Exhibit 99.1
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October 26, 2010 | Media Contact: | Anthony Farina |
WILMINGTON, Del. | | 302-773-4418 |
| | anthony.r.farina@usa.dupont.com |
| | |
| Investor Contact: | 302-774-4994 |
DuPont Delivers 3Q 2010 Earnings of $.40 per Share Despite $.13 Pharmaceuticals Decline
2010 EPS Guidance Increased on Continued Global Sales Growth
Highlights:
· DuPont’s third quarter 2010 earnings per share were $.40, compared to $.45 per share in the prior year, despite a $.13 decline in Pharmaceuticals income related to patent expirations.
· Sales of $7.0 billion grew 17 percent versus the prior year, principally reflecting 14 percent higher volume. Sales in emerging markets increased 22 percent.
· All segments had robust volume increases, with Safety & Protection up 31 percent and Electronics & Communications up 24 percent.
· DuPont made a $500 million voluntary contribution to its principal U.S. pension plan in September. The company expects 2010 free cash flow to be about $1.7 billion.
· DuPont increased its full-year 2010 earnings guidance to about $3.10 per share, excluding significant items. The company’s previous guidance was a range of $2.90 to $3.05 per share.
“I am proud of our business teams’ performance this quarter, with segment pre-tax earnings up 33 percent excluding Pharmaceuticals income. DuPont’s market focus and science-based innovations helped drive outstanding sales growth, with all business segments and regions contributing. Our deep customer engagement and disciplined execution are gaining traction toward achieving our long-term growth targets,” said DuPont Chair and CEO Ellen Kullman. “This quarter’s results were complemented by ongoing productivity improvements and rigorous cost management that contributed to profitable growth.”
E. I. du Pont de Nemours and Company
Global Consolidated Sales and Net Income
Third quarter 2010 consolidated net sales of $7.0 billion were 17 percent higher than the prior year reflecting 14 percent higher volume, 5 percent higher local selling prices, a 1 percent reduction from currency exchange rates and a 1 percent reduction from portfolio changes. The table below shows regional sales and variances versus the third quarter 2009.
| | Three Months Ended
September 30, 2010 | | Percentage Change Due to: | |
(Dollars in billions) | | $ | | %
Change | | Local
Currency
Price | | Currency
Effect | | Volume | | Portfolio/
Other | |
U.S. | | $ | 2.2 | | 17 | | 5 | | — | | 13 | | (1 | ) |
EMEA* | | 1.7 | | 9 | | 6 | | (8 | ) | 12 | | (1 | ) |
Asia Pacific | | 1.9 | | 31 | | 7 | | 2 | | 23 | | (1 | ) |
Latin America | | 1.1 | | 11 | | 4 | | 1 | | 9 | | (3 | ) |
Canada | | 0.1 | | 21 | | 3 | | 2 | | 17 | | (1 | ) |
| | | | | | | | | | | | | |
Total Consolidated Sales | | $ | 7.0 | | 17 | | 5 | | (1 | ) | 14 | | (1 | ) |
* Europe, Middle East & Africa
Third quarter 2010 net income attributable to DuPont was $367 million versus $409 million in 2009. Pharmaceuticals income was down substantially in the quarter related to patent expirations. Fourteen percent higher sales volume was partly offset by selected growth investments in Agriculture & Nutrition and Safety & Protection and higher pension expense. Fixed costs were 45 percent of sales, improving from 49 percent in third quarter 2009. Fixed cost productivity is tracking ahead of pace for the full year.
2
Earnings Per Share
The table below shows year-over-year earnings per share (EPS) variances for the third quarter.
EPS ANALYSIS |
| | | |
| | 3Q | |
| | | |
EPS- 2009 | | $ | .45 | |
| | | |
Local prices | | .29 | |
Variable cost* | | (.29 | ) |
Volume | | .31 | |
Fixed cost* | | (.18 | ) |
Currency | | (.02 | ) |
Other (includes Pharmaceuticals)** | | (.10 | ) |
Tax | | (.06 | ) |
| | | |
EPS- 2010 | | $ | .40 | |
* Fixed and variable costs exclude volume & currency impacts
** Includes $(.13) lower Pharmaceuticals income
3
Business Segment Performance
The table below shows third quarter 2010 segment sales and related variances versus the prior year.
| | Three Months Ended | | Percentage Change | |
| | September 30, 2010 | | | | Due to: | | | |
SEGMENT SALES*
(Dollars in billions) | | $ | | % Change | | USD
Price | | Volume | | Portfolio
and Other | |
Agriculture & Nutrition | | $ | 1.3 | | 2 | | — | | 5 | | (3 | ) |
Electronics & Communications | | 0.7 | | 30 | | 6 | | 24 | | — | |
Performance Chemicals | | 1.7 | | 26 | | 12 | | 15 | | (1 | ) |
Performance Coatings | | 0.9 | | 6 | | 1 | | 5 | | — | |
Performance Materials | | 1.6 | | 21 | | 4 | | 19 | | (2 | ) |
Safety & Protection | | 0.9 | | 30 | | (1 | ) | 31 | | — | |
| | | | | | | | | | | | |
* Segment sales include transfers
Segment pre-tax operating income (PTOI) for third quarter 2010 was $763 million compared to third quarter 2009 PTOI of $757 million. The $6 million PTOI increase reflects higher segment sales, more than offsetting an expected decline from Pharmaceuticals as shown in the table below.
PRE-TAX OPERATING INCOME (LOSS)
SEGMENT PTOI | | | | | | $ change | |
(Dollars in millions) | | 3Q 2010 | | 3Q 2009 | | vs. 2009 | |
| | | | | | | |
Agriculture & Nutrition | | $ | (181 | ) | $ | (113 | ) | $ | (68 | ) |
Electronics & Communications | | 126 | | 77 | | 49 | |
Performance Chemicals | | 292 | | 207 | | 85 | |
Performance Coatings | | 64 | | 58 | | 6 | |
Performance Materials | | 281 | | 230 | | 51 | |
Safety & Protection | | 134 | | 58 | | 76 | |
Other | | (64 | ) | (26 | ) | (38 | ) |
| | $ | 652 | | $ | 491 | | $ | 161 | |
Pharmaceuticals | | 111 | | 266 | | (155 | ) |
Total Segment PTOI | | $ | 763 | | $ | 757 | | $ | 6 | |
4
The following is a summary of business results for each of the company’s reportable segments, comparing third quarter 2010 with third quarter 2009, for sales and PTOI. All references to selling price are on a U.S. dollar basis, including the impact of currency.
Agriculture & Nutrition — Third quarter 2010 sales of $1.3 billion were up $27 million, or 2 percent, principally reflecting 5 percent higher volume, partially offset by Crop Protection portfolio changes of 3 percent. Increased sales primarily reflect technology penetration in the Latin American seed market and broad-based sales increase of Rynaxypyr® insecticide. Segment PTOI for the third quarter was a loss of $181 million, compared to a loss of $113 million in the third quarter 2009, reflecting growth investments and the impact of divested businesses. Year-to-date sales were $7.5 billion, up 9 percent versus the prior year and year-to-date PTOI was $1.5 billion, up 15 percent.
Electronics & Communications — Third quarter 2010 sales of $703 million were up $161 million, or 30 percent, reflecting 24 percent higher volume and 6 percent higher selling prices, primarily pass-through of metals prices. Higher volume was driven by growth in all regions, particularly in Asia Pacific and Europe, and strong demand across most market segments, particularly in photovoltaics. PTOI of $126 million was up $49 million reflecting significantly higher volume.
Performance Chemicals — Third quarter 2010 sales of $1.7 billion were up $344 million, or 26 percent, reflecting 15 percent higher volume and 12 percent higher selling prices. The sales increase occurred in all regions, especially in North America and Asia Pacific, and was driven by strong demand across most market segments, particularly for titanium dioxide, fluoropolymers and industrial chemicals. PTOI was $292 million, an improvement of $85 million, primarily due to higher volume and selling prices.
Performance Coatings — Third quarter 2010 sales of $937 million were up $55 million, or 6 percent, on 5 percent higher volume. Results reflect continued strengthening in North American and European heavy duty truck markets, and increased demand in global automotive markets, most significant in North America. PTOI was $64 million, up 10 percent from higher volume.
Performance Materials — Third quarter 2010 sales of $1.6 billion were up $275 million, or 21 percent, with 19 percent higher volume and a 4 percent increase in selling prices. The higher volume reflects strong demand in automotive, electronic and packaging markets, with growth in all regions, particularly Asia Pacific. PTOI was $281 million, an improvement of 22 percent from higher volume and selling prices, partially offset by the absence of a $24 million benefit from insurance recoveries in the prior year.
Safety & Protection — Third quarter 2010 sales of $871 million were up $201 million, or 30 percent, primarily due to higher volume. Growth reflects increased demand for aramid and nonwoven products due to strengthening in industrial markets, and strong demand across all regions. PTOI was $134 million, an improvement of $76 million from higher volume and the absence of a $26 million asset impairment charge in the prior year.
Additional information is available on the DuPont Investor Center website at www.dupont.com.
5
Outlook
The company expects full-year earnings to be about $3.10 per share, excluding significant items which will include a fourth quarter $.13 per share loss on the early extinguishment of debt. The previous guidance range was $2.90 to $3.05 per share. The increased outlook reflects strong third quarter results and expectations for sustained demand in key global markets, continued pricing momentum and benefits from ongoing productivity. The outlook also assumes Pharmaceuticals full-year pre-tax income will be about $480 million. The company expects full-year free cash flow to be about $1.7 billion.
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.
# # #
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, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
Net sales | | $ | 7,001 | | $ | 5,961 | | $ | 24,101 | | $ | 19,690 | |
Other income, net (a) | | 66 | | 195 | | 890 | | 824 | |
Total | | 7,067 | | 6,156 | | 24,991 | | 20,514 | |
| | | | | | | | | |
Cost of goods sold and other operating charges (a) | | 5,443 | | 4,560 | | 17,223 | | 14,752 | |
Selling, general and administrative expenses | | 782 | | 770 | | 2,796 | | 2,584 | |
Research and development expense | | 409 | | 335 | | 1,178 | | 989 | |
Interest expense | | 103 | | 100 | | 309 | | 312 | |
Employee separation / asset related charges, net (a) | | — | | — | | — | | 265 | |
Total | | 6,737 | | 5,765 | | 21,506 | | 18,902 | |
| | | | | | | | | |
Income before income taxes | | 330 | | 391 | | 3,485 | | 1,612 | |
(Benefit from) provision for income taxes (a) | | (39 | ) | (23 | ) | 811 | | 288 | |
| | | | | | | | | |
Net income | | 369 | | 414 | | 2,674 | | 1,324 | |
| | | | | | | | | |
Less: Net income attributable to noncontrolling interests | | 2 | | 5 | | 19 | | 10 | |
| | | | | | | | | |
Net income attributable to DuPont | | $ | 367 | | $ | 409 | | $ | 2,655 | | $ | 1,314 | |
| | | | | | | | | |
Basic earnings per share of common stock | | $ | 0.40 | | $ | 0.45 | | $ | 2.92 | | $ | 1.44 | |
| | | | | | | | | |
Diluted earnings per share of common stock | | $ | 0.40 | | $ | 0.45 | | $ | 2.89 | | $ | 1.44 | |
| | | | | | | | | |
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 | | 908,366,000 | | 904,615,000 | | 906,991,000 | | 904,350,000 | |
Diluted | | 918,500,000 | | 910,291,000 | | 914,987,000 | | 907,996,000 | |
(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,
2010 | | December 31,
2009 | |
Assets | | | | | |
Current assets | | | | | |
Cash and cash equivalents | | $ | 4,088 | | $ | 4,021 | |
Marketable securities | | 1,892 | | 2,116 | |
Accounts and notes receivable, net | | 7,498 | | 5,030 | |
Inventories | | 5,420 | | 5,380 | |
Prepaid expenses | | 127 | | 129 | |
Income taxes | | 564 | | 612 | |
Total current assets | | 19,589 | | 17,288 | |
Property, plant and equipment, net of accumulated depreciation (September 30, 2010 - $18,467; December 31, 2009 - $17,821) | | 10,976 | | 11,094 | |
Goodwill | | 2,135 | | 2,137 | |
Other intangible assets | | 2,407 | | 2,552 | |
Investment in affiliates | | 1,108 | | 1,014 | |
Other assets | | 3,703 | | 4,100 | |
Total | | $ | 39,918 | | $ | 38,185 | |
| | | | | |
Liabilities and Stockholders’ Equity | | | | | |
Current liabilities | | | | | |
Accounts payable | | $ | 3,545 | | $ | 3,542 | |
Short-term borrowings and capital lease obligations | | 2,211 | | 1,506 | |
Income taxes | | 194 | | 154 | |
Other accrued liabilities | | 3,371 | | 4,188 | |
Total current liabilities | | 9,321 | | 9,390 | |
| | | | | |
Long-term borrowings and capital lease obligations | | 10,175 | | 9,528 | |
Other liabilities | | 10,639 | | 11,490 | |
Deferred income taxes | | 132 | | 126 | |
Total liabilities | | 30,267 | | 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 September 30, 2010 - 998,029,000; December 31, 2009 - 990,855,000 | | 299 | | 297 | |
Additional paid-in capital | | 8,763 | | 8,469 | |
Reinvested earnings | | 12,235 | | 10,710 | |
Accumulated other comprehensive loss | | (5,610 | ) | (5,771 | ) |
Common stock held in treasury, at cost (87,041,000 shares at September 30, 2010 and December 31, 2009) | | (6,727 | ) | (6,727 | ) |
Total DuPont stockholders’ equity | | 9,197 | | 7,215 | |
Noncontrolling interests | | 454 | | 436 | |
Total equity | | 9,651 | | 7,651 | |
Total | | $ | 39,918 | | $ | 38,185 | |
8
E. I. du Pont de Nemours and Company
Condensed Consolidated Statements of Cash Flows
(Dollars in millions)
SCHEDULE A (continued)
| | Nine Months Ended
September 30, | |
| | 2010 | | 2009 | |
| | | | | |
Cash provided by operating activities | | $ | 35 | | $ | 923 | |
| | | | | |
Investing activities | | | | | |
Purchases of property, plant and equipment | | (899 | ) | (990 | ) |
Investments in affiliates | | (71 | ) | (105 | ) |
Payments for businesses (net of cash acquired) | | — | | (12 | ) |
Other investing activities - net | | 676 | | (1,518 | ) |
Cash used for investing activities | | (294 | ) | (2,625 | ) |
| | | | | |
Financing activities | | | | | |
Dividends paid to stockholders | | (1,122 | ) | (1,119 | ) |
Net increase in borrowings | | 1,327 | | 1,408 | |
Other financing activities - net | | 181 | | (14 | ) |
Cash provided by financing activities | | 386 | | 275 | |
| | | | | |
Effect of exchange rate changes on cash | | (60 | ) | 31 | |
| | | | | |
Increase (decrease) in cash and cash equivalents | | 67 | | (1,396 | ) |
| | | | | |
Cash and cash equivalents at beginning of period | | 4,021 | | 3,645 | |
| | | | | |
Cash and cash equivalents at end of period | | $ | 4,088 | | $ | 2,249 | |
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E. I. du Pont de Nemours and Company
Schedules 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 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | | | |
Year-to-date - Total | | $ | 59 | | $ | (215 | ) | $ | 87 | | $ | (141 | ) | $ | 0.09 | | $ | (0.15 | ) |
(a) Second quarter and year-to-date 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 year-to-date 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 year-to-date 2009 included a $75 reduction in estimated costs recorded in Employee separation / asset related charges, net related to the 2008 restructuring program primarily due to the achievement of work force reductions through non-severance programs and redeployments. Pre-tax amounts by segment were: Agriculture & Nutrition - $(1); Performance Chemicals - $3; Performance Coatings - $42; Performance Materials - $28; Safety & Protection - $1; and Other - $2.
(d) Second quarter and year-to-date 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.
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) | | 2010 | | 2009 | | 2010 | | 2009 | |
Agriculture & Nutrition | | $ | 1,271 | | $ | 1,244 | | $ | 7,543 | | $ | 6,919 | |
Electronics & Communications | | 703 | | 542 | | 1,991 | | 1,336 | |
Performance Chemicals | | 1,675 | | 1,331 | | 4,658 | | 3,644 | |
Performance Coatings | | 937 | | 882 | | 2,801 | | 2,454 | |
Performance Materials | | 1,578 | | 1,303 | | 4,688 | | 3,332 | |
Safety & Protection | | 871 | | 670 | | 2,505 | | 2,052 | |
Other | | 49 | | 54 | | 154 | | 113 | |
Total Segment sales | | $ | 7,084 | | $ | 6,026 | | $ | 24,340 | | $ | 19,850 | |
| | | | | | | | | |
Elimination of transfers | | (83 | ) | (65 | ) | (239 | ) | (160 | ) |
Consolidated net sales | | $ | 7,001 | | $ | 5,961 | | $ | 24,101 | | $ | 19,690 | |
(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) | | 2010 | | 2009 | | 2010 | | 2009 | |
Agriculture & Nutrition | | $ | (181 | ) | $ | (113 | ) | $ | 1,522 | | $ | 1,319 | |
Electronics & Communications | | 126 | | 77 | | 339 | | 20 | |
Performance Chemicals | | 292 | | 207 | | 756 | | 330 | |
Performance Coatings | | 64 | | 58 | | 184 | | (9 | ) |
Performance Materials | | 281 | | 230 | | 772 | | 89 | |
Safety & Protection | | 134 | | 58 | | 357 | | 116 | |
Pharmaceuticals | | 111 | | 266 | | 402 | | 790 | |
Other | | (64 | ) | (26 | ) | (111 | ) | (113 | ) |
Total Segment PTOI | | $ | 763 | | $ | 757 | | $ | 4,221 | | $ | 2,542 | |
| | | | | | | | | |
Net exchange gains (losses) (1) | | (160 | ) | (128 | ) | (25 | ) | (202 | ) |
Corporate expenses & net interest | | (273 | ) | (238 | ) | (711 | ) | (728 | ) |
Income before income taxes | | $ | 330 | | $ | 391 | | $ | 3,485 | | $ | 1,612 | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) (2) | | 2010 | | 2009 | | 2010 | | 2009 | |
Agriculture & Nutrition | | $ | — | | $ | — | | $ | — | | $ | (1 | ) |
Electronics & Communications | | — | | — | | — | | (43 | ) |
Performance Chemicals | | — | | — | | — | | (63 | ) |
Performance Coatings | | — | | — | | — | | (23 | ) |
Performance Materials | | — | | — | | — | | (32 | ) |
Safety & Protection | | — | | — | | — | | (54 | ) |
Pharmaceuticals | | — | | — | | — | | — | |
Other | | — | | — | | — | | 1 | |
Total significant items by segment | | $ | — | | $ | — | | $ | — | | $ | (215 | ) |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
PTOI EXCLUDING SIGNIFICANT ITEMS | | 2010 | | 2009 | | 2010 | | 2009 | |
Agriculture & Nutrition | | $ | (181 | ) | $ | (113 | ) | $ | 1,522 | | $ | 1,320 | |
Electronics & Communications | | 126 | | 77 | | 339 | | 63 | |
Performance Chemicals | | 292 | | 207 | | 756 | | 393 | |
Performance Coatings | | 64 | | 58 | | 184 | | 14 | |
Performance Materials | | 281 | | 230 | | 772 | | 121 | |
Safety & Protection | | 134 | | 58 | | 357 | | 170 | |
Pharmaceuticals | | 111 | | 266 | | 402 | | 790 | |
Other | | (64 | ) | (26 | ) | (111 | ) | (114 | ) |
Total Segment PTOI excluding significant items | | $ | 763 | | $ | 757 | | $ | 4,221 | | $ | 2,757 | |
(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, | |
| | 2010 | | 2009 | | %
Change | | 2010 | | 2009 | | %
Change | |
| | | | | | | | | | | | | |
Segment PTOI | | $ | 763 | | $ | 757 | | 1 | % | $ | 4,221 | | $ | 2,542 | | 66 | % |
Significant items charge included in PTOI (per Schedule B) | | — | | — | | | | — | | 215 | | | |
Segment PTOI excluding significant items | | $ | 763 | | $ | 757 | | 1 | % | $ | 4,221 | | $ | 2,757 | | 53 | % |
| | | | | | | | | | | | | |
Net income attributable to DuPont | | $ | 367 | | $ | 409 | | -10 | % | $ | 2,655 | | $ | 1,314 | | 102 | % |
Significant items (benefit) charge included in net income attributable to DuPont (per Schedule B) | | — | | — | | | | (87 | ) | 141 | | | |
Net income attributable to DuPont excluding significant items | | $ | 367 | | $ | 409 | | -10 | % | $ | 2,568 | | $ | 1,455 | | 76 | % |
| | | | | | | | | | | | | |
EPS | | $ | 0.40 | | $ | 0.45 | | -11 | % | $ | 2.89 | | $ | 1.44 | | 101 | % |
Significant items (benefit) charge included in EPS (per Schedule B) | | — | | — | | | | (0.09 | ) | 0.15 | | | |
EPS excluding significant items | | $ | 0.40 | | $ | 0.45 | | -11 | % | $ | 2.80 | | $ | 1.59 | | 76 | % |
| | | | | | | | | | | | | |
Average number of diluted shares outstanding | | 918,500,000 | | 910,291,000 | | 0.9 | % | 914,987,000 | | 907,996,000 | | 0.8 | % |
Reconciliation of Earnings Per Share (EPS) Oulook
| | Year Ended | |
| | December 31, | |
| | 2010
Outlook | | 2009
Actual | |
| | | | | |
Earnings per share - excluding significant items | | About $3.10 | | $ | 2.03 | |
Adjustment of interest and accruals related to income tax settlements | | 0.09 | | — | |
4Q loss on early extinguishment of debt | | (0.13 | ) | — | |
Net restructuring and hurricane related items | | — | | (0.11 | ) |
Reported EPS | | About $3.06 | | $ | 1.92 | |
13
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
September 30, | | Nine Months Ended
September 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| | | | | | | | | |
Income before income taxes | | $ | 330 | | $ | 391 | | $ | 3,485 | | $ | 1,612 | |
Less: Net income attributable to noncontrolling interests | | 2 | | 5 | | 19 | | 10 | |
Add: Interest expense | | 103 | | 100 | | 309 | | 312 | |
Adjusted EBIT | | 431 | | 486 | | 3,775 | | 1,914 | |
Add: Depreciation and amortization | | 325 | | 369 | | 1,046 | | 1,157 | |
Adjusted EBITDA | | $ | 756 | | $ | 855 | | $ | 4,821 | | $ | 3,071 | |
Calculation of Free Cash Flow
| | Nine Month Ended | |
| | September 30, | |
| | 2010 | | 2009 | |
Cash provided by operating activities | | $ | 35 | | $ | 923 | |
Less: Purchases of property, plant and equipment | | 899 | | 990 | |
Free cash flow | | $ | (864 | ) | $ | (67 | ) |
Reconciliations of Fixed Costs as a Percent of Sales
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| | | | | | | | | |
Total charges and expenses - consolidated income statements | | $ | 6,737 | | $ | 5,765 | | $ | 21,506 | | $ | 18,902 | |
Remove: | | | | | | | | | |
Interest expense | | (103 | ) | (100 | ) | (309 | ) | (312 | ) |
Variable costs (1) | | (3,491 | ) | (2,758 | ) | (11,595 | ) | (9,528 | ) |
Significant items - charge (2) | | — | | — | | — | | (215 | ) |
Fixed costs | | $ | 3,143 | | $ | 2,907 | | $ | 9,602 | | $ | 8,847 | |
| | | | | | | | | |
Consolidated net sales | | $ | 7,001 | | $ | 5,961 | | $ | 24,101 | | $ | 19,690 | |
| | | | | | | | | |
Fixed costs as a percent of consolidated net sales | | 44.9 | % | 48.8 | % | 39.8 | % | 44.9 | % |
(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, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
Subsidiary/Affiliate Monetary Position Gain (Loss) | | | | | | | | | |
Pre-tax exchange gains (losses) (includes equity affiliates) | | $ | 283 | | $ | 190 | | $ | (125 | ) | $ | 288 | |
Local tax benefits (expenses) | | 3 | | 7 | | (19 | ) | (51 | ) |
Net after-tax impact from subsidiary exchange gains (losses) | | $ | 286 | | $ | 197 | | $ | (144 | ) | $ | 237 | |
| | | | | | | | | |
Hedging Program Gain (Loss) | | | | | | | | | |
Pre-tax exchange gains (losses) | | $ | (443 | ) | $ | (318 | ) | $ | 100 | | $ | (490 | ) |
Tax benefits (expenses) | | 154 | | 110 | | (35 | ) | 168 | |
Net after-tax impact from hedging program exchange gains (losses) | | $ | (289 | ) | $ | (208 | ) | $ | 65 | | $ | (322 | ) |
| | | | | | | | | |
Total Exchange Gain (Loss) | | | | | | | | | |
Pre-tax exchange gains (losses) | | $ | (160 | ) | $ | (128 | ) | $ | (25 | ) | $ | (202 | ) |
Tax benefits (expenses) | | 157 | | 117 | | (54 | ) | 117 | |
Net after-tax exchange gains (losses) | | $ | (3 | ) | $ | (11 | ) | $ | (79 | ) | $ | (85 | ) |
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, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| | | | | | | | | |
Income before income taxes | | $ | 330 | | $ | 391 | | $ | 3,485 | | $ | 1,612 | |
Add: Significant items - (benefit) charge (1) | | — | | — | | (59 | ) | 215 | |
Less: Net exchange gains (losses) | | (160 | ) | (128 | ) | (25 | ) | (202 | ) |
Income before income taxes, significant items and exchange gains/losses | | $ | 490 | | $ | 519 | | $ | 3,451 | | $ | 2,029 | |
| | | | | | | | | |
(Benefit from) provision for income taxes | | $ | (39 | ) | $ | (23 | ) | $ | 811 | | $ | 288 | |
Add: Tax benefit on significant items | | — | | — | | 28 | | 74 | |
Tax benefits (expenses) on exchange gains/losses | | 157 | | 117 | | (54 | ) | 117 | |
Provision for income taxes, excluding taxes on significant items and exchange gains/losses | | $ | 118 | | $ | 94 | | $ | 785 | | $ | 479 | |
| | | | | | | | | |
Effective income tax rate | | (11.8 | )% | (5.9 | )% | 23.3 | % | 17.9 | % |
Significant items effect | | — | | — | | 1.2 | % | 1.9 | % |
Tax rate before significant items | | (11.8 | )% | (5.9 | )% | 24.5 | % | 19.8 | % |
Exchange gains (losses) effect | | 35.9 | % | 24.0 | % | (1.8 | )% | 3.8 | % |
Base income tax rate | | 24.1 | % | 18.1 | % | 22.7 | % | 23.6 | % |
(1) See Schedule B for detail of significant items.
15
