Three Months Ended

Nine Months Ended

CONSOLIDATED INCOME STATEMENT(a)

September 30

September 30

(Dollars in millions, except per share)

2002

2001

2002

2001

SALES(b)

$5,482

$5,641

$18,324

$19,497

Other Income(c)

255

135

337

521

Total

5,737

5,776

18,661

20,018

Cost of Goods Sold and Other Operating Charges(d)

3,851

3,958

12,204

13,059

Selling, General and Administrative Expenses

621

687

1,993

2,269

Depreciation

339

328

958

995

Amortization of Goodwill and Other Intangible Assets(e)

53

113

154

338

Research and Development Expense

322

441

928

1,288

Interest Expense(f)

79

148

279

492

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

(23)

-

232

1,046

Gain on Sale of DuPont Pharmaceuticals(h)

-

-

(19)

-

Total

5,242

5,675

16,729

19,487

MINORITY INTERESTS

495

101

1,932

531

Provision for (Benefit from) Income Taxes(i)

5

(46)

368

87

Minority Interests in Earnings of Consolidated Subsidiaries

21

5

73

31

IN ACCOUNTING PRINCIPLES

469

142

1,491

413

Net of Income Taxes(j)

-

-

(2,944)

11

NET INCOME (LOSS)(b)

$ 469

$ 142

$(1,453)

$ 424

COMMON STOCK(k)

Accounting Principles

$ .47

$ .13

$ 1.49

$ .39

Cumulative Effect of Changes in Accounting Principles

-

-

(2.96)

.01

Net Income (Loss)

$ .47

$ .13

$(1.47)

$ .40

COMMON STOCK(k)

Accounting Principles

$ .47

$ .13

$ 1.49

$ .39

Cumulative Effect of Changes in Accounting Principles

-

-

(2.95)

.01

Net Income (Loss)

$ .47

$ .13

$(1.46)

$ .40

DIVIDENDS PER SHARE OF COMMON STOCK

$ .35

$ .35

$ 1.05

$ 1.05

(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)

(Dollars in Millions)

Three Months Ended

Nine Months Ended

September 30

September 30

2002

2001

2002

2001

SEGMENT SALES(2)

Agriculture & Nutrition

$ 608

$ 542

$ 3,769

$ 3,602

Coatings & Color Technologies

1,276

1,206

3,725

3,703

Electronic & Communication Technologies

645

614

1,905

2,122

Performance Materials

1,237

1,149

3,667

3,571

Pharmaceuticals

-

393

-

902

Safety & Protection

853

858

2,575

2,760

Textiles & Interiors

1,582

1,553

4,727

4,992

Other

6

39

16

106

6,207

6,354

20,384

21,758

Elimination of Transfers

(97)

(111)

(284)

(384)

Elimination of Equity Affiliate Sales

(631)

(602)

(1,780)

(1,884)

Miscellaneous

3

-

4

7

$5,482

$5,641

$18,324

$19,497

AFTER-TAX OPERATING INCOME (LOSS)(3)(4)

Agriculture & Nutrition(5)

$ (92)

$ (162)

$ 463

$ 135

Coatings & Color Technologies

170

112

391

322

Electronic & Communication Technologies(6)

67

51

169

241

Performance Materials(7)

180

58

391

170

Pharmaceuticals(8)

72

133

195

79

Safety & Protection

128

112

350

340

Textiles & Interiors(9)

61

10

28

(339)

Other(10)

(18)

(16)

(91)

(55)

568

298

1,896

893

Interest & Exchange Gains and Losses(11)

(5)

(72)

(194)

(257)

Corporate Expenses(12)

(83)

(76)

(180)

(215)

Corporate Minority Interest(13)

(11)

(8)

(31)

(8)

469

142

1,491

413

-

-

(2,944)

11

NET INCOME (LOSS)

$ 469

$ 142

$ (1,453)

$ 424

(c)

Other income for the three months ended September 30, 2002 includes a gain of $84 resulting from the sale of the company's Clysar® shrink film business. Year-to-date 2002 also includes an exchange 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 rate.

Year-to-date 2001 includes a gain of $52 resulting from the company's sale of stock that reduced its ownership interest in DuPont Photomasks.

(d)

Third quarter 2001 includes a charge of $56 to establish a reserve related to settlement of YieldGard® (MON 810 Bt) insect resistant corn litigation with Monsanto.

Year-to-date 2002 includes charges of $47 to write off inventory associated with discontinued specialty herbicide products and $50 to establish a litigation reserve (see Note (m)) related to a previously divested business. Year-to-date 2001 includes charges of $56 to establish the litigation reserve described above and $133 resulting from the sale of acquired Pioneer inventories, which, in accordance with purchase accounting rules, were recorded at estimated fair market value on October 1, 1999.

(e)

On January 1, 2002, the company adopted SFAS No. 142, which requires that goodwill and indefinite-lived intangible assets no longer be amortized. In addition, an initial impairment test of goodwill and indefinite-lived assets as of January 1, 2002 needed to be performed. Thereafter, annual impairment tests must be performed. The company will perform these annual tests during the fourth quarter of each year. These tests must be performed more frequently if there are triggering events. If the initial test resulted in impairment, an adjustment was 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 could be measured in other than the first interim reporting period, it needed to 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 was 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 biotechnology traits and a slower than expected rate of acceptance by the public of new agricultural products based on biotechnology. 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 the Textiles & Interiors segment. No impairment charge was appropriate 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 September 30, 2002 were as follows:

Assembled

Goodwill

Cumulative

Balance as of

Workforce

Adjustments and

Effect of

Balance as of

Dec. 31, 2001

Reclassification

Acquisitions

Adoption

Sept. 30, 2002

Agriculture & Nutrition

$2,891

$55*

$164**

$(2,866)

$ 244

Coatings & Color

711

-

-

-

711

Electronic & Communication

40

-

-

-

40

Performance Materials

2

-

-

-

2

Pharmaceuticals

-

-

-

-

-

Safety & Protection

12

-

13

-

25

Textiles & Interiors

88

-

-

(78)

10

Other

2

-

-

-

2

$3,746

$55

$177

$(2,944)

$1,034

*

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

**

Primarily attributable to the preliminary allocation of goodwill related to the recent acquisition of Liqui-Box.

Amortization expense of $47 (pretax) and $42 (after-tax) was recorded in the third quarter of 2001, and $139 (pretax) and $126 (after-tax) was recorded during the nine months ended September 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 nine-month periods ended September 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 nine-month periods ended September 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

168

(11)

157

1,041

(66)

975

1,322

(101)

1,221

Total Other Intangible Assets

$3,973

$(822)

$3,151

(f)

Year-to-date 2002 includes a charge of $21 for the early extinguishment of $242 of outstanding debentures; this charge principally represents premiums paid to investors. 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.

(g)

During the third quarter of 2002, the company recorded a net benefit of $23 resulting from changes in estimates related to prior years' restructuring programs. This is principally attributable to net benefits associated with the 2001 restructuring program of $8 for lower dismantlement and removal costs and $7 for lower severance payments to terminated employees.

Year-to-date 2002 Employee Separation Costs and Write-Down of Assets totaled $232. This includes charges of $285, the net benefit of $23 discussed above, and a gain of $30, resulting principally from a favorable litigation settlement associated with the company's exit from a joint venture in China in 1999.

The year-to-date 2002 charges of $285 includes $248 in the Textiles & Interiors segment and $37 in the Agriculture & Nutrition segment. Within the Textiles & Interiors segment, a charge of $209 relates to a restructuring program instituted in the second quarter to better align the business with accelerating structural changes to become more competitive in response to continued weakening economic conditions, particularly in the U.S. textile industry. The charge of $209 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. At September 30, 2002 about 950 employees had been terminated. Employee terminations will be completed by June 2003. The charge of $209 also includes $55 related to the write-down of o perating 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. Year-to-date Textiles & Interiors 2002 charges also include $39 to withdraw from a joint venture in China due to depressed market conditions.

Within the Agriculture & Nutrition segment, a charge of $37 was recorded 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 principally covers the write-down of the net book value of the facilities to fair value less costs to sell. The transaction is expected to close during the first half of 2003.

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

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."

The remaining reserve balances for the company's 2001 and 2000 programs follow:

Employee

Separation

Other

Costs

Exit Costs

Total

Balance at December 31, 2001

$ 215

$ 71

$ 286

Changes to accounts:

Credits to income in third quarter 2002

(7)

(8)

(15)

Employee separation settlements

(144)

(144)

Other expenditures

(43)

(43)

Balance at September 30, 2002

$ 64

$ 20

$ 84

Balance at December 31, 2001

$ 7

$ -

$ 7

Changes to accounts:

Employee separation settlements

(6)

-

(6)

Balance at September 30, 2002

$ 1

$ -

$ 1

On July 30, 2002, the Financial Accounting Standards Board issued SFAS No. 146 "Accounting For Costs Associated With Exit Or Disposal Activities." This standard requires that companies recognize costs associated with exit or disposal activities when incurred rather than at the date of a commitment to an exit or disposal plan. The company adopted this standard effective July 1, 2002. The adoption of this standard will only impact restructuring programs initiated after this date.

(h)

Year-to-date 2002 includes a benefit of $19 to reflect final settlement with Bristol-Myers Squibb in connection with the sale of DuPont Pharmaceuticals, which occurred on October 1, 2001.

(i)

Year-to-date 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.

Third quarter and year-to-date 2001 includes a one-time deferred tax benefit of $49 to recognize differences between the book basis and tax basis of the company's investment in DuPont Pharmaceuticals as a result of the fourth quarter 2001 sale of DuPont Pharmaceuticals.

(j)

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, which resulted in a pretax cumulative effect type benefit to income of $19 ($11 after-tax).

(k)

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 before cumulative effect of changes in accounting principles and net income (loss) is reduced by preferred dividends of $2.5 for the three-month periods ended September 30, 2002 and 2001 and $7.5 for the nine-month periods ended September 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 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 during the period:

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

(l)

Inventories

September 30,

December 31,

2002

2001

Finished Products

$2,713

$2,652

Semifinished Products

975

1,185

Raw Materials and Supplies

906

844

4,594

4,681

Less: Adjustment of Inventories to a

Last-In, First-Out (LIFO) Basis

495

466

$4,099

$4,215

(m)

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 company accrues for contingencies when a loss is probable and the amounts can be reasonably estimated.

BenlateÒ

In 1991, DuPont began receiving claims by growers that use of BenlateÒ 50 DF fungicide had caused crop damage. As indicated in the table below, DuPont has since been served with several hundred lawsuits, most of which have been disposed of by trial, dismissal or settlement.

Twenty of the 105 cases currently pending against the company were filed by growers who allege plant damage using Benlate® DF and, in some cases Benlate® WP. Five cases include claims for alleged personal injuries arising from exposure to Benlate® DF and/or Benlate® WP. In addition, 28 cases include claims for alleged damage to shrimping operations from Benlate® OD. Also, many of these cases include allegations of fraud and misconduct, as well as violations of Federal and State racketeering laws. In August 2001, a Florida jury found DuPont liable under Florida's racketeering statute and for product defect involving alleged crop damage. In March 2002, pursuant to DuPont's motion, the judge withdrew the jury's finding of liability under the racketeering statute and entered judgment for the plaintiffs in the approximate amount of $29. The judgment was later reduced to $26. DuPont has appealed. The company has concluded that it is not probable that the adv erse judgment in this case will ultimately be upheld; therefore, DuPont has not established a reserve for this matter.

Certain plaintiffs who previously settled with the company have filed cases alleging fraud and other misconduct relating to the litigation and settlement of BenlateÒ 50 DF claims. Approximately 51 such cases were filed. The Florida Federal Court dismissed the lead case of 28 cases pending before it. Plaintiffs have appealed. The remaining cases are in various stages of development in trial and appellate courts in Florida and Hawaii.

The cases involving damage to shrimp are pending against the company in State Court in Broward County, Florida. These cases were brought by Ecuadorian shrimp farmers alleging that BenlateÒ OD applied to banana plantations in Ecuador ran-off and was deposited in plaintiffs' shrimp farms, causing massive numbers of shrimp to die. Two cases were tried in the fall of 2000 and in early 2001, which resulted in adverse judgments of approximately $14 in each case. DuPont contends that the injuries alleged are attributable to a virus, Taura Syndrome Virus, and in no way involve BenlateÒ OD. The company has appealed both cases. DuPont has not established a reserve for either case because the company has concluded that it is not probable that the adverse judgments ultimately will be upheld. The 26 untried cases are on hold pending the resolution of the appeal of the case tried in the fall of 2000. Oral arguments on this appeal were heard by the intermediate appellate court on October 22, 2002.

DuPont believes that BenlateÒ did not cause the damages alleged in these cases and denies the allegations of fraud and misconduct. DuPont continues to defend itself in ongoing matters. To date, DuPont has incurred costs and expenses of approximately $1,500 associated with these matters. The company has established reserves in its financial statements to cover estimated future costs. While it is reasonably possible that additional losses may be incurred, a range of such losses cannot be reasonably estimated at this time.

Benlate® Securities Fraud Class Action

A securities fraud class action was filed in September 1995 by a shareholder in federal district court in Florida against the company and the then-Chairman. This action is still pending. The plaintiffs in this case allege that DuPont made false and misleading statements and omissions about Benlate® 50 DF, with the alleged effect of inflating the price of DuPont's stock between June 19, 1993, and January 27, 1995. The district court has certified the case as a class action. Discovery has concluded. Trial is expected to begin second or third quarter 2003. Management recognizes that it is reasonably possible that the company may incur losses associated with this matter, but it is not possible to estimate the range of such losses at this time.

DuPont Conagra Visions, Inc.

In 1997, DuPont and ConAgra sold a group of joint ventures known as DCV, Inc., which they co-owned, to DCV Holdings, Inc. Subsequently, the parties learned that the U.S. Department of Justice was investigating DuCoa, a DCV company, for participation in a ten-year antitrust conspiracy to fix prices and allocate customers in the vitamins market. Three DuCoa executives pled guilty to criminal price fixing in March 1999. These developments resulted in the filing of multiple civil antitrust lawsuits against DuPont, ConAgra and DuCoa in various federal and state courts. Additionally, in 1998, DCV Holdings sued DuPont and ConAgra in Delaware state court alleging claims for breach of contract, fraud and recission. In April 2002, the Delaware state court rejected a number of DCV Holdings' claims, including its claim that DuPont committed fraud because it knew about, but failed to disclose, DuCoa's antitrust violations prior to closing. DCV Holdings has appealed the decision. On Sep tember 30, 2002, DuCoa pled guilty to violations of the antitrust laws.

DuPont has settled with three groups of antitrust plaintiffs and a settlement offer has been made to a fourth group of plaintiffs. Once this settlement is concluded, the only pending antitrust claims against DuPont will be state class actions brought by indirect purchasers in Iowa, Minnesota and Wisconsin. DuPont does not anticipate there will be any criminal action against the company.

DuPont recorded a $50 charge against earnings in the second quarter of 2002 to reserve for these matters. DuPont does not believe that it is reasonably possible that it will incur a material loss in excess of the amounts accrued.

Environmental Remediation

The company is also subject to contingencies pursuant to environmental laws and regulations that in the future may require the company to take further action to correct the effects on the environment of prior disposal practices or releases of chemical or petroleum substances by the company or other parties. The company has accrued for certain environmental remediation activities consistent with the company's policies as set forth in Note 1 to the company's consolidated financial statements included in Item 8 of the company's Annual Report on Form 10-K for the period ended December 31, 2001. At September 30, 2002, such reserves amounted to $390.

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 third quarter of 2002. In addition, the company has guaranteed certain obligations of Conoco Inc., its former subsidiary, which totaled $267, plus interest, at September 30, 2002. No material loss is anticipated by reason of such agreements and guarantees.

(n)

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