DuPont Reports Q2 Operating Earnings Per Share of $1.17; Reaffirms Updated Full-Year Outlook

Three Months Ended June 30, 2014

Percentage Change Due to:

(Dollars in millions)

%
Change

Local  Price

Currency Effect

Volume

Portfolio/ Other

U.S. & Canada

$    4,603

(3)

-

(1)

-

(2)

EMEA*

2,119

2

(1)

4

(1)

-

Asia Pacific

2,089

-

(2)

(2)

5

(1)

Latin America

895

(4)

1

(2)

(2)

(1)

Total Consolidated Sales

$    9,706

(1)

-

-

-

(1)

* Europe, Middle East & Africa

SEGMENT SALES

Three Months Ended

Percentage Change 

(Dollars in millions)

June 30, 2014

Due to:

USD
Price

Volume

Portfolio/
Other

Agriculture

$      3,615

-

1

(1)

-

Electronics & Communications 

617

(6)

(10)

4

-

Industrial Biosciences

317

4

2

2

-

Nutrition & Health

926

7

1

6

-

Performance Chemicals

1,696

(8)

(4)

-

(4)

Performance Materials

1,582

(2)

1

(1)

(2)

Safety & Protection

1,029

1

-

1

-

Other

1

Total segment sales

9,783

Elimination of transfers

(77)

Consolidated net sales

 Change vs. 2013 

(Dollars in millions)

2Q14

2Q13

$

%

Agriculture 

$      836

$     941

$  (105)

-11%

Electronics & Communications

89

95

(6)

-6%

Industrial Biosciences

59

43

16

37%

Nutrition & Health

105

61

44

72%

Performance Chemicals ⁽¹⁾

251

268

(17)

-6%

Performance Materials ⁽¹⁾

303

332

(29)

-9%

Safety & Protection

209

172

37

22%

Other

(82)

(55)

(27)

-49%

Total segment operating earnings ⁽²⁾

1,770

1,857

(87)

-5%

Exchange gains & losses ⁽³⁾

(51)

35

(86)

nm

Corporate expenses

(186)

(195)

9

5%

Interest expense

(94)

(115)

21

18%

Operating earnings before income taxes 

1,439

1,582

(143)

-9%

Provision for income taxes on operating earnings       

(350)

(389)

39

nm

Net income attributable to noncontrolling interests

(4)

(4)

-

Operating earnings  

$  1,085

$  1,189

$  (104)

-9%

Operating earnings per share

$     1.17

$    1.28

$ (0.11)

-9%

(1)  Prior period reflects the reclassifications of the Viton^®product line from Performance Materials to Performance Chemicals.

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

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

E.I. du Pont de Nemours and Company

Consolidated Income Statements

(Dollars in millions, except per share amounts)

SCHEDULE A

Three Months Ended

June 30,

Six Months Ended

June 30,

2014

2013

2014

2013

Net sales

$

9,706

$

9,844

$

19,834

$

20,252

Other income, net ^(a)

408

159

425

251

Total

10,114

10,003

20,259

20,503

Cost of goods sold

5,999

6,056

11,999

12,249

Other operating charges ^(a)

825

942

1,622

1,854

Selling, general and administrative expenses

948

983

1,873

1,966

Research and development expense

545

542

1,063

1,063

Interest expense

94

115

197

232

Employee separation and asset related charges ^(a)

263

—

263

—

Total

8,674

8,638

17,017

17,364

Income from continuing operations before income taxes

1,440

1,365

3,242

3,139

Provision for income taxes on continuing operations ^(a)

366

335

723

722

Income from continuing operations after income taxes

1,074

1,030

2,519

2,417

Income from discontinued operations after taxes

—

4

—

1,972

Net income

1,074

1,034

2,519

4,389

Less:  Net income attributable to noncontrolling interests

4

4

10

11

Net income attributable to DuPont

$

1,070

$

1,030

$

2,509

$

4,378

Basic earnings per share of common stock ^(b):

Basic earnings per share of common stock from continuing operations

$

1.16

$

1.11

$

2.72

$

2.59

Basic earnings per share of common stock from discontinued operations

—

—

—

2.13

Basic earnings per share of common stock

$

1.16

$

1.11

$

2.72

$

4.73

Diluted earnings per share of common stock ^(b):

Diluted earnings per share of common stock from continuing operations

$

1.15

$

1.10

$

2.70

$

2.58

Diluted earnings per share of common stock from discontinued operations

—

—

—

2.12

Diluted earnings per share of common stock

$

1.15

$

1.11

$

2.70

$

4.69

Dividends per share of common stock

$

0.45

$

0.45

$

0.90

$

0.88

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

  Basic

918,684,000

922,684,000

921,058,000

925,500,000

  Diluted

925,587,000

929,480,000

928,145,000

932,311,000

^(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

June 30,

Six Months Ended

June 30,

2014

2013

2014

2013

%

Change

Income from continuing operations after income taxes (GAAP)

$

1,074

$

1,030

4 %

$

2,519

$

2,417

4 %

Less: Significant items benefit (charge) included in income from continuing

       operations after income taxes (per Schedule B)

8

(78)

(4)

(58)

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

    operations after income taxes

(23)

(85)

(44)

(184)

Net income attributable to noncontrolling interest

4

4

10

11

Operating earnings

$

1,085

$

1,189

(9)%

$

2,557

$

2,648

(3)%

EPS from continuing operations (GAAP)

$

1.15

$

1.10

5 %

$

2.70

$

2.58

5 %

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

0.01

(0.08)

—

(0.06)

Non-operating pension/OPEB costs included in EPS

(0.03)

(0.10)

(0.05)

(0.20)

Operating EPS

$

1.17

$

1.28

(9)%

$

2.75

$

2.84

(3)%

E.I. du Pont de Nemours and Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share amounts)

Schedule A (continued)

June 30,

2014

December 31,

2013

Assets

Current assets

Cash and cash equivalents

$

4,174

$

8,941

Marketable securities

173

145

Accounts and notes receivable, net

8,896

6,047

Inventories

6,940

8,042

Prepaid expenses

252

206

Deferred income taxes

894

775

Assets held for sale

—

228

Total current assets

21,329

24,384

Property, plant and equipment, net of accumulated depreciation

   (June 30, 2014- $19,961; December 31, 2013 - $19,438)

13,035

12,993

Goodwill

4,686

4,713

Other intangible assets

4,885

5,096

Investment in affiliates

982

1,011

Deferred income taxes

2,420

2,353

Other assets

977

949

Total

$

48,314

$

51,499

Liabilities and Equity

Current liabilities

Accounts payable

$

3,542

$

5,180

Short-term borrowings and capital lease obligations

2,506

1,721

Income taxes

763

247

Other accrued liabilities

4,228

6,219

Total current liabilities

11,039

13,367

Long-term borrowings and capital lease obligations

9,292

10,741

Other liabilities

9,931

10,179

Deferred income taxes

924

926

Total liabilities

31,186

35,213

Commitments and contingent liabilities

—

—

Stockholders' equity

Preferred stock

237

237

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

   Issued at June 30, 2014 - 1,003,546,000; December 31, 2013 - 1,014,027,000)

301

304

Additional paid-in capital

11,168

11,072

Reinvested earnings

17,572

16,784

Accumulated other comprehensive loss

(5,453)

(5,441)

Common stock held in treasury, at cost (87,584,000 shares at June 30, 2014 and 87,041,000 shares at December 31, 2013)

(6,762)

(6,727)

Total DuPont stockholders' equity

17,063

16,229

Noncontrolling interests

65

57

Total equity

17,128

16,286

Total

$

48,314

$

51,499

E.I. du Pont de Nemours and Company

Condensed Consolidated Statement of Cash Flows

(Dollars in millions)

SCHEDULE A (continued)

Six Months Ended

June 30,

2014

2013

Total Company

Net income

$

2,519

$

4,389

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

Depreciation

635

644

Amortization

245

193

Other operating charges and credits - net

631

185

Gain on sale of business

(398)

(2,682)

Contributions to pension plans

(168)

(176)

Change in operating assets and liabilities - net

(5,535)

(5,184)

Cash used for operating activities

(2,071)

(2,631)

Investing activities

Purchases of property, plant and equipment

(781)

(757)

Investments in affiliates

(23)

(31)

Proceeds from sale of business - net

639

4,815

Proceeds from sales of assets - net

10

88

Net increase in short-term financial instruments

(22)

(99)

Forward exchange contract settlements

(63)

58

Other investing activities - net

8

8

Cash (used for) provided by investing activities

(232)

4,082

Financing activities

Dividends paid to stockholders

(836)

(823)

Net (decrease) increase in borrowings

(631)

2,369

Repurchase of common stock

(1,061)

(1,000)

Proceeds from exercise of stock options

214

384

Other financing activities - net

(76)

74

Cash (used for) provided by financing activities

(2,390)

1,004

Effect of exchange rate changes on cash

(74)

(149)

(Decrease) increase in cash and cash equivalents

(4,767)

2,306

Cash and cash equivalents at beginning of period

8,941

4,379

Cash and cash equivalents at end of period

$

4,174

$

6,685

Reconciliation of Non-GAAP Measure

Calculation of Free Cash Flow - Total Company

Six Months Ended

June 30,

2014

2013

Cash used for operating activities

$

(2,071)

$

(2,631)

Purchases of property, plant and equipment

(781)

(757)

Free cash flow

$

(2,852)

$

(3,388)

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)

2014

2013

2014

2013

2014

2013

1st Quarter

Separation transaction costs ^(a)

$

(16)

$

—

$

(12)

$

—

$

(0.01)

$

—

Customer claims charge ^(e)

—

(35)

—

(22)

—

(0.02)

Income tax items ^(f)

—

—

—

42

—

0.04

1st Quarter - Total

$

(16)

$

(35)

$

(12)

$

20

$

(0.01)

$

0.02

2nd Quarter

Separation transaction costs ^(a)

$

(35)

$

—

$

(26)

$

—

$

(0.03)

$

—

Gain on sale of business ^(b)

391

—

273

—

0.30

—

Restructuring charge ^(c)

(263)

—

(182)

—

(0.20)

—

Venezuela devaluation ^(d)

(58)

—

(57)

—

(0.06)

—

Customer claims charge ^(e)

—

(80)

—

(51)

—

(0.05)

Income tax items ^(g)

—

(11)

—

(27)

—

(0.03)

2nd Quarter - Total

$

35

$

(91)

$

8

$

(78)

$

0.01

$

(0.08)

Year-to-date Total

$

19

$

(126)

$

(4)

$

(58)

$

—

$

(0.06)

(a)

Second and first quarter 2014 included a charge of $(35) and $(16), respectively, recorded in Other operating charges associated with transaction costs related to the separation of the Performance Chemicals segment.  For full-year 2014, costs associated with the separation are expected to be approximately $(170), $(0.13) per share.

(b)

Second quarter 2014 included a gain of $391 recorded in Other income, net associated with the sale of Glass Laminating Solutions/Vinyls in the Performance Materials segment.

(c)

Second quarter 2014 included a $(263) restructuring charge recorded in Employee separation/asset related charges, net, consisting of $(166) of severance and related benefit costs, $(94) of asset shut downs, and $(3) of other non-personnel charges as a result of the company's plan to reduce residual costs associated with the separation of the Performance Chemicals segment and to improve productivity across all businesses and functions.  Pre-tax charges by segment are: Agriculture - $(47), Electronics & Communications - $(68), Industrial Biosciences - $(2), Nutrition & Health - $(8), Performance Chemicals - $(19), Performance Materials - $(29), Safety & Protection - $(31), Other - $(2), and Corporate expenses - $(57).

(d)

Second quarter 2014 included a charge of $(58) recorded in Other income, net associated with remeasuring the company's Venezuelan net monetary assets from the official exchange rate to the SICAD II exchange system.

(e)

Second and first quarter 2013 included charges of $(80) and $(35), respectively, recorded in Other operating charges associated with resolving claims related to the use of the Imprelis® herbicide.  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. To date, the company has recognized and received $73 of insurance recoveries from its insurance carriers and continues to seek recovery although the timing and outcome remain uncertain.  The company had accruals of $364 related to these claims at June 30, 2014.  These charges relate to the Agriculture segment.

(f)

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.

(g)

Second quarter 2013 includes a charge of $(11) in Other income, net related to interest on a prior year tax position. Second quarter 2013 also includes a charge of $(49) associated with a change in accrual for a prior year tax position offset by a $33 benefit for an enacted tax law change.

E.I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

SCHEDULE C

Three Months Ended

June 30,

Six Months Ended

June 30,

SEGMENT SALES ⁽¹⁾

2014

2013

2014

2013

Agriculture

$

3,615

$

3,631

$

8,009

$

8,300

Electronics & Communications

617

653

1,197

1,269

Industrial Biosciences

317

304

618

593

Nutrition & Health

926

865

1,787

1,733

Performance Chemicals ⁽²⁾

1,696

1,837

3,287

3,480

Performance Materials ⁽²⁾

1,582

1,615

3,116

3,116

Safety & Protection

1,029

1,017

1,976

1,924

Other

1

3

2

4

Total Segment sales

9,783

9,925

19,992

20,419

Elimination of transfers

(77)

(81)

(158)

(167)

Consolidated net sales

$

9,706

$

9,844

$

19,834

$

20,252

⁽¹⁾  Sales for the reporting segments include transfers.

⁽²⁾  Prior periods reflect the reclassifications of the Viton^® product line from Performance Materials to Performance

     Chemicals.

E.I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

SCHEDULE C (continued)

Three Months Ended

June 30,

Six Months Ended

June 30,

INCOME FROM CONTINUING OPERATIONS (GAAP)

2014

2013

2014

2013

Agriculture

$

789

$

861

$

2,231

$

2,342

Electronics & Communications

21

95

96

144

Industrial Biosciences

57

43

113

84

Nutrition & Health

97

61

190

137

Performance Chemicals ⁽³⁾

232

268

438

524

Performance Materials ⁽³⁾

665

332

958

619

Safety & Protection

178

172

353

310

Other

(84)

(55)

(176)

(142)

Total Segment PTOI

1,955

1,777

4,203

4,018

Corporate expenses

(278)

(206)

(495)

(420)

Interest expense

(94)

(115)

(197)

(232)

Non-operating pension/OPEB costs

(34)

(126)

(64)

(273)

Net exchange (losses) gains ⁽¹⁾

(109)

35

(205)

46

Income before income taxes from continuing operations

$

1,440

$

1,365