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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 5(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) April 24, 2001
E. I. du Pont de Nemours and Company
(Exact Name of Registrant as Specified in Its Charter)
Delaware 1-815 51-0014090
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
1007 Market Street
Wilmington, Delaware 19898
(Address of principal executive offices)
Registrant's telephone number, including area code: (302) 774-1000
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Item 5. Other Events
The Registrant files, pursuant to Regulation FD, its earnings news release
dated April 24, 2001, entitled "DuPont Reports First Quarter 2001 Earnings," a
copy of which is below. This earnings news release is also filed in connection
with Debt and/or Equity Securities that may be offered on a delayed or
continuous basis under Registration Statements on Form S-3 (No. 33-53327, No.
33-61339, No. 33-60069 and No. 333-86363).
April 24, 2001 Contact: Clif Webb
WILMINGTON, Del. 302-774-4005
r-clifton.webb@usa.dupont.com
DUPONT REPORTS FIRST QUARTER 2001 EARNINGS
Summary
o First quarter 2001 underlying earnings of $.54 per share were in line with
expectations, but 36 percent below first quarter 2000 earnings of $.85 per
share.
o Segment sales in first quarter 2001 of $7.6 billion decreased 9 percent
versus first quarter 2000. This reflects 7 percent lower volume and 2
percent lower U.S. dollar selling prices.
o First quarter underlying after-tax operating income (ATOI) was $734
million, 33 percent below first quarter 2000. ATOI margin was 10 percent.
o Pharmaceuticals accounted for approximately one-third of the underlying
ATOI decline. Excluding Pharmaceuticals, ATOI reductions also reflect a
$165 million impact from higher raw material costs and $100 million from
lower sales volume.
o Worldwide local currency selling prices were up 1 percent. Adverse currency
effects, principally from the weaker euro and Japanese yen, reduced first
quarter worldwide segment sales by 3 percent.
o Actions leading to business restructurings and personnel reductions to
better align resources with the specific mission of each business are under
way. One-time charges associated with these initiatives will be taken in
the second quarter and have no impact on first quarter results.
Earnings Comparisons
($ per share diluted)
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1Q'01 1Q'00
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Underlying .54 .85
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One-Time Items (.07) (.09)
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Reported .47 .76
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2
DuPont reported earnings before one-time items, of $.54 per share for the
first quarter, compared to $.85 per share earned last year.
"We are taking the right steps to manage through a global economic
slowdown," said Charles O. Holliday, Jr., DuPont chairman and chief executive
officer. "As we take these steps, we are managing operating costs and capital
spending in line with current economic conditions and streamlining businesses to
sharpen competitiveness."
Global Sales and Income Highlights
For the quarter, consolidated sales totaled $6.9 billion compared to $7.6
billion in 2000. Segment sales, including transfers and a pro rata share of
sales by equity affiliates, were $7.6 billion, down 9 percent from $8.3 billion
in 2000. Net income was $495 million versus $803 million in 2000, resulting in
earnings per share of $.47 compared to $.76 last year. The earnings decline
reflects significantly lower Pharmaceuticals results and reduced earnings across
the company's chemicals and materials segments. The latter resulted principally
from lower U.S. sales volumes, higher raw material costs, and a stronger U.S.
dollar.
Net income before one-time items was $567 million, compared to $898 million
in the first quarter of 2000, down $331 million or 37 percent. One-time items
are described in the notes to the accompanying financial statements and are
summarized in the table below:
ONE-TIME ITEMS
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$MM Pretax $MM After-Tax ($ Per Share)
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2001 2000 2001 2000 2001 2000
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Pioneer - In-Process R&D Revision 11 11 .01
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Pioneer - Purchase Accounting (133) (347) (83) (215) (.08) (.20)
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Asset Sale - Equity Securities 176 109 .10
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Adoption of SFAS 133* 19 11 .01
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1st Quarter - Total (114) (160) (72) (95) (.07) (.09)
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* Reflects the cumulative effect of a change in accounting principle.
Effective January 1, 2001, the company adopted SFAS 133 - "Accounting for
Derivative Instruments and Hedging Activities," as amended.
3
Regional segment sales and related variances for the first quarter 2001
compared with the first quarter 2000 are summarized below:
FIRST QUARTER
FIRST QUARTER
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Segment Sales % Change Due To
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Q1'01 % Change Local Currency Pharmaceuticals/
$B vs. Q1'00 Price Effect Volume Other*
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Worldwide 7.6 (9) 1 (3) (4) (3)
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U.S. 3.7 (13) 1 0 (9) (5)
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Europe 2.1 (3) 3 (7) 1 0
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Asia Pacific 1.1 (1) 1 (4) 2 0
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Canada, Mexico,
S. America 0.7 (9) 2 (2) (9) 0
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* Includes impact from reduced ownership in DuPont Photomasks. In
addition, the Pharmaceuticals segment has been isolated for purposes
of this analysis.
o Worldwide volumes declined 7 percent, including a 2 percent decline
attributable to pharmaceuticals and 1 percent from portfolio changes.
o U.S. first quarter sales volume (excluding Pharmaceuticals/Other) declined
9 percent versus 2000 principally reflecting lower volumes of fibers,
automotive finishes, and white pigments.
o European volume was up 1 percent and local currency prices up 3 percent.
However, the stronger dollar reduced European sales by 7 percent.
o Asia Pacific sales decreased 1 percent, the first decline since the
economic downturn in 1998. Marginally higher volume and local prices were
more than offset by the negative impact of weaker currencies, particularly
the Japanese yen.
Six Sigma
At the end of the current quarter, there were about 1,200 trained Black
Belts and over 3,600 active projects. The potential pretax benefit from active
projects was $700 million, about the same as at year-end. The actual annualized
pretax benefit of completed projects at the end of the current quarter was $490
million, compared to $370 million at year-end.
4
Business Segment Performance
Summarized below are comments on individual segment first quarter 2001
results excluding one-time items, compared to first quarter 2000 results:
o Performance Coatings & Polymers - Sales were 12 percent lower than 2000
reflecting lower vehicle builds and lower refinish sales in the United
States, as well as the weak euro. Increased raw material costs were a
significant factor in lower results in Engineering Polymers and Elastomers,
in addition to lower volumes. Segment ATOI declined 26 percent.
o Specialty Fibers - Sales and ATOI were 5 percent and 22 percent lower,
respectively. Continued earnings growth from Advanced Fibers Systems only
partly offset lower Lycra(R) elastane earnings, which were adversely
affected by lower U.S. dollar prices, higher raw material costs, and lower
volume. Earnings for Nonwovens were essentially flat on modestly higher
sales.
o Specialty Polymers - ATOI increases in Fluoropolymers and the Electronic
Technologies unit of DuPont iTechnologies only partly offset a decline in
Packaging & Industrial Polymers earnings resulting from lower volumes and
higher ethane costs. Results also declined in DuPont Surfaces and the
Imaging Technologies unit of DuPont iTechnologies. Segment earnings
decreased 21 percent on 5 percent lower sales.
o Pigments & Chemicals - ATOI declined 24 percent on 1 percent lower sales
reflecting lower earnings in all strategic business units. Three percent
lower worldwide volume was partly offset by 2 percent higher U.S. dollar
prices. Segment earnings were negatively affected by high chlorine and
energy costs in White Pigment & Mineral Products and by a litigation
settlement in DuPont Chemical Solutions Enterprise.
o Polyester Enterprise - Sales were 4 percent lower, reflecting continuing
depressed conditions in worldwide fibers markets. Margins continue to be
reduced by lower prices and higher raw material and energy costs, resulting
in a first quarter loss of $8 million.
o Nylon Enterprise - Sales decreased 13 percent and ATOI declined 86 percent,
principally reflecting the impact of a 40 percent increase in raw material
costs (largely natural gas related), 15 percent lower volumes, and less
favorable product mix. Sales declines were principally due to lower
flooring and apparel volumes, particularly in the United States.
o Agriculture & Nutrition - Sales declined 3 percent and ATOI fell 23 percent
reflecting lower earnings in both Crop Protection and Nutrition & Health.
Crop Protection earnings were significantly affected by currency in Europe
and Asia, and by a litigation settlement. Nutrition & Health results
reflect high natural gas prices and weaker European volumes.
5
o Pioneer - Worldwide sales increased slightly, reflecting strong early
season sales in the United States and southern Europe, partly offset by
lower U.S. dollar prices due to the weak euro. Earnings increased 17
percent reflecting improved margins and a more favorable product mix.
o Pharmaceuticals - The loss of $64 million was primarily due to lower sales,
as wholesaler inventories in the distribution channel continue to be
reduced. Underlying demand for Sustiva(TM) efavirenz and Cardiolite(R)
cardiac imaging agent grew 15 percent, and the Coumadin(R) (warfarin sodium
tablets, USP) crystalline market position remains strong. The DuPont share
of Cozaar(R)/Hyzaar(R) U.S. operating profits increased this quarter as of
February 1. R&D and marketing expenses increased as planned. Major product
sales are shown below:
($ in millions) 1Q 2001 1Q 2000
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Coumadin(R) 26 100
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Sustiva(TM) 55 96
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Cardiolite(R)/Miraluma(TM) 18 40
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Outlook
Based on demand signals observed in the first quarter in key markets, the
company now anticipates that the global economic slowdown will similarly impact
the manufacturing sector through the second quarter and perhaps into the second
half of 2001. In the second quarter the company expects continued volume
pressure due to macro economic factors; stabilizing energy and raw material
costs, albeit at a higher level than second quarter last year; and normal
seasonality for its portfolio of businesses.
o The company expects second quarter volumes to remain below 2000 levels in
the United States in its chemical and materials businesses, although
sequential declines should moderate considerably. In Europe and Asia,
year-over-year volume growth is approaching zero, and continued strength of
the U.S. dollar will likely result in negative revenue comparisons in the
second quarter.
o The agriculture related segments, as expected, are operating in a difficult
U.S. farm economy and experiencing negative currency impacts during the
first half selling season. In addition, poor weather conditions in North
America, together with high fertilizer costs, are expected to result in
lower corn acreage than last year. Accordingly, the company expects the
full-year operating outlook for these segments will be moderately negative
versus 2000.
o Pharmaceuticals segment sales and earnings should improve in the second
quarter, but ATOI losses are again expected. A return to more normal levels
of sales and earnings is expected in the second half of the year.
6
The economic outlook for the second half of 2001 remains uncertain.
However, key indicators suggest that declines in U.S. manufacturing and global
automotive markets may be moderating. The company is encouraged by these trends,
but continues to plan for a second half economy that is on balance, similarly
challenging to the second half of last year.
"We will emerge from the current economic turbulence an even stronger
company," Holliday said. "We have accelerated operational initiatives begun last
year to manage costs and we are directing resources to businesses having the
best long-term growth potential."
Forward-Looking Statements: This news release contains forward-looking
statements based on management's current expectations, estimates and
projections. All statements that address expectations or projections about the
future, including statements about the company's strategy for growth, product
development, market position, expected expenditures and financial results are
forward-looking statements. Some of the forward-looking statements may be
identified by words like "expects," "anticipates," "plans," "intends,"
"projects," "indicates," and similar expressions. These statements are not
guarantees of future performance and involve a number of risks, uncertainties
and assumptions. Many factors, including those discussed more fully elsewhere in
this release and in documents filed with the Securities and Exchange Commission
by DuPont, particularly its latest annual report on Form 10-K and quarterly
report on Form 10-Q, as well as others, could cause results to differ materially
from those stated. These factors include, but are not limited to changes in the
laws, regulations, policies and economic conditions, including inflation,
interest and foreign currency exchange rates, of countries in which the company
does business; competitive pressures; successful integration of structural
changes, including restructuring plans, acquisitions, divestitures and
alliances; cost of raw materials, research and development of new products,
including regulatory approval and market acceptance; and seasonality of
agricultural products.
More information about segment results and highlights may be accessed on
www.dupont.com via the "For Investors" web page.
# # #
4/24/01
7
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
Three Months Ended
CONSOLIDATED INCOME STATEMENT March 31
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(Dollars in millions, except per share) 2001 2000
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SALES $ 6,859 $ 7,593
Other Income(a) 170 348
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Total 7,029 7,941
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Cost of Goods Sold and Other Expenses(b) 4,486 4,856
Selling, General and Administrative Expenses 757 757
Depreciation 327 351
Amortization of Goodwill and Other Intangible Assets 112 107
Research and Development Expense 410 421
Interest and Debt Expense 178 201
Purchase In-Process Research and Development(c) -- (11)
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Total 6,270 6,682
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INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 759 1,259
Provision for Income Tax Expenses 272 439
Minority Interests in Earnings of Consolidated Subsidiaries 3 17
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INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN 484 803
ACCOUNTING PRINCIPLE
Cumulative Effect of a Change in Accounting Principle, Net of Income Taxes(d) 11 --
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NET INCOME $ 495 $ 803
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BASIC EARNINGS PER SHARE OF COMMON STOCK(e)
Income before Cumulative Effect of a Change in Accounting Principle $ .46 $ .76
Cumulative Effect of a Change in Accounting Principle .01 --
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Net Income $ .47 $ .76
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DILUTED EARNINGS PER SHARE OF COMMON STOCK(e)
Income before Cumulative Effect of a Change in Accounting Principle $ .46 $ .76
Cumulative Effect of a Change in Accounting Principle .01 --
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Net Income $ .47 $ .76
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DIVIDENDS PER SHARE OF COMMON STOCK $ .35 $ .35
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8
FOOTNOTES TO CONSOLIDATED INCOME STATEMENT
(a) First quarter 2000 includes a $176 gain resulting from the sale by Pioneer
of certain equity securities classified as available for sale.
(b) In accordance with purchase accounting rules applied to the acquisition of
the remaining 80 percent ownership interest in Pioneer on October 1, 1999,
Pioneer inventory was increased to fair value. This inventory step-up
generates noncash charges to cost of goods sold as the inventory on hand at
the acquisition date is sold. Charges in first quarter 2001 and 2000 were
$133 and $347, respectively.
(c) Purchased in-process research and development represents the value assigned
in a purchase business combination to research and development projects of
the acquired business that were commenced but not yet completed at the date
of acquisition, for which technological feasibility has not yet been
established, and which have no alternative future use in research and
development activities or otherwise. During first quarter 2000, a credit
of $11 was recorded based on revisions of preliminary purchase price
allocations associated with the October 1, 1999 purchase of the remaining
80 percent ownership interest in Pioneer.
(d) On January 1, 2001, the company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended.
(e) Earnings per share are calculated on the basis of the following average
number of common shares outstanding:
Three Months Ended
March 31
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Basic Diluted
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2001 1,042,168,259 1,047,973,561
2000 1,047,036,515 1,057,077,345
9
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
Three Months Ended
CONSOLIDATED SEGMENT INFORMATION(a) March 31
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(Dollars in millions) 2001 2000
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SEGMENT SALES(b)
Agriculture & Nutrition $ 609 $ 628
Nylon Enterprise 960 1,109
Performance Coatings & Polymers 1,458 1,653
Pharmaceuticals 205 389
Pigments & Chemicals 951 960
Pioneer 929 921
Polyester Enterprise 545 567
Specialty Fibers 858 905
Specialty Polymers 1,039 1,091
Other 81 123
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Total Segment Sales 7,635 8,346
Elimination of Intersegment Transfers (146) (159)
Elimination of Equity Affiliate Sales (628) (595)
Miscellaneous (2) 1
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CONSOLIDATED SALES $ 6,859 $ 7,593
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AFTER-TAX OPERATING INCOME (LOSS)
Agriculture & Nutrition $ 48 $ 62
Nylon Enterprise 12 87
Performance Coatings & Polymers 132 179
Pharmaceuticals (64) 54
Pigments & Chemicals 124 164
Pioneer(c) 118 77
Polyester Enterprise (8) 9
Specialty Fibers 156 201
Specialty Polymers 130 165
Other 3 --
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Total Segment ATOI 651 998
Interest & Exchange Gains and Losses (97) (123)
Corporate Expenses (70) (72)
INCOME FROM OPERATIONS $ 484 $ 803
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(a) Certain reclassifications of segment data have been made to reflect changes
in organizational structure.
(b) Includes pro rata share of equity affiliate sales and intersegment
transfers. Excludes sales of intermediates by DuPont to joint ventures
within the Nylon Enterprise and Polyester Enterprise segments.
(c) Includes noncash charges of $83 and $215 for first quarter 2001 and 2000,
respectively, resulting from the sale of acquired Pioneer inventories
which, in accordance with purchase accounting rules, were recorded at fair
value on October 1, 1999. The first quarter 2000 charge was partly offset
by a $109 gain resulting from the sale of certain equity securities
classified as available for sale and a credit of $11 to reduce the
preliminary purchase price allocated to acquired in-process research and
development.
10
E. I. DUPONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
SEGMENT SALES(a)
(1ST QUARTER 2001 VS. 1ST QUARTER 2000)
Segment Sales
Three Months Ended Percentage Change Due to:
March 31 -------------------------
---------------------------- U.S. $
$ Change Price Volume Other(b)
----------- ------------ --------- ------------ --------------
Agriculture & Nutrition $ 609 (3) (5) 2
Nylon Enterprise 960 (13) 2 (15)
Performance Coatings & Polymers 1,458 (12) (3) (9)
Pharmaceuticals 205 (47) 0 (47)
Pigments & Chemicals 951 (1) 2 (3)
Pioneer 929 1 (2) 3
Polyester Enterprise 545 (4) (4) 0
Specialty Fibers 858 (5) (6) 1
Specialty Polymers 1,039 (5) 2 (7)
Other 81 (34) 0 0 (34)
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Total $7,635 (9) (2) (7)
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(a) Includes intersegment transfers and pro rata share of equity affiliate
sales.
(b) Reflects reduced interest in DuPont Photomasks, Inc.
SEGMENT INFORMATION Three Months Ended
EXCLUDING IMPACT OF ONE-TIME ITEMS - March 31
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(Dollars in millions) 2001 2000 % Chg.
------------ ------------ ------------
AFTER-TAX OPERATING INCOME (LOSS)
Agriculture & Nutrition $ 48 $ 62 (23)
Nylon Enterprise 12 87 (86)
Performance Coatings & Polymers 132 179 (26)
Pharmaceuticals (64) 54 N/M
Pigments & Chemicals 124 164 (24)
Pioneer 201 172 17
Polyester Enterprise (8) 9 N/M
Specialty Fibers 156 201 (22)
Specialty Polymers 130 165 (21)
Other 3 - N/M
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Total Segment ATOI 734 1,093 (33)
Interest & Exchange Gains (Loss) (97) (123)
Corporate Expenses (70) (72)
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INCOME FROM OPERATIONS $ 567 $ 898 (37)
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11
E. I. DUPONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES
FINANCIAL SUMMARY
(Dollars in millions, except per share)
Three Months Ended
March 31
2001 2000 % Chg.
------------ ------------ ------------
Selected Income Statement Data -
Excluding Impact of One-Time Items and
Cumulative Effect of a Change in Accounting Principle
Consolidated Sales $6,859 $7,593 (10)%
Segment Sales 7,635 8,346 (9)
Segment ATOI 734 1,093 (33)
EBIT 1,086 1,636 (34)
EBITDA 1,525 2,094 (27)
Income from Operations 567 898 (37)
EPS - Diluted 0.54 0.85 (36)
1st Quarter 2001 Vs.
1st Quarter 2000
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Segment ATOI Variance Analysis -
Excluding Impact of One-Time Items
Local Prices $ 75
Volume (230)
Costs (167)
Other 13
Currency (50)
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Total $(359)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
E. I. DU PONT DE NEMOURS AND COMPANY
(Registrant)
/s/ D. B. Smith
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D. B. Smith
Assistant Controller
April 24, 2001
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