DUPONT E I DE NEMOURS & CO, 10-Q, 1997-11-03

DUPONT E I DE NEMOURS & CO
10-Q, 1997-11-03
PLASTIC MATERIAL, SYNTH RESIN/RUBBER, CELLULOS (NO GLASS)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-815

E. I. du Pont de Nemours and Company
(Exact Name of Registrant as Specified in Its Charter)

Delaware 51-0014090
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

1007 Market Street, Wilmington, Delaware 19898
(Address of Principal Executive Offices)

(302) 774-1000
(Registrant's Telephone Number)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

Yes X No

1,131,577,141 shares (excludes 23,704,887 shares held by DuPont's
Flexitrust) of common stock, $0.30 par value, were outstanding at
October 27, 1997.

1
<PAGE>

Form 10-Q

E. I. DU PONT DE NEMOURS AND COMPANY

Table of Contents

Page(s)
-------
Part I

Item 1. Financial Statements

Consolidated Income Statement ............................... 3

Consolidated Statement of Cash Flows ........................ 4

Consolidated Balance Sheet .................................. 5

Notes to Financial Statements ............................... 6-7

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations

Financial Results ........................................... 8

Industry Segment Performance ................................ 9-10

Consolidated Industry Segment Information ................... 11

Financial Condition ......................................... 12-14

Other Item .................................................. 14

Part II

Item 1. Legal Proceedings .................................... 15-16

Item 6. Exhibits and Reports on Form 8-K ..................... 16-18

Signature ....................................................... 19

Exhibit Index ................................................... 20

Exhibit 3.2 - Company's Bylaws, as last revised
September 1, 1997 .............................................. 21

Exhibit 10.7 - Company's Variable Compensation Plan, as
last amended effective April 30, 1997 ......................... 22

Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges .. 23

2
<PAGE>

<TABLE>
Form 10-Q

E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES

Three Months Ended Nine Months Ended
CONSOLIDATED INCOME STATEMENT<Fa> September 30 September 30
- ----------------------------------------------------------------------------------------------------------------
(Dollars in millions, except per share) 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES ...................................................... $11,136 $10,486 $33,749 $32,403
Other Income ............................................... 410<Fb> 319 1,062<Fb> 1,072
------- ------- ------- -------
Total .................................................. 11,546 10,805 34,811 33,475
------- ------- ------- -------
Cost of Goods Sold and Other Expenses ...................... 8,455 7,767 25,058 24,034
Selling, General and Administrative Expenses ............... 644 648 1,995 2,106
Depreciation, Depletion and Amortization ................... 597 628 1,785 1,886
Exploration Expenses, Including Dry Hole Costs
and Impairment of Unproved Properties .................... 129 88 321 235
Interest and Debt Expense .................................. 155 171 459 547
Purchased In-Process Research and Development<Fc>........... 850 - 850 -
Write-down of Assets and Related Costs<Fd> ................. 340 - 340 -
------- ------- ------- -------
Total .................................................. 11,170 9,302 30,808 28,808
------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES ............................... 376 1,503 4,003 4,667
Provision for Income Taxes ................................. 393<Fc> 605 1,860<Fc> 1,889
------- ------- ------- -------
NET INCOME (LOSS) .......................................... $ (17) $ 898 $ 2,143 $ 2,778
======= ======= ======= =======

EARNINGS (LOSS) PER SHARE OF COMMON STOCK<Fe> .............. $ (.02) $ .80 $ 1.89 $ 2.47<Ff>
======= ======= ======= =======
DIVIDENDS PER SHARE OF COMMON STOCK ........................ $ .315 $ .285 $ .915 $ .83
======= ======= ======= =======

See Notes to Financial Statements.

</TABLE>

3
<PAGE>

<TABLE>
Form 10-Q

Nine Months Ended
CONSOLIDATED STATEMENT OF CASH FLOWS<Fa> September 30
- ---------------------------------------------------------------------------------------------
(Dollars in millions) 1997 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS
Net Income ...................................................... $ 2,143 $ 2,778
Adjustments to Reconcile Net Income to Cash
Provided by Operations:
Depreciation, Depletion and Amortization .................... 1,785 1,886
Dry Hole Costs and Impairment of Unproved Properties ........ 111 74
Purchase of In-Process R&D .................................. 850 -
Other Noncash Charges and Credits - Net ..................... 195 (654)
Change in Operating Assets and Liabilities - Net ............ (1,138) 48
------- -------

Cash Provided by Operations ............................... 3,946 4,132
------- -------

INVESTMENT ACTIVITIES
Purchases of Property, Plant and Equipment ...................... (3,451) (2,212)
Investment in Affiliates ........................................ (2,121) (279)
Payments for Businesses Acquired ................................ (41) (75)
Proceeds from Sales of Assets ................................... 631 1,249
Investments in Short-Term Financial Instruments - Net ........... (458) (351)
Miscellaneous - Net ............................................. 119 63
------- -------

Cash Used for Investment Activities ....................... (5,321) (1,605)
------- -------

FINANCING ACTIVITIES
Dividends Paid to Stockholders .................................. (1,042) (937)
Net Increase (Decrease) in Borrowings ........................... 3,063 (1,030)
Purchase of Treasury Stock ...................................... (181) -
Proceeds from Exercise of Stock Options ......................... 104 260
Changes to Minority Interests ................................... (54) 363
Repurchase of Warrants .......................................... - (504)
------- -------

Cash Provided by (Used for) Financing Activities .......... 1,890 (1,848)
------- -------

Effect of Exchange Rate Changes on Cash ........................... (96) (37)
------- -------

INCREASE IN CASH AND CASH EQUIVALENTS ............................. $ 419 $ 642
======= =======

See Notes to Financial Statements.

</TABLE>

4
<PAGE>

<TABLE>

Form 10-Q
<CAPTION>

CONSOLIDATED BALANCE SHEET<Fa> September 30 December 31
- -------------------------------------------------------------------------------------------------------------------
(Dollars in millions, except per share) 1997 1996
- -------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents ........................................................ $ 1,485 $ 1,066
Marketable Securities ............................................................ 708 253
Accounts and Notes Receivable .................................................... 5,858 5,193
Inventories<Fg> .................................................................. 4,005 3,706
Prepaid Expenses ................................................................. 398 297
Deferred Income Taxes ............................................................ 593 588
------- -------
Total Current Assets ........................................................... 13,047 11,103
PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation, depletion and
amortization (September 30, 1997 - $29,621; December 31, 1996 - $29,336) ......... 21,994 21,213
INVESTMENT IN AFFILIATES ........................................................... 3,597 2,278
OTHER ASSETS ....................................................................... 3,714 3,393
------- -------
TOTAL .......................................................................... $42,352 $37,987
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable ................................................................. $ 2,571 $ 2,757
Short-Term Borrowings and Capital Lease Obligations .............................. 6,271 3,910
Income Taxes ..................................................................... 572 526
Other Accrued Liabilities ........................................................ 4,084 3,794
------- -------
Total Current Liabilities ...................................................... 13,498 10,987
LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS ................................. 5,786 5,087
OTHER LIABILITIES .................................................................. 8,450 8,451
DEFERRED INCOME TAXES .............................................................. 2,345 2,133
------- -------
Total Liabilities .............................................................. 30,079 26,658
------- -------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES .................................... 605 620
------- -------
STOCKHOLDERS' EQUITY
Preferred Stock .................................................................. 237 237
Common Stock, $.30 par value; 1,800,000,000 shares authorized; shares issued
at September 30, 1997 - 1,155,282,028; December 31, 1996 - 1,158,085,450 ....... 347 347
Additional Paid-In Capital ....................................................... 6,850 6,676
Reinvested Earnings .............................................................. 5,871 4,931
Cumulative Translation Adjustments ............................................... (170) (23)
Common Stock Held in Trust for Unearned Employee Compensation and Benefits
(Flexitrust), at Market (Shares: September 30, 1997 - 23,822,433;
December 31, 1996 - 30,991,590) ................................................ (1,467) (1,459)

------- -------
Total Stockholders' Equity ..................................................... 11,668 10,709
------- -------
TOTAL .......................................................................... $42,352 $37,987
======= =======

See Notes to Financial Statements.

</TABLE>

5
<PAGE>

Form 10-Q

NOTES TO FINANCIAL STATEMENTS
(Dollars in millions, except per share)

[FN]
<Fa> These statements are unaudited, but reflect all adjustments that, in
the opinion of management, are necessary to provide a fair presentation
of the financial position, results of operations and cash flows for the
dates and periods covered. All such adjustments are of a normal
recurring nature. Certain reclassifications of 1996 data have been
made to conform to 1997 classifications.

<Fb> Includes a benefit of $115 from the company's equity interest in the
gain on the sale by The DuPont Merck Pharmaceutical Company of its
generic and multisource product lines.

<Fc> On September 18, 1997 the company acquired a 20% interest in Pioneer
Hi-Bred International, Inc. for about $1,700. The charge of $850
represents the estimated portion of the purchase price attributable to
the acquisition of research and development in progress at the time of
acquisition for which technological feasibility has not yet been
established and no alternative future use is anticipated. Purchase
price allocations are based on preliminary assumptions that are subject
to revision following completion of an independent valuation by an
outside appraisal firm. This charge was not tax effected because the
transaction was a stock acquisition rather than an asset purchase.

<Fd> Represents charges associated with the pending sale of the company's
global graphic arts films and offset printing plates businesses.

<Fe> Earnings per share are calculated on the basis of the following average
number of common shares outstanding:

Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
1997 1,131,012,611 1,130,030,845
1996 1,122,734,872 1,119,760,912

Shares held by the Flexitrust are not considered outstanding in comput-
ing the foregoing average shares outstanding. Earnings per share
calculations that reflect the impact of common stock equivalents in the
periods presented do not result in materially dilutive primary or fully
diluted earnings per share. The effect of the Financial Accounting
Standards Board, "Statement of Financial Accounting Standards No. 128,
Earnings Per Share," is discussed on page 8.

<Ff> Earnings per share of $2.47 does not equal the sum of quarterly
earnings per share due to changes in average share calculations.

6
<PAGE>

Form 10-Q

NOTES TO FINANCIAL STATEMENTS
(Dollars in millions, except per share)
(Continued)

[FN]
<Fg> Inventories September 30 December 31
----------- 1997 1996
------------ -----------
Chemicals ........................... $ 322 $ 281
Fibers .............................. 737 692
Polymers ............................ 742 620
Petroleum ........................... 1,348 1,270
Life Sciences ....................... 550 561
Diversified Businesses .............. 306 282
------ ------
Total ............................. $4,005 $3,706
====== ======

7
<PAGE>

Form 10-Q

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

(a) Results of Operations

(1) Financial Results:

DuPont reported third quarter earnings, before nonrecurring
charges, of $.86 per share, compared to $.84 per share in the third
quarter of 1996. A net loss of $17 million, or $.02 per share, was
recorded after reflecting net charges for nonrecurring items of
$998 million, or $.88 per share. Third quarter nonrecurring items
include an after-tax one-time noncash charge of $850 million, or
$.75 per share, to write-off acquired in-process research and
development associated with the Pioneer Hi-Bred International, Inc.
transaction, $220 million, or $.19 per share, in connection with
the planned divestiture of global graphic arts films and offset
printing plates businesses, and a gain of $72 million, or $.06 per
share, from the sale by The DuPont Merck Pharmaceutical Company of
its generic and multisource product lines.

Net income, including nonrecurring items, was
$2.1 billion, or $1.89 per share, for the first nine months of
1997, compared to $2.8 billion, or $2.47 per share, in the same
period last year. Excluding nonrecurring items from both years,
net income was $3.1 billion versus $2.9 billion last year, up
9 percent. Year-to-date sales were $33.7 billion compared to
$32.4 billion for 1996.

In February 1997, the Financial Accounting Standards Board
issued "Statement of Financial Accounting Standards No. 128,
Earnings Per Share." This Standard becomes effective for the
company in the fourth quarter 1997 and requires two presentations
of earnings per share -- "basic" and "diluted." Had this Standard
been in effect for the third quarter 1997, earnings per share on a
pro forma basis would have been:

Three Months Ended Nine Months Ended
September 30, 1997 September 30, 1997
------------------ ------------------
Basic (same as
reported) $(.02) $1.89
Diluted $(.02) $1.86

"Diluted Earnings Per Share" for the nine months ended
September 30, 1997, is less than "Basic Earnings Per Share,"
principally due to the assumed increase in the number of average
shares outstanding resulting from outstanding options where the
average market price of the company's common stock during the
nine-month period ended September 30, 1997, was in excess of
related option prices. This calculation for the three-month period
ended September 30, 1997, is antidilutive.

8
<PAGE>

Form 10-Q

(2) Industry Segment Performance:

The following text compares third quarter 1997 results
with third quarter 1996, for each industry segment, excluding the
earnings impact of nonrecurring items described in the footnotes
to the "Consolidated Industry Segment Information" table.

Sales for the third quarter totaled $11.1 billion. Sales
for Chemicals and Specialties segments were $5.8 billion, up
5 percent on an ongoing business basis, reflecting 8 percent
higher volumes partly offset by 3 percent lower average selling
prices. Lower selling prices result from an 8 percent decline in
prices outside the United States, entirely due to the stronger
dollar. Sales volumes were up 4 percent in the United States,
10 percent in Europe, 15 percent in Asia Pacific, and 18 percent
in the rest of the world.

Petroleum segment sales for the quarter were $5.3 billion,
up 8 percent from last year. Worldwide refined product sales were
up 11 percent and gas deliveries outside the United States were up
20 percent. Crude oil prices averaged $17.96 per barrel for the
period, 10 percent lower than last year. Worldwide gas prices
were essentially flat at $2.27 per thousand cubic feet. Crude oil
production was down 6 percent.

o Chemicals segment earnings were $154 million, up
12 percent from $138 million last year principally
reflecting higher earnings from white pigments and
specialty chemicals. Segment sales increased 4 percent
as 6 percent higher sales volume was partly offset by
2 percent lower selling prices.

o Fibers segment earnings of $238 million were up 16 percent
from $206 million last year, principally reflecting
increased earnings for "Dacron" polyester, "Lycra" brand
spandex, and aramids, partly offset by lower nylon earn-
ings. Nylon earnings were adversely affected by the
stronger dollar and higher ingredients costs due to
supply disruptions. Segment sales were 9 percent higher,
reflecting 12 percent higher volume partly offset by
3 percent lower selling prices.

o Polymers segment earnings were $228 million, up 7 percent
from $213 million in 1996. Results principally reflect
higher earnings from the DuPont Dow elastomers venture,
automotive products, and packaging and industrial
polymers. Segment sales were up 7 percent, reflecting
9 percent higher volume partly offset by 2 percent lower
prices.

9
<PAGE>

Form 10-Q

o Petroleum segment earnings of $282 million, a third
quarter record, were up 10 percent from $256 million in
1996. This is the ninth consecutive quarterly year-over-
year earnings improvement. Strong U.S. Downstream
margins, higher gas volumes outside the United States and
lower taxes contributed to the earnings improvement,
partly offset by lower crude oil prices and production,
and higher exploration and refinery turnaround expenses.
The quarter also included an after-tax gain from the sale
of certain Norwegian producing properties that was offset
by litigation settlement expenses. Upstream earnings
totaled $175 million, up 7 percent, and Downstream earn-
ings were $107 million, up 15 percent.

o Life Sciences segment earnings were $122 million versus
the $178 million earned in 1996. Excluding the higher
allocation of operating income to DuPont in 1996 from the
DuPont Merck joint venture, Life Sciences segment earnings
were down 7 percent, with higher pharmaceutical earnings
offset by lower results in agricultural products. Agri-
cultural products sales were down 9 percent, compared to a
seasonally stronger third quarter last year, reflecting
6 percent lower volume and 3 percent lower prices.

o Diversified Businesses segment earnings totaled
$52 million, up $12 million or 30 percent from $40 million
in 1996. Both the current quarter and the third quarter
1996 reflect significant operating losses from the print-
ing and publishing businesses to be divested. Higher
earnings versus last year reflect better results from
films and photopolymers and electronic materials. After
adjusting for divestiture of medical products businesses,
the segment had a 9 percent increase in volume offset by
8 percent lower selling prices. The decline in selling
prices is attributable to lower prices for polyester films
and the effect of a stronger dollar.

10
<PAGE>

<TABLE>
Form 10-Q
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES

Three Months Ended Nine Months Ended
CONSOLIDATED INDUSTRY SEGMENT INFORMATION September 30 September 30
- -------------------------------------------------------------------------------------------------------------
(Dollars in millions) 1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES
- -----
Chemicals ...................................... $ 1,064 $ 1,025 $ 3,183 $ 3,100
Fibers ......................................... 1,885 1,735 5,748 5,301
Polymers ....................................... 1,688 1,573 5,106 5,071
Petroleum ...................................... 5,342 4,929 15,563 14,549
Life Sciences .................................. 474 522 2,057 2,000
Diversified Businesses ......................... 683 702 2,092 2,382
------- ------- ------- -------
Total ...................................... $11,136 $10,486 $33,749 $32,403
======= ======= ======= =======
AFTER-TAX OPERATING INCOME (LOSS)
- ---------------------------------
Chemicals ...................................... $ 154 $ 138 $ 434 $ 425<Fa>
Fibers ......................................... 238 206 716 561<Fa>
Polymers ....................................... 228 213 695 710<Fb>
Petroleum ...................................... 282 256 859 647<Fc>
Life Sciences .................................. (656)<Fd> 131<Fe> (271)<Fd> 540<Fe>
Diversified Businesses ......................... (168)<Ff> 40 (28)<Ff> 199<Fg>
------- ------- ------- -------
Total ...................................... 78 984 2,405 3,082

Interest and Other Corporate
Expenses Net of Tax .......................... (95) (86) (262) (304)
------- ------- ------- -------
NET INCOME (LOSS) .............................. $ (17) $ 898 $ 2,143 $ 2,778
- ----------------- ======= ======= ======= =======

<FN>
<Fa> The Chemicals and Fibers segments include a charge of $21 and $32, respec-
tively, principally for employee separation costs in the United States.
<Fb> Includes a gain of $55 associated with the formation of the DuPont Dow
elastomers joint venture.
<Fc> Includes charges of $63 for write-down of investment in a European
natural gas marketing joint venture, and $22, principally for employee
separation costs in the United States, partly offset by a net benefit of
$44 related to environmental insurance recoveries.
<Fd> Includes a benefit of $72 from the company's equity interest in the sale
by DuPont Merck of its generic and multisource product lines and an esti-
mated charge of $850, associated with the agricultural products business,
related to the acquisition of research and development in progress at the
time of acquisition for which technological feasibility has not yet been
established and no alternative future use is anticipated.
<Fe> Includes a charge of $47 in third quarter and $110 for nine months asso-
ciated with "Benlate" 50 DF fungicide recall.
<Ff> Includes a charge of $220 for the write-down of assets held for sale and
other related costs associated with the pending sale of the company's
global graphic arts films and offset printing plates businesses.
<Fg> Includes gains of $41 from the sale of certain medical products busi-
nesses and $33 related to sale of stock received in connection with the
previously sold connector systems business, and a charge of $26, prin-
cipally employee separation costs outside the United States, associated
with the printing and publishing business.

</TABLE>

11
<PAGE>

Form 10-Q

(b) Financial Condition at September 30, 1997

Cash Provided By Operations

DuPont recorded a net cash inflow from operations of $3.9 billion
for the first nine months of 1997, as compared with $4.1 billion for the
same period in 1996. The $850 million adjustment for "Purchase of
In-Process R&D" shown in the Consolidated Statement of Cash Flows relates to
a noncash charge to Net Income in connection with the purchase of a 20%
interest in Pioneer Hi-Bred International, Inc. (Pioneer) (see Note (c) to
Financial Statements). "Other Noncash Charges and Credit - Net" for 1997
includes the $340 million pretax charge to Net Income taken in connection
with the write-down of assets held for sale and other related costs
associated with the pending sale of the company's global graphic arts films
and offset printing plates businesses. "Other Noncash Charges and Credits -
Net" for 1996 consists primarily of significant undistributed earnings of
affiliated companies and gains on sales of assets that are reported in
Investment Activities - "Proceeds from Sales of Assets." The change in
Operating Assets and Liabilities - Net -- 1997 versus 1996 -- was a net
outflow of $1.2 billion. This principally reflects (a) a $0.3 billion net
increase in trade accounts receivable due to higher sales; (b) a
$0.3 billion net increase in miscellaneous receivables resulting from
increases in receivables from forward exchange contracts entered into under
the company's foreign currency hedging program; and (c) a $0.4 billion net
decrease in other accrued liabilities; in 1996, other accrued liabilities
increased significantly primarily due to increases in reserves for litiga-
tion and business divestiture activities.

Investment Activities

Year-to-date capital expenditures for plant, property and equipment
and investments in affiliates were $5.6 billion -- $3.1 billion higher than
the same period last year. The increase is principally comprised of
purchases for:

(a) a 20% equity interest in Pioneer at a cost of about
$1.7 billion. This purchase was made as part of
the agreement between DuPont and Pioneer to form a
research alliance and a separate joint venture com-
pany, Optimum Quality Grains L.L.C., to speed the
discovery, development and delivery of new crops that
benefit farmers, livestock producers and consumers
worldwide;

(b) a 19.8% equity interest in PT Branta Mulia, an
Indonesian company, for $65 million. This affiliated
company manufactures and markets nylon tire cord in
Asia; and

12
<PAGE>

Form 10-Q

In July, DuPont announced that it had reached agreement with ICI to
acquire various businesses from ICI for about $3 billion. DuPont expects
that the fourth quarter 1997 will include a payment of about $1.4 billion
for the purchase of ICI's polyester resins and intermediates businesses.
The acquisition of ICI's tioxide and polyester films businesses is expected
to be completed during the first half of 1998 at a cost of $1.6 billion.

In August 1997, DuPont and Ralston Purina Company announced they
had signed a letter of intent for DuPont to purchase Protein Technologies
International (PTI) and its related affiliates from Ralston for
$1.5 billion. Approximately 80% of the consideration will be in the form of
newly issued DuPont common stock; the remainder will be paid as a result of
assuming certain liabilities from Ralston. PTI is a leading worldwide
supplier of soy proteins to the food and paper processing industries. Clos-
ing on the PTI acquisition is expected to take place in the fourth quarter
1997.

In October 1997, Conoco Inc., DuPont's petroleum subsidiary, and
American Electric Power of Columbus, Ohio, announced plans to form two
jointly held energy venture companies. One venture company will acquire
approximately $1 billion of energy related facilities from certain DuPont
industrial plants in the United States and then lease them back to DuPont.
The second venture company will provide energy management services, includ-
ing operations, maintenance, and conservation advice. DuPont and American
Electric each plan initial investments of $125 million in the joint
ventures. Both ventures will then borrow the additional funds needed to
acquire further energy related assets. Capital needs for future energy
projects at these sites, or for other large industrial or commercial
customers, will be provided by the joint ventures.

It is currently expected that cash expenditures for purchases of
property, plant and equipment, investment in affiliates and payments for
businesses acquired will total $8.5 billion in 1997, assuming the ICI
acquisitions are completed as described.

Proceeds from asset sales total $0.6 billion through September 30,
1997. The most significant proceeds were: (a) $175 million from collection
of a note from The Sterling Group, Inc. received in connection with their
purchase of the diagnostic imaging business last year; (b) $125 million
from The DuPont Merck Pharmaceutical Company (DMPC), a joint venture between
DuPont and Merck, representing DuPont's share of the proceeds DMPC received
from the sale of its generic and multisource product lines, and
(c) $62 million from the sale of the New England Nuclear business to Genstar
Capital LLC. Sales of other Chemicals and Specialties businesses and assets
total $142 million, and proceeds from sales of various petroleum properties
were $127 million.

13
<PAGE>

Form 10-Q

Financing Activities

In February 1997, the company announced a program to purchase
shares of DuPont common stock on the open market to offset ownership
dilution due to the shares issued under compensation programs. During the
first half of 1997, the company spent $181 million under this program;
immediately after purchase these shares were retired.

The company has announced that it will buy back shares equal to the
number of shares issued to Ralston for the acquisition of PTI as discussed
above.

Borrowings at September 30, 1997 totaled $12.0 billion and were
$3.1 billion above year-end 1996. Commercial paper borrowings were
$2.2 billion higher, and in mid-September, DuPont received proceeds of
$0.5 billion from the sale of five-year notes at an all-in cost of 6.80% and
$0.5 billion from the sale of ten-year notes at an all-in cost of 6.95%.
Cash and marketable securities increased $0.9 billion from year-end 1996.

Following the announcement of the acquisitions discussed above,
Moody's Investor Services and Standard & Poor's both affirmed their existing
credit ratings of DuPont's debt.

Certain Statistics
At 9/30/97 At 12/31/96
---------- -----------
Cash Flow to Debt (previous
12 months cash provided by
operations to total debt) 51% 71%

Current Ratio (current assets to
current liabilities) 1.0 1.0

Earnings to Fixed Charges 7.3 6.8

The Cash Flow to Debt ratio at September 30, 1997 is down from
year-end 1996 due to the increase in borrowings discussed above. Days'
sales outstanding averaged 34 days in the third quarter, up one day from
restated second quarter and down one day from the restated third quarter of
1996.

On October 29, the DuPont board of directors approved a management
transition in which E. S. Woolard, 63, stepped down as board chairman, but
he will remain a director. President and Chief Executive Officer (CEO)
J. A. Krol, 61, became chairman and CEO, with plans to remain as CEO until
February 1, 1998. The board elected C. O. Holliday, Jr., 49, to immediately
succeed Krol as president and to become CEO on February 1, 1998. Krol plans
to serve as chairman until December 31, 1998, when Holliday will become
chairman and CEO. Holliday is currently a DuPont executive vice president
and chairman - DuPont Asia Pacific and a director.

14
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Form 10-Q

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

In 1991, DuPont began receiving claims by growers that use of
"Benlate" 50 DF fungicide had caused crop damage. Based on the belief that
"Benlate" 50 DF would be found to be a contributor to the claimed damage,
DuPont began paying crop damage claims. In 1992, however, after 18 months
of extensive research, DuPont scientists concluded that "Benlate" 50 DF was
not responsible for plant damage reports received since March 1991, and
concurrent with these research findings, DuPont stopped paying claims.
To date, DuPont has been served with more than 700 lawsuits by growers who
allege plant damage from using "Benlate" 50 DF fungicide. Approximately 70
lawsuits are pending against the company; the rest having been disposed of
by trial, dismissal or settlement. The remaining docket of "Benlate" 50 DF
cases includes alleged personal injury cases, alleged crop damage cases, and
cases alleging discovery abuse and fraud. Among the remaining personal
injury cases is the pending appeal of a June 1996 verdict of $3,980,000
against DuPont. Four personal injury cases are pending in West Virginia and
two personal injury cases are pending in Delaware state court. The same
plaintiffs' attorney who filed these Delaware cases has indicated that he
intends to file additional personal injury cases. DuPont prevailed in two
jury trials in crop cases in June and July of 1997 in Florida. One appeal
from an adverse jury verdict in a crop case is still pending. In 1997,
three putative "Benlate" 50 DF class actions alleging crop damage and
asserting fraud claims were filed: one in Florida state court on behalf of
growers of ornamental plants in Florida; another in Hawaii state court on
behalf of Hawaii growers; and a third in Alabama state court seeking a
nationwide class. All three were removed to federal court. The Florida
class action has been remanded back to state court, and motions to remand
the remaining cases to the state courts have been or are expected to be
filed. The Alabama case has received conditional class certification. The
United States Court of Appeals for the Eleventh Circuit reversed and
remanded a sanctions order by a federal district court in Georgia which had
found that DuPont had engaged in discovery abuse during the first "Benlate"
50 DF crop case to go to trial. The Eleventh Circuit ordered that a
different judge shall preside over the matter on remand. DuPont's petition
for writ of certiorari in the United States Supreme Court, seeking review of
certain aspects of the Eleventh Circuit's decision, has been denied and
DuPont awaits further proceedings. A shareholder derivative action pending
in the same Georgia federal district court, alleging that DuPont's Board of
Directors breached various duties in its role in the "Benlate" 50 DF
litigation, remains stayed. A securities fraud class action filed in
September 1995 by a shareholder in federal district court in Florida against
the company and the then-chairman is also still pending. The plaintiff in
this case alleges that DuPont made false and misleading statements and
omissions about "Benlate" 50 DF, with the alleged effect of inflating the
price of DuPont's stock between June 19, 1993, and January 27, 1995. The

15
<PAGE>

Form 10-Q

district court has certified the case as a class action and has denied a
motion to dismiss filed by DuPont. Discovery is proceeding. Certain
plaintiffs who have previously settled with the company have filed cases
alleging fraud and other misconduct relating to the litigation and
settlement of "Benlate" 50 DF claims. One such lawsuit was filed in federal
district court in Georgia by five growers alleging fraud (including civil
racketeering claims) based generally on the assertion that at the time of
their settlements with DuPont, these plaintiffs were unaware of alleged
discovery abuse by DuPont. The Georgia district court has granted DuPont's
motion for judgment on the pleadings in this matter, holding that the
release plaintiffs executed when they originally settled barred their
attempt to seek additional amounts from DuPont. The court also granted a
similar DuPont motion with respect to another case that had been transferred
from Hawaii federal court. Four cases based on similar allegations were
filed in Hawaii. Three of these matters were filed in Hawaii state courts
and one is pending in Hawaii federal court. Seven additional such cases
have been filed in Florida involving early settlements through DuPont's
claims adjusting company. Five of these have been dismissed on the grounds
that the prelitigation settlements barred their claims. DuPont continues to
believe that "Benlate" 50 DF fungicide did not cause the damages alleged in
these cases and intends to defend against such allegations in ongoing
matters.

The company's balance sheets reflect accruals for estimated costs
associated with this matter. Adverse changes in estimates of such costs
could result in additional future charges.

On September 2, 1997, the U.S. Department of Justice (DOJ) filed
suit against DuPont related to an August 1995 oleum release from DuPont's
plant in Wurtland, Kentucky. DuPont previously paid a $125,000 fine and
agreed to undertake supplemental environmental projects, related to the
oleum release, valued at $460,000. In its complaint, the DOJ alleges
violations under Section 112(r) of the Clean Air Act, Section 103(a) of the
Comprehensive Environmental Response, Compensation and Liability Act and
Section 304(a)(1) of the Emergency Planning and Community Right-to-Know Act.
DOJ offered to settle this action for $2,700,000. DuPont denies these
alleged violations, believes that DOJ's settlement offer is inappropriate
and excessive and plans to contest this action by DOJ.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

The exhibit index filed with this Form 10-Q is on page 20.

(b) Reports on Form 8-K

1. On July 16, 1997, a Current Report on Form 8-K was filed
in connection with Debt and/or Equity Securities that may
be offered on a delayed or continuous basis under

16
<PAGE>

Form 10-Q

Registration Statements on Form S-3 (No. 33-53327,
No. 33-61339 and No. 33-60069). Under Item 7. "Financial
Statements and Exhibits," the Registrant's Press Release
dated July 13, 1997, was filed announcing agreement to
acquire ICI's white pigment business outside North
America, its worldwide polyester films, resins and
intermediates businesses and all related technologies.

2. On July 23, 1997, a Current Report on Form 8-K was filed
in connection with Debt and/or Equity Securities that may
be offered on a delayed or continuous basis under
Registration Statements on Form S-3 (No. 33-53327,
No. 33-61339 and No. 33-60069). Under Item 7. "Financial
Statements and Exhibits," the Registrant's Earnings Press
Release dated July 23, 1997, was filed.

3. On August 11, 1997, a Current Report on Form 8-K was
filed in connection with Debt and/or Equity Securities
that may be offered on a delayed or continuous basis
under Registration Statements on Form S-3 (No. 33-53327,
No. 33-61339 and No. 33-60069). Under Item 2.
"Acquisition or Disposition of Assets," the Registrant's
Press Release dated August 7, 1997, was filed announcing
an agreement between DuPont and Pioneer Hi-Bred Inter-
national, Inc. (Pioneer) to: (1) take an equity interest
in Pioneer, (2) form a research alliance, and (3) form a
separate joint venture company.

4. On August 22, 1997, a Current Report on Form 8-K was
filed in connection with Debt and/or Equity Securities
that may be offered on a delayed or continuous basis
under Registration Statements on Form S-3 (No. 33-53327,
No. 33-61339 and No. 33-60069). Under Item 2.
"Acquisition or Disposition of Assets," the Registrant's
Press Release dated August 22, 1997, was filed announcing
that DuPont and Ralston Purina Company had signed a
letter of intent for DuPont to purchase Protein Tech-
nologies International and its related affiliates from
Ralston for $1.5 billion comprised of DuPont stock less
certain liabilities.

5. On September 29, 1997, a Current Report on Form 8-K was
filed in connection with Debt and/or Equity Securities
that may be offered on a delayed or continuous basis
under Registration Statements on Form S-3 (No. 33-53327,
No.33-61339 and No. 33-60069). Under Item 5. "Other
Events," the Registrant filed a notice that on April 30,
1997, the stockholders of the Company approved an
amendment to the Charter to increase the number of

17
<PAGE>

Form 10-Q

authorized shares of DuPont common stock in order to
effect a two-for-one stock split; and, under Item 7.
"Financial Statements," the Registrant filed pro forma
financial information, "Five-year Financial Review 1992
through 1996."

6. On October 22, 1997, a Current Report on Form 8-K was
filed in connection with Debt and/or Equity Securities
that may be offered on a delayed or continuous basis
under Registration Statements on Form S-3 (No. 33-53327,
No. 33-61339 and No. 33-60069). Under Item 7. "Financial
Statements and Exhibits," the Registrant's Earnings Press
Release dated October 22, 1997, was filed.

18
<PAGE>

Form 10-Q

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

E. I. DU PONT DE NEMOURS AND COMPANY
(Registrant)

Date: October 31, 1997
-----------------------------------------

By /s/K. M. Landgraf
-----------------------------------------

K. M. Landgraf
Executive Vice President - DuPont Finance
(As Duly Authorized Officer and Principal
Financial and Accounting Officer)

19
<PAGE>

Form 10-Q

EXHIBIT INDEX

Exhibit
Number Description
- ------- -----------

3.2 Company's Bylaws, as last revised September 1, 1997.

10.7 Company's Variable Compensation Plan, as last amended
effective April 30, 1997.

12 Computation of Ratio of Earnings to Fixed Charges.

20
<PAGE>

Form 10-Q
EXHIBIT 3.2

BYLAWS
OF
E. I. DU PONT DE NEMOURS AND COMPANY

Incorporated Under The Laws of Delaware

AS REVISED September 1, 1997

21
<PAGE>

Form 10-Q
EXHIBIT 3.2

BYLAWS

Page
----
ARTICLE I.

MEETING OF STOCKHOLDERS:
Section 1. Annual 1
Section 2. Special 1
Section 3. Notice 1
Section 4. Quorum 1
Section 5. Organization 1
Section 6. Voting 2
Section 7. Inspectors 2

ARTICLE II.

BOARD OF DIRECTORS:
Section 1. Number 2
Section 2. Term 2
Section 3. Increase of Number 2
Section 4. Resignation 2
Section 5. Vacancies 2
Section 6. Regular Meetings 2
Section 7. Special Meetings 3
Section 8. Quorum 3
Section 9. Place of Meeting, Etc. 3
Section 10. Interested Directors; Quorum 3

ARTICLE III.

COMMITTEES OF THE BOARD:
Section 1. Committees 4
Section 2. Procedure 4
Section 3. Reports to the Board 4
Section 4. Strategic Direction Committee 4
Section 5. Audit Committee 5
Section 6 Environmental Policy Committee 5
Section 7. Compensation Committee 5
Section 8. Corporate Governance Committee 5

ARTICLE IV.

OFFICE OF THE CHIEF EXECUTIVE 5

<PAGE>

Form 10-Q
EXHIBIT 3.2

Page
----
ARTICLE V.

OFFICERS:
Section 1. Officers 6
Section 2. Chairman of the Board 6
Section 3. President 6
Section 4. Executive Vice Presidents 6
Section 5. Vice Presidents 6
Section 6. Executive Vice President - Finance 6
Section 7. Treasurer 6
Section 8. Assistant Treasurer 7
Section 9. Controller 7
Section 10. Assistant Controller 7
Section 11. Secretary 7
Section 12. Assistant Secretary 7
Section 13. Removal 7
Section 14. Resignation 7
Section 15. Vacancies 7

ARTICLE VI.

MISCELLANEOUS:
Section 1. Indemnification of Directors or Officers 8
Section 2. Certificate for Shares 8
Section 3. Transfer of Shares 9
Section 4. Regulations 9
Section 5. Record Date of Stockholders 9
Section 6. Corporate Seal 9

ARTICLE VII.

AMENDMENTS 10

<PAGE>

Form 10-Q
EXHIBIT 3.2

BYLAWS
OF
E. I. DU PONT DE NEMOURS AND COMPANY

ARTICLE I.
MEETING OF STOCKHOLDERS

SECTION 1. Annual. Meetings of the stockholders for the
purpose of electing Directors, and transacting such other proper
business as may be brought before the meeting, shall be held
annually at such date, time and place, within or without the
State of Delaware as may be designated by the Board of Directors
("Board").

SECTION 2. Special. Special meetings of the stockholders
may be called by the Board and shall be called by the Secretary
at the request in writing of the holders of record of at least
twenty-five percent of the outstanding stock of the corporation
entitled to vote. Special meetings shall be held within or
without the State of Delaware, as the Board shall designate.

SECTION 3. Notice. Written notice of each meeting of
stockholders, stating the place, date and hour of the meeting,
and the purpose or purposes thereof, shall be mailed not less
than ten nor more than sixty days before the date of such
meeting to each stockholder entitled to vote thereat.

SECTION 4. Quorum. Unless otherwise provided by statute,
the holders of shares of stock entitled to cast a majority of
votes at a meeting, present either in person or by proxy, shall
constitute a quorum at such meeting.

Absence of a quorum of the holders of Common Stock or
Preferred Stock at any meeting or adjournment thereof, at which
under the Certificate of Incorporation the holders of Preferred
Stock have the right to elect any Directors, shall not prevent
the election of Directors by the other class of stockholders
entitled to elect Directors as a class if the necessary quorum
of stockholders of such other class shall be present in person
or by proxy.

SECTION 5. Organization. The Chairman of the Board or,
in the Chairman's absence, the President shall preside at
meetings of stockholders. The Secretary of the Company shall act
as Secretary of all meetings of the stockholders, but in the
absence of the Secretary the presiding officer may appoint a
Secretary of the meeting. The order of business for such
meetings shall be determined by the Chairman of the Board, or,
in the Chairman's absence, by the President.

1
<PAGE>

Form 10-Q
EXHIBIT 3.2

SECTION 6. Voting. Each stockholder entitled to vote at
any meeting shall be entitled to one vote, in person or by written
proxy, for each share held of record. Upon the demand of any
stockholder, such stockholder shall be entitled to vote by ballot.
All elections and questions shall be decided by plurality vote,
except as otherwise required by statute.

SECTION 7. Inspectors. At each meeting of the
stockholders the polls shall be opened and closed; the proxies
and ballots shall be received and be taken in charge, and all
questions touching the qualification of voters and the validity
of proxies, and the acceptance or rejection of votes shall be
decided by three Inspectors, two of whom shall have power to make
a decision. Such Inspectors shall be appointed by the Board
before the meeting, or in default thereof, by the presiding
officer at the meeting, and shall be sworn to the faithful
performance of their duties. If any of the Inspectors previously
appointed shall fail to attend or refuse or be unable to serve,
substitutes shall be appointed by the presiding officer.

ARTICLE II.
BOARD OF DIRECTORS

SECTION 1. Number. The business and affairs of the
Company shall be under the direction of the Board. The number of
Directors, which shall not be less than ten, shall be determined
from time to time by the vote of two-thirds of the whole Board.

SECTION 2. Term. Each Director shall hold office until
the next annual election of Directors and until the Director's
successor is elected and qualified.

SECTION 3. Increase of Number. In case of any increase
in the number of Directors between Annual Meetings of
Stockholders, each additional Director shall be elected by the
vote of two-thirds of the whole Board.

SECTION 4. Resignation. A Director may resign at any
time by giving written notice to the Chairman of the Board or the
Secretary. The acceptance thereof shall not be necessary to make
it effective; and such resignation shall take effect at the time
specified therein or, in the absence of such specification, it
shall take effect upon the receipt thereof.

SECTION 5. Vacancies. In case of any vacancy in the
Board for any cause, the remaining Directors, by vote of majority
of the whole Board, may elect a successor to hold office for the
unexpired term of the Director whose place is vacant.

SECTION 6. Regular Meetings. Regular meetings of the
Board shall be held at such times as the Board may designate. A
notice of each regular meeting shall not be required.

2
<PAGE>

Form 10-Q
EXHIBIT 3.2

SECTION 7. Special Meetings. Special meetings of the
Board shall be held whenever called by the direction of the
Chairman of the Board, or of one-third of the Directors.

The Secretary shall give notice of such special
meetings by mailing the same at least two days before the
meeting, or by telegraphing the same at least one day before the
meeting to each Director; but such notice may be waived by any
Director. Unless otherwise indicated in the notice thereof, any
and all business may be transacted at a special meeting. At any
meeting at which every Director shall be present, any business
may be transacted, irrespective of notice.

SECTION 8. Quorum. One-third of the Board shall
constitute a quorum. If there be less than a quorum present at
any meeting, a majority of those present may adjourn the meeting
from time to time.

Except as otherwise provided by law, the Certificate of
Incorporation, or by these Bylaws, the affirmative vote of a
majority of the Directors present at any meeting at which there
is a quorum shall be necessary for the passage of any resolution.

SECTION 9. Place of Meeting, Etc. The Directors shall
hold the meetings, and may have an office or offices in such
place or places within or outside the State of Delaware as the
Board from time to time may determine.

SECTION 10. Interested Directors; Quorum

1) No contract or other transaction between the Company and
one or more of its Directors, or between the Company and any
other corporation, partnership, association, or other
organization in which one or more of the Directors of the Company
is a Director or officer, or has a financial interest, shall be
void or voidable, because the Director is present at or
participates in the meeting of the Board or committee thereof
which authorizes the contract or transaction, or solely because
such Director's vote is counted for such purpose, if:

(a) the material facts as to such Director's
relationship or interest and as to the contract or transaction are
disclosed or are known to the Board or the committee, and the
Board or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the
disinterested Directors, even though the disinterested Directors
be less than a quorum; or

(b) the material facts as to such Director's
relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved
in good faith by vote of the stockholders; or

3
<PAGE>

Form 10-Q
EXHIBIT 3.2

(c) the contract or transaction is fair as to the Company
as of the time it is authorized, approved or ratified, by the
Board, a committee thereof, or the stockholders; and

2) Common or interested Directors may be counted in
determining the presence of a quorum at a meeting of the Board or
of a committee which authorizes the contract or transaction.

ARTICLE III.
COMMITTEES OF THE BOARD

SECTION 1. Committees. The Board shall by the
affirmative vote of a majority of the whole Board, elect from the
Directors a Strategic Direction Committee, an Audit Committee, an
Environmental Policy Committee, a Compensation Committee, and a
Corporate Governance Committee and may, by resolution passed by a
majority of the whole Board, designate one or more additional
committees, each committee to consist of one or more Directors.
The Board shall designate for each of these committees a Chairman,
and, if desired, a Vice Chairman, who shall continue as such
during the pleasure of the Board. The number of members of each
committee shall be determined from time to time by the Board.

SECTION 2. Procedure. Each Committee shall fix its own
rules of procedure and shall meet where and as provided by such
rules. A majority of a committee shall constitute a quorum. In
the absence or disqualification of a member of any committee, the
members of such committee present at any meeting, and not
disqualified from voting, whether or not they constitute a
quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or
disqualified member.

SECTION 3. Reports To The Board. Each Committee shall
keep regular minutes of its proceedings and shall periodically
report to the Board summaries of the Committee's significant
completed actions and such other matters as requested by the
Board.

SECTION 4. Strategic Direction Committee. The Strategic
Direction Committee shall review the Company's strategic
direction and overall objectives and shall have such powers and
perform such duties as may be assigned to it from time to time by
the Board.

4
<PAGE>

Form 10-Q
EXHIBIT 3.2

SECTION 5. Audit Committee. The Audit Committee shall
employ independent public accountants, subject to stockholder
ratification at each annual meeting, review the adequacy of
internal controls and the accounting principles employed in
financial reporting, and shall have such power and perform such
duties as may be assigned to it from time to time by the Board.
None of the Members of the Audit Committee shall be an officer or
employee of the Company or its subsidiaries.

SECTION 6. Environmental Policy Committee. The
Environmental Policy Committee shall review the Company's
environmental policies and practices and shall have such powers
and perform such duties as may be assigned to it from time to
time by the Board.

SECTION 7. Compensation Committee. The Compensation
Committee shall have the power and authority vested in it by the
Compensation Plans of the Company and shall have such powers and
perform such duties as may be assigned to it from time to time by
the Board. None of the members of the Compensation Committee shall
be an officer or employee of the Company or its subsidiaries.

SECTION 8. Corporate Governance Committee. The
Corporate Governance Committee shall recommend to the Board
nominees for election as directors of the Company. The Committee
shall also have responsibility for reviewing and making
recommendations to the Board related to matters on corporate
governance and shall have such powers and perform such duties as
may be assigned to it from time to time by the Board. None of the
members of the Corporate Governance Committee shall be an officer
or employee of the Company or its subsidiaries.

ARTICLE IV.
OFFICE OF THE CHIEF EXECUTIVE

The Board shall elect an Office of the Chief Executive
whose members shall include the President and such other officers
as may be designated by the Board. The Office of the Chief
Executive shall have responsibility for the strategic direction
and operations of all the businesses of the Company and shall
have such powers and perform such duties as may be assigned to it
from time to time by the Board.

All significant completed actions by the Office of the
Chief Executive shall be reported to the Board at the next
succeeding Board meeting, or at its meeting held in the month
following the taking of such action.

5
<PAGE>

Form 10-Q
EXHIBIT 3.2

ARTICLE V.
OFFICERS

SECTION 1. Officers. The officers of the Company shall
be a Chairman of the Board, a President, one or more Executive
Vice Presidents, an Executive Vice President - Finance and a
Secretary.

The Board and the Office of the Chief Executive, may
appoint such other officers as they deem necessary, who shall have
such authority and shall perform such duties as may be prescribed,
respectively, by the Board or the Office of the Chief Executive.

SECTION 2. Chairman of the Board. The Chairman of the
Board shall preside at all meetings of the stockholders and of
the Board. The Chairman may sign and execute all authorized
bonds, contracts or other obligations, in the name of the
Company, and with the Treasurer may sign all certificates of the
shares in the capital stock of the Company.

SECTION 3. President. The President shall be the chief
executive officer of the Company and, subject to the Board and
the Office of the Chief Executive, shall have general charge of
the business and affairs of the Company and shall perform such
other duties as may be assigned to the President by the Board or
the Chairman of the Board. In the absence or inability to act of
the Chairman of the Board, the President shall perform the duties
of the Chairman of the Board.

SECTION 4. Executive Vice Presidents. Each Executive
Vice President shall have such powers and perform such duties as
may be assigned to such Executive Vice President by the Board or
the Office of the Chief Executive.

SECTION 5. Vice Presidents. The Board or the Office of
the Chief Executive may appoint one or more Vice Presidents. Each
Vice President shall have such title, powers and duties as may be
assigned to such Vice President by the Board or the Office of the
Chief Executive.

SECTION 6. Executive Vice President - Finance. The
Executive Vice President - Finance shall be the chief financial
officer of the Company, and shall have such powers and perform
such duties as may be assigned to such Executive Vice President -
Finance by the Board or the Office of the Chief Executive.

SECTION 7. Treasurer. The Board shall appoint a
Treasurer. Under the general direction of the Executive Vice
President - Finance, the Treasurer shall have such powers and
perform such duties as may be assigned to such Treasurer by the
Board or the Office of the Chief Executive.

6
<PAGE>

Form 10-Q
EXHIBIT 3.2

SECTION 8. Assistant Treasurer. The Board or the Office
of the Chief Executive may appoint one or more Assistant
Treasurers. Each Assistant Treasurer shall have such powers and
shall perform such duties as may be assigned to such Assistant
Treasurer by the Board or the Office of the Chief Executive.

SECTION 9. Controller. The Board may appoint a
Controller. Under the general direction of the Executive Vice
President - Finance, the Controller shall have such powers and
perform such duties as may be assigned to such Controller by the
Board or the Office of the Chief Executive.

SECTION 10. Assistant Controller. The Board or the
Office of the Chief Executive may appoint one or more Assistant
Controllers. Each Assistant Controller shall have such powers and
shall perform such duties as may be assigned to such Assistant
Controller by the Board or the Office of the Chief Executive.

SECTION 11. Secretary. The Secretary shall keep the
minutes of all the meetings of the Board and the minutes of all
the meetings of the stockholders; the Secretary shall attend to
the giving and serving of all notices of meetings as required by
law or these Bylaws; the Secretary shall affix the seal of the
Company to any instruments when so required; and the Secretary
shall in general perform all the corporate duties incident to the
office of Secretary, subject to the control of the Board or the
Chairman of the Board, and such other duties as may be assigned
to the Secretary by the Board or the Chairman of the Board.

SECTION 12. Assistant Secretary. The Board or the
Office of the Chief Executive may appoint one or more Assistant
Secretaries. Each Assistant Secretary shall have such powers and
shall perform such duties as may be assigned to such Assistant
Secretary by the Board or the Chairman of the Board or the
President; and such Assistant Secretary shall affix the seal of
the Company to any instruments when so required.

SECTION 13. Removal. All officers may be removed or
suspended at any time by the vote of the majority of the whole
Board. All officers, agents and employees, other than officers
elected or appointed by the Board, may be suspended or removed by
the committee or by the officer appointing them.

SECTION 14. Resignation. Any officer may resign at any
time by giving written notice to the Chairman of the Board, the
President or the Secretary. Unless otherwise stated in such
notice of resignation, the acceptance thereof shall not be
necessary to make it effective; and such resignation shall take
effect at the time specified therein or, in the absence of such
specification, it shall take effect upon the receipt thereof.

SECTION 15. Vacancies. A vacancy in any office shall be
filled in the same manner as provided for election or appointment
to such office.

7
<PAGE>

Form 10-Q
EXHIBIT 3.2
ARTICLE VI.
MISCELLANEOUS

SECTION 1. Indemnification of Directors or Officers.
Each person who is or was a Director or officer of the Company
(including the heirs, executors, administrators or estate of such
person) shall be indemnified by the Company as of right to the
full extent permitted by the General Corporation Law of Delaware
against any liability, cost or expense asserted against such
Director or officer and incurred by such Director or officer by
reason of the fact that such person is or was a Director or
officer. The right to indemnification conferred by this Section
shall include the right to be paid by the Company the expenses
incurred in defending in any action, suit or proceeding in
advance of its final disposition, subject to the receipt by the
Company of such undertakings as might be required of an
indemnitee by the General Corporation Law of Delaware.

In any action by an indemnitee to enforce a right to
indemnification hereunder or by the Company to recover advances
made hereunder, the burden of proving that the indemnitee is not
entitled to be indemnified shall be on the Company. In such an
action, neither the failure of the Company (including its Board,
independent legal counsel or stockholders) to have made a
determination that indemnification is proper, nor a determination
by the Company that indemnification is improper, shall create a
presumption that the indemnitee is not entitled to be indemnified
or, in the case of such an action brought by the indemnitee, be a
defense thereto. If successful in whole or in part in such an
action, an indemnitee shall be entitled to be paid also the
expense of prosecuting or defending same. The Company may, but
shall not be obligated to, maintain insurance at its expense, to
protect itself and any such person against any such liability,
cost or expense.

SECTION 2. Certificate for Shares. The shares of the
capital stock of the Company shall be represented by certificates
unless the Company provides by appropriate action that some or all
of any or all classes or series of the Company's stock shall be
uncertificated. Notwithstanding the Company's taking such action,
to the extent required by law, every holder of stock represented
by certificates and, upon request, every holder of uncertificated
shares, shall be entitled to a certificate representing the number
of shares in the Company owned by such stockholder in such form,
not inconsistent with the Certificate of Incorporation, as shall
be prescribed by the Board. Certificates representing shares of
the capital stock of the Company shall be signed by the Chairman
of the Board, President or an Executive Vice President and the
Treasurer, Secretary or an Assistant Secretary. Any or all
signatures on the certificate, including those of the Transfer
Agent and Registrar, may be facsimile.

The name of the person owning the shares represented
thereby, with the number of such shares and the date of issue,
shall be entered on the Company's books.

8
<PAGE>

Form 10-Q
EXHIBIT 3.2

All certificates surrendered to the Company shall be
cancelled, and no new certificates shall be issued until the
former certificate for the same number of shares of the same
class shall have been surrendered and cancelled, except that the
Board may determine, from time to time, the conditions and
provisions on which new certificates may be used in substitution
of any certificates that may have been lost, stolen or destroyed.

SECTION 3. Transfer of Shares. Shares in the capital
stock of the Company shall be transferred by the record holder
thereof, in person, or by any such person's attorney upon
surrender and cancellation of certificates for a like number of
shares.

SECTION 4. Regulations. The Board also may make rules
and regulations concerning the issue, transfer and registration
of certificates for shares of the capital stock of the Company.

The Board may appoint one or more transfer agents and
one or more registrars of transfers, and may require all stock
certificates to bear the signature of a transfer agent and a
registrar of transfer.

SECTION 5. Record Date of Stockholders. The Board may
fix in advance a date, not exceeding sixty days preceding the
date of any meeting of stockholders, or the date for the payment
of any dividend or other distribution, or the date for the
allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, as a record date
for the determination of the stockholders entitled to notice of,
and to vote at, any such meeting, or entitled to receive payment
of any such dividend or other distribution, or to any such
allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, and in such
case only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of, and to
vote at, such meeting, or to receive any such dividend or other
distribution, or to receive such allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any
transfer of any stock on the books of the Company after such
record date fixed as aforesaid.

SECTION 6. Corporate Seal. The seal of the Company
shall be circular in form, containing the words "E. I. DU PONT DE
NEMOURS AND CO." and "DELAWARE" on the circumference, surrounding
the words "FOUNDED" and "SEAL," and the date "1802."

The seal shall be in the custody of the Secretary. A
duplicate of the seal may be kept and used by the Executive Vice
President - Finance, any Vice President - DuPont Finance, the
Treasurer, or by any Assistant Secretary or Assistant Treasurer.

9
<PAGE>

Form 10-Q
EXHIBIT 3.2

ARTICLE VII.
AMENDMENTS

The Board shall have the power to adopt, amend and
repeal the Bylaws of the Company, by a vote of the majority of
the whole Board, at any regular or special meeting of the Board,
provided that notice of intention to adopt, amend or repeal the
Bylaws in whole or in part shall have been given at the next
preceding meeting, or, without any such notice, by the vote of
two-thirds of the whole Board.

I hereby certify that the foregoing is a true and correct copy of
the Bylaws of E. I. du Pont de Nemours and Company.

Witness my hand and the corporate seal of the Company this
day of 199 .
- ------------ ------------------ --

----------------------------
Secretary

10
<PAGE>

Form 10-Q

Exhibit 10.7

VARIABLE COMPENSATION PLAN

Last Amended - April 30, 1997

E. I. du Pont de Nemours and Company

22
<PAGE>

Form 10-Q
Exhibit 10.7

VARIABLE COMPENSATION PLAN

I. PURPOSES

The purposes of this Variable Compensation Plan (the "Plan") are:
(a) to provide greater incentive for employees continually to exert their
best efforts on behalf of E. I. du Pont de Nemours and Company (the
"Company") by granting them compensation that, combined with their regular
salaries, results in total compensation that is competitive based on
performance; and (b) to further the identity of interests of such employees
with those of the Company's stockholders generally.

II. FORM OF GRANTS

1. Variable compensation under this Plan may be granted in acquired
common stock of this Company, or in new common stock to be issued directly
to the beneficiaries, or in cash, or in two or more of said forms.

2. The Compensation Committee shall determine the portion of each
award under this Plan to be paid in cash and the portion to be delivered to
the beneficiary in the form of common stock.

III. LIMITATIONS ON GRANTS

1. Grants under this Plan shall be made from the Variable Compensa-
tion Fund which the Company shall establish and to which shall be credited
annually an amount to be determined by the Compensation Committee. This
amount shall not exceed 20% of the "variable net income." For any year, the
maximum amount of the individual grant under this Plan to the Chief
Executive Officer or any of the four other highest compensated executive
officers of the Company at year-end shown in the Company's Proxy Statement,
or such other individuals as may be prescribed in rules under Section 162(m)
of the Internal Revenue Code, shall not exceed 2% of the maximum amount
which may be credited to the Fund for such year; however, the Compensation
Committee, or the Board of Directors if the grant is made to an employee
director, may in its discretion make individual grants which are less than
such individual maximum amount. This Plan shall be interpreted consistent
with the requirements of performance-based compensation plans under
Section 162(m) of the Internal Revenue Code.

2. The term "variable net income" for any year, as used in this
Plan, shall mean the amount of net income or loss as shown in the Consoli-
dated Income Statement of this Company and its consolidated subsidiaries set
forth in the Annual Report to the Stockholders for such year; provided, how-
ever, that such net income or loss shall be adjusted to omit the effects of

(i) charges and/or credits resulting from extraordinary items,
accounting changes (including charges and/or credits to current year
operations therefrom), and similarly disclosed amounts in the Com-
pany's Consolidated Income Statement, and

1
<PAGE>

Form 10-Q
Exhibit 10.7

(ii) any charges/credits disclosed in the footnotes to
Industry Segment Information for such year;

and shall be further adjusted by

(a) adding any amount which has been deducted in computing
said net income with respect to any provision for the Variable
Compensation Fund, and

(b) deducting an amount equal to 6% of the "variable net
capital employed," as defined in paragraph 3 of this Article.

3. The term "variable net capital employed" for any year, as used
in this Plan, shall mean the average of the amounts of Stockholders' Equity
as of December 31st of such year and December 31st of the preceding year, as
shown in the Consolidated Balance Sheets of this Company and its subsidi-
aries set forth in the Annual Reports to the Stockholders, after adjusting
said amounts, however, by adding to Stockholders' Equity as stated in the
later of such Balance Sheets any amount which has been deducted in computing
net income with respect to any provision for the Variable Compensation Fund,
as described in paragraph 2(a) of this Article.

4. Grants for each year need not have an aggregate value equal to
the entire amount available in the Variable Compensation Fund. Any
ungranted portion of the Fund shall be carried forward and be available for
grants in a succeeding year or years, and while grants in the aggregate for
any year may exceed the amount credited for that year to the Variable Com-
pensation Fund, they shall not exceed the total amount in the Fund.

IV. ADMINISTRATION

1. Except as otherwise specifically provided, the Plan shall be
administered by the Compensation Committee of the Company's Board of
Directors. The Compensation Committee shall be elected pursuant to the
Bylaws of the Company, and the members thereof shall be ineligible for
grants for services performed while serving on said Committee.

2. The decision of the Compensation Committee with respect to any
questions arising as to interpretation of this Plan, including the sever-
ability of any and all of the provisions thereof, shall be final, conclusive
and binding.

V. ELIGIBILITY FOR GRANTS

1. Grants under the Plan may be made to those employees who have
contributed the most in a general way to the Company's success by their
ability, efficiency, and loyalty, consideration being given to ability to
succeed in more important managerial responsibility in the Company. Grants
may also be made to:

(a) a person performing services on a consultant basis,

2
<PAGE>

Form 10-Q
Exhibit 10.7

(b) an employee who retired or plans to retire pursuant to the
provisions of the pension and retirement plan or policy of a plan
company,

(d) the surviving spouse or estate of a deceased employee.

No grant may be made to a director except for services performed as an
employee of a plan company.

2. Except as set forth in subparagraphs (a) to (d) of the preceding
paragraph, to be eligible for a grant an employee shall be employed by a
plan company as of the date final action is taken on a grant under this Plan
and shall be expected to continue in the employ of such a company.

3. For purposes of this Plan, the term "employee" shall include an
employee of a corporation or other business entity in which the Company
shall directly or indirectly own fifty percent or more of the outstanding
voting stock or other ownership interest. The term "plan company" as used
in this Plan shall mean a business entity whose employees are eligible for
grants under this Plan.

VI. GRANTS

1. The Compensation Committee shall determine each year the total
amount of the Variable Compensation Fund to be distributed. Grants for any
calendar year shall be made as soon as practicable after the close of such
calendar year.

2. Employees in countries other than the United States may be
granted variable compensation through plans or programs other than this
Plan.

VII. STOCK FOR GRANTS

1. With respect to the portion of grants under this Plan to be
delivered in common stock, the Compensation Committee of the Company's Board
of Directors shall determine whether, and to what extent, such portion of
the grants shall be in new common stock to be issued directly to benefici-
aries, or in common stock acquired by the Company.

2. The value per share at which common stock is to be granted to
beneficiaries under this Plan shall be fixed and determined by the Board of
Directors. Common stock to be delivered in payment of grants under this
Plan shall be issued or registered in the names of beneficiaries at the time
of delivery provided under Article IX hereof.

3
<PAGE>

Form 10-Q
Exhibit 10.7

VIII. RECOMMENDATIONS AND GRANTS

1. Recommendations for grants to members of the Board of Directors
shall be made by the Compensation Committee. Recommendations for grants to
employees who are not members of the Board of Directors shall be made to the
Compensation Committee by the Office of the Chief Executive.

2. Any grant to a director shall be made in the sole discretion of
the Board of Directors, a majority of whose members taking final action on
any such grant shall be ineligible for grants under Article V. Any grant to
an employee who is not a member of the Board of Directors shall be made in
the sole discretion of the Compensation Committee which shall take final
action on any such grant. No person shall have a right to a grant under
this Plan until final action has been taken to make such grant. At the dis-
cretion of the Compensation Committee, grants to employees of a plan company
may be made subject to approval by the board of directors or other manage-
ment group of such company.

3. Action to establish a minimum liability for variable compensa-
tion grants under this Plan, if deemed appropriate, shall be taken by the
Compensation Committee prior to year-end of the calendar year for which
grants are to be made.

IX. DELIVERY OF GRANTS

When any stock or cash is granted under this Plan, certificates of
stock, or cash, as the case may be, representing such grant, shall be
delivered to the beneficiary promptly, or at such future times and under
such terms and conditions as the Compensation Committee may determine. If
it is determined that the grant be delivered promptly to the beneficiary,
that beneficiary may be given the option to defer delivery of the grant to
the extent provided in terms and conditions established by the Compensation
Committee.

X. AMENDMENTS

While it is the present intention of the Company to make grants
annually, the Board of Directors reserves the right to modify this Plan from
time to time or to repeal the Plan entirely, or to direct the discontinuance
of making grants either temporarily or permanently; provided, however, that
no modification of this Plan shall operate to annul, without the consent of
the beneficiary, a grant already made hereunder; provided, also, that no
modification without approval of the stockholders shall increase the maximum
amount which may be credited to the Variable Compensation Fund as herein-
above provided.

XI. MISCELLANEOUS

All expenses and costs in connection with the operation of this Plan
shall be borne by the Company and no part thereof shall be charged against
the Variable Compensation Fund.

4
<PAGE>

<TABLE>
Form 10-Q

Exhibit 12

E. I. DU PONT DE NEMOURS AND COMPANY

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)

Years Ended December 31
Nine Months Ended -------------------------------------------------
September 30, 1997 1996 1995 1994 1993 1992
------------------ --------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Income ....................................... $2,143 $3,636 $3,293 $2,727 $ 566<Fa> $ 975<Fa>
Provision for Income Taxes ....................... 1,860 2,345 2,097 1,655 392 836
Minority Interests in Earnings of Consolidated
Subsidiaries ................................... 54 59 30 18 5 10
Adjustment for Companies Accounted for
by the Equity Method ........................... 887<Fb> 81 41 18 41 6
Capitalized Interest ............................. (126) (144) (170) (143) (194) (194)
Amortization of Capitalized Interest ............. 97<Fc> 191<Fc> 154 154 144 101
------ ------ ------ ------ ------ ------
4,915 6,168 5,445 4,429 954 1,734
------ ------ ------ ------ ------ ------

Fixed Charges:
Interest and Debt Expense ...................... 474 729 758 559 594 643
Adjustment for Companies Accounted for by the
Equity Method - Interest and Debt Expense .... 89 70 71 55 42 62
Capitalized Interest ........................... 126 144 170 143 194 194
Rental Expense Representative of Interest
Factor ....................................... 89 118 113 118 143 151
------ ------ ------ ------ ------ ------
778 1,061 1,112 875 973 1,050
------ ------ ------ ------ ------ ------

Total Adjusted Earnings Available for Payment of
Fixed Charges .................................... $5,693 $7,229 $6,557 $5,304 $1,927 $2,784
====== ====== ====== ====== ====== ======

Number of Times Fixed Charges are Earned ........... 7.3 6.8 5.9 6.1 2.0 2.7
====== ====== ====== ====== ====== ======

<FN>
<Fa> Income Before Extraordinary Item and Transition Effect of Accounting
Changes.
<Fb> Includes write-off of Purchased In-Process Research and Development
associated with acquisition of 20% interest in Pioneer Hi-Bred
International, Inc.
<Fc> Includes write-off of capitalized interest associated with divested
businesses.

</TABLE>

<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary Financial Information Extracted From
Form 10-Q For The Quarterly Period Ended September 30, 1997, And Is
Qualified In Its Entirety By Reference To Such Financial Statements
</LEGEND>
<MULTIPLIER> 1,000,000

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,485
<SECURITIES> 708
<RECEIVABLES> 5,858<F1>
<ALLOWANCES> 0
<INVENTORY> 4,005
<CURRENT-ASSETS> 13,047
<PP&E> 51,615
<DEPRECIATION> 29,621
<TOTAL-ASSETS> 42,352
<CURRENT-LIABILITIES> 13,498
<BONDS> 5,786
0
237
<COMMON> 347
<OTHER-SE> 11,084
<TOTAL-LIABILITY-AND-EQUITY> 42,352
<SALES> 33,749
<TOTAL-REVENUES> 34,811
<CGS> 25,058<F2>
<TOTAL-COSTS> 30,349<F3>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 459
<INCOME-PRETAX> 4,003
<INCOME-TAX> 1,860
<INCOME-CONTINUING> 2,143
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,143
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes Other Accounts In Addition To Notes and Accounts
Receivable-Trade.
<F2>Includes Other Expenses.
<F3>Cost of Goods Sold and Other Expenses; Depreciation, Depletion and
Amortization; Exploration Expenses, Including Dry Hole Costs and
Impairment of Unproved Properties; Selling, General and Administrative
Expenses; Purchased In-Process Research and Development; and Write-down
of Assets and Related Costs.
</FN>

</TABLE>