8-KOther Events

EIDP, Inc. 8-K Report (Jul 24, 2002)

Filed July 24, 2002For Securities:CTA-PBCTA-PA

Summary

E. I. du Pont de Nemours and Company (DuPont) reported significant improvements in its second quarter 2002 financial results, demonstrating a strong rebound from the prior year. Underlying earnings per share surged by 73% to $0.71, driven by a 45% increase in after-tax operating income (ATOI) before one-time items. This improvement was primarily attributed to lower raw material and fixed costs, coupled with a 5% increase in sales volume, which largely offset a 4% decrease in local selling prices. The company's consolidated sales were $6.7 billion, a slight decrease from $7.0 billion in the prior year, but comparable business sales increased by 1%. While reported earnings per share were $0.54, this figure was impacted by a $0.17 per share charge primarily related to restructuring in the Textiles and Interiors businesses. A significant non-cash charge of $2.9 billion (or $2.94 per share) related to goodwill impairment under the new SFAS No. 142 accounting standard also affected year-to-date reported results.

Key Highlights

  • 1Underlying earnings per share increased 73% to $0.71 in Q2 2002, up from $0.41 in Q2 2001.
  • 2After-tax operating income (ATOI) before one-time items rose 45% year-over-year, driven by cost reductions and volume growth.
  • 3Comparable business sales increased by 1%, with global volume up 5% despite a 4% decline in local prices.
  • 4Significant one-time charges in Q2 2002 included a $0.17 per share restructuring charge for Textiles and Interiors.
  • 5The company adopted SFAS No. 142, resulting in a non-cash goodwill impairment charge of $2.9 billion ($2.94 per share) for the year-to-date period.
  • 6Performance Materials and Textiles & Interiors segments showed notable improvements in ATOI.
  • 7DuPont expects substantial improvement in the second half of 2002, with Q3 earnings per share anticipated to double year-over-year on an underlying basis.

Frequently Asked Questions

The significant increase in earnings was primarily driven by improved operational efficiencies, including lower raw material and fixed costs, and a healthy increase in sales volume across several segments. The adoption of SFAS No. 142 also eliminated goodwill amortization, positively impacting the bottom line.

The primary one-time item impacting reported earnings was a $0.17 per share charge related to restructuring and asset write-downs in the Textiles & Interiors segment. Additionally, a significant non-cash charge of $2.94 per share for goodwill impairment was recognized year-to-date due to the adoption of SFAS No. 142.

Performance Materials and Textiles & Interiors segments demonstrated notable strength. Performance Materials saw a 163% increase in ATOI driven by higher volumes and lower raw material costs. Textiles & Interiors experienced a substantial increase in ATOI due to lower costs and improved capacity utilization, with strong volume gains in flooring and spandex.

DuPont anticipates continued global economic recovery, albeit at a more modest pace. The company expects substantial improvement in second half 2002 results compared to the prior year. Specifically, they project third quarter 2002 underlying earnings per share to be approximately double those of the third quarter of 2001, with fourth quarter earnings expected to be sequentially stronger and triple those of the fourth quarter of 2001.