CTA-PB

Business Context and Reporting Period

This Form 8-K, filed on April 4, 2007, by E. I. du Pont de Nemours and Company (DuPont), addresses a change in segment reporting effective January 1, 2007. The company realigned businesses within its Agriculture & Nutrition, Performance Materials, and Other segments to better align with growth platforms. Additionally, segment sales will no longer include a pro rata share of equity affiliates' sales. The filing provides historical segment data for 2006, 2005, and 2004 restated to be consistent with the new 2007 presentation.

Key Financial Metrics (2006 Restated)

All dollar amounts are in millions. The following metrics reflect the restated 2006 figures consistent with the new reporting structure:

• Total Net Sales: $27,421
• Total Pretax Operating Income (PTOI): $4,283
• Income Before Income Taxes and Minority Interests: $3,329
• Total Segment Net Assets: $19,722
• Total Assets: $31,777
• Depreciation and Amortization: $1,384 (Consolidated)
• Expenditures for Long-Lived Assets: $1,532 (Consolidated)

Segment Performance (2006 Net Sales and PTOI):

Material Changes Versus Prior Periods

The filing details significant adjustments to historical data to ensure comparability with the 2007 reporting structure:

• Segment Realignment Impact on 2006 PTOI:
  • Agriculture & Nutrition: Increased by $97 million.
  • Coatings & Color Technologies: Increased by $22 million.
  • Electronic & Communication Technologies: Decreased by $12 million.
  • Performance Materials: Decreased by $68 million.
  • Other: Pretax operating loss increased by $39 million.
• Year-Over-Year Comparison (Restated 2006 vs. 2005):
  • Total Net Sales increased from $26,639 million in 2005 to $27,421 million in 2006.
  • Total Segment PTOI increased from $4,139 million in 2005 to $4,283 million in 2006.
  • Income before taxes decreased from $3,563 million in 2005 to $3,329 million in 2006, largely due to a reduction in net exchange gains (which were $445 million in 2005 vs. a $4 million loss in 2006).

Unusual Items and Management Commentary

The filing highlights several non-recurring items affecting the reported financials for 2006, 2005, and 2004:

• 2006 Unusual Items:
  • Transaction Cutoff Change: A change in practice for transaction cutoffs in Q4 2006 resulted in a $107 million reduction to net sales and a $58 million pretax charge.
  • Restructuring Charges: Totaling $194 million, primarily in Agriculture & Nutrition ($122 million) and Performance Materials ($72 million).
  • Insurance Recoveries: A $61 million benefit related to asbestos litigation expenses and recoveries from Hurricane Katrina damage ($123 million in Coatings & Color Technologies; $20 million in Safety & Protection).
  • Asset Impairment: A $47 million charge in Safety & Protection for an underperforming industrial chemicals asset.
• 2005 Unusual Items: Included $160 million in charges related to Hurricane damage and a $25 million gain from the disposition of DuPont Dow Elastomers LLC assets.
• 2004 Unusual Items: Included significant charges related to the sale of INVISTA ($667 million), PFOA litigation settlements ($108 million), and DDE antitrust litigation ($268 million).

Management Commentary: The company states that the segment realignment is intended to provide more opportunity for synergy and technology development. The Pharmaceuticals segment is noted as being limited to income from the Cozaar and Hyzaar collaboration.

Investor Verification Checklist

• Verify the impact of the $107 million sales reduction and $58 million charge due to the Q4 2006 transaction cutoff change on future revenue recognition policies.
• Confirm the sustainability of the $61 million asbestos litigation insurance recovery benefit included in 2006 results.
• Review the $194 million restructuring charges to assess future cash flow requirements for implementation.
• Monitor the volatility of net exchange gains/losses, which swung from a $445 million gain in 2005 to a $4 million loss in 2006.
• Assess the performance of the Pharmaceuticals segment, which contributed $819 million to PTOI but $0 to net sales, to understand the nature of this income stream.