Welcome to the DuPont Fourth Quarter 2015 Conference Call. My name is John and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. Now I’ll turn the call over to Greg Friedman, Vice President of Investor Relations. Greg, you may begin.

Thank you, John. Good morning everyone and welcome. Thank you for joining us to cover DuPont’s fourth quarter 2015 performance. Joining me are Ed Breen, Chair and CEO; Nick Fanandakis, Executive Vice President and CFO; and Jim Collins, Executive Vice President responsible for our Agriculture segment. The slides for today’s presentation and corresponding segment commentary can be found on our website along with our news release. During the course of this conference call, we will make forward-looking statements and I direct you to slide one for our disclaimers. All statements that address expectations or projections about the future are forward-looking statements. Although they reflect our current expectations, these statements are not guarantees of future performance but involve a number of risks and assumptions. We urge you to review DuPont’s SEC filings for a discussion of some of the factors that could cause actual results to differ materially. We will also refer to non-GAAP measures. We request that you review our reconciliations to GAAP statements provided with our earnings news release and today’s slides, which are posted on our website. For today’s agenda, Ed will provide opening remarks; Nick will review our fourth quarter financial performance; and Ed will provide concluding remarks followed by your questions. With that introduction it’s now my pleasure to turn the call over to Ed.

Thank you, Greg and good morning everyone. We entered 2016 with a lot of momentum on key initiatives. I’d like to comment on the quarter and our progress operationally before having Nick go through the numbers; then I’ll come back and provide an update on our planned merger with the Dow. The quarter came in largely as expected amid continued challenging macroeconomic conditions including currency pressures. The progress we are making on the three critical initiatives, I outlined last quarter, contributed to the quarter and will serve us well in the future, regardless of macro conditions, our cost structure; our working capital; and our capital spending. First on our cost structure: Cost reductions contributed $0.10 per share to our fourth quarter results, providing $0.40 in savings for the full year from our operational redesign program. We also announced in December a new global cost savings and restructuring plan designed to reduce 2016 costs by $700 million versus 2015 or $900 million on a run rate basis. We have since identified an additional $100 million savings bringing our run rate total to $1 billion and increasing our 2016 savings to about $730 million. This plan will further simplify our organization into fewer larger businesses with integrated R&D, engineering, and manufacturing functions, accelerate decision making, and connect even more closely to our end markets. It will sharpen our focus by giving the businesses more control over their P&Ls and more agility to pursue growth. When we complete our cost savings program, our SG&A will reduce by about 15% on a run rate basis in 2016. Within that number, we are reducing our corporate costs by $200 million. On an operating earnings basis, corporate expenses as a percentage of sales will reduce to about 1.3% in 2016 from 2.3% in 2015. I want…

Thank you, Ed. Let’s start with the details of the fourth quarter on slide two. Operating earnings per share of $0.27 were largely in line with our expectations. While we continued our disciplined focus on cost reductions and productivity, our results again were significantly impacted by currency, challenges in ag markets, particularly in Brazil and the continued weakness in emerging markets. Segment results declined $0.23 per share in the quarter, including a $0.17 per share negative impact from currency, primarily the Brazilian real. Full year operating earnings per share were $2.77 versus 3.36 in the prior year. Currency negatively impacted results by $0.71 per share. Excluding the currency impact for the full year, operating EPS would have increased by 4%. Excluding currency, consolidated net sales for the quarter of $5.3 billion declined 1%. Currency negatively impacted sales by an additional 8 percentage points. The dollar remains strong relative to most other currencies, particularly the Brazilian real. Turning now to slide three, consistent with prior quarters, currency was a significant headwind to the segment results. Segment results excluding currency were down $0.06 per share year-over-year, as growth in Industrial Biosciences and Nutrition & Health was more than offset by declines in Agriculture, Performance Materials, Safety & Protection, and Electronics & Communications. Net after-tax exchange gains and losses were a $0.04 headwind in the quarter. This was primarily driven by the recent currency devaluation in Argentina. A higher tax rate reduced operating EPS by 0.03 per share in the quarter. A continued shift to a higher percentage of our earnings in the U.S. and Canada versus prior year resulted in this higher tax rate. While changes in corporate expense did not impact quarterly results, I would like to highlight that for the full year decreases in corporate expenses contributed $0.09 to earnings,…

Great, thank you Nick. I would like to walk you through our priorities for 2016; it’s simple, we have three. One, delivering growth and operating earnings, an important driver here is delivering the $1 billion in run rate cost savings and the organizational efficiencies that come with the restructuring. Equally important, we are placing a lot of emphasis on keeping the business steady and on track. Our people are very focused on connecting even more closely with customers to deliver the value added solutions they expect from DuPont. Two is driving improved capital allocation and working capital performance to generate more cash and to enhance our returns. Three, closing the merger, planning for synergies and preparing for the intended separations. Let me now say a few words about the merger of equals with Dow which we announced in December and which will be named DowDuPont. As we said at the time, we intend to combine two complementary portfolios to create three strong, highly focused, independent businesses well equipped to deliver growth and long-term sustainable value. Each business would target attractive markets, where combined science, technology and operational expertise will drive value for our stakeholders. We are focused on completing the merger in the second half of 2016 subject to customary closing conditions, including regulatory approval and approval by both DuPont and Dow shareholders. We’ve identified the priority work streams and established our teams. We have begun the process of addressing the requirements under various competition laws including a Hart-Scott-Rodino Act in the U.S. We’re also focused on the preparation of the merge co-registration statement on Form S-4 to be filed with the SEC. The initial filing will be made after each of DuPont and Dow filed their annual reports with the Commission in February. In December, we said that we…

Thanks, Ed. We’ll open the line for questions now. John, if you would please give the instructions?

Thank you. And we will now begin the question-and-answer session. All lines have been placed on mute to prevent any background noise. [Operator Instructions] And our first question comes from Jeff Zekauskas from JP Morgan.

In going [ph] through your slides, it looks like you think your agricultural operating income will be down about $250 million in the first quarter, but you think it would be flat for the year. How might you accomplish that? And secondly, in choosing the heads of the separated companies, will there be a procedure where you go outside both Dow and DuPont to compare candidates from outside the companies as well as candidates inside the companies or will those leaders essentially be chosen from inside both companies?

Yes, Jeff. This is Ed; I’ll take that your second question then turn it over to Jim Collins for the ag question. So, we will have a process in place where we will look both externally and internally in the company. We are setting up a process for that that is not just for who the CEOs will be, but there is obviously many other key public company positions that need to be staffed. I would certainly hope that some of that staffing obviously is going to be from key people in the companies, but our master [ph] is going to be best staff we can get to run the businesses. Jim, do you want to take?

Sure, thanks Jeff. You’re right. When you look at full year operating earnings, we’re about flat and that’s primarily driven by local pricing gains in North America with new germplasms they have for Pioneer seed and corn, and transition to our T Series soybean. So we’re getting some good pricing momentum there. And obviously, we’re starting to see the benefit of our cost reduction efforts flow through. These are dramatically offset clearly again by the currency impact, and we are having some impacts primarily in crop protection and in soybeans in Brazil. For example, if you excluded currency for the full year, we would be up about 10% in operating earnings.

Our next question is from David Begleiter from Deutsche Bank.

Ed, just on a cost savings, ex the Dow merger, how much more you think was available to DuPont, so beyond $1 billion of savings you’ve targeted already?

Look, there is always cost savings. I mean I am a believer that they occur every year in a few percent range, as you keep streamlining your company, I would say. So, you are never done with it. I think where there was more cost savings, David, in DuPont was when we could get up on a IT platform because that would really streamline some of our G&A back office; unfortunately we’re not; we’re on a very fragmented IT system. One of the benefits it looks like we obviously get here with the Dow merger is Dow is on the IT platform that we were going through the global -- actually latest revision of the SAP platform. And so between the work we did here on that platform and the work they -- obviously already up on that platform, that’s where -- and let me just use the ag company as an example. Their ag business is on the platform, if we can translate ourselves on to that platform, that’s where there would be cost savings or I guess to back that up, if DuPont would have stayed on its own of course over the next couple of years getting that platform up and running that’s where more costs would have come out of the Company, mostly in the G&A area. But we will get that benefit quicker in the merger if we can merge on to that platform. The teams have already met on that a couple of times. I actually sat in one of those meetings actually up in Midland at the Dow corporate office with the teams and we’re feeling very bullish about that prospect to lean on to that platform.

And just for Jim, Jim expectations for crop chemical pricing in 2016 year-over-year?

It is going to continue to be a pretty challenging market where we’ve got some inventory carryovers that we’re dealing with both in Latin America, lowering lower insect pressure that we saw here in the fourth quarter and the impact of insect protected varieties of soybeans that are out there. I think in North America, we look at the market in general and see that it will be another challenging environment. We do have some new product launches that will be coming out, our fungicide and our insecticide, [ph] so that will help us from a mix standpoint.

And our next question is from Vincent Andrews from Morgan Stanley.

Thanks, two questions. First, you talked about getting a lot of local pricing in the seed business, in both North America and South America but your remarks in the slide deck as well as some competitor commentary talk about is very competitive environment. So, I was wondering if you can reconcile, it sounds like you are expecting to see net pricing gains but you are also seeing some competition; so what do you see going on in the marketplace?

Yes, thanks. Fourth quarter, you saw some of the impact of the pricing actions that we took primarily in our crop protection business in Latin America and that was largely that to mitigate the currency impact. We also look forward; we’ve got new genetics, [ph] something in North America. So, I look at our pricing book year-over-year for like products. We’re about flat, and you add to that the conversion to T Series soybeans in North America and the new genetics in corn and plus the launch, the continued launch of our products like Leptra in Brazil. That Leptra ramp up in Safrinha was good but in summer corn, could be one of the largest ramp ups that we’ve had in our history. So, it’s going to be tough, it will be competitive but we feel good about the lineup that we have going forward.

And then separately in Performance Materials, there were comments about the weakness in spot ethylene prices but contract ethylene is much stronger than spot. So, I’m just wondering why -- how exposed are you to the spot market and what is the opportunity to get that exposure more towards the contract side of things?

When you look at the spot prices, like we said, it’s down about 60% on a year-over-year basis. Exposure, we’re -- about half of our output is exposed to these external market spot prices. And as you are well aware, the driver here is the reduction in oil and the competition being naphtha based and the impact that’s having on us even though we’re natural gas supplier.

And our next question is from Jonas Oxgaard from Bernstein.

A question on the capital allocation, if -- using your guidance of 2016 and sort of back of the envelop I get to you guys getting somewhere $3.5 billion in operating income. But you say you’re going to spend about $4.5 billion on CapEx dividends and share repurchases and that’s excluding any merger cost. So, I’d assume, at least another $0.5 or so from all the costs associated with restructuring and merger. So, are you guys planning on going into debt or how are you thinking about your position there?

When you look at the cash uses next year, we are anticipating obviously dividends, extremely important to the Company in the past and the future. And so dividends are going to be about $1.3 billion. We are reducing our CapEx from the levels in the past of about 1.4 to 1.5 down about $1.1 billion. And as we said in the commentary, that’s in line with our depreciation, amortization. We made the commitments on the $2 billion of share repurchase; we are committed to accomplishing that. We’re limited right now on our ability to enter the market because of the transaction that’s going on, and we will have that limitation probably through the proxy vote. But then after that, we’ll be looking to enter the marketplace on that. So when you add all that up, you’re right, there is a higher cash train versus the operating income, but we’re also looking at driving some working capital improvements. This is an area that we have focus on; we had some improvements, slight improvement in our working capital turns this year. But we’re looking at attacking all three areas, receivables; inventory; payables. And we believe, if we can get to best in class in these areas that we can liberate another $1 billion plus of cash in the medium-term. So that’s where we’re driving our efforts.

Our next question is from Duffy Fischer from Barclays.

First question for Jim; Latin American or Brazilian in particular soy corn share, you’ve got a couple of trends, obviously Leptra should help down there, you’ve struggled with the Bt resistance on some of the corn. How do you see those two playing out against each other this year and where would you anticipate ending up in corn for this year?

We continue to see some pretty competitive challenges in corn seed in Brazil, especially in the summer season. And we lost some share in 2015. It’s a little too early to size what that might be, based on planted acres. We are excited about the launch of Leptra hybrids. We’ve got some of those coming in to the Safrinha season. And then we would expect that to be about 10% of our Safrinha volume. And then as we start to think about that 2016 full summer season, and this would be one of the fastest ramp ups of new trade in our portfolio. So, we’ll have much more significant volumes of that going forward. In soybeans, it’s a little too early to comment on final share. Clearly we did face some competitive pressure in Brazil, based on the adoption of the inset protected soybean varieties that were out there. And we’re collaborating with our crop protection colleagues in the use of seed treatments to offset some of that. And so we’ll have to be back to you later as the season unfolds to really range just how that unfolded.

And then Ed, we’ve been hearing now for little over two years, probably about the competitive dynamics hurting the Solamet paste. Is it fair to think about that is kind of commoditized at this point or is that still specialty product that we can see a nice rebound in?

Yes, you will see a nice rebound there with the launch at the end of the year, beginning of the year, but there is another launch of a product coming out about mid-year that we feel will be much more competitive as we move forward there. Nick, you might want to comment on that.

Yes, I think Ed characterized it right. It is a business that the competition has gotten more intense but it’s still a business that relies a lot on innovation and development of new products. We issued one in December that kind of leveled the playing field; we’re starting to see the impact of that, and we have one scheduled for the second half of the year that we believe is going to give us a leg up again from a competitive standpoint, so in second half of the year.

Our next question is from Laurence Alexander from Jefferies.

Good morning. Could you speak a little bit about what you’re seeing on the industrial markets order flow and how much visibility you have supporting the outlook for the 3% light vehicle production growth?

Well, certainly the industrial production index, as well as global GDP are under pressure, and we’re seeing that across the globe. We did see auto builds about 2% up for the year; we’re forecasting it to be through IHS as a database there, around 3% for the year, next year 2% to 3% and for the first quarter about 2%, in line with what happened in the fourth quarter. Keep in mind that in China, there was a major stimulus that was launched in that fourth quarter rose the year-over-year fourth quarter numbers up 8%; so starting to see some of that stimulus incentive impacting the industrial numbers as well. Oil and gas continues to be a weakening area for us and obviously with the prices that are out there from the oil base. And so that’s impacting some of our other industrial businesses as well. It’s interesting to note though that -- and I don’t want to say there is a trend here, but our fourth quarter organic revenue was actually our best of the year. We had been running kind of minus 3% through the first nine months of the year and we are minus 1% in the fourth quarter. And if you kind of look at it around the geographies, it was kind of flat in Latin America, flat in North America, pretty flat in Asia and our one down market was Europe which was down about 2%. So, we’ll see how the trend goes here in the first half of the year but that was little bit encouraging that we saw that lift.

Our next question is from John Roberts from UBS.

Do you know where the ag company will be headquartered yet?

We have not made that announcement yet; I would expect we will make that in the next few weeks. We’ve been going through that analysis. And it’s something we want to get out there by the way for whole bunch of reasons but the number one reason in my mind is for our employees, so they understand and have some clarity on that. So, we’re moving as fast as we can to get that announced. And it will be in the next few weeks.

And then the Asian volume was flat in the quarter but the Electronics & Communications segment was down pretty materially. How did Asia end up flat with the electronics segment so weak?

Well we saw increases in volume growth in Nutrition & Health, was up about 11%, IB was up. And when you take up the PV [ph] which was the biggest part of the E&C, E&C would have actually had a good quarter as well. So, we did see offsetting areas where we saw strength in that region.

And that applies directly just to China and N&H was up there, IB was up, Ag was up, and PV was down. So, that’s kind of the offset.

Our next question is from P.J. Juvekar from Citi.

Just a couple of questions, your R&D expense of roughly $1.9 billion in 2016, can you tell us how much of that was in Ag and where do you see that R&D expense growing next year?

Let me talk R&D in total and then Jim you might want to add some color or commentary. But about half of our R&D in the Company is in Ag. And by the reductions that we have done, just to put that in perspective, takes our R&D to between $1.6 billion and $1.7 billion. And I think we are very selective in how we did it. And one of the things if you look back historically just to put this in perspective because I know there has been a lot said and talked about it, but through the last 15 years the R&D has averaged in DuPont $1.65 billion and that’s a run rate over 15 years. And actually from 2000 to 2010 it was $200 million lower than that and then there was a little bit of a ramp up to bring that average up to the 1,650. And that’s exactly about where we are going to be as we move forward through 2016 and on. So, we are at a very heavy robust level; we’re still one of the highest R&D companies in the world. And it’s not off of run rate that the Company has run at for many-many years. Any other commentary on the Ag, Jim you want to add?

Yes, a little bit. As we really back in 2014, we started to take a continued, more focused look at where our spending was trending and trying to stay focused on the things that could really move the needle in terms of the new genetics and things like our T Series soybeans worked in the new genetics in corn. Overall from a corporate perspective, we spend about 75% of our R&D in agriculture on sees and the balance of that in crop protection. In the seed business, about 40% of that or so would be on breeding and product testing and advancing the new genetics through to commercialization, another 40% is on things like enabling technologies that allow us to produce seed more efficiently, characterization, trade integration, things like seed production technology, and then the balance of that actually at a much smaller portion would be focused on discovery, on trade discovery and development. And we’ve been ramping up our efforts in areas around insect control in corn, key agronomic trades like drought and nitrogen, and then continuing to work on our own programs around soy insect control as well as soy output trades, things like our [Indiscernible] that would be out there in marketplace.

And just quickly, when do you expect to 40% [ph] if you could come back? Thanks.

If you look back at 2015, financially it did have an impact based on year-over-year, some of that was from lower volumes that we just didn’t have to sell and some of that was from the fixed overhead cost that we had at that site to continue to flow through. We have forecasted and expect the impact of the report shutdowns to continue throughout the year of 2016. And we continue to work with regulators. And at this point we really don’t yet have a timeline for when the report shutdown would be resolved. So, it’s later in the year we were able to get that resolved and started back up that would actually be a tailwind for us. In our current outlook, we’re not counting on it.

Our next question is from Frank Mitsch from Wells Fargo Securities.

Nick, I know you’re really busy this week with the earnings and snow, so you probably missed some of the football this week. And I would just suggest you go back and check it out, because Cam Newton was really amazing.

Yes, I don’t think I have to worry about that anymore.

Ed, I know you’re busy this week and also with [indiscernible] but also busy upsizing the cost reductions, 2016 goes from 700 to 730; run rate 900 million to 1 billion, that’s after one month, because you rolled these numbers out one month ago. And you also rolled out -- you and Andrew rolled out a $3 billion number a month ago in terms of synergies for the combined entities. If I extrapolate out your upsizing here, I come out to $6 billion by September. Obviously that’s not right. But how should we be thinking, now that you’re a month into the progress, you’ve got a couple of teams together working on the synergy; how should we think about the combined synergies of DowDuPont?

Yes. And let me just clarify again, to your comments, our cost reduction of $1 billion is separate from the DowDuPont $3 billion. And on our $1 billion, we’re moving obviously as rapidly as we can. I want to get that out of the way and how things settle down for the Company and all that. So, we’re moving as fast as we can and we did identify more and so we’re moving on that. The interesting thing on the $3 billion of the synergies with Dow, we have broken that out by all those key buckets we mentioned in our prepared remarks. The teams are meeting, as my comment was one of our big opportunities is this IT platform, that’s why I got personally involved in it, because if we can overlay onto that, there is a huge opportunity. But if you look back at our charts, there is 1.2 billion to 1.3 billion in Ag that is very identified at this point in time. And there is so much overlap in the supply chain, the manufacturing chain, the sales chain. And by the way the percentages we’re talking about on the Ag side are very similar to other transactions of similar type companies there. And then, we’re in good shape, looking at the synergies on the specialty company. A lot of that comes from the combination of the electronics businesses from Dow and DuPont coming together and the synergies, then we have on the material side are identified. But where we’re still working and we have a lot of opportunity is the purchasing supply chain, as I mentioned the IT and then we have a great opportunity to look at more shared services across the whole platform. And that’s where hundreds of millions of dollars of savings could come from there. So, it’s a combination of all that. Now, we’re doing a lot of heavy on. So for instance, in the supply chain area between the two companies, just to give you, we have hundreds of warehouses around the world and we don’t need that when we come together. So that is work you can’t do in one week; that’s going to take us the next three or four months literally identifying every single one and going work merging converts together. [Ph] So a little bit heavy lifting on that supply chain, purchasing, IT side and then the shared service, how do we want to move two more for a lot of the back office work which will reduce our G&A. So, I really plan and we’re really pushing with the teams that we are totally identified on the 3 billion minimum by the time we get to close a merger, so we can move immediately on it. And I would also say I would be very helpful that the $3 billion is our floor number and not the ceiling number. And if we can get more out of that, obviously we’re going to just move on it.

That’s very helpful, I appreciate the color there. And then just operationally on safety and protection. I know you guys highlighted oil and gas being weak, no surprise there. You also talked about military being weak. Can you offer some commentary on what you’re seeing there and what your expectations are for the military side?

Well, it’s really delays in the tenders and spending there. So, it’s more of a timing thing than a cancellation thing. And so it’s difficult, Frank, to predict exactly when that’s going to free up again on the spending side of it. But those tenders are in place, and it’s just a matter of when they get executed against.

Our next question is from Don Carson from Susquehanna Financial.

Question for Jim on Ag. Jim, you talked about how crop protection sales were down 24% in the fourth quarter and in your slides. What was the full year impact? And could you sort of sight what the key factors were, how much of that was channel destock in Brazil, how much was La Porte? And what’s your expectation for crop protection sales in ‘16 versus ‘15?

So, I did talk a little bit about the impact in fourth quarter volumes related to the insect-protected varieties down in Brazil. So that was one impact. We will expect to see that carry over as well. Paste pressure is another aspect; again it’s difficult to predict what we’re going to see going forward. If we think about 2016, just overall total macroeconomics, we’re predicting net farm income and net farm prices for growers to be challenged. And from the past, as they start to make purchasing decisions, lock in lands, they will secure their seed and they’ll make sure they’ve got their fertility programs right and then sort of back into what their crop protection regime is going to be. On top of that for our own business, we’re missing some volumes associated with the La Porte. And so that kind of all adds to that picture, so overall, strong competitive market. I think on the offset there, we’ve got a strong crop protection pipeline that continues to come forward. We’re not into the full blown launch of [Indiscernible] here. We’ll expect to see some recovery in [indiscernible] volumes especially in places like Asia Pacific in foods and vegetables; on fungicide, Zorvec, early days, but starting to get some traction on that and our new insecticide Prexil. [Ph] So, those are couple of areas that would offset some of that in the downside and Prexil, [Ph] we’re really just getting some testing going on that the full launch of will be in 2017.

As you look to the merger with Dow in ag, any trust concerns on corn seed markets here either in the U.S. or Brazil and Argentina?

No. I think if I look at the overlap of our portfolios, we have a very complementary set of products, both on the seed side and the chemistry side. Dow got some very strong brands that looking at how we go to market with not only the Pioneer brand but our PROaccess brand makes a modest sense of then how we might mange through that. And then as Ed said earlier, as we start to look at the synergies, looking at our supply chains and how we produce seed globally looking at our go to market efficiencies, both in seed and crop protection and then taking a step back and looking at both our R&D and our G&A overheads where we’re totally duplicative, taking very aggressive approach there as well.

And it’s from Steve Byrne from Bank of America. Please go ahead.

Just a couple of more for Jim. You’ve looked at the feasibility of transferring the products from La Porte to one of the Dow ag facilities post merger and what’s your outlook for channel inventory levels of crop protection down in south America at the end of Safrinha season?

So I’ll take the second one first. We do expect to see some challenging inventories as that insect control market in the fourth quarter last year really died on; its’ the combination of just lower paste pressure and the impact of insect protected soybean varieties that we’re in that market. So inventories have been challenged. Now we saw some of that coming in and we started to take some actions to correct for that but still will have some pressure there. On La Porte and Lannate and some opportunities there, it’s really way too early to be thinking about those kinds of actions. We’re just in the early days of thinking through integration and certainly those might be opportunities but those would really come once the merger was complete, we have a chance to really sit down with our counterparts and understand what their capabilities are.

Great. Well, thanks everybody for joining the call today. The IR team is available for your further questions, and we ask that you have a good day. Thank you.

Thank you, ladies and gentlemen. That concludes today’s call. Thank you for all participating. You may disconnect at this time.