Highlights

• The company reported fourth quarter earnings of $.16 per share, compared to fourth quarter 2004 earnings of $.28 per share.
• Fourth quarter earnings before significant items were $.13 per share compared to $.37 per share in the fourth quarter 2004.  The reduction in earnings is largely attributable to disruptions from hurricanes and other plant outages, higher energy and ingredient costs and lower crop protection product sales.
• Fourth quarter raw material costs increased $350 million versus last year.  Local price increases of 5 percent offset about 75 percent of this cost increase.
• Total worldwide volumes declined 4 percent.  Excluding the estimated impact of business interruptions from Gulf Coast hurricanes, volumes would have been essentially flat.
• During the fourth quarter the company completed a $3 billion share buyback, reducing shares outstanding by 8 percent.
• Full-year 2005 earnings were $2.07 per share versus $1.77 in 2004.  Before significant items, earnings per share in 2005 totaled $2.34 compared to $2.38 in 2004.
• The company expects 2006 earnings per share of about $2.60, an increase of 11 percent, compared to 2005 earnings per share before significant items.

Global Consolidated Net Income and Sales

Net income for the fourth quarter was $153 million, or $.16 per share, including a $.03 per share significant item benefit from lower than expected tax cost associated with the repatriation of cash under the American Jobs Creation Act of 2004.  Fourth quarter 2004 net income was $278 million, or $.28 per share, including significant items totaling a net after-tax charge of $93 million, or $.09 per share.  See Schedule B for a summary of significant items.

Current quarter net income reflects the impact of prolonged disruptions to power, logistics and to production and sales resulting from Gulf Coast Hurricanes Katrina and Rita, in addition to temporary unplanned production interruptions at three of the company's plants which are located in Brazil, The Netherlands and the United States.  Fourth quarter net income also reflects lower sales of crop protection products, and higher costs.  These negatives were partly offset by an income tax benefit recorded in the quarter, resulting from a lower full-year base income tax rate.

Consolidated net sales for the fourth quarter were $5.8 billion, down 3 percent versus the fourth quarter 2004, but were flat on a comparable business basis.  Local selling prices were up 5 percent offsetting a 4 percent volume decline.

Hurricane-related production disruptions to U.S. plants affected sales in all regions.  Excluding these production disruptions, worldwide volumes would have been flat and U.S. volumes up modestly, as shown in the table below.  Volumes in the Asia Pacific region were negatively affected by the hurricane impact and lower sales of crop protection chemicals attributable to lower insect pressure in the growing season.

Earnings Per Share

The table below shows the variances in fourth quarter 2005 earnings per share (EPS) versus fourth quarter 2004, by major element:

The $.20 per share benefit from higher local prices offset about 60 percent of the combined impact of higher raw material costs and lower volumes.  Fixed costs increased, principally due to production disruptions from hurricanes and other unplanned plant outages, in addition to higher investment for growth.

Business Segment Performance

Segment pretax operating income (PTOI) for fourth quarter 2005 was $393 million compared to $596 million in the fourth quarter 2004.  Segment PTOI and percentage changes versus fourth quarter 2004 are shown in the table below.

Agriculture & Nutrition

• PTOI decreased $147 million with a current quarter seasonal loss of $272 million versus a $125 million loss in the prior year.  The decline reflects 5 percent lower worldwide volumes and higher costs.
• Fourth quarter sales of $0.9 billion were down 6 percent, principally reflecting lower insecticide demand in Asia and lower herbicide sales in the United States.
• Cost of goods sold increased significantly as a result of higher raw material costs.  Fixed costs were also higher due in part to a production disruption at the segment's crop protection chemicals plant in Brazil.
• Nine new products were introduced during the quarter, including new herbicide registrations for cereals and specialties.  One hundred sixty-five new products were introduced during 2005.

Coatings & Color Technologies

• PTOI was $162 million versus $236 million earned in the prior year.  PTOI declined 31 percent, primarily due to production and sales disruptions in the titanium dioxide business caused by Hurricane Katrina, and higher raw material costs across all businesses.
• Fourth quarter sales were $1.5 billion, down 4 percent. U.S. dollar ("USD") prices increased 3 percent, while volumes were 7 percent lower, primarily due to the Gulf Coast hurricanes.
• Higher selling prices largely reflect local price improvements for titanium dioxide, refinish and OEM products, partly offset by a negative currency impact.
• Sixty-five new products were launched during the quarter, including new waterborne basecoats for conversion from solvent to waterborne paint systems and an expanded line of inks.  Three hundred sixty-two new products were introduced during 2005.

Electronic & Communication Technologies

• PTOI was $87 million versus $93 million in the prior year, down 6 percent.  The decline is primarily due to higher raw material and other costs.
• Fourth quarter sales were $0.8 billion, up 5 percent.  Sales growth reflects 1 percent higher USD prices and 4 percent higher volume. 
• Revenue growth reflects higher sales volumes for electronic materials and higher prices and volumes for fluoroproducts.
• Seventy-six new products were introduced during the quarter, including new fluoropolymer films for photovoltaic and fuel cell applications.  Two hundred eighteen new products were introduced during 2005.
  

Performance Materials

• PTOI was $54 million versus $26 million in 2004 which included a $118 million litigation charge.  Excluding this charge, PTOI declined 62 percent, primarily due to lower earnings from packaging and industrial polymers reflecting business interruptions resulting from the hurricanes and higher raw material costs.
• Fourth quarter sales of $1.6 billion, increased marginally versus fourth quarter 2004, on a comparable business basis.  Higher prices essentially offset lower volume.
• Fifty-seven new products were launched during the quarter, including new packaging resins and new compounds for improved processing.  One hundred eighty-four new products were introduced during 2005.
  

Safety & Protection

• PTOI was $210 million versus $227 million in the prior year.  The earnings decline was largely due to hurricane disruptions to production and sales, higher raw material costs, and increased spending for growth initiatives.
• Fourth quarter sales of $1.3 billion were up 3 percent as 4 percent higher USD prices were partly offset by lower volume.  The volume decline is largely attributable to the impact of hurricanes on Gulf Coast operations.  Volumes grew in all businesses except industrial chemicals.
• Twenty-four new products were introduced during the quarter, including new transformer applications for Nomex  and new products for medical packaging.  Two hundred four new products were introduced during 2005.
  

Additional information on segment performance is available on the DuPont Investor Center at www.dupont.com.

Outlook

We will continue to face challenging headwinds during 2006, and our priorities for the year are very clear.  Each of the four improvement actions we announced on Nov. 7 are on or ahead of schedule," said Chairman and CEO Charles O. Holliday, Jr.  "Our strategies and these actions are the right steps to accelerate creation of superior value for our customers and shareholders."

The company expects several factors to negatively impact first quarter 2006 results versus the first quarter 2005 earnings of $.96 per share:

• Results for the Agriculture & Nutrition segment are forecast to be below last year's first quarter based on an expectation of lower volumes in crop protection chemicals, competitive pressures, and a shift in seasonal revenues between the first and second quarters.
• Results of the Performance Materials and Coatings & Color Technologies segments will continue to be significantly impacted by the effects of Hurricanes Katrina and Rita.  The company's DeLisle titanium dioxide plant, damaged by Hurricane Katrina, is not expected to resume full operations until April of 2006.  In addition, historically high energy and ingredient costs will continue to constrain earnings in these segments.

Taking these factors into account, first quarter 2006 earnings are expected to be about $.70 per share.  The company's recently announced initiatives to accelerate value creation, combined with the share repurchase program, should enable the company to earn about $2.60 per share in 2006.  The company reported $2.34 per share before significant items in 2005.

Use of Non-GAAP Measures

Management believes that measures of income excluding significant items ("non-GAAP" information) are meaningful to investors because they provide insight with respect to ongoing operating results of the company.  Such measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance.  Reconciliations of non-GAAP measures to GAAP are provided in Schedule E.

DuPont is a science company.  Founded in 1802, DuPont puts science to work by creating sustainable solutions essential to a better, safer, healthier life for people everywhere.  Operating in more than 70 countries, DuPont offers a wide range of innovative products and services for markets including agriculture, nutrition, electronics, communications, safety and protection, home and construction, transportation and protective apparel.

Forward-Looking Statements:  This news release contains forward-looking statements based on management's current expectations, estimates and projections.  All statements that address expectations or projections about the future, including statements about the company's strategy for growth, product development, market position, expected expenditures and financial results are forward-looking statements.  Some of the forward-looking statements may be identified by words like "expects," "anticipates," "plans," "intends," "projects," "indicates," and similar expressions.  These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions.  Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by DuPont, particularly its latest annual report on Form 10-K and quarterly report on Form 10-Q, as well as others, could cause results to differ materially from those stated.  These factors include, but are not limited to changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates, of countries in which the company does business; competitive pressures; successful integration of structural changes, including restructuring plans, acquisitions, divestitures and alliances; cost of raw materials, research and development of new products, including regulatory approval and market acceptance; seasonality of sales of agricultural products; and severe weather events that cause business interruptions, including plant and power outages, or disruptions in supplier and customer operations.

1/24/06

Financial Schedule Attachments (In PDF Format, Adobe Acrobat Reader required) available here.
The full release with schedules included in PDF format is available here.