Exhibit 99.1
Unaudited Pro Forma Combined Statements of Operations and Pro Forma Historical Segment Information
The following unaudited pro forma combined statements of operations (the “unaudited pro forma statements of operations”) and pro forma historical segment information for DuPont are derived from DowDuPont’s consolidated financial statements and accompanying notes, adjusted to give effect to the Merger, Distributions, which will be treated as discontinued operations, and Financings (collectively the “Transactions”). The historical consolidated financial information has been adjusted to give effect to pro forma events that are (1) directly attributable to the Transactions, (2) factually supportable and (3) with respect to the statements of operations, expected to have a continuing impact on the results.
For purposes of DowDupont’s financial statement presentation, Historical Dow was determined to be the accounting acquirer in the Merger, and Historical DuPont’s assets and liabilities were reflected at fair value as of the close of the Merger. As a result, the historical financial statements of Historical Dow for periods prior to the Merger are considered to be the historical financial statements of DowDuPont.
The unaudited pro forma statements of operations and pro forma historical segment information are based on and should be read in conjunction with each of DowDuPont’s, Historical Dow’s and Historical DuPont’s financial statements contained in the Quarterly Reports on Form 10-Q for the three months ended March 31, 2019 and Annual Reports on Form 10-K for the year ended December 31, 2018 filed with the SEC. The unaudited pro forma statements of operations and pro forma historical segment information, prepared in accordance with Article 11 of SEC Regulation S-X, are presented for informational purposes only, and do not purport to represent what results of operations would have been had the Transactions occurred on the dates indicated, nor do they purport to project DuPont’s results of operations or financial position for any future period or as of any future date.
The unaudited pro forma statements of operations for the years ended December 31, 2018 and 2017 include costs of approximately $1.0 billion and $1.2 billion, respectively, previously allocated to the materials science and agriculture businesses that did not meet the definition of expenses related to discontinued operations in accordance with Financial Accounting Standards Board Accounting Standards Codification 205, “Presentation of Financial Statements” (“ASC 205”) and thus are reflected in DuPont’s pro forma income (loss) from continuing operations. A significant portion of these costs relate to Historical Dow and consist of leveraged services provided through service centers, as well as other corporate overhead costs related to information technology, finance, manufacturing, research & development, sales & marketing, supply chain, human resources, sourcing & logistics, legal and communications, public affairs & government affairs functions. These costs related to Historical Dow are no longer being incurred by DuPont after the Dow Distribution.
Pro forma provision (credit) for income taxes on continuing operations also includes the impact of the Tax Cuts and Jobs Act (“The Act”) which was enacted on December 22, 2017. The Act, among other things, reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent, required companies to pay a one-time transition tax on earnings of foreign subsidiaries that were previously deferred, created new provisions related to foreign sourced earnings, eliminated the domestic manufacturing deduction and moved to a territorial system. In accordance with Staff Accounting Bulletin 118, income tax effects of The Act were refined upon obtaining, preparing or analyzing additional information during the measurement period. As of December 31, 2018, DowDuPont completed its accounting for the tax effects of The Act.
One-time transaction-related costs incurred prior to, or concurrent with, the closing of the Merger and subsequent Distributions are not included in the unaudited pro forma statements of operations and pro forma historical segment information. In addition, the unaudited pro forma statements of operations and pro forma historical segment information do not reflect restructuring or integration activities or other costs following the Distributions that may be incurred to achieve cost or growth synergies of DuPont. As no assurance can be made that these costs will be incurred, or the growth synergies will be achieved, no adjustment has been made.
For additional information on the Transactions, refer to DuPont’s Form 8-K’s filed on June 3, 2019 and other filings with the SEC. The pro forma information included in this filing is consistent with the adjustments made in the unaudited pro forma financial statements included in the Current Report on Form 8-K filed on June 3, 2019.
5
DuPont
Summary of Pro Forma Combined Statements of Operations (Unaudited)
Three Months Ended | Year Ended | Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||||||
In millions, except per share amounts | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||||||||||||||
Net sales | $ | 5,414 | $ | 22,594 | $ | 5,457 | $ | 5,683 | $ | 5,857 | $ | 5,597 | $ | 21,000 | $ | 5,361 | $ | 5,272 | $ | 5,322 | $ | 5,045 | |||||||||||
Cost of sales | 3,643 | 15,376 | 3,661 | 3,789 | 4,103 | 3,823 | 16,018 | 4,769 | 3,932 | 3,785 | 3,532 | ||||||||||||||||||||||
Research and development expenses | 267 | 1,070 | 262 | 264 | 270 | 274 | 1,090 | 272 | 271 | 272 | 275 | ||||||||||||||||||||||
Selling, general and administrative expenses | 726 | 3,028 | 727 | 731 | 768 | 802 | 2,984 | 740 | 728 | 752 | 764 | ||||||||||||||||||||||
Amortization of intangibles | 256 | 1,044 | 257 | 256 | 266 | 265 | 1,010 | 265 | 248 | 249 | 248 | ||||||||||||||||||||||
Restructuring, goodwill impairment and asset related charges – net | 71 | 147 | 37 | 11 | 46 | 53 | 590 | 273 | 9 | 160 | 148 | ||||||||||||||||||||||
Integration and separation costs | 438 | 1,394 | 444 | 385 | 291 | 274 | 810 | 303 | 250 | 151 | 106 | ||||||||||||||||||||||
Equity in earnings of nonconsolidated affiliates | 40 | 447 | 291 | 45 | 54 | 57 | 410 | 220 | 47 | 50 | 93 | ||||||||||||||||||||||
Sundry income (expense) - net | 84 | 92 | 117 | (9 | ) | 82 | (98 | ) | (69 | ) | (32 | ) | (69 | ) | (102 | ) | 134 | ||||||||||||||||
Interest expense and amortization of debt discount | 180 | 684 | 171 | 171 | 171 | 171 | 684 | 171 | 171 | 171 | 171 | ||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | (43 | ) | $ | 390 | $ | 306 | $ | 112 | $ | 78 | $ | (106 | ) | $ | (1,845 | ) | $ | (1,244 | ) | $ | (359 | ) | $ | (270 | ) | $ | 28 | |||||
Provision (credit) for income taxes on continuing operations | (61 | ) | 172 | 15 | 24 | 89 | 44 | (2,295 | ) | (1,704 | ) | (143 | ) | (248 | ) | (200 | ) | ||||||||||||||||
Income (loss) from continuing operations, net of tax | $ | 18 | $ | 218 | $ | 291 | $ | 88 | $ | (11 | ) | $ | (150 | ) | $ | 450 | $ | 460 | $ | (216 | ) | $ | (22 | ) | $ | 228 | |||||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 11 | 39 | 13 | 15 | (2 | ) | 13 | 31 | 9 | 6 | 7 | 9 | |||||||||||||||||||||
Net income (loss) from continuing operations available to DuPont common stockholders | $ | 7 | $ | 179 | $ | 278 | $ | 73 | $ | (9 | ) | $ | (163 | ) | $ | 419 | $ | 451 | $ | (222 | ) | $ | (29 | ) | $ | 219 | |||||||
Per common share data: | |||||||||||||||||||||||||||||||||
Earnings per common share from continuing operations - basic 1 | $ | 0.01 | $ | 0.21 | $ | 0.36 | $ | 0.09 | $ | (0.02 | ) | $ | (0.22 | ) | $ | 0.52 | $ | 0.58 | $ | (0.29 | ) | $ | (0.05 | ) | $ | 0.28 | |||||||
Earnings per common share from continuing operations - diluted 1 | $ | 0.01 | $ | 0.21 | $ | 0.36 | $ | 0.09 | $ | (0.02 | ) | $ | (0.22 | ) | $ | 0.52 | $ | 0.58 | $ | (0.29 | ) | $ | (0.05 | ) | $ | 0.28 | |||||||
Weighted-average common shares outstanding - basic | 750.0 | 767.0 | 760.7 | 765.4 | 769.6 | 772.3 | 774.6 | 775.6 | 776.0 | 775.0 | 771.9 | ||||||||||||||||||||||
Weighted-average common shares outstanding - diluted | 753.1 | 771.8 | 764.3 | 770.4 | 769.6 | 772.3 | 782.0 | 781.9 | 776.0 | 775.0 | 780.4 |
1. | Pro forma earnings per common share from continuing operations for the year may not equal the sum of the quarterly pro forma earnings per common share from continuing operations amounts due to the change in average share calculations. |
Refer to subsequent tables for reconciliations of historical consolidated statements of income to the unaudited pro forma statements of operations.
6
DuPont
Selected Pro Forma Historical Segment Information (Unaudited)
Three Months Ended | Year Ended | Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||||||
In millions | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||||||||||||||
Pro forma net sales by segment | |||||||||||||||||||||||||||||||||
Electronics & Imaging | $ | 825 | $ | 3,635 | $ | 910 | $ | 940 | $ | 921 | $ | 864 | $ | 3,592 | $ | 906 | $ | 928 | $ | 913 | $ | 845 | |||||||||||
Nutrition & Biosciences | 1,535 | 6,216 | 1,485 | 1,533 | 1,621 | 1,577 | 5,389 | 1,428 | 1,326 | 1,346 | 1,289 | ||||||||||||||||||||||
Transportation & Industrial | 1,317 | 5,422 | 1,270 | 1,357 | 1,417 | 1,378 | 4,958 | 1,253 | 1,254 | 1,239 | 1,212 | ||||||||||||||||||||||
Safety & Construction | 1,283 | 5,294 | 1,294 | 1,364 | 1,372 | 1,264 | 5,003 | 1,252 | 1,278 | 1,293 | 1,180 | ||||||||||||||||||||||
Non-Core | 454 | 2,027 | 498 | 489 | 526 | 514 | 2,058 | 522 | 486 | 531 | 519 | ||||||||||||||||||||||
Total | $ | 5,414 | $ | 22,594 | $ | 5,457 | $ | 5,683 | $ | 5,857 | $ | 5,597 | $ | 21,000 | $ | 5,361 | $ | 5,272 | $ | 5,322 | $ | 5,045 | |||||||||||
Pro forma operating EBITDA1 by segment | |||||||||||||||||||||||||||||||||
Electronics & Imaging | $ | 288 | $ | 1,210 | $ | 321 | $ | 322 | $ | 290 | $ | 277 | $ | 1,190 | $ | 297 | $ | 317 | $ | 331 | $ | 245 | |||||||||||
Nutrition & Biosciences | 353 | 1,445 | 330 | 364 | 383 | 368 | 1,162 | 308 | 282 | 284 | 288 | ||||||||||||||||||||||
Transportation & Industrial | 372 | 1,518 | 344 | 383 | 402 | 389 | 1,235 | 329 | 314 | 283 | 309 | ||||||||||||||||||||||
Safety & Construction | 374 | 1,283 | 311 | 350 | 296 | 326 | 1,178 | 253 | 342 | 275 | 308 | ||||||||||||||||||||||
Non-Core | 94 | 677 | 358 | 86 | 123 | 110 | 661 | 294 | 78 | 125 | 164 | ||||||||||||||||||||||
Corporate | (51 | ) | (228 | ) | (42 | ) | (50 | ) | (72 | ) | (64 | ) | (257 | ) | (78 | ) | (31 | ) | (76 | ) | (72 | ) | |||||||||||
Total | $ | 1,430 | $ | 5,905 | $ | 1,622 | $ | 1,455 | $ | 1,422 | $ | 1,406 | $ | 5,169 | $ | 1,403 | $ | 1,302 | $ | 1,222 | $ | 1,242 | |||||||||||
Pro forma equity in earnings (losses)2 of nonconsolidated affiliates by segment | |||||||||||||||||||||||||||||||||
Electronics & Imaging | $ | 3 | $ | 23 | $ | 3 | $ | 7 | $ | 6 | $ | 7 | $ | 20 | $ | 3 | $ | 6 | $ | 6 | $ | 5 | |||||||||||
Nutrition & Biosciences | — | (1 | ) | (2 | ) | — | — | 1 | (2 | ) | — | — | (2 | ) | — | ||||||||||||||||||
Transportation & Industrial | — | 1 | (3 | ) | 1 | 1 | 2 | 5 | — | 2 | 2 | 1 | |||||||||||||||||||||
Safety & Construction | 8 | 24 | 5 | 6 | 8 | 5 | 18 | 3 | 3 | 6 | 6 | ||||||||||||||||||||||
Non-Core | 29 | 400 | 288 | 31 | 39 | 42 | 369 | 214 | 36 | 38 | 81 | ||||||||||||||||||||||
Total | $ | 40 | $ | 447 | $ | 291 | $ | 45 | $ | 54 | $ | 57 | $ | 410 | $ | 220 | $ | 47 | $ | 50 | $ | 93 |
1. | DuPont uses pro forma operating EBITDA as its measure of profit / loss for segment reporting. Pro forma operating EBITDA is defined as pro forma earnings (i.e. pro forma income (loss) from continuing operations before income taxes) before interest, depreciation, amortization, non-operating pension / other post employment benefits (“OPEB”) / charges, and foreign exchange gains / losses, excluding the impact of costs historically allocated to the materials science and agriculture businesses that did not meet the criteria to be recorded as discontinued operations and adjusted significant items. |
2. | Does not exclude the impact of significant items. |
7
DuPont
Disaggregation of Revenue
Net Trade Sales by Segment and Major Product Line
The following table reflects the new segment structure of DuPont effective immediately following the Corteva Distribution. In conjunction with the Segment Realignment effective June 1, 2019, DuPont made the following changes to its major product lines:
• | Realigned its product lines within Nutrition & Biosciences as Food & Beverage, Health & Biosciences, and Pharma Solutions; |
• | Renamed its products lines within Transportation & Industrial (formerly known as Transportation & Advanced Polymers) as Mobility Solutions, Healthcare & Specialty, and Industrial & Consumer (formerly known as Engineering Polymers, Performance Solutions, and Performance Resins, respectively); and |
• | Realigned and renamed its product lines within Safety & Construction as Safety Solutions, Shelter Solutions, and Water Solutions. |
Three Months Ended | Year Ended | Three Months Ended | ||||||||||||||||
In millions | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||||||||
Advanced Printing | $ | 119 | $ | 512 | $ | 125 | $ | 129 | $ | 136 | $ | 122 | ||||||
Display Technologies | 85 | 313 | 83 | 88 | 82 | 60 | ||||||||||||
Interconnect Solutions | 238 | 1,174 | 282 | 313 | 298 | 281 | ||||||||||||
Semiconductor Technologies | 383 | 1,636 | 420 | 410 | 405 | 401 | ||||||||||||
Electronics & Imaging | $ | 825 | $ | 3,635 | $ | 910 | $ | 940 | $ | 921 | $ | 864 | ||||||
Food & Beverage | $ | 738 | $ | 3,008 | $ | 705 | $ | 724 | $ | 805 | $ | 774 | ||||||
Health & Biosciences | 573 | 2,395 | 566 | 597 | 620 | 612 | ||||||||||||
Pharma Solutions | 224 | 813 | 214 | 212 | 196 | 191 | ||||||||||||
Nutrition & Biosciences | $ | 1,535 | $ | 6,216 | $ | 1,485 | $ | 1,533 | $ | 1,621 | $ | 1,577 | ||||||
Mobility Solutions | $ | 625 | $ | 2,532 | $ | 615 | $ | 648 | $ | 648 | $ | 621 | ||||||
Healthcare & Specialty | 384 | 1,581 | 364 | 387 | 424 | 406 | ||||||||||||
Industrial & Consumer | 308 | 1,309 | 291 | 322 | 345 | 351 | ||||||||||||
Transportation & Industrial | $ | 1,317 | $ | 5,422 | $ | 1,270 | $ | 1,357 | $ | 1,417 | $ | 1,378 | ||||||
Safety Solutions | $ | 665 | $ | 2,483 | $ | 613 | $ | 619 | $ | 639 | $ | 612 | ||||||
Shelter Solutions | 357 | 1,796 | 429 | 473 | 471 | 423 | ||||||||||||
Water Solutions | 261 | 1,015 | 252 | 272 | 262 | 229 | ||||||||||||
Safety & Construction | $ | 1,283 | $ | 5,294 | $ | 1,294 | $ | 1,364 | $ | 1,372 | $ | 1,264 | ||||||
Biomaterials | $ | 59 | $ | 284 | $ | 66 | $ | 74 | $ | 74 | $ | 70 | ||||||
Clean Technologies | 65 | 301 | 77 | 71 | 79 | 74 | ||||||||||||
DuPont Teijin Films | 37 | 198 | 49 | 51 | 51 | 47 | ||||||||||||
Photovoltaic & Advanced Materials | 254 | 1,085 | 259 | 255 | 283 | 288 | ||||||||||||
Sustainable Solutions | 39 | 159 | 47 | 38 | 39 | 35 | ||||||||||||
Non-Core | $ | 454 | $ | 2,027 | $ | 498 | $ | 489 | $ | 526 | $ | 514 | ||||||
Total | $ | 5,414 | $ | 22,594 | $ | 5,457 | $ | 5,683 | $ | 5,857 | $ | 5,597 |
8
DuPont
Reconciliation of Pro forma Income from Continuing Operations, Net of Tax
to Pro forma Operating EBITDA (Unaudited)
Three Months Ended | Year Ended | Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||||||
In millions | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||||||||||||||
Pro forma income (loss) from continuing operations, net of tax (GAAP) | $ | 18 | $ | 218 | $ | 291 | $ | 88 | $ | (11 | ) | $ | (150 | ) | $ | 450 | $ | 460 | $ | (216 | ) | $ | (22 | ) | $ | 228 | |||||||
+ Provision (credit) for income taxes on continuing operations | (61 | ) | 172 | 15 | 24 | 89 | 44 | (2,295 | ) | (1,704 | ) | (143 | ) | (248 | ) | (200 | ) | ||||||||||||||||
Pro forma income (loss) from continuing operations before income taxes | $ | (43 | ) | $ | 390 | $ | 306 | $ | 112 | $ | 78 | $ | (106 | ) | $ | (1,845 | ) | $ | (1,244 | ) | $ | (359 | ) | $ | (270 | ) | $ | 28 | |||||
+ Depreciation and amortization | 527 | 2,170 | 526 | 542 | 551 | 551 | 2,131 | 570 | 508 | 531 | 522 | ||||||||||||||||||||||
- Interest income1 | 39 | 39 | 10 | 8 | 11 | 10 | 22 | 1 | 6 | 10 | 5 | ||||||||||||||||||||||
+ Interest expense and amortization of debt discount | 180 | 684 | 171 | 171 | 171 | 171 | 684 | 171 | 171 | 171 | 171 | ||||||||||||||||||||||
- Non-operating pension/OPEB benefit | 21 | 96 | 17 | 24 | 28 | 27 | 57 | 28 | 12 | 9 | 8 | ||||||||||||||||||||||
- Foreign exchange gains (losses), net 1, 2 | (61 | ) | (43 | ) | 55 | (26 | ) | 53 | (125 | ) | (493 | ) | (71 | ) | (133 | ) | (184 | ) | (105 | ) | |||||||||||||
+ Costs historically allocated to the materials science and agriculture businesses3 | 256 | 1,044 | 202 | 234 | 352 | 256 | 1,192 | 269 | 272 | 314 | 337 | ||||||||||||||||||||||
- Adjusted significant items benefit (charge) | (509 | ) | (1,709 | ) | (499 | ) | (402 | ) | (362 | ) | (446 | ) | (2,593 | ) | (1,595 | ) | (595 | ) | (311 | ) | (92 | ) | |||||||||||
Pro forma operating EBITDA (Non-GAAP)4 | $ | 1,430 | $ | 5,905 | $ | 1,622 | $ | 1,455 | $ | 1,422 | $ | 1,406 | $ | 5,169 | $ | 1,403 | $ | 1,302 | $ | 1,222 | $ | 1,242 |
2. Excludes a $50 million pretax foreign exchange loss included in adjusted significant items, related to adjustments to Historical DuPont’s foreign currency exchange contracts as a result of U.S. tax reform for the year ended December 31, 2018 and three months ended March 31, 2018.
3. Costs previously allocated to the materials science and agriculture businesses that did not meet the definition of expenses related to discontinued operations in accordance with ASC 205.
4. Pro forma operating EBITDA is defined as pro forma earnings (i.e. pro forma income (loss) from continuing operations before income taxes) before interest, depreciation, amortization, non-operating pension / other post employment benefits (“OPEB”) / charges, and foreign exchange gains / losses, excluding the impact of costs historically allocated to the materials science and agriculture businesses that did not meet the criteria to be recorded as discontinued operations and adjusted significant items. DuPont’s management believes these financial measures are useful to investors because they provide additional information related to the ongoing performance of DuPont to offer a more meaningful comparison related to future results of operations. These non-GAAP financial measures supplement disclosures prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and should not be viewed as an alternative to U.S. GAAP. Furthermore, such non-GAAP measures may not be consistent with similar measures provided or used by other companies.
DuPont
Pro Forma Significant Items (Unaudited)
Three Months Ended | Year Ended | Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||||||
In millions | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||||||||||||||
Merger-related inventory step-up amortization 1 | $ | — | $ | (77 | ) | $ | (4 | ) | $ | — | $ | (4 | ) | $ | (69 | ) | $ | (1,355 | ) | $ | (1,019 | ) | $ | (336 | ) | $ | — | $ | — | ||||
Net loss on divestitures and changes in joint venture ownership 2 | — | (41 | ) | (14 | ) | (6 | ) | (21 | ) | — | 162 | — | — | — | 162 | ||||||||||||||||||
Integration and separation costs | (438 | ) | (1,394 | ) | (444 | ) | (385 | ) | (291 | ) | (274 | ) | (810 | ) | (303 | ) | (250 | ) | (151 | ) | (106 | ) | |||||||||||
Income tax related item 3 | — | (50 | ) | — | — | — | (50 | ) | — | — | — | — | — | ||||||||||||||||||||
Restructuring and asset-related charges - net | (71 | ) | (147 | ) | (37 | ) | (11 | ) | (46 | ) | (53 | ) | (590 | ) | (273 | ) | (9 | ) | (160 | ) | (148 | ) | |||||||||||
Total pretax pro forma significant items benefit (charge) 4 | $ | (509 | ) | $ | (1,709 | ) | $ | (499 | ) | $ | (402 | ) | $ | (362 | ) | $ | (446 | ) | $ | (2,593 | ) | $ | (1,595 | ) | $ | (595 | ) | $ | (311 | ) | $ | (92 | ) |
+ Total tax impact of significant items benefit (charge) 5 | 109 | 290 | 76 | 61 | 70 | 83 | 654 | 380 | 168 | 100 | 6 | ||||||||||||||||||||||
+ Tax only significant items benefit (charge) | 62 | (177 | ) | (79 | ) | 9 | — | (107 | ) | 1,339 | 1,292 | (33 | ) | (8 | ) | 88 | |||||||||||||||||
Total pro forma significant items benefit (charge), net of tax 6 | $ | (338 | ) | $ | (1,596 | ) | $ | (502 | ) | $ | (332 | ) | $ | (292 | ) | $ | (470 | ) | $ | (600 | ) | $ | 77 | $ | (460 | ) | $ | (219 | ) | $ | 2 |
1. | Reflected in cost of sales. |
2. | Reflected in sundry income (expense) - net. |
3. | Includes a foreign exchange loss related to adjustments to Historical DuPont’s foreign currency exchange contracts as a result of U.S. tax reform. |
4. | Impact on income (loss) from continuing operations before income taxes. |
5. | The income tax effect for each adjustment was calculated based on the statutory tax rate for the jurisdiction(s) in which the adjustment was taxable or deductible. |
6. | Impact on net (loss) income from continuing operations available for DuPont common stockholders. |
9
DuPont
Reconciliation of Pro Forma Earnings (Loss) Per Common Share from Continuing Operations - Diluted
to Pro Forma Adjusted Earnings Per Common Share from Continuing Operations - Diluted (Unaudited)
Three Months Ended | Year Ended | Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||||||
Pretax (in millions) | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||||||||||||||
Pro forma income (loss) from continuing operations before income taxes (GAAP) | $ | (43 | ) | $ | 390 | $ | 306 | $ | 112 | $ | 78 | $ | (106 | ) | $ | (1,845 | ) | $ | (1,244 | ) | $ | (359 | ) | $ | (270 | ) | $ | 28 | |||||
Less: Pretax significant items benefit (charge)1 | (509 | ) | (1,709 | ) | (499 | ) | (402 | ) | (362 | ) | (446 | ) | (2,593 | ) | (1,595 | ) | (595 | ) | (311 | ) | (92 | ) | |||||||||||
Less: Merger-related pretax amortization of intangibles1 | (200 | ) | (817 | ) | (200 | ) | (202 | ) | (207 | ) | (208 | ) | (774 | ) | (206 | ) | (190 | ) | (189 | ) | (189 | ) | |||||||||||
Less: Pretax non-op pension / OPEB benefit1 | 21 | 96 | 17 | 24 | 28 | 27 | 57 | 28 | 12 | 9 | 8 | ||||||||||||||||||||||
Less: Pretax costs historically allocated to the materials science and agriculture businesses1 | (256 | ) | (1,044 | ) | (202 | ) | (234 | ) | (352 | ) | (256 | ) | (1,192 | ) | (269 | ) | (272 | ) | (314 | ) | (337 | ) | |||||||||||
Pro forma adjusted results (Non-GAAP) | $ | 901 | $ | 3,864 | $ | 1,190 | $ | 926 | $ | 971 | $ | 777 | $ | 2,657 | $ | 798 | $ | 686 | $ | 535 | $ | 638 |
Three Months Ended | Year Ended | Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||||||
Net of tax (in millions) | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||||||||||||||
Pro forma net income (loss) from continuing operations available to DuPont common stockholders (GAAP) | $ | 7 | $ | 179 | $ | 278 | $ | 73 | $ | (9 | ) | $ | (163 | ) | $ | 419 | $ | 451 | $ | (222 | ) | $ | (29 | ) | $ | 219 | |||||||
Less: Significant items benefit (charge), net of tax2 | (338 | ) | (1,596 | ) | (502 | ) | (332 | ) | (292 | ) | (470 | ) | (600 | ) | 77 | (460 | ) | (219 | ) | 2 | |||||||||||||
Less: Merger-related amortization of intangibles, net of tax2 | (157 | ) | (641 | ) | (157 | ) | (158 | ) | (163 | ) | (163 | ) | (533 | ) | (142 | ) | (143 | ) | (118 | ) | (130 | ) | |||||||||||
Less: Non-op pension / OPEB benefit, net of tax2 | 17 | 80 | 16 | 20 | 22 | 22 | 42 | 19 | 11 | 6 | 6 | ||||||||||||||||||||||
Less: Costs historically allocated to the materials science and agriculture businesses, net of tax2 | (197 | ) | (804 | ) | (156 | ) | (180 | ) | (271 | ) | (197 | ) | (763 | ) | (172 | ) | (174 | ) | (201 | ) | (216 | ) | |||||||||||
Pro forma adjusted results (Non-GAAP) | $ | 682 | $ | 3,140 | $ | 1,077 | $ | 723 | $ | 695 | $ | 645 | $ | 2,273 | $ | 669 | $ | 544 | $ | 503 | $ | 557 |
Three Months Ended | Year Ended 3 | Three Months Ended | Year Ended 3 | Three Months Ended | |||||||||||||||||||||||||||||
Earnings per common share (“EPS”) - diluted | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||||||||||||||
Pro forma earnings per common share from continuing operations - diluted (GAAP)4 | $ | 0.01 | $ | 0.21 | $ | 0.36 | $ | 0.09 | $ | (0.02 | ) | $ | (0.22 | ) | $ | 0.52 | $ | 0.58 | $ | (0.29 | ) | $ | (0.05 | ) | $ | 0.28 | |||||||
Less: Significant items benefit (charge) - diluted4 | (0.45 | ) | (2.07 | ) | (0.66 | ) | (0.43 | ) | (0.38 | ) | (0.61 | ) | (0.77 | ) | 0.10 | (0.59 | ) | (0.28 | ) | — | |||||||||||||
Less: Merger-related amortization of intangibles - diluted4 | (0.21 | ) | (0.83 | ) | (0.21 | ) | (0.21 | ) | (0.21 | ) | (0.21 | ) | (0.68 | ) | (0.18 | ) | (0.18 | ) | (0.15 | ) | (0.17 | ) | |||||||||||
Less: Non-op pension / OPEB benefit - diluted4 | 0.02 | 0.10 | 0.02 | 0.03 | 0.03 | 0.03 | 0.05 | 0.02 | 0.01 | 0.01 | 0.01 | ||||||||||||||||||||||
Less: Costs historically allocated to the materials science and agriculture businesses - diluted4 | (0.25 | ) | (1.04 | ) | (0.20 | ) | (0.24 | ) | (0.35 | ) | (0.26 | ) | (0.97 | ) | (0.22 | ) | (0.23 | ) | (0.27 | ) | (0.27 | ) | |||||||||||
Pro forma adjusted earnings per common share from continuing operations - diluted (Non-GAAP)5 | $ | 0.90 | $ | 4.05 | $ | 1.41 | $ | 0.94 | $ | 0.89 | $ | 0.83 | $ | 2.89 | $ | 0.86 | $ | 0.70 | $ | 0.64 | $ | 0.71 |
1. | Impact on income (loss) from continuing operations before income taxes. |
2. | Impact on income (loss) from continuing operations, net of tax. The income tax effect for each adjustment was calculated based on the statutory tax rate for the jurisdiction(s) in which the adjustment was taxable or deductible. |
3. | Pro forma earnings per share amounts from continuing operations - diluted for the year may not equal the sum of the quarterly pro forma earnings per common share from continuing operations - diluted amounts due to the change in average share calculations. |
10
4. | Impact on earnings per common share from continuing operations - diluted. |
5. | Pro forma adjusted earnings per common share from continuing operations - diluted, a non-GAAP measure, is defined as pro forma earnings per common share from continuing operations - diluted, excluding the after-tax impact of significant items, after-tax impact of amortization expense associated with intangibles acquired as part of the Merger, after-tax impact of non-operating pension / other post employment benefits (“OPEB”) / charges, and after-tax impact of costs historically allocated to the materials science and agriculture businesses that did not meet the criteria to be recorded as discontinued operations. The most comparable measure is pro forma earnings per common share from continuing operations - diluted. DuPont’s management believes these financial measures are useful to investors because they provide additional information related to the ongoing performance of DuPont to offer a more meaningful comparison related to future results of operations. These non-GAAP financial measures supplement U.S GAAP disclosures and should not be viewed as an alternative to U.S. GAAP. Furthermore, such non-GAAP measures may not be consistent with similar measures provided or used by other companies. |
11
DuPont
Unaudited Pro Forma Combined Statement of Operations
For the Three Months Ended March 31, 2019
DowDuPont | Distribution of Dow1 | Distribution of Corteva2 | Historical Adjustments3 | DuPont Adjusted4 | Separation and Financing Pro Forma Adjustments5 | DuPont | |||||||||||||||||
In millions, except per share amounts | As Reported | Subtotal | Pro Forma | ||||||||||||||||||||
Net sales | $ | 19,649 | $ | (10,867 | ) | $ | (3,368 | ) | $ | — | $ | 5,414 | $ | — | $ | 5,414 | |||||||
Cost of sales | 14,726 | (8,917 | ) | (2,192 | ) | 4 | 3,621 | 22 | 3,643 | ||||||||||||||
Research and development expenses | 717 | (163 | ) | (287 | ) | — | 267 | — | 267 | ||||||||||||||
Selling, general and administrative expenses | 1,672 | (329 | ) | (617 | ) | — | 726 | — | 726 | ||||||||||||||
Amortization of intangibles | 474 | (116 | ) | (102 | ) | — | 256 | — | 256 | ||||||||||||||
Restructuring, goodwill impairment and asset related charges – net | 287 | (157 | ) | (59 | ) | — | 71 | — | 71 | ||||||||||||||
Integration and separation costs | 813 | (44 | ) | (158 | ) | — | 611 | (173 | ) | 438 | |||||||||||||
Equity in earnings of nonconsolidated affiliates | 26 | 13 | 1 | — | 40 | — | 40 | ||||||||||||||||
Sundry income (expense) - net | 248 | (99 | ) | (65 | ) | — | 84 | — | 84 | ||||||||||||||
Interest expense and amortization of debt discount | 454 | (240 | ) | (63 | ) | — | 151 | 29 | 180 | ||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 780 | $ | (987 | ) | $ | 46 | $ | (4 | ) | $ | (165 | ) | $ | 122 | $ | (43 | ) | |||||
Provision (credit) for income taxes on continuing operations | 209 | (261 | ) | (34 | ) | (5 | ) | (91 | ) | 30 | (61 | ) | |||||||||||
Income (loss) from continuing operations, net of tax | $ | 571 | $ | (726 | ) | $ | 80 | $ | 1 | $ | (74 | ) | $ | 92 | $ | 18 | |||||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 51 | (32 | ) | (8 | ) | — | 11 | — | 11 | ||||||||||||||
Net income (loss) from continuing operations available to DuPont common stockholders | $ | 520 | $ | (694 | ) | $ | 88 | $ | 1 | $ | (85 | ) | $ | 92 | $ | 7 | |||||||
Per common share data: | |||||||||||||||||||||||
Earnings per common share from continuing operations - basic6 | $ | 0.23 | $ | 0.01 | |||||||||||||||||||
Earnings per common share from continuing operations - diluted6 | $ | 0.23 | $ | 0.01 | |||||||||||||||||||
Weighted-average common shares outstanding - basic | 2,250.1 | 750.0 | |||||||||||||||||||||
Weighted-average common shares outstanding - diluted | 2,259.2 | 753.1 |
1. Represents the distribution of Dow in accordance with the discontinued operations guidance in ASC 205.
2. Represents the distribution of Corteva in accordance with the discontinued operations guidance in ASC 205.
3. Refer to Historical Adjustments at the end of this section for additional details.
4. Represents DuPont’s current best estimate of DuPont’s retrospectively revised historical consolidated statement of operations for the three months ended March 31, 2019 reflecting the discontinued operations of Dow and Corteva. Actual results could differ from these estimates.
5. Refer to Pro Forma Adjustments at the end of this section for additional details.
6. Refer to the Earnings Per Share Reconciliation at the end of this section for additional details.
12
DuPont
Unaudited Pro Forma Combined Statement of Operations
For the Year Ended December 31, 2018
DowDuPont | Distribution of Dow1 | Distribution of Corteva2 | Historical Adjustments3 | DuPont Adjusted4 | Separation and Financing Pro Forma Adjustments5 | DuPont | |||||||||||||||||
In millions, except per share amounts | As Reported | Subtotal | Pro Forma | ||||||||||||||||||||
Net sales | $ | 85,977 | $ | (49,224 | ) | $ | (14,159 | ) | $ | — | $ | 22,594 | $ | — | $ | 22,594 | |||||||
Cost of sales | 65,333 | (40,187 | ) | (9,838 | ) | (6 | ) | 15,302 | 74 | 15,376 | |||||||||||||
Research and development expenses | 3,060 | (670 | ) | (1,320 | ) | — | 1,070 | — | 1,070 | ||||||||||||||
Selling, general and administrative expenses | 6,709 | (1,304 | ) | (2,377 | ) | — | 3,028 | — | 3,028 | ||||||||||||||
Amortization of intangibles | 1,903 | (469 | ) | (390 | ) | — | 1,044 | — | 1,044 | ||||||||||||||
Restructuring, goodwill impairment and asset related charges – net | 1,105 | (219 | ) | (739 | ) | — | 147 | — | 147 | ||||||||||||||
Integration and separation costs | 2,463 | (135 | ) | (441 | ) | — | 1,887 | (493 | ) | 1,394 | |||||||||||||
Equity in earnings of nonconsolidated affiliates | 1,001 | (554 | ) | — | — | 447 | — | 447 | |||||||||||||||
Sundry income (expense) - net | 592 | (242 | ) | (258 | ) | — | 92 | — | 92 | ||||||||||||||
Interest expense and amortization of debt discount | 1,504 | (1,062 | ) | (387 | ) | — | 55 | 629 | 684 | ||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 5,493 | $ | (5,974 | ) | $ | 1,075 | $ | 6 | $ | 600 | $ | (210 | ) | $ | 390 | |||||||
Provision (credit) for income taxes on continuing operations | 1,489 | (1,471 | ) | 191 | 5 | 214 | (42 | ) | 172 | ||||||||||||||
Income (loss) from continuing operations, net of tax | $ | 4,004 | $ | (4,503 | ) | $ | 884 | $ | 1 | $ | 386 | $ | (168 | ) | $ | 218 | |||||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 155 | (101 | ) | (15 | ) | — | 39 | — | 39 | ||||||||||||||
Net income (loss) from continuing operations available to DuPont common stockholders | $ | 3,849 | $ | (4,402 | ) | $ | 899 | $ | 1 | $ | 347 | $ | (168 | ) | $ | 179 | |||||||
Per common share data: | |||||||||||||||||||||||
Earnings per common share from continuing operations - basic6 | $ | 1.66 | $ | 0.21 | |||||||||||||||||||
Earnings per common share from continuing operations - diluted6 | $ | 1.65 | $ | 0.21 | |||||||||||||||||||
Weighted-average common shares outstanding - basic | 2,301.0 | 767.0 | |||||||||||||||||||||
Weighted-average common shares outstanding - diluted | 2,315.5 | 771.8 |
1. Represents the distribution of Dow in accordance with the discontinued operations guidance in ASC 205.
2. Represents the distribution of Corteva in accordance with the discontinued operations guidance in ASC 205.
3. Refer to Historical Adjustments at the end of this section for additional details.
4. Represents DuPont’s current best estimate of DuPont’s retrospectively revised historical consolidated statement of income for the year ended December 31, 2018 reflecting the discontinued operations of Dow and Corteva. Actual results could differ from these estimates.
5. Refer to Pro Forma Adjustments at the end of this section for additional details.
6. Refer to the Earnings Per Share Reconciliation at the end of this section for additional details.
13
DuPont
Unaudited Pro Forma Combined Statement of Operations
For the Three Months Ended December 31, 2018
DowDuPont | Distribution of Dow1 | Distribution of Corteva2 | Historical Adjustments3 | DuPont Adjusted4 | Separation and Financing Pro Forma Adjustments5 | DuPont | |||||||||||||||||
In millions, except per share amounts | As Reported | Subtotal | Pro Forma | ||||||||||||||||||||
Net sales | $ | 20,099 | $ | (11,849 | ) | $ | (2,793 | ) | $ | — | $ | 5,457 | $ | — | $ | 5,457 | |||||||
Cost of sales | 15,567 | (9,942 | ) | (1,974 | ) | (9 | ) | 3,642 | 19 | 3,661 | |||||||||||||
Research and development expenses | 749 | (151 | ) | (336 | ) | — | 262 | — | 262 | ||||||||||||||
Selling, general and administrative expenses | 1,566 | (298 | ) | (541 | ) | — | 727 | — | 727 | ||||||||||||||
Amortization of intangibles | 479 | (116 | ) | (106 | ) | — | 257 | — | 257 | ||||||||||||||
Restructuring, goodwill impairment and asset related charges – net | 364 | (45 | ) | (282 | ) | — | 37 | — | 37 | ||||||||||||||
Integration and separation costs | 782 | (46 | ) | (161 | ) | — | 575 | (131 | ) | 444 | |||||||||||||
Equity in earnings of nonconsolidated affiliates | 316 | (24 | ) | (1 | ) | — | 291 | — | 291 | ||||||||||||||
Sundry income (expense) - net | 252 | (124 | ) | (11 | ) | — | 117 | — | 117 | ||||||||||||||
Interest expense and amortization of debt discount | 432 | (283 | ) | (94 | ) | — | 55 | 116 | 171 | ||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 728 | $ | (1,116 | ) | $ | 689 | $ | 9 | $ | 310 | $ | (4 | ) | $ | 306 | |||||||
Provision (credit) for income taxes on continuing operations | 215 | (387 | ) | 183 | 2 | 13 | 2 | 15 | |||||||||||||||
Income (loss) from continuing operations, net of tax | $ | 513 | $ | (729 | ) | $ | 506 | $ | 7 | $ | 297 | $ | (6 | ) | $ | 291 | |||||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 38 | (23 | ) | (2 | ) | — | 13 | — | 13 | ||||||||||||||
Net income (loss) from continuing operations available to DuPont common stockholders | $ | 475 | $ | (706 | ) | $ | 508 | $ | 7 | $ | 284 | $ | (6 | ) | $ | 278 | |||||||
Per common share data: | |||||||||||||||||||||||
Earnings per common share from continuing operations - basic6 | $ | 0.21 | $ | 0.36 | |||||||||||||||||||
Earnings per common share from continuing operations - diluted6 | $ | 0.21 | $ | 0.36 | |||||||||||||||||||
Weighted-average common shares outstanding - basic | 2,282.1 | 760.7 | |||||||||||||||||||||
Weighted-average common shares outstanding - diluted | 2,292.9 | 764.3 |
1. Represents the distribution of Dow in accordance with the discontinued operations guidance in ASC 205.
2. Represents the distribution of Corteva in accordance with the discontinued operations guidance in ASC 205.
3. Refer to Historical Adjustments at the end of this section for additional details.
4. Represents DuPont’s current best estimate of DuPont’s retrospectively revised historical consolidated statement of income for the three months ended December 31, 2018 reflecting the discontinued operations of Dow and Corteva. Actual results could differ from these estimates.
5. Refer to Pro Forma Adjustments at the end of this section for additional details.
6. Refer to the Earnings Per Share Reconciliation at the end of this section for additional details.
14
DuPont
Unaudited Pro Forma Combined Statement of Operations
For the Three Months Ended September 30, 2018
DowDuPont | Distribution of Dow1 | Distribution of Corteva2 | Historical Adjustments3 | DuPont Adjusted4 | Separation and Financing Pro Forma Adjustments5 | DuPont | |||||||||||||||||
In millions, except per share amounts | As Reported | Subtotal | Pro Forma | ||||||||||||||||||||
Net sales | $ | 20,123 | $ | (12,485 | ) | $ | (1,955 | ) | $ | — | $ | 5,683 | $ | — | $ | 5,683 | |||||||
Cost of sales | 15,477 | (10,190 | ) | (1,512 | ) | (5 | ) | 3,770 | 19 | 3,789 | |||||||||||||
Research and development expenses | 740 | (158 | ) | (318 | ) | — | 264 | — | 264 | ||||||||||||||
Selling, general and administrative expenses | 1,496 | (302 | ) | (463 | ) | — | 731 | — | 731 | ||||||||||||||
Amortization of intangibles | 462 | (118 | ) | (88 | ) | — | 256 | — | 256 | ||||||||||||||
Restructuring, goodwill impairment and asset related charges – net | 290 | (46 | ) | (233 | ) | — | 11 | — | 11 | ||||||||||||||
Integration and separation costs | 666 | (36 | ) | (111 | ) | — | 519 | (134 | ) | 385 | |||||||||||||
Equity in earnings of nonconsolidated affiliates | 178 | (135 | ) | 2 | — | 45 | — | 45 | |||||||||||||||
Sundry income (expense) - net | 47 | (1 | ) | (55 | ) | — | (9 | ) | — | (9 | ) | ||||||||||||
Interest expense and amortization of debt discount | 362 | (255 | ) | (107 | ) | — | — | 171 | 171 | ||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 855 | $ | (1,516 | ) | $ | 824 | $ | 5 | $ | 168 | $ | (56 | ) | $ | 112 | |||||||
Provision (credit) for income taxes on continuing operations | 320 | (398 | ) | 114 | 1 | 37 | (13 | ) | 24 | ||||||||||||||
Income (loss) from continuing operations, net of tax | $ | 535 | $ | (1,118 | ) | $ | 710 | $ | 4 | $ | 131 | $ | (43 | ) | $ | 88 | |||||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 38 | (21 | ) | (2 | ) | — | 15 | — | 15 | ||||||||||||||
Net income (loss) from continuing operations available to DuPont common stockholders | $ | 497 | $ | (1,097 | ) | $ | 712 | $ | 4 | $ | 116 | $ | (43 | ) | $ | 73 | |||||||
Per common share data: | |||||||||||||||||||||||
Earnings per common share from continuing operations - basic6 | $ | 0.22 | $ | 0.09 | |||||||||||||||||||
Earnings per common share from continuing operations - diluted6 | $ | 0.21 | $ | 0.09 | |||||||||||||||||||
Weighted-average common shares outstanding - basic | 2,296.2 | 765.4 | |||||||||||||||||||||
Weighted-average common shares outstanding - diluted | 2,311.3 | 770.4 |
1. Represents the distribution of Dow in accordance with the discontinued operations guidance in ASC 205.
2. Represents the distribution of Corteva in accordance with the discontinued operations guidance in ASC 205.
3. Refer to Historical Adjustments at the end of this section for additional details.
4. Represents DuPont’s current best estimate of DuPont’s retrospectively revised historical consolidated statement of income for the three months ended September 30, 2018 reflecting the discontinued operations of Dow and Corteva. Actual results could differ from these estimates.
5. Refer to Pro Forma Adjustments at the end of this section for additional details.
6. Refer to the Earnings Per Share Reconciliation at the end of this section for additional details.
15
DuPont
Unaudited Pro Forma Combined Statement of Operations
For the Three Months Ended June 30, 2018
DowDuPont | Distribution of Dow1 | Distribution of Corteva2 | Historical Adjustments3 | DuPont Adjusted4 | Separation and Financing Pro Forma Adjustments5 | DuPont | |||||||||||||||||
In millions, except per share amounts | As Reported | Subtotal | Pro Forma | ||||||||||||||||||||
Net sales | $ | 24,245 | $ | (12,750 | ) | $ | (5,638 | ) | $ | — | $ | 5,857 | $ | — | $ | 5,857 | |||||||
Cost of sales | 17,974 | (10,266 | ) | (3,622 | ) | (1 | ) | 4,085 | 18 | 4,103 | |||||||||||||
Research and development expenses | 803 | (188 | ) | (345 | ) | — | 270 | — | 270 | ||||||||||||||
Selling, general and administrative expenses | 1,933 | (370 | ) | (795 | ) | — | 768 | — | 768 | ||||||||||||||
Amortization of intangibles | 488 | (116 | ) | (106 | ) | — | 266 | — | 266 | ||||||||||||||
Restructuring, goodwill impairment and asset related charges – net | 189 | (42 | ) | (101 | ) | — | 46 | — | 46 | ||||||||||||||
Integration and separation costs | 558 | (32 | ) | (98 | ) | — | 428 | (137 | ) | 291 | |||||||||||||
Equity in earnings of nonconsolidated affiliates | 250 | (194 | ) | (2 | ) | — | 54 | — | 54 | ||||||||||||||
Sundry income (expense) - net | 178 | (21 | ) | (75 | ) | — | 82 | — | 82 | ||||||||||||||
Interest expense and amortization of debt discount | 360 | (263 | ) | (97 | ) | — | — | 171 | 171 | ||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 2,368 | $ | (1,688 | ) | $ | (551 | ) | $ | 1 | $ | 130 | $ | (52 | ) | $ | 78 | ||||||
Provision (credit) for income taxes on continuing operations | 565 | (369 | ) | (97 | ) | — | 99 | (10 | ) | 89 | |||||||||||||
Income (loss) from continuing operations, net of tax | $ | 1,803 | $ | (1,319 | ) | $ | (454 | ) | $ | 1 | $ | 31 | $ | (42 | ) | $ | (11 | ) | |||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 35 | (36 | ) | (1 | ) | — | (2 | ) | — | (2 | ) | ||||||||||||
Net income (loss) from continuing operations available to DuPont common stockholders | $ | 1,768 | $ | (1,283 | ) | $ | (453 | ) | $ | 1 | $ | 33 | $ | (42 | ) | $ | (9 | ) | |||||
Per common share data: | |||||||||||||||||||||||
Earnings per common share from continuing operations - basic6 | $ | 0.76 | $ | (0.02 | ) | ||||||||||||||||||
Earnings per common share from continuing operations - diluted6 | $ | 0.76 | $ | (0.02 | ) | ||||||||||||||||||
Weighted-average common shares outstanding - basic | 2,308.9 | 769.6 | |||||||||||||||||||||
Weighted-average common shares outstanding - diluted | 2,323.6 | 769.6 |
1. Represents the distribution of Dow in accordance with the discontinued operations guidance in ASC 205.
2. Represents the distribution of Corteva in accordance with the discontinued operations guidance in ASC 205.
3. Refer to Historical Adjustments at the end of this section for additional details.
4. Represents DuPont’s current best estimate of DuPont’s retrospectively revised historical consolidated statement of income for the three months ended June 30, 2018 reflecting the discontinued operations of Dow and Corteva. Actual results could differ from these estimates.
5. Refer to Pro Forma Adjustments at the end of this section for additional details.
6. Refer to the Earnings Per Share Reconciliation at the end of this section for additional details.
16
DuPont
Unaudited Pro Forma Combined Statement of Operations
For the Three Months Ended March 31, 2018
DowDuPont | Distribution of Dow1 | Distribution of Corteva2 | Historical Adjustments3 | DuPont Adjusted4 | Separation and Financing Pro Forma Adjustments5 | DuPont | |||||||||||||||||
In millions, except per share amounts | As Reported | Subtotal | Pro Forma | ||||||||||||||||||||
Net sales | $ | 21,510 | $ | (12,140 | ) | $ | (3,773 | ) | $ | — | $ | 5,597 | $ | — | $ | 5,597 | |||||||
Cost of sales | 16,315 | (9,789 | ) | (2,730 | ) | 9 | 3,805 | 18 | 3,823 | ||||||||||||||
Research and development expenses | 768 | (173 | ) | (321 | ) | — | 274 | — | 274 | ||||||||||||||
Selling, general and administrative expenses | 1,714 | (334 | ) | (578 | ) | — | 802 | — | 802 | ||||||||||||||
Amortization of intangibles | 474 | (119 | ) | (90 | ) | — | 265 | — | 265 | ||||||||||||||
Restructuring, goodwill impairment and asset related charges – net | 262 | (86 | ) | (123 | ) | — | 53 | — | 53 | ||||||||||||||
Integration and separation costs | 457 | (21 | ) | (71 | ) | — | 365 | (91 | ) | 274 | |||||||||||||
Equity in earnings of nonconsolidated affiliates | 257 | (201 | ) | 1 | — | 57 | — | 57 | |||||||||||||||
Sundry income (expense) - net | 115 | (96 | ) | (117 | ) | — | (98 | ) | — | (98 | ) | ||||||||||||
Interest expense and amortization of debt discount | 350 | (261 | ) | (89 | ) | — | — | 171 | 171 | ||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 1,542 | $ | (1,654 | ) | $ | 113 | $ | (9 | ) | $ | (8 | ) | $ | (98 | ) | $ | (106 | ) | ||||
Provision (credit) for income taxes on continuing operations | 389 | (317 | ) | (9 | ) | 2 | 65 | (21 | ) | 44 | |||||||||||||
Income (loss) from continuing operations, net of tax | $ | 1,153 | $ | (1,337 | ) | $ | 122 | $ | (11 | ) | $ | (73 | ) | $ | (77 | ) | $ | (150 | ) | ||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 44 | (21 | ) | (10 | ) | — | 13 | — | 13 | ||||||||||||||
Net income (loss) from continuing operations available to DuPont common stockholders | $ | 1,109 | $ | (1,316 | ) | $ | 132 | $ | (11 | ) | $ | (86 | ) | $ | (77 | ) | $ | (163 | ) | ||||
Per common share data: | |||||||||||||||||||||||
Earnings per common share from continuing operations - basic6 | $ | 0.47 | $ | (0.22 | ) | ||||||||||||||||||
Earnings per common share from continuing operations - diluted6 | $ | 0.47 | $ | (0.22 | ) | ||||||||||||||||||
Weighted-average common shares outstanding - basic | 2,317.0 | 772.3 | |||||||||||||||||||||
Weighted-average common shares outstanding - diluted | 2,334.3 | 772.3 |
1. Represents the distribution of Dow in accordance with the discontinued operations guidance in ASC 205.
2. Represents the distribution of Corteva in accordance with the discontinued operations guidance in ASC 205.
3. Refer to Historical Adjustments at the end of this section for additional details.
4. Represents DuPont’s current best estimate of DuPont’s retrospectively revised historical consolidated statement of operations for the three months ended March 31, 2018 reflecting the discontinued operations of Dow and Corteva. Actual results could differ from these estimates.
5. Refer to Pro Forma Adjustments at the end of this section for additional details.
6. Refer to the Earnings Per Share Reconciliation at the end of this section for additional details.
17
DuPont
Unaudited Pro Forma Combined Statement of Operations
For the Year Ended December 31, 2017
DowDuPont | Distribution of Dow1 | Distribution of Corteva2 | Historical Adjustments3 | DuPont Adjusted4 | Historical DuPont As Adjusted (1/1/2017 - 8/31/2017)5 | Merger Pro Forma Adjustments6 | Separation and Financing Pro Forma Adjustments6 | DuPont | |||||||||||||||||||||
In millions, except per share amounts | As Reported | Subtotal | Pro Forma | ||||||||||||||||||||||||||
Net sales | $ | 62,484 | $ | (43,449 | ) | $ | (7,363 | ) | $ | — | $ | 11,672 | $ | 9,334 | $ | (6 | ) | $ | — | $ | 21,000 | ||||||||
Cost of sales | 49,791 | (35,434 | ) | (5,199 | ) | 400 | 9,558 | 6,263 | 138 | 59 | 16,018 | ||||||||||||||||||
Research and development expenses | 2,141 | (669 | ) | (815 | ) | — | 657 | 424 | 9 | — | 1,090 | ||||||||||||||||||
Selling, general and administrative expenses | 4,064 | (1,322 | ) | (1,127 | ) | — | 1,615 | 1,349 | 20 | — | 2,984 | ||||||||||||||||||
Amortization of intangibles | 1,013 | (400 | ) | (108 | ) | — | 505 | 101 | 404 | — | 1,010 | ||||||||||||||||||
Restructuring, goodwill impairment and asset related charges – net | 3,280 | (2,740 | ) | (252 | ) | — | 288 | 311 | (9 | ) | — | 590 | |||||||||||||||||
Integration and separation costs | 1,101 | (31 | ) | (63 | ) | — | 1,007 | 356 | (148 | ) | (405 | ) | 810 | ||||||||||||||||
Equity in earnings of nonconsolidated affiliates | 764 | (394 | ) | (3 | ) | — | 367 | 58 | (15 | ) | — | 410 | |||||||||||||||||
Sundry income (expense) - net | 417 | (28 | ) | (323 | ) | — | 66 | (135 | ) | — | — | (69 | ) | ||||||||||||||||
Interest expense and amortization of debt discount | 1,082 | (915 | ) | (167 | ) | — | — | — | — | 684 | 684 | ||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 1,193 | $ | (2,360 | ) | $ | 42 | $ | (400 | ) | $ | (1,525 | ) | $ | 453 | $ | (435 | ) | $ | (338 | ) | $ | (1,845 | ) | |||||
Provision (credit) for income taxes on continuing operations7 | (476 | ) | (1,250 | ) | 67 | (99 | ) | (1,758 | ) | (284 | ) | (133 | ) | (120 | ) | (2,295 | ) | ||||||||||||
Income (loss) from continuing operations, net of tax | $ | 1,669 | $ | (1,110 | ) | $ | (25 | ) | $ | (301 | ) | $ | 233 | $ | 737 | $ | (302 | ) | $ | (218 | ) | $ | 450 | ||||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 132 | (101 | ) | (15 | ) | — | 16 | 15 | — | — | 31 | ||||||||||||||||||
Net income (loss) from continuing operations available to DuPont common stockholders | $ | 1,537 | $ | (1,009 | ) | $ | (10 | ) | $ | (301 | ) | $ | 217 | $ | 722 | $ | (302 | ) | $ | (218 | ) | $ | 419 | ||||||
Per common share data: | |||||||||||||||||||||||||||||
Earnings per common share from continuing operations - basic8 | $ | 0.97 | $ | 0.52 | |||||||||||||||||||||||||
Earnings per common share from continuing operations - diluted8 | $ | 0.95 | $ | 0.52 | |||||||||||||||||||||||||
Weighted-average common shares outstanding - basic | 1,579.8 | 774.6 | |||||||||||||||||||||||||||
Weighted-average common shares outstanding - diluted | 1,598.1 | 782.0 |
1. Represents the distribution of Dow in accordance with the discontinued operations guidance in ASC 205. Reflects a full year of results of Historical Dow’s materials science business along with Historical DuPont’s materials science business for the post-merger period September 1 through December 31, 2017.
2. Represents the distribution of Corteva in accordance with the discontinued operations guidance in ASC 205. Reflects a full year of results of Historical Dow’s agriculture business along with Historical DuPont’s agriculture business for the post-merger period September 1 through December 31, 2017.
3. Refer to Historical Adjustments at the end of this section for additional details.
4. Represents DuPont’s current best estimate of DuPont’s retrospectively revised historical consolidated statement of operations for the year ended December 31, 2017 reflecting the discontinued operations of Dow and Corteva. Actual results could differ from these estimates.
5. Reflects Historical DuPont for the pre-merger period from January 1 through August 31, 2017 after giving effect to the distributions of Historical DuPont’s materials science and agriculture businesses.
6. Refer to Pro Forma Adjustments at the end of this section for additional details.
7. In connection with The Act, credit for income taxes on continuing operations includes a provisional benefit of $2,666 million related to the remeasurement of deferred taxes, partially offset by a provisional charge of $1,580 million related to the one-time transition tax liability for foreign subsidiaries.
8. Refer to the Earnings Per Share Reconciliation at the end of this section for additional details.
18
DuPont
Unaudited Pro Forma Combined Statement of Operations
For the Three Months Ended December 31, 2017
DowDuPont | Distribution of Dow1 | Distribution of Corteva2 | Historical Adjustments3 | DuPont Adjusted4 | Merger Pro Forma Adjustments5 | Separation and Financing Pro Forma Adjustments5 | DuPont | |||||||||||||||||||
In millions, except per share amounts | As Reported | Subtotal | Pro Forma | |||||||||||||||||||||||
Net sales | $ | 20,066 | $ | (11,958 | ) | $ | (2,747 | ) | $ | — | $ | 5,361 | $ | — | $ | — | $ | 5,361 | ||||||||
Cost of sales | 16,650 | (10,070 | ) | (2,148 | ) | 322 | 4,754 | — | 15 | 4,769 | ||||||||||||||||
Research and development expenses | 786 | (164 | ) | (350 | ) | — | 272 | — | — | 272 | ||||||||||||||||
Selling, general and administrative expenses | 1,584 | (319 | ) | (525 | ) | — | 740 | — | — | 740 | ||||||||||||||||
Amortization of intangibles | 457 | (115 | ) | (77 | ) | — | 265 | — | — | 265 | ||||||||||||||||
Restructuring, goodwill impairment and asset related charges – net | 3,114 | (2,635 | ) | (206 | ) | — | 273 | — | — | 273 | ||||||||||||||||
Integration and separation costs | 502 | (23 | ) | (49 | ) | — | 430 | — | (127 | ) | 303 | |||||||||||||||
Equity in earnings of nonconsolidated affiliates | 362 | (139 | ) | (3 | ) | — | 220 | — | — | 220 | ||||||||||||||||
Sundry income (expense) - net | 145 | 547 | (724 | ) | — | (32 | ) | — | — | (32 | ) | |||||||||||||||
Interest expense and amortization of debt discount | 354 | (250 | ) | (104 | ) | — | — | — | 171 | 171 | ||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | (2,874 | ) | $ | 2,026 | $ | (15 | ) | $ | (322 | ) | $ | (1,185 | ) | $ | — | $ | (59 | ) | $ | (1,244 | ) | ||||
Provision (credit) for income taxes on continuing operations6 | (1,715 | ) | 112 | (11 | ) | (69 | ) | (1,683 | ) | — | (21 | ) | (1,704 | ) | ||||||||||||
Income (loss) from continuing operations, net of tax | $ | (1,159 | ) | $ | 1,914 | $ | (4 | ) | $ | (253 | ) | $ | 498 | $ | — | $ | (38 | ) | $ | 460 | ||||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 47 | (35 | ) | (3 | ) | — | 9 | — | — | 9 | ||||||||||||||||
Net income (loss) from continuing operations available to DuPont common stockholders | $ | (1,206 | ) | $ | 1,949 | $ | (1 | ) | $ | (253 | ) | $ | 489 | $ | — | $ | (38 | ) | $ | 451 | ||||||
Per common share data: | ||||||||||||||||||||||||||
Earnings per common share from continuing operations - basic7 | $ | (0.52 | ) | $ | 0.58 | |||||||||||||||||||||
Earnings per common share from continuing operations - diluted7 | $ | (0.52 | ) | $ | 0.58 | |||||||||||||||||||||
Weighted-average common shares outstanding - basic | 2,326.9 | 775.6 | ||||||||||||||||||||||||
Weighted-average common shares outstanding - diluted | 2,326.9 | 781.9 |
1. Represents the distribution of Dow in accordance with the discontinued operations guidance in ASC 205. Reflects the results of Historical Dow’s materials science business for the three months ended December 31, 2017 and DuPont’s materials science business for the post-merger period October 1 through December 31, 2017.
2. Represents the distribution of Corteva in accordance with the discontinued operations guidance in ASC 205. Reflects the results of Historical Dow’s agriculture business for the three months ended December 31, 2017 and Historical DuPont’s agriculture business for the post-merger period October 1 through December 31, 2017.
3. Refer to Historical Adjustments at the end of this section for additional details.
4. Represents DuPont’s current best estimate of DuPont’s retrospectively revised historical consolidated statement of income for the three months ended December 31, 2017 reflecting the discontinued operations of Dow and Corteva. Actual results could differ from these estimates.
5. Refer to Pro Forma Adjustments at the end of this section for additional details.
6. In connection with The Act, credit for income taxes on continuing operations includes a provisional benefit of $2,666 million related to the remeasurement of deferred taxes, partially offset by a provisional charge of $1,580 million related to the one-time transition tax liability for foreign subsidiaries.
7. Refer to the Earnings Per Share Reconciliation at the end of this section for additional details.
19
DuPont
Unaudited Pro Forma Combined Statement of Operations
For the Three Months Ended September 30, 2017
DowDuPont | Distribution of Dow1 | Distribution of Corteva2 | Historical Adjustments3 | DuPont Adjusted4 | Historical DuPont As Adjusted (7/1/2017 - 8/31/2017)5 | Merger Pro Forma Adjustments6 | Separation and Financing Pro Forma Adjustments6 | DuPont | |||||||||||||||||||||
In millions, except per share amounts | As Reported | Subtotal | Pro Forma | ||||||||||||||||||||||||||
Net sales | $ | 15,354 | $ | (10,919 | ) | $ | (1,490 | ) | $ | — | $ | 2,945 | $ | 2,329 | $ | (2 | ) | $ | — | $ | 5,272 | ||||||||
Cost of sales | 12,186 | (8,800 | ) | (1,151 | ) | 78 | 2,313 | 1,576 | 28 | 15 | 3,932 | ||||||||||||||||||
Research and development expenses | 528 | (163 | ) | (201 | ) | — | 164 | 104 | 3 | — | 271 | ||||||||||||||||||
Selling, general and administrative expenses | 1,001 | (333 | ) | (277 | ) | — | 391 | 331 | 6 | — | 728 | ||||||||||||||||||
Amortization of intangibles | 244 | (100 | ) | (23 | ) | — | 121 | 25 | 102 | — | 248 | ||||||||||||||||||
Restructuring, goodwill impairment and asset related charges – net | 179 | (117 | ) | (47 | ) | — | 15 | 3 | (9 | ) | — | 9 | |||||||||||||||||
Integration and separation costs | 354 | (8 | ) | (14 | ) | — | 332 | 161 | (107 | ) | (136 | ) | 250 | ||||||||||||||||
Equity in earnings of nonconsolidated affiliates | 152 | (125 | ) | 4 | — | 31 | 19 | (3 | ) | — | 47 | ||||||||||||||||||
Sundry income (expense) - net | 394 | (244 | ) | (42 | ) | — | 108 | (177 | ) | — | — | (69 | ) | ||||||||||||||||
Interest expense and amortization of debt discount | 283 | (235 | ) | (48 | ) | — | — | — | — | 171 | 171 | ||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 1,125 | $ | (1,532 | ) | $ | 233 | $ | (78 | ) | $ | (252 | ) | $ | (29 | ) | $ | (28 | ) | $ | (50 | ) | $ | (359 | ) | ||||
Provision (credit) for income taxes on continuing operations | 571 | (639 | ) | 64 | (30 | ) | (34 | ) | (85 | ) | (6 | ) | (18 | ) | (143 | ) | |||||||||||||
Income (loss) from continuing operations, net of tax | $ | 554 | $ | (893 | ) | $ | 169 | $ | (48 | ) | $ | (218 | ) | $ | 56 | $ | (22 | ) | $ | (32 | ) | $ | (216 | ) | |||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 20 | (23 | ) | 6 | — | 3 | 3 | — | — | 6 | |||||||||||||||||||
Net income (loss) from continuing operations available to DuPont common stockholders | $ | 534 | $ | (870 | ) | $ | 163 | $ | (48 | ) | $ | (221 | ) | $ | 53 | $ | (22 | ) | $ | (32 | ) | $ | (222 | ) | |||||
Per common share data: | |||||||||||||||||||||||||||||
Earnings per common share from continuing operations - basic7 | $ | 0.33 | $ | (0.29 | ) | ||||||||||||||||||||||||
Earnings per common share from continuing operations - diluted7 | $ | 0.33 | $ | (0.29 | ) | ||||||||||||||||||||||||
Weighted-average common shares outstanding - basic | 1,577.8 | 776.0 | |||||||||||||||||||||||||||
Weighted-average common shares outstanding - diluted | 1,595.3 | 776.0 |
1. Represents the distribution of Dow in accordance with the discontinued operations guidance in ASC 205. Reflects the results of Historical Dow’s materials science business for the three months ended September 30, 2017 and Historical DuPont’s materials science business for the post-merger period September 1 through September 30, 2017.
2. Represents the distribution of Corteva in accordance with the discontinued operations guidance in ASC 205. Reflects the results of Historical Dow’s agriculture business for the three months ended September 30, 2017 and Historical DuPont’s agriculture business for the post-merger period September 1 through September 30, 2017.
3. Refer to Historical Adjustments at the end of this section for additional details.
4. Represents DuPont’s current best estimate of DuPont’s retrospectively revised historical consolidated statement of operations for the three months ended September 30, 2017 reflecting the discontinued operations of Dow and Corteva. Actual results could differ from these estimates.
5. Reflects Historical DuPont for the pre-merger period from July 1 through August 31, 2017 after giving effect to the distributions of Historical DuPont’s materials science and agriculture businesses.
6. Refer to Pro Forma Adjustments at the end of this section for additional details.
7. Refer to the Earnings Per Share Reconciliation at the end of this section for additional details.
20
DuPont
Unaudited Pro Forma Combined Statement of Operations
For the Three Months Ended June 30, 2017
DowDuPont | Distribution of Dow1 | Distribution of Corteva2 | Historical Adjustments3 | DuPont Adjusted4 | Historical DuPont As Adjusted (4/1/2017 - 6/30/2017)5 | Merger Pro Forma Adjustments6 | Separation and Financing Pro Forma Adjustments6 | DuPont | |||||||||||||||||||||
In millions, except per share amounts | As Reported | Subtotal | Pro Forma | ||||||||||||||||||||||||||
Net sales | $ | 13,834 | $ | (10,504 | ) | $ | (1,592 | ) | $ | — | $ | 1,738 | $ | 3,586 | $ | (2 | ) | $ | — | $ | 5,322 | ||||||||
Cost of sales | 10,761 | (8,475 | ) | (988 | ) | (1 | ) | 1,297 | 2,399 | 74 | 15 | 3,785 | |||||||||||||||||
Research and development expenses | 408 | (166 | ) | (133 | ) | — | 109 | 160 | 3 | — | 272 | ||||||||||||||||||
Selling, general and administrative expenses | 720 | (310 | ) | (168 | ) | — | 242 | 503 | 7 | — | 752 | ||||||||||||||||||
Amortization of intangibles | 157 | (93 | ) | (4 | ) | — | 60 | 38 | 151 | — | 249 | ||||||||||||||||||
Restructuring, goodwill impairment and asset related charges – net | (12 | ) | 12 | — | — | — | 160 | — | — | 160 | |||||||||||||||||||
Integration and separation costs | 136 | — | — | — | 136 | 129 | (30 | ) | (84 | ) | 151 | ||||||||||||||||||
Equity in earnings of nonconsolidated affiliates | 54 | (19 | ) | (2 | ) | — | 33 | 23 | (6 | ) | — | 50 | |||||||||||||||||
Sundry income (expense) - net | 322 | (285 | ) | (15 | ) | — | 22 | (124 | ) | — | — | (102 | ) | ||||||||||||||||
Interest expense and amortization of debt discount | 226 | (218 | ) | (8 | ) | — | — | — | — | 171 | 171 | ||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 1,814 | $ | (1,558 | ) | $ | (308 | ) | $ | 1 | $ | (51 | ) | $ | 96 | $ | (213 | ) | $ | (102 | ) | $ | (270 | ) | |||||
Provision (credit) for income taxes on continuing operations | 455 | (399 | ) | (81 | ) | — | (25 | ) | (121 | ) | (66 | ) | (36 | ) | (248 | ) | |||||||||||||
Income (loss) from continuing operations, net of tax | $ | 1,359 | $ | (1,159 | ) | $ | (227 | ) | $ | 1 | $ | (26 | ) | $ | 217 | $ | (147 | ) | $ | (66 | ) | $ | (22 | ) | |||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 38 | (31 | ) | (5 | ) | — | 2 | 5 | — | — | 7 | ||||||||||||||||||
Net income (loss) from continuing operations available to DuPont common stockholders | $ | 1,321 | $ | (1,128 | ) | $ | (222 | ) | $ | 1 | $ | (28 | ) | $ | 212 | $ | (147 | ) | $ | (66 | ) | $ | (29 | ) | |||||
Per common share data: | |||||||||||||||||||||||||||||
Earnings per common share from continuing operations - basic7 | $ | 1.08 | $ | (0.05 | ) | ||||||||||||||||||||||||
Earnings per common share from continuing operations - diluted7 | $ | 1.07 | $ | (0.05 | ) | ||||||||||||||||||||||||
Weighted-average common shares outstanding - basic | 1,211.8 | 775.0 | |||||||||||||||||||||||||||
Weighted-average common shares outstanding - diluted | 1,229.0 | 775.0 |
1. Represents the distribution of Dow in accordance with the discontinued operations guidance in ASC 205. Reflects the results of Historical Dow’s materials science business for the three months ended June 30, 2017.
2. Represents the distribution of Corteva in accordance with the discontinued operations guidance in ASC 205. Reflects the results of Historical Dow’s agriculture business for the three months ended June 30, 2017.
3. Refer to Historical Adjustments at the end of this section for additional details.
4. Represents DuPont’s current best estimate of DuPont’s retrospectively revised historical consolidated statement of operations for the three months ended June 30, 2017 reflecting the discontinued operations of Dow and Corteva. Actual results could differ from these estimates.
5. Reflects Historical DuPont for the pre-merger period from April 1 through June 30, 2017 after giving effect to the distributions of Historical DuPont’s materials science and agriculture businesses.
6. Refer to Pro Forma Adjustments at the end of this section for additional details.
7. Refer to the Earnings Per Share Reconciliation at the end of this section for additional details.
21
DuPont
Unaudited Pro Forma Combined Statement of Operations
For the Three Months Ended March 31, 2017
DowDuPont | Distribution of Dow1 | Distribution of Corteva2 | Historical Adjustments3 | DuPont Adjusted4 | Historical DuPont As Adjusted (1/1/2017 - 3/31/2017)4 | Merger Pro Forma Adjustments6 | Separation and Financing Pro Forma Adjustments6 | DuPont | |||||||||||||||||||||
In millions, except per share amounts | As Reported | Subtotal | Pro Forma | ||||||||||||||||||||||||||
Net sales | $ | 13,230 | $ | (10,068 | ) | $ | (1,534 | ) | $ | — | $ | 1,628 | $ | 3,419 | $ | (2 | ) | $ | — | $ | 5,045 | ||||||||
Cost of sales | 10,194 | (8,089 | ) | (912 | ) | 1 | 1,194 | 2,288 | 36 | 14 | 3,532 | ||||||||||||||||||
Research and development expenses | 419 | (176 | ) | (131 | ) | — | 112 | 160 | 3 | — | 275 | ||||||||||||||||||
Selling, general and administrative expenses | 759 | (360 | ) | (157 | ) | — | 242 | 515 | 7 | — | 764 | ||||||||||||||||||
Amortization of intangibles | 155 | (92 | ) | (4 | ) | — | 59 | 38 | 151 | — | 248 | ||||||||||||||||||
Restructuring, goodwill impairment and asset related charges – net | (1 | ) | — | 1 | — | — | 148 | — | — | 148 | |||||||||||||||||||
Integration and separation costs | 109 | — | — | — | 109 | 66 | (11 | ) | (58 | ) | 106 | ||||||||||||||||||
Equity in earnings of nonconsolidated affiliates | 196 | (111 | ) | (2 | ) | — | 83 | 16 | (6 | ) | — | 93 | |||||||||||||||||
Sundry income (expense) - net | (444 | ) | (46 | ) | 458 | — | (32 | ) | 166 | — | — | 134 | |||||||||||||||||
Interest expense and amortization of debt discount | 219 | (212 | ) | (7 | ) | — | — | — | — | 171 | 171 | ||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 1,128 | $ | (1,296 | ) | $ | 132 | $ | (1 | ) | $ | (37 | ) | $ | 386 | $ | (194 | ) | $ | (127 | ) | $ | 28 | ||||||
Provision (credit) for income taxes on continuing operations | 213 | (324 | ) | 95 | — | (16 | ) | (78 | ) | (61 | ) | (45 | ) | (200 | ) | ||||||||||||||
Income (loss) from continuing operations, net of tax | $ | 915 | $ | (972 | ) | $ | 37 | $ | (1 | ) | $ | (21 | ) | $ | 464 | $ | (133 | ) | $ | (82 | ) | $ | 228 | ||||||
Net income (loss) from continuing operations attributable to noncontrolling interests | 27 | (12 | ) | (13 | ) | — | 2 | 7 | — | — | 9 | ||||||||||||||||||
Net income (loss) from continuing operations available to DuPont common stockholders | $ | 888 | $ | (960 | ) | $ | 50 | $ | (1 | ) | $ | (23 | ) | $ | 457 | $ | (133 | ) | $ | (82 | ) | $ | 219 | ||||||
Per common share data: | |||||||||||||||||||||||||||||
Earnings per common share from continuing operations - basic 7 | $ | 0.74 | $ | 0.28 | |||||||||||||||||||||||||
Earnings per common share from continuing operations - diluted 7 | $ | 0.72 | $ | 0.28 | |||||||||||||||||||||||||
Weighted-average common shares outstanding - basic | 1,202.5 | 771.9 | |||||||||||||||||||||||||||
Weighted-average common shares outstanding - diluted | 1,222.1 | 780.4 |
1. Represents the distribution of Dow in accordance with the discontinued operations guidance in ASC 205. Reflects the results of Historical Dow’s materials science business for the three months ended March 31, 2017.
2. Represents the distribution of Corteva in accordance with the discontinued operations guidance in ASC 205. Reflects the results of Historical Dow’s agriculture business for the three months ended March 31, 2017.
3. Refer to Historical Adjustments at the end of this section for additional details.
4. Represents DuPont’s current best estimate of DuPont’s retrospectively revised historical consolidated statements of operations for the three months ended March 31, 2017 reflecting the discontinued operations of Dow and Corteva. Actual results could differ from these estimates.
5. Reflects Historical DuPont for the pre-merger period from January 1 through March 31, 2017 after giving effect to the distributions of Historical DuPont’s materials science and agriculture businesses.
6. Refer to Pro Forma Adjustments at the end of this section for additional details.
7. Refer to the Earnings Per Share Reconciliation at the end of this section for additional details.
22
DuPont
Historical Adjustments
Inventory Historical Adjustments:
The effect of the change in the method of accounting for inventory impacted the historical reported amounts of cost of sales in the unaudited pro forma combined statements of operations as follows:
Three Months Ended | Year Ended | Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||||||
In millions | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||||||||||||||
Cost of sales | $ | 4 | $ | (6 | ) | $ | (9 | ) | $ | (5 | ) | $ | (1 | ) | $ | 9 | $ | 400 | $ | 322 | $ | 78 | $ | (1 | ) | $ | 1 | ||||||
(Credit) provision for income taxes on continuing operations1 | (5 | ) | 5 | 2 | 1 | — | 2 | (99 | ) | (69 | ) | (30 | ) | — | — |
1. Represents the income tax effect on the impact from the LIFO accounting policy change calculated using enacted statutory tax rates applicable in each period at the legal entity in which the pre-tax adjustments were made.
DuPont
Pro Forma Adjustments
Separation Pro Forma Adjustments:
DuPont has entered into various supply agreements with Dow in connection with the Dow Distribution. These agreements provide for different pricing than the historical intercompany and intracompany practices of DowDuPont. The financial impact of these agreements is expected to result in an unfavorable impact to income (loss) from continuing operations as follows:
Three Months Ended | Year Ended | Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||||||
In millions | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||||||||||||||
Cost of sales | $ | 22 | $ | 74 | $ | 19 | $ | 19 | $ | 18 | $ | 18 | $ | 59 | $ | 15 | $ | 15 | $ | 15 | $ | 14 | |||||||||||
Credit for income taxes on continuing operations1 | (4 | ) | (14 | ) | (4 | ) | (4 | ) | (3 | ) | (3 | ) | (16 | ) | (4 | ) | (4 | ) | (4 | ) | (4 | ) |
1. Represents the income tax effect of the elimination of one-time transaction costs directly attributable to the expected distribution transactions calculated using enacted statutory tax rates applicable in each period at the legal entity in which the pre-tax adjustments were made.
Adjustment to eliminate one-time transaction costs directly attributable to the expected distribution transactions. The below represents the impact to the respective unaudited pro forma combined statements of operations.
Three Months Ended | Year Ended | Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||||||
In millions | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||||||||||||||
Integration and separation costs | $ | (173 | ) | $ | (493 | ) | $ | (131 | ) | $ | (134 | ) | $ | (137 | ) | $ | (91 | ) | $ | (405 | ) | $ | (127 | ) | $ | (136 | ) | $ | (84 | ) | $ | (58 | ) |
Provision for income taxes on continuing operations1 | 40 | 117 | 33 | 31 | 32 | 21 | 142 | 45 | 48 | 29 | 20 |
1. Represents the income tax effect of the elimination of one-time transaction costs directly attributable to the expected distribution transactions calculated using enacted statutory tax rates applicable in each period at the legal entity in which the pre-tax adjustments were made.
23
Financings Pro Forma Adjustments:
Adjustment to interest expense consists of the following:
Three Months Ended | Year Ended | Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||||||
In millions | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||||||||||||||
Cash interest expense related to the Financings | $ | 28 | $ | 612 | $ | 113 | $ | 167 | $ | 166 | $ | 166 | $ | 666 | $ | 167 | $ | 167 | $ | 166 | $ | 166 | |||||||||||
Amortization of deferred financing fees | 1 | 17 | 3 | 4 | 5 | 5 | 18 | 4 | 4 | 5 | 5 | ||||||||||||||||||||||
Pro forma adjustment to interest expense | $ | 29 | $ | 629 | $ | 116 | $ | 171 | $ | 171 | $ | 171 | $ | 684 | $ | 171 | $ | 171 | $ | 171 | $ | 171 | |||||||||||
Credit for income taxes on continuing operations1 | $ | (6 | ) | $ | (145 | ) | $ | (27 | ) | $ | (40 | ) | $ | (39 | ) | $ | (39 | ) | $ | (246 | ) | $ | (62 | ) | $ | (62 | ) | $ | (61 | ) | $ | (61 | ) |
1. Represents the income tax effect on the pro forma adjustment to interest expense calculated using enacted statutory tax rates applicable in each period at the legal entity in which the pre-tax adjustments were made.
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Merger Pro Forma Adjustments:
The unaudited pro forma statements of operations reflect the following adjustments related to the Merger:
Year Ended | Three Months Ended | ||||||||||||||
In millions | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||
Net sales | |||||||||||||||
Intercompany transactions 1 | $ | (6 | ) | $ | — | $ | (2 | ) | $ | (2 | ) | $ | (2 | ) | |
Cost of sales | |||||||||||||||
Intercompany transactions 1 | $ | (6 | ) | $ | — | $ | (2 | ) | $ | (2 | ) | $ | (2 | ) | |
Policy harmonization 2 | (3 | ) | — | (6 | ) | 20 | (17 | ) | |||||||
Depreciation expense 3 | 147 | — | 36 | 56 | 55 | ||||||||||
Total cost of sales | $ | 138 | $ | — | $ | 28 | $ | 74 | $ | 36 | |||||
Research and development expenses | |||||||||||||||
Depreciation expense 3 | $ | 9 | $ | — | $ | 3 | $ | 3 | $ | 3 | |||||
Selling, general and administrative expenses | |||||||||||||||
Depreciation expense 3 | $ | 20 | $ | — | $ | 6 | $ | 7 | $ | 7 | |||||
Amortization of intangibles | |||||||||||||||
Amortization expense 4 | $ | 404 | $ | — | $ | 102 | $ | 151 | $ | 151 | |||||
Restructuring, goodwill impairment and asset related charges – net | |||||||||||||||
Restructuring charge 5 | $ | (9 | ) | $ | — | $ | (9 | ) | $ | — | $ | — | |||
Integration and separation costs | |||||||||||||||
Transaction costs 5 | $ | (148 | ) | $ | — | $ | (107 | ) | $ | (30 | ) | $ | (11 | ) | |
Equity in earnings of nonconsolidated affiliates | |||||||||||||||
Fair value of nonconsolidated affiliates 6 | $ | (15 | ) | $ | — | $ | (3 | ) | $ | (6 | ) | $ | (6 | ) | |
Total pro forma adjustments to income from continuing operations before income taxes | $ | (435 | ) | $ | — | $ | (28 | ) | $ | (213 | ) | $ | (194 | ) | |
Provision for income taxes on continuing operations 7 | |||||||||||||||
Policy harmonization 2 | $ | 1 | $ | — | $ | 2 | $ | (6 | ) | $ | 5 | ||||
Depreciation expense 3 | (56 | ) | — | (14 | ) | (21 | ) | (21 | ) | ||||||
Amortization expense 4 | (125 | ) | — | (31 | ) | (47 | ) | (47 | ) | ||||||
Restructuring charge 5 | 3 | — | 3 | — | — | ||||||||||
Transaction costs 5 | 49 | — | 35 | 10 | 4 | ||||||||||
Fair value of nonconsolidated affiliates 6 | 5 | — | 1 | 2 | 2 | ||||||||||
Total provision (credit) for income taxes on continuing operations | $ | (133 | ) | $ | — | $ | (6 | ) | $ | (66 | ) | $ | (61 | ) | |
Total pro forma adjustments to income from continuing operations, net of tax | $ | (302 | ) | $ | — | $ | (22 | ) | $ | (147 | ) | $ | (133 | ) |
1. Transactions between Historical Dow and Historical DuPont have been eliminated as if they were consolidated affiliates for the period January 1 through August 31, 2017. Adjustments reflect the elimination of intercompany net sales and cost of sales.
2. Represents a reduction to cost of sales for the period January 1 through August 31, 2017, due to conforming Historical DuPont’s accounting policy of deferring and amortizing expenses for planned major maintenance activities to DowDuPont’s accounting policy of directly expensing the costs as incurred.
3. Represents estimated additional depreciation expense in cost of sales, research and development expenses and selling, general and administrative expenses, resulting from the fair value adjustment to net property for the period January 1 through August 31, 2017 related to the ongoing specialty products businesses.
4. Represents estimated additional amortization expense resulting from the fair value adjustment to intangibles for the period January 1 through August 31, 2017 reflected in amortization of intangibles related to the ongoing specialty products businesses.
5. Represents the elimination of one-time merger related transaction costs from integration and separation and restructuring, goodwill impairment and asset-related charges-net costs for the period January 1 through August 31, 2017.
6. Represents a reduction to equity in earnings of nonconsolidated affiliates for the period January 1 through August 31, 2017 related to the amortization of the fair value adjustment to Historical DuPont’s investments in nonconsolidated affiliates.
7. Represents the income tax effect of the Merger pro forma adjustments calculated using enacted statutory rates applicable in each period at the legal entity in which the pretax adjustments were made.
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DuPont
Earnings Per Share Reconciliation
The table below contains a reconciliation of the numerator for basic and diluted earnings per share calculations for the periods indicated:
Three Months Ended | Year Ended | Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||||||
In millions | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||||||||||||||||
Pro forma net income (loss) from continuing operations available to DuPont common stockholders | $ | 7 | $ | 179 | $ | 278 | $ | 73 | $ | (9 | ) | $ | (163 | ) | $ | 419 | $ | 451 | $ | (222 | ) | $ | (29 | ) | $ | 219 | |||||||
Net income from continuing operations attributable to participating securities1 | (1 | ) | (17 | ) | (2 | ) | (2 | ) | (7 | ) | (6 | ) | (13 | ) | — | (3 | ) | (6 | ) | (4 | ) | ||||||||||||
Pro forma net income (loss) from continuing operations available to DuPont common stockholders – basic and diluted | $ | 6 | $ | 162 | $ | 276 | $ | 71 | $ | (16 | ) | $ | (169 | ) | $ | 406 | $ | 451 | $ | (225 | ) | $ | (35 | ) | $ | 215 |
1. Pro forma basic and diluted earnings per share is calculated by dividing pro forma net income (loss) available to DuPont common stockholders by pro forma weighted-average number of DuPont common shares outstanding. Pro forma net income available for DuPont common stockholders is reduced by net income attributable to deferred stock awards, as these awards are considered participating securities due to the DowDuPont’s practice of paying dividend equivalents on unvested shares.
Reconciliation of the denominator for pro forma basic and diluted earnings per share calculations for the periods indicated, prior to reflecting the DuPont 1-for-3 Reverse Stock Split:
Years Ended | Three Months Ended | |||||||||
In millions | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | |||||
DowDuPont weighted-average common shares – basic | 1,579.8 | 2,326.9 | 1,577.8 | 1,211.8 | 1,202.5 | |||||
Weighted-average shares issued to Historical DuPont stockholders as consideration for the Merger1 | 744.1 | — | 750.2 | 1,113.2 | 1,113.2 | |||||
DuPont weighted-average common shares – basic | 2,323.9 | 2,326.9 | 2,328.0 | 2,325.0 | 2,315.7 | |||||
Plus dilutive effect of DowDuPont equity compensation plans | 22.2 | 18.9 | 21.7 | 22.7 | 25.5 | |||||
DuPont weighted-average common shares – diluted | 2,346.1 | 2,345.8 | 2,349.7 | 2,347.7 | 2,341.2 | |||||
Equity awards and deferred stock awards excluded from earnings per share calculations 2 | 1.4 | 0.5 | 1.8 | 2.2 | 1.1 |
1. As a result of the Merger, share amounts for the year ended December 31, 2017, reflect a weighted average effect of Dow shares outstanding prior to August 31, 2017 and DowDuPont shares outstanding on and after August 31, 2017. As such, for purposes of calculating pro forma basic and diluted earnings per share, the impact of the shares issued to DuPont stockholders as part of the Merger, have been included as if the Merger had been consummated on January 1, 2017.
2. These outstanding options to purchase shares of common stock and deferred stock awards were excluded from the calculation of diluted earnings per share because the effect of including them would have been antidilutive.
Reconciliation of the pro forma denominators for basic and diluted earnings per share calculations have been adjusted to reflect DuPont’s 1-for-3 Reverse Stock Split as follows:
Three Months Ended | Years Ended | Three Months Ended | Years Ended | Three Months Ended | ||||||||||||||||||
In millions | Mar 31, 2019 | Dec 31, 2018 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | |||||||||||
Historical basic weighted average common shares outstanding | 2,250.1 | 2,301.0 | 2,282.1 | 2,296.2 | 2,308.9 | 2,317.0 | 2,323.9 | 2,326.9 | 2,328.0 | 2,325.0 | 2,315.7 | |||||||||||
Pro forma basic weighted average common shares outstanding | 750.0 | 767.0 | 760.7 | 765.4 | 769.6 | 772.3 | 774.6 | 775.6 | 776.0 | 775.0 | 771.9 | |||||||||||
Historical diluted weighted average common shares outstanding | 2,259.2 | 2,315.5 | 2,292.9 | 2,311.3 | 2,323.6 | 2,334.3 | 2,346.1 | 2,345.8 | 2,349.7 | 2,347.7 | 2,341.2 | |||||||||||
Pro forma diluted weighted average common shares outstanding1 | 753.1 | 771.8 | 764.3 | 770.4 | 769.6 | 772.3 | 782.0 | 781.9 | 776.0 | 775.0 | 780.4 |
1. For the periods where pro forma net income (loss) from continuing operations available to DuPont common stockholders - basic and diluted is in a loss position, diluted earnings per share does not consider the impact of potentially dilutive securities because the inclusion of the potential common shares would have an antidilutive effect.
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