DuPont Grows Second Quarter Earnings 8 Percent to $1.48 Ex-items

Strong Agriculture Results, Acquisition Integration and Productivity Contribute to Growth

Jul 24, 2012, 06:00 ET from DuPont

WILMINGTON, Del., July 24, 2012 /PRNewswire/ --

Highlights:

  • Second-quarter 2012 earnings were $1.48 per share versus $1.37 per share in the prior year, excluding significant items from both periods.  Reported second-quarter earnings were $1.25 per share versus $1.29 per share in the prior year.
  • Sales increased 7 percent to $11.0 billion reflecting 6 percent higher local prices and a 5 percent increase from portfolio changes, partially offset by a 3 percent reduction from currency and 1 percent lower sales volume.  Sales in developing markets grew 11 percent.
  • Segment pre-tax operating income, excluding pharmaceuticals and significant items, increased 13 percent, principally attributable to higher earnings from Agriculture and Performance Materials and a prior-year acquisition benefiting Nutrition & Health and Industrial Biosciences.
  • For the first half of 2012, Agriculture delivered 15 percent sales growth and 16 percent higher pre-tax operating income excluding significant items, reflecting strong northern-hemisphere business performance across both seed and crop protection product lines.
  • The company is on track versus its full-year 2012 productivity targets for fixed costs and working capital.  Year-to-date fixed cost productivity totals $190 million.
  • DuPont expects full-year earnings to be toward the lower end of its existing outlook range of $4.20 to $4.40 per share, excluding significant items, due to uncertainties associated with macros and currency as well as a higher tax rate related to earnings mix.  Prior year earnings were $3.93 per share on a comparable basis.

"Our agriculture, food and bioscience businesses are performing exceptionally well globally, and our advanced materials businesses are achieving solid results despite slower growth in some key markets and continued weakness in Europe," said DuPont Chair and CEO Ellen Kullman.  "Our global teams continue to execute well in a dynamic environment, while investing for growth driven by science-powered innovation and collaboration."

Global Consolidated Sales and Net Income

Second-quarter 2012 consolidated net sales of $11.0 billion were 7 percent higher than the prior year reflecting 6 percent higher local prices and a 5 percent net increase from portfolio changes, partly offset by a 3 percent negative currency impact and 1 percent lower volume.

The table below shows regional sales and variances versus the second quarter 2011.



Three Months Ended
June 30, 2012


Percentage Change Due to:

(Dollars in billions)


$


% Change


Local Price


Currency Effect


Volume


Portfolio/
Other

U.S. & Canada


$     5.0


12


8


-


2


2

EMEA*


2.5


(2)


5


(7)


(8)


8

Asia Pacific


2.4


5


1


(1)


(1)


6

Latin America


1.1


14


9


(5)


4


6














Total Consolidated Sales


$   11.0


7


6


(3)


(1)


5



























* Europe, Middle East & Africa











Second-quarter 2012 net income attributable to DuPont was $1,179 million versus $1,218 million in 2011. Excluding significant items, net income attributable to DuPont of $1,394 million increased $95 million, or 7 percent, from $1,299 million in the second quarter 2011. 

Earnings Per Share

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





EPS ANALYSIS







2Q






EPS 2011


$1.29


Less: Significant items (schedule B)        


( .08)


EPS 2011 – Excluding significant items


$1.37


Local prices


 

.49


Variable cost*


(.03)


Volume


(.06)


Fixed cost*


(.15)


Currency


(.06)


Portfolio changes


.06


Exchange losses


(.04)


Income tax


(.02)


Pharmaceuticals income


(.05)


Other                                                                


(.03)






EPS 2012 – Excluding significant items  


$1.48


   Significant items - (schedule B)


(.23)


EPS 2012


$1.25


 

*                   Excluding volume and currency impacts

 









Business Segment Performance

The table below shows second quarter 2012 segment sales and related variances versus the prior year.

SEGMENT SALES*

Three Months Ended


Percentage Change 

(Dollars in billions)

June 30, 2012

Due to:


$


% Change


USD
Price


Volume


Portfolio
and Other

Agriculture

$      3.4


13


7


6


-

Electronics & Communications 

0.8


(11)


(5)


(6)


-

Industrial Biosciences

0.3


144


-


10


134

Nutrition & Health

0.9


82


-


5


77

Performance Chemicals

2.0


(1)


9


(10)


-

Performance Coatings

1.1


(1)


1


(2)


-

Performance Materials

1.7


(3)


(1)


1


(3)

Safety & Protection

1.0


(4)


1


(5)


-


*    Segment sales include transfers

Segment pre-tax operating income (PTOI) for second quarter 2012 was $1,898 million compared to second quarter 2011 PTOI of $1,943 million.   Excluding significant items, PTOI was $2,178 million, up 9 percent from $1,993 million in the prior year, as shown in the table below.

SEGMENT PTOI excluding Significant Items*




Change versus 2011

(Dollars in millions)


2Q 2012


2Q 2011


$


%










Agriculture


$     926


$     826


$     100


12%

Electronics & Communications


75


103


(28)


-27%

Industrial Biosciences


44


10


34


340%

Nutrition & Health


112


38


74


195%

Performance Chemicals


538


503


35


7%

Performance Coatings


92


73


19


26%

Performance Materials


317


254


63


25%

Safety & Protection


127


143


(16)


-11%

Other


(69)


(37)


(32)


nm



$  2,162


$  1,913


$     249


13%

Pharmaceuticals


16


80


(64)


-80%

Total Segment PTOI


$  2,178


$  1,993


$     185


9%










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

The following is a summary of business results for each of the company's reportable segments, comparing second quarter 2012 with second quarter 2011, for sales and PTOI, excluding significant items.  References to selling price are on a U.S. dollar basis, including the impact of currency.

Agriculture – Sales of $3.4 billion were up $0.4 billion, or 13 percent, with 7 percent price and 6 percent volume gains.  Pioneer seed maintained its momentum delivering 12 percent sales growth on agriculture macros and strong business performance in North America corn and soybeans.  Crop Protection sales growth of 15 percent was underpinned by strong demand across all product lines.   PTOI of $926 million improved 12 percent on strong sales performance partially offset by input cost increases in seeds, unfavorable currency impact and higher investments in Right Product Right Acre commercial and R&D activities.

First half sales of $7.5 billion were up $1.0 billion, or 15 percent, with 8 percent volume and 7 percent price gains.  Pioneer seed sales growth of 16 percent reflects strong northern hemisphere performance with global price and volume gains on new product penetration. Crop Protection sales growth of 11 percent reflects continued strong demand in all product lines with standout performance in insect control products.  PTOI for the first half of $2.2 billion improved 16 percent on higher volume and price partially offset by input cost increases in seeds, unfavorable currency impact and higher spending for growth investments.

Electronics & Communications – Sales of $795 million were down 11 percent on 6 percent lower volume and 5 percent lower selling prices, primarily pass-through of lower metals prices.  Sales reflect continued soft demand for photovoltaic materials, though up sequentially from first quarter.  Volume decline in photovoltaics was partially offset by increased demand for smart phones and tablets.  PTOI of $75 million declined $28 million from lower volume and plant utilization.  Additionally, PTOI in the prior year included a $20 million reduction due to extreme volatility in metals prices.

Industrial Biosciences – Sales of $300 million were up $177 million, primarily due to two months acquisition benefit from the Danisco enzyme business. Biomaterial sales into apparel and carpeting accounted for a 10 percent volume increase.  PTOI of $44 million was up $34 million benefiting from the acquisition and realization of cost synergies.  PTOI includes $5 million of amortization expense associated with the fair value step-up of acquired intangible assets.

Nutrition & Health Sales of $885 million were up $399 million, or 82 percent, primarily reflecting two months acquisition benefit from the Danisco specialty food ingredients business.  Higher volume reflects continued strong demand in Solae specialty soy products.  PTOI of $112 million was up $74 million benefiting from the acquisition, realization of cost synergies and favorable product mix in Solae.  PTOI includes $20 million of amortization expense associated with the fair value step-up of acquired intangible assets.

Performance Chemicals – Sales of $2.0 billion were down 1 percent, with 10 percent lower volume partially offset by 9 percent higher selling prices.  Higher selling prices more than offset higher ore costs.  Lower volume reflects continued softness in titanium dioxide, particularly in Asia Pacific and Europe, and weakening demand in fluoropolymers.  PTOI of $538 million increased $35 million on higher selling prices and continued productivity actions.

Performance Coatings – Sales of $1.1 billion were down 1 percent, with 2 percent lower volume partially offset by 1 percent higher selling prices.  OEM volume growth in North America and Asia Pacific was more than offset by lower refinish and powder coatings volume, particularly in European markets.  Higher local selling prices across all regions and market segments were partially offset by the impact of unfavorable currency.  PTOI of $92 million increased $19 million on higher selling prices, mix enrichment and continued productivity actions, partially offset by unfavorable currency. 

Performance Materials – Sales of $1.7 billion were down 3 percent, primarily reflecting a 3 percent reduction from a portfolio change and 1 percent lower selling prices, partially offset by 1 percent higher volume.  The lower selling prices were primarily affected by unfavorable currency.  Volume growth in packaging markets and continued strong demand in the automotive market, particularly in North America, were partially offset by softness in the industrial and electronic markets.  PTOI of $317 million increased $63 million due to lower feedstock costs and higher volume, partially offset by unfavorable currency. 

Safety & Protection – Sales of $986 million were down 4 percent, with 5 percent lower volume partially offset by 1 percent higher selling prices.  Volume declined due to lower public sector demand and continued softness in industrial markets.  Higher local selling prices from value-based pricing were partially offset by the impact of unfavorable currency.  PTOI of $127 million decreased $16 million on weaker mix, unfavorable currency and higher spending for growth initiatives, partially offset by value-based pricing actions. 

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

Outlook 

DuPont expects full-year earnings to be toward the lower end of its existing outlook range of $4.20 to $4.40 per share, excluding significant items, due to uncertainties associated with macros and currency as well as a higher tax rate related to earnings mix.  Prior year earnings were $3.93 per share on a comparable basis.

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," "anticipates," "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.

E. I. du Pont de Nemours and Company Consolidated Income Statements (Dollars in millions, except per share amounts)

SCHEDULE A

Three Months Ended June 30,

Six Months Ended June 30,

2012

2011

2012

2011

Net sales

$            11,006

$          10,264

$            22,236

$          20,298

Other income, net(a)

277

229

303

254

Total

11,283

10,493

22,539

20,552

Cost of goods sold and other operating charges (a)

7,815

7,191

15,342

14,022

Selling, general and administrative expenses

1,186

1,136

2,355

2,163

Research and development expense 

528

462

1,033

861

Interest expense 

117

115

231

215

Total

9,646

8,904

18,961

17,261

Income before income taxes

1,637

1,589

3,578

3,291

Provision for (benefit from) income taxes

449

360

890

618

Net income 

1,188

1,229

2,688

2,673

Less:  Net income attributable to noncontrolling interests

9

11

21

24

Net income attributable to DuPont

$              1,179

$            1,218

$              2,667

$            2,649

Basic earnings per share of common stock

$                1.26

$              1.31

$                2.85

$              2.85

Diluted earnings per share of common stock 

$                1.25

$              1.29

$                2.82

$              2.80

Dividends per share of common stock

$                0.43

$              0.41

$                0.84

$              0.82

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

  Basic

934,057,000

930,798,000

933,982,000

927,860,000

  Diluted

942,832,000

943,987,000

943,533,000

942,461,000

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

 E. I. du Pont de Nemours and Company Condensed Consolidated Balance Sheets (Dollars in millions, except per share amounts)

SCHEDULE A (continued)

June 30, 2012

December 31, 2011

Assets

Current assets

Cash and cash equivalents

$           3,506

$           3,586

Marketable securities

50

433

Accounts and notes receivable, net 

9,476

6,022

Inventories 

6,011

7,195

Prepaid expenses 

151

151

Deferred income taxes 

932

671

Total current assets

20,126

18,058

Property, plant and equipment, net of accumulated depreciation    (June 30, 2012 - $19,962; December 31, 2011 - $19,349)

13,342

13,412

Goodwill

5,348

5,413

Other intangible assets 

5,228

5,413

Investment in affiliates

1,087

1,117

Deferred income taxes 

3,822

4,067

Other assets 

1,078

1,012

Total

$         50,031

$         48,492

Liabilities and Equity

Current liabilities

Accounts payable

$           3,695

$           4,816

Short-term borrowings and capital lease obligations 

3,696

817

Income taxes 

930

255

Other accrued liabilities 

4,117

5,297

Total current liabilities

12,438

11,185

Long-term borrowings and capital lease obligations 

11,254

11,736

Other liabilities 

14,643

15,508

Deferred income taxes 

1,051

1,001

Total liabilities

39,386

39,430

Commitments and contingent liabilities 

Stockholders' equity

Preferred stock

237

237

Common stock, $0.30 par value; 1,800,000,000 shares authorized;    issued at June 30, 2012 - 1,017,365,000; December 31, 2011 - 1,013,164,000

305

304

Additional paid-in capital

10,494

10,107

Reinvested earnings

14,975

13,422

Accumulated other comprehensive loss 

(8,743)

(8,750)

Common stock held in treasury, at cost (87,041,000 shares    at June 30, 2012 and December 31, 2011)

(6,727)

(6,727)

Total DuPont stockholders' equity

10,541

8,593

Noncontrolling interests

104

469

Total equity

10,645

9,062

Total

$         50,031

$         48,492

E. I. du Pont de Nemours and Company Condensed Consolidated Statement of Cash Flows (Dollars in millions)

SCHEDULE A (continued)

Six Months Ended June 30,

2012

2011

Cash provided by (used for) operating activities

$        (1,117)

$           (644)

Investing activities

Purchases of property, plant and equipment

(696)

(741)

Investments in affiliates

(14)

(27)

Payments for businesses (net of cash acquired)

-

(6,264)

Proceeds from sales of assets - net of cash sold

166

59

Net (increase) decrease in short-term financial instruments

388

2,404

Forward exchange contract settlements

80

(454)

Other investing activities - net

(7)

(13)

Cash provided by (used for) investing activities

(83)

(5,036)

Financing activities

Dividends paid to stockholders

(788)

(767)

Net increase (decrease) in borrowings

2,406

3,823

Repurchase of common stock

(400)

(272)

Proceeds from exercise of stock options

406

768

Payments for non-controlling interest

(447)

-

Other financing activities - net

27

(22)

Cash provided by (used for) financing activities

1,204

3,530

Effect of exchange rate changes on cash

(84)

155

Increase (decrease) in cash and cash equivalents

(80)

(1,995)

Cash and cash equivalents at beginning of period

3,586

4,263

Cash and cash equivalents at end of period

$          3,506

$          2,268

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)

2012

2011

2012

2011

2012

2011

1st Quarter

Customer claims charge (a)

$        (50)

$            -

$        (32)

$            -

$      (0.04)

$               -

1st Quarter - Total

$        (50)

$            -

$        (32)

$            -

$      (0.04)

$               -

2nd Quarter

Customer claims charge (a)

$       (265)

$            -

$       (169)

$            -

$      (0.18)

$               -

Litigation settlement (b)

(137)

-

(123)

-

(0.13)

-

Gain on the sale of equity 

method investment (c)

122

-

77

-

0.08

-

Transition costs related to the

acquisition of Danisco (d)

-

(103)

-

(81)

-

(0.08)

2nd Quarter - Total

$       (280)

$       (103)

$       (215)

$        (81)

$      (0.23)

$        (0.08)

Year-to-date - Total (e)

$       (330)

$       (103)

$       (247)

$        (81)

$      (0.26)

$        (0.09)

(a)

First quarter and second quarter 2012 included charges of $50 and $265, respectively, recorded in Cost of goods sold and other operating charges associated with the company's process to fairly resolve claims related to the use of Imprelis® herbicide, bringing the total charges to $490 at June 30, 2012.  The company will continue to evaluate reported claim damage as additional information becomes available. It is reasonably possible that additional charges could result from this evaluation. While there is a high degree of uncertainty, total charges could range as high as $575. The company has submitted, and will continue to submit, requests for payment to its insurance carriers for costs associated with this matter in excess of $100.  This matter relates to the Agriculture segment.

(b)

Second quarter 2012 included a charge of $137 recorded in Cost of goods sold and other operating charges primarily related to the company's settlement of litigation with Invista.  This matter relates to Other.  

(c)

Second quarter 2012 included a pre-tax gain of $122 recorded in Other income, net associated with the sale of an equity method investment in the Electronics & Communications segment.

(d)

Second quarter 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).

(e)

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.

 

E. I. du Pont de Nemours and Company Consolidated Segment Information (Dollars in millions)

SCHEDULE C

Three Months Ended June 30,

Six Months Ended June 30,

SEGMENT SALES (1)

2012

2011

2012

2011

Agriculture

$          3,388

$          2,997

$     7,468

$     6,501

Electronics & Communications

795

891

1,472

1,702

Industrial Biosciences

300

123

588

123

Nutrition & Health

885

486

1,693

810

Performance Chemicals

1,968

1,995

3,868

3,792

Performance Coatings

1,089

1,105

2,139

2,098

Performance Materials

1,699

1,745

3,299

3,452

Safety & Protection

986

1,025

1,927

1,990

Other

1

1

2

37

Total Segment sales

11,111

10,368

22,456

20,505

Elimination of transfers

(105)

(104)

(220)

(207)

Consolidated net sales

$        11,006

$        10,264

$   22,236

$   20,298

(1)   Sales for the reporting segments include transfers.

 

E. I. du Pont de Nemours and Company Consolidated Segment Information (Dollars in millions)

SCHEDULE C (continued)

Three Months Ended June 30,

Six Months Ended June 30,

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

2012

2011

2012

2011

Agriculture 

$                  661

$                  826

$    1,925

$   1,937

Electronics & Communications

197

103

230

214

Industrial Biosciences

44

(7)

85

(7)

Nutrition & Health

112

5

195

30

Performance Chemicals

538

503

1,050

897

Performance Coatings

92

73

179

138

Performance Materials

317

254

557

542

Safety & Protection

127

143

227

288

Pharmaceuticals 

16

80

43

130

Other

(206)

(37)

(266)

(101)

Total Segment PTOI

1,898

1,943

4,225

4,068

Net exchange gains (losses) (1)

28

4

(52)

(139)

Corporate expenses & net interest

(289)

(358)

(595)

(638)

Income before income taxes

$               1,637

$               1,589

$    3,578

$   3,291

Three Months Ended June 30,

Six Months Ended June 30,

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

2012

2011

2012

2011

Agriculture 

$                (265)

$                      -

$     (315)

$           -

Electronics & Communications

122

-

122

-

Industrial Biosciences

-

(17)

-

(17)

Nutrition & Health

-

(33)

-

(33)

Performance Chemicals

-

-

-

-

Performance Coatings

-

-

-

-

Performance Materials

-

-

-

-

Safety & Protection

-

-

-

-

Pharmaceuticals 

-

-

-

-

Other

(137)

-

(137)

-

Total significant items by segment

$                (280)

$                  (50)

$     (330)

$      (50)

Three Months Ended June 30,

Six Months Ended June 30,

PTOI EXCLUDING SIGNIFICANT ITEMS

2012

2011

2012

2011

Agriculture 

$                  926

$                  826

$    2,240

$   1,937

Electronics & Communications

75

103

108

214

Industrial Biosciences

44

10

85

10

Nutrition & Health

112

38

195

63

Performance Chemicals

538

503

1,050

897

Performance Coatings

92

73

179

138

Performance Materials

317

254

557

542

Safety & Protection

127

143

227

288

Pharmaceuticals 

16

80

43

130

Other

(69)

(37)

(129)

(101)

Total Segment PTOI excluding significant items

$               2,178

$               1,993

$    4,555

$   4,118

(1)  See Schedule D for additional information on exchange gains and losses.

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

 

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 June 30,

Six Months Ended June 30, 

2012

2011

% Change

2012

2011

% Change

Segment PTOI

$               1,898

$               1,943

-2%

$              4,225

$              4,068

4%

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

280

50

330

50

Segment PTOI excluding significant items

$               2,178

$               1,993

9%

$              4,555

$              4,118

11%

Net income attributable to DuPont

$               1,179

$               1,218

-3%

$              2,667

$              2,649

1%

Significant items (benefit) charge included in net income

attributable to DuPont (per Schedule B)

215

81

247

81

Net income attributable to DuPont 

excluding significant items

$               1,394

$               1,299

7%

$              2,914

$              2,730

7%

EPS

$                 1.25

$                 1.29

-3%

$                2.82

$                2.80

1%

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

0.23

0.08

0.26

0.09

EPS excluding significant items

$                 1.48

$                 1.37

8%

$                3.08

$                2.89

7%

Average number of diluted shares outstanding

942,832,000

943,987,000

-0.1%

943,533,000

942,461,000

0.1%

Reconciliation of Earnings Per Share (EPS) Outlook

Year Ended December 31,

2012 Outlook

2011 Actual

Earning per share - excluding significant items

$4.20 - $4.40

$                 3.93

Sale of an equity method investment

0.08

-

Danisco acquisition related costs

-

(0.22)

Customer claims charges

(0.21)

(0.12)

Charges related to a licensing agreement

-

(0.03)

Sale of a business

-

0.13

Restructuring charge/adjustments

-

(0.01)

Litigation Settlement

(0.13)

-

Reported EPS

$3.94 to $4.14

$                 3.68

 

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 June 30,

Six Months Ended June 30,

2012

2011

2012

2011

Income before income taxes

$               1,637

$          1,589

$          3,578

$          3,291

Less: Net income attributable to noncontrolling interests

9

11

21

24

Add:  Interest expense 

117

115

231

215

Adjusted EBIT

1,745

1,693

3,788

3,482

Add: Depreciation and amortization 

445

383

900

744

Adjusted EBITDA

$               2,190

$          2,076

$          4,688

$          4,226

Calculation of Free Cash Flow

Six Months Ended June 30,

2012

2011

Cash provided by (used for) operating activities

$             (1,117)

$           (644)

Less: Purchases of property, plant and equipment

696

741

Free cash flow

$             (1,813)

$        (1,385)

Reconciliations of Fixed Costs as a Percent of Sales

Three Months Ended June 30,

Six Months Ended June 30,

2012

2011

2012

2011

Total charges and expenses - consolidated income statements

$               9,646

$          8,904

$        18,961

$        17,261

Remove:  

   Interest expense

(117)

(115)

(231)

(215)

   Variable costs (1)

(5,072)

(4,936)

(10,209)

(9,658)

   Significant items - benefit (charge) (2)

(402)

(103)

(452)

(103)

       Fixed costs

$               4,055

$          3,750

$          8,069

$          7,285

Consolidated net sales

$             11,006

$        10,264

$        22,236

$        20,298

Fixed costs as a percent of consolidated net sales

36.8%

36.5%

36.3%

35.9%

(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. 

  

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 and the related tax impact is recorded in Provision for (benefit from) income taxes on the Consolidated Income Statements.

Three Months Ended June 30,

Six Months Ended June 30,

2012

2011

2012

2011

Subsidiary/Affiliate Monetary Position Gain (Loss)

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

$        (210)

$        55

$        (162)

$         285

Local tax benefits (expenses)

24

(10)

16

(5)

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

$        (186)

$        45

$        (146)

$         280

Hedging Program Gain (Loss)

Pre-tax exchange gains (losses)

$          238

$      (51)

$         110

$       (424)

Tax benefits (expenses)

(83)

17

(39)

147

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

$          155

$      (34)

$           71

$       (277)

Total Exchange Gain (Loss)

Pre-tax exchange gains (losses)

$            28

$          4

$          (52)

$       (139)

Tax benefits (expenses)

(59)

7

(23)

142

Net after-tax exchange gains (losses)

$          (31)

$        11

$          (75)

$             3

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 June 30,

Six Months Ended June 30,

2012

2011

2012

2011

Income before income taxes 

$       1,637

$   1,589

$      3,578

$      3,291

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

280

103

330

103

Less:  Net exchange gains (losses)

28

4

(52)

(139)

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

$       1,889

$   1,688

$      3,960

$      3,533

Provision for (benefit from) income taxes

$          449

$      360

$         890

$         618

Add:  Tax benefits (expenses) on significant items

65

22

83

22

          Tax benefits (expenses) on exchange gains/losses

(59)

7

(23)

142

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

$          455

$      389

$         950

$         782

Effective income tax rate

27.4%

22.7%

24.9%

18.8%

Significant items effect

(0.6%)

(0.1%)

0.0%

0.1%

Tax rate before significant items

26.8%

22.6%

24.9%

18.9%

Exchange gains (losses) effect

(2.7%)

0.4%

(0.9%)

3.2%

Base income tax rate

24.1%

23.0%

24.0%

22.1%

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

 

SOURCE DuPont



RELATED LINKS

http://www.dupont.com