EX-99.1 2 a123115enr.htm EX-99.1 Exhibit

 
 
 
 
 
Exhibit 99.1
 
 
 
 
 
 
 
 
 
 
January 26, 2016
 
 
 
Media Contact:
Dan Turner
WILMINGTON, Del.
 
 
 
 
302-996-8372
 
 
 
 
 
daniel.a.turner@dupont.com
 
 
 
 
Investor Contact:
302-774-4994

DuPont Reports 4Q and Full-Year Operating EPS of $0.27 and $2.77

Increasing 2016 Cost Savings to Annual Run Rate of $1.0 Billion

Company Expects 2016 Full-Year Operating Earnings of $2.95 - $3.10 Per Share

Fourth-Quarter Highlights

•
Fourth-quarter operating earnings per share were $0.27, in line with expectations, versus $0.57 in prior year. GAAP1 (losses) earnings per share were ($0.26) versus $0.63 in prior year.

•
Excluding currency, sales declined 1 percent. Currency negatively impacted sales by an additional 8 percent.

•
Segment pre-tax operating earnings of $553 million included $170 million, or $0.17 per share, of negative impact from currency. Growth in Industrial Biosciences and Nutrition & Health was more than offset by declines in Agriculture, Performance Materials, Safety & Protection and Electronics & Communications.

•
Cost reductions from operational redesign contributed an incremental $0.10 per share to fourth-quarter operating earnings.

•
Actions underway for 2016 global cost savings and restructuring plan, expected to reduce operating costs2 by about $1.0 billion on run-rate basis by end of 2016, which represents about $730 million in cost reductions in 2016 versus prior year.

•
Completed $2 billion accelerated share repurchase program; announces first quarter dividend of $0.38 per share.

Full-Year Highlights

•
Reported full-year operating earnings per share of $2.77 versus $3.36 in prior year. Operating earnings, excluding negative currency impact of $0.71 per share, increased 4 percent. GAAP1 earnings per share were $2.09 versus $3.39 in prior year.

•
Excluding currency and portfolio, sales declined 3 percent. Currency and portfolio negatively impacted sales by an additional 7 percent and 2 percent, respectively.

•
Segment pre-tax operating earnings of $4.2 billion included approximately $785 million of negative impact from currency. Operating margins expanded in each segment, except Agriculture, on cost reductions and productivity.

•
Cost reductions from 2014 operational redesign are essentially complete and contributed an incremental $0.40 per share to full-year operating earnings.

1Generally Accepted Accounting Principles (GAAP)
2Operating costs defined as other operating charges, selling, general & administrative, and research & development costs, excluding significant items and non-operating pension/OPEB costs.
E.I. du Pont de Nemours and Company

2

WILMINGTON, Del., Jan. 26, 2016 - DuPont (NYSE: DD), a science company that brings world-class, innovative products, materials, and services to the global marketplace, today announced fourth-quarter 2015 operating earnings of $0.27 per share compared with $0.57 per share in the prior year. GAAP1 (losses) earnings were ($0.26) per share, compared with $0.63 per share in the prior year. Refer to Schedule B for details of significant items.

For the full-year 2015, DuPont delivered operating earnings of $2.77 per share, compared with $3.36 per share in the prior year. GAAP1 earnings were $2.09 per share, compared with $3.39 per share in the prior year.

Fourth-quarter sales were $5.3 billion, down 9 percent versus prior year due to negative impacts from currency (8 percent) and volume (1 percent). Full-year sales were $25.1 billion, down 12 percent versus prior year due to negative impacts from currency (7 percent), portfolio (2 percent) and volume (3 percent).

DuPont’s board of directors approved a first-quarter dividend of 38 cents per share, the 446th consecutive quarterly dividend since the company's first dividend in the fourth quarter of 1904. The first-quarter dividend of 38 cents per share of common stock is payable on March 14, 2016, to stockholders of record at the close of business on Feb. 12, 2016. Regular quarterly dividends of $1.125 per share on the $4.50 series preferred stock and $0.875 cents per share on the $3.50 series preferred stock also were declared, both payable on April 25, 2016, to stockholders of record as of April 8, 2016.

On Dec. 11, 2015, DuPont and The Dow Chemical Company announced that their boards of directors unanimously approved a definitive agreement under which the companies will combine in an all-stock merger of equals. The combined company will be named DowDuPont. The merger is expected to close in the second half of 2016, subject to customary closing conditions, including regulatory approvals, and approval by both Dow and DuPont shareholders. The parties intend to subsequently pursue a separation of DowDuPont into three independent, publicly traded companies through tax-free spin-offs. These separations would occur as soon as feasible, subject to regulatory and board approval.

“We are making progress on key initiatives, including further improving our cost structure and restructuring our organization to enhance our competitiveness,” said Ed Breen, Chair and CEO of DuPont. “In this pivotal year for DuPont we have three priorities: deliver operating earnings growth while positioning our businesses to compete successfully over the long term; continue to improve our capital allocation and working capital performance; and complete the proposed merger of equals with Dow.  Our merger process is on track. We are meeting key milestones and have begun our planning to create three strong, highly focused, independent businesses in agriculture, material science and specialty products.”

3

Global Consolidated Net Sales - 4th Quarter and Full Year
 
 
Three Months Ended
 
 
 
 
 
 
December 31, 2015
Percentage Change Due to:
(Dollars in millions)
 
$
 
% Change
 
Local Price and Product Mix
 
Currency
 
Volume
 
Portfolio/Other
U.S. & Canada
 
$
1,884

 
(4
)
 
(2
)
 
—

 
(1
)
 
(1
)
EMEA*
 
1,193

 
(16
)
 
(1
)
 
(12
)
 
(2
)
 
(1
)
Asia Pacific
 
1,417

 
(5
)
 
(3
)
 
(4
)
 
—

 
2

Latin America
 
805

 
(18
)
 
5

 
(23
)
 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Total Consolidated Net Sales
 
$
5,299

 
(9
)
 
—

 
(8
)
 
(1
)
 
—


 
 
Twelve Months Ended
 
 
 
 
 
 
December 31, 2015
Percentage Change Due to:
(Dollars in millions)
 
$
 
% Change
 
Local Price and Product Mix
 
Currency
 
Volume
 
Portfolio/Other
U.S. & Canada
 
$
10,755

 
(6
)
 
(2
)
 
(1
)
 
(2
)
 
(1
)
EMEA*
 
6,043

 
(17
)
 
2

 
(15
)
 
(2
)
 
(2
)
Asia Pacific
 
5,617

 
(9
)
 
(2
)
 
(3
)
 
(2
)
 
(2
)
Latin America
 
2,715

 
(23
)
 
2

 
(15
)
 
(9
)
 
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Consolidated Net Sales
 
$
25,130

 
(12
)
 
—

 
(7
)
 
(3
)
 
(2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
* Europe, Middle East & Africa
 
 
 
 
 
 
 
 
 
 
 
 

Segment Net Sales - 4th Quarter and Full Year
 
 
Three Months Ended
 
 
 
 
December 31, 2015
Percentage Change Due to:
(Dollars in millions)
 
$
 
% Change
 
Local Price and Product Mix
 
Currency
 
Volume
 
Portfolio/Other
Agriculture
 
$
1,550

 
(11
)
 
6

 
(16
)
 
—

 
(1
)
Electronics & Communications
 
493

 
(14
)
 
(4
)
 
(2
)
 
(8
)
 
—

Industrial Biosciences
 
301

 
(6
)
 
(1
)
 
(5
)
 
—

 
—

Nutrition & Health
 
807

 
(4
)
 
—

 
(8
)
 
4

 
—

Performance Materials
 
1,284

 
(11
)
 
(6
)
 
(5
)
 
(1
)
 
1

Safety & Protection
 
864

 
(8
)
 
(1
)
 
(3
)
 
(4
)
 
—

Other
 
—

 
 
 
 
 
 
 
 
 
 
Consolidated Net Sales
 
5,299

 
(9
)
 
—

 
(8
)
 
(1
)
 
—



4

 
 
Twelve Months Ended
 
 
 
 
December 31, 2015
Percentage Change Due to:
(Dollars in millions)
 
$
 
% Change
 
Local Price and Product Mix
 
Currency
 
Volume
 
Portfolio/Other
Agriculture
 
$
9,798

 
(13
)
 
3

 
(9
)
 
(6
)
 
(1
)
Electronics & Communications
 
2,070

 
(13
)
 
(4
)
 
(2
)
 
(7
)
 
—

Industrial Biosciences
 
1,171

 
(6
)
 
(3
)
 
(6
)
 
3

 
—

Nutrition & Health
 
3,256

 
(8
)
 
—

 
(9
)
 
2

 
(1
)
Performance Materials
 
5,305

 
(12
)
 
(4
)
 
(6
)
 
1

 
(3
)
Safety & Protection
 
3,527

 
(9
)
 
—

 
(4
)
 
(1
)
 
(4
)
Other
 
3

 
 
 
 
 
 
 
 
 
 
Consolidated Net Sales
 
25,130

 
(12
)
 
—

 
(7
)
 
(3
)
 
(2
)

Operating Earnings - 4th Quarter and Full Year
 
 
 
 
 
 
 Change vs. 2014
(Dollars in millions)
 
4Q15
 
4Q14
 
$
 
%
Agriculture
 
$
(54
)
 
$
134

 
$
(188
)
 
-140
 %
Electronics & Communications
 
87

 
92

 
(5
)
 
-5
 %
Industrial Biosciences
 
55

 
44

 
11

 
25
 %
Nutrition & Health
 
85

 
79

 
6

 
8
 %
Performance Materials
 
281

 
326

 
(45
)
 
-14
 %
Safety & Protection
 
182

 
205

 
(23
)
 
-11
 %
Other
 
(83
)
 
(92
)
 
9

 
10
 %
Total segment operating earnings (1)
 
553

 
788

 
(235
)
 
-30
 %
 
 
 
 
 
 
 
 

Exchange gains (losses) (2)
 
(24
)
 
152

 
(176
)
 
nm

Corporate expenses (1)
 
(160
)
 
(134
)
 
(26
)
 
19
 %
Interest expense
 
(82
)
 
(87
)
 
5

 
-6
 %
Operating earnings before income taxes
 
287

 
719

 
(432
)
 
-60
 %
 
 
 
 
 
 
 
 

Provision for income taxes on operating earnings
 
(51
)
 
(200
)
 
149

 


Less: Net (loss) attributable to noncontrolling interests
 
(3
)
 
—

 
(3
)
 

Operating earnings
 
$
239

 
$
519

 
$
(280
)
 
-54
 %
 
 
 
 
 
 
 
 

Operating earnings per share
 
$
0.27

 
$
0.57

 
$
(0.30
)
 
-53
 %


5

 
 
 
 
 
 
 Change vs. 2014
(Dollars in millions)
 
YTD 2015
 
YTD 2014
 
$
 
%
Agriculture
 
$
1,646

 
$
2,352

 
$
(706
)
 
-30
 %
Electronics & Communications
 
359

 
336

 
23

 
7
 %
Industrial Biosciences
 
203

 
192

 
11

 
6
 %
Nutrition & Health
 
373

 
369

 
4

 
1
 %
Performance Materials
 
1,216

 
1,267

 
(51
)
 
-4
 %
Safety & Protection
 
704

 
772

 
(68
)
 
-9
 %
Other
 
(258
)
 
(256
)
 
(2
)
 
-1
 %
Total segment operating earnings (1)
 
4,243

 
5,032

 
(789
)
 
-16
 %
 
 
 
 
 
 
 
 
 
Exchange gains (losses) (1), (2)
 
93

 
254

 
(161
)
 
nm

Corporate expenses (1)
 
(573
)
 
(677
)
 
104

 
-15
 %
Interest expense (1)
 
(322
)
 
(377
)
 
55

 
-15
 %
Operating earnings before income taxes
 
3,441

 
4,232

 
(791
)
 
-19
 %
 
 
 
 
 
 
 
 
 
Provision for income taxes on operating earnings
 
(932
)
 
(1,112
)
 
180

 
 
Less: Net income attributable to noncontrolling interests
 
6

 
10

 
(4
)
 
 
Operating earnings
 
$
2,503

 
$
3,110

 
$
(607
)
 
-20
 %
 
 
 
 
 
 
 
 
 
Operating earnings per share
 
$
2.77

 
$
3.36

 
$
(0.59
)
 
-18
 %
 
 
 
 
 
 
 
 
 
(1)  See Schedules B and C for listing of significant items and their impact by segment.
(2)  See Schedule D for additional information on exchange gains and losses.
The following is a summary of business results for each of the company’s reportable segments comparing fourth quarter with the prior year, unless otherwise noted.

Agriculture - An operating loss of $54 million resulted in $188 million lower operating earnings as increases in local price and cost reductions and continued productivity improvements were more than offset by a $139 million negative currency impact and about a $30 million negative impact from the continued shutdown of the LaPorte manufacturing facility. Prior year results benefitted from a timing impact from performance-based compensation adjustments and $36 million in gains from portfolio actions. Excluding the impact of currency, the segment would have reported operating earnings of $85 million.
Electronics & Communications - Operating earnings of $87 million decreased $5 million, or 5 percent, as cost reductions and continued productivity improvements were more than offset by competitive pressures impacting Solamet® paste. Excluding the impact of currency, operating earnings would have decreased by about 10 percent.
Industrial Biosciences - Operating earnings of $55 million increased $11 million, or 25 percent, as benefits from cost reductions and continued productivity improvements were partially offset by a $2 million negative impact from currency and slightly lower pricing. Operating margins improved 450 basis points. Excluding the impact of currency, operating earnings would have increased 30 percent.
Nutrition & Health - Operating earnings of $85 million increased $6 million, or 8 percent, as cost reductions, continued productivity improvements and broad-based volume growth led by probiotics, cultures, and ingredient systems, more than offset the absence of an $18 million gain on termination of a distribution agreement in the prior year and a $12 million negative currency impact. Excluding the impact of currency, operating earnings would have increased by about 23 percent.



6

Performance Materials - Operating earnings of $281 million decreased $45 million, or 14 percent. Cost reductions, continued productivity improvements and increased demand for Performance Polymers in global automotive markets, were more than offset by lower ethylene price and volume and $19 million of negative currency impact. Operating earnings included a $33 million benefit from the sale of a business and tax benefits associated with a manufacturing site. Excluding the impact of currency, operating earnings would have decreased by about 8 percent.
Safety & Protection - Operating earnings of $182 million decreased $23 million, or 11 percent. Cost reductions and productivity improvements were more than offset by lower demand and a $2 million negative currency impact. Volume declines in Nomex® thermal-resistant fiber, Kevlar® high-strength material and Sustainable Solutions offerings were driven by weakness in the oil and gas industry and in military spending. Excluding the impact of currency, operating earnings would have decreased by about 10 percent.

2016 Outlook
Current difficult global economic conditions in agriculture and slower growth in emerging markets are expected to continue, challenging the company’s sales growth in 2016. The company expects 2016 operating earnings of $2.95 to $3.10 per share, including an expected benefit of $0.64 per share from the 2016 global cost savings and restructuring plan. The increase in the expected benefit results from identification of additional savings that will be delivered from the existing plans, including previously announced employee reduction estimates. The benefit from the 2016 global cost savings and restructuring plan will be weighted toward the second half of 2016 as specific actions continue to be implemented in the first and second quarters. 2016 operating earnings also includes approximately $0.30 per share of estimated negative currency impact due to the continued strengthening of the U.S. dollar, pressuring both the top and bottom line. A higher base tax rate, reflecting the expected geographic mix of earnings, is expected to negatively impact operating earnings by $0.05 - $0.10 per share. The currency impact is expected to be most significant in the first half of the year due to a further strengthening of the U.S dollar. Given the seasonality of the company’s operating earnings from Agriculture in the northern hemisphere, the company anticipates approximately two-thirds of the expected currency impact to occur in the first half of 2016. Excluding the impact of currency, the guidance for full-year operating earnings per share, including expected benefits from cost savings and share repurchases, represents a 17-23 percent increase year over year.

DuPont will hold a conference call and webcast on Tuesday, Jan. 26, 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 9594983#.  For additional information see the investor center at http://www.dupont.com.

Use of Non-GAAP Measures
Management believes that certain non-GAAP measurements are meaningful to investors because they provide insight with respect to ongoing operating results of the company. Such measurements are not recognized in accordance with GAAP 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.


7


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 document contains forward-looking statements which may be identified by their use of words like “plans,” “expects,” “will,” “believes,” “intends,” “estimates,” “anticipates” or other words of similar meaning. All statements that address expectations or projections about the future, including statements about the company’s strategy for growth, product development, regulatory approval, market position, anticipated benefits of recent acquisitions, timing of anticipated benefits from restructuring actions, outcome of contingencies, such as litigation and environmental matters, expenditures and financial results, and timing of, as well as expected benefits, including synergies, from proposed merger with The Dow Chemical Company and intended post-merger separations, are forward looking statements. 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.  The company undertakes no duty to update any forward-looking statements as a result of future developments or new information.


# # #
1/26/16




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



SCHEDULE A
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2015
 
2014
 
2015
 
2014
Net sales
$
5,299

 
$
5,849

 
$
25,130

 
$
28,406

Cost of goods sold
3,409

 
3,673

 
15,112

 
17,023

Other operating charges (1)
46

 
36

 
459

 
645

Selling, general and administrative expenses (1)
1,075

 
1,058

 
4,615

 
4,891

Research and development expense
483

 
467

 
1,898

 
1,958

Other income, net (1)
(145
)
 
(528
)
 
(697
)
 
(1,277
)
Interest expense (1)
82

 
87

 
342

 
377

Employee separation / asset related charges, net (1)
770

 
232

 
810

 
476

 
 
 
 
 
 
 
 
(Loss) Income from continuing operations before income taxes
(421
)
 
824

 
2,591

 
4,313

(Benefit from) Provision for income taxes on continuing operations (1)
(190
)
 
247

 
696

 
1,168

(Loss) Income from continuing operations after income taxes

(231
)
 
577

 
1,895

 
3,145

(Loss) Income from discontinued operations after income taxes

(25
)
 
106

 
64

 
491

 
 
 
 
 
 
 
 
Net (loss) income
(256
)
 
683

 
1,959

 
3,636

 
 
 
 
 
 
 
 
Less: Net (loss) income attributable to noncontrolling interests
(3
)
 
—

 
6

 
11

 
 
 
 
 
 
 
 
Net (loss) income attributable to DuPont
$
(253
)
 
$
683

 
$
1,953

 
$
3,625

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

$
(0.26
)
 
$
0.63

 
$
2.10

 
$
3.42

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

(0.03
)
 
0.12

 
0.07

 
0.54

Basic (loss) earnings per share of common stock

$
(0.29
)
 
$
0.75

 
$
2.17

 
$
3.95

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

$
(0.26
)
 
$
0.63

 
$
2.09

 
$
3.39

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

(0.03
)
 
0.12

 
0.07

 
0.53

Diluted (loss) earnings per share of common stock (2)

$
(0.29
)
 
$
0.74

 
$
2.16

 
$
3.92

 
 
 
 
 
 
 
 
Dividends per share of common stock
$
0.38

 
$
0.47

 
$
1.72

 
$
1.84

 
 
 
 
 
 
 
 
Average number of shares outstanding used in earnings (loss) per share (EPS) calculation:
 
 
 
 
 
 
 
  Basic
876,500,000

 
906,339,000

 
893,992,000

 
914,752,000

  Diluted
881,727,000

 
913,650,000

 
899,527,000

 
921,873,000

 
 
 
 
 
 
 
 
Reconciliation of Non-GAAP Measures
 
 
 
 
 
 
 
 
 
 
 
Summary of Earnings Comparison
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2015
 
2014
 
% Change
 
2015
 
2014
 
% Change
(Loss) Income from continuing operations after income taxes (GAAP)
$
(231
)
 
$
577

 
(140
)%
 
$
1,895

 
$
3,145

 
(40
)%
Less: Significant items (charge) benefit included in income from continuing operations after income taxes (per Schedule B)
(411
)
 
79

 
 
 
(348
)
 
112

 
 
Non-operating pension/OPEB costs included in income from continuing operations after income taxes (3)
(56
)
 
(21
)
 
 
 
(266
)
 
(87
)
 
 
Net (loss) income attributable to noncontrolling interest from continuing operations
(3
)
 
—

 
 
 
6

 
10

 
 
Operating earnings (Non-GAAP)
$
239

 
$
519

 
(54
)%
 
$
2,503

 
$
3,110

 
(20
)%
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) Earnings per share from continuing operations (GAAP)
$
(0.26
)
 
$
0.63

 
(141
)%
 
$
2.09

 
$
3.39

 
(38
)%
Less: Significant items (charge) benefit included in EPS (per Schedule B)
(0.47
)
 
0.09

 
 
 
(0.39
)
 
0.12

 
 
Non-operating pension/OPEB costs included in EPS (3)
(0.06
)
 
(0.03
)
 
 
 
(0.29
)
 
(0.09
)
 
 
Operating EPS (Non-GAAP)
$
0.27

 
$
0.57

 
(53
)%
 
$
2.77

 
$
3.36

 
(18
)%
 
 
 
 
 
 
 
 
 
 
 
 

9
E.I. du Pont de Nemours and Company
Condensed Consolidated Balance Sheets
(Dollars in millions, except per share amounts)

SCHEDULE A (continued)
 
 
 
 
December 31,
2015
 
December 31,
2014
Assets
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
5,300

 
$
6,910

Marketable securities
 
906

 
124

Accounts and notes receivable, net
 
4,643

 
5,238

Inventories
 
6,140

 
6,787

Prepaid expenses
 
248

 
264

Deferred income taxes
 
518

 
532

Assets of discontinued operations
 
—

 
6,227

Total current assets
 
17,755

 
26,082

Property, plant and equipment, net of accumulated depreciation
   (December 31, 2015 - $14,346; December 31, 2014 - $13,765)
 
9,784

 
10,008

Goodwill
 
4,248

 
4,332

Other intangible assets
 
4,144

 
4,569

Investment in affiliates
 
688

 
762

Deferred income taxes
 
3,431

 
3,734

Other assets
 
1,116

 
1,003

Total
 
$
41,166

 
$
50,490

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Current liabilities
 
 
 
 
Accounts payable
 
$
3,398

 
$
3,786

Short-term borrowings and capital lease obligations
 
1,165

 
1,422

Income taxes
 
210

 
534

Other accrued liabilities
 
5,580

 
5,596

Liabilities of discontinued operations
 
—

 
2,467

Total current liabilities
 
10,353

 
13,805

Long-term borrowings and capital lease obligations
 
7,642

 
9,233

Other liabilities
 
12,591

 
13,615

Deferred income taxes
 
380

 
459

Total liabilities
 
30,966

 
37,112

 
 
 
 
 
Commitments and contingent liabilities
 
 
 
 
 
 
 
 
 
Stockholders' equity
 
 
 
 
Preferred stock
 
237

 
237

Common stock, $0.30 par value; 1,800,000,000 shares authorized;
   Issued at December 31, 2015 - 958,388,000; December 31, 2014 - 992,020,000
 
288

 
298

Additional paid-in capital
 
11,081

 
11,174

Reinvested earnings
 
14,510

 
16,894

Accumulated other comprehensive loss
 
(9,396
)
 
(8,556
)
Common stock held in treasury, at cost (87,041,000 shares at December 31, 2015 and December 31, 2014)
 
(6,727
)
 
(6,727
)
Total DuPont stockholders' equity
 
9,993

 
13,320

Noncontrolling interests
 
207

 
58

Total equity
 
10,200

 
13,378

Total
 
$
41,166

 
$
50,490


10
E.I. du Pont de Nemours and Company
Condensed Consolidated Statement of Cash Flows
(Dollars in millions)


SCHEDULE A (continued)
 
 
Twelve Months Ended
December 31,
 
2015
 
2014
Total Company
 
 
 
Net income
$
1,959

 
$
3,636

Adjustments to reconcile net income to cash used for operating activities:
 
 
 
Depreciation
1,104

 
1,254

Amortization of intangible assets
362

 
363

Net periodic pension benefit cost
591

 
406

Contributions to pension plans
(308
)
 
(311
)
Gain on sale of businesses
(59
)
 
(726
)
Other operating activities - net
253

 
366

Change in operating assets and liabilities - net
(1,586
)
 
(1,276
)
Cash provided by operating activities
2,316

 
3,712

 
 
 
 
Investing activities
 
 
 
Purchases of property, plant and equipment
(1,629
)
 
(2,020
)
Investments in affiliates
(76
)
 
(42
)
Payments for businesses - net of cash acquired
(152
)
 
—

Proceeds from sales of businesses - net
139

 
1,058

Proceeds from sales of assets - net
17

 
34

Net (increase) decrease in short-term financial instruments
(776
)
 
14

Foreign currency exchange contract settlements
615

 
430

Other investing activities - net
34

 
189

Cash used for investing activities
(1,828
)
 
(337
)
 
 
 
 
Financing activities
 
 
 
Dividends paid to stockholders
(1,546
)
 
(1,696
)
Net increase (decrease) in borrowings
2,141

 
(1,701
)
Prepayments / repurchase of common stock
(2,353
)
 
(2,000
)
Proceeds from exercise of stock options
274

 
327

Payment for noncontrolling interests
(1
)
 
—

Cash transferred to Chemours at spin-off
(250
)
 
—

Other financing activities - net
(88
)
 
(4
)
Cash used for financing activities
(1,823
)
 
(5,074
)
 
 
 
 
Effect of exchange rate changes on cash
(275
)
 
(332
)
 
 
 
 
Decrease in cash and cash equivalents
(1,610
)
 
(2,031
)
 
 
 
 
Cash and cash equivalents at beginning of period
6,910

 
8,941

 
 
 
 
Cash and cash equivalents at end of period
$
5,300

 
$
6,910

 
 
 
 
Reconciliation of Non-GAAP Measure
 
 
 
Calculation of Free Cash Flow
 
 
 
 
Twelve Months Ended
December 31,
 
2015
 
2014
Cash provided by operating activities
$
2,316

 
$
3,712

Purchases of property, plant and equipment
(1,629
)
 
(2,020
)
Free cash flow
$
687

 
$
1,692

 
 
 
 
(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 December 31, 2015 includes a $23 after-tax exchange loss on foreign pension balances.

11
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)
 
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
1st Quarter
 
 
 
 
 
 
 
 
 
 
 
Separation transaction costs (1)
$
(12
)
 
$
(3
)
 
$
(11
)
 
$
(2
)
 
$
(0.01
)
 
$
—

Customer claims recovery (4)
35

 
—

 
22

 
—

 
0.02

 
—

Asset impairment charge (5)
(37
)
 
—

 
(30
)
 
—

 
(0.03
)
 
—

Ukraine devaluation (6)
(40
)
 
—

 
(38
)
 
—

 
(0.04
)
 
—

1st Quarter - Total
$
(54
)
 
$
(3
)
 
$
(57
)
 
$
(2
)
 
$
(0.06
)
 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter
 
 
 
 
 
 
 
 
 
 
 
Separation transaction costs (1)
$
(25
)
 
$
(4
)
 
$
(38
)
 
$
(4
)
 
$
(0.04
)
 
$
(0.01
)
Restructuring charges, net (2)
(2
)
 
(244
)
 
(2
)
 
(168
)
 
—

 
(0.18
)
Litigation settlement (3)
112

 
—

 
72

 
—

 
0.08

 
—

Venezuela devaluation(7)
—

 
(58
)
 
—

 
(57
)
 
—

 
(0.06
)
Gain on sale of business (8)
—

 
391

 
—

 
273

 
—

 
0.30

2nd Quarter - Total
$
85

 
$
85

 
$
32

 
$
44

 
$
0.04

 
$
0.05

 
 
 
 
 
 
 
 
 
 
 
 
 
3rd Quarter
 
 
 
 
 
 
 
 
 
 
 
Separation transaction costs (1)
$
(9
)
 
$
(10
)
 
$
(6
)
 
$
(9
)
 
$
(0.01
)
 
$
(0.01
)
Customer claims recovery (4)
147

 
—

 
94

 
—

 
0.11

 
—

3rd Quarter - Total
$
138

 
$
(10
)
 
$
88

 
$
(9
)
 
$
0.10

 
$
(0.01
)
 
 
 
 
 
 
 
 
 
 
 
 
4th Quarter
 
 
 
 
 
 
 
 
 
 
 
Merger related costs(9)
$
(10
)
 
—

 
$
(7
)
 
—

 
$
(0.01
)
 
—

Separation transaction costs (1)
$
—

 
$
(16
)
 
$
—

 
$
(10
)
 
$
—

 
$
(0.01
)
Restructuring charges, net (2)
$
(775
)
 
(297
)
 
$
(508
)
 
(199
)
 
$
(0.58
)
 
(0.21
)
Litigation settlement (3)
$
33

 
—

 
$
21

 
—

 
$
0.02

 
—

Customer claims adjustment/recovery (4)
$
130

 
210

 
$
83

 
134

 
$
0.10

 
0.14

Gain on sale of business (8)
$
—

 
240

 
$
—

 
154

 
$
—

 
0.17

4th Quarter - Total
$
(622
)
 
$
137

 
$
(411
)
 
$
79

 
$
(0.47
)
 
$
0.09

 
 
 
 
 
 
 
 
 
 
 
 
Year-to-date Total(10)
$
(453
)
 
$
209

 
$
(348
)
 
$
112

 
$
(0.39
)
 
$
0.12









12
E.I. du Pont de Nemours and Company
Schedule of Significant Items from Continuing Operations
(Dollars in millions, except per share amounts)



SCHEDULE B (continued)
 
(1)
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.
 
Fourth, third, second and first quarter 2014 included charges of $(16), $(10), $(4) and $(3), respectively, recorded in other operating charges associated with transaction costs related to the separation of the Performance Chemicals segment.

 
 
(2)
Fourth quarter 2015 included a $(798) restructuring charge consisting of $(793) recorded in employee separation/asset related charges, net and $(5) recorded in other income, net associated with structural actions across all businesses and staff functions globally to operate more efficiently by further consolidating businesses and aligning staff functions more closely with them. The charge included $(656) of severance and related benefit costs, $(109) of asset related charges, and $(33) of contract termination costs. Pre-tax charges by segment are: Agriculture - $(161), Electronics & Communications - $(93), Industrial Biosciences - $(51), Nutrition & Health - $(47), Performance Materials - $(61), Safety & Protection - $(53), Other - $(2), and Corporate expenses - $(330).
 

 
Fourth and Second quarter 2015 included a $23 and $(2) restructuring benefit (charge) recorded in employee separation/asset related charges, net, respectively, 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 as follows: Agriculture - $(3), Electronics & Communications - $15, Industrial Biosciences - $(1), Nutrition & Health - $(3), Performance Materials - $(1), Safety & Protection $4, Other - $(1), and Corporate expenses - $11.
 
As a result of the company's plan to reduce residual costs associated with the separation of the Performance Chemicals segment and to improve productivity across all businesses and functions, fourth quarter and second quarter 2014 included $(297) and $(244) restructuring charges, respectively. The charges include $(301) of severance and related benefit costs, $(17) of other non-personnel charges, and $(223) of asset related charges, including $(65) of charges associated with the restructuring actions of a joint venture. The fourth quarter charge consisted of $(232) recorded in employee separation/asset related charges, net, and $(65) recorded in other income, net. The second quarter charge was recored to employee separation/asset related charges, net. Fourth quarter 2014 pre-tax charges by segment were: Agriculture - $(87), Electronics & Communications - $(16), Industrial Biosciences - $(11), Nutrition & Health - $(7), Performance Materials - $(70), Safety & Protection - $(21), Other - $(8), and Corporate expenses - $(77). Second quarter pre-tax charges by segment are: Agriculture - $(47), Electronics & Communications - $(68), Industrial Biosciences - $(2), Nutrition & Health - $(8), Performance Materials - $(29), Safety & Protection - $(31), Other - $(2), and Corporate expenses - $(57).
 
 
(3)
Fourth quarter and second quarter 2015 included gains of $33 and $112, respectively, net of legal expenses, recorded in other income, net related to the company's settlement of a legal claim. This matter relates to the Safety & Protection segment.
 
 
(4)
Fourth quarter 2015 included a benefit of $130 in other operating charges for reduction in accrual for customer claims related to the use of the Agriculture segment’s Imprelis® herbicide. At December 31, 2015, the company had an accrual balance of $41 which represents the company’s best estimate associated with resolving the remaining claims for this matter.
The company recorded net insurance recoveries of $147 and $35 in other operating charges in the third and first quarter 2015, respectively, and $210 in the fourth quarter of 2014 for recovery of costs for customer claims related to the use of the Imprelis® herbicide.


 
 
(5)
During first quarter of 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. One of the primary investors has communicated they would not fund the revised operating plan of the investee. As a result, the carrying value of our 6% equity investment in this venture exceeds its fair value.

 
 
(6)
First quarter 2015 included a charge of $(40) in other 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 2014 included a charge of $(58) recorded in other income, net associated with remeasuring the company's Venezuelan net monetary assets from the official exchange rate to the SICAD II exchange system.
 
 
(8)
Fourth quarter 2014 included a gain of $240 recorded in other income, net associated with the sale of copper fungicides and land management businesses, both within the Agriculture segment. Second quarter 2014 included a gain of $391 recorded in other income, net associated with the sale of Glass Laminating Solutions/Vinyls in the Performance Materials segment.
 
 
(9)
Fourth quarter 2015 included charges of $(10) recorded in selling, general and administrative expenses related to transaction costs associated with the planned merger with the Dow Chemical Company announced on December 11, 2015.
 
 
(10)
Earnings per share for the year may not equal the sum of quarterly earnings per share due to the changes in average share calculations.


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

SCHEDULE C
 
 
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
SEGMENT NET SALES
 
2015
 
2014
 
2015
 
2014
Agriculture
 
$
1,550

 
$
1,732

 
$
9,798

 
$
11,296

Electronics & Communications
 
493

 
571

 
2,070

 
2,381

Industrial Biosciences
 
301

 
319

 
1,171

 
1,244

Nutrition & Health
 
807

 
843

 
3,256

 
3,529

Performance Materials
 
1,284

 
1,441

 
5,305

 
6,059

Safety & Protection
 
864

 
942

 
3,527

 
3,892

Other
 
—

 
1

 
3

 
5

Consolidated net sales
 
$
5,299

 
$
5,849

 
$
25,130

 
$
28,406

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
SEGMENT OPERATING EARNINGS
 
2015
 
2014
 
2015
 
2014
Agriculture
 
$
(54
)
 
$
134

 
$
1,646

 
$
2,352

Electronics & Communications
 
87

 
92

 
359

 
336

Industrial Biosciences
 
55

 
44

 
203

 
192

Nutrition & Health
 
85

 
79

 
373

 
369

Performance Materials
 
281

 
326

 
1,216

 
1,267

Safety & Protection
 
182

 
205

 
704

 
772

Other
 
(83
)
 
(92
)
 
(258
)
 
(256
)
Total segment operating earnings
 
553

 
788

 
4,243

 
5,032

Corporate expenses
 
(160
)
 
(134
)
 
(573
)
 
(677
)
Interest expense
 
(82
)
 
(87
)
 
(322
)
 
(377
)
Operating earnings before income taxes and exchange gains (losses)
 
311

 
567

 
3,348

 
3,978

Net exchange gains (losses) (1)
 
(24
)
 
152

 
93

 
254

Operating earnings before income taxes (Non-GAAP)
 
$
287

 
$
719

 
$
3,441

 
$
4,232

Non-operating pension/OPEB costs
 
(86
)
 
(32
)
 
(397
)
 
(128
)
Total significant items before income taxes
 
(622
)
 
137

 
(453
)
 
209

(Loss) Income from continuing operations before income taxes
 
$
(421
)
 
$
824

 
$
2,591

 
$
4,313

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) (2)
 
2015
 
2014
 
2015
 
2014
Agriculture
 
$
(30
)
 
$
363

 
$
148

 
$
316

Electronics & Communications
 
(89
)
 
(16
)
 
(78
)
 
(84
)
Industrial Biosciences
 
(51
)
 
(11
)
 
(52
)
 
(13
)
Nutrition & Health
 
(46
)
 
(7
)
 
(50
)
 
(15
)
Performance Materials
 
(60
)
 
(70
)
 
(62
)
 
292

Safety & Protection
 
(17
)
 
(21
)
 
96

 
(52
)
Other
 
—

 
(8
)
 
(40
)
 
(10
)
Total significant items by segment
 
(293
)
 
230

 
(38
)
 
434

Corporate expenses
 
(329
)
 
(93
)
 
(355
)
 
(167
)
Interest expense
 
—

 
—

 
(20
)
 
—

Net exchange gains (losses)
 
—

 
—

 
(40
)
 
(58
)
Total significant items before income taxes
 
$
(622
)
 
$
137

 
$
(453
)
 
$
209



14
E.I. du Pont de Nemours and Company
Consolidated Segment Information
(Dollars in millions)


SCHEDULE C (continued)
 
 
 
 
 
 
 
 
 
 
Reconciliation of Segment Operating Earnings excluding the impact of currency (Non-GAAP)
 
 
 
 
Segment operating earnings excluding the impact of currency assumes current operating earnings results using foreign currency exchange rates in effect for the comparable prior-year period.

 
 
 
 
 
 
 
 
Three Months Ended
December 31, 2014

 
Three Months Ended
December 31, 2015

 
 
Segment Operating Earnings
 
Segment Operating Earnings
 
Impact of Currency
 
Segment Operating Earnings Excluding Currency
 
% Change
Agriculture
 
$
134

 
$
(54
)
 
$
(139
)
 
$
85

 
(37
)%
Electronics & Communications
 
92

 
87

 
4

 
83

 
(10
)
Industrial Biosciences
 
44

 
55

 
(2
)
 
57

 
30

Nutrition & Health
 
79

 
85

 
(12
)
 
97

 
23

Performance Materials
 
326

 
281

 
(19
)
 
300

 
(8
)
Safety & Protection
 
205

 
182

 
(2
)
 
184

 
(10
)
Other
 
(92
)
 
(83
)
 
—

 
(83
)
 
10

Total segment operating earnings
 
$
788

 
$
553

 
$
(170
)
 
$
723

 
(8
)%
 
 
 
 
 
 
 
 
 
 
 
(1)  See Schedule D for additional information on exchange gains and losses.  Year to date December 31, 2015 exchange gains, on an operating earnings basis (Non-GAAP), excludes the impact of a $23 exchange loss on non-operating pension.
(2)  See Schedule B for detail of significant items.


15
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
December 31,
 
Twelve Months Ended
December 31,
 
 
 
2015
 
2014
 
2015
 
2014
(Loss) Income from continuing operations before income taxes
 
$
(421
)
 
$
824

 
$
2,591

 
$
4,313

Add: Significant items charge (benefit) before income taxes
 
622

 
(137
)
 
453

 
(209
)
Add: Non-operating pension/OPEB costs (1)
 
86

 
32

 
397

 
128

Operating earnings before income taxes
 
$
287

 
$
719

 
$
3,441

 
$
4,232

Less: Net (loss) income attributable to noncontrolling interests from continuing operations
 
(3
)
 
—

 
6

 
10

Add: Interest expense
 
 
82

 
87

 
322

 
377

Adjusted EBIT from operating earnings
 
372

 
806

 
3,757

 
4,599

Add: Depreciation and amortization
 
303

 
316

 
1,338

 
1,366

Adjusted EBITDA from operating earnings
 
$
675

 
$
1,122

 
$
5,095

 
$
5,965

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Operating Earnings Per Share (EPS) Outlook
 
 
 
 
The reconciliation below represents the company's outlook on an operating earnings basis, defined as income from continuing operations excluding significant items and non-operating pension/OPEB costs. The 2016 Operating EPS excludes merger related costs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
 
 
 
 
 
 
2016 Outlook
 
2015 Actual
Operating EPS (Non-GAAP)
 
 
 
 
 
 
$ 2.95 - 3.10

 
$
2.77

 
 
 
 
 
 
 
 
 
 
Significant items
 
 
 
 
 
 
 
 
 
Separation transaction costs
 
 
 
 


 
—

 
(0.06
)
Merger related costs
 
 
 
 
 
 
—

 
(0.01
)
Gain on sale of business
 
 
 
 
 
 
—

 
—

Restructuring charge, net
 
 
 
 


 
—

 
(0.58
)
Venezuela devaluation
 
 
 
 
 
 
—

 
—

Customer claims recovery
 
 
 
 
 
 
—

 
0.23

Litigation settlement
 
 
 
 
 
 
—

 
0.10

Asset impairment charge
 
 
 
 
 
 
—

 
(0.03
)
Ukraine devaluation
 
 
 
 
 
 
—

 
(0.04
)
 
 
 
 
 
 
 
 
 
 
Non-operating pension/OPEB costs - estimate(2)
 
 
 
 
 
 
(0.15
)
 
(0.29
)
 
 
 
 
 
 
 
 
 
 
EPS from continuing operations (GAAP)
 
 
 
 
 
 
$ 2.80 - 2.95

 
$
2.09

 
 
 
 
 
 
 
 
 
 


16
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 (3)
 
 
 
 
 
 
 
 
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 income, net and the related tax impact is recorded in provision for (benefit from) income taxes on the Consolidated Income Statements.
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
 
2015
 
2014
 
2015
 
2014
Subsidiary Monetary Position Gain (Loss)
 
 
 
 
 
 
 
 
Pre-tax exchange losses
 
$
(23
)
 
$
(168
)
 
$
(320
)
 
$
(353
)
Local tax expenses
 
(44
)
 
(75
)
 
(70
)
 
(208
)
Net after-tax impact from subsidiary exchange losses
 
$
(67
)
 
$
(243
)
 
$
(390
)
 
$
(561
)
 
 
 
 
 
 
 
 
 
Hedging Program Gain (Loss)
 
 
 
 
 
 
 
 
Pre-tax exchange (losses) gains
 
$
(1
)
 
$
320

 
$
413

 
$
607

Tax expenses
 
—

 
(112
)
 
(150
)
 
(212
)
Net after-tax impact from hedging program exchange (losses) gains
 
$
(1
)
 
$
208

 
$
263

 
$
395

 
 
 
 
 
 
 
 
 
Total Exchange Gain (Loss)
 
 
 
 
 
 
 
 
Pre-tax exchange (losses) gains (4)
 
$
(24
)
 
$
152

 
$
93

 
$
254

Tax expenses
 
(44
)
 
(187
)
 
(220
)
 
(420
)
Net after-tax exchange losses
 
$
(68
)
 
$
(35
)
 
$
(127
)
 
$
(166
)
 
 
 
 
 
 
 
 
 
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
December 31,
 
Twelve Months Ended
December 31,
 
 
2015
 
2014
 
2015
 
2014
(Loss) Income from continuing operations before income taxes
 
$
(421
)
 
$
824

 
$
2,591

 
$
4,313

Add: Significant items - charge (benefit) (3)
 
622

 
(137
)
 
453

 
(209
)
           Non-operating pension/OPEB costs (1)
 
86

 
32

 
397

 
128

Less: Net exchange (losses) gains (4)
 
(24
)
 
152

 
93

 
254

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

$
311

 
$
567

 
$
3,348

 
$
3,978

 
 
 
 
 
 
 
 
 
(Benefit) Provision for income taxes on continuing operations
 
$
(190
)
 
$
247

 
$
696

 
$
1,168

Add: Tax benefits (expenses) on significant items
 
211

 
(58
)
 
105

 
(97
)
          Tax benefits on non-operating pension/OPEB costs
 
30

 
11

 
131

 
41

          Tax expenses on exchange gains/losses
 
(44
)
 
(187
)
 
(220
)
 
(420
)
Provision for income taxes on continuing earnings, excluding exchange gains (losses)
$
7

 
$
13

 
$
712

 
$
692

 
 
 
 
 
 
 
 
 
Effective income tax rate
 
45.1
 %
 
30.0
 %
 
26.9
 %
 
27.1
 %
Significant items effect and non-operating pension/OPEB costs effect
 
(27.3
)%
 
(2.2
)%
 
0.2
 %
 
(0.8
)%
Tax rate, from continuing operations before significant items and non-operating pension/OPEB costs
17.8
 %
 
27.8
 %
 
27.1
 %
 
26.3
 %
Exchange gains (losses) effect
 
(15.5
)%
 
(25.5
)%
 
(5.8
)%
 
(8.9
)%
Base income tax rate from continuing operations
 
2.3
 %
 
2.3
 %
 
21.3
 %
 
17.4
 %
 
 
 
 
 
 
 
 
 
(1) Year to date December 31, 2015, non-operating pension/OPEB costs includes a $23 exchange loss on foreign pension balances.

(2)  The 2016 estimate for non-operating pension/OPEB costs does not include expected settlement losses and curtailment gains as a result of actions associated with the 2016 global cost savings and restructuring plan.

(3)  See Schedule B for detail of significant items.

(4) Year to date December 31, 2015 exchange gains, on an operating earnings basis (Non-GAAP), excludes a $23 exchange loss on non-operating pension.