Three Months Ended

Six Months Ended

CONSOLIDATED INCOME STATEMENT(a)

June 30

(Dollars in millions, except per share)

2002

2001

2002

2001

SALES (b)

$6,700

$6,997

$12,842

$13,856

Other Income(c)

25

216

82

386

6,725

7,213

12,924

14,242

Cost of Goods Sold and Other Operating Charges(d)

4,369

4,615

8,353

9,101

Selling, General and Administrative Expenses

727

825

1,372

1,582

Depreciation

314

340

619

667

Amortization of Goodwill and Other Intangible Assets(e)

50

113

101

225

Research and Development Expense(f)

319

437

606

847

Interest Expense(g)

110

166

200

344

Employee Separation Costs and Write-Down of Assets(h)

246

1,046

255

1,046

Gain on Sale of DuPont Pharmaceuticals(i)

(19)

-

(19)

-

6,116

7,542

11,487

13,812

MINORITY INTERESTS

609

(329)

1,437

430

Provision for (Benefit from) Income Taxes(j)

35

(139)

363

133

Minority Interests in Earnings of Consolidated Subsidiaries

31

23

52

26

CHANGES IN ACCOUNTING PRINCIPLES

Net of Income Taxes(k)

-

-

(2,944)

11

NET INCOME (LOSS)(b)

$ 543

$ (213)

$ (1,922)

$ 282

COMMON STOCK(l)

$ .54

$ (.21)

$ 1.02

$ .26

-

-

(2.96)

.01

$ .54

$ (.21)

$ (1.94)

$ .27

COMMON STOCK(l)

$ .54

$ (.21)

$ 1.01

$ .25

-

-

(2.94)

.01

$ .54

$ (.21)

$ (1.93)

$ .26

DIVIDENDS PER SHARE OF COMMON STOCK

$ .35

$ .35

$ .70

$ .70

(a)

recurring adjustments) necessary to provide a fair presentation of the financial position, results of operations and cash flows for the dates and periods covered. Results for interim periods should not be considered indicative of results for a full year. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the registrant's Annual Report on Form 10-K for the year ended December 31, 2001. Certain reclassifications of prior years' data have been made to conform to current year classifications.

(b)

INDUSTRY SEGMENT INFORMATION(1)

(c)

Other income for the three months ended June 30, 2002 decreased $191 versus the same period in the prior year. The change is primarily due to increased net monetary asset positions and a weakening U.S. dollar, which, when hedged, created net pretax losses totaling $126 in 2002 compared to $13 in 2001 (excluding equity affiliates). The pretax losses are largely offset by associated tax benefits. In addition, second quarter 2001 includes a $52 gain resulting from the company's sale of stock that reduced its ownership of DuPont Photomasks.

Year-to-date 2002 other income decreased $304, also primarily due to net exchange losses, which totaled $213 this year versus $10 last year. The 2002 year-to-date net exchange losses also include a loss of $63 resulting from the mandatory conversion of the company's U.S. dollar-denominated trade receivables to Argentine pesos and moving from a preferential to a free-market exchange.

(d)

Second quarter 2002 includes charges of $47 to write off inventory associated with discontinued specialty herbicide products and $50 to establish a litigation reserve related to a previously divested business. Year-to-date 2001 includes a charge of $133 resulting from the sale of acquired Pioneer inventories, which, in accordance with purchase accounting rules, were recorded at estimated fair value on October 1, 1999.

(e)

On January 1, 2002, the company adopted Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," which requires that goodwill and indefinite-lived intangible assets no longer be amortized. In addition, an initial (and at least annually thereafter) impairment test of these assets must be performed. If the initial test results in impairment, an adjustment is to be recorded in net income as a cumulative effect of a change in accounting principle (net of tax). Although a transitional impairment loss for goodwill may be measured in other than the first interim reporting period, it must be recognized in financial statements in the first interim period irrespective of the period in which measurement has been completed. Impairment losses after the initial adoption impairment are to be recorded as part of income from continuing operations.

During the second quarter of 2002, the company completed its initial review of goodwill and recorded a cumulative effect of a change in accounting principle of $2,944 effective January 1, 2002 to reduce the carrying value of its goodwill. As there is no tax benefit associated with this charge (goodwill arose in connection with the acquisition of stock versus a purchase of assets), both the pretax and after-tax amounts are the same. The details of this noncash charge are as follows:

A variety of fair valuation methods were used in measuring for impairment, including discounted net cash flow and comparable company multiples of revenues and EBITDA (earnings before interest, taxes, depreciation and amortization). The primary factors that resulted in the impairment charge in the Agriculture & Nutrition segment are the difficult economic environment in the agriculture sector, slower than expected development of and access to biotech traits and a slower than expected rate of acceptance by the public of new ag biotech products. While the original strategic intent of the Textiles & Interiors commercial flooring business has not changed, the realization of the economic benefits from the business has been limited by poor economic conditions, particularly in the commercial office sector, and lower than expected margins in the competitive distribution market. These factors contributed to goodwill impairment in this segment. No impairment charge was appropria te for either of these businesses under the Financial Accounting Standard Board's previous impairment standard, which was based on undiscounted cash flows.

The changes in goodwill through the period ended June 30, 2002 were as follows:

Assembled

Goodwill

Cumulative

Balance as of

Workforce

Adjustments and

Effect of

Balance as of

December 31, 2001

Reclassification

Acquisitions

Adoption

June 30, 2002

Agriculture & Nutrition

$2,891

$55*

$ (2)

$(2,866)

$ 78

Coatings & Color

711

-

1

-

712

Electronic & Communication

40

-

-

-

40

Performance Materials

2

-

-

-

2

Pharmaceuticals

-

-

-

-

-

Safety & Protection

12

-

5

-

17

Textiles & Interiors

88

-

-

(78)

10

Other

2

-

215**

-

217

$3,746

$55

$219

$(2,944)

$1,076

*

$113, net of $24 in accumulated amortization and $34 in deferred taxes.

**

Attributable to a preliminary allocation of purchase price related to the recent acquisition of Liqui-Box Corporation.

Amortization expense of $47 (pretax) and $43 (after-tax) was recorded in the second quarter of 2001, and $92 (pretax) and $84 (after-tax) was recorded during the six months ended June 30, 2001 related to goodwill and indefinite-lived intangible assets that are no longer being amortized due to the adoption of SFAS No. 142. Segment detail related to these amounts (after-tax) is shown below for the three- and six-month periods ended June 30, 2001:

The following table provides a reconciliation of reported net income to adjusted net income and adjusted earnings per share amounts for the three- and six-month periods ended June 30, 2002 and 2001 as if the nonamortization provisions of SFAS No. 142 had been applied as of January 1, 2001:

As additional information, the following table provides a reconciliation of reported net income to adjusted net income and adjusted earnings per share amounts for the years 1999 through 2001 as if the nonamortization provisions of SFAS No. 142 had been applied:

The gross carrying amounts and accumulated amortization in total and by major class of other intangible assets are as follows:

December 31, 2001

Accumulated

Gross

Amortization

Net

Intangible Assets Subject to Amortization

$2,336

$(610)

$1,726

53

(25)

28

49

(7)

42

213

(79)

134

2,651

(721)

1,930

Intangible Assets Not Subject To Amortization

113

(24)

89

1,209

(77)

1,132

1,322

(101)

1,221

Total Other Intangible Assets

$3,973

$(822)

$3,151

June 30, 2002

Accumulated

Gross

Amortization

Net

Intangible Assets Subject to Amortization

$2,352

$(696)

$1,656

63

(30)

33

49

(7)

42

192

(89)

103

2,656

(822)

1,834

Intangible Assets Not Subject To Amortization

1,132**

-

1,132

1,132

-

1,132

Total Other Intangible Assets

$3,788

$(822)

$2,966

The aggregate amortization expense for definite-lived intangible assets was $50 and $101 for the three and six months ended June 30, 2002, respectively. The estimated aggregate pretax amortization for 2002 and each of the next five years is approximately $200, $200, $200, $195, $180, and $170.

(f)

Research and development expense (R&D) for the three months ended June 30, 2002 decreased $118 or 27% from the same period in the prior year. This change is primarily due to the divestiture of DuPont Pharmaceuticals, which accounted for approximately 31% of total R&D expense in the second quarter of 2001.

Year-to-date 2002 R&D expense decreased $241 or 28.5% over the prior year, also due to the divestiture of DuPont Pharmaceuticals.

(g)

Second quarter 2002 Interest Expense includes a charge of $21 for the early extinguishment of $242 of outstanding debentures. Due to the company's early adoption of SFAS No. 145 effective April 1, 2002, such extinguishment of debt would not be considered extraordinary as defined by APB Opinion No. 30 and therefore, is reported as a component of income from continuing operations. This charge principally represents premiums paid to investors. Interest expense excluding this charge is $77 lower in the second quarter of 2002 versus second quarter of 2001, primarily due to lower levels of debt.

(h)

During the second quarter of 2002, the company recorded total charges of $246 in the Textiles & Interiors and the Agriculture & Nutrition segments. A charge of $209 was recorded in the Textiles & Interiors segment in connection with a restructuring program instituted in the second quarter to better align the business with accelerating structural changes so as to become a more competitive integrated enterprise and to respond to continuing weakening economic conditions, particularly in the U.S. textile industry. This charge includes $154 related to termination payments for approximately 2,000 employees involved in technical, manufacturing, marketing and administrative activities. Termination benefits were communicated to employees prior to June 30, 2002, and such benefits may be settled over time or at the time of termination. Employee terminations will be completed by June 2003.

In addition, the second quarter 2002 charge in Textiles & Interiors included $55 related to the write-down of operating facilities that were shut down during the second quarter principally due to transferring production to more cost competitive facilities. This charge covers the net book value of facilities in the United States and South America of $42 and the estimated dismantlement and removal costs less proceeds from the sale of equipment and scrap of $13. Dismantlement and removal activities are expected to be essentially complete in 2003. The effect of these shutdowns on operating results was not material.

A charge of $37 was recorded in the Agriculture & Nutrition segment in connection with the company reaching a definitive agreement to sell a European manufacturing facility that was no longer required under the strategic business plan. This charge covers principally the write-down of the net book value of the facilities to fair value less cost to sell. The transaction is expected to close by mid-2003.

Account balances and activity for the second quarter restructuring programs are as follows:

In addition to the above charges in the second quarter, year-to-date 2002 includes a net charge of $9 related to exiting joint ventures in China. Of this net charge, $39 was recorded to withdraw from a polyester joint venture due to depressed market conditions. This charge was partly offset by a $30 gain resulting principally from a favorable litigation settlement associated with the company's exit from a nylon joint venture in 1999.

Second quarter and year-to-date 2001 charges of $1,046 include $441 associated with termination payments for approximately 5,500 employees, $303 for asset impairments (principally the write-down of polyester assets to be sold to Alpek), and $302 related to the shutdown and dismantlement of several facilities. At June 30, 2002, essentially all employees had been terminated thereby completing this portion of the program. A complete discussion of these restructuring activities is contained in Item 8 of the company's Annual Report on Form 10-K for the period ended December 31, 2001 at Note 6 "Employee Separation Costs and Write-down of Assets."

Year-to-date 2002, there were no other changes to estimates related to the company's reserves established for restructuring initiatives in prior years. Account balances and activity for these programs are as follows:

Employee

Separation

Other

Costs

Exit Costs

Total

Balance at December 31, 2001

$215

$ 71

$286

Changes to accounts:

Employee separation settlements

(86)

-

(86)

Other expenditures

-

(20)

(20)

Balance at March 31, 2002

129

51

180

Changes to accounts:

Employee separation settlements

(28)

-

(28)

Other expenditures

-

(24)

(24)

Balance at June 30, 2002

$101

$ 27

$128

Balance at December 31, 2001

$ 7

$ -

$ 7

Changes to accounts:

Employee separation settlements

(5)

-

(5)

Balance at March 31 and June 30, 2002

$ 2

$ -

$ 2

(i)

During second quarter 2002, a benefit of $19 was recorded to reflect final settlement with Bristol-Myers Squibb in connection with the sale of DuPont Pharmaceuticals, which occurred on October 1, 2001.

(j)

Second quarter 2002 includes a net $65 noncash tax benefit, principally due to agreement on certain prior year audit issues previously reserved for, partly offset by the establishment of a reserve for an additional tax contingency. In addition, the second quarter 2002 tax provision reflects income tax benefits associated with losses on forward exchange contracts that were entered into pursuant to the company's ongoing program to reduce foreign currency exchange exposure. See also Note (c).

(k)

On January 1, 2002, the company adopted SFAS No. 142 which resulted in a cumulative effect type charge to income of $2,944 (see Note (e)). On January 1, 2001, the company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" as amended, which resulted in a pretax cumulative effect type benefit to income of $19 ($11 after-tax).

(l)

Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares (the denominator) for the period. The numerator for both income (loss) before cumulative effect of a change in accounting principle and net income (loss) is reduced by preferred dividends of $2.5 for the three-month periods ended June 30, 2002 and 2001 and $5.0 for the six-month periods ended June 30, 2002 and 2001. For diluted earnings per share, the denominator is based on the following weighted-average number of common shares and includes the additional common shares that would have been outstanding if potentially dilutive common shares had been issued:

The difference between basic and diluted weighted-average common shares outstanding generally results from the assumption that dilutive stock options outstanding were exercised. The diluted weighted-average common shares outstanding for the three-month period ended June 30, 2001 excludes incremental shares of 6,025,863 related to in-the-money stock options. These shares are excluded due to their antidilutive effect as a result of the company's loss before cumulative effect of a change in accounting principle for the three months ended June 30, 2001.

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

Compensation expense (benefit) recognized in income for stock-based employee compensation awards was not material for the three and six months ended June 30, 2002, and 2001.

(m)

Inventories

June 30,

December 31,

2002

2001

Finished Products

$2,555

$2,652

Semifinished Products

786

1,185

Raw Materials and Supplies

901

844

4,242

4,681

Less: Adjustment of Inventories to a

Last-In, First-Out (LIFO) Basis

483

466

$3,759

$4,215

(n)

Contingencies

The company is subject to various lawsuits and claims arising out of the normal course of its business. These lawsuits and claims include actions based on alleged exposures to products; intellectual property and environmental matters; and contract and antitrust claims. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the final outcome of these lawsuits and claims in the opinion of company counsel. However, while the ultimate liabilities resulting from such lawsuits and claims may be significant to the results of operations in the period recognized, management does not anticipate they will have a material adverse effect on the consolidated financial position or liquidity of the company.

BenlateÒ

Since 1991 DuPont has been served with several hundred lawsuits alleging property damage, including damage to shrimping operations from various forms of BenlateÒ fungicide. A small number of cases allege personal injuries. Many of these cases include allegations of fraud and misconduct. The majority of these lawsuits were disposed of by trial, settlement or dismissal. However, certain plaintiffs who previously settled with the company have filed cases alleging fraud and other misconduct relating to the litigation and settlement of BenlateÒ claims. There are approximately 110 cases pending. DuPont believes that BenlateÒ did not cause the damages alleged in these cases and denies the allegations of fraud and misconduct. DuPont intends to defend itself in these cases.

Environmental

Form 10-K for the period ended December 31, 2001. At June 30, 2002, such reserves amounted to $384 and, in management's opinion, are appropriate based on existing facts and circumstances. Under adverse changes in circumstances, potential liability may exceed amounts accrued. In the event that future remediation expenditures are in excess of amounts accrued, they may be significant to results of operations of the company in the period recognized but management does not anticipate that they will have a material adverse effect on the company's consolidated financial position or liquidity.

Other

The company has directly guaranteed various debt obligations under agreements with certain affiliated and other companies to provide specified minimum revenues from shipments or purchases of products. At December 31, 2001, the company had directly guaranteed $953 of the obligations of certain affiliated companies and others. This amount has not changed significantly through the end of the second quarter of 2002 and no material loss is anticipated by reason of such agreements and guarantees. In addition, the company has historically guaranteed certain obligations of Conoco Inc., its former subsidiary, which totaled $267, plus interest, at June 30, 2002.

(o)

The following sets forth the company's Total Comprehensive Income (Loss) for the periods shown:

(p)

The company's objectives and strategies for holding derivative instruments are included within the company's Annual Report on Form 10-K for the period ended December 31, 2001. During the quarter ended June 30, 2002, hedge ineffectiveness of $1 was reported in earnings. There were no hedge gains or losses excluded from the assessment of hedge effectiveness or reclassifications to earnings for forecasted transactions that did not occur related to cash flow hedges. The table below summarizes the effect of cash flow hedges on accumulated other comprehensive income (loss) for the period: