DuPont Delivers 3Q 2010 Earnings of $.40 per Share Despite $.13 Pharmaceuticals Decline

2010 EPS Guidance Increased on Continued Global Sales Growth

Oct 26, 2010, 06:00 ET from DuPont

WILMINGTON, Del., Oct. 26 /PRNewswire-FirstCall/ --

Highlights:

  • DuPont's (NYSE: DD) 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."

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.      

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

Business Segment Performance

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

SEGMENT SALES*

Three Months Ended

Percentage Change

(Dollars in billions)

September 30, 2010

Due to:

$

% 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

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.

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.

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.

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

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

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.

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.

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.

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) Outlook

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

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.

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.

SOURCE DuPont



RELATED LINKS

http://www.dupont.com