OR

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

Commission File Number 1-815

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

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

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

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

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in
Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the Registrant is a shell company (as defined by Rule12b-2 of the Exchange Act).

921,270,775 shares (excludes 87,041,427 shares of treasury stock) of common stock, $0.30 par value, were outstanding at April 17, 2006.

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Table of Contents

The terms "DuPont" or the "company" as used herein refer to E. I. du Pont de Nemours and Company and its consolidated subsidiaries, or to E. I. du Pont de Nemours and Company, as the context may indicate.

2

Consolidated Income Statements (Unaudited)
(Dollars in millions, except per share)

See pages 6-22 for Notes to Consolidated Financial Statements.

See pages 6-22 for Notes to Consolidated Financial Statements.

4

5

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

Note 1. Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. Results for interim periods should not be considered indicative of results for a full year. These interim consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and notes thereto contained in the company's Annual Report on Form 10-K for the year ended December 31, 2005. The Consolidated Financial Statements include the accounts of the company and all of its subsidiaries in which a controlling interest is maintained, as well as variable interest entities in which DuPont is considered the primary beneficiary. Certain reclassifications of prior year's data have been made to conform to current year classifications.

The DuPont Stock Performance Plan provides for long-term incentive grants of stock options, time-vested restricted stock units, and performance-based restricted stock units to key employees.

Effective January 1, 2006, the company adopted Statement of Financial Accounting Standard (SFAS) No. 123(R), "Share-Based Payment," using the modified prospective application transition method. Because the company adopted the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," as amended, prospectively on January 1, 2003, the adoption of SFAS No. 123(R) did not have a material impact on the company's financial position or results of operations. Prior to adoption of FAS No. 123(R), the nominal vesting approach was followed for all awards. Upon adoption of SFAS No. 123(R) on January 1, 2006, the company began expensing new stock-based compensation awards using a non-substantive approach, under which compensation costs are recognized over at least six months for awards granted to employees who are retirement eligible at the date of the grant or would become retirement eligible during the vesting period of the grant. Using the non-substantive vesting approach in lieu of the nominal vesting approach would not have had a material impact on the company's results of operations for the three months ended March 31, 2005. Prior to the adoption of SFAS No. 123(R), the company reported the tax benefit of stock option exercises as operating cash flows. Upon the adoption of SFAS No. 123(R), tax benefits resulting from tax deductions in excess of compensation cost recognized for those options or restricted stock units are reported as financing cash flows rather than as a reduction of taxes paid.

The total stock-based compensation cost included in the Consolidated Income Statements for the three months ended March 31, 2006 and 2005 was $43 and $21, respectively. Total income tax benefits recognized in the Consolidated Income Statements related to stock-based compensation arrangements was $15 and $7 for the three months ended March 31, 2006 and 2005.

The maximum number of shares that may be granted subject to option or in the form of time-vested and performance-based restricted stock units for any consecutive five-year period is 72 million shares. Of the 72 million shares, 12 million may be in the form of time-vested and/or performance-based restricted stock units. At December 31, 2005, approximately 42 million shares were authorized by the company's Board of Directors for future grant under the company's plan. The company's Compensation Committee determines the long-term incentive mix, including stock options, time-vested and performance-based restricted stock units, and may authorize new grants annually.

6

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

The company issues new shares to satisfy stock compensation awards. Management currently purchases stock under the company's share repurchase plan as approved by the Board of Directors in June 2001 to offset dilution from shares issued under employee compensation plan. Management has not established a timeline for completion of this repurchase plan.

The company grants stock option awards under the DuPont Stock Performance Plan. The purchase price of shares subject to option is equal to the market price of the company's stock on the date of grant. Generally, options are exercisable from one to three years after date of grant. Prior to 2004, options expired 10 years from date of grant; however, beginning in 2004, options serially vest over a three-year period and carry a six-year option term. The plan allows retirement eligible employees to retain any granted awards upon retirement provided the employee has rendered at least six months of service following grant date.

For purposes of determining the fair value of stock options awards, the company uses the Black-Scholes option pricing model and the assumptions set forth in the table below. The weighted-average grant-date fair value of options granted in the periods ending March 31, 2006 and 2005 was $7.28 and $8.80, respectively.

The company determines the dividend yield by dividing the current annual dividend on the company's stock by the option exercise price. A historical daily measurement of volatility is determined based on the expected life of the option granted. The risk free interest rate is determined by reference to the yield on an outstanding U.S. Treasury note with a term equal to the expected life of the option granted. Expected life is determined by reference to the company's historical experience.

Stock Option awards as of March 31, 2006 and changes during the period then ended were as follows:

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

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between DuPont's closing stock price on the last trading day of the first quarter of fiscal 2006 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2006. The amount changes based on the fair market value of DuPont's stock. Total intrinsic value of options exercised for the three months ended March 31, 2006 and 2005 was $2 and $143, respectively.

As of March 31, 2006, $87 of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 1.6 years.

In 2004, the company began issuing time-vested restricted stock units in addition to stock options. These restricted stock units serially vest over a three-year period. Concurrently, stock option terms were reduced from ten years to six years and the number of options granted was also reduced. A retirement eligible employee retains any granted awards upon retirement provided the employee has rendered at least six months of service following grant date. Additional restricted stock units are also granted from time to time to key senior management employees. These restricted stock units generally vest over periods ranging from two to five years.

The company also grants performance-based restricted stock units to senior leadership. Vesting occurs upon attainment of pre-established corporate revenue growth and return on investment objectives versus peer companies at the end of a three-year performance period. The actual award, delivered as DuPont common stock, can range from zero percent to 200 percent of the original grant. During the first quarter 2006, 361,100 performance-based restricted stock units were granted at a weighted average grant date fair value of $39.31.

The fair value of time-vested and performance-based restricted stock units is based upon the market price of the underlying common stock as of the date of the grant.

Nonvested awards of time-vested and performance-based restricted stock units as of March 31, 2006 and changes during the period then ended were as follows:

The table includes restricted stock units for the Board of Directors settled in cash.

As of March 31, 2006, there was $106 unrecognized stock-based compensation expense related to nonvested awards. That cost is expected to be recognized over a weighted-average period of 1.8 years. The total fair value of shares vested during the three months ended March 31, 2006 and 2005 was $22 and $10, respectively.

8

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

A transformation plan was instituted during the first quarter 2006 within the Coatings & Color Technologies segment in order to better serve the company's customers and improve profitability. The plan includes the elimination of 1,700 positions and encompasses redeployment of employees in excess positions to the extent possible. Restructuring charges resulting from the plan totaled $135 and are included in Cost of goods sold and other operating charges. These charges include $123 related to severance payments primarily in Europe and the U.S. for approximately 1,300 employees involved in manufacturing, marketing, administrative and technical activities. All employees are expected to be off the roles by fourth quarter 2007. No employee terminations or cash payments related to these activities were made during the first quarter 2006. In connection with this program, a $12 charge was also recorded related to exit costs of non-strategic assets.

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

The account balance and activity for prior year programs are as follows:

The remaining liability balance at March 31, 2006 represents payments to be made over time to separated employees.

In the first quarter 2006, the company recorded a tax provision of $232 million, including $4 million of tax expense associated with the company's policy of hedging the foreign currency-denominated monetary assets and liabilities of its operations. Also included in the first quarter 2006 was a net tax benefit of $41 million related to the reversal of certain prior year tax contingencies previously reserved.

In the first quarter 2005, the company recorded a tax provision of $509 million, including $149 million of tax expense associated with the company's policy of hedging the foreign currency-denominated monetary assets and liabilities of its operations.

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

Set forth below is a reconciliation of the numerator and denominator for basic and diluted earnings per share calculations for the periods indicated:

The following average stock options are antidilutive, and therefore, are not included in the diluted earnings per share calculations:

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

Changes in goodwill for the period ended March 31, 2006 are summarized in the table below.

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

The aggregate amortization expense for definite-lived intangible assets was $59 and $57 for the three-month periods ended March 31, 2006 and 2005. The estimated aggregate pretax amortization expense for 2006 and each of the next five years is approximately $230, $210, $190, $165, $130, and $110.

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

The company warrants to the original purchaser of its products that it will, at its option refund, repair or replace, without charge, such products if they fail due to a manufacturing defect. The term of these warranties varies (30 days to 10 years) by product. The company's estimated product warranty liability as of March 31, 2006 is $30. During the first quarter of 2006, the company increased its reserve for product warranty liability primarily in the Safety & Protection segment to reflect obligations at March 31, 2006 related to certain product warranties. The company has recourse provisions for certain products that would enable recovery from third parties for amounts paid under the warranties. The company accrues for product warranties when, based on available information, it is probable that customers will make claims under warranties relating to products that have been sold, and a reasonable estimate of the costs (based on historical claims experience relative to sales) can be made.

Set forth below is a reconciliation of the company's estimated product warranty liability from December 31, 2005 through March 31, 2006:

In connection with acquisitions and divestitures, the company has indemnified respective parties against certain liabilities that may arise in connection with these transactions and business activities prior to the completion of the transaction. The term of these indemnifications, which typically pertain to environmental, tax and product liabilities, is generally indefinite. In addition, the company indemnifies its duly elected or appointed directors and officers to the fullest extent permitted by Delaware law, against liabilities incurred as a result of their activities for the company, such as adverse judgments relating to litigation matters. If the indemnified party were to incur a liability or have a liability increase as a result of a successful claim, pursuant to the terms of the indemnification, the company would be required to reimburse the indemnified party. The maximum amount of potential future payments is generally unlimited. The carrying amounts recorded for all indemnifications as of March 31, 2006 and December 31, 2005 are $111 and $103, respectively. Although it is reasonably possible that future payments may exceed amounts accrued, due to the nature of indemnified items, it is not possible to make a reasonable estimate of the maximum potential loss or range of loss. No assets are held as collateral and no specific recourse provisions exist.

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

In connection with the sale of the majority of the net assets of Textiles & Interiors (INVISTA), the company indemnified the purchasers, subsidiaries of Koch Industries, Inc. (Koch), against certain liabilities primarily related to taxes, legal and environmental matters, and other representations and warranties. The estimated fair value of these obligations of $70 is included in the indemnification balance of $111 stated above. The fair value was based on management's best estimate of the value expected to be required to issue the indemnifications in a stand alone, arm's length transaction with an unrelated party and, where appropriate, by the utilization of probability-weighted discounted net cash flow models.

The company has directly guaranteed various debt obligations under agreements with third parties related to equity affiliates, customers, suppliers and other unaffiliated companies. At March 31, 2006, the company had directly guaranteed $597 of such obligations, plus $273 relating to guarantees of historical obligations for divested subsidiaries. This represents the maximum potential amount of future (undiscounted) payments that the company could be required to make under the guarantees.

In certain cases, the company has recourse to assets held as collateral, as well as personal guarantees from customers and suppliers. Assuming liquidation, these assets are estimated to cover approximately one-third of the $273 of guaranteed obligations of customers and suppliers. Set forth below are the company's guaranteed obligations at March 31, 2006:

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

As of March 31, 2006, the company had one synthetic lease program relating to short-lived equipment. In connection with this synthetic lease program, the company had residual value guarantees in the amount of $101 at March 31, 2006. The guarantee amounts are tied to the unamortized lease values of the assets under synthetic lease and are due should the company decide neither to renew these leases nor to exercise its purchase option. At March 31, 2006, the company had no liabilities recorded for these obligations. Any residual value guarantee amounts paid to the lessor may be recovered by the company from the sale of the assets to a third party.

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

In March 2006, DuPont settled the only case pending in Australia alleging plant damage for $375 thousand. Nine cases are pending in Florida state court, involving allegations that BenlateÒ caused crop damage. Two of these cases, involving twenty-seven Costa Rican fern growers, are in trial.

Twenty-four of the pending cases seek to reopen settlements with the company by alleging that the company committed fraud and misconduct, as well as violations of federal and state racketeering laws. Plaintiffs are appealing the Florida federal court's dismissal of 16 of the reopener cases. One of the two cases pending in Florida state court is scheduled for trial in June 2006. In December 2005, the Ninth Circuit Court of Appeals reversed the Hawaii federal court's dismissal of the five reopener cases before it. These five cases are scheduled for a common issues trial in November 2006. The remaining case in Hawaii state court was settled in part for $1.2. The remainder of this case was dismissed on DuPont's motion. Plaintiffs have appealed.

In one of the three cases involving allegations that BenlateÒ caused birth defects to children exposed in utero pending before it, the Delaware state court granted the company's motion to dismiss due to insufficient scientific support for causation. Plaintiffs have appealed and the court has stayed the other two cases pending the outcome of the appeal.

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

Twenty-six cases involving damage to shrimp are pending against the company in state court in Florida. The company contends that the injuries alleged are attributable to a virus, Taura Syndrome Virus, and in no way involve BenlateÒ OD. One case was tried in late 2000 and another in early 2001. Both trials resulted in adverse judgments of approximately $14 each. The intermediate appellate court subsequently reversed the adverse verdicts and, in the first quarter of 2005, judgments were entered in the company's favor in both cases. Plaintiffs have filed a motion seeking sanctions for alleged discovery defaults in all of the cases, including the two cases in which judgment has been entered for the company. Hearings are ongoing in this matter.

The company does not believe that BenlateÒ caused the damages alleged in each of these cases and denies the allegations of fraud and misconduct. The company continues to defend itself in ongoing matters. As of March 31, 2006, the company has incurred costs and expenses of approximately $1,900 associated with these matters. The company has recovered approximately $275 of its costs to date and expenses through insurance and does not expect additional insurance recoveries, if any, to be significant. While management recognizes that it is reasonably possible that additional losses may be incurred, a range of such losses cannot be reasonably estimated at this time. At March 31, 2006, no reserves exist for BenlateÒ litigation matters.

In July and December 2004, the EPA filed administrative complaints against DuPont alleging that the company failed to comply with the technical reporting requirements of the Toxic Substances Control Act (TSCA) and the Resource Conservation and Recovery Act (RCRA) regarding PFOA, (collectively, perflurooctanoic acids and its salts, including the ammonium salt). The first complaint related to information about PFOA for a period beginning in June 1981 through March 2001; the second related to information about PFOA for a period beginning in late July 2004 to mid-October 2004. In December 2005, the parties entered into a settlement agreement to resolve the four original counts set forth in the complaints and four additional counts raised by the EPA in 2005. As a result in 2005, the company established reserves of $16.5 to fund its obligations under the settlement agreement. The agreement requires the company to pay civil fines of $10.25 and fund two Supplemental Environmental projects at a total cost of $6.25. The company paid the civil fines of $10.25 in January 2006 and expects that the projects will be completed, and the costs of $6.25 incurred, over a three-year period ending December 31, 2009.

On May 17, 2005, DuPont was served with a grand jury subpoena from the U.S. District Court for the District of Columbia. The subpoena, which was served by the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice (DOJ) relates to PFOA, ammonium perfluorooctanoate (APFO), C-8 and FC-143. The subpoena calls for the production of documents previously produced to the EPA and other documents related to those chemicals. DuPont has been and will continue to be fully responsive to the DOJ in this matter and has begun the production of documents. It is expected that the collection, review and production of documents will continue at least through 2006.

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

In August 2001, a class action was filed in West Virginia state court against DuPont and the Lubeck Public Service District. DuPont uses PFOA as a processing aid to manufacture fluoropolymer resins and dispersions at various sites around the world including its Washington Works plant in West Virginia. The complaint alleged that residents living near the Washington Works facility had suffered, or may suffer, deleterious health effects from exposure to PFOA in drinking water. The relief sought included damages for medical monitoring, diminution of property values, and punitive damages plus injunctive relief to stop releases of PFOA. DuPont and attorneys for the class reached a settlement agreement in 2004 and as a result, the company established reserves of $108 in 2004. The agreement was approved by the Wood County Circuit Court on February 28, 2005 after a fairness hearing. The settlement binds a class of approximately 80,000 residents. As defined by the court, the class includes those individuals who have consumed, for at least one year, water containing 0.05 parts per billion or greater of PFOA from any of six designated public water sources or from sole source private wells.

In July 2005, the company paid the plaintiffs' attorneys' fees and expenses of $23 and made a payment of $70, which class counsel has designated to fund a community health project. The company also is funding a health study (estimated to cost $5, which was placed in an interest bearing escrow account) by an independent science panel of experts in the communities exposed to PFOA to evaluate available scientific evidence on whether any probable link exists between exposure to PFOA and human disease. In addition, the company is providing state-of-the art water treatment systems (estimated to cost about $15 of which $10 was placed in an interest bearing escrow account) designed to reduce the level of PFOA in water to six area water districts. The company is funding a bottled water program (estimated to cost about $3) for residents in one water district on an interim basis until the installation of the water treatment systems. As of March 31, 2006, the company increased its reserves relating to this matter by $3 reflecting the increased cost projections for the water treatment systems and bottled water program. As a result of the payments and activities undertaken pursuant to the settlement agreement, the reserves balance at March 31, 2006 was $16, including $12 placed in interest-bearing escrow accounts.

The settlement resulted in the dismissal of all claims asserted in the lawsuit except for personal injury claims. If the independent science panel concludes that no probable link exists between exposure to PFOA and any diseases, then the settlement would also resolve personal injury claims. If it concludes that a probable link does exist between exposure to PFOA and any diseases, then DuPont would also fund up to $235 for a medical monitoring program to pay for such medical testing. In this event, plaintiffs would retain their right to pursue personal injury claims. All other claims in the lawsuit would remain dismissed by the settlement. While there can be no assurance as to what the independent science panel will conclude, DuPont believes it is remote that the panel will find a probable link. Therefore, the company believes it is remote that it will incur additional losses and at March 31, 2006, the company had not established any reserves related to this matter.

A purported class action lawsuit was filed in New Jersey federal district court in April 2006. The lawsuit was filed on behalf of individuals who claim to have consumed, for at least one year, drinking water from a source containing more than 0.05 parts per billion (ppb) of perfluorinated chemicals (including PFOA) allegedly released from DuPont's Chambers Works Plant in Deepwater, New Jersey. The plaintiffs claim they are entitled to various forms of relief, including in excess of $5 in monetary "relief," medical monitoring, and punitive damages. The company intends to defend itself vigorously.

While DuPont believes that it is reasonably possible that it will incur losses related to exposure to PFOA from sources other than Washington Works, it is not aware of any particular source that may cause such loss, and, therefore, a range of such loss, if any, cannot be reasonably estimated at this time.

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

As of March 31, 2006, 16 intrastate class actions had been filed on behalf of consumers that have purchased cookware with TeflonÒ non-stick coating in federal district courts against DuPont. The actions were filed in Colorado, Connecticut, Florida, Illinois, Iowa, Massachusetts, Michigan, Missouri, New Jersey, New York, Ohio, Pennsylvania, South Carolina and Texas; and two were filed in California. On April 27, 2006, a seventeenth intrastate class action was filed in the District of Columbia. All of these actions have been or will be consolidated for procedural purposes, including discovery, in the federal court of the Southern District of Iowa. None of the courts have issued rulings certifying any of the classes.

The actions allege that DuPont violated state laws by engaging in deceptive and unfair trade practices by failing "to disclose to consumers that products containing TeflonÒ were or are potentially harmful to consumers" and that DuPont has liability based on state law theories of negligence and strict liability. The actions allege that TeflonÒ contained or released harmful and dangerous substances, including a chemical (PFOA) alleged to have been determined to be "likely" to cause cancer in humans. The actions seek unspecified monetary damages for consumers who purchased cooking products containing TeflonÒ , as well as the creation of funds for medical monitoring and independent scientific research, attorneys' fees and other relief.

In December 2005, a motion was filed by a single named plaintiff in the Superior Court for the Province of Quebec, Canada seeking authorization to institute a class action on behalf of all Quebec consumers who have purchased or used kitchen items, household appliances or food-packaging containing TeflonÒ or ZonylÒ non-stick coatings. Damages are not quantified, but are alleged to include the cost of replacement products as well as one hundred dollars per class member as exemplary damages. No additional pleadings have been filed.

The company believes that the 16 class actions and the motion filed in Quebec are without merit and, therefore, believes it is remote that it will incur losses related to these actions. Therefore, at March 31, 2006, the company had not established any reserves related to these matters.

Investigations of the U.S., European Union and Canadian synthetic rubber markets for possible antitrust violations are ongoing. These investigations included DuPont Dow Elastomers, LLC (DDE), as a result of its participation in the polychloroprene (PCP) and ethylene propylene diene monomer (EPDM) markets. DDE was a joint venture between The Dow Chemical Company (Dow) and DuPont. DDE and DuPont were named in related civil litigation.

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

In April 2004, DuPont and Dow entered into a series of agreements under which DuPont obtained complete control over directing DDE's response to these investigations and the related litigation, and DuPont agreed to a disproportionate share of the venture's liabilities and costs related to these matters. Consequently, DuPont bears any potential liabilities and costs up to the initial $150. Dow is obligated to indemnify DuPont for up to $72.5 by paying 15 to 30 percent toward liabilities and costs in excess of $150. On June 30, 2005, DDE became a wholly owned subsidiary of DuPont and was renamed DuPont Performance Elastomers LLC (DPE).

DDE resolved all criminal antitrust allegations against it related to PCP in the United States through a plea agreement with the Department of Justice (DOJ) in January 2005 which was approved by the court on March 29, 2005. The agreement requires the subsidiary to pay a fine of $84 which, at its election, may be paid in six equal, annual installments. The first installment was paid in 2005 and another installment was paid during the first quarter 2006. The agreement also requires the subsidiary to provide ongoing cooperation with the DOJ's investigation. DDE responded to investigations from the European Union and Canadian antitrust authorities and DPE continues to cooperate with the authorities.

In November 2004, the court approved the settlement reached by DDE and attorneys for the class of federal antitrust litigation related to PCP for $42, including attorneys' fees and costs. DDE also reached a settlement with attorneys for the class of federal antitrust litigation related to EPDM for $24.6, including attorneys' fees and costs. The court approved the EPDM settlement in May 2005. Including these settlements, DPE has paid $93 related to civil lawsuits and claims through March 31, 2006. Certain claims are still pending.

As a result of its April 2004 agreements with Dow, DuPont established reserves in 2004 of $268, of which $18 will be reimbursed by Dow to reflect its share of anticipated losses. At March 31, 2006, the balance of the reserves was $139 which includes $56 for the remaining 4 installment payments yet to be made under the plea agreement with the DOJ. Given the uncertainties inherent in predicting the outcome of these matters and the likelihood of additional future claims, it is reasonably possible that actual losses may exceed the amount accrued. However, a range of such losses cannot be reasonably estimated at this time.

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 the information available indicates that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. While the ultimate liabilities resulting from such lawsuits and claims may be significant to results of operations in the period recognized, management does not anticipate they will have a material adverse effect on the company's consolidated financial position or liquidity.

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. Additional information relating to environmental remediation activity is contained in Notes 1 and 24 to the

19

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

The following sets forth the company's total comprehensive income for the periods shown:

The company's objectives and strategies for holding derivative instruments are included in Note 29 to the company's Consolidated Financial Statements included in the company's Annual Report on Form 10-K for the year ended December 31, 2005. During first quarter of 2006, no hedge ineffectiveness 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 following table summarizes the effect of cash flow hedges on accumulated other comprehensive income (loss) for the period:

20

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

The following sets forth the components of the company's net periodic pension benefit cost:

The company disclosed in its Consolidated Financial Statements for the year ended December 31, 2005, that it expected to contribute approximately $280 to its pension plans, other than to the principal U.S. pension plan in 2006. As of March 31, 2006, contributions of $77 have been made to these pension plans and the company anticipates additional contributions of approximately $215 during the remainder of 2006.

The following sets forth the components of the company's net periodic cost for other postretirement benefits:

The company disclosed in its Consolidated Financial Statements for the year ended December 31, 2005, that it expected to make payments of approximately $350 to its other postretirement benefit plans in 2006. Through March 31, 2006, the company has made benefit payments of $89 related to its postretirement benefit plans and anticipates additional payments of approximately $260 during the remainder of 2006.

21

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

Segment sales include transfers and a pro rata share of equity affiliates' sales. Segment pretax operating income (PTOI) is defined as operating income before income taxes, minority interests, exchange gains (losses), corporate expenses and interest.

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

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

• The company has undertaken and may continue to undertake productivity initiatives, including cost reduction programs, organizational restructurings and Six Sigma projects, to improve performance and generate cost savings. There can be no assurance that these will be completed or beneficial to the company. Also, there can be no assurance that any estimated cost savings from such activities will be realized.
  

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