2014

DuPont Reports 4Q and Full-Year 2012 EPS of $.11 and $3.33 Ex-items Expects Modest Growth in 2013 Operating Earnings

WILMINGTON, Del., Jan. 22, 2013 /PRNewswire/ --

Fourth Quarter:

  • Fourth quarter 2012 earnings per share (EPS) from continuing operations, excluding significant items, was $.11 versus prior year earnings of $.26.  Reported fourth quarter 2012 EPS from continuing operations was $.02 versus $.31 in the prior year.

  • Sales of $7.3 billion equaled the prior year.  Three percent higher volume was offset by 2 percent negative currency impact and a 1 percent reduction from portfolio changes. 

  • Segment pre-tax operating income (PTOI) was down, primarily reflecting lower price and volume in Performance Chemicals.  Titanium dioxide pricing led the decline. 

Full Year:

  • 2012 EPS from continuing operations, excluding significant items, was $3.33 versus $3.55 in 2011.  Currency was a $.27 per share headwind for the year.  Reported EPS from continuing operations was $2.61 versus $3.30 in 2011 (see Schedule B.)

  • Sales were $34.8 billion, up 3 percent with a 6 percent increase in developing markets.

  • Segment PTOI increased 3 percent to $5.7 billion, excluding Pharmaceuticals and significant items.  Agriculture PTOI increased 18 percent driven by volume and pricing growth for seed and crop protection businesses in North America and Latin America.  Performance Chemicals PTOI decreased 16 percent from lower sales across the segment.

  • Free cash flow was $3.1 billion versus $3.3 billion in the prior year.  2012 includes a $0.5 billion contribution to the principal U.S. pension plan and lower net income, partly offset by improved working capital productivity.

  • Fixed cost and working capital productivity benefits were each about $400 million, surpassing their
    $300 million targets.

  • Reflecting the change in reporting for the cost of non-operating pension and other post-employment benefits and excluding significant items, 2012 operating earnings were $3.77 per share.  On the same basis, the 2013 outlook for operating earnings is $3.85 to $4.05 per share, an increase of 2 to 7 percent over the prior year.

"DuPont stands stronger today than it did a year ago.  Our segments delivered innovation, productivity and integration cost synergies.  This, coupled with a record year in new product introductions, has strengthened our market position," said DuPont Chair and CEO Ellen Kullman.  "However, weakness in markets served by Performance Chemicals and Electronics & Communications provided significant challenges in 2012.  We've adjusted our plans to meet the changing market environment and grow our businesses in a slow-growth world economy."

Global Consolidated Sales  - 4th Quarter
Fourth quarter 2012 sales were $7.3 billion, flat versus the prior year.  Currency impact and portfolio changes offset 3 percent volume growth.  Volume was driven by Agriculture, with robust sales in Latin America and a strong start to the North American selling season, and increases in Asia Pacific for Performance Materials, Electronics & Communications and Performance Chemicals.  The table below shows fourth quarter regional sales and variances versus fourth quarter 2011.



Three Months Ended
December 31, 2012


Percentage Change Due to:

(Dollars in billions)


$


% Change


Local

Price


Currency Effect


Volume


Portfolio/

Other

U.S. & Canada


$     2.5


-


2


-


-


(2)

EMEA*


1.6


(8)


(1)


(4)


(2)


(1)

Asia Pacific


1.9


-


(5)


(1)


6


-

Latin America


1.3


10


7


(4)


8


(1)



























Total Consolidated Sales


$     7.3


-


-


(2)


3


(1)

Global Consolidated Sales - Full-Year
Full-year 2012 sales were $34.8 billion, up 3 percent versus 2011, reflecting 4 percent higher local prices, 2 percent adverse currency impact, 2 percent lower volume, and a 3 percent net increase from portfolio changes.  Local prices increased for all segments except Electronics & Communications which had lower pass-through of metals prices.  Lower global volume principally reflects decreases for Performance Chemicals and Electronics & Communications, partly offset by higher Agriculture volumes.  The table below shows regional sales and variances versus 2011.



Year Ended
December 31, 2012


Percentage Change Due to:

(Dollars in billions)


$


% Change


Local

Price


Currency Effect


Volume


Portfolio/

Other

U.S. & Canada


$   14.2


8


6


-


-


2

EMEA*


8.1


(1)


3


(6)


(4)


6

Asia Pacific


8.0


(4)


(1)


(1)


(5)


3

Latin America


4.5


11


9


(5)


5


2



























Total Consolidated Sales


$   34.8


3


4


(2)


(2)


3



























* Europe, Middle East & Africa










Income from Continuing Operations - 4th Quarter
Excluding significant items, fourth quarter 2012 income from continuing operations was $110 million versus $246 million in the prior year.  The decrease principally reflects lower income from Performance Chemicals and Pharmaceuticals, increased spending for growth initiatives and adverse currency impact.  Reported fourth quarter 2012 income from continuing operations was $19 million versus $293 million in the fourth quarter 2011.

Earnings Per Share - 4th Quarter
The table below shows year-over-year earnings per share (EPS) variances for the fourth quarter.





EPS  ANALYSIS







4Q






EPS 2011


$.31


   Less: Significant items - (schedule B)


.05






EPS 2011 –Excluding significant items


.26






   Local prices


(.01)


   Variable cost*


.12


   Volume


(.03)


   Fixed cost*


(.12)


   Currency


(.04)


   Income tax


.04


   Pharmaceuticals income


(.06)


   Other**


(.05)






EPS 2012 – Excluding significant items  


$.11


   Add: Significant items - (schedule B)


(.09)






EPS 2012


$.02










*  Excludes volume and currency impacts

** Includes interest expense, net exchange gains/losses, and other income









Business Segment Performance - 4th Quarter
The tables below show fourth quarter 2012 segment sales with  related variances versus the prior year and fourth quarter PTOI excluding significant items.

SEGMENT SALES*

Three Months Ended


Percentage Change 

(Dollars in billions)

December 31, 2012

Due to:


$


% Change


USD

Price


Volume


Portfolio

and Other

Agriculture

$      1.5


18


7


11


-

Electronics & Communications 

0.6


(1)


(3)


2


-

Industrial Biosciences

0.3


4


1


3


-

Nutrition & Health

0.9


6


3


3


-

Performance Chemicals

1.6


(15)


(7)


(8)


-

Performance Materials

1.5


(5)


(5)


3


(3)

Safety & Protection

1.0


2


(1)


3


-


*    Segment sales include transfers

 

SEGMENT PTOI excluding Significant Items*





Change versus 2011

(Dollars in millions)



4Q 2012


4Q 2011


$


%











Agriculture



$     (92)


$   (116)


$      24


21%

Electronics & Communications



24


42


(18)


-43%

Industrial Biosciences



44


34


10


29%

Nutrition & Health



66


52


14


27%

Performance Chemicals



200


433


(233)


-54%

Performance Materials



254


151


103


68%

Safety & Protection



88


94


(6)


-6%

Other



(71)


(74)


3


nm




$     513


$     616


$   (103)


-17%

Pharmaceuticals



9


89


(80)


-90%

Total Segment PTOI



$     522


$     705


$   (183)


-26%











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


Business Segment Performance - Full Year
The tables below show full-year 2012 segment sales with related variances versus the prior year, and full-year PTOI excluding significant items.


12 Months Ended


Percentage Change 

SEGMENT SALES*

December 31, 2012

Due to:

(Dollars in billions)


$


% Change


USD

Price


Volume


Portfolio

and Other

Agriculture

$    10.4


14


6


8


-

Electronics & Communications 

2.7


(15)


(4)


(11)


-

Industrial Biosciences

1.2


67


(4)


8


63

Nutrition & Health

3.4


39


1


3


35

Performance Chemicals

7.2


(8)


4


(12)


-

Performance Materials

6.4


(5)


(2)


-


(3)

Safety & Protection

3.8


(3)


-


(3)


-


*    Segment sales include transfers

 

SEGMENT PTOI excluding Significant Items*







(Dollars in millions)






Change versus 2011



FY 2012


FY 2011


$


%










Agriculture


$  2,063


$   1,752


$      311


18%

Electronics & Communications


172


355


(183)


-52%

Industrial Biosciences


171


78


93


119%

Nutrition & Health


348


170


178


105%

Performance Chemicals


1,622


1,923


(301)


-16%

Performance Materials


1,117


924


193


21%

Safety & Protection


418


500


(82)


-16%

Other


(259)


(235)


(24)


nm



$  5,652


$   5,467


$      185


3%

Pharmaceuticals


62


289


(227)


-79%

Total Segment PTOI


$  5,714


$   5,756


$       (42)


-1%










* 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 in the fourth quarter (unless otherwise noted), comparing current period with the prior year, 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 $1.5 billion were up 18 percent on 11 percent higher volume and 7 percent higher prices despite the negative impact of currency.  PTOI seasonal loss of ($92) million improved $24 million on higher volume in Latin America and stronger than expected pricing gains, partially offset by continued investment in commercial and R&D activities. 

Full-year sales of $10.4 billion grew 14 percent on 8 percent higher volume and 6 percent higher prices.  Pioneer seed sales increased from higher global volume and pricing gains in corn and soybeans.  Crop Protection sales grew on strong demand for insecticides and herbicides in all regions.  Full-year PTOI increased 18 percent as strong sales more than offset unfavorable currency and higher investments in commercial and R&D activities to support growth.  

Electronics & Communications – Sales of $622 million were down 1 percent, with 2 percent higher volume offset by
3 percent lower prices, primarily pass-through of lower metals prices.  Volume growth from increased demand for materials in smart phones and tablets was partly offset by continued softness in photovoltaic materials.  PTOI declined $18 million as the prior year included OLED technology licensing income of $20 million.

Industrial Biosciences – Sales of $300 million were up 4 percent on 3 percent higher volume and 1 percent higher prices.  Volume growth reflects strong sales of Sorona® polymer for carpeting, and continued growth in food enzymes in Europe.  PTOI of $44 million was up $10 million on higher volume and the benefit of synergies realized from the integration of the Danisco enzyme business.

Nutrition & Health Sales of $853 million were up 6 percent on 3 percent higher volume and 3 percent higher prices.  Volume growth reflects strong demand for probiotics, cultures and enablers.  Higher local prices in all regions were partly offset by unfavorable currency.  PTOI of $66 million was up $14 million on higher sales and the benefit of synergies realized from the integration of the Danisco specialty food ingredients business, partly offset by higher raw material costs.

Performance Chemicals – Sales of $1.6 billion were down 15 percent, with 8 percent lower volume and 7 percent lower prices.  Lower volume resulted primarily from weak demand for fluoropolymers in U.S. and Europe.  Lower prices reflect cyclical pressure in the titanium dioxide market.  PTOI of $200 million decreased $233 million on lower sales and plant utilization in both businesses.

Performance Materials – Sales of $1.5 billion were down 5 percent, with 5 percent lower prices and a 3 percent reduction from a portfolio change, partly offset by 3 percent higher volume.  Stable packaging markets and strong demand in the North American automotive market were partially offset by softness in the industrial and electronics markets and a weak Europe.  PTOI of $254 million increased $103 million due to lower feedstock costs, higher volume and mix enrichment, partly offset by unfavorable currency. 

Safety & Protection – Sales of $964 million were up 2 percent on 3 percent higher volume, partly offset by 1 percent lower prices due to unfavorable currency.  Volume increased on higher demand for Sustainable Solutions offerings and U.S. residential and commercial construction products.  PTOI of $88 million decreased $6 million primarily due to lower plant utilization related to softness in certain industrial markets and U.S. public sector markets. 

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

Outlook
Reflecting the change in reporting for the cost of non-operating pension and other post-employment benefits and excluding significant items, 2012 operating earnings were $3.77 per share.  On the same basis, the 2013 outlook for operating earnings is $3.85 to $4.05 per share, an increase of 2 to 7 percent over the prior year. First half 2013 operating earnings are expected to decline modestly on a year-over-year basis.  Additionally, full-year 2013 sales are expected to be about $36 billion.

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.

  

E. I. du Pont de Nemours and Company

Consolidated Income Statements

(Dollars in millions, except per share amounts)


SCHEDULE A









Three Months Ended
December 31,


Year Ended
December 31,






2012


2011


2012


2011

Net sales





$          7,325


$          7,343


$        34,812


$        33,681

Other income, net(a)





247


338


498


742

Total





7,572


7,681


35,310


34,423













Cost of goods sold and other operating charges (a)





5,983


5,927


25,604


24,874

Selling, general and administrative expenses





842


791


3,567


3,358

Research and development expense (a)





547


527


2,067


1,910

Interest expense 





117


116


464


447

Employee separation / asset related charges, net (a)





99


17


493


53

Total





7,588


7,378


32,195


30,642













(Loss) income from continuing operations before income taxes





(16)


303


3,115


3,781

(Benefit from) provision for income taxes on continuing operations 





(35)


10


622


626

Income from continuing operations after income taxes





19


293


2,493


3,155

Net income from discontinued operations after taxes





93


84


320


355













Net income 





112


377


2,813


3,510













Less:  Net income attributable to noncontrolling interests





1


4


25


36













Net income attributable to DuPont   





$             111


$             373


$          2,788


$          3,474













Basic earnings per share of common stock (b):












Basic earnings per share of common stock from continuing operations





$            0.02


$            0.31


$            2.63


$            3.35

Basic earnings per share of common stock from discontinued operations





0.10


0.09


0.34


0.38

Basic earnings per share of common stock





$            0.12


$            0.40


$            2.98


$            3.73













Diluted earnings per share of common stock (b):












Diluted earnings per share of common stock from continuing operations





$            0.02


$            0.31


$            2.61


$            3.30

Diluted earnings per share of common stock from discontinued operations





0.10


0.09


0.34


0.38

Diluted earnings per share of common stock





$            0.12


$            0.40


$            2.95


$            3.68

























Dividends per share of common stock   





$            0.43


$            0.41


$            1.70


$            1.64













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












  Basic





933,420,000


925,588,000


933,275,000


928,417,000

  Diluted





941,219,000


935,709,000


942,197,000


941,029,000

























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










(b) The sum of the individual earnings per share amounts may not equal the total due to rounding.







  

E. I. du Pont de Nemours and Company

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share amounts)


SCHEDULE A (continued)





December 31,
2012


December 31,
2011

Assets





Current assets





Cash and cash equivalents


$           4,284


$           3,586

Marketable securities


123


433

Accounts and notes receivable, net 


5,452


6,022

Inventories 


7,422


7,195

Prepaid expenses


204


151

Deferred income taxes 


650


671

Assets held for sale


3,056


-

Total current assets


21,191


18,058

Property, plant and equipment, net of accumulated depreciation
   (December 31, 2012 - $19,085; December 31, 2011 - $19,349)


12,741


13,412

Goodwill


4,616


5,413

Other intangible assets 


5,126


5,413

Investment in affiliates


1,163


1,117

Deferred income taxes 


3,939


4,067

Other assets


960


1,012

Total


$         49,736


$         48,492






Liabilities and Equity





Current liabilities





Accounts payable


$           4,853


$           4,816

Short-term borrowings and capital lease obligations 


1,275


817

Income taxes 


340


255

Other accrued liabilities


5,997


5,297

Liabilities related to assets held for sale


1,084


-

Total current liabilities


13,549


11,185

Long-term borrowings and capital lease obligations 


10,465


11,736

Other liabilities


14,687


15,508

Deferred income taxes


856


1,001

Total liabilities


39,557


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 December 31, 2012 - 1,020,057,000; December 31, 2011 - 1,013,164,000


306


304

Additional paid-in capital


10,632


10,107

Reinvested earnings


14,286


13,422

Accumulated other comprehensive loss 


(8,646)


(8,750)

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


(6,727)


(6,727)

Total DuPont stockholders' equity


10,088


8,593

Noncontrolling interests


91


469

Total equity


10,179


9,062

Total


$         49,736


$         48,492






  

E. I. du Pont de Nemours and Company

Condensed Consolidated Statement of Cash Flows

(Dollars in millions, except per share amounts)





SCHEDULE A (continued)



Year Ended
December 31,

Total Company

2012


2011





Cash provided by (used for) operating activities

$ 4,849


$ 5,152





Investing activities




Purchases of property, plant and equipment

(1,793)


(1,843)

Investments in affiliates

(97)


(67)

Payments for businesses (net of cash acquired)

(18)


(6,459)

Net (increase) decrease in short-term financial instruments

315


2,149

Proceeds from sales of assets - net of cash sold

302


214

Other investing activities - net

(55)


(232)

Cash provided by (used for) investing activities

(1,346)


(6,238)





Financing activities




Dividends paid to stockholders

(1,594)


(1,533)

Net increase (decrease) in borrowings

(793)


1,561

Repurchase of common stock

(400)


(672)

Proceeds from exercise of stock options

550


952

Payments for noncontrolling interest

(470)


-

Other financing activities - net

10


95

Cash provided by (used for) financing activities

(2,697)


403





Effect of exchange rate changes on cash

(13)


6





Cash classified as held for sale

(95)


-





Increase (decrease) in cash and cash equivalents

698


(677)





Cash and cash equivalents at beginning of period

3,586


4,263





Cash and cash equivalents at end of period

$ 4,284


$ 3,586





  

E. I. du Pont de Nemours and Company

Schedule of Significant Items from Continuing Operations

(Dollars in millions, except per share amounts)














SCHEDULE B












SIGNIFICANT ITEMS FROM CONTINUING OPERATIONS
























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)

3rd Quarter












Customer claims charge (a)

$ (125)


$   (75)


$   (80)


$   (48)


$ (0.09)


$ (0.05)

Restructuring charge (e)

(152)


-


(105)


-


(0.11)


-

Asset impairment charge (f)

(242)


-


(157)


-


(0.17)


-

Transition costs and restructuring charge













related to the acquisition of Danisco (g)

-


(171)


-


(122)


-


(0.13)

Charge related to milestone payment













for licensing agreement (h)

-


(50)


-


(33)


-


(0.03)

3rd Quarter - Total

$ (519)


$ (296)


$ (342)


$ (203)


$ (0.37)


$ (0.21)














4th Quarter












Customer claims charge (a)

$ (135)


$ (100)


$   (89)


$   (64)


$ (0.09)


$ (0.07)

Restructuring charge/adjustments (i)

(66)


(17)


(56)


(11)


(0.06)


(0.01)

Asset impairment charge (j)

(33)


-


(21)


-


(0.02)


-

Gain on sale of business (k)

117


-


75


-


0.08


-

Sale of a business (l)

-


49


-


122


-


0.13

4th Quarter - Total

$ (117)


$   (68)


$   (91)


$    47


$ (0.09)


$  0.05














Full Year - Total (m)

$ (966)


$ (467)


$ (680)


$ (237)


$ (0.72)


$ (0.25)



























  

E. I. du Pont de Nemours and Company

Schedule of Significant Items from Continuing Operations

(Dollars in millions, except per share amounts)














SCHEDULE B (continued)























SIGNIFICANT ITEMS FROM CONTINUING OPERATIONS




















(a)

Fourth quarter 2012, third quarter 2012, second quarter 2012, first quarter 2012, fourth quarter 2011, and third quarter 2011 included charges of $(135), $(125), $(265), $(50), $(100), and $(75), 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 $(750) at December 31, 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 $(900). The company has an applicable insurance program with a deductible equal to the first $100 of costs and expenses. The insurance program limits are $725 for costs and expenses in excess of the $100. The company has submitted, and will continue to submit, requests for payment to its insurance carriers for costs associated with this matter.  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 is included in 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)

Third quarter 2012 included a $(152) restructuring charge recorded in Employee separation/asset related charges, net consisting of $(133) of severance and related benefit costs and $(19) of asset related charges as a result of the company's plan to eliminate corporate costs previously allocated to Performance Coatings and cost-cutting actions to improve competitiveness.  Pre-tax charges by segment were: Agriculture - $(3), Nutrition & Health - $(13), Electronics & Communications - $(7), Performance Chemicals - $(3), Performance Materials - $(9), Safety & Protection - $(55), Industrial Biosciences - $(3), and Corporate expenses - $(59).














(f)

Third quarter 2012 included a $(242) impairment charge recorded in Employee separation/asset related charges, net related to asset groupings within the Electronics & Communications and Performance Materials segments. The charge of $(150) within Electronics & Communications was a result of conditions within the thin film photovoltaic market. The charge of $(92) within Performance Materials was the result of deteriorating conditions in an industrial polymer market.














(g)

Third quarter 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).














(h)

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














(i)

Fourth quarter 2012 included a $(66) restructuring charge recorded in Employee separation/asset related charges, net primarily as a result of the company's plans to eliminate corporate costs previously allocated to Performance Coatings and cost-cutting actions to improve competitiveness, partially offset by a reversal of prior year restructuring accruals. Pre-tax charges by segment are: Agriculture - $(8), Electronics & Communications - $(2), Nutrition & Health - $(36), Performance Materials - $(3), Safety & Protection - $(3), Other - $11, and Corporate expenses - $(25). Fourth quarter 2011 included a $(17) restructuring charge recorded in Employee separation/asset related charges, net primarily related to severance and related benefit costs associated with the Danisco acquisition, partially offset by a reversal of prior year restructuring accruals.  Pre-tax charges by segment were: Industrial Biosciences - $(1), Nutrition & Health - $(4), Performance Materials - $(2), and Other - $(10).














(j)

Fourth quarter 2012 included a $(33) impairment charge recorded in Employee separation/asset related charges, net related to an asset group within the Performance Chemicals segment.  The charge was a result of strategic decisions related to deteriorating conditions within a specific industrial chemicals market.














(k)

Fourth quarter 2012 included a pre-tax gain of $117 recorded in Other income, net associated with the sale of a business within the Agriculture segment.














(l)

Fourth quarter 2011 included a pre-tax gain of $49 recorded in Other income, net associated with the sale of a business in the Performance Materials segment and a related tax benefit of $73.














(m)

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
December 31,


Year Ended
December 31,

SEGMENT SALES (1)




2012


2011


2012


2011

Agriculture




$ 1,535


$ 1,297


$ 10,426


$   9,166

Electronics & Communications




622


630


2,701


3,173

Industrial Biosciences




300


289


1,180


705

Nutrition & Health




853


806


3,422


2,460

Performance Chemicals




1,588


1,860


7,188


7,794

Performance Materials




1,534


1,618


6,447


6,815

Safety & Protection




964


943


3,825


3,934

Other




1


1


5


40

Total Segment sales




7,397


7,444


35,194


34,087












Elimination of transfers




(72)


(101)


(382)


(406)

Consolidated net sales




$ 7,325


$ 7,343


$ 34,812


$ 33,681























(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
December 31,


Year Ended
December 31,

PRE-TAX OPERATING INCOME/(LOSS) (PTOI) FROM CONTINUING OPERATIONS


2012


2011


2012


2011

Agriculture 


$ (118)


$ (216)


$ 1,594


$ 1,527

Electronics & Communications


22


42


135


355

Industrial Biosciences


44


33


168


(1)

Nutrition & Health


30


48


299


44

Performance Chemicals


167


433


1,586


1,923

Performance Materials


251


198


1,013


971

Safety & Protection


85


94


360


500

Pharmaceuticals 


9


89


62


289

Other


(60)


(84)


(385)


(263)

Total Segment PTOI


430


637


4,832


5,345










Net exchange gains (losses) (1)


(54)


(14)


(215)


(146)

Corporate expenses & net interest


(392)


(320)


(1,502)


(1,418)

(Loss) income before income taxes from continuing operations  


$   (16)


$  303


$ 3,115


$ 3,781





















Three Months Ended
December 31,


Year Ended
December 31,

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


2012


2011


2012


2011

Agriculture 


$   (26)


$ (100)


$  (469)


$  (225)

Electronics & Communications


(2)


-


(37)


-

Industrial Biosciences


-


(1)


(3)


(79)

Nutrition & Health


(36)


(4)


(49)


(126)

Performance Chemicals


(33)


-


(36)


-

Performance Materials


(3)


47


(104)


47

Safety & Protection


(3)


-


(58)


-

Pharmaceuticals 


-


-


-


-

Other


11


(10)


(126)


(28)

Total significant items by segment


$   (92)


$   (68)


$  (882)


$  (411)





















Three Months Ended
December 31,


Year Ended
December 31,

PTOI EXCLUDING SIGNIFICANT ITEMS


2012


2011


2012


2011

Agriculture 


$   (92)


$ (116)


$ 2,063


$ 1,752

Electronics & Communications


24


42


172


355

Industrial Biosciences


44


34


171


78

Nutrition & Health


66


52


348


170

Performance Chemicals


200


433


1,622


1,923

Performance Materials


254


151


1,117


924

Safety & Protection


88


94


418


500

Pharmaceuticals 


9


89


62


289

Other


(71)


(74)


(259)


(235)

Total Segment PTOI excluding significant items


$  522


$  705


$ 5,714


$ 5,756










(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
December 31, 


Year Ended
December 31, 









2012


2011


%
Change


2012


2011


%
Change




















Segment PTOI








$              430


$             637


-32%


$          4,832


$          5,345


-10%

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


92


68




882


411



Segment PTOI excluding significant items


$              522


$             705


-26%


$          5,714


$          5,756


-1%




















Income from continuing operations after income taxes



$                19


$             293


-94%


$          2,493


$          3,155


-21%

Significant items (benefit) charge included in income from













continuing operations after income taxes (per Schedule B)




91


(47)




680


237



Income from continuing operations after income taxes, excluding significant items


$              110


$             246


-55%


$          3,173


$          3,392


-6%




















EPS from continuing operations








$             0.02


$            0.31


-94%


$            2.61


$            3.30


-21%

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


0.09


(0.05)




0.72


0.25



EPS from continuing operations, excluding significant items




$             0.11


$            0.26


-58%


$            3.33


$            3.55


-6%




















Average number of diluted shares outstanding




941,219,000


935,709,000


1%


942,197,000


941,029,000


0%


























































Reconciliation of Operating Earnings Per Share (EPS) Outlook













The reconciliation below represents the company's outlook on an operating earnings basis, defined as earnings from continuing operations excluding significant items and non-operating pension/OPEB costs, as presented on December 13, 2012.


























Year Ended December 31,

















2013 Outlook


2012 Actual









Operating EPS








 $3.85 - $4.05 


$            3.77




























Significant items



















1Q 2013 U.S. tax law items retroactive to 2012 - estimate








0.07


-









Sale of an equity method investment










0.08









Customer claims charges










(0.39)









Restructuring charge/adjustments










(0.17)









Litigation settlement










(0.13)









Asset impairment charge










(0.19)









Sale of business










0.08




























Non-operating pension/OPEB costs - estimate








(0.42)


(0.47)




























Impact of LIFO accounting change








-


0.03




























Reported EPS from continuing operations








 $3.50 - $3.70 


$            2.61









  

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions)
















SCHEDULE D
























Reconciliations of Adjusted EBIT / EBITDA to Consolidated Income Statements




























Three Months Ended
December 31,


Year Ended
December 31,









2012


2011


2012


2011
















(Loss) income from continuing operations before income taxes








$    (16)


$    303


$   3,115


$   3,781

Less: Net income attributable to noncontrolling interests



1


4


25


36

Add:  Interest expense 








117


116


464


447

Adjusted EBIT from continuing operations








100


415


3,554


4,192

Add: Depreciation and amortization 








394


393


1,631


1,451

Adjusted EBITDA from continuing operations








$    494


$    808


$   5,185


$   5,643












































Calculation of Free Cash Flow - Total Company

























Year Ended
December 31,

























2012


2011





Cash provided by (used for) operating activities








$ 4,849


$ 5,152





Less: Purchases of property, plant and equipment








1,793


1,843





Free cash flow








$ 3,056


$ 3,309



































  

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions)



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

December 31,


Year Ended
December 31,







2012


2011


2012


2011

Subsidiary/Affiliate Monetary Position Gain (Loss)













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






$         (8)


$        (83)


$       (58)


$        (13)

Local tax benefits (expenses)