DuPont 2006 annual review Our Mission. Our Vision. Our Values. OUR MISSION Sustainable Growth: The creation of shareholder and societal value while we reduce our environmental footprint along the value chains in which we operate. OUR VISION To be the world’s most dynamic science company, creating sustainable solutions essential to a better, safer, healthier life for people everywhere. OUR CORE VALUES Safety and Health Environmental Stewardship Highest Ethical Behavior Respect for People DuPont science and innovation deliver sustainable solutions in alternative energy, building innovations, automotive fi nishes, food packaging and agriculture. from the Chairman To All DuPont Stakeholders In 2006, DuPont remained focused on our three growth strategies: put science to work, go where the growth is, and capitalize on the power of One DuPont. It was a successful year marked by solid fi nancial performance, exciting scientifi c and business developments, and promising growth. During the year I had numerous oppor- as a percentage of sales was lower than tunities to interact face-to-face with our the prior year. We expect cost productivity company’s stakeholders—shareholders, improvement to continue in 2007. customers, employees and the public, including community, university and Investors have noticed that in the past three government leaders, and NGOs. Those years our return on invested capital has interactions gave me a chance to listen and nearly doubled to 16 percent. Our goal is to answer. One of the best ways to convey the continue to improve returns on capital. progress of the past year is to share with Finally, investors have yet to fully appreciate you some of those questions and answers. our leadership in bio-based materials and DuPont shares increased more than 14 what it means for the future. Although gains percent in value in 2006 with a total from commercialization of these products shareholder return of 18 percent. What are still ahead of us, we are very excited do investors need to know about the com- about the enormous opportunity created by pany’s future performance and prospects? our scientifi c advances and the relationships we are putting in place. It’s the right science As strong as our 2006 results were, I believe at the right time. the best is yet to come. We have reshaped our company into a powerful combination DuPont has introduced more than 1,000 of fi ve growth platforms, each of which is new products each year for the past several a global leader. We have world-class pro- years. Can you sustain your rate of new prietary intellectual property and products product introductions? What are you doing with strong brands. We have exceptional to boost R&D productivity? And when scientifi c and process engineering capability will we see more revenue growth from in promising new fi elds like bio-based new products? materials and biofuels. Through 2006, we recorded 12 consecutive With regard to biotechnology in agriculture, quarters of pricing gains, due in part to we are one of few companies in the world new products which, in many cases, are who have the knowledge and capability to replacing older products but create greater bring higher value seeds to market to meet value for our customers and higher margins the world’s rapidly growing demand for pro- for DuPont. We believe we can sustain our tein. I fi rmly believe that commercialization of current rate of new products, judging from this new science is still in its early stages and leading indicators such as our number of will bring us outstanding growth for decades. new patent fi lings, which have doubled from six years ago. In addition to our science capability and potential for customer-driven innovations, Some candidates that we are especially we are making great strides in improving excited about include Optimum™GAT™— our cost productivity. In 2006, we exceeded a proprietary herbicide-tolerant trait that our goal of $200 million in cost savings, and DuPont plans to commercialize in soy- it was the third year in a row that fi xed cost beans, corn, cotton and other crops— DuPont 2006 Annual Review | 1 The DuPont Operating Team (from left to right) David Bills, Diane Gulyas, Jim Borel, Tom Connelly, Jeff Keefer, Erik Fyrwald, Uma Chowdhry, Chad Holliday, Mark Vergnano, Ellen Kullman, Mathieu Vrijsen, Stacey Mobley, Richard Goodmanson, Terry Caloghiris. and biobutanol, a higher energy biofuel our products across several of our growth for cars that requires no modifi cation to platforms. We have dedicated teams in the engine and is easier to transport and place working with these companies to mix with gasoline. identify new value-creating opportunities that help them win in their markets. These Our new R&D model is delivering more customers particularly value our science customer-driven new products faster. There capability and intense focus on them. Not is exciting growth potential in our R&D pipe- surprisingly, our growth at most of these line, and we’re on our way to achieving our accounts is running almost twice the rate goal of a 30 percent improvement in R&D of growth of the total company. productivity by 2010. In 2006, 34 percent of our sales came from products introduced Among the most exciting growth areas within the last fi ve years. It often takes our that DuPont is pursuing are bio-based new products three to fi ve years to reach the materials and biofuels. What are you doing steep part of their growth curve. Many of our to commercialize these new products more recently introduced new products are now rapidly? Does biotechnology in general just crossing that threshold. fi t with your objective to be a force for sustainability? What are you doing to ensure customer satis- faction and retain customers? What do your We think 2006 was a watershed year for our most important customers think of DuPont? materials and fuel biotechnology businesses. We put in place a high-powered team of top DuPont has more than 200,000 customers business leaders to drive business growth whom we invoice directly and many in this area. With our partner Tate & Lyle, we multiples of that who use our products and successfully started the new Bio-PDO™ plant services. Our emphasis is on understanding in Loudon, Tennessee. SmartStrand™ carpet their unique challenges and providing from Mohawk with our DuPont™ Sorona® science-based solutions that create more polymer saw strong growth in 2006. We value for them. If our customers win, so are expanding capacity to manufacture do we. We are especially focused on about Sorona® in partnership with Zhangjiagang 80 strategic customers who buy many of Glory Chemical Industry Co. in China. DuPont 2006 Annual Review | 2 We announced an historic partnership with In 2006 you announced your “2015 Sustain- BP to develop a superior performing biofuel ability Goals.” Will those goals make a real called biobutanol. impact on the way you do business? We made good progress this year with We see ourselves entering a new phase Integrated Corn Bio-Refi nery (ICBR) tech- of sustainability. The fi rst was a focus on nology, which will enable cellulosic ethanol internal safety and meeting environmental to be produced from agricultural byproducts. regulations back in the 1970s. In the late With our partner Broin, we have positive 1980s and 1990s came voluntary foot- momentum both commercially and in our print reductions, going beyond regulatory laboratories. We look ahead to major mile- requirements and pursuing a goal of zero stones including commercial scale-up of ICBR safety and environmental incidents. Now we and, ultimately, next-generation biobutanol. are in a third phase of sustainable growth, characterized by a holistic approach, fully Opportunities for biotechnology exist in integrated into our business models. In this agriculture, materials, energy, polymers, phase, safety and environmental protection sensors, electronics, and personal care—and are market-driven business fundamentals many of these applications are interrelated. throughout the global value chain. Working In agriculture, biotechnology is probably the in partnership with others, we are building most powerful scientifi c tool at our disposal sustainability into our products themselves in this century to feed and clothe people as well as into the way we make them. around the world. We know biotechnology cannot be developed in a vacuum. To help Our 2015 Sustainability Goals span all of DuPont consider and address important our operations—from R&D to manufac- issues regarding biotechnology, we have turing to marketing. And they go beyond an independent panel of external experts to traditional footprint reductions to include guide and challenge us in the development, market-facing goals that tie our business testing and commercialization of new growth directly to the development of products based on biotechnology. With safer and environmentally improved new careful science, independent oversight, products for the many global markets we and market opportunity, biotechnology serve. They will have a big impact on the will continue to grow. way we do business in the years ahead. In November, DuPont Tate & Lyle Bio Products, LLC, announced the fi rst commercial shipments of Bio-PDO™ from its facility in Loudon, Tennessee. DuPont 2006 Annual Review | 3 We are confi dent our employees will productivity of crops; better displays on deliver on these goals, since sustainability televisions and computer screens; lighter is central to our total value proposition. and more fuel-effi cient vehicles; better protected people and safer buildings— We also have seen enough scientifi c data all made possible because DuPont is on the environmental impact of greenhouse delivering “The miracles of science™.” gases that we advocate others follow our position of signifi cant reductions. Renewal is an ongoing challenge for any company, let alone a company that is 205 A lot of people really liked your old years old.