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May 4, 2015 10
1 Total Shareholder Return measured from 12/31/08 12/31/14. Calculated as
the appreciation or depreciation of share price, plus any dividends, over a
given period, expressed as a percentage of the shares value at the beginning
of the period. Assumes dividends are re-invested at the closing price
applicable on the ex-dividend date. Source: Datastream. Proxy Peers: 3M, Air
Products, Baxter Intl, Boeing, Caterpillar, Dow Chemical, Emerson, Honeywell,
Ingersoll-Rand, Johnson Controls, Johnson and Johnson, Kimberly Clark, Merck,
Monsanto, Procter and Gamble, Syngenta AG, and United Technologies. TSR
reported on a market cap weighted basis. Closing prices are adjusted for
spin-offs, stock splits, rights and special dividends. 2 Adjusted operating
EPS compound annual growth rate is calculated from 12/31/08 12/31/14 and is
defined as diluted earnings per share from continuing operations excluding
non -operating pension/OPEB costs, significant items, Performance Chemicals
and Pharma. As required under U.S. GAAP, EPS from continuing operations
excludes Performance Coatings for all periods presented. Reconciliations of
non-GAAP measures to GAAP are included at the end of this document. 3 Total
Shareholder Return measured from 12/31/08 3/15/13. Calculated as the
appreciation or depreciation of share price, plus any dividends, over a given
period, expressed as a percentage of the shares value at the beginning of
the period. Assumes dividends are re-invested at the closing price applicable
on the ex-dividend date. Source: Datastream. 4 Segment sales include
transfers and exclude Performance Coatings, Performance Chemicals and Other;
Compounded Annual Growth Rate (CAGR) is calculated from 12/31/08 12/31/14. 5
Adjusted operating EPS compound annual growth rate is calculated from
12/31/11 12/31/14 and is defined as diluted earnings per share from
continuing operations excluding non -operating pension/OPEB costs,
significant items, Performance Chemicals and Pharma. As required under U.S.
GAAP, EPS from continuing operations excludes Performance Coatings for all
periods presented. Reconciliations of non-GAAP measures to GAAP are included
at the end of this document. 6 Segment adjusted operating margin is based on
total segment sales and segment adjusted operating earnings, excluding
Performance Chemicals and Other/Pharma. Segment adjusted operating earnings
are calculated using segment pre-tax operating income excluding significant
items; calculations include certain corporate expenses and exclude adjusted
operating earnings of Performance Chemicals and Pharma/Other. Calculation is
from 12/31/08 vs. 12/31/14. Reconciliations of non-GAAP measures to GAAP are
included at the end of this document. 7 Adjusted Segment EBITDA margins are
based on segment sales and adjusted segment EBITDA. Adjusted Segment EBITDA
calculated as segment pre-tax operating income, excluding significant items,
plus depreciation and amortization; calculations include certain corporate
expenses. Reconciliations of non-GAAP measures to GAAP are included at the
end of this document. 8 Figure based on 2014 segment sales data, which
includes transfers and excludes Performance Chemicals and Other. 9 (i)
DuPonts adjusted Segment EBITDA margins are based on segment sales and
adjusted segment EBITDA. Adjusted Segment EBITDA calculated as segment
pre-tax operating income, excluding significant items, plus depreciation and
amortization; calculations include certain corporate expenses. See non-GAAP
reconciliations at the end of this document. (ii) Peer EBITDA margins
calendarized to December where possible; exclude non-recurring
expenses/income where applicable and allocate corporate overhead based on
gross segment revenue contribution. (iii) Uses comparable industry segment
where applicable. 10 DuPont Agriculture Segment operating earnings is based
on segment pre-tax operating income excluding significant items.
Reconciliations of non-GAAP measures to GAAP are included at the end of this
document. Peers Earnings metrics represent the relevant non-GAAP earnings
metric as presented in their issued investor materials using the comparable
industry segment where applicable. Generally, the peer metrics are reflective
of pre-tax earnings associated with operations adjusted for significant
items. No adjustments have been made to peer reported metrics to conform them
to U.S Dollars or to Segment Operating Earnings as reported by DuPont. 11
Permission to use quotation neither sought nor obtained. 12 Value
destruction from a complete split could be about $20B from lost working
capital efficiencies, high taxes from asset sale gains, and additional
overhead from splitting businesses, among other factors. We maintain our view
that a majority of investors will side with DD as Mr. Gallogly did, having
previously had discussions with Trian. (Wells Fargo, 27 March 2015*);
Moody's views activist investor Trian Partners' proposed strategic and
operating initiatives that call for a breakup of E.I. du Pont de Nemours
(DuPont, A2 stable) as being credit negative [] A breakup of DuPont would
leave two much smaller entities and each one individually would likely not be
able to support DuPont's current credit profile. Neither entity would have
the scale and business diversity of DuPont today. Both would exhibit greater
volatility in earnings and cash flows. (Moodys, 26 September 2014*);
DuPonts businesses are good free cash flow generating entities as the
company is configured currently. There are earnings risks near term due to
the weakness in the Euro [] However, we think that these risks are probably
more than offset by the benefits of the progressive rationalization of
DuPonts business model to increasing return and free cash flow generation.
(J.P. Morgan, 18 September 2014*); Mr. Peltzs spin-off plan [] would leave
the remaining Company [] with more expensive financing costs, poorer access
to the debt and commercial paper markets, and little cushion for the next and
inevitable downturn. (Gimme Credit, 4 February 2015*) *Permission to use
quotation neither sought nor obtained. 13 Analysis based on assumptions and
details outlined in Trian White Papers dated 9/16/2014 and 2/17/2015;
indicative estimates are subject to interest rate assumptions, among other
items. 14 From the November 2014 issue of The Harvard Business Review.
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