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8-K - 8-K - DUPONT E I DE NEMOURS & COa11-28507_18k.htm

Exhibit 99.1

 

 

October 25, 2011

 

Media Contact:

 

Michael Hanretta

WILMINGTON, Del.

 

 

 

302-774-4005

 

 

 

 

michael.j.hanretta@usa.dupont.com

 

 

Investor Contact:

 

302-774-4994

 

DuPont Delivers Strong EPS Growth on 32% Higher Sales for Third Quarter 2011

Full-year Earnings Outlook Narrowed to Upper Half of Previous Range

 

Highlights:

 

·                  Third quarter 2011 earnings were $.69 per share excluding significant items (see Schedule B) versus $.40 per share in the prior year.  Reported third quarter 2011 earnings were $.48 per share versus $.40 per share in the prior year.

 

·                  Sales increased 32 percent to $9.2 billion with 15 percent higher local prices, 4 percent currency benefit, 1 percent higher volume, and a 12 percent net increase from portfolio changes.  Sales in developing markets grew 38 percent.

 

·                  Growth in demand for the company’s agricultural products and further expansion into food ingredient and enzyme markets offset destocking in photovoltaics and specialty polymers.

 

·                  Segment pre-tax operating income excluding significant items increased 50 percent to $1.1 billion, largely driven by improvements in the Performance Chemicals and Agriculture segments and the acquisition of Danisco.

 

·                  DuPont is on track to meet its full-year 2011 productivity targets for fixed costs and working capital.  Year-to-date fixed cost productivity totals more than $250 million.

 

·                  Given the strong performance in the third quarter, the company has raised its expectations for full-year 2011 earnings to a range of $3.97 to $4.05 per share excluding significant items.  This moves the range to the upper half of the company’s previous guidance of $3.90 to $4.05 per share.

 

“The resilience and diversity of DuPont’s business portfolio was evident in our strong third quarter results.  Despite turbulent global economic and market conditions, we delivered solid growth through innovative products and process technologies, disciplined execution and continued productivity gains,” said DuPont Chair and CEO Ellen Kullman.  “Our portfolio is further strengthened by the rapid integration of Danisco, continued capacity expansions and selective growth investments across many of our businesses.”

 

E. I. du Pont de Nemours and Company

 



 

Global Consolidated Sales and Net Income

 

Third quarter 2011 consolidated net sales of $9.2 billion were 32 percent higher than the prior year reflecting 15 percent higher local prices, 4 percent favorable currency effect, 1 percent higher volume and a 12 percent net increase from portfolio changes.  The table below shows regional sales and variances versus the third quarter 2010.

 

 

 

Three Months Ended
September 30, 2011

 

Percentage Change Due to:

 

(Dollars in billions)

 

$

 

%
Change

 

Local
Currency
Price

 

Currency
Effect

 

Volume

 

Portfolio/
Other

 

U.S. & Canada

 

$

2.9

 

23

 

12

 

 

(1

)

12

 

EMEA*

 

2.4

 

40

 

14

 

11

 

(2

)

17

 

Asia Pacific

 

2.4

 

29

 

18

 

4

 

(1

)

8

 

Latin America

 

1.5

 

43

 

16

 

3

 

17

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consolidated Sales

 

$

9.2

 

32

 

15

 

4

 

1

 

12

 

 


* Europe, Middle East & Africa

 

Third quarter 2011 net income attributable to DuPont was $452 million versus $367 million in the third quarter 2010. Excluding significant items, net income attributable to DuPont increased $288 million, or 78 percent, to $655 million.  The increase principally reflects higher selling prices and currency benefit, partly offset by increased spending for selling, marketing and research and development, and increased costs for raw materials, energy, and freight.

 

2



 

Earnings Per Share

 

The table below shows year-over-year earnings per share (EPS) variances for the third quarter.

 

EPS ANALYSIS

 

 

 

 

 

 

3Q

 

 

 

 

 

EPS 2010

 

$

.40

 

Local prices

 

.87

 

Variable cost*

 

(.50

)

Volume

 

.07

 

Fixed cost*

 

(.21

)

Currency

 

.08

 

Exchange gains/losses

 

(.05

)

Higher shares outstanding

 

(.02

)

Income tax

 

.05

 

Danisco impact**

 

.04

 

Other***

 

(.04

)

 

 

 

 

EPS 2011 – Excluding significant items

 

$

.69

 

Significant items - (schedule B)

 

(.21

)

 

 

 

 

 

EPS 2011

 

$

.48

 

 


*                       Excludes volume and currency impacts

**                After interest expense and additional depreciation/amortization expense related to the fair value step-up of acquired long-lived Danisco assets

***         Principally lower Pharmaceuticals income

 

3



 

Business Segment Performance

 

The table below shows third quarter 2011 segment sales and related variances versus the prior year.

 

SEGMENT SALES*

(Dollars in billions)

 

 

 

Three Months Ended

 

Percentage Change

 

 

 

September 30, 2011

 

Due to:

 

 

 

$

 

% Change

 

USD
Price

 

Volume

 

Portfolio
and Other

 

Agriculture

 

$

1.4

 

41

 

15

 

26

 

 

Electronics & Communications

 

0.8

 

20

 

28

 

(8

)

 

Industrial Biosciences

 

0.3

 

nm

 

nm

 

nm

 

nm

 

Nutrition & Health

 

0.8

 

178

 

6

 

4

 

168

 

Performance Chemicals

 

2.1

 

28

 

29

 

(1

)

 

Performance Coatings

 

1.1

 

17

 

13

 

4

 

 

Performance Materials

 

1.7

 

11

 

18

 

(7

)

 

Safety & Protection

 

1.0

 

15

 

8

 

 

7

 

 


*    Segment sales include transfers

 

Segment pre-tax operating income (PTOI), excluding significant items, increased 50 percent to $1.1 billion largely driven by improvements in Performance Chemicals and Agriculture, and acquisition benefits in Nutrition & Health and Industrial Biosciences, as shown in the table below.

 

SEGMENT PTOI excluding Significant Items*

(Dollars in millions)

 

 

 

 

 

 

 

Change versus 2010

 

 

 

3Q 2011

 

3Q 2010

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

Agriculture

 

$

(69

)

$

(191

)

$

122

 

nm

 

Electronics & Communications

 

99

 

126

 

(27

)

-21

%

Industrial Biosciences

 

34

 

 

34

 

nm

 

Nutrition & Health

 

55

 

10

 

45

 

450

%

Performance Chemicals

 

593

 

292

 

301

 

103

%

Performance Coatings

 

72

 

64

 

8

 

13

%

Performance Materials

 

231

 

281

 

(50

)

-18

%

Safety & Protection

 

118

 

134

 

(16

)

-12

%

Other

 

(60

)

(64

)

4

 

nm

 

 

 

$

1,073

 

$

652

 

$

421

 

65

%

Pharmaceuticals

 

70

 

111

 

(41

)

-37

%

Total Segment PTOI

 

$

1,143

 

$

763

 

$

380

 

50

%

 


* See Schedules B and C for listing of significant items and their impact by segment.

 

4



 

The following is a summary of business results for each of the company’s reportable segments, comparing third quarter 2011 with third quarter 2010, for sales and PTOI (loss) excluding significant items. References to selling price are on a U.S. dollar basis, including the impact of currency.

 

Agriculture - Sales of $1.4 billion were up $0.4 billion, or 41 percent, from 26 percent higher volume and 15 percent higher selling prices principally reflecting a strong, early start to the Latin American season.  For Pioneer seed, volume and price growth was delivered in both corn and soybeans.  Crop Protection sales increased across all regions and market segments, led by continued strong demand for Rynaxypyr® insecticide.  PTOI of $(69) million improved from $(191) million due to higher sales, partially offset by growth investments and portfolio changes.

 

Electronics & Communications - Sales of $841 million were up 20 percent, with 28 percent higher selling prices, primarily metals pass-through, and 8 percent lower volume.  Lower volume reflects destocking in photovoltaics, and softness in plasma displays and packaging graphics.  PTOI of $99 million decreased $27 million on lower volume.

 

Industrial Biosciences - Sales of $293 million and PTOI of $34 million reflect the acquisition of Danisco’s enzyme business.  PTOI includes approximately $4 million of amortization expense associated with the fair value step-up of intangible assets acquired as part of the acquisition.

 

Nutrition & Health - Sales of $844 million were up $540 million principally due to the acquisition of Danisco’s specialty food ingredients business.  PTOI of $55 million increased $45 million reflecting the acquisition and includes $22 million of amortization expense associated with the fair value step-up of the acquired intangible assets.

 

Performance Chemicals - Sales of $2.1 billion were up 28 percent, with 29 percent higher selling prices and 1 percent lower volume.  Higher selling prices were driven by strong global demand for titanium dioxide and fluoropolymers and pass-through pricing of higher raw material costs for industrial chemicals.  Volume declined in refrigerants and industrial chemicals.  PTOI of $593 million increased $301 million due to higher selling prices.

 

Performance Coatings - Sales of $1.1 billion were up 17 percent, with 13 percent higher selling prices and 4 percent higher volume.  Higher selling prices reflect favorable currency and pricing actions across all market segments to offset higher raw material costs.  Demand increased for OEM motor vehicle coatings and remained strong for industrial coatings, particularly in the North American heavy-duty truck market.  PTOI of $72 million increased $8 million on strong sales performance led by refinish.

 

Performance Materials - Sales of $1.7 billion were up 11 percent, with 18 percent higher selling prices and 7 percent lower volume.  Higher selling prices offset higher raw material costs.  Lower volume reflects broad-based channel destocking along with softening in consumer and industrial markets, and production-related supply issues in ethylene-based polymers.  PTOI of $231 million decreased $50 million on lower volume.

 

Safety & Protection - Sales of $1.0 billion were up 15 percent, with 8 percent higher selling prices and a 7 percent increase from the MECS acquisition.  Higher selling prices primarily reflect pricing actions to offset raw material cost increases.  PTOI of $118 million decreased $16 million on destocking in industrial markets and higher spending for growth initiatives including the Cooper River Kevlar® expansion, which more than offset the impact of the acquisition and favorable currency.

 

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

 

5



 

Outlook

 

Given the strong performance in the third quarter, the company has raised its expectations for full-year 2011 earnings to a range of $3.97 to $4.05 per share excluding significant items.  This moves the range to the upper half of the company’s previous guidance of $3.90 to $4.05 per share.  Expectations for the fourth quarter include slowing global growth, some destocking, and the recognition that a portion of Agriculture sales in Latin America was shifted to the third quarter by the early start of the planting season.

 

Use of Non-GAAP Measures

 

Management believes that certain non-GAAP measurements 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 (NYSE: DD) has been bringing world-class science and engineering to the global marketplace in the form of innovative products, materials, and services since 1802.  The company believes that by collaborating with customers, governments, NGOs, and thought leaders we can help find solutions to such global challenges as providing enough healthy food for people everywhere, decreasing dependence on fossil fuels, and protecting life and the environment.  For additional information about DuPont and its commitment to inclusive innovation, please visit http://www.dupont.com.

 

Forward-Looking Statements:  This news release contains forward-looking statements which may be identified by their use of words like “plans,” “expects,” “will,” “believes,” “intends,” “estimates” or other words of similar meaning.  All statements that address expectations or projections about the future, including statements about the company’s growth strategy, product development, regulatory approval, market position, anticipated benefits of acquisitions, outcome of contingencies, such as litigation and environmental matters, expenditures and financial results, are forward-looking statements.  Forward-looking statements are not guarantees of future performance and are based on certain assumptions and expectations of future events which may not be 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; significant litigation and environmental matters; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, interest and currency exchange rates; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, weather events and natural disasters; inability to protect and enforce the company’s intellectual property rights; and integration of acquired businesses and completion of divestitures of underperforming or non-strategic assets or businesses.  The company undertakes no duty to update any forward-looking statements as a result of future developments or new information.

 

#   #   #

 

10/25/11

 

6



 

E. I. du Pont de Nemours and Company

Consolidated Income Statements

(Dollars in millions, except per share amounts)

 

SCHEDULE A

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

Net sales

 

$

9,238

 

$

7,001

 

$

29,536

 

$

24,101

 

Other income, net (a)

 

161

 

66

 

415

 

890

 

Total

 

9,399

 

7,067

 

29,951

 

24,991

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold and other operating charges (a)

 

7,107

 

5,443

 

21,129

 

17,223

 

Selling, general and administrative expenses

 

1,014

 

782

 

3,177

 

2,796

 

Research and development expense (a)

 

557

 

409

 

1,418

 

1,178

 

Interest expense

 

116

 

103

 

331

 

309

 

Employee separation / asset related charges, net (a)

 

36

 

 

36

 

 

Total

 

8,830

 

6,737

 

26,091

 

21,506

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

569

 

330

 

3,860

 

3,485

 

Provision for (benefit from) income taxes (a)

 

109

 

(39

)

727

 

811

 

 

 

 

 

 

 

 

 

 

 

Net income

 

460

 

369

 

3,133

 

2,674

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

8

 

2

 

32

 

19

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to DuPont

 

$

452

 

$

367

 

$

3,101

 

$

2,655

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share of common stock

 

$

0.48

 

$

0.40

 

$

3.33

 

$

2.92

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share of common stock

 

$

0.48

 

$

0.40

 

$

3.28

 

$

2.89

 

 

 

 

 

 

 

 

 

 

 

Dividends per share of common stock

 

$

0.41

 

$

0.41

 

$

1.23

 

$

1.23

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

932,356,000

 

908,366,000

 

929,369,000

 

906,991,000

 

Diluted

 

943,485,000

 

918,500,000

 

942,812,000

 

914,987,000

 

 


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

 

7



 

E. I. du Pont de Nemours and Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share amounts)

 

SCHEDULE A (continued)

 

 

 

September 30,
2011

 

December 31,
2010

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

2,750

 

$

4,263

 

Marketable securities

 

229

 

2,538

 

Accounts and notes receivable, net

 

8,544

 

5,635

 

Inventories

 

6,413

 

5,967

 

Prepaid expenses

 

154

 

122

 

Deferred income taxes

 

705

 

534

 

Total current assets

 

18,795

 

19,059

 

Property, plant and equipment, net of accumulated depreciation (September 30, 2011 - $19,362; December 31, 2010 - $18,628)

 

13,235

 

11,339

 

Goodwill

 

5,493

 

2,617

 

Other intangible assets

 

5,550

 

2,704

 

Investment in affiliates

 

1,079

 

1,041

 

Other assets

 

3,642

 

3,650

 

Total

 

$

47,794

 

$

40,410

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

3,981

 

$

4,230

 

Short-term borrowings and capital lease obligations

 

3,301

 

133

 

Income taxes

 

520

 

225

 

Other accrued liabilities

 

3,568

 

4,801

 

Total current liabilities

 

11,370

 

9,389

 

 

 

 

 

 

 

Long-term borrowings and capital lease obligations

 

12,200

 

10,137

 

Other liabilities

 

11,065

 

11,026

 

Deferred income taxes

 

1,135

 

115

 

Total liabilities

 

35,770

 

30,667

 

 

 

 

 

 

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Preferred stock

 

237

 

237

 

 

 

 

 

 

 

Common stock, $0.30 par value; 1,800,000,000 shares authorized; issued at September 30, 2011 - 1,010,894,000; December 31, 2010 - 1,004,351,000

 

303

 

301

 

Additional paid-in capital

 

9,983

 

9,227

 

Reinvested earnings

 

13,432

 

12,030

 

Accumulated other comprehensive loss

 

(5,684

)

(5,790

)

Common stock held in treasury, at cost (87,041,000 shares at September 30, 2011 and December 31, 2010)

 

(6,727

)

(6,727

)

Total DuPont stockholders’ equity

 

11,544

 

9,278

 

Noncontrolling interests

 

480

 

465

 

Total equity

 

12,024

 

9,743

 

Total

 

$

47,794

 

$

40,410

 

 

8



 

E. I. du Pont de Nemours and Company

Condensed Consolidated Statement of Cash Flows

(Dollars in millions)

 

SCHEDULE A (continued)

 

 

 

Nine Months Ended
September 30,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

Cash provided by (used for) operating activities

 

$

431

 

$

35

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant and equipment

 

(1,211

)

(899

)

Investments in affiliates

 

(35

)

(71

)

Payments for businesses (net of cash acquired)

 

(6,459

)

 

Net (increase) decrease in short-term financial instruments

 

2,365

 

201

 

Other investing activities - net

 

(236

)

475

 

Cash provided by (used for) investing activities

 

(5,576

)

(294

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Dividends paid to stockholders

 

(1,152

)

(1,122

)

Net increase (decrease) in borrowings

 

4,503

 

1,327

 

Repurchase of common stock

 

(672

)

 

Proceeds from exercise of stock options

 

833

 

199

 

Other financing activities - net

 

52

 

(18

)

Cash provided by (used for) financing activities

 

3,564

 

386

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

68

 

(60

)

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(1,513

)

67

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

4,263

 

4,021

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

2,750

 

$

4,088

 

 

9



 

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)

 

 

 

2011

 

2010

 

2011

 

2010

 

2011

 

2010

 

1st Quarter - Total

 

$

 

$

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2nd Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction costs related to the acquisition of Danisco (a)

 

$

(103

)

$

 

$

(81

)

$

 

$

(0.08

)

$

 

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

 

 

59

 

 

87

 

 

0.09

 

2nd Quarter - Total

 

$

(103

)

$

59

 

$

(81

)

$

87

 

$

(0.08

)

$

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3rd Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction costs and restructuring charge related to the acquisition of Danisco (c)

 

$

(171

)

$

 

$

(122

)

$

 

$

(0.13

)

$

 

Customer claims charge (d)

 

(75

)

 

(48

)

 

(0.05

)

 

Charge related to milestone payment for licensing agreement (e)

 

(50

)

 

(33

)

 

(0.03

)

 

3rd Quarter - Total

 

$

(296

)

$

 

$

(203

)

$

 

$

(0.21

)

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year-to-date - Total (f)

 

$

(399

)

$

59

 

$

(284

)

$

87

 

$

(0.30

)

$

0.09

 

 


(a)

Second quarter and year-to-date 2011 included charges related to the Danisco acquisition of $(103) recorded in Cost of goods sold and other operating charges. These charges included $(60) of transaction costs and a $(43) charge related to the fair value step-up of inventories that were acquired from Danisco and sold in the second quarter 2011. Pre-tax charges by segment were: Industrial Biosciences - $(17), Nutrition & Health - $(33), and Corporate expenses - $(53).

(b)

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

(c)

Third quarter and year-to-date 2011 included charges related to the Danisco acquisition of $(171). These charges included $(135) recorded in Cost of goods sold and other operating charges for $(3) of transaction costs and a $(132) charge related to the fair value step-up of inventories that were acquired from Danisco and sold in the third quarter 2011. These charges also included a $(36) restructuring charge recorded in Employee separation / asset related charges, net related to severance and related benefit costs. Pre-tax charges by segment were: Industrial Biosciences - $(61), Nutrition & Health - $(89), Other - $(18), and Corporate expenses - $(3).

(d)

Third quarter and year-to-date 2011 included a $(75) charge recorded in Cost of goods sold and other operating charges associated with the company’s process to fairly resolve claims associated with the use of Imprelis® herbicide. The company will continue to evaluate reported claim damage as additional information becomes available, which could result in future charges that cannot be reasonably estimated at this time; the company intends to seek recovery from its insurance carriers for costs associated with this matter in excess of $100. This matter relates to the Agriculture segment.

(e)

Third quarter and year-to-date 2011 included a $(50) charge recorded in Research and development expense in connection with a milestone payment associated with a Pioneer licensing agreement.

(f)

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.

 

10



 

E. I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

 

SCHEDULE C

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

SEGMENT SALES (1)

 

2011

 

2010

 

2011

 

2010

 

Agriculture

 

$

1,368

 

$

967

 

$

7,869

 

$

6,641

 

Electronics & Communications

 

841

 

703

 

2,543

 

1,991

 

Industrial Biosciences

 

293

 

 

416

 

 

Nutrition & Health

 

844

 

304

 

1,654

 

902

 

Performance Chemicals

 

2,142

 

1,675

 

5,934

 

4,658

 

Performance Coatings

 

1,100

 

937

 

3,198

 

2,801

 

Performance Materials

 

1,745

 

1,578

 

5,197

 

4,688

 

Safety & Protection

 

1,001

 

871

 

2,991

 

2,505

 

Other

 

2

 

49

 

39

 

154

 

Total Segment sales

 

9,336

 

7,084

 

29,841

 

24,340

 

 

 

 

 

 

 

 

 

 

 

Elimination of transfers

 

(98

)

(83

)

(305

)

(239

)

Consolidated net sales

 

$

9,238

 

$

7,001

 

$

29,536

 

$

24,101

 

 


(1)             Sales for the reporting segments include transfers.

 

11



 

E. I. du Pont de Nemours and Company

Consolidated Segment Information

(Dollars in millions)

 

SCHEDULE C (continued)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

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

 

2011

 

2010

 

2011

 

2010

 

Agriculture

 

$

(194

)

$

(191

)

$

1,743

 

$

1,478

 

Electronics & Communications

 

99

 

126

 

313

 

339

 

Industrial Biosciences

 

(27

)

 

(34

)

 

Nutrition & Health

 

(34

)

10

 

(4

)

44

 

Performance Chemicals

 

593

 

292

 

1,490

 

756

 

Performance Coatings

 

72

 

64

 

210

 

184

 

Performance Materials

 

231

 

281

 

773

 

772

 

Safety & Protection

 

118

 

134

 

406

 

357

 

Pharmaceuticals

 

70

 

111

 

200

 

402

 

Other

 

(78

)

(64

)

(179

)

(111

)

Total Segment PTOI

 

850

 

763

 

4,918

 

4,221

 

 

 

 

 

 

 

 

 

 

 

Net exchange gains (losses) (1)

 

(6

)

(160

)

(145

)

(25

)

Corporate expenses & net interest

 

(275

)

(273

)

(913

)

(711

)

Income before income taxes

 

$

569

 

$

330

 

$

3,860

 

$

3,485

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

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

 

2011

 

2010

 

2011

 

2010

 

Agriculture

 

$

(125

)

$

 

$

(125

)

$

 

Electronics & Communications

 

 

 

 

 

Industrial Biosciences

 

(61

)

 

(78

)

 

Nutrition & Health

 

(89

)

 

(122

)

 

Performance Chemicals

 

 

 

 

 

Performance Coatings

 

 

 

 

 

Performance Materials

 

 

 

 

 

Safety & Protection

 

 

 

 

 

Pharmaceuticals

 

 

 

 

 

Other

 

(18

)

 

(18

)

 

Total significant items by segment

 

$

(293

)

$

 

$

(343

)

$

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 
September 30,

 

Nine Months Ended 
September 30,

 

PTOI EXCLUDING SIGNIFICANT ITEMS

 

2011

 

2010

 

2011

 

2010

 

Agriculture

 

$

(69

)

$

(191

)

$

1,868

 

$

1,478

 

Electronics & Communications

 

99

 

126

 

313

 

339

 

Industrial Biosciences

 

34

 

 

44

 

 

Nutrition & Health

 

55

 

10

 

118

 

44

 

Performance Chemicals

 

593

 

292

 

1,490

 

756

 

Performance Coatings

 

72

 

64

 

210

 

184

 

Performance Materials

 

231

 

281

 

773

 

772

 

Safety & Protection

 

118

 

134

 

406

 

357

 

Pharmaceuticals

 

70

 

111

 

200

 

402

 

Other

 

(60

)

(64

)

(161

)

(111

)

Total Segment PTOI excluding significant items

 

$

1,143

 

$

763

 

$

5,261

 

$

4,221

 

 


(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.

 

12



 

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
September 30,

 

Nine Months Ended
September 30,

 

 

 

2011

 

2010

 

%
Change

 

2011

 

2010

 

%
Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment PTOI

 

$

850

 

$

763

 

11

%

$

4,918

 

$

4,221

 

17

%

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

 

293

 

 

 

 

343

 

 

 

 

Segment PTOI excluding significant items

 

$

1,143

 

$

763

 

50

%

$

5,261

 

$

4,221

 

25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to DuPont

 

$

452

 

$

367

 

23

%

$

3,101

 

$

2,655

 

17

%

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

 

203

 

 

 

 

284

 

(87

)

 

 

Net income attributable to DuPont excluding significant items

 

$

655

 

$

367

 

78

%

$

3,385

 

$

2,568

 

32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS

 

$

0.48

 

$

0.40

 

20

%

$

3.28

 

$

2.89

 

13

%

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

 

0.21

 

 

 

 

0.30

 

(0.09

)

 

 

EPS excluding significant items

 

$

0.69

 

$

0.40

 

73

%

$

3.58

 

$

2.80

 

28

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average number of diluted shares outstanding

 

943,485,000

 

918,500,000

 

2.7

%

942,812,000

 

914,987,000

 

3.0

%

 

Reconciliation of Earnings Per Share (EPS) Outlook

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2011
Outlook

 

2010
Actual

 

 

 

 

 

 

 

Earnings per share - excluding significant items

 

$3.97 to $4.05

 

$

3.28

 

Danisco acquisition related costs

 

(0.23) to (0.25)

 

 

Customer claims charge

 

(0.05)

 

 

Charge related to a licensing agreement

 

(0.03)

 

(0.03

)

Adjustments of interest and accruals related to income tax settlements and tax valuation allowances

 

 

0.14

 

Loss on early extinguishment of debt

 

 

(0.13

)

Reversal of accruals related to the 2008 and 2009 restructuring reserves

 

 

0.02

 

Reported EPS

 

$3.64 to $3.74

 

$

3.28

 

 

13



 

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions, except per share amounts)

 

SCHEDULE D

 

Reconciliations of Adjusted EBIT / EBITDA to Consolidated Income Statements

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

569

 

$

330

 

$

3,860

 

$

3,485

 

Less: Net income attributable to noncontrolling interests

 

8

 

2

 

32

 

19

 

Add: Interest expense

 

116

 

103

 

331

 

309

 

Adjusted EBIT

 

677

 

431

 

4,159

 

3,775

 

Add: Depreciation and amortization

 

395

 

325

 

1,139

 

1,046

 

Adjusted EBITDA

 

$

1,072

 

$

756

 

$

5,298

 

$

4,821

 

 

Calculation of Free Cash Flow

 

 

 

Nine Months Ended 
September 30,

 

 

 

2011

 

2010

 

Cash provided by (used for) operating activities

 

$

431

 

$

35

 

Less: Purchases of property, plant and equipment

 

1,211

 

899

 

Free cash flow

 

$

(780

)

$

(864

)

 

Reconciliations of Fixed Costs as a Percent of Sales

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Total charges and expenses - consolidated income statements

 

$

8,830

 

$

6,737

 

$

26,091

 

$

21,506

 

Remove:

 

 

 

 

 

 

 

 

 

Interest expense

 

(116

)

(103

)

(331

)

(309

)

Variable costs (1)

 

(4,547

)

(3,491

)

(14,205

)

(11,595

)

Significant items - benefit (charge) (2)

 

(296

)

 

(399

)

 

Fixed costs

 

$

3,871

 

$

3,143

 

$

11,156

 

$

9,602

 

 

 

 

 

 

 

 

 

 

 

Consolidated net sales

 

$

9,238

 

$

7,001

 

$

29,536

 

$

24,101

 

 

 

 

 

 

 

 

 

 

 

Fixed costs as a percent of consolidated net sales

 

41.9

%

44.9

%

37.8

%

39.8

%

 


(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.

 

14



 

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 
September 30,

 

Nine Months Ended
September 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

Subsidiary/Affiliate Monetary Position Gain (Loss)

 

 

 

 

 

 

 

 

 

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

 

$

(228

)

$

283

 

$

57

 

$

(125

)

Local tax benefits (expenses)

 

35

 

3

 

31

 

(19

)

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

 

$

(193

)

$

286

 

$

88

 

$

(144

)

 

 

 

 

 

 

 

 

 

 

Hedging Program Gain (Loss)

 

 

 

 

 

 

 

 

 

Pre-tax exchange gains (losses)

 

$

222

 

$

(443

)

$

(202

)

$

100

 

Tax benefits (expenses)

 

(76

)

154

 

70

 

(35

)

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

 

$

146

 

$

(289

)

$

(132

)

$

65

 

 

 

 

 

 

 

 

 

 

 

Total Exchange Gain (Loss)

 

 

 

 

 

 

 

 

 

Pre-tax exchange gains (losses)

 

$

(6

)

$

(160

)

$

(145

)

$

(25

)

Tax benefits (expenses)

 

(41

)

157

 

101

 

(54

)

Net after-tax exchange gains (losses)

 

$

(47

)

$

(3

)

$

(44

)

$

(79

)

 

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 
September 30,

 

Nine Months Ended 
September 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

569

 

$

330

 

$

3,860

 

$

3,485

 

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

 

296

 

 

399

 

(59

)

Less:  Net exchange gains (losses)

 

(6

)

(160

)

(145

)

(25

)

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

 

$

871

 

$

490

 

$

4,404

 

$

3,451

 

 

 

 

 

 

 

 

 

 

 

Provision for (benefit from) income taxes

 

$

109

 

$

(39

)

$

727

 

$

811

 

Add:  Tax benefit (expenses) on significant items

 

93

 

 

115

 

28

 

Tax benefits (expenses) on exchange gains/losses

 

(41

)

157

 

101

 

(54

)

Provision for income taxes, excluding taxes on significant items and exchange gains/losses

 

$

161

 

$

118

 

$

943

 

$

785

 

 

 

 

 

 

 

 

 

 

 

Effective income tax rate

 

19.2

%

(11.8

)%

18.8

%

23.3

%

Significant items effect

 

4.2

%

 

1.0

%

1.2

%

Tax rate before significant items

 

23.4

%

(11.8

)%

19.8

%

24.5

%

Exchange gains (losses) effect

 

(4.9

)%

35.9

%

1.6

%

(1.8

)%

Base income tax rate

 

18.5

%

24.1

%

21.4

%

22.7

%

 


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

 

15