10-QPeriod: Q3 FY2003

EIDP, Inc. Quarterly Report for Q3 Ended Sep 30, 2003

Filed November 12, 2003For Securities:CTA-PBCTA-PA

Summary

E.I. du Pont de Nemours and Company (DuPont) reported a net loss of $873 million, or $0.88 per share, for the third quarter of 2003, a significant decline from the $469 million net income ($0.47 per share) reported in the same period last year. This loss was primarily driven by substantial separation charges and a goodwill impairment charge related to the planned sale of its Textiles & Interiors segment, totaling $1,314 million and $291 million pre-tax, respectively. Despite these charges, consolidated net sales increased by 12% to $6.1 billion for the quarter, driven by higher volumes, favorable currency impacts, and acquisitions across various segments. For the nine months ended September 30, 2003, DuPont reported a net income of $337 million ($0.33 per share), a significant improvement from a net loss of $1,453 million ($1.47 per share) in the prior year. This turnaround was largely due to the absence of a substantial cumulative effect of accounting changes seen in the prior year and improved operating performance in many segments, partially offset by the aforementioned separation and impairment charges in the current quarter. The company continues to navigate operational challenges, including rising raw material costs and pension expenses, while strategically positioning itself through divestitures and acquisitions.

Key Highlights

  • 1Q3 2003 net loss of $873 million ($0.88/share) compared to a net income of $469 million ($0.47/share) in Q3 2002, heavily impacted by significant separation and goodwill impairment charges for the Textiles & Interiors segment.
  • 2Nine-month net income of $337 million ($0.33/share) in 2003, a substantial improvement from a net loss of $1,453 million ($1.47/share) in the same period of 2002, driven by the absence of large prior-year accounting charges.
  • 3Consolidated net sales increased 12% to $6.1 billion for Q3 2003 and 12% to $20.5 billion for the nine months, benefiting from volume growth, currency impacts, and acquisitions.
  • 4Significant strategic action: DuPont is in negotiations to sell substantially all assets of its Textiles & Interiors segment, leading to the classification of related assets and liabilities as held for sale.
  • 5Increased raw material costs and non-cash pension expenses are noted as significant factors impacting profitability across several operating segments.
  • 6Acquisition activity is evident, including the consolidation of DuPont Canada and the formation of The Solae Company, contributing to sales growth.
  • 7The company's net debt increased significantly from $2.7 billion to $8.3 billion between December 31, 2002, and September 30, 2003, primarily due to operational cash usage, acquisitions, and redemption of minority interest structures.

Frequently Asked Questions

The net loss of $873 million in the third quarter of 2003 was primarily due to substantial separation charges and a goodwill impairment charge related to the planned sale of the company's Textiles & Interiors segment. These charges amounted to $1,314 million and $291 million pre-tax, respectively.

Consolidated net sales showed strong growth. For the third quarter of 2003, sales increased by 12% to $6.1 billion compared to the prior year. For the nine months ended September 30, 2003, sales also increased by 12% to $20.5 billion. This growth was driven by higher volumes, favorable currency exchange rates, and contributions from acquired businesses.

DuPont is actively pursuing the sale of substantially all of the assets related to its Textiles & Interiors segment. The company has classified these assets and liabilities as 'held for sale' and expects to complete the transaction in the first half of 2004, subject to regulatory approvals. This strategic divestiture is a key factor influencing the current financial results.

The company is facing challenges from increasing raw material costs, particularly for oil and natural gas derivatives, and rising non-cash pension expenses across several operating segments. These factors, combined with specific segment-level issues like pricing pressures and start-up costs, are impacting overall profitability.