DUPONT REPORTS THIRD QUARTER 2003 EARNINGS
Summary
|
Earnings
Comparisons* |
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|
|
|
|
9 Months |
9 Months |
|
|
3Q'2003 |
3Q'2002 |
YTD 2003 |
YTD 2002 |
|
Reported |
(.88) |
.47 |
.36 |
1.49 |
|
Special Items |
(1.01) |
.07 |
(1.01) |
(.17) |
|
Before Special Items |
.13 |
.40 |
1.37 |
1.66 |
|
* Excludes cumulative effect of changes in accounting principles of $(.03) first quarter and year-to-date 2003; first quarter and year-to-date 2002 were $(2.94) and $(2.95), respectively. |
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"Our businesses increased volume and significantly improved the top line performance of the company in a still challenging and difficult economy," said DuPont Chairman and Chief Executive Officer Charles O. Holliday, Jr. "We held, and in some cases improved, our competitive position by focusing on productivity and meeting the needs of our customers. We are confident that we will meet our growth objectives as the economy improves," Holliday said.
Global Consolidated Net Sales
and Net Income
Third quarter consolidated net sales totaled $6.1 billion compared to $5.5
billion in third quarter 2002, up 12 percent. Third quarter net income before
cumulative effect of changes in accounting principles was a loss of $873
million, or $.88 per share, including non-cash after-tax charges totaling
$1,039 million or $1.04 per share, taken in connection with the anticipated
separation of INVISTA. This compares to third quarter 2002 earnings of $469
million or $.47 per share. In addition to the INVISTA separation-related charges,
the decrease in income reflects higher raw material costs, higher taxes,
increased non-cash pension expense and a reduction in benefits from other
special items versus the third quarter 2002 as shown below.
|
SPECIAL ITEMS |
||||||
|
|
$MM Pretax |
$MM After-Tax |
($ Per Share) |
|||
|
|
2003 |
2002 |
2003 |
2002 |
2003 |
2002 |
|
1st Quarter – Total |
(78) |
(72) |
(51) |
(73) |
(.05) |
(.07) |
|
2nd Quarter – Total |
80 |
(345) |
52 |
(168) |
.05 |
(.17) |
|
3rd Quarter |
|
|
|
|
|
|
|
Insurance proceeds – Benlate® litigation |
25 |
|
16 |
|
.02 |
|
|
Arbitration ruling – Pharma |
23 |
|
15 |
|
.01 |
|
|
INVISTA separation charges |
(1,605) |
|
(1,039) |
|
(1.04) |
|
|
Performance Materials – Clysar® sale |
|
84 |
|
51 |
|
.05 |
|
Changes in restructuring estimates |
|
23 |
|
17 |
|
.02 |
|
3rd Quarter – Total |
(1,557) |
107 |
(1,008) |
68 |
(1.01) |
.07 |
Income before special items shown above was $135 million, or $.13 per share, versus $401 million, or $.40 per share, in the third quarter 2002.
Segment Sales
Worldwide and regional segment sales and related variances for the third
quarter 2003 compared with the third quarter 2002 are summarized below. Segment
sales include transfers and a pro rata share of equity affiliate sales.
|
|
Segment Sales |
% Change Due To |
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|
|
3Q'03 |
% Change |
Local |
Currency |
Volume |
Other* |
|
Worldwide** |
7.0 |
12 |
(1) |
3 |
4 |
5 |
|
|
3.0 |
7 |
(1) |
NA |
1 |
7 |
|
|
1.9 |
14 |
0 |
11 |
0 |
3 |
|
|
1.3 |
17 |
0 |
1 |
14 |
2 |
|
|
0.8 |
20 |
0 |
3 |
9 |
8 |
|
* Net impact of acquisitions and divestitures and a change in management reporting for DTI inter-segment transfers. |
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|
** Percentage variances do not add to total sales percentage change due to rounding. |
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Business Segment Performance
Comments on individual segment sales and after-tax operating income (ATOI) for
the third quarter 2003 compared with the third quarter 2002 are summarized
below. All segments had a benefit to sales ranging from 2-5 percent resulting
from the currency effect of the weaker dollar. Additional segment information
is available to investors and the public via the earnings data section of the
Agriculture & Nutrition – Third quarter sales of $0.8 billion were 32 percent higher reflecting 4 percent higher U.S. dollar selling prices, 10 percent higher volume, and an 18 percent benefit attributable to additional sales from The Solae Company, a newly formed venture with Bunge Limited. ATOI was a loss of $142 million versus a loss of $91 million. After-tax losses, which are typical in the seasonally low third quarter, increased versus last year principally because of a lower effective tax rate on seasonal losses, higher non-cash pension expense, and higher raw material costs.
Coatings & Color Technologies – Sales of $1.4 billion were up 8 percent principally reflecting 7 percent higher U.S. dollar selling prices and 2 percent added through an acquisition, partly offset by 1 percent lower volume. ATOI declined 29 percent to $120 million, as the benefit of higher revenue was more than offset by less favorable product and geographic mix in coatings and non-cash pension expense across the segment.
Electronic & Communication Technologies – Sales of $0.7 billion were up 13 percent, reflecting 11 percent higher volumes, 3 percent lower prices and 5 percent acquisition-related sales growth. ATOI was $32 million versus $67 million last year. Earnings declined as a result of pricing pressure in Fluoropolymers; start-up costs for Displays; and non-cash pension expense, which more than offset the benefits of higher revenue. Commercialization of Organic Light Emitting Diode (OLED) displays has been delayed due to technical difficulties with start-up.
Performance Materials – Sales of $1.3 billion were up 4 percent reflecting 3 percent higher volume and 2 percent higher U.S. dollar selling prices partly offset by a 1 percent reduction due to the divestiture of the DuPont™ Clysar® shrink film business. ATOI was $55 million compared to $181 million last year. In addition to significantly higher raw material and non-cash pension costs, the earnings decline reflects the absence of a $51 million gain on the sale of the Clysar® business in the third quarter 2002.
Pharmaceuticals – ATOI was $100 million versus $72 million last year. The current quarter ATOI includes a $15 million one-time benefit from a favorable arbitration ruling.
Safety & Protection – Sales of $1.0 billion were up 17 percent due to 2 percent higher prices, 9 percent higher volumes, and 6 percent from acquisitions. Increased revenue was largely offset by higher non-cash pension expense and raw material costs. ATOI declined 1 percent due to absence of a $3 million restructuring benefit in third quarter 2002.
Textiles & Interiors – Sales were $1.7 billion, up 3 percent excluding the impact of the change in management reporting for inter-segment transfers. This reflects 2 percent higher volume and 1 percent higher U.S. dollar selling prices. ATOI was a loss of $1,047 million versus earnings of $60 million last year. The earnings decline principally reflects non-cash charges totaling $1,039 million associated with the anticipated separation of INVISTA, explained in more detail below, significantly higher raw material and non-cash pension costs.
INVISTA Impairment Charges
In conjunction with the anticipated separation of INVISTA, and in light of the
previously announced negotiations for the sale of INVISTA, DuPont recorded an
after-tax non-cash impairment charge of $987 million to write-down to estimated
fair value various manufacturing and intangible assets, including goodwill, as
well as investments in certain joint ventures. In addition, a non-cash
after-tax charge of $52 million was recorded for pension curtailment losses.
Additional charges and credits may be recorded in connection with the
separation which cannot be reasonably estimated at this time.
Earnings Outlook
Macroeconomic indicators, as well as the company's September volumes, suggest
that the industrial sector is likely in the early stages of a recovery. Given
this expectation, the company reaffirms the full year 2003 outlook which it
provided on September 17 of approximately $1.60 earnings per share before
special items. Year-to-date, net special items total losses of $1.01 per share.
Thus, the company's outlook for the full year 2003, including special items, is
approximately $0.59. This excludes unknown special items that could occur in
the fourth quarter.
Use of Non-GAAP Measures
Management believes that earnings before special items, a
"non-GAAP" measure, is meaningful to investors because it
provides 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.
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.
More information about segment results and highlights may be
accessed on www.dupont.com via the "
Consolidated Income Statement, Consolidate Segment Information and Financial Summary Attachments (In PDF Format, Adobe Acrobat Reader required) available by clicking here.
Full News Release above with Consolidated Income Statement, Consolidate Segment Information and Financial Summary Attachments included is available in PDF Format by clicking here.
# # #
10/22/03
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