SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) April 26, 2005
E. I. du Pont de Nemours and Company
(Exact Name of Registrant as Specified in Its Charter)
Delaware |
1-815 |
51-0014090 |
(State or Other Jurisdiction |
(Commission |
(I.R.S. Employer |
Of Incorporation) |
File Number) |
Identification No.) |
1007 Market Street
Wilmington, Delaware 19898
(Address of principal executive offices)
Registrant's telephone number, including area code: (302) 774-1000
1
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition
On April 26, 2005, the Registrant announced its consolidated financial results for the quarter ended March 31, 2005. A copy of the Registrant's earnings news release is furnished on Form 8-K. The information contained in Item 2.02 of this report on Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor incorporated by reference in any registration statement filed by the Registrant under the Securities Act of 1933, as amended.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
E. I. DU PONT DE NEMOURS AND COMPANY |
(Registrant) |
/s/ D. B. Smith |
D. B. Smith |
Vice President and Controller |
April 26, 2005
3
April 26, 2005 |
Contact: |
Clif Webb |
WILMINGTON, Del. |
302-774-4005 |
|
r-clifton.webb@usa.dupont.com |
DUPONT REAFFIRMS FULL-YEAR OUTLOOK
AND REPORTS FIRST QUARTER 2005 EARNINGS AT MID-POINT OF GUIDANCE
Highlights
"This was the fifth consecutive quarter that operating margins improved despite increased cost for energy and raw materials," said Charles O. Holliday, Jr., DuPont Chairman & Chief Executive Officer. "We continue to help our customers grow by putting our science to work, expanding in emerging markets and staying intensely focused on cost productivity."
Earnings Comparisons
1Q'05 |
1Q'04 |
|
Reported Net Income |
.96 |
.66 |
Special Items (see schedules A and B) |
- |
(.30) |
Earnings Before Special Items |
.96 |
.96 |
4
Global Consolidated Net Sales and Net Income
Consolidated net sales for the first quarter were $7.4 billion compared to $8.1 billion in the first quarter 2004. Net income for the first quarter was $967 million or $.96 per share. First quarter 2004 net income was $668 million or $.66 per share.
Earnings Per Share
The table below reconciles 2005 first quarter earnings per share to first quarter 2004 before special items, by major element:
Earnings Per Share (EPS) |
||||||
1st Quarter |
||||||
EPS before Special Items - 2004 |
$ .96 |
|||||
Variance versus 1st Qtr. 2004 from: |
||||||
Local Prices |
$ .24 |
|||||
Volume |
.03 |
|||||
Variable Costs |
(.19) |
|||||
Fixed Costs |
.00 |
|||||
Currency |
.04 |
|||||
Other Income |
.02 |
|||||
Textiles & Interiors (divested in 2004) |
(.13) |
|||||
All Other |
(.01) |
|||||
EPS before Special Items - 2005 |
$ .96 |
|||||
1st Quarter |
||||||
Reported EPS - 2004 |
$ .66 |
|||||
Reported EPS - 2005 |
$ .96 |
|||||
5
Business Segment Performance - Segment Sales
Three Months Ended |
Percentage Change Due to |
|||||||||
SEGMENT SALES* |
March 31 |
U.S. $ |
Portfolio |
|||||||
(Dollars in billions) |
$ |
% Change |
Price |
Volume |
Change** |
|||||
Agriculture & Nutrition |
$2.4 |
7% |
5 |
2 |
- |
|||||
Coatings & Color Technologies |
1.5 |
8 |
6 |
2 |
- |
|||||
Electronic & Communication |
||||||||||
Technologies |
0.8 |
5 |
7 |
(2) |
- |
|||||
Performance Materials |
1.8 |
18 |
11 |
(3) |
10 |
|||||
Safety & Protection |
1.3 |
18 |
8 |
10 |
- |
|||||
Total Core Segments |
$7.8 |
11% |
7 |
2 |
2 |
The following table shows core segment sales on a regional basis:
Three Months Ended |
Percentage Change Due to |
|||||||||||
SEGMENT SALES* |
March 31 |
Local |
Currency |
Portfolio |
||||||||
(Dollars in billions) |
$ |
% Change |
Price |
Effect |
Volume |
Change** |
||||||
U.S. |
$3.3 |
5% |
6 |
- |
(2) |
1 |
||||||
Europe |
2.5 |
12 |
2 |
6 |
2 |
2 |
||||||
Asia Pacific |
1.3 |
22 |
5 |
3 |
10 |
4 |
||||||
Canada & Latin America |
0.7 |
16 |
5 |
4 |
6 |
1 |
||||||
Total Core Segments |
$7.8 |
11% |
5 |
2 |
2 |
2 |
* |
Includes transfers and a pro rata share of equity affiliate sales. |
** |
Additional sales from the consolidation of DDE as a variable interest entity. |
6
Business Segment Performance - PTOI
Segment PTOI for the quarter was $1,608 million versus $1,033 million in the first quarter 2004. Excluding Textiles & Interiors and special items in the prior year, PTOI grew 14 percent. Segment PTOI and percentage changes versus first quarter 2004, both excluding and including prior-year special items, are shown below:
Three Months Ended March 31, 2005 |
||||||
% Change |
% Change |
|||||
vs. 2004 |
vs. 2004 |
|||||
PRETAX OPERATING INCOME |
(Dollars |
Excluding |
Including |
|||
(Excluding Textiles & Interiors) |
in millions) |
Special Items |
Special Items |
|||
Agriculture & Nutrition |
$ 757 |
20% |
20% |
|||
Coatings & Color Technologies |
166 |
(12) |
8 |
|||
Electronic & Communication Technologies |
105 |
14 |
14 |
|||
Performance Materials |
211 |
|
35 |
NM |
||
Pharmaceuticals |
159 |
7 |
7 |
|||
Safety & Protection |
231 |
0 |
0 |
|||
Other |
(21) |
NM |
NM |
|||
Total |
$1,608 |
14% |
31% |
7
Additional information on segment performance including reconciliation of segment non-GAAP measures to GAAP is shown on schedules C, D, and F. The company encourages review of these schedules, along with information available on the DuPont Investor Center at www.DuPont.com.
Outlook
"We are confident we will grow earnings and cash flow again this year even though raw material costs are now much higher than anyone expected," said Holliday. "That confidence comes from our growing stream of new products, our strong growth rates in emerging markets and our intense focus on productivity."
DuPont reaffirms its 2005 outlook for earnings per share of between $2.65 and $2.85, and its expectation that approximately 70 percent of full-year earnings will be realized in the first half.
The company now expects current market trends for energy-related costs to increase raw material costs significantly more than previously expected. All other key expectations underlying this outlook, described below, are unchanged from those in the company's prior outlook for 2005.
Revenue growth:
8
Productivity improvements:
Global economy:
"As we announced earlier today, increasing the dividend to our shareholders underscores our financial strength, our strong operating results and our confidence in the company's continued sustainable growth," said Holliday.
Use of Non-GAAP Measures: Management believes that measures of earnings before special items ("non-GAAP" information) are meaningful to investors because they provide insight with respect to ongoing operating results of the company. Special items represent significant charges or credits that are important to an understanding of the company's ongoing operations. Such measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance. A reconciliation of non-GAAP measures to GAAP is provided in Schedule F.
DuPont is a science company. Founded in 1802, DuPont puts science to work by creating sustainable solutions essential to a better, safer, healthier life for people everywhere. Operating in more than 70 countries, DuPont offers a wide range of innovative products and services for markets including agriculture, nutrition, electronics, communications, safety and protection, home and construction, transportation and protective apparel.
9
Forward-Looking Statements: This news release contains forward-looking statements based on management's current expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the company's strategy for growth, product development, market position, expected expenditures and financial results are forward-looking statements. Some of the forward-looking statements may be identified by words like "expects," "anticipates," "plans," "intends," "projects," "indicates," and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by DuPont, particularly its latest annual report on Form 10-K and quarterly report on Form 10-Q, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates, of countries in which the company does business; competitive pressures; successful integration of structural changes, including restructuring plans, acquisitions, divestitures and alliances; cost of raw materials, research and development of new products, including regulatory approval and market acceptance; and seasonality of sales of agricultural products.
# # #
4/26/05
10
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE A
Three Months Ended |
|||
CONSOLIDATED INCOME STATEMENT |
March 31, |
||
(Dollars in millions, except per share) |
2005 |
2004 |
|
NET SALES |
$7,431 |
$8,073 |
|
Other Income(a) |
395 |
132 |
|
Total |
7,826 |
8,205 |
|
Cost of Goods Sold and Other Operating Charges(b) |
5,051 |
5,757 |
|
Selling, General and Administrative Expenses |
807 |
820 |
|
Amortization of Intangible Assets |
57 |
54 |
|
Research and Development Expense |
313 |
337 |
|
Interest Expense |
104 |
85 |
|
Separation Charges - Textiles & Interiors(c) |
- |
345 |
|
Total |
6,332 |
7,398 |
|
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS |
1,494 |
807 |
|
Provision for Income Taxes(d) |
509 |
126 |
|
Minority Interests in Earnings of Consolidated Subsidiaries |
18 |
13 |
|
NET INCOME |
$ 967 |
$ 668 |
|
BASIC EARNINGS PER SHARE OF COMMON STOCK(e) |
|||
Net Income |
$ 0.97 |
$ 0.67 |
|
DILUTED EARNINGS PER SHARE OF COMMON STOCK(e) |
|||
Net Income |
$ 0.96 |
$ 0.66 |
|
DIVIDENDS PER SHARE OF COMMON STOCK |
$ 0.35 |
$ 0.35 |
NOTES TO CONSOLIDATED INCOME STATEMENT
(a) |
First quarter 2004 includes a charge of $150 in the Performance Materials segment to provide for the company's share of anticipated losses associated with DuPont Dow Elastomers LLC antitrust litigation matters. |
(b) |
First quarter 2004 includes a charge of $36 in the Coatings & Color Technologies segment to provide for the anticipated settlement of litigation in Refinish. |
(c) |
First quarter 2004 reflects an INVISTA-related charge of $345 which includes an agreed upon reduction in sales price of $240, and other changes in estimates associated with the sale. |
(d) |
First quarter 2004 includes tax benefits of $210 related to the anticipated separation of INVISTA. |
(e) |
Earnings per share are calculated on the basis of the following average number of common shares outstanding: |
Three Months Ended |
||||
March 31 |
||||
Basic |
Diluted |
|||
2005 |
996,304,498 |
1,005,997,377 |
||
2004 |
999,242,763 |
1,003,401,021 |
11
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE B
SPECIAL ITEMS
(Dollars in millions, except per share)
Pretax |
After-Tax |
($ Per Share) |
||||||||||
2005 |
2004 |
2005 |
2004 |
2005 |
2004 |
|||||||
1st Quarter: |
||||||||||||
INVISTA Separation Charges |
$(345) |
$(135) |
$(.14) |
|||||||||
DuPont Dow Elastomers LLC |
||||||||||||
Litigation Reserve |
(150) |
(138) |
(.14) |
|||||||||
Refinish Litigation Settlement |
(36) |
(23) |
(.02) |
|||||||||
1st Quarter - Total |
$(531) |
$(296) |
$(.30) |
|||||||||
12
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE C
Three Months Ended |
|||
CONSOLIDATED SEGMENT INFORMATION(1) |
March 31, |
||
(Dollars in millions) |
2005 |
2004 |
|
SEGMENT SALES (2) |
|||
Agriculture & Nutrition |
$2,356 |
$2,201 |
|
Coatings & Color Technologies |
1,536 |
1,417 |
|
Electronic & Communication Technologies |
854 |
816 |
|
Performance Materials |
1,785 |
1,519 |
|
Safety & Protection |
1,282 |
1,089 |
|
Textiles & Interiors |
N/A |
1,883 |
|
Other |
12 |
12 |
|
Total Segment Sales |
7,825 |
8,937 |
|
Elimination of Transfers |
(78) |
(251) |
|
Elimination of Equity Affiliate Sales |
(316) |
(613) |
|
CONSOLIDATED NET SALES |
$7,431 |
$8,073 |
|
PRETAX OPERATING INCOME (LOSS) (PTOI)(3) |
|||
Agriculture & Nutrition |
$ 757 |
$ 631 |
|
Coatings & Color Technologies(b) |
166 |
153 |
|
Electronic & Communication Technologies |
105 |
92 |
|
Performance Materials(a) |
211 |
6 |
|
Pharmaceuticals |
159 |
148 |
|
Safety & Protection |
231 |
231 |
|
Textiles & Interiors(c) |
N/A |
(195) |
|
Other |
(21) |
(33) |
|
Total Segment PTOI |
1,608 |
1,033 |
|
Exchange Gains and Losses(4) |
111 |
(13) |
|
Corporate Expenses & Interest |
(225) |
(213) |
|
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS |
$1,494 |
$ 807 |
|
(1) |
Certain reclassifications of segment data have been made to reflect changes in organizational structure. Beginning in 2005, Textiles & Interiors is no longer an operating segment of the company. The remaining assets and charges related to separation activities are reported under Other. |
(2) |
Includes transfers and pro rata share of equity affiliate sales. |
(3) |
See respective Notes to Consolidated Income Statement for segment specific details. |
(4) |
Net after-tax exchange losses for first quarter 2005 and 2004 were $38 and $32, respectively. Gains and losses resulting from the company's hedging program are largely offset by associated tax charges and benefits. |
13
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE D
SEGMENT INFORMATION EXCLUDING IMPACT OF SPECIAL ITEMS
(Dollars in millions)
Three Months Ended |
||||||
March 31 |
||||||
2005 |
2004 |
% Chg. |
||||
PRETAX OPERATING INCOME (LOSS) |
||||||
Agriculture & Nutrition |
$ 757 |
$ 631 |
20% |
|||
Coatings & Color Technologies |
166 |
189 |
(12) |
|||
Electronic & Communication Technologies |
105 |
92 |
14 |
|||
Performance Materials |
211 |
156 |
35 |
|||
Pharmaceuticals |
159 |
148 |
7 |
|||
Safety & Protection |
231 |
231 |
- |
|||
Textiles & Interiors |
N/A |
150 |
N/M |
|||
Other |
(21) |
(33) |
N/M |
|||
Total Segment PTOI |
1,608 |
1,564 |
3 |
|||
Exchange Gains and Losses(1) |
111 |
(13) |
||||
Corporate Expenses & Interest |
(225) |
(213) |
||||
INCOME BEFORE SPECIAL ITEMS, INCOME TAXES AND MINORITY |
||||||
INTERESTS |
1,494 |
1,338 |
12 |
|||
Special Items |
- |
(531) |
||||
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS |
$1,494 |
$ 807 |
85% |
|||
(1) |
Net after-tax exchange losses for first quarter 2005 and 2004 were $38 and $32, respectively. Gains and losses resulting from the company's hedging program are generally offset by associated tax charges and benefits. |
SCHEDULE E
SELECTED INCOME STATEMENT DATA EXCLUDING IMPACT OF SPECIAL ITEMS
(Dollars in millions, except per share)
Three Months Ended |
||||||
March 31 |
||||||
2005 |
2004 |
% Chg. |
||||
Consolidated Net Sales |
$7,431 |
$8,073 |
(8)% |
|||
Segment Sales |
7,825 |
8,937 |
(12) |
|||
Segment PTOI* |
1,608 |
1,564 |
3 |
|||
EBIT* |
1,547 |
1,401 |
10 |
|||
EBITDA* |
1,879 |
1,711 |
10 |
|||
Income Before Income Taxes and |
||||||
Minority Interests |
1,494 |
1,338 |
12 |
|||
EPS - Diluted |
0.96 |
0.96 |
- |
* |
See Reconciliation of Non-GAAP Measures (Schedule F) |
14
SCHEDULE F
RECONCILIATION OF NON-GAAP MEASURES
(Dollars in millions)
Reconciliation of Segment PTOI |
||||
Three Months Ended |
||||
March 31, |
||||
2005 |
2004 |
|||
Segment PTOI Before Special Items |
$1,608 |
$1,564 |
||
Special Items included in Segment PTOI |
- |
(531) |
||
Segment PTOI |
$1,608 |
$1,033 |
||
Reconciliation of EBIT / EBITDA to Consolidated Income Statement |
||||
Three Months Ended |
||||
March 31, |
||||
2005 |
2004 |
|||
Income Before Income Taxes and |
||||
Minority Interests |
$1,494 |
$ 807 |
||
Less: Minority Interest in Earnings |
||||
of Consolidated Subsidiaries(1) |
(19) |
(11) |
||
Add: Net Interest Expense(2) |
72 |
74 |
||
Special Items |
- |
531 |
||
EBIT |
1,547 |
1,401 |
||
Add: Depreciation and Amortization(3) |
332 |
310 |
||
EBITDA |
$1,879 |
$1,711 |
||
(1) |
Excludes income taxes and corporate minority interests. |
(2) |
Includes interest expense plus amortization of capitalized interest less interest income. |
(3) |
Excludes amortization of capitalized interest. |
Reconciliation of Base income Tax Rate to Effective Income Tax Rate |
||||
Three Months Ended |
||||
March 31, |
||||
2005 |
2004 |
|||
Income Before Income Taxes and |
||||
Minority Interests |
$1,494 |
$ 807 |
||
Remove: Special Items - Charge |
- |
531 |
||
Net Exchange (Gains)/Losses |
(111) |
13 |
||
Income Before Income Taxes, |
||||
Special Items, Exchange Gains/Losses |
||||
and Minority Interests |
$1,383 |
$1,351 |
||
Provision for Income Taxes |
$ 509 |
$ 126 |
||
Remove: Tax on Special Items |
- |
235 |
||
Tax on Exchange Gains/Losses |
(149) |
(19) |
||
Provision for Income Taxes, |
||||
Excluding Taxes on Special Items and |
||||
Exchange Gains/Losses |
$ 360 |
$ 342 |
||
Effective Income Tax Rate |
34.1% |
15.6% |
||
Base Income Tax Rate |
26.0% |
25.3% |
15