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DuPont Delivers Strong Results in Second Quarter; Increases 2011 Earnings Guidance
Sales Gains in all Segments & Regions and Danisco Acquisition Underpin Growth Outlook

WILMINGTON, Del., July 28, 2011 /PRNewswire via COMTEX/ --

Highlights:

  • Second-quarter 2011 earnings were $1.37 per share, up 17 percent versus $1.17 per share in the prior year, excluding significant items from both periods (see Schedule B). Reported second-quarter 2011 earnings were $1.29 per share, including significant item charges of $.08 per share related to the acquisition. Reported second-quarter 2010 earnings were $1.26 per share.
  • Sales increased 19 percent to $10.3 billion with 11 percent higher local prices, 2 percent higher sales volume, 3 percent currency benefit and a 3 percent net increase from portfolio changes. Sales in developing markets grew 29 percent and represent 30 percent of total sales.
  • Strong performances in Agriculture, Performance Chemicals and Safety & Protection, and the acquisition of Danisco contributed to a 20 percent increase in segment pre-tax operating income, excluding significant items.
  • The company is on track versus its full-year 2011 productivity targets for fixed costs and working capital. Year-to-date fixed cost productivity totals more than $180 million.
  • The company increased its full-year 2011 earnings outlook, excluding significant items, to a range of $3.90 to $4.05 per share. The increase reflects strong second-quarter results, the expectation for continued global economic growth and about $.05 per share full-year impact from Danisco on an underlying basis. Prior guidance was a range of $3.65 to $3.85 per share, excluding the impact of Danisco.

"Our strong second-quarter sales growth across all segments and regions resulted from consistent global execution and customer-focused innovation," said DuPont (NYSE: DD) Chair and CEO Ellen Kullman. "We are increasing our earnings outlook for 2011 based on strong performance year-to-date and confidence in our business plans for the second half of the year. Longer term, we expect additional compelling growth opportunities across our businesses stemming from science-powered innovations and collaboration, including the integration of Danisco's world-class enzymes, fermentation and specialty food ingredients capabilities with DuPont's strong industrial biosciences and nutrition & health offerings."

Global Consolidated Sales and Net Income

Second-quarter 2011 consolidated net sales of $10.3 billion were 19 percent higher than the prior year reflecting 11 percent higher local prices, 2 percent higher volume, 3 percent favorable currency effect and a 3 percent net increase from portfolio changes. The table below shows regional sales and variances versus the second quarter 2010.



Three Months Ended
June 30, 2011


Percentage Change Due to:

(Dollars in billions)


$


% Change


Local Currency Price


Currency Effect


Volume


Portfolio/Other

U.S.


$ 4.1


14


9


-


1


4

EMEA*


2.6


22


9


8


1


4

Asia Pacific


2.3


26


16


4


4


2

Latin America


0.9


28


12


3


11


2

Canada


0.4


3


5


4


(7)


1














Total Consolidated Sales


$ 10.3


19


11


3


2


3



























* Europe, Middle East & Africa

Second-quarter 2011 net income attributable to DuPont increased 5 percent to $1,218 million versus $1,159 million in 2010. Excluding significant items, net income attributable to DuPont of $1,299 million increased $227 million, or 21 percent, from $1,072 million in the second quarter 2010. The increase principally reflects higher selling prices, increased sales volume and currency benefit, partly offset by higher raw material, energy, and freight costs.

Earnings Per Share

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






EPS ANALYSIS







2Q






EPS 2010


$1.26


Less: significant items (schedule B)


.09


EPS 2010 - Excluding significant items


$1.17


Local prices


.80


Variable cost*


(.46)


Volume


.06


Fixed cost*


(.19)


Currency


.07


Other**


(.02)


Higher shares outstanding


(.04)


Income tax


(.03)


Danisco impact***


.01






EPS 2011 - Excluding significant items


$1.37


Significant items - (schedule B)


(.08)






EPS 2011


$1.29



* Excludes volume and currency impacts

** Principally absence of prior-year asset sales and higher

interest expense, partly offset by exchange gains

*** After interest expense and additional

depreciation/amortization expense related to the fair

value step-up of acquired long-lived Danisco assets


Business Segment Performance

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

SEGMENT SALES*

Three Months Ended


Percentage Change

(Dollars in billions)

June 30, 2011

Due to:


$


% Change


USD Price


Volume


Portfolio and Other

Agriculture

$ 3.0


10


6


4


-

Electronics & Communications

0.9


36


27


9


-

Industrial Biosciences

0.1


nm


nm


nm


nm

Nutrition & Health

0.5


64


4


2


58

Performance Chemicals

2.0


27


28


(1)


-

Performance Coatings

1.1


15


14


1


-

Performance Materials

1.7


11


14


(2)


(1)

Safety & Protection

1.0


21


6


7


8


* Segment sales include transfers

Segment pre-tax operating income (PTOI) for second quarter 2011 was $1,943 million compared to second quarter 2010 PTOI of $1,655 million. Excluding significant items, PTOI was $1,993 million, a 20 percent improvement from prior year, as shown in the table below.









SEGMENT PTOI excluding Significant Items




Change versus 2010




(Dollars in millions)


2Q 2011


2Q 2010


$


%
















Agriculture


$ 826


$ 746


$ 80


11%




Electronics & Communications


103


108


(5)


-5%




Industrial Biosciences


10


-


10


nm




Nutrition & Health


38


16


22


138%




Performance Chemicals


503


274


229


84%




Performance Coatings


73


75


(2)


-3%




Performance Materials


254


261


(7)


-3%




Safety & Protection


143


121


22


18%




Other


(37)


(16)


(21)


nm






$ 1,913


$ 1,585


$ 328


21%




Pharmaceuticals


80


70


10


14%




Total Segment PTOI


$ 1,993


$ 1,655


$ 338


20%



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

In view of the company's expanded business portfolio following the Danisco acquisition, two new reportable segments have been added: Industrial Biosciences and Nutrition & Health. The Industrial Biosciences segment includes Danisco's enzyme business and DuPont(TM) Sorona® and Bio-PDO(TM) businesses, previously reported in Other. The new Nutrition & Health segment contains Danisco's food ingredients business and DuPont's Nutrition & Health business previously reported as part of the Agriculture & Nutrition segment. The former Agriculture & Nutrition segment, now renamed Agriculture, includes the seed and crop protection businesses. The following is a summary of business results for each of the company's reportable segments, comparing second quarter 2011 with second quarter 2010, 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 $3.0 billion were up $264 million, or 10 percent, reflecting 6 percent price gains and 4 percent volume gains. Pioneer seed growth was led by strong market performance in North America spanning volume, price and portfolio gains. Crop Protection sales increased across all product lines more than offsetting the impact of divested businesses. PTOI for the quarter of $826 million grew 11 percent on higher sales, partly offset by the impact of portfolio changes.

First-half sales of $6.5 billion grew 15 percent with 9 percent higher volume, 5 percent price gains and 1 percent favorable impact of portfolio changes. Pioneer seed business delivered volume and price gains in North America and Europe. Crop Protection sales growth was underpinned by continued strong Rynaxypyr® sales, solid herbicide and picoxystrobin fungicide growth, partly offset by the impact of divested businesses. PTOI for the first half of $1.9 billion grew 16 percent on higher sales.

Electronics & Communications - Sales of $891 million were up 36 percent, with 27 percent higher selling prices, primarily pass-through of metals prices, and 9 percent higher volume. Volume growth was fueled by strong demand for photovoltaics and consumer electronics in Asia Pacific. PTOI of $103 million decreased $5 million reflecting increased spending for photovoltaics growth initiatives and extreme volatility of metals pricing which reduced PTOI by about $20 million.

Industrial Biosciences - Sales of $123 million and PTOI of $10 million primarily reflect the acquisition of Danisco's enzyme business. PTOI included approximately $2 million of amortization expense associated with the fair value step-up of intangible assets acquired as part of the acquisition.

Nutrition & Health -Sales of $486 million were up $189 million, or 64 percent, with a 58 percent increase from the acquisition of Danisco's food ingredients business, 4 percent higher selling prices and 2 percent volume growth. PTOI of $38 million increased $22 million, primarily due to the acquisition. PTOI included approximately $7 million of amortization expense associated with the fair value step-up of intangible assets acquired as part of the acquisition.

Performance Chemicals - Sales of $2.0 billion were up 27 percent, with 28 percent higher selling prices and 1 percent lower volume. Sales increased substantially across all major regions. Higher selling prices stemmed from strong global demand for titanium dioxide, refrigerants, fluoroproducts and industrial chemicals, and more than offset raw material increases. Lower volume reflects weather-related supply disruptions in industrial chemicals. PTOI was $503 million, increasing $229 million on strong sales performance.

Performance Coatings - Sales of $1.1 billion were up 15 percent, with 14 percent higher selling prices and 1 percent higher volume. Higher selling prices reflect pricing actions across all market segments to offset higher raw material costs along with a favorable currency impact. Strong demand continued in industrial coatings, particularly in North American heavy-duty truck markets. PTOI of $73 million decreased slightly as higher sales were offset by higher raw material, energy and freight costs.

Performance Materials - Sales of $1.7 billion were up 11 percent, with 14 percent higher selling prices, partially offset by 2 percent lower volume and a 1 percent reduction from a portfolio change. Ongoing demand in electronic, packaging and automotive markets led to favorable pricing in all regions. Lower volume reflects supply constraints due to production outages, as well as supply chain disruptions as a result of the Japan earthquake. PTOI of $254 million decreased slightly due to the absence of a $27 million benefit from a gain on the sale of a business and an insurance recovery in the prior year and lower volume, partially offset by higher selling prices.

Safety & Protection - Sales of $1.0 billion were up 21 percent, with an 8 percent increase from a portfolio change as a result of the MECS acquisition, 7 percent higher volume and 6 percent higher selling prices. Higher volume reflects continued growth from increased demand for aramid and nonwoven products in industrial and public sector markets across all major regions. Higher selling prices primarily reflect pricing actions taken to offset increases in raw material costs. PTOI of $143 million increased significantly, primarily driven by the portfolio change and a favorable currency impact, partially offset by higher spending for the Kevlar® expansion at Cooper River.

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

Outlook

The company increased its full-year 2011 earnings outlook, excluding significant items, to a range of $3.90 to $4.05 per share. The increase reflects strong second-quarter results, the expectation for continued global economic growth and about $.05 per share full-year operating earnings from Danisco on an underlying basis. Prior guidance was a range of $3.65 to $3.85 per share, excluding the impact of Danisco.

The company's estimate for the impact of the Danisco acquisition on full-year reported earnings is now a reduction of $.18 to $.29 per share, versus the previous estimate of a $.30 to $.45 per share reduction. The current view is based on anticipated full-year Danisco operating earnings of about $.05 per share and significant item charges related to the acquisition estimated to be $.23 to $.34 per share. In addition to these Danisco charges, the company expects a $.03 per share significant item charge in the third quarter associated with a licensing agreement.

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 (http://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 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
June 30,


Six Months Ended
June 30,


2011


2010


2011


2010

Net sales

$ 10,264


$ 8,616


$ 20,298


$ 17,100

Other income, net (a)

229


464


254


824

Total

10,493


9,080


20,552


17,924









Cost of goods sold and other operating charges (a)

7,191


5,984


14,022


11,780

Selling, general and administrative expenses

1,136


1,021


2,163


2,014

Research and development expense

462


404


861


769

Interest expense

115


103


215


206

Total

8,904


7,512


17,261


14,769









Income before income taxes

1,589


1,568


3,291


3,155

Provision for income taxes (a)

360


400


618


850









Net income

1,229


1,168


2,673


2,305









Less: Net income attributable to noncontrolling interests

11


9


24


17









Net income attributable to DuPont

$ 1,218


$ 1,159


$ 2,649


$ 2,288









Basic earnings per share of common stock

$ 1.31


$ 1.27


$ 2.85


$ 2.52









Diluted earnings per share of common stock

$ 1.29


$ 1.26


$ 2.80


$ 2.50









Dividends per share of common stock

$ 0.41


$ 0.41


$ 0.82


$ 0.82









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








Basic

930,798,000


907,099,000


927,860,000


906,289,000

Diluted

943,987,000


914,548,000


942,461,000


913,216,000

















(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,
2011


December 31,
2010

Assets




Current assets




Cash and cash equivalents

$ 2,268


$ 4,263

Marketable securities

214


2,538

Accounts and notes receivable, net

9,368


5,635

Inventories

6,049


5,967

Prepaid expenses

166


122

Deferred income taxes

638


534

Total current assets

18,703


19,059

Property, plant and equipment, net of accumulated depreciation (June 30, 2011 - $19,146; December 31, 2010 - $18,628)

13,185


11,339

Goodwill

5,550


2,617

Other intangible assets

5,494


2,704

Investment in affiliates

1,084


1,041

Other assets

3,720


3,650

Total

$ 47,736


$ 40,410





Liabilities and Stockholders' Equity




Current liabilities




Accounts payable

$ 3,767


$ 4,360

Short-term borrowings and capital lease obligations

2,336


133

Income taxes

516


225

Other accrued liabilities

3,922


4,671

Total current liabilities

10,541


9,389

Long-term borrowings and capital lease obligations

12,460


10,137

Other liabilities

11,059


11,026

Deferred income taxes

1,174


115

Total liabilities

35,234


30,667





Commitments and contingent liabilities








Stockholders' equity




Preferred stock

237


237

Common stock, $0.30 par value; 1,800,000,000 shares authorized; issued at June 30, 2011 - 1,018,112,000; December 31, 2010 - 1,004,351,000

305


301

Additional paid-in capital

9,978


9,227

Reinvested earnings

13,683


12,030

Accumulated other comprehensive loss

(5,453)


(5,790)

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

(6,727)


(6,727)

Total DuPont stockholders' equity

12,023


9,278

Noncontrolling interests

479


465

Total equity

12,502


9,743

Total

$ 47,736


$ 40,410

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,


2011


2010





Cash provided by (used for) operating activities

$ (644)


$ (424)





Investing activities




Purchases of property, plant and equipment

(741)


(500)

Investments in affiliates

(27)


(54)

Payments for businesses (net of cash acquired)

(6,264)


-

Net (increase) decrease in short-term financial instruments

2,404


253

Other investing activities - net

(408)


576

Cash provided by (used for) investing activities

(5,036)


275





Financing activities




Dividends paid to stockholders

(767)


(748)

Net increase (decrease) in borrowings

3,823


(831)

Repurchase of common stock

(272)


-

Proceeds from exercise of stock options

768


33

Other financing activities - net

(22)


2

Cash provided by (used for) financing activities

3,530


(1,544)





Effect of exchange rate changes on cash

155


(113)





Increase (decrease) in cash and cash equivalents

(1,995)


(1,806)





Cash and cash equivalents at beginning of period

4,263


4,021





Cash and cash equivalents at end of period

$ 2,268


$ 2,215

E. I. du Pont de Nemours and Company

Schedule of Significant Items

(Dollars in millions, except per share amounts)

SCHEDULE B












SIGNIFICANT ITEMS














Pre-tax


After-tax


($ Per Share)



2011


2010


2011


2010


2011


2010

1st Quarter - Total

$ -


$ -


$ -


$ -


$ -


$ -

2nd Quarter













Transaction costs related to the acquisition of Danisco (a)

(103)


-


(81)


-


(0.08)


-


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

-


59


-


87


-


0.09

2nd Quarter - Total

$ (103)


$ 59


$ (81)


$ 87


$ (0.08)


$ 0.09














Year-to-date - Total (c)

$ (103)


$ 59


$ (81)


$ 87


$ (0.09)


$ 0.10



























(a) Second quarter and full year 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) and Nutrition & Health - $(33). The remaining fair value step-up of inventories acquired from Danisco of $132 is expected to be expensed in 2011 as these inventories are sold.

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

(c) Earnings per share for the year does 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)

2011


2010


2011


2010

Agriculture

$ 2,997


$ 2,733


$ 6,501


$ 5,674

Electronics & Communications

891


657


1,702


1,288

Industrial Biosciences

123


-


123


-

Nutrition & Health

486


297


810


598

Performance Chemicals

1,995


1,569


3,792


2,983

Performance Coatings

1,105


962


2,098


1,864

Performance Materials

1,745


1,576


3,452


3,110

Safety & Protection

1,025


845


1,990


1,634

Other

1


57


37


105

Total Segment sales

$ 10,368


$ 8,696


$ 20,505


$ 17,256









Elimination of transfers

(104)


(80)


(207)


(156)

Consolidated net sales

$ 10,264


$ 8,616


$ 20,298


$ 17,100

















(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)

2011


2010


2011


2010

Agriculture

$ 826


$ 746


$ 1,937


$ 1,669

Electronics & Communications

103


108


214


213

Industrial Biosciences

(7)


-


(7)


-

Nutrition & Health

5


16


30


34

Performance Chemicals

503


274


897


464

Performance Coatings

73


75


138


120

Performance Materials

254


261


542


491

Safety & Protection

143


121


288


223

Pharmaceuticals

80


70


130


291

Other

(37)


(16)


(101)


(47)

Total Segment PTOI

1,943


1,655


4,068


3,458









Net exchange gains (losses) (1)

4


105


(139)


135

Corporate expenses & net interest

(358)


(192)


(638)


(438)

Income before income taxes

$ 1,589


$ 1,568


$ 3,291


$ 3,155


















Three Months Ended
June 30,


Six Months Ended
June 30,

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

2011


2010


2011


2010

Agriculture

$ -


$ -


$ -


$ -

Electronics & Communications

-


-


-


-

Industrial Biosciences

(17)


-


(17)


-

Nutrition & Health

(33)


-


(33)


-

Performance Chemicals

-


-


-


-

Performance Coatings

-


-


-


-

Performance Materials

-


-


-


-

Safety & Protection

-


-


-


-

Pharmaceuticals

-


-


-


-

Other

-


-


-


-

Total significant items by segment

$ (50)


$ -


$ (50)


$ -


















Three Months Ended
June 30,


Six Months Ended
June 30,

PTOI EXCLUDING SIGNIFICANT ITEMS

2011


2010


2011


2010

Agriculture

$ 826


$ 746


$ 1,937


$ 1,669

Electronics & Communications

103


108


214


213

Industrial Biosciences

10


-


10


-

Nutrition & Health

38


16


63


34

Performance Chemicals

503


274


897


464

Performance Coatings

73


75


138


120

Performance Materials

254


261


542


491

Safety & Protection

143


121


288


223

Pharmaceuticals

80


70


130


291

Other

(37)


(16)


(101)


(47)

Total Segment PTOI excluding significant items

$ 1,993


$ 1,655


$ 4,118


$ 3,458









(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
June 30,


Six Months Ended
June 30,


2011


2010


%
Change


2011


2010


%
Change













Segment PTOI

$ 1,943


$ 1,655


17%


$ 4,068


$ 3,458


18%

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

50


-




50


-



Segment PTOI excluding significant items

$ 1,993


$ 1,655


20%


$ 4,118


$ 3,458


19%













Net income attributable to DuPont

$ 1,218


$ 1,159


5%


$ 2,649


$ 2,288


16%

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

81


(87)




81


(87)



Net income attributable to DuPont












excluding significant items

$ 1,299


$ 1,072


21%


$ 2,730


$ 2,201


24%













EPS

$ 1.29


$ 1.26


2%


$ 2.80


$ 2.50


12%

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

0.08


(0.09)




0.09


(0.10)



EPS excluding significant items

$ 1.37


$ 1.17


17%


$ 2.89


$ 2.40


20%













Average number of diluted shares outstanding

943,987,000


914,548,000


3.2%


942,461,000


913,216,000


3.2%













Reconciliation of Earnings Per Share (EPS) Outlook









Year Ended


December 31,


2011
Outlook


2010
Actual





Earnings per share - excluding significant items

$3.90 to $4.05


$ 3.28

Danisco acquisition related costs

(0.23) to (0.34)


-

Charge related to a licensing agreement

(0.03)


(0.03)

Adjustments of interest and accruals related to income tax




settlements and tax valuation allowances

-


0.14

Loss on early extinguishment of debt

-


(0.13)

Reversal of accruals related to the 2008 and




2009 restructuring reserves

-


0.02

Reported EPS

$3.53 to $3.79


$ 3.28

E. I. du Pont de Nemours and Company

Reconciliation of Non-GAAP Measures

(Dollars in millions, except per share amounts)

SCHEDULE D
















Reconciliations of Adjusted EBIT / EBITDA to Consolidated Income Statements















Three Months Ended
June 30,


Six Months Ended
June 30,


2011


2010


2011


2010









Income before income taxes

$ 1,589


$ 1,568


$ 3,291


$ 3,155

Less: Net income attributable to noncontrolling interests

11


9


24


17

Add: Interest expense

115


103


215


206

Adjusted EBIT

1,693


1,662


3,482


3,344

Add: Depreciation and amortization

383


355


744


721

Adjusted EBITDA

$ 2,076


$ 2,017


$ 4,226


$ 4,065

























Calculation of Free Cash Flow























Six Months Ended
June 30,






2011


2010





Cash provided by (used for) operating activities

$ (644)


$ (424)





Less: Purchases of property, plant and equipment

741


500





Free cash flow

$ (1,385)


$ (924)





























Reconciliations of Fixed Costs as a Percent of Sales















Three Months Ended
June 30,


Six Months Ended
June 30,


2011


2010


2011


2010









Total charges and expenses - consolidated income statements

$ 8,904


$ 7,512


$ 17,261


$ 14,769

Remove:








Interest expense

(115)


(103)


(215)


(206)

Variable costs (1)

(4,936)


(4,119)


(9,658)


(8,104)

Significant items - benefit (charge) (2)

(103)


-


(103)


-

Fixed costs

$ 3,750


$ 3,290


$ 7,285


$ 6,459









Consolidated net sales

$ 10,264


$ 8,616


$ 20,298


$ 17,100









Fixed costs as a percent of consolidated net sales

36.5%


38.2%


35.9%


37.8%









(1) Includes variable manufacturing costs, freight, commissions and other selling expenses which vary with the volume of sales.

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

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 June 30,


Six Months Ended
June 30,


2011


2010


2011


2010

Subsidiary/Affiliate Monetary Position Gain (Loss)








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

$ 55


$ (223)


$ 285


$ (408)

Local tax benefits (expenses)

(10)


(12)


(5)


(22)

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

$ 45


$ (235)


$ 280


$ (430)









Hedging Program Gain (Loss)








Pre-tax exchange gains (losses)

$ (51)


$ 328


$ (424)


$ 543

Tax benefits (expenses)

17


(114)


147


(189)

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

$ (34)


$ 214


$ (277)


$ 354









Total Exchange Gain (Loss)








Pre-tax exchange gains (losses)

$ 4


$ 105


$ (139)


$ 135

Tax benefits (expenses)

7


(126)


142


(211)

Net after-tax exchange gains (losses)

$ 11


$ (21)


$ 3


$ (76)









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,


2011


2010


2011


2010









Income before income taxes

$ 1,589


$ 1,568


$ 3,291


$ 3,155

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

103


(59)


103


(59)

Less: Net exchange gains (losses)

4


105


(139)


135

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

$ 1,688


$ 1,404


$ 3,533


$ 2,961









Provision for income taxes

$ 360


$ 400


$ 618


$ 850

Add: Tax benefit (expenses) on significant items

22


28


22


28

Tax benefits (expenses) on exchange gains/losses

7


(126)


142


(211)

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

$ 389


$ 302


$ 782


$ 667









Effective income tax rate

22.7%


25.5%


18.8%


26.9%

Significant items effect

(0.1)%


2.9%


0.1%


1.5%

Tax rate before significant items

22.6%


28.4%


18.9%


28.4%

Exchange gains (losses) effect

0.4%


(6.9)%


3.2%


(5.9)%

Base income tax rate

23.0%


21.5%


22.1%


22.5%

















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

E. I. du Pont de Nemours and Company

Danisco Opening Balance Sheet

(Dollars in millions, except per share amounts)

SCHEDULE E


The Danisco acquisition was valued at $6,417, plus net debt assumed of $617. The following table summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date. These amounts represent the preliminary allocation of the purchase price. Final determination of the fair value may result in further adjustments to the values presented below.



Net working capital, including inventory step-up (1)

$ 795

Property, plant and equipment (PP&E) (2)

1,720

Goodwill

2,925

Definite-lived intangible assets (3)

1,857

Indefinite-lived intangible assets

1,002

Net debt

(617)

Deferred income taxes (4)

(1,060)

Other liabilities, net of other assets

(205)

Net assets acquired

$ 6,417



(1) The fair value of inventories acquired included a step-up in the value of $175, of which $43 was expensed to cost of goods sold and other operating charges in the second quarter and the remaining amount is expected to be expensed in 2011. The step-up in the value of inventories acquired by segment were: Industrial Biosciences - $70 and Nutrition & Health - $105.

(2) The fair value of PP&E acquired included a step-up in the value of $607. The depreciation expense related to this step-up in value for the full-year 2011 by segment is expected to be: Industrial Biosciences - $9 and Nutrition & Health - $18.

(3) The amortization expense related to the fair value step-up of definite-lived intangible assets for the full-year 2011 by segment is expected to be: Industrial Biosciences - $11 and Nutrition & Health - $51.

(4) The deferred income tax liabilities assumed represent the adjustments for the tax impact of fair value adjustments, primarily relating to the definite-lived intangible assets.

SOURCE DuPont