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 25, 2006
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
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:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
1
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition
On April 25, 2006, the Registrant announced its consolidated financial results for the quarter ended March 31, 2006. 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 25, 2006
3
April 25, 2006 |
Contact: |
Michelle Reardon |
WILMINGTON, Del. |
302-774-7447 |
|
Michelle.S.Reardon@usa.dupont.com |
DUPONT REPORTS FIRST QUARTER 2006 EARNINGS;
INCREASES FULL-YEAR GUIDANCE
"We knew it would be a difficult operating environment in the first quarter, and I am very encouraged by the better than expected performance of our company," said Charles O. Holliday, Jr., DuPont chairman and chief executive officer. "I am especially pleased with how our people delivered these results. We are fully committed to growing revenue, controlling costs and improving return on assets across all of our businesses."
4
Global Consolidated Net Income and Sales
Consolidated net income for the first quarter was $817 million, or $.88 per share, including a previously announced Coatings & Color Technologies restructuring charge of $.10 per share, partly offset by a favorable tax audit settlement of $.05 per share. First quarter net income reflects higher local selling prices across all regions which were more than offset by the impact of higher raw material costs and the adverse effect of the stronger dollar. First quarter 2005 net income was $967 million, or $.96 per share.
Consolidated net sales for the first quarter were $7.4 billion, essentially equal to the first quarter 2005, and up 2 percent on a comparable business basis. For the quarter, volume increased 2 percent, reflecting increases in all regions except Europe, which had a modest decline. U.S. volume was up 1 percent in spite of reduced production for most of the quarter at the DeLisle, Miss., titanium dioxide (TiO2) plant, resulting from Hurricane Katrina.
Three Months Ended |
Percentage Change Due to: |
|||||||||
March 31, 2006 |
Local |
Currency |
||||||||
(Dollars in billions) |
$ |
% Change* |
Price |
Effect |
Volume |
|||||
U.S. |
$3.2 |
4% |
3 |
- |
1 |
|||||
Europe |
2.3 |
(6) |
3 |
(8) |
(1) |
|||||
Asia Pacific |
1.1 |
4 |
4 |
(5) |
5 |
|||||
Canada & Latin America |
0.8 |
15 |
5 |
4 |
6 |
|||||
Total Consolidated Sales |
$7.4 |
2 |
3 |
(3) |
2 |
* |
Percentages shown are on a comparable business basis by excluding first quarter 2005 sales of $167 million for former elastomers businesses transferred to The Dow Chemical Company on June 30, 2005. |
5
Earnings Per Share
The table below shows the variances in first quarter 2006 earnings per share (EPS) versus first quarter 2005, by major element:
EPS ANALYSIS |
|||||
1st Quarter |
|||||
EPS - 2005 |
$ .96 |
||||
Local prices |
.20 |
||||
Volume |
.02 |
||||
Variable costs |
(.26) |
||||
Fixed costs |
(.03) |
||||
Currency |
(.06) |
||||
Lower shares net of higher interest |
.05 |
||||
Other |
.05 |
||||
Subtotal |
.93 |
||||
1Q'06 Significant items (see Schedule B) |
(.05) |
||||
EPS - 2006 |
$ .88 |
||||
Improved local pricing and higher volumes offset much of the impact of higher raw material costs. While total fixed costs were lower than last year, and fixed cost productivity (measured as percent of sales) improved 40 basis points versus last year, total fixed costs, excluding a currency translation benefit and portfolio changes, were slightly higher.
6
Business Segment Performance
Segment pretax operating income (PTOI) for first quarter 2006 was $1.3 billion, including a restructuring charge of $135 million for the Coatings & Color Technologies segment. Segment PTOI, sales, and percentage changes versus first quarter 2005 are shown in the tables below.
Three Months Ended March 31 |
||||||
PRETAX OPERATING INCOME |
% Change |
|||||
(Dollars in millions) |
2006 |
2005 |
vs. 2005 |
|||
Agriculture & Nutrition |
$ 588 |
$ 757 |
(22)% |
|||
Coatings & Color Technologies |
15 |
161 |
(91)* |
|||
Electronic & Communication Technologies |
163 |
110 |
48 |
|||
Performance Materials |
137 |
|
211 |
(35) |
||
Pharmaceuticals |
169 |
159 |
6 |
|||
Safety & Protection |
269 |
231 |
16 |
|||
Other |
(26) |
(21) |
n/m** |
|||
Total |
$1,315 |
$1,608 |
(18)% |
* |
2006 PTOI includes a $135 restructuring charge; excluding this charge, PTOI declined 7 percent. |
** |
Percentage change not meaningful (n/m). |
Percentage |
||||||||
Three Months Ended |
Change Due to: |
|||||||
SEGMENT SALES* |
March 31 |
U.S. $ |
||||||
(Dollars in billions) |
$ |
% Change |
Price |
Volume |
||||
Agriculture & Nutrition |
$2.2 |
(5) |
(3) |
(2) |
||||
Coatings & Color Technologies |
1.5 |
(1) |
2 |
(3) |
||||
Electronic & Communication Technologies |
0.9 |
6 |
1 |
5 |
||||
Performance Materials |
1.7 |
6 |
1 |
5 |
||||
Safety & Protection |
1.4 |
8 |
5 |
3 |
* |
Segment sales include inter-segment transfers and a pro rata share of affiliates' sales. Percentages shown for Performance Materials are after excluding first quarter 2005 sales of $167 million for former elastomers businesses transferred to The Dow Chemical Company on June 30, 2005. |
Following are summaries of first quarter 2006 performance for the business segments. Additional information on segment performance is available on the DuPont Investor Center at www.dupont.com.
Agriculture & Nutrition
7
Coatings & Color Technologies
Electronic & Communication Technologies
Performance Materials
8
Safety & Protection
Outlook
On January 25, the company provided its full-year earnings outlook of $2.60 per share, up 11 percent from $2.34 per share in 2005 before significant items. On March 15, this outlook was increased to $2.70 per share, excluding significant items, because of improved operating performance by many of the company's businesses. Today, the company increased its full-year 2006 outlook to about $2.80 per share, including first quarter significant items totaling a net charge of $.05 per share. Excluding significant items, the company expects to earn about $2.85 per share, 22 percent higher than 2005 earnings per share of $2.34.
For the second quarter, the company expects to earn about $.90 per share, anticipating that continued pricing strength, volume and fixed cost control will offset higher energy and ingredient costs and competitive pressures in its production agriculture businesses.
"We are raising our full-year earnings outlook in light of first quarter performance and the progress we have made in successfully implementing initiatives to accelerate shareholder value," Holliday said. "We are building on the positive momentum achieved in the first quarter, taking the necessary measures in underperforming businesses, and accelerating execution to deliver on our commitments."
9
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 E.
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.
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.
# # #
4/25/06
Ò
Herculex is a registered trademark of Dow AgroSciences LLC.
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) |
2006 |
2005 |
||
NET SALES |
$7,394 |
$7,431 |
||
Other Income, Net (1) |
270 |
395 |
||
Total |
7,664 |
7,826 |
||
Cost of Goods Sold and Other Operating Charges (2) |
5,336 |
5,051 |
||
Selling, General and Administrative Expenses |
791 |
807 |
||
Amortization of Intangible Assets |
59 |
57 |
||
Research and Development Expense |
313 |
313 |
||
Interest Expense |
114 |
104 |
||
Total |
6,613 |
6,332 |
||
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS |
1,051 |
1,494 |
||
Provision for Income Taxes (1) |
232 |
509 |
||
Minority Interests in Earnings of Consolidated Subsidiaries |
2 |
18 |
||
NET INCOME |
$ 817 |
$ 967 |
||
BASIC EARNINGS PER SHARE OF COMMON STOCK (3) |
$ 0.88 |
$ 0.97 |
||
DILUTED EARNINGS PER SHARE OF COMMON STOCK (3) |
$ 0.88 |
$ 0.96 |
||
DIVIDENDS PER SHARE OF COMMON STOCK |
$ 0.37 |
$ 0.35 |
11
NOTES TO CONSOLIDATED INCOME STATEMENT
(1) |
First quarter 2006 includes a reversal of accrued interest of $7 ($4 after-tax) and the reversal of $44 of income taxes associated with favorable settlement of certain prior-year tax contingencies which had been previously reserved. |
(2) |
First quarter 2006 includes a restructuring charge of $135 ($98 after-tax) in the Coatings & Color Technologies segment in connection with the company's plans to close and consolidate certain manufacturing and laboratory sites within the segment. The charge consists of employee separation charges, primarily in Europe, for approximately 1,300 employees and other exit costs. |
(3) |
Earnings per share are calculated on the basis of the following average number of common shares outstanding: |
Three Months Ended |
||||
March 31 |
||||
Basic |
Diluted |
|||
2006 |
921,213,271 |
929,800,408 |
||
2005 |
996,304,498 |
1,005,997,377 |
12
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE B
SIGNIFICANT ITEMS
(Dollars in millions, except per share)
Pretax |
After-Tax |
($ Per Share) |
||||||||||
2006 |
2005 |
2006 |
2005 |
2006 |
2005 |
|||||||
1st Quarter |
||||||||||||
Restructuring Charges - |
||||||||||||
Coatings & Color Technologies |
$(135) |
$ - |
$(98) |
$ - |
$(.10) |
$ - |
||||||
Corporate Tax-Related Item |
7 |
- |
48 |
- |
.05 |
- |
||||||
Total |
$(128) |
$ - |
$(50) |
$ - |
$(.05) |
$ - |
13
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) |
2006 |
2005 |
|
SALES (2) |
|||
Agriculture & Nutrition |
$2,246 |
$2,356 |
|
Coatings & Color Technologies |
1,482 |
1,504 |
|
Electronic & Communication Technologies |
942 |
886 |
|
Performance Materials |
1,715 |
1,785 |
|
Safety & Protection |
1,383 |
1,282 |
|
Other |
13 |
12 |
|
Elimination of Transfers |
(90) |
(78) |
|
Elimination of Equity Affiliate Sales |
(297) |
(316) |
|
CONSOLIDATED NET SALES |
$7,394 |
$7,431 |
|
PRETAX OPERATING INCOME (LOSS) (PTOI) |
|||
Agriculture & Nutrition |
$ 588 |
$ 757 |
|
Coatings & Color Technologies (3) |
15 |
161 |
|
Electronic & Communication Technologies |
163 |
110 |
|
Performance Materials |
137 |
211 |
|
Pharmaceuticals |
169 |
159 |
|
Safety & Protection |
269 |
231 |
|
Other |
(26) |
(21) |
|
Total Segment PTOI |
1,315 |
1,608 |
|
Exchange Gains and Losses (4) |
(18) |
111 |
|
Corporate Expenses & Interest |
(246) |
(225) |
|
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS |
$1,051 |
$1,494 |
|
(1) |
Certain reclassifications of segment data have been made to reflect changes in organizational structure. |
(2) |
Sales for the reporting segments include transfers and a pro rata share of equity affiliate sales. |
(3) |
2006 includes a restructuring charge of $135. |
(4) |
Net after-tax exchange activity for first quarter 2006 and 2005 were a loss of $22 and a loss of $38, respectively. Gains and losses resulting from the company's hedging program are largely offset by associated tax effects. |
14
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE D
SELECTED INCOME STATEMENT DATA
(Dollars in millions, except per share)
Three Months Ended |
||||||
March 31, |
||||||
2006 |
2005 |
% Chg. |
||||
Consolidated Net Sales |
$7,394 |
$7,431 |
(0.4)% |
|||
Segment Sales |
7,781 |
7,825 |
(0.5) |
|||
Segment PTOI |
1,315 |
1,608 |
(18.2) |
|||
Adjusted EBIT* |
1,144 |
1,543 |
(25.8) |
|||
Adjusted EBITDA* |
1,481 |
1,875 |
(21.0) |
|||
Income Before Income Taxes and Minority Interests |
1,051 |
1,494 |
(29.6) |
|||
EPS - Diluted |
$ .88 |
$ .96 |
(8.3) |
* |
See Reconciliation of Non-GAAP measures (Schedule E). |
SCHEDULE E
RECONCILIATION OF NON-GAAP MEASURES
(Dollars in millions)
Reconciliation of EBIT / EBITDA to Consolidated Income Statement |
||||
Three Months Ended |
||||
March 31, |
||||
2006 |
2005 |
|||
Income Before Income Taxes and Minority Interests |
$1,051 |
$1,494 |
||
Less: Minority Interest in Earnings (Losses) of Consolidated |
||||
Subsidiaries (1) |
2 |
23 |
||
Add: Net Interest Expense (2) |
95 |
72 |
||
Adjusted EBIT |
1,144 |
1,543 |
||
Add: Depreciation and Amortization (3) |
337 |
332 |
||
Adjusted EBITDA |
$1,481 |
$1,875 |
||
(1) |
Excludes income taxes. |
(2) |
Includes interest expense plus amortization of capitalized interest less interest income. |
(3) |
Excludes amortization of capitalized interest. |
15
SCHEDULE E -- (Continued)
Reconciliation of Earnings Per Share (EPS) |
||||
Three Months Ended |
||||
March 31, |
||||
2006 |
2005 |
|||
Earnings Per Share before Significant Items |
$.93 |
$.96 |
||
Significant Items included in EPS |
(.05) |
- |
||
EPS |
$.88 |
$.96 |
Reconciliation of Earnings Per Share (EPS) Outlook |
||||
Year Ended |
||||
December 31, |
||||
2006 |
2005 |
|||
Outlook |
Actual |
|||
Earnings Per Share before Significant Items |
$2.85 |
$2.34 |
||
Significant Items included in EPS: |
||||
Coatings & Color Technologies - Restructuring Charges |
(.10) |
- |
||
American Jobs Creation Act |
- |
(.29) |
||
Hurricane Charges |
- |
(.09) |
||
Textiles & Interiors - Separation Charges |
- |
.03 |
||
Sale of Photomasks Stock |
- |
.03 |
||
Corporate Tax-Related Items |
.05 |
.05 |
||
Net Charge for Significant Items |
(.05) |
(.27) |
||
Reported EPS |
$2.80 |
$2.07 |
Reconciliation of Base Income Tax Rate to Effective Income Tax Rate |
||||
Three Months Ended |
||||
March 31, |
||||
2006 |
2005 |
|||
Income Before Income Taxes and Minority Interests |
$1,051 |
$1,494 |
||
Remove: Significant Items - Charge/(Benefit) |
128 |
- |
||
Net Exchange (Gains)/Losses |
18 |
(111) |
||
Income Before Income Taxes, Significant Items, |
||||
Exchange Gains/Losses and Minority Interests |
$1,197 |
$1,383 |
||
Provision for (Benefit from) Income Taxes |
$ 232 |
$ 509 |
||
Remove: (Expense)/Benefit |
||||
Tax on Significant Items |
78 |
- |
||
Tax on Exchange Gains/Losses |
(4) |
(149) |
||
Provision for Income Taxes, Excluding Taxes |
||||
on Significant Items and Exchange Gains/Losses |
$ 306 |
$ 360 |
||
Effective Income Tax Rate |
22.1% |
34.1% |
||
Base Income Tax Rate |
25.6% |
26.0% |
16
SCHEDULE E -- (Continued)
Reconciliation of Fixed Cost as a Percent of Sales |
||||
Three Months Ended |
||||
March 31, |
||||
2006 |
2005 |
|||
Total Charges and Expenses - Consolidated |
$6,613 |
$6,332 |
||
Income Statement |
||||
Remove: |
||||
Interest Expense |
114 |
104 |
||
Fixed Cost - Textiles & Interiors |
- |
10 |
||
Variable Costs (1) |
3,436 |
3,245 |
||
Significant Items - Charge (2) |
135 |
- |
||
Fixed Cost |
$2,928 |
$2,973 |
||
Consolidated Net Sales |
$7,394 |
$7,431 |
||
Fixed Costs as a Percent of Sales |
39.6% |
40.0% |
(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. |
17