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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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51-0014090
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(State or other Jurisdiction of
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(I.R.S. Employer
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Incorporation or Organization)
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Identification No.)
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Large Accelerated Filer
x
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Accelerated Filer
o
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Non-Accelerated Filer
o
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Smaller reporting company
o
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Emerging growth company
o
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Item 1.
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CONSOLIDATED FINANCIAL STATEMENTS
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|
Three Months Ended
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Six Months Ended
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||||||||||
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June 30,
|
June 30,
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Net sales
|
$
|
7,424
|
|
$
|
7,061
|
|
$
|
15,167
|
|
$
|
14,466
|
|
Cost of goods sold
|
4,192
|
|
3,990
|
|
8,563
|
|
8,232
|
|
||||
Other operating charges
|
176
|
|
143
|
|
380
|
|
328
|
|
||||
Selling, general and administrative expenses
|
1,348
|
|
1,211
|
|
2,608
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|
2,339
|
|
||||
Research and development expense
|
441
|
|
432
|
|
857
|
|
850
|
|
||||
Other (loss) income, net
|
(21
|
)
|
51
|
|
285
|
|
423
|
|
||||
Interest expense
|
99
|
|
93
|
|
183
|
|
185
|
|
||||
Employee separation / asset related charges, net
|
160
|
|
(90
|
)
|
312
|
|
(13
|
)
|
||||
Income from continuing operations before income taxes
|
987
|
|
1,333
|
|
2,549
|
|
2,968
|
|
||||
Provision for income taxes on continuing operations
|
128
|
|
306
|
|
352
|
|
712
|
|
||||
Income from continuing operations after income taxes
|
859
|
|
1,027
|
|
2,197
|
|
2,256
|
|
||||
Income (loss) from discontinued operations after income taxes
|
10
|
|
(3
|
)
|
(207
|
)
|
—
|
|
||||
Net income
|
869
|
|
1,024
|
|
1,990
|
|
2,256
|
|
||||
Less: Net income attributable to noncontrolling interests
|
7
|
|
4
|
|
15
|
|
10
|
|
||||
Net income attributable to DuPont
|
$
|
862
|
|
$
|
1,020
|
|
$
|
1,975
|
|
$
|
2,246
|
|
Basic earnings (loss) per share of common stock:
|
|
|
|
|
||||||||
Basic earnings per share of common stock from continuing operations
|
$
|
0.98
|
|
$
|
1.17
|
|
$
|
2.51
|
|
$
|
2.56
|
|
Basic earnings (loss) per share of common stock from discontinued operations
|
0.01
|
|
—
|
|
(0.24
|
)
|
—
|
|
||||
Basic earnings per share of common stock
|
$
|
0.99
|
|
$
|
1.16
|
|
$
|
2.27
|
|
$
|
2.56
|
|
Diluted earnings (loss) per share of common stock:
|
|
|
|
|
||||||||
Diluted earnings per share of common stock from continuing operations
|
$
|
0.97
|
|
$
|
1.16
|
|
$
|
2.50
|
|
$
|
2.55
|
|
Diluted earnings (loss) per share of common stock from discontinued operations
|
0.01
|
|
—
|
|
(0.24
|
)
|
—
|
|
||||
Diluted earnings per share of common stock
|
$
|
0.99
|
|
$
|
1.16
|
|
$
|
2.26
|
|
$
|
2.55
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|
Dividends per share of common stock
|
$
|
0.38
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|
$
|
0.38
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$
|
0.76
|
|
$
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0.76
|
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||
|
June 30,
|
June 30,
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Net income
|
$
|
869
|
|
$
|
1,024
|
|
$
|
1,990
|
|
$
|
2,256
|
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Other comprehensive income (loss), net of tax:
|
|
|
|
|
||||||||
Cumulative translation adjustment
|
275
|
|
(97
|
)
|
653
|
|
73
|
|
||||
Adjustments to pension benefit plans
|
88
|
|
(636
|
)
|
197
|
|
(1,255
|
)
|
||||
Adjustments to other benefit plans
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3
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|
(104
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)
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7
|
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(219
|
)
|
||||
Net change in unrealized losses on securities
|
—
|
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14
|
|
—
|
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6
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|
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Net gains (losses) on cash flow hedging derivative instruments
|
(8
|
)
|
17
|
|
(11
|
)
|
34
|
|
||||
Total other comprehensive income (loss)
|
358
|
|
(806
|
)
|
846
|
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(1,361
|
)
|
||||
Comprehensive income
|
1,227
|
|
218
|
|
2,836
|
|
895
|
|
||||
Comprehensive income attributable to noncontrolling interests, net of tax
|
7
|
|
4
|
|
15
|
|
10
|
|
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Comprehensive income attributable to DuPont
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$
|
1,220
|
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$
|
214
|
|
$
|
2,821
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$
|
885
|
|
|
June 30,
2017 |
December 31,
2016 |
||||
Assets
|
|
|
|
|
||
Current assets
|
|
|
|
|
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Cash and cash equivalents
|
$
|
3,254
|
|
$
|
4,605
|
|
Marketable securities
|
2,974
|
|
1,362
|
|
||
Accounts and notes receivable, net
|
8,562
|
|
4,971
|
|
||
Inventories
|
4,856
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5,673
|
|
||
Prepaid expenses
|
476
|
|
506
|
|
||
Total current assets
|
20,122
|
|
17,117
|
|
||
Property, plant and equipment, net of accumulated depreciation
(June 30, 2017 - $15,294; December 31, 2016 - $14,736)
|
8,959
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|
9,231
|
|
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Goodwill
|
4,232
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|
4,180
|
|
||
Other intangible assets
|
3,623
|
|
3,664
|
|
||
Investment in affiliates
|
698
|
|
649
|
|
||
Deferred income taxes
|
2,841
|
|
3,308
|
|
||
Other assets
|
2,731
|
|
1,815
|
|
||
Total
|
$
|
43,206
|
|
$
|
39,964
|
|
Liabilities and Equity
|
|
|
|
|
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Current liabilities
|
|
|
|
|
||
Accounts payable
|
$
|
2,756
|
|
$
|
3,705
|
|
Short-term borrowings and capital lease obligations
|
3,473
|
|
429
|
|
||
Income taxes
|
153
|
|
101
|
|
||
Other accrued liabilities
|
4,060
|
|
4,662
|
|
||
Total current liabilities
|
10,442
|
|
8,897
|
|
||
Long-term borrowings and capital lease obligations
|
10,086
|
|
8,107
|
|
||
Other liabilities
|
9,718
|
|
12,333
|
|
||
Deferred income taxes
|
366
|
|
431
|
|
||
Total liabilities
|
30,612
|
|
29,768
|
|
||
Commitments and contingent liabilities
|
|
|
|
|
||
Stockholders’ equity
|
|
|
|
|
||
Preferred stock
|
237
|
|
237
|
|
||
Common stock, $0.30 par value; 1,800,000,000 shares authorized;
Issued at June 30, 2017 - 954,703,000; December 31, 2016 - 950,044,000
|
286
|
|
285
|
|
||
Additional paid-in capital
|
11,424
|
|
11,190
|
|
||
Reinvested earnings
|
16,233
|
|
14,924
|
|
||
Accumulated other comprehensive loss
|
(9,065
|
)
|
(9,911
|
)
|
||
Common stock held in treasury, at cost
(87,041,000 shares at June 30, 2017 and December 31, 2016)
|
(6,727
|
)
|
(6,727
|
)
|
||
Total DuPont stockholders’ equity
|
12,388
|
|
9,998
|
|
||
Noncontrolling interests
|
206
|
|
198
|
|
||
Total equity
|
12,594
|
|
10,196
|
|
||
Total
|
$
|
43,206
|
|
$
|
39,964
|
|
|
Six Months Ended
|
|||||
|
June 30,
|
|||||
|
2017
|
2016
|
||||
Operating activities
|
|
|
||||
Net income
|
$
|
1,990
|
|
$
|
2,256
|
|
Adjustments to reconcile net income to cash used for operating activities:
|
|
|
|
|
||
Depreciation
|
462
|
|
473
|
|
||
Amortization of intangible assets
|
108
|
|
226
|
|
||
Net periodic pension benefit cost
|
219
|
|
320
|
|
||
Contributions to pension plans
|
(2,994
|
)
|
(237
|
)
|
||
Gain on sale of businesses and other assets
|
(202
|
)
|
(385
|
)
|
||
Asset related charges
|
279
|
|
78
|
|
||
Other operating activities - net
|
279
|
|
300
|
|
||
Change in operating assets and liabilities - net
|
(4,196
|
)
|
(4,491
|
)
|
||
Cash used for operating activities
|
(4,055
|
)
|
(1,460
|
)
|
||
Investing activities
|
|
|
|
|
||
Purchases of property, plant and equipment
|
(524
|
)
|
(507
|
)
|
||
Investments in affiliates
|
(22
|
)
|
(2
|
)
|
||
Proceeds from sale of businesses and other assets - net
|
296
|
|
212
|
|
||
Purchases of short-term financial instruments
|
(4,243
|
)
|
(509
|
)
|
||
Proceeds from maturities and sales of short-term financial instruments
|
2,633
|
|
683
|
|
||
Foreign currency exchange contract settlements
|
(29
|
)
|
(280
|
)
|
||
Other investing activities - net
|
(43
|
)
|
(15
|
)
|
||
Cash used for investing activities
|
(1,932
|
)
|
(418
|
)
|
||
Financing activities
|
|
|
|
|
||
Dividends paid to stockholders
|
(664
|
)
|
(669
|
)
|
||
Net increase in short-term (less than 90 days) borrowings
|
3,011
|
|
1,670
|
|
||
Long-term and other borrowings:
|
|
|
||||
Receipts
|
2,234
|
|
717
|
|
||
Payments
|
(204
|
)
|
(755
|
)
|
||
Proceeds from exercise of stock options
|
203
|
|
70
|
|
||
Other financing activities - net
|
(49
|
)
|
(39
|
)
|
||
Cash provided by financing activities
|
4,531
|
|
994
|
|
||
Effect of exchange rate changes on cash
|
105
|
|
(5
|
)
|
||
Decrease in cash and cash equivalents
|
$
|
(1,351
|
)
|
$
|
(889
|
)
|
Cash and cash equivalents at beginning of period
|
4,605
|
|
5,300
|
|
||
Cash and cash equivalents at end of period
|
$
|
3,254
|
|
$
|
4,411
|
|
|
Three Months Ended
June 30, 2017
|
Six Months Ended
June 30, 2017
|
||||
Electronics & Communications
|
$
|
1
|
|
$
|
6
|
|
Industrial Biosciences
|
—
|
|
6
|
|
||
Nutrition & Health
|
—
|
|
2
|
|
||
Performance Materials
|
2
|
|
13
|
|
||
Protection Solutions
|
157
|
|
281
|
|
||
Corporate expenses
|
—
|
|
4
|
|
||
|
$
|
160
|
|
$
|
312
|
|
|
Severance and Related Benefit Costs
|
Asset Related Charges
1
|
Total
|
||||||
Charges to income from continuing operations for the six months ended June 30, 2017
|
$
|
33
|
|
$
|
279
|
|
$
|
312
|
|
Payments
|
(5
|
)
|
—
|
|
(5
|
)
|
|||
Asset write-offs
|
—
|
|
(279
|
)
|
(279
|
)
|
|||
Balance as of June 30, 2017
|
$
|
28
|
|
$
|
—
|
|
$
|
28
|
|
1.
|
Includes
accelerated depreciation related to site closure. Charge for accelerated depreciation represents the difference between the depreciation expense to be recognized over the revised useful life of the site, based upon the anticipated date the site will be closed and depreciation expense as determined utilizing the useful life prior to the restructuring action.
|
|
Severance and Related Benefit Costs
|
Other Non-Personnel Charges
1
|
Total
|
||||||
Balance at December 31, 2016
|
$
|
100
|
|
$
|
22
|
|
$
|
122
|
|
Payments
|
(69
|
)
|
(11
|
)
|
(80
|
)
|
|||
Net translation adjustment
|
2
|
|
—
|
|
2
|
|
|||
Balance as of June 30, 2017
|
$
|
33
|
|
$
|
11
|
|
$
|
44
|
|
1.
|
Other non-personnel charges consist of contractual obligation costs.
|
|
Three Months Ended
June 30, 2016
|
Six Months Ended
June 30, 2016
|
||||
Agriculture
|
$
|
(5
|
)
|
$
|
16
|
|
Electronics & Communications
|
(8
|
)
|
(15
|
)
|
||
Industrial Biosciences
|
(3
|
)
|
(4
|
)
|
||
Nutrition & Health
|
(12
|
)
|
(13
|
)
|
||
Performance Materials
|
(9
|
)
|
(5
|
)
|
||
Protection Solutions
|
(7
|
)
|
(10
|
)
|
||
Other
|
—
|
|
3
|
|
||
Corporate expenses
|
(46
|
)
|
(60
|
)
|
||
|
$
|
(90
|
)
|
$
|
(88
|
)
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||
|
June 30,
|
June 30,
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Royalty income
|
$
|
28
|
|
$
|
24
|
|
$
|
73
|
|
$
|
81
|
|
Interest income
|
33
|
|
27
|
|
58
|
|
43
|
|
||||
Equity in earnings of affiliates, net
|
24
|
|
28
|
|
42
|
|
38
|
|
||||
Net gain on sales of businesses and other assets
1,2
|
10
|
|
11
|
|
202
|
|
384
|
|
||||
Net exchange losses
|
(140
|
)
|
(15
|
)
|
(199
|
)
|
(136
|
)
|
||||
Miscellaneous income and expenses, net
3
|
24
|
|
(24
|
)
|
109
|
|
13
|
|
||||
Other (loss) income, net
|
$
|
(21
|
)
|
$
|
51
|
|
$
|
285
|
|
$
|
423
|
|
1.
|
Includes a pre-tax gain of
$162
(
$86
net of tax) for the six months ended June 30, 2017 related to the sale of the global food safety diagnostic business. See Note 3 for additional information.
|
2.
|
Includes a pre-tax gain of
$369
(
$214
net of tax) for the six months ended June 30, 2016 related to the sale of DuPont (Shenzhen) Manufacturing Limited. See Note 3 for additional information.
|
3.
|
Miscellaneous income and expenses, net, includes interest items, gains (losses) on available for sale securities, gains related to litigation settlements, licensing income, and other items. For the six months ended June 30, 2017, the amount includes a
$47
benefit associated with accrued interest reversals related to a reduction in the company's unrecognized tax benefits due to the closure of various tax statutes of limitations. See Note 6 for additional information.
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||
|
June 30,
|
June 30,
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Subsidiary Monetary Position Gain (Loss)
|
|
|
|
|
||||||||
Pre-tax exchange (losses) gains
|
$
|
(54
|
)
|
$
|
146
|
|
$
|
(28
|
)
|
$
|
179
|
|
Local tax benefits (expenses)
|
94
|
|
(60
|
)
|
130
|
|
(47
|
)
|
||||
Net after-tax impact from subsidiary exchange gains
|
$
|
40
|
|
$
|
86
|
|
$
|
102
|
|
$
|
132
|
|
|
|
|
|
|
||||||||
Hedging Program Gain (Loss)
|
|
|
|
|
||||||||
Pre-tax exchange losses
|
$
|
(86
|
)
|
$
|
(161
|
)
|
$
|
(171
|
)
|
$
|
(315
|
)
|
Tax benefits
|
31
|
|
58
|
|
61
|
|
113
|
|
||||
Net after-tax impact from hedging program exchange losses
|
$
|
(55
|
)
|
$
|
(103
|
)
|
$
|
(110
|
)
|
$
|
(202
|
)
|
|
|
|
|
|
||||||||
Total Exchange Gain (Loss)
|
|
|
|
|
||||||||
Pre-tax exchange losses
|
$
|
(140
|
)
|
$
|
(15
|
)
|
$
|
(199
|
)
|
$
|
(136
|
)
|
Tax benefits (expenses)
|
125
|
|
(2
|
)
|
191
|
|
66
|
|
||||
Net after-tax exchange losses
|
$
|
(15
|
)
|
$
|
(17
|
)
|
$
|
(8
|
)
|
$
|
(70
|
)
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||
|
June 30,
|
June 30,
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Numerator:
|
|
|
|
|
||||||||
Income from continuing operations after income taxes attributable to DuPont
|
$
|
852
|
|
$
|
1,023
|
|
$
|
2,182
|
|
$
|
2,246
|
|
Preferred dividends
|
(3
|
)
|
(3
|
)
|
(5
|
)
|
(5
|
)
|
||||
Income from continuing operations after income taxes available to DuPont common stockholders
|
$
|
849
|
|
$
|
1,020
|
|
$
|
2,177
|
|
$
|
2,241
|
|
|
|
|
|
|
||||||||
Income (loss) from discontinued operations after income taxes available to DuPont common stockholders
|
$
|
10
|
|
$
|
(3
|
)
|
$
|
(207
|
)
|
$
|
—
|
|
|
|
|
|
|
||||||||
Net income available to common stockholders
|
$
|
859
|
|
$
|
1,017
|
|
$
|
1,970
|
|
$
|
2,241
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
||||||||
Weighted-average number of common shares outstanding - Basic
|
868,481,000
|
|
875,013,000
|
|
867,496,000
|
|
874,269,000
|
|
||||
Dilutive effect of the company’s employee compensation plans
|
4,269,000
|
|
4,166,000
|
|
4,424,000
|
|
3,945,000
|
|
||||
Weighted-average number of common shares outstanding - Diluted
|
872,750,000
|
|
879,179,000
|
|
871,920,000
|
|
878,214,000
|
|
|
Three Months Ended
|
Six Months Ended
|
||||||
|
June 30,
|
June 30,
|
||||||
|
2017
|
2016
|
2017
|
2016
|
||||
Average number of stock options
|
—
|
|
4,994,000
|
|
3,000
|
|
5,049,000
|
|
|
June 30,
2017 |
December 31,
2016 |
||||
Finished products
|
$
|
2,880
|
|
$
|
3,113
|
|
Semi-finished products
|
1,424
|
|
2,009
|
|
||
Raw materials, stores and supplies
|
713
|
|
719
|
|
||
|
5,017
|
|
5,841
|
|
||
Adjustment of inventories to a last-in, first-out (LIFO) basis
|
(161
|
)
|
(168
|
)
|
||
Total
|
$
|
4,856
|
|
$
|
5,673
|
|
|
June 30, 2017
|
December 31, 2016
|
||||||||||||||||
|
Gross
|
Accumulated
Amortization
|
Net
|
Gross
|
Accumulated
Amortization
|
Net
|
||||||||||||
Intangible assets subject to amortization (Definite-lived):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Customer lists
|
$
|
1,633
|
|
$
|
(643
|
)
|
$
|
990
|
|
$
|
1,574
|
|
$
|
(586
|
)
|
$
|
988
|
|
Patents
|
458
|
|
(287
|
)
|
171
|
|
446
|
|
(259
|
)
|
187
|
|
||||||
Purchased and licensed technology
|
920
|
|
(589
|
)
|
331
|
|
964
|
|
(579
|
)
|
385
|
|
||||||
Trademarks / trade names
|
54
|
|
(17
|
)
|
37
|
|
53
|
|
(15
|
)
|
38
|
|
||||||
Other
1
|
173
|
|
(89
|
)
|
84
|
|
171
|
|
(82
|
)
|
89
|
|
||||||
|
3,238
|
|
(1,625
|
)
|
1,613
|
|
3,208
|
|
(1,521
|
)
|
1,687
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Intangible assets not subject to amortization (Indefinite-lived):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
In-process research and development
|
74
|
|
—
|
|
74
|
|
73
|
|
—
|
|
73
|
|
||||||
Microbial cell factories
|
306
|
|
—
|
|
306
|
|
306
|
|
—
|
|
306
|
|
||||||
Pioneer germplasm
|
1,057
|
|
—
|
|
1,057
|
|
1,053
|
|
—
|
|
1,053
|
|
||||||
Trademarks / trade names
|
573
|
|
—
|
|
573
|
|
545
|
|
—
|
|
545
|
|
||||||
|
2,010
|
|
—
|
|
2,010
|
|
1,977
|
|
—
|
|
1,977
|
|
||||||
Total
|
$
|
5,248
|
|
$
|
(1,625
|
)
|
$
|
3,623
|
|
$
|
5,185
|
|
$
|
(1,521
|
)
|
$
|
3,664
|
|
1.
|
Primarily consists of sales networks, marketing and manufacturing alliances and non-competition agreements.
|
|
Short-Term
|
Long-Term
|
Total
|
||||||
Obligations for customers and suppliers
1
:
|
|
|
|
|
|
|
|||
Bank borrowings (terms up to 5 years)
|
$
|
112
|
|
$
|
7
|
|
$
|
119
|
|
Obligations for equity affiliates
2
:
|
|
|
|
|
|
|
|||
Bank borrowings (terms up to 1 year)
|
168
|
|
—
|
|
168
|
|
|||
Obligations for Chemours
3
:
|
|
|
|
||||||
Chemours' purchase obligations (final expiration - 2018)
|
11
|
|
—
|
|
11
|
|
|||
Total
|
$
|
291
|
|
$
|
7
|
|
$
|
298
|
|
1.
|
Existing guarantees for customers and suppliers, as part of contractual agreements.
|
2.
|
Existing guarantees for equity affiliates' liquidity needs in normal operations.
|
3.
|
Guarantee for Chemours' raw material purchase obligations under agreement with third party supplier.
|
|
Cumulative Translation Adjustment
1
|
Net Gains (Losses) on Cash Flow Hedging Derivative Instruments
|
Pension Benefit Plans
|
Other Benefit Plans
|
Unrealized Gain (Loss) on Securities
|
Total
|
||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance January 1, 2017
|
$
|
(2,843
|
)
|
$
|
7
|
|
$
|
(6,720
|
)
|
$
|
(357
|
)
|
$
|
2
|
|
$
|
(9,911
|
)
|
Other comprehensive income (loss) before reclassifications
|
653
|
|
2
|
|
(47
|
)
|
—
|
|
1
|
|
609
|
|
||||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
(13
|
)
|
244
|
|
7
|
|
(1
|
)
|
237
|
|
||||||
Net other comprehensive income (loss)
|
653
|
|
(11
|
)
|
197
|
|
7
|
|
—
|
|
846
|
|
||||||
Balance June 30, 2017
|
$
|
(2,190
|
)
|
$
|
(4
|
)
|
$
|
(6,523
|
)
|
$
|
(350
|
)
|
$
|
2
|
|
$
|
(9,065
|
)
|
1.
|
The cumulative translation adjustment gain for the six months ended June 30, 2017 is primarily driven by the weakening of the U.S. dollar (USD) against the European Euro (EUR).
|
|
Cumulative Translation Adjustment
1
|
Net Gains (Losses) on Cash Flow Hedging Derivative Instruments
|
Pension Benefit Plans
2
|
Other Benefit Plans
|
Unrealized Gain (Loss) on Securities
|
Total
|
||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance January 1, 2016
|
$
|
(2,333
|
)
|
$
|
(24
|
)
|
$
|
(7,043
|
)
|
$
|
22
|
|
$
|
(18
|
)
|
$
|
(9,396
|
)
|
Other comprehensive income (loss) before reclassifications
|
73
|
|
23
|
|
(1,564
|
)
|
(170
|
)
|
(7
|
)
|
(1,645
|
)
|
||||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
11
|
|
309
|
|
(49
|
)
|
13
|
|
284
|
|
||||||
Net other comprehensive income (loss)
|
73
|
|
34
|
|
(1,255
|
)
|
(219
|
)
|
6
|
|
(1,361
|
)
|
||||||
Balance June 30, 2016
|
$
|
(2,260
|
)
|
$
|
10
|
|
$
|
(8,298
|
)
|
$
|
(197
|
)
|
$
|
(12
|
)
|
$
|
(10,757
|
)
|
1.
|
The cumulative translation adjustment gain for the six months ended June 30, 2016 is primarily driven by a modest weakening of the USD against the EUR and the Brazilian real (BRL).
|
2.
|
The Pension Benefit Plans loss recognized in other comprehensive (loss) income during the six months ended June 30, 2016 includes the impact of the re-measurement of the principal U.S. pension plan as of June 30, 2016. See Note 14 for additional information.
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||
|
June 30,
|
June 30,
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Net gains (losses) on cash flow hedging derivative instruments
|
$
|
5
|
|
$
|
(11
|
)
|
$
|
6
|
|
$
|
(21
|
)
|
Pension benefit plans, net
|
(54
|
)
|
357
|
|
(114
|
)
|
708
|
|
||||
Other benefit plans, net
|
(2
|
)
|
58
|
|
(4
|
)
|
119
|
|
||||
Tax (expense) benefit from income taxes related to other comprehensive income (loss) items
|
$
|
(51
|
)
|
$
|
404
|
|
$
|
(112
|
)
|
$
|
806
|
|
|
Three Months Ended
|
Six Months Ended
|
Consolidated Statements of Income Classification
|
||||||||||
|
June 30,
|
June 30,
|
|||||||||||
|
2017
|
2016
|
2017
|
2016
|
|||||||||
Net gains (losses) on cash flow hedging derivative instruments, before tax:
|
$
|
(13
|
)
|
$
|
7
|
|
$
|
(21
|
)
|
$
|
18
|
|
See (1) below
|
Tax expense (benefit)
|
5
|
|
(3
|
)
|
8
|
|
(7
|
)
|
See (2) below
|
||||
After-tax
|
$
|
(8
|
)
|
$
|
4
|
|
$
|
(13
|
)
|
$
|
11
|
|
|
Amortization of pension benefit plans:
|
|
|
|
|
|
||||||||
Prior service benefit
|
(1
|
)
|
(1
|
)
|
(2
|
)
|
(3
|
)
|
See (3) below
|
||||
Actuarial losses
|
189
|
|
204
|
|
379
|
|
376
|
|
See (3) below
|
||||
Curtailment loss
|
—
|
|
17
|
|
—
|
|
66
|
|
See (3) below
|
||||
Settlement loss
|
—
|
|
37
|
|
—
|
|
38
|
|
See (3) below
|
||||
Total before tax
|
$
|
188
|
|
$
|
257
|
|
$
|
377
|
|
$
|
477
|
|
|
Tax benefit
|
(68
|
)
|
(91
|
)
|
(133
|
)
|
(168
|
)
|
See (2) below
|
||||
After-tax
|
$
|
120
|
|
$
|
166
|
|
$
|
244
|
|
$
|
309
|
|
|
Amortization of other benefit plans:
|
|
|
|
|
|
||||||||
Prior service benefit
|
(18
|
)
|
(36
|
)
|
(35
|
)
|
(75
|
)
|
See (3) below
|
||||
Actuarial losses
|
23
|
|
18
|
|
46
|
|
35
|
|
See (3) below
|
||||
Curtailment gain
|
—
|
|
(3
|
)
|
—
|
|
(33
|
)
|
See (3) below
|
||||
Total before tax
|
$
|
5
|
|
$
|
(21
|
)
|
$
|
11
|
|
$
|
(73
|
)
|
|
Tax (benefit) expense
|
(2
|
)
|
8
|
|
(4
|
)
|
24
|
|
See (2) below
|
||||
After-tax
|
$
|
3
|
|
$
|
(13
|
)
|
$
|
7
|
|
$
|
(49
|
)
|
|
Net realized gains (losses) on investments, before tax:
|
—
|
|
12
|
|
(1
|
)
|
13
|
|
See (4) below
|
||||
Tax expense
|
—
|
|
—
|
|
—
|
|
—
|
|
See (2) below
|
||||
After-tax
|
$
|
—
|
|
$
|
12
|
|
$
|
(1
|
)
|
$
|
13
|
|
|
Total reclassifications for the period, after-tax
|
$
|
115
|
|
$
|
169
|
|
$
|
237
|
|
$
|
284
|
|
|
1.
|
Cost of goods sold.
|
2.
|
Provision for income taxes from continuing operations.
|
3.
|
These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost of the company's pension and other benefit plans. See Note 14 for additional information.
|
4.
|
Other (loss) income, net.
|
|
June 30, 2017
|
December 31, 2016
|
||||||||||||||||
|
Cash and Cash Equivalents
|
Marketable Securities
|
Total Estimated Fair Value
|
Cash and Cash Equivalents
|
Marketable Securities
|
Total Estimated Fair Value
|
||||||||||||
Cash
|
$
|
1,507
|
|
$
|
—
|
|
$
|
1,507
|
|
$
|
1,892
|
|
$
|
—
|
|
$
|
1,892
|
|
|
|
|
|
|
|
|
||||||||||||
Level 2:
|
|
|
|
|
|
|
||||||||||||
Certificate of deposit / time deposits
1
|
1,747
|
|
2,974
|
|
4,721
|
|
2,713
|
|
1,362
|
|
4,075
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total cash, cash equivalents and marketable securities
|
$
|
3,254
|
|
$
|
2,974
|
|
|
$
|
4,605
|
|
$
|
1,362
|
|
|
1.
|
Represents held-to-maturity investments reported at amortized cost.
|
|
June 30, 2017
|
December 31, 2016
|
||||
Derivatives designated as hedging instruments:
|
|
|
||||
Commodity contracts
|
$
|
173
|
|
$
|
422
|
|
Derivatives not designated as hedging instruments:
|
|
|
||||
Foreign currency contracts
|
9,782
|
|
9,896
|
|
||
Commodity contracts
|
6
|
|
7
|
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||
|
June 30,
|
June 30,
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Beginning balance
|
$
|
4
|
|
$
|
(7
|
)
|
$
|
7
|
|
$
|
(24
|
)
|
Additions and revaluations of derivatives designated as cash flow hedges
|
—
|
|
13
|
|
2
|
|
23
|
|
||||
Clearance of hedge results to earnings
|
(8
|
)
|
4
|
|
(13
|
)
|
11
|
|
||||
Ending balance
|
$
|
(4
|
)
|
$
|
10
|
|
$
|
(4
|
)
|
$
|
10
|
|
|
|
Fair Value Using Level 2 Inputs
|
|||||
|
Balance Sheet Location
|
June 30, 2017
|
December 31, 2016
|
||||
Asset derivatives:
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|||
Foreign currency contracts
1
|
Accounts and notes receivable, net
|
$
|
44
|
|
$
|
182
|
|
Commodity contracts
|
Accounts and notes receivable, net
|
3
|
|
—
|
|
||
Total asset derivatives
2
|
|
$
|
47
|
|
$
|
182
|
|
Cash collateral
1
|
Other accrued liabilities
|
$
|
—
|
|
$
|
52
|
|
|
|
|
|
||||
Liability derivatives:
|
|
|
|
|
|||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||
Foreign currency contracts
|
Other accrued liabilities
|
$
|
125
|
|
$
|
121
|
|
Total liability derivatives
2
|
|
$
|
125
|
|
$
|
121
|
|
1.
|
Cash collateral held as of December 31, 2016 is related to foreign currency derivatives not designated as hedging instruments.
|
2.
|
The company's derivative assets and liabilities subject to enforceable master netting arrangements totaled
$39
at
June 30, 2017
and
$114
at
December 31, 2016
.
|
|
Amount of Gain (Loss)
Recognized in OCI
1
(Effective Portion)
|
Amount of Gain (Loss)
Recognized in Income
2
|
|
||||||||||
Three Months Ended June 30,
|
2017
|
2016
|
2017
|
2016
|
Income Statement Classification
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||||||
Cash flow hedges:
|
|
|
|
|
|
||||||||
Commodity contracts
|
$
|
—
|
|
$
|
21
|
|
$
|
13
|
|
$
|
(7
|
)
|
Cost of goods sold
|
|
—
|
|
21
|
|
13
|
|
(7
|
)
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
—
|
|
—
|
|
(86
|
)
|
(161
|
)
|
Other (loss) income, net
3
|
||||
Foreign currency contracts
|
—
|
|
—
|
|
(1
|
)
|
(11
|
)
|
Net sales
|
||||
Commodity contracts
|
—
|
|
—
|
|
—
|
|
(10
|
)
|
Cost of goods sold
|
||||
|
—
|
|
—
|
|
(87
|
)
|
(182
|
)
|
|
||||
Total derivatives
|
$
|
—
|
|
$
|
21
|
|
$
|
(74
|
)
|
$
|
(189
|
)
|
|
|
Amount of Gain (Loss)
Recognized in OCI 1 (Effective Portion) |
Amount of Gain (Loss)
Recognized in Income 2 |
|
||||||||||
Six Months Ended June 30,
|
2017
|
2016
|
2017
|
2016
|
Income Statement Classification
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||||||
Cash flow hedges:
|
|
|
|
|
|
||||||||
Commodity contracts
|
$
|
4
|
|
$
|
37
|
|
$
|
21
|
|
$
|
(18
|
)
|
Cost of goods sold
|
|
4
|
|
37
|
|
21
|
|
(18
|
)
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
—
|
|
—
|
|
(171
|
)
|
(315
|
)
|
Other (loss) income, net
3
|
||||
Foreign currency contracts
|
—
|
|
—
|
|
(1
|
)
|
(15
|
)
|
Net sales
|
||||
Commodity contracts
|
—
|
|
—
|
|
4
|
|
(10
|
)
|
Cost of goods sold
|
||||
|
—
|
|
—
|
|
(168
|
)
|
(340
|
)
|
|
||||
Total derivatives
|
$
|
4
|
|
$
|
37
|
|
$
|
(147
|
)
|
$
|
(358
|
)
|
|
1.
|
OCI is defined as other comprehensive income (loss).
|
2.
|
For cash flow hedges, this represents the effective portion of the gain (loss) reclassified from accumulated OCI into income during the period. For the
three and six months ended
months ended
June 30, 2017
and
2016
, there was no material ineffectiveness with regard to the company's cash flow hedges.
|
3.
|
Gain (loss) recognized in other (loss) income, net, was partially offset by the related gain (loss) on the foreign currency-denominated monetary assets and liabilities of the company's operations, see Note 5 for additional information.
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||
|
June 30,
|
June 30,
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Service cost
|
$
|
34
|
|
$
|
42
|
|
$
|
67
|
|
$
|
89
|
|
Interest cost
|
197
|
|
206
|
|
392
|
|
423
|
|
||||
Expected return on plan assets
|
(309
|
)
|
(331
|
)
|
(617
|
)
|
(669
|
)
|
||||
Amortization of loss
|
189
|
|
204
|
|
379
|
|
376
|
|
||||
Amortization of prior service benefit
|
(1
|
)
|
(1
|
)
|
(2
|
)
|
(3
|
)
|
||||
Curtailment loss
|
—
|
|
17
|
|
—
|
|
66
|
|
||||
Settlement loss
|
—
|
|
37
|
|
—
|
|
38
|
|
||||
Net periodic benefit cost - Total
|
$
|
110
|
|
$
|
174
|
|
$
|
219
|
|
$
|
320
|
|
Less: Discontinued operations
|
—
|
|
—
|
|
—
|
|
(4
|
)
|
||||
Net periodic benefit cost - Continuing operations
|
$
|
110
|
|
$
|
174
|
|
$
|
219
|
|
$
|
324
|
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||
|
June 30,
|
June 30,
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Service cost
|
$
|
2
|
|
$
|
4
|
|
$
|
4
|
|
$
|
7
|
|
Interest cost
|
23
|
|
21
|
|
45
|
|
44
|
|
||||
Amortization of loss
|
23
|
|
18
|
|
46
|
|
35
|
|
||||
Amortization of prior service benefit
|
(18
|
)
|
(36
|
)
|
(35
|
)
|
(75
|
)
|
||||
Curtailment gain
|
—
|
|
(3
|
)
|
—
|
|
(33
|
)
|
||||
Net periodic benefit cost (credit)
- Total
|
$
|
30
|
|
$
|
4
|
|
$
|
60
|
|
$
|
(22
|
)
|
Three Months
Ended June 30,
|
Agriculture
1
|
Electronics &
Communications
|
Industrial Biosciences
|
Nutrition & Health
|
Performance
Materials
|
Protection Solutions
|
Other
|
Total
|
||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
3,446
|
|
$
|
546
|
|
$
|
395
|
|
$
|
818
|
|
$
|
1,381
|
|
$
|
801
|
|
$
|
37
|
|
$
|
7,424
|
|
Operating earnings
|
963
|
|
116
|
|
76
|
|
135
|
|
329
|
|
191
|
|
(53
|
)
|
1,757
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
3,218
|
|
$
|
494
|
|
$
|
355
|
|
$
|
835
|
|
$
|
1,335
|
|
$
|
786
|
|
$
|
38
|
|
$
|
7,061
|
|
Operating earnings
|
865
|
|
93
|
|
62
|
|
130
|
|
325
|
|
188
|
|
(50
|
)
|
1,613
|
|
Six Months
Ended June 30,
|
Agriculture
1
|
Electronics &
Communications
|
Industrial Biosciences
|
Nutrition & Health
|
Performance
Materials
|
Protection Solutions
|
Other
|
Total
|
||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
7,374
|
|
$
|
1,056
|
|
$
|
763
|
|
$
|
1,607
|
|
$
|
2,749
|
|
$
|
1,548
|
|
$
|
70
|
|
$
|
15,167
|
|
Operating earnings
|
2,199
|
|
205
|
|
151
|
|
256
|
|
684
|
|
368
|
|
(115
|
)
|
3,748
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
7,004
|
|
$
|
946
|
|
$
|
707
|
|
$
|
1,636
|
|
$
|
2,584
|
|
$
|
1,515
|
|
$
|
74
|
|
$
|
14,466
|
|
Operating earnings
|
1,966
|
|
152
|
|
125
|
|
234
|
|
598
|
|
364
|
|
(109
|
)
|
3,330
|
|
1.
|
As of
June 30, 2017
, Agriculture net assets were
$10,181
, an increase of
$3,839
from
$6,342
at
December 31, 2016
. The increase was primarily due to higher trade receivables related to normal seasonality in the sales and cash collections cycle.
|
|
Three Months Ended
June 30, |
Six Months Ended
June 30,
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Total segment operating earnings
|
$
|
1,757
|
|
$
|
1,613
|
|
$
|
3,748
|
|
$
|
3,330
|
|
Significant pre-tax (charges) benefits not included in segment operating earnings
|
(160
|
)
|
74
|
|
(146
|
)
|
6
|
|
||||
Non-operating pension and other post employment benefit costs
|
(104
|
)
|
(133
|
)
|
(208
|
)
|
(207
|
)
|
||||
Exchange losses
|
(140
|
)
|
(15
|
)
|
(199
|
)
|
(136
|
)
|
||||
Corporate (expenses) income
1,2,3,4,5
|
(267
|
)
|
(113
|
)
|
(463
|
)
|
160
|
|
||||
Interest expense
|
(99
|
)
|
(93
|
)
|
(183
|
)
|
(185
|
)
|
||||
Income from continuing operations before income taxes
|
$
|
987
|
|
$
|
1,333
|
|
$
|
2,549
|
|
$
|
2,968
|
|
1.
|
Includes transaction costs associated with the planned merger with Dow and related activities of
$(216)
and
$(386)
in the three and six months ended June 30, 2017, respectively, and
$(76)
and
$(100)
in the three and six months ended June 30, 2016, respectively, which were recorded in selling, general and administrative expenses in the company's interim Consolidated Income Statements. See Note 2 for additional information.
|
2.
|
Includes a
$(4)
charge recorded in employee separation / asset related charges, net in the company's interim Consolidated Income Statement for the six months ended June 30, 2017, respectively, associated with the 2017 restructuring program. See Note 4 for additional information.
|
3.
|
Includes a
$47
benefit on accrued interest reversals recorded in other (loss) income, net, in the company's interim Consolidated Income Statement for the six months ended June 30, 2017, respectively, related to a reduction in the company’s unrecognized tax benefits due to the closure of various tax statutes of limitations. See Note 6 for additional information.
|
4.
|
Includes a gain of
$369
associated with the sale of DuPont (Shenzhen) Manufacturing Limited entity, which held certain buildings and other assets. The gain was recorded in other (loss) income, net, in the company's interim Consolidated Income Statement for the six months ended June 30, 2016. See Note 3 for additional information.
|
5.
|
Includes a
$46
and
$60
net benefit recorded in employee separation / asset related charges, net in the company's interim Consolidated Income Statements for the three and six months ended June 30, 2016, respectively, associated with the 2016 global cost savings and restructuring plan. See Note 4 for additional information.
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||
Agriculture
1,4,5
|
$
|
—
|
|
$
|
35
|
|
$
|
—
|
|
$
|
(38
|
)
|
Electronics & Communications
2,4
|
(1
|
)
|
8
|
|
(6
|
)
|
15
|
|
||||
Industrial Biosciences
2,4
|
—
|
|
3
|
|
(6
|
)
|
4
|
|
||||
Nutrition & Health
2,3,4
|
—
|
|
12
|
|
160
|
|
13
|
|
||||
Performance Materials
2,4
|
(2
|
)
|
9
|
|
(13
|
)
|
5
|
|
||||
Protection Solutions
2,4
|
(157
|
)
|
7
|
|
(281
|
)
|
10
|
|
||||
Other
4
|
—
|
|
—
|
|
—
|
|
(3
|
)
|
||||
|
$
|
(160
|
)
|
$
|
74
|
|
$
|
(146
|
)
|
$
|
6
|
|
1.
|
Includes
$30
of net insurance recoveries recorded in other operating charges in the company's interim Consolidated Income Statements for the three and six months ended June 30, 2016 for recovery of costs for customer claims related to the use of Imprelis
®
herbicide. Includes
$23
for reduction in accrual recorded in other operating charges in the company's interim Consolidated Income Statement for the six months ended June 30, 2016 for customer claims related to the use of the Imprelis
®
herbicide.
|
2.
|
Includes a
$(160)
and
$(308)
restructuring charge in employee separation / asset related charges, net in the company's interim Consolidated Income Statements for the three and six months ended June 30, 2017, respectively, associated with the 2017 restructuring program. See Note 4 for additional information.
|
3.
|
Includes a
$162
gain recorded in other (loss) income, net, in the company's interim Consolidated Income Statement for the six months ended June 30, 2017, associated with the sale of the company's global food safety diagnostic business. See Note 3 for additional information.
|
4.
|
Includes a
$44
and
$28
net restructuring benefit in employee separation / asset related charges, net in the company's interim Consolidated Income Statements for the three and six months ended June 30, 2016, respectively, associated with the 2016 global cost savings and restructuring program. See Note 4 for additional information.
|
5.
|
Includes a
$(75)
restructuring charge recorded in employee separation / asset related charges, net in the company's interim Consolidated Income Statement for the six months ended June 30, 2016, related to the decision not to re-start the insecticide manufacturing facility at the La Porte site located in La Porte, Texas. See Note 4 for additional information.
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Risks related to the DowDuPont Merger, the Intended Business Separations and the FMC Transactions including, but not limited to, (i) the completion of the Merger Transaction and the FMC Transactions 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 or the Acquired H&N Business and other conditions to the completion of the Merger Transaction and the FMC Transactions, (ii) the possibility that the Merger Transaction and the FMC Transactions may not close, including because the various approvals, authorizations and declarations of non-objections from certain regulatory and governmental authorities with respect to either the Merger Transaction, including receipt of approvals by certain regulators of the respective purchasers in relation to the FMC Transactions, EAA Transaction, defined below, and the Brazil Seeds Transaction, defined below, or the FMC Transactions may not be obtained, on a timely basis or otherwise, including that these regulatory or governmental authorities may not approve of FMC as an acceptable purchaser of the Divested Ag Business in connection with the FMC Transactions or may impose conditions on the granting of the various approvals, authorizations and declarations of non-objections, including requiring the respective Dow, DuPont and FMC businesses, including the Acquired H&N Business (in the case of DuPont) and the Divested Ag Business (in the case of FMC), to divest certain assets if necessary to obtain certain regulatory approvals or otherwise limiting the ability of the combined company to integrate parts of the Dow and DuPont businesses and/or the DuPont and Health and Nutrition businesses, (iii) the ability of DuPont to integrate the Acquired H&N Business successfully and to achieve anticipated synergies, (iv) potential litigation or regulatory actions relating to the Merger Transaction or the FMC Transactions that could be instituted against DuPont or its directors, (v) the risk that disruptions from the Merger Transaction or the FMC Transactions will harm DuPont’s business, including current plans and operations, (vi) the ability of 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 Transaction or the FMC Transactions, (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 Transaction or the FMC Transactions that could affect DuPont’s financial performance, (xii) certain restrictions during the pendency of the Merger Transaction or the FMC Transactions that may impact 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 Merger Transaction
|
•
|
Volatility in energy and raw material prices;
|
•
|
Failure to develop and market new products and optimally manage product life cycles;
|
•
|
Outcome of significant litigation and environmental matters, including those related to divested businesses, including realization of associated indemnification assets, if any;
|
•
|
Failure to appropriately manage process safety and product stewardship issues;
|
•
|
Ability to obtain and maintain regulatory approval for its products especially in the Agriculture segment;
|
•
|
Failure to realize all of the expected benefits from cost and productivity initiatives to the extent and as anticipated;
|
•
|
Effect of changes in tax, environmental and other laws and regulations or political conditions in the United States of America (U.S.) and other countries in which the company operates;
|
•
|
Conditions in the global economy and global capital markets, including economic factors such as inflation, deflation, fluctuation in currency rates, interest rates and commodity prices;
|
•
|
Failure to appropriately respond to market acceptance, government rules, regulations and policies affecting products based on biotechnology;
|
•
|
Impact of business disruptions, including supply disruptions, and security threats, regardless of cause, including acts of sabotage, cyber-attacks, terrorism or war, natural disasters and weather events and patterns which could affect demand as well as availability of product, particularly in the Agriculture segment;
|
•
|
Ability to discover, develop and protect new technologies and enforce the company's intellectual property rights; and
|
•
|
Successful integration of acquired businesses and separation of underperforming or non-strategic assets or businesses.
|
•
|
Net sales were $7.4 billion, 5 percent above the same period last year, reflecting a 6 percent volume increase partially offset by a 1 percent decline in local price. Volume grew in all reportable segments, led by Agriculture, Electronics & Communications, and Protection Solutions.
|
•
|
Segment operating earnings increased in all reportable segments driven by higher volumes. Segment operating margins expanded in most reportable segments.
|
•
|
Second quarter results include pre-tax charges of $376 million, comprised of $216 million of costs in connection with the planned merger with Dow and related activities, and $160 million of restructuring charges.
|
•
|
Income from continuing operations after taxes was $0.9 billion versus $1.0 billion for the same period in the prior year.
|
•
|
Net sales were $15.2 billion, 5 percent above the same period last year due to volume growth. Volume grew in most reportable segments led by Agriculture, Performance Materials, and Electronics & Communications.
|
•
|
Segment operating earnings increased in all reportable segments driven by higher volumes.
|
•
|
Agriculture sales increased 5 percent on a 5 percent benefit from volume and a 1 percent benefit from local price, partially offset by a 1 percent negative impact from portfolio. Agriculture operating earnings increased 12 percent on growth in volume and local price.
|
•
|
Year-to-date results include pre-tax charges of $698 million, comprised of $386 million of costs in connection with the planned merger with Dow and related activities and $312 million of restructuring charges, partially offset by a $162 million pre-tax gain from the sale of the global food safety diagnostics business. Year-to-date results in the prior year included a pre-tax gain of $369 million from the sale of the DuPont (Shenzhen) Manufacturing Limited entity partially offset by $100 million in pre-tax costs in connection with the planned merger with Dow and related activities.
|
•
|
Income from continuing operations after taxes was $2.2 billion versus $2.3 billion for the same period in the prior year.
|
|
Three Months Ended June 30, 2017
|
Percent Change Due to:
|
||||||||||
|
Net Sales
($ Billions)
|
Percent
Change vs.
2016
|
Local
Price and Product Mix
|
Currency
|
Volume
|
Portfolio and Other
|
||||||
Worldwide
|
$
|
7.4
|
|
5
|
|
(1
|
)
|
—
|
|
6
|
|
—
|
U.S. & Canada
|
3.8
|
|
6
|
|
—
|
|
—
|
|
6
|
|
—
|
|
Europe, Middle East & Africa (EMEA)
|
1.4
|
|
1
|
|
—
|
|
(2
|
)
|
3
|
|
—
|
|
Asia Pacific
|
1.7
|
|
10
|
|
(1
|
)
|
—
|
|
11
|
|
—
|
|
Latin America
|
0.5
|
|
(3
|
)
|
(4
|
)
|
2
|
|
(1
|
)
|
—
|
|
Six Months Ended June 30, 2017
|
Percent Change Due to:
|
||||||||||
|
Net Sales
($ Billions)
|
Percent
Change vs.
2016
|
Local
Price and Product Mix
|
Currency
|
Volume
|
Portfolio and Other
|
||||||
Worldwide
|
$
|
15.2
|
|
5
|
—
|
|
—
|
|
5
|
|
—
|
|
U.S. & Canada
|
7.4
|
|
3
|
—
|
|
—
|
|
3
|
|
—
|
|
|
Europe, Middle East & Africa (EMEA)
|
3.5
|
|
3
|
1
|
|
(3
|
)
|
6
|
|
(1
|
)
|
|
Asia Pacific
|
3.2
|
|
11
|
(1
|
)
|
—
|
|
13
|
|
(1
|
)
|
|
Latin America
|
1.1
|
|
6
|
1
|
|
7
|
|
(2
|
)
|
—
|
|
|
Three Months Ended
|
|
|
|
|
|||||||
|
June 30, 2017
|
Percentage Change Due to:
|
||||||||||
|
Segment
Net Sales
($ Billions)
|
Percent
Change vs.
2016
|
Local Price and Product Mix
|
Currency
|
Volume
|
Portfolio
and Other
|
||||||
Agriculture
|
$
|
3.4
|
|
7
|
|
(1
|
)
|
—
|
|
8
|
—
|
|
Electronics & Communications
|
0.5
|
|
11
|
|
(1
|
)
|
(1
|
)
|
13
|
—
|
|
|
Industrial Biosciences
|
0.4
|
|
11
|
|
3
|
|
(1
|
)
|
9
|
—
|
|
|
Nutrition & Health
|
0.8
|
|
(2
|
)
|
(1
|
)
|
(1
|
)
|
1
|
(1
|
)
|
|
Performance Materials
|
1.4
|
|
3
|
|
2
|
|
(1
|
)
|
2
|
—
|
|
|
Protection Solutions
|
0.8
|
|
2
|
|
(2
|
)
|
(1
|
)
|
5
|
—
|
|
|
Six Months Ended
|
|
|
|
|
|||||||
|
June 30, 2017
|
Percentage Change Due to:
|
||||||||||
|
Segment
Net Sales
($ Billions)
|
Percent
Change vs.
2016
|
Local Price and Product Mix
|
Currency
|
Volume
|
Portfolio
and Other
|
||||||
Agriculture
|
$
|
7.4
|
|
5
|
|
1
|
|
—
|
|
5
|
(1
|
)
|
Electronics & Communications
|
1.1
|
|
12
|
|
(1
|
)
|
(1
|
)
|
14
|
—
|
|
|
Industrial Biosciences
|
0.8
|
|
8
|
|
2
|
|
(1
|
)
|
7
|
—
|
|
|
Nutrition & Health
|
1.6
|
|
(2
|
)
|
—
|
|
(1
|
)
|
—
|
(1
|
)
|
|
Performance Materials
|
2.7
|
|
6
|
|
1
|
|
(1
|
)
|
6
|
—
|
|
|
Protection Solutions
|
1.5
|
|
2
|
|
(2
|
)
|
(1
|
)
|
5
|
—
|
|
(Dollars in millions)
|
June 30, 2017
|
December 31, 2016
|
||||
Cash, cash equivalents and marketable securities
|
$
|
6,228
|
|
$
|
5,967
|
|
Total debt
|
13,559
|
|
8,536
|
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 1.
|
LEGAL PROCEEDINGS
|
Item 6.
|
EXHIBITS
|
|
E. I. DU PONT DE NEMOURS AND COMPANY
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
|
July 25, 2017
|
|
|
|
|
|
|
|
By:
|
/s/ Nicholas C. Fanandakis
|
|
|
|
|
|
Nicholas C. Fanandakis
|
|
|
Executive Vice President and
|
|
|
Chief Financial Officer
|
|
|
(As Duly Authorized Officer and
|
|
|
Principal Financial and Accounting Officer)
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
Company’s Restated Certificate of Incorporation (incorporated by reference to Exhibit 99.2 to the company’s Current Report on Form 8-K (Commission file number 1-815) dated June 1, 2015).
|
|
|
|
3.2
|
|
Company’s Bylaws, as last amended effective October 22, 2015 (incorporated by reference to Exhibit 3.2 to the company's Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended September 30, 2015).
|
|
|
|
4
|
|
The company agrees to provide the Commission, on request, copies of instruments defining the rights of holders of long-term debt of the company and its subsidiaries.
|
|
|
|
10.1*
|
|
The DuPont Stock Accumulation and Deferred Compensation Plan for Directors, as last amended effective January 1, 2009 (incorporated by reference to Exhibit 10.1 to the company's Annual Report on Form 10-K (Commission file number 1-815) for the year ended December 31, 2013).
|
|
|
|
10.2*
|
|
Company’s Supplemental Retirement Income Plan, as last amended effective December 18, 1996 (incorporated by reference to Exhibit 10.2 to the company’s Annual Report on Form 10-K (Commission file number 1-815) for the year ended December 31, 2011).
|
|
|
|
10.3*
|
|
Company’s Pension Restoration Plan, as last amended effective June 29, 2015 (incorporated by reference to Exhibit 10.3 to the company's Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended June 30, 2015).
|
|
|
|
10.4*
|
|
Company’s Rules for Lump Sum Payments, as last amended effective May 15, 2014 (incorporated by reference to Exhibit 10.4 to the company's Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended June 30, 2015).
|
|
|
|
10.5*
|
|
Company’s Stock Performance Plan, as last amended effective January 25, 2007 (incorporated by reference to Exhibit 10.5 to the company’s Annual Report on Form 10-K (Commission file number 1-815) for the year ended December 31, 2011).
|
|
|
|
10.6*
|
|
Company’s Equity and Incentive Plan, as amended and restated effective March 14, 2016 (incorporated by reference to Exhibit 10.06 to the company's Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended June 30, 2016).
|
|
|
|
10.7*
|
|
Form of 2013 Award Terms under the company’s Equity and Incentive Plan (incorporated by reference to Exhibit 10.7 to the company’s Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended June 30, 2013).
|
|
|
|
10.8*
|
|
Company’s Retirement Savings Restoration Plan, as last amended effective May 15, 2014. (incorporated by reference to Exhibit 10.08 to the company's Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended June 30, 2014).
|
|
|
|
10.9*
|
|
Company’s Retirement Income Plan for Directors, as last amended January 2011 (incorporated by reference to Exhibit 10.9 to the company's Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended March 31, 2012).
|
|
|
|
10.10*
|
|
Company's Senior Executive Severance Plan, as amended and restated effective December 10, 2015 (incorporated by reference to Exhibit 10.10 to the company's Annual Report on Form 10-K (Commission file number 1-815) for the year ended December 31, 2015). The company agrees to furnish supplementally a copy of any omitted schedules to the Commission upon request.
|
Exhibit
Number
|
|
Description
|
|
|
|
10.11*
|
|
Supplemental Deferral Terms for Deferred Long Term Incentive Awards and Deferred Variable Compensation Awards (incorporated by reference to Exhibit 10.12 to the company's Annual Report on Form 10-K (Commission file number 1-815) for the year ended December 31, 2013).
|
|
|
|
10.13*
|
|
Company’s Management Deferred Compensation Plan, as last amended effective April 15, 2014 (incorporated by reference to Exhibit 10.13 to the company's Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended June 30, 2014).
|
|
|
|
10.15*
|
|
Form of 2015 Award Terms under the Company's Equity and Incentive Plan (incorporated by reference to Exhibit 10.15 to the company's Quarterly Report on 10-Q (Commission file number 1-815) for the period ended March 31, 2015).
|
|
|
|
10.16*
|
|
Form of 2016 Award Terms under the Company’s Equity and Incentive Plan (incorporated by reference to Exhibit 10.16 to the company’s Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended March 31, 2017).
|
|
|
|
10.18**
|
|
Separation Agreement by and between the Company and The Chemours Company (incorporated by reference to Exhibit 2.1 to the company's Current Report on Form 8-K (Commission file number 1-815) dated July 8, 2015).
|
|
|
|
10.19
|
|
Tax Matters Agreement by and between the Company and The Chemours Company (incorporated by reference to Exhibit 2.2 to the company's Current Report on Form 8-K (Commission file number 1-815) dated July 8, 2015).
|
|
|
|
10.20**
|
|
Agreement and Plan of Merger by and between the Company and The Dow Chemical Company, dated as of December 11, 2015 (incorporated by reference to Exhibit 2.1 to the company's Current Report on Form 8-K (Commission file number 1-815) dated December 11, 2015).
|
|
|
|
10.21**
|
|
Master Repurchase Agreement by and among Cooperatieve Rabobank, U.A. (New York Branch), The Bank of Tokyo Mitsubishi UFJ Ltd. (New York Branch) and PHI Financial Services, Inc. dated as of January 31, 2017 (incorporated by reference to Exhibit 10.21 to the company's Annual Report on Form 10-K (Commission file number 1-815) for the year ended December 31, 2016).
|
|
|
|
10.22**
|
|
Master Framework Agreement by and among Cooperatieve Rabobank, U.A. (New York Branch), The Bank of Tokyo Mitsubishi UFJ Ltd. (New York Branch) and PHI Financial Services, Inc. dated as of January 31, 2017 (incorporated by reference to Exhibit 10.22 to the company's Annual Report on Form 10-K (Commission file number 1-815) for the year ended December 31, 2016).
|
|
|
|
10.23*
|
|
Form of 2017 Award Terms under the Company's Equity and Incentive Plan (incorporated by reference to Exhibit 10.23 to the company’s Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended March 31, 2017).
|
|
|
|
10.24**
|
|
Amendment No. 1, dated March 31, 2017, to the Agreement and Plan of Merger, dated as of December 11, 2015 by and among the Company, The Dow Chemical Company, Diamond Merger Sub, Inc., Orion Merger Sub, Inc. and Diamond-Orion HoldCo, Inc. (n/k/a DowDuPont Inc.) (incorporated by reference to Exhibit 2.1 to the Company’s current report on Form 8-K (Commission file number 1-815) dated March 31, 2017).
|
|
|
|
10.25**
|
|
Transaction Agreement, dated as of March 31, 2017, by and between the Company and FMC Corporation
(incorporated by reference to Exhibit 10.25 to the company’s Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended March 31, 2017).
|
|
|
|
10.26
|
|
Purchase Price Allocation Side Letter Agreement, dated as of May 12, 2017, by and between the Company and FMC Corporation.
|
|
|
|
12
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
|
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) Certification of the company’s Principal Executive Officer.
|
|
|
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of the company’s Principal Financial Officer.
|
|
|
|
32.1
|
|
Section 1350 Certification of the company’s Principal Executive Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.
|
|
|
|
32.2
|
|
Section 1350 Certification of the company’s Principal Financial Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
P.O.
|
Box 2915
|
|
|
|
|
||||
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Income from continuing operations before income taxes
|
$
|
2,549
|
|
|
$
|
2,968
|
|
Adjustment for companies accounted for by the
equity method
|
(30
|
)
|
|
(19
|
)
|
||
Less: Capitalized interest
|
(13
|
)
|
|
(12
|
)
|
||
Add: Amortization of capitalized interest
|
13
|
|
|
14
|
|
||
|
2,519
|
|
|
2,951
|
|
||
Fixed charges:
|
|
|
|
|
|||
Interest and debt expense
|
183
|
|
|
185
|
|
||
Capitalized interest
|
13
|
|
|
12
|
|
||
Rental expense representative of interest factor
|
38
|
|
|
54
|
|
||
|
234
|
|
|
251
|
|
||
Total adjusted earnings available for payment of
fixed charges
|
$
|
2,753
|
|
|
$
|
3,202
|
|
Number of times fixed charges earned
|
11.8
|
|
|
12.8
|
|
1.
|
I have reviewed this report on Form 10-Q for the period ended
June 30, 2017
of E. I. du Pont de Nemours and Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
July 25, 2017
|
|
|
By:
|
/s/ Edward D. Breen
|
|
|
|
Edward D. Breen
|
|
Chair of the Board and
|
|
Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-Q for the period ended
June 30, 2017
of E. I. du Pont de Nemours and Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
July 25, 2017
|
|
|
By:
|
/s/ Nicholas C. Fanandakis
|
|
|
|
Nicholas C. Fanandakis
|
|
Executive Vice President and
|
|
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Edward D. Breen
|
|
Edward D. Breen
|
Chief Executive Officer
|
July 25, 2017
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Nicholas C. Fanandakis
|
|
Nicholas C. Fanandakis
|
Chief Financial Officer
|
July 25, 2017
|