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) July 28, 1999
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
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Item 7. Financial Statements and Exhibits
---------------------------------
In connection with Debt and/or Equity Securities that may be offered
on a delayed or continuous basis under Registration Statements on Form S-3
(No. 33-53327, No. 33-61339 and No. 33-60069), we hereby file the following
press release.
Exhibit
Number Description of Exhibit
------- -------------------------------------------------
99 Copy of the Registrant's Earnings Press Release,
dated July 28, 1999.
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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/ D. B. Smith
------------------------------------
D. B. Smith
Assistant Controller
July 28, 1999
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EXHIBIT INDEX
Exhibit
Number Description of Exhibits
- ------- ------------------------------------------------------------
99 Copy of the Registrant's Earnings Press Release, dated
July 28, 1999.
4
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EXHIBIT 99
Contact: Susan Gaffney
(302) 774-2698
DUPONT REPORTS SECOND QUARTER 1999 EARNINGS
-------------------------------------------
Wilmington, Del., July 28 -- DuPont reported second
quarter earnings per share from continuing operations before
nonrecurring items of $.78 up 7 percent from second quarter
earnings of $.73 last year. Including discontinued operations
and nonrecurring items, diluted earnings per share were $.80
compared to $.83 in 1998.
Earnings Comparisons - Second Quarter
-------------------------------------
Including
Nonrecurring
(per share diluted) Underlying Items
-------------- --------------
1999 1998 1999 1998
---- ---- ---- ----
Continuing Operations $.78 $.73 $.74 $.69
Discontinued Operations .06 .14 .06 .14
---- ---- ---- ----
$.84 $.87 $.80 $.83
Highlights of the Quarter
- -------------------------
o Sales increased to $7.0 billion, up 9 percent from the
prior year reflecting growth from acquisitions.
o Underlying income from continuing operations increased
6 percent to $886 million, the second highest level in
DuPont history.
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o Plans are being implemented for streamlining operations,
consolidating manufacturing, and workforce reductions to
improve performance in the Polyester Enterprise and the
Crop Protection products and Performance Coatings
businesses.
o The DuPont/Conoco exchange offer commenced July 12
offering U.S. shareholders 2.95 shares of Conoco Class B
common stock in exchange for one share of DuPont common.
This offer will expire August 6 and is being made
through a registration statement filed with the U.S.
Securities and Exchange Commission.
"We are pleased to have regained our earnings growth
momentum, even in the face of continuing price declines," said
Charles O. Holliday, Jr., chairman and CEO. "Although the
polyester industry and U.S. agriculture markets remain weak,
most of our other businesses began to see some volume improve-
ment. While economic conditions in Europe and South America
remain sluggish and raw material costs are increasing, we remain
optimistic for continued year-over-year earnings growth."
RESULTS FROM CONTINUING OPERATIONS
- ----------------------------------
Sales in the quarter were $7.0 billion, up 9 percent
from $6.4 billion in the second quarter of 1998, with acquisi-
tions adding 13 percent to top-line growth. Excluding acquisi-
tions, worldwide volumes declined about 1 percent, while prices
were down 3 percent. Adverse currency effect from a stronger
dollar was less than 1 percent.
The Asia Pacific region turned in a strong performance
with a sales increase of 16 percent on 20 percent volume growth,
reflecting gains in nearly all business units.
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European sales were up 20 percent, with volumes up
24 percent. Excluding the Herberts acquisition, volumes were
down 2 percent, while prices, reflecting a stronger dollar,
declined 4 percent.
U.S. volumes were down 3 percent compared to last year's
second quarter. Excluding the adverse volume impact resulting
from weakness in the crop protection products business, U.S.
volume was up 1 percent. Prices were down 3 percent, adversely
affected by significantly lower polyester fiber prices.
Excluding nonrecurring items, income from continuing
operations for the second quarter 1999 was $886 million, com-
pared to $839 million in 1998. Nonrecurring charges totaling
$40 million and $45 million were taken in 1999 and 1998,
respectively. The current quarter's nonrecurring item relates
to employee separation costs for Polyester Enterprise staffing
reductions as described in the accompanying footnotes. Second
quarter 1998 nonrecurring charges were for employee separation
costs recorded in connection with rationalization of the global
Nylon Enterprise.
Segment Analysis
----------------
The following compares the second quarter 1999 with the
second quarter 1998 for segment sales and earnings before
nonrecurring items. Total segment underlying after-tax
operating income was $1,008 million compared to $975 million
last year. Total segment sales were $7.9 billion, compared to
$7.5 billion last year.
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Agriculture & Nutrition segment earnings were down
13 percent, principally reflecting weakness in the U.S. crop
protection business for corn and soybeans, partly offset by
better results for Nutrition & Health. Segment sales declined
11 percent reflecting a significant volume decrease in the
United States and eastern European Crop Protection Products
markets.
Nylon Enterprise segment earnings were down 20 percent
reflecting lower sales as higher volumes were more than offset
by lower prices. Apparel and industrial markets continue to
show weakness, while residential flooring remains strong in
North America.
Performance Coatings & Polymers segment earnings were up
25 percent reflecting higher earnings across all business units.
Sales were up 39 percent reflecting the addition of the Herberts
acquisition and an average of 5 percent higher sales volume in
the remaining businesses.
Pharmaceuticals segment earnings were up 96 percent,
primarily due to earnings improvements from "Sustiva" and
"Cozaar" as well as the current 100 percent ownership, increased
from 50 percent last year. Partly offsetting these improvements
were higher research and development costs and expected lower
sales of "Coumadin".
8
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Pigments and Chemicals segment earnings were up
15 percent, reflecting increased earnings for white pigments and
fluorochemicals. Fluorochemicals benefited from increased sales
of CFC alternative products, and white pigments from growing
volumes in Asia Pacific and lower raw material costs.
Polyester Enterprise segment posted a loss of
$13 million versus earnings of $1 million last year. Sales were
down 12 percent reflecting both excess capacity and intense
competitive pressures in the industry.
Specialty Fibers segment sales and earnings each
increased 4 percent, reflecting better results for "Lycra"
spandex and nonwovens. "Lycra" volumes remain strong but
average prices were adversely affected due to a combination of
competitive pricing and currency weakness in Europe and South
America.
Specialty Polymers segment earnings were essentially
flat as earnings improvements in Photopolymers and Electronic
Materials and "Corian" were offset by declines for Packaging and
Industrial Polymers and Fluoropolymers.
The Other segment earnings were $12 million versus a
loss of $5 million last year. This principally reflects the
absence of staff employee separation costs incurred last year,
and a benefit from internal service billings to businesses
exceeding actual costs for staff services, consistent with
internal segment reporting. This billing difference will be
eliminated by year-end.
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DISCONTINUED OPERATIONS
- -----------------------
Income from discontinued operations (Conoco, DuPont's
energy subsidiary) was $71 million compared to $165 million in
last year's second quarter, down 57 percent principally reflect-
ing lower natural gas prices and lower downstream volumes and
margins, partly offset by higher oil prices. These factors,
combined with the reduction of the company's ownership to about
70 percent, resulted in a significant earnings decline. Please
refer to the press release issued by Conoco today for additional
information and perspective regarding its operations.
Forward-Looking Statements This news release contains forward-
looking statements based on management's current expectations,
estimates and projections. All statements that address expec-
tations 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 state-
ments 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 DuPont's filings with the
Securities and Exchange Commission, particularly its latest
annual report on Form 10-K, 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, regula-
tions, policies and economic conditions of countries in which
the company does business; competitive pressures; successful
integration of structural changes, including acquisitions,
divestitures and alliances; failure of the company or related
third parties to become Year 2000 capable; research and
development of new products, including regulatory approval and
market acceptance.
###
7/28/99
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<TABLE>
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
<CAPTION>
Three Months Ended Six Months Ended
CONSOLIDATED INCOME STATEMENT June 30 June 30
- -----------------------------------------------------------------------------------------------------------------------
(Dollars in millions, except per share) 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES ........................................................ $6,994 $6,432 $13,289 $12,626
Other Income<Fa> ............................................. 235 192 253<Fb> 489
------ ------ ------- -------
Total .................................................... 7,229 6,624 13,542 13,115
------ ------ ------- -------
Cost of Goods Sold and Other Expenses<Fa> .................... 4,381 4,057 8,254 8,106
Selling, General and Administrative Expenses ................. 625 506 1,160 985
Depreciation and Amortization ................................ 373 367 708 699
Research and Development ..................................... 387 274 745 538
Interest Expense ............................................. 117 129 213 256
Purchased In-Process Research and Development<Fc> ............ - - 40 60
Employee Separation Costs and Write-Down of Assets<Fd> ....... 62 68 62 186
------ ------ ------- -------
Total .................................................... 5,945 5,401 11,182 10,830
------ ------ ------- -------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
AND MINORITY INTERESTS ...................................... 1,284 1,223 2,360 2,285
Provision for Income Tax Expenses ............................ 418 416 850 833
Minority Interests in Earnings of Consolidated Subsidiaries .. 20 13 36 21
------ ------ ------- -------
INCOME FROM CONTINUING OPERATIONS ............................ 846 794 1,474 1,431
DISCONTINUED OPERATIONS
Income from Operations of Discontinued Business,
Net of Income Taxes ...................................... - 165 - 434
Gain on Disposal of Discontinued Business,
Net of Income Taxes ...................................... 71 - 106 -
------ ------ ------- -------
NET INCOME ................................................... $ 917 $ 959 $ 1,580 $ 1,865
====== ====== ======= =======
BASIC EARNINGS PER SHARE OF COMMON STOCK<Fe>
Continuing Operations ...................................... $ .75 $ .70 $ 1.30 $ 1.26
Discontinued Operations .................................... .06 .15 .10 .39
------ ------ ------- -------
Net Income ................................................. $ .81 $ .85 $ 1.40 $ 1.65
====== ====== ======= =======
DILUTED EARNINGS PER SHARE OF COMMON STOCK<Fe>
Continuing Operations ...................................... $ .74 $ .69 $ 1.29 $ 1.24
Discontinued Operations .................................... .06 .14 .09 .38
------ ------ ------- -------
Net Income ................................................. $ .80 $ .83 $ 1.38 $ 1.62
====== ====== ======= =======
DIVIDENDS PER SHARE OF COMMON STOCK .......................... $ .35 $ .35 $ .70 $ .665
====== ====== ======= =======
</TABLE>
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[FN]
NOTES TO CONSOLIDATED INCOME STATEMENT
- --------------------------------------
<Fa> Amortization of intangible assets is principally reported in Cost of
Goods Sold and Other Expenses. Amortization for companies accounted for
under the equity method is reported in Other Income. Total amortization
of intangible assets was $61 and $107 for the second quarter and
year-to-date 1999, respectively. Amounts for comparable periods of 1998
were $23 and $58, respectively.
<Fb> Includes an exchange loss of $131 on forward exchange contracts purchased
in 1998 to lock in the U.S. dollar cost of the acquisition of Herberts,
the automotive coatings business of Hoechst AG. The purchase price for
Herberts was negotiated in German marks.
<Fc> Purchased in-process research and development represents the value
assigned in a purchase business combination to research and development
projects of the acquired business that were in progress at the time of
purchase for which technological feasibility has not yet been established
and no alternative future use is anticipated. Year-to-date 1999
represents an estimated charge that was recorded in the first quarter in
conjunction with the purchase of Herberts based on preliminary
allocations of purchase price that are subject to revision upon
completion of valuations and purchase accounting allocations.
Year-to-date 1998 represents a charge for revision, based on finalization
of the purchase price allocation in conjunction with the purchase of
Protein Technologies International.
<Fd> Second quarter 1999 charges of $62 result from employee separation costs
for about 850 employees within the Polyester Enterprise. Second quarter
1998 charges of $68 result from employee separation costs for about 950
people within the Nylon Enterprise. Year-to-date 1998 charges also
include $40 of employee separation costs within the Nylon Enterprise
related to the termination of about 550 employees and $78 for the
shutdown of related manufacturing facilities.
<Fe> Earnings per share are calculated on the basis of the following average
number of common shares:
Three Months Ended Six Months Ended
June 30 June 30
------------------------------ ------------------------------
Basic Diluted Basic Diluted
------------- ------------- ------------- -------------
1999 1,129,006,814 1,144,189,906 1,128,051,977 1,141,147,812
1998 1,129,926,272 1,151,784,525 1,129,175,175 1,148,733,824
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<TABLE>
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
<CAPTION>
CONSOLIDATED SEGMENT INFORMATION - Three Months Ended Six Months Ended
CONTINUING OPERATIONS<Fa> June 30 June 30
- -----------------------------------------------------------------------------------------------------------------------
(Dollars in millions) 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SEGMENT SALES<Fb>
- -------------
Agriculture & Nutrition ...................................... $1,092 $1,231 $ 1,872 $ 2,001
Nylon Enterprise ............................................. 1,149 1,162 2,252 2,335
Performance Coatings & Polymers .............................. 1,656 1,190 2,806 2,338
Pharmaceuticals<Fc> .......................................... 380 193 789 410
Pigments & Chemicals ......................................... 949 939 1,815 1,859
Polyester Enterprise ......................................... 667 759 1,291 1,493
Specialty Fibers ............................................. 857 828 1,720 1,679
Specialty Polymers ........................................... 1,072 1,055 2,074 2,089
Other ........................................................ 107 109 209 282
------ ------ ------- -------
Total Segment Sales ...................................... 7,929 7,466 14,828 14,486
Elimination of Intersegment Transfers ........................ (234) (182) (407) (386)
Elimination of Equity Affiliate Sales ........................ (701) (852) (1,132) (1,474)
------ ------ ------- -------
SALES .................................................... $6,994 $6,432 $13,289 $12,626
====== ====== ======= =======
AFTER-TAX OPERATING INCOME (LOSS)
- ---------------------------------
Agriculture & Nutrition ...................................... $ 206 $ 236 $ 297 $ 265<Fd>
Nylon Enterprise ............................................. 104 85<Fe> 206 90<Fe>
Performance Coatings & Polymers .............................. 160 128 260<Ff> 250
Pharmaceuticals .............................................. 49 25 124 75
Pigments & Chemicals ......................................... 158 137 304 294
Polyester Enterprise ......................................... (53)<Fg> 1 (59)<Fg> 5
Specialty Fibers ............................................. 168 161 349 349
Specialty Polymers ........................................... 164 162 328 320
Other ........................................................ 12 (5) 22 40
------ ------ ------- -------
Total Segment ATOI ....................................... 968 930 1,831 1,688
Interest & Exchange Gains and Losses ......................... (48) (82) (211)<Fh> (152)
Corporate Expenses ........................................... (74) (54) (146) (105)
------ ------ ------- -------
INCOME FROM CONTINUING OPERATIONS ........................ $ 846 $ 794 $ 1,474 $ 1,431
====== ====== ======= =======
</TABLE>
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[FN]
NOTES TO CONSOLIDATED SEGMENT INFORMATION - CONTINUING OPERATIONS
- -----------------------------------------------------------------
<Fa> Certain reclassifications of segment data have been made to reflect
changes in organizational structure.
<Fb> Includes pro rata equity affiliate sales and intersegment transfers.
<Fc> The increase in sales reflects the current 100 percent ownership of the
pharmaceuticals business versus 50 percent in 1998. In addition,
effective first quarter 1999, revenues from contract manufacturing are
reclassified from Other Income to Sales, and prior periods have been
restated. These revenues are $21 and $48 for second quarter and
year-to-date 1999, respectively, versus $20 and $35 for the comparable
periods of 1998.
<Fd> Includes a charge of $60 for revision, based on finalization of the
purchase price allocation in conjunction with the purchase of Protein
Technologies International, related to the value assigned to research and
development in progress at the time of purchase for which technological
feasibility has not yet been established and no alternative future use is
anticipated.
<Fe> Includes charges of $45 for the quarter and $130 for the year-to-date
related to rationalization of global Nylon operations, primarily shutdown
of certain manufacturing facilities and employee separation costs.
<Ff> Includes an estimated charge of $40 based on preliminary purchase price
allocations in conjunction with the purchase of Herberts, the automotive
coatings business of Hoechst AG, related to the value assigned to
research and development in progress at the time of purchase for which
technological feasibility has not yet been established and no alternative
future use is anticipated.
<Fg> Includes a charge of $40 related to employee separation costs for about
850 employees within the Polyester Enterprise.
<Fh> Includes an exchange loss of $81 on forward exchange contracts purchased
in 1998 to lock in the U.S. dollar cost of the acquisition of Herberts.
The purchase price for Herberts was negotiated in German marks.
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<TABLE>
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
<CAPTION>
SEGMENT SALES VARIANCES
(2ND QUARTER 1999 VS 2ND QUARTER 1998)
- -------------------------------------------------------------------------------------------------------------------------
Sales Percentage Change Due to:
Percent -----------------------------
Change Price Volume Other<Fa>
------- ----- ------ --------
(%) (%) (%) (%)
<S> <C> <C> <C> <C>
Agriculture & Nutrition .............................................. (11) 1 (12)
Nylon Enterprise ..................................................... (1) (4) 3
Performance Coatings & Polymers ...................................... 39 (2) 5 36
Pharmaceuticals ...................................................... 97 N/A N/A 97
Pigments & Chemicals ................................................. 1 (1) 2
Polyester Enterprise ................................................. (12) (11) (1)
Specialty Fibers ..................................................... 4 (5) 9
Specialty Polymers ................................................... 2 (4) 6
Other ................................................................ (2) N/A N/A (2)
<FN>
- ----------------
<Fa> Includes sales increase/(decrease) due to acquisitions and divestitures.
<CAPTION>
CONSOLIDATED SEGMENT INFORMATION
EXCLUDING IMPACT OF NONRECURRING ITEMS - Three Months Ended Six Months Ended
CONTINUING OPERATIONS June 30 June 30
- ------------------------------------------------------------------------------------------------------------------------
(Dollars in millions) 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AFTER-TAX OPERATING INCOME
- --------------------------
Agriculture & Nutrition .............................................. $ 206 $236 $ 297 $ 325
Nylon Enterprise ..................................................... 104 130 206 220
Performance Coatings & Polymers ...................................... 160 128 300 250
Pharmaceuticals ...................................................... 49 25 124 75
Pigments & Chemicals ................................................. 158 137 304 294
Polyester Enterprise ................................................. (13) 1 (19) 5
Specialty Fibers ..................................................... 168 161 349 349
Specialty Polymers ................................................... 164 162 328 320
Other ................................................................ 12 (5) 22 40
------ ---- ------ ------
Total Segment ATOI ................................................ 1,008 975 1,911 1,878
Interest & Exchange Gains and Losses ................................. (48) (82) (130) (152)
Corporate Expenses ................................................... (74) (54) (146) (105)
------ ---- ------ ------
INCOME FROM CONTINUING OPERATIONS ................................. $ 886 $839 $1,635 $1,621
====== ==== ====== ======
</TABLE>
15
