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Part II
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations–Continued
key segments supported by strong product performance. Pioneer benefited from the global launch of 26 new soybean varieties
and 95 new Pioneerbrand corn hybrids that include new combinations of corn borer, corn rootworm and weed management
traits highlighted by the expansion of the Herculex1 family of traits.
Agriculture & Nutrition also serves the global production agriculture industry with crop protection products in the grain and
specialty crop sectors, forestry, and vegetation management. Principal crop protection products are herbicides, fungicides,
insect control products and plant growth regulators. Sales of crop protection products increased slightly, with the most
significant growth in insecticides, specifically in specialty crops in Latin America and cereals in Europe. The segment also
continued to strengthen its global position in products for cotton due to its broad array of offerings, expanded its presence in
fruit and vegetable specialty markets and continues to expand product offerings in the professional pest control market.
Agriculture & Nutrition also serves the specialty food ingredients market, including soy proteins and lecithins through its
majority-owned venture with Bunge Limited, The Solae Company. Sales from these products declined modestly in 2005,
primarily due to reduced sales in parts of Europe and Asia Pacific.
2005 versus 2004 Sales of $6.4 billion increased 2 percent reflecting 4 percent higher USD selling prices and 2 percent lower
volumes. Higher selling prices reflect a richer mix in corn and soybean seed. Volume declines were driven by lower corn seed
sales in North America and specialty food ingredients partially offset by increases in the sale of soybeans, insecticides in Latin
America and herbicides for cereals in Europe. During the year approximately 160 new products and product applications were
introduced.
2005 PTOI was $862 million versus $769 million in 2004, up 12 percent. The improvement in 2005 PTOI reflects higher USD
selling prices partially offset by lower volumes and higher raw material costs. 2004 results also included restructuring charges
of $34 million. In addition, during 2005 the segment continued to increase research spending and drive productivity improve-
ments while managing overall fixed costs to a level consistent with 2004.
2004 versus 2003 Sales of $6.2 billion increased 14 percent reflecting 7 percent higher selling prices, 4 percent higher
volumes, and a 3 percent benefit resulting from the formation of The Solae Company and the acquisition of the remaining
interest in Griffin LLC. Higher selling prices were driven by a richer mix in corn and soybean seed, reflecting the success of
the 2004 technology offering. Volume growth was driven by higher corn sales throughout all regions as well as increased
soybean sales in the Northern Hemisphere, higher sales of insecticides in Asia Pacific and higher worldwide sales of
soy-based products.
2004 PTOI was $769 million versus $671 million in 2003, up 14 percent. The improvement in 2004 PTOI reflects higher selling
prices and higher sales volumes, partly offset by higher raw material costs. 2004 results also included restructuring charges of
$34 million, whereas 2003 included a benefit of $64 million, principally related to the formation of The Solae Company.
Outlook In 2006, the segment is anticipating modest earnings growth through a continued focus on providing value to its
customers. Pioneer expects to increase its corn value offerings, including stacked traits and seed treatments in the U.S. and
Canada, and grow corn volumes in key international markets. Pioneer also expects continued market share gains in key
soybean markets including the U.S., Canada and Brazil. The segment’s introduction of new crop protection products is
projected to drive volume gains. Segment margins will be challenged by an expected acre shift from corn to lower margin
soybeans along with higher raw material costs and continued investments in research, which will drive long-term profitability.
1Registered Trademark of Dow AgroSciences LLC
30