EIDP, Inc.: Form 10-Q for the period ended Jun 30, 2015

Cautionary Statements About Forward-Looking Statements

This report contains forward-looking statements which may be identified by their use of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” 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, segment outlooks and financial results, are forward-looking statements.

Forward-looking statements are based on certain assumptions and expectations of future events which may not be accurate or 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;
• Outcome of significant litigation and environmental matters, including those related to divested businesses;
• Failure to appropriately manage process safety and product stewardship issues;
• 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, fluctuations in currency rates, interest rates and commodity prices;
• Ability 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, weather events and natural disasters;
• Ability to discover, develop and protect new technologies and enforce the company's intellectual property rights;
• Successful integration of acquired businesses and separation of underperforming or non-strategic assets or businesses; and
• Timely realization of the expected full benefits of the separation of the Performance Chemicals segment through the spin-off of The Chemours Company (Chemours).

For 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, see the Risk Factors discussion set forth under Part I, Item 1A of the company's 2014 Annual Report.

Recent Developments

Separation of Performance Chemicals

On July 1, 2015 (the Distribution Date), DuPont completed the separation of its Performance Chemicals segment though the spin-off of all of the issued and outstanding stock of Chemours. The company filed a Form 8-K (including pro forma financials) on July 8, 2015 in connection with the completion of the spin. Beginning in the third quarter of 2015, Chemours' financial results will be reflected in DuPont's Consolidated Financial Statements as a discontinued operation, along with comparative prior periods.

In connection with the spin-off, the company received a dividend from Chemours in May 2015 of $3,923 million comprised of a cash distribution of $3,416 million and a distribution in-kind of $507 million in the form of ten-year notes maturing in 2025 with a fixed interest rate of 7% (the Chemours Notes Received). DuPont will use the distribution proceeds to buy back shares of common stock. See Liquidity & Capital Resources for additional information.

Subsequent to June 30, 2015, DuPont anticipates it will incur additional transaction costs of approximately $130 million. These costs primarily relate to non-recurring professional fees associated with regulatory filings and separation activities within finance, legal and information system functions. The company expects a majority of the transaction costs to be incurred as of December 31, 2015.

Redesign Initiative

In June 2014, DuPont announced its global, multi-year initiative to redesign its global organization and operating model to reduce costs and improve productivity and agility across all businesses and functions. DuPont commenced a restructuring plan to realign and rebalance staff function support, enhance operational efficiency, and to reduce residual costs associated with the separation of its Performance Chemicals segment. The company continues to make significant progress in this effort with cost savings of $0.10 per share and $0.20 per share in the three and six months ended June 30, 2015 and expected to increase to $0.40 per share for 2015. The company expects to yield savings on a run-rate basis of approximately $1 billion by the fourth quarter of 2015 and $1.3 billion by 2017.

Results of Operations

Overview

The following is a summary of the results of operations for the three months ended June 30, 2015:

• Net Sales were $8.6 billion versus $9.7 billion in the same period last year, down 11 percent due to negative currency impact, the absence of sales from divested businesses, lower sales volume and local selling prices and product mix.
• Total segment pre-tax operating income (PTOI) was $1.6 billion, 16 percent below $2.0 billion last year, principally due to the absence of a prior-year gain on the sale of Glass Laminating Solutions/Vinyls (GLS/Vinyls), the negative currency impact and a significant decline in Performance Chemicals PTOI, partially offset with productivity improvements, a pre-tax gain of $112 million related to the company’s settlement of a legal claim and lower restructuring charges.
• Net Income was $940 million, 12 percent below $1,070 million, principally due to lower segment PTOI. Earnings per share were $1.03 verses $1.15 in the same period last year.
• Cost savings from the strategic redesign of the company’s operating model improved earnings $0.10 per share.

The following is a summary of the results of operations for the six months ended June 30, 2015:

• Net Sales were $17.8 billion versus $19.8 billion in the same period prior last year, down 10 percent due to negative currency impacts, lower sales volume and local selling prices, and the absence of sales from divested businesses.
• Total segment PTOI was $3.6 billion, 15 percent below $4.2 billion last year, principally due to the absence of a prior-year gain on the sale of GLS/Vinyls, negative currency impact from a stronger U.S. dollar, and PTOI declines in Performance Chemicals and Agriculture partially offset with productivity improvements, a pre-tax gain of $112 million related to the company’s settlement of a legal claim and lower restructuring charges.
• Net Income was $2.0 billion, 21 percent below $2.5 billion last year, principally due to lower segment PTOI. Earnings per share were $2.15 verses $2.70 in the same period last year.
• Cost savings from the strategic redesign of the company’s operating model improved earnings $0.20 per share.

Net Sales

Net sales for the three months ended June 30, 2015 were $8.6 billion versus $9.7 billion in the prior year, an 11 percent decline, principally attributable to a 5 percent negative currency impact, largely from a weakness in the Euro, Russian ruble, Brazilian real and eastern European currencies; a 2 percent impact from absence of sales from divested businesses; 2 percent lower volume and 2 percent lower local prices. Higher prices in Agriculture were more than offset by lower prices in the other segments, principally Performance Chemicals. Lower volume primarily reflects a decline in Agriculture in the Americas. Total company sales in developing markets were $2.5 billion, down 11 percent, reflecting a 7 percent negative currency impact, largely due to weaker currencies in Eastern Europe and Latin America, and a combined 4 percent negative impact from lower local selling prices, volume, and absence of sales from divested businesses. Developing markets include China, India and countries located in Latin America, Eastern and Central Europe, Middle East, Africa and Southeast Asia.

The tables below shows a regional breakdown of net sales based on location of customers and percentage variances from the prior year:

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Net sales for the six months ended June 30, 2015 were $17.8 billion, down 10 percent versus $19.8 billion in the prior year. Lower sales are attributable to a 5 percent negative currency impact, 2 percent lower volume, a 2 percent negative impact from absence of sales from divested businesses, and 1 percent lower local prices. Volume reflects declines in Agriculture and Electronics & Communications, partly offset with increases in Performance Materials and Industrial Biosciences. Agriculture prices were 2 percent higher, but were more than offset by lower prices in the other segments, principally Performance Chemicals. Total company sales in developing markets were $5.0 billion, down 13 percent versus $5.8 billion in the prior year, reflecting 8 percent negative currency impact, largely due to weaker currencies in Eastern Europe and Latin America, lower local selling prices, volume decline, and the absence of sales from divested businesses.

Other Income, Net

Other income, net, totaled $283 million for the three months ended June 30, 2015, a decrease of $125 million compared to $408 million in the prior year primarily due to the absence of the $391 million gain related to the sale of GLS/Vinyls within the Performance Materials segment, offset by $112 million of income for a litigation claim settled in the second quarter of 2015 and an increase in pre-tax exchange gain (loss) of $135 million. The pre-tax exchange gain was driven by an $88 million adjustment for gains, attributable to the first quarter 2015, on foreign exchange contracts. These contracts were used to align the hedge portfolio to the revised currency exposure of certain foreign entities associated with their change in functional currency during the first quarter of 2015 resulting from the Performance Chemicals separation, coupled with the company's redesign initiative. The impact of the adjustment was not material to either period.

For the six months ended June 30, 2015, other income, net, was $481 million compared to $425 million in the prior year, an increase of $56 million. The increase was primarily due to an increase in pre-tax exchange gains, which was driven by gains on foreign currency contracts due to strengthening of the U.S. dollar versus global currencies, as well as the $112 million of income for a litigation claim settlement in the second quarter of 2015, partially offset by the absence of the $391 million gain related to the sale of GLS/Vinyls within the Performance Materials segment.

Additional information related to the company's other income, net, is included in Note 4 to the interim Consolidated Financial Statements.

Cost of Goods Sold (COGS)

COGS totaled $5.3 billion in the second quarter 2015 versus $6.0 billion in the prior year, a 12 percent decrease principally due to the currency impact of a stronger U.S. dollar and divestitures. COGS as a percent of net sales decreased to 61 percent from 62 percent last year primarily due to improved productivity partially offset by the negative impact of currency which decreased sales by 5 percent and COGS by 4 percent.

COGS for the six months ended June 30, 2015 was $10.8 billion versus $12.0 billion in the prior year, a 10 percent decrease principally due to the currency impact of a stronger U.S. dollar and divestitures. COGS as a percent of net sales increased to 61 percent from 60 percent last year primarily due to the negative impact of currency which decreased sales by 5 percent and COGS by 4 percent, partially offset by improved productivity.

Other Operating Charges

Other operating charges were $349 million in the second quarter 2015, versus $300 million in the prior year, a 16 percent increase, primarily due to increased separation transaction costs.

For the six months ended June 30, 2015, other operating charges were $632 million versus $586 million in the prior year. The increase was primarily due to increased separation costs partially offset by insurance recoveries and lower project related costs.

Selling, General and Administrative Expenses (SG&A)

SG&A totaled $1.4 billion for the second quarter 2015 versus $1.5 billion in the prior year. Year-to-date SG&A totaled $2.7 billion versus $2.9 billion in the prior year. The decrease in both periods was primarily due to the strengthening of the U.S. dollar versus global currencies, cost savings from the company's operational redesign initiative, and lower selling and commission expense. SG&A was approximately 16 percent of net sales for the second quarter 2015 and 15 percent for 2014. SG&A was approximately 15 percent of net sales for the six months ended in 2015 and 2014.

Research and Development Expense (R&D)

R&D totaled $515 million and $545 million for the second quarter 2015 and 2014, respectively. The decrease was primarily due to the impact of currency, improved productivity and lower spend. R&D was approximately 6 percent of net sales for the second quarter 2015 and 2014.

R&D was relatively flat at $1.0 billion and $1.1 billion for the six months ended June 30, 2015 and 2014, respectively. For the six months ended in June 30, 2015, R&D is slightly less due to the impact of currency, improved productivity and lower spend. R&D was approximately 6 percent and 5 percent of net sales for the six months ended June 30, 2015 and 2014, respectively.

Interest Expense

Interest expense totaled $127 million in the second quarter 2015, compared to $94 million in 2014. For the six months ended June 30, 2015, interest expense was $211 million versus $197 million in the prior year. The increase in both periods was primarily due to higher borrowings for Chemours debt and the premium paid on the early retirement of DuPont debt. See Liquidity & Capital Resources for additional information.

Employee Separation / Asset Related Charges, Net

Employee separation / asset related charges, net totaled $61 million in the second quarter 2015, compared to $263 million in the prior year. In the second quarter 2015, a restructuring charge of $61 million was recorded in employee separation / asset related charges, net consisting of severance and related benefit costs in the Performance Chemicals segment to achieve fixed cost and operational productivity improvements for Chemours post-spin. In the second quarter 2014, $263 million was recorded for the 2014 restructuring program.

For the six months ended June 30, 2015, employee separation / asset related charges, net were $99 million, compared to $263 million in 2014. The six months ended June 30, 2015 included charges recorded in employee separation / asset related charges, net of $38 million in the first quarter related to cost investment impairments and $61 million consisting of severance and related benefit costs in the Performance Chemicals segment. The six months ended June 30, 2014 includes a charge of $263 million was recorded for the 2014 restructuring program.

See Note 3 to the interim Consolidated Financial Statements for additional information.

Provision for Income Taxes

The company's effective tax rate for the second quarter 2015 was 19.6 percent as compared to 25.4 percent in 2014. The lower effective tax rate is primarily driven by the impact of the company’s higher exchange gains recognized for the second quarter of 2015 on the re-measurement of the net monetary asset positions which are often not taxable in their local jurisdictions. The unfavorable impact of the Venezuelan bolivar devaluation in 2014 also contributed to the decrease in the effective tax rate.

The company’s effective tax rate for the six months ended June 30, 2015 was 28.7 percent as compared to 22.3 percent in 2014. About 5 percent of the higher effective tax rate is driven by the impact of the company’s hedging program which is largely taxable in the U.S., whereas the offsetting exchange losses on the re-measurement of the net monetary asset positions are often not tax deductible in their local jurisdictions. Transaction costs related to the Performance Chemicals segment and geographic mix of earnings also contributed to the increase in the effective tax rate.

See Note 5 to the interim Consolidated Financial Statements for additional information.

Outlook

In July 2015, the company revised its 2015 outlook to exclude the anticipated full-year earnings from the Performance Chemicals segment. In addition, consistent with continuing weakness in global agricultural markets, the company is reducing expectations for the year in its Agriculture segment due to weaker demand in global crop protection markets, reduced expectations for corn area in Latin America, and lower than expected soybean volumes in North America.

Recent Accounting Pronouncements

See Note 1 to the interim Consolidated Financial Statements for a description of recent accounting pronouncements.

Segment Reviews

Summarized below are comments on individual segment sales and PTOI for the three and six month period ended June 30, 2015 compared with the same period in 2014. Segment PTOI is defined as income (loss) before income taxes excluding non-operating pension and other postretirement employee benefit costs, exchange gains (losses), corporate expenses and interest. All references to prices are based on local price unless otherwise specified. A reconciliation of segment sales to consolidated net sales and segment PTOI to income before income taxes for the three and six month periods ended June 30, 2015 and 2014 is included in Note 14 to the interim Consolidated Financial Statements. See Note 3 to the interim Consolidated Financial Statements for information related to the 2014 restructuring plan and the Chemours restructuring program.

Segment PTOI includes certain items which management believes are significant to understanding the segment results discussed below. See Note 14 to the interim Consolidated Financial Statements and Note 21 to the Consolidated Financial Statements of the company’s 2014 annual report for details related to these items. These items are excluded from the 2015 segment outlooks below which discuss management’s current expectations for full-year 2015 segment sales and PTOI compared to full-year 2014.

The following table summarizes second quarter and year-to-date 2015 segment sales and related variances versus prior year:

Agriculture - Second quarter 2015 segment sales of $3,218 million decreased $397 million, or 11 percent, driven by lower volumes and the negative impact of currency of $194 million, partially offset by higher local prices and improved mix of Pioneer's new corn hybrids and soybean varieties. Decreased volumes are due to reduced soybean seed sales, lower crop protection volumes, and reductions in global corn planted area. PTOI of $774 million decreased $15 million, or 2 percent, on lower sales and a $84 million negative currency impact, partially offset by improved productivity and disciplined cost actions and the absence of $47 million associated with the 2014 restructuring program in second quarter 2014. Second quarter 2015 PTOI included charges of $4 million associated with the 2014 restructuring program.

Year-to-date segment sales of $7,155 million decreased $854 million, or 11 percent on the negative impact of currency of $528 million and lower volumes, partially offset by improved mix of Pioneer's new corn hybrids and soybean varieties and pricing actions in Europe to mitigate the impact of a stronger U.S. dollar. Decreased volumes are due to reduced soybean sales, reductions in global corn planted area and the timing of seed shipments. PTOI of $1,948 million decreased $283 million or 13 percent on $290 million negative currency impact and lower sales partially offset by disciplined cost actions, increases in pricing from new product mix, insurance recoveries of $35 million for recovery of costs for customer claims related to the use of the Imprelis® herbicide and the absence of $47 million associated with the 2014 restructuring program in second quarter 2014. See Notes 10 to the interim Consolidated Financial Statements for more information related to the Imprelis® matter.

Outlook For the full year 2015, sales are expected to be in the high-single-digits percent lower with PTOI in the low-twenty percent range below 2014 due to the negative impact of currency and lower volumes, partially offset by pricing gains, productivity and disciplined cost management.

Electronics & Communications - Second quarter 2015 segment sales of $534 million decreased $83 million, or 13 percent due to competitive pressures impacting sales of Solamet® paste, lower pricing from the pass-through of lower metals prices and the negative impact of currency partially offset by volume growth in Tedlar® film in photovoltaics and products for the consumer electronics market. PTOI of $104 million increased $83 million due to productivity gains and the absence of $68 million associated with the 2014 restructuring program in second quarter 2014, partially offset by lower sales. Second quarter 2015 PTOI included $11 million benefit associated with the 2014 restructuring program.

Year-to-date segment sales of $1,055 million decreased $142 million, or 12 percent on lower volumes and reduced selling prices due to competitive pressures impacting sales of Solamet® paste, lower pricing from the pass-through of metals prices, and the negative impact of currency partially offset by increased volumes in Tedlar® film and products for the consumer electronics market. PTOI of $189 million increased $93 million or 97 percent driven by productivity gains and the absence of $68 million associated with the 2014 restructuring program in second quarter 2014, partially offset by the above mentioned competitive pressures and negative impact of currency.

Outlook For the full year 2015, sales are expected to be down high-single-digits percent on lower sales of Solamet® paste, lower metal prices and currency. PTOI is expected to increase in the low-single-digits percent as productivity gains will more than offset the negative impacts of currency.

Industrial Biosciences - Second quarter 2015 segment sales of $288 million decreased $29 million, or 9 percent driven by the negative impact of currency of $24 million, lower pricing, and lower biomaterials sales in U.S. residential home improvement markets, partially offset by volume growth in enzymes, principally for animal nutrition, health and personal care and food markets. PTOI of $49 million decreased $8 million, or 14 percent, on lower pricing and the negative impact of currency, partially offset by productivity improvements and increased enzyme demand. Second quarter 2015 and second quarter 2014 PTOI included charges of $1 million and $2 million, respectively, associated with the 2014 restructuring program.

Year-to-date segment sales of $573 million decreased $45 million, or 7 percent due to the negative impact of currency of $39 million and lower prices and lower demand for biomaterials, partially offset by enzyme volume growth discussed above. PTOI of $105 million decreased $8 million, or 7 percent driven by lower pricing and the negative impact of currency, partially offset with productivity gains and enzyme demand.

Outlook For the full year 2015, sales are expected to be down mid-single-digits percent due primarily to currency. PTOI is expected to be down low-single-digits percent as higher volumes, prices and improved mix will be more than offset by currency.

Nutrition & Health - Second quarter 2015 segment sales of $826 million decreased $100 million, or 11 percent, driven by the negative impact of currency of $83 million and the pass-through of lower soybean crush commodity prices. Volume growth in probiotics, texturants, cultures and ingredient systems was offset by lower volumes in specialty proteins. PTOI of $99 million increased $2 million, or 2 percent driven by productivity gains, mostly offset by the negative impact of currency of $12 million. Second quarter 2015 and second quarter 2014 PTOI included charges of $4 million and $8 million, respectively, associated with the 2014 restructuring program.

Year-to-date segment sales of $1,639 million decreased $148 million, or 8 percent, driven by the negative impact of currency of $151 million partially offset with volume growth. Volume growth in probiotics, texturants, cultures and ingredient systems was partially offset by lower volumes in specialty proteins. PTOI of $188 million decreased $2 million, or 1 percent driven by the negative impact of currency of $23 million, partially offset by volume and productivity gains.

Outlook For the full year 2015, sales are expected to be mid-single-digits percent lower as volume gains are more than offset by currency. PTOI is expected to be about flat as both product margin expansion and productivity gains are offset by currency.

Performance Chemicals - Second quarter 2015 segment sales of $1,502 million decreased $194 million, or 11 percent, and PTOI of $54 million decreased $178 million or 77 percent, driven by lower prices primarily for titanium dioxide, and the negative impact of currency of $68 million for segment sales and $43 million for PTOI. Titanium dioxide prices continue to be negatively impacted by strong regional competition. PTOI decline was partially offset by the absence of a $19 million charge associated with the 2014 restructuring program in second quarter 2014. The second quarter 2015 PTOI included a $61 million charge associated with the Chemours restructuring program and a $2 million benefit associated with the 2014 restructuring program.

Year-to-date 2015 segment sales of $2,866 million decreased $421 million, or 13 percent, and PTOI of $183 million decreased $255 million or 58 percent, driven by lower prices and volumes primarily for titanium dioxide, and the negative impact of currency of $124 million for segment sales and $71 million for PTOI.

Performance Materials - Second quarter 2015 segment sales of $1,365 million decreased $217 million, or 14 percent, driven by the negative impact of currency of $104 million, the portfolio changes from the sale of Glass Laminating Solutions/Vinyls (GLS/Vinyls) and lower ethylene pricing. Partially offsetting the declines are increased volumes of ethylene as prior year ethylene sales were constrained due to a scheduled outage at the Orange, Texas ethylene unit. Second quarter PTOI of $309 million decreased $356 million or 54 percent, driven by the absence of the $391 million pre-tax gain on the sale of GLS/Vinyls in the second quarter 2014 and the negative impact of currency of $42 million, partially offset by lower product costs, productivity and ethylene volume growth. Second quarter 2015 and 2014 PTOI included a charge of $2 million and $29 million, respectively, associated with the 2014 restructuring plan.

Year-to-date 2015 segment sales of $2,776 million decreased $340 million, or 11 percent, driven by the portfolio changes from the sale of GLS/Vinyls, the negative impact of currency of $180 million and lower ethylene pricing. Partially offsetting the declines are increased volumes of ethylene as prior year ethylene sales were constrained in advance of a scheduled outage at the Orange, Texas ethylene unit. PTOI of $636 million decreased $322 million or 34 percent, driven by the absence of the $391 million pre-tax gain on the sale of GLS/Vinyls in the second quarter 2014 and the negative impact of currency of $66 million, partially offset by volume growth of ethylene and lower product costs.

Outlook For the full year 2015, sales are expected to be down about 10 percent due primarily to currency, portfolio changes from the sale of GLS/Vinyls, and lower ethylene prices. PTOI is expected to be down mid-single-digits percent as volume growth is more than offset by the negative impacts from currency and portfolio changes.

Safety & Protection - Second quarter 2015 segment sales of $925 million decreased $104 million or 10 percent due to the portfolio impact of the Sontara® divestiture and the negative impact of currency of $47 million. Increased demand for Tyvek® protective material, including medical packaging and protective garments, was offset by lower demand, particularly in the oil and gas industry, impacting Nomex® thermal resistant fiber and Sustainable Solutions offerings. PTOI of $308 million increased $130 million or 73 percent, driven by a pre-tax gain of $112 million, net of legal expenses, recorded in other income, net related to the company’s settlement of a legal claim. In addition, PTOI includes the negative impact of currency of $20 million and higher costs associated with the first quarter outage at the Chambers Works facility in New Jersey that were offset by productivity improvements and the absence of a $31 million charge associated with the 2014 restructuring program in second quarter 2014. The second quarter 2015 PTOI included a $1 million benefit associated with the 2014 restructuring program.

Year-to-date 2015 segment sales of $1,834 million decreased $142 million or 7 percent due to the portfolio impact of the Sontara® divestiture and the negative impact of currency of $85 million partially offset by volume growth driven by increased demand for Tyvek® protective material. PTOI of $492 million increased $139 million or 39 percent, driven by a pre-tax gain of $112 million, net of legal expenses, recorded in other income, net related to the company’s settlement of a legal claim. In addition, PTOI includes the negative impact of currency of $35 million and higher costs associated with the first quarter outage at the Chambers Works facility in New Jersey offset by productivity improvements and the absence of a $31 million charge associated with the 2014 restructuring program in second quarter 2014.

Outlook For the full year 2015, sales are expected to be down in the low-single-digits percent range as volume growth in Tyvek®, Nomex®, and Kevlar® high-strength materials will be more than offset by the negative impacts of currency and portfolio changes from the Sontara® divestiture. PTOI is expected to increase low-single-digits percent range due to volume growth and productivity.

Liquidity & Capital Resources

Information related to the company's liquidity and capital resources can be found in the company's 2014 Annual Report, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources. Discussion below provides the updates to this information for the six months ended June 30, 2015.

(Dollars in millions)

Total debt as of June 30, 2015 was $12.7 billion, a $2.0 billion increase from $10.7 billion as of December 31, 2014. The increase in total debt is primarily due to the debt issued by Chemours. These Chemours arrangements were offset by a $488 million debt exchange, in which the company retired $152 million of 1.95% notes, $277 million of 2.75% notes, and $59 million of 5.25% notes all due in 2016. The company paid a premium of $20 million in connection with the early retirement of the $488 million of 2016 notes. The company's debt was also reduced due to the pay down of maturing debt.

In connection with the separation, the company received dividend proceeds from Chemours in May 2015 of $3,923 million comprised of a cash distribution of $3,416 million and a distribution in-kind of $507 million in the form of ten-year notes maturing in 2025 with a fixed interest rate of 7%. Chemours financed the dividend payment through issuance of approximately $4,000 million of debt comprised of $1,500 million aggregate principal amount of borrowing under a senior secured term loan facility with variable interest rates and a term of seven years, $1,350 million of 6.625% senior unsecured notes due 2023, $750 million of 7% senior unsecured notes due 2025 and €360 million of 6.125% senior unsecured notes due 2023. Since at June 30, 2015, Chemours was a wholly-owned, consolidated subsidiary of the company, DuPont’s Condensed Consolidated Balance Sheet for the period ended June 30, 2015 includes Chemours’ Debt. The transfer of the liability associated with Chemours’ Debt, as well as all other assets and liabilities transferred to Chemours, will be reflected in DuPont’s financial statements in the third quarter of 2015.

The company's cash, cash equivalents and marketable securities at June 30, 2015 and December 31, 2014 are $5.3 billion and $7.0 billion, respectively. The $1.7 billion decrease was primarily due to cash used to fund normal working capital needs, payments of the shareholder dividends, as well as debt retirement, partially offset by cash received from issuance of Chemours debt.

Summary of Cash Flows

Cash used for operating activities was $2.0 billion for the six months ended June 30, 2015, essentially equal to the same period last year. The decline in net income coupled with higher income tax payments was offset by various working capital benefits.

Cash used for investing activities was $1.0 billion for the six months ended June 30, 2015 compared to $0.2 billion for the same period last year. The $0.8 billion increase in cash used for investing activities was primarily due to the absence of proceeds from the sale of the GLS/Vinyls business which occurred in 2014 coupled with an increase in investment in short-term financial instruments partially offset by an increase in cash settlements from foreign currency contracts. Purchases of property, plant and equipment increased by $0.2 billion primarily due to an adjustment to reflect these purchases on a cash basis. The impact of the adjustment was not material to prior periods.

Cash provided by financing activities was $1.0 billion for the six months ended June 30, 2015 compared to $2.4 billion of cash used for financing activities for the same period last year. The $3.4 billion increase in cash provided by financing activities was due primarily to Chemours borrowings coupled with lower repurchase of common stock.

Dividends paid to shareholders during the six months ended June 30, 2015 totaled $0.9 billion. In July 2015, the Board of Directors declared a third quarter common stock dividend of $0.38 per share. The company has paid quarterly consecutive dividends since the company’s first dividend in the fourth quarter 1904.

In January 2014, the company's Board of Directors authorized a $5 billion share buyback plan. During the three and six months ended June, 30, 2015, the company purchased and retired 1.0 million and 4.6 million shares, respectively, in the open market which offset the dilution from employee compensation plans in the first and second quarter 2015. As of June 30, 2015, the company has purchased 34.7 million shares at a total cost of $2.4 billion under the plan. There is no required completion date for the remaining stock purchases.

In the first quarter 2015, DuPont announced its intention to buy back shares of about $4 billion using the distribution proceeds received from Chemours. In connection with the completion of the spin-off of Chemours, the Board of Directors authorized the use of the distribution proceeds to buy back shares of the company's common stock as follows: $2 billion to be purchased and retired by December 31, 2015 with the remainder to be purchased and retired by December 31, 2016. The company expects to use an accelerated share repurchase plan in connection with the $2 billion buyback by year end.

See Part II, Item 2 and Note 11 to the interim Consolidated Financial Statements for additional information.

Guarantees and Off-Balance Sheet Arrangements

For detailed information related to Guarantees, Indemnifications, and Obligations for Equity Affiliates and Others, see the company's 2014 Annual Report, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Off- Balance Sheet Arrangements, and Note 10 to the interim Consolidated Financial Statements.

Contractual Obligations

Information related to the company's contractual obligations at December 31, 2014 can be found in the company's 2014 Annual Report, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Off-Balance Sheet Arrangements. The company's long-term debt obligations at June 30, 2015 increased by $3.7 billion versus prior year end primarily due to $3.9 billion associated with the debt issued by Chemours. See Note 9 to the interim Consolidated Financial Statements and Liquidity & Capital Resources for additional information.

See Note 12, “Financial Instruments”, to the interim Consolidated Financial Statements. See also Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, of the company's 2014 Annual Report for information on the company's utilization of financial instruments and an analysis of the sensitivity of these instruments.

a) Evaluation of Disclosure Controls and Procedures

The company maintains a system of disclosure controls and procedures to give reasonable assurance that information required to be disclosed in the company's reports filed or submitted under the Securities Exchange Act of 1934 (Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. These controls and procedures also give reasonable assurance that information required to be disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required disclosures.

As of June 30, 2015, the company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), together with management, conducted an evaluation of the effectiveness of the company's disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the CEO and CFO concluded that these disclosure controls and procedures are effective.

b) Changes in Internal Control over Financial Reporting

There has been no change in the company's internal control over financial reporting that occurred during the quarter ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting.

There have been no material changes in the company's risk factors discussed in Part I, Item 1A, Risk Factors, in the company's 2014 Annual Report.