DuPont
An investment analysis

DuPont makes a variety of high-value products for industry today, including
polymers,
chemicals, fibers, and petroleum products...products for agriculture,
electronics,
transportation, apparel, food, aerospace, construction, and health care.
DuPont serves
customers in these and other industries every day, offering "better things
for better living"
as the company prepares to begin its third century of scientific,
technological,
commercial, and social achievement. DuPont is a research and technology
based
chemical and energy company with its annual revenue exceeding $39 billion.
Eleuthére Irénée du Pont de Nemours, a French immigrant, established DuPont
in
1802 in a small Delaware town. E.I. du Pont was a student of Antoine
Lavoisier, the
father of modern chemistry, and when he came to America he brought some of
the new
ideas about the manufacturing of consistently reliable gun powder. His
product ignited
when it was supposed to, in a manner consistent with expectations. This was
greatly
appreciated by the citizens of the growing nation, including Thomas
Jefferson, who wrote
thanking du Pont for the quality of his powder, which was being used to clear
the land at
Monticello. Many other heroes of early America owed their success, and their
lives, to
the dependable quality of DuPont\'s first product. This represents a good,
strong start for
a company.
DuPont, which is moving through the last decade of the twentieth century and
toward its third century, emphasizes several things; competing globally;
sharpening its
business focus; increasing productivity; committing to safety, health, and
environmental
excellence; and continuing to extend its significant science and
technological
achievement.
One of DuPont\'s major strategies is to focus on businesses in which DuPont
has
core competencies, where DuPont can build competitive advantage. The most
notable
example of this focus was the 1993 transaction in which DuPont acquired ICI\'s
nylon
business and ICI acquired DuPont\'s acrylics business. This strengthened the
company\'s
position in the global nylon business while divesting a business that no
longer fit its
portfolio.
Another major factor in the transformation of the company in the1990s was
the
focus on reducing costs and improving productivity. This was necessary to
give the
company the flexibility for competitive pricing and to grow market share and
earnings.
DuPont had strong plants in several countries around the world for many
years,
and their globalization trend continued in the 1990s. New plants opened in
Spain,
Singapore, Korea, Taiwan, and China, and a major technical service center
opened in
Japan. In 1994, a Conoco joint venture began producing oil from the Ardalin
Field in the
Russian Arctic--the first major oil field brought into production by a
Russian/Western
partnership since demise of the Soviet Union.
A further major development was the redemption of 156 million DuPont shares
from Seagram for $8.8 billion in cash and warrants --- one of the largest
stock
redemptions in history. This large block of shares was redeemed at a 13
percent discount
to market price. While DuPont later sold some new shares, there are 18
percent fewer
shares currently outstanding than just prior to the redemption. This resulted
in a
significant opportunity for wealth creation for our stockholders. The share
redemption
was made possible by four years of cost reduction, productivity improvement
and
organizational change that have made DuPont strong financially and allowed
them to
move decisively and quickly.
The DuPont that emerged from the company\'s transformation in the 1990s has
often been described by people inside and outside the company as "the new
DuPont."
This characterization is only partly appropriate, because while DuPont has
changed, there
are many things that remain the same. The core competency in science and
technology,
the commitment to safety, the concern for people, the feeling of community,
the
emphasis on personal and corporate integrity, the future focus, and indeed
the willingness
to change. DuPont is a company not only out for their own interest, but also
for the best
interest of the world.
What has always set DuPont apart is the quality of the people, people
committed
to making life easier and better for everybody, proud to be a part of an
enterprise making
"better things for better living." That was true in 1802. And it is just as
true today.
In the second quarter of 1995 DuPont reported earnings per share of $1.70,
up 47
percent from the $1.16 earned in the second quarter 1994. Net income
totaled $938
million, compared to $792 million earned in 1994. Both earnings per share
and net
income increased 27 percent."These outstanding results continue to reflect
strong
revenue gains and ongoing productivity improvements," said DuPont Chairman
Edgar
S.Woolard Jr. Sales for the second quarter were $11.1 billion, up 9 percent
from prior
year.
The third quarter of the 1995 business year led DuPont to a $1.38 per share
earning. This number exceeded the $.95 earned in the third quarter of 1994
by more than
45%. Net income totaled $769 million compared to $647 million earned in
1994. Sales
for the third quarter were $10.2