PIONEER HI BRED INTERNATIONAL INC, 10-K, 1996-11-25

PIONEER HI BRED INTERNATIONAL INC
10-K, 1996-11-25
AGRICULTURAL PRODUCTION-CROPS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the fiscal year ended August 31, 1996

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from to

Commission File Number : 0-7908

PIONEER HI-BRED INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

Iowa
(State or other jurisdiction of incorporation or organization)

42-0470520
(I.R.S. Employer Identification No.)

700 Capital Square, 400 Locust, Des Moines, Iowa 50309
(Address of principal executive offices)

(515) 248-4800
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
Common Stock ($1.00 par value) New York Stock Exchange

<PAGE>

Securities registered pursuant to Section 12(g) of the Act:

Title of class
NONE

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of voting stock held by non-affiliates of the
Registrant as of October 9, 1996, was $5,127,129,984. As of October 9, 1996,
82,378,119 shares of the Registrant's Common Stock, $1.00 par value, were
outstanding.

<PAGE>

DOCUMENTS INCORPORATED BY REFERENCE

1. Registrant incorporates by reference portions of the Pioneer Hi-Bred
International, Inc. Annual Shareholders' Report for the year ended August
31, 1996. (Items 1 and 2 of Part I, Items 5, 6, 7 and 8 of Part II.)

2. Registrant incorporates by reference portions of the Pioneer Hi-Bred
International, Inc. Proxy Statement for the annual meeting of shareholders
on January 28, 1997. (Items 10, 11, 12 and 13 of Part III).

PART I

ITEM 1. BUSINESS

The description of business contained in the Annual Report to
Shareholders for the year ended August 31, 1996 is incorporated
herein by reference.

ITEM 2. PROPERTIES

The description of properties contained in the Annual Report to
Shareholders for the year ended August 31, 1996 is incorporated
herein by reference.

ITEM 3. LEGAL PROCEEDINGS

The description of legal proceedings contained within footnote 7 in
the Annual Report to Shareholders for the year ended August 31, 1996
is incorporated herein by reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Market information for the Registrant's Common Stock contained in the
Annual Report to Shareholders for the year ended August 31, 1996 is
incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA

Selected financial data contained in the Annual Report to
Shareholders for the year ended August 31, 1996 is incorporated
herein by reference.

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Management's discussion and analysis of financial condition and
results of operations contained in the Annual Report to Shareholders
for the year ended August 31, 1996 is incorporated herein by
reference.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements of the Registrant, together
with the report thereon of KPMG Peat Marwick LLP contained in the
Annual Report to Shareholders for the year ended August 31, 1996 are
incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Reference is made to registrant's definitive proxy statement to be
filed with the Commission pursuant to Regulation 14(a) not later than
December 10, 1996; and the information responsive to the item is
incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements

The consolidated financial statements of Pioneer Hi-Bred
International, Inc. and subsidiaries filed are listed on page
6.

(a) 2. Financial Statement Schedules

The financial statement schedules of Pioneer Hi-Bred
International, Inc. and subsidiaries filed are listed on page
6.

(a) 3. Exhibits

The exhibits to the Annual Report of Pioneer Hi-Bred
International, Inc. filed are listed on page 9.

(b) Reports on Form 8-K

No report on Form 8-K was filed during the fourth quarter of
the year ended August 31, 1996.

<PAGE>

FINANCIAL STATEMENTS
AND
FINANCIAL STATEMENT SCHEDULES
OF
PIONEER HI-BRED INTERNATIONAL, INC.
FOR THE FISCAL YEAR ENDED AUGUST 31, 1996

INDEX

Financial Statements

The following consolidated financial statements of Pioneer Hi-Bred
International, Inc. and subsidiaries are incorporated by reference in Part II,
Item 8:

Independent Auditors' Report
Consolidated Balance Sheets - August 31, 1996 and 1995
Consolidated Statements of Income - years ended August 31, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity - years ended August 31, 1996,
1995 and 1994 Consolidated Statements of Cash Flows - years ended August 31,
1996, 1995 and 1994 Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
<S> <C>
Page

Financial Statement Schedules

The following financial statement schedules of Pioneer Hi-Bred International,
Inc. and subsidiaries are submitted in response to Part IV, Item 14:

Independent Auditors' Report................................................ 7

Schedule II - Valuation and Qualifying Accounts............................. 8

Exhibits to the Annual Report............................................... 9

All other financial statement schedules have been omitted as not required, not
applicable, or because all the data are included in the financial statements.

</TABLE>

<PAGE>

Independent Auditors' Report

To the Shareholders
Pioneer Hi-Bred International, Inc.

Under date of October 4, 1996, we reported on the consolidated balance sheets of
Pioneer Hi-Bred International, Inc. and subsidiaries as of August 31, 1996 and
1995, and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the years in the three-year period ended August 31,
1996, as contained in the 1996 annual report to stockholders. These consolidated
financial statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1996. In connection with our audits of
the aforementioned consolidated financial statements, we also have audited the
related 1996, 1995 and 1994 financial statement schedule II. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.

KPMG Peat Marwick LLP

Des Moines, Iowa
October 4, 1996

<PAGE>

PIONEER HI-BRED INTERNATIONAL, INC.

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
(In millions)
<TABLE>
<CAPTION>

Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------

Additions
Balance At Charged To Balance
Beginning Costs And Deductions At End
Description Of Period Expenses (Recoveries)* Of Period
<S> <C> <C> <C> <C>

Allowance for Doubtful Accounts:

Year ended August 31, 1996....... $ 19 $ 5 $ 1 $ 23
------- ------ ------ ------

Year ended August 31, 1995....... $ 21 $ 2 $ 4 $ 19
------- ------ ------ ------

Year ended August 31, 1994....... $ 19 $ 5 $ 3 $ 21
------- ------ ------ ------

<FN>

*Represents accounts charged off as uncollectible, net of recoveries of bad debts.
</FN>
</TABLE>

<PAGE>

INDEX

Exhibits to Annual Report on Form 10-K
Year Ended August 31, 1996
PIONEER HI-BRED INTERNATIONAL, INC.
<TABLE>
<CAPTION>
<S> <C>

Page

Exhibit 3.1--Articles of Incorporation (Note 1)............................... 10
Exhibit 3.2--By-Laws (Note 2)................................................. 10

Exhibit 4.1--Articles of Incorporation (Note 1)............................... 10
Exhibit 4.2--By-Laws (Note 2)................................................. 10
Exhibit 4.3--Rights Agreement (Note 3)........................................ 10
Exhibit 4.4--Specimen of Company's Common Stock Certificate (Note 4).......... 10

Exhibit 10--Material Contracts
.1 Stock Option Plan (Note 5)....................................... 10
.2 Deferred Compensation Plan (Note 6).............................. 10
.3 Annual Deferred Compensation Plan (Note 7)....................... 10
.4 Consulting Agreement with a Director (Note 8).................... 10
.5 Supplemental Executive Retirement Plan........................... 11-27
.6 Restricted Stock Plan - Performance Based........................ 28-36
.7 Management Reward Program - Performance Based.................... 37-44

Exhibit 11--Statement re: Computation of earnings per share.................. 45

Exhibit 13--Annual Report to Shareholders for the fiscal year ended August 31, 1996
.1 Description of the Company's business............................ 46-47
.2 Selected financial data.......................................... 48
.3 Consolidated net sales and operating income (loss) by product
statement....................................................... 49
.4 Management's discussion and analysis of financial condition and results
of operations................................................... 50-58
.5 Consolidated financial statements of the Registrant, together with the
report thereon.................................................. 59-77
.6 Research and product development................................. 78
.7 Description of properties........................................ 79
.8 Market for the Registrant's common stock......................... 80

Exhibit 21--Subsidiaries of Registrant........................................ 81-84

Exhibit 23--Consents of experts and counsel................................... 85

Exhibit 27--Financial data schedule........................................... 86

<FN>
See Notes for Exhibits to Annual Report on Form 10-K
</FN>
</TABLE>

<PAGE>

INDEX

Notes for Exhibits to Annual Report on Form 10-K
Year Ended August 31, 1996
PIONEER HI-BRED INTERNATIONAL, INC.

Note 1. Incorporated herein by reference to Exhibit 4.2 of the Company's Form
S-8 Registration Statement, filed July 26, 1996 (file #333-08927)

Note 2. Incorporated herein by reference to Exhibit 4.3 of the Company's Form
S-8 Registration Statement, filed July 26, 1996 (file #333-08927)

Note 3. Incorporated herein by reference to Exhibit 1 of the Company's Form
8-A/A-1, filed March 14, 1995 (file #95520632)

Note 4. Incorporated herein by reference to Exhibit 4.5 of the Company's Form
S-8 Registration Statement, filed July 26, 1996 (file #333-08927)

Note 5. Incorporated herein by reference to Exhibit 4.1 of the Company's Form
S-8 Registration Statement, filed July 26, 1996 (file #333-08927)

Note 6. Incorporated herein by reference to Exhibit 10.2 of the Company's
1993 Annual Report on Form 10-K, filed November 29, 1993

Note 7. Incorporated herein by reference to Exhibit 10.3 of the Company's
1993 Annual Report on Form 10-K, filed November 29, 1993

Note 8. Incorporated herein by reference to Exhibit 10.5 of the Company's
1995 Annual Report on Form 10-K, filed November 28, 1995

<PAGE>

PIONEER HI-BRED INTERNATIONAL, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

ARTICLE I

Amendment and Restatement

Section 1.1. Amendment and Restatement. Pioneer Hi-Bred International, Inc.
hereby amends and restates the Pioneer Hi-Bred International, Inc. Supplemental
Executive Retirement Plan (the `Plan'). The amended and restated Plan shall
apply only with respect to Participants who are employed by the Company or its
Subsidiaries on or after the effective date of this amendment and restatement.

Section 1.2. Effective Date. The effective date of the amended and restated
Plan is March 14, 1989.

Section 1.3. Purpose. The purpose of the Plan is to supplement the
retirement benefits provided to selected executive employees under the Pioneer
Hi-Bred International, Inc., Retirement Plan and to provide equitable retirement
and survivor benefits for key executive employees, their surviving spouses, and
Beneficiaries.

ARTICLE II

Definitions

As used in this Plan, the following terms shall have the following
meanings:

Section 2.1. "Actuarial Equivalent" means a benefit having the same value
as the benefit which such Actuarial Equivalent replaces. The determination of an
Actuarial Equivalent shall be based on an annual interest rate assumption of
eight percent (8%) and the 1984 Unisex Pension Mortality Table with the ages in
said table set back one (1) year.

Section 2.2. "Base Income" means the average of the Executive's
Compensation in the last full Calendar Year prior to the Executive's Normal
Retirement, Early Retirement, Death, or Disability determination, whichever
occurs first, and the three immediately preceding Calendar Years.

Section 2.3. "Beneficiary" means the person or persons designated pursuant
to Section 4.9 by a Participant, or subsequent to the Participant's death, the
Participant's spouse, to receive the benefits under this Plan if the Participant
and the Participant's spouse do not live to receive benefits through the Term
Certain Expiration Date. If such designation is not made, "Beneficiary" means
the legal representative of the Participant or of the Participant's spouse, if a
spouse survives the Participant.

Section 2.4. "Board of Directors" means the Board of Directors of Pioneer
Hi-Bred International, Inc. or a committee of the Board of Directors appointed
to administer the Plan.

<PAGE>

Section 2.5. "Calendar Year" means the twelve-month period beginning
January 1 and ending December 31.

Section 2.6. "Change in Control" means (a) the acquisition, whether
directly, indirectly, beneficially (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the "1934 Act")), or of record, of
securities of Pioneer Hi-Bred International, Inc. representing twenty-five
percent (25%) or more in number of any class of its then outstanding voting
securities by any "person" (within the meaning of Sections 13(d) and 14(d)(2) of
the 1934 Act), including any corporation or group of associated persons acting
in concert, other than (I) the Company and/or (II) any employee pension benefit
plan (within the meaning of Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended) of the Company, including a trust established
pursuant to any such plan, or (b) the nomination and election of twenty-five
percent (25%) or more of the members of the Board of Directors of Pioneer
Hi-Bred International, Inc., without recommendation of such Board of Directors.
The ownership of record of twenty-five percent (25%) or more in number of any
class of the then outstanding voting securities of Pioneer Hi-Bred
International, Inc. by a person engaged in the business of acting as a nominee
for unrelated beneficial owners shall not in and of itself be deemed to
constitute a Change in Control.

Section 2.7. "Company" means Pioneer Hi-Bred International, Inc., an Iowa
corporation, and all wholly-owned subsidiaries of Pioneer Hi-Bred International,
Inc.

Section 2.8. "Compensation" means all amounts paid or allocated by the
Company to the Executive for services rendered to the Company, including any
bonuses, restricted stock grants valued on the date of grant) and any amounts
which the Executive would have received but for the Executive's election to
defer the compensation in return for the unsecured promise of the Company to
make payments after retirement or other termination of employment.
Notwithstanding the above definition, Compensation shall not include:

(a) Company contributions to any qualified pension or
profit-sharing plan.
(b) Director's fees.
(c) Amounts paid as reimbursement for expenses incurred on
behalf of the Company.
(d) Amounts includible in the income of the Executive due to
personal use of Company automobiles, aircraft, or other
facilities or services, or due to payment of travel
expenses for the Executive's spouse.
(e) Incidental benefits paid on behalf of the Executive such
as hospitalization insurance, health and accident
insurance and group life insurance.
(f) Extraordinary and nonrecurring expenses such as severance
pay, lump sum payments made to terminate an employment
contract, and relocation expenses, including mortgage
interest differential payments and relocation bonuses.
(g) Dividends paid on restricted stock.

Compensation shall include all amounts contributed under a salary reduction
agreement by the Participant to a plan maintained by the Company pursuant to
Section 401(k) or Section 125 of the Internal Revenue Code of 1986, as amended.

<PAGE>

Section 2.9. "Competitive Activities" means (a) engaging, directly or
indirectly, whether as an employee, independent contractor, consultant, or
otherwise, in a business similar to the business of the Company, during the
period of the Executive's employment with the Company, and/or (b) owning,
managing, operating, controlling, being employed by or having a financial
interest in, or being connected in any manner with the ownership, management,
operation, or conduct of any such similar business, provided that mere ownership
(directly, indirectly or beneficially) of the stock of a corporation
representing less than five percent (5%) of such corporation's outstanding stock
shall not be considered a Competitive Activity.

Section 2.10. "Date of Potential Change in Control" means the date as of
which the Board of Directors determines that a Potential Change of Control has
occurred under Section 5.2 of Article V.

Section 2.11. "Disability" means permanent long-term disability for which
the Executive would be entitled to disability benefits under any Company
long-term disability plan. Such determination shall be made in the sole
discretion of the Board of Directors and the decision of the Board of Directors
shall be final.

Section 2.12. "Early Retirement" means retirement prior to age 65 by a
Participant who remains in Full-Time Employment until age 55 or, if later, the
date on which the Participant completes five (5) years of service with the
Company.

Section 2.13. "Executive" means a key executive employee of the Company who
is designated as such by the Board of Directors under Section 3.1.

Section 2.14. "Full-Time Employment" means employment as a full-time
salaried employee of the Company or its Subsidiaries, including any period of
determined Disability.

Section 2.15. "Integration Benefits" means the sum of (a) Social Security
benefits, (b) retirement benefits provided by any jurisdiction outside the
United States, whether coverage is mandatory or elective, (c) retirement or
survivorship benefits received under any pension or profit sharing plan of the
Company that qualifies for treatment under Section 401 of the Internal Revenue
Code of 1986, as amended, but not including benefits received under a plan
including a cash or deferred arrangement (within the meaning of Section 401(k)
of the Internal Revenue Code of 1986, as amended) or an employee stock ownership
plan (within the meaning of Section 4975(e)(7) of the Internal Revenue Code of
1986, as amended), And (d) retirement or survivorship benefits received under
any pension or profit sharing plan of the Company maintained for the benefit of
nonresident alien employees with no U.S. source income. For purposes of this
Plan, "Social Security benefits" shall be deemed to be those benefits which
would be payable to the Participant or, in the event of the Participant's death,
the benefits which would be payable to the Participant's surviving spouse, at
the Participant's Social Security retirement age. For purposes of this Plan, a
Participant shall be deemed to have elected to receive any benefits the
Participant is entitled to receive under any qualified plan in the form of
15-year certain and life annuity based on the actuarial assumptions contained in
such qualified plan, or, if no actuarial assumptions are contained in such
qualified plan, based upon the actuarial assumptions specified in the Pioneer
Hi-Bred International, Inc. Retirement Plan. The retirement benefits provided by
any jurisdiction outside the United States shall be deemed to be an amount
certified by a consulting firm selected by the Company. Subject to the
foregoing, the Participant's Integration Benefits shall be determined by the
Corporate Human Resources Department as of the date of the Participant's Normal
Retirement, Early Retirement, death, or Disability determination and shall not
thereafter be adjusted on account of cost-of-living adjustments; or otherwise.

<PAGE>

Section 2.16. "Involuntary Termination of Employment" means (a) the
termination of employment of a Participant by the Company other than Termination
for Cause, (b) the resignation or retirement of a Participant for Stated Good
Reason, or (c) in the case of a Participant who is in the Full-Time Employment
of a domestic Subsidiary, either (I) the sale of a substantial portion of the
assets of the Subsidiary within the meaning of Section 280G of the Internal
Revenue Code of l986, as amended, or (II) the acquisition by an unrelated third
party of ownership of more than fifty percent (50%) of the then outstanding
stock, capital, or profits interest of the Subsidiary. The Board of Directors,
in its sole discretion, shall determine whether the acquisition by an unrelated
third party of ownership of an interest in a foreign subsidiary constitutes an
Involuntary Termination of Employment.

Section 2.17. "Letter of Credit" means one or more irrevocable agreements
maintained by the Company under which the Minimum Amount is available for the
account of the Company.

Section 2.18. "Minimum Amount" means an amount that is no less than one
hundred percent (100%) of the change-in-control benefits that would be provided
under Section 4.8 of this Plan if each Participant were entitled to
change-in-control benefits on the Date of Potential Change in Control.

Section 2.19. "Named Fiduciary" means the Corporate Human Resources
Department of Pioneer Hi-Bred International, Inc.

Section 2.20. "Normal Retirement" means retirement by a Participant who
remains in the employ of the Company until age 65 at any time on or after the
Participant attains age 65.

Section 2.21. "Participant" means an Executive who is designated as
eligible to participate in this Plan by the Board of Directors.

Section 2.22. "Plan" means the Pioneer Hi-Bred International, Inc.
Supplemental Executive Retirement Plan, as amended from time to time.

Section 2.23. "Potential Change in Control" means

(A) The execution by Pioneer Hi-Bred International, Inc. of a written
agreement which, if consummated, would constitute a Change in Control.

(B) A public announcement (including any filing with the Securities and
Exchange Commission) by any "person" (within the meaning of Sections 13(d) and
14(d)(2) of the 1934 Act) including any corporation or group of associated firms
acting in concert, other than (I) the Company and/or (II) any employee pension
benefit plan (within the meaning of Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended) of the Company including a trust
established pursuant to such plan, of an intention to take or consider taking
actions which, if consummated, would constitute a Change in Control.

<PAGE>

(C) The acquisition, whether directly, indirectly, beneficially (within the
meaning of Rule 13d-3 of the 1934 Act), or of record, of securities of Pioneer
Hi-Bred International, Inc. representing fifteen percent (15%) or more in number
of any class of its then outstanding voting securities by any "person" (within
the meaning of Sections 13(d) and 14(d)(2) of the 1934 Act), including any
corporation or group of associated persons acting in concert, other than (I) the
Company and/or (II) an employee pension benefit plan (within the meaning of
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended)
of the Company, including a trust established pursuant to any such plan. For
purposes of this Section 2.23(C), the ownership of record of fifteen percent
(15%) or more in number of any class of the then outstanding voting securities
of Pioneer Hi-Bred International, Inc. by a person engaged in the business of
acting as a nominee for unrelated beneficial owners shall not in and of itself
be deemed to constitute a Potential Change in Control.

(D) The occurrence of any other event that the Board of Directors
determines is a Potential Change in Control.

Section 2.24. "Stated Good Reason" means a written determination by a
Participant that he reasonably and in good faith cannot continue to fulfill the
responsibilities for which he was employed. The Participant's determinations
will be conclusively presumed to be reasonable and in good faith if, without the
Participant's express written consent the Company (a) reduces the Participant's
base salary or rate of compensation as in effect immediately prior to the Change
in Control, or as the same may have been increased thereafter, (b) fails to
continue any bonus plans in which the Participant was entitled to participate
immediately prior to the Change in Control, substantially in the form then in
effect, (c) fails to continue in effect any benefit or compensation plan in
which the Participant is participating immediately prior to the Change in
Control (or plans providing substantially similar benefits), (d) assigns to the
Participants any duties inconsistent with the Participant's duties,
responsibilities or status immediately prior to the Change in Control, or
changes the Participant's reporting responsibilities, titles or offices, or (e)
requires the Participant to change the location of his job or office, so that
the Participant will be based at a location more than thirty (30) miles distant
by public highway from the location of his job or office immediately prior to
the Change in Control.

Section 2.25. "Subsidiary" means a corporation in which a majority of the
voting securities outstanding at the time is owned directly or indirectly by the
Company and/or by one or more of its other subsidiaries, or a non-corporate
entity in which a majority of the capital or profits interest is owned directly
or indirectly by the Company and/or by one or more of its other subsidiaries.

Section 2.26. "Target Pre-Retirement Survivor Benefit" means the product of
the applicable percentage multiplied by the Participant's Base Income.

Participant's Age at Date of Death Applicable Percentage

Less than 50 years 75%

50 to less than 55 years 70%

55 to less than 60 years 65%

60 to less than 65 years 60%

<PAGE>

However, for purposes of this definition, "Base Income" shall be the
Participant's Compensation in the last Calendar Year completed prior to the
Participant's death in which the Participant was not disabled, subject to bonus
and restricted stock grant recomputations substituting a four-year average of
incentive bonuses paid and restricted stock granted for such Calendar Year and
the three preceding Calendar Years in lieu of the incentive bonus paid and
restricted stock granted in that Calendar Year.

Section 2.27. "Target Retirement Benefit" means the product of sixty
percent (60%) and the Participant's Base Income.

Section 2.28. "Term Certain Expiration Date" means the fifteenth
anniversary of the event, retirement or death, which causes payment of benefits
under the Plan to commence.

Section 2.29. "Termination for Cause" means the termination of employment
of a Participant as a direct result of an act or acts of dishonesty constituting
a felony under the laws of the United States or the State of Iowa and resulting
or intended to result directly or indirectly in gain or personal enrichment at
the expense of the Company. An act or acts of dishonesty constituting a felony
will be deemed to occur only if the act or acts constituting the felony are
established either by (a) the specific admission of the Participant, or (b) a
final nonappealable judgment of a court of competent jurisdiction.

Section 2.30. "Trust" means the Pioneer Hi-Bred International, Inc.
Supplemental Executive Retirement Plan Trust established under the Pioneer
Hi-Bred International, Inc. Supplemental Executive Retirement Plan Trust
Agreement.

Section 2.31. "Trust Agreement" means the Pioneer Hi-Bred International,
Inc. Supplemental Executive Retirement Plan Trust Agreement.

Section 2.32. "Trustee" means the banking organization named in the Trust
to hold and administer money and property in accordance with the Trust
Agreement.

Section 2.33. "Trust Fund" means all money and property delivered to the
Trustee by the Company under the Trust Agreement, all investments and
reinvestments made therewith or proceeds thereof and all earnings and profits
thereon, less all payments and charges authorized under the Trust Agreement.

ARTICLE III

Participation

Section 3.1. Participation. The Board of Directors shall have the sole
discretion, from time to time, to designate which Executives shall participate
in this Plan. This designation shall be by resolution of the Board of Directors.

<PAGE>

ARTICLE IV

Benefits and Distributions

Section 4.1. Normal Retirement Benefits. If a Participant remains in the
Full-Time Employment of the Company until age 65, the Participant shall receive
a normal retirement benefit. The amount of the Participant's annual normal
retirement benefit shall be equal to the Target Retirement Benefit reduced by
the Integration Benefits. The Participant's annual normal retirement benefit, as
so determined, shall be divided by twelve (12) to determine the Participant's
monthly normal retirement benefits. The Participant's monthly normal retirement
benefits shall be paid on the first day of each month with benefit payments
commencing on the first day of the month immediately following the month of such
Participant's retirement. The Participant's normal retirement benefits shall be
paid in the form of an annuity for the Participant's life.

Section 4.2. Early Retirement Benefits. The Board of Directors may grant
early retirement benefits to a Participant who is in Full-Time Employment
provided the Participant has at least five years of service with the Company and
is at least age 55. The Board of Directors, in its sole discretion, may provide
that early retirement benefits begin at any time after the granting of Early
Retirement rather than at age 65. The amount of the Participant's annual early
retirement benefit shall be determined by the Board of Directors. The
Participant's annual early retirement benefit, as so determined, shall be
divided by twelve (12) to determine the Participant's monthly early retirement
benefit. The Participant's monthly early retirement benefits shall be paid on
the first day of each month with benefit payments commencing on the first day of
the month determined by the Board of Directors as the date early retirement
benefit payments shall commence. The Participant's early retirement benefits
shall be paid in the form of an annuity for the Participant's life.

Section 4.3. Post-Retirement Death Benefits. If a Participant dies after
benefits become payable under Section 4.1 or Section 4.2, but before the
Participant receives payment of normal or early retirement benefits for 180
months, the Participant's surviving spouse, or in the event the Participant's
spouse does not survive him or such spouse dies prior to the Term Certain
Expiration Date, the Participant's Beneficiary, shall be entitled to receive a
post-retirement death benefit. The amount of the annual post-retirement death
benefit shall be equal to the Participant's Target Retirement Benefit reduced by
the amount of Integration Benefits. The annual post-retirement death benefit, as
so determined, shall be divided by twelve (12) to determine the monthly
post-retirement death benefits. The monthly post-retirement death benefits shall
be paid on the first day of each month, with benefit payments commencing on the
first day of the month immediately following the month of the Participant's
death and continuing until the Term Certain Expiration Date. If the
Participant's spouse survives the Term Certain Expiration Date, the
Participant's spouse shall be entitled to receive a continuing post-retirement
death benefit in an amount equal to two-thirds (2/3) of the Participant's Target
Retirement Benefit reduced by the Integration Benefits. The surviving spouse's
continuing post-retirement death benefits shall be paid in the form of an
annuity for the life of the Participant's surviving spouse.

<PAGE>

Section 4.4. Pre-Retirement Survivor Benefits. If a Participant dies prior
to age 65 but while in Full-Time Employment and if the Participant is survived
by the participant's spouse, the Participant's spouse shall receive a
pre-retirement survivor benefit. In the event the Participant's spouse does not
survive him or the Participant's spouse survives but does not live until the
Term Certain Expiration Date, the designated Beneficiary shall receive a
pre-retirement survivor benefit. The amount of the annual pre-retirement
survivor benefit payable to the Participant's surviving spouse shall be equal to
the Target Pre-Retirement Survivor Benefit reduced by the Integration Benefits.
The amount of the annual pre-retirement survivor benefit payable to a
Beneficiary other than the Participant's surviving spouse shall be equal to the
Target Pre-Retirement Survivor Benefit less Integration Benefits to which the
Participant's spouse would have been entitled through the Term Certain
Expiration Date. The annual pre-retirement survivor benefit, as so determined,
shall be divided by twelve (12) to determine the monthly pre-retirement survivor
benefit. The monthly pre-retirement survivor benefits shall be paid on the first
day of each month, with benefit payments commencing on the first day of the
month immediately following the month of the Participant's death and continuing
until the Term Certain Expiration Date.

Section 4.5. Termination of Employment Benefits. Except as provided in
Section 4.8, if a Participant's employment terminates prior to age 65, either by
the Company or by the Participant, and either with or without cause, no further
amounts shall be paid under any provision of this Plan, unless the Board of
Directors, in its sole discretion, shall provide that benefits will be paid
regardless of the Participant's termination of employment, provided that death,
Early Retirement and determined Disability shall not be deemed a termination of
employment for purposes of this Section 4.5.

Section 4.6. Lump Sum Payment. At any time, in the sole discretion of the
Board of Directors, the Actuarial Equivalent of the future benefits due under
the Plan on behalf of any recipient may be computed and paid in one lump sum.

Section 4.7. Prohibition of Competitive Activities. Except as provided in
Section 4.8, if a Participant engages in Competitive Activities, no further
benefits shall be payable under any provision of this Plan.

Section 4.8. Change-in-Control Benefits.

(a) Notwithstanding any other provision of this Plan, in the event of the
Involuntary Termination of Employment of a Participant within five (5) years
following a Change in Control, the Participant shall receive change-in-control
benefits. Such change-in-control benefits shall be paid in lieu of and not in
addition to any other benefits payable under this Plan.

(b) If, on the date of the Participant's Involuntary Termination of
Employment, the sum of the Participant's age and years of service equals at
least fifty-five (55), the amount of the Participant's change-in-control
benefits shall be an amount equal to the lump sum present value, as of the date
of the Participant's Involuntary Termination of Employment, of the monthly
normal retirement benefits that would be payable under this Plan determined as
if the Participant had (i) remained in Full-Time Employment until age 65, (ii)
retired on such date, and (iii) received monthly normal retirement benefit
payments for 180 months. In all other cases, in the event of the Involuntary
Termination of Employment of a Participant, the amount of the Participant's
change-in-control benefits shall be an amount equal to the lump sum present
value as of the date of the Participant's Involuntary Termination of Employment
of the monthly early retirement benefits that would be payable under this Plan
determined as if the Participant had (i) remained in Full-Time Employment until

<PAGE>

age 55 (or, if later, the date on which would have completed five (5) years of
service), (ii) retired on such date and (iii) received monthly early retirement
benefit payments for 180 months equal to The Actuarial Equivalent of the
Participant's normal retirement benefits.

(c) The Participant's change-in-control benefits shall be paid in a lump
sum no later than sixty (60) days following the Participant's Involuntary
Termination of Employment. In the event of the Participant's death following the
date of the Participant's Involuntary Termination of Employment but prior to
payment of the change-in-control benefits, the Participant's change-in-control
benefits shall be paid to the Participant's spouse, or, in the event the
Participant's spouse does not survive him, the Participant's Beneficiary.

(d) For purposes of determining the present value of such normal or early
retirement benefits for purposes of this Section 4.8, the interest rate
assumption shall be the rate used by the Pension Benefit Guaranty Corporation to
determine the present value of an immediate benefit upon plan termination as of
the first day of the month immediately preceding the date of the Participant's
Involuntary Termination of Employment.

Section 4.9. Designation of Beneficiary. The Participant, or, subsequent to
the Participant's death, the Participant's spouse may designate a beneficiary or
beneficiaries, primary and contingent, to receive any post-retirement death
benefits or pre-retirement survivor benefits payable under this Plan if the
Participant and the Participant's spouse do not live to receive benefits through
the Term Certain Expiration Date. Such designation shall be in writing, signed
by the Participant or the Participant's spouse, as the case may be, and
delivered to the Corporate Human Resources Department of the Company, to be
effective when received by the Corporate Human Resources Department. The
Participant, or the Participant's spouse, as the case may be, shall have the
right to change such designation, without the consent of any prior beneficiary,
by filing a new designation, in the same manner, with the Corporate Human
Resources Department of the Company. Any such changes shall be deemed to revoke
all prior designations, unless a contrary intention is expressly stated in the
change of designation. In the event such designation is not made, any remaining
payments to be paid under this Plan shall be paid to the legal representative of
the Participant or of the Participant's spouse, if a spouse survives the
Participant.

Section 4.10. Facility of Payment. If the Board of Directors determines
that a Participant, his spouse or Beneficiary is unable to care for his affairs
and a legal representative has not been appointed for such person, the Board of
Directors may (but shall not be required to) direct that any payments made
hereunder shall be made to a spouse, parent, child, or other blood relative of
such person, or to anyone found by the Board of Directors properly to have
incurred expense for the support and maintenance of such Participant, his spouse
or Beneficiary, so long as, under applicable law, such payments are permitted
and discharge completely all liabilities of the Company under the Plan.

Section 4.11. Taxes. The Company shall deduct from any distributions under
this Plan the amount of any taxes required to be withheld from such distribution
by any federal, state or local government. The Participants, their spouses,
Beneficiaries and personal representatives shall bear any and all federal,
state, local or other taxes imposed on amounts distributed under this Plan.

<PAGE>

ARTICLE V

Funding of Benefits

Section 5.1. Notification. Immediately upon gaining knowledge that a
Potential Change in Control has occurred or is likely to occur, a member or
members of the Board of Directors shall notify the President of Pioneer Hi-Bred
International, Inc. The notification shall be a written certification of such
member or members to the President setting forth the facts upon which such
knowledge is based.

Section 5.2. Meeting of the Board of Directors. Upon receipt of the
notification required by Section 5.1 of this Article V, the President or any two
members of the Board of Directors shall call a special meeting of the Board of
Directors to determine whether a Potential Change in Control has occurred. If
the Board of Directors determines that a Potential Change in Control has
occurred, the Board of Directors shall direct the appropriate officers of
Pioneer Hi-Bred International Inc. to fund the Trust in accordance with Section
5.3 of this Article V.

Section 5.3. Funding the Trust. On the Date of potential Change in Control,
or as soon as is administratively feasible following the Date of Potential
Change in Control, Pioneer Hi-Bred International, Inc. shall contribute to the
Trust (a) a Letter of Credit in the Minimum Amount, or (b) cash or property
equal in value to the Minimum Amount. In the event that Pioneer Hi-Bred
International, Inc. funds the Trust with a Letter of Credit, the Board of
Directors shall cause the Minimum Amount to be drawn and contributed to the
Trust upon the occurrence of a Change in Control, or earlier in the discretion
of the Board of Directors.

Section 5.4. The Trust. The Trust Fund shall be held and administered for
the sole purpose of providing deferred compensation to Participants in
accordance with the provisions of this Plan and the Trust Agreement and
defraying reasonable expenses of administration in accordance with the
provisions of the Trust Agreement; provided that if (a) Pioneer Hi-Bred
International, Inc. is unable to pay its debts as they mature or as they become
due or (b) Pioneer Hi-Bred International, Inc. files or has filed against it any
proceedings under the bankruptcy laws of the United States or the State of Iowa,
the Trust Fund shall be used to satisfy the claims of the general creditors of
Pioneer Hi-Bred International, Inc.

ARTICLE VI

Administration and Amendment of Plan

Section 6.1. Authority of Board of Directors. The Plan shall be
administered by the Board of Directors. 'The Board of Directors shall have
plenary authority to select employees who are eligible to participate in the
Plan, to make all determinations required under the Plan, to interpret the Plan,
to decide all questions of fact arising under the Plan, to formulate rules and
regulations covering the operation of the Plan and to make all other
determinations necessary or desirable in the administration of the Plan. The
decision of the Board of Directors on any questions concerning or involving the
interpretation or administration of the Plan shall be final and conclusive.
While this Plan is intended to supplement the benefits provided under the
Pioneer Hi-Bred International, Inc. Retirement Plan, in interpreting or
administering this Plan, the Board of Directors need not consider or be bound by
any interpretation of the provisions of the Pioneer Hi-Bred International, Inc.
Retirement Plan or the manner in which such plan is administered.

<PAGE>

Section 6.2. Claim for Benefits. Any claim for benefits shall be made in
writing to the Named Fiduciary. The claim for benefits shall be reviewed by the
Named Fiduciary and the Board of Directors. If any part of the claim is denied,
the Named Fiduciary shall provide a written notice, within ninety (90) days
after the receipt of the claim by the Named Fiduciary, setting forth: (a) the
specific reasons for the denial; (b) specific reference to the provision of this
Plan or any agreement entered into between the Participant and the Company upon
which the denial is based; (c) any additional information the claimant should
furnish to perfect the claim; and (d) the steps to be taken if a review of the
denial is desired.

If a claim is denied and a review is desired, the Participant (or the
Participant's Beneficiary, as the case may be) shall notify the Named Fiduciary
in writing within sixty (60) days. In requesting a review, the Participant or
Beneficiary may review this Plan or any documents relating to it and submit any
written issues and comments he may feel appropriate. In its sole discretion the
Board of Directors shall then review the claim and provide a written decision
within sixty (60) days. This decision shall state the specific reasons for the
decision and shall include reference to specific provisions of the Plan or any
agreement entered into between the Participant and the Company on which the
decision is based.

Section 6.3. Information Concerning Integration Benefits. The recipient
of benefits under any provision of this Plan shall be required to inform the
Company of any amount of Social Security benefits, retirement benefits provided
by any jurisdiction outside the United States or any other amount which might
affect benefits under this Plan, to be received by the recipient. If such
information is requested by the Company, but adequate information is not
received prior to five (5) days before the payment date of any payment dependent
on the information requested, the benefit payment may be delayed, without
interest, until ten (10) days after such information is received.

Section 6.4. Amendment and Termination. The Plan may at any time be
amended, modified or terminated by the Board of Directors. Prior to a Change in
Control, no amendment, modification or termination shall, without the written
consent of the affected Participant, spouse or Beneficiary, reduce the benefits
any such person was receiving under this Plan. In the event of a Change in
Control, no amendment, modification or termination shall, without the written
consent of the affected Participant, spouse, or Beneficiary, reduce the benefits
such person was receiving or the benefits that would be paid upon the
Participant's retirement, death, or termination of employment, including the
benefits that would be paid upon the Participant's Involuntary Termination of a
Participant following a Change in Control, under the terms of the Plan
immediately prior to the Change in Control.

ARTICLE VII

Miscellaneous

Section 7.1. No Assignment. The right of a Participant (or Beneficiary, as
the case may be) to receive any distribution under the Plan shall not be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, levy or charge, and any attempt so to anticipate, alienate, sell,
transfer, assign, pledge, encumber, levy or charge the same shall be void;
provided, however, that the right to receive payment is transferable by the laws
of descent and distribution.

<PAGE>

Section 7.2. Unsecured Claim. The right of any Participant (or his
Beneficiary or personal representative) to receive any distribution under the
Plan (directly from the Company or through the Trust) shall be an unsecured
claim against the general assets of the Company, and neither the Plan nor the
Trust entitle a Participant (or his Beneficiary or personal representative) to a
greater priority than the Company's general creditors. Assets, if any, which may
be set aside by the Company for accounting purposes shall not in any way be held
in trust for, or be subject to, any prior claims by the Participant or his
Beneficiary. The Company shall have no duty whatsoever to purchase any assets
for purposes of providing benefits under this Plan. The Company's promise to pay
the benefits provided under this Plan shall be a contractual obligation that is
not evidenced by notes or secured in any way.

Section 7.3. No Rights in Life Insurance. If the Company elects to purchase
one or more life insurance contracts to provide the Company with funds to make
payments under this Plan, the Company shall at all times be the sole and
complete owner and beneficiary of such contracts, and shall have the
unrestricted right to use all amounts and to exercise all options and privileges
thereunder without the knowledge or consent of the Participant, his Beneficiary,
or any other person, and no Participant, Beneficiary, or person, other than the
Company, shall have any right, title, or interest whatsoever in or to any such
contract. The Participant shall cooperate with all reasonable requests made by
the Company or any insurance carrier selected by the Company to determine
whether the Participant is insurable at standard rates, including any requests
made by the Company or such insurance carrier that the Participant submit to a
medical examination, or provide other information relevant to a determination of
whether the Participant is insurable at standard rates, including the
Participant's current health status, health history of the Participant and any
family members, and the activities engaged in by the Participant including
dangerous or illegal activities.

Section 7.4. No Contract of Employment. Nothing in this Plan shall be
construed as a contract of employment between the Company and any Participant.
Nothing in this Plan shall be deemed to constitute a contract for services
between the Company and the Participant, and nothing contained in this Plan
shall be deemed to give the Participant any right to continue furnishing
services to the Company or the Company any right to demand such services. Except
as provided in Section 4.8, nothing in this Plan shall be construed as a
limitation of the right of the Company to discharge the Participant, with or
without cause.

Section 7.5. Binding Effect. This Plan shall be binding upon the Company,
its successors and assigns, and upon the Participant, his spouse, his
Beneficiary, and their heirs, legatees, executors and personal or legal
representatives.

Section 7.6. Gender; Headings. Any masculine pronoun shall include the
feminine and the singular shall include the plural, and vice versa. The headings
in this Plan are for convenience of reference only.

Section 7.7. Severability. If any provision of this Plan is held to be
illegal, invalid, or unenforceable, such illegality, invalidity, or
unenforceability shall not affect the remaining provisions of this Plan, and
such provisions shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never been inserted herein.

Section 7.8. Governing Law. This Plan shall be governed by the laws of the
State of Iowa without reference to the principles of conflicts of law therein.

<PAGE>

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its
duly authorized officers.

PIONEER HI-BRED INTERNATIONAL, INC.

By: /s/ Thomas N. Urban
--- -------------------
Thomas N. Urban
President
By: /s/Dale L. Porter
- --- -----------------
Dale L. Porter
Secretary

TO: Corporate Human Resources Department
Pioneer Hi-Bred International, Inc.
Suite 700, Capital Square
Des Moines, Iowa 50309
RE: Beneficiary Designation

Gentlemen:

Pursuant to Section 4.9 of the Pioneer Hi-Bred International, Inc. Supplemental
Executive Retirement Plan, effective as amended and restated March 14, 1989, I
hereby designate that benefits payable under Sections 4.4, 4.5, or 4.8(c) of the
Plan be paid to the following person(s) in the indicated proportions (if none
indicated, benefits shall be payable in equal proportion to each person
designated):

(Designated Beneficiaries) (Proportion)

========================= ==============
========================= ==============

If any person is deceased at the time of any payment to be made under the Plan,
the payment allocable to that person shall be made to the following person(s) in
the indicated proportions (if none indicated, benefits shall be payable in equal
proportion to each person designated):

(Designated Beneficiaries) (Proportion)

========================== ==============
========================== ==============

Notwithstanding any provision of the Plan and this designation to the contrary,
in the event that my spouse survives me, he/she [shall] [shall not] have the
right to revoke any designation of beneficiaries made herein and thereupon
designate the person(s) to receive the benefits described in Sections 4.3, 4.4,
or 4.7 of the Plan.

This beneficiary designation shall remain in full force unless and until
canceled or superseded by written notice executed by me and delivered to you
before my death.

Very truly,
------------------------------

<PAGE>

AMENDMENT TO THE SERP

1) "Fiscal" replaces the word "Calendar" in Sections 2.2 and 2.26.

2) Section 2.5 be deleted in its entirety.

3) A new Section 2.7 should be added which shall read in its entirety
as follows:

Section 2.7 "Company Long-Term Disability Plan" means a group
disability plan which is sponsored by the Company or one of its
Subsidiaries and for which premiums are paid by the Company or one
of its Subsidiaries or which is funded by the Company or one of its
Subsidiaries without the payment of premiums by the Participant. It
does not include a plan or a portion of the plan for which premiums
are paid by the Participant.

4) The first sentence of Section 2.8 be deleted and replaced with the
following:

"Compensation" means all amounts paid or allocated by the Company to
the Executive for services rendered to the Company, including any
bonuses, restricted stock grants and any amounts which the Executive
would have received but for the Executive's election to defer the
compensation in return for the unsecured promise of the Company to
make payments after retirement or other termination of employment.
Restricted stock grants, bonuses and other compensation will be
included as part of compensation for the Fiscal Year in which the
service was rendered. Restricted Stock will be valued on the date of
grant without regards to restrictions.

5) The following language in Section 2.12 should be deleted:

"any Long-Term disability plan sponsored by the Company or a
subsidiary" and replaced with: "Company Long-Term Disability Plan"

6) Capitalize Company Long Term Disability Plan in Section 2.11.

7) A new Section 2.12 should be added which reads as follows:

Section 2.12. "Disability Retirement" means retirement of a
participant who has a disability and who has requested disability
retirement, and that is accepted and approved by the Board of
Directors in its sole discretion prior to a participant reaching age
65.

8) Section 2.12 shall be deleted and replaced with the following:

Section 2.12 "Early Retirement" means retirement accepted and
approved by the Board of Directors in its sole discretion prior to a
Participant reaching age sixty-five (65) who remains in Full Time
Employment until age fifty-five (55), or if later, the date of which
the Participant completes five (5) years of service with the
Company.

9) A new Section 2.14 be added which shall read in its entirety as
follows:

Section 2.14 "Fiscal Year" means the 12 month period beginning
September 1 and ending August 31.

<PAGE>

10) The following should be included at the end of Section 2.14:

"unless Disability Retirement is accepted and approved by the
board of directors."

11) The second sentence of Section 2.15 shall be deleted and replaced
with the following:

For purposes of this Plan, "Social Security Benefits" shall be
deemed to be zero until the Participant first begins receiving
Social Security benefit payments. Thereafter, Social Security
benefits shall equal the actual amount of Social Security benefits
which the Participant receives when the Participant first begins
receiving benefits.

12) The following should be included after "Subject to the foregoing" in
the last sentence of Section 2.15:

"and as set forth in Article IV."

13) The following sentence be added after the last sentence of 2.26:

For purposes of the recomputation, restricted stock grants and
bonuses will be included in Compensation for the Fiscal Year in
which the services was rendered. Restricted stock will be valued on
the date of grant without regards to restrictions.

14) The following shall be added after the end of the second sentence of
Section 4.1:

If necessary, the normal retirement benefit will be adjusted when
the Participant begins receiving Social Security Benefits.

15) The first three sentences of Section 4.2 shall be deleted and
replaced with the following:

Section 4.2 Early Retirement Benefits.
If early retirement is accepted and approved by the Board of
Directors in its sole discretion, a Participant who is in Full Time
Employment and has reached age fifty-five (55) and has five (5)
years of service will receive an early retirement benefit. The
amount of the Participant's early retirement benefit shall be equal
to the Target Retirement Benefit reduced by the Integration
Benefits. If necessary, the early retirement benefit will be
adjusted when the Participant begins to receive Social Security
benefits.

16) A new Section 4.3 should be added which reads as follows:

Section 4.3. Disability Retirement Benefits.
If the Participant so requests, and if Disability Retirement is
accepted and approved by the Board of Directors in its sole
discretion, a Participant who has a disability will receive a
disability retirement benefit in lieu of any benefits that might be
paid under Section 4.1 or 4.2. The amount of the Participant's
disability retirement benefit shall be equal to the Target
Retirement Benefit reduced by the Integration Benefit and the amount
that the Participant is receiving under any Company Long-Term
Disability Plan.

<PAGE>

Prior to being entitled to receive benefits described under clauses
(c) and (d) of the first sentence of Section 2.15 because the
Participant is receiving disability benefits, there will be no
reduction for such benefits. After the Participant is entitled to
receive benefits described under clauses (c) and (d) of the first
sentence of Section 2.15, disability retirement benefits will be
recalculated with a reduction for such benefits as described in
Section 2.15.

If necessary, the disability retirement benefit will be adjusted
when the Participant begins to receive Social Security Benefits. It
also will be adjusted based upon any adjustment in the benefits that
are payable under any Company long term disability plan.

The Participant's annual disability retirement benefit, as so
determined shall be divided by twelve (12) to determine the
Participant's monthly disability retirement benefits. The
Participant's monthly disability retirement benefits shall be paid
on the first day of each month with benefit payments commencing on
the first day of the month immediately following the month
Disability Retirement is approved. The Participant's disability
retirement benefits shall be paid in the form of an annuity for the
Participant's life.

17) The following language should be deleted from the first sentence of
Section 4.3:

"4.1 or Section 4.2 but before the Participant receives payment of
normal or early retirement benefits for 180 months" and replaced
with "4.1, Section 4.2 or Section 4.3 but before the Participant
receives payment of normal, early or disability retirement benefits
for 180 months,"

18) The second sentence of Section 4.3 should be deleted and replaced
with the following:

The amount of annual post-retirement death benefits shall be equal
to the annual benefit payable to the Participant under Section 4.1,
4.2 or 4.3 except as set forth below. Reductions for Social Security
benefits and Company Long-Term Disability Plan payments will no
longer be based upon what was paid to the Participant but will be
adjusted based upon the amount of the benefits payable under a
Company Long-Term Disability Plan or amount of Social Security
benefits payable to the surviving spouse or other Beneficiary
because of the Participant's death. If Participant was receiving
disability retirement benefits, and the Participant did not receive
benefits described under clauses (c) and (d) of the first sentence
of Section 2.15, post-retirement death benefits will also be reduced
by the payments to surviving spouse or the Participant's Beneficiary
received from benefits described under clauses (c) and (d) of the
first sentence of Section 2.15.

19) The following should be deleted from the fifth sentence of Section
4.3:

"or the Participant's Target Retirement Benefit reduced by the
Integration Benefits" and replaced by the following: "of the amount
of annual post-retirement death benefits that the surviving spouse
was receiving at the Term Certain Expiration Date."

<PAGE>

20) The following should be added at the end of the third sentence of
Section 4.4:

"and the amount of benefits the surviving spouse receives under a
Company Long-Term Disability Plan."

21) The following language should be deleted from the fourth sentence of
Section 4.4:

"to which the Participant's spouse would have been entitled through
the Term Certain Expiration Date" and replaced with the following:
"and the amount of benefits the Beneficiary receives under a Company
long term disability plan."

22) Add the following at the end of Section 4.4:

For the purposes of this Section only, the Social Security Benefits
included in the Integration Benefits shall be the Social Security
Benefits payable to the Surviving Spouse or other beneficiary
because of the Participant's death. If necessary, the benefit will
be adjusted based upon the amount of the benefits payable under a
Company long term disability plan or amount of Social Security
benefits payable to the surviving spouse or other Beneficiary. The
monthly pre-retirement death benefits for Beneficiaries other than
the surviving spouse should only be paid until the Term Certain
Expiration Date.

23) In Section 4.5 replace "and determined Disability" with "Disability
and Disability Retirement".

24) In the last sentence of Section 4.8(b) delete the following:

"equal to the Actuarial Equivalent of the Participant's normal
retirement benefits."

25) The following shall be added after the last sentence of Section
4.8(d):

For the purposes of this Section 4.8, Social Security Benefits
included in the Integration Benefits will be zero.

26) The following section be added at Section 4.12:

Section 4.12 Benefits Calculations.
If necessary, the Company will calculate a benefit based on
estimated bonus, restricted stock awards and compensation. The
estimates will be determined by the Company in its sole discretion.
The Company will recalculate the benefits based on the actual
amounts and will adjust the next payment so that that payment and
all previous payments equal the amount the employee would have been
entitled to if the employee had received his benefits based on the
actual amount from the beginning of the payments. Thereafter,
payments will be based on the actual amounts.

27) The following should replace "retirement" in the third sentence of
Section 6.4 "Normal, Early or Disability Retirement".

28) In Sections 4.5 and 7.4, "Section 4.8" should be replaced with
"Section 4.9".

29) The section numbers be renumbered as appropriate to reflect the
above changes.

<PAGE>

PIONEER HI-BRED INTERNATIONAL, INC.

RESTRICTED STOCK PLAN -- PERFORMANCE BASED

SECTION 1. ESTABLISHMENT AND PURPOSE

1.1 Establishment. Pioneer Hi-Bred International, Inc. hereby establishes a
stock reward plan for key management employees, as described herein, which shall
be known as the PIONEER HI-BRED INTERNATIONAL, INC. RESTRICTED STOCK PLAN --
PERFORMANCE-BASED (hereinafter called the "Plan").

1.2 Effective Date. The effective date of the Plan is September 1, 1995.

1.3 Purpose. The purpose of this Plan is to align the interests of key
management employees with the long-term interest of shareholders through the
ownership and retention of Company stock.

SECTION 2. DEFINITIONS

Whenever used herein, the following terms shall have the meanings set forth
below:

(a) "Base Salary" means a Participant's base annual salary as of August 31
of the Plan Year without reduction for contributions or deferrals to various
plans.
(b) "Board" means the Board of Directors of Pioneer Hi-Bred International,
Inc.
(c) "Change in Control" means (i) the acquisition, whether directly,
indirectly, beneficially (within the meaning of Rule 13d-3 of the Securities and
Exchange Act of 1934, as amended (the "1934 Act")), or of record, of securities
of Pioneer Hi-Bred International, Inc. representing twenty-five percent (25%) or
more in number of any class of its then outstanding voting securities by any
"person" (within the meaning of Sections 13(d) and 14(d)(2) of the 1934 Act),
including any corporation or group of associated persons action in concert,
other than (A) the Company and/or (B) any employee pension benefit plan (within
the meaning of Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended) of the Company, including a trust established pursuant to any
such plan, or (ii) the nomination and election of twenty-five percent (25%) or
more of the members of the Board of Directors of the Company without
recommendation of such Board of Directors. The ownership of record of 25% or
more in number of any class of the then outstanding voting securities of the
Company by a person engaged in the business of acting as nominee for unrelated
beneficial owners shall not in and of itself be deemed to constitute a Change in
Control.
(d) "CIC Participant" means an employee 1) who would have been eligible for
a grant in respect of the Plan Year prior to the Plan Year in which the Change
in Control occurs regardless of whether he or she was terminated after the Plan
Year but before the grant or 2) who but for his or her termination, would have
been eligible for a grant in respect of the Plan Year in which the Change in
Control occurred.
(e) "Committee" means the Compensation Committee of the Board or any
successor Committee.
(f) "Company" means Pioneer Hi-Bred International, Inc., an Iowa
corporation, and any division or subsidiary thereof.
(g) "Corporate Management Committee" means the Company's committee of
executive officers selected by the chief executive officer or any successor
committee. (h) "The Cumulative Three Years Earnings Per Share" means for a given
Plan Year the sum of the Earnings Per Share for the Plan Year and the two
previous Plan Years. Plan year for years prior to the effective date shall be
the Company's fiscal year.

<PAGE>

(i) "Earnings Per Share" means the after tax earnings per share of
outstanding stock plus or minus adjustments to remove the impact of unusual or
nonrecurring events.
(j) "EPS Growth Percentage" means the percentage that corresponds to the
Cumulative Three Years Earnings Per Share for the given Plan Year as shown on
Attachment 1 or as may be modified prior to the Plan Year by the Compensation
Committee. Minimum is 0% with no maximum. Interpolation of actual results is
computed between table points. Points beyond 25% are calculated using the same
methodology used in calculating the EPS Growth Percentage on Attachment 1.
(k) "EPS Multiplier" means the multiplier as calculated in Section 5.2.
(l) "Fair Market Value" of a share of Common Stock of the Company shall
mean, with respect to the date in question, either (x) the average of the
highest and lowest selling prices or (y) the closing sale price of such stock,
as selected by the Committee; or if the Company's Common Stock is not quoted by
NASDAQ, traded on a national exchange, or otherwise traded publicly, the value
determined, in good faith, by the Committee.
(m) "Involuntary Termination of Employment" means (a) the termination of
employment of a CIC Participant by the Company other than Termination for Cause,
(b) the resignation or retirement of a CIC Participant for Stated Good Reason,
or (c) in the case of a CIC Participant who is in the full-time employment of a
domestic Subsidiary, either (I) the sale of a substantial portion of the assets
of the Subsidiary within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, or (II) the acquisition by an unrelated third party of
ownership of more than fifty percent (50%) of the then outstanding stock,
capital, or profits interest of the Subsidiary. The Board of Directors, in its
sole discretion, shall determine whether the acquisition by an unrelated third
party of ownership of an interest in a foreign subsidiary constitutes an
Involuntary Termination of Employment.
(n) "Key Management Employee" means those employees eligible under Section
4.
(o) "Operations Committee" means the Company Committee of officers
responsible for various operations as selected by the chief executive officer or
any successor committee.
(p) "Outstanding Stock" means the weighted average daily stock outstanding
without giving effect to the dilutive impact of outstanding options.
(q) "Participant Pay Band" means that Pay Band for which the Participant is
categorized pursuant to Section 5.3.
(r) "Pay Band Target Percentage" means the Reward targets as a percent of
Base Salary for a Pay Band or portion thereof as set forth in Section 5.4. (s)
"Participant" means a Key Management Employee who is awarded and holds
Restricted Stock pursuant to the Plan.
(t) "Pay Band" means job evaluation categories I - VI. The Pay Band may be
further divided or consolidated as necessary.
(u) "Plan" means the Pioneer Hi-Bred International, Inc. Restricted Stock
Plan -- Performance-Based, as amended from time to time.
(v) "Plan Year" means the 12 month period beginning September 1 and ending
August 31.
(w) "Prior to the Plan Year" means either prior to or within the first
ninety days of the Plan Year.
(x) "Restricted Stock" means the common stock, $1.00 par value, of Pioneer
Hi-Bred International, Inc. which is issued or granted pursuant to the Plan.
(y) "Shares" means the common stock, $1 par value, of the Company.

<PAGE>

(z) "Stated Good Reason" means a written determination by a CIC Participant
that he reasonably and in good faith cannot continue to fulfill the
responsibilities for which he was employed. This determination will be
conclusively presumed to be reasonable and in good faith if, without the CIC
Participant's express written consent, the Company (a) reduces the CIC
Participant's base salary or rate of compensation as in effect immediately prior
to the Change in Control, or as the same may have been increased thereafter, (b)
fails to continue any bonus plans in which the CIC Participant was entitled to
participate immediately prior to the Change in Control, substantially in the
form then in effect, (c) fails to continue in effect any benefit or compensation
plan in which the CIC Participant is participating immediately prior to the
Change in Control (or plans providing substantially similar benefits), (d)
assigns to the CIC Participants any duties inconsistent with the CIC
Participant's duties, responsibilities or status immediately prior to the Change
in Control, or changes the CIC Participant's reporting responsibilities, titles
or offices, or (e) requires the CIC Participant to change the location of his
job or office, so that the Participant will be based at a location more than
thirty (30) miles distant by public highway from the location of his job or
office immediately prior to the Change in Control.
(aa) "Subsidiary" means a corporation in which the majority of the voting
securities outstanding at the time is owned directly or indirectly by Pioneer
Hi-Bred International, Inc. and/or by one or more of its other subsidiaries, or
a non-corporate entity in which a majority of the capital or profits interest is
owned directly or indirectly by Pioneer Hi-Bred International, Inc. and/or one
or more of its other subsidiaries.
(ab) "Termination for Cause" means the termination of employment of a CIC
Participant as a direct result of an act or acts of dishonesty, constituting a
felony under the laws of the United States or the State of Iowa and resulting or
intended to result directly or indirectly in gain or personal enrichment at the
expense of the Company. An act or acts of dishonesty constituting a felony will
be deemed to occur only if the act or acts constituting the felony are
established either by (a) the specific admission of the Participant or (b) a
final noappealable judgment of a court of competent jurisdiction.

SECTION 3. ADMINISTRATION

3.1 Administration. The Plan shall be administered by the Committee. The
Committee shall have authority to make all determinations required under the
Plan, to interpret the Plan, to decide questions of facts arising under the
Plan, to formulate rules and regulations covering the operation of the Plan and
to make all other determinations necessary or desirable in the administration of
the Plan. The decisions of the Committee on any questions concerning or
involving the interpretation or administration of the Plan shall be final and
conclusive.

3.2 Delegation of Authority. The Committee may delegate to any officer of
the Company its duties under the Plan pursuant to such conditions or limitations
as the Committee may establish, except that only the Committee may administer
the Plan for Participants who are subject to Section 16 of the Securities
Exchange Act of 1934.

SECTION 4. ELIGIBILITY

To be eligible to participate in the Plan an individual must be on
full-time, regular status on the United States or Canadian payroll. To be
eligible to receive grants, such employee must be eligible as of the last day of
the Plan Year and as of the date of the grant except as set forth below.
Employees who meet the following conditions are also eligible to receive a
grant: 1) eligible on the last day of the Plan Year, 2) before the date of the
grant employment terminates because of normal retirement, death, or total and
permanent disability, or employment terminates after early retirement is
accepted and approved by the Committee, and 3) the employee is not terminated
for cause as determined by the Committee prior to the date of the grants. This
eligibility exception does not mean that grants of stock will be accelerated.
Additionally, the employee must be in one of the Pay Bands a) I - III

<PAGE>

(inclusive), b) IV with recommendation of the Corporate Officer to whom the
employee's business unit reports and approval by the Operations Committee, or c)
(as an exception) with the approval of the Corporate Management Committee. Prior
to the Plan Year, the Committee may adjust which Pay Band an employee must be in
to be eligible. Other employees of the Company or its affiliates approved by the
Committee will also be eligible and entitled to grants including officers not on
the United States or Canadian payroll.

SECTION 5. GRANT

5.1 Nature of Goal. Grants will be based upon three-year EPS growth.

5.2 EPS Multipliers.

The EPS Multiplier is that multiplier as set forth below, or as approved by
the Committee Prior to the Plan Year, that corresponds to EPS Growth Percentage.

EPS Growth Percentage Multiplier*

0% 0.00
1% 0.08
2% 0.17
3% 0.25
4% 0.33
5% 0.42
6% 0.50
7% 0.58
8% 0.67
9% 0.75
10% 0.83
11% 0.92
12% 1.00
13% 1.00
14% 1.00
15% 1.25
16% 1.40
17% 1.55
18% 1.70
19% 1.85
20% 2.00
21% 2.05
22% 2.10
23% 2.15
24% 2.20
25% 2.25

*Minimum is 0% with no maximum. Interpolation of actual results is
computed between table points. Beyond 25% each 1% increase in the EPS Growth
Percentage corresponds to an .05 increase in the multiplier.

5.3 Pay Band. Each employee is assigned or reassigned to a Pay Band. An
appropriate Pay Band for an employee is determined by considering job factors
such as: 1) impact, 2) complexity, 3) knowledge, skills and competencies, and 4)
experience.

<PAGE>

5.4 Pay Band Target Percent. The following table sets forth the targets as
a percent of Base Salary for each respective Pay Band:

Pay Band Target

CEO 75%
I 60%
II 45-50%*
III 25-40%*
IV 10%

*The exact Pay Band Target Percent will be determined prior to the Plan
Year depending upon market data.

Such Pay Band Target Percentage may be modified by the Committee Prior to
the Plan Year. If a Key Management Employee moves from 1 eligible Pay Band or
portion thereof to another in a Plan Year the Pay Band Target Percent will be
adjusted pro rata for the portion of the year in each Pay Band.

5.5 Grant. a) Shares of the Restricted Stock will be granted under the Plan
equal in value to i) EPS multiplier, multiplied by the Pay Band Target
Percentage multiplied by Base Salary, or ii) such lesser value as the Committee
shall determine in its sole discretion.

b)The shares to be granted will be determined as of the grant date, or such
other date approved by the Committee, based on the Fair Market Value of a share
of Common Stock the trading day before the grant. Such value shall be without
reference to any restrictions on transfer. Such grants will be made following
the end of the Plan Year.

c) The calculation in clause i) of Section 5.5(a), for a Key Management
Employee who was eligible at the end of the Plan Year but not eligible during
some period of the Plan Year will be reduced pro rata for the portion of the
Plan Year he was not eligible.

5.6 Maximum. In no event will the reward be in excess of a maximum set for
each Pay Band as approved by the Committee prior to the Plan Year but any such
reward is subject to the overriding maximum reward described below. In no event
will the maximum value of a reward (valued at the date of grant without regard
to restrictions) to an individual employee under this Plan exceed three million
dollars for a Plan Year.

SECTION 6. COMMITTEE CERTIFICATION

Before any grant is made the Committee must certify that the multiplier
level was in fact reached and all other material terms of the Plan were
satisfied.

SECTION 7. CHANGE IN CONTROL BENEFITS

7.1 Benefits. Notwithstanding any other provision of this Plan, in the
event of the Involuntary Termination of Employment of a CIC Participant within
three (3) years following a Change in Control, the CIC Participant shall receive
a cash amount equal to the Change in Control benefits. Such Change in Control
benefits shall be paid in lieu of and not in addition to any other benefits for
the Plan Year under this Plan.

<PAGE>

7.2 Amount. The amount of the Change in Control benefit shall equal the
amount calculated in clause a(i) of Section 5.5 (with no reduction) prorated for
the portion of the Plan Year before Involuntary Termination of Employment of a
CIC Participant and subject to the maximum set forth in the second sentence of
Section 5.6. In addition, if the Involuntary Termination of Employment is after
a Plan Year, but prior to a grant in respect of that Plan Year, in addition to
the amount paid for the Plan Year in which the Involuntary Termination of
Employment occurred, the CIC participant shall receive an amount equal to the
calculation under clause a(i) of Section 5.5 (with no reduction) for the Plan
Year prior to the Involuntary Termination subject to the maximum set forth in
the second sentence of Section 5.6.

7.3 Amendment & Termination. No amendment or termination of the Plan, 1
year prior to or after a Change in Control, will affect the payments under this
Section 7 for Involuntary Termination of Employment after the Change in Control.

SECTION 8. STOCK SUBJECT TO THE PLAN

8.1 Number. The total number of Shares that may be granted under the Plan
shall not exceed 1,750,000. These Shares may consist, in whole or in part, of
authorized but unissued Shares or Shares reacquired by the Company, including
without limitation, Shares purchased in the open market, and not reserved for
any other purpose.

8.2 Reacquired Shares. If, at any time, Shares issued pursuant to the Plan
shall have been reacquired by the Company in connection with the restrictions
herein imposed on such shares, such reacquired Shares again shall become
available for issuance under the Plan at any time prior to its termination.

8.3 Adjustment in Capitalization. In the event of any change in the
outstanding Shares of the Company by reason of a stock dividend, stock split,
recapitalization, merger, consolidation, combination, or exchange of shares or
other similar corporate change, the aggregate number and kind of Shares issuable
under this Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive.

SECTION 9. SHARES OF RESTRICTED STOCK

9.1 Grant of Shares of Restricted Stock. Awards of Restricted Stock to
Participants shall be granted under a Restricted Stock Agreement between the
Company and the Participant which shall provide that the shares subject to any
such award shall be subject to such forfeiture and other conditions, including
the provisions of Section 9.6 hereof, for such period of time as the Committee
shall designate.

9.2 Transferability. Subject to Section 9.7 through 9.9 hereof, the
shares of Restricted Stock granted to a Participant may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated as long
as the shares are subject to forfeiture or other conditions as provided in the
Plan, and as set forth in the Restricted Stock Agreement pursuant to which such
shares were granted.

9.3 Removal of Restrictions. Except as otherwise provided herein, or as may
be required by applicable law, shares of Restricted Stock covered by each
Restricted Stock Agreement made under this Plan will become freely transferable
by the Participant upon the expiration of a period of time following the date of
grant as specified in terms of the Restricted Stock Agreement.

<PAGE>

9.4 Other Restrictions. The Company may impose such other restrictions on
any shares granted pursuant to this Plan as it may deem advisable, including,
without limitation, restrictions on the transfer until all amounts owing to the
Company are paid and any withholding relating to the Restricted Stock have been
paid, and restrictions required by the federal securities laws, by the
requirements of any stock exchange upon which such shares or shares of the same
class are then listed and by any state securities laws applicable to such
shares.

9.5 Legends and Escrow. In addition to any other legends or restrictions,
the Company specifically reserves the right to place on each certificate or
account representing shares of Restricted Stock a legend as follows:

"The sales or other transfer of shares of stock represented by
this certificate (account), whether voluntary, involuntary, or by
operation of law, is subject to the restrictions on transfer and
forfeiture conditions (which include the satisfaction of certain
employment service requirements) set forth in the Pioneer Hi-Bred
International, Inc. Restricted Stock Plan -- Performance-Based and in a
Restricted Stock Agreement. A copy of such plan and agreement may be
inspected at the offices of the Secretary of the Company."

All shares of Restricted Stock shall be held by the Committee in escrow
on behalf of the Participant awarded such shares, together with a Power of
Attorney executed by the Participant, in form satisfactory to the Committee and
authorizing the Company to transfer such shares as provided in the Restricted
Stock Agreement, until such time as all restrictions imposed on such shares
pursuant to the Plan and the Restricted Stock Agreement have expired or been
earlier terminated.

9.6 Termination of Employment. In the event that, prior to the removal of
restrictions on shares of Restricted Stock as contemplated by Section 9.3, a
Participant's employment with the Company terminates for any reason other than
normal retirement, death, total and permanent disability or early retirement
accepted and approved by the Committee, then any shares subject to time period
restrictions or forfeiture conditions at the date of such termination shall
automatically be forfeited to the Company. A Participant shall not forfeit any
rights to Restricted Stock previously granted to him, solely because he or she
ceases to qualify as a Key Management Employee.

9.7 Normal Retirement, Death or Total, Permanent Disability and Early
Retirement. In the event that, prior to the removal of restrictions on shares of
Restricted Stock as contemplated by Section 9.3, a Participant's employment with
the Company terminates because of normal retirement, death or total and
permanent disability, any uncompleted portion of a time period restriction or
forfeiture conditions, as set forth in the terms of the Restricted Stock
Agreement, shall be waived by the Company. If early retirement is accepted and
approved by the Committee in its sole discretion any uncompleted portion of a
time period restriction or forfeiture condition, as set forth in the terms of
the Restricted Stock Agreement, shall be waived. The shares released from such
restrictions pursuant to this Section 9.7 thereafter shall be freely
transferable by the Participant, subject to any applicable legal requirements.

9.8 Change in Control. Upon a Change in Control, all restrictions shall
lapse on shares of Restricted Stock granted under this Plan.

9.9 Waiver at the Committee's Discretion. Notwithstanding the above, the
Committee also may waive all restrictions on shares of Restricted Stock at any
time, in its sole discretion. The shares released from such restrictions
pursuant to this Section 9.9 thereafter shall be freely transferable by the
Participant, subject to any applicable legal requirements.

<PAGE>

9.10 Voting Rights. Participants shall have full voting rights with respect
to shares of Restricted Stock.

9.11 Dividend Rights. Except as the Committee may otherwise determine,
Participants shall have full dividend rights with any such dividends being paid
currently. If all or part of a dividend is paid in shares of stock, the dividend
shares shall be subject to the same restrictions on transferability as the
shares of Restricted Stock that are the basis for the dividend.

9.12 Security Interest in Shares of Restricted Stock. In connection with
the execution of any Restricted Stock Agreement, the Committee may require that
a Participant grants to the Company a security interest in the shares of
Restricted Stock issued or granted pursuant to this Plan to secure the payment
of any sums then owing or thereafter coming due to the Company, including income
tax withholdings, to the Company by such Participant. This security interest
shall continue until the shares of Restricted Stock are no longer held by the
Committee in escrow on behalf of the Participant pursuant to Section 9.5 and are
no longer subject to restrictions pursuant to the Plan.

SECTION 10. WITHHOLDING OF TAXES

The Company may require, as a condition to any grant under the Plan or to
the release of any restrictions, security interest or escrow hereunder, that the
Participant pay to the Company, in cash, any federal, state or local taxes of
any kind required by law to be withheld with respect to any grant, vesting or
delivery of Restricted Stock. The Committee, in its sole discretion, may permit
Participants to pay such taxes a) through the withholding of Restricted Stock
otherwise deliverable to such Participant in connection with such vesting or
delivery or b) the delivery to the Company of Shares otherwise acquired by the
Participant. The Restricted Stock withheld by the Company or Shares tendered to
the Company for the satisfaction of tax withholding obligations under this
section shall be valued in the same manner as used in computing the withholding
taxes under applicable law. The Company, to the extent permitted or required by
law, shall have the right to deduct from any payment of any kind (including
salary or bonus) otherwise due to a Participant any federal, state or local
taxes of any kind required by law to be withheld with respect to any grant,
vesting or delivery of Restricted Stock under the Plan, or to retain or sell
without notice a sufficient number of the Restricted Stock granted or to be
granted to such Participant to cover any such taxes, provided that the Company
shall not sell any such Restricted Stock if such sale would be considered a sale
by such Participant for purposes of Section 16 of the Exchange Act.

SECTION 11. SHAREHOLDER APPROVAL

This Plan will not be effective unless the shareholders approve the Plan by
a majority of the vote in a separate shareholder vote.

SECTION 12. AMENDMENT AND TERMINATION

12.1 Amendment. Except as set forth in Section 7.3, this Plan may be
amended by the Board without shareholder approval except as otherwise required
by the law. Any such amendment will not apply to the Plan Year in which such
amendment was adopted or earlier Plan Years.

12.2 Termination. The Company reserves the right to terminate the Plan at
any time by action of the Board except as set forth in Section 7.3. After a
Change in Control any termination will not apply to the Plan Year in which such
termination was adopted or any earlier Plan Year.

<PAGE>

12.3 Existing Restrictions. Neither amendment nor termination of this Plan
shall affect any shares previously issued or any restrictions previously issued
or any restrictions previously imposed on such shares pursuant to this Plan.

SECTION 13. PROVISIONS APPLICABLE SOLELY TO INSIDERS

Persons subject to Section 16 of the 1934 Act with respect to securities of the
Company , may have to comply with additional rules imposed by the Company to
ensure compliance with Section 16.

SECTION 14 - MISCELLANEOUS

14.1 No Contract of Employment. Nothing in this Plan shall be construed as
a contract of employment between the Company and any Participant. Nothing in
this Plan shall be deemed to constitute a contract for services between the
Company and a Participant, and nothing contained in the Plan shall be deemed to
give a Participant any right to continue furnishing services to the Company or
the Company any right to demand such services. Nothing in this Plan shall be
construed as an elimination of the right of the Company to discharge a
Participant, with or without cause.

14.2 Severability. If any provision of this Plan is held to be illegal,
invalid, or unenforceable, such illegality, invalidity or unenforceability shall
not affect the remaining provisions of this Plan, and such provision shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never been inserted.

14.3 Governing Law. This Plan shall be governed by the laws of the State of
Iowa without reference to the principles of conflict of laws therein.
Notwithstanding the foregoing, this Plan shall be administered as to constitute
a plan of performance-based compensation under all applicable federal tax laws.

PIONEER HI-BRED INTERNATIONAL, INC.

By:/s/ Charles S. Johnson
-------------------------
Charles S. Johnson
President and CEO

/s/ Jerry L. Chicoine
- ---------------------
Jerry L. Chicoine
Secretary

<PAGE>

PIONEER HI-BRED INTERNATIONAL, INC.
MANAGEMENT REWARD PROGRAM -- PERFORMANCE-BASED

ARTICLE 1 - ESTABLISHMENT OF THE PLAN

Section 1.1 - Establishment of the Plan

The Company hereby establishes the Pioneer Hi-Bred International, Inc.,
Management Reward Program -- Performance- Based (the "Plan").

Section 1.2 - Effective Date

The effective date of the Plan is September 1, 1995.

Section 1.3 - Purpose

The Plan is designed to focus management efforts on the earnings and
return on equity of the company and to reward results achieved in relation to
those goals.

ARTICLE 2 - DEFINITIONS

Section 2.1 - Base Salary

Base Salary means a Participant's base annual salary as of August 31 of
the Plan Year without reduction for contributions or deferrals to various plans.

Section 2.2 - Board

Board means the Board of Directors of Pioneer Hi-Bred International, Inc.

Section 2.3 - Change in Control

Change in Control means (i) the acquisition, whether directly, indirectly,
beneficially (within the meaning of Rule 13d-3 of the Securities and Exchange
Act of 1934, as amended (the "1934 Act")), or of record, of securities of
Pioneer Hi-Bred International, Inc. representing twenty-five percent (25%) or
more in number of any class of its then outstanding voting securities by any
"person" (within the meaning of Sections 13(d) and 14(d)(2) of the 1934 Act),
including any corporation or group of associated persons acting in concert,
other than (A) the Corporation and/or (B) any employee pension benefit plan
(within the meaning of Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended) of the Corporation, including a trust established
pursuant to any such plan, or (ii) the nomination and election of twenty-five
percent (25%) or more of the members of the Board of the Corporation without
recommendation of such Board. The ownership of record of 25% or more in number
of any class of the then outstanding voting securities of the Corporation by a
person engaged in the business of acting as nominee for unrelated beneficial
owners shall not in and of itself be deemed to constitute a Change in Control.

Section 2.4 - CIC Participant

"CIC Participant" means an employee 1) who would have been eligible for a
reward in respect of the Plan Year prior to the Plan Year in which the Change in
Control occurs or 2) who but for his or her termination, would have been
eligible for a reward in respect of the Plan Year in which the Change in Control
occurred.

<PAGE>

Section 2.5 - Committee

Committee means the Compensation Committee of the Board or any successor
committee.

Section 2.6 - Company

Company means Pioneer Hi-Bred International, Inc., an Iowa Corporation and
any division or Subsidiary thereof.

Section 2.7 - Corporate Management Committee

Corporate Management Committee means the Company's committee of executive
officers selected by the chief executive officer or any successor committee.

Section 2.8 - Earnings Per Share (EPS)

Earnings Per Share means the after tax earnings per share of outstanding
stock plus or minus adjustments to remove the impact of unusual or nonrecurring
events.

Section 2.9 - EPS Growth Percentage

EPS Growth Percentage means the percentage that corresponds to the
Earnings Per Share for the given Plan Year as shown on Attachment 1 or as may be
modified prior to the Plan Year by the Compensation Committee. Minimum is 0%
with no maximum. Interpolation of actual results is computed between table
points. Points beyond 25% will be determined by the percentage the Earnings Per
Share exceeds the Earnings Per Share set forth in the 13% row for the previous
year.

Section 2.10 - EPS Multiplier

EPS Multiplier means the multiplier as calculated in Section 4.2(a).

Section 2.11 - Involuntary Termination of Employment

Involuntary Termination of Employment means (a) the termination of
employment of a CIC Participant by the Company other than Termination for Cause,
(b) the resignation or retirement of a CIC Participant for Stated Good Reason,
or (c) in the case of a CIC Participant who is in the full-time employment of a
domestic Subsidiary, either (I) the sale of a substantial portion of the assets
of the Subsidiary within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, or (II) the acquisition by an unrelated third party of
ownership of more than fifty percent (50%) of the then outstanding stock,
capital, or profits interest of the Subsidiary. The Board, in its sole
discretion, shall determine whether the acquisition by an unrelated third party
of ownership of an interest in a foreign subsidiary constitutes an Involuntary
Termination of Employment.

Section 2.12 - Outstanding Stock

Outstanding Stock means the weighted average daily stock outstanding
without giving effect to the dilutive impact of outstanding options.

Section 2.13 - Participants

Participants means an employee who is eligible to participate in this Plan
under Article 3.

<PAGE>

Section 2.14 - Participant Pay Band
Participant Pay Band means that Pay Band for which the Participant is
categorized pursuant to Section 4.4.

Section 2.15 - Pay Band

Pay Band means job evaluation categories I - VI. The Pay Bands may be
further divided or consolidated as necessary.

Section 2.16 - Pay Band Target Percentage

Pay Band Target Percentage means the Reward targets as a percent of Base
Salary for a Pay Band or portion thereof as set forth in Section 4.6.

Section 2.17 - Plan

Plan means Pioneer Hi-Bred International, Inc., Management Reward Program
- -- Performance-Based, as amended from time to time.

Section 2.18 - Plan Year

Plan Year means the 12 month period beginning September 1 and ending
August 31.

Section 2.19 - Prior to the Plan Year

Prior to the Plan Year means either prior to or within the first 90 days
of the Plan Year.

Section 2.20 - Return on Equity (ROE)

Return on Equity (ROE) means net income over ending shareholders equity
with adjustments to remove the impact of unusual or nonrecurring events.

Section 2.21 - Reward

Reward means the reward under this Plan.

Section 2.22 - ROE Modifier

ROE Modifier means the modifier as calculated in Section 4.2(b).

Section 2.23 - Stated Good Reason

Stated Good Reason means a written determination by a CIC Participant that
he reasonably and in good faith cannot continue to fulfill the responsibilities
for which he was employed. The CIC Participant's determinations will be
conclusively presumed to be reasonable and in good faith if, without the CIC
Participant's express written consent, the Company (a) reduces the CIC
Participant's base salary or rate of compensation as in effect immediately prior
to the Change in Control, or as the same may have been increased thereafter, (b)
fails to continue any bonus plans in which the CIC Participant was entitled to
participate immediately prior to the Change in Control, substantially in the
form then in effect, (c) fails to continue in effect any benefit or compensation
plan in which the CIC Participant is participating immediately prior to the
Change in Control (or plans providing substantially similar benefits), (d)
assigns to the CIC Participants any duties inconsistent with the CIC
Participant's duties, responsibilities or status immediately prior to the Change

<PAGE>

in Control, or changes the CIC Participant's reporting responsibilities, titles
or offices, or (e) requires the CIC Participant to change the location of his
job or office, so that the CIC Participant will be based at a location more than
thirty (30) miles distant by public highway from the location of his job or
office immediately prior to the Change in Control.

Section 2.24 - Subsidiary

Subsidiary means a corporation in which the majority of the voting
securities outstanding at the time is owned directly or indirectly by Pioneer
Hi-Bred International, Inc. and/or by one or more of its other subsidiaries, or
a non-corporate entity in which a majority of the capital or profits interest is
owned directly or indirectly by Pioneer Hi-Bred International, Inc. and/or one
or more of its other subsidiaries.

Section 2.25 - Termination for Cause

Termination for Cause shall mean the termination of employment of a CIC
Participant as a direct result of an act or acts of dishonesty, constituting a
felony under the laws of the United States or the State of Iowa and resulting or
intended to result directly or indirectly in gain or personal enrichment at the
expense of the Company. An act or acts of dishonesty constituting a felony will
be deemed to occur only if the act or acts constituting the felony are
established either by (a) the specific admission of the Participant or (b) a
final nonappealable judgment of a court of competent jurisdiction.

ARTICLE 3 - ADMINISTRATION

Section 3.1 - Administration

The Plan shall be administered by the Committee. The Committee shall have
authority to make all determinations required under the Plan, to interpret the
Plan, to decide questions of facts arising under the Plan, to formulate rules
and regulations covering the operation of the Plan and to make all other
determinations necessary or desirable in the administration of the Plan. The
decisions of the Committee on any questions concerning or involving the
interpretation or administration of the Plan shall be final and conclusive.

Section 3.2 - Delegation of Authority

The Committee may delegate to any officer of the Company its duties
under the Plan pursuant to such conditions or limitations as the Committee may
establish, except that only the Committee may administer the plan for
Participants who are subject to Section 16 of the Securities Exchange Act of
1934.

ARTICLE 4 - ELIGIBILITY

Section 4.1 - Eligibility

To be eligible to participate in the Plan an individual must be on
full-time, regular status on the United States or Canadian payroll. To be
entitled to receive a reward such employee must be on such payroll as of the
last day of the Plan year. Additionally, the employee must be in one of the
following Pay Bands: a)I - IV (inclusive), b)V with approval of the corporate
officer to whom the employee's business unit reports, or c)(as an exception)
with the approval of the Corporate Management Committee. Prior to the Plan Year
the Committee may adjust which pay band an employee must be in to be eligible.
Other employees of the Company or its affiliates approved by the Committee will
also be eligible and entitled to Rewards including officers not on the U.S. or
Canadian payroll.

<PAGE>

Section 4.2 - Other Plans

Participants are not eligible for profit sharing or any sales incentive
program. Employees eligible for sales incentive programs are not eligible to
participate in the Plan.

ARTICLE 5 - REWARD

Section 5.1 - Nature of Goal

Rewards will be based upon EPS growth.

Section 5.2 - Multipliers

a) EPS Multiplier. The EPS Multiplier is that multiplier as set forth
below, or as approved by the Committee Prior to the Plan Year, that corresponds
to EPS Growth Percentage.

EPS Growth Percentage Multiplier*

<PAGE>

b) ROE Modifier. ROE Modifier is that modifier as set forth below,
or as approved by the Committee Prior to the Plan Year, that corresponds to
Return on Equity.

ROE Modifier*

16%** .80
17% .85
18% .90
19% .95
20% 1.00
21% 1.05
22% 1.10
23% 1.15
24%*** 1.20

*Minimum is .80 with a maximum of 1.20. Interpolation of actual results
is computed between table points.

**Less than or equal to

***Greater than or equal to

Section 5.3 - Participant Pay Band

Each employee is assigned or reassigned to a Pay Band. An appropriate Pay
Band for an employee is determined by considering job factors such as: 1
impact, 2) complexity, 3) knowledge, skill and competencies, and 4) experience.

Section 5.4 - Pay Band Target Percent

The following table sets forth the targets as a percent of Base Salary for
each respective Pay Band:

Pay Band Target

CEO 62%
I 47%
II 32-37%*
III 12-27%*
IV 5-12%*
V 2-4%*

Such Pay Band Target Percentage may be modified by the Committee Prior to
the Plan Year. If a Key Management Employee moves from 1 eligible Pay Band or
portion thereof to another in a Plan Year, the Pay Band Target Percentage will
be adjusted pro rata for the portion of the year in each Pay Band.

*The exact Pay Band Target Percent will be determined prior to the Plan
Year depending upon market data.

<PAGE>

Section 5.5 - Reward

a) The Reward equals i) EPS Multiplier, multiplied by ROE Modifier,
multiplied by Pay Band Target Percentage, multiplied by Base Salary, or ii) such
lesser amount the Committee shall determine in its sole discretion.

b) The calculation in clause i) of Section 5.5(a), for an Eligible
Employee who was eligible at the end of the Plan Year but not eligible during
some period of the Plan Year will be reduced pro rata for the portion of the
Plan Year he was not eligible.

Section 5.6 - Maximum Reward

The Reward received by a Participant will in no event exceed $3 million
for a Plan Year.

ARTICLE 6 - COMMITTEE CERTIFICATION

Section 6.1 - Committee Certification

Before any Reward is paid, the Committee must certify that the multiplier
and modifier levels were in fact reached and all other material terms of the
Plan were satisfied.

ARTICLE 7 - PAYMENT

Section 7.1 - Payment

Participants will be paid their Reward less all applicable withholdings
and deductions within 75 days following the Plan year.

ARTICLE 8 - CHANGE IN CONTROL BENEFITS

Section 8.1 - Benefits

Notwithstanding any other provision of this Plan, in the event of the
Involuntary Termination of Employment of a CIC Participant within three (3)
years following a Change in Control, the CIC Participant shall receive Change in
Control benefits. Such Change in Control benefits shall be paid in lieu of and
not in addition to any other benefits for that Plan Year under this Plan.

Section 8.2 - Amount

The amount of the Change in Control benefit shall equal the amount
calculated in clause a(i) of Section 5.5 (with no reduction) prorated for the
portion of the Plan Year before Involuntary Termination of Employment of the CIC
Participant.

Section 8.3 - Amendment & Termination

No amendment or termination of the Plan one year prior to or after a
Change in Control will affect payments under this Article 8 for Involuntary
Termination of Employment after a Change in Control.

<PAGE>

ARTICLE 9 - SHAREHOLDER APPROVAL

Section 9.1 - Shareholder Approval

This Plan will not be effective unless the shareholders approve the Plan
by a majority of the vote in a separate shareholder vote.

ARTICLE 10 - AMENDMENT AND TERMINATION OF THE PLAN

Section 10.1 - Amendment

Except as set forth in Section 8.3 the Plan may be amended by the Board
without shareholder approval except as otherwise required by law. Any such
amendment will not apply to the Plan Year in which such amendment was adopted or
earlier Plan Years.

Section 10.2 - Termination

The Company reserves the right to terminate the Plan at any time by action
of the Board; except as set forth in Section 8.3. After a Change in Control any
termination will not apply to the Plan Year in which such termination was
adopted or any earlier Plan Year.

ARTICLE 11 - MISCELLANEOUS

Section 11.1 - No Contract of Employment

Nothing in this Plan shall be construed as a contract of employment
between the Company and any Participant. Nothing in this Plan shall be deemed to
constitute a contract for services between a Company and a Participant, and
nothing contained in the Plan shall be deemed to give a Participant any right to
continue furnishing services to the Company or the Company any right to demand
such services. Nothing in this Plan shall be construed as an elimination of the
right of the Company to discharge a Participant, with or without cause.

Section 11.2 - Severability

If any provision of this Plan is held to be illegal, invalid, or
unenforceable, such illegality, invalidity or unenforceability shall not affect
the remaining provisions of this Plan, and such provision shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never been
inserted.

Section 11.3 - Governing Law

This Plan shall be governed by the laws of the State of Iowa without
reference to the principles of conflict of laws therein. Notwithstanding the
foregoing, this Plan shall be administered as to constitute a plan of
performance-based compensation under all applicable federal tax laws.

PIONEER HI-BRED INTERNATIONAL, INC.

By:/s/ Charles S. Johnson
-------------------------
Charles S. Johnson
President and CEO

/s/ Jerry L. Chicoine
- ---------------------
Jerry L. Chicoine
Secretary

<PAGE>

EXHIBIT 11

PIONEER HI-BRED INTERNATIONAL, INC.

COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>

Years Ended August 31,
1996 1995 1994 1993 1992
Number of shares of common
stock outstanding at
beginning of the period....... 83,487 86,215 89,442 90,274 90,829

Weighted average number of
shares of common stock
issued during the period...... 75 128 90 148 52

Weighted average number of
shares of common stock
purchased for the treasury
during the period............. (408) (1,832) (884) (308) (92)
-------- ------- ------- ------- -------

Weighted average number of
shares of common stock
outstanding during the
period........................ 83,154 84,511 88,648 90,114 90,789
-------- ------- ------- ------- -------

Income before cumulative
effect of changes in
accounting principles......... $222,962 $182,590 $212,664 $137,453 $152,160
------- ------- ------- ------- -------

Income before cumulative
effect of changes in
accounting principles
per common share.............. $ 2.68 $ 2.16 $ 2.40 $ 1.53 $ 1.68
------- ------- ------- ------- -------

Net income....................... $222,962 $182,590 $212,664 $120,484 $152,160
------- ------- ------- ------- -------

Earnings per common share........ $ 2.68 $ 2.16 $ 2.40 $ 1.34 $ 1.68
------- ------- ------- ------- -------

<FN>

The common stock equivalents have not entered into the net income per share
computations because they would not have a dilutive effect.
</FN>

</TABLE>

<PAGE>

The Company's Business

Pioneer Hi-Bred's business is the broad application of the science of genetics.
Pioneer was founded in 1926 to apply newly discovered genetic techniques to
hybridize corn. Today, the Company develops, produces, and markets hybrids of
corn, sorghum, and sunflowers; and varieties of soybeans, alfalfa, wheat, and
canola.

Hybrids, crosses of two or more unrelated inbred lines, can be reproduced only
by crossing the original parent lines. Thus, a grower must purchase new seed
each year to obtain the original hybrid. Varietal crops, such as soybeans and
wheat, will reproduce themselves with little or no genetic variation. Growers
can save grain from the previous crop for planting. Growers are becoming
increasingly aware of the advantages of purchasing "new" seed every year,
although in times of cash-flow crisis, they may tend to forgo those advantages.

Pioneer maintains the ownership of and controls the use of inbreds and varieties
through patents and the Plant Variety Protection Act. Within the U.S., this
essentially prohibits other parties from selling seed produced from those
inbreds and varieties until such protection expires, usually well after the
useful life of the seed. Outside of the U.S., the level of protection afforded
varies from country to country according to local law and international
agreement. Pioneer also applies for patents on new hybrids moving toward
commercialization. The Company believes it is vital that products developed by
its research programs remain proprietary. They must remain so in order to
provide the economic return necessary to support continued research and product
development, and to generate an adequate return to the Company's shareholders.

Sales by Region - 1996
(in millions) Corn Soybeans Other Total

North America............. $ 908 $ 160 $ 89 $ 1,157
Europe.................... $ 336 $ 4 $ 63 $ 403
Latin America............. $ 84 $ - $ 13 $ 97
Other Regions............. $ 49 $ - $ 15 $ 64

The Company's principal products are hybrid seed corn and soybean seed, which
have accounted for approximately 89 percent of total net sales and substantially
100 percent of operating profits over the last five years. These products are
expected to maintain a dominant role in the Company's results of operations for
the foreseeable future. Approximately 67 percent of total 1996 sales were made
within the U.S. and Canada (the North America region) and 23 percent in Europe.
Our goal within developing nations is to aid the development of the existing
seed markets and establish businesses that can grow and prosper.

Two significant factors that determine the volume of seed sold and the related
profit are government policies and weather. Government policies affect, among
other things, crop acreage and commodity prices. Weather can affect commodity
prices, product performance, the Company's seed field yields, and planting
decisions made by farmers. Compared to hybrid seed, sales and profits from
non-hybrid seed are more heavily dependent on commodity prices and the
competition from farmer-saved seed. As a result, the margins are narrower and
contributions are subject to year-to-year fluctuations.

In North America, the majority of Pioneer brand seed is marketed through
independent sales representatives, most of whom are also farmers. In areas
outside of the traditional Corn Belt, seed products are often marketed through
dealers and distributors who handle other agricultural supplies. Pioneer
products are marketed outside North America through a network of subsidiaries,
joint ventures, and independent producer-distributors.

<PAGE>

The hybrid seed industry is characterized by intense competition. In 1996,
Pioneer seed corn held an estimated market share of 44 percent in North America.
The next six competitors held an estimated combined market share of 27 percent
with the closest competitor holding approximately 10 percent. The remainder of
the market is divided among more than 300 companies selling regionally. The
Company's 1996 purchased soybean seed market share is estimated at 17 percent,
highest in the industry.

Pioneer has a leading market share position in most countries outside North
America in which it operates. Significant markets in which the Company operates
include: France, Italy, Germany, Hungary, Austria, Mexico, and Brazil. The
Company's market share within these countries ranges form near 10 percent to
more than 60 percent.

Competition in the seed industry is based primarily on product performance and
price. The Company's objective is to produce products which consistently
out-perform the competition and so command a premium price. The Company has been
successful competing on that basis and expects to continue to do so through its
ongoing investment in research and product development. The future success of
the Company depends heavily on the results of these research activities.
Continued improvement in the performance of the Company's products is necessary
to maintain profit margins and market share.

The Company's research and product development activities are directed at
products with significant market potential. Pioneer believes it possesses the
largest single proprietary pool of germplasm in the world from which to develop
new hybrid and varietal seed products. The majority of the Company's seed
research is done through classical plant breeding techniques. However, the use
of biotechnology is expected to have an impact on future results, both for
Pioneer and the seed industry at large. Certain of our current products require
government approval before commercialization. It is expected a larger number of
our future products will also require such government approval.

In the production of its commercial seed, the Company generally provides the
parent seed stock, detasseling and roguing labor, and certain other production
inputs. The balance of the labor, equipment, and inputs are supplied by
independent growers. The Company believes the availability of growers, parent
stock, and other inputs necessary to produce its commercial seed is adequate for
planned production levels.

Pioneer continues to pursue ISO 9000 certification and has 35 sites certified in
six countries, including 19 production sites in the U.S. Certification with
these standards will allow us to move product more easily from country to
country.

Pioneer brand microbial products include inoculants for high-moisture corn
silage, hay, and other forages, and direct-fed microbial products for livestock.
This product line is focused on the research and development of products
containing naturally occurring microorganisms.

The nutrition and industry markets (NIM) group is the worldwide focal point for
addressing opportunities driven by the "end-use" markets. The primary mission of
the NIM group is to ensure that Pioneer is the premier seed supplier in this
end-use market segment.

At August 31, 1996, the Company employed approximately 4,700 people worldwide.

Because the seed business is highly seasonal, the Company's interim results will
not necessarily indicate the results for the full year. Substantially all seed
sales are made from late second quarter through the end of the third quarter
(February 1 through May 31) of the fiscal year. Typically, the Company operates
at a loss during the first and fourth quarters. Varying climatic conditions can
change the earnings pattern between quarters. These conditions affect the
delivery of seed and can cause a shift in sales between quarters.

<PAGE>

SELECTED FINANCIAL DATA

Consolidated Ten-Year Financial History

Years Ended August 31,1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------

(In millions, except per share and statistical amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Summary Operations:
Net Sales..................$1,721 $1,532 $1,479 $1,343 $1,262 $1,125 $ 964 $ 867 $ 759 $ 710
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Gross Profit...............$ 858 $ 760 $ 759 $ 700 $ 640 $ 549 $ 442 $ 391 $ 389 $ 349
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Restructuring and Settlements $ -- $ -- $ 45 $ (54) $ -- $ -- $ -- $ -- $ --
===== ===== ===== ==== ===== ===== ===== ===== =====
$........................--
Income From Continuing
Operations...............$ 223 $ 183 $ 213 $ 137 $ 152 $ 104 $ 73 $ 82 $ 84 $ 64
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Net Income.................$ 223 $ 183 $ 213 $ 120 $ 152 $ 104 $ 73 $ 98 $ 65 $ 54
===== ===== ===== ===== ===== ===== ===== ===== ===== =====

Per Common Share Data:
Income From Continuing
Operations...............$ 2.68 $ 2.16 $ 2.40 $ 1.53 $ 1.68 $ 1.15 $ 0.78 $ 0.86 $ 0.88 $ 0.67
Net Income.................$ 2.68 $ 2.16 $ 2.40 $ 1.34 $ 1.68 $ 1.15 $ 0.78 $ 1.03 $ 0.68 $ 0.56
Growth in Earnings Per
Share*.................... 24.1% (10.0)% 56.9% (8.9)% 46.1% 47.4% (9.3)% (2.3)% 31.3% (20.2)%
Dividends Declared.........$ 0.83 $ 0.71 $ 0.59 $ 0.50 $ 0.40 $ 0.39 $ 0.39 $ 0.36 $ 0.35 $ 0.26
Shareholders' Equity.......$12.36 $10.94 $10.22 $ 9.23 $ 8.86 $ 7.51 $ 7.00 $ 6.62 $ 6.04 $ 5.70

Balance Sheet Summary:
Current Assets.............$ 784 $ 770 $ 742 $ 717 $ 703 $ 606 $ 538 $ 474 $ 450 $ 465
Net Property & Other Assets 638 523 511 504 513 480 468 440 414 401
------ ------- ------- ------- ------- ------- ------- ------- ------- ------
Total Assets...............$1,422 $1,293 $1,253 $1,221 $1,216 $1,086 $1,006 $ 914 $ 864 $ 866
===== ===== ===== ===== ===== ===== ===== ===== ===== =====

Current Liabilities........$ 288 $ 280 $ 232 $ 261 $ 286 $ 295 $ 294 $ 221 $ 209 $ 228
Long-Term Debt............. 25 18 66 68 74 67 19 17 28 33
Other Long-Term Liabilities 91 82 74 67 57 43 44 49 50
------ ------ ------ ------ ------ ------ ------ ------ ------
59
Total Liabilities..........$ 404 $ 380 $ 372 $ 396 $ 417 $ 405 $ 357 $ 287 $ 287 $ 320
===== ===== ===== ===== ===== ===== ===== ===== ===== =====

Shareholders' Equity.......$1,018 $ 913 $ 881 $ 825 $ 799 $ 681 $ 649 $ 627 $ 577 $ 546
===== ===== ===== ===== ===== ===== ===== ===== ===== =====

Dividends Declared.........$ 69 $ 60 $ 52 $ 45 $ 36 $ 35 $ 36 $ 34 $ 33 $ 25
Average Shares Outstanding. 83.2 84.5 88.6 90.1 90.8 90.9 93.5 95.4 95.5 95.8

Other Statistics:
Return on Ending Equity*... 21.9% 20.0% 24.1% 16.7% 19.0% 15.3% 11.2% 13.1% 14.6% 11.7%
Return on Net Sales*....... 13.0% 12.0% 14.4% 10.2% 12.1% 9.3% 7.5% 9.4% 11.1% 9.0%
Return on Ending Assets*... 15.7% 14.2% 17.0% 11.2% 12.5% 9.6% 7.2% 9.0% 9.8% 7.4%
Gross Profit on Net Sales.. 49.9% 49.6% 51.3% 52.1% 50.7% 48.8% 45.8% 45.1% 51.2% 49.2%
Dividends Declared as a % of
Net Income............ 30.9% 32.8% 24.6% 37.4% 23.9% 33.8% 49.7% 34.7% 50.9% 46.2%
Stock Price at August 31,..$55.13 $43.00 $31.25 $32.75 $26.50 $17.42 $13.25 $14.00 $11.75 $11.92
Market Capitalization at
August 31, (in millions) $4,542 $3,590 $2,694 $2,929 $2,392 $1,579 $1,229 $1,326 $1,122 $1,142
Number of Employees........ 4,738 4,924 4,847 4,807 5,016 4,829 4,601 4,026 4,805 5,235
<FN>

*Based on income from continuing operations before cumulative effect of accounting
change
</FN>
</TABLE>

<PAGE>

Consolidated Net Sales and Operating Income (Loss) by Product

Years Ended August 31, 1996 % 1995 % 1994 % 1993 % 1992 %
- -----------------------------------------------------------------------------------------------------------
(In millions, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

NET SALES:
Corn......................... $1,377 80.0 $1,227 80.0 $ 1,185 80.1 $1,077 80.2 $1,013 80.3
Soybeans..................... 164 9.5 145 9.5 128 8.7 116 8.6 109 8.6
Other........................ 180 10.5 160 10.5 166 11.2 150 11.2 140 11.1
----- ----- ----- ----- ------ ----- ------ ---- ----- -----
Total Net Sales................. $1,721 100.0 $1,532 100.0 $ 1,479 100.0 $1,343 100.0 $1,262 100.0
===== ===== ===== ===== ====== ===== ===== ===== ===== =====

OPERATING INCOME (LOSS):
Corn......................... $ 410 29.8 $ 359 29.3 $ 383 32.3 $ 354 32.9 $ 317 31.3
===== ===== ===== ==== =====
Soybeans..................... 16 9.8 9 6.2 7 5.5 7 6.0 8 7.3
===== ===== ===== ==== =====
Other........................ (3) (1.6) (15) (9.4) (21)(12.6) (24)(16.0) (30) (21.4)
===== ==== ===== ===== =====
Restructuring and Settlements -- -- -- -- 45 3.0 (53) (3.9) -- --
---- ===== ---- ==== ---- ===== ----- ==== ----- =====
Product Line Operating Income... $ 423 24.6 $ 353 23.0 $ 414 28.0 $ 284 21.1 $ 295 23.3
Indirect General and Administrative
Expense...................... (76) (4.4) (73) (4.7) (68) (4.6) (59) (4.4) (52) (4.1)
----- ----- ----- ----- ------ ----- ----- ----- ----- -----
- ----
Operating Income................ $ 347 20.2 $ 280 18.3 $ 346 23.4 $ 225 16.7 $ 243 19.2
Financial Income (Expense)...... 7 0.4 11 0.7 3 0.2 (6) (0.4) (3) (0.2)
----- ----- ----- ----- ------ ----- ------ ---- ----- -----
Income Before Items Shown Below. $ 354 20.6 $ 291 19.0 $ 349 23.6 $ 219 16.3 $ 240 19.0
Income Taxes.................... (127) (7.4) (106) (6.9) (134) (9.1) (86) (6.4) (87) (6.9)
Minority Interest and Other..... (4) (0.2) (2) (0.1) (2) (0.1) 4 0.3 (1) --
----- ----- ----- ----- ------ ------ ----- ---- ----- -----
Income Before Cumulative Effect of
Accounting Change............ $ 223 13.0 $ 183 12.0 $ 213 14.4 $ 137 10.2 $ 152 12.1
Cumulative Effect of Accounting
Change, Net.................. -- -- -- -- -- -- (17) (1.2) -- --
----- ----- ----- ----- ------ ----- ------ ---- ----- -----
NET INCOME...................... $ 223 13.0 $ 183 12.0 $ 213 14.4 $ 120 9.0 $ 152 12.1
===== ===== ===== ===== ====== ===== ===== ==== ===== =====

Income Per Common Share:
Income Before Cumulative Effect
of Accounting Change....... $ 2.68 $ 2.16 $ 2.40 $ 1.53 $ 1.68
Cumulative Effect Of Accounting
Change, Net................ -- -- -- (.19) --
----- ----- ------ ------ -----
Net Income................... $ 2.68 $ 2.16 $ 2.40 $ 1.34 $ 1.68
===== ===== ====== ===== =====

Average Shares Outstanding...... 83.2 84.5 88.6 90.1 90.8
</TABLE>

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Year Ended August 31, 1996, Compared to the Year Ended August 31, 1995

Pioneer once again achieved outstanding financial results, posting record
earnings in 1996. After-tax earnings in 1996 were $223 million, on sales of $1.7
billion. After-tax earnings in 1995 totaled $183 million, on sales of $1.5
billion. Earnings per share were $2.68 in 1996, a 24 percent increase over 1995
earnings of $2.16 per share. Return on Ending Equity (ROE) was above the
targeted level of 20 percent for the third consecutive year. At the same time,
we continued to increase our investment in research and product development.

Current year sales and earnings were positively impacted by strong corn sales in
North America, Europe, Latin America, and Asia. Higher sales of soybeans and
other products also contributed to the improvement in earnings.

An estimated 11 percent increase in corn acreage was the primary driver for
higher 1996 sales and operating income in North America. Corn acreage rose over
1995 levels as a result of changes in government programs and higher corn
commodity prices. An increase in the average per-unit sales price of the
Company's seed corn sold in North America also positively impacted 1996 sales
revenue and operating income. Higher seed costs in North America partially
offset this improvement.

Operations outside North America also generated good earnings growth in 1996.
Operating income in Europe improved as several countries experienced increases,
either individually or in combination, in the three primary drivers: market
size, market share, and sales price. Latin American and Asian operations also
continued to grow, providing additional operating income over 1995 levels
largely by capturing the benefits of larger markets.

North American soybean operations had record results in 1996. Higher sales and
operating income from a year earlier resulted from increased market size. In
addition, wheat and sorghum operations also positively impacted current year
operating income.

Management is optimistic that 1997 will be another good year. North American
corn acreage is expected to be similar to or slightly higher than 1996 levels.
Higher commodity costs related to the 1996 crop will push per-unit seed corn
cost of sales higher in 1997. However, the average seed corn sales price is
expected to increase, which should keep overall margins similar to or better
than 1996 levels. While results in regions outside North America are more
difficult to predict, management believes that the Company is on target for
future growth in these regions and will build on the record results of 1996.

As we look forward, all indications point to continued strong financial
performance. As always, uncertainties exist that could affect the Company's
expectations, and fluctuations in expected results are likely as more
information becomes available. Some of the important factors that could cause
actual results to vary significantly from our expectations include weather, seed
field yields, government programs/approvals, commodity prices, changes in corn
acreage, intellectual property positions, product performance, customer
preferences, currency fluctuations, and costs.

Hybrid Seed Corn

In 1996, seed corn operating income improved $51 million, or 14 percent, over
last year. Operations within North America account for $20 million of the
increase. European operations improved $25 million over 1995, with Latin America
and Asia accounting for virtually all of the remaining improvement.

<PAGE>

Corn Net Sales and Product Line Operating Income

Increase Increase
1996 (Decrease) 1995 (Decrease) 1994
- ---------------------------------------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C> <C> <C> <C> <C>

NET SALES:
North America.... $ 908 $ 100 12.4% $ 808 $ (38) (4.5)% $ 846
Europe........... 336 31 10.2% 305 84 38.0% 221
Latin America.... 84 18 27.3% 66 10 17.9% 56
Other regions.... 49 1 2.1% 48 (14) (22.6)% 62
------ ------- ------ ----- ------
Total net sales..... $ 1,377 $ 150 12.2% $ 1,227 $ 42 3.5% $ 1,185
====== ======= ===== ====== ====== ====== ======

OPERATING INCOME:
North America.... $ 276 $ 20 7.8% $ 256 $ (21) (7.6)% $ 277
Europe........... 100 25 33.3% 75 6 8.7% 69
Latin America.... 21 3 16.7% 18 (1) (5.3)% 19
Other regions.... 13 3 30.0% 10 (8) (44.4)% 18
------ ------- ------ ----- ------
Total operating income$ 410 $ 51 14.2% $ 359 $ (24) (6.3)% $ 383
======= ======= ====== ====== ====== ====== ======

UNIT SALES:
(80,000-kernel units)
North America.... 12.1 1.2 11.4% 10.9 (0.9) (7.6)% 11.8
Europe........... 2.9 0.2 7.1% 2.7 0.5 23.1% 2.2
Latin America.... 1.3 0.4 30.5% 0.9 -- 3.5% 0.9
Other regions.... 1.1 0.1 14.7% 1.0 -- (5.9)% 1.0
------ ------- ------ ----- ------
Total unit sales.... 17.4 1.9 12.0% 15.5 (0.4) (2.6)% 15.9
====== ======= ===== ====== ====== ======= ======

ACRES:
North America.... 82.7 8.5 11.4% 74.2 (7.8) (9.5)% 82.0
====== ======= ===== ====== ====== ======= ======
</TABLE>

Higher seed corn unit sales were the primary factor contributing to the North
American improvement, principally the result of an increase in market size. Corn
acreage in 1996 increased approximately 11 percent over the prior year. In 1995,
government programs reduced the number of corn acres planted. In 1996, no
government restrictions and higher commodity prices encouraged the planting of
more corn acres. Although overall corn acreage rose in North America, extremely
wet field conditions in the Ohio River Valley region prohibited corn acres from
reaching our customers' original planting intentions. Some were forced to switch
to soybeans or other crops, which reduced our margin opportunities in that
region.

In North America, current year seed corn unit sales increased approximately 1.2
million units, or 11 percent, over the previous year, the result of a
world-class Pioneer sales and supply organization meeting the changing needs of
customers. Sales of two key hybrids accounted for approximately 28 percent of
the Company's 1996 and 1995 North American seed corn hybrid unit sales.

North American operating income was also positively affected by an approximate
one percent increase in the average seed corn selling price per unit. A shift by
customers to higher-priced, better-performing premium hybrids was responsible
for the increase. The 1996 list price for all hybrids remained unchanged from
1995.

<PAGE>

Higher corn seeding rates and replant units lead management to believe that the
Company's 1996 seed corn market share will be approximately 44 percent, a slight
decrease from the previous year. Market share declines occurred in some areas of
the Northern Corn Belt after disappointing yields in that region in 1995. Those
were partially offset by market share gains in other areas of North America.
Management is confident that the new hybrids introduced in 1996 and those
planned for 1997 will help regain market share.

Higher seed costs also impacted current year results. The smaller crop harvested
in 1995 compared to 1994 and higher commodity costs increased the average
per-unit cost of sales approximately $1.00. Increased provisions for inventory
reserves also impacted current year results. Provisions in 1996 were $2.22 per
unit, compared to $1.31 per unit in 1995. The increase in 1996 was the result of
reserving inventory for a few particular hybrids and the higher production cost
of the 1995 seed crop.

Operations in the Company's European region (Europe, CIS, Turkey, Australia, and
Japan) and Latin America also played a significant role in the increase in seed
corn operating income.

Record unit sales of corn grain hybrids across all of Southern Europe accounted
for virtually the entire increase in European operating income in 1996.
Increased market size and market share in Spain and increased market share and
price in Italy and Greece were the significant factors contributing to this
improvement.

Latin American operations improved principally the result of increased market
size in Argentina due to a strong commodity price within the country.

Worldwide research and product development expenses for corn totaled $90
million, a three percent increase over 1995, as the Company continued its
emphasis on developing improved products for customers. The increase was due to
the expansion of biotechnology projects, research collaborations, and trait and
technology development.

For 1996, Pioneer research efforts created 24 new corn hybrids for release to
customers in North America. There are also 47 hybrids currently in the later
stages of testing, which have average yields greater than the current leader
package released in 1996. Pioneer is bringing new products to the market faster
than before, with the goal to always provide greater benefit to our customers.

Worldwide fixed selling and administrative expenses for corn increased $16
million, or nine percent, from 1995 levels. The major components of this
increase were a greater emphasis on the efforts of our nutrition and industry
markets (NIM) group and higher incentive compensation costs. Excluding these
items, fixed selling and administrative expenses increased one percent over
1995. Variable selling costs (commissions and shipping costs) as a percentage of
sales were comparable between the years.

Soybean Seed

The Company's second largest product in terms of revenue and operating income is
soybean seed. Operations in North America account for virtually all of the
worldwide soybean seed operating income. Growth of this product line over the
last several years continues, as evidenced by the $5 million, or 44 percent,
increase in North American operating income over a year ago.

<PAGE>

North American Soybean Market Share
1996 1995 1994
-----------------------------------

17.2% 17.5% 16.4%

North American Soybean Acreage
(in millions) 1996 1995 1994
-----------------------------------

66.4 64.6 63.8

North American Soybean Unit Sales
(in millions) 1996 1995 1994
-----------------------------------

11.338 10.961 9.396

Unit sales in North America increased three percent, to a record 11.3 million
units, the result of increased acreage. Current year list prices increased the
average per-unit sales price, however, higher per-unit cost of sales, the result
of higher commodity costs, offset most of the sales price improvement.

Twenty-one new soybean varieties were introduced in 1996. Five of these
varieties were resistant to the herbicide glyphosate -- the first large-scale
release of soybean varieties developed by using a combination of gene transfer
technology and traditional plant breeding. These new releases are evidence of
the Company's goal to provide higher-yielding and more valuable products to
customers.

Other Products

Other products operating results for 1996 improved $12 million over the prior
year, resulting from the improvement of several products. Increased North
American wheat acreage and increased North American sorghum acreage and price
contributed to the current year improvement.

Other Products Net Sales and Combined Product Line Operating (Loss)

NET SALES:
Alfalfa............. $ 32 $ -- -- $ 32 $ -- -- $ 32
Sorghum............. 31 5 19.2% 26 3 13.0% 23
Wheat............... 25 7 38.9% 18 -- -- 18
Sunflower........... 22 3 15.8% 19 3 18.8% 16
Microbial products.. 28 1 3.7% 27 3 12.5% 24
Developing products. 42 4 10.5% 38 (15) (28.3)% 53
------ ------- ------ ------ -------
Total net sales..... $ 180 $ 20 12.5% $ 160 $ (6) (3.6)% $ 166
====== ======= ====== ====== ====== ======= =======

Total combined
operating (loss).. $ (3) $ 12 $ (15) $ 6 $ (21)
====== ======= ====== ====== =======
</TABLE>

<PAGE>

While these products as a whole operate at a loss, they provide the sales
organization a complete lineup of seed products to meet the needs of our
customers. As such, they support and contribute to the sales of the Company's
two major products, seed corn and soybean seed. In addition, the prospects for
some of these product lines to generate greater levels of operating profit in
the near-term are promising.

Corporate and Other Items

Indirect general and administrative expenses increased $3 million, or four
percent, in 1996. Higher incentive compensation costs were partially offset by
decreases in several expense categories resulting from active fixed cost
management.

Translation gains in Mexico recorded in 1995 not matched by the same or similar
items in the current year account for virtually all of the $4 million change in
net financial income.

The effective tax rate of 36 percent for 1996 was substantially unchanged from
the 36.5 percent effective tax rate for 1995.

The Company will be more affected by new patents, patent positions, and patent
lawsuits in the future than it has been in the past. However, this is an area in
which Pioneer has become increasingly active through its research, patenting,
alliance, and monitoring activities. Pioneer believes that its current patent
positions, technologies, germplasm, and sales force place the Company in a good
position to freely develop and commercialize the products which will be
necessary to effectively compete in the market place.

Year Ended August 31, 1995, Compared to the Year Ended August 31, 1994

Hybrid Seed Corn

Planted corn acreage had a significant impact on 1995 operating income in North
America. Acreage planted to corn decreased ten percent from 1994. A major factor
contributing to the acreage decrease was a change in the U.S. government
set-aside program which required farmers participating in the 1995 feed grain
program to keep their corn acres at 92.5 percent or less of their historical
corn acreage base, down from 100 percent in 1994.

In addition, high cotton prices induced some farmers in the South to switch
acreage to cotton while wet conditions in the Corn Belt forced affected farmers
to switch acreage from corn to other crops such as soybeans. Others were never
able to plant a crop. As a result, the Company sold approximately 900,000 fewer
units in 1995.

Seed corn pricing was also a major factor in 1995 financial results. The average
per-unit sales price increased three percent due to an increase in the list
price of key hybrids and a higher-priced sales mix. The higher-priced sales mix
occurred as customers shifted their purchases to higher-priced,
better-performing hybrids, which are more profitable to growers and to Pioneer.

The Company's 1995 seed corn market share approximated 45 percent - comparable
to 1994. Maintaining market share was a challenge in a year when high levels of
seed inventory throughout the industry led to aggressive competition. Our sales
and supply management groups were able to use the flexibility of our product
lineup to respond to the changing needs of customers, providing them with
appropriate products when and where they were needed as growing conditions
changed.

<PAGE>

Higher seed corn yields from the 1994 crop also provided positive results,
reducing the average per unit cost of seed corn by $.80 per unit. Higher
operational fixed costs and provisions for inventory losses offset $7 million of
the improvements gained in production costs. Provisions for inventory reserves
totaled $1.31 per unit in 1995 compared to $.93 per unit in 1994.

Research expenses for corn in North America increased $11 million, or 18
percent, from 1994 levels. Planned growth in winter nursery costs and expansion
of biotechnology projects were the main factors contributing to this increase.

North American fixed selling and administrative expenses for seed corn decreased
$4 million, or five percent, from 1994 levels, the result of lower performance
incentive costs. Variable selling costs (commissions and shipping costs) as a
percentage of sales in North America increased from 1994 because of additional
expenses incurred shipping product to customers who switched seeds due to
weather related problems.

The Company's European region showed an increase in operating income from 1994.
Approximately $11 million of this change was the result of the weakening of the
U.S. dollar against certain European currencies. On a constant dollar basis,
1995 European operations provided a slight decrease in operating income from
1994.

Italian operations posted gains in operating income over 1994, the result of
lower production costs and fewer inventory writedowns. An increase in the
average unit sales price, an increase in market size, and market share gain over
1994 also contributed to the improvement.

In 1994, the Company acquired the remaining 65 percent interest in the French
entity, which handled distribution and marketing of PioneerAE brand products.
Increased sales and expenses were reported because the subsidiary was reflected
in the 1995 financials on a consolidated basis for the first time. Overall,
consolidated country operating income for France decreased due to fewer unit
sales.

Operating income in Hungary and Germany each decreased as unit sales declined
and inventory writedowns increased.

Mexico's operating income decreased due largely to the devaluation of the
Mexican peso. Also, nearly 35 percent fewer acres were planted to seed corn in
Northeast and Northwest regions because of drought, subsidy reductions, and
NAFTA quotas. These factors reduced unit sales 25 percent.

In Asia seed corn operating income in 1995 improved from 1994 levels. Increased
market size and market share in the Philippines, increased market size in
Indonesia, and cost savings contributed to the improvement in this region.

Soybean Seed

In 1995, North American operations accounted for virtually all of the worldwide
soybean seed operating income. North American unit sales increased 17 percent
from 1994, a result of market share gains and increased acreage. A continued
recognition of the value associated with Pioneer brand soybeans provided for
market share gains, as customers understood that planting Pioneer soybean seed,
much like Pioneer seed corn, provides economic value.

North American soybean acreage increased as poor weather conditions forced
customers who planned to plant corn to switch to soybeans. Higher overall
acreage and increased market share contributed $6 million more to operating
income than in 1994.

<PAGE>

The average sales price of soybean seed decreased approximately three percent
from 1994 levels, the result of bulk sales and early payment discounts. However,
contribution per unit remained the same because of lower cost of sales, the
result of lower commodity costs.

Increased investments in research and additional fixed selling and general and
administrative expenses reduced operating income $4 million from 1994.

Other Products

Operating results for other products increased from those recorded a year ago.
After allocation of fixed costs, these products as a whole were not profitable,
however, they provide value beyond the financial bottom line. These products
provide the sales organization a full line of seed products, significantly
aiding in the sale of higher margin products.

Corporate Items

Indirect general and administrative expenses increased $5 million in 1995, a
seven percent increase over 1994. The major components of this increase were
personnel costs and increased charitable contributions.

Net interest income for 1995 increased $2 million compared to a year ago because
of higher interest rates earned on current year investments and decreased
interest expense on lower levels of external borrowing.

Net exchange gain increased $6 million from 1994 levels. The strengthening of
certain European currencies against the U.S. dollar and translation gains in
Mexico accounted for a majority of the improvement.

A reduction in taxes on foreign earnings reduced the 1995 effective tax rate
to 36.5 percent, compared to 38.5 percent in 1994.

Restructuring and Settlements

On July 13, 1994, the U.S. Circuit Court of Appeals affirmed a prior court's
decision in the Company's lawsuit against Holden Foundation Seeds, Inc.,
awarding Pioneer damages for lost profits from the misappropriation of
germplasm. In August, the Company received the settlement plus interest totaling
$52 million. The Company also incurred $7 million of restructuring charges.

Liquidity and Capital Resources

Due to the seasonal nature of the agricultural seed business, the Company
generates most of its cash from operations during the second and third quarters
of the fiscal year. Cash generated during this time is used to pay the
commercial paper borrowings and accounts payable, which are the Company's
primary sources of credit during the first and fourth quarters of the fiscal
year. Any excess funds available are invested, primarily in short-term
commercial paper.

Historically, the Company has financed growth through earnings. Cash provided by
operating activities was $389 million in 1996, compared to $140 million and $331
million in 1995 and 1994, respectively. Collections on increased sales and lower
inventory levels were largely responsible for the high levels of cash provided
by operating activities for 1996. Higher inventory levels and a decrease in
accounts payable and accrued expenses contributed to the decrease in cash
provided by operating activities during 1995. Cash flow in 1994 was favorably
impacted by the settlement and collection of damages on the Holden suit.

<PAGE>

Most of the Company's financing is done through the issuance of commercial paper
in the U.S., backed by revolving and seasonal lines of credit. In addition,
foreign lines of credit and direct borrowing agreements are relied upon to
support overseas financing needs. Short-term debt at August 31, 1996, totaled
$13 million, a $45 million decrease from 1995 and $1 million lower than 1994.
Increased sales in 1996 and the collection of damages on the Holden suit during
August of 1994 allowed for lower levels of borrowing during those periods. In
1996, short-term borrowings peaked at $238 million compared to $217 and $164
million in 1995 and 1994, respectively.

At August 31, 1995, the Company had a $100 million private medium-term note
program of which $50 million was available. The medium term note matured in
February, 1996.

In 1996, short-term domestic investments peaked at $234 million compared to $257
million and $326 million in 1995 and 1994, respectively. Short-term investments
are made through a limited number of reputable institutions after evaluation of
investment procedures and credit quality. Pioneer invests in only high-quality,
short-term securities, primarily commercial paper. Individual securities must
meet credit quality standards, and the portfolios are monitored to ensure
diversification among issuers.

Fiscal 1996 and 1997 Available Domestic Lines of Credit
(in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
--------------------------------------------------

Revolving $ 200 $ 200 $ 200 $ 200
Seasonal 100 100 - -
---- ---- ----- ----
Total $ 300 $ 300 $ 200 $ 200
==== ==== ===== ====

The Company believes the domestic lines of credit available in 1997 are
sufficient to meet domestic borrowing needs. Revolving line of credit agreements
expire August, 2001. The Company also has a seasonal revolving credit facility
to meet peak borrowing needs which expires August, 1997.

At year end, cash and cash equivalents totaled $99 million, up from $84 million
at August 31, 1995. It is the Company's policy to repatriate excess funds
outside the U.S. not required for operating capital or to fund asset purchases.

Capital expenditures, including business and technology investments, were $164
million in 1996 compared to $86 million in 1995 and $79 million in 1994. In
1996, total expenditures were higher, principally due to expanded production
capacity and technology acquisitions. Capital expenditures for 1997 are expected
to approximate $125 million and are expected to be funded through earnings.

Dividends paid in July of 1996 increased to $.23 per share, up 15 percent from
the $.20 per share dividend paid the prior four quarters. The Company's dividend
policy is to annually pay out 40 percent of a four-year rolling average of
earnings.

Annual Dividends Paid
(in millions) 1994 1995 1996
---------------------------

$ 52 $ 60 $ 69

During 1996, 1.5 million shares of the Company's stock were repurchased under a
Board authorized repurchase plan at a total cost of $62 million. At August 31,
1996, authorized shares remaining to be purchased under the plan totaled 2.5
million.

<PAGE>

Effects of Inflation

Inflation typically is not a major factor in the Company's operations. The cost
of seed products is largely influenced by seed field yields and commodity prices
which are not impacted by inflation. Costs normally impacted by inflation-wages,
transportation, and energy-are a relatively small part of the total operations.

APPENDIX TO ANNUAL REPORT TO SHAREHOLDERS

The table titled "Sales by Region - 1996" appears in The Company's Business of
the Annual Report to Shareholders in the form of a bar graph.

The table titled "North American Soybean Market Share" appears in the Management
Discussion and Analysis of the Annual Report to Shareholders in the form of a
bar graph

The table titled "North American Soybean Average" appears in the Management
Discussion and Analysis of the Annual Report to Shareholders in the form of a
bar graph

The table titled "North American Soybean Unit Sales" appears in the Management
Discussion and Analysis of the Annual Report to Shareholders in the form of a
bar graph

The table titled "Fiscal 1996 and 1997 Available Domestic Lines of Credit"
appears in the Management Discussion and Analysis of the Annual Report to
Shareholders in the form of a bar graph

The table titled "Annual Dividends Paid" appears in the Management Discussion
and Analysis of the Annual Report to Shareholders in the form of a bar graph

<PAGE>

Independent Auditors' Report

To the Shareholders
Pioneer Hi-Bred International, Inc.:

We have audited the accompanying consolidated balance sheets of Pioneer Hi-Bred
International, Inc. and subsidiaries as of August 31, 1996 and 1995, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the years in the three-year period ended August 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Pioneer Hi-Bred
International, Inc. and subsidiaries as of August 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the years in the
three-year period ended August 31, 1996, in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

Des Moines, Iowa
October 4, 1996

<PAGE>

Consolidated Statements of Income

Years Ended August 31, 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------
(In millions, except per share amounts)
<S> <C> <C> <C>

Net sales............................................. $ 1,721 $ 1,532 $ 1,479
------ ------ ------

Operating costs and expenses:
Cost of goods sold................................ $ 727 $ 642 $ 606
Research and product development.................. 136 130 114
Selling........................................... 382 354 335
General and administrative........................ 129 126 123
Restructuring and settlements..................... -- -- (45)
------ ------ ------
$ 1,374 $ 1,252 $ 1,133
------ ------ ------

Operating income.................................. $ 347 $ 280 $ 346

Investment income..................................... 22 23 19
Interest expense...................................... (11) (13) (11)
Net exchange gain (loss).............................. (4) 1 (5)
------ ------ ------

Income before items below......................... $ 354 $ 291 $ 349

Provision for income taxes............................ (127) (106) (134)
Minority interest and other........................... (4) (2) (2)
------ ------ ------

Net income........................................ $ 223 $ 183 $ 213
====== ====== ======

Net income per common share........................... $ 2.68 $ 2.16 $ 2.40
====== ====== ======

Average shares outstanding............................ 83.2 84.5 88.6

<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>

<PAGE>

Consolidated Balance Sheets

ASSETS August 31, 1996 1995
- -----------------------------------------------------------------------------------------------------
(In millions)
<S> <C> <C>

CURRENT ASSETS
Cash and cash equivalents............................ $ 99 $ 84
Receivables:
Trade............................................. 208 163
Other............................................. 35 46
Inventories.......................................... 382 426
Deferred income taxes................................ 58 49
Other current assets................................. 2 2
------ ------

Total current assets.............................. $ 784 $ 770
------ ------

LONG-TERM ASSETS........................................ $ 81 $ 41
------ ------

PROPERTY AND EQUIPMENT
Land and land improvements........................... $ 63 $ 61
Buildings............................................ 354 331
Machinery and equipment.............................. 512 481
Construction in progress............................. 56 37
------ ------
$ 985 $ 910
Less accumulated depreciation........................ 475 438
------ ------
$ 510 $ 472
------ ------

INTANGIBLES............................................. $ 47 $ 10
------ ------

$ 1,422 $ 1,293
====== ======

<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>

<PAGE>

Consolidated Balance Sheets

LIABILITIES AND SHAREHOLDERS' EQUITY August 31, 1996 1995
- -----------------------------------------------------------------------------------------------------
(In millions)
<S> <C> <C>

CURRENT LIABILITIES
Short-term borrowings................................ $ 13 $ 58
Current maturities of long-term debt................. 12 53
Accounts payable, trade.............................. 89 58
Accrued compensation................................. 65 45
Income taxes payable................................. 63 23
Other................................................ 46 43
------ ------

Total current liabilities......................... $ 288 $ 280
------ ------

LONG-TERM DEBT.......................................... $ 25 $ 18
------ ------

DEFERRED ITEMS
Postretirement benefits.............................. $ 40 $ 37
Other................................................ 44 38
------- -------
$ 84 $ 75
------ ------

CONTINGENCIES

MINORITY INTEREST IN SUBSIDIARIES....................... $ 7 $ 7
------ ------

SHAREHOLDERS' EQUITY Capital stock:
Preferred, authorized 10,000,000 shares; issued none $ -- $ --
Common, $1 par value; authorized 150,000,000 shares;
issued 92,693,578 shares....................... 93 93
Additional paid-in capital........................... 23 18
Retained earnings.................................... 1,272 1,118
Unrealized gain on available-for-sale securities, net 11 --
Cumulative translation adjustment.................... (3) 1
------ ------
$ 1,396 $ 1,230

Less:
Cost of common shares acquired for the treasury, 1996
-- 10,304,700 shares; 1995 -- 9,206,749 shares. (364) (303)
Unearned compensation............................. (14) (14)
------ ------

$ 1,018 $ 913
------ ------

$ 1,422 $ 1,293
====== ======

<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>

<PAGE>

Consolidated Statements of Cash Flows

Years Ended August 31, 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................ $ 223 $ 183 $ 213
Noncash items included in net income:
Depreciation ................................. 65 61 60
Amortization.................................. 12 13 15
Restructuring of operations................... -- -- 3
Provision for doubtful accounts............... 5 2 5
(Gain) loss on disposal of assets............. (4) 1 2
Foreign currency exchange (gain) loss......... (4) 2 4
Other noncash items........................... 5 4 (8)
Change in assets and liabilities, net:
Receivables................................... (46) (20) (31)
Inventories................................... 43 (68) 26
Accounts payable and accrued expenses......... 61 (39) 23
Income taxes payable ......................... 40 (8) 12
Other assets and liabilities.................. (11) 9 7
------ ------ ------

Net cash provided by operating activities..... $ 389 $ 140 $ 331
------ ------ ------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of assets...................... $ 15 $ 6 $ 6
Payments received on notes receivable............. 12 6 9
Disbursements for notes receivable................ (2) (4) (6)
Capital expenditures.............................. (116) (86) (79)
Technology investments............................ (48) -- --
Other, net........................................ (5) (4) (8)
------ ------ ------

Net cash used in investing activities......... $ (144) $ (82) $ (78)
------ ------- ------

CASH FLOWS FROM FINANCING ACTIVITIES
Net short-term borrowings (payments).............. $ (42) $ 45 $ (47)
Proceeds from long-term borrowings................ 1 5 3
Principal payments on long-term borrowings........ (55) (2) (5)
Purchase of common stock.......................... (62) (100) (113)
Cash dividends paid............................... (69) (60) (52)
------ ------ ------

Net cash used in financing activities......... $ (227) $ (112) $ (214)
------ ------ ------

Effect of foreign currency exchange rate
changes on cash and cash equivalents.............. $ (3) $ 3 $ --
------ ------ ------
Effect of change in year-end of the Company's international
subsidiaries on cash and cash equivalents......... $ -- $ -- $ 4
------ ------ ------
Net increase (decrease) in cash and cash
equivalents................................. $ 15 $ (51) $ 43
Cash and cash equivalents, beginning.................. 84 135 92
------ ------ ------

CASH AND CASH EQUIVALENTS, ENDING..................... $ 99 $ 84 $ 135
====== ====== ======

<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>

<PAGE>

Consolidated Statements of Shareholders' Equity

Years Ended August 31, 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C>

COMMON STOCK
Balance, beginning and ending............................ $ 93 $ 93 $ 93
------- ------ ------

ADDITIONAL PAID-IN CAPITAL
Balance, beginning....................................... $ 18 $ 15 $ 13
Common stock issued from treasury for restricted stock plan 3 1 1
Tax benefits related to restricted stock plan......... 2 2 1
------- ------ ------
Balance, ending.......................................... $ 23 $ 18 $ 15
------- ------ ------

RETAINED EARNINGS
Balance, beginning....................................... $ 1,118 $ 995 $ 835
Net income............................................ 223 183 213
Change in reporting period of international subsidiaries -- -- (1)
Cash dividends on common stock (1996 -- $.83 per share;
1995 -- $.71 per share; 1994 -- $.59 per share).... (69) (60) (52)
------- ------ ------
Balance, ending.......................................... $ 1,272 $ 1,118 $ 995
------- ------ ------

UNREALIZED GAIN ON AVAILABLE-FOR-SALE SECURITIES, NET
Balance, beginning....................................... $ -- $ -- $ --
Current unrealized gain............................... 11 -- --
------- ------ ------
Balance, ending.......................................... $ 11 $ -- $ --
------- ------ ------

CUMULATIVE TRANSLATION ADJUSTMENT
Balance, beginning....................................... $ 1 $ (3) $ (7)
Current translation adjustment........................ (4) 4 4
------- ------ ------
Balance, ending.......................................... $ (3) $ 1 $ (3)
------- ------ ------

TREASURY STOCK
Balance, beginning....................................... $ (303) $ (207) $ (97)
Purchase of common stock for the treasury (1996 --1,148,900
shares; 1995 -- 2,844,209 shares; 1994 -- 3,325,200 shares)(62) (100) (113)
Common stock issued for restricted stock plan, net of forfeitures
and stock used to satisfy withholding taxes
(1996 -- 50,949 shares; 1995 -- 116,549 shares; 1994 --
97,336 shares)..................................... 1 4 3
------- ------ ------
Balance, ending.......................................... $ (364) $ (303) $ (207)
------- ------ ------

UNEARNED COMPENSATION
Balance, beginning....................................... $ (14) $ (12) $ (12)
Net additions of common stock to restricted stock plan (6) (8) (4)
Amortization of unearned compensation................. 6 6 4
------- ------ ------
Balance, ending.......................................... $ (14) $ (14) $ (12)
------- ------ ------

TOTAL SHAREHOLDERS' EQUITY AT YEAR END...................... $ 1,018 $ 913 $ 881
======= ====== ======

<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Business and Significant Accounting Policies

Nature of business:

The Company's business is the broad application of the science of
genetics. Pioneer was founded in 1926 to apply newly discovered
genetic techniques to hybridize corn. Today, the Company
develops, produces, and markets hybrids of corn, sorghum, and
sunflowers; varieties of soybeans, alfalfa, wheat, and canola;
and microorganisms useful in crop and livestock production.
Approximately 89 percent of the Company's total net sales are
from the sale of hybrid seed and soybean seed within the regions
of North America and Europe.

Consolidation policy:

The consolidated financial statements include the accounts of the
Company and all of its subsidiaries. All material intercompany
balances and transactions have been eliminated in consolidation.

Use of estimates:

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements. Actual results could differ from
those estimates.

Cash equivalents:

The Company considers all liquid investments with a maturity at
purchase of three months or less to be cash equivalents.

Receivables:

Receivables are stated net of an allowance for doubtful accounts
of $23 million and $19 million at August 31, 1996 and 1995,
respectively.

Inventories:

Inventories are valued at the lower of cost (first-in, first-out
method) or market. Gains or losses on commodity hedging
transactions are included as a component of inventory.

Property and equipment:

Property and equipment is recorded at cost, net of an allowance
for loss on plant closings of $9 million at August 31, 1996 and
1995. Depreciation is computed primarily by the straight-line
method over estimated service lives of two to forty years.

<PAGE>

Long-term assets:

Certain long-term assets were classified as available-for-sale
securities. No available-for-sale securities were owned at August
31, 1995. Available-for-sale securities held at August 31, 1996,
consisted of an equity security with an original cost of $30
million and an unrealized gain of $17 million.

Intangibles:

Intangible assets are stated at amortized cost and are amortized
by the straight-line method over one-to twenty-year periods, with
the weighted-average amortization period approximating 12 years
for the year ended August 31, 1996. Accumulated amortization of
$36 million and $32 million at August 31, 1996 and 1995,
respectively, have been netted against these assets.

Basis of accounting:

Subsidiary and asset acquisitions are accounted for by the
purchase method.

Translation of foreign currencies and foreign exchange hedging:

All assets and liabilities in the balance sheets of foreign
subsidiaries whose functional currency is other than the U.S.
dollar are translated at year-end exchange rates. Translation
gains and losses are not included in determining net income but
are accumulated as a separate component of shareholders' equity.
However, for subsidiaries considered to be operating in highly
inflationary countries and for certain other subsidiaries, the
U.S. dollar is the functional currency, and translation gains and
losses are included in determining net income. Foreign currency
transaction gains and losses are included in determining net
income.

The Company uses a combination of forward foreign exchange
contracts and foreign currency option contracts to hedge open
foreign-denominated payables and receivables and also to hedge
firm sales and purchase commitments with its foreign
subsidiaries. Unrealized gains and losses on hedges of existing
foreign-denominated payables or receivables are included in other
assets or liabilities and are recognized in net exchange gain
(loss) in conjunction with the revaluation of the
foreign-currency-denominated transaction. Unrealized gains and
losses related to qualifying hedges of firm sales and purchase
commitments are deferred and recognized in income when the future
sales or purchases are recognized, or immediately if the
commitment is canceled. Option premiums paid are amortized to
income over the life of the contract.

Income taxes:

Income taxes are computed in accordance with SFAS No. 109.
Deferred income taxes have been provided on temporary differences
in the financial statement and income tax bases of certain assets
and liabilities.

<PAGE>

Deferred income taxes have not been provided on the undistributed
earnings or the cumulative translation adjustment of the foreign
subsidiaries to the extent the Company intends to reinvest such
undistributed earnings indefinitely or to repatriate them only to
the extent that no additional income tax liability is created.
The cumulative amount of the undistributed net income and
translation adjustment of such subsidiaries is approximately $172
million at August 31, 1996. The Company files consolidated U.S.
federal income tax returns with its domestic subsidiaries;
therefore, no deferred income taxes have been provided on the
undistributed earnings of those subsidiaries.

Pension plans:

The Company's domestic and Canadian operations have defined
benefit pension plans covering substantially all their employees.
The plans provide benefits that are based on average monthly
earnings of the employees. The funding policy is to contribute
annually an amount to fund pension cost as actuarially determined
by an independent pension consulting firm.