DUPONT E I DE NEMOURS & CO, 10-Q, 1999-11-09

DUPONT E I DE NEMOURS & CO
10-Q, 1999-11-09
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, 1999

( ) 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

1,044,524,808 shares (excludes 7,947,919 shares held by DuPont's Flexitrust)
of common stock, $0.30 par value, were outstanding at October 31, 1999.

1
<PAGE>

Form 10-Q

E. I. DU PONT DE NEMOURS AND COMPANY

Table of Contents

Page(s)
-------
Part I Financial Information
Item 1. Financial Statements
Consolidated Income Statement ............................... 3
Consolidated Statement of Cash Flows ........................ 4
Consolidated Balance Sheet .................................. 5
Notes to Financial Statements ............................... 6-15

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Forward-Looking Statements .................................. 16-17
Results of Operations:
Financial Results ......................................... 18-19
Segment Performance ....................................... 19-20
Financial Condition ......................................... 20-22
Other Items:
Pioneer Hi-Bred International, Inc. Merger ................ 22-23
Borrowings ................................................ 23
WebMD Warrants ............................................ 23
Herberts Acquisition ...................................... 23
Year 2000 Readiness Disclosure ............................ 23-25
Purchased In-Process Research and Development ............. 25
Conoco Split-Off .......................................... 25-26

Part II Other Information
Item 1. Legal Proceedings .................................... 26-27
Item 6. Exhibits and Reports on Form 8-K ..................... 27-30

Signature ....................................................... 31
Exhibit Index ................................................... 32
Exhibit 12 - Computation of Ratio of Earnings to
Fixed Charges ................................................. 33
Exhibit 12.1 - Computation of Ratio of Earnings to
Fixed Charges - Pro Forma ..................................... 34

2
<PAGE>

<TABLE>

PART I. FINANCIAL INFORMATION Form 10-Q
Item 1. FINANCIAL STATEMENTS
E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES

Three Months Ended Nine Months Ended
CONSOLIDATED INCOME STATEMENT<Fa><Fb> September 30 September 30
- -----------------------------------------------------------------------------------------------------------------------
(Dollars in millions, except per share) 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES<Fc> .................................................... $6,481 $6,042 $19,800 $18,668
Other Income<Fd> ............................................. 159 136<Fe> 412<Ff> 625<Fe>
------ ------ ------- -------
Total .................................................... 6,640 6,178 20,212 19,293
------ ------ ------- -------
Cost of Goods Sold and Other Expenses<Fd> .................... 4,184 3,770 12,468 11,876
Selling, General and Administrative Expenses ................. 624 542 1,784 1,527
Depreciation and Amortization ................................ 373 368 1,081 1,067
Research and Development ..................................... 394 362 1,139 900
Interest and Debt Expense .................................... 120 160 333 416
Purchased In-Process Research and Development<Fg> ............ - 1,441 40 1,501
Employee Separation Costs and Write-Down of Assets<Fh> ....... 534 391 596 577
------ ------ ------- -------
Total .................................................... 6,229 7,034 17,441 17,864
------ ------ ------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES,
MINORITY INTERESTS AND EXTRAORDINARY ITEM .................. 411 (856) 2,771 1,429
Provision for Income Tax Expenses (Credits) .................. 216 (290) 1,066 543
Minority Interests in Earnings (Loss) of Consolidated
Subsidiaries ............................................... 14 (2) 50 19
------ ------ ------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
EXTRAORDINARY ITEM<Fc> ..................................... 181 (564) 1,655 867
DISCONTINUED OPERATIONS
Income from Operations of Discontinued Business,
Net of Income Taxes ...................................... - 160 - 594
Gain on Disposal of Discontinued Business,
Net of Income Taxes<Fi> .................................. 7,349 - 7,455 -
------ ------ ------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM ...................... 7,530 (404) 9,110 1,461
Extraordinary Charge from Early Extinguishment of Debt,
Net of Income Taxes<Fj> .................................... - (201) - (201)
------ ------ ------- -------
NET INCOME (LOSS) ............................................ $7,530 $ (605) $ 9,110 $ 1,260
====== ====== ======= =======
BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK<Fk><Fl>
Continuing Operations Before Extraordinary Item ............ $ .17 $ (.50) $ 1.50 $ .76
Discontinued Operations .................................... 7.08 .14 6.79 .53
Extraordinary Charge ....................................... - (.18) - (.18)
------ ------ ------- -------
Net Income (Loss) .......................................... $ 7.25 $ (.54) $ 8.29 $ 1.11
====== ====== ======= =======
DILUTED EARNINGS PER SHARE OF COMMON STOCK<Fk><Fl>
Continuing Operations Before Extraordinary Item ............ $ .17 $ (.50) $ 1.48 $ .75
Discontinued Operations .................................... 6.98 .14 6.71 .52
Extraordinary Charge ....................................... - (.18) - (.18)
------ ------ ------- -------
Net Income (Loss) .......................................... $ 7.15 $ (.54) $ 8.19 $ 1.09
====== ====== ======= =======
DIVIDENDS PER SHARE OF COMMON STOCK .......................... $ .35 $ .35 $ 1.05 $ 1.015
====== ====== ======= =======
See Notes to Financial Statements.

</TABLE>
3
<PAGE>

<TABLE>
Form 10-Q

Nine Months Ended
CONSOLIDATED STATEMENT OF CASH FLOWS<Fa><Fb> September 30
- ---------------------------------------------------------------------------------------------
(Dollars in millions) 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED BY CONTINUING OPERATIONS
Net Income .................................................... $ 9,110 $ 1,260
Adjustments to Reconcile Net Income to Cash
Provided by Continuing Operations:
Net Income from Discontinued Operations ................... (7,455) (594)
Extraordinary Charge from Early Retirement of Debt ........ - 275
Depreciation and Amortization ............................. 1,081 1,067
Purchased In-Process Research and Development ............. 40 1,501
Other Noncash Charges and Credits - Net ................... 564 (29)
Change in Operating Assets and Liabilities - Net .......... (355) (1,113)
------- -------
Cash Provided by Continuing Operations .................. 2,985 2,367
------- -------
INVESTMENT ACTIVITIES OF CONTINUING OPERATIONS
Purchases of Property, Plant and Equipment .................... (1,422) (1,561)
Investment in Affiliates ...................................... (37) (55)
Payments for Businesses Acquired (Net of Cash Acquired) ....... (1,689) (3,048)
Proceeds from Sales of Assets ................................. 64 369
Investments in Short-Term Financial Instruments - Net ......... (437) (220)
Miscellaneous - Net ........................................... (13) (39)
------- -------
Cash Used for Investment Activities of Continuing
Operations ............................................ (3,534) (4,554)
------- -------
FINANCING ACTIVITIES
Dividends Paid to Stockholders ................................ (1,141) (1,150)
Net (Decrease) Increase in Borrowings ......................... (1,453) 4,835
Acquisition of Treasury Stock<Fm> ............................. (690) (704)
Proceeds from Exercise of Stock Options ....................... 143 242
Increase (Decrease) in Minority Interests ..................... 105 (16)
------- -------
Cash (Used for) Provided by Financing Activities ........ (3,036) 3,207
------- -------
Net Cash Flow from Discontinued Operations<Fm> .................. 4,534 (193)
------- -------
Effect of Exchange Rate Changes on Cash ......................... (78) 124
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS<FN> ....................... $ 871 $ 951
======= =======

See Notes to Financial Statements.

</TABLE>

4
<PAGE>

CONSOLIDATED BALANCE SHEET<Fa><Fb> September 30 December 31
- -------------------------------------------------------------------------------------------------------------------
(Dollars in millions, except per share) 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents ........................................................ $ 2,305 $ 1,059
Marketable Securities ............................................................ 294 10
Accounts and Notes Receivable .................................................... 5,200 4,201
Inventories<Fo> .................................................................. 3,595 3,129
Prepaid Expenses ................................................................. 180 192
Deferred Income Taxes ............................................................ 533 645
-------- -------
Total Current Assets ........................................................... 12,107 9,236
PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation and amortization
(September 30, 1999 - $20,941; December 31, 1998 - $20,597) ..................... 14,601 14,131
INVESTMENT IN AFFILIATES ........................................................... 1,955 1,796
OTHER ASSETS ....................................................................... 5,773 4,956
NET ASSETS OF DISCONTINUED OPERATIONS<Fp> .......................................... - 8,417
-------- -------
TOTAL<Fc> ...................................................................... 34,436 38,536
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable ................................................................. 1,942 1,929
Short-Term Borrowings and Capital Lease Obligations .............................. 5,227 6,629
Income Taxes ..................................................................... 335 130
Other Accrued Liabilities ........................................................ 3,150 2,922
-------- -------
Total Current Liabilities ...................................................... 10,654 11,610
LONG-TERM BORROWINGS AND CAPITAL LEASE OBLIGATIONS ................................. 4,622 4,495
OTHER LIABILITIES .................................................................. 7,743 7,640
DEFERRED INCOME TAXES .............................................................. 627 430
-------- -------
Total Liabilities .............................................................. 23,646 24,175
-------- -------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES .................................... 505 407
-------- -------
STOCKHOLDERS' EQUITY<Fq>
Preferred Stock .................................................................. 237 237
Common Stock, $.30 par value; 1,800,000,000 shares authorized; shares issued
at September 30, 1999 - 1,139,514,154; December 31, 1998 - 1,140,354,154 ....... 342 342
Additional Paid-In Capital ....................................................... 7,788 7,854
Reinvested Earnings .............................................................. 14,637 6,705
Accumulated Other Comprehensive Loss ............................................. (170) (432)
Common Stock in Treasury, at Cost (Shares: September 30, 1999 - 155,980,872) .... (12,051) -
Common Stock Held in Trust for Unearned Employee Compensation and Benefits
(Flexitrust), at Market (Shares: September 30, 1999 - 8,226,864;
December 31, 1998 - 14,167,867) ................................................ (498) (752)
-------- -------
Total Stockholders' Equity ..................................................... 10,285 13,954
-------- -------
TOTAL .......................................................................... $ 34,436 $38,536
======== =======

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. The company's former petroleum business is reported
as discontinued operations and is discussed in Notes (b), (i) and (p).

<Fb> Discontinued Operations:

On September 28, 1998, the company announced that the Board of
Directors had approved a plan to divest the company's 100 percent-owned
petroleum business (Conoco Inc.). On October 21, 1998, the company's
interest in Conoco was reduced to 69.5 percent following an initial
public offering of Conoco Class A common stock. In July 1999, the
company announced the terms of the tax-free split-off to complete the
divestiture by exchanging the remaining Conoco shares held by the
company for DuPont common stock. On August 6, 1999, the company
successfully completed the exchange offer of Conoco Class B common
stock for DuPont common stock. The company's consolidated financial
statements and notes report its former petroleum business as discon-
tinued operations. Prior periods have been restated. Results reported
separately by Conoco prior to completion of the exchange offer on
August 6, 1999, were on a stand-alone basis and may differ from results
based on discontinued operations reporting. In addition, from
October 22, 1998, through August 6, 1999, the company's results from
discontinued operations reflected minority interests of 30.5 percent.

Discussion of the exchange offer is on pages 25 and 26.

6
<PAGE>

<TABLE>
Form 10-Q

NOTES TO FINANCIAL STATEMENTS
(Dollars in millions, except per share)
(Continued)
<CAPTION>
<FN>

<Fc> CONSOLIDATED SEGMENT INFORMATION - Three Months Ended Nine Months Ended
CONTINUING OPERATIONS<F1> September 30 September 30
-------------------------------------------------------------------------------------------------------------------
(Dollars in millions) 1999 1998 1999 1998
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SEGMENT SALES<F2>
-------------
Agriculture & Nutrition ............................. $ 461 $ 569 $ 2,333 $ 2,570
Nylon Enterprise .................................... 1,097 1,148 3,349 3,483
Performance Coatings & Polymers ..................... 1,618 1,074 4,424 3,412
Pharmaceuticals<F3> ................................. 384 366 1,173 776
Pigments & Chemicals ................................ 912 909 2,727 2,768
Polyester Enterprise ................................ 668 664 1,935 <F4> 2,157
Specialty Fibers .................................... 852 818 2,572 2,497
Specialty Polymers .................................. 1,069 990 3,143 3,079
Other ............................................... 105 104 314 386
------ ------ ------- -------
Total Segment Sales ............................. 7,166 6,642 21,970 21,128

Elimination of Intersegment Transfers ............... (189) (179) (542)<F4> (565)
Elimination of Equity Affiliate Sales ............... (496) (401) (1,628) (1,875)
Miscellaneous ....................................... - (20) - (20)
------ ------ ------- -------
SALES ........................................... $6,481 $6,042 $19,800 <F4> $18,668
====== ====== ======= =======
AFTER-TAX OPERATING INCOME (LOSS)<F5>
---------------------------------
Agriculture & Nutrition ............................. $ (143)<F6> $ (9) $ 154 <F6> $ 256 <F7>
Nylon Enterprise .................................... (250)<F8> 64 (44)<F8> 154 <F9>
Performance Coatings & Polymers ..................... 155 99 415 <F10> 349
Pharmaceuticals ..................................... 58 (796)<F11> 182 (721)<F11>
Pigments & Chemicals ................................ 160 134 <F12> 464 428 <F12>
Polyester Enterprise ................................ (23) (210)<F13> (82)<F14> (205)<F13>
Specialty Fibers .................................... 189 159 538 508
Specialty Polymers .................................. 166 145 494 465
Other ............................................... 23 (27) 45 13
------ ------ ------- -------
Total Segment ATOI .............................. 335 (441) 2,166 1,247

Interest & Exchange Gains and Losses ................ (81) (76) (292)<F15> (228)
Corporate Expenses .................................. (73) (47) (219) (152)
------ ------ ------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE EXTRAORDINARY ITEM ..................... $ 181 $ (564) $ 1,655 $ 867
====== ====== ======= =======
<CAPTION>

September 30 December 31
SIGNIFICANT CHANGE IN SEGMENT ASSETS 1999 1998
------------ -----------
<S> <C> <C>
Performance Coatings & Polymers ..................... $4,183<F16> $2,214
====== ======

</TABLE>

7
<PAGE>

Form 10-Q

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

[FN]

Footnotes to Note (c)
- ---------------------
<F1> Certain reclassifications of segment data have been made to reflect
changes in organizational structure.

<F2> Includes pro rata equity affiliate sales and intersegment transfers.

<F3> Effective first quarter 1999, revenues from contract manufacturing are
reclassified from Other Income to Sales, and prior periods have been
restated. These revenues are $20 and $70 for third quarter and
year-to-date 1999, respectively, versus $20 and $55 for the comparable
periods of 1998. The increase in year-to-date sales reflects the
current 100 percent ownership of the pharmaceuticals business versus 50
percent prior to July 1, 1998.

<F4> Includes minor reclassification between Sales and Intersegment Transfers
for second quarter 1999 activity within the Polyester Enterprise.

<F5> Third quarter 1998 includes a charge of $256 resulting from a
company-wide productivity improvement initiative as follows:
Agriculture & Nutrition - $13; Nylon Enterprise - $32; Performance
Coatings & Polymers - $17; Pigments & Chemicals - $40; Polyester
Enterprise - $98; Specialty Fibers - $3; Specialty Polymers - $10; and
Other - $43.

<F6> Includes total charges of $107 attributable to employee termination
payments, shutdown of various manufacturing facilities and the write-off
of an intangible asset.

<F7> Includes a charge of $60 for revision, based on finalization of the
purchase price allocation in conjunction with the purchase of Protein
Technologies International, related to the value assigned to research
and development in progress at the time of purchase for which
technological feasibility has not yet been established and no
alternative future use is anticipated.

<F8> Includes total net charges of $337, principally attributable to an
impairment charge for the write-down of the adipic acid plant in
Singapore, the write-down of manufacturing assets in India, and the
liquidation of a joint venture in China.

8
<PAGE>

Form 10-Q

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

[FN]

Footnotes to Note (c) - (Cont'd)
- ---------------------
<F9> In addition to the third quarter 1998 charge described in Note (5), 1998
year to date also includes charges within the Nylon Enterprise of $130
attributable to employee separation costs ($75) and the shutdown of
related manufacturing facilities ($55).

<F10> Includes an estimated charge of $40 based on preliminary purchase price
allocations in conjunction with the purchase of Herberts, the automotive
coatings business of Hoechst AG, related to the value assigned to
research and development in progress at the time of purchase for which
technological feasibility has not yet been established and no alterna-
tive future use is anticipated.

<F11> Includes an estimated charge of $845 based on preliminary purchase price
allocations in conjunction with the purchase of Merck's interest in The
DuPont Merck Pharmaceutical Company related to the value assigned to
research and development in progress at the time of purchase for which
technological feasibility has not yet been established and no alterna-
tive future use is anticipated.

<F12> Includes a $36 gain on the sale of hydrogen peroxide assets.

<F13> Includes a charge of $109 based on a revised estimate of the purchased
in-process research and development associated with the purchase of the
polyester businesses of ICI.

<F14> Includes a charge of $40 related to employee separation costs within the
Polyester Enterprise.

<F15> Includes an exchange loss of $81 on forward exchange contracts purchased
in 1998 to lock in the U.S. dollar cost of the acquisition of Herberts.
The purchase price for Herberts was negotiated in German marks.

<F16> The change is primarily a result of the purchase of Herberts.

9
<PAGE>

Form 10-Q

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

[FN]

<Fd> Amortization of intangible assets is principally reported in Cost of
Goods Sold and Other Expenses. Amortization for companies accounted for
under the equity method is reported in Other Income. Total amortization
of intangible assets was $60 and $167 for the third quarter and
year-to-date 1999, respectively. Amounts for comparable periods of 1998
were $49 and $107, respectively.

<Fe> Third quarter 1998 includes a $55 gain within Pigments & Chemicals due to
the sale of hydrogen peroxide assets.

<Ff> Includes an exchange loss of $131 on forward exchange contracts purchased
in 1998 to lock in the U.S. dollar cost of the acquisition of Herberts,
the automotive coatings business of Hoechst AG. The purchase price of
Herberts was negotiated in German marks.

<Fg> Purchased in-process research and development represents the value
assigned in a purchase business combination to research and development
projects of the acquired business that were in progress at the time of
purchase for which technological feasibility has not yet been established
and no alternative future use is anticipated. Year-to-date 1999
represents an estimated charge of $40 that was recorded in the first
quarter in conjunction with the purchase of Herberts based on preliminary
allocations of purchase price that are subject to revision upon
completion of valuations and purchase accounting allocations.

During the third quarter 1998, a charge of $1,300 was recorded in
conjunction with the purchase of Merck's interest in The DuPont Merck
Pharmaceutical Company based on preliminary allocations of purchase price
which were subject to revision upon completion of valuations and purchase
accounting allocations. In addition, a charge of $141 was recorded based
on a revised estimate of the purchased in-process research and
development associated with the purchase of the polyester businesses of
ICI. 1998 year to date also includes a $60 charge for revision based on
finalization of the purchase price allocation in conjunction with the
purchase of Protein Technologies International.

<Fh> Third quarter 1999 includes charges totaling $534 which were recorded
within the Agriculture & Nutrition segment ($170) and the Nylon
Enterprise segment ($364).

Third quarter charges resulting from restructuring activities within
Agriculture & Nutrition totaled $125. The restructuring was instituted
to address poor economic and intensely competitive market conditions for
crop protection products and position the business for future growth.
This charge included $45 related to employee termination payments for

10
<PAGE>

Form 10-Q

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

[FN]

approximately 800 employees involved in technical, manufacturing,
marketing and administrative activities. Approximately seventy percent
of these reductions will occur in the United States. Employee termina-
tions and charges against the reserves are expected to begin in the
fourth quarter. The remaining restructuring charge of $80 principally
relates to the write-down of plant and equipment associated with third
quarter shutdowns of operating facilities at Belle, West Virginia;
Chambers Works, New Jersey; LaPorte, Texas; Mobile, Alabama; Japan and
Puerto Rico. The effect of these shutdowns on third quarter operating
results was not material.

The company also recorded a charge of $45 in Agriculture & Nutrition
related to the write-off of an intangible asset. The company had
previously established an intangible asset related to the acquisition of
exclusive rights to market a product under a long-term contract that
included the purchase of stipulated minimum quantities. Due to
significantly lower than expected sales, the company notified the
supplier that it will not purchase the minimum quantity and therefore
will forego the right to exclusively market the product. An impairment
charge was recorded to write down the intangible asset to its fair value
based on the present value of cash flows.

Third quarter charges within the Nylon Enterprise included an impairment
charge of $252 for the write-down of manufacturing facilities which will
continue to be operated. The Nylon Enterprise constructed an adipic acid
manufacturing plant in Singapore designed to produce 250 million pounds
of adipic acid annually. The company has made substantial efforts to
resolve operational and technical problems that have plagued this
facility. Despite these efforts, the plant continues to operate at
significantly less than its design capacity. As a result, an impairment
charge was recorded to write down the plant to its fair value based on
the present value of cash flows.

The company also announced its intent in the third quarter to exit from
selected nylon ventures in the Asia Pacific region after it became
apparent that these operations would not become profitable due to
unfavorable market conditions. In connection with the pending sale of
the company's majority-owned subsidiary in India, a charge of $59 within
the Nylon Enterprise was recorded to write down assets to their estimated
net realizable value pursuant to a sale agreement. In the third quarter,
a definitive agreement was signed under which a third party will acquire
the company's equity interest and certain related manufacturing equip-
ment. This transaction is expected to close during the fourth quarter.

11
<PAGE>

Form 10-Q

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

[FN]

In addition, the company recorded a charge of $33 within the Nylon
Enterprise associated with its decision to withdraw from an equity
investment in China. Depressed market conditions resulted in the
partners agreeing to terminate and liquidate the venture.

Within the Nylon Enterprise, the company also recorded a charge of $28
associated with restructuring activities in Europe. This included
termination payments of $15 to about 120 employees, involved principally
in manufacturing activities. Employee terminations and charges against
the reserves are expected to begin in the fourth quarter. Also included
was $13 principally for the shutdown in the third quarter of 1999 of a
manufacturing facility in Germany. The effect on third quarter operating
results of this shutdown was not material.

Finally, third quarter 1999 charges within the Nylon Enterprise reflect
an $8 benefit due to a favorable adjustment of a reserve balance estab-
lished in 1998 in connection with the pending sale of a nonstrategic
business.

Year-to-date 1999 charges also includes $62 of employee separation costs
within the Polyester Enterprise for about 850 employees primarily engaged
in manufacturing.

Third quarter 1998 charges of $391 result from implementation of
company-wide productivity improvement initiatives. This includes $202
associated with separation costs for over 2,600 employees, and $189 in
asset write-downs, principally due to shutdown and dismantlement of
excess production capacity. Year-to-date 1998 charges also include $108
of separation costs for about 1,500 employees within the Nylon Enterprise
and $78 for the shutdown of related manufacturing facilities.

<Fi> Gain on disposal of discontinued business reflects Conoco's operations
through August 6, 1999, and includes the gain realized by the company
from the completion of the Conoco exchange offer. For the third quarter,
this includes income from Conoco's operations of $58. The gain on the
exchange offer of $7,291 results from the difference between the market
value and the carrying value of the Conoco Class B common shares, less
direct expenses. The company did not recognize a deferred tax liability
for the difference between the book basis and tax basis of its investment
in Conoco's common stock because this basis difference will not be
subject to tax.

12
<PAGE>

Form 10-Q

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

[FN]

<Fj> During the third quarter 1998, the company recognized an extraordinary
after-tax charge of $201 ($275 pretax, less taxes of $74), as a result of
a debt call and tender offer with an aggregate principal amount of
$1,633.

<Fk> Basic earnings per share is computed by dividing income available to
common stockholders (the numerator) by the weighted-average number of
common shares (the denominator) for the period. The numerator for both
income from continuing operations and net income is reduced by preferred
dividends of $2.5 and $7.5 for the three- and nine-month periods,
respectively. For diluted earnings per share, the numerator is adjusted
to recognize reduced share of earnings assuming options in subsidiary
company stock are exercised if the effect of this adjustment is dilutive.
The denominator is based on the following weighted-average number of
common shares and includes the additional common shares that would have
been outstanding if potentially dilutive common shares had been issued:

Three Months Ended Nine Months Ended
September 30 September 30
------------------------------ ------------------------------
Basic Diluted Basic Diluted
------------- ------------- ------------- -------------
1999 1,038,268,303 1,052,845,443 1,097,795,167 1,111,388,460
1998 1,130,461,535 1,130,461,535 1,129,608,903 1,147,393,778

The difference between basic and diluted weighted-average common shares
outstanding results from the assumption that dilutive stock options
outstanding were exercised. For the three months ended September 1998
diluted shares equal basic shares for purposes of calculating diluted
earnings per share due to losses from continuing operations.

The following average stock options are antidilutive, and therefore are
not included in the diluted earnings per share calculation since the
exercise price is greater than the average market price:

Three Months Ended Nine Months Ended
September 30 September 30
--------------------- ---------------------
1999 1998 1999 1998
--------- --------- --------- ---------
Average Stock Options 3,073,840 8,114,410 4,903,426 5,216,497

13
<PAGE>

Form 10-Q

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

[FN]

Compensation expense (benefit) recognized in income for stock-based
employee compensation awards was $(16) and $(37) for the three months
and $14 and $23 for the nine months ended September 30, 1999 and 1998,
respectively.

Shares held by the Flexitrust and treasury stock are not considered
outstanding in computing the foregoing weighted-average number of common
shares.

<Fl> Year-to-date earnings per share do not equal the sum of quarterly
earnings per share due to changes in average shares outstanding in the
respective periods.

<Fm> As part of the Conoco divestiture, the company acquired 147,980,872
shares of treasury stock (valued at $11,405) from shareholders who are
United States persons in exchange for the company's remaining interest
in Conoco. Since this was a noncash transaction, the acquisition of
treasury shares and divestiture of the company's investment in Conoco is
not reflected in the Consolidated Statement of Cash Flows.

[FN] Includes the change in cash and cash equivalents classified in the
Consolidated Balance Sheet within Net Assets of Discontinued Opera-
tions. The nine months ended September 30, 1998, was restated to
reflect cash for discontinued operations on a consistent basis with
1999.

September 30 December 31
<Fo> Inventories 1999 1998
----------- ------------ -----------
Finished Products ........................ $2,547 $2,209
Semifinished Products .................... 892 836
Raw Materials and Supplies ............... 826 749
------ ------
4,265 3,794
Less: Adjustment of Inventories to a
Last-In, First-Out (LIFO) Basis ........ 670 665
------ ------
Total ................................ $3,595 $3,129
====== ======

14
<PAGE>

Form 10-Q

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

[FN]
September 30 December 31
<Fp> Net Assets of Discontinued Operations 1999 1998
------------------------------------- ------------ -----------
Cash and Cash Equivalents ................ $ - $ 375
Other Current Assets ..................... - 2,864
Property, Plant and Equipment - Net ...... - 11,438
Other Assets ............................. - 2,011
Current Liabilities ...................... - (2,473)
Other Liabilities ........................ - (4,115)
Minority Interests ....................... - (1,683)
------- -------
Net Assets of Discontinued Operations .. $ - $ 8,417
======= =======
The elimination of Net Assets of Discontinued Operations at September 30,
1999, reflects divestiture of Conoco Inc. in the third quarter 1999.

<Fq> The following sets forth the company's Total Comprehensive Income (Loss)
for the periods shown:
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -------------------
1999 1998 1999 1998
------ ------ ------ ------
Net Income (Loss) ...... $7,530 $(605) $9,110 $1,260
Other Comprehensive
Income, Net of Tax ... 353 55 262 28
------ ----- ------ ------
Total Comprehensive
Income (Loss) ........ $7,883 $(550) $9,372 $1,288
====== ===== ====== ======
The components of Other Comprehensive Income are unrealized holding gains
on available-for-sale securities, cumulative translation adjustments, and
minimum pension liability. The cumulative translation adjustments and
the minimum pension liability related to Conoco operations were recorded
in Net Income during the third quarter of 1999 as part of the gain on the
disposal of discontinued business.

15
<PAGE>

Form 10-Q

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

Forward-Looking Statements
--------------------------
This report contains forward-looking statements which may be
identified by their use of words like "plans," "expects," "will,"
"anticipates," "intends," "projects," "estimates" or other words of
similar meaning. All statements that address expectations or
projections about the future, including statements about the
company's strategy for growth, product development, market
position, expenditures, financial results and the company's efforts
to remediate Year 2000 issues, are forward-looking statements.

Forward-looking statements are based on certain assumptions
and expectations of future events. The company cannot guarantee that
these assumptions and expectations are accurate or will be realized.
In addition to the factors discussed in this report, the following
are some of the important factors that could cause the company's
actual results to differ materially from those projected in any such
forward-looking statements:

o The company operates in approximately 65 countries world-
wide and derives about half of its revenues from sales
outside the United States. Changes in the laws or policies
of other governmental and quasi-governmental activities in
the countries in which the company operates could affect
its business in the country and the company's results of
operations. In addition, economic factors (including
inflation and fluctuations in interest rates and foreign
currency exchange rates) and competitive factors (such as
greater price competition or a decline in U.S. or European
industry sales from slowing economic growth) in those
countries could affect the company's revenues, expenses and
results.

o The company's growth objectives are largely dependent on its
ability to renew its pipeline of new products and to bring
those products to market. This ability may be adversely
affected by difficulties or delays in product development
including, but not limited to, the inability to identify
viable new products; successfully complete clinical trials of
new pharmaceuticals; obtain relevant regulatory approvals,
which may include approval from the U.S. Food and Drug
Administration; the ability to obtain adequate intellectual
property protection; or gain market acceptance of the new
products.

16
<PAGE>

Form 10-Q

o As part of its strategy for growth, the company has made and
may continue to make acquisitions, divestitures and strategic
alliances. There can be no assurance that these will be
completed or beneficial to the company.

o The company has undertaken and may continue to undertake pro-
ductivity initiatives, including organizational restructur-
ings, to improve performance and generate cost savings.
There can be no assurance that these will be completed or
beneficial to the company. Also there can be no assurance
that any estimated cost savings from such activities will be
realized.

o The company has articulated and updated in its periodic
reports filed with the Securities and Exchange Commission on
Forms 10-Q and 10-K its timetable and assessment of costs to
become Year 2000-capable. The failure of the company or
third parties with which it conducts business to become Year
2000-capable could have a material adverse affect on the
company's financial condition, results of operation and
liquidity.

o The company's facilities are subject to a broad array of
environmental laws and regulations. The costs of complying
with complex environmental laws and regulations as well as
internal voluntary programs, are significant and will con-
tinue to be so for the foreseeable future. The company's
accruals for such costs and liabilities may not be adequate
since the estimates on which the accruals are based depend
on a number of factors including the nature of the allega-
tion, the complexity of the site, the nature of the remedy,
the outcome of discussions with regulatory agencies and
other potentially responsible parties (PRPs) at multi-party
sites, and the number and financial viability of other
PRPs.

o The company's results of operations could be affected by
significant litigation adverse to the company including
product liability claims, patent infringement claims and
antitrust claims.

o Results in the company's Agriculture & Nutrition segment,
which includes Pioneer Hi-Bred International, Inc., can be
significantly effected by changes in agriculture conditions,
including weather, government programs, and commodity
pricing. In addition, this segment is impacted by the
seasonality of sales of agricultural products with highest
sales in the first half of the year, particularly the second
quarter.

The foregoing list of important factors does not include all
such factors nor necessarily presents them in order of importance.

17
<PAGE>

Form 10-Q

(a) Results of Operations

(1) Financial Results:

DuPont's third quarter underlying diluted earnings per share
from continuing operations of $.59 were up 11 percent from 1998 third
quarter earnings of $.53. Including income from discontinued
operations of $.06 per share, nonrecurring charges totaling $.42 per
share, and a $6.92 per share gain on the disposition of Conoco, total
diluted earnings were $7.15 per share compared to a loss of $.54 per
share in 1998.

Results From Continuing Operations
----------------------------------
Sales in the quarter were $6.5 billion, or 7 percent over the
third quarter of 1998. With the Herberts business fully integrated
into DuPont Performance Coatings, DuPont is now the global leader in
automotive coatings. Sales, excluding this acquisition, were essen-
tially flat with worldwide volumes up 3 percent and prices down
3 percent. Currency impact on prices was negligible. From a
regional perspective:

o Sales in the Asia Pacific region increased 31 percent with
26 percent volume growth, reflecting gains in all business
units.

o Europe sales were up 16 percent, with volume up 23 percent.
Excluding the Herberts acquisition, sales declined 5 percent
as 2 percent higher volume was more than offset by 7 percent
lower prices, the latter principally reflecting a stronger
dollar.

o U.S. sales volume was flat compared to last year's third
quarter. Discounting the adverse volume impact from weakness
in the Crop Protection Products business, U.S. volume would
have been 1 percent higher. Prices were down 2 percent,
principally a result of lower polyester and nylon prices.

Excluding nonrecurring items, income from continuing opera-
tions for the third quarter 1999 was $625 million compared to
$610 million in 1998. Nonrecurring charges totaled $444 million and
$1.2 billion in 1999 and 1998, respectively. The current quarter's
nonrecurring items principally relate to previously announced charges
for Nylon and Crop Protection Products. Third quarter 1998 included
the write-off of purchased in-process research and development,
charges for productivity initiatives, and a gain from an asset sale.
Nonrecurring items are described in more detail in the notes to the
financial statements.

18
<PAGE>

Form 10-Q

Results From Discontinued Operations
------------------------------------
Underlying income from discontinued operations (Conoco,
formerly DuPont's energy subsidiary) was $58 million compared to
$160 million in last year's third quarter, with the reduction
principally reflecting completion of the divestiture of Conoco on
August 6, 1999, versus full ownership throughout the third quarter of
last year. The current quarter also includes a gain of $7.3 billion
or $6.92 per diluted share on the final disposition of Conoco.

(2) Segment Performance:

The following text compares third quarter 1999 results with
third quarter 1998, for sales and earnings of each segment, excluding
the earnings impact of nonrecurring items described in the footnotes
to the "Consolidated Segment Information - Continuing Operations"
table at Note (c) on pages 7 to 9. Segment results include inter-
segment transfers and a pro rata ownership share of the sales and
earnings of equity affiliates. Comparing segment performance with
the same quarter of last year, DuPont improved underlying after-tax
operating income by 6 percent, recording $779 million compared with
$733 million. Total segment sales were $7.2 billion, compared to
$6.6 billion last year.

o The Agriculture & Nutrition segment posted a loss of
$36 million versus earnings of $4 million last year,
principally reflecting weakness in the Crop Protection
Products business. Segment sales declined 19 percent.

o Nylon Enterprise segment earnings were down 9 percent,
reflecting lower sales resulting from flat volumes and lower
prices. Higher apparel and intermediates sales volumes were
offset by slightly lower flooring and industrial sales
volumes. Excluding the impact of lost production and
out-of-pocket costs resulting from natural disasters, and an
unexpected power outage at the Seaford, Delaware plant, third
quarter earnings would have been modestly higher than last
year.

o Performance Coatings & Polymers segment earnings were up
34 percent, reflecting double digit earnings growth in all
business units. Sales increased 51 percent, reflecting
principally the addition of Herberts and 10 percent higher
sales volume in the remaining businesses. Engineering
Polymers was particularly strong, reflecting in part a
turnaround in Asia.

19
<PAGE>

Form 10-Q

o Pharmaceuticals segment earnings were up 18 percent,
primarily due to earnings improvements from "Sustiva"
(efavirenz) and "Cozaar" (antihypertensive drug) and lower
income taxes resulting from an increase in the proportion of
lower-taxed foreign source income. Partly offsetting these
improvements were higher research and development costs and
expected lower sales of "Coumadin" (warfarin sodium).

o Pigments and Chemicals segment earnings were up 16 percent,
reflecting increased earnings for White Pigments and
Fluorochemicals. Fluorochemicals benefited from increased
sales of CFC alternative products, and White Pigments from
higher volumes in Europe and Asia.

o Polyester Enterprise segment posted a loss of $23 million
versus a loss of $3 million last year, largely due to an
earnings decline in "Dacron". About one-third of this
decline is attributable to recent hurricanes and floods on
the U.S. east coast. The balance reflects a combination of
lower selling prices and higher raw material costs.

o Specialty Fibers segment earnings increased 17 percent,
reflecting better results for "Lycra" spandex, Advanced Fiber
Systems and Nonwovens. Sales were up 4 percent driven by
9 percent volume growth.

o Specialty Polymers segment earnings were up 7 percent,
reflecting improvements in Photopolymers and Electronic
Materials and "Corian", partly offset by lower results in
Packaging & Industrial Polymers. Segment sales increased
8 percent, primarily reflecting significant volume growth
outside the United States.

o The Other segment earnings were $23 million versus
$16 million last year. The earnings increase principally
reflects sales of interests in affiliates, partly offset by
Global Services Business employee separation costs and the
absence of prior-year earnings from Coal operations.

(b) Financial Condition at September 30, 1999

Cash provided by continuing operations was $3.0 billion for the first
nine months of 1999, as compared with $2.4 billion for the same period in
1998. Income from continuing operations of $1.7 billion in 1999 compared to
$0.7 billion in the prior year reflecting higher noncash charges in 1998. The
1998 results included a $275 million noncash charge from early retirement of
debt. Noncash charges for depreciation and amortization were comparable year
to year. Noncash charges for write-off of in-process R&D related to acquisi-
tions were $1.5 billion in 1998. Other noncash charges and credits - net were

20
<PAGE>

Form 10-Q

$564 million in 1999 primarily due to nonrecurring charges to write down or
write off assets in the Nylon Enterprise and in the Agricultural & Nutrition
segments. The absence of timing difference between affiliate income and
dividend payment for DuPont Merck Pharmaceuticals also contributed to other
noncash charges and credits - net being higher in 1999 than prior year. Net
operating assets and liabilities increased $355 million in 1999 as compared to
a $1.1 billion increase in 1998. This change is primarily attributable to the
increased tax liability that was recorded in 1999 due to higher income from
continuing operations.

Year-to-date capital investments for purchases of property, plant,
and equipment and investments in affiliates were $1.5 billion in 1999, as
compared to $1.6 billion spent in 1998. Payments for businesses acquired in
1999 totaled $1.7 billion which primarily reflects a cash outlay in February
for the acquisition of Herberts, the automotive coatings company of Hoechst
AG. This acquisition also included the assumption of $0.2 billion in
Herbert's debt. The 1998 payments for businesses acquired total $3.0 billion,
and include $2.3 billion (net of cash acquired) for acquisition of Merck's
50 percent interest in The DuPont Merck Pharmaceutical Company, and
$0.7 billion for acquisition of ICI's polyester films business.

Proceeds from the sale of assets in the first nine months of 1999
totaled $64 million, none of which were individually significant. Proceeds
from the sale of assets in the same period of 1998 totaled $369 million, and
included the sale of certain hydrogen peroxide properties, and proceeds
related to the sale of the Printing and Publishing business.

Year-to-date the company spent $690 million to purchase about
8.8 million shares of DuPont common stock. Eight million shares were
purchased from non-U.S. shareholders in conjunction with the Conoco split-off
from DuPont in August. These shares are retained in treasury stock. The
remaining purchases of 840,000 shares were retired as part of the program
initiated in 1997 to purchase and retire up to 20 million shares of DuPont
common stock to offset dilution from shares issued under compensation
programs. In the first nine months of 1998, the company spent $769 million to
purchase and retire 12.8 million shares of DuPont common stock, and not
related to the shares buyback program, the company received $65 million as a
final payment associated with 16 million shares repurchased in a private
placement transaction in December 1997.

Proceeds from exercise of stock options were $143 million in the
first nine months of 1999, as compared to $242 million in 1998. Increase in
minority interests in 1999 results from the sale of an approximate 17 percent
interest in the DuPont Photomasks, Inc. business, further reducing DuPont's
ownership to approximately 52 percent.

21
<PAGE>

Form 10-Q

Total debt, including capital lease obligations, at September 30,
1999, was $9.8 billion, as compared to $11.1 billion at year-end 1998. During
the second quarter 1999, Conoco paid off all outstanding intercompany debt to
DuPont. Conoco's debt to DuPont stood at $4.6 billion at year-end 1998. The
proceeds from Conoco, together with cash provided by continuing operations,
were used to finance the $3.5 billion spent on investment activities, pay
dividends, and reduce borrowings.

Certain Statistics - Continuing Operations
------------------------------------------
At 9/30/99 At 12/31/98
---------- -----------
Cash Flow to Total Debt
(previous 12 months cash
provided by operations to
total debt) .................. 48% 37%

Current Ratio (current assets
to current liabilities) ...... 1.1:1 0.8:1

Earnings to Fixed Charges ...... 5.1 3.3

Earnings to Fixed Charges -
Pro Forma*.................... 6.7 4.5

------------------
*Pro Forma statistics reflect the ratio of earnings to fixed
charges on a continuing operations basis, excluding interest and
debt expense which has been allocated to or incurred by discon-
tinued operations.

The Cash Flow to Total Debt ratio increased as of September 30, 1999,
versus year-end 1998 primarily due to the $1.3 billion decrease in total debt.
Days' sales outstanding averaged 56 days in the third quarter, an increase of
1 day from second quarter 1999, and a decrease of 2 days from the third
quarter of 1998.

Pioneer Hi-Bred International, Inc. Merger
------------------------------------------
In March 1999, DuPont announced an agreement with Pioneer Hi-Bred
International, Inc. (Pioneer) of Des Moines, Iowa, for a cash and stock merger
valued at approximately $7.7 billion. On October 1, 1999, Pioneer was merged
with and into Delta Acquisition Sub, a wholly owned subsidiary of DuPont. As
a result, Pioneer became a wholly owned subsidiary of DuPont. Under the terms
of the merger agreement, each Pioneer common share outstanding immediately
before the merger, other than those owned by DuPont, was converted into either
$40.00 in cash or 0.6561 shares of DuPont common stock. Consideration paid

22
<PAGE>

Form 10-Q

included $3,422 million in cash and about 68.6 million shares of DuPont common
stock. In addition, the acquisition also included the assumption of
$0.7 billion of Pioneer debt. DuPont now owns 100 percent of Pioneer, the
world's largest seed company and a leader in North America and other key
markets.

A description of the acquisition and DuPont's unaudited pro forma
combined financial statements were included in the Form 8-K filed on
October 18, 1999.

Borrowings
----------
In October 1999, DuPont sold $1 billion of 6.750 percent five-year
notes due October 15, 2004, yielding 6.816 percent, and $1 billion of
6.875 percent ten-year notes due October 15, 2009, yielding 7.058 percent.
The proceeds from these borrowings were used primarily to repay commercial
paper.

WebMD Warrants
--------------
DuPont owns a warrant position in WebMD, Inc., entitling it to
purchase WebMD common stock. On November 11, 1999, WebMD shareholders will
vote to approve a merger with Healtheon Corporation. If the merger is
approved, DuPont expects to record a nonrecurring credit to earnings to adjust
its warrants to purchase Healtheon common stock to market value.

Herberts Acquisition
--------------------
The company continues to obtain data to support the final purchase
price allocation, principally in respect of the cost of exiting certain
activities of the Herberts business, and valuation of tangible and intangible
assets.

Year 2000 Readiness Disclosure
------------------------------
This is an update on the status of the company's program to become
Year 2000-capable, and should be read in conjunction with the Year 2000
Readiness Disclosure in the company's 1998 annual report on Form 10-K/A. The
company has essentially completed its remediation of all critical and
significant systems, including those acquired on October 1, 1999, when the
company acquired the remaining approximately 80 percent of Pioneer Hi-Bred
International, Inc. it did not already own. In addition to being remediated,
over 99 percent of these systems have been tested and returned to production.

The company has established global, regional and significant business
unit event management control centers to monitor internal and external Year
2000 events beginning in the fourth quarter through February 29, 2000. While
there may be minimal disruptions as a result of the Year 2000 Problem, the
company's individual businesses have completed over 2000 contingency plans to

23
<PAGE>

Form 10-Q

address potential interruptions in internal systems which may be caused by the
Year 2000 Problem as well as in the supply chain due to the failure of key
suppliers and major customers to become Year 2000-capable on a timely basis.
The company is testing most of these contingency plans under various Year 2000
scenarios to verify the execution process for the plans, to make sure that the
required communications links are in place and to assure integration of the
plans within and across all of the businesses. The majority of DuPont's 320
operating units will be operating in normal mode or placed on standby for
several hours. Relatively few operating units will be shutdown for up to
several days as an added precaution in the event of loss or fluctuations in
the supply of electricity or other utilities.

The company's plant and business operations are highly dependent on a
continuous supply of key services from raw material suppliers and utility
providers. If the Year 2000 Problem causes suppliers and utility providers to
fail to deliver such essential materials and services, multiple disruptions in
the company's plant operations, computer infrastructure or telecommunications
systems could result. Because of the inherent uncertainties associated with
the Year 2000 Problem, including understanding the readiness of key third
parties, it is not possible to quantify the potential impact at this time.
However, the failure of key third parties, including suppliers, utility
providers, major customers and governments, or the company to properly and
timely address the Year 2000 Problem could have a material adverse impact on
the company's financial condition, results of operations or liquidity.
Furthermore, there can be no guarantee that any contingency plans developed by
the company will prevent such failures from having a material adverse effect.
However, the company believes that there is a low probability that these
multiple failures are likely to occur.

The company has revised its projected expenditures to become Year
2000-capable to reflect lower costs. Costs are lower than expected because of
increased efficiencies in the company's execution of its Year 2000 plan,
resulting from greater than expected use of internal resources and the com-
pany's partnership with Computer Sciences Consulting and Andersen Consulting.
The company now expects total expenditures to become Year 2000-capable to be
in the range of $300 million to $350 million, including Pioneer. The company
expects that approximately 25 percent of its total expenditures will reflect
internal costs. As of September 30, 1999, the company had spent an estimated
$285 million on implementing its plan. The company does not specifically
track all costs associated with employees working on Year 2000 projects,
but has included an estimate of these costs in the amount of internal costs
included in the range above. The company does not include the costs of
systems projects which will address the Year 2000 Problem but were initiated
to accomplish other (non-Year 2000) objectives. The company will fund Year
2000 expenditures from cash flow from operations and expects that total
remediation costs and the reallocation of internal resources, will not have a
material adverse effect on the company's financial condition, results of
operations or liquidity.

24
<PAGE>

Form 10-Q

The foregoing statement of Year 2000 readiness and assessment of
costs to become Year 2000-capable reflect management's best estimates. These
estimates are based upon many assumptions, including: assumptions about the
cost, availability and ability of resources to identify and classify systems
properly; properly identifying them as needing remediation; locating,
remediating and modifying affected systems; and making various assessments of
Year 2000 readiness of key third parties. Based upon its activities to date,
the company does not believe that these factors will cause its current projec-
tions to differ significantly from those estimated.

Purchased In-Process Research and Development
---------------------------------------------
There were no significant developments during the three-month period
ended September 30, 1999, with respect to in-process research and development
acquired in prior periods.

Conoco Split-Off
----------------
On September 28, 1998, the company announced that the Board of
Directors had approved a plan to divest the company's 100 percent-owned
petroleum business (Conoco Inc.). On October 21, 1998, the company's
interest in Conoco was reduced to 69.5 percent following an initial public
offering of Conoco Class A common stock. In connection with the separation
from DuPont, Conoco and DuPont entered into a tax sharing agreement. Several
matters under the tax sharing agreement are currently in dispute between
Conoco and DuPont. DuPont's obligations to Conoco arising out of the most
significant of these matters could range from zero to up to approximately
$160 million, depending on the outcome of the dispute. DuPont believes that
any settlement of the dispute will not be material to its financial position
or to the gain on disposal of discontinued business.

On July 9, 1999, DuPont set the exchange ratio for the offer to its
shareholders to exchange one share of DuPont common stock for 2.95 shares of
the Conoco Class B common stock currently held by DuPont up to a maximum of
148 million shares of DuPont common stock. The exchange offer was available
only to DuPont shareholders who are United States persons, as defined in the
Offering Circular-Prospectus, and the exchange offer commenced on July 12, and
it expired at 12:00 midnight, New York City time, on August 6, 1999.

Pursuant to the July 12, 1999, exchange offer, 353,253,044 shares of
DuPont common stock were properly tendered and not withdrawn, including
1,515,613 shares held by eligible odd-lot shareholders. In accordance with
the terms of the exchange offer, DuPont accepted all shares tendered by
eligible odd-lot shareholders. All other shares were subject to exchange on a
pro rata basis, with the final proration factor equal to 41.641451459 percent.
Pursuant to the exchange offer, DuPont accepted for exchange 147,980,872
shares of DuPont common stock for 436,543,573 shares of Conoco Class B common
stock owned by DuPont.

25
<PAGE>

Form 10-Q

Also on July 14, 1999, DuPont commenced an offer to its shareholders
who are non-United States persons to sell some or all of their shares to
DuPont for $80.76 for each share of DuPont common stock up to a maximum of
8 million shares of DuPont common stock. Only non-United States persons as
defined in the Offer to Purchase were eligible to participate in the cash
offer. The cash offer expired at 12:00 midnight, New York City time, on
August 10, 1999.

Pursuant to the July 14, 1999, offer, 48,390,144 shares of DuPont
common stock were properly tendered and not withdrawn; including shares held
by eligible odd-lot shareholders. In accordance, with the offer, DuPont
accepted all shares tendered by eligible odd-lot shareholders. All other
shares were subject to purchase on a pro rata basis. Pursuant to the offer,
DuPont purchased 8,000,000 shares of DuPont common stock for $646 million.

At the conclusion of these offers, DuPont no longer had any ownership
interest in Conoco Inc.

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 several hundred lawsuits; approximately 140
cases are currently pending, most of these suits were filed by growers who
allege plant damage from using "Benlate" 50 DF fungicide. Some of these cases
include claims for alleged damage to shrimping operations; a smaller number of
cases include claims for alleged personal injuries. In addition, 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 district court has certified the case as a class
action. Discovery is proceeding. A shareholder derivative action filed in
Georgia federal district court, alleging that DuPont's Board of Directors
breached various duties in connection with the "Benlate" 50 DF litigation,
also remains pending. A motion to dismiss the complaint was filed. Certain
plaintiffs who previously settled with the company have filed cases alleging
fraud and other misconduct relating to the litigation and settlement of
"Benlate" 50 DF claims. These cases are in various stages of proceedings in

26
<PAGE>

Form 10-Q

trial and appellate courts in Florida, Hawaii, and Delaware. Additional
"Benlate" 50 DF cases may be filed, although 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 sheet reflects accruals for estimated costs
associated with this matter. Adverse changes in these estimated costs could
result in additional future charges.

On May 19, 1997, approximately 11,500 pounds of a hydrogen fluoride
(HF)/tar mixture was released from DuPont's Louisville, Kentucky, fluoro-
products facility. This release lasted about 40 minutes. There were no
on-site injuries, and only one off-site person reported any exposure. No
toxic tort suits were filed as a result of this release. DuPont's incident
investigation concluded that an inadequate valve stem design was a key factor
contributing to the release (the valve stem twisted and the valve indicated it
was in a closed position, when it was actually open). DuPont's process
isolation procedures were also reviewed and modified as as result of this
incident. By letter dated July 13, 1999, the U.S. Department of Justice (DOJ)
provided "formal notice" to DuPont that, due to the May 1997 HF release, DOJ
intended to bring a "federal court action" against DuPont under the Clean Air
Act (CAA) Section 112(r) -- General Duty Clause. DOJ proposed a settlement
prior to filing its action for $1.7 million. DuPont sought and received a
meeting with Environmental Protection Agency and DOJ in September 1999.
Settlement discussions are ongoing. DuPont will contest the proposed
$1.7 million fine as excessive and unreasonable because there was no environ-
mental harm nor human health impacts associated with the May 1997 incident.

The Indiana Departments of Natural Resources and Environmental
Management and the United States Department of Interior are in the process of
conducting a natural resource damage assessment of the Grand Calumet River and
the Indiana Harbor Canal System under the Comprehensive Environmental
Response, Compensation and Liability Act and the Oil Pollution Act. The
company's plant in East Chicago, Indiana, which discharges industrial waste-
water into these waterways, was identified as one of 17 potentially respon-
sible parties (PRPs) for the cost of the assessment and any determined natural
resource damages. The trustees recently indicated that their preferred remedy
is to dredge the entire Grand Cal/Indiana Harbor system. DuPont has joined
with 8 other PRPs to contest the remedy. A settlement offer has been tendered
to the trustees and negotiations are ongoing.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

The exhibit index filed with this Form 10-Q is on page 32.

27
<PAGE>

Form 10-Q

(b) Reports on Form 8-K

1. On July 2, 1999, 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 press release entitled, "DuPont to
Restructure Crop Protection Business."

2. On July 12, 1999, 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 Regis-
trant filed three press releases entitled, "DuPont Sets
Ratio for Exchange Offer for Conoco Inc. Class B Common
Stock," "SEC Declares Registration Statement for Exchange
Offer Effective," and "DuPont Commences Exchange Offer for
Conoco Inc. Class B Common Stock."

3. On July 14, 1999, 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 Regis-
trant filed a press release entitled, "DuPont Commences
Cash Offer for DuPont Common Stock."

4. On July 28, 1999, a Current Report on Form 8-K was filed in
connection with Debt Securities that may be offered on a
delayed or continuous basis under its Registration State-
ments 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 28, 1999, was filed.

5. On August 2, 1999, 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 press release entitled,
"DuPont Realigns Senior Leadership Responsibilities; Sets
Pioneer Hi-Bred International, Inc. Post-Merger Executive
Roles," dated July 30, 1999.

28
<PAGE>

Form 10-Q

6. On August 9, 1999, 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 Registra-
tion Statements on Form S-3 (No. 33-53327, No. 33-61339,
and No. 33-60069). Under Item 5, "Other Events," the
Registrant filed a press release entitled, "DuPont Exchange
Offer for Conoco Inc. Class B Common Stock Successful."

7. On August 11, 1999, 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 Registra-
tion Statements on Form S-3 (No. 33-53327, No. 33-61339,
and No. 33-60069). Under Item 5, "Other Events," the
Registrant filed a press release entitled, "DuPont
Completes Cash Offer for DuPont Common Stock."

8. On August 16, 1999, a Current Report on Form 8-K was filed
in connection with Debt Securities that may be offered on a
delayed or continuous basis under its Registration State-
ments on Form S-3 (No. 33-53327, No. 33-61339, and
No. 33-60069). Under Item 2, "Acquisition and Disposition
of Assets," the Registrant's exchange and cash offers for
common stock of E. I. du Pont de Nemours and Company, both
associated with the separation of Conoco from DuPont, were
filed; and under Item 7, "Financial Statements and
Exhibits," unaudited pro forma consolidated financial
statements of DuPont for the year ended December 31, 1998,
the six months ended June 30, 1999, and as of June 30,
1999, prepared by DuPont to illustrate the estimated
effects of the completed exchange offer, the completed cash
offer and the transactions directly associated with
Conoco's initial public offering and separation from DuPont
were filed.

9. On September 1, 1999, 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 unaudited pro forma combined
financial statements of DuPont for the year ended
December 31, 1998, the six months ended June 30, 1999, and
as of June 30, 1999, to illustrate the estimated effects on
DuPont of the disposition of Conoco Inc. ("Conoco") through
the Conoco exchange offer, the cash offer, and the trans-
actions directly associated with Conoco's initial public
offering and separation from DuPont, and the Registrant
filed unaudited pro forma combined financial statements of
DuPont for the year ended December 31, 1998, the six months

29
<PAGE>

Form 10-Q

ended June 30, 1999, and as of June 30, 1999, to illustrate
the estimated effects on DuPont of the proposed acquisition
of the remaining approximately 80 percent of Pioneer not
presently owned by DuPont.

10. On September 15, 1999, 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 press release entitled,
"Revised DuPont Nylon Strategy Calls For Reduced Asian
Growth."

11. On October 8, 1999, 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 Registra-
tion Statements on Form S-3 (No. 33-53327, No. 33-61339,
No. 33-60069 and No. 333-86363). Under Item 5, "Other
Events," the Registrant filed a press release entitled,
"DuPont Announces Final Proration Factor For Merger With
Pioneer Hi-Bred International, Inc."

12. On October 8, 1999, a Current Report on Form 8-K was filed
in connection with Debt Securities that may be offered on a
delayed or continuous basis under its Registration State-
ments on Form S-3 (No. 33-53327, No. 33-61339,
No. 33-60069 and No. 333-86363). Under Item 5, "Other
Events," the Registrant filed a press release entitled
"DuPont Plans to Acquire CombiChem to Assist in Drug
Discovery."

13. On October 18, 1999, 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 Registra-
tion Statements on Form S-3 (No. 33-53327, No. 33-61339,
No. 33-60069 and No. 333-86363). Under Item 2, "Acquisi-
tion or Disposition of Assets," the Registrant filed
information related to the merger of DuPont and Pioneer
Hi-Bred International, Inc.

14. On October 20, 1999, a Current Report on Form 8-K was filed
in connection with Debt Securities that may be offered on a
delayed or continuous basis under its Registration
Statements on Form S-3 (No. 33-53327, No. 33-61339,
No. 33-60069 and No. 333-86363). Under Item 7. "Financial
Statements and Exhibits," the Registrant's Earnings Press
Release, date October 20, 1999, was filed.

30
<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: November 9, 1999
-----------------------------------------

By /s/ G. M. Pfeiffer
-----------------------------------------

G. M. Pfeiffer
Senior Vice President - DuPont Finance
(As Duly Authorized Officer and Principal
Financial and Accounting Officer)

31
<PAGE>

Form 10-Q

EXHIBIT INDEX

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

12 Computation of Ratio of Earnings to Fixed Charges.

12.1 Computation of Ratio of Earnings to Fixed Charges -
Pro Forma.

27* Financial Data Schedule - quarter ended September 30, 1999.

- --------------
*Filed electronically only.

32
<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, 1999 1998 1997 1996 1995 1994
------------------ --------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Income from Continuing Operations Before
Extraordinary Item ............................ $1,655 $1,648 $1,432 $2,931 $2,858 $2,205
Provision for Income Taxes ...................... 1,066 941 1,354 1,416 1,432 1,164
Minority Interests in Earnings of Consolidated
Subsidiaries .................................. 50 24 43 40 29 15
Adjustment for Companies Accounted for
by the Equity Method .......................... (52) (39) 936<Fa> 82 126 (33)
Capitalized Interest ............................ (86) (120) (80) (70) (76) (83)
Amortization of Capitalized Interest ............ 56<Fb> 65<Fb> 82<Fb> 127<Fb> 81 77
------ ------ ------ ------ ------ ------
2,689 2,519 3,767 4,526 4,450 3,345
------ ------ ------ ------ ------ ------
Fixed Charges:
Interest and Debt Expense - Continuing
Operations .................................. 333 520 389 409 449 343
Interest and Debt Expense - Discontinued
Operations<Fc> .............................. 180 304 252 304 308 216
Capitalized Interest - Continuing Operations .. 86 120 80 70 76 83
Capitalized Interest - Discontinued
Operations<Fc> .............................. 3 78 90 73 95 59
Rental Expense Representative of Interest
Factor ...................................... 54 71 83 80 80 83

------ ------ ------ ------ ------ ------
656 1,093 894 936 1,008 784
------ ------ ------ ------ ------ ------
Total Adjusted Earnings Available for Payment of
Fixed Charges ................................. $3,345 $3,612 $4,661 $5,462 $5,458 $4,129
====== ====== ====== ====== ====== ======
Number of Times Fixed Charges are Earned ........ 5.1 3.3 5.2 5.8 5.4 5.3
====== ====== ====== ====== ====== ======

<FN>
- --------------------------------
<Fa> Includes write-off of Purchased In-Process Research and Development
associated with acquisition of 20% interest in Pioneer Hi-Bred
International, Inc.
<Fb> Includes write-off of capitalized interest associated with divested
businesses.
<Fc> Divestiture of Conoco Inc. was completed August 6, 1999.

</TABLE>

33
<PAGE>

<TABLE>
Form 10-Q
Exhibit 12.1

E. I. DU PONT DE NEMOURS AND COMPANY

PRO FORMA

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

Ratio of earnings to fixed charges on a continuing
operations basis excluding interest allocated to or incurred by
Conoco Inc., which is reported as discontinued operations.

Years Ended December 31
Nine Months Ended -----------------------------------------------------
September 30, 1999 1998 1997 1996 1995 1994
------------------ --------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Income from Continuing Operations Before
Extraordinary Item ............................ $1,655 $1,648 $1,432 $2,931 $2,858 $2,205
Provision for Income Taxes ...................... 1,066 941 1,354 1,416 1,432 1,164
Minority Interests in Earnings of Consolidated
Subsidiaries .................................. 50 24 43 40 29 15
Adjustment for Companies Accounted for
by the Equity Method .......................... (52) (39) 936<Fa> 82 126 (33)
Capitalized Interest ............................ (86) (120) (80) (70) (76) (83)
Amortization of Capitalized Interest ............ 56<Fb> 65<Fb> 82<Fb> 127<Fb> 81 77
------ ------ ------ ------ ------ ------
2,689 2,519 3,767 4,526 4,450 3,345
------ ------ ------ ------ ------ ------
Fixed Charges:
Interest and Debt Expense<Fc> ................. 333 520 389 409 449 343
Capitalized Interest .......................... 86 120 80 70 76 83
Rental Expense Representative of Interest
Factor ...................................... 54 71 83 80 80 83
------ ------ ------ ------ ------ ------
473 711 552 559 605 509
------ ------ ------ ------ ------ ------
Total Adjusted Earnings Available for Payment
of Fixed Charges .............................. $3,162 $3,230 $4,319 $5,085 $5,055 $3,854
====== ====== ====== ====== ====== ======
Number of Times Fixed Charges are Earned<Fc> .... 6.7 4.5 7.8 9.1 8.4 7.6
====== ====== ====== ====== ====== ======

<FN>
- -----------------------------
<Fa> Includes write-off of Purchased In-Process Research and Development
associated with acquisition of 20% interest in Pioneer Hi-Bred
International, Inc.
<Fb> Includes write-off of capitalized interest associated with divested
businesses.
<Fc> Excludes interest and debt expense which has been allocated to
or incurred by discontinued operations. Divestiture of Conoco Inc.
was completed August 6, 1999.

</TABLE>

<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary Financial Information Extracted From
Form 10-Q For The Quarterly Period Ended September 30, 1999, 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,305
<SECURITIES> 294
<RECEIVABLES> 5,200<F1>
<ALLOWANCES> 0
<INVENTORY> 3,595
<CURRENT-ASSETS> 12,107
<PP&E> 35,542
<DEPRECIATION> 20,941
<TOTAL-ASSETS> 34,436
<CURRENT-LIABILITIES> 10,654
<BONDS> 4,622
0
237
<COMMON> 342
<OTHER-SE> 9,706
<TOTAL-LIABILITY-AND-EQUITY> 34,436
<SALES> 19,800
<TOTAL-REVENUES> 20,212
<CGS> 12,468<F2>
<TOTAL-COSTS> 17,108<F3>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 333
<INCOME-PRETAX> 2,771
<INCOME-TAX> 1,066
<INCOME-CONTINUING> 1,655
<DISCONTINUED> 7,455
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,110
<EPS-BASIC> 8.29
<EPS-DILUTED> 8.19
<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 and Amortization;
Research and Development; Selling, General and Administrative Expenses;
Purchased In-Process Research and Development; and Employee Separation
Costs and Write-Down of Assets.
</FN>

</TABLE>