Highlights

• As previously announced, the third quarter included significant items totaling $.42 per share for taxes associated with repatriation under the American Jobs Creation Act, and charges for hurricane damage. Third quarter 2005 earnings were a loss of $.09 per share.
• Excluding significant items, third quarter earnings were $.33 per share, an increase of 32 percent vs. last year.
• Segment sales grew 5 percent to $6.2 billion, reflecting increases in all operating segments, excluding prior year sales from divested businesses.
• Local prices increased 4 percent, more than offsetting higher energy and ingredient costs.
• Continued volume growth in Asia, Latin America and Eastern Europe helped to offset lower volumes in the United States and Western Europe. Total volumes declined 1 percent, in part reflecting the impact of the hurricanes on U.S. demand.
• Business interruptions from Hurricanes Katrina and Rita reduced third quarter sales about $100 million and pretax operating income about $50 million, or approximately $.03 per share. Sale of non-core assets resulted in a gain of $.03 per share.
• Separately, the company announced actions to increase shareholder value, including a $5 billion share repurchase program and initiatives to accelerate its growth and productivity strategies.
  

"We continued our positive momentum with our seventh consecutive quarter of margin expansion," said DuPont Chairman and CEO Charles O. Holliday, Jr.  "However, soaring energy and ingredient costs are causing a structural shift that will create challenges for our customers, suppliers, and our own operations.  We have initiated a number of actions today to ensure we achieve our sustainable growth goals despite these new challenges." 

Global Consolidated Net Sales and Net Income

Consolidated net sales for the third quarter were $5.9 billion, up 2 percent versus the third quarter 2004.  Net sales increased 5 percent, excluding $155 million third quarter 2004 sales of the DuPont Dow Elastomers businesses transferred to Dow on June 30, 2005.  Net income for the third quarter 2005 was a loss of $82 million, or $.09 per share, largely due to a tax charge of $320 million, or $.32 per share, related to planned repatriation under the American Jobs Creation Act; and $95 million after tax, or $.10 per share, for damaged facilities, inventory write-offs and clean-up costs associated with hurricane damage.  Third quarter 2004 net income was $331 million, or $.33 per share, including significant items totaling a net after-tax benefit of $78 million, or $.08 per share.  See Schedule B for a summary of these items.

Earnings Per Share

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

Business Segment Performance - Segment Sales

Third quarter 2005 segment sales, which include transfers and pro rata share of equity affiliate sales, were $6.2 billion.  Third quarter 2004 sales of $6.4 billion included $0.5 billion from divested Textiles & Interiors (T&I), elastomers and photomasks businesses.  As shown below, sales increased 5 percent versus 2004 excluding these divested businesses.  Sales grew from 4 percent higher local selling prices and a 2 percent currency benefit, partly offset by 1 percent lower volume.  Lower volume is largely attributable to the impact of Hurricanes Katrina and Rita.

ANALYSIS OF SEGMENT SALES*

Business Segment Performance – PTOI

Segment pretax operating income (PTOI) for third quarter 2005 was $545 million compared to $438 million in the third quarter 2004.  Segment PTOI and percentage changes versus third quarter 2004 are shown in the table below.  The third quarter 2005 segment performance reflects a $146 million hurricane charge. In addition, the current quarter includes gains of $31 million from the divestiture of non-core assets and $20 million from the sale of a T&I affiliate.  The third quarter 2004 segment results included charges of $165 million from significant items (See Schedule B).  Excluding significant items, segment PTOI increased 15 percent versus prior year.  Excluding the divested T&I, elastomers and photomasks businesses, segment PTOI increased 11 percent and, as a percentage of sales, increased 1 percentage point.  The third quarter 2005 benefit from gains on asset sales offset the impact of hurricane-related business interruptions.

Agriculture & Nutrition

• PTOI increased $49 million with a current quarter seasonal loss of $134 million versus a $183 million loss in the prior year.  The improvement reflects higher prices, higher crop protection volumes and productivity gains.
• Third quarter sales were $1.0 billion, up 3 percent on higher prices, higher sales in Latin America, and some early seasonal herbicide sales in North America that occurred in the fourth quarter last year.
• 57 new products were introduced during the quarter, including new corn hybrids and soybean varieties for the southern hemisphere growing season.
  

Coatings & Color Technologies

• PTOI was $42 million, including a $113 million charge for hurricane damage, versus $179 million in the prior year.  Excluding that charge, PTOI declined 13 percent, primarily due to higher raw material costs and business interruption in the titanium dioxide business caused by the hurricanes.
• Third quarter segment sales were $1.5 billion, up 5 percent on 6 percent higher USD prices and 1 percent lower volume.
• Higher selling prices largely reflect price improvements in titanium dioxide and refinish products. 
• 109 new products were launched during the quarter, including a complete new line of aviation primers, topcoats, and sealers.

Electronic & Communication Technologies

• PTOI was $129 million versus $34 million in the prior year.  Excluding a $63 million significant item charge in the prior year, PTOI increased 33 percent.
• Third quarter sales were $0.9 billion, up 9 percent excluding third quarter 2004 Photomasks sales.  Sales growth reflects 5 percent higher USD prices and 4 percent higher volume.
• Higher sales volumes for electronic materials and fluoroproducts and higher fluorochemical prices drove sales and earnings improvement.
• 36 new products were introduced during the quarter, including new conductive pastes for photovoltaic panels. 
  

Performance Materials

• PTOI was $68 million versus $160 million in 2004.  Excluding an $11 million hurricane charge, PTOI declined 51 percent, primarily due to lower sales volumes (due in part to hurricanes) and declines in elastomers.
• Excluding elastomers sales related to businesses transferred to Dow, third quarter sales were $1.5 billion, up 1 percent on 10 percent higher USD prices and 9 percent lower volume. 
• Price increases offset the impact of significantly higher raw material costs in the quarter.  Lower volumes reflect hurricane business interruption in the ethylene copolymers and related intermediates businesses; declines in elastomers; and a business decision to not support sales to certain lower margin accounts. 
• 61 new products were launched during the quarter including new Crastin® resins with Teflon® lubrication for conveyor parts.
  

Safety & Protection

• PTOI was $256 million versus $216 million in the prior year.  Excluding a $22 million hurricane charge, PTOI improved 29 percent, reflecting strong sales growth and a $31 million gain on the sale of non-core assets.
• Third quarter sales were $1.3 billion, up 7 percent on 4 percent higher USD prices and 3 percent higher volume.
• All businesses, excluding chemicals, recorded solid double digit sales growth.  Chemicals sales were down primarily due to hurricane business interruption.
• 62 new products were introduced during the quarter, including new reinforced Tychem® protective apparel.
  

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

Outlook

"We are working hard to overcome the challenges the hurricanes have presented and to achieve a strong finish to the year for our customers and our shareholders," said Holliday.  "We have accelerated our pricing initiatives and cost productivity measures to offset the extraordinary increases in energy and ingredient costs.  The additional actions the company announced today will help us accelerate value creation for our shareholders."

n the fourth quarter 2004, the company earned $.37 per share before a $.09 charge for significant items.  The company expects several factors to impact fourth quarter 2005 earnings. 

• Results of the Coatings & Color Technologies segment will be reduced because its largest titanium dioxide manufacturing plant at DeLisle, Miss., damaged by Hurricane Katrina, will not begin to restart production until late December.
• Similarly, results of the Performance Materials segment will be reduced because its largest ethylene copolymers and intermediates plant at Orange, Tex., was shut down due to Hurricane Rita.  Although production began to start this month, recovery to full capacity is not expected until year-end.
• Results for the Agriculture & Nutrition segment for the second half 2005 will be essentially flat with last year and show percentage growth in the high-teens for the full year.  However, for the fourth quarter, results are expected to be below last year due to the split of seasonal revenues and costs between the third and fourth quarters.
• Finally, the base tax rate in fourth quarter 2005 is expected to be about 26 percent, the same as the 2005 year-to-date rate.  While the full-year base tax rate in 2004 was about 25 percent, the rate in the fourth quarter 2004 was only 20 percent.

Taking these factors into account and recognizing the company's ongoing pricing initiatives to offset rising energy and ingredient costs, the company expects fourth quarter earnings to be in a range of $.20 to $.25 per share.  The share repurchase program announced today is not expected to impact fourth quarter 2005 earnings per share.

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.

10/25/05

Financial Schedule Attachments (In PDF Format, Adobe Acrobat Reader required) available here.

The full release with schedules included in PDF format is available here.