-
4Q GAAP Loss Per Share from Continuing Operations of $0.52; Adj. EPS
Up 41% to $0.83
-
4Q GAAP Net Loss from Continuing Operations of $1.2B; Op. EBITDA Up
24% to $3.9B
-
4Q Net Sales Rise 13% to $20.1B, with Gains in all Operating Segments
and Geographies
-
2017 GAAP EPS from Continuing Operations of $0.95; Pro Forma Adj. EPS
Up 22% to $3.40
-
2017 GAAP Net Income from Continuing Operations of $1.7B; Pro Forma
Op. EBITDA Up 15% to $16.2B
-
2017 GAAP Net Sales of $62.5B; Pro Forma Net Sales Grow 12% to $79.5B,
with Gains in all Operating Segments and Geographies
MIDLAND, Mich. & WILMINGTON, Del.--(BUSINESS WIRE)--
DowDuPont (NYSE: DWDP):
Fourth Quarter 2017 Highlights
-
DowDuPont reported a GAAP loss per share from continuing operations of
$0.52. Adjusted earnings1 per share increased 41 percent to
$0.83, compared with pro forma adjusted earnings per share in the
year-ago period of $0.59. Adjusted earnings per share excludes
significant items in the quarter totaling net charges of $1.26 per
share, as well as a $0.09 per share charge for DuPont amortization of
intangible assets.
-
Net sales increased 13 percent to $20.1 billion, with gains in all
operating segments and geographies, from pro forma net sales of $17.7
billion in the year-ago period. The primary sales growth drivers by
division were: Materials Science – Industrial Intermediates &
Infrastructure (27 percent) and Packaging & Specialty Plastics (17
percent); Specialty Products – Transportation & Advanced Polymers and
Nutrition & Biosciences (10 percent each); and Agriculture
(5 percent). Regional sales increases were led by Europe, Middle East
and Africa (EMEA) (25 percent) and North America (10 percent), with
gains in all divisions, led by the Materials Science operating
segments.
-
Volume grew 6 percent on a pro forma basis, with increases in all
operating segments and geographies on broad-based, consumer-led and
investment-driven demand. Volume gains were led by Industrial
Intermediates & Infrastructure (13 percent), Packaging & Specialty
Plastics (8 percent), Electronics & Imaging (6 percent) and
Transportation & Advanced Polymers (5 percent). Regional volume growth
was led by EMEA (10 percent) and Asia Pacific (6 percent).
-
Local price rose 5 percent on a pro forma basis, led by increases in
all geographies and double-digit gains in Industrial Intermediates &
Infrastructure (12 percent) and Performance Materials & Coatings
(10 percent).
-
Operating EBITDA1 increased 24 percent on a pro forma basis
to $3.9 billion, driven by volume and price gains, including new
capacity additions in the U.S. Gulf Coast and Saudi Arabia; cost
synergies; lower pension/OPEB costs2; and higher equity
earnings. These gains more than offset higher feedstock costs and
startup expenses related to new assets on the U.S. Gulf Coast.
-
The Company achieved an annual cost synergy run-rate of more than $800
million and more than $200 million of realized savings in the fourth
quarter. DowDuPont is announcing today that it is increasing its cost
synergy commitment from $3 billion to $3.3 billion.
-
Cash flow from operations in the quarter was $4.2 billion, driven by
increased cash earnings and Agriculture’s seasonal cash inflow, partly
offset by contributions to pension plans.
-
The Company returned nearly $2 billion to shareholders in the quarter
through dividends ($0.9 billion) and share repurchases ($1 billion).
-
Fourth quarter GAAP results include net tax benefits of $1.1 billion
(a significant item of $0.46 per share) related to remeasurements and
charges as a result of new U.S. tax legislation. The Company expects
this new legislation to translate into a 1-2 percentage point
reduction in its 2018 tax rate versus previous expectations.
-
The Company is announcing today that it has updated the timing and
sequence of the intended separation of the companies: Materials
Science is expected to separate by the end of the first quarter of
2019, and Agriculture and Specialty Products are expected to separate
by June 1, 2019.
CEO Quote
“Our fourth quarter operating results continued the strong performance
that we delivered throughout 2017, as we grew our top and bottom lines
by double digits in the quarter and the full year,” said Ed Breen, chief
executive officer of DowDuPont. “Our 2017 results reflect robust
underlying demand for many of our products, the power of our innovation
engine and our leading positions in growing markets. We delivered these
results while completing our merger, realigning the business around key
end-markets, and achieving more than $800 million in run-rate savings
from our cost synergy programs. Based on the progress we’ve made, we are
raising our commitment for cost synergies from $3 billion to
$3.3 billion, an increase of 10 percent. We also are making significant
progress standing up the intended public companies, which we now expect
to spin about 14 to 16 months from today.”
2017 Full-Year Highlights
-
GAAP earnings per share from continuing operations was $0.95. Pro
forma adjusted earnings per share increased 22 percent to $3.40 versus
the year-ago period. Pro forma adjusted earnings per share excludes
significant items totaling net charges of $1.90 per share, as well as
a $0.33 per share charge for DuPont amortization of intangible assets.
-
GAAP net sales increased 30 percent. Pro forma net sales increased to
$79.5 billion, up 12 percent versus the year-ago period, with gains in
all operating segments and all geographies. Primary sales growth
drivers were: Materials Science – Performance Materials & Coatings (37
percent), Industrial Intermediates & Infrastructure (17 percent) and
Packaging & Specialty Plastics (13 percent); Specialty Products –
Transportation & Advanced Polymers (14 percent) and Electronics &
Imaging (12 percent); and Agriculture (2 percent). Sales rose
double-digits in EMEA (17 percent), Asia Pacific (15 percent) and
North America (10 percent). Sales in Latin America grew 5 percent.
-
Pro forma operating EBITDA increased 15 percent to $16.2 billion,
driven by volume and price gains, including new capacity additions;
cost synergies and productivity actions; higher equity earnings; lower
pension/OPEB costs; and the full-year contribution of silicones. These
gains more than offset higher feedstock costs, startup expenses on the
U.S. Gulf Coast and the unfavorable impact of hurricanes. Increases
were achieved in most operating segments, led by double-digit growth
in Performance Materials & Coatings; Industrial Intermediates &
Infrastructure; Electronics & Imaging; Transportation & Advanced
Polymers; and Agriculture.
-
Less than two weeks following merger close, DowDuPont announced
certain targeted portfolio adjustments to the Materials Science and
Specialty Products divisions to better align with end-markets and
further enhance the competitive advantages of the intended companies.
-
DowDuPont satisfied key regulatory remedies required of the merger
transaction, including: divesting DuPont’s cereal broadleaf herbicides
and chewing insecticides portfolios, as well as certain parts of its
crop protection R&D pipeline and organization to FMC; divesting Dow’s
PRIMACOR™ ethylene acrylic acid copolymers and ionomers
business; and divesting a select portion of Dow AgroSciences' corn
seed business in Brazil. The Company also closed its acquisition of
FMC's Health and Nutrition business.
Fourth Quarter Segment Information
Agriculture
Sales of $2.8 billion were up 5 percent from pro forma net sales of $2.7
billion in the year-ago period. Volume and currency improvements of 2
percent and 1 percent, respectively, were partially offset by local
price declines. Portfolio-related actions increased sales by 3 percent.
Organic revenue growth was realized in both seed and crop protection.
Seed volume and price rose slightly as earlier Brazil safrinha
deliveries, doubling of corn sales in Argentina, driven by penetration
of Leptra® corn hybrids, and growth in the European sunflower
and corn seed business were partially offset by the reduction in Brazil
summer corn area. Crop protection volume improvement was driven by the
continued penetration of new products such as Vessarya™
fungicide and increased demand for Optinyte™ nitrogen
stabilizers and novel seed treatment solutions. Crop protection pricing
declined, driven by generic pricing pressure, specifically in Latin
America and Asia Pacific.
Operating EBITDA for the segment more than doubled to $224 million,
versus pro forma operating EBITDA of $100 million in the year-ago
period. The improvement resulted primarily from synergies and other cost
reductions, lower pension/OPEB costs, volume increases, and a net
portfolio gain. This improvement was partially offset by lower local
price due to generic crop protection pricing pressure and higher soybean
royalties.
Full-year pro forma net sales of $14.3 billion rose 2 percent from pro
forma net sales of $14.1 billion reported in the year-ago period driven
by higher volumes and a portfolio gain. Full-year seed sales increased 5
percent due to both volume and price improvement. Full-year crop
protection sales were down 1 percent as growth from new products was
more than offset by pricing pressures in Latin America and high
inventory levels in China.
Full-year pro-forma operating EBITDA for the segment improved 12 percent
to $2.6 billion versus pro forma operating EBITDA of $2.3 billion in the
year-ago period. The improvement resulted primarily from higher volumes,
synergies, lower pension/OPEB costs and currency. Pro forma operating
EBITDA growth was partially offset by lower local price due to generic
crop protection pricing pressure and higher soybean royalties.
Materials Science
Performance Materials & Coatings
Performance Materials & Coatings reported net sales of $2.2 billion, up
15 percent versus pro forma net sales of $1.9 billion in the year-ago
period. The year-over-year gain was primarily driven by double-digit
growth in both businesses, as well as double-digit increases across all
geographic regions. Local price increased 10 percent, with gains in all
geographic regions and both businesses. Volume grew 4 percent, driven by
gains in North America, Asia Pacific and Latin America.
Consumer Solutions delivered double-digit sales growth in all geographic
regions, driven by strong gains in local price in Asia Pacific and EMEA;
disciplined price/volume management in upstream silicone intermediate
products; and broad-based demand for downstream applications including
pressure sensitive adhesives and high performance building solutions.
Coatings & Performance Monomers achieved double-digit growth in sales,
on strong local price increases in all geographic regions and higher
demand in North America.
Operating EBITDA increased to $613 million, up 56 percent from pro forma
operating EBITDA of $392 million in the year-ago period, primarily due
to increased pricing, higher equity earnings, strong end-market demand
and cost synergies.
Equity earnings for the segment totaled $223 million, compared with pro
forma equity earnings of $176 million in the year-ago period, driven by
two factors at the HSC Group – higher demand from the photovoltaics
end-market and DowDuPont’s share of a settlement of a long-term
polysilicon sales agreement.
Industrial Intermediates & Infrastructure
Industrial Intermediates & Infrastructure reported net sales of $3.6
billion, up 27 percent versus pro forma net sales of $2.8 billion in the
year-ago period. Double-digit sales gains were reported in all
geographic regions. Volume grew 13 percent while local price rose 12
percent.
Polyurethanes & Chlor-Alkali and Vinyl (CAV) delivered robust sales
growth in all geographic regions, driven by double-digit price and
volume gains. The business also reported strong price and demand
increases in downstream, higher-margin systems applications, as well as
higher merchant sales of methylene diphenyl diisocyanate (MDI) and
caustic where industry supply/demand fundamentals remained tight.
Industrial Solutions grew sales double digits, led by surfactants,
glycol ethers and ethylene glycols in consumer-driven applications,
including electronics processing, crop defense and food and
pharmaceuticals. The business delivered volume and price gains in all
geographic regions. Construction Chemicals delivered sales growth driven
by demand for methyl cellulosics in EMEA. Energy Solutions reported
lower sales due to reduced project activity in energy market sectors.
Operating EBITDA was $677 million, up 38 percent from pro forma
operating EBITDA of $489 million in the year-ago period. Pricing
momentum, improved equity earnings and demand growth in most businesses
more than offset the impact of higher raw material costs.
Equity earnings for the segment totaled $71 million, compared with pro
forma equity earnings of $31 million in the year-ago period. The
year-over-year growth was driven by improvement in Sadara equity losses
due to further progression of facility startups and contributions from
the EQUATE joint venture as a result of higher monoethylene glycol
pricing.
Packaging & Specialty Plastics
The Packaging & Specialty Plastics segment reported net sales of $6.1
billion, up 17 percent from pro forma net sales of $5.2 billion in the
year-ago period. Sales growth was driven by volume gains of 8 percent,
local price increases of 7 percent and a 2 percent tailwind from
currency, primarily in Europe. Volume highlights included double-digit
percent growth in North America and EMEA on higher hydrocarbons sales,
new capacity additions on the U.S. Gulf Coast and ramp-up in Sadara
production. Local price gains were recorded in all geographic regions.
The Packaging and Specialty Plastics business grew volume on continued
consumer-led demand across key end-markets. Notable highlights included
double-digit sales growth in food and specialty packaging as well as in
industrial and consumer packaging end-markets in EMEA, enabled by the
contributions of volumes from the Sadara joint venture. Volume growth in
North America was driven by robust demand in food and specialty
packaging as well as in health and hygiene applications, supported by
start-up of the ELITE™ polyethylene unit. Gradual recovery
from hurricane-related supply limitations continued to impact
polyethylene sales volumes, particularly exports to Latin America, as
well as global sales of ethylene copolymers and products for wire and
cable applications. The business also delivered volume gains in
elastomers applications, including: footwear and photovoltaics
applications in Asia Pacific; hot melt adhesives in EMEA; and
infrastructure applications in North America.
Operating EBITDA for the segment totaled $1.3 billion, flat with pro
forma operating EBITDA in the year-ago period. Price and volume gains,
including the benefit of new capacity additions, were offset by
increased feedstock costs; cost and production impacts from
hurricane-related disruptions and maintenance activities; as well as
commissioning and startup costs for the U.S. Gulf Coast growth projects.
Equity earnings for the segment were $59 million, down from pro forma
equity earnings of $64 million in the year-ago period. Improvement in
Sadara equity losses, driven by higher sales of polyethylene, were more
than offset by reduced earnings at the Thai joint ventures, due to
rising raw material costs, and at the Kuwait joint ventures, driven by
planned maintenance activities.
Specialty Products
Electronics & Imaging
Electronics & Imaging delivered net sales of $1.2 billion, an increase
of 1 percent versus pro forma net sales in the year-ago period. Net
sales growth was led by volume gains of 6 percent, which more than
offset a 5 percent negative impact from portfolio-related actions (sales
of the Display Films and Authentication businesses).
Volume growth in the segment was driven by double-digit gains in
consumer electronics, industrial and semiconductor end-markets,
primarily in Asia Pacific. Continued demand for mobile phones and other
consumer electronics, as well as industrial applications drove volume
gains. Increased semiconductor content in end-use applications drove
strong demand in both memory and logic market segments. Partially
offsetting this growth was a decline in photovoltaics as demand for
Tedlar® film was more than offset by continued declines in
Solamet® paste due to competitive pressure.
Operating EBITDA for the segment was $367 million, up 11 percent from
pro forma operating EBITDA of $331 million in the year-ago period.
Volume growth, lower pension/OPEB costs, and cost synergies more than
offset hurricane-related costs, a negative impact from portfolio and
higher raw material costs.
Nutrition & Biosciences
Nutrition & Biosciences reported net sales of $1.6 billion, up from pro
forma net sales of $1.4 billion in the year-ago period. Net sales growth
of 10 percent was due to a 6 percent net benefit from portfolio, a
2 percent benefit from volume and a 2 percent benefit from currency. The
positive impact from portfolio-related actions was due to the
acquisition of FMC’s Health & Nutrition business.
Volume growth in the segment was led by increased demand for bioactives,
continued growth in probiotics, demand for microbial control solutions
in energy markets in North America, and growth in pharmaceuticals,
including excipients and vegetal-based encapsulations. Growth in
bioactives reflected strength in home and personal care and animal
nutrition markets due to new product introductions. Continued growth in
probiotics was driven by demand in Asia Pacific and Europe. Partially
offsetting this growth were declines in systems and texturants due to
continued weakness in packaged food markets, primarily in North America,
and specific actions taken to exit low-margin market segments.
Operating EBITDA for the segment was $352 million, up 14 percent from
pro forma operating EBITDA of $309 million in the year-ago period driven
by a portfolio benefit, lower pension/OPEB costs, cost synergies, and
volume growth. Partially offsetting these gains was the absence of a $27
million gain from a prior-year asset sale.
Transportation & Advanced Polymers
Transportation & Advanced Polymers reported net sales of $1.3 billion,
up from pro forma net sales of $1.2 billion in the year-ago period. Net
sales growth of 10 percent included volume gains of 5 percent, local
price benefits of 4 percent and 1 percent from currency. The growth,
which was achieved in most geographies, was led by strong demand from
the automotive market and broad-based demand from electronics and
industrial markets. Focused application development and continued trends
in light weighting of vehicles and higher temperature environments
fueled stronger demand for adhesives and engineered polymers. The
segment continued to outpace global industry auto builds, which
according to IHS rose 1 percent in the quarter versus last year.
Volume gains were also achieved by Kalrez® and Vespel®
high-performance parts as demand from the electronics and aerospace
markets remained robust while demand for specialty silicones in medical
devices remained solid. Volume growth was led by Asia Pacific, followed
by the Americas and Europe.
Operating EBITDA for the segment was $365 million, up 32 percent from
pro forma operating EBITDA of $276 million in the year-ago period.
Benefits from lower pension/OPEB costs, volume gains, improved local
price and cost synergies more than offset higher raw material costs.
Safety & Construction
Safety and Construction delivered net sales of $1.3 billion, compared
with pro forma net sales of $1.2 billion for the year-ago period. Net
sales growth of 4 percent was driven by volume gains of 4 percent and
currency of 1 percent, partly offset by a decrease in local price of 1
percent. Volume growth reflected continued solid demand across
industrial markets, construction and medical packaging. Local price
declines reflected pressure in isolated areas of aramids as well as
product mix, partly offset by gains in building solutions.
The volume gain was led by Tyvek® protective materials, which
achieved double-digit percent volume growth due to increased demand from
industrial and construction markets as well as medical packaging.
Contributing to the volume gain was a high-single-digit percent increase
in Kevlar® high-strength materials, reflecting higher demand
from industrial markets. A low-single-digit percent volume gain from
water filtration reflected strength in ion exchange resins and
ultra-filtration in industrial applications. Building Solutions volumes
also rose by the low-single-digits percent with gains in foam board amid
stronger construction demand. Nomex® thermal-resistant
garment volumes were even with strong sales in the prior year’s quarter
while Corian® design volume was constrained by raw material
availability. Regionally, volume growth was driven by Europe, followed
by Asia Pacific and Latin America. Drivers included Tyvek®
for graphics and house wrap in EMEA, and gains from Kevlar®
in Asia Pacific.
Operating EBITDA for the segment was $285 million, up 26 percent from
pro forma operating EBITDA of $227 million in the year-ago period as
lower pension/OPEB costs and broad-based volume growth was partly offset
by the impact of lower local price and higher raw material costs.
Outlook
“The trajectory of global economic expansion has gained momentum –
driven by robust fundamentals in consumer and business confidence,
employment and wage growth and manufacturing and infrastructure
investment activity,” said Andrew Liveris, executive chairman of
DowDuPont. “In developed economies in particular, such as the United
States, Germany, France, Canada and the U.K., we continue to see strong
leading indicators of broad-based growth. Furthermore, early signs from
the business community point to U.S. tax reform as a catalyst for
further domestic capital investments, which will take advantage of
enhanced competitiveness and pro-business incentives. Adding to this,
the emerging middle class in developing economies, most notably in India
and China, but also in Africa and the Middle East, continues to support
sustainable growth.
“All of this bodes well for the products and technologies within
DowDuPont’s portfolio, which are well positioned to meet growing needs
in the Materials Science, Agriculture and Specialty Product sectors.
Looking ahead, our levers of value creation are clear: continuing to
further unlock the cost and growth synergies of this merger transaction,
capitalizing on our early success and achieving the enhanced cost
synergy commitment we are announcing today; delivering new products from
our in-flight growth investments and powerful innovation pipeline; and
quickly standing and separating into three industry-leading companies on
the new accelerated timeline we announced today.”
Conference Call
The Company will host a live
webcast of its fourth quarter and full-year earnings conference call
with investors to discuss its results, business outlook and other
matters today at 8:00 a.m. ET. The slide presentation that accompanies
the conference call will be posted on the DowDuPont Investor Relations
events and presentations page.
A replay of the webcast will also be available on the investor events
and presentations page of www.dow-dupont.com.
(1)
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Adjusted earnings per share, Pro forma adjusted earnings per share,
Operating EBITDA and Pro forma operating EBITDA are non-GAAP
measures. See page 9 for further discussion. Full-year 2017 and
prior year information is on a pro forma basis and was determined in
accordance with Article 11 of Regulation S-X.
|
(2)
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Pension/OPEB (other post employment benefit plans) costs include all
components of net periodic benefit cost from continuing operations.
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About DowDuPont™
DowDuPont (NYSE: DWDP) is a holding company comprised of The Dow
Chemical Company and DuPont with the intent to form strong, independent,
publicly traded companies in agriculture, materials science and
specialty products sectors that will lead their respective industries
through productive, science-based innovation to meet the needs of
customers and help solve global challenges. For more information, please
visit us at www.dow-dupont.com.
Cautionary Statement About Forward-Looking Statements
This communication contains “forward-looking statements” within the
meaning of the federal securities laws, including Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. In this context, forward-looking
statements often address expected future business and financial
performance and financial condition, and often contain words such as
“expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,”
“will,” “would,” “target,” similar expressions, and variations or
negatives of these words.
On December 11, 2015, The Dow Chemical Company (“Dow”) and E. I. du Pont
de Nemours and Company (“DuPont”) announced entry into an Agreement and
Plan of Merger, as amended on March 31, 2017, (the “Merger Agreement”)
under which the companies would combine in an all-stock merger of equals
transaction (the “Merger”). Effective August 31, 2017, the Merger was
completed and each of Dow and DuPont became subsidiaries of DowDuPont
Inc. (“DowDuPont” or the “Company”).
Forward-looking statements by their nature address matters that are, to
varying degrees, uncertain, including the intended separation, subject
to approval of the Company’s board of directors, of DowDuPont’s
agriculture, materials science and specialty products businesses in one
or more tax efficient transactions on anticipated terms (the “Intended
Business Separations”). Forward-looking statements are not guarantees of
future performance and are based on certain assumptions and expectations
of future events which may not be realized. Forward-looking statements
also involve risks and uncertainties, many of which are beyond the
Company’s control. Some of the important factors that could cause
DowDuPont’s, Dow’s or DuPont’s actual results to differ materially from
those projected in any such forward-looking statements include, but are
not limited to: (i) costs to achieve and achieving the successful
integration of the respective agriculture, materials science and
specialty products businesses of Dow and DuPont, anticipated tax
treatment, unforeseen liabilities, future capital expenditures,
revenues, expenses, earnings, productivity actions, economic
performance, indebtedness, financial condition, losses, future
prospects, business and management strategies for the management,
expansion and growth of the combined operations; (ii) costs to achieve
and achievement of the anticipated synergies by the combined
agriculture, materials science and specialty products businesses; (iii)
risks associated with the Intended Business Separations, including
conditions which could delay, prevent or otherwise adversely affect the
proposed transactions, including possible issues or delays in obtaining
required regulatory approvals or clearances related to the Intended
Business Separations, associated cost, disruptions in the financial
markets or other potential barriers; (iv) disruptions or business
uncertainty, including from the Intended Business Separations, could
adversely impact DowDuPont’s business (either directly or as conducted
by and through Dow or DuPont), or financial performance and its ability
to retain and hire key personnel; (v) uncertainty as to the long-term
value of DowDuPont common stock; and (vi) risks to DowDuPont’s, DuPont’s
and Dow’s business, operations and results of operations from: the
availability of and fluctuations in the cost of energy and feedstocks;
balance of supply and demand and impact of balance on prices; failure to
develop and market new products and optimally manage product life
cycles; ability, cost and impact on business operations, including the
supply chain, of responding to changes in market acceptance, rules,
regulations and policies and failure to respond to such changes; outcome
of significant litigation, environmental matters and other commitments
and contingencies; failure to appropriately manage process safety and
product stewardship issues; global economic and capital markets
conditions, including the continued availability of capital and
financing, as well as inflation, interest and currency exchange rates;
changes in political conditions, business or supply disruptions;
security threats, such as acts of sabotage, terrorism or war, natural
disasters and weather events and patterns which could result in a
significant operational event for the Company, adversely impact demand
or production; ability to discover, develop and protect new technologies
and to protect and enforce the Company’s intellectual property rights;
failure to effectively manage acquisitions, divestitures, alliances,
joint ventures and other portfolio changes; unpredictability and
severity of catastrophic events, including, but not limited to, acts of
terrorism or outbreak of war or hostilities, as well as management’s
response to any of the aforementioned factors. These risks are and will
be more fully discussed in the current, quarterly and annual reports
filed with the U. S. Securities and Exchange Commission by DowDuPont.
While the list of factors presented here is, considered representative,
no such list should be considered to be a complete statement of all
potential risks and uncertainties. Unlisted factors may present
significant additional obstacles to the realization of forward-looking
statements. Consequences of material differences in results as compared
with those anticipated in the forward-looking statements could include,
among other things, business disruption, operational problems, financial
loss, legal liability to third parties and similar risks, any of which
could have a material adverse effect on DowDuPont’s, Dow’s or DuPont’s
consolidated financial condition, results of operations, credit rating
or liquidity. None of DowDuPont, Dow or DuPont assumes any obligation to
publicly provide revisions or updates to any forward-looking statements
whether as a result of new information, future developments or
otherwise, should circumstances change, except as otherwise required by
securities and other applicable laws.
Merger of Equals
Effective August 31, 2017, pursuant to the merger of equals transaction
contemplated by the Agreement and Plan of Merger, dated as of December
11, 2015, as amended on March 31, 2017 (the "Merger Agreement"), The Dow
Chemical Company ("Dow") and E. I. du Pont de Nemours & Company
("DuPont") each merged with subsidiaries of DowDuPont Inc. ("DowDuPont"
or the "Company") and, as a result, Dow and DuPont became subsidiaries
of DowDuPont Inc. (the "Merger"). Dow was determined to be the
accounting acquirer in the Merger and, as a result, the historical
financial statements of Dow, prepared under U.S. generally accepted
accounting principles ("U.S. GAAP"), for the periods prior to the Merger
are considered to be the historical financial statements of DowDuPont.
Unaudited Pro Forma Financial Information
In order to provide the most meaningful comparison of results of
operations and results by segment, supplemental unaudited pro forma
financial information has been included in the following financial
schedules. The unaudited pro forma financial information is based on the
historical consolidated financial statements and accompanying notes of
both Dow and DuPont and has been prepared to illustrate the effects of
the Merger, assuming the Merger had been consummated on January 1, 2016.
The results for the three months ended December 31, 2017, are presented
on a U.S. GAAP basis. For all other periods presented, adjustments have
been made for (1) the preliminary purchase accounting impact, (2)
accounting policy alignment, (3) eliminate the effect of events that are
directly attributable to the Merger Agreement (e.g., one-time
transaction costs), (4) eliminate the impact of transactions between Dow
and DuPont, and (5) eliminate the effect of consummated divestitures
agreed to with certain regulatory agencies as a condition of approval
for the Merger. The unaudited pro forma financial information was based
on and should be read in conjunction with the separate historical
financial statements and accompanying notes contained in each of the Dow
and DuPont Quarterly Reports on Form 10-Q and Annual Reports on Form
10-K for the applicable periods. The pro forma financial statements were
prepared in accordance with Article 11 of Regulation S-X.
The unaudited pro forma financial information has been presented for
informational purposes only and is not necessarily indicative of what
DowDuPont's results of operations actually would have been had the
Merger been completed as of January 1, 2016, nor is it indicative of the
future operating results of DowDuPont. The unaudited pro forma financial
information does not reflect any cost or growth synergies that DowDuPont
may achieve as a result of the Merger, future costs to combine the
operations of Dow and DuPont or the costs necessary to achieve any cost
or growth synergies.
Non-GAAP Financial Measures
This earnings release includes information that does not conform to U.S.
GAAP and are considered non-GAAP measures. These measures include the
Company's pro forma consolidated results and pro forma earnings per
share on an adjusted basis. Management uses these measures internally
for planning, forecasting and evaluating the performance of the
Company's segments, including allocating resources. DowDuPont's
management believes that these non-GAAP measures best reflect the
ongoing performance of the Company during the periods presented and
provide more relevant and meaningful information to investors as they
provide insight with respect to ongoing operating results of the Company
and a more useful comparison of year-over-year results. These non-GAAP
measures supplement the Company's U.S. GAAP disclosures and should not
be viewed as an alternative to U.S. GAAP measures of performance.
Furthermore, such non-GAAP measures may not be consistent with similar
measures provided or used by other companies. Non-GAAP measures included
in this release are defined below. Reconciliations for these non-GAAP
measures to GAAP are provided in the Pro Forma Consolidated Statements
of Income on page 12 and the Selected Pro Forma Financial Information
and Non-GAAP Measures starting on page 14.
Adjusted earnings per share is defined as “Earnings per common share
from continuing operations - diluted” excluding the after-tax impact of
significant items and the after-tax impact of amortization expense
associated with DuPont’s intangible assets. Pro forma adjusted earnings
per share is defined as “Pro Forma earnings per common share from
continuing operations - diluted” excluding the after-tax impact of pro
forma significant items and the after-tax impact of pro forma
amortization expense associated with DuPont’s intangible assets.
Although amortization of DuPont’s intangible assets is excluded from
these non-GAAP measures, management believes it is important for
investors to understand that such intangible assets contribute to
revenue generation. Amortization of intangible assets that relate to
past acquisitions will recur in future periods until such intangible
assets have been fully amortized. Any future acquisitions may result in
amortization of additional intangible assets.
Operating EBITDA is defined as earnings (i.e., “Income from continuing
operations before income taxes”) before interest, depreciation,
amortization and foreign exchange gains (losses), excluding the impact
of significant items. Pro forma operating EBITDA is defined as earnings
(i.e., “Pro Forma income from continuing operations before income
taxes”) before interest, depreciation, amortization and foreign exchange
gains (losses), excluding the impact of significant items.
|
|
|
|
|
|
DowDuPont Inc.
Consolidated Statements of Income
|
|
|
|
|
|
(In millions, except per share amounts) Unaudited
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
Dec 31, 2017
|
Dec 31, 2016
|
|
Dec 31, 2017
|
Dec 31, 2016
|
Net sales
|
|
$
|
20,066
|
|
$
|
13,020
|
|
|
$
|
62,484
|
|
$
|
48,158
|
Cost of sales
|
|
17,284
|
|
10,574
|
|
|
50,414
|
|
37,640
|
Research and development expenses
|
|
767
|
|
425
|
|
|
2,110
|
|
1,584
|
Selling, general and administrative expenses
|
|
1,553
|
|
790
|
|
|
4,021
|
|
2,956
|
Amortization of intangibles
|
|
457
|
|
157
|
|
|
1,013
|
|
544
|
Restructuring, goodwill impairment and asset related charges - net
|
|
3,114
|
|
143
|
|
|
3,280
|
|
595
|
Integration and separation costs
|
|
502
|
|
121
|
|
|
1,101
|
|
349
|
Asbestos-related charge
|
|
—
|
|
1,113
|
|
|
—
|
|
1,113
|
Equity in earnings of nonconsolidated affiliates
|
|
362
|
|
251
|
|
|
764
|
|
442
|
Sundry income (expense) - net
|
|
729
|
|
83
|
|
|
966
|
|
1,452
|
Interest expense and amortization of debt discount
|
|
354
|
|
229
|
|
|
1,082
|
|
858
|
Income (Loss) from continuing operations before income taxes
|
|
(2,874
|
)
|
(198
|
)
|
|
1,193
|
|
4,413
|
Provision (Credit) for income taxes on continuing operations
|
|
(1,715
|
)
|
(282
|
)
|
|
(476
|
)
|
9
|
Income (Loss) from continuing operations, net of tax
|
|
(1,159
|
)
|
84
|
|
|
1,669
|
|
4,404
|
Loss from discontinued operations, net of tax
|
|
(57
|
)
|
—
|
|
|
(77
|
)
|
—
|
Net income (loss)
|
|
(1,216
|
)
|
84
|
|
|
1,592
|
|
4,404
|
Net income attributable to noncontrolling interests
|
|
47
|
|
32
|
|
|
132
|
|
86
|
Net income (loss) attributable to DowDuPont Inc.
|
|
(1,263
|
)
|
52
|
|
|
1,460
|
|
4,318
|
Preferred stock dividends
|
|
—
|
|
85
|
|
|
—
|
|
340
|
Net income (loss) available for DowDuPont Inc. common stockholders
|
|
$
|
(1,263
|
)
|
$
|
(33
|
)
|
|
$
|
1,460
|
|
$
|
3,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share data:
|
|
|
|
|
|
|
Earnings (Loss) per common share from continuing operations - basic
|
|
$
|
(0.52
|
)
|
$
|
(0.03
|
)
|
|
$
|
0.97
|
|
$
|
3.57
|
Loss per common share from discontinued operations - basic
|
|
(0.02
|
)
|
—
|
|
|
(0.05
|
)
|
—
|
Earnings (Loss) per common share - basic
|
|
$
|
(0.54
|
)
|
$
|
(0.03
|
)
|
|
$
|
0.92
|
|
$
|
3.57
|
Earnings (Loss) per common share from continuing operations - diluted
|
|
$
|
(0.52
|
)
|
$
|
(0.03
|
)
|
|
$
|
0.95
|
|
$
|
3.52
|
Loss per common share from discontinued operations - diluted
|
|
(0.02
|
)
|
—
|
|
|
(0.04
|
)
|
—
|
Earnings (Loss) per common share - diluted
|
|
$
|
(0.54
|
)
|
$
|
(0.03
|
)
|
|
$
|
0.91
|
|
$
|
3.52
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
$
|
0.38
|
|
$
|
0.46
|
|
|
$
|
1.76
|
|
$
|
1.84
|
Weighted-average common shares outstanding - basic
|
|
2,326.9
|
|
1,106.2
|
|
|
1,579.8
|
|
1,108.1
|
Weighted-average common shares outstanding - diluted
|
|
2,326.9
|
|
1,106.2
|
|
|
1,598.1
|
|
1,123.2
|
Note: The consolidated statements of income for the three and twelve
months ended December 31, 2017 and 2016, reflect the results of Dow for
all periods presented and the results of DuPont for the periods
beginning on and after September 1, 2017.
|
|
|
|
|
|
DowDuPont Inc.
Consolidated Balance Sheets
|
|
|
|
(In millions, except share amounts) Unaudited
|
Dec 31, 2017
|
Dec 31, 2016
|
Assets
|
|
|
Current Assets
|
|
|
Cash and cash equivalents (variable interest entities restricted -
2017: $107; 2016: $75)
|
$
|
13,438
|
|
$
|
6,607
|
|
Marketable securities
|
956
|
|
—
|
|
Accounts and notes receivable:
|
|
|
Trade (net of allowance for doubtful receivables - 2017: $134; 2016:
$110)
|
11,314
|
|
4,666
|
|
Other
|
5,579
|
|
4,312
|
|
Inventories
|
16,992
|
|
7,363
|
|
Other current assets
|
1,614
|
|
711
|
|
Total current assets
|
49,893
|
|
23,659
|
|
Investments
|
|
|
Investment in nonconsolidated affiliates
|
5,336
|
|
3,747
|
|
Other investments (investments carried at fair value - 2017: $1,512;
2016: $1,959)
|
2,564
|
|
2,969
|
|
Noncurrent receivables
|
680
|
|
708
|
|
Total investments
|
8,580
|
|
7,424
|
|
Property
|
|
|
Property
|
73,304
|
|
57,438
|
|
Less accumulated depreciation
|
37,057
|
|
33,952
|
|
Net property (variable interest entities restricted - 2017: $907;
2016: $961)
|
36,247
|
|
23,486
|
|
Other Assets
|
|
|
Goodwill
|
59,527
|
|
15,272
|
|
Other intangible assets (net of accumulated amortization - 2017:
$5,550; 2016: $4,295)
|
33,274
|
|
6,026
|
|
Deferred income tax assets
|
1,869
|
|
3,079
|
|
Deferred charges and other assets
|
2,774
|
|
565
|
|
Total other assets
|
97,444
|
|
24,942
|
|
Total Assets
|
$
|
192,164
|
|
$
|
79,511
|
|
Liabilities and Equity
|
|
|
Current Liabilities
|
|
|
Notes payable
|
$
|
1,948
|
|
$
|
272
|
|
Long-term debt due within one year
|
2,067
|
|
635
|
|
Accounts payable:
|
|
|
Trade
|
9,134
|
|
4,519
|
|
Other
|
3,727
|
|
2,097
|
|
Income taxes payable
|
843
|
|
600
|
|
Accrued and other current liabilities
|
8,409
|
|
4,481
|
|
Total current liabilities
|
26,128
|
|
12,604
|
|
Long-Term Debt (variable interest entities nonrecourse - 2017: $249;
2016: $330)
|
30,056
|
|
20,456
|
|
Other Noncurrent Liabilities
|
|
|
Deferred income tax liabilities
|
6,266
|
|
923
|
|
Pension and other postretirement benefits - noncurrent
|
18,581
|
|
11,375
|
|
Asbestos-related liabilities - noncurrent
|
1,237
|
|
1,364
|
|
Other noncurrent obligations
|
7,969
|
|
5,560
|
|
Total other noncurrent liabilities
|
34,053
|
|
19,222
|
|
Stockholders' Equity
|
|
|
Common stock (2017: authorized 5,000,000,000 shares of $0.01 par
value each, issued 2,341,455,518 shares; 2016: authorized
1,500,000,000 shares of $2.50 par value each, issued 1,242,794,836)
|
23
|
|
3,107
|
|
Additional paid-in capital
|
81,257
|
|
4,262
|
|
Retained earnings
|
29,211
|
|
30,338
|
|
Accumulated other comprehensive loss
|
(8,972
|
)
|
(9,822
|
)
|
Unearned ESOP shares
|
(189
|
)
|
(239
|
)
|
Treasury stock at cost (2017: 14,123,049 shares; 2016: 31,661,501
shares)
|
(1,000
|
)
|
(1,659
|
)
|
DowDuPont's stockholders' equity
|
100,330
|
|
25,987
|
|
Noncontrolling interests
|
1,597
|
|
1,242
|
|
Total equity
|
101,927
|
|
27,229
|
|
Total Liabilities and Equity
|
$
|
192,164
|
|
$
|
79,511
|
|
Note: The consolidated balance sheet at December 31, 2017, reflects the
financial position of DowDuPont. The consolidated balance sheet at
December 31, 2016, solely reflects the financial position of Dow.
|
|
|
|
|
|
|
|
DowDuPont Inc.
Pro Forma Consolidated Statements of Income
|
|
|
|
|
In millions, except per share amounts (Unaudited)
|
Three Months Ended
|
|
Twelve Months Ended
|
Dec 31, 2017
|
|
Dec 31, 2016
|
|
Dec 31, 2017
|
|
Dec 31, 2016
|
As Reported
|
|
Pro Forma
|
|
Pro Forma
|
|
Pro Forma
|
Net sales
|
$
|
20,066
|
|
|
$
|
17,734
|
|
|
$
|
79,535
|
|
|
$
|
70,894
|
Cost of sales
|
17,284
|
|
|
13,688
|
|
|
60,960
|
|
|
51,996
|
Research and development expenses
|
767
|
|
|
762
|
|
|
3,157
|
|
|
3,061
|
Selling, general and administrative expenses
|
1,553
|
|
|
1,548
|
|
|
6,776
|
|
|
6,701
|
Amortization of intangibles
|
457
|
|
|
423
|
|
|
1,743
|
|
|
1,624
|
Restructuring, goodwill impairment and asset related charges - net
|
3,114
|
|
|
537
|
|
|
3,593
|
|
|
1,151
|
Integration and separation costs
|
502
|
|
|
223
|
|
|
1,499
|
|
|
476
|
Asbestos-related charge
|
—
|
|
|
1,113
|
|
|
—
|
|
|
1,113
|
Equity in earnings of nonconsolidated affiliates
|
362
|
|
|
283
|
|
|
804
|
|
|
516
|
Sundry income (expense) - net
|
729
|
|
|
282
|
|
|
955
|
|
|
1,903
|
Interest expense and amortization of debt discount
|
354
|
|
|
291
|
|
|
1,256
|
|
|
1,108
|
Income (Loss) from continuing operations before income taxes
|
$
|
(2,874
|
)
|
|
$
|
(286
|
)
|
|
$
|
2,310
|
|
|
$
|
6,083
|
Provision (Credit) for income taxes on continuing operations
|
(1,715
|
)
|
|
(323
|
)
|
|
(602
|
)
|
|
288
|
Income (Loss) from continuing operations, net of tax
|
$
|
(1,159
|
)
|
|
$
|
37
|
|
|
$
|
2,912
|
|
|
$
|
5,795
|
Net income attributable to noncontrolling interests
|
47
|
|
|
33
|
|
|
159
|
|
|
108
|
Net income (loss) from continuing operations attributable to
DowDuPont Inc.
|
$
|
(1,206
|
)
|
|
$
|
4
|
|
|
$
|
2,753
|
|
|
$
|
5,687
|
Preferred stock dividends
|
—
|
|
|
85
|
|
|
—
|
|
|
340
|
Net income (loss) from continuing operations available for DowDuPont
Inc. common stockholders
|
$
|
(1,206
|
)
|
|
$
|
(81
|
)
|
|
$
|
2,753
|
|
|
$
|
5,347
|
|
|
|
|
|
|
|
|
Per common share data:
|
|
|
|
|
|
|
|
Earnings (Loss) per common share from continuing operations - basic
|
$
|
(0.52
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
1.18
|
|
|
$
|
2.40
|
Earnings (Loss) per common share from continuing operations - diluted
|
$
|
(0.52
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
1.17
|
|
|
$
|
2.37
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic
|
2,326.9
|
|
|
2,219.4
|
|
|
2,323.9
|
|
|
2,221.3
|
Weighted-average common shares outstanding - diluted
|
2,326.9
|
|
|
2,219.4
|
|
|
2,346.1
|
|
|
2,242.1
|
|
|
|
|
|
|
|
|
|
|
|
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 1
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
Dec 31, 2017
|
|
Dec 31, 2016
|
|
Dec 31, 2017
|
|
Dec 31, 2016
|
Dollars per share
|
|
As Reported
|
|
Pro Forma
|
|
Pro Forma
|
|
Pro Forma
|
Pro forma earnings (loss) per common share from continuing
operations - diluted
|
|
$
|
(0.52
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
1.17
|
|
|
$
|
2.37
|
|
- Impact of pro forma significant items, after-tax 2
|
|
(1.26
|
)
|
|
(0.55
|
)
|
|
(1.90
|
)
|
|
(0.09
|
)
|
- Impact of pro forma amortization of DuPont's intangible assets,
after-tax
|
|
(0.09
|
)
|
|
(0.08
|
)
|
|
(0.33
|
)
|
|
(0.33
|
)
|
Pro forma adjusted earnings per common share from continuing
operations - diluted (Non-GAAP) 3
|
|
$
|
0.83
|
|
|
$
|
0.59
|
|
|
$
|
3.40
|
|
|
$
|
2.79
|
|
1.
|
|
Adjusted earnings per common share (“Adjusted EPS”) and Pro forma
adjusted earnings per share (“Pro Forma Adjusted EPS”) are non-GAAP
measures. See further discussion and definition of these measures on
page 9.
|
2.
|
|
Refer to Selected Pro Forma Financial Information and Non-GAAP
Measures section for additional information on the impact of
reported and pro forma significant items.
|
3.
|
|
For the three months ended December 31, 2017, Adjusted EPS is
calculated as “Loss per common share from continuing operations -
diluted” excluding the after-tax impact of significant items and the
after-tax impact of amortization expense associated with DuPont’s
intangible assets. For the three months ended December 31, 2016 and
the twelve-month periods ended December 31, 2017 and 2016, Pro Forma
Adjusted EPS is calculated as “Pro forma earnings (loss) per common
share from continuing operations - diluted,” excluding the after-tax
impact of pro forma significant items and the after-tax impact of
pro forma amortization expense associated with DuPont’s intangible
assets.
|
|
|
|
|
|
|
|
|
DowDuPont Inc.
Pro Forma Net Sales by Segment and Geographic Region
|
|
|
|
|
Pro Forma Net Sales by Segment and Geographic Region
|
Three Months Ended
|
|
Twelve Months Ended
|
In millions (Unaudited)
|
Dec 31, 2017
|
|
Dec 31, 2016
|
|
Dec 31, 2017
|
Dec 31, 2016
|
As Reported
|
|
Pro Forma
|
|
Pro Forma
|
Pro Forma
|
Agriculture
|
$
|
2,787
|
|
|
$
|
2,664
|
|
|
$
|
14,342
|
|
$
|
|
14,060
|
Performance Materials & Coatings
|
2,203
|
|
|
1,922
|
|
|
8,740
|
|
6,362
|
Industrial Intermediates & Infrastructure
|
3,554
|
|
|
2,805
|
|
|
12,640
|
|
10,820
|
Packaging & Specialty Plastics
|
6,092
|
|
|
5,212
|
|
|
22,392
|
|
19,848
|
Electronics & Imaging
|
1,192
|
|
|
1,182
|
|
|
4,775
|
|
4,266
|
Nutrition & Biosciences
|
1,589
|
|
|
1,450
|
|
|
5,980
|
|
5,763
|
Transportation & Advanced Polymers
|
1,297
|
|
|
1,181
|
|
|
5,131
|
|
4,497
|
Safety & Construction
|
1,290
|
|
|
1,236
|
|
|
5,142
|
|
4,984
|
Corporate
|
62
|
|
|
82
|
|
|
393
|
|
294
|
Total
|
$
|
20,066
|
|
|
$
|
17,734
|
|
|
$
|
79,535
|
|
$
|
|
70,894
|
U.S. & Canada
|
$
|
7,034
|
|
|
$
|
6,368
|
|
|
$
|
30,986
|
|
$
|
|
28,230
|
EMEA 1
|
5,584
|
|
|
4,482
|
|
|
21,932
|
|
18,797
|
Asia Pacific
|
4,893
|
|
|
4,497
|
|
|
17,906
|
|
15,566
|
Latin America
|
2,555
|
|
|
2,387
|
|
|
8,711
|
|
8,301
|
Total
|
$
|
20,066
|
|
|
$
|
17,734
|
|
|
$
|
79,535
|
|
$
|
|
70,894
|
|
Pro Forma Net Sales Variance by Segment and Geographic Region
|
|
Three Months Ended Dec 31, 2017
|
|
Twelve Months Ended Dec 31, 2017
|
Percent change from prior year
|
Local Price & Product
Mix
|
|
Currency
|
|
Volume
|
|
Portfolio / Other 2
|
|
Total
|
|
Local Price & Product
Mix
|
|
Currency
|
|
Volume
|
|
Portfolio / Other 2
|
|
Total
|
Agriculture
|
(1
|
)%
|
|
1
|
%
|
|
2
|
%
|
|
3
|
%
|
|
5
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1
|
%
|
|
1
|
%
|
|
2
|
%
|
Performance Materials & Coatings
|
10
|
|
|
1
|
|
|
4
|
|
|
—
|
|
|
15
|
|
|
8
|
|
|
—
|
|
|
2
|
|
|
27
|
|
|
37
|
|
Industrial Intermediates & Infrastructure
|
12
|
|
|
2
|
|
|
13
|
|
|
—
|
|
|
27
|
|
|
10
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
17
|
|
Packaging & Specialty Plastics
|
7
|
|
|
2
|
|
|
8
|
|
|
—
|
|
|
17
|
|
|
8
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
13
|
|
Electronics & Imaging
|
—
|
|
|
—
|
|
|
6
|
|
|
(5
|
)
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
11
|
|
|
2
|
|
|
12
|
|
Nutrition & Biosciences
|
—
|
|
|
2
|
|
|
2
|
|
|
6
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
1
|
|
|
4
|
|
Transportation & Advanced Polymers
|
4
|
|
|
1
|
|
|
5
|
|
|
—
|
|
|
10
|
|
|
2
|
|
|
—
|
|
|
7
|
|
|
5
|
|
|
14
|
|
Safety & Construction
|
(1
|
)
|
|
1
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
(1
|
)
|
|
—
|
|
|
4
|
|
|
—
|
|
|
3
|
|
Total
|
5
|
%
|
|
1
|
%
|
|
6
|
%
|
|
1
|
%
|
|
13
|
%
|
|
4
|
%
|
|
—
|
%
|
|
5
|
%
|
|
3
|
%
|
|
12
|
%
|
U.S. & Canada
|
5
|
%
|
|
—
|
%
|
|
5
|
%
|
|
—
|
%
|
|
10
|
%
|
|
4
|
%
|
|
—
|
%
|
|
3
|
%
|
|
3
|
%
|
|
10
|
%
|
EMEA 1
|
8
|
|
|
6
|
|
|
10
|
|
|
1
|
|
|
25
|
|
|
8
|
|
|
1
|
|
|
5
|
|
|
3
|
|
|
17
|
|
Asia Pacific
|
3
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
9
|
|
|
2
|
|
|
—
|
|
|
8
|
|
|
5
|
|
|
15
|
|
Latin America
|
2
|
|
|
—
|
|
|
1
|
|
|
4
|
|
|
7
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
3
|
|
|
5
|
|
Total
|
5
|
%
|
|
1
|
%
|
|
6
|
%
|
|
1
|
%
|
|
13
|
%
|
|
4
|
%
|
|
—
|
%
|
|
5
|
%
|
|
3
|
%
|
|
12
|
%
|
1.
|
|
Europe, Middle East and Africa.
|
2.
|
|
Pro forma net sales for Agriculture excludes sales related to the
November 30, 2017, divestiture of a portion of Dow AgroSciences'
corn seed business in Brazil for the period January 1, 2016 through
August 31, 2017; sales from September 1, 2017 through November 30,
2017, are included in Portfolio/Other. Pro forma net sales also
excludes sales related to the September 1, 2017, divestiture of the
global Ethylene Acrylic Acid ("EAA") copolymers and ionomers
business for the period January 1, 2016 through August 31, 2017.
Portfolio/Other includes sales for the acquisition of the H&N
Business acquired on November 1, 2017, impacting Nutrition &
Biosciences. Portfolio/Other also reflects sales from January 1,
2017 through May 31, 2017, related to the ownership restructure of
Dow Corning Corporation on June 1, 2016 (impacts Performance
Materials & Coatings, Electronics & Imaging and Transportation &
Advanced Polymers); the divestitures of SKC Haas Display Films group
of companies (divested June 30, 2017) and the authentication
business (divested on January 6, 2017), impacting Electronics &
Imaging; and, the divestiture of the global food safety diagnostic
business (divested February 28, 2017), impacting Nutrition &
Biosciences.
|
|
|
|
|
|
|
|
|
DowDuPont Inc.
Selected Pro Forma Financial Information and Non-GAAP Measures
|
|
|
|
|
|
|
|
|
Pro Forma Operating EBITDA by Segment 1
|
Three Months Ended
|
|
Twelve Months Ended
|
In millions (Unaudited)
|
Dec 31, 2017
|
|
Dec 31, 2016
|
|
Dec 31, 2017
|
|
Dec 31, 2016
|
As Reported
|
|
Pro Forma
|
|
Pro Forma
|
|
Pro Forma
|
Agriculture
|
$
|
224
|
|
|
$
|
100
|
|
|
$
|
2,611
|
|
|
$
|
2,322
|
|
Performance Materials & Coatings
|
613
|
|
|
392
|
|
|
2,121
|
|
|
1,228
|
|
Industrial Intermediates & Infrastructure
|
677
|
|
|
489
|
|
|
2,282
|
|
|
1,672
|
|
Packaging & Specialty Plastics
|
1,274
|
|
|
1,273
|
|
|
4,698
|
|
|
5,129
|
|
Electronics & Imaging
|
367
|
|
|
331
|
|
|
1,486
|
|
|
1,173
|
|
Nutrition & Biosciences
|
352
|
|
|
309
|
|
|
1,302
|
|
|
1,227
|
|
Transportation & Advanced Polymers
|
365
|
|
|
276
|
|
|
1,319
|
|
|
1,045
|
|
Safety & Construction
|
285
|
|
|
227
|
|
|
1,190
|
|
|
1,130
|
|
Corporate
|
(219
|
)
|
|
(212
|
)
|
|
(843
|
)
|
|
(812
|
)
|
Total
|
$
|
3,938
|
|
|
$
|
3,185
|
|
|
$
|
16,166
|
|
|
$
|
14,114
|
|
|
|
|
|
|
|
|
|
Pro Forma Significant Items by Segment (Pretax)
|
Dec 31, 2017
|
|
Dec 31, 2016
|
|
Dec 31, 2017
|
|
Dec 31, 2016
|
In millions (Unaudited)
|
As Reported
|
|
Pro Forma
|
|
Pro Forma
|
|
Pro Forma
|
Agriculture
|
$
|
159
|
|
|
$
|
4
|
|
|
$
|
(393
|
)
|
|
$
|
(45
|
)
|
Performance Materials & Coatings
|
(1,581
|
)
|
|
16
|
|
|
(1,578
|
)
|
|
1,363
|
|
Industrial Intermediates & Infrastructure
|
(17
|
)
|
|
(1
|
)
|
|
(17
|
)
|
|
(1,313
|
)
|
Packaging & Specialty Plastics
|
(808
|
)
|
|
(119
|
)
|
|
(472
|
)
|
|
(129
|
)
|
Electronics & Imaging
|
(219
|
)
|
|
4
|
|
|
(272
|
)
|
|
440
|
|
Nutrition & Biosciences
|
(301
|
)
|
|
(3
|
)
|
|
(249
|
)
|
|
(162
|
)
|
Transportation & Advanced Polymers
|
(146
|
)
|
|
7
|
|
|
(218
|
)
|
|
279
|
|
Safety & Construction
|
(197
|
)
|
|
—
|
|
|
(496
|
)
|
|
—
|
|
Corporate
|
(1,879
|
)
|
|
(1,859
|
)
|
|
(3,132
|
)
|
|
(2,097
|
)
|
Total
|
$
|
(4,989
|
)
|
|
$
|
(1,951
|
)
|
|
$
|
(6,827
|
)
|
|
$
|
(1,664
|
)
|
|
|
|
|
|
|
|
|
Pro Forma Equity in Earnings (Losses) of Nonconsolidated
Affiliates by Segment 2
|
Dec 31, 2017
|
|
Dec 31, 2016
|
|
Dec 31, 2017
|
|
Dec 31, 2016
|
|
|
|
In millions (Unaudited)
|
As Reported
|
|
Pro Forma
|
|
Pro Forma
|
|
Pro Forma
|
Agriculture
|
$
|
4
|
|
|
$
|
13
|
|
|
$
|
(5
|
)
|
|
$
|
10
|
|
Performance Materials & Coatings
|
223
|
|
|
176
|
|
|
394
|
|
|
302
|
|
Industrial Intermediates & Infrastructure
|
71
|
|
|
31
|
|
|
172
|
|
|
(18
|
)
|
Packaging & Specialty Plastics
|
59
|
|
|
64
|
|
|
194
|
|
|
156
|
|
Electronics & Imaging
|
3
|
|
|
4
|
|
|
21
|
|
|
46
|
|
Nutrition & Biosciences
|
3
|
|
|
5
|
|
|
19
|
|
|
19
|
|
Transportation & Advanced Polymers
|
(3
|
)
|
|
—
|
|
|
7
|
|
|
15
|
|
Safety & Construction
|
3
|
|
|
4
|
|
|
18
|
|
|
25
|
|
Corporate
|
(1
|
)
|
|
(14
|
)
|
|
(16
|
)
|
|
(39
|
)
|
Total
|
$
|
362
|
|
|
$
|
283
|
|
|
$
|
804
|
|
|
$
|
516
|
|
|
|
|
|
|
|
|
|
Reconciliation of "Pro forma income (loss) from continuing
operations, net of tax" to "Pro forma Operating EBITDA"
|
Dec 31, 2017
|
|
Dec 31, 2016
|
|
Dec 31, 2017
|
|
Dec 31, 2016
|
|
|
|
In millions (Unaudited)
|
As Reported
|
|
Pro Forma
|
|
Pro Forma
|
|
Pro Forma
|
Pro forma income (loss) from continuing operations, net of tax
|
$
|
(1,159
|
)
|
|
$
|
37
|
|
|
$
|
2,912
|
|
|
$
|
5,795
|
|
+ Provision (Credit) for income taxes on continuing operations
|
(1,715
|
)
|
|
(323
|
)
|
|
(602
|
)
|
|
288
|
|
Pro forma income (loss) from continuing operations before income
taxes
|
$
|
(2,874
|
)
|
|
$
|
(286
|
)
|
|
$
|
2,310
|
|
|
$
|
6,083
|
|
+ Depreciation and amortization
|
1,451
|
|
|
1,385
|
|
|
5,546
|
|
|
5,236
|
|
- Interest income 3
|
61
|
|
|
74
|
|
|
230
|
|
|
209
|
|
+ Interest expense and amortization of debt discount
|
354
|
|
|
291
|
|
|
1,256
|
|
|
1,108
|
|
- Foreign exchange gains (losses), net 3
|
(79
|
)
|
|
82
|
|
|
(457
|
)
|
|
(232
|
)
|
Pro forma EBITDA
|
$
|
(1,051
|
)
|
|
$
|
1,234
|
|
|
$
|
9,339
|
|
|
$
|
12,450
|
|
- Adjusted significant items 4
|
(4,989
|
)
|
|
(1,951
|
)
|
|
(6,827
|
)
|
|
(1,664
|
)
|
Pro forma Operating EBITDA
|
$
|
3,938
|
|
|
$
|
3,185
|
|
|
$
|
16,166
|
|
|
$
|
14,114
|
|
1.
|
|
The Company uses Operating EBITDA (for the three months ended
December 31, 2017) and Pro Forma Operating EBITDA (for the three
months ended December 31, 2016 and the twelve-month periods ended
December 31, 2017 and 2016), as its measure of profit/loss for
segment reporting. The Company defines Operating EBITDA as earnings
(i.e., “Income (loss) from continuing operations before income
taxes”) before interest, depreciation, amortization and foreign
exchange gains (losses), excluding the impact of significant items.
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 and foreign
exchange gains (losses), excluding the impact of adjusted
significant items.
|
2.
|
|
Does not exclude the impact of significant items.
|
3.
|
|
Included in "Sundry income (expense) - net."
|
4.
|
|
Adjusted significant items, excluding the impact of one-time
transaction costs directly attributable to the Merger and reflected
in the pro forma adjustments.
|
|
|
DowDuPont Inc.
Selected Pro Forma Financial Information and Non-GAAP Measures
|
|
|
|
|
Reconciliation of Pro Forma
Non-GAAP Measures 1
|
Pretax Impact 2
|
Net Income 3
|
EPS - Diluted 4
|
Three Months Ended Dec 31,
|
Twelve Months Ended Dec 31,
|
Three Months Ended Dec 31,
|
Twelve Months Ended Dec 31,
|
Three Months Ended Dec 31,
|
Twelve Months Ended Dec 31,
|
In millions, except per share amounts (Unaudited)
|
Significant Items Impacting Results
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
Reported pro forma results
|
$
|
(2,874
|
)
|
$
|
(286
|
)
|
$
|
2,310
|
|
$
|
6,083
|
|
$
|
(1,206
|
)
|
$
|
(81
|
)
|
$
|
2,753
|
|
$
|
5,347
|
|
$
|
(0.52
|
)
|
$
|
(0.04
|
)
|
$
|
1.17
|
|
$
|
2.37
|
|
- Significant items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Asbestos-related charge 5
|
—
|
|
(1,113
|
)
|
—
|
|
(1,113
|
)
|
—
|
|
(701
|
)
|
—
|
|
(701
|
)
|
—
|
|
(0.31
|
)
|
—
|
|
(0.31
|
)
|
Charge for the termination of a terminal use agreement 6
|
—
|
|
(117
|
)
|
—
|
|
(117
|
)
|
—
|
|
(74
|
)
|
—
|
|
(74
|
)
|
—
|
|
(0.03
|
)
|
—
|
|
(0.03
|
)
|
Customer claims adjustment/recovery 7
|
—
|
|
—
|
|
—
|
|
53
|
|
—
|
|
—
|
|
—
|
|
34
|
|
—
|
|
—
|
|
—
|
|
0.02
|
|
Environmental charges 8
|
—
|
|
(295
|
)
|
—
|
|
(295
|
)
|
—
|
|
(205
|
)
|
—
|
|
(205
|
)
|
—
|
|
(0.09
|
)
|
—
|
|
(0.09
|
)
|
Gains on sales of businesses/entities 9
|
635
|
|
—
|
|
1,031
|
|
375
|
|
419
|
|
—
|
|
645
|
|
220
|
|
0.18
|
|
—
|
|
0.28
|
|
0.09
|
|
Impact of Dow Corning ownership restructure 10
|
—
|
|
—
|
|
—
|
|
2,106
|
|
—
|
|
—
|
|
—
|
|
2,350
|
|
—
|
|
—
|
|
—
|
|
1.05
|
|
Integration and separation costs 11
|
(502
|
)
|
(223
|
)
|
(1,499
|
)
|
(476
|
)
|
(351
|
)
|
(177
|
)
|
(1,028
|
)
|
(367
|
)
|
(0.15
|
)
|
(0.08
|
)
|
(0.44
|
)
|
(0.16
|
)
|
Merger-related inventory step-up amortization 12
|
(1,116
|
)
|
—
|
|
(1,483
|
)
|
—
|
|
(933
|
)
|
—
|
|
(1,231
|
)
|
—
|
|
(0.40
|
)
|
—
|
|
(0.53
|
)
|
—
|
|
Litigation related charges, awards and adjustments 13
|
—
|
|
27
|
|
(332
|
)
|
(1,208
|
)
|
—
|
|
17
|
|
(215
|
)
|
(761
|
)
|
—
|
|
0.01
|
|
(0.08
|
)
|
(0.34
|
)
|
Restructuring, goodwill impairment and asset related charges - net 14
|
(3,114
|
)
|
(557
|
)
|
(3,594
|
)
|
(1,176
|
)
|
(2,842
|
)
|
(357
|
)
|
(3,161
|
)
|
(782
|
)
|
(1.21
|
)
|
(0.16
|
)
|
(1.34
|
)
|
(0.35
|
)
|
Settlement and curtailment items 15
|
(892
|
)
|
382
|
|
(892
|
)
|
382
|
|
(594
|
)
|
254
|
|
(594
|
)
|
254
|
|
(0.25
|
)
|
0.11
|
|
(0.25
|
)
|
0.11
|
|
Transaction costs and productivity
actions 16
|
—
|
|
(55
|
)
|
(58
|
)
|
(195
|
)
|
—
|
|
(37
|
)
|
(37
|
)
|
(159
|
)
|
—
|
|
(0.02
|
)
|
(0.02
|
)
|
(0.08
|
)
|
Income tax items 17
|
—
|
|
—
|
|
—
|
|
—
|
|
1,347
|
|
44
|
|
1,151
|
|
(13
|
)
|
0.57
|
|
0.02
|
|
0.48
|
|
—
|
|
Total significant items
|
$
|
(4,989
|
)
|
$
|
(1,951
|
)
|
$
|
(6,827
|
)
|
$
|
(1,664
|
)
|
$
|
(2,954
|
)
|
$
|
(1,236
|
)
|
$
|
(4,470
|
)
|
$
|
(204
|
)
|
$
|
(1.26
|
)
|
$
|
(0.55
|
)
|
$
|
(1.90
|
)
|
$
|
(0.09
|
)
|
- DuPont amortization of intangibles
|
(300
|
)
|
(266
|
)
|
(1,119
|
)
|
(1,080
|
)
|
(208
|
)
|
(180
|
)
|
(766
|
)
|
(730
|
)
|
(0.09
|
)
|
(0.08
|
)
|
(0.33
|
)
|
(0.33
|
)
|
Pro forma adjusted results (Non-GAAP)
|
$
|
2,415
|
|
$
|
1,931
|
|
$
|
10,256
|
|
$
|
8,827
|
|
$
|
1,956
|
|
$
|
1,335
|
|
$
|
7,989
|
|
$
|
6,281
|
|
$
|
0.83
|
|
$
|
0.59
|
|
$
|
3.40
|
|
$
|
2.79
|
|
1.
|
|
The results for the three months ended December 31, 2017, are
presented on an as reported basis. The three months ended December
31, 2016 and the twelve months ended December 31, 2017 and 2016, are
reported on a pro forma basis.
|
|
|
|
2.
|
|
Pro forma "Income (loss) from continuing operations before income
taxes."
|
|
|
|
3.
|
|
Pro forma "Net income (loss) available for DowDuPont Inc. common
stockholders." The income tax effect on significant items is
calculated based upon the enacted tax laws and statutory income tax
rates applicable in the tax jurisdiction(s) of the underlying
non-GAAP adjustment.
|
|
|
|
4.
|
|
Pro forma "Earnings (loss) per common share from continuing
operations - diluted."
|
|
|
|
5.
|
|
Pretax charge related to Dow's election to change its method of
accounting for asbestos-related defense costs from expensing as
incurred to estimating and accruing a liability, included in
"Asbestos-related charge." As a result of this accounting policy
change, Dow recorded a pretax charge of $1,009 million for
asbestos-related defense costs through the terminal date of 2049.
Dow also recorded a pretax charge of $104 million to increase the
asbestos-related liability for pending and future claims through the
terminal date of 2049.
|
|
|
|
6.
|
|
Pretax charge related to Dow's termination of a terminal use
agreement, included in "Cost of sales."
|
|
|
|
7.
|
|
Pretax gain of $53 million, included in "Selling, general and
administrative expenses," for a reduction in customer claims accrual
($23 million) and insurance recoveries for recovery of costs for
customer claims related to the use of DuPont's Imprelis® herbicide
($30 million).
|
|
|
|
8.
|
|
Pretax charge for environmental remediation activities at a number
of historical Dow locations, primarily resulting from the
culmination of negotiations with regulators and/or final agency
approval, included in "Cost of sales."
|
9.
|
|
Gains on sales of businesses/entities were recorded in "Sundry
income (expense) - net." The three months ended December 31, 2017,
includes a pretax gain of $635 million related to the sale of a
portion of Dow AgroSciences' corn seed business in Brazil. In
addition to this item, the twelve months ended December 31, 2017,
includes:
|
|
|
- Pretax gain of $227 million related to the sale of Dow's global
EAA copolymers and ionomers business.
|
|
|
- Pretax gain of $162 million associated with the sale of DuPont's
global food safety diagnostics business.
|
|
|
- Pretax gain of $7 million related to post-closing adjustments on
the split-off of Dow's chlorine value chain.
|
|
|
The twelve months ended December 31, 2016, includes the following
items:
|
|
|
- Pretax gain of $369 million associated with the sale of the DuPont
(Shenzhen) Manufacturing Limited entity.
|
|
|
- Pretax gain of $6 million related to post-closing adjustments on
the split-off of Dow's chlorine value chain.
|
10.
|
|
Includes a non-taxable gain of $2,445 million related to the Dow
Corning ownership restructure, included in "Sundry income (expense)
- net"; a $317 million charge for the fair value step-up in
inventories, included in "Cost of sales"; and, a pretax loss of $22
million related to the early redemption of debt incurred by Dow
Corning, included in "Equity in earnings of nonconsolidated
affiliates."
|
|
|
|
11.
|
|
Integration and separation costs related to the Merger, post-Merger
integration and intended business separation activities, and costs
related to the ownership restructure of Dow Corning, included in
"Integration and separation costs."
|
|
|
|
12.
|
|
The three and twelve months ended December 31, 2017, include a
pretax loss of $1,116 million and $1,483 million, respectively, for
the fair value step-up in DuPont's inventories as a result of the
Merger and acquisition of the FMC H&N business, included in "Cost of
sales" ($1,109 million and $1,469 million for the three and twelve
months, respectively) and the amortization of a basis difference
related to the fair value step-up in inventories, included in
"Equity in earnings of nonconsolidated affiliates" ($7 million and
$14 million for the three and twelve months, respectively).
|
|
|
|
13.
|
|
The twelve months ended December 31, 2017, includes a pretax loss of
$469 million related to Dow AgroSciences' arbitration matter with
Bayer CropScience and a pretax gain of $137 million related to Dow's
patent infringement matter with Nova Chemicals Corporation, both
included in "Sundry income (expense) - net." The three months ended
December 31, 2016, includes a pretax credit of $27 million related
to a decrease in Dow Corning's implant liability, included in
"Sundry income (expense) - net." In addition to this item, the
twelve months ended December 31, 2016, includes a pretax loss of
$1,235 million related to Dow's settlement of the urethane matters
class action lawsuit and the opt-out cases litigation, included in
"Sundry income (expense) - net."
|
14.
|
|
The three and twelve months ended December 31, 2017, include the
following pretax impacts recorded in “Restructuring, goodwill
impairment and asset related charges, net”:
|
|
|
- Impairment charge of $1,491 million related to goodwill associated
with the Coatings & Performance Monomers reporting unit; and an
impairment charge of $939 million related to Dow manufacturing
assets and facilities and an equity method investment.
|
|
|
- Restructuring charges of $695 million and $875 million during the
three and twelve months, respectively, related to the DowDuPont Cost
Synergy Program (including the following charges for the three and
twelve months, respectively: $331 million and $500 million of
severance and related benefit costs, $290 million and $301 million
of asset write-downs and write-offs, and $74 million for contract
termination costs).
|
|
|
- Restructuring charge of $312 million during the twelve months
consisting of severance charges of $33 million and asset-related
charges of $279 million, primarily associated with actions to
improve DuPont plant productivity.
|
|
|
- Gain of $11 million and $23 million for the three and twelve
months, respectively, related to adjustments to prior years’
restructuring programs.
|
|
|
The three and twelve months ended December 31, 2016, include the
following pretax impacts recorded in “Restructuring, goodwill
impairment and asset related charges, net” unless specifically
addressed below:
|
|
|
- Impairment charge of $435 million related to the write-down of
DuPont's uncompleted enterprise resource planning system.
|
|
|
- Charge related to AgroFresh, including a partial impairment charge
of $143 million of Dow’s investment in AgroFresh Solutions Inc. and
post-closing adjustments of $20 million related to non-cash
consideration (included in "Sundry income (expense) - net").
|
|
|
- Net gains of $34 million and $102 million during the three and
twelve months, respectively, related to adjustments to DuPont’s 2016
and 2014 restructuring programs. The charge in the twelve months
includes $3 million recorded in "Sundry income (expense) - net."
|
|
|
- Gain of $7 million and net charge of $68 million during the three
and twelve months, respectively, related to the decision to not
re-start the insecticide manufacturing facility at the DuPont site
in La Porte, Texas.
|
|
|
- Charge of $449 million during the twelve months for a
restructuring plan that incorporated actions related to the
ownership restructure of Dow Corning.
|
|
|
- Asset impairment charge of $158 million during the twelve months
related to DuPont’s indefinite lived intangible assets.
|
|
|
- Charge of $5 million during the twelve months related to
adjustments to Dow’s 2015 restructuring program.
|
15.
|
|
The three and twelve months ended December 31, 2017, include a
pretax settlement charge of $892 million related to the payment of
plan obligations to certain participants of a Dow U.S. non-qualified
pension plan as a result of the Merger, included in "Cost of sales"
($888 million) and "Selling, general and administrative expenses"
($4 million). The three and twelve months ended December 31, 2016,
include a pretax gain of $382 million related to changes to DuPont's
U.S. pension plan and U.S. other postretirement benefits plan,
included in "Cost of sales" ($172 million), "Selling, general and
administrative expenses" ($153 million) and "Research and
development expenses" ($57 million).
|
16.
|
|
Includes implementation costs associated with Dow's restructuring
programs and other productivity actions, recorded in:
|
|
|
- "Cost of sales" ($39 million in the three months ended December
31, 2016; $49 million and $123 million in the twelve months ended
December 31, 2017 and 2016, respectively).
|
|
|
- "Selling, general and administrative expenses" ($8 million in the
three months ended December 31, 2016; $9 million and $31 million in
the twelve months ended December 31, 2017 and 2016, respectively).
|
|
|
- "Sundry income (expense) - net" ($8 million and $41 million in the
three and twelve months ended December 31, 2016, respectively).
|
17.
|
|
Income tax items were recorded in "Provision (Credit) for income
taxes on continuing operations." The three months ended December 31,
2017, includes a net tax benefit of $1,086 million related to the
recognition of the effects of new U.S. tax legislation, as well as a
net tax benefit of $261 million related to an internal legal entity
restructuring associated with the intended business separations. In
addition to this item, the twelve months ended December 31, 2017,
includes:
|
|
|
- Tax charge of $267 million related to changes in tax attributes
resulting from the Merger, including a reduction in a deferred tax
asset in Germany and the recognition of deferred tax gains in the
United States.
|
|
|
- Tax benefit of $100 million related to a reduction in DuPont's
unrecognized tax benefits, and reversal of associated interest, due
to the closure of various tax statutes of limitations.
|
|
|
- Tax charge of $29 million related to the elimination of a tax
benefit resulting from DuPont's second quarter 2017 principal U.S.
pension plan contribution.
|
|
|
The three and twelve months ended December 31, 2016, include a tax
benefit of $44 million and a tax charge of $57 million,
respectively, for the settlement of an uncertain tax position
associated with a historical change in the legal ownership structure
of a Dow nonconsolidated affiliate.
|
®™ Trademark of The Dow Chemical Company ("Dow") or E. I. du Pont de
Nemours and Company ("DuPont") or affiliated companies of Dow or DuPont.
|
|
DowDuPont Inc.
Selected Pro Forma Financial Information and Non-GAAP Measures
|
|
|
|
|
|
|
|
|
Pro Forma Common Shares Outstanding
|
Three Months Ended
|
|
Twelve Months Ended
|
Shares in millions (Unaudited)
|
Dec 31, 2017
|
|
Dec 31, 2016
|
|
Dec 31, 2017
|
|
Dec 31, 2016
|
As Reported 1
|
|
Pro Forma 1
|
|
Pro Forma
|
|
Pro Forma
|
Dow common shares outstanding - basic 2
|
|
|
1,106.2
|
|
|
808.1
|
|
|
1,108.1
|
DuPont common shares outstanding - basic 3
|
|
|
1,113.2
|
|
|
744.1
|
|
|
1,113.2
|
DowDuPont common shares outstanding - basic 4
|
2,326.9
|
|
|
|
|
771.7
|
|
|
|
Total DowDuPont common shares outstanding - basic
|
2,326.9
|
|
|
2,219.4
|
|
|
2,323.9
|
|
|
2,221.3
|
Dilutive impact of Dow equity-based awards 2
|
|
|
15.9
|
|
|
12.2
|
|
|
15.1
|
Dilutive impact of DuPont equity-based awards 5
|
|
|
6.3
|
|
|
3.9
|
|
|
5.7
|
Dilutive impact of DowDuPont equity-based awards 4
|
18.9
|
|
|
|
|
6.1
|
|
|
|
Total DowDuPont common shares outstanding - diluted
|
2,345.8
|
|
|
2,241.6
|
|
|
2,346.1
|
|
|
2,242.1
|
1.
|
|
For the three months ended December 31, 2017 and 2016, the Company
reported "Net loss from continuing operations available for
DowDuPont Inc. common stockholders." In accordance with U.S. GAAP,
"Weighted-average common shares outstanding - basic" was used in the
reported calculation of "Loss per common share from continuing
operations - diluted." For the three months ended December 31, 2017
and 2016, the Company reported "Net income from continuing
operations available for DowDuPont Inc. common stockholders" on an
operating basis (Non-GAAP) and "Weighted-average common shares
outstanding - diluted" was used in the calculation of "Adjusted
earnings per common share from continuing operations - diluted"
(Non-GAAP).
|
2.
|
|
Reflects share amounts as reported by Dow in its Annual Report on
Form 10-K and Current Report on Form 8-K for the periods presented.
The share amount in the twelve-month period ended December 31, 2017,
reflects a weighted averaging effect of Dow shares outstanding prior
to August 31, 2017. On December 30, 2016, Dow converted 4 million
shares of Preferred Stock into 96.8 million shares of Dow common
stock. In accordance with U.S. GAAP, the basic share count for the
three- and twelve-month periods ended December 31, 2016 reflects a
two-day averaging effect related to this conversion, or 2.1 million
shares for the three-month period ended December 31, 2016 and 0.5
million shares for the twelve-month period ended December 31, 2016.
|
3.
|
|
DuPont common shares outstanding - basic for all periods presented
reflects DuPont's common stock issued and outstanding at August 31,
2017, multiplied by the Merger Agreement conversion ratio of 1.2820.
The share amount shown in the twelve-month period ended December 31,
2017, reflects a weighted averaging effect of DuPont shares
outstanding prior to August 31, 2017.
|
4.
|
|
The DowDuPont share amount for the twelve-month period ended
December 31, 2017, reflects a weighted averaging effect of DowDuPont
shares outstanding after August 31, 2017.
|
5.
|
|
The "Dilutive impact of DuPont equity-based awards" reflects share
amounts as reported by DuPont in its Annual Report on Form 10-K and
Current Report on Form 8-K for the periods presented, multiplied by
the Merger Agreement conversion ratio of 1.2820. The share amount
shown in the twelve-month period ended December 31, 2017, reflects a
weighted averaging effect of DuPont shares outstanding prior to
August 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DowDuPont Inc.
Unaudited Pro Forma Combined Statement of Income
For the Three Months Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
In millions, except per share amounts
|
|
Historical Dow 1
|
|
Historical DuPont 2
|
|
Reclass 3
|
|
Divestitures 4
|
|
Pro Forma 5
|
|
Pro Forma
|
Net sales
|
|
$
|
13,020
|
|
|
$
|
5,211
|
|
|
$
|
62
|
|
|
$
|
(507
|
)
|
|
$
|
(52
|
)
|
|
$
|
17,734
|
|
Cost of sales
|
|
10,574
|
|
|
3,147
|
|
|
145
|
|
|
(226
|
)
|
|
48
|
|
|
13,688
|
|
Other operating charges
|
|
—
|
|
|
182
|
|
|
(182
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Research and development expenses
|
|
425
|
|
|
381
|
|
|
(10
|
)
|
|
(42
|
)
|
|
8
|
|
|
762
|
|
Selling, general and administrative expenses
|
|
911
|
|
|
964
|
|
|
(284
|
)
|
|
(53
|
)
|
|
10
|
|
|
1,548
|
|
Other (loss) income, net
|
|
—
|
|
|
301
|
|
|
(301
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Amortization of intangibles
|
|
157
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
220
|
|
|
423
|
|
Restructuring, goodwill impairment and asset related charges - net
|
|
—
|
|
|
393
|
|
|
143
|
|
|
1
|
|
|
—
|
|
|
537
|
|
Integration and separation costs
|
|
—
|
|
|
—
|
|
|
285
|
|
|
—
|
|
|
(62
|
)
|
|
223
|
|
Asbestos-related charge
|
|
1,113
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,113
|
|
Equity in earnings of nonconsolidated affiliates
|
|
251
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
(7
|
)
|
|
283
|
|
Sundry income (expense) - net
|
|
(103
|
)
|
|
—
|
|
|
388
|
|
|
(3
|
)
|
|
—
|
|
|
282
|
|
Interest income
|
|
43
|
|
|
—
|
|
|
(43
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Interest expense and amortization of debt discount
|
|
229
|
|
|
92
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
291
|
|
Income (Loss) from continuing operations before income taxes
|
|
(198
|
)
|
|
353
|
|
|
2
|
|
|
(190
|
)
|
|
(253
|
)
|
|
(286
|
)
|
Provision (Credit) for income taxes on continuing operations
|
|
(282
|
)
|
|
101
|
|
|
2
|
|
|
(57
|
)
|
|
(87
|
)
|
|
(323
|
)
|
Income from continuing operations, net of tax
|
|
84
|
|
|
252
|
|
|
—
|
|
|
(133
|
)
|
|
(166
|
)
|
|
37
|
|
Net income attributable to noncontrolling interests
|
|
32
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
3
|
|
|
33
|
|
Net income from continuing operations attributable to DowDuPont Inc.
|
|
52
|
|
|
254
|
|
|
—
|
|
|
(133
|
)
|
|
(169
|
)
|
|
4
|
|
Preferred stock dividends
|
|
85
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
85
|
|
Net income (loss) available for DowDuPont Inc. common stockholders
|
|
$
|
(33
|
)
|
|
$
|
251
|
|
|
$
|
—
|
|
|
$
|
(133
|
)
|
|
$
|
(166
|
)
|
|
$
|
(81
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share from continuing operations - basic
|
|
|
|
|
|
|
|
$
|
(0.04
|
)
|
Earnings per common share from continuing operations - diluted
|
|
|
|
|
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic
|
|
|
|
|
|
|
|
2,219.4
|
|
Weighted-average common shares outstanding - diluted
|
|
|
|
|
|
|
|
2,219.4
|
|
1.
|
|
See the U.S. GAAP consolidated statements of income.
|
2.
|
|
See the consolidated statements of income included in DuPont's
Current Report on Form 8-K for the year ended December 31, 2016.
|
3.
|
|
Certain reclassifications were made to conform to the presentation
used for DowDuPont. The reclassifications are consistent with those
identified and disclosed in the Current Report on Form 8-K/A filed
with the SEC on October 26, 2017. Additionally, in the fourth
quarter of 2017, to improve comparability and conform to the current
period presentation, the Company reclassified $143 million of asset
impairment charges from "Sundry income (expense) - net" to
"Restructuring, goodwill impairment and asset related charges - net."
|
4.
|
|
Includes the following divestitures agreed to with certain
regulatory agencies as a condition of approval for the Merger,
including: Dow’s global EAA copolymers and ionomers business
(divested on September 1, 2017); a portion of Dow AgroSciences’ corn
seed business in Brazil; and DuPont’s cereal broadleaf herbicides
and chewing insecticides portfolio as well as its crop protection
research and development pipeline and organization.
|
5.
|
|
Certain pro forma adjustments were made to illustrate the estimated
effects of the Merger, assuming the Merger had been consummated on
January 1, 2016. The pro forma adjustments are consistent with those
identified and disclosed in the Current Report on Form 8-K/A filed
with the SEC on October 26, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DowDuPont Inc.
Unaudited Pro Forma Combined Statement of Income
For the Twelve Months Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
In millions, except per share amounts
|
DWDP 1
|
|
Historical DuPont 2
|
|
Reclass 3
|
|
Divestitures 4
|
|
Pro Forma 5
|
|
Pro Forma
|
Net sales
|
$
|
62,484
|
|
|
$
|
18,349
|
|
|
$
|
84
|
|
|
$
|
(1,219
|
)
|
|
$
|
(163
|
)
|
|
$
|
79,535
|
|
Cost of sales
|
50,414
|
|
|
10,617
|
|
|
387
|
|
|
(523
|
)
|
|
65
|
|
|
60,960
|
|
Other operating charges
|
—
|
|
|
521
|
|
|
(521
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Research and development expenses
|
2,110
|
|
|
1,159
|
|
|
(27
|
)
|
|
(104
|
)
|
|
19
|
|
|
3,157
|
|
Selling, general and administrative expenses
|
4,021
|
|
|
3,452
|
|
|
(583
|
)
|
|
(143
|
)
|
|
29
|
|
|
6,776
|
|
Other (loss) income, net
|
—
|
|
|
173
|
|
|
(173
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Amortization of intangibles
|
1,013
|
|
|
—
|
|
|
139
|
|
|
—
|
|
|
591
|
|
|
1,743
|
|
Restructuring, goodwill impairment and asset related charges - net
|
3,280
|
|
|
323
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
3,593
|
|
Integration and separation costs
|
1,101
|
|
|
—
|
|
|
605
|
|
|
(24
|
)
|
|
(183
|
)
|
|
1,499
|
|
Equity in earnings of nonconsolidated affiliates
|
764
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
(15
|
)
|
|
804
|
|
Sundry income (expense) - net
|
966
|
|
|
—
|
|
|
1
|
|
|
(12
|
)
|
|
—
|
|
|
955
|
|
Interest expense and amortization of debt discount
|
1,082
|
|
|
254
|
|
|
—
|
|
|
—
|
|
|
(80
|
)
|
|
1,256
|
|
Income from continuing operations before income taxes
|
1,193
|
|
|
2,196
|
|
|
(33
|
)
|
|
(437
|
)
|
|
(609
|
)
|
|
2,310
|
|
Provision (Credit) for income taxes on continuing operations
|
(476
|
)
|
|
228
|
|
|
(33
|
)
|
|
(88
|
)
|
|
(233
|
)
|
|
(602
|
)
|
Income from continuing operations, net of tax
|
1,669
|
|
|
1,968
|
|
|
—
|
|
|
(349
|
)
|
|
(376
|
)
|
|
2,912
|
|
Net income attributable to noncontrolling interests
|
132
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
159
|
|
Net income from continuing operations attributable to DowDuPont Inc.
|
1,537
|
|
|
1,948
|
|
|
—
|
|
|
(349
|
)
|
|
(383
|
)
|
|
2,753
|
|
Preferred stock dividends
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
Net income from continuing operations available for DowDuPont Inc.
common stockholders
|
$
|
1,537
|
|
|
$
|
1,941
|
|
|
$
|
—
|
|
|
$
|
(349
|
)
|
|
$
|
(376
|
)
|
|
$
|
2,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share data:
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share from continuing operations - basic
|
|
|
|
|
|
|
|
$
|
1.18
|
|
Earnings per common share from continuing operations - diluted
|
|
|
|
|
|
|
|
$
|
1.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic
|
|
|
|
|
|
|
|
2,323.9
|
|
Weighted-average common shares outstanding - diluted
|
|
|
|
|
|
|
|
2,346.1
|
|
1.
|
|
See the U.S. GAAP consolidated statements of income.
|
2.
|
|
Reflects DuPont activity for the period from January 1, 2017 to
August 31, 2017, prior to the Merger.
|
3.
|
|
Certain reclassifications were made to conform to the presentation
used for DowDuPont. The reclassifications are consistent with those
identified and disclosed in the Current Report on Form 8-K/A filed
with the SEC on October 26, 2017.
|
4.
|
|
Includes the following divestitures agreed to with certain
regulatory agencies as a condition of approval for the Merger,
including: Dow’s global EAA copolymers and ionomers business
(divested on September 1, 2017); a portion of Dow AgroSciences’ corn
seed business in Brazil (for the period of January 1, 2017 through
August 31, 2017); and DuPont’s cereal broadleaf herbicides and
chewing insecticides portfolio as well as its crop protection
research and development pipeline and organization (for the period
of January 1, 2017 through August 31, 2017; activity from September
1, 2017 through the November 1, 2017 divestiture was treated as
discontinued operations).
|
5.
|
|
Certain pro forma adjustments were made to illustrate the estimated
effects of the Merger, assuming the Merger had been consummated on
January 1, 2016. The pro forma adjustments are consistent with those
identified and disclosed in the Current Report on Form 8-K/A filed
with the SEC on October 26, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DowDuPont Inc.
Unaudited Pro Forma Combined Statement of Income
For the Twelve Months Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
In millions, except per share amounts
|
Historical Dow 1
|
|
Historical DuPont 2
|
|
Reclass 3
|
|
Divestitures 4
|
|
Pro Forma 5
|
|
Pro Forma
|
Net sales
|
$
|
48,158
|
|
|
$
|
24,594
|
|
|
$
|
170
|
|
|
$
|
(1,812
|
)
|
|
$
|
(216
|
)
|
|
$
|
70,894
|
Cost of sales
|
37,641
|
|
|
14,469
|
|
|
559
|
|
|
(783
|
)
|
|
110
|
|
|
51,996
|
Other operating charges
|
—
|
|
|
686
|
|
|
(686
|
)
|
|
—
|
|
|
—
|
|
|
—
|
Research and development expenses
|
1,584
|
|
|
1,641
|
|
|
(40
|
)
|
|
(153
|
)
|
|
29
|
|
|
3,061
|
Selling, general and administrative expenses
|
3,304
|
|
|
4,319
|
|
|
(762
|
)
|
|
(203
|
)
|
|
43
|
|
|
6,701
|
Other (loss) income, net
|
—
|
|
|
708
|
|
|
(708
|
)
|
|
—
|
|
|
—
|
|
|
—
|
Amortization of intangibles
|
544
|
|
|
—
|
|
|
194
|
|
|
—
|
|
|
886
|
|
|
1,624
|
Restructuring, goodwill impairment and asset related charges - net
|
452
|
|
|
552
|
|
|
143
|
|
|
4
|
|
|
—
|
|
|
1,151
|
Integration and separation costs
|
—
|
|
|
—
|
|
|
735
|
|
|
—
|
|
|
(259
|
)
|
|
476
|
Asbestos-related charge
|
1,113
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,113
|
Equity in earnings of nonconsolidated affiliates
|
442
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
(25
|
)
|
|
516
|
Sundry income (expense) - net
|
1,202
|
|
|
—
|
|
|
711
|
|
|
(10
|
)
|
|
—
|
|
|
1,903
|
Interest income
|
107
|
|
|
—
|
|
|
(107
|
)
|
|
—
|
|
|
—
|
|
|
—
|
Interest expense and amortization of debt discount
|
858
|
|
|
370
|
|
|
—
|
|
|
—
|
|
|
(120
|
)
|
|
1,108
|
Income from continuing operations before income taxes
|
4,413
|
|
|
3,265
|
|
|
22
|
|
|
(687
|
)
|
|
(930
|
)
|
|
6,083
|
Provision for income taxes on continuing operations
|
9
|
|
|
744
|
|
|
22
|
|
|
(160
|
)
|
|
(327
|
)
|
|
288
|
Income from continuing operations, net of tax
|
4,404
|
|
|
2,521
|
|
|
—
|
|
|
(527
|
)
|
|
(603
|
)
|
|
5,795
|
Net income attributable to noncontrolling interests
|
86
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
108
|
Net income from continuing operations attributable to DowDuPont Inc.
|
4,318
|
|
|
2,509
|
|
|
—
|
|
|
(527
|
)
|
|
(613
|
)
|
|
5,687
|
Preferred stock dividends
|
340
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
340
|
Net income from continuing operations available for DowDuPont Inc.
common stockholders
|
$
|
3,978
|
|
|
$
|
2,499
|
|
|
$
|
—
|
|
|
$
|
(527
|
)
|
|
$
|
(603
|
)
|
|
$
|
5,347
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share data:
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share from continuing operations - basic
|
|
|
|
|
|
|
|
$
|
2.40
|
Earnings per common share from continuing operations - diluted
|
|
|
|
|
|
|
|
$
|
2.37
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic
|
|
|
|
|
|
|
|
2,221.3
|
Weighted-average common shares outstanding - diluted
|
|
|
|
|
|
|
|
2,242.1
|
1.
|
|
See the U.S. GAAP consolidated statements of income.
|
2.
|
|
See the consolidated statements of income included in DuPont's
Annual Report on Form 10-K for the year ended December 31, 2016.
|
3.
|
|
Certain reclassifications were made to conform to the presentation
used for DowDuPont. The reclassifications are consistent with those
identified and disclosed in the Current Report on Form 8-K/A filed
with the SEC on October 26, 2017. Additionally, in the fourth
quarter of 2017, to improve comparability and conform to the current
period presentation, the Company reclassified $143 million of asset
impairment charges from "Sundry income (expense) - net" to
"Restructuring, goodwill impairment and asset related charges - net."
|
4.
|
|
Includes the following divestitures agreed to with certain
regulatory agencies as a condition of approval for the Merger,
including: Dow’s global EAA copolymers and ionomers business; a
portion of Dow AgroSciences’ corn seed business in Brazil; and
DuPont’s cereal broadleaf herbicides and chewing insecticides
portfolio as well as its crop protection research and development
pipeline and organization.
|
5.
|
|
Certain pro forma adjustments were made to illustrate the estimated
effects of the Merger, assuming that the Merger had been consummated
on January 1, 2016. The pro forma adjustments are consistent with
those identified and disclosed in the Current Report on Form 8-K/A
filed with the SEC on October 26, 2017.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180201005534/en/
Source: DowDuPont