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Form 8-K DUPONT E I DE NEMOURS & For: Oct 25

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October 25, 2016 6:47 AM EDT
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of Earliest Event Reported): October 25, 2016
 
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.)
 
974 Centre Road
Wilmington, Delaware 19805
(Address of principal executive offices)
 
Registrant’s telephone number, including area code:   (302) 774-1000
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



Item 2.02     Results of Operations and Financial Condition
On October 25, 2016, the Registrant announced its consolidated financial results for the quarter ended September 30, 2016. A copy of the Registrant’s press release and related presentation are furnished herewith on Form 8-K as Exhibits 99.1 and 99.2, respectively. The information contained in Item 2.02, including Exhibit 99.1 and Exhibit 99.2, of this report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and it will not be incorporated by reference into any registration statement or other document filed by the Registrant under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such a filing.

Item 9.01     Financial Statements and Exhibits
(d) Exhibits:
99.1    Press Release dated October 25, 2016
99.2    DuPont Third Quarter 2016 Earnings Presentation dated October 25, 2016








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/ Jeanmarie F. Desmond
 
Jeanmarie F. Desmond
 
Vice President and Controller
 
October 25, 2016



 
 
 
 
 
Exhibit 99.1
exhibit991image1a02a01a02a05.jpg
 
 
 
 
exhibit991image2a03a01a02a05.jpg
 
 
 
 
 
 
October 25, 2016
 
 
 
Media Contact:
Dan Turner
WILMINGTON, Del.
 
 
 
 
302-996-8372
 
 
 
 
 
 
 
 
 
Investor Contact:
302-774-4994

DuPont Reports Third-Quarter 2016 Results

Total Company Sales Grew on 3-Percent Volume Improvement

Operating Margins Expanded in all Reportable Segments

Increases Full-Year 2016 Operating Earnings Guidance

Third-Quarter Highlights

•
GAAP1 earnings per share totaled $0.01 versus $0.14 in prior year. Operating earnings2 per share increased to $0.34 from $0.13 in prior year.

•
Sales of $4.9 billion increased 1 percent. Volumes grew 3 percent on increased demand primarily in Performance Materials, Agriculture, Nutrition & Health, and Industrial Biosciences. Local prices declined by 2 percent.

•
Total company gross margins expanded 45 basis points. GAAP (loss) from continuing operations before taxes was $(56) million, including charges of $(280) million related to an asset impairment and transaction costs. Prior year GAAP income of $227 million included a benefit of $147 million from insurance recoveries.

•
Total segment pre-tax operating earnings2 of $607 million increased 40 percent. Total segment operating margins increased about 350 basis points, and operating margins expanded in all reportable segments.
 
•
GAAP operating costs3 increased by 2 percent. Excluding significant items and non-operating pension/OPEB costs, operating costs2 declined by 14 percent versus prior year.

•
Free cash flow4 improved by about $1.3 billion year-to-date primarily due to working capital improvements and lower capital expenditures.

•
DuPont now expects full-year 2016 GAAP earnings to be about $2.71 per share, an increase of 30 percent from prior year. 2016 operating earnings2 are now expected to increase 17 percent versus prior year to $3.25 per share.

WILMINGTON, Del., Oct. 25, 2016 - DuPont (NYSE: DD), a science company that brings world-class, innovative products, materials, and services to the global marketplace, today announced third-quarter 2016 GAAP earnings of $0.01 per share and operating earnings2 of $0.34 per share. Prior year GAAP and operating earnings2 were $0.14 and $0.13 per share, respectively. Refer to Schedule B for details of significant items excluded from operating earnings per share.


1 Generally Accepted Accounting Principles (GAAP)
2 See schedules A, C, and D for definitions and reconciliations of non-GAAP measures.
3 GAAP operating costs defined as other operating charges, selling, general & administrative, and research & development costs.
4 Free cash flow is defined as cash used for operating activities less purchases of property, plant and equipment. See schedule A for reconciliation of non-GAAP measure.

E.I. du Pont de Nemours and Company

2

Third-quarter 2016 sales totaled $4.9 billion, up 1 percent versus prior year as 3-percent volume growth more than offset 2-percent lower local price.

Free cash flow4 improvement of $1.3 billion year-to-date reflected improvements in working capital, lower tax payments, lower capital expenditures and the absence of Chemours cash outflows.

“This quarter we continued the strong momentum from the first half of the year. We increased segment operating earnings 40 percent, expanded operating margins in each reportable segment, reduced costs, grew volumes and improved free cash flow. As a result of our continued performance and progress against strategic initiatives, we are raising our operating earnings guidance for the year,” said Ed Breen, chairman and CEO of DuPont. “We also are making progress preparing for the merger with Dow. We developed an organizational design that fosters innovation and takes advantage of our market connections to drive growth. In addition, we have finalized plans to realize our cost synergies. We continue to work constructively with regulators in key jurisdictions to close the merger as soon as possible. In the event that regulators in those jurisdictions use their full allotted time, closing would be expected to occur in the first quarter of 2017. We expect the intended spins to occur about 18 months after closing.”

Global Consolidated Net Sales - 3rd Quarter
 
 
Three Months Ended
 
 
 
 
 
 
September 30, 2016
Percentage Change Due to:
(Dollars in millions)
 
$
 
% Change
 
Local Price and Product Mix **
 
Currency
 
Volume **
 
Portfolio/Other
U.S. & Canada
 
$
1,597

 
1

 
(4
)
 
—

 
6

 
(1
)
EMEA*
 
1,133

 
(5
)
 
—

 
(2
)
 
(2
)
 
(1
)
Asia Pacific
 
1,421

 
7

 
(1
)
 
—

 
6

 
2

Latin America
 
766

 
—

 
(1
)
 
4

 
(3
)
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Total Consolidated Net Sales
 
$
4,917

 
1

 
(2
)
 
—

 
3

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
* Europe, Middle East & Africa
 
 
 
 
 
 
 
 
 
 
 
 
** Organic sales growth is defined as the sum of local price and product mix and volume.











3

Segment Net Sales - 3rd Quarter
 
 
Three Months Ended
 
 
 
 
September, 2016
Percentage Change Due to:
(Dollars in millions)
 
$
 
% Change
 
Local Price and Product Mix
 
Currency
 
Volume
 
Portfolio/Other
Agriculture
 
$
1,119

 
2

 
(3
)
 
2

 
4

 
(1
)
Electronics & Communications
 
493

 
(7
)
 
(1
)
 
—

 
(6
)
 
—

Industrial Biosciences
 
392

 
5

 
—

 
(1
)
 
5

 
1

Nutrition & Health
 
823

 
2

 
(1
)
 
(1
)
 
4

 
—

Performance Materials
 
1,334

 
2

 
(2
)
 
—

 
4

 
—

Protection Solutions
 
722

 
—

 
(1
)
 
—

 
1

 
—

Other
 
34

 
 
 
 
 
 
 
 
 
 
Consolidated Net Sales
 
$
4,917

 
1

 
(2
)
 
—

 
3

 
—




Operating Earnings (2) - 3rd Quarter
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Change vs. 2015
(Dollars in millions)
 
 
3Q16
 
3Q15
 
$
 
%
Agriculture
 
$
(189
)
 
$
(210
)
 
$
21

 
10
 %
Electronics & Communications
 
108

 
104

 
4

 
4
 %
Industrial Biosciences
 
78

 
61

 
17

 
28
 %
Nutrition & Health
 
135

 
102

 
33

 
32
 %
Performance Materials
 
371

 
317

 
54

 
17
 %
Protection Solutions
 
162

 
146

 
16

 
11
 %
Other
 
(58
)
 
(87
)
 
29

 
33
 %
Total segment operating earnings (5)
 
607

 
433

 
174

 
40
 %
 
 
 
 
 
 
 
 

Exchange gains (losses)(6)
 
(76
)
 
(36
)
 
(40
)
 
nm

Corporate expenses (5)
 
(83
)
 
(111
)
 
28

 
-25
 %
Interest expense
 
(93
)
 
(82
)
 
(11
)
 
13
 %
Operating earnings before income taxes (2)
 
355

 
204

 
151

 
74
 %
 
 
 
 
 
 
 
 
 

Provision for income taxes on operating earnings (2)
 
(53
)
 
(87
)
 
34

 


Less: Net income attributable to noncontrolling interests
 
4

 
—

 
4

 

Operating earnings (2)
 
$
298

 
$
117

 
$
181

 
155
 %
 
 
 
 
 
 
 
 
 

Operating earnings per share (2)
 
$
0.34

 
$
0.13

 
$
0.21

 
162
 %
GAAP earnings per share
 
$
0.01

 
$
0.14

 
$
(0.13
)
 
-93
 %
 
 
 
 
 
 
 
 
 
 
(5)  See Schedules B and C for listing of significant items and their impact by segment.
(6)  See Schedule D for additional information on exchange gains and losses.




4

The following is a summary of business results for each of the company’s reportable segments comparing the third quarter with the prior year.

Agriculture - A seasonal operating loss of $189 million improved $21 million, or 10 percent, as cost savings, higher volumes and a $28 million benefit from currency were partially offset by lower local price and higher product costs. Increased seed volumes were partially offset by lower fungicide and insecticide volumes. Increased seed prices were more than offset by lower crop protection prices. Prior year operating earnings included a $27 million gain from asset sales and a $21 million benefit related to prior periods. Operating margins expanded by 230 basis points.

Electronics & Communications - Operating earnings of $108 million increased $4 million, or 4 percent, as cost savings more than offset lower demand, driven by declines in Tedlar® film and continued weakness in consumer electronics. Operating margins expanded by about 240 basis points.

Industrial Biosciences - Operating earnings of $78 million increased $17 million, or 28 percent, as increased demand in bioactives and biomaterials and cost savings more than offset lower volume in CleanTech. Demand in bioactives increased due to growth in home and personal care while strength in biomaterials reflected growth in the apparel market. Operating margins expanded by 360 basis points.

Nutrition & Health - Operating earnings of $135 million increased $33 million, or 32 percent, on continued broad-based volume growth led by probiotics, cultures and ingredient systems; cost savings; and lower product costs. Operating margins expanded by 380 basis points.

Performance Materials - Operating earnings of $371 million increased $54 million, or 17 percent. Cost savings, increased demand in automotive markets (primarily in China), and lower product costs more than offset a $14 million negative impact from currency, as well as the absence of a $16 million net benefit from a joint venture in the prior year. Operating margins expanded by about 350 basis points.

Protection Solutions - Operating earnings of $162 million increased $16 million, or 11 percent, driven by cost savings and increased volumes. Volume growth was driven by increased demand in Tyvek® protective materials and surfaces, primarily in North America. Operating margins expanded by 225 basis points.

2016 Outlook
The company now expects full-year 2016 GAAP earnings to be about $2.71 per share, an increase of 30 percent from prior year. Full-year 2016 operating earnings2 are now expected to increase 17 percent versus prior year to $3.25 per share, up from our previously communicated range of $3.15 - $3.20 per share. The estimated headwind from a higher base tax rate is now expected to be about $0.07 per share.  The company continues to expect a benefit of $0.64 per share from the 2016 global cost savings and restructuring plan and a headwind from currency of about $0.15 per share. The company’s full-year 2016 GAAP earnings include an expected charge of about $0.37 per share for transaction costs associated with the planned merger with Dow.


5

DuPont will hold a conference call and webcast on Tuesday, Oct. 25, 2016, at 8:00 AM EDT to discuss this news release.  The webcast and additional presentation materials can be accessed by visiting the company’s investor website (Events & Presentations) at www.investors.dupont.com.  A replay of the conference call webcast will be available for 90 days by calling 1-630-652-3042, Passcode 6102133#.  For additional information see the investor center at http://www.dupont.com.

Use of Non-GAAP Measures
This earnings release includes information that does not conform to U.S. generally accepted accounting principles (GAAP) and are considered non-GAAP measures. These measures include the company’s consolidated results and earnings per share on an operating earnings basis, which excludes significant items and non-operating pension and other postretirement employee benefit costs (operating earnings and operating EPS), total segment pre-tax operating earnings, operating costs and corporate expenses on an operating earnings basis. Management uses these measures internally for planning, forecasting and evaluating the performance of the company’s segments, including allocating resources and evaluating incentive compensation. From a liquidity perspective, management uses free cash flow, which is defined as cash provided/used by operating activities less purchases of property, plant and equipment. Free cash flow is useful to investors and management to evaluate the company’s cash flow and financial performance, and is an integral financial measure used in the company’s financial planning process. Management believes that these non-GAAP measurements are meaningful to investors as they provide insight with respect to ongoing operating results of the company and provide a more useful comparison of year-over-year results. These non-GAAP measurements supplement our GAAP disclosures and should not be viewed as an alternative to GAAP measures of performance. Reconciliations of non-GAAP measures to GAAP are provided in schedules A, C and D. Details of significant items are provided in schedule B.

About DuPont
DuPont (NYSE: DD) has been bringing world-class science and engineering to the global marketplace in the form of innovative products, materials, and services since 1802. The company believes that by collaborating with customers, governments, NGOs, and thought leaders we can help find solutions to such global challenges as providing enough healthy food for people everywhere, decreasing dependence on fossil fuels, and protecting life and the environment. For additional information about DuPont and its commitment to inclusive innovation, please visit http://www.dupont.com.

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.


6

Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the consummation of the proposed transaction and the anticipated benefits thereof. 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 the company’s actual results to differ materially from those projected in any such forward-looking statements are: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; ability to respond to market acceptance, rules, regulations and policies affecting products based on biotechnology and, in general, for products for the agriculture industry; outcome of significant litigation and environmental matters, including realization of associated indemnification assets, if any; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, interest and currency exchange rates; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, natural disasters and weather events and patterns which could affect demand as well as availability of products for the agriculture industry; ability to protect and enforce the company’s intellectual property rights; successful integration of acquired businesses and separation of underperforming or non-strategic assets or businesses; and risks related to the agreement entered on December 11, 2015, with The Dow Chemical Company pursuant to which the companies have agreed to effect an all-stock merger of equals, including the completion of the proposed transaction on anticipated terms and timing, the ability to fully and timely realize the expected benefits of the proposed transaction and risks related to the intended business separations contemplated to occur after the completion of the proposed transaction. Important risk factors relating to the proposed transaction and intended business separations include, but are not limited to, (i) the completion of the proposed transaction on anticipated terms and timing, including obtaining regulatory approvals, anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the new combined company’s operations and other conditions to the completion of the merger, (ii) the ability of Dow and DuPont to integrate the business successfully and to achieve anticipated synergies, risks and costs and pursuit and/or implementation of the potential separations, including anticipated timing, any changes to the configuration of businesses included in the potential separation if implemented, (iii) the intended separation of the agriculture, material science and specialty products businesses of the combined company post-mergers in one or more tax efficient transactions on anticipated terms and timing, including a number of conditions which could delay, prevent or otherwise adversely affect the proposed transactions, including possible issues or delays in obtaining required regulatory approvals or clearances, disruptions in the financial markets or other potential barriers, (iv) potential litigation relating to the proposed transaction that could be instituted against Dow, DuPont or their respective directors, (v) the risk that disruptions from the proposed transaction will harm Dow’s or DuPont’s business, including current plans and operations, (vi) the ability of Dow or DuPont to retain and hire key personnel, (vii) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger, (viii) uncertainty as to the long-term value of DowDuPont common stock, (ix) continued availability of capital and financing and rating agency actions, (x) legislative, regulatory and economic developments, (xi) potential business uncertainty, including changes to existing business relationships, during the pendency of the merger that could affect Dow’s and/or DuPont’s financial performance, (xii) certain restrictions during the pendency of the merger that may impact Dow’s or DuPont’s ability to pursue certain business opportunities or strategic transactions and (xiii) 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, as well as other risks associated with the proposed merger, are more fully discussed in the joint proxy statement/prospectus included in the registration statement on Form S-4 declared effective by the SEC on June 9, 2016 (File No. 333-209869), as last amended, (the “Registration Statement”) in connection with the proposed merger. While the list of factors presented here is, and the list of factors presented in the Registration Statement are, 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 Dow’s or DuPont’s consolidated financial condition, results of operations, credit rating or liquidity. Neither Dow nor DuPont assumes any obligation to publicly provide revisions or updates to any forward-looking statements regarding the proposed transaction and intended business separations, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. The company undertakes no duty to publicly revise or update any forward-looking statements as a result of future developments, or new information or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

# # #
10/25/16


7
E.I. du Pont de Nemours and Company
Consolidated Income Statements
(Dollars in millions, except per share amounts)



SCHEDULE A
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
Net sales
$
4,917

 
$
4,873

 
$
19,383

 
$
19,831

Cost of goods sold
3,090

 
3,084

 
11,322

 
11,703

Other operating charges (1)
176

 
91

 
504

 
413

Selling, general and administrative expenses (1)
1,016

 
1,046

 
3,355

 
3,540

Research and development expense
410

 
441

 
1,260

 
1,415

Other (loss) income, net (1)
(16
)
 
98

 
407

 
552

Interest expense (1)
93

 
82

 
278

 
260

Employee separation / asset related charges, net (1)
172

 
—

 
159

 
40

 
 
 
 
 
 
 
 
(Loss) Income from continuing operations before income taxes
(56
)
 
227

 
2,912

 
3,012

(Benefit from) Provision for income taxes on continuing operations (1)
(69
)
 
96

 
643

 
886

Income from continuing operations after income taxes
13

 
131

 
2,269

 
2,126

(Loss) Income from discontinued operations after income taxes
(7
)
 
104

 
(7
)
 
89

 
 
 
 
 
 
 
 
Net income
6

 
235

 
2,262

 
2,215

 
 
 
 
 
 
 
 
Less: Net income attributable to noncontrolling interests
4

 
—

 
14

 
9

 
 
 
 
 
 
 
 
Net income attributable to DuPont
$
2

 
$
235

 
$
2,248

 
$
2,206

 
 
 
 
 
 
 
 
Basic earnings (loss) per share of common stock:
 
 
 
 
 
 
 
Basic earnings per share of common stock from continuing operations
$
0.01

 
$
0.14

 
$
2.57

 
$
2.34

Basic (loss) earnings per share of common stock from discontinued operations
(0.01
)
 
0.12

 
(0.01
)
 
0.10

Basic earnings per share of common stock (2)
$
—

 
$
0.26

 
$
2.56

 
$
2.44

 
 
 
 
 
 
 
 
Diluted earnings (loss) per share of common stock:
 
 
 
 
 
 
 
Diluted earnings per share of common stock from continuing operations
$
0.01

 
$
0.14

 
$
2.56

 
$
2.33

Diluted (loss) earnings per share of common stock from discontinued operations
(0.01
)
 
0.12

 
(0.01
)
 
0.10

Diluted earnings per share of common stock (2)
$
—

 
$
0.26

 
$
2.55

 
$
2.43

 
 
 
 
 
 
 
 
Dividends per share of common stock
$
0.38

 
$
0.38

 
$
1.14

 
$
1.34

 
 
 
 
 
 
 
 
Average number of shares outstanding used in earnings (loss) per share (EPS) calculation:
 
 
 
 
 
 
 
  Basic
874,292,000

 
887,275,000

 
874,274,000

 
899,883,000

  Diluted
879,391,000

 
891,286,000

 
878,606,000

 
905,522,000

 
 
 
 
 
 
 
 
Reconciliation of Non-GAAP Measures
 
 
 
 
 
 
 
 
 
 
 
Summary of Earnings Comparison
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
% Change
 
2016
 
2015
 
% Change
Income from continuing operations after income taxes (GAAP)
$
13

 
$
131

 
(90
)%
 
$
2,269

 
$
2,126

 
7
%
Less: Significant items (charge) benefit included in income from continuing operations after income taxes (per Schedule B)
(216
)
 
88

 
 
 
(37
)
 
63

 
 
Non-operating pension/OPEB costs included in income from continuing operations after income taxes (3)
(73
)
 
(74
)
 
 
 
(208
)
 
(210
)
 
 
Net income attributable to noncontrolling interest from continuing operations
4

 
—

 
 
 
14

 
9

 
 
Operating earnings (Non-GAAP) (4)
$
298

 
$
117

 
155
 %
 
$
2,500

 
$
2,264

 
10
%
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share from continuing operations (GAAP)
$
0.01

 
$
0.14

 
(93
)%
 
$
2.56

 
$
2.33

 
10
%
Less: Significant items (charge) benefit included in EPS (per Schedule B)
(0.25
)
 
0.10

 
 
 
(0.04
)
 
0.07

 
 
Non-operating pension/OPEB costs included in EPS (3)
(0.08
)
 
(0.09
)
 
 
 
(0.24
)
 
(0.23
)
 
 
Operating earnings per share (Non-GAAP) (4)
$
0.34

 
$
0.13

 
162
 %
 
$
2.84

 
$
2.49

 
14
%
 
 
 
 
 
 
 
 
 
 
 
 

8
E.I. du Pont de Nemours and Company
Condensed Consolidated Balance Sheets
(Dollars in millions, except per share amounts)

SCHEDULE A (continued)
 
 
 
 
September 30,
2016
 
December 31,
2015
Assets
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
4,452

 
$
5,300

Marketable securities
 
1,080

 
906

Accounts and notes receivable, net
 
7,073

 
4,643

Inventories
 
5,168

 
6,140

Prepaid expenses
 
525

 
398

Total current assets
 
18,298

 
17,387

Property, plant and equipment, net of accumulated depreciation
   (September 30, 2016 - $14,895; December 31, 2015 - $14,346)
 
9,654

 
9,784

Goodwill
 
4,267

 
4,248

Other intangible assets
 
3,787

 
4,144

Investment in affiliates
 
687

 
688

Deferred income taxes
 
4,466

 
3,799

Other assets
 
1,322

 
1,116

Total
 
$
42,481

 
$
41,166

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Current liabilities
 
 
 
 
Accounts payable
 
$
2,627

 
$
3,398

Short-term borrowings and capital lease obligations
 
3,242

 
1,165

Income taxes
 
109

 
173

Other accrued liabilities
 
3,132

 
5,580

Total current liabilities
 
9,110

 
10,316

Long-term borrowings and capital lease obligations
 
8,114

 
7,642

Other liabilities
 
14,927

 
12,591

Deferred income taxes
 
376

 
417

Total liabilities
 
32,527

 
30,966

 
 
 
 
 
Commitments and contingent liabilities
 
 
 
 
 
 
 
 
 
Stockholders' equity
 
 
 
 
Preferred stock
 
237

 
237

Common stock, $0.30 par value; 1,800,000,000 shares authorized;
   Issued at September 30, 2016 - 956,356,000; December 31, 2015 - 958,388,000
 
287

 
288

Additional paid-in capital
 
11,214

 
11,081

Reinvested earnings
 
15,407

 
14,510

Accumulated other comprehensive loss
 
(10,667
)
 
(9,396
)
Common stock held in treasury, at cost (87,041,000 shares at September 30, 2016 and December 31, 2015)
 
(6,727
)
 
(6,727
)
Total DuPont stockholders' equity
 
9,751

 
9,993

Noncontrolling interests
 
203

 
207

Total equity
 
9,954

 
10,200

Total
 
$
42,481

 
$
41,166


9
E.I. du Pont de Nemours and Company
Condensed Consolidated Statement of Cash Flows
(Dollars in millions)


SCHEDULE A (continued)
 
 
Nine Months Ended
September 30,
 
2016
 
2015
Total Company
 
 
 
 
 
 
 
Net income
$
2,262

 
$
2,215

Adjustments to reconcile net income to cash used for operating activities:
 
 
 
Depreciation
707

 
856

Amortization of intangible assets
272

 
307

Net periodic pension benefit cost
474

 
445

Contributions to pension plans
(427
)
 
(260
)
Gain on sale of businesses and other assets
(385
)
 
(48
)
Other operating activities - net
668

 
89

Change in operating assets and liabilities - net
(4,648
)
 
(5,449
)
Cash used for operating activities
(1,077
)
 
(1,845
)
Investing activities
 
 
 
Purchases of property, plant and equipment
(759
)
 
(1,291
)
Investments in affiliates
(2
)
 
(59
)
Payments for businesses - net of cash acquired
—

 
(77
)
Proceeds from sale of businesses and other assets - net
240

 
79

Net increase in short-term financial instruments
(168
)
 
(252
)
Foreign currency exchange contract settlements
(370
)
 
543

Other investing activities - net
(16
)
 
12

Cash used for investing activities
(1,075
)
 
(1,045
)
Financing activities
 
 
 
Dividends paid to stockholders
(1,004
)
 
(1,210
)
Net increase in borrowings
2,576

 
3,262

Repurchase of common stock
(416
)
 
(2,353
)
Proceeds from exercise of stock options
140

 
208

Cash transferred to Chemours at spin-off
—

 
(250
)
Other financing activities - net
(16
)
 
(87
)
Cash provided by (used for) financing activities
1,280

 
(430
)
Effect of exchange rate changes on cash
24

 
(266
)
Decrease in cash and cash equivalents
(848
)
 
(3,586
)
Cash and cash equivalents at beginning of period
5,300

 
6,910

Cash and cash equivalents at end of period
$
4,452

 
$
3,324

 
 
 
 
Reconciliation of Non-GAAP Measure
 
 
 
Calculation of Free Cash Flow - Total Company
 
 
 
 
Nine Months Ended September 30,
 
2016
 
2015
Cash used for operating activities (GAAP)
$
(1,077
)
 
$
(1,845
)
Purchases of property, plant and equipment
(759
)
 
(1,291
)
Free cash flow (Non-GAAP)
$
(1,836
)
 
$
(3,136
)
 
 
 
 
(1) See Schedule B for detail of significant items.
(2) The sum of the individual earnings per share amounts from continuing operations and discontinued operations may not equal the total company earnings per share amounts due to rounding.
(3) Year to date September 30, 2015, non-operating pension/OPEB costs includes a $23 exchange loss on foreign pension balances.
(4) Operating earnings and operating earnings per share are defined as earnings from continuing operations excluding significant items and non-operating pension/OPEB costs. Non-operating pension/OPEB costs includes all of the components of net periodic benefit cost from continuing operations with the exception of the service cost component.

10
E.I. du Pont de Nemours and Company
Schedule of Significant Items from Continuing Operations
(Dollars in millions, except per share amounts)


SCHEDULE B
 
 
 
 
 
 
 
 
 
 
SIGNIFICANT ITEMS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax
 
After-tax
 
($ Per Share)
 
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
1st Quarter
 
 
 
 
 
 
 
 
 
 
 
Transaction costs (1)
$
(24
)
 
$
(12
)
 
$
(21
)
 
$
(11
)
 
$
(0.02
)
 
$
(0.01
)
Customer claims adjustment/recovery (4)
23

 
35

 
15

 
22

 
0.02

 
0.02

Gain on sale of entity (5)
369

 
—

 
214

 
—

 
0.24

 
—

Restructuring charges, net (2)
(77
)
 
—

 
(48
)
 
—

 
(0.06
)
 
—

Asset impairment charge (3)
—

 
(37
)
 
—

 
(30
)
 
—

 
(0.03
)
Ukraine devaluation (6)
—

 
(40
)
 
—

 
(38
)
 
—

 
(0.04
)
1st Quarter - Total
$
291

 
$
(54
)
 
$
160

 
$
(57
)
 
$
0.18

 
$
(0.06
)
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter
 
 
 
 
 
 
 
 
 
 
 
Transaction costs (1)
$
(76
)
 
$
(25
)
 
$
(59
)
 
$
(38
)
 
$
(0.07
)
 
$
(0.04
)
Customer claims recovery (4)
30

 
—

 
19

 
—

 
0.02

 
—

Restructuring adjustments / charges (2)
90

 
(2
)
 
59

 
(2
)
 
0.07

 
—

Litigation settlement (7)
—

 
112

 
—

 
72

 
—

 
0.08

2nd Quarter - Total
$
44

 
$
85

 
$
19

 
$
32

 
$
0.02

 
$
0.04

 
 
 
 
 
 
 
 
 
 
 
 
 
3rd Quarter
 
 
 
 
 
 
 
 
 
 
 
Transaction costs (1)
$
(122
)
 
$
(9
)
 
$
(91
)
 
$
(6
)
 
$
(0.10
)
 
$
(0.01
)
Restructuring charges, net(2)
(17
)
 
—

 
(14
)
 
—

 
(0.02
)
 
—

Asset impairment charge(3)
(158
)
 
 
 
(111
)
 
 
 
(0.13
)
 
 
Customer claims adjustment/recovery (4)
—

 
147

 
—

 
94

 
—

 
0.11

3rd Quarter - Total
$
(297
)
 
$
138

 
$
(216
)
 
$
88

 
$
(0.25
)
 
$
0.10

 
 
 
 
 
 
 
 
 
 
 
 
 
Year-to-date Total (8)
$
38

 
$
169

 
$
(37
)
 
$
63

 
$
(0.04
)
 
$
0.07




11
E.I. du Pont de Nemours and Company
Schedule of Significant Items from Continuing Operations
(Dollars in millions, except per share amounts)



(1)
Third, second and first quarter 2016 included charges of $(122), $(76) and $(24), respectively, recorded in selling, general and administrative expenses related to costs associated with the planned merger with The Dow Chemical Company and related activities.
 
Third quarter and first quarter 2015 included charges of $(9) and $(12) respectively, recorded in other operating charges associated with transaction costs related to the separation of the Performance Chemicals segment. Second quarter 2015 included charges of $(25) associated with transaction costs related to the separation of the Performance Chemicals segment consisting of $(5) recorded in other operating charges and $(20) recorded in interest expense. Second quarter 2015 also includes a tax charge of $(17) due to a state tax rate change associated with the separation.
 
 
(2)
Third, second and first quarter 2016 included (charges) / benefits of $(17), $90 and $(2), respectively, associated with the 2016 Global Cost Savings and Restructuring Program. The charges in the third and first quarters were primarily due to identification of additional asset related charges with the first quarter charge being offset by reduction in severance and related benefit costs. The second quarter benefit was primarily due to the reduction in severance and related benefit costs due to the elimination of positions at a lower cost than expected. The third quarter charge consisted of $(14) recorded in employee separation/asset related charges, net and $(3) recorded to other (loss) income, net. The second and first quarter charge / benefit was recorded in employee separation/asset related charges, net. The quarterly impact of this activity by segment is as follows:
 
• Third quarter 2016 impact by segment: Agriculture - $(13), Electronics & Communications - $(2), Nutrition & Health - $(1), Performance Materials - $2, and Corporate expenses - $(3).
 
• Second quarter 2016 impact by segment: Agriculture - $5, Electronics & Communications - $8, Industrial Biosciences - $3, Nutrition & Health - $12, Performance Materials - $9, Protection Solutions - $7, and Corporate expenses - $46.
 
• First quarter 2016 impact by segment: Agriculture - $(21), Electronics & Communications - $7, Industrial Biosciences - $1, Nutrition & Health - $1, Performance Materials - $(4), Protection Solutions - $3, Other - $(3), and Corporate expenses - $14.
 
First quarter 2016 included a $(75) restructuring charge recorded in employee separation/asset related charges, net related to the decision to not re-start the Agriculture segment's insecticide manufacturing facility at the La Porte site located in La Porte, Texas. The charge included $(41) of asset related charges, $(18) of contract termination costs, and $(16) of employee severance and related benefit costs.
 
Second quarter 2015 included a $(2) restructuring charge recorded in employee separation/asset related charges, net associated with the 2014 restructuring program. These adjustments were primarily due to the identification of additional projects in certain segments, offset by lower than estimated individual severance costs and workforce reductions achieved through non-severance programs. The net reduction impacted segment earnings for the three months ended as follows: Agriculture - $(4), Electronics & Communications - $11, Industrial Biosciences - $(1), Nutrition & Health - $(4), Performance Materials - $(2), Protection Solutions - $1, and Other - $(3).
 
 
(3)
During third quarter 2016, a $(158) pre-tax impairment charge was recorded in employee separation / asset related charges, net related to the write-down of indefinite lived intangible assets within the Industrial Biosciences segment. The third quarter charge was the result of realignment of brand marketing strategies and a determination to phase out the use of certain acquired trade names.
 
During first quarter 2015, a $(37) pre-tax impairment charge was recorded in employee separation / asset related charges, net for a cost basis investment within the Other segment. The assessment resulted from the venture's revised operating plan reflecting underperformance of its European wheat based ethanol facility and deteriorating European ethanol market conditions.
 
 
(4)
The company recorded insurance recoveries of $30, $147 and $35 in the second quarter 2016, third quarter 2015 and first quarter 2015, respectively, in other operating charges for recovery of costs for customer claims related to the use of the Agriculture's segment Imprelis® herbicide.
First quarter 2016 included a benefit of $23 in other operating charges for reduction in accrual for customer claims related to the use of the Imprelis® herbicide.
 
 
(5)
First quarter 2016 included a gain of $369 recorded in other (loss) income, net associated with the sale of the DuPont (Shenzhen) Manufacturing Limited entity, which held certain buildings and other assets. The gain is reflected as a Corporate item.
 
 
(6)
First quarter 2015 included a charge of $(40) in other (loss) income, net associated with remeasuring the company’s Ukrainian hryvnia net monetary assets. Ukraine’s central bank adopted a decision to no longer set the indicative hryvnia exchange rate. The hryvnia became a free-floating exchange rate and lost approximately a third of its value through the quarter.
 
 
(7)
Second quarter 2015 included a gain of $112, net of legal expenses, recorded in other (loss) income, net related to the company's settlement of a legal claim. This matter relates to the Protection Solutions segment.
 
 
(8)
Earnings per share for the year may not equal the sum of quarterly earnings per share due to the changes in average share calculations.
 
 



12
E.I. du Pont de Nemours and Company
Consolidated Segment Information
(Dollars in millions)


SCHEDULE C
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
SEGMENT NET SALES (1)
 
2016
 
2015
 
2016
 
2015
Agriculture
 
$
1,119

 
$
1,093

 
$
8,123

 
$
8,248

Electronics & Communications
 
493

 
532

 
1,439

 
1,577

Industrial Biosciences
 
392

 
374

 
1,099

 
1,081

Nutrition & Health
 
823

 
810

 
2,459

 
2,449

Performance Materials
 
1,334

 
1,302

 
3,918

 
4,021

Protection Solutions
 
722

 
723

 
2,237

 
2,319

Other
 
34

 
39

 
108

 
136

Consolidated net sales
 
$
4,917

 
$
4,873

 
$
19,383

 
$
19,831

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
SEGMENT OPERATING EARNINGS (1)
 
2016
 
2015
 
2016
 
2015
Agriculture
 
$
(189
)
 
$
(210
)
 
$
1,777

 
$
1,700

Electronics & Communications
 
108

 
104

 
260

 
272

Industrial Biosciences
 
78

 
61

 
203

 
165

Nutrition & Health
 
135

 
102

 
369

 
288

Performance Materials
 
371

 
317

 
969

 
935

Protection Solutions
 
162

 
146

 
526

 
494

Other
 
(58
)
 
(87
)
 
(167
)
 
(164
)
Total segment operating earnings
 
607

 
433

 
3,937

 
3,690

Corporate expenses
 
(83
)
 
(111
)
 
(252
)
 
(413
)
Interest expense
 
(93
)
 
(82
)
 
(278
)
 
(240
)
Operating earnings before income taxes and exchange (losses) gains
 
431

 
240

 
3,407

 
3,037

Net exchange (losses) gains (2)
 
(76
)
 
(36
)
 
(212
)
 
117

Operating earnings before income taxes (Non-GAAP)
 
$
355

 
$
204

 
$
3,195

 
$
3,154

Non-operating pension/OPEB costs (3)
 
(114
)
 
(115
)
 
(321
)
 
(311
)
Total significant items before income taxes
 
(297
)
 
138

 
38

 
169

(Loss) Income from continuing operations before income taxes (GAAP)
 
$
(56
)
 
$
227

 
$
2,912

 
$
3,012

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) (1)(4)
 
2016
 
2015
 
2016
 
2015
Agriculture
 
$
(13
)
 
$
147

 
$
(51
)
 
$
178

Electronics & Communications
 
(2
)
 
—

 
13

 
11

Industrial Biosciences
 
(158
)
 
—

 
(154
)
 
(1
)
Nutrition & Health
 
(1
)
 
—

 
12

 
(4
)
Performance Materials
 
2

 
—

 
7

 
(2
)
Protection Solutions
 
—

 
—

 
10

 
113

Other
 
—

 
—

 
(3
)
 
(40
)
Total significant items by segment
 
(172
)
 
147

 
(166
)
 
255

Corporate expenses
 
(125
)
 
(9
)
 
204

 
(26
)
Interest expense
 
—

 
—

 
—

 
(20
)
Net exchange (losses) gains
 
—

 
—

 
—

 
(40
)
Total significant items before income taxes
 
$
(297
)
 
$
138

 
$
38

 
$
169


13
E.I. du Pont de Nemours and Company
Consolidated Segment Information
(Dollars in millions)

SCHEDULE C (continued)
 
 
 
 
 
 
 
 
 
 
Corporate Expenses
 
 
 
 
The reconciliation below reflects GAAP corporate expenses excluding significant items.
 
 
 
 
 
Three Months Ended
September 30,
 
 
2016
 
2015
Corporate expenses (GAAP)
 
$
208

 
$
120

Significant items (4)
 
125

 
9

Corporate expenses (Non-GAAP)
 
$
83

 
$
111

 
 
 
 
 
(1) Segment operating earnings is defined as income (loss) from continuing operations before income taxes excluding significant pre-tax benefits (charges), non-operating pension/OPEB costs, exchange gains (losses), corporate expenses and interest. DuPont Sustainable Solutions, previously within the company's Safety & Protection segment (now Protection Solutions) was comprised of two business units: Clean Technologies (CleanTech) and Consulting Solutions.  Effective January 1, 2016, the CleanTech business is reported in the Industrial Biosciences segment and the Consulting Solutions business unit is reported within Other.  Reclassifications of prior year data have been made to conform to current year classifications.
(2)  See Schedule D for additional information on exchange gains and losses.  Year to date September 30, 2015 exchange gains, on an operating earnings basis (Non-GAAP), excludes the impact of a $23 exchange loss on non-operating pension.
(3) Year to date September 30, 2015, non-operating pension/OPEB costs includes a $23 exchange loss on foreign pension balances.
(4)  See Schedule B for detail of significant items.



14
E.I. du Pont de Nemours and Company
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)

SCHEDULE D
 
 
 
 
 
 
 
 
 
Reconciliations of Adjusted EBIT / EBITDA to Consolidated Income Statements
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
2016
 
2015
 
2016
 
2015
Income from continuing operations after income taxes (GAAP)
 
$
13

 
$
131

 
$
2,269

 
$
2,126

Add: (Benefit from) Provision for income taxes on continuing operations
 
(69
)
 
96

 
643

 
886

(Loss) Income from continuing operations before income taxes
 
$
(56
)
 
$
227

 
$
2,912

 
$
3,012

Add: Significant items charge (benefit) before income taxes(2)
 
297

 
(138
)
 
(38
)
 
(169
)
Add: Non-operating pension/OPEB costs (1)
 
114

 
115

 
321

 
311

Operating earnings before income taxes (Non-GAAP)
 
$
355

 
$
204

 
$
3,195

 
$
3,154

Less: Net income attributable to noncontrolling interests from continuing operations
 
4

 
—

 
14

 
9

Add: Interest expense (2)
 
 
93

 
82

 
278

 
240

Adjusted EBIT from operating earnings (Non-GAAP)
 
444

 
286

 
3,459

 
3,385

Add: Depreciation and amortization
 
280

 
291

 
979

 
1,035

Adjusted EBITDA from operating earnings (Non-GAAP)
 
$
724

 
$
577

 
$
4,438

 
$
4,420


Reconciliation of Operating Costs to Consolidated Income Statement Line Items
GAAP operating costs is defined as other operating charges, selling, general and administrative expenses, and research and development costs. The reconciliation below reflects operating costs excluding significant items and non-operating pension/OPEB costs.
 
 
 
 
 
Three Months Ended September 30, 2016
 
Three Months Ended September 30, 2015
 
As Reported (GAAP)
Less: Significant Items (2)
Less: Non-Operating Pension/OPEB Costs

(Non-GAAP)
 
As Reported (GAAP)
Less: Significant Items (2)
Less: Non-Operating Pension/OPEB Costs

(Non-GAAP)
Other operating charges
$
176

$
—

$
—

$
176

 
$
91

$
(138
)
$
—

$
229

Selling, general and administrative expenses
1,016

122

45

849

 
1,046

—

46

1,000

Research and development expense
410

—

17

393

 
441

—

17

424

Total
$
1,602

$
122

$
62

$
1,418

 
$
1,578

$
(138
)
$
63

$
1,653


Reconciliation of Operating Earnings Per Share (EPS) Outlook
The reconciliation below represents the company's outlook on an operating earnings basis, defined as earnings excluding significant items and non-operating pension/OPEB costs.
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
 
 
2016 Outlook
 
2015 Actual
Operating EPS (Non-GAAP)
 
 
$
3.25

 
$
2.77

 
 
 
 
 
 
Significant items (2)
 
 
 
 
 
Transaction costs (3) 
 
 
(0.37
)
 
(0.07
)
Gain on sale of entity
 
 
0.24

 
—

Restructuring adjustments / charges
 
 
(0.01
)
 
(0.58
)
Customer claims adjustment/recovery
 
 
0.04

 
0.23

Litigation settlement
 
 
—

 
0.10

Asset impairment charge
 
 
(0.13
)
 
(0.03
)
Ukraine devaluation
 
 
—

 
(0.04
)
 
 
 
 
 
 
Non-operating pension/OPEB costs - estimate
 
 
(0.31
)
 
(0.29
)
 
 
 
 
 
 
EPS from continuing operations (GAAP)
 
 
$
2.71

 
$
2.09


15
E.I. du Pont de Nemours and Company
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)


SCHEDULE D (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exchange Gains/Losses on Operating Earnings (2)
 
 
 
 
 
 
 
 
The company routinely uses forward exchange contracts to offset its net exposures, by currency, related to the foreign currency denominated monetary assets and liabilities of its operations. The objective of this program is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes. The net pre-tax exchange gains and losses are recorded in other (loss) income, net and the related tax impact is recorded in (benefit from) provision for income taxes on the Consolidated Income Statements.
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2016
 
2015
 
2016
 
2015
Subsidiary Monetary Position Gain (Loss)
 
 
 
 
 
 
 
 
Pre-tax exchange gains (losses)
 
$
6

 
$
(210
)
 
$
185

 
$
(297
)
Local tax benefits (expenses)
 
18

 
67

 
(29
)
 
(26
)
Net after-tax impact from subsidiary exchange gains (losses)
 
$
24

 
$
(143
)
 
$
156

 
$
(323
)
 
 
 
 
 
 
 
 
 
Hedging Program Gain (Loss)
 
 
 
 
 
 
 
 
Pre-tax exchange (losses) gains
 
$
(82
)
 
$
174

 
$
(397
)
 
$
414

Tax benefits (expenses)
 
30

 
(63
)
 
143

 
(150
)
Net after-tax impact from hedging program exchange (losses) gains
 
$
(52
)
 
$
111

 
$
(254
)
 
$
264

 
 
 
 
 
 
 
 
 
Total Exchange Gain (Loss)
 
 
 
 
 
 
 
 
Pre-tax exchange (losses) gains (4)
 
$
(76
)
 
$
(36
)
 
$
(212
)
 
$
117

Tax benefits (expenses)
 
48

 
4

 
114

 
(176
)
Net after-tax exchange losses
 
$
(28
)
 
$
(32
)
 
$
(98
)
 
$
(59
)
 
 
 
 
 
 
 
 
 
As shown above, the "Total Exchange Gain (Loss)" is the sum of the "Subsidiary Monetary Position Gain (Loss)" and the "Hedging Program Gain (Loss)."
 
 
 
 
 
 
 
 
 
Reconciliation of Base Income Tax Rate to Effective Income Tax Rate
 
 
 
 
Base income tax rate is defined as the effective income tax rate less the effect of exchange gains (losses), as defined above, significant items and non-operating pension/OPEB costs.
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2016
 
2015
 
2016
 
2015
(Loss) Income from continuing operations before income taxes (GAAP)
 
$
(56
)
 
$
227

 
$
2,912

 
$
3,012

Add: Significant items - charge (benefit) (2)
 
297

 
(138
)
 
(38
)
 
(169
)
           Non-operating pension/OPEB costs (1)
 
114

 
115

 
321

 
311

Less: Net exchange (losses) gains (4)
 
(76
)
 
(36
)
 
(212
)
 
117

Income from continuing operations before income taxes, significant items,
    exchange (losses) gains, and non-operating pension/OPEB costs (Non-GAAP)
$
431

 
$
240

 
$
3,407

 
$
3,037

 
 
 
 
 
 
 
 
 
(Benefit from) Provision for income taxes on continuing operations (GAAP)
 
$
(69
)
 
$
96

 
$
643

 
$
886

Add: Tax benefits (expenses) on significant items
 
81

 
(50
)
 
(75
)
 
(106
)
          Tax benefits on non-operating pension/OPEB costs
 
41

 
41

 
113

 
101

          Tax benefits (expenses) on exchange gains/losses
 
48

 
4

 
114

 
(176
)
Provision for income taxes on continuing earnings, excluding exchange (losses)gains (Non-GAAP)
$
101

 
$
91

 
$
795

 
$
705

 
 
 
 
 
 
 
 
 
Effective income tax rate (GAAP)
 
123.2
 %
 
42.3
 %
 
22.1
 %
 
29.4
 %
Significant items and non-operating pension/OPEB costs effect
 
(108.3
)%
 
0.3
 %
 
(0.8
)%
 
(1.5
)%
Tax rate, from continuing operations before significant items and non-operating pension/OPEB costs
14.9
 %
 
42.6
 %
 
21.3
 %
 
27.9
 %
Exchange (losses) gains effect
 
8.5
 %
 
(4.7
)%
 
2.0
 %
 
(4.7
)%
Base income tax rate from continuing operations (Non-GAAP)
 
23.4
 %
 
37.9
 %
 
23.3
 %
 
23.2
 %
 
 
 
 
 
 
 
 
 
(1) Year to date September 30, 2015, non-operating pension/OPEB costs includes a $23 exchange loss on foreign pension balances.
(2) See Schedule B for detail of significant items.
(3) The 2016 outlook for significant items includes the current estimate for full year 2016 transaction costs associated with the planned merger with The Dow Chemical Company and related activities.
(4) Year to date September 30, 2015 exchange gains, on an operating earnings basis (Non-GAAP), excludes a $23 exchange loss on non-operating pension.

0 DuPont Third-Quarter 2016 Earnings CONFERENCE CALL OCTOBER 25, 2016

 
1 Regulation G This document includes information that does not conform to U.S. generally accepted accounting principles (GAAP) and are considered non-GAAP measures. These measures include the company’s consolidated results and earnings per share on an operating earnings basis, which excludes significant items and non-operating pension and other postretirement employee benefit costs (operating earnings and operating EPS), total segment pre-tax operating earnings, operating costs and corporate expenses on an operating earnings basis. Management uses these measures internally for planning, forecasting and evaluating the performance of the Company’s segments, including allocating resources and evaluating incentive compensation. Management believes that these non-GAAP measurements are meaningful to investors as they provide insight with respect to ongoing operating results of the company and provide a more useful comparison of year-over-year results. From a liquidity perspective, management uses free cash flow which is defined as cash provided/used by operating activities less purchases of property, plant and equipment. Free cash flow is useful to investors and management to evaluate the company’s cash flow and financial performance, and is an integral financial measure used in the company’s financial planning process. These non-GAAP measurements supplement our GAAP disclosures and should not be viewed as an alternative to GAAP measures of performance. This data should be read in conjunction with previously published company reports on Forms 10-K, 10-Q, and 8-K. These reports, along with reconciliations of non-GAAP measures to GAAP are available on the Investor Center of www.dupont.com under Filings and Reports – Reconciliations and Other Data. Reconciliations of non-GAAP measures to GAAP are also included with this presentation. 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. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the consummation of the proposed transaction and the anticipated benefits thereof. 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 the company’s actual results to differ materially from those projected in any such forward-looking statements are: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; ability to respond to market acceptance, rules, regulations and policies affecting products based on biotechnology and, in general, for products for the agriculture industry; outcome of significant litigation and environmental matters, including realization of associated indemnification assets, if any; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, interest and currency exchange rates; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, natural disasters and weather events and patterns which could affect demand as well as availability of products for the agriculture industry; ability to protect and enforce the company’s intellectual property rights; successful integration of acquired businesses and separation of underperforming or non-strategic assets or businesses;

 
2 and risks related to the agreement entered on December 11, 2015, with The Dow Chemical Company pursuant to which the companies have agreed to effect an all-stock merger of equals, including the completion of the proposed transaction on anticipated terms and timing, the ability to fully and timely realize the expected benefits of the proposed transaction and risks related to the intended business separations contemplated to occur after the completion of the proposed transaction. Important risk factors relating to the proposed transaction and intended business separations include, but are not limited to, (i) the completion of the proposed transaction on anticipated terms and timing, including obtaining regulatory approvals, anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the new combined company’s operations and other conditions to the completion of the merger, (ii) the ability of Dow and DuPont to integrate the business successfully and to achieve anticipated synergies, risks and costs and pursuit and/or implementation of the potential separations, including anticipated timing, any changes to the configuration of businesses included in the potential separation if implemented, (iii) the intended separation of the agriculture, material science and specialty products businesses of the combined company post-mergers in one or more tax efficient transactions on anticipated terms and timing, including a number of conditions which could delay, prevent or otherwise adversely affect the proposed transactions, including possible issues or delays in obtaining required regulatory approvals or clearances, disruptions in the financial markets or other potential barriers, (iv) potential litigation relating to the proposed transaction that could be instituted against Dow, DuPont or their respective directors, (v) the risk that disruptions from the proposed transaction will harm Dow’s or DuPont’s business, including current plans and operations, (vi) the ability of Dow or DuPont to retain and hire key personnel, (vii) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger, (viii) uncertainty as to the long-term value of DowDuPont common stock, (ix) continued availability of capital and financing and rating agency actions, (x) legislative, regulatory and economic developments, (xi) potential business uncertainty, including changes to existing business relationships, during the pendency of the merger that could affect Dow’s and/or DuPont’s financial performance, (xii) certain restrictions during the pendency of the merger that may impact Dow’s or DuPont’s ability to pursue certain business opportunities or strategic transactions and (xiii) 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, as well as other risks associated with the proposed merger, are more fully discussed in the joint proxy statement/prospectus included in the registration statement on Form S-4 declared effective by the SEC on June 9, 2016 (File No. 333-209869), as last amended, (the “Registration Statement”) in connection with the proposed merger. While the list of factors presented here is, and the list of factors presented in the Registration Statement are, 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 Dow’s or DuPont’s consolidated financial condition, results of operations, credit rating or liquidity. Neither Dow nor DuPont assumes any obligation to publicly provide revisions or updates to any forward-looking statements regarding the proposed transaction and intended business separations, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. The company undertakes no duty to publicly revise or update any forward-looking statements as a result of future developments, or new information or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Developing Markets Total developing markets is comprised of Developing Asia, Developing Europe, Middle East & Africa, and Latin America. A detailed list of all developing countries is available on the Earnings News Release link on the Investor Center website at www.dupont.com.

 
3 3Q 2016 Financial Results $ in millions, except EPS 3Q16 vs. 3Q15 EPS US GAAP earnings* $0.01 (93%) Operating earnings** $0.34 162% Segment Operating Earnings* $607 40% 3Q16 vs. 3Q15 Consolidated Net Sales $4,917 1% Volume*** 3% Local Price & Product Mix*** (2%) Currency Impact - Portfolio - * 2016 US GAAP earnings included charges of $0.25 per share primarily related to an asset impairment and transaction costs. Prior year earnings included a benefit of $0.10 per share primarily related to insurance recoveries. ** See appendix for reconciliations of non-GAAP measures *** Organic sales growth is defined as the sum of local price & product mix and volume.

 
4 3Q 2016 EPS Variance $0.15 $0.03 $0.04 ($0.01) 3Q15 Segment Results Tax Rate Corp Expenses Interest 3Q16 ($0.01) GAAP EPS $0.14 3Q15 Sig Items & Non-Op Pension* ($0.33) GAAP EPS $0.01 3Q16 Sig Items & Non-Op Pension* Operating EPS* $.13 Operating EPS* $.34 • See appendix for details of significant items and reconciliation of non-GAAP measures  Segment results increased $0.15 per share, including a benefit from currency of $0.01 per share. The improvement in segment results was primarily due to cost savings and volume growth across most segments.  A lower tax rate as a result of a shift in the geographic mix of earnings benefitted earnings by $0.04 per share.  A decrease in corporate expenses, primarily due to cost savings, contributed $0.03 per share in the quarter.  Higher interest expense negatively impacted results by $0.01 per share. Key Factors

 
5 *See appendix for details of significant items and reconciliation of non-GAAP measures  Performance Materials grew as cost savings, increased demand in automotive markets (primarily in China), and lower product costs more than offset a negative impact from currency. Prior year earnings included a net benefit from a joint venture.  Nutrition & Health increased on continued broad-based volume growth led by probiotics, cultures and ingredient systems, cost savings and lower product costs.  Other increased on lower costs associated with discontinued businesses, primarily environmental costs.  Agriculture results increased as cost savings, higher volumes and a benefit from currency were partially offset by lower local price and higher product costs.  Industrial Biosciences improved as increased demand in bioactives and biomaterials and cost savings more than offset lower volume in CleanTech.  Protection Solutions results increased driven by cost savings and volume growth.  Electronics & Communications increased as cost savings more than offset lower demand, driven by declines in Tedlar ® film and continued weakness in consumer electronics. Key Factors $54 $33 $29 $21 $17 $16 $4 3Q15 PM N&H Other Ag IB PS E&C 3Q16 $433 Segment Operating Earnings* $607 Total Segment Operating Earnings* 3Q 2016 Segment Operating Earnings Variance ($ in millions)

 
6 Balance Sheet and Cash September 30, 2016 Free Cash Flow • Reflects normal seasonal cash outflow • Year-over-year improvement of $1.3 billion  Working capital improvement of ~$400 million  Lower tax payments of ~$200 million  Capex spend down ~$300 million, 28 percent  Absence of net cash outflow of ~$400 million associated with Chemours Balance Sheet • $5.8 billion in net debt** • Increased since year-end due to normal seasonal working capital requirements • $416MM in share repurchases; 6 million shares retired Expected Uses of Cash for 2016 • $1.3 billion for normal dividends • Capex spend est. $1.1 billion for FY 2016 • Open market share repurchases -4.0 -3.0 -2.0 -1.0 0.0 2015 2016 $ B il li o n s 0 4 8 12 16 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 $ B ill io n s Gross Debt Cash Net Debt** Free Cash Flow* Cash and Debt * Free Cash Flow is cash used for operating activities of ($1,077MM) and ($1,845MM) less purchases of plant, property and equipment of $759MM and $1,291MM for the period ended September 30, 2016, and 2015, respectively. ** See appendix for reconciliation of non-GAAP measures.

 
7 Full-Year 2016 Expectations and Outlook * See appendix for reconciliation of Non-GAAP measures • Base tax rate now expected to be ~23%, a headwind to FY 2016 operating EPS of $0.07 per share Revised FY 2016 Guidance vs. July Guidance vs. Prior Year GAAP EPS ~$2.71 30% increase Operating EPS* $3.25 + $0.10 from low end of range 17% increase

 
2013 Highlights Cost Savings Update 2016 Global Cost Savings and Restructuring Plan: Achieve $1.0B of run rate cost savings by year-end 2016; represents ~$730 million in cost reductions in 2016 3Q16 QTD ($ in millions) GAAP Basis* Operating Earnings** Basis Operating costs* $24, up 2% ($235), down 14% SG&A ($30), down 3% ($151), down 15% Corporate expenses Up 73% Down 25% *Operating costs defined as other operating charges, selling, general & administrative, and research & development costs. GAAP basis includes $122 million of transaction costs associated with the pending merger with Dow and related activities. **See appendix for reconciliation of non-GAAP measures. 8

 
9 Performance Materials 3Q14 3Q15 3Q16 0% 6% 12% 18% 24% 30% 0 80 160 240 320 400 M a rg in $ in M ill io n s 3Q Operating Earnings 3Q Sales Vol 4%, Local Price -2%, Currency 0%, Port./Other 0% $ in M ill io n s 1,302 1100 1200 1300 1400 3Q15 Volume Local Price 3Q16 (ex-curr & portf.) Curr. Portf./ Other 3Q16 1,334 3Q Comments • Sales – Up 2 percent on higher volume partially offset by lower local price. • Volume increased 4 percent, driven by increased demand in automotive markets, primarily in China. • Price declined 2 percent, primarily due to pressure for raw materials pass- through. • Operating Earnings – Operating earnings of $371 million increased 17 percent as cost savings, increased volume, and lower product costs more than offset a $14 million negative impact from currency and the absence of $16 million net benefit from a joint venture in the prior year. • Operating margins expanded by about 350 basis points to 28 percent reaching the highest operating margin and operating earnings in the past 6 years. 4Q Outlook • According to IHS, global autobuilds are expected to be up 2% in the quarter; autobuild growth in China is expected to be flat. • Sales – Expected to be up low-single-digits percent driven by higher volume in automotive markets partially offset by lower local pricing. • Operating Earnings – Expected to be up low-single-digit percent as lower costs and volume growth are partially offset by lower pricing driven by pressure for raw materials pass-through. • Operating earnings growth will be negatively impacted by $33 million of benefits from the sale of a business and realization of tax benefits associated with a manufacturing site which were recorded in the fourth quarter of 2015.

 
10 Nutrition & Health 3Q14 3Q15 3Q16 0% 6% 12% 18% 30 60 90 120 150 M a rg in $ i n M il li o n s 3Q Comments • Sales – 2 percent higher as 4 percent higher volumes were partially offset by lower local price and negative currency impact. • Continued broad-based volume growth led by probiotics, cultures and ingredient systems. • Operating Earnings – Increased $33 million, or 32 percent, on volume growth, cost savings and lower product costs. • Operating margin improved 380 basis points; 13 consecutive quarters of year-over-year improvement. 4Q Outlook • Market conditions to remain challenging especially in the Middle East and Latin America. • Sales – Expected to be up in the low-single-digit percent range with continued strength in probiotics and cultures. • Operating Earnings – Expected to be up in the mid-30 percent range driven by cost savings and volume growth. 3Q Operating Earnings 3Q Sales Vol 4%, Local Price -1%, Currency -1%, Port./Other 0% 700 750 800 850 900 3Q15 Volume Local Price 3Q16 (ex-curr & portf.) Curr. Portf./ Other 3Q16 $ in M ill io n s 810 823

 
11 Agriculture Pioneer, Crop Protection 3Q14 3Q15 3Q16 -20.0% -15.0% -10.0% -5.0% 0.0% -225 -180 -135 -90 -45 0 M a rg in $ in M ill io n s 4Q Outlook • Expect continued commodity price weakness in the agriculture sector. • Continued successful introduction of Leptra® corn hybrids for Brazil summer season; Crop protection portfolio growing in Asia with the Zorvec™ launch and growth in Cyazypyr® and Rynaxypyr®. • Sales – Expect sales to be down in the mid-single-digits percent due to the change in timing of deliveries of seeds primarily driven by the route-to-market change in the Southern US. • Operating Earnings – Expect seasonal loss to be nearly half of what it was in the same quarter of last year driven by favorable currency rates, cost savings, and increased volumes in Crop Protection, primarily Asia insecticides and fungicides, partially offset by the negative impact of the timing of seed deliveries. 3Q Comments • The industry continues to face challenging conditions driven by low commodity prices, declining farm incomes, and tightened credit availability in key markets. • Sales – Up 2 percent as higher volumes and favorable currency rates were partially offset by lower local pricing and portfolio changes. • Seed sales were up 10 percent and crop protection sales were down 4 percent. • Operating Earnings – Improvement in seasonal loss of $21 million as cost savings, higher volume, and a $28 million benefit from currency more than offset lower local price and higher product costs. • Prior year operating earnings included a $27 million gain from asset sales and a $21 million benefit related to prior periods. • Operating margins improved by 230 basis points. 3Q Operating Earnings 3Q Sales Vol 4%, Local Price -3%, Currency 2%, Port./Other -1% 1,000 1,050 1,100 1,150 1,200 3Q15 Volume Local Price 3Q16 (ex-curr & portf.) Curr. Portf./ Other 3Q16 1,093 $ in M ill io n s 1,119

 
12 Industrial Biosciences 3Q14 3Q15 3Q16 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 0 20 40 60 80 M a rg in $ in M ill io n s Note: DuPont Sustainable Solutions, previously reported within the company’s Safety & Protection segment (now Protection Solutions), was comprised of two business units: clean technologies (CleanTech) and consulting solutions. Effective January 1, 2016, the clean technologies business unit became part of Industrial Biosciences and the consulting business unit became part of Other. 3Q Operating Earnings 3Q Sales Vol 5%, Local Price 0%, Currency -1%, Port./Other 1% 250 300 350 400 450 3Q15 Volume Local Price 3Q16 (ex-curr & portf.) Curr. Portf./ Other 3Q16 $ in M ill io n s 374 392 3Q Comments • Sales – Increased 5 percent due to strong volume growth. • Volume growth in bioactives and gains in sales of biomaterials were partly offset by softness in CleanTech. • Operating Earnings – Increased 28 percent on sales gains and cost savings. • Operating margins expanded by 360 basis points. 4Q Outlook • Sales: Comparable with the prior year’s quarter with volume gains in bioactives and biomaterials offset by softness from CleanTech. • Anticipate volume growth in bioactives across all industry segment, supported by new product launches. • Operating Earnings – Expected to be up by the mid-single- digits percent due to cost savings and continued growth in bioactives, offset by weakness in CleanTech.

 
13 Protection Solutions 3Q14 3Q15 3Q16 0% 5% 10% 15% 20% 25% 0 50 100 150 200 M a rg in $ in M ill io n s 3Q Operating Earnings 3Q Sales Vol 1%, Local Price -1%, Currency 0%, Port./Other 0% Note: DuPont Sustainable Solutions, previously reported within the company’s Safety & Protection segment (now Protection Solutions), was comprised of two business units: clean technologies (CleanTech) and consulting solutions. Effective January 1, 2016, the clean technologies business unit became part of Industrial Biosciences and the consulting business unit became part of Other. 600 650 700 750 3Q15 Volume Local Price 3Q16 (ex-curr & portf.) Curr. Portf./ Other 3Q16 723 722 $ in M ill io n s 3Q Comments • Sales – Flat with volume gains offset by lower local prices. • Demand for Tyvek® protective material in the construction market drove volume gains. Sales of Corian ® surfaces in North America and Zodiaq ® surfaces also rose. However, demand from the oil and gas industry and the military remained soft, impacting sales of Nomex® thermal-resistant fiber and Kevlar® high-strength materials. • Operating Earnings – Increased 11 percent on benefits from cost savings and higher volumes. • Operating margin expanded by 225 basis points. 4Q Outlook • Continued weakness in oil and gas markets pressuring top line growth. • Sales – Comparable with the prior year’s quarter with gains from Kevlar ® high-strength materials and continued growth in Surfaces offset by declines in Nomex ® thermal-resistant fiber. • Operating Earnings – Up by the high-single-digit percent, driven by cost savings.

 
14 Electronics & Communications 3Q14 3Q15 3Q16 0% 5% 10% 15% 20% 25% 0 30 60 90 120 M a rg in $ in M ill io n s 3Q Comments • Sales – Down 7 percent on lower demand for Tedlar® film and continued weakness in consumer electronics markets. • Declines in Tedlar® were driven by reduced demand in China photovoltaics, primarily as a result of the feed-in-tariff reductions at the end of the second quarter. • Operating Earnings – Increased 4 percent to $108 million as cost savings more than offset the impact of lower sales. • Operating margin improved by about 240 basis points. 4Q Outlook • Expect PV market demand to remain strong but down year over year in China due to feed-in-tariff reductions. • Solamet® paste sales continuing to grow sequentially on new product launches. • Sales – Expected to be about flat on continued weakness in consumer electronics and lower Tedlar® sales. • Operating Earnings – Expected to be up high-single-digits percent on cost savings. 3Q Operating Earnings 3Q Sales Vol -6%, Local Price -1%, Currency 0%, Port./Other 0% 400 450 500 550 3Q15 Volume Local Price 3Q16 (ex-curr & portf.) Curr. Portf./ Other 3Q16 $ i n M il li o n s 532 493

 
15 Appendix 1 Third Quarter 2016 Segment Commentary This data should be read in conjunction with the Company’s third quarter earnings news release dated October 25, 2016, DuPont’s 3Q 2016 Earnings Conference Call presentation materials and reconciliations of non-GAAP to GAAP measures included in the presentation materials and posted on the DuPont Investor Center website at www.dupont.com.

 
16 Agriculture Under a backdrop of challenging market conditions, our Ag segment continues to execute well. For the third quarter in a row, the segment has delivered strong results. Ag sales were $1.1 billion and operating earnings for the quarter were a seasonal loss of $189 million. Operating margins improved 230 basis points. The solid performance was driven by a strong start to the Brazil summer season with our new Leptra® hybrids continuing their successful launch. Favorable currency and cost savings also helped to drive earnings improvement. Our third quarter volume increased 4 percent with growth in both corn and soybean seeds partially offset by lower crop protection volume, due to continued low pest pressure and high industry inventories. In Latin America, farmers chose a stronger mix of Pioneer’s newest corn hybrids resulting in higher net corn price. The third-quarter seasonal operating earnings loss improved by $21 million, driven by cost savings, higher volumes, and a $28 million benefit from currency. It is important to note that the $21 million improvement came despite the absence of $48 million of one-time benefits which were recorded in the third quarter of last year. Year-to-date sales of $8.1 billion grew organically by 2 percent driven equally by volume and price. In corn seed we have grown sales by 4 percent year-to-date also driven by both volume and price improvement. This was enabled by building upon our leading positions in high-value global markets including North America, Brazil, Mexico, Southern Europe and South Africa, driven by the performance of our newest products and continued enhancements to our direct route-to-market. Our year-to-date segment operating earnings increased 5 percent, driven by cost savings and favorable pricing, which provided us the ability to overcome currency headwinds and weakness in the crop protection industry. Segment Commentary Third Quarter Earnings 2016

 
17 Agriculture (continued) Segment Commentary Third Quarter Earnings 2016 Turning to our outlook for the final quarter of the year, we currently expect sales to be down in the mid-single- digits percent range and the seasonal operating earnings loss to be nearly half of what it was in the same quarter of last year. The fourth-quarter outlook is pressured by timing in two respects. First, we are shifting seed deliveries from the fourth quarter to the first quarter of 2017, primarily driven by our Southern route-to- market change to a sales agency model, which is similar to the approach we utilize in the Midwest; and second, we realized sales in the third quarter to the detriment of the fourth quarter, primarily in Asia and Africa. The Ag industry continues to face tough conditions with challenging commodity prices leading to a further decline in net farmer income and high channel inventories. However, one thing remains clear – global demand continues to climb, which places an emphasis on innovation to meet farmers’ financial goals and the needs of a growing population. We are helping to drive productivity to meet those needs through our new product introductions such as our latest corn genetics, Leptra® and Qrome® corn products; our newest crop protection products, such as our ZorvecTM fungicide; and continued expansion of our EncircaSM services digital Ag offering, which will be on more than 2 million paid acres this year, up more than 2 times versus last year.

 
18 Nutrition & Health Sales were 2 percent higher as continued broad-based volume growth of 4 percent – led by probiotics, cultures and ingredient systems – was partially offset by lower local price and the negative impact from currency. Demand for probiotics continued to be strong with over 30-percent volume growth in the quarter, primarily in the U.S. From a regional perspective, volume grew double-digits in Asia Pacific, driven by demand for ingredient systems and cultures in China. Operating earnings of $135 million increased $33 million, or 32 percent, on volume growth, cost savings and lower product costs. The business delivered 380 basis points of operating margin improvement and has now grown operating margins year-over-year for thirteen consecutive quarters. Looking ahead to the fourth quarter, market conditions are expected to remain challenging, particularly in the Middle East and Latin America. In the fourth quarter, we expect sales to be up low-single-digits percent with continued strength in probiotics and cultures . Operating earnings are expected to be up in the mid-30 percent range benefitting from cost savings and volume growth. Segment Commentary Third Quarter Earnings 2016

 
19 Performance Materials Sales of $1.3 billion were up 2 percent over prior year driven by higher volume. Price declined 2 percent in the quarter, driven by pricing pressures for raw material pass-through. Segment volume increased 4 percent driven by increased demand in Asia Pacific automotive markets, primarily China. According to IHS, global automotive demand rose about 5 percent in the third quarter with strong growth in the Asia Pacific region, primarily China. IHS is forecasting year-over-year growth of 3 percent in 2016, with 2 percent growth in the fourth quarter versus prior year. Operating earnings of $371 million increased 17 percent as cost savings, increased volume, and lower product costs, more than offset a $14 million negative impact from currency, as well as the absence of $16 million net benefit from a joint venture in the prior year. Operating margins expanded by about 350 basis points to 28 percent reaching the highest operating margin and operating earnings in the past 6 years. For the fourth quarter, we expect sales and operating earnings to be up in the low-single-digit percent range. Operating earnings growth will be negatively impacted by $33 million of benefits from the sale of a business and realization of tax benefits associated with a manufacturing site which were recorded in the fourth quarter of 2015. Segment Commentary Third Quarter Earnings 2016

 
20 Industrial Biosciences* Third-quarter sales of $392 million for Industrial Biosciences increased 5 percent. Volumes for the segment rose by 5 percent, while portfolio gains were offset by currency. Strong growth in bioactives and biomaterials more than offset lower CleanTech licensing volumes. The strong growth in bioactives reflected volume gains associated with new product launches and gains in home and personal care products, food and grain processing. Sales of biomaterials rose due to volume growth in apparel, partially offset by softness in flooring. While CleanTech acid revenues grew in the quarter, overall CleanTech sales declined due to weaker aftermarket volumes. Operating earnings of $78 million increased $17 million or 28 percent in the quarter. Sales gains and cost savings drove the operating earnings improvement. Operating margin expansion was robust, rising 360 basis points year over year. Turning to the fourth quarter, we anticipate sales comparable to the prior year as volume growth in bioactives and biomaterials is offset by continued softness from CleanTech. We expect fourth-quarter operating earnings to rise versus the prior year by mid-single-digits percent, as we capture benefits from cost savings and continued sales growth in bioactives, partly offset by lower volumes from CleanTech. * On 1/1/2016, the Clean Technologies business unit within DuPont Protection Solutions became part of Industrial Biosciences. Reclassification of prior year data has been made to reflect the current year classification. Segment Commentary Third Quarter Earnings 2016

 
21 Protection Solutions* Sales of $722 million in the third quarter were comparable with the prior year. The benefit of a 1-percent improvement in volume was offset by a 1-percent reduction from price/mix. Demand for Tyvek® protective material sold into the construction market drove volume gains. Sales in Surfaces increased, reflecting volume growth for Corian® surfaces in the North American market, along with gains from Zodiaq® surfaces. However, demand from the oil and gas industry and the military remained soft. Slightly lower sales of Nomex® thermal-resistant fiber and Kevlar® high-strength materials nearly offset gains from Tyvek® and Surfaces. Operating earnings of $162 million increased 11 percent for the quarter, benefitting from cost savings and higher volumes. Operating earnings margin expanded by 225 basis points. Turning to the fourth quarter, sales are expected to be about even with prior year. Gains from Kevlar®, including fiber optic cables and composite structures, and continued growth in Surfaces are expected to be offset by declines in Nomex®, due to continued weakness in the oil and gas industry. Sales of Tyvek® are expected to be similar to the prior year. We anticipate that our operating earnings will rise by the high-single-digit percent, including gains from cost savings. * DuPont Sustainable Solutions, previously within this segment, was comprised of two business units: Clean Technologies and consulting solutions. On 1/1/2016, the Clean Technologies business unit became part of Industrial Biosciences, and consulting solutions became part of Other. Reclassification of prior-year data has been made to reflect the current-year classification. Segment Commentary Third Quarter Earnings 2016

 
22 Electronics & Communications Third-quarter sales declined 7 percent on lower demand for Tedlar® film and continued weakness in consumer electronics markets, as well as lower local pricing. Declines in Tedlar® were driven by lower demand in China photovoltaics, primarily as a result of the feed-in-tariff reductions at the end of the second quarter. Operating earnings of $108 million increased 4 percent, as cost savings more than offset the impact of lower sales. Operating margins expanded by about 240 basis points year over year. For the fourth quarter we expect sales to be about flat with prior year on continued weakness in consumer electronics markets and reduced demand for Tedlar®, primarily in China, due to feed-in-tariff reductions in the photovoltaics market. Operating earnings are anticipated to increase high-single-digits percent on cost savings. Segment Commentary Third Quarter Earnings 2016

 
INDEX PAGE SELECTED OPERATING RESULTS 24 SELECTED INCOME STATEMENT DATA 25 SEGMENT NET SALES 26 SEGMENT OPERATING EARNINGS 27 SIGNIFICANT ITEMS BY SEGMENT - PRETAX OPERATING INCOME; DEPRECIATION AND AMORTIZATION BY SEGMENT 28 RECONCILIATION OF NON-GAAP MEASURES 29-32 RECONCILIATION OF BASE INCOME TAX RATE TO EFFECTIVE INCOME TAX RATE 33 Note: Management believes that an analysis of operating earnings (as defined on page 24), a "non-GAAP" measure, is meaningful to investors because it provides insight with respect to ongoing operating results of the company. Such measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance. E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES QUARTERLY SUPPLEMENTAL FINANCIAL DATA AND NON-GAAP RECONCILIATIONS (UNAUDITED) September 30, 2016 DuPont Sustainable Solutions, previously within the company's Safety & Protection segment (now Protection Solutions) was comprised of two business units: clean technologies and consulting solutions. Effective January 1, 2016, the clean technologies business is reported in the Industrial Biosciences segment and the consulting solutions business unit is reported within Other. Reclassifications of prior year data have been made to conform to current year classifications.

 
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES Year Year Year Year Year Year 2016 3Q16 2Q16 1Q16 2015 4Q15 3Q15 2Q15 1Q15 2014 4Q14 3Q14 2Q14 1Q14 2013 4Q13 3Q13 2Q13 1Q13 2012 2011 INCOME STATEMENT DATA Consolidated Net Sales 19,383 4,917 7,061 7,405 25,130 5,299 4,873 7,121 7,837 28,406 5,849 5,905 8,058 8,594 28,998 6,119 6,000 8,060 8,819 27,610 25,883 Operating Earnings After Income Taxes, 2,500 298 1,093 1,109 2,503 239 117 994 1,153 3,110 519 361 907 1,323 2,926 392 249 1,003 1,282 2,238 2,210 Attributable to DuPont (1) (Non-GAAP) Significant Items - After-tax (37) (216) 19 160 (348) (411) 88 32 (57) 112 79 (9) 44 (2) (377) (292) (27) (78) 20 (657) (238) Non-Operating Pension & OPEB Costs - After-tax (2) (208) (73) (89) (46) (266) (56) (74) (57) (79) (87) (21) (22) (22) (22) (356) (80) (94) (84) (98) (437) (355) Income from Continuing Operations After Income Taxes Attributable to DuPont (GAAP) 2,255 9 1,023 1,223 1,889 (228) 131 969 1,017 3,135 577 330 929 1,299 2,193 20 128 841 1,204 1,144 1,617 Depreciation 707 234 235 238 978 248 241 245 244 1,006 248 247 261 250 1,027 258 254 253 262 1,065 941 STATEMENT OF CASH FLOW DATA (3) Cash (Used for) Provided by Operating Activities (1,077) 426 341 (1,844) 2,316 4,161 200 78 (2,123) 3,712 5,514 269 350 (2,421) 3,179 5,512 298 36 (2,667) 4,849 5,152 Capital Expenditures (4) 761 254 149 358 1,705 355 362 378 610 2,062 714 544 462 342 1,940 674 478 449 339 1,890 1,910 (3) Data is on a total company basis. (4) Includes purchases of property, plant and equipment and investment in affiliates. SELECTED OPERATING RESULTS (UNAUDITED) (dollars in millions) (1) Operating earnings are defined as earnings from continuing operations (GAAP) excluding “significant items” and “non-operating pension and other post-employment benefit (OPEB) costs”. Non- operating pension/OPEB costs includes all of the components of net periodic benefit cost from continuing operations with the exception of the service cost component. (2) First quarter 2015 includes the impact of an after-tax exchange loss on non-operating pension of $23. 3Q16 Supplemental Financial Data and Non-GAAP Reconciliations 24 10/25/2016

 
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES Year Year Year Year Year Year 2016 3Q16 2Q16 1Q16 2015 4Q15 3Q15 2Q15 1Q15 2014 4Q14 3Q14 2Q14 1Q14 2013 4Q13 3Q13 2Q13 1Q13 2012 2011 Consolidated Net Sales 19,383 4,917 7,061 7,405 25,130 5,299 4,873 7,121 7,837 28,406 5,849 5,905 8,058 8,594 28,998 6,119 6,000 8,060 8,819 27,610 25,883 Total Segment Operating Earnings (1) 3,937 607 1,613 1,717 4,243 553 433 1,447 1,810 5,032 788 686 1,516 2,042 4,906 716 603 1,581 2,006 4,389 4,175 Adjusted EBIT (Operating Earnings) (1) (2) 3,459 444 1,511 1,504 3,757 372 286 1,305 1,794 4,599 806 768 1,283 1,742 4,019 441 332 1,425 1,821 3,311 3,122 Adjusted EBITDA (Operating Earnings) (1) (2) 4,438 724 1,850 1,864 5,095 675 577 1,666 2,177 5,965 1,122 1,064 1,663 2,116 5,360 766 646 1,763 2,185 4,680 4,308 Operating Earnings Before Income Taxes (1) 3,195 355 1,422 1,418 3,441 287 204 1,236 1,714 4,232 719 676 1,192 1,645 3,584 333 227 1,314 1,710 2,871 2,714 Operating Earnings Per Share (1) (3) 2.84 0.34 1.24 1.26 2.77 0.27 0.13 1.09 1.26 3.36 0.57 0.39 0.98 1.42 3.12 0.42 0.26 1.08 1.37 2.36 2.34 (1) See Reconciliation of Non-GAAP Measures. (2) Adjusted EBIT from operating earnings is operating earnings (as defined on page 24) before income taxes, net income attributable to noncontrolling interests and interest expense. Adjusted EBITDA from operating earnings is adjusted EBIT from operating earnings before depreciation and amortization of intangible assets. (3) Earnings per share for the year may not equal the sum of quarterly earnings per share due to changes in average share calculations. SELECTED INCOME STATEMENT DATA OPERATING EARNINGS (UNAUDITED) (dollars in millions, except per share) 3Q16 Supplemental Financial Data and Non-GAAP Reconciliations 25 10/25/2016

 
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES Year Year Year Year Year Year 2016 3Q16 2Q16 1Q16 2015 4Q15 3Q15 2Q15 1Q15 2014 4Q14 3Q14 2Q14 1Q14 2013 4Q13 3Q13 2Q13 1Q13 2012 2011 Agriculture 8,123 1,119 3,218 3,786 9,798 1,550 1,093 3,218 3,937 11,296 1,732 1,563 3,610 4,391 11,728 1,804 1,630 3,629 4,665 10,421 9,165 Electronics & Communications 1,439 493 494 452 2,070 493 532 528 517 2,381 571 620 613 577 2,534 639 635 648 612 2,684 3,154 Industrial Biosciences 1,099 392 355 352 1,478 397 374 357 350 1,624 418 407 404 395 1,631 424 410 416 381 1,604 1,074 Nutrition & Health 2,459 823 835 801 3,256 807 810 826 813 3,529 843 899 926 861 3,473 872 868 865 868 3,422 2,460 Performance Materials 3,918 1,334 1,335 1,249 5,305 1,284 1,302 1,338 1,381 6,059 1,441 1,531 1,567 1,520 6,166 1,505 1,580 1,599 1,482 6,095 6,445 Protection Solutions 2,237 722 786 729 3,039 720 723 806 790 3,304 784 834 885 801 3,229 807 820 841 761 3,122 3,295 Other 108 34 38 36 184 48 39 48 49 213 60 51 53 49 237 68 57 62 50 262 290 CONSOLIDATED NET SALES 19,383 4,917 7,061 7,405 25,130 5,299 4,873 7,121 7,837 28,406 5,849 5,905 8,058 8,594 28,998 6,119 6,000 8,060 8,819 27,610 25,883 SEGMENT NET SALES SEGMENT NET SALES (UNAUDITED) (dollars in millions) 3Q16 Supplemental Financial Data and Non-GAAP Reconciliations 26 10/25/2016

 
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES Year Year Year Year Year Year 2016 3Q16 2Q16 1Q16 2015 4Q15 3Q15 2Q15 1Q15 2014 4Q14 3Q14 2Q14 1Q14 2013 4Q13 3Q13 2Q13 1Q13 2012 2011 Agriculture 1,777 (189) 865 1,101 1,646 (54) (210) 772 1,138 2,352 134 (56) 835 1,439 2,480 90 (56) 937 1,509 2,129 1,776 Electronics & Communications 260 108 93 59 359 87 104 89 79 336 92 90 84 70 314 90 92 90 42 237 420 Industrial Biosciences 203 78 62 63 243 78 61 50 54 269 69 58 71 71 232 61 58 61 52 228 130 Nutrition & Health 369 135 130 104 373 85 102 100 86 369 79 99 103 88 286 79 76 59 72 305 201 Performance Materials 969 371 325 273 1,216 281 317 301 317 1,267 326 366 293 282 1,249 287 357 322 283 1,140 945 Protection Solutions 526 162 188 176 641 147 146 181 167 672 169 174 181 148 553 161 141 137 114 475 532 Other (167) (58) (50) (59) (235) (71) (87) (46) (31) (233) (81) (45) (51) (56) (208) (52) (65) (25) (66) (125) 171 TOTAL SEGMENT OPERATING EARNINGS 3,937 607 1,613 1,717 4,243 553 433 1,447 1,810 5,032 788 686 1,516 2,042 4,906 716 603 1,581 2,006 4,389 4,175 Corporate Expenses (252) (83) (83) (86) (573) (160) (111) (148) (154) (677) (134) (167) (174) (202) (773) (206) (164) (198) (205) (842) (801) Interest Expense (278) (93) (93) (92) (322) (82) (82) (74) (84) (377) (87) (93) (94) (103) (448) (108) (108) (115) (117) (464) (447) 3,407 431 1,437 1,539 3,348 311 240 1,225 1,572 3,978 567 426 1,248 1,737 3,685 402 331 1,268 1,684 3,083 2,927 (795) (101) (323) (371) (712) (7) (91) (268) (346) (692) (13) (56) (279) (344) (680) 24 (36) (290) (378) (685) (544) Net After-tax Exchange (Losses) Gains (1) (98) (28) (17) (53) (127) (68) (32) 42 (69) (166) (35) (8) (59) (64) (66) (34) (43) 29 (18) (136) (134) Less: Net Income Attr. to Noncontrolling Interests 14 4 4 6 6 (3) - 5 4 10 - 1 3 6 13 - 3 4 6 24 39 OPERATING EARNINGS (Non-GAAP) 2,500 298 1,093 1,109 2,503 239 117 994 1,153 3,110 519 361 907 1,323 2,926 392 249 1,003 1,282 2,238 2,210 Net Income Attributable to Noncontrolling Interests 14 4 4 6 6 (3) - 5 4 10 - 1 3 6 13 - 3 4 6 24 39 Non-Operating Pension & OPEB Costs - After-tax (1) (208) (73) (89) (46) (266) (56) (74) (57) (79) (87) (21) (22) (22) (22) (356) (80) (94) (84) (98) (437) (355) Significant Items - After-tax (37) (216) 19 160 (348) (411) 88 32 (57) 112 79 (9) 44 (2) (377) (292) (27) (78) 20 (657) (238) INCOME FROM CONTINUING OPERATIONS AFTER INCOME TAXES (GAAP) 2,269 13 1,027 1,229 1,895 (231) 131 974 1,021 3,145 577 331 932 1,305 2,206 20 131 845 1,210 1,168 1,656 (1) OPERATING EARNINGS (UNAUDITED) (dollars in millions) In the first quarter 2015, the impact of an after-tax exchange loss on non-operating pension of $23 is excluded from Net After-tax Exchange Losses and is included within Non-Operating Pension & OPEB Costs-After tax above. OPERATING EARNINGS BEFORE INCOME TAXES AND EXCHANGE (LOSSES) GAINS (Non-GAAP) Provision For Income Taxes on Operating Earnings, Excluding Taxes on Exchange (Losses) Gains SEGMENT OPERATING EARNINGS 3Q16 Supplemental Financial Data and Non-GAAP Reconciliations 27 10/25/2016

 
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES SEGMENT PRETAX IMPACT OF Year Year Year Year Year Year SIGNIFICANT ITEMS 2016 3Q16 2Q16 1Q16 2015 4Q15 3Q15 2Q15 1Q15 2014 4Q14 3Q14 2Q14 1Q14 2013 4Q13 3Q13 2Q13 1Q13 2012 2011 Agriculture (51) (13) 35 (73) 148 (30) 147 (4) 35 316 363 - (47) - (351) (196) (40) (80) (35) (469) (225) Electronics & Communications 13 (2) 8 7 (78) (89) - 11 - (84) (16) - (68) - (131) (131) - - - (37) - Industrial Biosciences (154) (158) 3 1 (61) (60) - (1) - (20) (16) - (4) - (1) (1) - - - (10) (79) Nutrition & Health 12 (1) 12 1 (50) (46) - (4) - (15) (7) - (8) - 6 6 - - - (49) (126) Performance Materials 7 2 9 (4) (62) (60) - (2) - 292 (70) - 362 - (16) (16) - - - (104) 47 Protection Solutions 10 - 7 3 105 (8) - 113 - (45) (17) - (28) - 6 6 - - - (51) - Other (3) - - (3) (40) - - (3) (37) (10) (7) - (3) - 1 1 - - - (137) - TOTAL SIGNIFICANT ITEMS BY SEGMENT - PRETAX (166) (172) 74 (68) (38) (293) 147 110 (2) 434 230 - 204 - (486) (331) (40) (80) (35) (857) (383) DEPRECIATION AND Year Year Year Year Year Year AMORTIZATION 2016 3Q16 2Q16 1Q16 2015 4Q15 3Q15 2Q15 1Q15 2014 4Q14 3Q14 2Q14 1Q14 2013 4Q13 3Q13 2Q13 1Q13 2012 2011 Agriculture 343 72 126 145 453 79 74 139 161 436 97 78 121 140 358 79 72 95 112 337 295 Electronics & Communications 66 22 22 22 100 30 23 24 23 97 23 25 23 26 105 25 27 27 26 113 99 Industrial Biosciences 75 24 25 26 101 25 26 24 26 102 25 26 26 25 98 26 23 24 25 106 74 Nutrition & Health 170 55 57 58 236 58 58 58 62 264 64 66 68 66 271 67 66 66 72 288 207 Performance Materials 97 32 34 31 125 33 30 31 31 139 33 35 35 36 162 41 40 40 41 171 188 Protection Solutions 110 37 35 38 156 38 40 39 39 168 41 41 43 43 178 47 44 43 44 166 143 Other 7 3 1 3 6 2 - 3 1 8 1 2 2 3 9 2 1 5 1 10 9 TOTAL DEPRECIATION AND AMORTIZATION BY SEGMENT 868 245 300 323 1,177 265 251 318 343 1,214 284 273 318 339 1,181 287 273 300 321 1,191 1,015 SIGNIFICANT ITEMS BY SEGMENT - PRETAX OPERATING INCOME (UNAUDITED) (dollars in millions) DEPRECIATION AND AMORTIZATION BY SEGMENT (dollars in millions) 3Q16 Supplemental Financial Data and Non-GAAP Reconciliations 28 10/25/2016

 
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES Year Year Year Year Year Year 2016 3Q16 2Q16 1Q16 2015 4Q15 3Q15 2Q15 1Q15 2014 4Q14 3Q14 2Q14 1Q14 2013 4Q13 3Q13 2Q13 1Q13 2012 2011 RECONCILIATION OF DILUTED EARNINGS PER SHARE (EPS) (1) Operating EPS (Non-GAAP) 2.84 0.34 1.24 1.26 2.77 0.27 0.13 1.09 1.26 3.36 0.57 0.39 0.98 1.42 3.12 0.42 0.26 1.08 1.37 2.36 2.34 Non-Operating Pension & OPEB Costs (2) (0.24) (0.08) (0.10) (0.05) (0.29) (0.06) (0.09) (0.07) (0.09) (0.09) (0.03) (0.02) (0.03) (0.03) (0.38) (0.09) (0.10) (0.10) (0.11) (0.46) (0.38) Significant Items (0.04) (0.25) 0.02 0.18 (0.39) (0.47) 0.10 0.04 (0.06) 0.12 0.09 (0.01) 0.05 - (0.40) (0.31) (0.03) (0.08) 0.02 (0.70) (0.25) EPS from continuing operations (GAAP) 2.56 0.01 1.16 1.39 2.09 (0.26) 0.14 1.06 1.11 3.39 0.63 0.36 1.00 1.39 2.34 0.02 0.13 0.90 1.28 1.20 1.71 RECONCILIATION OF ADJUSTED EBIT / ADJUSTED EBITDA TO CONSOLIDATED INCOME STATEMENTS Income (Loss) From Continuing Operations After Income Taxes (GAAP) 2,269 13 1,027 1,229 1,895 (231) 131 974 1,021 3,145 577 331 932 1,305 2,206 20 131 845 1,210 1,168 1,656 Add: (Benefit from) Provision for income taxes on continuing operations 643 (69) 306 406 696 (190) 96 260 530 1,168 247 303 313 305 360 (129) (84) 254 319 122 59 Income (Loss) From Continuing Operations Before Income Taxes 2,912 (56) 1,333 1,635 2,591 (421) 227 1,234 1,551 4,313 824 634 1,245 1,610 2,566 (109) 47 1,099 1,529 1,290 1,715 Add: Significant Items - Pretax - (Benefit) / Charge (38) 297 (44) (291) 453 622 (138) (85) 54 (209) (137) 10 (85) 3 485 319 40 91 35 930 467 Add: Non-Operating Pension & OPEB Costs - Pretax (2) 321 114 133 74 397 86 115 87 109 128 32 32 32 32 533 123 140 124 146 651 532 Operating Earnings Before Income Taxes (Non-GAAP) 3,195 355 1,422 1,418 3,441 287 204 1,236 1,714 4,232 719 676 1,192 1,645 3,584 333 227 1,314 1,710 2,871 2,714 Less: Net Income Attributable to Noncontrolling Interests 14 4 4 6 6 (3) - 5 4 10 - 1 3 6 13 - 3 4 6 24 39 Add: Interest Expense 278 93 93 92 322 82 82 74 84 377 87 93 94 103 448 108 108 115 117 464 447 Adjusted EBIT (Operating Earnings) (Non-GAAP) 3,459 444 1,511 1,504 3,757 372 286 1,305 1,794 4,599 806 768 1,283 1,742 4,019 441 332 1,425 1,821 3,311 3,122 Add: Depreciation and Amortization 979 280 339 360 1,338 303 291 361 383 1,366 316 296 380 374 1,341 325 314 338 364 1,369 1,186 Adjusted EBITDA (Operating Earnings) (Non-GAAP) 4,438 724 1,850 1,864 5,095 675 577 1,666 2,177 5,965 1,122 1,064 1,663 2,116 5,360 766 646 1,763 2,185 4,680 4,308 (1) Earnings per share for the year may not equal the sum of quarterly earnings per share due to changes in average share calculations. (2) RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED) (dollars in millions, except per share) First quarter 2015 includes the impact of an exchange loss on non-operating pension of $23. 3Q16 Supplemental Financial Data and Non-GAAP Reconciliations 29 10/25/2016

 
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES Sep-16 Jun-16 Mar-16 Dec-15 Sep-15 Jun-15 Mar-15 Dec-14 Sep-14 Jun-14 Mar-14 Dec-13 Sep-13 Jun-13 Mar-13 Dec-12 Dec-11 CALCULATION OF NET DEBT Cash and Cash Equivalents 4,452 4,411 4,166 5,300 3,324 4,746 3,622 6,910 3,982 4,174 3,782 8,941 7,005 6,685 6,555 4,284 3,586 Marketable Securities 1,080 742 623 906 406 556 125 124 566 173 67 145 184 211 26 123 433 Total Cash 5,532 5,153 4,789 6,206 3,730 5,302 3,747 7,034 4,548 4,347 3,849 9,086 7,189 6,896 6,581 4,407 4,019 Short-Term Borrowings and Capital Lease Obligations 3,242 2,295 1,625 1,165 1,781 647 1,621 1,422 3,889 2,506 2,019 1,721 4,204 3,315 2,006 1,275 817 Long-Term Borrowings and Capital Lease Obligations 8,114 8,119 8,126 7,642 8,155 12,088 8,727 9,233 9,241 9,251 9,259 10,699 10,755 10,765 11,279 10,429 11,691 Total Debt 11,356 10,414 9,751 8,807 9,936 12,735 10,348 10,655 13,130 11,757 11,278 12,420 14,959 14,080 13,285 11,704 12,508 Net Debt (Non-GAAP) 5,824 5,261 4,962 2,601 6,206 7,433 6,601 3,621 8,582 7,410 7,429 3,334 7,770 7,184 6,704 7,297 8,489 Year Year Year Year Year Year 2016 3Q16 2Q16 1Q16 2015 4Q15 3Q15 2Q15 1Q15 2014 4Q14 3Q14 2Q14 1Q14 2013 4Q13 3Q13 2Q13 1Q13 2012 2011 CALCULATION OF FREE CASH FLOW (1) Cash (Used for)Provided by Operating Activities (GAAP) (1,077) 426 341 (1,844) 2,316 4,161 200 78 (2,123) 3,712 5,514 269 350 (2,421) 3,179 5,512 298 36 (2,667) 4,849 5,152 Less: Purchases of Property, Plant and Equipment 759 252 150 357 1,629 338 353 373 565 2,020 709 530 461 320 1,882 659 466 436 321 1,793 1,843 Free Cash Flow (Non-GAAP) (1,836) 174 191 (2,201) 687 3,823 (153) (295) (2,688) 1,692 4,805 (261) (111) (2,741) 1,297 4,853 (168) (400) (2,988) 3,056 3,309 (1) Data is on a total company basis. RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED) (dollars in millions) 3Q16 Supplemental Financial Data and Non-GAAP Reconciliations 30 10/25/2016

 
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES SEGMENT OPERATING EARNINGS MARGIN % Year Year Year Year Year Year (Segment Operating Earnings / Segment Net Sales) (1) 2016 3Q16 2Q16 1Q16 2015 4Q15 3Q15 2Q15 1Q15 2014 4Q14 3Q14 2Q14 1Q14 2013 4Q13 3Q13 2Q13 1Q13 2012 2011 Agriculture 21.9% -16.9% 26.9% 29.1% 16.8% -3.5% -19.2% 24.0% 28.9% 20.8% 7.7% -3.6% 23.1% 32.8% 21.1% 5.0% -3.4% 25.8% 32.3% 20.4% 19.4% Electronics & Communications 18.1% 21.9% 18.8% 13.1% 17.3% 17.6% 19.5% 16.9% 15.3% 14.1% 16.1% 14.5% 13.7% 12.1% 12.4% 14.1% 14.5% 13.9% 6.9% 8.8% 13.3% Industrial Biosciences 18.5% 19.9% 17.5% 17.9% 16.4% 19.6% 16.3% 14.0% 15.4% 16.6% 16.5% 14.3% 17.6% 18.0% 14.2% 14.4% 14.1% 14.7% 13.6% 14.2% 12.1% Nutrition & Health 15.0% 16.4% 15.6% 13.0% 11.5% 10.5% 12.6% 12.1% 10.6% 10.5% 9.4% 11.0% 11.1% 10.2% 8.2% 9.1% 8.8% 6.8% 8.3% 8.9% 8.2% Performance Materials 24.7% 27.8% 24.3% 21.9% 22.9% 21.9% 24.3% 22.5% 23.0% 20.9% 22.6% 23.9% 18.7% 18.6% 20.3% 19.1% 22.6% 20.1% 19.1% 18.7% 14.7% Protection Solutions 23.5% 22.4% 23.9% 24.1% 21.1% 20.4% 20.2% 22.5% 21.1% 20.3% 21.6% 20.9% 20.5% 18.5% 17.1% 20.0% 17.2% 16.3% 15.0% 15.2% 16.1% 20.3% 12.3% 22.8% 23.2% 16.9% 10.4% 8.9% 20.3% 23.1% 17.7% 13.5% 11.6% 18.8% 23.8% 16.9% 11.7% 10.1% 19.6% 22.7% 15.9% 16.1% TOTAL SEGMENT OPERATING EARNINGS MARGIN % RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED) (1) Segment Operating Earnings margin %'s for Other (which includes consulting solutions, pre-commercial programs, pharmaceuticals, and non-aligned businesses) are not presented separately above as they are not meaningful; however, the results are included in the Total margin %'s above. 3Q16 Supplemental Financial Data and Non-GAAP Reconciliations 31 10/25/2016

 
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES As Reported (GAAP) Less: Significant Items (1) Less: Non- Operating Pension/OPEB Costs (Non-GAAP) As Reported (GAAP) Less: Significant Items (1) Less: Non- Operating Pension/OPEB Costs (Non-GAAP) Other operating charges 176$ -$ -$ 176$ 91$ (138)$ -$ 229$ Selling, general and administrative expenses 1,016 122 45 849 1,046 - 46 1,000 Research and development expense 410 - 17 393 441 - 17 424 Total 1,602$ 122$ 62$ 1,418$ 1,578$ (138)$ 63$ 1,653$ (1) Further information regarding significant items is included in our Quarterly Earnings Release financials. 2016 2015 Corporate expenses (GAAP) 208$ 120$ Significant items (1) 125 9 Corporate expenses (Non-GAAP) 83$ 111$ (1) Further information regarding significant items is included in our Quarterly Earnings Release financials. Coporate expenses The reconciliation below reflects GAAP corporate expenses excluding significant items. Three Months Ended September 30, RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED) (dollars in millions) Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Reconciliation of Operating Costs to Consolidated Income Statement Line Items GAAP operating costs is defined as other operating charges, selling, general and administrative expenses, and research and development costs. The reconciliation below reflects operating costs excluding significant items and non-operating pension/OPEB costs. 3Q16 Supplemental Financial Data and Non-GAAP Reconciliations 32 10/25/2016

 
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES 2016 2015 2016 Outlook 1 2015 Actual Effective income tax rate (GAAP) 123.2% 42.3% 20.4% 26.9% Significant items effect and non-operating pension/OPEB costs effect (108.3%) 0.3% 0.8% 0.2% Tax rate, from continuing operations, before significant items and non-operating pension/OPEB costs 14.9% 42.6% 21.2% 27.1% Exchange gains (losses) effect 2 8.5% (4.7%) 1.8% (5.8%) Base income tax rate from continuing operations (Non-GAAP) 23.4% 37.9% 23.0% 21.3% (1) Represents the company's anticipated full year tax rates for 2016. (2) The company does not forecast the impact of exchange gains (losses) on the projected tax rate. Three Months Ended September 30, RECONCILIATION OF BASE INCOME TAX RATE TO EFFECTIVE INCOME TAX RATE (UNAUDITED) Base income tax rate is defined as the effective income tax rate less the effect of exchange gains (losses), significant items and non-operating pension/OPEB costs. Year Ended December 31, 3Q16 Supplemental Financial Data and Non-GAAP Reconciliations 33 10/25/2016

 
23 Copyright © 2016 DuPont. All rights reserved. The DuPont Oval Logo, DuPontTM, The miracles of scienceTM, and all products, unless otherwise noted, denoted with ® or M are trademarks or registered trademarks of E. I. du Pont de Nemours and Company. +Images reproduced by E. I. du Pont de Nemours and Company under license from the National Geographic Society.

 

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