DuPont 2009 Annual Report Download - page 23

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Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
The company’s current estimate of the 2010 effective income tax rate is about 23-24 percent, excluding tax effects of
exchange gains and losses which cannot be reasonably estimated at this time. See Note 6 for additional detail on items
that significantly impact the company’s effective tax rates.
(Dollars in millions) 2009 2008 2007
NET INCOME ATTRIBUTABLE TO DUPONT $1,755 $2,007 $2,988
2009 versus 2008 Net income attributable to DuPont (‘‘earnings’’) for 2009 decreased $252 million, or 13 percent
versus 2008. The decrease in earnings is principally attributable to lower sales volume, unfavorable currency impacts,
and higher non-cash pension costs. Partly offsetting these factors were lower costs for raw materials, energy, and
freight, benefits from cost reductions and productivity actions, lower restructuring charges, and the absence of
prior-year hurricane-related charges.
2008 versus 2007 Earnings for 2008 decreased $981 million, or 33 percent versus 2007. The decrease in earnings is
attributable to a substantial decline in sales volume, primarily occurring during the fourth quarter 2008, and higher fixed
costs including restructuring and hurricane-related charges.
Corporate Outlook
For the year 2010, the company’s earnings outlook is a range of $2.15 to $2.45 per share, with expected 10 percent
sales growth, reflecting anticipated continued global economic recovery, increasing industrial production, and, on
average, a weaker U.S. dollar versus 2009. Favorable global agriculture market and competitive conditions are
expected to support continued sales and earnings growth for the Agriculture & Nutrition segment, partly offset by
anticipated higher commodities costs. Demand for the company’s polymer, chemical, material, and electronic product
lines is expected to increase moderately versus the depressed levels of 2009. Earnings from Cozaar/Hyzaarare
expected to decline about $690 to $740 million pre-tax, reflecting expiration of certain patents for these
pharmaceuticals. The company expects approximately $410 million higher pre-tax non-cash pension costs. This is
expected to be partially offset by $160 million lower pre-tax costs resulting from a change in other employee-related
benefits. The company plans to continue a differential level of support for businesses expected to have above-average
growth rates and margins. For 2010, the company has set targets for capital expenditures of about $1.6 billion and fixed
cost productivity programs totaling about $400 million.
Accounting Standards Issued Not Yet Adopted
In June 2009, FASB issued authoritative guidance on accounting for transfers of financial assets, which is applied to
financial asset transfers on or after the effective date, which is January 1, 2010 for the company’s financial statements.
The new requirement limits the circumstances in which a financial asset may be de-recognized when the transferor has
not transferred the entire financial asset or has continuing involvement with the transferred asset. The concept of a
qualifying special-purpose entity, which had previously facilitated sale accounting for certain asset transfers, is
removed by the new requirement. The company expects that this will not have a material effect on its financial position
or results of operations.
In June 2009, FASB issued authoritative guidance on accounting for variable interest entities, which is effective for
reporting periods beginning after November 15, 2009. The amendments change the process for how an enterprise
determines which party consolidates a variable interest entity (VIE) to a primarily qualitative analysis. The party that
consolidates the VIE (the primary beneficiary) is defined as the party with (1) the power to direct activities of the VIE that
most significantly affect the VIE’s economic performance and (2) the obligation to absorb losses of the VIE or the right
to receive benefits from the VIE. Upon adoption, reporting enterprises must reconsider their conclusions on whether an
entity should be consolidated and should a change result, the effect on net assets will be recorded as a cumulative
effect adjustment to retained earnings. The company expects that upon adoption this will not have a material effect on
its financial position or results of operations.
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