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UNITED STATES 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) January 22, 2008
E. I. du Pont de Nemours and Company
(Exact Name of Registrant as Specified in Its Charter)
         
Delaware
(State or Other Jurisdiction
Of Incorporation) 		  1-815
(Commission
File Number) 		  51-0014090
(I.R.S. Employer
Identification No.)
1007 Market Street
Wilmington, Delaware 19898
(Address of principal executive offices)
Registrant’s telephone number, including area code: (302) 774-1000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

Section 2 — Financial Information
Item 2.02   Results of Operations and Financial Condition
     On January 22, 2008, the Registrant announced its consolidated financial results for the quarter ended December 31, 2007. 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed by the Registrant under the Securities Act of 1933, as amended, or the Exchange Act.

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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/ Barry J. Niziolek    
  Barry J. Niziolek   
  Vice President and Controller   
 
January 22, 2008

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JANUARY 22, 2008
  Contact:     Anthony Farina
WILMINGTON, Del.
      302-774-4005
 
      anthony.r.farina@usa.dupont.com
DuPont Delivers Strong Fourth Quarter, Full-Year Sales and Earnings Growth
Broad Global Presence and Agriculture Markets Boost Revenue Growth
Highlights
•   Fourth quarter 2007 earnings were $.60 per share, compared to fourth quarter 2006 earnings of $.94 per share. Excluding significant items, earnings per share increased 27 percent to $.57 per share from $.45 per share in the prior-year quarter (see Schedule B for a listing of significant items.)
 
•   Sales increased 11 percent to $7.0 billion, reflecting 3 percent volume growth, 3 percent higher local selling prices, 4 percent currency benefit and a 1 percent net benefit related to portfolio and other changes.
 
•   Sales in emerging markets grew 20 percent, led by Brazil, China and India. Sales in the United States grew 5 percent despite lower U.S. housing starts and auto builds.
 
•   Local selling price gains more than offset higher ingredient costs.
 
•   Fixed costs as a percentage of sales improved 210 basis points from the prior-year quarter.
 
•   Fourth quarter 2007 segment pre-tax operating income (PTOI) increased 30 percent to $937 million, excluding significant items. Segment PTOI margin on the same basis improved 210 basis points.
 
•   Full year 2007 earnings were $3.22 per share versus $3.38 in 2006. Excluding significant items, 2007 earnings increased 14 percent to $3.28 per share from $2.88 in the prior year.
     “DuPont’s strong earnings growth in the fourth quarter reflects our global presence and the breadth of our product offerings,” said Charles O. Holliday, Jr., DuPont chairman and chief executive officer. “We delivered 14 percent earnings per share growth for the year despite weakness in certain U.S. markets and higher ingredient costs.”

 

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Global Consolidated Sales
     Consolidated net sales increased 11 percent to $7.0 billion in the fourth quarter. Outside the United States, sales increased 14 percent, boosted by 20 percent growth in emerging markets, particularly Brazil, China and India. A summary of fourth quarter 2007 worldwide and regional sales performance is shown below.
                                                 
    Three Months Ended    
    December 31, 2007   Percentage Change Due to:
(Dollars in billions)   $   %
Change		   Local
Currency
Price		   Currency
Effect		   Volume   Portfolio/
Other
U.S.
   $ 2.3       5 %     3       —       1       1  
Europe
     2.2       13 %     3       10       (1 )     1  
Asia Pacific
     1.4       17 %     3       4       10       —  
Canada & Latin America
     1.1       15 %     4       5       5       1  
 
Total Consolidated Sales
   $ 7.0       11 %     3       4       3       1  

 

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Net Income and Earnings Per Share
     Net income for the fourth quarter 2007 was $545 million, or $.60 per share, including a net benefit of $23 million, or $.03 per share, for significant items. Fourth quarter 2006 net income was $871 million, or $.94 per share, including a net benefit of $449 million, or $.49 per share, for significant items. See attached Schedule B for a listing of significant items in both periods.
     The table below shows the variances in fourth quarter 2007 earnings per share (EPS) versus fourth quarter 2006.
EPS Analysis
         
    EPS  
4th Quarter 2006
   $ .94  
Significant items
     .49  
 
      
 
        
EPS excluding significant items
     .45  
Local prices
     .25  
Variable costs*
     (.19 )
Volume
     .04  
Fixed costs*
     (.02 )
Currency
     .08  
Pharmaceuticals
     .01  
Tax
     (.10 )
Other
     .05  
4th Quarter 2007 excluding significant items
   $ .57  
Significant items
     .03  
 
      
 
        
4th Quarter 2007-reported
   $ .60  
 
      
*   Excludes volume and currency impact
     These results are higher than the outlook issued by the company on January 9, largely due to finalization of the company’s tax rate and higher business performance.

 

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Business Segment Performance
     Segment sales and related percentage variances for fourth quarter 2007 versus the prior year quarter are shown in the table below.
                                         
SEGMENT SALES*   Three Months Ended   Percentage Change
(Dollars in billions)   December 31, 2007   Due to:
    $   %
Change		   USD
Price		   Volume   Portfolio
and Other
Agriculture & Nutrition
   $ 1.3       23 %     11 %     11 %     1 %
Coatings & Color Technologies
     1.7       8 %     6 %     1 %     1 %
Electronic & Communication Technologies
     1.0       13 %     5 %     7 %     1 %
Performance Materials
     1.7       12 %     12 %     -2 %     2 %
Safety & Protection
     1.4       4 %     4 %     1 %     -1 %
*   Segment sales include transfers
     Segment PTOI for the fourth quarter 2007 was $804 million versus $576 million in the fourth quarter 2006. Excluding significant items, segment PTOI increased 30 percent from $721 million to $937 million.
     Current quarter segment PTOI, excluding significant items, and comparisons with prior-year quarter are shown below.
PRE-TAX OPERATING INCOME EXCLUDING SIGNIFICANT ITEMS*
                         
    Three Months Ended December 31, 2007  
                    % Change vs.  
(Dollars in millions)   2007     2006     2006  
Agriculture & Nutrition
   $ (89 )   $ (148 )     40 %
Coatings & Color Technologies
     216       205       5  
Electronic & Communication Technologies
     156       112       39  
Performance Materials
     186       121       54  
Pharmaceuticals
     246       240       3  
Safety & Protection
     277       245       13  
Other
     (55 )     (54 )     2  
 
                    
 
   $ 937     $ 721       30 %
*   See Schedule B and Schedule C for a listing of significant items and their impact by segment.
     The following are business segment highlights, excluding significant items, comparing fourth quarter 2007 results to fourth quarter 2006.
Agriculture & Nutrition
•   Fourth quarter sales increased $237 million to $1.3 billion with strong sales growth in all regions. Brazil delivered record revenue and earnings growth this selling season, which was driven by robust demand for Pioneer® brand seed with superior yield, advantaged market channel capabilities and market share gains.

 

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•   A seasonal PTOI loss of $89 million reflected an improvement of $59 million versus the prior-year quarter. Earnings gains were driven by strong sales, improved margins, and cost productivity improvements, moderated by planned growth investments. 2007 PTOI includes a gain of $15 million relating to the divestiture of certain crop chemical assets.
Coatings & Color Technologies
•   Sales increased to $1.7 billion. Broad-based sales increases outside the United States, which were driven primarily by higher USD selling prices, offset continued weakness in North American auto and housing markets.
 
•   PTOI increased 5 percent to $216 million, compared to $205 million in the prior-year quarter. Earnings grew substantially in coatings which reflected fixed cost reductions and higher sales. This increase was partially offset by the absence of a gain on the sale of assets in the prior year and modest earnings declines in titanium dioxide.
Electronic & Communication Technologies
•   Sales grew to $1.0 billion, reflecting higher volumes, particularly in Latin America and Asia, and higher USD selling prices. Price improvements in North America increased revenue in the region compared to the prior-year quarter.
 
•   PTOI increased to $156 million, including a $28 million gain from an asset sale. Excluding the gain, PTOI increased 14 percent, reflecting higher volumes in imaging and fluoroproducts and fixed cost productivity.
Performance Materials
•   Sales grew to $1.7 billion primarily due to higher USD selling prices. Volume growth in Latin America, Asia and Europe was more than offset by lower demand in North America.
 
•   PTOI grew to $186 million, reflecting strong sales across all product lines, currency benefits and fixed cost productivity. 2007 PTOI includes a $16 million charge for a manufacturing asset write-down.
Safety & Protection
•   Sales grew to $1.4 billion, reflecting higher USD selling prices and volume growth in the surfaces, Kevlar® and Nomex® product lines.
 
•   PTOI grew to $277 million, reflecting the segment’s diverse products and markets, which offset weakness in the U.S. housing market.
     Additional information on segment performance is available on the DuPont Investor Center website at www.dupont.com.
Outlook
     The company today reaffirmed its 2008 full-year earnings outlook of $3.35 to $3.55 per share announced on January 9. For the first quarter 2008, the company expects to earn $1.12 to $1.17 per share. In the first quarter 2007, the company earned $1.07 per share, excluding a $.06 significant item charge.
     In a letter to shareholders posted today, Holliday highlighted the company’s recent improvements in profitability, return on capital and productivity. Holliday also outlined how the

 

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company plans to achieve higher profitability in 2008 and beyond by making advances in agriculture, safety and protection, emerging markets and cost productivity. The letter is available at www.dupont.com.
     “We are confident we can deliver attractive growth in earnings in 2008, and see even stronger growth in the years to follow — continuing our improvement of the last three years,” Holliday said.
     The company announced that it will host an investors meeting March 14 at 9 a.m. (EST) in New York City. Details for the meeting are available on the DuPont Investor Center website at www.dupont.com.
Use of Non-GAAP Measures
     Management believes that measures of income excluding significant items (“non-GAAP” information) are meaningful to investors because they provide insight with respect to ongoing operating results of the company. Such measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance. Reconciliations of non-GAAP measures to GAAP are provided in Schedule D.
     DuPont is a science-based products and services 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 and food; building and construction; communications; and transportation.
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; seasonality of sales of agricultural products; and severe weather events that cause business interruptions, including plant and power outages, or disruptions in supplier and customer operations.
# # #
01/22/08

 

 

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E. I. du Pont de Nemours and Company
Consolidated Income Statements
(Dollars in millions, except per share amounts)
SCHEDULE A
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2007     2006     2007     2006  
Net sales (a)
   $ 6,983     $ 6,276     $ 29,378     $ 27,421  
Other income, net (b), (c), (d), (h)
     230       559       1,275       1,561  
 
                        
Total
     7,213       6,835       30,653       28,982  
 
                                
Cost of goods sold and other operating charges (a). (b), (e), (f), (g), (j), (k)
     5,349       5,114       21,565       20,440  
Selling, general and administrative expenses
     852       824       3,364       3,224  
Amortization of intangible assets
     50       55       213       227  
Research and development expense
     359       341       1,338       1,302  
Interest expense
     110       113       430       460  
 
                        
Total
     6,720       6,447       26,910       25,653  
 
                                
Income before income taxes and minority interests
     493       388       3,743       3,329  
Provision for (benefit from) income taxes (h), (i)
     (54 )     (465 )     748       196  
Minority interests in earnings (losses) of consolidated subsidiaries
     2       (18 )     7       (15 )
 
                        
Net income
   $ 545     $ 871     $ 2,988     $ 3,148  
 
                        
Basic earnings per share of common stock
   $ 0.60     $ 0.94     $ 3.25     $ 3.41  
 
                        
Diluted earnings per share of common stock
   $ 0.60     $ 0.94     $ 3.22     $ 3.38  
 
                        
Dividends per share of common stock
   $ 0.41     $ 0.37     $ 1.52     $ 1.48  
 
                        
 
                                
Average number of shares outstanding used in earnings per share (EPS) calculation:
                                
Basic
     899,847,021       921,039,777       917,132,033       921,474,024  
Diluted
     906,478,654       928,010,485       925,402,371       928,600,741  
See Notes to Schedules of Significant Items for additional information.

 

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E. I. du Pont de Nemours and Company
Schedules of Significant Items
(Dollars in millions, except per share amounts)
SCHEDULE B
SIGNIFICANT ITEMS (1)
                                                 
    Pre-tax     After-tax     ($ Per Share)  
    2007     2006     2007     2006     2007     2006  
1st Quarter — Total
   $ (52 )   $ (128 )   $ (52 )   $ (50 )   $ (0.06 )   $ (0.05 )
 
                                    
2nd Quarter — Total
   $ —     $ —     $ —     $ 31     $ —     $ 0.03  
 
                                    
3rd Quarter — Total
   $ (40 )   $ 50     $ (26 )   $ 33     $ (0.03 )   $ 0.03  
 
                                    
4th Quarter:
                                                
Impairment charge — Performance Materials (d)
   $ (165 )   $ —     $ (135 )   $ —     $ (0.15 )   $ —  
Reversal of certain litigation accruals — Performance Materials (e)
     32       —       46       —       0.05       —  
Income tax related items:
                                                
Reversal of accruals related to tax settlements and valuation allowances and reversal of interest on tax settlements (h)
     6       90       112       518       0.13       0.56  
AJCA related adjustments (i)
     —       —       —       20       —       0.02  
Restructuring charges (f)
     —       (194 )     —       (119 )(2)     —       (0.13 )
Hurricane insurance recoveries (b)
     —       93       —       60       —       0.07  
Asbestos insurance recoveries (c)
    —       61       —       40       —       0.04  
Sales terms and expense accrual changes (a)
     —       (58 )     —       (39 )     —       (0.04 )
Impairment loss on asset held-for-sale (g)
     —       (47 )     —       (31 )     —       (0.03 )
 
                                    
4th Quarter — Total
   $ (127 )   $ (55 )   $ 23     $ 449     $ 0.03     $ 0.49  
 
                                    
Full Year Total
   $ (219 )   $ (133 )   $ (55 )   $ 463     $ (0.06 )   $ 0.50  
 
                                    
(1)   See Notes to Schedules of Significant Items for additional information and Schedule C for detail by segment.
 
(2)   After-tax amount is net of minority interest benefit of $20 or $0.02 per share.

 

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E. I. du Pont de Nemours and Company
Notes to Schedules of Significant Items
(Dollars in millions, except per share amounts)
(a)   In the fourth quarter 2006, the company recorded sales on a destination basis which were historically recorded when shipped, and also adjusted accruals which were historically recorded on a lag-month basis. The impact of these changes in the fourth quarter and full year 2006 was a reduction to net sales of $107, pretax of $58 and net income of $39 or $.04 per share. Sales and Pretax amounts by segment were: $15 and $6 — Agriculture & Nutrition; $31 and $17 — Coatings & Color Technologies; $11 and $5 — Electronic & Communication Technologies; $30 and $17 — Performance Materials; and $20 and $13 - Safety & Protection, respectively.
 
(b)   Fourth quarter and full year 2006 includes a benefit of $15 in Other income and a benefit of $78 in Cost of goods sold and other operating charges resulting from insurance recoveries relating to the damage suffered from Hurricane Katrina in 2005. Pretax amounts for the fourth quarter 2006 items by segment were: $80 — Coatings & Color Technologies and $13 — Safety & Protection. Full year 2006 also includes a third quarter benefit of $50 in Cost of goods sold and other operating charges resulting from Hurricane Katrina insurance recoveries. Pretax amounts by segment for the third quarter benefit were: $43 — Coatings & Color Technologies and $7 — Safety & Protection.
 
(c)   Fourth quarter and full year 2006 includes a benefit of $61 in Other income from insurance recoveries, net of fees, which relate to asbestos litigation expenses incurred by the company in prior periods. Pretax amounts by segment for the insurance recoveries were: $7 - Agriculture & Nutrition; $19 — Coatings & Color Technologies; $10 - Electronic & Communication Technologies; $12 — Performance Materials; and $13 — Safety & Protection.
 
(d)   Fourth quarter and full year 2007 includes a $165 charge in Other income to adjust the carrying value of the company’s investment in a 50/50 polyester films joint venture which is reported in the Performance Materials segment.
 
(e)   Fourth quarter 2007 includes a net $32 benefit in Cost of goods sold and other operating charges resulting from the reversal of certain litigation accruals in the Performance Materials segment established in prior periods for the elastomers antitrust matter. Including a net $52 charge taken in the first quarter 2007, the full year 2007 reflects a net $20 charge in Cost of goods sold and other operating charges for the same matter.
 
(f)   Fourth quarter and full year 2006 includes a restructuring charge of $194 in Cost of goods sold and other operating charges associated with the investment and streamlining program announced during the fourth quarter 2006. Due to the realignment of certain businesses in 2007, $122 of the charge was reflected within the Agriculture & Nutrition segment and $72 was reflected within the Performance Materials segment. The charge consisted of employee separation and employee related costs of $64, primarily associated with the elimination of approximately 1,500 positions globally, and asset impairment costs of $130.
 
(g)   Fourth quarter and full year 2006 includes an asset impairment charge of $47 in Cost of goods sold and other operating charges associated with an underperforming industrial chemicals asset held for sale within the Safety & Protection segment.

 

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E. I. du Pont de Nemours and Company
Notes to Schedules of Significant Items
(Dollars in millions, except per share amounts)
(h)   Fourth quarter and full year 2007 includes benefits for the reversal of accrued interest of $6 ($4 after-tax) in Other income and the reversal of income tax accruals of $108 associated with favorable settlement of certain prior year tax contingencies.
 
    Fourth quarter and full year 2006 includes benefits for the reversal of accrued interest of $90 ($59 after-tax) in Other income and the reversal of income tax accruals of $459 associated with favorable settlement of certain prior year tax contingencies and tax valuation allowances. Full year 2006 also includes benefits for the reversal of accrued interest of $7 ($4 after-tax) in Other income and the reversal of income tax accruals of $44 associated with favorable settlement of certain prior year tax contingencies. Additionally, full year 2006 includes a tax benefit of $31 associated with an increase in the deferred tax assets of a European subsidiary for a tax basis investment loss recognized on the local tax return.
 
(i)   Fourth quarter and full year 2006 includes the reversal of income tax accruals of $20 related to the finalization of taxes related to the Company’s repatriation of foreign earnings under the American Jobs Creation Act of 2004 (AJCA).
 
(j)   Full year 2007 includes a $40 charge in Cost of goods sold and other operating charges for existing litigation in the Other segment relating to a discontinued business.
 
(k)   Full year 2006 includes a restructuring charge of $135 in Cost of goods sold and other operating charges in connection with the company’s plans to close and consolidate certain manufacturing and laboratory sites in the Coatings & Color Technologies segment. The charge consisted of employee separation costs, primarily in Europe and the U.S., for approximately 1,300 employees and other exit costs.

 

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E. I. du Pont de Nemours and Company
Consolidated Segment Information
(Dollars in millions)
SCHEDULE C
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
SEGMENT SALES (1)   2007     2006 (2)     2007     2006(2)  
Agriculture & Nutrition
   $ 1,251     $ 1,014     $ 6,842     $ 6,008  
Coatings & Color Technologies
     1,700       1,575       6,609       6,290  
Electronic & Communication Technologies
     963       854       3,797       3,573  
Performance Materials
     1,711       1,523       6,630       6,179  
Safety & Protection
     1,397       1,338       5,641       5,496  
Other
     42       39       178       180  
 
                        
Total Segment sales
   $ 7,064     $ 6,343     $ 29,697     $ 27,726  
 
                                
Elimination of transfers
     (81 )     (67 )     (319 )     (305 )
 
                        
Consolidated net sales
   $ 6,983     $ 6,276     $ 29,378     $ 27,421  
 
                        
(1)   Sales for the reporting segments include transfers.
 
(2)   Certain reclassifications of 2006 segment data have been made to reflect changes in organizational structure for 2007.

 

 

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E. I. du Pont de Nemours and Company
Consolidated Segment Information
(Dollars in millions)
SCHEDULE C (continued)
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
PRETAX OPERATING INCOME/(LOSS) (PTOI)   2007     2006 (1)     2007     2006 (1)  
Agriculture & Nutrition
   $ (89 )   $ (269 )   $ 894     $ 604  
Coatings & Color Technologies
     216       287       840       817  
Electronic & Communication Technologies
     156       117       594       577  
Performance Materials
     53       44       626       559  
Pharmaceuticals
     246       240       949       819  
Safety & Protection
     277       211       1,199       1,080  
Other
     (55 )     (54 )     (224 )     (173 )
 
                        
Total Segment PTOI
   $ 804     $ 576     $ 4,878     $ 4,283  
 
                                
Net exchange losses (2)
     (35 )     (9 )     (85 )     (4 )
Corporate expenses & net interest
     (276 )     (179 )     (1,050 )     (950 )
 
                        
Income before income taxes and minority interests
   $ 493     $ 388     $ 3,743     $ 3,329  
 
                        
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) (3)   2007     2006 (1)     2007     2006 (1)  
Agriculture & Nutrition (a), (c), (f)
   $ —     $ (121 )   $ —     $ (121 )
Coatings & Color Technologies (a), (b), (c), (k)
    —       82       —       (10 )
Electronic & Communication Technologies (a). (c)
    —       5       —       5  
Performance Materials (a), (c), (d), (e), (f)
     (133 )     (77 )     (185 )     (77 )
Safety & Protection (a), (b), (c), (g)
     —       (34 )     —       (27 )
Other (j)
     —       —       (40 )     —  
 
                        
Total Significant Items by segment
   $ (133 )   $ (145 )   $ (225 )   $ (230 )
 
                        
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
PTOI EXCLUDING SIGNIFICANT ITEMS   2007     2006 (1)     2007     2006 (1)  
Agriculture & Nutrition
   $ (89 )   $ (148 )   $ 894     $ 725  
Coatings & Color Technologies
     216       205       840       827  
Electronic & Communication Technologies
     156       112       594       572  
Performance Materials
     186       121       811       636  
Pharmaceuticals
     246       240       949       819  
Safety & Protection
     277       245       1,199       1,107  
Other
     (55 )     (54 )     (184 )     (173 )
 
                        
Total Segment PTOI excluding Significant Items
   $ 937     $ 721     $ 5,103     $ 4,513  
 
                        
(1)   Certain reclassifications of 2006 segment data have been made to reflect changes in organizational structure for 2007.
 
(2)   Net after-tax exchange activity for the three and twelve months ended December 31, 2007 were losses of $14 and $31, respectively. For the three and twelve months ended December 31, 2006, the net after-tax exchange activity were losses of $11 and $30, respectively. Gains and losses resulting from the company’s hedging program are largely offset by associated tax effects.
 
(3)   Refer to the Notes to Schedules of Significant Items for additional information.

 

 

13

E. I. du Pont de Nemours and Company
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
SCHEDULE D
Summary of Earnings Comparisons
                                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
                    %                     %  
    2007     2006     Change     2007     2006     Change  
Segment sales
   $ 7,064     $ 6,343       11 %   $ 29,697     $ 27,726       7 %
Significant Items included in segment sales
     —       107               —       107          
 
                                        
Segment sales excluding Significant Items
   $ 7,064     $ 6,450       10 %   $ 29,697     $ 27,833       7 %
 
                                        
 
                                                
Segment PTOI
   $ 804     $ 576       40 %   $ 4,878     $ 4,283       14 %
Significant Items charge included in PTOI (per Schedule B)
     133       145               225       230          
 
                                        
Segment PTOI excluding Significant Items
   $ 937     $ 721       30 %   $ 5,103     $ 4,513       13 %
 
                                        
 
                                                
Net Income
   $ 545     $ 871       -37 %   $ 2,988     $ 3,148       -5 %
Significant Items (benefit)/ charge included in Net Income (per Schedule B)
     (23 )     (449 )             55       (463 )        
 
                                        
Net Income excluding Significant Items
   $ 522     $ 422       24 %   $ 3,043     $ 2,685       13 %
 
                                        
 
                                                
EPS
   $ 0.60     $ 0.94       -36 %   $ 3.22     $ 3.38       -5 %
Significant Items (benefit)/ charge included in EPS (per Schedule B)
     (0.03 )     (0.49 )             0.06       (0.50 )        
 
                                        
EPS excluding Significant Items
   $ 0.57     $ 0.45       27 %   $ 3.28     $ 2.88       14 %
 
                                        
 
                                                
Average number of diluted shares outstanding
     906,478,654       928,010,485       -2.3 %     925,402,371       928,600,741       -0.3 %
Calculation of Segment PTOI as a Percent of Segment Sales
                                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2007     2006     % Change     2007     2006     % Change  
Segment PTOI excluding Significant Items
   $ 937     $ 721       30 %   $ 5,103     $ 4,513       13 %
Segment sales excluding Significant Items
   $ 7,064     $ 6,450       10 %   $ 29,697     $ 27,833       7 %
 
                                                
Segment PTOI as a percent of segment sales
     13.3 %     11.2 %             17.2 %     16.2 %        

 

14

E. I. du Pont de Nemours and Company
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
SCHEDULE D (continued)
Reconciliations of Adjusted EBIT / Adjusted EBITDA to Consolidated Income Statement
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2007     2006     2007     2006  
Income before income taxes and minority interests
   $ 493     $ 388     $ 3,743     $ 3,329  
Less: Minority interest in (earnings)/losses of consolidated subsidiaries (1)
     (2 )     20       (9 )     16  
Add: Net interest expense (2)
     88       10       379       322  
 
                        
Adjusted EBIT
     579       418       4,113       3,667  
Add: Depreciation and amortization (3)
     334       339       1,337       1,353  
 
                        
Adjusted EBITDA
   $ 913     $ 757     $ 5,450     $ 5,020  
 
                        
(1)   Excludes income taxes.
 
(2)   Includes interest expense plus amortization of capitalized interest less miscellaneous interest.
 
(3)   Excludes amortization of capitalized interest.
Reconciliations of Fixed Costs as a Percent of Sales
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2007     2006     2007     2006  
Total charges and expenses — consolidated income statements
   $ 6,720     $ 6,447     $ 26,910     $ 25,653  
Remove:
                                
Interest expense
     (110 )     (113 )     (430 )     (460 )
Variable costs (1)
     (3,522 )     (3,234 )     (14,378 )     (13,300 )
Significant Items — benefit/(charge) (2)
     32       (114 )     (60 )     (199 )
 
                        
Fixed costs
   $ 3,120     $ 2,986     $ 12,042     $ 11,694  
 
                        
 
                                
Consolidated net sales
   $ 6,983     $ 6,276     $ 29,378     $ 27,421  
Add: Significant Items included in net sales
     —       107       —       107  
 
                        
Adjusted consolidated net sales
   $ 6,983     $ 6,383     $ 29,378     $ 27,528  
 
                        
 
                                
Fixed costs as a percent of adjusted consolidated net sales
     44.7 %     46.8 %     41.0 %     42.5 %
(1)   Includes variable manufacturing costs, freight, commissions and other selling expenses which vary with the volume of sales.
 
(2)   See Schedule B for detail of Significant Items.

 

 

15

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 Earnings Per Share (EPS) Outlook
                                         
    Year Ended     Quarter Ended  
    December 31,     March 31,  
    2008                     2008        
    Outlook     2007 Actual     2006 Actual     Outlook     2007 Actual  
Earnings per share — excluding Significant Items
   $ 3.35 to $3.55     $ 3.28     $ 2.88     $ 1.12 to $1.17       1.07  
Significant Items included in EPS:
                                        
Impairment charge — Performance Materials
     —       (0.15 )                        
Litigation related charges — Other
     —       (0.03 )     —       —       —  
Litigation related charges, net — Performance Materials
     —       (0.01 )     —       —       (0.06 )
Restructuring charges -
                                        
Agriculture & Nutrition
     —       —       (0.08 )     —       —  
Performance Materials
     —       —       (0.05 )     —       —  
Coatings & Color Technologies
     —       —       (0.10 )     —       —  
American Jobs Creation Act
     —       —       0.02       —       —  
Hurricane related items
     —       —       0.10       —       —  
Asbestos insurance recoveries
     —       —       0.04       —       —  
Asset impairment — Safety & Protection
     —       —       (0.03 )     —       —  
Sales terms and expense accrual changes
     —       —       (0.04 )     —       —  
Corporate tax-related items
     —       0.13       0.64       —       —  
 
                              
Net (charge)/benefit for Significant Items
     —       (0.06 )     0.50       —       (0.06 )
 
                              
Reported EPS
   $ 3.35 to $3.55     $ 3.22     $ 3.38     $ 1.12 to $1.17     $ 1.01  
 
                              
Reconciliation of Base Income Tax Rate to Effective Income Tax Rate
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2007     2006     2007     2006  
Income before income taxes and minority interests
   $ 493     $ 388     $ 3,743     $ 3,329  
Add: Significant Items — charge
     127       55       219       133  
Net exchange losses
     35       9       85       4  
 
                        
Income before income taxes, Significant Items, exchange gains/losses and minority interests
   $ 655     $ 452     $ 4,047     $ 3,466  
 
                        
 
                                
Provision for income taxes
   $ (54 )   $ (465 )   $ 748     $ 196  
Add: Tax benefit on Significant Items
     150       484       164       576  
Tax benefit/(expense) on exchange gains/losses
     21       (2 )     54       (26 )
 
                        
Provision for income taxes, excluding taxes on Significant Items and exchange gains/losses
   $ 117     $ 17     $ 966     $ 746  
 
                        
 
                                
Effective income tax rate
     (11.0 )%     (119.8 )%     20.0 %     5.9 %
Base income tax rate
     17.9 %     3.8 %     23.9 %     21.5 %