CTA-PB

Business Context and Reporting Period

This Form 8-K, filed on April 23, 2002, reports E. I. du Pont de Nemours and Company's (DuPont) financial results for the first quarter ended March 31, 2002. The company is restructuring its operations into five market- and technology-focused growth platforms and has formed DuPont Textiles & Interiors (DTI), with a goal to separate DTI by the end of 2003. Additionally, DuPont announced a broad business agreement with Monsanto to cross-license technologies and dismiss pending lawsuits.

Key Financial Metrics

The filing text does not provide specific values for total debt, cash flow from operations, or liquidity ratios in this summary release.

Material Changes vs. Prior Period

• Sales Decline: Consolidated sales decreased 10% year-over-year. On a comparable business basis, the decline was 8%, driven by a 4% drop in local prices, a 2% negative currency impact, and a 2% volume decrease.
• Volume Trends: Worldwide volumes were sequentially flat, the first time since the economic downturn began that volumes did not decline. U.S. volumes increased 6% sequentially, offset by declines in Asia and Latin America.
• Segment Performance:
  • Agriculture & Nutrition: Sales up 4%; After-Tax Operating Income (ATOI) up 27% (partly due to the elimination of goodwill amortization under SFAS 142).
  • Pharmaceuticals: Turned a $64 million loss in Q1 2001 into a $51 million profit in Q1 2002, reflecting the divestiture of DuPont Pharmaceuticals in late 2001.
  • Electronic & Communication Technologies: Sales down 26% and ATOI down 61% due to depressed markets in electronics and wire/cable.
  • Textiles & Interiors: Sales down 15% and ATOI down 55% due to lower prices outweighing volume gains in nylon flooring and spandex.
• One-Time Items: Net charges of $0.07 per share reduced reported earnings. Key items included a $63 million exchange loss from Argentina, a $39 million charge for withdrawing from a polyester joint venture in China, and a $133 million purchase accounting charge in 2001 (not present in 2002).

Guidance, Outlook, and Risks

Outlook: DuPont anticipates second-quarter underlying earnings per share to show double-digit improvement versus the prior year and to be approximately equal to the first-quarter underlying EPS of $0.55. Management expects sequential volume increases in the U.S. and possibly Europe, benefiting from lower raw material costs. However, these gains may be mitigated by a strong U.S. dollar and a difficult pricing environment.

Risks and Contingencies:

• Goodwill Impairment: Under SFAS 142, the company must test goodwill for impairment by the end of 2002. Preliminary indications suggest potential impairment in Pioneer Hi-Bred International Inc. and DuPont Flooring Systems Inc., with recorded goodwill totaling $2.9 billion in these units.
• Market Conditions: Continued weakness in the electronics, wire and cable, and apparel fiber sectors.
• Foreign Exchange: Volatility in currency rates, exemplified by the Argentina peso conversion loss.

Investor Verification Checklist

• Verify the magnitude of potential goodwill impairment charges for Pioneer Hi-Bred and DuPont Flooring Systems expected by Q3 2002.
• Confirm the timeline and financial impact of the separation of the DuPont Textiles & Interiors (DTI) subsidiary.
• Monitor the sustainability of volume momentum in the U.S. versus declines in Asia and Latin America.
• Assess the impact of the strong U.S. dollar on future earnings in non-U.S. regions.
• Review the details of the cross-licensing agreement with Monsanto for potential long-term revenue or cost implications.