Summary
E.I. du Pont de Nemours and Company (DuPont) reported financial results for the third quarter and the first nine months of 2002. For the third quarter, the company reported net income of $469 million, or $0.47 per share, a significant increase from $142 million, or $0.13 per share, in the same period last year. This improvement was driven by higher sales volumes in most segments, lower operating expenses, and a lower effective tax rate. However, for the first nine months of the year, the company reported a net loss of $1,453 million, or -$1.47 per share, compared to a net income of $424 million, or $0.40 per share, in the prior year. This substantial year-to-date loss is largely attributable to a significant non-cash charge of $2,944 million recognized in the second quarter due to the adoption of SFAS No. 142, which requires impairment testing for goodwill. Consolidated sales for the third quarter decreased slightly by 3% to $5.5 billion, primarily due to the divestiture of DuPont Pharmaceuticals, though excluding this, sales increased by 4%. The company continued to face pricing pressures in certain segments, particularly in Textiles & Interiors and Electronic & Communication Technologies. Despite these challenges, management highlights operational improvements and cost-saving initiatives. The company ended the period with $3.5 billion in cash and cash equivalents, though consolidated net debt increased significantly due to operational cash flow, investments, and dividend payments.
Key Highlights
- 1Third-quarter net income surged to $469 million ($0.47/share) from $142 million ($0.13/share) in Q3 2001, driven by improved segment performance and a lower tax rate.
- 2Nine-month net loss of $1,453 million (-$1.47/share) compared to a net income of $424 million ($0.40/share) in the prior year, primarily due to a $2.94 billion non-cash goodwill impairment charge recognized in Q2 2002.
- 3Consolidated sales for Q3 2002 were $5.5 billion, down 3% year-over-year, mainly due to the divestiture of DuPont Pharmaceuticals; excluding this, sales grew 4%.
- 4Segment performance was mixed, with notable improvements in Performance Materials, Coatings & Color Technologies, and Textiles & Interiors during Q3.
- 5The company adopted SFAS No. 142, leading to a significant goodwill impairment charge ($2.94 billion) and the cessation of goodwill amortization.
- 6Operating cash flow for the first nine months was $422 million, while consolidated net debt increased by $2.3 billion to $3.3 billion.
- 7Significant legal proceedings, including ongoing litigation related to BenlateÒ and environmental matters, continue to be a factor, with associated costs and reserves.