Exhibit 99.2
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Spin-off of The Chemours Company
On July 1, 2015, E. I. du Pont de Nemours and Company ("DuPont"), completed the previously announced separation of its Performance Chemicals segment into a separate and independent public company through the distribution of all of the then outstanding common stock of The Chemours Company ("Chemours"). DuPont distributed pro rata to its stockholders one share of Chemours common stock, par value $0.01 per share, for every five shares of DuPont common stock, par value $0.30 per share, held as of 5:00 p.m. ET on June 23, 2015, the record date for the distribution. DuPont's stockholders received cash in lieu of fractional shares. Fractional shares of Chemours common stock were not distributed to DuPont common stockholders. Instead, the fractional shares of Chemours common stock were aggregated and sold in the open market, with the net proceeds distributed pro rata in cash payments to the DuPont common stockholders who otherwise would have received fractional shares of Chemours common stock.
As of the effective date and time of the distribution, DuPont does not beneficially own any equity interest in Chemours and will no longer consolidate Chemours into its financial results. Beginning in the third quarter of 2015, Chemours' historical financial results for periods prior to July 1, 2015 will be reflected in DuPont's Consolidated Financial Statements as a discontinued operation.
Unaudited Pro Forma Consolidated Financial Information
The following unaudited pro forma consolidated financial statements were derived from the historical consolidated financial statements of DuPont, which were prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP").
The unaudited pro forma consolidated income statements for the three months ended March 31, 2015 and for each of the years ended December 31, 2014, 2013 and 2012, are presented as if the spin-off had occurred on January 1, 2012. The unaudited pro forma consolidated balance sheet as of March 31, 2015 is presented as if the spin-off had occurred on that date.
The unaudited pro forma consolidated financial statements include pro forma adjustments that are based on the best information available and assumptions that management believes are factually supportable. The unaudited pro forma consolidated financial statements have been presented for illustrative and informational purposes only and are not intended to reflect or be indicative of DuPont's consolidated results of operations or financial position had the spin-off occurred as of the dates presented, and should not be taken as representation of DuPont's future consolidated results of operations or financial condition.
The company believes that the adjustments included within the Discontinued Operation - Performance Chemicals column of the unaudited pro forma consolidated financial statements are consistent with the guidance for discontinued operations under GAAP. DuPont's current estimates on a discontinued operations basis are preliminary and could change as the company finalizes discontinued operations accounting to be reported in the Quarterly Report on Form 10-Q for the three and nine month periods ending September 30, 2015 and the Annual Report on Form 10-K for the year ending December 31, 2015.
The following unaudited pro forma consolidated financial statements should be read in conjunction with the historical consolidated financial statements of DuPont, the accompanying notes to those financial statements and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in DuPont’s Annual Report on Form 10-K for the year ended December 31, 2014 and its Quarterly Report on Form 10-Q for the three months ended March 31, 2015.
The Pro Forma Adjustments column in the unaudited pro forma consolidated financial statements reflects pro forma adjustments which are described in the accompanying notes. Excluded from the pro forma consolidated income statements are amounts that are non-recurring in nature or amounts that are not material, such as the transition service arrangements which are short-term and interest expense adjustments which are not material.
In connection with the separation, DuPont received dividend proceeds of $3,923 million from Chemours, substantially all of which DuPont intends to return to its shareholders through share repurchases within the 12 to 18 months from the distribution date. The expected future share repurchases are not reflected in the unaudited pro forma consolidated financial statements.
E.I. du Pont de Nemours and Company
Unaudited Pro Forma Consolidated Income Statement
For the Three Months Ended March 31, 2015
(in millions, except per share data)
|
| | | | | | | | | | | | | | | | | |
| Historical DuPont (as reported) | | Discontinued Operation - Performance Chemicals | | Pro Forma Adjustments | | Notes | | Pro Forma DuPont Continuing Operations |
Net sales | $ | 9,172 |
| | $ | 1,335 |
| | | | | | $ | 7,837 |
|
Other income, net | 198 |
| | (1 | ) | | | | | | 199 |
|
Total | 9,370 |
|
| 1,334 |
|
| — |
|
|
|
| 8,036 |
|
Cost of goods sold | 5,553 |
| | 1,037 |
| | | | | | 4,516 |
|
Other operating charges | 283 |
| | 173 |
| | | | | | 110 |
|
Selling, general and administrative expenses | 1,312 |
| | 57 |
| | | | | | 1,255 |
|
Research and development expense | 499 |
| | 17 |
| | | | | | 482 |
|
Interest expense | 84 |
| | — |
| | | | | | 84 |
|
Employee separation / asset related charges, net | 38 |
| | — |
| | | | | | 38 |
|
Total | 7,769 |
| | 1,284 |
| | — |
| | | | 6,485 |
|
Income from continuing operations before income taxes | 1,601 |
| | 50 |
| | — |
| | | | 1,551 |
|
Provision for income taxes on continuing operations | 566 |
| | 36 |
| | | | | | 530 |
|
Net income from continuing operations | 1,035 |
| | 14 |
| | — |
| | | | 1,021 |
|
Less: Net income attributable to noncontrolling interests | 4 |
| | — |
| | | | | | 4 |
|
Net income from continuing operations attributable to DuPont | $ | 1,031 |
| | $ | 14 |
| | $ | — |
| | | | $ | 1,017 |
|
| | | | | | | | | |
Per Share information: | | | | | | | | | |
Basic earnings per share of common stock from continuing operations | $ | 1.13 |
| | | | | | | | $ | 1.12 |
|
Diluted earnings per share of common stock from continuing operations | $ | 1.13 |
| | | | | | | | $ | 1.11 |
|
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
Basic | 907 |
| | | | | | | | 907 |
|
Diluted | 914 |
| | | | | | | | 914 |
|
| | | | | | | | | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements on page 7. | |
| | | | | | | | | |
E.I. du Pont de Nemours and Company
Unaudited Pro Forma Consolidated Income Statement
For the Year Ended December 31, 2014
(in millions, except per share data)
|
| | | | | | | | | | | | | | | | | |
| Historical DuPont (as reported) | | Discontinued Operation - Performance Chemicals | | Pro Forma Adjustments | | Notes | | Pro Forma DuPont Continuing Operations |
Net sales | $ | 34,723 |
| | $ | 6,317 |
| | | | | | $ | 28,406 |
|
Other income, net | 1,323 |
| | 46 |
| | | | | | 1,277 |
|
Total | 36,046 |
| | 6,363 |
| | — |
| |
| | 29,683 |
|
Cost of goods sold | 21,703 |
| | 4,680 |
| | | | | | 17,023 |
|
Other operating charges | 1,067 |
| | 599 |
| | | | | | 468 |
|
Selling, general and administrative expenses | 5,344 |
| | 294 |
| | | | | | 5,050 |
|
Research and development expense | 2,067 |
| | 91 |
| | | | | | 1,976 |
|
Interest expense | 377 |
| | — |
| | | | | | 377 |
|
Employee separation / asset related charges, net | 497 |
| | 21 |
| | | | | | 476 |
|
Total | 31,055 |
| | 5,685 |
| | — |
| |
| | 25,370 |
|
Income from continuing operations before income taxes | 4,991 |
| | 678 |
| | — |
| |
| | 4,313 |
|
Provision for income taxes on continuing operations | 1,370 |
| | 202 |
| | | | | | 1,168 |
|
Net income from continuing operations | 3,621 |
| | 476 |
| | — |
| |
| | 3,145 |
|
Less: Net income attributable to noncontrolling interests | 11 |
| | 1 |
| | | | | | 10 |
|
Net income from continuing operations attributable to DuPont | $ | 3,610 |
| | $ | 475 |
| | $ | — |
| |
| | $ | 3,135 |
|
| | | | | | | | | |
Per Share information: | | | | | | | | | |
Basic earnings per share of common stock from continuing operations | $ | 3.94 |
| | | | | | | | $ | 3.42 |
|
Diluted earnings per share of common stock from continuing operations | $ | 3.90 |
| | | | | | | | $ | 3.39 |
|
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
Basic | 915 |
| | | | | | | | 915 |
|
Diluted | 922 |
| | | | | | | | 922 |
|
| | | | | | | | | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements on page 7. | |
| | | | | | | | | |
E.I. du Pont de Nemours and Company
Unaudited Pro Forma Consolidated Income Statement
For the Year Ended December 31, 2013
(in millions, except per share data)
|
| | | | | | | | | | | | | | | | | |
| Historical DuPont (as reported) | | Discontinued Operation - Performance Chemicals | | Pro Forma Adjustments | | Notes | | Pro Forma DuPont Continuing Operations |
Net sales | $ | 35,734 |
| | $ | 6,736 |
| | | | | | $ | 28,998 |
|
Other income, net | 410 |
| | 39 |
| | | | | | 371 |
|
Total | 36,144 |
| | 6,775 |
| | — |
| |
| | 29,369 |
|
Cost of goods sold | 22,547 |
| | 4,905 |
| | | | | | 17,642 |
|
Other operating charges | 1,560 |
| | 525 |
| | | | | | 1,035 |
|
Selling, general and administrative expenses | 5,833 |
| | 321 |
| | | | | | 5,512 |
|
Research and development expense | 2,153 |
| | 99 |
| | | | | | 2,054 |
|
Interest expense | 448 |
| | — |
| | | | | | 448 |
|
Employee separation / asset related charges, net | 114 |
| | 2 |
| | | | | | 112 |
|
Total | 32,655 |
| | 5,852 |
| | — |
| |
| | 26,803 |
|
Income from continuing operations before income taxes | 3,489 |
| | 923 |
| | — |
| |
| | 2,566 |
|
Provision for income taxes on continuing operations | 626 |
| | 266 |
| | | | | | 360 |
|
Net income from continuing operations | 2,863 |
| | 657 |
| | — |
| |
| | 2,206 |
|
Less: Net income attributable to noncontrolling interests | 14 |
| | 1 |
| | | | | | 13 |
|
Net income from continuing operations attributable to DuPont | $ | 2,849 |
| | $ | 656 |
| | $ | — |
| |
| | $ | 2,193 |
|
| | | | | | | | | |
Per Share information: | | | | | | | | | |
Basic earnings per share of common stock from continuing operations | $ | 3.07 |
| | | | | | | | $ | 2.36 |
|
Diluted earnings per share of common stock from continuing operations | $ | 3.04 |
| | | | | | | | $ | 2.34 |
|
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
Basic | 926 |
| | | | | | | | 926 |
|
Diluted | 933 |
| | | | | | | | 933 |
|
| | | | | | | | | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements on page 7. | |
| | | | | | | | | |
E.I. du Pont de Nemours and Company
Unaudited Pro Forma Consolidated Income Statement
For the Year Ended December 31, 2012
(in millions, except per share data)
|
| | | | | | | | | | | | | | | | | |
| Historical DuPont (as reported) | | Discontinued Operation - Performance Chemicals | | Pro Forma Adjustments | | Notes | | Pro Forma DuPont Continuing Operations |
Net sales | $ | 34,812 |
| | $ | 7,202 |
| | | | | | $ | 27,610 |
|
Other income, net | 498 |
| | 66 |
| | | | | | 432 |
|
Total | 35,310 |
| | 7,268 |
| | — |
| |
| | 28,042 |
|
Cost of goods sold | 21,400 |
| | 4,538 |
| | | | | | 16,862 |
|
Other operating charges | 1,856 |
| | 452 |
| | | | | | 1,404 |
|
Selling, general and administrative expenses | 5,886 |
| | 337 |
| | | | | | 5,549 |
|
Research and development expense | 2,123 |
| | 107 |
| | | | | | 2,016 |
|
Interest expense | 464 |
| | — |
| | | | | | 464 |
|
Employee separation / asset related charges, net | 493 |
| | 36 |
| | | | | | 457 |
|
Total | 32,222 |
| | 5,470 |
| | — |
| |
| | 26,752 |
|
Income from continuing operations before income taxes | 3,088 |
| | 1,798 |
| | — |
| |
| | 1,290 |
|
Provision for income taxes on continuing operations | 616 |
| | 494 |
| | | | | | 122 |
|
Net income from continuing operations | 2,472 |
| | 1,304 |
| | — |
| |
| | 1,168 |
|
Less: Net income attributable to noncontrolling interests | 25 |
| | 1 |
| | | | | | 24 |
|
Net income from continuing operations attributable to DuPont | $ | 2,447 |
| | $ | 1,303 |
| | $ | — |
| |
| | $ | 1,144 |
|
| | | | | | | | | |
Per Share information: | | | | | | | | | |
Basic earnings per share of common stock from continuing operations | $ | 2.61 |
| |
| | | | | | $ | 1.21 |
|
Diluted earnings per share of common stock from continuing operations | $ | 2.59 |
| |
| | | | | | $ | 1.20 |
|
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
Basic | 933 |
| | | | | | | | 933 |
|
Diluted | 942 |
| | | | | | | | 942 |
|
| | | | | | | | | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements on page 7. | |
| | | | | | | | | |
E.I. du Pont de Nemours and Company
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 2015
(in millions, except per share data)
|
| | | | | | | | | | | | | | | | | |
| Historical DuPont (as reported) | | Discontinued Operation - Performance Chemicals | | Pro Forma Adjustments | | Notes | | Pro Forma DuPont Continuing Operations |
Assets | | | | | | | | | |
Current assets | | | | | | | | | |
Cash and cash equivalents | $ | 3,622 |
| | $ | — |
| | $ | 3,216 |
| | (A) | | $ | 6,838 |
|
Marketable securities | 125 |
| | — |
| | | | | | 125 |
|
Accounts and notes receivable, net | 7,651 |
| | 968 |
| | 88 |
| | (C) (D) | | 6,771 |
|
Inventories | 7,051 |
| | 1,115 |
| | | | | | 5,936 |
|
Prepaid expenses | 366 |
| | 9 |
| | | | | | 357 |
|
Deferred income taxes | 504 |
| | 64 |
| | 13 |
| | (D) | | 453 |
|
Total current assets | 19,319 |
| | 2,156 |
| | 3,317 |
| |
| | 20,480 |
|
Property, plant and equipment, net | 12,873 |
| | 3,284 |
| | | | | | 9,589 |
|
Goodwill | 4,365 |
| | 195 |
| | | | | | 4,170 |
|
Other intangible assets | 4,307 |
| | 11 |
| | | | | | 4,296 |
|
Investment in affiliates | 929 |
| | 168 |
| | | | | | 761 |
|
Deferred income taxes | 3,244 |
| | 20 |
| | 339 |
| | (D) | | 3,563 |
|
Other assets | 1,138 |
| | 435 |
| | 403 |
| | (C) | | 1,106 |
|
Total | $ | 46,175 |
| | $ | 6,269 |
| | $ | 4,059 |
| |
| | $ | 43,965 |
|
| | | | | | | | |
|
Liabilities and Equity | | | | | | | | |
|
Current liabilities | | | | | | | | |
|
Accounts payable | $ | 3,706 |
| | $ | 916 |
| | | | | | $ | 2,790 |
|
Short-term borrowings and capital lease obligations | 1,621 |
| | — |
| | (152 | ) | | (A) | | 1,469 |
|
Income taxes | 654 |
| | 42 |
| | 16 |
| | (D) | | 628 |
|
Other accrued liabilities | 4,751 |
| | 308 |
| | 385 |
| | (B) (C) | | 4,828 |
|
Total current liabilities | 10,732 |
| | 1,266 |
| | 249 |
| |
| | 9,715 |
|
Long-term borrowings and capital lease obligations | 8,763 |
| | — |
| | (336 | ) | | (A) | | 8,427 |
|
Other liabilities | 13,329 |
| | 565 |
| | 403 |
| | (C) | | 13,167 |
|
Deferred income taxes | 489 |
| | 393 |
| | 339 |
| | (D) | | 435 |
|
Total liabilities | 33,313 |
| | 2,224 |
| | 655 |
| |
| | 31,744 |
|
| | | | | | | | |
|
Stockholders' equity | | | | | | | | |
|
Preferred stock | 237 |
| | — |
| | | | | | 237 |
|
Common stock, $0.30 par value; 1,800,000,000 shares authorized; Issued at March 31, 2015 - 992,224,000 | 298 |
| | — |
| | | | | | 298 |
|
Additional paid-in capital | 11,311 |
| | — |
| | | | | | 11,311 |
|
Reinvested earnings | 17,405 |
| | 4,514 |
| | 3,404 |
| | (A) (E) | | 16,295 |
|
Accumulated other comprehensive loss | (9,722 | ) | | (473 | ) | | | | | | (9,249 | ) |
Common stock held in treasury, at cost (87,041,000 shares at March 31, 2015) | (6,727 | ) | | — |
| | | | | | (6,727 | ) |
Total DuPont stockholders' equity | 12,802 |
| | 4,041 |
| | 3,404 |
| |
| | 12,165 |
|
Noncontrolling interests | 60 |
| | 4 |
| | | | | | 56 |
|
Total equity | 12,862 |
| | 4,045 |
| | 3,404 |
| |
| | 12,221 |
|
Total | $ | 46,175 |
| | $ | 6,269 |
| | $ | 4,059 |
| |
| | $ | 43,965 |
|
See Notes to Unaudited Pro Forma Consolidated Financial Statements on page 7.
E.I. du Pont de Nemours and Company
Notes to Unaudited Pro Forma Consolidated Financial Statements
(in millions, except per share data)
| |
(A) | In accordance with the Separation Agreement, DuPont received a cash distribution of $3,416 and a distribution in-kind of 2025 notes (as described below) with an aggregate principal amount of $507, which was paid from the net proceeds of Chemours' borrowings (as described below). The $507 of 2025 notes were issued directly to DuPont, who then exchanged these notes with certain financial institutions to retire $488 of DuPont’s outstanding debt which is shown as a reduction of $152 and $336 from short term borrowings and long term borrowings, respectively, in the Unaudited Pro Forma Balance Sheet. |
DuPont expects to return substantially all of the aggregate proceeds to its shareholders through share repurchases within 12 to 18 months from the distribution date. The expected future share repurchases are not reflected in the Unaudited Pro Forma Consolidated Financial Statements.
On May 12, 2015, in connection with the spin-off, Chemours entered into certain financing transactions. Details of the Chemours transactions are as follows: Chemours issued $1,350 of 6.625% senior unsecured notes due 2023, $750 of 7.0% senior unsecured notes due 2025 and €360 of 6.125% senior unsecured notes due 2023. The 2025 notes include the exchange for previously held DuPont notes as follows: $152 aggregate principal amount of DuPont’s outstanding 1.95% notes due 2016, $277 aggregate principal amount of DuPont’s outstanding 2.75% notes due 2016 and $59 aggregate principal amount of DuPont’s outstanding 5.25% notes due 2016. Chemours retained the debt as of the distribution date and therefore no pro forma adjustment was made to add the debt from May 2015 as it was removed at separation.
The pro forma adjustment also reflects the establishment of the target cash amount of $200 to Chemours, as defined in the Separation Agreement.
| |
(B) | Subsequent to March 31, 2015, DuPont anticipates it will incur additional one-time spin-off costs of approximately $300. These costs primarily relate to non-recurring professional fees associated with regulatory filings and separation activities within finance, legal and information system functions. The company expects a majority of the spin-off costs to be incurred in 2015. |
| |
(C) | Pursuant to the Separation Agreement, Chemours indemnifies DuPont against certain litigation, environmental, workers' compensation and other liabilities that arose prior to the distribution. The term of this indemnification is indefinite and includes defense costs and expenses, as well as monetary and non-monetary settlements and judgments. Within the unaudited pro forma consolidated balance sheet, the liabilities described are included in the Historical DuPont column and are removed within the Discontinued Operation - Performance Chemicals column. The indemnified liabilities and related indemnification assets are included within the Pro Forma Adjustment column; including $85 within other accrued liabilities and $403 within other liabilities and $85 within accounts and notes receivable, net and $403 within other assets. |
| |
(D) | Reflects a reclassification of tax balances associated with jurisdictional netting within continuing operations. |
| |
(E) | Reflects the impact to DuPont's Stockholders' Equity from pro forma adjustments described above. |