Full
Year
|
|
|
|
|
Change vs.
2015
|
(Dollars in
millions)
|
4Q16
|
|
4Q15
|
|
$
|
|
%
|
Agriculture
|
$
(19)
|
|
$
(54)
|
|
$
35
|
|
65%
|
Electronics &
Communications
|
98
|
|
87
|
|
11
|
|
13%
|
Industrial
Biosciences
|
67
|
|
78
|
|
(11)
|
|
-14%
|
Nutrition &
Health
|
135
|
|
85
|
|
50
|
|
59%
|
Performance
Materials
|
328
|
|
281
|
|
47
|
|
17%
|
Protection
Solutions
|
142
|
|
147
|
|
(5)
|
|
-3%
|
Other
|
(48)
|
|
(71)
|
|
23
|
|
32%
|
Total segment
operating earnings (5)
|
703
|
|
553
|
|
150
|
|
27%
|
|
|
|
|
|
|
|
|
Exchange gains
(losses) (6)
|
106
|
|
(24)
|
|
130
|
|
nm
|
Corporate expenses
(5)
|
(88)
|
|
(160)
|
|
72
|
|
-45%
|
Interest
expense
|
(92)
|
|
(82)
|
|
(10)
|
|
12%
|
Operating earnings
before income taxes (2)
|
629
|
|
287
|
|
342
|
|
119%
|
Provision for income
taxes on operating earnings (2)
|
(180)
|
|
(51)
|
|
(129)
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(2)
|
|
(3)
|
|
1
|
|
|
Operating earnings
(2)
|
$
451
|
|
$
239
|
|
$
212
|
|
89%
|
|
|
|
|
|
|
|
|
Operating earnings
per share (2)
|
$0.51
|
|
$
0.27
|
|
$
0.24
|
|
89%
|
GAAP earnings per
share
|
$0.29
|
|
$
(0.26)
|
|
$
0.55
|
|
212%
|
Operating Earnings – 4th Quarter and Full Year,
Continued
|
|
|
|
|
Change vs.
2015
|
(Dollars in
millions)
|
YTD 2016
|
|
YTD 2015
|
|
$
|
|
%
|
Agriculture
|
$
1,758
|
|
$
1,646
|
|
$
112
|
|
7%
|
Electronics &
Communications
|
358
|
|
359
|
|
(1)
|
|
0%
|
Industrial
Biosciences
|
270
|
|
243
|
|
27
|
|
11%
|
Nutrition &
Health
|
504
|
|
373
|
|
131
|
|
35%
|
Performance
Materials
|
1,297
|
|
1,216
|
|
81
|
|
7%
|
Protection
Solutions
|
668
|
|
641
|
|
27
|
|
4%
|
Other
|
(215)
|
|
(235)
|
|
20
|
|
9%
|
Total segment
operating earnings (5)
|
4,640
|
|
4,243
|
|
397
|
|
9%
|
|
|
|
|
|
|
|
|
Exchange gains
(losses) (5) (6)
|
(106)
|
|
93
|
|
(199)
|
|
nm
|
Corporate expenses
(5)
|
(340)
|
|
(573)
|
|
233
|
|
-41%
|
Interest
expense
|
(370)
|
|
(322)
|
|
(48)
|
|
15%
|
Operating earnings
before income taxes (2)
|
3,824
|
|
3,441
|
|
383
|
|
11%
|
Provision for income
taxes on operating earnings (2)
|
(861)
|
|
(932)
|
|
71
|
|
|
Less: Net income
attributable to noncontrolling interests
|
12
|
|
6
|
|
6
|
|
|
Operating earnings
(2)
|
$
2,951
|
|
$
2,503
|
|
$
448
|
|
18%
|
|
|
|
|
|
|
|
|
Operating earnings
per share (2)
|
$3.35
|
|
$
2.77
|
|
$
0.58
|
|
21%
|
GAAP earnings per
share
|
$2.85
|
|
$
2.09
|
|
$
0.76
|
|
36%
|
|
|
|
|
|
|
|
|
(5) See Schedules B
and C for listing of significant items.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) 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 and full
year with the prior year, unless otherwise noted.
Agriculture – For the fourth-quarter 2016, an operating
loss of $19 million improved
$35 million, or 65 percent. A
benefit from currency of $78 million
and cost savings, were partially offset by timing of seed
deliveries, primarily related to the southern U.S. route-to-market
change. Operating margins expanded by about 210 basis
points.
Full-year operating earnings of $1,758
million increased $112
million, or 7 percent, as cost savings and lower product
costs were partially offset by timing of seed deliveries, primarily
related to the southern U.S. route-to-market change and negative
currency. Operating margins expanded by about 170 basis
points.
Electronics & Communications – Fourth-quarter
2016 operating earnings of $98
million increased $11 million,
or 13 percent, on cost savings and volume growth in
Solamet® paste. Operating margins expanded by
about 115 basis points.
Full-year operating earnings of $358
million were even with the prior year as cost savings were
offset by lower sales and a $16
million litigation expense. Sales declined on weakness
in consumer electronics markets and decreased demand in the
photovoltaic market impacting sales of Tedlar® film.
Operating margins expanded by about 90 basis points.
Industrial Biosciences - Fourth-quarter 2016 operating
earnings of $67 million decreased
$11 million, or 14 percent, primarily
due to declines in CleanTech. Operating margins contracted by
about 295 basis points.
Full-year operating earnings of $270
million increased $27 million,
or 11 percent, reflecting cost savings and an increase in sales,
partly offset by a negative impact from currency. Operating margins
expanded by 155 basis points.
Nutrition & Health – Fourth-quarter 2016 operating
earnings of $135 million increased
$50 million, or 59 percent, on cost
savings and a $27 million gain from
an asset sale. Volume was flat as growth in sweeteners and
probiotics was offset by declines in protein solutions. Operating
margins expanded by 615 basis points.
Full-year operating earnings of $504
million increased $131
million, or 35 percent, on cost savings, volume growth in
probiotics and cultures and a $27
million gain from an asset sale. Operating margins expanded
by about 400 basis points.
Performance Materials - Fourth-quarter 2016 operating
earnings of $328 million increased
$47 million, or 17 percent, as lower
product costs, cost savings, and increased demand in global
automotive markets, more than offset the absence of $33 million in prior year benefits from the sale
of a business and tax benefits associated with a manufacturing
site. Operating margins expanded by 275 basis points.
Full-year operating earnings of $1,297
million increased $81 million,
or 7 percent as cost savings, increased volumes, and lower product
costs, more than offset a $63 million
negative impact from currency and the absence of $49 million of benefits from the prior year,
comprised of a net benefit from a joint venture, the sale of a
business and the realization of tax benefits associated with a
manufacturing site. Operating margins expanded by about 180 basis
points.
Protection Solutions – Fourth-quarter 2016 operating
earnings of $142 million decreased
$5 million, or 3 percent, as cost
savings were more than offset by higher costs due to lower plant
utilization and the negative impact from currency. Operating
margins contracted by about 60 basis points.
Full-year operating earnings of $668
million increased $27 million,
or 4 percent, as cost savings were partially offset by the impact
of lower sales. Operating margins expanded by about 150 basis
points.
First-Quarter 2017 Outlook
We expect the merger to
close in the first half of 2017, pending regulatory approval.
Therefore, only guidance for the first quarter of 2017 is being
provided. The company expects first-quarter 2017 GAAP earnings to
decrease about 18 percent from prior year. The company's
first-quarter 2017 GAAP earnings include an expected charge of
about $0.15 per share for transaction
costs associated with the planned merger with Dow. Prior year GAAP
earnings included a net benefit of $0.18 per share from significant items, primarily
due to a gain on the sale of an entity.
First-quarter 2017 operating earnings2 are expected
to increase about 8 percent versus prior year driven by benefits
from cost savings and the impact of the change in timing for seed
deliveries, primarily related to the southern U.S. route-to-market
change in Agriculture. These benefits are anticipated to be
partially offset by the expected reduction in planted corn acres in
the U.S.
DuPont will hold a conference call and webcast on Tuesday, Jan. 24, 2017, at 8:00 AM ET 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 6670063#. For additional information
see the investor center at http://www.dupont.com.
Use of Non-GAAP Measures
This earnings release
includes information that does not conform to U.S. generally
accepted accounting principles (GAAP) and are considered non-GAAP
measures. These measures include the company's consolidated
results and earnings per share on an operating earnings basis,
which excludes significant items and non-operating pension and
other postretirement employee benefit costs (operating earnings and
operating EPS), total segment pre-tax operating earnings, operating
costs and corporate expenses on an operating earnings basis.
Management uses these measures internally for planning, forecasting
and evaluating the performance of the company's segments, including
allocating resources and evaluating incentive compensation.
From a liquidity perspective, management uses free cash flow, which
is defined as cash provided/used by operating activities less
purchases of property, plant and equipment. Free cash flow is
useful to investors and management to evaluate the company's cash
flow and financial performance, and is an integral financial
measure used in the company's financial planning process.
Management believes that these non-GAAP measurements are meaningful
to investors as they provide insight with respect to ongoing
operating results of the company and provide a more useful
comparison of year-over-year results. These non-GAAP
measurements supplement our GAAP disclosures 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. Details of significant items are
provided in schedule B.
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 communication contains
"forward-looking statements" within the meaning of the federal
securities laws, including Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. In this context, forward-looking statements often
address expected future business and financial performance and
financial condition, and often contain words such as "expect,"
"anticipate," "intend," "plan," "believe," "seek," "see," "will,"
"would," "target," similar expressions, and variations or negatives
of these words.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain, such as statements about the
consummation of the proposed transaction and the anticipated
benefits thereof. 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. Important risk factors
relating to the proposed transaction and intended business
separations include, but are not limited to, (i) the
completion of the proposed transaction on anticipated terms and
timing, including obtaining regulatory approvals, anticipated
tax treatment, unforeseen liabilities, future capital expenditures,
revenues, expenses, earnings, synergies, economic performance,
indebtedness, financial condition, losses, future prospects,
business and management strategies for the management, expansion
and growth of the new combined company's operations and other
conditions to the completion of the merger, (ii) the various
approvals, authorizations and declarations of non-objection from
certain regulatory and governmental authorities may not be
obtained, on a timely basis or otherwise, including that these
regulatory or governmental agencies may impose conditions on the
granting of such approvals, including requiring the respective Dow
and DuPont businesses to divest certain assets if necessary in
order to obtain certain regulatory approvals or otherwise limiting
the ability of the combined company to integrate parts of the
DuPont and Dow businesses, (iii) the ability of Dow and DuPont to
integrate the business successfully and to achieve anticipated
synergies, risks and costs and pursuit and/or implementation of the
potential separations, including anticipated timing, any changes to
the configuration of businesses included in the potential
separation if implemented, (iv) the intended separation of the
agriculture, material science and specialty products businesses of
the combined company post-mergers in one or more tax efficient
transactions on anticipated terms and timing, including a number of
conditions which could delay, prevent or otherwise adversely affect
the proposed transactions, including possible issues or delays in
obtaining required regulatory approvals or clearances, disruptions
in the financial markets or other potential barriers, (v) continued
availability of capital and financing and rating agency actions,
(vi) potential business uncertainty, including changes to existing
business relationships, during the pendency of the merger that
could affect DuPont's financial performance, and (vii) certain
restrictions during the pendency of the merger that may impact
DuPont's ability to pursue certain business opportunities or
strategic transactions. These risks, as well as other risks
associated with the proposed merger, are more fully discussed in
the joint proxy statement of Dow and DuPont and the prospectus of
DowDuPont included in the definitive registration statement on Form
S-4 (File No. 333-209869), (as amended, the Registration
Statement). While the list of factors presented here is, and the
list of factors presented in the Registration Statement are,
considered representative, no such list should be considered to be
a complete statement of all potential risks and uncertainties.
Unlisted factors may present significant additional obstacles to
the realization of forward-looking statements. Consequences of
material differences in results as compared with those anticipated
in the forward-looking statements could include, among other
things, business disruption, operational problems, financial loss,
legal liability to third parties and similar risks, any of which
could have a material adverse effect on DuPont's consolidated
financial condition, results of operations, credit rating or
liquidity. The company undertakes no duty to publicly revise or
update any forward-looking statements whether as a result of future
developments, new information or otherwise, should circumstances
change, except as otherwise required by securities and other
applicable laws.
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,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net sales
|
$
|
5,211
|
|
|
$
|
5,299
|
|
|
$
|
24,594
|
|
|
$
|
25,130
|
|
Cost of goods
sold
|
3,147
|
|
|
3,409
|
|
|
14,469
|
|
|
15,112
|
|
Other operating
charges (1)
|
182
|
|
|
46
|
|
|
686
|
|
|
459
|
|
Selling, general and
administrative expenses (1)
|
964
|
|
|
1,075
|
|
|
4,319
|
|
|
4,615
|
|
Research and
development expense
|
381
|
|
|
483
|
|
|
1,641
|
|
|
1,898
|
|
Other income, net
(1)
|
(301)
|
|
|
(145)
|
|
|
(708)
|
|
|
(697)
|
|
Interest expense
(1)
|
92
|
|
|
82
|
|
|
370
|
|
|
342
|
|
Employee separation /
asset related charges, net (1)
|
393
|
|
|
770
|
|
|
552
|
|
|
810
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations before income taxes
|
353
|
|
|
(421)
|
|
|
3,265
|
|
|
2,591
|
|
Provision for
(benefit from) income taxes on continuing operations
(1)
|
101
|
|
|
(190)
|
|
|
744
|
|
|
696
|
|
Income (loss) from
continuing operations after income taxes
|
252
|
|
|
(231)
|
|
|
2,521
|
|
|
1,895
|
|
Income (loss) from
discontinued operations after income taxes
|
11
|
|
|
(25)
|
|
|
4
|
|
|
64
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
263
|
|
|
(256)
|
|
|
2,525
|
|
|
1,959
|
|
|
|
|
|
|
|
|
|
Less: Net
(loss) income attributable to noncontrolling interests
|
(2)
|
|
|
(3)
|
|
|
12
|
|
|
6
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to DuPont
|
$
|
265
|
|
|
$
|
(253)
|
|
|
$
|
2,513
|
|
|
$
|
1,953
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share of common stock:
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share of common stock from continuing operations
|
$
|
0.29
|
|
|
$
|
(0.26)
|
|
|
$
|
2.86
|
|
|
$
|
2.10
|
|
Basic earnings (loss)
per share of common stock from discontinued operations
|
0.01
|
|
|
(0.03)
|
|
|
—
|
|
|
0.07
|
|
Basic earnings (loss)
per share of common stock (2)
|
$
|
0.30
|
|
|
$
|
(0.29)
|
|
|
$
|
2.87
|
|
|
$
|
2.17
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share of common stock:
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share of common stock from continuing
operations
|
$
|
0.29
|
|
|
$
|
(0.26)
|
|
|
$
|
2.85
|
|
|
$
|
2.09
|
|
Diluted earnings
(loss) per share of common stock from discontinued
operations
|
0.01
|
|
|
(0.03)
|
|
|
—
|
|
|
0.07
|
|
Diluted earnings
(loss) per share of common stock (2)
|
$
|
0.30
|
|
|
$
|
(0.29)
|
|
|
$
|
2.85
|
|
|
$
|
2.16
|
|
|
|
|
|
|
|
|
|
Dividends per share
of common stock
|
$
|
0.38
|
|
|
$
|
0.38
|
|
|
$
|
1.52
|
|
|
$
|
1.72
|
|
|
|
|
|
|
|
|
|
Average number of
shares outstanding used in earnings (loss) per share (EPS)
calculation:
|
|
|
|
|
|
|
|
Basic
|
867,460,000
|
|
|
876,500,000
|
|
|
872,560,000
|
|
|
893,992,000
|
|
Diluted
|
872,363,000
|
|
|
881,727,000
|
|
|
877,036,000
|
|
|
899,527,000
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Non-GAAP Measures
|
|
|
|
|
|
|
|
|
|
|
|
Summary of
Earnings Comparison
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
2016
|
|
2015
|
|
%
Change
|
|
2016
|
|
2015
|
|
%
Change
|
Income (loss) from
continuing operations after income taxes (GAAP)
|
$
|
252
|
|
|
$
|
(231)
|
|
|
209%
|
|
|
$
|
2,521
|
|
|
$
|
1,895
|
|
|
33%
|
|
Less: Significant
items charge included in income from continuing operations
after income taxes (per Schedule B)
|
(384)
|
|
|
(411)
|
|
|
|
|
(421)
|
|
|
(348)
|
|
|
|
Non-operating
pension/OPEB benefits (costs) included in income from
continuing operations after income taxes (3)
|
187
|
|
|
(56)
|
|
|
|
|
(21)
|
|
|
(266)
|
|
|
|
Net (loss) income
attributable to noncontrolling interest from continuing
operations
|
(2)
|
|
|
(3)
|
|
|
|
|
12
|
|
|
6
|
|
|
|
Operating earnings
(Non-GAAP) (4)
|
$
|
451
|
|
|
$
|
239
|
|
|
89%
|
|
|
$
|
2,951
|
|
|
$
|
2,503
|
|
|
18%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share from continuing operations (GAAP)
|
$
|
0.29
|
|
|
$
|
(0.26)
|
|
|
212%
|
|
|
$
|
2.85
|
|
|
$
|
2.09
|
|
|
36%
|
|
Less: Significant
items charge included in EPS (per Schedule B)
|
(0.44)
|
|
|
(0.47)
|
|
|
|
|
(0.48)
|
|
|
(0.39)
|
|
|
|
Non-operating
pension/OPEB benefits (costs) included in EPS
(3)
|
0.22
|
|
|
(0.06)
|
|
|
|
|
(0.02)
|
|
|
(0.29)
|
|
|
|
Operating earnings
per share (Non-GAAP) (4)
|
$
|
0.51
|
|
|
$
|
0.27
|
|
|
89%
|
|
|
$
|
3.35
|
|
|
$
|
2.77
|
|
|
21%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E.I. du Pont de
Nemours and Company
Condensed
Consolidated Balance Sheets
(Dollars in
millions, except per share amounts)
|
|
SCHEDULE A
(continued)
|
|
|
|
|
December
31,
2016
|
|
December
31,
2015
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
4,605
|
|
|
$
|
5,300
|
|
Marketable
securities
|
|
1,362
|
|
|
906
|
|
Accounts and notes
receivable, net
|
|
4,971
|
|
|
4,643
|
|
Inventories
|
|
5,673
|
|
|
6,140
|
|
Prepaid
expenses
|
|
506
|
|
|
398
|
|
Total current
assets
|
|
17,117
|
|
|
17,387
|
|
Property, plant
and equipment, net of accumulated depreciation
(December 31, 2016 - $14,736; December 31, 2015 -
$14,346)
|
|
9,231
|
|
|
9,784
|
|
Goodwill
|
|
4,180
|
|
|
4,248
|
|
Other intangible
assets
|
|
3,664
|
|
|
4,144
|
|
Investment in
affiliates
|
|
649
|
|
|
688
|
|
Deferred income
taxes
|
|
3,308
|
|
|
3,799
|
|
Other
assets
|
|
1,815
|
|
|
1,116
|
|
Total
|
|
$
|
39,964
|
|
|
$
|
41,166
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts
payable
|
|
$
|
3,705
|
|
|
$
|
3,398
|
|
Short-term borrowings
and capital lease obligations
|
|
429
|
|
|
1,165
|
|
Income
taxes
|
|
101
|
|
|
173
|
|
Other accrued
liabilities
|
|
4,662
|
|
|
5,580
|
|
Total current
liabilities
|
|
8,897
|
|
|
10,316
|
|
Long-term
borrowings and capital lease obligations
|
|
8,107
|
|
|
7,642
|
|
Other
liabilities
|
|
12,333
|
|
|
12,591
|
|
Deferred income
taxes
|
|
431
|
|
|
417
|
|
Total
liabilities
|
|
29,768
|
|
|
30,966
|
|
|
|
|
|
|
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, 2016 - 950,044,000; December 31, 2015 -
958,388,000
|
|
285
|
|
|
288
|
|
Additional paid-in
capital
|
|
11,190
|
|
|
11,081
|
|
Reinvested
earnings
|
|
14,924
|
|
|
14,510
|
|
Accumulated other
comprehensive loss
|
|
(9,911)
|
|
|
(9,396)
|
|
Common stock held in
treasury, at cost (87,041,000 shares at December 31, 2016
and December 31, 2015)
|
|
(6,727)
|
|
|
(6,727)
|
|
Total DuPont
stockholders' equity
|
|
9,998
|
|
|
9,993
|
|
Noncontrolling
interests
|
|
198
|
|
|
207
|
|
Total
equity
|
|
10,196
|
|
|
10,200
|
|
Total
|
|
$
|
39,964
|
|
|
$
|
41,166
|
|
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,
|
|
2016
|
|
2015
|
Total
Company
|
|
|
|
|
|
|
|
Net income
|
$
|
2,525
|
|
|
$
|
1,959
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Depreciation
|
939
|
|
|
1,104
|
|
Amortization of intangible assets
|
319
|
|
|
362
|
|
Net
periodic pension benefit cost
|
572
|
|
|
591
|
|
Contributions to pension plans
|
(535)
|
|
|
(308)
|
|
Gain on
sale of businesses and other assets
|
(436)
|
|
|
(59)
|
|
Asset-related charges
|
682
|
|
|
147
|
|
Other
operating activities - net
|
366
|
|
|
106
|
|
Change
in operating assets and liabilities - net
|
(1,132)
|
|
|
(1,586)
|
|
Cash provided by
operating activities
|
3,300
|
|
|
2,316
|
|
Investing
activities
|
|
|
|
Purchases of
property, plant and equipment
|
(1,019)
|
|
|
(1,629)
|
|
Investments in
affiliates
|
(19)
|
|
|
(76)
|
|
Payments for
businesses - net of cash acquired
|
—
|
|
|
(152)
|
|
Proceeds from sale of
businesses and other assets - net
|
316
|
|
|
156
|
|
Net increase in
short-term financial instruments
|
(452)
|
|
|
(776)
|
|
Foreign currency
exchange contract settlements
|
(385)
|
|
|
615
|
|
Other investing
activities - net
|
45
|
|
|
34
|
|
Cash used for
investing activities
|
(1,514)
|
|
|
(1,828)
|
|
Financing
activities
|
|
|
|
Dividends paid to
stockholders
|
(1,335)
|
|
|
(1,546)
|
|
Net (decrease)
increase in borrowings
|
(240)
|
|
|
2,141
|
|
Repurchase of common
stock
|
(916)
|
|
|
(2,353)
|
|
Proceeds from
exercise of stock options
|
181
|
|
|
274
|
|
Cash transferred to
Chemours at spin-off
|
—
|
|
|
(250)
|
|
Other financing
activities - net
|
(18)
|
|
|
(89)
|
|
Cash used for
financing activities
|
(2,328)
|
|
|
(1,823)
|
|
Effect of exchange
rate changes on cash
|
(153)
|
|
|
(275)
|
|
Decrease in cash
and cash equivalents
|
(695)
|
|
|
(1,610)
|
|
Cash and cash
equivalents at beginning of period
|
5,300
|
|
|
6,910
|
|
Cash and cash
equivalents at end of period
|
$
|
4,605
|
|
|
$
|
5,300
|
|
|
|
|
|
Reconciliation of
Non-GAAP Measure
|
|
|
|
Calculation of
Free Cash Flow - Total Company
|
|
|
|
|
Twelve Months
Ended December 31,
|
|
2016
|
|
2015
|
Cash provided by
operating activities (GAAP)
|
$
|
3,300
|
|
|
$
|
2,316
|
|
Purchases of
property, plant and equipment
|
(1,019)
|
|
|
(1,629)
|
|
Free cash flow
(Non-GAAP)
|
$
|
2,281
|
|
|
$
|
687
|
|
|
|
|
|
(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)
|
Fourth quarter 2016
and year to date 2016, non-operating pension/OPEB benefits /
(costs) include a $382 pre-tax curtailment gain ($254 after-tax or
$0.29 per share) related to the changes to the U.S. Pension Plan
and U.S. OPEB benefits announced in November 2016. Year to
date 2015, non-operating pension/OPEB costs includes a $23 exchange
loss on foreign pension balances.
|
(4)
|
Operating earnings
and operating earnings per share are defined as earnings from
continuing operations excluding significant items and non-operating
pension/OPEB costs. Non-operating pension/OPEB costs includes all
of the components of net periodic benefit cost from continuing
operations with the exception of the service cost
component.
|
E.I. du Pont de
Nemours and Company
Schedule of
Significant Items from Continuing Operations
(Dollars in
millions, except per share amounts)
|
|
SCHEDULE
B
|
|
|
|
|
|
|
|
|
|
|
SIGNIFICANT
ITEMS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
|
|
After-tax(8)
|
|
($ Per
Share)
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
1st
Quarter
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
costs(1)
|
$
|
(24)
|
|
|
$
|
(12)
|
|
|
$
|
(21)
|
|
|
$
|
(11)
|
|
|
$
|
(0.02)
|
|
|
$
|
(0.01)
|
|
Customer claims
adjustment/recovery(4)
|
23
|
|
|
35
|
|
|
15
|
|
|
22
|
|
|
0.02
|
|
|
0.02
|
|
Gain on sale of
entity(5)
|
369
|
|
|
—
|
|
|
214
|
|
|
—
|
|
|
0.24
|
|
|
—
|
|
Restructuring
charges, net(2)
|
(77)
|
|
|
—
|
|
|
(48)
|
|
|
—
|
|
|
(0.06)
|
|
|
—
|
|
Asset impairment
charge(3)
|
—
|
|
|
(37)
|
|
|
—
|
|
|
(30)
|
|
|
—
|
|
|
(0.03)
|
|
Ukraine
devaluation(6)
|
—
|
|
|
(40)
|
|
|
—
|
|
|
(38)
|
|
|
—
|
|
|
(0.04)
|
|
1st Quarter -
Total
|
$
|
291
|
|
|
$
|
(54)
|
|
|
$
|
160
|
|
|
$
|
(57)
|
|
|
$
|
0.18
|
|
|
$
|
(0.06)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd
Quarter
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
costs(1)
|
$
|
(76)
|
|
|
$
|
(25)
|
|
|
$
|
(59)
|
|
|
$
|
(38)
|
|
|
$
|
(0.07)
|
|
|
$
|
(0.04)
|
|
Customer claims
recovery(4)
|
30
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
Restructuring
adjustments / charges(2)
|
90
|
|
|
(2)
|
|
|
59
|
|
|
(2)
|
|
|
0.07
|
|
|
—
|
|
Litigation
settlement(7)
|
—
|
|
|
112
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
0.08
|
|
2nd Quarter -
Total
|
$
|
44
|
|
|
$
|
85
|
|
|
$
|
19
|
|
|
$
|
32
|
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3rd
Quarter
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
costs(1)
|
$
|
(122)
|
|
|
$
|
(9)
|
|
|
$
|
(91)
|
|
|
$
|
(6)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.01)
|
|
Restructuring
charges, net(2)
|
(17)
|
|
|
—
|
|
|
(14)
|
|
|
—
|
|
|
(0.02)
|
|
|
—
|
|
Asset impairment
charge(3)
|
(158)
|
|
|
—
|
|
|
(111)
|
|
|
—
|
|
|
(0.13)
|
|
|
—
|
|
Customer claims
adjustment/recovery(4)
|
—
|
|
|
147
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
0.11
|
|
3rd Quarter -
Total
|
$
|
(297)
|
|
|
$
|
138
|
|
|
$
|
(216)
|
|
|
$
|
88
|
|
|
$
|
(0.25)
|
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4th
Quarter
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
costs(1)
|
$
|
(164)
|
|
|
$
|
(10)
|
|
|
$
|
(131)
|
|
|
$
|
(7)
|
|
|
$
|
(0.15)
|
|
|
$
|
(0.01)
|
|
Restructuring
adjustments / charges(2)
|
42
|
|
|
(775)
|
|
|
25
|
|
|
(508)
|
|
|
0.03
|
|
|
(0.58)
|
|
Asset impairment
charge(3)
|
(435)
|
|
|
—
|
|
|
(278)
|
|
|
—
|
|
|
(0.32)
|
|
|
—
|
|
Litigation settlement
(7)
|
—
|
|
|
33
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
0.02
|
|
Customer claims
adjustment/recovery (4)
|
—
|
|
|
130
|
|
|
—
|
|
|
83
|
|
|
—
|
|
|
0.10
|
|
4th Quarter -
Total
|
$
|
(557)
|
|
|
$
|
(622)
|
|
|
$
|
(384)
|
|
|
$
|
(411)
|
|
|
$
|
(0.44)
|
|
|
$
|
(0.47)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-date Total
(9)
|
$
|
(519)
|
|
|
$
|
(453)
|
|
|
$
|
(421)
|
|
|
$
|
(348)
|
|
|
$
|
(0.48)
|
|
|
$
|
(0.39)
|
|
E.I. du Pont de
Nemours and Company
Schedule of
Significant Items from Continuing Operations
(Dollars in
millions, except per share amounts)
|
|
(1)
|
Fourth, third,
second, and first quarter 2016 included charges of $(164), $(122),
$(76), and $(24), respectively, and fourth quarter 2015 included
charges of ($10), recorded in selling, general and administrative
expenses related to costs associated with the planned merger with
The Dow Chemical Company and related activities. For fourth
quarter 2016 and full year 2016, the effective tax rate for the
total of pre-tax charges was 32.2% and 27.0%, respectively. A
significant portion of the transaction costs are in the US;
however, those costs are not always tax-deductible. In addition,
the Company incurred $(20) in the fourth quarter 2016 of other tax
costs related to the planned merger and related
activities.
|
|
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.
|
|
|
(2)
|
Fourth, third, second
and first quarter 2016 included benefits / (charges) of $14, $(17),
$90 and $(2), respectively, associated with the 2016 Global Cost
Savings and Restructuring Program. The fourth and
second quarter benefits were primarily due to the reduction in
severance and related benefit costs due to the elimination of
positions at a lower cost than expected. The charges in the
third and first quarters were primarily due to identification of
additional asset-related charges with the first quarter charge
being offset by reduction in severance and related benefit
costs. The third quarter charge consisted of $(14) recorded
in employee separation/asset related charges, net and $(3) recorded
to other income, net. The fourth, second and first quarter
benefits / (charges) were recorded in employee separation/asset
related charges, net.
|
|
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.
|
|
Fourth quarter 2016
included a benefit of $7 for reductions to the first quarter 2016
charge for La Porte site contract termination costs within the
Agriculture segment. The first quarter 2016 included a
$(75) restructuring charge related to the decision to not re-start
the segment's insecticide manufacturing facility at the La Porte
site located in La Porte, Texas. The first quarter charge included
$(41) of asset related charges, $(18) of contract termination
costs, and $(16) of employee severance and related benefit
costs. The fourth quarter 2016 benefit and first quarter 2016
charge were recorded in employee separation/asset related charges,
net.
|
|
Fourth quarter 2016
and fourth quarter 2015 included benefits of $21 and $23 for
reductions to the previously recognized severance costs related to
the 2014 restructuring program. Second quarter 2015 included
a $(2) net restructuring charge 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 activity in 2016
and 2015 related to the 2014 restructuring program was recorded in
employee separation/asset related charges, net.
|
|
|
(3)
|
During the fourth
quarter 2016, a $(435) pre-tax impairment charge was recorded in
employee separation / asset related charges, net related to the
write-down of the company's uncompleted enterprise resource
planning (ERP) system which the company had elected to defer
further testing and deployment in fourth quarter 2015.
The company intends to complete the ERP project, however, given the
uncertainties related to timing as well as potential
developments and changes to technologies in the market place at the
time of restart, it can no longer be considered
probable.
|
|
During third quarter
2016, a $(158) pre-tax impairment charge was recorded in employee
separation / asset related charges, net related to the write-down
of indefinite lived intangible assets within the Industrial
Biosciences segment. The third quarter charge was the result
of realignment of brand marketing strategies and a determination to
phase out the use of certain acquired trade names.
|
|
During first quarter
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.
|
|
|
(4)
|
In the second quarter
2016, third quarter 2015 and first quarter 2015, the company
recorded insurance recoveries of $30, $147 and $35, respectively,
in other operating charges for recovery of costs for customer
claims related to the use of the Agriculture's segment
Imprelis® herbicide. First quarter 2016 and fourth
quarter 2015 included benefits of $23 and $130, respectively, in
other operating charges for reductions in the accrual for customer
claims related to the use of the Imprelis® herbicide.
|
|
|
(5)
|
First quarter 2016
included a gain of $369 recorded in other income, net associated
with the sale of the DuPont (Shenzhen) Manufacturing Limited
entity, which held certain buildings and other assets. The
gain is reflected as a Corporate item.
|
|
|
(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)
|
Fourth 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 Protection Solutions segment.
|
|
|
(8)
|
Unless specifically
addressed in notes above, the income tax effect on significant
items is calculated based upon the enacted tax laws and statutory
income tax rates applicable in the tax jurisdiction(s) of the
underlying non-GAAP adjustment.
|
|
|
(9)
|
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
(1)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Agriculture
|
|
$
|
1,393
|
|
|
$
|
1,550
|
|
|
$
|
9,516
|
|
|
$
|
9,798
|
|
Electronics &
Communications
|
|
521
|
|
|
493
|
|
|
1,960
|
|
|
2,070
|
|
Industrial
Biosciences
|
|
401
|
|
|
397
|
|
|
1,500
|
|
|
1,478
|
|
Nutrition &
Health
|
|
809
|
|
|
807
|
|
|
3,268
|
|
|
3,256
|
|
Performance
Materials
|
|
1,331
|
|
|
1,284
|
|
|
5,249
|
|
|
5,305
|
|
Protection
Solutions
|
|
717
|
|
|
720
|
|
|
2,954
|
|
|
3,039
|
|
Other
|
|
39
|
|
|
48
|
|
|
147
|
|
|
184
|
|
Consolidated net
sales
|
|
$
|
5,211
|
|
|
$
|
5,299
|
|
|
$
|
24,594
|
|
|
$
|
25,130
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
SEGMENT OPERATING
EARNINGS (1)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Agriculture
|
|
$
|
(19)
|
|
|
$
|
(54)
|
|
|
$
|
1,758
|
|
|
$
|
1,646
|
|
Electronics &
Communications
|
|
98
|
|
|
87
|
|
|
358
|
|
|
359
|
|
Industrial
Biosciences
|
|
67
|
|
|
78
|
|
|
270
|
|
|
243
|
|
Nutrition &
Health
|
|
135
|
|
|
85
|
|
|
504
|
|
|
373
|
|
Performance
Materials
|
|
328
|
|
|
281
|
|
|
1,297
|
|
|
1,216
|
|
Protection
Solutions
|
|
142
|
|
|
147
|
|
|
668
|
|
|
641
|
|
Other
|
|
(48)
|
|
|
(71)
|
|
|
(215)
|
|
|
(235)
|
|
Total segment
operating earnings
|
|
703
|
|
|
553
|
|
|
4,640
|
|
|
4,243
|
|
Corporate
expenses
|
|
(88)
|
|
|
(160)
|
|
|
(340)
|
|
|
(573)
|
|
Interest
expense
|
|
(92)
|
|
|
(82)
|
|
|
(370)
|
|
|
(322)
|
|
Operating earnings
before income taxes and exchange gains (losses)
|
|
523
|
|
|
311
|
|
|
3,930
|
|
|
3,348
|
|
Net exchange gains
(losses)(2)
|
|
106
|
|
|
(24)
|
|
|
(106)
|
|
|
93
|
|
Operating earnings
before income taxes (Non-GAAP)
|
|
$
|
629
|
|
|
$
|
287
|
|
|
$
|
3,824
|
|
|
$
|
3,441
|
|
Non-operating
pension/OPEB benefits (costs) (3)
|
|
281
|
|
|
(86)
|
|
|
(40)
|
|
|
(397)
|
|
Total significant
items before income taxes
|
|
(557)
|
|
|
(622)
|
|
|
(519)
|
|
|
(453)
|
|
Income (loss) from
continuing operations before income taxes (GAAP)
|
|
$
|
353
|
|
|
$
|
(421)
|
|
|
$
|
3,265
|
|
|
$
|
2,591
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
SIGNIFICANT ITEMS BY
SEGMENT (PRE-TAX) (1)(4)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Agriculture
|
|
$
|
14
|
|
|
$
|
(30)
|
|
|
$
|
(37)
|
|
|
$
|
148
|
|
Electronics &
Communications
|
|
(9)
|
|
|
(89)
|
|
|
4
|
|
|
(78)
|
|
Industrial
Biosciences
|
|
2
|
|
|
(60)
|
|
|
(152)
|
|
|
(61)
|
|
Nutrition &
Health
|
|
(3)
|
|
|
(46)
|
|
|
9
|
|
|
(50)
|
|
Performance
Materials
|
|
(2)
|
|
|
(60)
|
|
|
5
|
|
|
(62)
|
|
Protection
Solutions
|
|
4
|
|
|
(8)
|
|
|
14
|
|
|
105
|
|
Other
|
|
(8)
|
|
|
—
|
|
|
(11)
|
|
|
(40)
|
|
Total significant
items by segment
|
|
(2)
|
|
|
(293)
|
|
|
(168)
|
|
|
(38)
|
|
Corporate
expenses
|
|
(555)
|
|
|
(329)
|
|
|
(351)
|
|
|
(355)
|
|
Interest
expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20)
|
|
Net exchange gains
(losses)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40)
|
|
Total significant
items before income taxes
|
|
$
|
(557)
|
|
|
$
|
(622)
|
|
|
$
|
(519)
|
|
|
$
|
(453)
|
|
E.I. du Pont de
Nemours and Company
Consolidated Segment
Information
(Dollars in
millions)
|
|
SCHEDULE C
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
Expenses
|
|
|
|
|
|
|
|
|
The reconciliation
below reflects GAAP corporate expenses excluding significant
items.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December
31,
|
|
Twelve Months
Ended
December
31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Corporate expenses
(GAAP)
|
|
$
|
643
|
|
|
$
|
489
|
|
|
$
|
691
|
|
|
$
|
928
|
|
Less:
Significant items charge (4)
|
|
555
|
|
|
329
|
|
|
351
|
|
|
355
|
|
Corporate expenses
(Non-GAAP)
|
|
$
|
88
|
|
|
$
|
160
|
|
|
$
|
340
|
|
|
$
|
573
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Segment operating
earnings is defined as income (loss) from continuing operations
before income taxes excluding significant pre-tax benefits
(charges), non-operating pension/OPEB costs, exchange gains
(losses), corporate expenses and interest. DuPont Sustainable
Solutions, previously within the company's former Safety &
Protection segment (now Protection Solutions) was comprised of two
business units: Clean Technologies (CleanTech) and Consulting
Solutions. Effective January 1, 2016, the CleanTech business
is reported in the Industrial Biosciences segment and the
Consulting Solutions business unit is reported within Other.
Reclassifications of prior year data have been made to conform to
current year classifications.
|
(2)
|
See Schedule D for
additional information on exchange gains and losses. Year to
date 2015 exchange gains, on an operating earnings basis
(Non-GAAP), excludes the impact of a $23 exchange loss on
non-operating pension.
|
(3)
|
Fourth quarter 2016
and year to date 2016, non-operating pension/OPEB benefits (costs)
include a $382 pre-tax curtailment gain ($254 after-tax or $0.29
per share) related to the changes to the U.S. Pension Plan and U.S.
OPEB benefits announced in November 2016. Year to date 2015,
non-operating pension/OPEB costs includes a $23 exchange loss on
foreign pension balances.
|
(4)
|
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,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Income (loss) from
continuing operations after income taxes (GAAP)
|
|
$
|
252
|
|
|
$
|
(231)
|
|
|
$
|
2,521
|
|
|
$
|
1,895
|
|
Add: Provision for
(benefit from) for income taxes on continuing operations
|
|
101
|
|
|
(190)
|
|
|
744
|
|
|
696
|
|
Income (loss) from
continuing operations before income taxes
|
|
$
|
353
|
|
|
$
|
(421)
|
|
|
$
|
3,265
|
|
|
$
|
2,591
|
|
Add: Significant
items charge before income taxes(1)
|
|
557
|
|
|
622
|
|
|
519
|
|
|
453
|
|
Add: Non-operating
pension/OPEB (benefits) costs (2)
|
|
(281)
|
|
|
86
|
|
|
40
|
|
|
397
|
|
Operating earnings
before income taxes (Non-GAAP)
|
|
$
|
629
|
|
|
$
|
287
|
|
|
$
|
3,824
|
|
|
$
|
3,441
|
|
Less: Net (loss)
income attributable to noncontrolling interests from continuing
operations
|
|
(2)
|
|
|
(3)
|
|
|
12
|
|
|
6
|
|
Add: Interest
expense (1)
|
|
|
92
|
|
|
82
|
|
|
370
|
|
|
322
|
|
Adjusted EBIT from
operating earnings (Non-GAAP)
|
|
723
|
|
|
372
|
|
|
4,182
|
|
|
3,757
|
|
Add: Depreciation and
amortization
|
|
279
|
|
|
303
|
|
|
1,258
|
|
|
1,338
|
|
Adjusted EBITDA from
operating earnings (Non-GAAP)
|
|
$
|
1,002
|
|
|
$
|
675
|
|
|
$
|
5,440
|
|
|
$
|
5,095
|
|
Reconciliation of
Operating Costs to Consolidated Income Statement Line
Items
|
GAAP operating costs
is defined as other operating charges, selling, general and
administrative expenses, and research and development expense. The
reconciliation below reflects operating costs excluding significant
items and non-operating pension/OPEB (benefits) costs.
|
|
|
|
|
|
Three Months Ended
December 31, 2016
|
|
Three Months Ended
December 31, 2015
|
|
As
Reported
(GAAP)
|
Less:
Significant
Items (1)
|
Less: Non-
Operating
Pension/
OPEB
Benefits
|
(Non-GAAP)
|
|
As
Reported
(GAAP)
|
Less:
Significant
Items (1)
|
Less: Non-
Operating
Pension/
OPEB Costs
|
(Non-GAAP)
|
Other operating
charges
|
$
|
182
|
|
$
|
—
|
|
$
|
—
|
|
$
|
182
|
|
|
$
|
46
|
|
$
|
(130)
|
|
$
|
—
|
|
$
|
176
|
|
Selling, general and
administrative
expenses
|
964
|
|
164
|
|
(112)
|
|
912
|
|
|
1,075
|
|
10
|
|
35
|
|
1,030
|
|
Research and
development expense
|
381
|
|
—
|
|
(42)
|
|
423
|
|
|
483
|
|
—
|
|
13
|
|
470
|
|
Total
|
$
|
1,527
|
|
$
|
164
|
|
$
|
(154)
|
|
$
|
1,517
|
|
|
$
|
1,604
|
|
$
|
(120)
|
|
$
|
48
|
|
$
|
1,676
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended December 31, 2016
|
|
Twelve Months
Ended December 31, 2015
|
|
As
Reported
(GAAP)
|
Less:
Significant
Items (1)
|
Less: Non-
Operating
Pension/
OPEB
Costs
|
(Non-GAAP)
|
|
As
Reported
(GAAP)
|
Less:
Significant
Items (1)
|
Less: Non-
Operating
Pension/
OPEB Costs
|
(Non-GAAP)
|
Other operating
charges
|
$
|
686
|
|
$
|
(53)
|
|
$
|
—
|
|
$
|
739
|
|
|
$
|
459
|
|
$
|
(286)
|
|
$
|
—
|
|
$
|
745
|
|
Selling, general and
administrative
expenses
|
4,319
|
|
386
|
|
16
|
|
3,917
|
|
|
4,615
|
|
10
|
|
150
|
|
4,455
|
|
Research and
development expense
|
1,641
|
|
—
|
|
6
|
|
1,635
|
|
|
1,898
|
|
—
|
|
56
|
|
1,842
|
|
Total
|
$
|
6,646
|
|
$
|
333
|
|
$
|
22
|
|
$
|
6,291
|
|
|
$
|
6,972
|
|
$
|
(276)
|
|
$
|
206
|
|
$
|
7,042
|
|
E.I. du Pont de
Nemours and Company
Reconciliation of
Non-GAAP Measures
(Dollars in
millions, except per share amounts)
|
|
SCHEDULE D
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Operating Earnings Per Share (EPS) Outlook
|
The reconciliation
below represents the company's outlook on an operating earnings
basis, defined as earnings excluding significant items and
non-operating pension/OPEB costs.
|
|
|
|
|
|
|
|
|
|
Quarter ended
March 31,
|
|
|
|
2017
Outlook
|
|
2016
Actual
|
EPS from continuing
operations (GAAP)
|
|
|
$
|
1.14
|
|
|
$
|
1.39
|
|
|
|
|
|
|
|
Significant items
(1), (3)
|
|
|
|
|
|
Transaction costs
(3)
|
|
|
(0.15)
|
|
|
(0.02)
|
|
Gain on sale of
entity
|
|
|
—
|
|
|
0.24
|
|
Restructuring
charges, net
|
|
|
—
|
|
|
(0.06)
|
|
Customer claims
adjustment
|
|
|
—
|
|
|
0.02
|
|
|
|
|
|
|
|
Non-operating
pension/OPEB costs - estimate
|
|
|
(0.07)
|
|
|
(0.05)
|
|
|
|
|
|
|
|
Operating EPS
(Non-GAAP)
|
|
|
$
|
1.36
|
|
|
$
|
1.26
|
|
Exchange
Gains/Losses on Operating Earnings (1)
|
|
|
|
|
|
|
|
|
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 loss, 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,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Subsidiary
Monetary Position Gain (Loss)
|
|
|
|
|
|
|
|
|
Pre-tax exchange
gains (losses)
|
|
$
|
13
|
|
|
$
|
(23)
|
|
|
$
|
198
|
|
|
$
|
(320)
|
|
Local tax (expenses)
benefits
|
|
(97)
|
|
|
(44)
|
|
|
(126)
|
|
|
(70)
|
|
Net after-tax impact
from subsidiary exchange (losses) gains
|
|
$
|
(84)
|
|
|
$
|
(67)
|
|
|
$
|
72
|
|
|
$
|
(390)
|
|
|
|
|
|
|
|
|
|
|
Hedging Program
Gain (Loss)
|
|
|
|
|
|
|
|
|
Pre-tax exchange
gains (losses)
|
|
$
|
93
|
|
|
$
|
(1)
|
|
|
$
|
(304)
|
|
|
$
|
413
|
|
Tax (expenses)
benefits
|
|
(33)
|
|
|
—
|
|
|
110
|
|
|
(150)
|
|
Net after-tax impact
from hedging program exchange gains (losses)
|
|
$
|
60
|
|
|
$
|
(1)
|
|
|
$
|
(194)
|
|
|
$
|
263
|
|
|
|
|
|
|
|
|
|
|
Total Exchange
Gain (Loss)
|
|
|
|
|
|
|
|
|
Pre-tax exchange
gains (losses) (4)
|
|
$
|
106
|
|
|
$
|
(24)
|
|
|
$
|
(106)
|
|
|
$
|
93
|
|
Tax (expenses)
benefits
|
|
(130)
|
|
|
(44)
|
|
|
(16)
|
|
|
(220)
|
|
Net after-tax
exchange losses
|
|
$
|
(24)
|
|
|
$
|
(68)
|
|
|
$
|
(122)
|
|
|
$
|
(127)
|
|
|
|
|
|
|
|
|
|
|
As shown above, the
"Total Exchange Gain (Loss)" is the sum of the "Subsidiary Monetary
Position Gain (Loss)" and the "Hedging Program Gain
(Loss)."
|
|
|
|
|
|
|
|
|
|
E.I. du Pont de
Nemours and Company
Reconciliation of
Non-GAAP Measures
(Dollars in
millions, except per share amounts)
|
|
SCHEDULE D
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Income (loss) from
continuing operations before income taxes (GAAP)
|
|
$
|
353
|
|
|
$
|
(421)
|
|
|
$
|
3,265
|
|
|
$
|
2,591
|
|
Add:
Significant items - charge (2)
|
|
557
|
|
|
622
|
|
|
519
|
|
|
453
|
|
Non-operating pension/OPEB (benefits) costs
(1)
|
|
(281)
|
|
|
86
|
|
|
40
|
|
|
397
|
|
Less: Net
exchange gains (losses) (4)
|
|
106
|
|
|
(24)
|
|
|
(106)
|
|
|
93
|
|
Income from
continuing operations before income taxes, significant
items,
exchange gains (losses), and non-operating pension/OPEB costs
(Non-GAAP)
|
$
|
523
|
|
|
$
|
311
|
|
|
$
|
3,930
|
|
|
$
|
3,348
|
|
|
|
|
|
|
|
|
|
|
Provision for
(benefit from) income taxes on continuing operations
(GAAP)
|
|
$
|
101
|
|
|
$
|
(190)
|
|
|
$
|
744
|
|
|
$
|
696
|
|
Add: Tax
benefits on significant items
|
|
173
|
|
|
211
|
|
|
98
|
|
|
105
|
|
Tax (expenses) benefits on non-operating pension/OPEB
benefits/costs
|
|
(94)
|
|
|
30
|
|
|
19
|
|
|
131
|
|
Tax expenses on exchange gains/losses
|
|
(130)
|
|
|
(44)
|
|
|
(16)
|
|
|
(220)
|
|
Provision for income
taxes on continuing earnings, excluding exchange gains
(losses) (Non-GAAP)
|
$
|
50
|
|
|
$
|
7
|
|
|
$
|
845
|
|
|
$
|
712
|
|
|
|
|
|
|
|
|
|
|
Effective income tax
rate (GAAP)
|
|
28.6
|
%
|
|
45.1
|
%
|
|
22.8
|
%
|
|
26.9
|
%
|
Significant items and
non-operating pension/OPEB costs effect
|
|
—
|
%
|
|
(27.3)
|
%
|
|
(0.3)
|
%
|
|
0.2
|
%
|
Tax rate, from
continuing operations before significant items and
non-operating
pension/OPEB benefits/costs
|
28.6
|
%
|
|
17.8
|
%
|
|
22.5
|
%
|
|
27.1
|
%
|
Exchange gains
(losses) effect
|
|
(19.0)
|
%
|
|
(15.5)
|
%
|
|
(1.0)
|
%
|
|
(5.8)
|
%
|
Base income tax rate
from continuing operations (Non-GAAP)
|
|
9.6
|
%
|
|
2.3
|
%
|
|
21.5
|
%
|
|
21.3
|
%
|
|
|
|
|
|
|
|
|
|
(1)
|
See Schedule B for
detail of significant items.
|
(2)
|
Fourth quarter 2016
and year to date 2016, non-operating pension/OPEB (benefits) costs
include a $(382) pre-tax curtailment gain ($(254) after-tax or
$(0.29) per share) related to the changes to the U.S. Pension Plan
and U.S. OPEB benefits announced in November 2016.Year to date
December 31, 2015, non-operating pension/OPEB costs includes a $23
exchange loss on foreign pension balances.
|
(3)
|
The 2017 first
quarter outlook for significant items includes the current estimate
for first quarter transaction costs associated with the planned
merger with The Dow Chemical Company and related activities.
It does not include expected gain related to the sale of the
company's Nutrition & Health food safety diagnostics business
which is expected to close during the first half of 2017 pending
customary closing conditions.
|
(4)
|
Year to date December
31, 2015 exchange gains (losses), on an operating earnings basis
(Non-GAAP), excludes a $23 exchange loss on non-
operating pension.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/dupont-reports-fourth-quarter-and-full-year-results-300395253.html
SOURCE DuPont