Wilmington, DE, Mar. 4--Between 13 percent and 41 percent of the 2004 profit increase previously forecast by the DuPont Co. will result from an accounting adjustment related to the pending sale of Invista, the company told regulators Wednesday.
DuPont reiterated its projection that it will earn $2 to $2.20 a share, compared with $1.66 in 2003. The consensus of 16 analysts polled by First Call is $2.15.
However, up to 14 cents will come from an adjustment the company first disclosed in October. The impending sale of its polyester, nylon and Lycra business to Koch Industries Inc. required reclassifying the assets in a way that benefits DuPont's bottom line.
Spokesman R. Clifton Webb said the quarterly benefit will be 7 cents a share. He said the amount wasn't specified before Wednesday's filing of Form 10K, an annual report to the Securities and Exchange Commission.
"The sale of Invista remains on track for completion during the first half of 2004," Webb said in a statement. That could mean up to a 14-cent benefit to 2004 earnings.
Although DuPont reiterated the sale timeline in its filing, its chief financial officer co-signed a Jan. 23 memo citing the end of March as a target date. "We cannot be more specific about the timing of the sale," Webb said.
DuPont also said in the 10K that earnings will benefit from Medicare reform, which will help employers cover certain prescription-drug benefits beginning in 2006. The amount, 4 cents a share for the year after taxes, was previously disclosed. Webb said it will be "largely offset" by pension and stock option-related adjustments.
The Invista benefit alone could account for up to 41 percent of DuPont's projected increase, should 2004 earnings match the lowest estimate. At $2.20, it could be up to 26 percent.
Standard & Poor's Inc. analyst Richard O'Reilly noted that DuPont previously said the $4.4 billion Invista sale would be "neutral to accretive" to 2004 earnings.
