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

Cautionary Statements About Forward-Looking Statements This report contains forward-looking statements which may be identified by their use of words like "plans," "expects," "will," "anticipates," "intends," "projects," "estimates" or other words of similar meaning. All statements that address expectations or projections about the future, including statements about the company's strategy for growth, product development, market position, expenditures and financial results, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The company cannot guarantee that these assumptions and expectations are accurate or will be realized. For some of the important factors that could cause the company's actual results to differ materially from those projected in any such forward-looking statements see the Risk Factors discussion set forth under Part II, Item 1A beginning on page 35. Additional risks and uncertainties not presently known to the company or that the company currently believes to be immaterial also could affect its businesses. Results of Operations
Overview
The company's financial results for the first quarter of 2009 reflect an ongoing severe global economic recession, characterized by extraordinary decreases in demand with inventory destocking in most supply chains. Of the major markets served by DuPont, only agriculture continues to show growth. As a result, sales for the first quarter 2009 were 20 percent below the prior year, with volumes declining 19 percent. Net income attributable to DuPont ("earnings") declined 59 percent versus prior year largely attributable to the decline in sales volume. The company has made cash generation its top priority to maintain its financial strength. This has included intensifying working relationships with customers, striving for efficiencies via cost cutting and productivity improvements, reducing working capital, and trimming capital expenditures. The company is continuing to support future growth in areas such as agriculture, protective materials, applied bio-sciences and photovoltaics and is aligning capital spending with the level of demand in other businesses. Net Sales
Net sales for the first quarter 2009 were $6.9 billion versus $8.6 billion in the prior year, down 20 percent, reflecting 19 percent lower sales volume and a 1 percent net reduction from portfolio changes. A 5 percent increase in local selling prices was offset by a 5 percent reduction from currency exchange. Higher local selling prices principally reflect higher prices for seeds and other value-in-use products. The global economic recession had a significant negative impact on the company's sales volumes in all regions. Volumes outside the United States declined 23 percent, reflecting lower overall demand particularly for products related to motor vehicle production and construction. Volumes were 14 percent lower in the United States as higher Agriculture & Nutrition volumes partially offset significantly lower volumes in the other segments.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued The table below shows a regional breakdown of net sales based on location of customers and percentage variances from the prior year: Three Months Ended March 31, 2009 Percent Change Due to: 2009 Net Sales Percent Local Currency ($ Billions) Change vs. 2008 Price Effect Volume Portfolio U.S. $ 3.1 (9 ) 6 - (14 ) (1 ) Europe, Middle East & Africa 2.1 (28 ) 3 (11 ) (20 ) - Asia Pacific 0.9 (28 ) 5 (1 ) (31 ) (1 ) Canada & Latin America 0.8 (22 ) 9 (11 ) (19 ) (1 ) Total Consolidated Sales $ 6.9 (20 ) 5 (5 ) (19 ) (1 )

Other Income, Net
First quarter 2009 other income, net, totaled $399 million as compared to $195 million in the prior year, an increase of $204 million. The increase is largely attributable to increases of $184 million in net pre-tax exchange gains. Additional information related to the company's other income, net, is included in Note 4 to the interim Consolidated Financial Statements. Cost of Goods Sold and Other Operating Charges (COGS) COGS totaled $5.2 billion in the first quarter 2009 versus $6.0 billion in the prior year, a decrease of 13 percent, principally reflecting lower sales volume. COGS as a percent of net sales was 75 percent versus 69 percent for the first quarter 2008. The 6 percentage point increase reflects significantly lower capacity utilization, with modest increases in raw material, energy and freight costs, and unfavorable currency impact on sales. Selling, General and Administrative Expenses (SG&A) SG&A totaled $907 million for the first quarter 2009 versus $934 million in the prior year. The decrease in SG&A was primarily due to strict cost controls in response to weak market conditions. The decrease was partially offset by increased global commissions and selling and marketing investments related to the company's seed products. SG&A was approximately 13 percent of net sales for the three-month period in 2009 and 11 percent in 2008. Research and Development Expense (R&D)
R&D totaled $323 million and $330 million for the first quarter 2009 and 2008, respectively. R&D was approximately 5 percent of net sales for the three-month period in 2009 and 4 percent in 2008.
Interest Expense
Interest expense totaled $106 million in the first quarter 2009 compared to $80 million in 2008. The increase in interest expense is due primarily to higher average gross debt.
Provision for Income Taxes
The company's effective tax rate for the first quarter 2009 was 34.7 percent as compared to 18.6 percent in 2008. The higher effective tax rate in 2009 versus 2008 principally relates to the impact of tax associated with the company's policy of hedging the foreign currency-denominated monetary assets and liabilities of its operations.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued Net Income Attributable to DuPont
Earnings for the first quarter of 2009 were $488 million versus $1,191 million in the first quarter 2008, a 59 percent decrease. The decrease in earnings principally results from lower sales volume, higher pension costs, and unfavorable currency impacts. Partly offsetting these factors were benefits from cost reduction productivity measures.
Corporate Outlook
The company's 2009 earnings outlook has been revised downward to a range of $1.70 to $2.10 per share. The revision anticipates that weak demand across key markets will continue throughout 2009. While favorable conditions in global agriculture markets and the benefit of cost reductions and lower raw material costs are expected, the protracted recessionary environment and the impact of currency are expected to limit the company's revenue growth. DuPont will continue aggressive actions to reduce costs and capital expenditures, in addition to maintaining an appropriate level of investment for high-growth, high-margin businesses including seed products and photovoltaics. The company has increased its full-year fixed cost reduction goal from $730 million to $1 billion, targeting savings from cost reduction and productivity projects, and developing plans for additional restructuring actions expected to be finalized and approved in the second quarter. The company also reduced its planned 2009 capital expenditures to $1.4 billion, and reaffirmed its $1.0 billion improvement goal for working capital reduction projects currently underway. Accounting Standards Issued Not Yet Adopted See Note 1 to the interim Consolidated Financial Statements for a description of recent accounting pronouncements.
Segment Reviews
Summarized below are comments on individual segment sales and pre-tax operating income/loss (PTOI) for the three-month period ended March 31, 2009 compared with the same period in 2008. Segment sales include transfers. Segment PTOI is defined as operating income/loss before income taxes, noncontrolling interests, exchange gains/losses, corporate expenses and net interest. Agriculture & Nutrition - First quarter 2009 sales of $3.1 billion were 6 percent higher, reflecting 5 percent higher USD selling prices, and 1 percent volume growth. The higher USD selling prices reflect significantly higher local selling prices, partially offset by unfavorable currency impacts across all regions. The volume growth was driven by higher corn and soybean seed sales in North America and higher corn seed sales in Europe reflecting anticipated market share gains in both regions, and strong demand for insecticides and soybean herbicides in North America. The volume growth was partially offset by lower corn seed sales in Latin America due to a decrease in planted corn acreage and lower sales of fungicides and soy protein products. PTOI for the first quarter of $852 million increased 8 percent, primarily due to the increase in sales and higher value product mix partially offset by significant unfavorable currency impacts.
Coatings & Color Technologies - First quarter 2009 sales of $1.2 billion were down 30 percent, reflecting 29 percent decrease in volume and 1 percent lower USD selling prices. The decline in volume reflects lower sales of products due to fewer motor vehicles builds, and decreased demand for refinish and titanium dioxide products as supply chains destocked in response to the global economic recession. The lower USD selling prices reflect unfavorable currency impacts, partially offset by higher local selling prices. First quarter 2009 PTOI was a loss of $19 million compared to income of $190 million in the first quarter 2008. The decrease in PTOI was mainly due to lower volumes and charges associated with low capacity utilization of production units, partially offset by fixed costs productivity improvements.
Electronic & Communication Technologies - Sales in the first quarter of $696 million decreased 32 percent, reflecting a 31 percent decline in volume and 1 percent lower USD selling prices. The decreased volume is directly related to the current economic recession and reflects lower demand for

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued products across all regions and markets. The lower USD selling prices were mainly driven by unfavorable currency impacts. First quarter 2009 PTOI was a loss of $54 million compared to income of $175 million in the first quarter 2008, driven by lower volumes and charges associated with low capacity utilization of production units, partially offset by improvements in fixed costs productivity.
Performance Materials - First quarter sales of $942 million were down 45 percent, reflecting a 39 percent decline in volume, 3 percent lower USD selling prices, and 3 percent decrease from portfolio changes. The decrease in volume mainly reflects the effect of the global economic recession and destocking of downstream inventory channels. Volume also continued to be impacted by plant shutdowns that followed Hurricanes Gustav and Ike. During the quarter, repair work associated with these shutdowns was largely completed and all production units returned to operation. The lower USD selling prices reflect a significantly weaker sales mix driven by the destocking process and unfavorable currency impacts. First quarter 2009 PTOI was a loss of $146 million compared to income of $219 million in the first quarter 2008. The decline in PTOI was driven by decreased sales volume, the impact of lower margins on sales of inventory manufactured or acquired in 2008, and charges associated with low capacity utilization of production units, partially offset by improved fixed costs productivity.
Safety & Protection - Sales in the first quarter of $1 billion decreased 24 percent, reflecting an 18 percent decline in volume, 5 percent lower USD selling prices and a 1 percent decrease due to portfolio changes. The lower volume reflects decreased demand for products in motor vehicle, industrial and residential construction markets as customers reduced inventories in response to the economic recession. The lower USD selling prices were mainly driven by unfavorable currency impacts and lower local selling prices for some industrial chemicals products due to contractual pass-through of raw material price declines. First quarter 2009 PTOI was $72 million, a decrease of 74 percent, primarily due to the impact of lower volumes and charges associated with low capacity utilization of production units.
Pharmaceuticals - First quarter 2009 PTOI was $252 million compared to $235 million in the first quarter 2008.
Other - The company includes embryonic businesses not included in growth platforms, such as applied biosciences and nonaligned businesses in Other. Sales in the first quarter 2009 of $28 million decreased 30 percent from the first quarter 2008. PTOI for the first quarter 2009 was a loss of $44 million compared to a loss of $26 million in the first quarter 2008. Liquidity & Capital Resources
Despite the global economic recession and adverse conditions in the global capital markets, management believes the company's ability to generate cash from operations, coupled with cost reduction initiatives and access to capital markets, will be adequate to meet anticipated cash requirements to fund working capital, capital spending, dividend payments, debt maturities and other cash needs. The company's liquidity needs can be met through a variety of sources, including: cash provided by operating activities, cash and cash equivalents, marketable securities, commercial paper, syndicated credit lines, bilateral credit lines, equity and long-term debt markets and asset sales. The company's current strong financial position, liquidity and credit ratings have not been materially impacted by the current credit environment. In addition, cash generating actions have been implemented including spending reductions and restructuring to better align capital expenditures and costs with anticipated continuing lower global demand. However, there can be no assurance that the cost or availability of future borrowings will not be impacted by the ongoing credit market instability. The company will continue to monitor the financial markets in order to respond to changing conditions.
Pursuant to its cash discipline policy, the company seeks first to maintain a strong balance sheet and second, to return excess cash to shareholders unless the opportunity to invest for growth is compelling. Cash and cash equivalents and marketable securities balances of $2.4 billion as of March 31, 2009, provide primary liquidity to support all short-term obligations. The company has access to approximately $2.6 billion in credit lines with several major financial institutions, as additional support to meet short term liquidity needs. These credit lines are primarily multi-year facilities.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued The company continually reviews its debt portfolio and occasionally may rebalance it to ensure adequate liquidity and an optimum debt maturity schedule. Cash used for operating activities was $832 million for the three months ended March 31, 2009 compared to $951 million during the same period ended in 2008. The $119 million decrease is primarily due to working capital reductions, including a $1.1 billion decrease in the change in inventory levels, partially offset by lower earnings in 2009.
Cash used for investing activities was $393 million for the three months ended March 31, 2009 compared to $520 million for the same period last year. The $127 million decrease was mainly due to lower capital expenditures and the impact of a strengthening U.S. dollar on forward exchange contract settlements. Purchases of property, plant and equipment (PP&E) for the three months ended March 31, 2009 totaled $358 million, a reduction of $52 million compared to the prior year.
Cash provided by financing activities was $20 million for the three months ended March 31, 2009 compared to $1,262 million in the prior year. The $1.2 billion reduction was primarily due to a decrease in the net proceeds from borrowings. Dividends paid to shareholders during the three months ended March 31, 2009 totaled $375 million. In April 2009, the company's Board of Directors declared a second quarter common stock dividend of $0.41 per share. The second quarter dividend was the company's 419th consecutive quarterly dividend since the company's first dividend in the fourth quarter 1904. Cash and Cash Equivalents and Marketable Securities Cash and cash equivalents and marketable securities were $2.4 billion at March 31, 2009, a decrease of $1.3 billion from $3.7 billion at December 31, 2008. The decrease in cash combined with cash generated from proceeds from borrowings and earnings were mainly used to fund working capital, capital projects and dividend needs.
Debt
Total debt at March 31, 2009 was $10.1 billion, an increase of $0.4 billion from the $9.7 billion at December 31, 2008. The proceeds from the increased borrowings along with earnings and cash were primarily used to fund normal seasonal working capital needs, principally in the Agriculture & Nutrition segment as well as capital projects and dividends. Guarantees and Off-Balance Sheet Arrangements For detailed information related to Guarantees, Indemnifications, Obligations for Equity Affiliates and Others, Certain Derivative Instruments, and Master Operating Leases, see pages 36 - 37 to the company's 2008 Annual Report, and Note 10 to the interim Consolidated Financial Statements. Contractual Obligations
Information related to the company's contractual obligations at December 31, 2008 can be found on page 38 of the company's 2008 Annual Report.
PFOA
DuPont manufactures fluoropolymer resins and dispersions as well as fluorotelomers, marketing many of them under the Teflon ® and Zonyl ® brands. The fluoropolymer resins and dispersions businesses are part of the Electronic & Communication Technologies segment; the fluorotelomers business is part of the Safety & Protection segment.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued Fluoropolymer resins and dispersions are high-performance materials with many end uses including architectural fabrics, telecommunications and electronic wiring insulation, automotive fuel systems, computer chip processing equipment, weather-resistant/breathable apparel and non-stick cookware. Fluorotelomers are used to make soil, stain and grease repellants for paper, apparel, upholstery and carpets as well as firefighting foams and coatings.
A form of PFOA (collectively, perfluorooctanoic acid and its salts, including the ammonium salt) is used as a processing agent to manufacture fluoropolymer resins and dispersions. For over 50 years, DuPont purchased its PFOA needs from a third party, but beginning in the fall of 2002, it began producing PFOA to support the manufacture of fluoropolymer resins and dispersions. PFOA is not used in the manufacture of fluorotelomers; however, it is an unintended by-product present at trace levels in some fluorotelomer-based products. DuPont Performance Elastomers, LLC (DPE) uses PFOA in the manufacture of raw materials to manufacture Kalrez ® perfluoroelastomer parts. PFOA is also used in the manufacture of some fluoroelastomers marketed by DPE under the Viton ® trademark. The wholly owned subsidiary is a part of the Performance Materials segment.
PFOA is bio-persistent and has been detected at very low levels in the blood of the general population. As a result, the EPA initiated a process to enhance its understanding of the sources of PFOA in the environment and the pathways through which human exposure to PFOA is occurring. In 2005, the EPA issued a draft risk assessment on PFOA stating that the cancer data for PFOA may be best described as "suggestive evidence of carcinogenicity, but not sufficient to assess human carcinogenic potential" under the EPA's Guidelines for Carcinogen Risk Assessment. At EPA's request, the Science Advisory Board (SAB) reviewed and commented on the scientific soundness of this assessment. In its May 2006 report, the SAB set forth the view, based on laboratory studies in rats, that the human carcinogenic potential of PFOA is more consistent with the Guidelines' descriptor of "likely to be carcinogenic." However, the report stated that additional data should be considered before the EPA finalizes its risk assessment of PFOA. The EPA has acknowledged that it will consider additional data, including new research and testing, and has indicated that another SAB review will be sought after the EPA makes its risk assessment. DuPont disputes the cancer classification recommended in the SAB report. Although the EPA has stated that there remains considerable scientific uncertainty regarding potential risks associated with PFOA, it also stated that it does not believe that there is any reason for consumers to stop using any products because of concerns about PFOA.
DuPont respects the EPA's position raising questions about exposure routes and the potential toxicity of PFOA and DuPont and other companies have outlined plans to continue research, emission reduction and product stewardship activities to help address the EPA's questions. In January 2006, DuPont pledged its commitment to the EPA's 2010/15 PFOA Stewardship Program. The EPA program asks participants (1) to commit to achieve, no later than 2010, a 95 percent reduction in both facility emissions and product content levels of PFOA, PFOA precursors and related higher homologue chemicals and (2) to commit to working toward the elimination of PFOA, PFOA precursors and related higher homologue chemicals from emissions and products by no later than 2015. In October 2008, (for the year 2007), DuPont reported to the EPA that it had achieved a 98 percent reduction of PFOA emissions in U.S. manufacturing facilities. The company achieved about a 97 percent reduction in global manufacturing emissions, exceeding the EPA's 2010 objective. DuPont will work individually and with others in the industry to inform EPA's regulatory counterparts in the European Union, Canada, China and Japan about these activities and PFOA in general, including emissions reductions from DuPont's facilities, reformulation of the company's fluoropolymer dispersions and new manufacturing processes for fluorotelomers products.
In February 2007, DuPont announced its commitment to no longer make, use or buy PFOA by 2015, or sooner if possible. DuPont has developed PFOA replacement technology and successfully used this technology in its global manufacturing facilities to produce test materials for all major fluoropolymer

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued product lines. DuPont has begun to supply fluoropolymer products without PFOA to customers for testing in their processes, and is working to obtain appropriate regulatory approvals for this technology.
DuPont introduced in late 2006, EchelonTM technology which reduces the PFOA content 99 percent in aqueous fluoropolymer dispersion products. DuPont has converted customers representing over 95 percent of the sales volume for these products line to newly formulated EchelonTM technology. In the first quarter 2008, DuPont introduced its next generation fluorotelomer products. The products are marketed as DuPont™ Capstone™ products for use in home furnishings, fire fighting foam, fluorosurfactants, textiles and leather goods. Additional products will be introduced for paper packaging and other end use markets pending appropriate regulatory approvals.
In January 2009, the EPA issued a national Provisional Health Advisory for PFOA of 0.4 ppb in drinking water. In March 2009, EPA and DuPont entered an Order on Consent under the Safe Drinking Water Act (SDWA) reflecting the advisory level (see Note 10 to the interim Consolidated Financial Statements). In February 2007, the New Jersey Department of Environmental Protection (NJDEP) identified a preliminary drinking-water guidance level for PFOA of 0.04 ppb as part of the first phase of an ongoing process to establish a state drinking-water standard. During the first quarter 2009, the NJDEP began the process to establish a permanent Maximum Contaminant Level (MCL) for PFOA in drinking water. The process is estimated to take 2 to 4 years. While the NJDEP will continue sampling and evaluation of data from all sources, it has not recommended a change in consumption patterns.
Occupational exposure to PFOA has been associated with small increases in some lipids (e.g. cholesterol). These associations were also observed in a recent community study. It is not known whether these are causal associations. Based on health and toxicological studies, DuPont believes the weight of evidence indicates that PFOA exposure does not pose a health risk to the general public. To date, there are no human health effects known to be caused by PFOA, although study of the chemical continues.
There have not been any regulatory or government actions that prohibit the production or use of PFOA. However, there can be no assurance that the EPA or any other regulatory entity or government body will not choose to regulate or prohibit the production or use of PFOA in the future. Products currently manufactured by the company representing approximately $1 billion of 2008 revenues could be affected by any such regulation or prohibition. DuPont has established reserves in connection with certain PFOA environmental and litigation matters (see Note 10 to the interim Consolidated Financial Statements).