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8-K - 8-K - DUPONT E I DE NEMOURS & COa11-4537_18k.htm

Exhibit 99.1

 

 

 

January 25, 2011

Media Contact:

Anthony Farina

WILMINGTON, Del.

 

302-773-4418

 

 

anthony.r.farina@usa.dupont.com

 

Investor Contact:

302-774-4994

 

DuPont Delivers Fourth Quarter 2010 Earnings of $.40 per Share; $.50 Excluding Significant Items

Full Year 2010 EPS Jumps More than 60 Percent on Sales Increase of 21 Percent

 

4Q Highlights:

 

·                  DuPont’s fourth quarter 2010 earnings per share were $.40, compared to $.48 in the prior year despite a $.14 per share Pharmaceuticals decline.  Excluding significant items, earnings per share were $.50 versus $.44 in the prior year.  (See Schedule B for significant items.)

 

·                  Sales were $7.4 billion, up 15 percent versus prior year driven by 12 percent higher volume and 6 percent higher local prices, partly offset by 2 percent impact from currency and a 1 percent reduction from portfolio changes.  Developing market sales increased 24 percent.

 

·                  Growth in sales was broad based across segments and regions, with particularly strong growth in Electronics & Communications and Performance Chemicals.

 

Full-Year Highlights:

 

·                  2010 earnings were $3.28 per share versus $1.92 in 2009. Excluding significant items, 2010 earnings were $3.28 per share versus $2.03 in 2009, up 62 percent.

 

·                  Sales increased 21 percent to $31.5 billion with sales volume approaching pre-recession levels driven by significant economic recovery in developed markets, share gains, and continued penetration of developing markets.

 

·                  Full-year free cash flow was $3.1 billion versus the company’s target of greater than $1.7 billion, primarily driven by higher earnings and working capital productivity.

 

·                  DuPont exceeded its full-year productivity targets of $400 million each for fixed costs and working capital.

 

·                  DuPont increased its full-year 2011 earnings guidance to a range of $3.45 to $3.75 per share.  Previous guidance was $3.30 to $3.60 per share.  Additionally, the impact of the planned Danisco acquisition could reduce 2011 earnings by $.30-$.45 per share on a reported basis.

 

“The fourth quarter was a strong finish to an outstanding year.  We laid the groundwork for recovery in 2009 and executed with precision and effectiveness in 2010, meeting and often exceeding our business goals and financial commitments, some a full year early,” said DuPont Chair and CEO Ellen Kullman.  “We continue to differentiate DuPont through sustainable growth, disciplined execution and ongoing productivity coupled with science-powered innovation to address population megatrends around food, energy and protection.”

 

E. I. du Pont de Nemours and Company

 



 

Global Consolidated Sales and Net Income

 

Fourth quarter 2010 consolidated net sales of $7.4 billion were 15 percent higher than the prior year reflecting 12 percent higher volume, 6 percent higher local selling prices, a 2 percent reduction from currency exchange rates and a 1 percent reduction from portfolio changes. The table below shows regional sales and variances versus the fourth quarter 2009.

 

 

 

Three Months Ended
December 31, 2010

 

Percentage Change Due to:

 

(Dollars in billions)

 

$

 

%
Change

 

Local
Currency
Price

 

Currency
Effect

 

Volume

 

Portfolio
/Other

 

U.S.

 

$

2.2

 

15

 

6

 

 

9

 

 

EMEA*

 

1.9

 

6

 

6

 

(7

)

8

 

(1

)

Asia Pacific

 

2.0

 

26

 

8

 

2

 

17

 

(1

)

Latin America

 

1.2

 

18

 

6

 

1

 

14

 

(3

)

Canada

 

0.1

 

 

1

 

1

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consolidated Sales

 

$

7.4

 

15

 

6

 

(2

)

12

 

(1

)

 


* Europe, Middle East & Africa

 

Fourth quarter 2010 net income attributable to DuPont was $376 million versus $441 million in 2009.  Excluding significant items in both years, fourth quarter 2010 net income attributable to DuPont was $463 million versus $402 million in 2009.  Pharmaceuticals pre-tax income declined $160 million versus fourth quarter 2009 due to patent expirations.  Fixed costs were 47 percent of sales, improving from 50 percent in fourth quarter 2009.  Fixed cost productivity exceeded the $400 million improvement target set for the full year.

 

2



 

Earnings Per Share

 

The table below shows year-over-year earnings per share (EPS) variances for the fourth quarter, excluding significant items.

 

EPS ANALYSIS

 

 

 

4Q

 

 

 

 

 

EPS 2009

 

$

.48

 

Less: Significant items (Schedule B)

 

.04

 

EPS 2009 - Excluding significant items

 

$

.44

 

 

 

 

 

Local prices

 

.38

 

Variable cost*

 

(.32

)

Volume

 

.21

 

Fixed cost*

 

(.21

)

Currency

 

(.03

)

Other (includes Pharmaceuticals)**

 

(.08

)

Tax

 

.11

 

EPS 2010 - Excluding significant items

 

$

.50

 

Significant items (Schedule B)

 

(.10

)

EPS 2010

 

$

.40

 

 


* Fixed and variable costs exclude volume & currency impacts

** Principally $(.14) lower Pharmaceuticals income, partly offset by $.03 higher equity affiliate income and $.03 exchange gains.

 

3



 

Business Segment Performance for 4th Quarter

 

The table below shows fourth quarter 2010 segment sales and related variances versus the prior year.

 

 

 

Three Months Ended
December 31, 2010

 

Percentage Change
Due to:

 

SEGMENT SALES*
(Dollars in billions)

 

$

 

% Change

 

USD
Price

 

Volume

 

Portfolio
and
Other

 

Agriculture & Nutrition

 

$

1.5

 

13

 

1

 

13

 

(1

)

Electronics & Communications

 

0.8

 

33

 

9

 

24

 

 

Performance Chemicals

 

1.7

 

26

 

14

 

13

 

(1

)

Performance Coatings

 

1.0

 

3

 

(1

)

4

 

 

Performance Materials

 

1.6

 

11

 

5

 

9

 

(3

)

Safety & Protection

 

0.9

 

13

 

 

13

 

 

 


*    Segment sales include transfers

 

Segment pre-tax operating income (PTOI) for fourth quarter 2010 was $641 million compared to fourth quarter 2009 PTOI of $798 million.  Excluding significant items, PTOI for fourth quarter 2010 was $657 million compared to $743 million in the fourth quarter 2009.  The decrease in PTOI principally reflects lower Pharmaceuticals income partly offset by higher segment sales.

 

PRE-TAX OPERATING INCOME (LOSS) EXCLUDING SIGNIFICANT ITEMS

 

SEGMENT PTOI
(Dollars in millions)

 

4Q 2010

 

4Q 2009

 

$ change
vs. 2009

 

 

 

 

 

 

 

 

 

Agriculture & Nutrition

 

$

(117

)

$

(97

)

$

(20

)

Electronics & Communications

 

98

 

61

 

37

 

Performance Chemicals

 

315

 

208

 

107

 

Performance Coatings

 

71

 

70

 

1

 

Performance Materials

 

206

 

174

 

32

 

Safety & Protection

 

92

 

135

 

(43

)

Other*

 

(95

)

(55

)

(40

)

 

 

$

570

 

$

496

 

$

74

 

Pharmaceuticals**

 

87

 

247

 

(160

)

Total Segment PTOI

 

$

657

 

$

743

 

$

(86

)

 


*      4Q 2010 includes $32 million in charges related to legal settlements for discontinued businesses.

**          4Q 2009 includes a $63 million charge in other income relating to the timing of rebates and other sales deductions.

 

4



 

Business Segment Performance for Full Year

 

The tables below show full-year 2010 segment sales with related variances versus the prior year, and full-year PTOI excluding significant items.

 

 

 

12 Months Ended
December 31, 2010

 

Percentage Change
Due to:

 

SEGMENT SALES*
(Dollars in billions)

 

$

 

% Change

 

USD
Price

 

Volume

 

Portfolio
and Other

 

Agriculture & Nutrition

 

$

9.1

 

10

 

4

 

7

 

(1

)

Electronics & Communications

 

2.8

 

44

 

7

 

37

 

 

Performance Chemicals

 

6.3

 

27

 

10

 

18

 

(1

)

Performance Coatings

 

3.8

 

11

 

2

 

9

 

 

Performance Materials

 

6.3

 

32

 

7

 

27

 

(2

)

Safety & Protection

 

3.4

 

20

 

 

20

 

 

 


*    Segment sales include transfers

 

Consolidated net sales were $31.5 billion, up 21 percent versus prior year driven by 17 percent higher volume and 5 percent higher local prices, partly offset by a 1 percent reduction from portfolio changes.  Developing market sales increased 27 percent.

 

SEGMENT PTOI EXCLUDING SIGNIFICANT ITEMS
(Dollars in millions)

 

FY 2010

 

FY 2009

 

$ change
vs. 2009

 

 

 

 

 

 

 

 

 

Agriculture & Nutrition

 

$

1,405

 

$

1,223

 

$

182

 

Electronics & Communications

 

437

 

124

 

313

 

Performance Chemicals

 

1,071

 

601

 

470

 

Performance Coatings

 

255

 

84

 

171

 

Performance Materials

 

978

 

295

 

683

 

Safety & Protection

 

449

 

305

 

144

 

Other

 

(206

)

(169

)

(37

)

 

 

$

4,389

 

$

2,463

 

$

1,926

 

Pharmaceuticals

 

489

 

1,037

 

(548

)

Total Segment PTOI

 

$

4,878

 

$

3,500

 

$

1,378

 

 

5



 

The following is a summary of business results for each of the company’s reportable segments, comparing fourth quarter 2010 with fourth quarter 2009, for sales and PTOI excluding significant items.  All references to selling price are on a U.S. dollar basis, including the impact of currency.

 

Agriculture & Nutrition — Fourth quarter 2010 sales of $1.5 billion were up 13 percent, reflecting higher volume. Increased sales primarily reflect a strong start to the North American season, an increase in Latin America corn sales, an increase in Brazil soybean volume, and higher sales for crop protection products across all regions, led by continued expansion of Rynaxypyr® insecticide.  PTOI for the fourth quarter was a seasonal loss of $117 million compared to a loss of $97 million in the fourth quarter 2009, reflecting continued growth investments.

 

Electronics & Communications — Fourth quarter 2010 sales of $0.8 billion were up 33 percent, reflecting 24 percent higher volume and 9 percent higher selling prices, primarily pass-through of metals prices.  Higher volume was driven by growth in all regions, particularly in Asia Pacific, and strong demand across most market segments, especially photovoltaics.  PTOI of $98 million was up $37 million reflecting substantially higher volume.

 

Performance Chemicals — Fourth quarter 2010 sales of $1.7 billion were up 26 percent, principally reflecting 13 percent higher volume and 14 percent higher selling prices.  Sales increased across all regions, especially in North America and Asia Pacific.  Higher selling prices primarily reflect favorable pricing for titanium dioxide. PTOI was $315 million, an improvement of $107 million reflecting higher selling prices and volume.

 

Performance Coatings — Fourth quarter 2010 sales of $1.0 billion were up 3 percent, reflecting 4 percent higher volume, while selling prices declined 1 percent due to unfavorable currency impacts.  Results reflect continued strengthening in industrial coatings, particularly the North American and European heavy duty truck markets, and modest growth in global automotive markets, most significantly in North America.  PTOI was $71 million, essentially flat versus prior year.

 

Performance Materials — Fourth quarter 2010 sales of $1.6 billion were up 11 percent, with 9 percent higher volume and a 5 percent increase in selling prices, partly offset by a 3 percent portfolio change.  The higher volume reflects double-digit growth in Asia Pacific and North America.  PTOI was $206 million, an improvement of $32 million, resulting from a $31 million combined benefit from an acquisition and an early termination of a supply agreement.  The impact of higher volume was offset by a weaker overall sales mix and increased raw material costs.

 

Safety & Protection — Fourth quarter 2010 sales of $0.9 billion were up 13 percent from higher volume.  Growth reflects increased demand for aramid and nonwoven products due to the continued recovery in industrial markets and strong demand across all regions.  PTOI was $92 million versus $135 million in the prior year. The year-over-year reduction was due to higher raw material costs, higher spending for aramids growth initiatives and a net $11 million charge related to an asset impairment and a separate gain on an asset sale.

 

Additional information is available on the DuPont Investor Center website at www.dupont.com.

 

6



 

Outlook

 

The company revised its full-year 2011 earnings outlook to a range of $3.45 to $3.75 per share.  Previous guidance was $3.30 to $3.60 per share.  This revision reflects a lower base tax rate of 20 to 21 percent and reduced pension expense headwind, partly offset by anticipated dilution from increased shares outstanding.  The earnings outlook reflects the expectation for continued steady global economic growth with increasing industrial production, favorable North American agricultural conditions, and the company’s further penetration of developing markets.  As previously announced, earnings from Pharmaceuticals are expected to decline about $280 million pre-tax versus 2010.

 

DuPont announced January 9 that it entered into a definitive agreement for the acquisition of Danisco, expected to be completed early in the second quarter.  The impact of this acquisition could reduce 2011 earnings by $.30-$.45 per share on a reported basis.

 

Use of Non-GAAP Measures

 

Management believes that certain non-GAAP measurements, such as free cash flow, are meaningful to investors because they provide insight with respect to ongoing operating results of the company.  Such measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance.  Reconciliations of non-GAAP measures to GAAP are provided in schedules C and D.

 

DuPont (www.dupont.com) is a science-based products and services company. Founded in 1802, DuPont puts science to work by creating sustainable solutions essential to a better, safer, healthier life for people everywhere. Operating in more than 90 countries, DuPont offers a wide range of innovative products and services for markets including agriculture and food; building and construction; communications; and transportation.

 

Forward-Looking Statements:  This news release contains forward-looking statements based on management’s current expectations, estimates and projections.  All statements that address expectations or projections about the future, including statements about the company’s strategy for growth, product development, market position, expected expenditures and financial results are forward-looking statements.  Some of the forward-looking statements may be identified by words like “expects,” “anticipates,” “plans,” “intends,” “projects,” “indicates,” and similar expressions.  These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions.  Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by DuPont, particularly its latest annual report on Form 10-K and quarterly report on Form 10-Q, as well as others, could cause results to differ materially from those stated.  These factors include, but are not limited to changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates, of countries in which the company does business; competitive pressures; successful integration of structural changes, including restructuring plans, acquisitions, divestitures and alliances; cost of raw materials, research and development of new products, including regulatory approval and market acceptance; seasonality of sales of agricultural products; and severe weather events that cause business interruptions, including plant and power outages, or disruptions in supplier and customer operations. The company undertakes no duty to update any forward-looking statements as a result of future developments or new information.

 

#   #   #

 

01/25/11

 

7



 

E. I. du Pont de Nemours and Company

Consolidated Income Statements

(Dollars in millions, except per share amounts)

 

SCHEDULE A

 

 

 

Three Months Ended
December 31,

 

Year Ended 
December 31,

 

 

 

2010

 

2009

 

2010

 

2009

 

Net sales

 

$

 7,404

 

$

 6,419

 

$

 31,505

 

$

 26,109

 

Other income, net (a)

 

338

 

395

 

1,228

 

1,219

 

Total

 

7,742

 

6,814

 

32,733

 

27,328

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold and other operating charges (a)

 

5,923

 

4,956

 

23,146

 

19,708

 

Selling, general and administrative expenses

 

873

 

856

 

3,669

 

3,440

 

Research and development expense (a)

 

473

 

389

 

1,651

 

1,378

 

Interest expense (a)

 

281

 

96

 

590

 

408

 

Employee separation / asset related charges, net (a)

 

(34

)

(55

)

(34

)

210

 

Total

 

7,516

 

6,242

 

29,022

 

25,144

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

226

 

572

 

3,711

 

2,184

 

(Benefit from) provision for income taxes (a)

 

(152

)

127

 

659

 

415

 

 

 

 

 

 

 

 

 

 

 

Net income

 

378

 

445

 

3,052

 

1,769

 

 

 

 

 

 

 

 

 

 

 

Less:  Net income attributable to noncontrolling interests

 

2

 

4

 

21

 

14

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to DuPont

 

$

 376

 

$

 441

 

$

 3,031

 

$

 1,755

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share of common stock

 

$

 0.41

 

$

 0.48

 

$

 3.32

 

$

 1.93

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share of common stock

 

$

 0.40

 

$

 0.48

 

$

 3.28

 

$

 1.92

 

 

 

 

 

 

 

 

 

 

 

Dividends per share of common stock

 

$

 0.41

 

$

 0.41

 

$

 1.64

 

$

 1.64

 

 

 

 

 

 

 

 

 

 

 

Average number of shares outstanding used in earnings per share (EPS) calculation:

 

 

 

 

 

 

 

 

 

Basic

 

914,403,000

 

904,526,000

 

908,860,000

 

904,395,000

 

Diluted

 

928,800,000

 

910,854,000

 

921,655,000

 

908,712,000

 

 


(a) See Schedule B for detail of significant items.

 

8



 

E. I. du Pont de Nemours and Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share amounts)

 

SCHEDULE A (continued)

 

 

 

December 31,
2010

 

December 31,
2009

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

4,263

 

$

4,021

 

Marketable securities

 

2,538

 

2,116

 

Accounts and notes receivable, net

 

5,635

 

5,030

 

Inventories

 

5,967

 

5,380

 

Prepaid expenses

 

122

 

129

 

Income taxes

 

534

 

612

 

Total current assets

 

19,059

 

17,288

 

Property, plant and equipment, net of accumulated depreciation (December 31, 2010 - $18,628; December 31, 2009 - $17,821)

 

11,339

 

11,094

 

Goodwill

 

2,617

 

2,137

 

Other intangible assets

 

2,704

 

2,552

 

Investment in affiliates

 

1,041

 

1,014

 

Other assets

 

3,650

 

4,100

 

Total

 

$

40,410

 

$

38,185

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

4,360

 

$

3,542

 

Short-term borrowings and capital lease obligations

 

133

 

1,506

 

Income taxes

 

225

 

154

 

Other accrued liabilities

 

4,671

 

4,188

 

Total current liabilities

 

9,389

 

9,390

 

Long-term borrowings and capital lease obligations

 

10,137

 

9,528

 

Other liabilities

 

11,026

 

11,490

 

Deferred income taxes

 

115

 

126

 

Total liabilities

 

30,667

 

30,534

 

 

 

 

 

 

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Preferred stock

 

237

 

237

 

Common stock, $0.30 par value; 1,800,000,000 shares authorized; issued at December 31, 2010 - 1,004,351,000; December 31, 2009 - 990,855,000

 

301

 

297

 

Additional paid-in capital

 

9,227

 

8,469

 

Reinvested earnings

 

12,030

 

10,710

 

Accumulated other comprehensive loss

 

(5,790

)

(5,771

)

Common stock held in treasury, at cost (87,041,000 shares at December 31, 2010 and December 31, 2009)

 

(6,727

)

(6,727

)

Total DuPont stockholders’ equity

 

9,278

 

7,215

 

Noncontrolling interests

 

465

 

436

 

Total equity

 

9,743

 

7,651

 

Total

 

$

40,410

 

$

38,185

 

 

9



 

E. I. du Pont de Nemours and Company

Condensed Consolidated Statements of Cash Flows

(Dollars in millions)

 

SCHEDULE A (continued)

 

 

 

Year Ended
December 31,

 

 

 

2010

 

2009

 

 

 

 

 

 

 

Cash provided by operating activities

 

$

4,559

 

$

4,741

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant and equipment

 

(1,508

)

(1,308

)

Investments in affiliates

 

(100

)

(124

)

Payments for businesses (net of cash acquired)

 

(637

)

(13

)

Net (increase) decrease in short-term financial instruments

 

(457

)

(2,016

)

Other investing activities - net

 

263

 

(837

)

Cash used for investing activities

 

(2,439

)

(4,298

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Dividends paid to stockholders

 

(1,501

)

(1,492

)

Net (decrease) increase in borrowings

 

(778

)

1,391

 

Other financing activities - net

 

450

 

4

 

Cash used for financing activities

 

(1,829

)

(97

)

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

(49

)

30

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

242

 

376

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

4,021

 

3,645

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

4,263

 

$

4,021

 

 

10



 

E. I. du Pont de Nemours and Company

Schedule of Significant Items

(Dollars in millions, except per share amounts)

 

SCHEDULE B

 

SIGNIFICANT ITEMS

 

 

 

Pre-tax

 

After-tax

 

($ Per Share)

 

 

 

2010

 

2009

 

2010

 

2009

 

2010

 

2009

 

1st Quarter - Total

 

$

 

$

 

$

 

$

 

$

 

$

 

2nd Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment of interest and accruals related to income tax settlements (a)

 

$

59

 

$

 

$

87

 

$

 

$

0.09

 

$

 

2009 Restructuring charge (b)

 

 

(340

)

 

(227

)

 

(0.25

)

2008 Restructuring adjustment (c)

 

 

75

 

 

53

 

 

0.06

 

Hurricane proceeds and adjustments (d)

 

 

50

 

 

33

 

 

0.04

 

2nd Quarter - Total

 

$

59

 

$

(215

)

$

87

 

$

(141

)

$

0.09

 

$

(0.15

)

3rd Quarter - Total

 

$

 

$

 

$

 

$

 

$

 

$

 

4th Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

2008 and 2009 Restructuring adjustments (c)

 

$

34

 

$

55

 

$

23

 

$

39

 

$

0.02

 

$

0.04

 

Charge related to early extinguishment of debt (e)

 

(179

)

 

(117

)

 

(0.13

)

 

Charge related to upfront payment for licensing agreement (f)

 

(50

)

 

(32

)

 

(0.03

)

 

Reversal of accruals related to tax valuation allowances (g)

 

 

 

39

 

 

0.04

 

 

4th Quarter - Total

 

$

(195

)

$

55

 

$

(87

)

$

39

 

(0.10

)

$

0.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year-to-date - Total (h)

 

$

(136

)

$

(160

)

$

 

$

(102

)

$

 

$

(0.11

)

 


(a)

 

Second quarter and full year 2010 included benefits for the adjustment of accrued interest of $59 ($38 after-tax) in Other income, net and the adjustment of income tax accruals of $49 associated with settlements of prior year tax contingencies.

(b)

 

Second quarter and full year 2009 included a $(340) restructuring charge recorded in Employee separation / asset related charges, net related to severance and related benefit costs, asset related charges, and other non-personnel costs. Pre-tax amounts by segment were: Electronics & Communications - $(43); Performance Chemicals - $(66); Performance Coatings - $(65); Performance Materials - $(110); Safety & Protection - $(55); and Other - $(1).

(c)

 

Second quarter and fourth quarter 2009 included a net reduction of $75 and $55, respectively for estimated costs recorded in Employee separation / asset related charges, net related to the 2008 and 2009 restructuring programs primarily due to the achievement of work force reductions through non-severance programs. Total full year pre-tax amounts by segment were: Agriculture & Nutrition - $1; Electronics and Communications - $6; Performance Chemicals - $12; Performance Coatings - $50; Performance Materials - $52; Safety & Protection - $10; and Other - $(1).

 

 

Fourth quarter and full year 2010 included a net reduction of $34 for estimated costs recorded in Employee separation / asset related charges, net related to the 2008 and 2009 restructuring programs primarily due to the achievement of work force reductions through non-severance programs. Total full year pre-tax amounts by segment were: Electronics and Communications - $8; Performance Chemicals - $10; Performance Coatings - $(6); Performance Materials - $16, Safety & Protection - $5 and Other - $1. These restructuring programs were substantially completed by the end of 2010 with payments continuing into 2011.

(d)

 

Second quarter and full year 2009 included a $50 benefit in Cost of goods sold and other operating charges resulting from a reduction of $26 from lower than estimated inventory and permanent investment write-offs and $24 in insurance recoveries relating to the damage from Hurricane Ike in 2008. Total pre-tax amount related to the Performance Materials segment.

(e)

 

Fourth quarter and full year 2010 included a $(179) charge in Interest expense associated with the early extinguishment of debt.

(f)

 

Fourth quarter and full year 2010 included a $50 charge in Research and development expense for an upfront payment related to a Pioneer licensing arrangement with Syngenta AG for MIR604 (Agrisure™ RW) for corn seed trait technology. Since this payment is being made before regulatory approval is secured by Pioneer, it was charged to Research and development expense.

(g)

 

Fourth quarter and full year 2010 included a $39 benefit for the reversal of a tax valuation allowance related to the net deferred tax assets of a foreign subsidiary.

(h)

 

Earnings per share for the year may not equal the sum of quarterly earnings per share due to changes in average share calculations.

 

 

 

See Schedule C for detail by segment.

 

11



 

E. I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

 

SCHEDULE C

 

 

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

SEGMENT SALES (1)

 

2010

 

2009

 

2010

 

2009

 

Agriculture & Nutrition

 

$

1,542

 

$

1,368

 

$

9,085

 

$

8,287

 

Electronics & Communications

 

773

 

582

 

2,764

 

1,918

 

Performance Chemicals

 

1,664

 

1,320

 

6,322

 

4,964

 

Performance Coatings

 

1,005

 

975

 

3,806

 

3,429

 

Performance Materials

 

1,599

 

1,436

 

6,287

 

4,768

 

Safety & Protection

 

859

 

759

 

3,364

 

2,811

 

Other

 

40

 

45

 

194

 

158

 

Total Segment sales

 

$

7,482

 

$

6,485

 

$

31,822

 

$

26,335

 

 

 

 

 

 

 

 

 

 

 

Elimination of transfers

 

(78

)

(66

)

(317

)

(226

)

Consolidated net sales

 

$

7,404

 

$

6,419

 

$

31,505

 

$

26,109

 

 


(1)   Sales for the reporting segments include transfers.

 

12



 

E. I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

 

SCHEDULE C (continued)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

PRE-TAX OPERATING INCOME/(LOSS) (PTOI)

 

2010

 

2009

 

2010

 

2009

 

Agriculture & Nutrition

 

$

(167

)

$

(95

)

$

1,355

 

$

1,224

 

Electronics & Communications

 

106

 

67

 

445

 

87

 

Performance Chemicals

 

325

 

217

 

1,081

 

547

 

Performance Coatings

 

65

 

78

 

249

 

69

 

Performance Materials

 

222

 

198

 

994

 

287

 

Safety & Protection

 

97

 

144

 

454

 

260

 

Pharmaceuticals

 

87

 

247

 

489

 

1,037

 

Other

 

(94

)

(58

)

(205

)

(171

)

Total Segment PTOI

 

$

641

 

$

798

 

$

4,862

 

$

3,340

 

 

 

 

 

 

 

 

 

 

 

Net exchange gains (losses) (1)

 

12

 

(3

)

(13

)

(205

)

Corporate expenses & net interest

 

(427

)

(223

)

(1,138

)

(951

)

Income before income taxes

 

$

226

 

$

572

 

$

3,711

 

$

2,184

 

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) (2)

 

2010

 

2009

 

2010

 

2009

 

Agriculture & Nutrition

 

$

(50

)

$

2

 

$

(50

)

$

1

 

Electronics & Communications

 

8

 

6

 

8

 

(37

)

Performance Chemicals

 

10

 

9

 

10

 

(54

)

Performance Coatings

 

(6

)

8

 

(6

)

(15

)

Performance Materials

 

16

 

24

 

16

 

(8

)

Safety & Protection

 

5

 

9

 

5

 

(45

)

Pharmaceuticals

 

 

 

 

 

Other

 

1

 

(3

)

1

 

(2

)

Total significant items by segment

 

$

(16

)

$

55

 

$

(16

)

$

(160

)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

PTOI EXCLUDING SIGNIFICANT ITEMS

 

2010

 

2009

 

2010

 

2009

 

Agriculture & Nutrition

 

$

(117

)

$

(97

)

$

1,405

 

$

1,223

 

Electronics & Communications

 

98

 

61

 

437

 

124

 

Performance Chemicals

 

315

 

208

 

1,071

 

601

 

Performance Coatings

 

71

 

70

 

255

 

84

 

Performance Materials

 

206

 

174

 

978

 

295

 

Safety & Protection

 

92

 

135

 

449

 

305

 

Pharmaceuticals

 

87

 

247

 

489

 

1,037

 

Other

 

(95

)

(55

)

(206

)

(169

)

Total Segment PTOI excluding significant items

 

$

657

 

$

743

 

$

4,878

 

$

3,500

 

 


(1)

Gains and losses resulting from the company’s hedging program are largely offset by associated tax effects.

 

See Schedule D for additional information.

(2)

See Schedule B for detail of significant items.

 

13



 

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions, except per share amounts)

 

SCHEDULE D

 

Summary of Earnings Comparisons

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2010

 

2009

 

%
Change

 

2010

 

2009

 

%
Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment PTOI

 

$

641

 

$

798

 

-20

%

$

4,862

 

$

3,340

 

46

%

Significant items charge (benefit) included in PTOI (per Schedule B)

 

16

 

(55

)

 

 

16

 

160

 

 

 

Segment PTOI excluding significant items

 

$

657

 

$

743

 

-12

%

$

4,878

 

$

3,500

 

39

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to DuPont

 

$

376

 

$

441

 

-15

%

$

3,031

 

$

1,755

 

73

%

Significant items charge (benefit) included in net income attributable to DuPont (per Schedule B)

 

87

 

(39

)

 

 

 

102

 

 

 

Net income attributable to DuPont excluding significant items

 

$

463

 

$

402

 

15

%

$

3,031

 

$

1,857

 

63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS

 

$

0.40

 

$

0.48

 

-17

%

$

3.28

 

$

1.92

 

71

%

Significant items charge (benefit) included in EPS (per Schedule B)

 

0.10

 

(0.04

)

 

 

 

0.11

 

 

 

EPS excluding significant items

 

$

0.50

 

$

0.44

 

14

%

$

3.28

 

$

2.03

 

62

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average number of diluted shares outstanding

 

928,800,000

 

910,854,000

 

2.0

%

921,655,000

 

908,712,000

 

1.4

%

 

14



 

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions, except per share amounts)

 

SCHEDULE D (continued)

 

Reconciliations of Adjusted EBIT / EBITDA to Consolidated Income Statements

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

226

 

$

572

 

$

3,711

 

$

2,184

 

Less: Net income attributable to noncontrolling interests

 

2

 

4

 

21

 

14

 

Add: Interest expense

 

281

 

96

 

590

 

408

 

Adjusted EBIT

 

505

 

664

 

4,280

 

2,578

 

Add: Depreciation and amortization

 

334

 

346

 

1,380

 

1,503

 

Adjusted EBITDA

 

$

839

 

$

1,010

 

$

5,660

 

$

4,081

 

 

Calculation of Free Cash Flow

 

 

 

Year Ended
December 31,

 

 

 

2010

 

2009

 

Cash provided by operating activities

 

$

4,559

 

$

4,741

 

Less: Purchases of property, plant and equipment

 

1,508

 

1,308

 

Free cash flow

 

$

3,051

 

$

3,433

 

 

Reconciliations of Fixed Costs as a Percent of Sales

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

Total charges and expenses - consolidated income statements

 

$

7,516

 

$

6,242

 

$

29,022

 

$

25,144

 

Remove:

 

 

 

 

 

 

 

 

 

Interest expense

 

(281

)

(96

)

(590

)

(408

)

Variable costs (1)

 

(3,734

)

(2,979

)

(15,329

)

(12,507

)

Significant items - (charge) benefit (2)

 

(16

)

55

 

(16

)

(160

)

Fixed costs

 

$

3,485

 

$

3,222

 

$

13,087

 

$

12,069

 

 

 

 

 

 

 

 

 

 

 

Consolidated net sales

 

$

7,404

 

$

6,419

 

$

31,505

 

$

26,109

 

 

 

 

 

 

 

 

 

 

 

Fixed costs as a percent of consolidated net sales

 

47.1

%

50.2

%

41.5

%

46.2

%

 


(1)

 

Includes variable manufacturing costs, freight, commissions and other selling expenses which vary with the volume of sales.

(2)

 

See Schedule B for detail of significant items.

 

15



 

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions, except per share amounts)

 

SCHEDULE D (continued)

 

Exchange Gains/Losses

 

The company routinely uses forward exchange contracts to offset its net exposures, by currency, related to the foreign currency-denominated monetary assets and liabilities of its operations. The objective of this program is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes.  The net pre-tax exchange gains and losses are recorded in Other income, net on the Consolidated Income Statements and are largely offset by the associated tax impact.

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2010

 

2009

 

2010

 

2009

 

Subsidiary/Affiliate Monetary Position Gain (Loss)

 

 

 

 

 

 

 

 

 

Pre-tax exchange gains (losses) (includes equity affiliates)

 

$

(5

)

$

(8

)

$

(130

)

$

280

 

Local tax benefits (expenses)

 

(11

)

(24

)

(30

)

(75

)

Net after-tax impact from subsidiary exchange gains (losses)

 

$

(16

)

$

(32

)

$

(160

)

$

205

 

 

 

 

 

 

 

 

 

 

 

Hedging Program Gain (Loss)

 

 

 

 

 

 

 

 

 

Pre-tax exchange gains (losses)

 

$

17

 

$

5

 

$

117

 

$

(485

)

Tax benefits (expenses)

 

(6

)

(2

)

(41

)

166

 

Net after-tax impact from hedging program exchange gains (losses)

 

$

11

 

$

3

 

$

76

 

$

(319

)

 

 

 

 

 

 

 

 

 

 

Total Exchange Gain (Loss)

 

 

 

 

 

 

 

 

 

Pre-tax exchange gains (losses)

 

$

12

 

$

(3

)

$

(13

)

$

(205

)

Tax benefits (expenses)

 

(17

)

(26

)

(71

)

91

 

Net after-tax exchange gains (losses)

 

$

(5

)

$

(29

)

$

(84

)

$

(114

)

 

As shown above, the “Total Exchange Gain (Loss)” is the sum of the “Subsidiary/Affiliate Monetary Position Gain (Loss)” and the “Hedging Program Gain (Loss).”

 

Reconciliation of Base Income Tax Rate to Effective Income Tax Rate

 

Base income tax rate is defined as the effective income tax rate less the effect of exchange gains/losses, as defined above, and significant items.

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

226

 

$

572

 

$

3,711

 

$

2,184

 

Add: Significant items - charge (benefit) (1)

 

195

 

(55

)

136

 

160

 

Less: Net exchange gains (losses)

 

12

 

(3

)

(13

)

(205

)

Income before income taxes, significant items and exchange gains/losses

 

$

409

 

$

520

 

$

3,860

 

$

2,549

 

 

 

 

 

 

 

 

 

 

 

(Benefit from) provision for income taxes

 

$

(152

)

$

127

 

$

659

 

$

415

 

Add: Tax benefit (expenses) on significant items

 

108

 

(16

)

136

 

58

 

Tax benefits (expenses) on exchange gains/losses

 

(17

)

(26

)

(71

)

91

 

(Benefit from) provision for income taxes, excluding taxes on significant items and exchange gains/losses

 

$

(61

)

$

85

 

$

724

 

$

564

 

 

 

 

 

 

 

 

 

 

 

Effective income tax rate

 

(67.3

)%

22.2

%

17.8

%

19.0

%

Significant items effect

 

56.9

%

(0.7

)%

2.9

%

1.2

%

Tax rate before significant items

 

(10.4

)

21.5

%

20.7

%

20.2

%

Exchange gains (losses) effect

 

(4.5

)%

(5.2

)%

(1.9

)%

1.9

%

Base income tax rate

 

(14.9

)%

16.3

%

18.8

%

22.1

%

 


(1)  See Schedule B for detail of significant items.

 

16