THOMSON REUTERS STREETEVENTS EDITED TRANSCRIPT...CORPORATE PARTICIPANTS Carl Lukach DuPont - VP - IR...

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EDITED TRANSCRIPTDD - DuPont Investor Day

EVENT DATE/TIME: MAY 02, 2013 / 1:00PM GMT

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C O R P O R A T E P A R T I C I P A N T S

Carl Lukach DuPont - VP - IR

Ellen Kullman DuPont - Chairman, CEO

Nick Fanandakis DuPont - EVP, CFO

Tom Connelly DuPont - EVP, Chief Innovation Officer

Jim Borel DuPont - EVP - Agriculture, Nutrition & Health

Diane Gulyas DuPont - President - Performance Polymers

Jim Collins DuPont - President - Industrial Biosciences

Doug Muzyka DuPont - SVP, Chief Science & Technology Officer

Rik Miller DuPont - President - Crop Protection

Paul Schickler DuPont - President - Pioneer

Craig Binetti DuPont - President - Nutrition & Health

Mark Vergnano DuPont - EVP - Electronics & Communications, Safety & Protection Performance Chemicals

Dave Miller DuPont - President - Electronics & Communications

Thomas Powell DuPont - President - Protection Technologies

BC Chong DuPont - President - Titanium Technologies

C O N F E R E N C E C A L L P A R T I C I P A N T S

Don Carson Susquahanna Financial - Analyst

Mark Connelly CLSA - Analyst

Dave Begleiter Deutsche Bank - Analyst

Chris Willis Impala Asset Management - Analyst

Mike Ritzenthaler Piper Jaffray - Analyst

Vincent Andrews Morgan Stanley - Analyst

Brian Maguire Goldman Sachs - Analyst

PJ Juvekar Citi - Analyst

John Roberts UBS - Analyst

Duffy Fischer Barclays Capital - Analyst

Bill Cross Eaton Vance - Analyst

Phil Young - ChemSpeak

Kevin McCarthy Bank of America Merrill Lynch - Analyst

Gregg Goodnight UBS - Analyst

Jeff Zekauskus JPMorgan - Analyst

Mark Gulley BGR Partners - Analyst

Ron Fisher US Steel & Carnegie Pension Fund - Analyst

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MAY 02, 2013 / 1:00PM, DD - DuPont Investor Day



Chris Nocella RBC Capital Markets - Analyst

Mills Wallon CLC - Analyst

P R E S E N T A T I O N

Carl Lukach - DuPont - VP - IR

Good morning. Good morning. I'll give you a couple more seconds to sit down. Okay, let's get started. Welcome to all of you here at the DuPontCorporate Headquarters at Wilmington, Delaware. And also, welcome to those of you connecting on the webcast. Thank you for joining us. Weappreciate your interest in DuPont and welcome to our 2013 Investor Day.

I'm Carl Lukach and I'll be your host for today's program. I've got some opening comments to get us under way. Throughout today's event, we willbe making forward-looking statements. These are based on management's current expectations, estimates and projections. All statements thataddress expectations or projections about the future, including the company's strategy for growth, product development, market position, expectedexpenditures, and financial results, are forward-looking statements.

These statements are not guarantees of future performance and involve a number of risks and assumptions. Many factors including those discussedmore fully in our reports filed with the SEC could cause results to differ materially from those stated. We strongly encourage you to review thesefilings and obtain additional information about our risk factors.

Next word is about your safety. In the unlikely event of an emergency, there are two exit doors behind me and there also are exits out the back, upthe first flight of stairs and turn left. You do not have to go up the second floor steps in to the hotel lobby.

Let me turn now to the agenda for today, and I want to especially thank those of you in the audience or on the Web that contributed your thoughtsto us on how best to design this meeting so that we met the key interest of the investment community. You asked us to provide a clear explanationof where DuPont is going and how we're going to get there.

And you suggested that we do this in a way that addresses your key issues, important topics like TiO2, the PV market, more insights on the nutritionand health after our acquisition of Danisco, our R&D pipeline, our agricultural business, future trends in safety and protection, productivity gains,pension, cash, debt, and long-term growth rate. Lastly, you also told us clearly to provide plenty of time for Q&A.

So with all of that in mind, we designed a four-hour program for you that includes all of these things and more. First, our Chair and CEO, EllenKullman will present our strategic and operational priorities and what investors can expect going forward, including our long-term growth rates.Then, our Executive Vice President and Chief Financial Officer, Nick Fanandakis will focus on our operational priorities and share with you insightsabout our resource allocation process, leverage, and segment growth and margin targets.

Following Nick will be Tom Connelly, our Executive Vice President and Chief Innovation Officer. Tom will present an update on DuPont's R&Dpipeline and details on our new business segment, industrial biosciences, and review with you our performance materials segment.

After Tom we'll have a short intermission and then resume with Executive Vice President Jim Borel, who will provide you with insights about ouragriculture and our nutrition and health segments. And following Jim will be Executive Vice President Mark Vergnano, who will share with youinsights about our electronic and communications segment, our safety and protection segment, and our performance chemicals segment.

We've designed four question-and-answer sessions about 20 minutes each after Tom, Jim, and Mark, with a final Q&A session at the end for all ofthe presenters. All of the business presidents will join our presenters on stage to the join in the Q&A. That's about 80 minutes of Q&A and I'm sureyou're going to take great advantage of that.

After the final Q&A session, we'll have lunch available for you at the back of this room, and most of our senior leaders will join you in that lunchperiod from 1.00 until about 2.00. It would be webcast, accessible at DuPont.com. A replay will be available later today. If you do not have a

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presentation booklet, please raise your hand and we'll bring one down to you. My special request is that you please complete the short survey thatwe've included in there. We're asking you very specific questions and your responses would be most valuable to us, especially in designing futureevents.

So with that intro, it's now my pleasure and my privilege to turn the program over to DuPont Chair and CEO, Ellen Kullman. Ellen?

Ellen Kullman - DuPont - Chairman, CEO

Well, good morning, and thank you for joining us today, and we really appreciate you taking the time today to be here. It's been about a year anda half since our last investor day and a lot has happened since then both here at DuPont and around the world.

Since we were last together, the global economy has gone to a lot of change and we've gone through a lot of change at DuPont. As we look ahead,we're cautiously optimistic about the economic outlook. But we acknowledge that we have to adjust and find new ways to create value in a slowergrowing global economy.

So today I'll share with you what's next at DuPont and what you as investors can expect. I'll discuss our strategic priorities to increase the value ofDuPont and our operational priorities for getting there. We're very mindful of your expectations for a meaningful return on your investment in ourcompany and we've taken steps to make sure that our priorities are aligned with market realities and aligned with our commitment to deliver valueto you.

We stand on a strong foundation. We will leverage those strengths to grow the value of each of our businesses and drive total shareholder returnthrough our disciplined approach to capital allocation.

Let me take a minute to update you on our foundation and highlight the progress we've made since we last met 18 months ago. The first point isthat we're better positioned in growth markets today than just a few years ago. The global population growth and the resulting mega trendscontinue to create opportunities, and we differentially allocated resources to focus and increase our capability to win.

In agriculture, our market share is up in corn and soybeans. We brought hundreds of new products to farmers, including a blockbuster in cropprotection products. We have a very high value, high potential pipeline of new products to help meet the growing demands for food globally.

In nutritional health and food markets, we now have a meaningful presence in this attractive, fast-growing sector. Our customer list after theDanisco acquisition includes the largest, most recognized, and advanced food and dairy companies in the world. Also with Danisco, we've createda world-leading industrial biosciences capability and market position in enzymes and proprietary microbes. These are the building blocks of thenew advances in food, in fuel, and industrial materials.

In automotive markets, our ability to bring light weighting solutions to customers has reinforced this space as a growth market for us. In mobiledevices, personal computing and displays, we've advanced our position as an innovative supplier of enabling materials technologies for solutionsthat not only improve functionality, they reduce power usage and produce vivid color displays.

In the photovoltaic market, in spite of the upheavals currently going on in the module-manufacturing step of the value chain, we've strengthenedour position as a lead innovator. We've done this by delivering better paste and encapsulant films that boost conversion efficiency, prolong modulelife, and increase return on investment for solar panel installations.

In protection, we've added new offering such as process safety consulting to help companies meet the increasing standards in developing countries,and lighter weight Kevlar fabrics to better protect law enforcers in dangerous settings. These offerings use DuPont knowledge in science to makeour world a safer place.

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In emerging markets, our capability and presence is broader, it's deeper, and it's stronger. Our brand recognition is improving rapidly in thesefast-growing developing economies. We've onboarded and trained more than 9,000 local employees in the past four years to build up our salesforce and application development capabilities in countries like Vietnam, India, Indonesia, Russia, and the Ukraine.

The next point is about our portfolio. We've made important enhancements. Between 2011 and 2012, we made two major portfolio moves -- our$7 billion acquisition of Danisco and our $5 billion sale of performance coatings. And although they happened at different times, we consider themtogether in the context of making our portfolio more capable of growing the total value of DuPont.

Today you'll hear more about how Danisco will help catalyze our ability to accelerate, expand and grow some of the most attractive parts of ourbusiness. It presents growth opportunities across multiple DuPont businesses and we are working to capture these new synergies.

Coatings, by comparison, was not earning an adequate cash margin. We had higher value creating opportunities available to us in our portfolio,so we decided to monetize it. The way I look at it, we were able to pay for nearly all of Danisco with the internal funds from the sale of our coatingsbusiness and from the $2.6 billion and permanently eliminated working capital we generated from our productivity projects. The pairing of thesetwo transactions has positioned us for growth and for value creation going forward.

Now staying with the portfolio for a minute. I know there's been a lot of discussion about our TiO2 business. So let me clear that. Other than itscyclicality and other than the difficulty in predicting the term, it's a strong business with exceptional cash returns on investment. Our proprietarymanufacturing process technology gives us a significant low-cost advantage. Our TiO2 business earns well in excess of the cost of capital even atthe trough. And the peak of the cycle, even better. We use the cash from this business to fund R&D and growth investments in other businessesin our portfolio.

Counterbalancing these positives is the magnitude and the volatility that this business has shown. Mark will go into more detail on this. But I wantedto address it directly. My message to you is that we continuously review and assess the role of each of our businesses in accomplishing the overallvalue creation goals. We will choose the right path for our shareholders.

The next point is our improved cost division. In the past four years, we've captured accumulative $2.2 billion in fixed cost savings, and this has morethan offset inflation and help fund growth investments. Our productivity initiatives are ongoing and we announced a restructuring program lastyear to deal with the residual cost from the coatings sale. We're confident we will continue to generate productivity savings and focus our fixedcost on targeted growth investments in R&D and selling expense.

As for working capital productivity, we freed over $2.6 billion in previously locked cash in our balance sheet, by improving our work process andexecuting against our plan.

So I've described the strong foundation we stand on. Now let's talk about what's next and how we will increase the value of DuPont going forward.

So how do we create value for our shareholders? Well, it starts with the purpose of our company, which we have summed up in the statement.DuPont is a science company. We work collaboratively to find sustainable, innovative, market-driven solutions to solve some of the world's biggestand ever-increasing challenges, making lives better, safer and healthier for people everywhere.

Our purpose and our core value are constants. They all emanate from who we are as a company from what we do and how we create value. Wediscover and deliver science-based innovation that solves real problems for our customers, creating value for them, and for you, our shareholders.

Given our purpose, what's our strategy to grow the value at DuPont? It is to generate superior shareholder returns by building world-leadingpositions in three attractive spaces where we have strong science that is valued and rewarded by our customers. These spaces should come as nosurprise to you. They are Ag and Nutrition, Bio-based Industrials, and Advanced Materials. And each of these offers us the opportunity to continueto build a distinctive portfolio of high margin growth businesses.

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The scope of our portfolio also enables us to leverage a broad set of scientific capabilities across our businesses and to access many marketsproviding significant opportunities to drive innovation across these spaces.

While this overarching goal, we have three clear strategic priorities. The first is to become the clear leader in the high value science-driven segmentof the agriculture to food value chain, and to leverage the linkages across these segments. As Jim will describe, we're already uniquely positionedin this space and have tremendous opportunity and momentum to advance further.

Our second strategic priority is to strengthen and grow our leading position as a provider of differentiated, high-value advanced materials throughscience-based solutions. This has been a historic strength of DuPont and we will extend our lead here. And Mark and Tom will tell you more abouthow we will do so.

Our third strategic priority is to build on our leadership position in industrial biotechnology and create transformational new bio-based businessesin areas such as biofuel and biomaterials. We will achieve our goal by leveraging world-class capabilities and critical enabling technologies, suchas designing and operating cell factories and microbial pathway engineering.

Our application development capability and market access of our advanced materials businesses, along with the value chain relationships andfeedstock knowledge of our ag and nutrition businesses, are providing critical advantages to our success in industrial biosciences. And Tom willprovide an update on our progress here.

With these strategic priorities squarely in front of us, we have also defined operational priorities to make sure we deliver results in the short term.These include innovation, increasing our return on R&D, global reach, capitalizing on what exists, and extending it, and execution, driving it to thenext level.

Innovation is a top priority. An increasing return on our R&D investment is how we deliver value. Science is at the core of who we are as a company.Science differentiates us and gives us a competitive advantage. We bring that science to the world to help our customers succeed. We will delivernew products faster and with greater return on our investment.

Now, we received a lot of recognition for innovation as you see here, and that's a start. But our job is to continue to increase the financial returnon our scientific knowledge and capability.

Our R&D investments are the engines that drive our sustainable top-line growth. We have a number of metrics and are continuing to drive theconnectivity between these metrics and the bottom-line they create. The new products that come from these investments open new markets,bring us market share gain, and improve margins.

For example, over the last five years, we increased our seed business market share by 6 points in corn and over 10 points in soybeans. Our Solametpaste continues to gain share with each new product introduction. In 2012, we had over $10 billion in sales from products introduced over thepast four years, and we introduced in 2012 a record number of new products.

Our businesses grow on the strength of our science and the choices that we make in directing our R&D investments to areas of greatest potential.Now, our businesses do this through an evaluation of markets, competition, and our sciences' capability to differentiate us. Now this results inprojects that the business is prioritized for investment, and all projects are tracked by a gated process that assess progress against goals.

We combine strong portfolio management, disciplined execution and project tracking all with transparency. The top 100 projects for the companyare directly overseen by the Office of the Chief Executive. That's the top seven people in the company. And these projects comprise about 50% ofour research and development investment, and this will provide more details here, and Tom will share some examples.

Our second operating priority is our global reach and how we will extend it. As you know, 32% of our $35 billion in sales in 2012, it's about $12billion, came from developing markets, and our revenue growth rate in those markets over the past five years had averaged 14%. We've investedin our global footprint for the last decade and we're expanding that footprint into new growth areas in nutrition and health, and industrial biosciences.

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We're driving penetration in these high growing developing economic. And let me give you a couple of examples. Two years ago, we identifiedIndia to really differentiate our growth there. We needed to act differently. We've been incrementally investing there for years, but we sawopportunities coming out of the global financial crisis and we created teams to focus on accelerating growth by creating specific local capabilityto the very specific needs in six key market opportunities, in areas like automotive and agriculture. And these teams are delivering increasedpenetration and helping us grow the India market.

Now, we are accelerating our progress with other specific programs around the world. In China, we have our Go West program, which aligns withthe Chinese government's actions to industrialize the center in West of China. Our ASEAN program, where the rising middle class -- now this is aterritory that has twice the population of the US -- it presents a great opportunity for us not only in food and agriculture, but in all our businesses.

Our Russia and Eastern Europe program hold attractive growth opportunities for many businesses, including ag where we are adding seed productionfacilities in the Ukraine. And we're extending our sales capability across all our businesses by opening new offices in the Rostov and the Krasnodarregions.

In Africa, we've announced our plans to acquire the Pannar Seed company. Now, this will give us a strategic position to supply the increasing needof farmers with more technologically advanced seed. In Nigeria and Kenya, we're opening branch offices with a focus on agriculture and nutrition.

And in Latin America, we've been very successful over the years tailoring our products to local market needs. And our market penetration therefor certain products in Brazil and Mexico are higher than our market penetration in the US. But here, we are building out our capability in food andindustrial biosciences to continue our growth.

Our third operating priority is simply execution. We continue to build on our strengths here. And for those of you that know me well know this isthe passion of mine. I use data to drive decisions, I set clear targets, use metrics to monitor progress, and hold people accountable. I get thecompetitive benchmarks and I continuously raise the bar.

One element of execution has been our work to engrain productivity as an ongoing, ever-present expectation. Productivity is not a program. It'spart of every business, it's part of every function, and it's part of every region's game plan. It has to produce the productivity both fixed cost andworking capital, and we use it additionally in things like capital expenditures and, yes, even in research and development. It's about being moreeffective while being more efficient.

DuPont Production System, we call it DPS, is at its center and has been instrumental in building this capability into our manufacturing sites. Wecontinue to see great benefits from it every year.

And on the supply chain side, we're using DuPont Integrated Business Management to drive productivity into the supply chain and other transactionalprocesses. So our productivity efforts are ongoing and embedded into our execution process. Another aspect of execution that we're driving isour comprehensive approach to resource allocation, making sure we choose the right opportunities for value creation.

We allocate resources, capital, and research and development to each business annually and adjust it based on performance and opportunity. Itall starts at the corporate level and includes how we make funding decisions for acquisitions, debt reductions, dividends and share repurchases.

At the business level each year, we rigorously assess all of our value creation capability in terms of their market opportunity, in terms of theircompetitive dynamic and the strength of their value proposition in the market. We look at their capital requirements, their return on that capital,and we look at their track record of performance.

To drive execution, we define specific missions for each business and tailor metrics to match that mission. We also look top down at the totalportfolio to make sure it is performing to meet the commitments to our shareholders and to deliver on our company strategy. We determine whateach business must do to improve, and the bar goes up every year.

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We look to see where we need to invest. The allocation goes to the project that provides the greatest magnitude of value creation. We're moreintensely focused on cash returns on the capital in our decision-making. And it was through this process that we decided to sell our coatingsbusiness. In addition, we're looking for acquisitions to augment the organic growth we expect from the portfolio.

We look at adjacent spaces that could align and synergize with our businesses and with our direction. We look for companies that we can combinein ways to accelerate discovery and science-driven solutions for our customers, or which improves market access. Such acquisitions have to createtrajectory. They have to create an enhanced future for our company.

Additional uses of capital such as debt reduction, dividend, share repurchase, are also integrated into the overall resource allocation process, andwe're committed to weighing all of our options on a scale that balances both the short-term and long-term outlook for increasing returns to DuPontshareholders.

I've said many times that DuPont is a market-drive science company, and one way I visualize that and who we are as a company is by plotting ourseven business segments across our three scientific areas -- material science, biosciences, and agricultural sciences. The scientific capabilities areintegrated across our company and leveraged to discover and deliver solutions to our stakeholder problem. The vertical axis just represents markets.

The important part of this chart is at the intersections of markets and science. That's where we find the opportunity to deliver the new and todiscover solutions for our customers. That's where science meets demand.

All three of our strategic priorities -- innovation, global reach, and execution -- are built on a foundation of leveraging scientific capability andmarket knowledge and business support across our company. We continuously strive to capitalize on a potential differentiator that only we arecapable of, and we call that One DuPont.

A good example of leverage in our innovation, global reach and execution for value can be seen in our new DuPont innovation centers. We openedour 11th center just last month in Istanbul. All 11 opened in the last 20 months and they are low cost, but they have high impact.

The operative message here is to connect and collaborate, connect more directly to the local market and customers and collaborate to solveproblems. It's also a means to connect internally among our business, where they can share customer knowledge, scientific knowledge, and tapinto previously undiscovered growth opportunities.

Now you can see in the slide how we link and network our research resources, including our product-specific application development resourceswith individual customers and markets. Our goal is to identify new areas we can focus on profitably, increase our pace of innovation, and increaseour success rate.

We use these centers to directly connect locally with customers and to localize our science. We bring our 10,000 scientists and engineers to bearon that local problem no matter where they are in the world. We're able to increase our success rate in offering them solutions for their specificopportunities by leveraging our knowledge. In addition, we're creating a natural form for all our businesses to participate in addressing a singlecustomer problem. And that's where we find opportunities and leverage.

An example here would be CP Food Group in Thailand. CP is one of the largest food producers operating across 15 countries in China. They employabout 280,000 people and they have more than $30 billion in sales.

Now, we were selling them just nutrition and health products last year, and we invited their senior management team to join us in our innovationcenter in Bangkok, and we discovered we have opportunities to sell multiple products in many of our businesses, like pioneer seed in China,packaging polymers, and even photovoltaic materials.

This has now developed into a more strategic relationship between our companies. And we're just getting started with our new innovation centers.But we're already working on 169 new growth projects that have the potential to deliver about $400 million in sustainable incremental revenuewhen commercialized.

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The last point I'll make on leverage and synergies across the company is it has to deal with our support cost as well. The goal here is simple -- lowcost per unit support. The only way we can do that is to leverage our scale and this is an area where we are finding the next opportunities inproductivity gains.

So to summarize what you can expect from us. We're building up our strengths. We will grow the value of DuPont by building world-leadingpositions in agriculture and nutrition, advanced materials and industrial bioscience. We will increase our return on research and development,capitalize on our global reach, and we will execute in ways that are visible to you on our top and bottom line.

We'll continue to invest differentially across our portfolio in our most promising value creating opportunities. This includes acquisitions to increaseour organic growth rate. And we will execute successfully against our defined value creation strategies.

Finally, since we met 18 months ago, we re-measured our capability to grow and adjusted it for market changes, and we're reporting today ourlong-term five-year rolling growth targets of 7% average annual revenue growth and 12% average annual operating earnings per share growth.Now, we recognize these are challenging growth rates of a slower growing economy. Given the strength of our portfolio, our global reach, ourintegrated science, and our ability to execute, we will achieve these goals and increase our returns to you our shareholders.

So in closing, we appreciate your investment in DuPont. We will continue to earn your confidence by growing the total value of your investment.So again, thank you for joining us and I'll turn it back over to Carl.


Thank you, Ellen. My pleasure now to introduce you to, no stranger, Nick Fanandakis, our Executive Vice President and Chief Financial Officer. Nick?

Nick Fanandakis - DuPont - EVP, CFO

Thank you, Carl. Good morning, everyone. I want to thank all of you here with us in the room and those joining us through webcast for being withus today and your continued interest in the DuPont company. We have a great program for you this morning, and let's get started with slide two.

Today, I'm going to provide more insight on the three operational priorities that Ellen has just addressed and how they'll help us deliver superiorreturns to our shareholders. We're focused on increasing returns of our R&D spend, capitalizing on global reach by driving penetration in fast-growingdeveloping markets, and driving execution including delivering on ongoing productivity efforts and optimizing our resource allocations.

Looking at slide three, starting with our first operational priority, innovation. As a science company, innovation is the growth engine that connectsmarket insight to a broad range of technologies, allowing us to create new opportunities for our businesses and our customers.

As shown on slide four, we've increased our R&D investment by approximately 50% over the last five years. However, it's not just about spendingmore R&D dollars, but ensuring that we invest in these dollars in the appropriate place. As this chart shows, we've been increasing our R&Dinvestment in those businesses which have generated the greatest potential for growth.

For example, over the past five years, our ag segment sales have increased at a 13% compounded annual growth rate, while earnings increased ata 19% compounded annual growth rate. And over the same time, we have nearly doubled the amount of R&D investment in our ag segment. Thiswill create even greater value for our company and for our shareholders.

To ensure that we're investing our R&D dollars in the right place, our annual budget is based on a bottom-up top-down approach. We run whatwe call a prioritization of initiatives or POI process. Each business submits a POI plan to the Office of the Chief Executive for the projects that theywould most like to have funded. For funding purposes, we analyze these plans to determine which projects will generate the highest cash returns.

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One of my priorities as CFO is to make sure that the right financial rigor is in place to clearly understand all these opportunities that are beingpresented by each business and to ensure that we're maximizing the value generated from the R&D investment.

Moving to slide five. One of the metrics I review is the amount of sales that we're generating from new products, which are those products thathave been introduced in the last four years. These new products keep up relevant in the market place and enable us to maintain or extend ourleadership positions. This allows us to continue to provide more value to our customers and results in faster growth and higher margins. Last year,about 29% of our sales were from new products that were introduced in the last four years, and this is in line with our very aggressive target of30%.

As you can see on the graph, sales from new products have increased at a 6% compounded annual growth rate over the past five years. And duringthe global financial crisis, it would have been very easy for us to turn back that knob and reduce our spending to help weather the storm. But inthe DuPont company, we did just the opposite. We kept our level the same and we've continued to grow since then. And you can clearly see theseinvestments are paying off, as the compounded annual growth rate of sales from new products was 11% over the past three years. This is what wemean in DuPont when we say science meets demand.

Turning to slide six. I now want to discuss our second operational priority, global reach. Greater than 60% of our sales are generated outside theUnited States. Additionally, in 2012, approximately 32% of our sales were in fast-growing developing markets. Our margins on these sales havebeen steadily increasing and are nearly at parity with the margins we generate in developed regions. Our plan is to aggressively drive our penetrationin these developing markets around the world and capitalize on the expanded footprint to generate growth for the company and for our shareholders.

As you can see on slide seven, our sales in developing markets have grown at a compound annual growth rate of 14% over the past five years. Inparticular, China is a terrific example of growth driver for us in that sales there increased at a compound annual growth rate of 19% over the sametime period. And as Ellen discussed, we've been investing more in developing markets in the past several years, including the opening of ourinnovation centers, many of them in these developing regions. You can see these investments are paying dividends for us as our sales in developingmarkets have grown at a 22% compounded annual growth rate over the past three years.

As these economies continue to grow, I'm confident that we'll find even more opportunities to solve our customer problems with our advance inscience. It is at this intersection where science meets the needs of those customers in the markets that we're able to provide unique solutions oftenas higher margins for our company. Our ability to connect our local customers and collaborate and solve problems is a competitive advantage forus, and it will continue to drive growth for DuPont across the globe for many years to come.

Now let's move to slide eight and discuss in more detail the third operational priority execution. As Ellen mentioned, this incorporates a numberof capabilities that we have in building over the past few years. Every day, all of our businesses are held accountable to execute against theirindividual performance targets while outperforming the competition. Additionally, we are focused on delivering ongoing productivity gains inour business and optimizing the allocation of our resources.

Beginning on slide nine. Although productivity has been the area of focus within DuPont over the last decade, we instituted a more disciplinedprocess a few years ago during the global financial crisis. We embedded these processes which we call DuPont Integrated Business Management,or DIBM, and DuPont Production Systems, or DPS. We embedded these systems within each of our businesses. And today, we're more focusedthan ever on achieving and, more importantly, sustaining those productivity gains. Productivity is engrained in the DNA of each and every one ofour businesses.

Let me give you a reference point or proof point, if you will, around this. From 2009 to 2012, we delivered greater than $2.2 billion of fixed costsavings and another $2.6 billion of working capital productivity. We've used much of these costs and cash savings to reinvest in growth projectssuch as the Danisco acquisition, as well as to offset ongoing inflation. Although we're very pleased with the progress we've made in the area ofproductivity, we're not finished. There's more we can do and there's more we will do.

Last year, we implemented a restructuring program to eliminate the corporate cost previously allocated to our performance coatings business.This restructuring plan was designed to improve the efficiency and enhance the competitiveness of our businesses, and it's expected to achieve

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pretax cost savings of approximately $300 million this year, and $400 million per year in subsequent years. Beyond this initiative, we also committedto at least $300 million of ongoing productivity this year.

To close on productivity, I want to reiterate one key point that Ellen highlighted just a moment ago. Productivity is an everyday business requirement.It's not a special one-time event within the DuPont company.

Turning to slide 10. I'd like to switch gears and talk about how we're going about optimizing our allocation of resources within the company.Beginning with evaluating the portfolio, we continually are assessing the value creation capability of each of our businesses based on the attractivenessof the markets that they serve, as well as assessing their competitive advantage in their technological and science competencies. We also revieweach business' sales and earnings growth potential, as well as the cash returns on invested capital, including our R&D dollars.

This is done not only at the corporate level, but for all 12 businesses, but it also is done within each business at the business unit level that eachpresident is tasked to address. Each president evaluates their planning units on a continuing basis using much of the same criteria that I justdescribed.

The information that we gather from this ongoing evaluation helps us to identify those businesses or planning units that represent our strongestgrowth and highest cash return opportunities. We then maximize our allocation of those resources, including R&D, CapEx, and M&A to thoseprojects that have the ability to create the greatest value for the company and for our shareholders.

I've already addressed how we're investing more R&D in higher-growth business. Similar to R&D, we utilize our portfolio of evaluation or POIsprocess to decide where to invest our capital. As shown here on slide 11, we've been reallocating where we invest our capital over the past fiveyears. In keeping with our operational priority around execution, we're investing more today in those businesses that have proven they can generatefaster, higher cash returns, such as our ag segment.

We also run a very disciplined review process to make certain that we're generating the returns that we expect from our capital investments. Everybusiness and every functional president is held accountable for ensuring that the financial terms for each of their capital projects is meeting orexceeding our expectations. For those projects that are not meeting expectations, a detailed analysis is performed and an action plan is implementedto get the projects back on track.

We also capture key lessons learned so that we can avoid any similar issues in the future. Additionally, the results of this process are reviewedannually with the Office of the Chief Executive for all capital projects exceeding $10 million.

Now let's talk about M&A beginning on slide 12. We have and we'll continue to build our scientific strengths through M&A. We look for growthopportunities that are aligned with our strategic direction and that can advance or enable core capabilities in our ag and nutrition bio-basedmaterials or advanced materials.

While our focus is primarily on smaller bolt-on acquisitions in businesses that are in adjacent market spaces or those that provide access tocomplementary technologies, we will also consider larger cross business or transformational opportunities if they are compelling.

We're a science company focused on addressing some of the world's toughest challenges, including feeding the world, decreasing the dependenceon fossil fuels, and protecting people and the environment. However, we can't solve all these challenges alone. For this reason, in addition toacquiring companies, we look to develop strategic joint ventures or alliances, or acquire or license technologies.

We have a disciplined approach with our M&A process. We set high financial hurdles that must be met before we'll even consider an acquisition.As you might expect, the financial metric that I'm most focused on is the expected cash return on investment.

Additionally, I want an acquisition that we make to be earnings and cash accretive within a very short period of time, ideally within one year. Andcertainly that's what we showed in our results with the Danisco acquisition.

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Moving to slide 13. Over the past four years, we've been very active with M&A transactions. Of course, the two transactions that have gotten themost attention are the Danisco acquisition and the performance coatings divestiture. However, you can see here we've completed many of thetransactions as shown on the slide.

Although we've divested more annual sales than we've acquired, these transactions have dramatically improved the quality of our portfolio,including adding higher growth, higher returning businesses that build on our scientific strength. These transactions have also allowed us tocontinue to strengthen our M&A competency. This includes our ability to quickly and effectively integrate acquisitions, and our ability to aggressivelyaddress stranded cost with any divestitures.

At DuPont this month, we're celebrating our two-year anniversary of the purchase of Danisco. I'd like to take this occasion to just take a momentand give you a quick update on how I view the success of this acquisition.

In 2012, we outperformed our plan of achieving greater than $130 million of synergies and I'm happy to say we accomplished that one-year aheadof the original plan. Even better, while 2012 was a significant year of integration activities, the businesses we acquired were both earnings andcash accretive. So I'm very proud of the progress we've made with this acquisition and the value it continues to bring us.

Turning now to slide 14. In order to be able to fund our growth projects, we need to continue to exercise sound financial discipline, which includesmaintaining a strong balance sheet. This has enabled us to execute our strategic priorities, it's enabled us to weather the severe economic downturnwhen it occurred, and it's enabled us to take advantage of growth opportunities such as Danisco while continuing to return strong shareholderreturns.

I'm often asked by investors what's the right capital structure for DuPont. My view is, given the industries that we serve and the level of asset andtechnology intensity, the optimal capital structure for us is one that allows us to maintain our A/A2 credit rating. Maintaining this credit ratingprovides us with excellent access to short-term commercial paper market and long-term debt capital markets, which ensures our liquidity. Butmost important, a good rating gives us the flexibility to execute and potentially then drive some of these compelling opportunities within thecompany.

Although DuPont today we have a very strong balance sheet, some of our financial metrics were not commensurate with the A/A2 rating as weclosed out last year. This is why we used about $3 billion of our after-tax proceeds from the performance coatings divestiture to reduce our adjustednet debt levels.

And like many other companies, DuPont being a multinational, a substantial majority of our cash is held by foreign subsidiaries, because greaterthan 60% of our sales occur outside the United States. We generate significant cash beyond the US borders. We typically use this cash to fund localoperating and capital expenditure activities, including in developing markets, which allows us to further capitalize on our second operationalpriority of global market reach.

Part of the reason we needed to strengthen our financial metrics is that the credit agencies include the global unfunded post-retirement in theircalculation of adjusted net debt. Today, historically low interest rates are driving an increase in the unfunded post-retirement liabilities.

And as you can see on slide 15, our US principal pension plan was in overfunded status in 2007 when the discount rate was 6.25%. And you canalso see, however, that historically low interest rates have contributed to the plan now being only 7% funded, with the discount rates at 4.1%.

Occasionally, I get asked, with interest rates at historical lows, why don't you go out and borrow money to fund those pension contributions. Myanswer is, we typically do not prefund contributions because the discount rates and the return on the plan assets can change, which could lead toan overfunding position and thereby trapping the cash in the plans, such as we had in 2007.

My view is there is no incremental value to our shareholders in prefunding these contributions. The benefits just simply don't outweigh the risk.Therefore, we make the necessary contributions at the appropriate time as required. Additionally, we actively manage the plan's assets. We are

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weighted more towards equity securities and other higher-returning investments. In fact, our US principal pension plan has achieved double-digitreturns in the last three out of the four years, and it's averaged about a 10% return over the last 10 years.

Moving to slide 16. The three operational priorities that we've discussed are the enablers to deliver superior return to our shareholders. Drivingthese priorities will help the company to achieve our long-term sales and earnings growth targets and continue to return capital to our shareholders.

As shown here on slide 17, our long-term five-year rolling growth targets are 7% per sales and 12% for operating earnings. These targets reflectthe realities of the current operating environment as well as the changes that we have continued to make to our portfolio.

Today, we're operating in a slower growth environment. Economic conditions in Western Europe continue to be recession-like. Growth in Americais still largely soft, with some bright spots. And while China's growth is steady, it is not the double-digit growth rates that we saw in the past.

Offsetting this slower growth environment is the recent portfolio movements that we have completed that improved our growth profile, fullyintegrating the Danisco business as well as divesting the performance coatings business. Today, a greater percentage of our business are in thesecular growth markets.

Additionally, this chart shows the long-term sales growth and margin targets for each of our segments. These margin targets have been updatedto reflect the reporting change to operating earnings that was made in the first quarter of this year. And to provide you contextual basis, we'vealso included on this chart the 2012 margins on the same basis.

As you can see from the chart, the margins at the end of last year for performance chemicals and performance materials are higher than thelong-term targets. This is because the current long-term performance chemicals target reflects the expected margins over the full TiO2 cycle,whereas last year, 2012 margin, reflects a market which was at peak levels. For performance materials, last year's margin reflected a very favorablefeedstock environment that we expect to normalize over the long term.

Each of our today's presenters will provide you with more details on the segment growth drivers that will help them achieve these long-term salesand margin targets.

Now let's move to slide 18. Our plan is to grow the dividend in line with earnings growth. As always, any dividend payments are subject to boardapproval. What you can see from this chart, paying dividends to our shareholders is and has been a top priority. Just last week, our board approveda 5% increase to our dividend, and since 1904, we have never missed a quarterly dividend and, unlike some companies, we did not suspend ordecrease our dividend during the global financial crisis.

In addition to our dividend policy, we've also returned cash to our shareholders through share repurchases. As you can see on slide 19, we haverepurchased about $2.3 billion worth of shares over the past two plus years. In April, we just completed our $1 billion repurchase program usinga portion of the performance coatings divestiture proceeds.

So in summary, on slide 20, we have a clear path to deliver greater shareholder value. Our continued focus on the three operational priorities --innovation, global reach, and execution -- will enable us to achieve our long-term rolling five-year growth target of 7% top line and 12% operatingearnings growth. In addition, we'll continue to invest differentially across the portfolio in our most promising value creation opportunities. Lastly,returning cash to our shareholders has and will continue to be a key priority within the company.

So this ends my concluded remarks. Look forward to answer any questions you might have during the executive Q&A session. Let me turn it backover to Carl.


Thank you, Nick. I'll remind everyone that Ellen and Nick will be participating in the Q&A session at the last segment of our program.

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We'll now hear from Tom Connelly, our Executive Vice President and Chief Innovation Officer. Joining Tom on stage will be Doug Muzyka, SeniorVice President and Chief Science and Technology Office, Diane Gulyas, the President of DuPont Performance Polymers, and Jim Collins, Presidentof DuPont Industrial Biosciences.

Tom Connelly - DuPont - EVP, Chief Innovation Officer

Thank you, Carl, and good morning, everyone. I'm pleased to provide an overview of DuPont R&D and then to present our growth plans forperformance materials and industrial biosciences. So let's begin on chart two.

Throughout DuPont history, our science and innovation have been sources of competitive advantage, enabling us to thrive for more than twocenturies. In today's global environment, however, we must invest in R&D with a different mindset, as markets are more dynamic, more competitive,and fast changing. Innovation must be faster, better integrated, more localized, and it must generate a robust return on our investment. Investorsare demanding more details on our R&D direction and processes, and greater insights into the strength of our pipeline.

Today I will share with you our approach for ensuring a strong return and for accelerating innovation while providing an update on our excitingpipeline. Rest assured, we are moving decisively to maximize the value of our innovation growth engine.

Let's look now at our key markets on chart three. Our acquisition of Danisco and the divestiture of performance coatings have reshaped our portfolio.This chart reflects our current emphasis in market direction. Our areas of scientific focus include ag and nutrition, bio-based industrial and advancedmaterials.

In 2012, we generated over $10 billion of revenue from new products which we defined as products introduced within the past four years. Morethan $5 billion of new product sales came from the ag and the nutrition and health segments alone. This is meaningful progress and a strongpayback, but our customers and shareholders are demanding even more.

DuPont is a science company and science powered innovation is our growth engine. We are meeting customer and societal needs on a globalscale. We use our science to generate the growth, earnings and cash that powers our company. To achieve this, we must continually adapt ourapproach and leverage the strength of our R&D across our entire portfolio.

Chart four shows the description of how we are advancing our innovation model. Within DuPont, we are applying our science to some of theworld's biggest challenges in ways that create value for our company. This goal inspires us. Every resource we use and every dollar we invest isdeployed to achieve this objective. Our objective remains unchanged, but our approach is evolving.

For example, in the past two years, we have opened 11 innovation centers around the world, with the most recent one being last month in Turkey.The goal of these centers is to collaborate more closely with customers and local markets, while harnessing the creativity, imagination, and scienceto meet global challenges associated with food, energy and protection.

At the innovation centers, we tap the power of our science by linking with any of our 150 labs in 35 countries, totaling more than 10,000 scientistsand engineers in all. Our innovations are accelerated when we leverage global resources to local needs and bring market-driven science throughpartnerships with our customers. To grow quickly, innovation must be targeted and tailored to specific markets and regions. Our innovation centersare a low-cost, highly effective vehicle to achieve this objective.

Our performance polymers is a great example of innovating for local markets. Our Shanghai R&D center has played a critical role to meet the localneeds of the China automotive industry. In 2008, our polymer sales in China were about $75 million. Five years later, we've nearly tripled thosesales to $220 million. Our polymer's growth rate has been 50% higher than the growth rate of the automotive industry in China. This has beenachieved through local innovation and applications development.

On Chart five, we present the science competencies that will fuel better returns on our investment and grow the value of our R&D engine. Thischart illustrates DuPont sciences including chemistry, material science and biology. Now, during the past 15 years, we have significantly strengthened

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our biology capabilities through internal development, acquisition of key technologies, and collaboration with other companies, universities andgovernment laboratories.

With this portfolio of foundational sciences, the critical success factor to accelerate innovation lies in our ability to look across the boundaries ofthose scientific disciplines. We call our approach-integrated science. We pull together the right combination of chemistry, biology and materialscience from the competencies you'd see here. DuPont uses its strength to deliver faster, better, and even transformational solutions for ourcustomers.

While we have strong capabilities and strong and capable competitors in specific scientific disciplines, DuPont's breadth of science is unique. Simplystated, we are advantaged like no other company to meet customer needs while delivering value for our company and shareholders.

Chart six highlights another example of integrated science delivering value, this time our Sorona polymer. Now, I know that many of you are familiarwith our Bio-PDO and Sorona enterprise. But this chart demonstrates that integrated science is not just the talking point.

By pairing chemical and material science with biology, we have created a thriving business that is delivering over $300 million of new revenue forour company. Our unique science enables and enhances performance, sustainability, and lowers systems cost while delivering a reducedenvironmental footprint.

Bio 1, 3-Propanediol of Bio-PDO starts with corn that includes pioneer high-yielding hybrids. The corn is transformed into sugar using enzymesdeveloped by DuPont's Genencor science. The sugars are fermented into Bio-PDO using a production microorganism developed by DuPont.Bio-PDO monomer is polymerized into Sorona using a DuPont proprietary process. At every step, we use DuPont science.

Then we leverage our global reach and our market access through customer facing teams into areas such as automotive. Our applications base isgrowing. So in addition to automotive, Bio-PDO and Sorona find new uses in carpet, apparels, and personal care markets. Sorona is growing quitesimply because it is a better product, not just because it is green.

Our Sorona success demonstrates how integrated science is the differentiator for DuPont. This approach is being replicated on a broader scale todeliver even more innovation and deliver it faster.

On chart seven, we review our revenue growth from new products during the past four years. Revenue growth is essential to DuPont's success andit's one way we measure the impact of our science.

As I mentioned earlier, in 2012, DuPont recorded over $10 billion of sales of new products. As you can see on the right of this chart, all of oursegments are contributing new product sales, with ag having the largest share. Some examples include new fungicides for disease control andproduction agriculture, new formulations of Nomex fabric for protective garments and new application of Zytel high-performance plastics.

Our new product sales are a mix of next-generation products designed to replace our existing offering and products that capture revenue growthin new markets or adjacent spaces. In ag, for example, 15% to 20% of our seed offerings are new each year. These products are introduced to deliverimproved yield or durability and often replace previous varietals or hybrids.

AquaMAX corn hybrids are a great example. Growers who planted AquaMAX products in 2012 saw nearly a 9% yield advantage in their fields versuscompetitive products in water-limited environments. Even under favorable growing conditions, growers who planted AquaMAX still benefitedfrom yield advantage. We are also beginning to leverage this native trait technology to Europe and we expect sales of this product to more thantriple to 7 million acres in 2013.

The marketplace is the best measure of the value of our science. We have gained share in corn and soy in ag, made major strides in industrialbiosciences and nutrition and health, and we have strengthened our leadership positions in the area such as photovoltaic.

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Let's move now to chart eight for examples of projects in our R&D pipeline. This chart represents about a quarter of our top 100 projects and, asEllen mentioned, these critical projects are reviewed regularly to assure and measure progress and to ensure a strong return. The size of this circleis estimated at peak revenue for each product and the color of this circle represents the industry group, ag and nutrition, bio-based industrials,and advanced materials.

Overall, we have a strong and balanced pipeline across our portfolio. We are particularly proud of our blockbuster crop protection product,Rynaxypyr, that recently emerged from our pipeline. We launched this product in a very different way. We move faster and with greater globalcoordination during its rollout. Annual sales grew to $750 million in four years, the fastest time in DuPont's history for a product to reach thesesales levels.

Within our pipeline, we have exciting developments, like our next-generation refrigerants, Opteon YF, our OLED and our seed treatments, whichMark and Jim will talk about later. The DuPont pipeline is well positioned to bring future innovation and value to our global customers. Risk adjusted,this portfolio will deliver $7 billion in top-line growth by the 2016 timeframe.

In summary, increasing return on our R&D investment and maximizing our pipeline are our key priorities. By leveraging our innovation centers andintegrated science, we're making meaningful progress today against those objectives and I'm confident that we will deliver even more in the future.

And on this note, I will conclude my overview of DuPont R&D. Now I will focus on performance materials and industrial biosciences segments.Then, Jim and Mark will follow to present the rest of the portfolio.

I will begin on chart nine with performance materials. As a reminder, performance materials comprises performance polymers and our packagingand industrial polymers.

Let's turn to chart 10 for a review of their key products and geographies. Within performance materials, growth comes from innovative materialsand expert applications development that enhance our customer's product performance and sustainability, and we reduce their total systems cost.We leverage our four competencies to meet the needs of global customer base while delivering strong cash and earnings for the company. As thechart demonstrates, performance materials is diverse and we take advantage of our global reach to capture growth in high-growth countries suchas China.

On chart 11, we review key trends and market dynamics. Outlined here are the key markets that drive our business. Group packaging is a coremarket. Our high [performance] polymers function as sealants, barriers and adhesives in multilayer flexible films. Like meeting customer needsthrough applications development, we generate attractive margins, and innovation is highly valued in this segment.

Automotive is another top segment for performance polymers. With more than 3 billion vehicles on the roads in the near future, mobility, emissions,fuel economy and safety are critical. Automotive OEMs and their first-tier suppliers look for high-performance plastics to help increase fuel economyby reducing vehicle weight. Our Zytel and Vamac products integrate multiple parts at lower cost while enduring the higher temperatures inunder-the-hood applications on turbocharged engines.

While the growth rates in performance materials are modest, growth is stable and generates cash and earnings to support investments in ourfaster-growth businesses.

Turning to chart 12, I would like to talk briefly about the role of renewable polymers in this portfolio. Our performance polymer business has thebroadest offerings of renewably sourced engineering polymers in the industry. Our new generation of materials are derived from biomass insteadof petroleum and they reduce the environmental footprint without compromising performance.

We have been an innovator in renewables and we plan to maintain our leadership position through cross-business collaboration. This is just anotherexample of our approach to integrated science. And polymers, our renewables portfolio delivers today about $100 million in revenue, a numberthat we expect to grow steadily. Of our $4 billion portfolio of engineering polymers, about half could be renewably sourced in the years to come.

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Let's summarize on chart 13. Performance polymers has a clear understanding of the growth drivers and a strong record of executing our strategicplans. As the margin line indicates, we delivered a 400 basis point improvement in 2012. We took advantage of the favorable feedstock environment.So we are currently ahead of our long-term margin targets.

While we expect natural gas prices to remain low, we do anticipate some margin pressure in the future. However, by remaining focused on deliveringinnovation and expert applications know-how, we remain confident in our ability to deliver cash, earnings, and a strong return on invested capital.The bottom line results are clear. Performance material is a strong success story.

I will turn now to our bright future in industrial biosciences starting on chart 14. The industrial biosciences segment has a simple mission -- to createthe leading industrial's biotech business by delivering transformative innovation and driving sustainability. We are at the early stages of dynamicgrowth.

We have plans to build out our platforms and to accelerate our growth and to deliver strong revenue and earnings. We start with our broadtechnology foundation in bioprocessing and protein engineering, and link to DuPont's capabilities and production agriculture in our well-establishedpresence in advanced material. This is another example of integrated science.

As you can see on chart 15, we supply a diverse set of industries and geographies regardless of the industry or region, our applications developmentknow-how, our geographic reach and our pipeline of new products are the drivers of our growth.

On chart 16, I'll provide some insights into how our businesses are structured to maximize growth. We organize our business in three bio-basedsegments. We call them bioactive, biomaterials, and biorefineries. The first segment is focused on bioactive products such as enzymes and proteinsthat play an important role in the production of animal protein, in food processing, household cleaning, and personal care. Examples include feedenzymes for animal nutrition or baking enzymes that increase the shelf life of bread.

The second category is biomaterials and biochemicals like the Soronoa polymer I've already talked about. And the third category contains productsthat enable the further processing of sugars into fuels and carbohydrates. It also includes transformative technologies to convert biomass to ethanoland butanol.

The key end markets for industrial biosciences are diverse. This is evident from the spread that you see on our growth rates. High-income levelsaround the world drive demand for protein-rich diet and convenient items for automatic washing and process food. These trends fuel our growthin bioactives.

In biomaterials, we are capturing and capitalizing on our superior product performance and growing consumer preferences for sustainable materials.In biorefineries, our largest opportunity is biofuels. It has attractive growth rates, but fuel margins can be low. Therefore, we are developing multiplesources of income from biofuel's value chain. We have selected spaces where we can license technology to sell enzymes and fermentation microbes,and participate in actual fuel cells.

In our core enzymes markets highlighted on chart 17 we combine strong customer relationships with our science. We are the world's leadingsupplier of enzymes and other additives to help animals to digest a variety of feed products. Under the Axtra brand, we have launched two newfeed enzyme products that are tailored to the needs of the poultry industry.

In detergents, we are working collaboratively with both global and local brands to provide detergent enzymes that allow consumers to removetough stains while saving money by washing in cold water.

On chart 18, we illustrate some of our collaborative efforts in biomaterials. Mohawk Industries is a great example of a strategic partnership in action,with their SmartStrand line of carpeting using Sorona polymer. Mohawk's SmartStrand Silk line is the softest residential carpet on the market andthe performance in aesthetic advantage of Sorona have allowed Mohawk to take market share from their competitors.

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We're also excited about our work with Goodyear on Bioisoprene. As many of you know, isoprene is already an important raw material in theproduction of tires and adhesives. When commercial, we will have a strong value proposition as an excellent replacement for natural rubber. Weare making great progress and we have hit all of our technical milestones in the past year.

Now, I'd like to provide an update on biofuels starting with chart 19. Last November, DuPont moved into the commercial phase of advanced biofuelsby breaking ground our cellulosic ethanol facility in Nevada, Iowa. Following its completion in the second half of next year, the $200 million facilitywill be among the first and the largest commercial scale cellulosic biorefineries in the world.

Once fully operational, the facility will produce 30 million gallons per year of cellulosic ethanol. Our Nevada plant will showcase the strong competitiveadvantages that we enjoy. First, we bring unparalleled knowledge of feedstock supply chains through our Pioneer agronomist, our deep relationshipswith growers, and the experience that we've developed with our seed corn value chain.

Secondly, we bring a fully integrated technology package that has been optimized to deliver on the quality, quantity, and economics for ourcustomers. We have not just the best process elements, we have optimized the complete system.

Finally, we are a company that knows how to produce the key consumables, that is the enzymes and the fermentation microbe on an industrialscale and at a cost that makes our customers economically viable. Our intent is to globally license this fully integrated end-to-end productionsystem. We continue to advance our biobutanol program with Butamax, our joint venture with BP.

We have strong interest in the early adoption from a group of corn ethanol producers who now produce about 1 billion annual gallons of firstgeneration ethanol. They want to be among the first to convert their plants to biobutanol, and we expect the first phase of implementation tobegin in 2014.

Both of our biofuels programs aim to deliver fully integrated, lowest cost, lowest capital technology. We will provide nations around the world witha pathway to meet renewable fuels goals to reduce greenhouse gas emissions, to create jobs and energy independence.

I will now outline our plans to deliver a strong return on our investment in biofuels as detailed on chart 20. Already, more than 50 countries haveenacted mandates for biofuel. In the US, the renewable fuel standards, or RFS, creates a predictable ramp-up for second-generation fuels that arerequired to meet the mandates.

Based on the demand projection, we're going to need a substantial number of new cellulose-based plants to be built. DuPont's strategy is not tobuild or invest into these facilities, but we do intend to be the technology inside most of them.

If our biofuels technology moves forward, we will have three revenue streams -- licensing of engineering, design and technology; supply of enzymesand fermentation microbes, as well as some direct participation in fuel production and sales. No other company brings these capabilities to cellulosicethanol and butanol. That is the DuPont advantage.

By 2017, we expect to generate approximately $100 million of earnings from our licensing and sales of enzymes into biofuels. We anticipate earningswill grow to over $500 million per year by 2022.

Now let's move to chart 21. In conclusion, DuPont industrial biosciences' growth story is still in its early stages. We have a solid foundation ofearnings with lots of runway to growth. The drivers of this growth are innovation and new technologies, along with market and geographicexpansion. We anticipate annual sales growth in the 7% to 9% range and we will increase our margins from 14% today to the 16% to 18% rangeby delivering on our innovative new products by realizing the business growth synergies, our pricing actions, and further productivity efforts.

Now, I've highlighted a sampling of a growth program. But it's important to emphasize that growth of our base business, this is the business thatwe enjoy today and know well, will also play a key role in hitting our growth targets. That's one more reason why I'm excited and confident aboutour future in industrial biosciences.

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I'll sum up on chart 22. Let me close by reaffirming my commitment that DuPont innovation will be the key growth engine for the company. I amconfident in our pipeline and I am confident in our ability to generate attractive returns. I'm equally confident that performance materials willcontinue to achieve its mission of delivering cash and earnings through innovation and applications know-how.

For industrial biosciences, we have a great future and we are already the most compelling industrial biosciences business in the world.

And on that note, I will turn the floor back to Carl so that our leadership panel can entertain your questions.

Q U E S T I O N S A N D A N S W E R S


Okay, we'll now have our first Q&A session. Just process-wise, please raise your hand if you have a question. A microphone will be passed to you.And please introduce yourself and your company name before asking your questions, please. Don?

Don Carson - Susquahanna Financial - Analyst

Don Carson with Susquahanna. A question for you Jim on the viability of the advanced biofuels business. We've seen some pressure both from oilcompanies and corn-based ethanol producers to cut the RFS for advanced and cellulosic ethanol, and obviously there's always concerns oversubsidy. So how viable is this business with both the RFS threat and when will your technology be economic without subsidies?

Jim Borel - DuPont - EVP - Agriculture, Nutrition & Health

Thanks, Don. Clearly, we think the RFS, when it was enacted, it was a very visionary piece of legislation and it did exactly what it was designed todo. It created one of the world's largest biofuels industries in the US. But the work is not done. That was phase one, getting into the second generationin advanced biofuels. So we're certainly a strong proponent that the RFS is doing its job and remaining intact has been a core support from ourcompany.

At the same time, we have developed technology that we know over time subsidies and incentives will fall away. We'll have a tendency to sunset.So they do a nice job of encouraging new businesses. And so, our approach is that over the long term, our technology would be competitivewithout the subsidies. But we need this early support in order to get this business up and running and on the ground.

So we're counting on continued support by Congress and the administration and we're working with other industry partners to show our strongsupport for the RFS.


Second question here.

Mark Connelly - CLSA - Analyst

Thanks, Mark Connelly from CLSA. Tom, a couple of investor days back, you chaired a panel of global leaders and talked about decentralizingdecision-making to drive innovation faster. Can you tell us a couple of years later whether you've accomplished those goals and how you benchmarkagainst it?

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Absolutely. I remember that panel well. It was quite a good interaction. And I would say we continue to pursue the innovation on a global leveland with more local decision-making. You heard from Nick about the great progress we made in terms of our sales into the developing marketsnow comprise about a third of our total sales. They've continued to ramp and those strong growth rates that Nick showed, I think, are a directconsequence of that.

We've taken steps within technology to put regional technology leaders in each of the regions. You notice that most of our innovation centers areinto the developing parts of the world. They've been great link to pull DuPont's science and technology into the regions. And I will say Ellen's visionof how we run our businesses is to really encourage stronger regional decision-making. All of those trends I think are contributing to the kind ofgrowth that you've seen in the numbers that Nick showed you this morning.

Dave Begleiter - Deutsche Bank - Analyst

Thank you. Dave Begleiter, Deutsche Bank. For Diane, can you tell me about your track record in growing your performance polymers businessfaster than your peers and always to grow that, maintain that increasing share going forward versus people like BASF and [Sellmes]?

Diane Gulyas - DuPont - President - Performance Polymers

Great. Thank you, David. I think as you know and many of you know, our game plan is the same. It's always about bringing out innovative newproducts which we think we do better and faster than our competition. It's about our applications development where we work every step of thevalue chain and starting with the OEMs and the tier-ones, and all the way back to working on creating value at every step of the chain.

Our global reach is unparalleled, we think, versus our competition. We're well positioned in many countries. I'm so proud of what we do with theinnovation centers. Many of our customers, both OEMs and tier-ones, are global. And so those innovation centers become video connections toour engineers and designers and our partners all over the world. And my team uses them extensively. Some 15% to 20% of those 169 projects Ellentalked about come from performance polymers.

And last but not least, we are absolutely obsessed with productivity, and I think that game plan gives us a competitive advantage versus our globalcompetition.

Chris Willis - Impala Asset Management - Analyst

Chris Willis from Impala Asset Management. You pointed out that you had roughly $10 billion of sales in 2012 from new product introductionsover the last four years. Can you give us a rough idea of what the profit margins might be on this $10 billion sales?


Yes, we certainly can and maybe I'll ask Doug Muzyka, our Chief Technology Officer, who runs those processes to comment on that.

Doug Muzyka - DuPont - SVP, Chief Science & Technology Officer

In our portfolio, our development portfolio process, we really look at the competitive position as we direct our product development process andwe look at what the revenue and margin potential associated with them are. So for the most part in that portfolio, we aim to actually have the neteffect on the company to have a margin improvement. Not every single one of those products results in a margin improvement because we veryoften replace products in order to stay competitive. But on the whole, that group, the pie chart that you saw on Tom's chart, it shows improvingmargins versus the products that they either replace or the products that they drive top-line growth with.

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Maybe just to add a thought there. On a segment-by-segment basis, our new products are above the segment averages and we tested that timeand time again.

Mike Ritzenthaler - Piper Jaffray - Analyst

Mike Ritzenthaler with Piper Jaffray. One of the slides here shown the next-gen refrigerants that are coming out. And my question is, in order tohit the revenue bubble for those next-gen refrigerants, how much help is needed from the EPA to get down the virgin volume of the legacyproducts? And as a follow-up, were there very high expectations stemming from the work with Honeywell and some of the European OEMs?

Unidentified Company Representative

So let me take that question. I mean, clearly, adoption of Opteon YF is an important step and an environmentally sound step. For the rest of theaudience who may not be as familiar, Opteon YF has extremely low global warming potential, perhaps one-tenth of 1% of the global warmingpotential of the products that it replaces.

This technology has been adopted by the European Commission. Within Japan, there are strong indications that will be adopted. It will spread toAsia in connection with our new [Cap A] requirements, US automotive OEMs who see a role for it to play even without the refrigerant legislation.So we see very strong momentum, clearly, starting in Europe with its environmental consciousness. We're counting on it spreading beyond that,but we do not need total worldwide adoption to hit the targets that we set for it.

Brian Maguire - Goldman Sachs - Analyst

Brian Maguire from Goldman Sachs. Tom, it's a question on your Bio-PDO, Sorona, and Bioisoprene products. Are they cost competitive withtraditional petroleum-based chemistries or are you just substituting one bottle of raw material oil for another corn? And kind of related, are yougetting any price premium for them for being bio-based?


Yes, Bio-PDO run, it's a great story, and I think I'll let Jim Collins tell it.

Jim Collins - DuPont - President - Industrial Biosciences

All right. So it's a great example. PDO has been an article of commerce or commodity that had been out there before our program came along.And carpet fibers and apparel made from PDO were prohibitively expensive from oil. So as Tom said, one of the solutions that we brought was,first of all, the producer product at a much lower cost from renewable sources and bring some enabling performance characteristics to othermarkets that were unavailable to oil-based PDO. So it's a great example of your question in action. It actually solved a cost issue.

On Bioisoprene today, as we're working to our development cycle, we have a target or a goal to be competitive. But it isn't necessarily about costcompetitiveness as much as it is about an additional source of a key raw material for the rubber adhesives industries that are out there. So withBioisoprene and PDO, while we can't claim that we get a substantial premium for any kind of renewable attribute today, I think as we move forwardand the global forces continue to push us towards more sustainable supply chains, that will be a recognizable attribute that we'll certainly look toextract some value from.

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Unidentified Audience Member

Can you give us an update on your industrial biotech expected CapEx over the next five years? And you haven't had that many new products orbubbles added to the pipeline. Should we expect more chemicals to be added as target areas or are you going to pivot away from carbohydratesfeedstocks to something else?


So let me start. That entire question was specific to the bio-based industrials, just to be clear. Certainly, as we mentioned, those charts don't representeverything that we're working on. If you notice, the bubbles in my pipeline chart were more dense toward the outlet and there's lots going in theearly stages, but there's a certain point at which we're really willing to talk about things externally.

So there's more going on than is represented. Those 25 programs were only one quarter of our top 100 across the whole company. So it's certainlygoing on and we do see additional opportunities in industrial biosciences as across our whole portfolio. And Jim, do you want to make a commenton that?


Yes, I'll just add. As Tom said at the end, we're at the early stages of our growth story. And really, at the early stage, Nick mentioned the Daniscointegration. As we start to now look across all of those three strategic areas that Nick and Ellen highlighted, we're starting now to identify otherbiomaterial and biochemical opportunities. And Diane and I are great examples of that collaboration in action. We have a steering committee now.Our teams meet monthly and we have a number of programs that didn't show up on the bubble chart at this point, but they're coming.

So, Diane, why don't you say something about your view of renewables in your business?


Sure, happy to. Going back to, I think, the original question or the question before, our goal is class competitive, we're not going and assumingwe're going to get a premium. As Jim points out, if we get one, that's awesome. Functionally equivalent or superior and sustainable, and that's thetarget for the products in my business. We're looking at our entire portfolio. And we think over the next decade we could replace maybe half ofour products, and it's probably because of a partnership that I have with Doug and with Jim.

We actually have a managing process where the three of us meet quarterly and we look for targets where Jim's enzymes and Doug's sciencecapability together with my market access can create new opportunities for DuPont, and it's a partnership that we've been working for about thelast 12 to 18 months and we're starting to see some really interesting things, some of which we're ready to share with you, some of which we'renot.


You also asked the question about CapEx.


Maybe just two quick comments. Obviously this business competes with other businesses in DuPont, the process that Nick mentioned with FDOCEfor our share of that capital budget. So we have to bring projects that are competitive, that exceed and earn well above the returns that are in theexpectation. And as a business leader, I have to do my job to bring efficient uses of those capital programs.

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So again, we're sort of at the early stages of developing that capital plan, some of that capacity to support our core business growth in our enzymefermentation capacity. But then capital, as you know, we announced the $200 million investment in our Nevada facility for cellulosic ethanol. That'ssort of the start.

I'll reinforce the message Tom said, is we don't intend to invest in all of those ethanol facilities going forward. But we felt the first one we neededto step out with DuPont support to demonstrate the commercial viability. And then, over time, we expect to be in the licensing or a royalty model.


I think PJ's next. Lots of hands up. We'll get to you all.

PJ Juvekar - Citi - Analyst

Hi, yes, PJ Juvekar. Good morning, Tom. So there's a lot of innovation that's taking place here with shale oil and shale gas. You didn't talk aboutthat, but what do you plan to do to benefit from that? And the second question related to that is, let's say oil and gas prices come down becauseof the shale innovation. How do these bio-based materials compete with that in that environment?


Okay, let me make a comment, and Jim may want to jump in as well. So shale gas is a great thing for the country, it's a great thing for the environment.We're very supportive of what's going on in that regard and we are benefiting from that. Certainly, within our performance materials business, lownatural gas prices translates into some of the advantage that we're seeing there in terms of raw materials.

At the same time, the low natural gas is providing opportunities to our industrial biosciences business, because as you know, the C1 and C2molecules are becoming more abundant, and C3s, 4s and 5s are becoming less abundant, less available, and part of the Bioisoprene story is relatedto that. So we definitely see it as a very positive thing for our business.

From the standpoint of transportation fuels, the energy density of liquid transportation fuels makes them the materials of choice for quite a while.You may see some LNG show up here or there, but the kind of cars we drive around in are going to be powered by liquid transportation fuels. SoI don't think it really changes our views very much for those markets, PJ.

Jim, do you want to add something?


Exactly those two points. I mean, you're aware that natural gas powered vehicles are a tenth of 1% of the total fuel used in the US today. If thatgrows, let's assume, it most likely will displace diesel, because a lot of that natural gas will go to short-haul delivery vehicles or public transportationbuses and those type of things. So we think it will be positive again for the future of cellulosic or butanol-based fuels.

The third point I'll mention then is the fact that it actually helps the biofuels industry lower natural gas, because many of the first-gen plants outin the countryside today are powered on natural gas to get steam and energy. A matter of fact, our own cellulosic facility, when it starts up, will bepowered on natural gas. So this is actually helping the industry and the margins associated with it.

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John Roberts - UBS - Analyst

John Roberts, UBS. Tom, I think you said there's a billion gallons of ethanol looking to potentially be a leading edge converted to biobutanol. Whatdo they have to do to convert, like the spending required or the process of conversion? And does that tie it all to your $100 million in 2017 or $500million or 2022? Is that the kind of gallon edge that we need to see for this business to earn that kind of money?


Great question. So the first part is, we're still developing the final capital aspect of the conversion to be able to sit down with this early adoptersgroup that you mentioned and talk about the conversion cost. But we haven't generally talked about their financials and their returns and theopportunity for revenue and margin on the sale of butanol, and early adopter group all signed up based on understanding those financials.

So part one of your question, this is a real opportunity for that group. In those financial numbers, yes, you've started to see the front edge of thatconversion. We would expect to start the first conversion in 2015. And the actual installed equipment has to do with some separation equipment,has to do with changes to fermentation, and clearly, the separation of butanol was a little bit different than the extraction of ethanol. So there aresome changes to the backend from a distillation perspective, but all pretty available today type of manufacturing technology that would be easilyoperatable by an ethanol facility.

I don't know, Doug here, also close to the program, anything else you would have?


I don't think so.

Duffy Fischer - Barclays Capital - Analyst

Duffy Fischer from Barclays Capital. I was wondering, Tom, if you could just, on slide eight, it's kind of an interesting layout. You talked about theBioisoprene, the biobutanol, the cellulosic, and just the time lag between the three. And if I think back, we heard about biobutanol and cellulosicprobably five, six years ago from you guys. So can you go back and talk about what you would have thought when you first brought those productsout to us five or six years ago, what's going right, what's going wrong, and how we should think about timelines going forward as some of thesenew products come in in the bio area.


That's fine. Duffy, if you go back to our reports from the -- you go back to days as far as 2007, so more than five years ago, we're about five yearsago at this point, we said we would be moving, first of all, that cellulosic program as slightly more dense than the biobutanol, that's still true today.And we said we would be moving into commercialization phase, and in 2012, we made our announcement in 2012 of our plans for the Nevadafacility.

So I think we're pretty much tracking along the timelines. So we take those timelines pretty seriously and we're moving towards commercializationmore or less in the timeframe that we laid out certainly for biofuels but also to the other programs that we've been discussing.

Duffy Fischer - Barclays Capital - Analyst

But I guess the correlate, would Bioisoprene kind of be on that same timeline that we should think about actual commercial sales being sevenyears down the road from here? I mean, would it follow that same kind of path when you first brought out the biobutanol and the cellulosic as faras commercialization?

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Yes, I think about that timeframe we have, two critical milestones coming up in the next 24 months around the design and operation of a pilotplant to demonstrate the fully integrated technology. At that point, as Tom said, we're working with a partner at Goodyear and we have somediscussions to have with them about the timing for the full-scale commercial facility. I would say on our technology milestones, our teams haveactually done very, very well in 2012, and we had a good year last year technically around isoprene.

Bill Cross - Eaton Vance - Analyst

Bill Cross, Eaton Vance. Both performance materials and industrial biosciences are showing a bit higher margins for your target now than you hada year and a half ago, and each are showing lower growth sales growth targets than you expected a year and a half ago. Can you just do a littleattribution analysis to help us understand what factors are driving those changes, for example, with margins how much is attributable to thepension accounting change and the shale gale and other factors, and what's driving the change in the sales growth outlook, please?


Okay, but given the general nature, maybe I'll jump in to that. In terms of margins, the accounting change really accounts for the shift that you'reseeing. So we have not revised up or revised down our expectations. These businesses are tracking, they're delivering what we said we were goingto do. Jim is growing into his long-term targets as IB ramps up.

With regards to the growth rates, I think Nick summed it up well. So we look out at the macro environment, what's going on in Europe, China isgrowing well, but it's not China of the significant double-digit growth that we're seeing. So I think what we're saying is those growth rates representour view of the macro reality rather than any specific things. Obviously, we're doing what we can to exceed those rates.

Diane, any comments?


I think you said it well.


I would say on IB, the margin improvement is also attributable to the integration synergies. As Nick said, we delivered those synergies a full yearearlier. So we're getting those to the bottom line. So that's improving operating margin. And as Tom mentioned, our pipeline is beginning toaccelerate. We talk a lot about the final materials programs. We have a number of projects in our core enzymes business like the one that washighlighted around cold water with Procter & Gamble. These are new enzymes and these enzymes have good margins. So it's the mix effect as wellthat's improving that operating margin.


I'm sorry. Last question in this segment. We'll get everyone else later.

Vincent Andrews - Morgan Stanley - Analyst

Thank you. Vincent Andrews from Morgan Stanley. Could you just talk a little bit about on the technology licensing part of the cellulosic ethanolpiece? How well formed do you think the potential licensors of that technology are? And if we think back to sort of plain old corn ethanol and when

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all those plants were built way back when, sort of the prognosis for profitability of those looked pretty good, and then the market changed for avariety of reasons, and there will be a mandate and all that. But how well formed and what's your backlog of conversations and so forth.


Jim?


Probably a little too early to talk about any specific conversations. I can tell you we are engaged in a number of those, and they have been verypositive. I think the recent uncertainty around the regulatory environment around the RFS has created a little bit of a pause in a few of those, whichis again, why we're certainly so supportive of that legislation. And we send messages all the time that stability and policy is one of the key driversfor the ramp up of this business. So if tomorrow there was an absolute 100% assurance of the presence of that, it wouldn't be long before we couldbe out announcing some relationships.


Okay, ladies and gentlemen, we take a 10-minute break and resume with Jim Borel in our agriculture and nutrition health businesses.

(BREAK)



Okay, we'll get started here. That was a request. Here they come, okay. Okay, this is going to be one of those moving restarts I can see. Ladies andgentlemen we will restart the program now by hearing our Jim Borel, our Executive Vice President who will address our agriculture and nutritionand health segments.

Joining Jim on the stage for the Q&A session afterwards will be Rik Miller, President of DuPont Crop Protection, Paul Schickler, President of DuPontPioneer and Craig Binetti, Preside of DuPont Nutrition and Health. Jim, I'll turn it over to you now.


Thank you and good morning to all of you here in the room as well as on the webcast. I'm pleased to give you an overview of our agriculture andour nutrition and health segments and it's a great time to be in the food and production agriculture businesses.

Market fundamentals remain strong and at DuPont we have an important role to play in helping the world to feed a growing population in theworld with the challenges of sustainability.

Let's talk first about our nutrition and health segment. Nutrition and health has performed extremely well since our acquisitions of Danisco andSolae growing sales and expanding margins to over 9% in 2012 displayed a 4% point negative impact from purchase amortization.

We completed the structural integration of Danisco, Solae and the Legacy DuPont N&H business and we're ahead of plan on achieving the costsynergy. We're very excited about the science and the application capabilities that Danisco has brought to DuPont including enzyme, nutritionand food science.

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Our experience since the acquisition confirms that Danisco provided a great business today and good strategic fit to build on for the future. Today,I'm going to share with you what we make and sell in this business to help you better understand a strategic rationale of the Danisco addition andour plans to grow 7% to 9% sales and improve our margins to 12% to 14%.

To familiarize you with the segment, let's start with a brief snapshot of the business on slide three. We grew sales in 2012 at $3.4 billion comprisedof three businesses. Enablers, our combinations of the emulsifiers, texturants and systems, they get their name because they provide fundamentalsaround taste, texture, mouth feel, shelf life and appearance.

They enable different food formulations in dairy, bakery, meats, and they allow for the reduction of fats, sugars and salt creating healthier nutritionsolution.

We're market leaders in [14] solutions and strengthened our position in 2012 with the acquisition of the remaining portion of Solae. Soy protein isan important building block of nutrition and our ingredients are found in many products from infant formula to sports drinks.

Health and protection is a unique blend of sophisticated bio ingredients for active nutrition and bio protection such as cultures, probiotics andprebiotics, functional sweeteners and food safety diagnostics. They require strong capabilities in micro and molecular biology and fermentation.

Geographically, you can see that the US and Europe are our largest markets today. However we also have a significant and expanding footprint inthe developing economies of Asia and Latin America allowing us to create and customize product offerings to meet local taste.

We expect growth in developing markets to accelerate over the planning horizon as incomes rise and diets improve.

On slide four, you scan see the food value chain. We've chosen to play it two points with the highest growth and margins. And I'll discuss our inputprovider businesses of seed and crop protection in a few minutes. But in nutrition and health, we are the leading supplier of high value specialtyingredients to global packaged food companies such as Nestle, Kellogg, Unilever, Danone, General Mills.

We don't participate in the lower margin commodity segments, things like starch, sugars and syrups. Specialty food ingredients are a great phasein which to play. It's a $40 billion industry today going in about 6% per year which is above the package food industry because of the uniqueadvantages the specialty food ingredients provide in taste, texture, food safety and health to consumers.

There's also a segment in the food value chain where our science and our application know how can make a real difference and create new value.

One slide five, the trends which will drive market growth in the coming decades are secular in nature. By 2050, it's expected that the populationwill increase by 2 billion people and that population will be increasingly urbanized, changing where people get their food. Urbanization is goingto increase the importance of package and productive foods and to protecting foods as consumption moves farther from the source of production.

Rising incomes particularly in the developing world will change the number of calories people consume as well as their tastes. As income rises,consumers shift from satisfying basic caloric need and begin to demand more nutritious, tastier and healthier food products. Nourishing a populationwhere one in six people go to bed hungry every night, while at the same time, 20% of the world's population is obese, and over 30% of all ediblefood is wasted, it presents a large challenge.

We have strong science combined with knowledge of local markets to be able to address these challenges. So whether we're working in Kenya onextending raw milk freshness or in Switzerland on a special protein formula for the aging, we have the capability to provide local solutions.

And moving to slide 6, our products play an important role in feeding the world today, we participate in all the major segments of the food industry,including dairy, meat, bakery, and beverages. Our ingredients make the bread fresher, ice cream and cream cheese creamier, yogurt healthier,energy bars crunchier, and jams and mayonnaise lower in calories. We're making people healthier and food safer and more affordable.

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You'll find our products in every second ice cream, nutrition bar and specialty infant formula in the world, as well as in every third cheese and everyfourth local bread. Almost every meal you have, whether it's at home or in a restaurant contains our high quality food ingredients.

Turning to slide seven. Our nutrition health teams have developed some great innovative products. Let me share just a few examples. Our Fiber-Lineingredients help food companies create rye bread that has the taste and appearance of wheat bread and stimulate satiety and reduces cholesterolin the blood sugar levels. Our HOWARU probiotics are a unique blend of clinically documented ingredients that provide digestive benefits to olderadults, helping them to maintain natural immunity and efficient digestion.

Solae soy products help fight heart disease by lowering blood cholesterol levels. And finally, in food protection, a great example is BioVia, a naturalantimicrobial from plant extracts that's a valuable alternative to traditional chemical treatment against molds and yeast. Here, we have substantiallyhelp prevent food spoilage and waste for our customers.

These are just a few examples of how our customers utilize our industry-leading innovation and our broad portfolio of products, services, andapplication techniques to be able to differentiate their product offering in the global market place.

We're assembling a strong, very strong competitive position as shown on slide eight, and we expect our advantages will enable us to grow fasterthan the market over the long-term. First we have industry-leading science capabilities in areas such as nutrition science and immunology, andtogether with our colleagues in agriculture and industrial biosciences, DuPont's the leader in genomics and molecular biology and fermentation.

Secondly, we have very strong application know-how to use our science to solve specific needs of our customers, integrated local sales andapplication development teams, leveraging the power of 22 global food application centers, are better positioned than anyone to addressregion-specific food formulation needs.

Third, we have a broad relevant portfolio of products. We provide formulation capability across a variety of food applications. And finally, our routeto markets advantage. We have strong partnerships with the expanding global food companies that I mentioned earlier and with the emerging,regional and local companies. Our direct approach to customer sales and our single point of contact allows us to be a trusted integral partner withfood companies. No other specialty food ingredient supplier in the industry has our integrated capabilities, which is why we believe we'll continueto strengthen our position in this exciting market.

Underlying these capabilities is our commitment to productivity. In the roughly two years since we purchased Danisco, we've made materialimprovement in margins, utilizing tools such as DuPont Production Systems and DuPont Integrated Business Management and Six Sigma to improveoperational discipline. We're ahead of plan on the realization of the Danisco cost synergies and we continue at working at improving effectiveness.

On slide nine, DuPont nutrition and health is committed to growing sales 7% to 9% over time, while continuing to improve margins to 12% to 14%.We participate in an attractive growing market where our products and application innovation will allow us to differentiate ourselves. Our strongcustomer interface and position in developing markets allows us to take advantage of growth trends in each fast-changing economies. And finally,we're committed to continued margin expansion through mix enrichment fueled by product innovation, differential management, and commitmentto productivity.

Now let's shift the discussion to our agriculture segment, consisting of our seed business, DuPont Pioneer, and our crop protection business onslide 10. Agriculture has delivered exceptional results over the past few years. Sales have grown at 13% since 2007 and at a 15% rate since 2010,growing faster than both the overall market and of our primary competitors over this timeframe.

And at the same time, we've been able to expand margins from 18% in 2010 to 21% in 2012, consistent with our promises while continuing tomake strategic investments in commercial production and research capabilities. And while the ag market has been robust during this timeframe,our execution has been strong, and that's allowing us to outperform the market.

As I review the business and plans over the next few minutes, you'll understand why I'm excited that we're increasing our margin targets from 22%to 24% while expecting to grow sales at least 8% to 10% over the planning horizon.

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Moving to slide 11, you can see the major products we sell on agriculture, corn seeds are clearly the largest product group followed by soybeanseeds.

Our crop protection portfolio has become increasingly diversified and renewed from the successful introduction of insect and disease controlproducts like Rynaxypyr and Picoxystrobin. Geographically just over half of our agriculture sales occur in the US and Canada, but we have a strongand growing market position in Eastern Europe and in the developing markets of Latin America and Asia.

On slide 12, in the coming decade, we need to continue to push agricultural productivity higher. By 2050, global population is expected to top 9billion; rising income and a rapidly emerging middle class which is expected to grow by over a billion people in this decade alone will drive peopleto improve their diets.

In order to grow enough food, to adequately nourish those billions, we need to double the amount of food produced today by 2050 in a sustainableway. And that won't come by doubling the hectares in production; it has to be from being more productive on the existing production land base.That's going to require more science-based sustainable solutions for our farmer customers.

If you look at the timeline of our recent product introductions on slide 13, you see the results of a strong research pipeline. In the last five yearsalone we've delivered year-over-year with innovative technologies in agriculture including Optimum, AcreMax, Insect Protection, Y Series Soybeansand Rynaxypyr insect control products to name a few.

And these new technologies along with our continued advancements in breeding have driven our business growth allowing our Ag segment toachieve strong pricing gains, grow volume, and significantly strengthen our market position over this time frame.

Looking forward on slide 14, we're excited about our near-term seed and crop protection pipelines. We've made significant improvements andinvestments in recent years to strengthen the capabilities in Ag biotech in areas such as portfolio management, trait discovery, bioinformatics andregulatory affairs.

In crop protection we have a focused research effort that's built the most productive R&D pipeline in the industry. We have several exciting productsin our pre-launched phase in Ag that you should watch as future proof points of our continued momentum.

Our corn seed trait Events DP 4114 will deliver additional value by offering growers higher yielding products with proven above and belowgroundinsect protection technology. After all, that's what growers want, they want maximum yield potential with the peace of mind of solid insectprotection.

Delivering multiple traits in a single event is efficient and it ensures that the performance characteristics and yield potential of our industry leadinggenetics, shows up on a growers farm and at the crane elevator. That's what DP 4114 does.

Products containing both above and belowground insect protection are planted on about half of the North American corn acres, so we expect thistrait to have significant penetration in our lineup. We expect to commercialize 4114 early in the second half of this decade pending regulatoryapproval.

We've made tremendous progress in our development of seed treatment technology and we see this as a significant compliment to what we'redoing with our germplasm and traits. We found ways to extend both Rynaxyypyr and Cyazypyr into the field of seed treatment. We'll launch ournew DuPont Lumigen Seed Treatment Technologies in 2014 in the US, Canada and Brazil for corn, canola and soybeans.

In this technology portfolio, we'll provide new standard of insect control for both above and belowground pests. Proprietary pioneer brand OptimumGLY canola will replace our current round-up ready technology in our canola hybrids offering growers increased application flexibility and enhancedmarketplace choice.

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In collaborating with Bayer CropScience, to add liberty link to our canola lineup, opens up pioneer genetic options to the other half of the 21 millionacre herbicide-tolerant market in Canada. We expect to introduce both of these technologies to canola growers early in the second half of thisdecade pending regulatory approval.

In our crop protection pipeline, it's also been very productive delivering products like Rynaxypyr and Cyazypyr. Our R&D team is producing moreinnovation per dollar of investment than any other crop protection company in the world. We expect to deliver on average one new active ingredientevery year.

Many of the products in our crop protection pipeline offer novel modes of action creating an opportunity to displace competitive products andenter new market spaces to gain share. We've also been very successful in renewing existing technology like our so familiar [RIA] herbicide franchise.

And as we look into the future, we don't expect that any one company will be develop every technology internally to be successful, we'll need tohave a strong internal pipeline of genetics, biotech freights, and crop protection solutions, but also key collaborations, broad stacking and mixturerights and strong trait integration capabilities.

In fact, today each of the leading seed and crop protection companies sell products that include proprietary technologies as well as licensedtechnologies. And we continue to see new collaborations in the industry.

With our strong internal capabilities and important collaborations like our recently announced licensing agreements with Monsanto and ourindustry leading customer focus where we're very well positioned to create the best product options for our customers.

On slide 15, you can see the evolution of our innovative insect control product offerings in corn. The foundations of our corn product offering arethe Herculex traits which we developed in collaboration with the Dow and MicroGen.

These industry leading insect control crates enable our AcreMax integrated and reduced refuge products. In addition, we have access to otherleading technologies, like Agrisure Viptera from Syngenta. Our ability to integrate best in class crate into our leading Germplasm brings growersa broad range of insect control options today.

Beyond our current AcreMax trait packages, we're working hard on several pipeline programs to enhance yield performance, broaden test spectrumand extend durability with the next generation modes of action.

We're excited about the recent Cyazypyr registrations and the continued penetration of Rynaxypyr. As you can see on slide 16, we anticipate thislow environmental impact insect control products from the same novel class of chemistry will well exceed the billion dollar combined sales ofmaturity that we have planned.

Rynaxypyr grew again by 30% in 2012 and we expect sales to be over $800 million in 2013. [Full year] applied Cyazypyr is a strong compliment toRynaxypyr offering a broader spectrum of insect control for use on additional crops in the different times in the crop growing cycle.

Our Rynaxypyr-based seed treatments known previously as Dermacor are registered today in corn in Mexico and in rice in the US and Italy. Andwe're preparing for major launches in soybeans and corn in Brazil and Argentina and canola in Canada in 2014 under our new Lumigen seedtreatment technologies brand.

Early results from our testing last summer on corn and soybean in Brazil are confirming outstanding soil pest control as well as excellent earlyseason control of a broad spectrum of Lepidoptera and [full year pest]. The superior stand establishment and enhanced vigor is also paying off,and we've seen yield increases in the range of 3% to 5% in our soybean research trials and a positive yield response also in corn. And we'll continuetesting this coming summer to confirm the consistency of these very exciting early results.

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Looking into the future, we have a broad range of insect control programs for chewing and piercing insect pests as well as nematodes. Many ofthese products will contain new space -- will create new space for us in the market giving us strong confidence in our ability to sustain above marketgrowth.

On slide 17, DuPont Pioneer takes an integrated approach to product developments to deliver the right product on the right acre. We work closewith our customers to develop products to fit their local needs. Our products combine pioneer elite genetics and native traits like AQUAmax withthe best biotech trait options protected with seed applied technologies including fungicide, insecticide and biological seed treatment.

We then test these products extensively in local environments to ensure that they'll perform as expected where it matters most in our customers'field. We take this approach everywhere we do business around the world.

Moving to slide 18, we have a superior root to market to deliver our products to farmers and we continue to make investments around the worldto strengthen this advantage. In North America our sales reps are exclusive to Pioneer brand and sell direct to farmers.

In other parts of the world, our root-to-market may take different forms, from sales reps to retail to cooperatives, but all have their right product,right acre approach in common. Know the grower, know the environment, know the product and provide advice. An approach that's unmatchedin the industry.

In crop protection, we have strong relationships with our partners in distribution and retail, Pioneer and crop protection cooperate in many partsof the world. We've seen some great success with our go-to-market approach working together in the US corn and soybean market expanding ourweed control and our fungicide penetration.

In addition to DuPont Pioneer's leading seed products, we offer a variety of services to farmers to help provide cold farm management includingplanting and harvest mapping, grain marketing, crop insurance and financial services as shown on slide 19.

DuPont Pioneer has provided thousands of growers with harvest mapping services exceeding 10 million acres mapped annually. We launched ourprecision agriculture program more than 15 years ago and we're building on this work to expand our services offering to support a wide varietyof farming decisions including seed selection, in-season crop management and water and fertility management all at the growers' fingertips.

Now I'd like to share a brief video that highlights the services that we provide to farmers today. If we can roll the video.

(VIDEO PLAYING)


Now, moving to slide 20, over the next five years we expect that over half our growth in the agriculture segment will occur outside of North America,focused particularly on key markets of Russia, Ukraine, China, India, and Brazil, either markets we know well and we have a strong position todayon which to grow.

In Brazil, we have great momentum in both the seed and the crop protection businesses. We've see consistent corn share gains in Brazil and oursoybean businesses adding additional capacity to meet demands for high quality varieties.

We've grown organically in Brazil by deploying research across the country, advancing locally developed and tested products, investing in productionfacilities in creating a route-to-market approach that differentiates Pioneer in Brazil. We're expecting rapid adoption of our new Lumigen seedtreatment technologies in both corn and soybeans based on the performance we're seeing on out [large plot trials] this season.

Russia and the Ukraine combined represent 14 % of the world's arable land and account for about 10% of the world's grain production. Farmersin these countries are rapidly adopting new seed, crop protection and seed treatment technologies in our key crops of corn, sunflower and oil seed[rate].

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Combined with ambitious government policies to increase grain production, the potential for growth in this region is enormous. And ourlong-standing customer and industry relationships in Eastern Europe and our prominent market position leave us well positioned to lead thisgrowth.

Moving to slide 21, as we increase our margin goal, we affirm our long-term target of 8% to 10% sales growth and we see solid growth over theplanning horizon driven by continued innovation from our breeding, Ag biotech and crop protection research engines, our strong market positionin developing markets and past and future strategic investments position us well to capture these opportunities.

Growers around the world have quickly adopted new technology to improve yields and their profitability. Even if commodity prices moderate fromtoday's highs, farmers are going to look to technology to gain an edge on their competitors and to improve yields.

Longer term the trends of population growth, rising income and enriched diet are going to drive the need for Ag productivity making a strongcase for continued investment. So today, we're increasing our agriculture segment margin goals to 22% to 24%, we see this growth coming fromimprovement in gross margins based on value creation and productivity improvement or we continue to make strategic investments in our globalcommercial reach, production capacity and research and development.

At DuPont, we have three solid businesses with strong momentum in their own rights in Pioneer crop protection and Nutrition and Health, asshown on slide 22. But in addition, we're uniquely positioned across the food value chain. No other company can match the breadth and capabilitiesfrom production agriculture to nutrition science and food protection. And we're already beginning to see the value that can be created by thelinkages across these businesses through collaboration of our scientists and our business teams.

Let me share just two quick examples, first, the nutrition and health has been able to leverage our strong relationship with global food companiesto introduce the health and frying benefits of Pioneers' Plenish high oleic soybeans. And second, our industrial bioscience businesses, as Jim coveredearlier, broke ground on a $30 million gallon cellulosic ethanol plant Nevada, Iowa last fall.

Working together with the team at Pioneer, we developed environmentally sustainable plants to be able to move corns over that will benefit thefarmer, give the cellulosic ethanol plant a consistent source of feed stock, while strengthening Pioneer's relationship with the farmer.

In addition, we recently signed a collaboration agreement with the Natural Resources Conservation Service of USDA to create a framework forsustainable silver collection for use by farmer and the industry going forward. And while we're excited about our portfolio today, we continue tolook to enhance our science capabilities and our customer access as well as improve our return on capital.

We have a robust portfolio on management process; we actively evaluate internal investment opportunities, collaborations and bolt-on acquisitions,like our recently announced agreement to acquire Pannar Seed in Africa.

In conclusion, we are very excited about the future of each one of these businesses on their own and the value that they can create together. So,Rik, Paul, Craig and I will certainly welcome any of your questions. Thank you. Karl.



Okay, second Q&A session. Same process, please raise your hand and identify your name. So, you can go first.

Phil Young - - ChemSpeak

Phil Young from ChemSpeak; question about wheat. You have a chart in there, Jim, showing the world and a lot of the major crops listed, wheatwasn't in there. I was wondering how does DuPont feel about wheat as a potential growth market incremental crop protection or seed development?

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Rik Miller - DuPont - President - Crop Protection

I'll make a quick comment, Bill, and I'll let Paul expand on it. First of all, we see wheat as a significant opportunity and the way that we think we canmake a difference is with some unique technology that we think we can bring to be able to hybridize wheat, but Paul maybe you can talk a littlebit about where we are in the plant.

Paul Schickler - DuPont - President - Pioneer

We've been in the wheat business a long time. We're the leading wheat breeder in the United States and the (inaudible) wheat market. So we'vegot experience with the strong Germplasm base. But as you look to the future, the real opportunity is to improve productivity, longer term bringtechnology to that crop so that it can increase its competitiveness with other crops throughout the world and at DuPont Pioneer, I think we've gotthe leading reproductive biology program in the world in order to bring hybridization to wheat, both cost-effective as well as to deliver the increasedyield that are needed for hybridization.

So we're excited about our current position but we're even more excited about what the future would offer in wheat. And I think we should lookto crop protection to add to this because they have a strong business worldwide in the fungicide market for wheat.


Thank you, next question Kevin.

Kevin McCarthy - Bank of America Merrill Lynch - Analyst

Kevin McCarthy, Bank of America Merill Lynch. A few questions on the Pioneer Field 360, can you talk about basically the penetration of that, whereyou stand, what the ramp looks like, also how it might differ from your competitors field scripts program and a little bit about the business model,how do you expect to get paid, what that looks like?


Yeah, thanks, Kevin. Paul why don't you go ahead and --


Okay, thanks. Kevin, good question. We're excited about this new offering. As you know, we've always had a very close relationship with the farmergrower. That relationship has always involved advice and knowledge so that maximum advantage can be achieved from our products and ourtechnology.

This takes us to another step because now we're in the game of not just providing what I would call discreet information at various periods of theyear like planting advice or what to do at harvest or to provide yield map but it's really linking it all together so that it's a dynamic process so thatgrowers can adjust at planting, fertility, chemistry applications, harvesting, timing, they can adapt their management practices throughout theyear dynamically based upon the conditions that exist.

And also make marketing decisions through connections that we provide direct to grain merchandisers so that they can take advantage of thebest prices that are available. This combination of services that was announced a couple of months ago is being piloted right now. It's being offeredto select growers throughout the United States and Canada and will be in the market this fall with an offering. It will be subscription-based. Wehaven't yet set a price but it will be -- we'll get a nice return on this service.

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Mark Gulley - BGR Partners - Analyst

Mark Gulley, BGC Partners. Actually, a three-part question with respect to crop protection chemicals. First of all you talked about 1AI per year asyour goal, is that a genuine brand new molecule or maybe placed on sub-existing molecule in other applications? Two, $1 billion dollar goal forthis family but I think you're $800 million already, so when is the $1 billion goal to be achieved? And then three, Syngenta has some issues withrespect to some of the seed treatment AIs, I don't know how that's going to play up with respect to [bee colony collapse] and all that but do yournew products maybe address a hole in the market that might be created by some issues there? Thank you.


Three good questions Mark, Rik can answer most of them maybe Paul can add a comment about the seed treatment aspect.


Sure. Thank you, Mark. First of all in regard to the new active ingredient introduction per year out of the pipeline up, that's a new active ingredientthat we have committed to developing out of that pipeline. Some of those active ingredients will replace existing products in the marketplacetoday and that's where we're seeing some of the growth that we're seeing today from our pipeline is entering new markets and new spaces withour new innovative molecules that are coming out of that pipeline.

In regard to the second question, you're asking specifically about the -- yeah -- exactly, so as Jim has indicated, we'll be well over $1 billion withthat, what we term the family of Rynaxypyr, Cyazypyr and our new Lumigen seed treat technologies that we are launching.

With the trajectory that we are on, we have committed to be over a billion dollars with that family of products, and with the recent introductionsof Cyazypyr and the ramp up this year with new registrations, we look to meet that commitment.

In terms of the on-going issue that we're dealing with -- as an industry in Europe specifically I'm assuming you're talking about in [Neonex], I wouldsay that first and foremost, we're disappointed in the position that the EU commission and the member states have taken on this.

Certainly we are strongly supportive of science-based regulatory standards and the evaluations of our chemistry on science-based regulatorystandards, it appears that the commission or the member states were taking a hazard-based route there and so we stand strongly committed tosupporting in the position of CropLife International and the industry has taken around the assessment on the science-based standard relative towhether it be either be toxicity or the other associated issues that we've seen correlated to the colony collapse disorder that we're seeing in themarket today.


And maybe I'll wrap up on the opportunity in seed treatments, clearly, you know, in the Pioneer business, seed treatments has an important partof our offering to provide the protection that it does to seed as well as the additional vigor and yield potential that is generated.

We are very solidly in in both synthetic chemistry as well as biologicals on our seed treatment, the Pioneer Premium Seed Treatment offer that wemake to growers that come to our Pioneer sales rep in North America is a very important part of our offering and again it gets back to the uniquenessof our relationship with the grower where we have the ability to put together the right combination of a premium seed treatment for the conditionon a specific farm for a specific customer.

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May I add just a quick addition on to what Rik said about the new AI s, Mark. Two things I think are important, Rik's team doesn't put any to the endof the pipeline that is in the material difference in terms of performance and environmental safety, et cetera, so there's a combination of factorsthat -- which is why things like Rynaxypyr got great market acceptance and great regulatory support as they worked their way on the system. Sothat's one. This isn't just a new molecule to tick a box. These are going to be important changes for the industry.

Second thing is, because of our position, we've invested in the research engine in the pipeline rather than just getting bigger. And so the fact is,the vast majority of sales on new products like Rynaxypyr are coming out of the competitor's sales rather than just replacing our own. There'sobviously some cannibalization at any point. So we feel really good about the strong pipeline we have and having that help us continue to drivegrowth.


Okay next question but before we do, we're getting some feedbacks at the folks on the web cannot hear that question so clearly so please slowdown and ask your question clearly, it think Don's next and then Jeff and then David.

Don Carson - Susquahanna Financial - Analyst

Don Carson with Susquehanna again. A question on R&D productivity and levels for you Jim. You're spending about 10% of the segment on R&D.You've had good success in crop protection, success in breeding, but your primary in licensure of trait, so my question is are you satisfied with theproductivity of roughly $350 million to $400 million a year you're spending on biotech R&D? Have you changed the processes at all so that it willbe more productive going forward, and you'll come up with more proprietary traits or have you made the decision to be primarily an in-license ofother party's traits?


Yeah. So the first question is, bottom line is we're very pleased with the return but let me talk a little bit about that. The amount that we investedin biotechnology you can think of is three primary areas. We've increased regulatory and the workaround traits in progression which you need tobe able to do whether you're in licensing or using proprietary traits.

So a reasonable chunk of our biotech investment is going to be those kinds of things. But if you look specifically at our biotech trait discovery work,I've gone back in 1995 since the day we started and if you look at it from then through 2013, it's returned more than the cost of capital and weexpect with the pipeline we have that it's going to be even higher over time.

You saw the pipeline that we have, things like SPT, I mean, Herculex itself is a foundation that we were a key in developing and Plenish and, etcetera. So we've had things that have been successful already and we've got a pretty exciting pipeline. So yeah, we feel good about the returnsbut we do track it closely.


And then, Don, I might add a couple more components to that. The advanced technologies that come from our breeding biotechnology programdo have a direct impact on our Germplasm development as well. You know, all you need to do is look at the AQUAmax hybrids that are out in themarketplace, those were delivered through molecular breeding techniques.

On the soybeans aside, we've got Y Series and T Series soybeans that are market leaders, again, developed through that seed of technologies thatcome from our biotechnology program. And then as Jim mentioned, not only have we delivered Herculex and AcreMax and Plenish and seedproduction technology but I'm really excited about our pipeline with 4114 coming out and also the Optimum GLy technology for canola.

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Okay, Jeff , please?

Jeff Zekauskus - JPMorgan - Analyst

Jeff Zekauskas of JPMorgan. Can you talk a little bit more about your DP4114 trait, that is, do you view it as a second-generation trait or as a newtrait? What's the incremental market opportunity; can you size it in revenue terms? And when do you expect to introduce it into the market allthings being equal?


We're excited about 4114, basically what it is, it's a molecular stack of technology for above ground and below ground insects that are proven. Sowe're excited about the protection that it provides but doing so through a molecular stack instead of through breeding provides tremendousefficiencies as we have additional technologies to 4114 and it also drives a yield benefit as compared to the existing technologies that are deliveredthrough breeding approaches.

Commercially in the market, we expect it has completed its public comment period through the USDA and EPA so we would expect early secondhalf of the decade for commercialization.


And the market size?


When you look at the acres throughout North America -- in the United states and Canada, anywhere that a double and triple stack applies itself,this product will work so normally some would size up somewhere 80% of the market, about 40% is what we sell in triples and about 40% is whatwe sell in doubles. So this product has that potential.


Okay, I think, David then John.


Dave Begleiter at Deutsche Bank. Paul, on Monsanto's and taxed products, how do you start to compete in the insect protection market for soybeansin Brazil going forward?


I'll make some comments, get to Rik with a little bit more science behind the opportunity we've had certainly with Rynaxypyr seed treatment familyproducts. We're excited about that, we've been looking at this product for a number of years. The summer season just passed in the Brazil; it wastremendously exciting. What it does is it provides a broader spectrum of protection and other options that are in the marketplace today.

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And we're also excited about the length of coverage through flowering that it provides so we expect 2014 for that product to be in the marketplace,excited about it but then we also we have a very robust biotechnology insect protection program that will compliment. Rik?


I think Paul has said it well, if you look at the spectrum of control that we're going to be able to provide with the Lumigen seed treatment technologieson that seed and the above and below ground protection, that spectrum of control will essentially provide us with an advantage for that seed.


Okay, John.


John Roberts, UBS. The largest area of specialty food ingredients is the flavors market, if the opportunity presented itself, do you view that as anattractive part of that industry or because it's connected to fragrances and kind of leads to the things maybe it's not an area that you have aninterest in?


Thanks, John, for the question. You know if you really look at our portfolio we have today, we really have a breadth of a portfolio is what the foodcompanies are wanting. So if you look at whether it's our neighbors business or health and protection of protein, we offer a pretty wide and broadportfolio and the ability to do new formulations across multiple segments -- dairy, bakery, meat, so pretty satisfied with our portfolio.

We do have some partnerships in the flavor area and we utilize those partnerships where we need to when a flavor has to come into a formulation.


Final question in this segment.

Vincent Andrews - Morgan Stanley - Analyst

Thank you. Vincent Andrews from Morgan Stanley. Could you talk about China a little bit, you have it on your map on slide 20; just sort of whereyou are now and where you think that can go over maybe the next three-five-10 years, and then also you mentioned earlier about increasing R&Dspend as it relates to regulatory and could you talk a little bit about how you think China is thinking about sort of the continuing influx of foreignbiotech products into China, is that something they're still accepting of or just any update, that would be great.


Okay, I'll let Paul and Rik add to this but we see China as a major opportunity. We're already the largest international corn seed supplier, we've gottwo commercial joint ventures, we've had great growth, we made profitable sales there, so it's a good platform to grow from and we see significantopportunities to get some good momentum.

And on the crop protection side, it's a tough market but we also have a good business, Rynaxypyr has done well in China in its early days as well.Rick and Paul, maybe you could add some color to what you see going forward.

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Yeah. So Jim is spot on, if you look at the growers that we deal within China today, they're looking for innovation so the things that we have comingout of the pipeline in terms of disease control, insect control, even herbicides that will go on, the number of crops that we have there, they'relooking for innovation to enhance yield and quality.

Also would be enriched diet. It's not just about the corn, it's about fruit net buying and vegetable crops and you see an enhanced production ofthose crops in a larger and greater consumption as diets are enriched in China, so we are enjoying that growth as well.


As Jim said, we already have a very successful and growing leadership position in the China market for seed, what I'm excited about for the futureis that what we're doing for China as exactly what China need. Local developments, products that are right for the market. But equally is important,the rural development that China needs so badly, the migration that's occurring from rural to urban, all of what we're doing fits exactly in the Chinaplan for long term agricultural and food sustainability.

With technology, clearly, China is going to be a market in agriculture that accepts and adopts technology very, very quickly. The exciting thing thatI see there is we, DuPont, have a great relationship at multiple levels of the government. So we're very well connected and I think we'll be ready tomove quickly once technology is deregulated.



Okay, that concludes our segment on the agriculture and nutrition and health segment. Our final presentation today will be made by our ExecutiveVice President, Mark Vergnano. Mark will share with you his insights and plans that he has for our electronics and communications segment andour safety and protection segment and performance chemical segment.

Joining Mark on stage is are Dave Miller, President of DuPont Electronics and Communications, Tom Powell, President of DuPont Safety andProtection and BC Chong, President of DuPont Titanium Technologies.

Mark Vergnano - DuPont - EVP - Electronics & Communications, Safety & Protection Performance Chemicals

Great, thank you Karl. Good morning everyone. I plan to cover the growth plans for electronics communications, safety and protection, performancechemicals, and hopefully we'll address some of your top of mind questions.

So let's start with electronics and communications. As you can see here on slide, E&C had 2012 sales of about $2.7 billion led by revenue fromphotovoltaics materials. Almost 2/3 of our sales come from Asia, a number that continue to grow, it is the highest of any reporting segment withinDuPont.

When it comes to the markets we serve as you see on slide 4, we have 4 strategic areas of focus, photovoltaics, consumer electronic, advancedprinting and flat panel displays. These areas have a unique intersection of market opportunity and our technological capabilities.

You can see that the growth rates are compelling for PV and consumer electronics. The displays organic growth rate is less impressive; howeverour technology to replace LCD's creates a very large opportunity for DuPont, so I will focus my comments on these 3 market areas.

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Leading to slide 5, our view of the PV industry is that gigawatt installations will grow at a rate of about 20% over the next 5 to 10 years. However,as we have said in the past, this is an industry that is in its infant years and growth is going to be lumpy at certain times.

The gigawatt increase translates into about 15% growth for material as the trend of innovation is to efficiently use fewer materials to drive downcost to achieve [grid parity]. Even with all the growth we've seen in the market during the past couple of years PV represents a very small fractionof the electricity generated globally.

As you can see on the top right of this chart, PV represents only about 0.5% of the electricity generated each year. There are some near term growingthings affecting the ability to drive greater penetration. Currently there's an over capacity of solar module manufacturers, particularly in Chinawhich is pressuring the margins for these module producers, many of which are already financially distressed.

In addition the US established a dumping terrabond Chinese-modeled producers of 40% and the European Union has announced an investigationinto dumping through the possibility of a retroactive tariff. Since more than 80% of solar modules are produced in China, the threat of retroactivetariffs, has created great deal of uncertainty in the industry.

We expect these industry issues including the consolidation of the module-made manufacturer to be resolved in the next year or so. So while ourpenetration is low, we see very high PV project returns which are driving installation growth in TPD markets.

As good parity continues to expand on a broader scale we expect the investment growth trajectory to accelerate. As you can see at the bottom ofthe chart, 15% of the world's residential markets are at good parity today. We see this increasing to 50% of the world's residential markets by 2015.

For the PV industry to reach good parity broadly, we need to improve the efficiency, lifetime and cost of modules. Our science including ours solenet pays and tedlor back sheets are responsible for large portion of the industry's progress in the last few years. Our continued new productextensions and innovations will continue to do so in the future.

As we look at the cost drivers on slide six, that will drive the industry to broad re-parity we believe that our materials are very well sufficient toenable these advancements for improved efficiency, lifetime and cost. PV is a market with very attractive future growth rates, the PV industry roadmap is continually evolving and we are well positioned to capture the future growth with our unique and enabling material.

Another market with an attractive growth rate is consumer electronics in slide seven. As consumer devices have evolved and designer needs haveincreased, we've used the power of our science to create new generation of the materials that help designers move the industry forward.

Products like Capson, Pyrolux, and Riston help make lighter and smaller and smarter devices like tablets and smartphone which will have verystrong growth rate over the next couple of years.

Let me highlight an example of the need for science-based solution in smartphones. Consumers demand for smart cellular phones requiresever-increasing need for more technology in shrinking circuits' base as portable phones continue to add more capabilities. As a result cellularphone technology has become increasingly reliant on material solutions that enable thinner, more flexible component with improved heatdissipation in the limited real state available in today's cellular devices.

Our material, provide high performance electrical reliability, while allowing for low profile unique packaging capability. This provides greater designflexibility for smart phone manufacturers.

Next on slide eight, we believe that organic light emitting diode or OLEDs are the future of displays that will give the core technology of the nextgeneration TVs. Our proprietary solution putting technology is the most advanced in the industry and enables the lowest cost manufacturing,roughly 30% lower than the existing LCD displays. This step change improvement is key for driving OLED TV production.

We've received validation of our technology as one of the largest Asian manufacturers is currently licensing our technology today and we are onthe final stages of licensing discussions with the manufacturers.

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Importantly, we just don't derive value from the licensing of our processed technology. We also gained additional revenues through supplying ourproprietary materials that are essential for the OLED display. As the TV market converts to OLED, a 10% penetration into the global TV market wouldrepresent a$2 billion material opportunity.

I'm pleased to say that our technology transfers are on target and we are accelerating our plans to add material capability and capacity to meetthe market demand. Estimates from independent third-party research indicate OLED TV sales to begin in 2015 with 27 million units sold by 2018.

So in summary on slide nine, the drivers of growth in this segment are innovation in new technology, as well as market expansion. We expect theE&C segment to grow 79% on the top line with margins of 16% to 18%. Margin expansion will occur as our innovative product pipeline iscommercialized and the PV market improves.

In addition our cost and capital investments for tedblo back sheaths are behind us. We are confident that we can return to the margins that we'veachieved just a few years ago.

Next I'm going to cover, safety and protection begin with our sales summary on slide 11. 2012 sales were about $3.8 billion, as a reminder thissegment consists of three businesses building innovations, sustainable solutions and protection technologies.

Although construction products only account for about 12% of our total sales in the reporting segment, we do see some solid uplift in out Tibetand Korean-based US businesses going forward due to the improvement in the US residential housing market.

Within sustainable solutions, our GemTech technology-licensing unit has been bolstered from our MUCS acquisition two years ago and is reallygrowing nicely. Primarily in developing markets as the need for the removal of sulfur in fuel and air streams continues to be a strong growth driver.

Moving to slide 12, safety and protection sales are very heavily weighted to the industrial markets with over 60% of 2012 sales going into thesemarkets. Growth of these industrial markets has been weaker versus what we projected a couple of years ago due to an overall slowdown in globalinfrastructure investment particularly resulting from both China and Europe's economic issues.

Consistent with these economic realities, we have taken actions to reignite growth and improve our margins. These specifics are highlighted onslide 13, we're driving product innovation and application development investing in downstream marketing in brand and improving our cropstructure to gain profitable share.

To address the first action, we have upturn to gain in product innovation and application development allowing us to price the majority of ourofferings in each of the market segments on a value basis. A good recent example is from our Tibet product line where a large global pharmaceuticalcompany has adopted the DuPont Tibet air-cargo cover solution for their global shipments. Pictured on the top of this chart.

Tibet was selected for this multi-year agreement for air-cargo single use cover because of the unparalleled mix of properties that the productdelivers -- lightweight strength, breathability, water resistance and superior thermal protection. These properties provide protection to the highvalue pharmaceutical as well as adding distinct value to the shipper much better value than incumbence and full refrigeration alternatives.

To further explain our next two actions of downstream marketing and cost reduction, I'm going to focus on examples from our Kevlar product line.First let me give you a backdrop, and let's take a closer look at what's happening the [Para-aramid] industry globally, and you can see that on slide14.

Global needs for advanced material that offer high strength and lightweight protection continue to provide attractive growth opportunities forthe Para-aramid industry. This is an industry that DuPont created with the introduction of Kevlar over 40 years ago. Over the past 5 years, emergingcompetitors from Asia have acquired the base Para-aramid technology and have entered the space with small-scale investment than mostly low[en-mete] to products.

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Today these competitors account for less than 10% of sales into the market. Global demand for Para-aramid is down roughly 4% from the 2008peak. We believe that industry demand will return to between 5% and 8% annual growth rates as infrastructure and global; spending will resumeafter being in a relative holding pattern the past two years.

With that as the backdrop, let's talk about the second action investing in downstream marketing and using our strong brands. Despite the increasecompetitive intensity DuPont Kevlar and Nomex continue to be the most recognized and valued brands in the aramid industry.

Focusing on downstream marketing allows DuPont and our valued chain partners to command a premium even in those market segments wherecompetitive intensity is highest and price is under pressure. Using this strength we gain market share for each of the past two years and are wellpositioned to meet customer demand for many years for the industry's most advanced technologies.

For example, we have moved farther downstream in the value chain with offering such as our Kevlar XP fiber. This proprietary fiber allows us tooffer body armor manufacturers a higher performing, more complete solution that gives them more design flexibility than emerging competitorswho are just offering yarn at the bottom. Innovations like Kevlar XP allows us to work directly with body armor makers to better protect our brandin best positional products with the key decision makers located in the market place.

The third action in this list is really focused on our cost structure. We have significantly reduced cost in this business both in our manufacturingoperation and our routes to market to improve our overall competitive damage. This improves our cost leverage for our specialized products andallows us to be more aggressively competing in less differentiated market spaces to both improve our margins and gain share.

These cost action will help us improve utilization rates at our manufacturing facility while continuing to drive mix enrichment actions. A goodexample of this is the investment in our Cooper river Kevlar plant which provides us with technology to develop higher performing light tenurefibers that will be the highest growth products in the future.

The new technology used at this facility allows us to develop and produce these fibers at a significant cost advantage versus all of our competitions.We've had great reception from our customers on the new products from this facility and are on track with the qualifications which are helping usto gain valuable market share globally.

So in summary on slide 15, the new reality for SMP is that we are using our technology advantage to increase the rate of new productcommercialization, expanding our downstream presence and position in our valued chain and we're taking advantage of our improved coststructure.

As we complete our way positioning, we are confident that we will achieve our top line targets of 5% to 7% with margins of 21% to 23%. This6-point margin expansion will be based 1/3 on new product, about 1/3 on asset utilization and 1/3 on in-flight cost reductions.

Next, I'm going to cover performance chemicals beginning with our sales summary on slide 17. Roughly half of performance chemicals $7.2 billionin sales last year were from TIO2 with chemicals and flow of products accounting for the remainder.

The key markets we sell in to are on slide 18, where we have unique competitive advantages in each. About 60% of our TIO2 sales are in constructionwhile chemical and flow of product sales are more weighted toward the industrial chemical and specialty markets.

Turning to slide 19, the largest growth program for DC&F is our new family of DuPont Opteon brand product that will include refrigerants,[solmi-expansion] agents and specialty fluids all with low global warming potential. DuPont co-developed the Opteon product family in responseto Europe's mobile conditioning directive which created a demand for an auto-refrigerant with a global warming potential of less than 150.

Developing and commercializing this product with the collaborative effort with industry groups, government, NGO's, OEM and the developmentpartner. This collaborative approach created our innovative refrigerant that has a global warming potential of 4 which is 99.7% lower than thecurrent incumbent.

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This is also a near drop solution which offers significant savings to automakers, and downstream consumers versus all other alternatives considered.We estimate revenues for this product could reach the $300 to $500 million range within the next 5 years depending on adoption timing in EU,North America and parts of Asia.

Switching gears we now talk about our DPT business beginning on slide 20. Let's begin with a quick overview of the TL to market. As you couldsee from the graph on the top right of this slide, the underlying growth rate for TIO2 by volume is well correlated with global GDP rates. I want tohighlight two points implicit in this growth.

First, the steadiness in the long-term growth rate exists because there really is no significant credible not in kind competitive substitute for TIO2.We continue to see less efficient material and extenders in the marketplace; however they are not affecting the overall TIO2 growth rate.

Second, TIO2 global demand is yearly cycle versus the flings in the global economy. True to point, our DTP business sculpts the global financialcrisis earlier than many of our other businesses and subsequently recovered earlier. As a basic ingredient TIO2 swings are amplified by value chaininventories, when demand for consumer paint falls, we feel a larger cutback at the value chain destocks and in turn when demand recovers, wefeel the full weight of restocking.

As you can see from the graph on the lower right, these swings were even more amplified during the 2008 to 2012 time frame. After the deepplunge in demand in 2008 and 2009 TIO2 demand essentially overheated growing at a much faster rate than GDP in 2010 and 2011.

Beginning in late 2011 through this year, we've been going through a destocking period. Our TIO2 volume in the first quarter of 2013 was essentiallyflat on a year-over-year basis, an increase about 8% from the fourth quarter of 2012.

While demand patterns remain dynamic and evolving, we anticipate supply and demand in the global market stabilize around the middle of thisyear and from that point resume a growth trajectory which has historically tracked GDP.

Let's move to slide 21, TOI2 facilities throughout the world produce pigment using one of two processes. Technology is properly known in theindustry as chloride or sulfate roots, the choice of technology has a significant bearing on the environmental footprints of the process, the qualityof the product and consumer preference for it.

The industry has added about a million tons of nameplate capacity over the past four years with the majority of that being sulfate capacity locatedin China. This new sulfate capacity predominantly serve the lower end of their domestic market. There are significant implications when usingsulfate-processed technology including pigment quality a higher amount of processed weight and greater energy consumption than the chlorideprocess.

That is why we see many multi-national producers abandon the sulfate process for chloride-based production. China-based producers chose thesulfate technology due to its availability, their access to cheap labor and low environmental requirements.

This give them short cross term cost structure advantage that we expect to change in the coming years as labor and energy cost increase. Andgreater environmental requirement are mandated in china.

That being said there are handful of Chinese producers that can produce a pigment of a quality that can be exported out of china into the globalmarket. However this export quality TIO2 accounting for only about 10% of global capacity is rarely used in the high-stem application such asautomotive top coats and rain coatings.

Slide 22 shows our competitive position in the global market. We deliver the highest value at the lower cost of manufacturing in the entire industry.Our technology, decades of application know-how and cost structure provide with an extremely unique and differentiated position in this market.

To maintain this competitive position in this market as a world leader in the industry we are focused on two strategic priorities. Slide 23 highlightsthe first strategic priority which is to provide our customers with offerings to meet their highest value applications.

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These applications are more demanding require, greater opacity and UV protection. In many cases, lot-to-lot product consistency is an absolutemath due to the highly tuned processes of our customers and the quality that their customers require.

Our decades of industry knowledge provide us with a capability to help improve our customer process efficiency in these demanding applications.

Now, I want to go on more detail regarding the second competitive damage our industry leading cost position. Beginning on slide 24, the DuPontchloride technology process provides a higher degree of or speed stock flexibility, higher energy efficiency and higher scale to yield better costand capital productivity.

The result of many years of science and investment in our process technology has yield us the lowest cost position in our industry. Based on thirdparty evaluation and our own estimates we believe we have about 30% cost advantage versus the other major global producers.

This has enabled through our proprietary technology process where we are able to purchase a wide range or ores with TIO2 content as low as 60%.However, our competitors using the chloride technology must exclusively purchase a more narrow range of ores from 85% to 95%.

Some of this ores are naturally occurring but most often these are manufactured ores purchased from middle companies that invest capital energy,and fixed gross to beneficiate an ore and a furnace to produce a slag or synthetic retinol.

These additional processing cost are reflected in the large price difference that you can see between the (inaudible) oil, slag or natural retinol. Asyou can see on the slide, the spread of price difference has decreased dramatically the past couple of years, the more expensive ores do containmore titanium. But when the prices are normalized for TIO2 content the value of the [illunite] feedstock remains very clear.

Our unique ability to use a broad spectrum of ores clearly provides a distinct competitive advantage. DuPont facilities on average are larger thanour competitors providing significant scale opportunities. Our long experience curve in TIO2 manufacturing provides the know-how for highconvergence efficiency and the energy efficiency of a one step process is much higher than our competitors. Lastly, DuPont benefits from a muchbetter capital and cost productivity with larger average lying sizes allowing for a lot less steel and equipment for each kind of pigment produced.

Moving to slide 25, these cost advantages creates the opportunity for our DPT business to reinvest to reliably serve our customers including ourplan to (inaudible) our Mexico expansion. As you may recall, we plan new to add another 200,000-ton line to our existing facility.

Our plan is to time this additional capacity to meet customer demand. This additional capacity will only strengthen our advantage cost positiondue to two factors. First it's a brownfield expansion. So it will require less capital to install as we'll be able to take advantage of the infrastructurewe already have in place.

Secondly and more importantly, our Altamira site is our lowest cost producing facility on our entire circuit. We're able to utilize the widest rangeof ores on this site adding to our industry leading cost position. We can fully justify our investment in this facility purely on total cost benefits alone.

In summary on slide 26, we expect the performance chemical segments to deliver sales growth of 3% to 5% over the long-term including the TiO2cycle. Our long-term operating earnings margin targets for this segment are 18% to 20% returning to more historical norms.

So now let's move to slide 27. We will take a critical eye in investing growth opportunities within advanced materials that provide high cash returnsand further strengthen our unique competitive advantages. These investments will include our own innovations, focus both on acquisitions andjoint developments.

From recent examples of these types of investments include the Innovalight acquisition within electronics and communications, enhancing ourPV portfolio and leading to a series of new product introductions. The MECS acquisition and S&P providing technology licensing capability andaccess to key developing region accounts and the co-development of Opteon YF and performance chemicals introducing a new sustainablechemistry to the global refergerence market.

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These are just some great examples of what you should continue to expect from these businesses. So with that overview, I'll hand it back over toCarl and we can begin the Q&A session.


Okay, we'll go to our next Q&A session now, same procedure, raise hands, [Mills].


Mills Wallon - CLC - Analyst

Thanks, [Mills Wallon], [CLC]. I'm just curious as or if the potential for more bankruptcies in the solar panel space increases, what you might be doingto derisk your counterparty risk there if any.


So let me ask Dave to answer that because that's obviously something he deals with everyday.

Dave Miller - DuPont - President - Electronics & Communications

Thank you very much. When you mean counterparties, you're talking about getting paid? Yes. So we manage that very aggressively actually. Mostof our sales and [counteracts] and cash and advance are letter of credit, so we have a pretty low exposure there. That's something we have tomanage very aggressively as you might guess so for the last couple of years.

I do believe the consolidation will obviously strengthen the health of the remaining companies that's going on in a reasonable pace. We'd like tosee it go faster because of the profitability of our customer is for the larger - most of the manufacturers lost money last year and the year before,made money in 2010. So debt consolidation takes place as they get their cost down, as they implement more of our technology, they can gethealthier and consolidation is a part of that.


Okay, next question. Kevin?


Thanks, Kevin McCarthy, Bank of America Merrill Lynch. Mark, it seems to me you had previously attenuated the timeline associated with theexpansion of Altamira given the market conditions. Just this morning, I saw a story that indicated that you awarded an E&C contract there. I thinkit was 130 million in the story.

Can you confirm that and maybe give us an update on the current timeline for that project and where we might see that capacity coming online?


Yes. Kevin, we're in line of what we've said before. We said we're going to bring that online in 2015, that's still the plan. And yes, you're right, wehave BC and his team have been working with our partners and we did award the contract for on site work.

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Hi, Brian Maguire from Goldman Sachs. A question for BC, I just wanted to note if you have an estimate for how much TIG demand was lost forgood based on increase substitution and drifting from the price increases for the last couple of years and also increased acceptance of the Chineseproduct for the last couple of years. And how long will it take a long-term trend in in demand to kind of recover that lost volume?

BC Chong - DuPont - President - Titanium Technologies

Thank you for the question. So first, the Chinese products supports TiO2 so there's really no change in that TiO2 molecule for that. So as Markmentioned earlier on our expectation is that the TiO2 market will continue to grow some GDP numbers. And the main reason is because of thefact that there's really no other better solution for opacity, for [whiteness] than the TiO2 molecule will bring.

So no question, there's also a lot of opportunity they were able to describe on papers about replacement extension and so on, but those ideas hadalways been there. I mean it has been there 10 years ago, 20 years ago, 30 years ago.

So the numbers that we had projected on the GDP based growth idea is really based on the fact that they are growth in a GDP based reason. Andon top of that, it also added new products and added new applications have been added. For example use of in laminates and so on.

And plus the fact that the developing countries actually growth the TiO2 demand higher in GDP, I mean for those reasons the all pluses and minuses,the long-term 30, 40 years trend has been there, so the TiO2 goes with the market GDP. Therefore we do not see any permanent destruction ofthe demand. We see that the stocking and overtime they were washed out in a longer trend and there will be different GDP growth.


Okay, thank you. Right over here, I'm sorry.

Gregg Goodnight - UBS - Analyst

Hi, Gregg Goodnight, UBS. Mark mentioned the million tons of Chinese capacity based on sulfate that has been added, but there is another 1 millionto 2 million tons that is potential in the next three to four years. I'd like BC to comment, I know he's pretty close to the ground there is that capacityprobable? What would you put the probable number of new Chinese capacity out?


Well it could be really hard to be certain about this. So I'll say a couple of things about this. Certainly there are lots of announcements and we areexpecting some of these announcements to come through in our projection so they're not discounting the fact that there will be a significantamount of announcement.

They are projecting probably about 200,000 tons per year of addition into the industry. Before the technology however I think it's been officiallynot discouraged by the Chinese government. They have higher plan. So once it's really up there that we prefer that the industry are not investedin the Southeast facility. And also again they asked significant label cost escalation that you'll find in China. Electricity is high in a healthy process,environment issue is most severe to do it for (inaudible) product.

So for all these reasons, we believe that not all the announced expansion will come through but we certainly are counting another 200,000 tonsor so that will be coming through every year in our projection. It's something that they will look at everyday and we are certainly very consciousabout that fact. And our plan remains that we will always be a much lower cost in the healthy producers in China and on all that, they're going tobe driving our value adding to our customers so that our product command also at premium in a pricing as well.

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So I think having the fact that I'm a Chinese by way, although I'm a second generation Singaporean, but I have a lot of respect for Chinese of course,but I really think that we got a really good hand in GDP and with the low cost position that we have based become branding, we are more powerfulin the market, we have got innovation that is not just on GDP but across the use of technology across DuPont for example, we come up with thingslike easy clean surfaces, combining technology from Teflon in the added businesses in DuPont.

So a lot of things that we being and we really feel like our hand is pretty good here.


Thanks. P.J?

P.J. Juvekar Yes, hi. P.J. Juvekar at Citi. I have two related questions on electronics. The first one is on portable text. It seems that it's taking a littlelonger to turn around. And if China will impose some anti-dumping duties on some of these products, where do you see this business going?

And secondly on OLEDS, I think you mentioned, if you get 10% penetration in the PV market, it will be a $10 billion market opportunity. So why isyour display growth only 3% to 5% a year?

Dave Miller - DuPont - President - Electronics & Communications

So let me put into that. Thanks, P.J. On the PV dumping, so the PV the Chinese dumping case is against poly-silicon. We're not in poly-silicon. That'sthe focus of their dumping. Zooming out on the dumping in general, the dumping right now is creating some discontinuities in the global supplychain. So if you look at the global capacity. It's about 50 gigawatts a year, PV module capacity, 40 gigawatts of that is in China.

So the US market was a dumping, as Mark mentioned, the dumping was found last year, there's an issue there I'll come back to. And then Europeis in the middle of studying there's as well. So if Chinese modules can't make it into those two markets that leads 40 gigawatts chasing a muchsmaller part of the market.

The US market, the law was written that Chinese sourced sales are not - would have duties in the US, Chinese module is not. I know it's a littlecomplicated. Before, it's actually a back door approach. So Chinese can source sales from outside China, make module sale in the US, no duty.

So the US they have workarounds and they could change their supply channel that they're okay. The Europe has written a lot later, we don't knowhow that will come out, but Europe is a little bit later Chinese modules and sales will be covered.

So there's a lot going on. It does create a lot of discontinuities. That's why we've said this year we see growth in gigawatts as flat, received lots ofentire growth numbers in us and the big difference is in China. We've got six gigawatts projected in China, something as high as 10 gigawatts forChina, so that is a pretty big number.

So as these dumping case gets resolved this year, I think Mark mentioned this, it's going to take about a year or so for this stuff to get lined out,but getting pass that, we still see gigawatt growth 20% materials 15%. On OLEDs Mark said, it was $2 billion, I'm not sure I believe it's at 10, but it'sa $2 billion materials opportunity in 2018 based on 27 million PV.

So the growth rate of three to five we showed is for PVs in general, plasmas were going away, LCDs we believe will obviously start losing shares toOLEDS overtime, so the overall growth rate of PV as well. But due to the penetration of OLED into PV, it's going to be very, very, very high. So again,the growth rate three to five was for PVs in general which is GDP's OLEDS penetration is very high.


Okay, great. Jeff.

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Hi, Jeff Zekauskas for JP Morgan. I have a question on safety and protection in that the safety and protection margins that you show are 21% to23% which is what they were 18 months ago. But you now exclude your pension cost and I think that pension benefit is a little bit more than 500basis points.

So for that business, you are lowering your annualized PTOI by about 200 million. So now you go through a tense down a little bit, but that's notenough. Is it really pressure in aramids' margins that lead you to lower your margin expectations or is it in some other part of the business? Or canyou explain that large dislocation?


So, you're right, Jeff. The margin is lower between 400 and 500 basis points from that standpoint. It's primarily in the aramid side. I'll let Tom talkedyou through that because it's in our DPT business and it's primarily in the aramid side as we've realize that it's a little bit more of a competitivemarket.

We still think they're very good margins, but it's a little bit more competitive. And I'll let Tom talk to you about it as well as the actions that we'redoing with it.

Thomas Powell - DuPont - President - Protection Technologies

Yes. The aramid industry as Mark mentioned is actually very strong over the last four years so primarily on the industrial side, industrial applicationswhere aramids are used as we've seen fallout from China and from Europe it slowed down the growth of that industry. There has been emergingcompetition coming in, but as Mark mentioned, they're still pretty small, but it has put pressure on the margins for the next few years.


From that standpoint that's primarily why we're driving the actions that we're doing that we talked about whether it's new products into themarketplace or significant cost reductions. As you all might remember in the third quarter last year, we had a significant restructuring chargeprimarily because as we move DPC out of the company, we dealt with all that overhang, but in addition to that, we used this as an opportunity totake out cost in other places.

One of the places was in S&P primarily in DPT and so we have a significant cost reduction there to be able to be a little bit more leaner and to beable to be more competitive around it.


Okay, David and then Laurence.


Thank you, David Begleiter, Deutsche Bank. Mark, again on Kevlar, is it the ability to innovate in that space has it slowed over the last few yearsyou've sold out, build out the expansion, the market shrinks, from the past you've been able to innovate despite the market? Have you lost thatinnovation ability? And if you have, how do you get back in Kevlar?

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Thomas Powell - DuPont - President - Protection Technologies

I don't believe we've lost it at all. Now we have put a lot more resources into ramping that up. We've ramped up resources particularly in developingeconomies, in China and in Eastern Europe around growth that the underlying issue we've had is the slowdown in the market over the last fouryears driven by that industrial piece as well as the part in the US military which ties back to sequestration, but we haven't lost that capability. We'regoing to invest more in it going forward.

We still think the underlying growth in that market is going to be in the 5% to 8% kind of range, the shift we've been through a four-year flat periodhere which we've seen a couple of times in our history. Going back into the 1980s have been three periods where we hit this four or five year flatperiod. That's what we're going through it right now.


David, the only thing I'd add is I think there's has been a little bit of a change in that we've primarily, we've always had high application developmentespecially on the Kevlar side. That's sort of the lifeblood of that business. But a lot of it was focused as Tom said in the US and Europe and we havenow gotten more of our people out into Asia where we're seeing it both in India and China and other parts of Asia where we see the highest growthrate and in Eastern Europe as well.

That's where the growth is really happening. So we have to shift our balance of power if you will of our application development and shift it awayas we were ramping up our Kevlar facility, we focused a lot of attention on process technology because it is a very unique new process that wehave and shipping it back over to the product side.

So I'd say it's a geographic shift that you're seeing in right now.


Okay, last question in this section?


Over the last few presentations, we keep hearing that your advantage in the business is based on the growth of prospects from here and cashreturns. On those two criteria, could you rank the TiO2 aramids and PV businesses?


Yes, I don't think I can rank those Laurence from that standpoint. I think we look at opportunities holistically from that standpoint in terms of we'remaking investments. As I mentioned on the TiO2 side, the investment we're making if not for a capacity reason it's for really we're getting a hugebenefit out of cost. And if that business has a very distinct mission for us, it generates cash, right, so it draws off cash for the rest of the company.

The other businesses that we have all have their distinct missions whether it's Tom's business in protection technologies or Dave's in E&C. Andinside of that mission, they have their own portfolios they manage. So I think we do really good portfolio management as a company and theninside of each business, we try to manage those portfolios as well. And it's about where do we get the best returns inside of it.

So it's hard to holistically rank those because you have to really look inside.

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We'll have time for one more question in this section. I think [Duffy] you had your hand up?


A couple of questions on TiO2. If you held the price steady today and cost steady today around materials but you've got normal volumes wouldyour contribution be higher than what you've got based on your 18% to 20% long-term margin goals.

So you hold price steady today, so basically the spread per unit is the same, so cost and price is the same that you got back to normal volumes,would the contribution be higher than what you've got based into your normalized numbers overtime?


BC is doing the math.


It's going to be really hard to answer that question. And I think it's really important to recognize that I understand your question but I think forprice to stay steady and for the volume to stay steady as well, it's going to be a little bit unusual event. So I don't think that's ever done the mathto say this is the case that's slightly. The thing that I will say to you is that I think it's really important in this business is that our cost position topublic available data from the quarterly reports from our competition and so on, we benchmark them all the time. And we know that we gotexcluded a 30% cost advantage over that.

So I think the way we think about it is that as long as your cost advantage is substantial, then any price level as long as they're sustainable andthey'll get it. Definitely we are very, very strong in this industry. And the last thing I'll say the entire volume is concerned I think given that you toa very, very strong cost position that you have and plus the fact that our market position is very strong to in terms of our innovation, in terms ofour ability to work with customers and so on and we are the most recognized brand in the market, we got extended, so in terms of quality andservice, so I think we have a high confidence that we can grow this market and on top of that, we can grow this possibly because our cost positionis substantially better than competition and that includes the Chinese EP by the way.


So --


Go ahead.


No, it's okay but fair enough. So then you talked about 30% cost advantage versus the other chloride western guys. The bubble you put on therewith the five top Chinese guys that are sulfate, what would you guess your advantage is in cost versus them?

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This is a sulfate producer from China. There are a couple of things to take note off. One is that there are about 50 plus different producers in China,so that's one thing that we recognize. Many of them actually are very small producers. They are 15,000 tons, 20,000 tons, 30,000 tons producers.

So actually the majority of those have a very, very big position much bigger than our position. And that actually goes back to earlier question asyou have mentioned that lost investment that's announced, actually more on top of those investments that's announced were actually from thesmallest players, they're not from the large players and that speaks to the livelihood of all the capacity coming on stream.

Even they do, how likely are they going to be competitive? So this is the top five which is the operation. We did not have all the data on a publicbasis so it's really hard to give you a definite answer. I will say that our position on an average basis, based on what we know and from publisheddata, from IPOs and so, we got a position that is relatively strong in the range of 10% today. And that range will only increase for a couple of reasonsbecause labor cost is going to increase substantially faster than where DPT is located.

Electrical cost is going to increase faster as well. Environmental cost is going to increase as well. So for all those reasons, I think we only believe thatour advantage will actually stretch overtime. And that's why we feel very confident with the position that we are in.


I think Ellen said it well before. I think we are very confident about our position with this business from a standpoint with the industry leader. Wehave the cost position. We believe we have advantaged product. We think we have an advantage process. And as you're sort of alluded to, theissue that we're trying to manage as a management team is the volatility of that business. That's the negative of this business that we're trying tosort through.

So from the fundamental of the business, we believe we have distinct competitive advantages and what we have to work on as a managementteam is how do we not let that volatility, that business affect the volatility of DuPont.


And let me just add one more thing which I think is very helpful to remember, I think Ellen mentioned that through the cycle, even at the bottomof the cycle, this business returns substantially more than the cost of capital and at the same time, from published data of results, you can see thatmany of the suppliers of the TiO2 base, the majors. So even the Chinese producers, many of them are pretty much in the first quarter this year ata breakeven level.

While our business is to contain to deliver well over cost of capital and that will give you a sense of the level of cost competitiveness that DPT bringsto the industry.


Okay, thank you all team. That concludes this section of the program. We'll now move to the last section which is about 25 minute Q&A with all ofthe presenters today. Ellen and Nick if you would come forward and Jim and Tom and join Mark up here and we'll have 25 minutes more of Q&A.

Okay our first question is right here in the middle.


Joan (inaudible) Capital. I'm wondering after this episode in China with the [SEF] of the plans of your plant, this is -- you're not the only companythis has happened to, excuse me. I followed another company that was really destroyed by a similar event. So in terms of China being a critical part

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of your growth plans, can you discuss how you are going to revise how you're doing business China as a result of that and can you give us an updateon the suit or whatever is going on?


Okay sorry I have to turn it on. So in general as you know we are very active in defending our intellectual property from anybody and everybodywho would like to misuse it. There is a publication in TiO2, that SEF did not occur in China, that SEF occurred in the United States and hence courtcase, it's in the State of California.

So in changing how we do business in China, we do business in China in a very exact way by each business determining what technology we use,determining how we access the market and who our partners are and that's something that we take and spend a lot of time on to make sure thatwe're building out our position in the right way.

As far as intellectual property protection goes everybody has had to up their game over the last decade whether it's in -- from the standpoint ofretirees, direct employees, whether it's from the standpoint of our IT systems, there is just a tremendous amount of investment and focus on notonly the responsibility of our employees, but also in creating the appropriate defenses in our IT system and that work is a work that we are involvedin everyday. We take it very seriously.

And as I have been very public in saying is that we will aggressively go after anyone anywhere in the world who we believe is misusing ourtechnology. Mark, I don't know if you have any update on that specific issue.


No, I think obviously it's a legal process that we're going through. And I think Ellen said it extremely well, we work very hard to make sure we don'tlose technology and for some reason we do, we're very aggressive in terms of how we have to deal with that and wherever that threat comes from.


(Inaudible).


(Inaudible). Two questions, one on overall earnings growth and a couple of segment questions, Ellen, you're guiding up to 2% to 7% increase withthe overall year, you tripped down in the first half. So what gives you the confidence that we're going to have some sort of industrial recovery inthe second half of the year that would give you up earnings year over year?

And so you're somewhat back in the float up there. And for the improvement of the S&P and also in ag, are those also back and loaded over thefive-year timeframe? What kind of industrial growth you need to get that six-point improvement in S&P margins. And Jim, what drives the two-pointdifference in ag margins?


Yes. So first the second half of the year the cost year over year are certainly easier than the first half of the year, we have a very strong performancein electronics and communications and in performance chemicals in the first half of the year and obviously we do not have that in the second halfof the year.

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So if you take a look from a [cap] standpoint the year over year does gets better. Their macro areas that are also improving the second half of theyear is you look at what auto bills are doing. As you look at where China says there'll be versus what they've got.

So there are a lot of indicators that indicate that the volumes coming through the third quarter and fourth quarter will be higher in order to beable to make the year-end numbers whether it's automotive growth or industrial productions, industrial production lagging the first quarter andit's expected to catch up.

But Nick why don't you talk about it?


Yes, I think that's right. When you look at industrial production, we are still anticipating 2.5% growth in industrial production for the full year. Inthe first quarter when you look at it we are at 1% sort of annualized kind of rate. You look at auto bills down at 1.5% in the first quarter, growingnow up, twice at in the second quarter and about 2% to 3%, 4% for the year. So a lot of things from a macro perspective are going to be improvingin that second half of the year.


Yes, on the ag market I wouldn't expect us to be back end loaded. A couple of things, first of all the primary driver is going to be bringing that newtechnology to add new value in the farmers on both the seed and the chemistry side. And that's a key part of the margin expansion overtime. Andyou saw the pipeline.

The second thing is we have a bit of margin headwind as you know with the cost of goods on the seed side with lower seed field yields and highcommodity prices last year. If you've seen some return on the normal season that should help mitigate things in the near term. So we don't expectto be back and loaded in this distribution.


And down on the S&P side as I mentioned a third, a third, a third, a third of that cost reduction which we have completed and our now it's flowingthrough, the biggest next piece will be the asset utilization as we see our volumes increase and we're starting to see a slight steady increase in thatvolume, so we're confident the second half will be better.

As I mentioned before with the assets that we have in S&P, asset utilization is very important in terms of getting those margins up.


Nick, we all know the challenges related to pension fund accounting whether it's reported earnings or cash flow. How much consideration is beinggiven to shift one way or another over to define contribution plan versus define benefit plans.


No, we made that shift. We made that shift in 2007 where we discontinued on the - shifted to defining contribution. There is still some accumulationin the defined benefit, but it's mind or just due to the grand private portion of it, so we've already made that shift.

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So in the US and in around the world, we continue to shift country by country as we are able to move those programs. So this is a trend that's goingto be complete in the next year or two from a global perspective.


And overtime, you'll start to see that liability drop as a result of it.


Okay. Mike.

Mike Ritzenthaler - Piper Jaffray - Analyst

Mike Ritzenthaler Piper Jaffray. For margins in developing regions, Nick you have mentioned the increase in penetration for a volume growth,what's being specifically done to drive up margins in developing regions to parity? Is that a goal and is it just volumes to grow into the structurethat's already in place? Was there something more fundamental like a sales mechanism --


We put our technology centers in the regions. We put the innovation centers and additional geographies. We're doing value selling. We're doingapplications development. And the business in the developing economies are starting to look more and more like our business in other parts ofthe world.

We understand the value we create. We share that value in a way that we capture more for ourselves. So the business and the way we go aboutdoing the business in the new geography is looking a lot like we're doing in (technical difficulty) -- you've seen that in the margins and the numbers.


Well I think Tom is being a little modest here. I mean he has driven a lot of the innovation centers, the 11 centers I talked about. And I visited theone in Bangkok two months ago and the CP foods example and saw firsthand how those standards connecting locally to customer and bring allour businesses together to help CP become a more successful company is really driving our penetration and also the advancement in terms of thesophistication of the application on an increasing rate. So I think those innovation centers are really critical to our continued progress there.

(Technical difficulty)


It's Kevin McCarthy BofA Merrill Lynch. Nick in your prepared remarks, you discussed some criteria for M&A and you highlighted high cash returnson investment and high growth. My question is what are your criteria for divestment? Is it simply the opposite of those two things or are thereother factors such as volatility, commoditization that are meaningful in your view and maybe you can elaborate on the nature of your process forevaluating that? Is it a normal process? How frequently is it done? Thanks?

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So it's a continuous process. When we look and evaluate our portfolio and businesses we're doing this all the time and we're doing it versus ourcompetitive set and we're doing it as to how well they're being benchmarked and how well they're performing against that competitive set.

Are they achieving all of the objectives that we've set for them and not only are they achieving those objectives, but again back to the competitionbecause we may set an objective and the competitive space is doing even better, we'd look for the businesses to do even better in that regard.

Ultimately it comes down to what provides a greatest shareholder value. So when a decision is being made, when we look at performance coding's,we're looking at performance coding's over a period of time, like I said this is continuous process. And when it reaches a point where greatershareholder value can be created through a divestiture, then you have to move forward in that regard.

And so that's what catalyze us to make the decision in performance coding's is when greater value can be achieved through the divestiture versuscontinuing to run the facilities.


And our expectation is the we, in the office of the chief executives do it from an overall company portfolio, the business presidents are responsiblefor doing it within their portfolio, a product line that's commoditizing. Does it create more value by exiting that and using those resources someplace else. I mean cost protection chemical has several examples of that in the last couple of years where (inaudible) that active product linemanagement.

A lot of that you don't really see unless it's a natural sale, some of that are exits or some of that are maybe licensing deals and things like that. Butwe expect the portfolio to be managed very -- in a defined way at the product level and then at the corporate level. And I think it's that pace thatwe use that we continue to drive that really gives us great understanding into where the strengths of the companies are and where we want togo.


Okay, thanks. A lot of hands up. Let's go Mark and then P.J. We'll get everyone.

Mark Gulley - BGR Partners - Analyst

Mark Gulley, BGC Partners. Two questions with respect to electronics and PV, the biggest margin boos in your plan is in the electronics and chemicals- electronics and communication I'm sorry back to historical levels.

What gives you the confidence particularly given the having in margins in the last two years? And then secondly with respect to PV is the 15% goalsales or volume, does the pledge down in PV I think it's going to be pretty significant you acknowledge that you need good parity to do that andyou'd have the cost to come down. So not a great environment for placing I wouldn't think.


Yes. So I think the first piece of that is what gives us confidence is really those three areas that we talked about both the consumer electronics aswell as PV as well as the display side and I think all of them.

And I think Dave mentioned, I think there's a compelling case for PV, I think there's an absolute compelling case of why that's going to grow as anindustry over the next 5, 10, 20 years. So we feel very confident about that. We feel very confident about the position in there. And we're reallythinking about it as in from the material side of volume from that perspective to the other piece.

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But don't under estimate the display side that we talked about. We have some unique enabling technology on the display side with OLED that isreally going to kick into another gear here as OLED become the standard for PVs. And then the third piece is consumer electronics.

So I think we have three legs, three very solid legs for growth and that gives us a lot of confidence going forward.


Okay, P.J.

PJ Juvekar - Citi - Analyst

P.J. Juvekar from Citigroup. Ellen, you just mentioned something else I was going to ask about was that you can use this free cash flow from someof the cash comp businesses to grow your high growth businesses. It's a fine strategy, but it depresses your multiple. So you're going to get aconglomerate multiple.

If you got a clean break, you'll get a better multiple. So how did the multiple sort of factor come into your decision-making?


So obviously each business depending on what industry you're in has its own unique set of characteristics and competitive set, why it establishesa value there, right, or a multiple there. And we do take a look at that as we make projections out.

I think one of the important parts is that if you look at the decision like on the coding's business, we couldn't figure out how science could make-- be a differentiating factor to allow it to produce extraordinary results in its competitive set, right? It was an average player.

And so from that standpoint, there are probably others who would evaluate more than we did and that's what we found out as we went throughthat process. So I think you have to take it all into consideration because even an industry that have different multiples, you can get other leveragepoints in terms of our margins, in terms of things like that where we can produce superior results.

But we do take that into account. We do understand the impact that has as we look for short term and long term on how we're going to createshareholder value.


Mark?


Thanks, Mark. Ellen if we could strip out macro and just think about productivity and innovation which of your businesses are meaningfully aheadof where you thought they would be on those two metrics and which are meaningfully behind versus, say, 18 months ago? And I know it's hardto strip out the macro, but this is an innovation company?


Right. Actually my team would probably tell you that I'm never satisfied, that they're always behind. But I don't think I'm quite that harsh. First ofall, I think that they've all made progress. I think we've made tremendous progress in an accelerated rate in agriculture and I think that's the

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fundamentals of what we've been investing in over the last decade and the team that we have there between the pipeline and crop protectionand the advances that we have at Pioneer.

So tremendous progress there, I always believe they can do more. I think the Danisco acquisition was really critical in establishing that solid basein nutrition and health and industrial biosciences. I know we've been talking industrial bio sciences for awhile, I mean now we've got real revenueand we got real programs and we've got real confidence in our ability to make that make a meaningful difference in our company not only in thatsegment, but also in Diane's segments and in other places like that in the company.

I think that they can go faster, I always do. And they have those goals. I mean both Craig and Jim understand exactly what our expectations, myexpectation is there.

I think on the safety and protection side, yes I'm disappointed. I think even if you strip away the macros, I think we could have done some thingsdifferently and faster. I mean poor Dave and from electronics and communication side as well, lumpy business isn't something that we can enjoy,one of us would enjoy.

But I will tell you from a technology side, I think the progress we've made in OLED has been significant and I think it will be impactful from ourcompany. I think if you look at performance chemicals, you've got Opteon, I mean new generation of technology and the new generation andtechnology and core (inaudible) that are going well.

I don't think the macros are helping us there. And TiO2 to maintain that cost position and maintain that difference between us and our competitiveset is critical for us to continue to generate the cash. So the bar gets raised every year. And I think at any time I learned something right, you've gotto adjust.

It's hard to strip out the macros, but I do think one thing that I demand is that we use the key learning's from whether it's a research program or acapital program or a go-to-market program that didn't turn out as we expected and we learn from it, we adjust and we go forward to beat thecompetition because at the end of the day, if we can use our science to beat the competition, we will do very well. And I think that's part of ourprocess that we continually use.


Thanks for the question, back up from --


Thanks. This is a more general question about what disclosures are you going to make going forward because there's no doubt this is an innovationstory. But if you look across the chemical industry and the other industry, there are very few examples of companies that have actually generatedgreat returns through aggressive R&D programs.

In the metric you give us is a four-year sales from new products which I think is entirely helpful because as you readily admit it includes cannibalizationof existing products. Have you given some thought to providing more granularity around your R&D program so that we can get a better sense forthe incremental returns you're making on the significant investment is going into these products?


Absolutely. That's the direction that we're going. We talked about a significant number on our pipeline chart today, 25 of our top 100 projects, wetalked about the incremental revenue that we expect over the next four years time horizon coming from those projects and we will continue totalk more about that.

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We are highly differentiated, and we report our expenditure on the segment-by-segment basis so that you have a sense of where the money isgoing. It's certainly a heavy investment in the agriculture space where as Jim said, we're quite happy with the return we're getting there. We talkedabout what we're doing in nutrition and health, what we're doing in an industrial biosciences.

So we intend to get more granular in the way we approach it including adding new metrics to allow you to make that assessment more clearly.And certainly, it's been a major focus of [Doug Inteke], as he's come in to the role of chief technology officer to help you to make those judgmentsand make your own assessment.


Yes, so we've shown a glimpse to that. Look, and you can see it and share in places like in Pioneer very clearly and what we've done in soy and corn.You can see it the kind of numbers that Tom talked about whether it's $7 billion on a risk adjusted basis a new revenue, new revenue by 2016.

You can see it in what Mark talked about, about what we'd expect in revenue from OLEDs or that we've given you proof points today around that.Hopefully, as we continue to advance the science and understand what it truly can deliver.


Okay, if I could, sorry, if I could follow up with just, Nick said in his first slide which is about the return on the R&D.


Yes.


So just talking about sales and often disguise what's really going on underneath, right you've got a cost of the R&D, you've got a cost to whatevercapital was substituted or taken offline. So understanding that you're getting a real return on that investment I think is what we're missing.


Correct.


All right, maybe just a comment there. We can take a look on any individual project. We do look at projected economics about it, what we're goingto spend, what we expect to be returned. You can only really come to a conclusion on an individual project at the end of the project. So it's notvery helpful when you have things in flight. If you're going to take a measure and everything we measure is one way or another a surrogate lookingto answer the question, are we getting an attract of return on R&D spend? Every one of our metrics is really targeted towards helping us get ananswer to that.

On the individual project, you can only do that after the fact, when you take to look at the whole portfolio in the (inaudible) you know how muchyou're spending, you know how much new revenue is coming from that. You know it, the margin is on that. You can get a sense of whether or notyou're generating and attract a return from the overall portfolio, and that's really what we've spent our time doing, and that's what we try tomeasure.

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Let me add one more thing, Tom, if I could. So as Tom said, every individual project we're looking at in detail all the metrics around the return ofthat in R&D project or any significance we'd be looking at that. So we have the detailed metrics in between. When you look at proof points for theinvestment community to see, I would refer to the margin change we're talking about from our 12-base now and what we're talking about thelong-term margins because those margin improvements are being driven through that innovation and through that R&D. That's the main driverthere.

And so as you see, you start to realize those margins, those long-term targets, it's a proof point of our R&D paying up for us.


Brian Maguire from Goldman Sachs, and ag question for either Ellen or Jim. Over the last couple of months, industry-wide, it seemed like we'veseen an increase in cross licensing and collaboration. So my question for is, do you think we're entering a period of sort of reduced competitivepressure in the industry and do you think that will allow you to offset some of the maybe increased loyalties you'll have from some of the licensing?


Yes, and I don't think there's going to be a reduced competitive pressure. But Jim, why don't you --


-- yes, that was good (inaudible) I don't see any reduction in the competitive pressure. But I think I mentioned, we'd had wrap that had beenannounced recently so it seems like the top of mind for everybody. But this is not uncommon. And everybody out there is marketing somethingthat's in license and I think everybody has something that's proprietary as well. So it's a mixture.

I think there's hopefully increased collaboration and I'm getting technology to the market. But at the end of the day, the real competition is productsthat deliver value to farmers for that to crop protection or seed. And that's where the real competition is happening, and that's why we feel goodabout our growth prospects.


John. No, I'm sorry. No. Go ahead. I didn't see (inaudible) there. That's way too far. There you go.

Ron Fisher - US Steel & Carnegie Pension Fund - Analyst

In the back, yes. Ron Fisher, US Steel & Carnegie Pension Fund. Ellen as you look at your mix of business, the secular growers, the more cyclical typeof play. Do you have today, do you have the mix down where you want it? The growers require cash, but if you don't have enough of them, itdoesn't move the needle in the top line.

If you don't have enough on the cyclical side, maybe you don't have enough cash to invest in the grower. So I guess based on what you've gottoday, are you happy with that or that still need work?

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No, I don't think the portfolio is done if that's -- if that's the question. And I'm not sure it's ever done. It's not always the same rate and we continueto have to generate the earnings in cash even if you're growing. There's no big in a big hole. And so I do think it's a mix to that. But more importantly,we really bring science to differentiate it in the competitive landscape and can we generate superior returns to the competition.

So I don't think the portfolio is done. We continue to look at it in terms of what we should bring in, what is not maybe achieving its goals. And we'llcontinue to adjust and retake it, that is a very big part of the job that the senior leadership team of the company's engaged in.


Right here in the middle.

Chris Nocella - RBC Capital Markets - Analyst

Hi, Chris Nocella, RBC. Nick, you have a lot of cash in your balance sheet but you mentioned most of it's overseas. So, can this cash be used to makean acquisition? And if not, how do you view your ability to increase your leverage and maintain the A rating if the right opportunity came about?


Well, it's the cash that's overseas certainly can be used for a lot of things. It can be used for acquisition. It can be used for construction of theinnovation centers that we've been building across the globe. It can be used for additional capital projects beyond these innovation centers andproduction facilities.

So, certainly, the cash that is overseas has a -- is a definite need and use and is being fully utilized. And what was the second part, Chris? Sorry.

Chris Nocella - RBC Capital Markets - Analyst

Your ability to increase leverage if the opportunity came about.


Yes. Well, the strong balance sheet position that we have enables us to have access to capital right now at very attractive rates and our ability toincrease leverage is certainly there for us because of the strong balance sheet. I mean, you look at the fact that we went through in this co-acquisition,$7 billion and were able to maintain our Aa2 rating I think speaks a lot about the strength of the balance sheet.


Final question today. John?


John Roberts, UBS. And if anyone can find a way to enjoy a lumpy business, it's Dave Miller. The ethylene copolymer business you mentioned earlierkind of coming down off the cheap feedstock advantage that you had a little bit here, but can you grow that business faster over the next two tofive years? There's going to be a fair amount of ethylene capacity coming into North America and I haven't heard any plans really to step up thegrowth rate in the ethylene copolymer portfolio.

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Sure, absolutely. We're interested in growing that business and we have been growing that business outside the US. Keep in mind that we don'tproduce commodity polyethylene or polypropylene. We don't have business in our portfolio that's in depth to feed stock price. We are value sellerswith specialty ethylene copolymer.

So, it's a great business for a lot of differentiation. It's used in packaging, in food packaging, high valued most in -- high valued uses in multilayerpackaging. As developing economies develop, the interest in convenience in packaged food increases. These are huge opportunities for us.

So, we definitely have a growth orientation. We don't think that growth orientation translates into the need for a lot of investment in fixed (inaudible).There may be a time down the road where we're called on to do that but we see opportunities to continue to grow and including our volumewithout substantial requirements for new large investments.


Okay, thanks, Tom.

Okay, thank you everyone. This does conclude our program for the day. I want to thank all of you for being here and those are the hundreds or sowe heard on the web. I'd like to alert you to the fact that we are participating in five investor conferences over the next four weeks, all in New York.

We hope to see you there and hope you'll take advantage of the time with our executives there. A special thank you. There's a gentleman in theroom who has followed DuPont for 30 years and has just recently announced his retirement. And I want to call him out and say a special thanksfrom the management team at DuPont. [Bob Goodof] at (inaudible) from Boston, thank you, Bob.

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