EIDP, Inc.: Form 10-Q for the period ended Sep 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 benefits from the separation of Performance Chemicals.

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 The Chemours Company (Chemours). The financial position and results of operations of the Performance Chemicals segment are presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented.

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 incremental cost savings of $0.10 per share and $0.30 per share in the three and nine months ended September 30, 2015, respectively. For full year 2015, the company expects to deliver incremental cost savings of approximately $0.40 year over year. In October 2015, the company announced that it is accelerating, by one year, its operational redesign cost saving actions and as a result, expects to achieve $1.3 billion of savings on a run rate basis by the end of 2016. In addition, the company announced its commitment to achieving additional cost savings as part of its operational redesign and is targeting approximately $1.6 billion on a run rate basis by the end of 2017. The company anticipates that it will incur a charge in the fourth quarter of 2015 as plans related to the additional cost savings are developed.

Results of Operations

Overview

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

• Results were negatively impacted by macro challenges including currency, industry wide challenges in Agriculture markets, particularly in Brazil, and continued weakness in emerging markets and oil and gas markets affecting Safety & Protection partially offset by continued positive effects of the operational redesign and cost reductions in the quarter, including performance-based compensation.
• Net Sales were $4.9 billion, down 17 percent from $5.9 billion in the same period last year, principally reflecting an 8 percent negative currency impact and 7 percent lower volume.
• Total segment pre-tax operating income (PTOI) was $580 million versus $686 million last year, down 15 percent due to negative currency impacts of $187 million and lower volume, partly offset by insurance recoveries, productivity improvements and lower costs for raw materials, energy and freight. Growth in Electronics & Communications and Industrial Biosciences was more than offset by declines in Agriculture, Performance Materials and Safety & Protection.
• Income from continuing operations after taxes was $131 million versus $331 million in the prior year, principally reflecting lower segment PTOI and higher non-operating pension and OPEB costs.
• Cost savings from the strategic redesign of the company’s operating model contributed an incremental $0.10 per share.

The following is a summary of the results of continuing operations for the nine months ended September 30, 2015:

• Net Sales were $19.8 billion down 12 percent from $22.6 billion in the prior year, principally reflecting 7 percent negative currency impacts and 3 percent lower volume.
• Total segment PTOI was $3.9 billion versus $4.4 billion in the prior year, down 11 percent due to negative currency impacts of $613 million, the absence of a prior-year gain on the sale of GLS/Vinyls and lower volume, partly offset by productivity improvements, insurance recoveries, and lower costs for raw materials, energy and freight.
• Income from continuing operations after taxes was $2.1 billion versus $2.6 billion in the prior year, principally reflecting lower segment PTOI and higher non-operating pension and OPEB costs, partially offset by lower corporate expenses.
• Cost savings from the strategic redesign of the company’s operating model contributed an incremental $0.30 per share.

Net Sales

Net sales for the three months ended September 30, 2015 were $4.9 billion versus $5.9 billion in the prior year, a 17 percent decline, attributable to an 8 percent negative impact from weaker currencies, particularly the Brazilian real and Euro; 7 percent lower volume; 1 percent lower local prices and 1 percent due to absence of sales from divested businesses. Lower volume reflects a 17 percent decline in Agriculture, primarily driven by lower seed volume and reduced demand for insect control products in Latin America. Net sales in developing markets were $2.0 billion, down 22 percent, reflecting a 12 percent negative currency impact, largely due to weaker currencies in Eastern Europe and Latin America, 9 percent lower volume due to lower Agriculture sales in Latin America and EMEA, and 12 percent combined lower volume in the Electronics & Communications and Safety & Protection segments in Asia Pacific. 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:

Net sales for the nine months ended September 30, 2015 were $19.8 billion, down 12 percent versus $22.6 billion in the prior year. Lower sales are attributable to a 7 percent negative currency impact, 3 percent lower volume, and a 2 percent negative impact from the absence of sales from divested businesses. Volume reflects declines in Agriculture and Electronics & Communications, partly offset with increases in Performance Materials and Industrial Biosciences. Agriculture local selling prices were increased 2 percent, partially offsetting an 8 percent negative currency impact. Local prices in combined other segments were 2 percent lower, largely reflecting lower ethylene prices and pass through of lower precious metals prices. Total company sales in developing markets were $6.1 billion, down 16 percent versus $7.3 billion in the prior year, reflecting a 9 percent negative currency impact, lower volume, and the absence of sales from divested businesses.

Other Income, Net

Other income, net, totaled $98 million for the three months ended September 30, 2015, a decrease of $266 million compared to $364 million in the prior year primarily due to decrease in pre-tax net exchange gain (loss) of $286 million, partially offset by an increase in gains on sales of businesses and other assets. The decrease in pre-tax net exchange gains was driven by lower gains on foreign currency exchange contracts. See Notes 4 and 12 to the interim Consolidated Financial Statements for further discussion of the company's policy of hedging the foreign currency-denominated monetary assets and liabilities.

For the nine months ended September 30, 2015, other income, net, was $552 million compared to $749 million in the prior year, a decrease of $197 million primarily due to the absence of the $391 million gain related to the sale of GLS/Vinyls within the Performance Materials segment, partially offset by $112 million of income for a litigation claim settled in the second quarter of 2015.

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 $3.1 billion for the third quarter 2015 versus $3.7 billion in the prior year, a 17 percent decrease principally due to lower volume, the currency impact of a stronger dollar, lower costs for raw materials, energy and freight, and productivity improvements. COGS as a percent of sales was 63 percent, the same as prior year.

COGS for the nine months ended September 30, 2015 was $11.7 billion versus $13.4 billion in the prior year, a 12 percent decrease principally due to the currency impact of a stronger dollar, lower sales, and lower costs for raw materials, energy, and freight. COGS as a percent of sales was unchanged from prior year at 59 percent as the benefit of productivity improvements offset the negative impact of currency which decreased sales by 7 percent and COGS by 4 percent.

Other Operating Charges

Other operating charges were $91 million in the third quarter 2015, versus $201 million in the prior year. Year-to-date other operating charges totaled $413 million versus $609 million in the prior year. The decrease in both periods was primarily due to insurance recoveries associated with the Imprelis® matter.

Selling, General and Administrative Expenses (SG&A)

SG&A totaled $1.0 billion for the third quarter 2015 versus $1.2 billion in the prior year. Year-to-date SG&A totaled $3.5 billion versus $3.8 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 mainly in Agriculture. Partially offsetting the declines was an increase in pension and other postretirement employee benefit (OPEB) costs in the current year. SG&A was approximately 21 percent and 20 percent of net sales for the third quarter 2015 and 2014, respectively. SG&A was approximately 18 percent and 17 percent of net sales for the nine months ended in 2015 and 2014, respectively. The increase as a percentage of net sales in both periods was primarily driven by higher pension and OPEB costs in the current year.

Research and Development Expense (R&D)

R&D totaled $441 million and $486 million for the third quarter 2015 and 2014, respectively. Year-to-date R&D totaled $1.4 billion and $1.5 billion for the nine months ended September 30, 2015 and 2014, respectively. The decrease in both periods was primarily due to the impact of currency and lower spending. R&D was approximately 9 percent and 8 percent of net sales for the third quarter 2015 and 2014, respectively. R&D was approximately 7 percent of net sales for the nine months ended September 30, 2015 and 2014.

Interest Expense

Interest expense totaled $82 million in the third quarter 2015, compared to $93 million in 2014. For the nine months ended September 30, 2015, interest expense was $260 million versus $290 million in the prior year. The decrease in both periods was due to lower borrowings.

Employee Separation / Asset Related Charges, Net

For the nine months ended September 30, 2015, employee separation / asset related charges, net were $40 million, compared to $244 million in 2014. The nine months ended September 30, 2015 included $38 million in the first quarter related to cost investment impairments and $2 million in the second quarter related to adjustments to the 2014 restructuring program. The nine months ended September 30, 2014 includes a charge of $244 million recorded for the 2014 restructuring program.

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

Provision for Income Taxes on Continuing Operations

The company's effective tax rate for the third quarter 2015 was 42.3 percent as compared to 47.8 percent in 2014. The lower effective tax rate in 2015 versus 2014 reflects the favorable tax impact of higher exchange losses recognized for the third quarter of 2015 on the re-measurement of the net monetary asset positions. The favorable impact of a foreign tax court decision also contributed to the decrease in the effective tax rate. These impacts were partially offset by the tax impact of insurance recoveries associated with the Imprelis® matter as well as unfavorable geographic mix of earnings.

The company’s effective tax rate for the nine months ended September 30, 2015 was 29.4 percent as compared to 26.4 percent in 2014. The higher effective tax rate in 2015 versus 2014 reflects unfavorable geographic mix of earnings and the impact of a state tax rate change associated with the separation of Chemours. These impacts were partially offset by the favorable tax impact of higher exchange losses recognized for the third quarter of 2015 on the re-measurement of the net monetary asset positions which are not always tax deductible in their local jurisdictions.

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

Outlook

In October 2015, the company revised its 2015 outlook downward due to continued strengthening of the U.S. dollar versus currencies in emerging markets, particularly the Brazilian real, further weakening of agricultural markets, primarily in Brazil, and continued weakness in emerging markets.

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 net sales and PTOI for the three and nine month period ended September 30, 2015 compared with the same period in 2014. Segment PTOI is defined as income (loss) from continuing operations before income taxes excluding non-operating pension and other postretirement employee benefit costs, exchange gains (losses), corporate expenses and interest. Effective July 1, 2015, certain corporate expenses will now be included in segment PTOI. Reclassifications of prior year data have been made to conform to current year classifications. All references to prices are based on local price unless otherwise specified. A reconciliation of segment PTOI to income before income taxes for the three and nine month periods ended September 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.

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. These items are excluded from the Agriculture segment outlook below which discusses management’s current expectations for fourth quarter 2015 segment net sales and PTOI compared to fourth quarter 2014.

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

Agriculture - Third quarter 2015 segment net sales of $1,093 million decreased $470 million, or 30 percent, as demand for seed and crop protection products, primarily in Brazil, further weakened in the third quarter impacted by macroeconomic and competitive pressures. The volume decline of 17 percent and the negative impact of currency of $232 million were partially offset by higher local crop protection prices. Decreased volumes are driven by lower corn seed volumes as growers are expected to reduce hybrid corn planted area in Brazil, lower soybean seed volumes in Brazil and North America where adverse weather for late season planting lowered area expectations and reduced demand for insect control products in Brazil reflecting low expected insect pressure. Insect control volumes were also impacted by the shutdown of the LaPorte manufacturing facility in Texas.

Third quarter 2015 PTOI seasonal loss of $63 million was $7 million larger, or 13 percent, on lower volumes, a $108 million negative currency impact and an approximately $40 million negative impact from the shutdown of the LaPorte manufacturing facility, partially offset by net insurance recoveries of $147 million for recovery of costs for customer claims related to the use of the Imprelis® herbicide, increases in local price, cost reductions and continued productivity. Third quarter 2015 PTOI included $27 million for gains on the sales of assets and a $21 million benefit related to an adjustment for prior periods’ cost of goods sold. The impact of the adjustment was not material to current or prior periods.

Year-to-date segment net sales of $8,248 million decreased $1,316 million, or 14 percent, on the negative impact of currency of $760 million and lower volumes, partially offset by pricing actions in Europe and Africa to mitigate the impact of a stronger U.S. dollar and improved mix of Pioneer's new corn hybrids and soybean varieties in the U.S. Decreased volumes are due to reductions in global corn planted area and reduced soybean sales primarily due to soybean market share loss in North America.

PTOI of $1,878 million decreased $293 million, or 13 percent, on $399 million negative currency impact, lower volumes and an approximately $90 million negative impact of the shutdown of the LaPorte manufacturing facility partially offset by increases in local prices, cost reductions and continued productivity, net insurance recoveries of $182 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. Year-to-date PTOI included charges of $4 million associated with the 2014 restructuring program. See Note 10 to the interim Consolidated Financial Statements for more information related to the Imprelis® matter.

Outlook Fourth quarter 2015 sales are expected to be down low-teens percent due to the negative impact of currency, lower crop protection volumes in Brazil and the continued impact of the shutdown of the LaPorte manufacturing facility, partially offset by local pricing gains. Fourth quarter 2015 PTOI is expected to be a loss of about $100 million due to the significant impact from currency, lower crop protection volumes and the prior year impacts from performance based compensation adjustments and $36 million in gains from the sale of businesses, partially offset by continued productivity and cost reductions.

Electronics & Communications - Third quarter 2015 segment net sales of $532 million decreased $88 million, or 14 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 $14 million, or 16 percent, as cost reductions and continued productivity more than offset lower sales.

Year-to-date segment net sales of $1,577 million decreased $233 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 $283 million increased $107 million, or 61 percent, driven by cost reductions and continued productivity, and the absence of $68 million associated with the 2014 restructuring program in the prior year, partially offset by the above mentioned competitive pressures and negative impact of currency. Year-to-date PTOI included an $11 million benefit associated with the 2014 restructuring program.

Industrial Biosciences - Third quarter 2015 segment net sales of $305 million decreased $9 million, or 3 percent, as volume growth across the business was more than offset by the negative impact of currency of $18 million and lower pricing, primarily for biomaterials. Volume growth was driven primarily by home and personal care and food markets. PTOI of $52 million increased $10 million, or 24 percent, as volume growth, cost reductions and continued productivity were partially offset by lower pricing and the negative impact of currency.

Year-to-date segment net sales of $870 million decreased $55 million, or 6 percent, due to the negative impact of currency of $54 million, lower prices and lower demand for biomaterials, partially offset by volume growth in enzymes, principally for home and personal care, food markets and animal nutrition. PTOI of $147 million increased $1 million, or 1 percent, as lower pricing and the negative impact of currency offset enzyme demand, cost reductions and continued productivity. Year-to-date 2015 and 2014 PTOI included charges of $1 million and $2 million, respectively, associated with the 2014 restructuring program.

Nutrition & Health - Third quarter 2015 segment net sales of $810 million decreased $89 million, or 10 percent, primarily driven by the negative impact of currency of $83 million. Volume growth in probiotics, ingredient systems and texturants was offset by lower volumes due to competitive challenges in specialty proteins. PTOI of $102 million increased $3 million, or 3 percent, as cost reduction and continued productivity were partially offset by the negative impact of currency of $17 million.

Year-to-date segment net sales of $2,449 million decreased $237 million, or 9 percent, driven by the negative impact of currency of $235 million. Volume growth in probiotics, texturants, cultures and ingredient systems was partially offset by lower volumes in specialty proteins. PTOI of $284 million increased $2 million, or 1 percent driven by volume, cost reductions and continued productivity, partially offset by the negative impact of currency of $42 million. Year-to-date 2015 and 2014 PTOI included charges of $4 million and $8 million, respectively, associated with the 2014 restructuring program.

Performance Materials - Third quarter 2015 segment net sales of $1,302 million decreased $229 million, or 15 percent, driven by the negative impact of currency of $89 million, lower price and volume for ethylene, auto build weakness in Asia Pacific resulting in reduced demand for auto polymers, and the portfolio changes from the sale of a majority owned interest in a joint venture. PTOI of $317 million decreased $49 million or 13 percent, driven by the negative impact of currency of $47 million, lower volume and price for ethylene partially offset by cost reductions and continued productivity. Third quarter 2015 PTOI included a $16 million net benefit from a joint venture while prior year PTOI included a $23 million gain on sale of a majority owned interest in a joint venture.

Year-to-date 2015 segment net sales of $4,021 million decreased $597 million, or 13 percent, driven by the negative impact of currency of $269 million, the portfolio changes from the sale of Glass Laminating Solutions/Vinyls (GLS/Vinyls), and lower ethylene pricing. Partially offsetting the declines are increased ethylene volumes due to the prior year scheduled outage at the Orange Texas ethylene unit. PTOI of $933 million decreased $370 million or 28 percent, driven by the absence of the $391 million pre-tax gain on the sale of GLS/Vinyls in prior year and the negative impact of currency of $113 million, partially offset by cost reductions, continued productivity and lower product costs. Year-to-date 2015 and 2014 PTOI included a charge of $2 million and $29 million, respectively, associated with the 2014 restructuring plan.

Safety & Protection - Third quarter 2015 segment net sales of $831 million decreased $145 million, or 15 percent, due to lower volume, the portfolio impact of the Sontara® divestiture and the negative impact of currency of $40 million. Volume growth for Tyvek® protective material, including medical packaging, was more than offset by lower demand for Sustainable Solution offerings, Nomex® thermal-resistant fiber particularly from the oil and gas industry, and Kevlar® high-strength material due to military spending delays. PTOI of $156 million decreased $39 million, or 20 percent, driven by lower sales, higher unit costs associated with the slower-than-expected recovery from the outage in the first quarter at the Chambers Works facility in New Jersey and the negative impact of currency of $13 million, partially offset by cost reductions and continued productivity.

Year-to-date 2015 segment net sales of $2,663 million decreased $287 million, or 10 percent, due to the portfolio impact of the Sontara® divestiture and the negative impact of currency of $124 million. PTOI of $635 million increased $99 million, or 18 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, cost reductions and continued productivity, and the absence of a $31 million charge associated with the 2014 restructuring program in the prior year. This was partially offset by the negative impact of currency of $46 million, lower sales, and higher unit costs associated with the outage in the first quarter at the Chambers Works facility. Year-to-date 2015 PTOI included a $1 million benefit associated with the 2014 restructuring program.

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 nine months ended September 30, 2015.

(Dollars in millions)

The company's cash, cash equivalents and marketable securities at September 30, 2015 and December 31, 2014 are $3.7 billion and $7.0 billion, respectively. The $3.3 billion decrease was primarily due to share repurchases, dividend payments, purchases of property, plant and equipment and the company's seasonal working capital needs, partially offset with proceeds from the Chemours distribution. 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 senior unsecured notes maturing in 2025 with a fixed interest rate of 7%. The company exchanged the notes received from Chemours for $488 million of DuPont debt due in 2016.

Total debt as of September 30, 2015 was $9.9 billion, a $0.7 billion decrease from $10.7 billion as of December 31, 2014. The decrease in total debt is primarily due to repayments of $1.4 billion of maturing debt, the early retirement of $488 million notes due in 2016, partially offset by the issuance of commercial paper. The company paid a premium of $20 million in connection with the early retirement.

The company's credit ratings impact its access to the debt capital markets and cost of capital. The company remains committed to a strong financial position and a strong investment-grade rating. The company's long-term and short-term credit ratings are as follows:

In May 2015, Moody's Investors Service (Moody's) downgraded the company's long-term rating to A3 from A2, and the short-term rating to P-2 from P-1. In October 2015, Standard and Poor's Ratings Services (Standard and Poor's) downgraded the company's long-term rating to A- from A, and the short-term rating to A-2 from A-1. The company expects the impact of the downgrades to be immaterial to its liquidity position. While the downgrades may result in reduced market capacity for commercial paper, the company's liquidity needs can continue to be met through a variety of alternative sources, including cash provided by operating activities, cash and cash equivalents, marketable securities, commercial paper, syndicated credit lines, bilateral credit lines, equity and long-term debt markets and asset sales.

Summary of Cash Flows

Cash used for operating activities was $1.8 billion for the nine months ended September 30, 2015, essentially unchanged compared with the nine months ended September 30, 2014. The decline in net income was offset by various working capital benefits.

Cash used for investing activities was $1.0 billion for the nine months ended September 30, 2015 compared to $0.7 billion for the same period last year. The $0.3 billion increase in cash used for investing activities was primarily due to the absence of proceeds from the sale of GLS/Vinyls, partially offset by an increase in cash settlements from foreign currency contract settlements.

Cash used for financing activities was $0.4 billion for the nine months ended September 30, 2015 compared to $2.2 billion of cash for the same period last year. The $1.8 billion decrease in cash used for financing activities was primarily due to the distribution of Chemours borrowings to the company as part of the separation, partially offset by a reduction in short term borrowings, and an increase in the repurchase of common stock.

Dividends paid to shareholders during the nine months ended September 30, 2015 totaled $1.2 billion. In October 2015, the Board of Directors declared a fourth 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 nine months ended September, 30, 2015, the company purchased and retired 4.6 million shares in the open market which offset the dilution from employee compensation plans in the first and second quarter 2015. As of September 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. In August 2015, the company entered into an accelerated share repurchase (ASR) agreement. Under the terms of the August 2015 ASR agreement, the company paid $2 billion to the financial institution and received and retired an initial delivery of 28.8 million shares, which represents 80 percent of the $2 billion notional amount of the agreement. The purchase price per share and final number of shares retired will be determined using the volume-weighted price of the company's stock over the term of the ASR agreement. The August 2015 ASR will be completed in the fourth quarter 2015.

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 September 30, 2015 decreased by $1.9 billion versus prior year-end primarily due to $1.4 billion of debt principal maturities. As a result of the spin-off of Chemours on July 1, 2015, the company’s raw material obligations decreased by approximately $1.5 billion at September 30, 2015. In addition, Chemours indemnified DuPont against certain litigation, environmental, workers' compensation and other liabilities that arose prior to the distribution. At September 30, 2015, the indemnified assets were $500 million which offset the corresponding liabilities of $500 million. See Note 2 to the interim Consolidated Financial Statements for additional information in relation to the indemnification.

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 September 30, 2015, the company's Interim 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 September 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.