This spreadsheet supports STUDENT analysis of the case “DuPont Corporation: Sale of Performance Coatings”

(UVA-F-1709).

This spreadsheet was prepared by Susan Chaplinsky, Tipton P. Snavely Professor of Business Administration, and Felicia Marston, Professor of Commerce, McIntire
School of Commerce. Copyright © 2014 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. For customer service
inquiries, send an e-mail tosales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, posted to the Internet, or
transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation.

Rev. May 11, 2017

 Business Segment Performance
(dollars in millions)
Segment Sales Year-over-Year Growth
2009 2010 2011 2009 2010
Agriculture $7,069 $7,845 $9,166 7.9% 11.0%
Electronics & Communications 1,918 2,764 3,173 -10.7% 44.1%
Nutrition & Health 1,218 1,240 2,460 -13.2% 1.8%
Performance Chemicals 4,964 6,322 7,794 -14.5% 27.4%
Performance Coatings 3,429 3,806 4,281 -21.4% 11.0%
Performance Materials 4,768 6,287 6,815 -25.3% 31.9%
Safety & Protection 2,811 3,364 3,934 -24.4% 19.7%
Industrial Biosciences 705
Other 158 194 40
Total segment sales 26,335 31,822 38,368
Elimination of transfers (226) (317) (407)
Net sales $26,109 $31,505 $37,961 -14.5% 20.7%

Pretax Operating Income* Segment Margins

2009 2010 2011 2009 2010
Agriculture $1,160 $1,293 $1,527 16.4% 16.5%
Electronics & Communications 87 445 355 4.5% 16.1%
Nutrition & Health 64 62 44 5.3% 5.0%
Performance Chemicals 547 1,081 1,923 11.0% 17.1%
Performance Coatings 69 249 271 2.0% 6.5%
Performance Materials 287 994 973 6.0% 15.8%
Safety & Protection 260 454 500 9.2% 13.5%
Industrial Biosciences (1)
Pharmaceuticals (discontinued) 1,037 489 289
Other (169) (206) (235)
Total pretax operating income $3,342 $4,861 $5,646 12.8% 15.4%
*After significant items.

Data source: Company reports.

over-Year Growth
2011
16.8%
14.8%
98.4%
23.3%
12.5%
8.4%
16.9%

20.5%

gment Margins
2011
16.7%
11.2%
1.8%
24.7%
6.3%
14.3%
12.7%
-0.1%

14.9%
 Sales Growth Forecasts for Business Units

Est. Sales
Sales as % of
Growth Major Products
Product
(2012–14)

Agriculture 10% Corn seeds 47%

Soybean seeds 15%
Herbicides 13%
Performance Chemicals 12% White pigments (TiO2) 47%
Fluoroproducts 34%
ChemSolutions 19%
Performance Materials 4% Engineering resins 46%
Ethylene co-polymers 23%
Elastomers 9%
Performance Coatings 3%–5% Refinish coatings 43%
OEM coatings 31%
Ind. liquid and powder coatings 26%
Safety & Protection 7% Aramids products 39%
Tyvek/Typar 26%
Safety consulting & training 16%
Electronics & Communications 6% Photovoltaic materials 39%
Electronic materials 25%
Printing, packaging materials 18%
Nutrition & Health 15% Food ingredients 100%
Industrial Biosciences 29% Biomaterials—enzymes

Data Source: Company reports, Macquarie Research, “EI DuPont de Nemours & Co.,” analyst report, January 26, 2012, and author es
ness Units

Sales as % of
Major Industry
Industry

Seeds 68%
Chemicals 32%

Industrials and chemicals 36%

Construction 31%
Specialties 18%
Transportation 37%
Industrial 18%
Packaging 14%
Vehicle aftermarket 43%
Vehicle OEM 37%
General industrial 15%
Industrial 54%
Consumer 20%
Construction materials 12%
Photovoltaics 39%
Consumer electronics 18%
Advanced printing 18%
Food ingredients 100%
Bioprocessing 100%

st report, January 26, 2012, and author estimates.

 Performance Coatings Historical Performance
(dollars in millions)
Five-year
2007 2008 2009 2010 2011 CAGR
Net Sales $4,347 $4,360 $3,428 $3,806 $4,281 -0.3%
Year-over-Year Growth 0.3% -21.4% 11.0% 12.5%
Pretax Operating Income 366 -8 69 255 268 -6.0%
Margin 8.4% -0.2% 2.0% 6.7% 6.3%

Depreciation and Amortization 107 111 123 105 104

Research and Development 71 69 56 48 46
Capital Expenditures 126 91 55 74 80
Segment Net Assets 2,607 2,226 2,018 2,047 2,107

Sales by Industry
Aftermarket (refinishing) 53% 44% 43%
Vehicle OEM 28% 36% 37%
General Industrial 14% 14% 15%
Other 5% 6% 5%

Sales by Region
North America 26% 27% 27%
Asia-Pacific 12% 13% 13%
Europe, Middle East, and Africa 46% 44% 43%
Latin America 16% 18% 17%

Data source: Company Databooks, various years.

Stand-Alone Valuation
(dollars in millions)
PPG Industries
Metric Actual Projected
2011 2012E 2013E
Sales Growth (%) 10.9% 4.1% 4.3%
EBIT Margin (Pretax) 11.2% 11.0% 12.0%
EV/EBITDA 2012 (×) 7.3

DuPont Performance Coatings

Metric Projected
Closing
2011A 2012E 2013E 2014E 2015E
Sales Growth (%) 12.5% 4.0% 4.0% 4.0% 4.0%
Depreciation and Amortization $104 $115 $118 $122 $125
EBIT Margin (Pretax) 6.3% 10.0% 10.0% 10.0% 10.0%
Tax Rate1 25% 25% 25% 25% 25%
Capital Expenditures $80 $115 $122 $132 $144
Net Working Capital (%) 15.0% 15.0% 15.0% 15.0%

Terminal EBITDA Multiple (×) 2

Debt/EBITDA 2012 (×) N/A
Debt
Blended Interest Rate on Debt 6.75%
Unlevered Cost of Equity 3 11.2%

APV Analysis
2011A Closing 2012E 2013E 2014E 2015E
Net Sales $4,281 $4,452 $4,630 $4,816 $5,008
EBITDA $372 $560 $581 $604 $626
Depreciation and Amortization $104 $115 $118 $122 $125
Pretax Operating Income (EBIT) $268 $445 $463 $482 $501
Interest Expense $0 $0 $0 $0
Earnings before Taxes $445 $463 $482 $501
Taxes ($111) ($116) ($120) ($125)
Net Income $334 $347 $361 $376
Increase in Net Working Capital ($26) ($27) ($28) ($29)
Capital Expenditures ($115) ($122) ($132) ($144)
Residual (Levered) Cash Flow $308 $317 $323 $327

Unlevered Free Cash Flow $308 $317 $323 $327

Terminal Value
Unlevered FCF, including TV $308 $317 $323 $327
Enterprise Value (EV) $3,970
Interest Tax Shield
PV Tax Shield
EV with Tax Shield $3,970
Data sources: Historical information for DPC is from DuPont company Databooks. Projections are case writer estimates. PPG’s
enterprise value is based on prices at the end of January 2012. PPG’s projections are based on Buckingham Research Group analyst
report, PPG Industries: “Other” Industrial Coatings Review, May 21, 2012.
 
Notes to stand-alone model:
1
DPC’s estimated average tax rate of 25% is lower than the U.S. marginal corporate tax rate as a result of international operations taxed
at lower rates.
2
Assumed forward exit multiple for Terminal Value is based on projected EBITDA growth in 2017 and is below PPG’s multiple because
of lower margins and slightly lower growth.
3
Unlevered Cost of Equity (ku) is based on PPG’s estimated unlevered beta of 1.2, a normalized 4% long-term U.S. Treasury rate, and a
6% market risk premium.
2016E
4.0%
$130
10.0%
25%
$150
15.0%

7.0

2016E
$5,208
$651
$130
$521
$0
$521
($130)
$391
($30)
($150)
$341

$341
$4,738
$5,079
mates. PPG’s
ch Group analyst

onal operations taxed

PG’s multiple because

Treasury rate, and a

Stand-Alone Valuation
(dollars in millions)
PPG Industries
Metric Actual Projected
2011 2012E 2013E
Sales Growth (%) 10.9% 4.1% 4.3%
EBIT Margin (Pretax) 11.2% 11.0% 12.0%
EV/EBITDA 2012 (×) 7.3

DuPont Performance Coatings

Metric Projected
Closing
2011A 2012E 2013E 2014E 2015E
Sales Growth (%) 12.5% 5.0% 5.0% 5.0% 5.0%
Depreciation and Amortization $104 $115 $118 $122 $125
EBIT Margin (Pretax) 6.3% 12.0% 12.0% 12.0% 12.0%
Tax Rate1 25% 25% 25% 25% 25%
Capital Expenditures $80 $115 $122 $132 $144
Net Working Capital (%) 15.0% 15.0% 15.0% 15.0%

Terminal EBITDA Multiple (×) 2

Debt/EBITDA 2012 (×) N/A
Debt
Blended Interest Rate on Debt 6.75%
Unlevered Cost of Equity 3 11.2%

APV Analysis
2011A Closing 2012E 2013E 2014E 2015E
Net Sales $4,281 $4,495 $4,720 $4,956 $5,204
EBITDA $372 $654 $684 $717 $749
Depreciation and Amortization $104 $115 $118 $122 $125
Pretax Operating Income (EBIT) $268 $539 $566 $595 $624
Interest Expense $0 $0 $0 $0
Earnings before Taxes $539 $566 $595 $624
Taxes ($135) ($142) ($149) ($156)
Net Income $405 $425 $446 $468
Increase in Net Working Capital ($32) ($34) ($35) ($37)
Capital Expenditures ($115) ($122) ($132) ($144)
Residual (Levered) Cash Flow $372 $387 $401 $412

Unlevered Free Cash Flow $372 $387 $401 $412

Terminal Value
Unlevered FCF, including TV $372 $387 $401 $412
Enterprise Value (EV) $5,102
Interest Tax Shield
PV Tax Shield
EV with Tax Shield $5,102
Data sources: Historical information for DPC is from DuPont company Databooks. Projections are case writer estimates. PPG’s
enterprise value is based on prices at the end of January 2012. PPG’s projections are based on Buckingham Research Group analyst
report, PPG Industries: “Other” Industrial Coatings Review, May 21, 2012.
 
Notes to stand-alone model:
1
DPC’s estimated average tax rate of 25% is lower than the U.S. marginal corporate tax rate as a result of international operations taxed
at lower rates.
2
Assumed forward exit multiple for Terminal Value is based on projected EBITDA growth in 2017 and is below PPG’s multiple because
of lower margins and slightly lower growth.
3
Unlevered Cost of Equity (ku) is based on PPG’s estimated unlevered beta of 1.2, a normalized 4% long-term U.S. Treasury rate, and a
6% market risk premium.
2016E
5.0%
$130
12.0%
25%
$150
15.0%

7.5

2016E
$5,464
$786
$130
$656
$0
$656
($164)
$492
($39)
($150)
$433

$433
$6,187
$6,620 4,713.91 4,341.46 3,954.39 3,553.77 3,141.92 2,709.20
4,713.91 4,341.46 3,954.39 3,553.77 3,141.92 2,709.20
mates. PPG’s
ch Group analyst

onal operations taxed

PG’s multiple because

Treasury rate, and a

 Financial Characteristics of Potential Strategic Buyers
(Fiscal year-end values in millions, except multiples and percentages)

Market
Capitalization
12/31/2011 Revenues EBITDA Total Debt
Akzo Nobel NV $11,837 $18,972 $2,311 4,585
BASF SE $66,702 $95,482 $15,205 16,972
PPG Industries $12,893 $14,885 $2,141 3,682
Sherwin-Williams $9,263 $8,766 $956 993
Valspar $3,637 $3,953 $513 1,057

Data source: Financial data are from Capital IQ; stock price performance is based on CRSP data.
 l Strategic Buyers
multiples and percentages)

Five-Year
Total Debt/ Stock One-Year Stock
EBITDA Performance Performance
2.0× NA -21.0%
1.1× -5.4% -12.8%
1.7× 30.0% -0.7%
1.0× 40.4% 6.6%
2.1× 41.0% 13.0%
 Buyout Deals

Volume and Number of Buyout Deals above $1 Billion

$600 120
Deal Volume ($ billions )

$500 98 100

No. Deals > $ 1 B

$400 80

$300 61 60

$200 41 40
33 36
28 31
$100 20
10
$0 0
2004 2005 2006 2007 2008 2009 2010 2011
Above $1B Under $1B No. Deals > $1B

Debt, Equity, and Purchase Price Multiples for Buyout Deals

Medians 2004 2005 2006 2007 2008 2009 2010

Total Debt/EBITDA 5.3 5 5.9 7.6 4.4 3.3 4.6
Equity/EBITDA 2.3 3.2 3.1 1.2 5 3.2 2.7
Purchase Price/EBITDA 7.6 8.2 9 8.8 9.4 6.5 7.3

Data source: PitchBook, Annual Private Equity Breakdown 2012.

2011
6.2 2306.4
2.8
9.0
 Private Equity Exits

Number of Exits by Exit Type

300
266
252
250 240
229
219
Number of Exits

193
200
164
150 142 150
150
107
100
66
51
50 33 40
24 30
14
0
2006 2007 2008 2009 2010 2011

Strategic buyer PE-backed IPOs Secondary buyouts

Exit Multiple by Exit Type

Medians 2006 2007 2008 2009 2010 2011 Average
Strategic buyer 9.5 10.9 9.5 8.0 8.5 8.7 9.2
PE-backed IPOs 5.8 11.7 10.8 7.4 7.2 5.1 8.0
Secondary buyouts 11.0 6.9 9.8 12.4 9.4 9.6 9.9

Data source: PitchBook and Grant Thornton, Private Equity Exits Report, 2012 Annual Edition.