DuPont 2006 Annual Report Download - page 6

Item 1. Business, continued
Seasonality
Sales of the company’s products in Agriculture & Nutrition are affected by seasonal patterns. Agriculture &
Nutrition’s performance is strongest in the first half of the year. The segment generally operates at a loss
during the third and fourth quarters of the year. As a result of the seasonal nature of its seed business,
Agriculture & Nutrition’s inventory is at its highest level at the end of the calendar year and is sold down in
the first and second quarters. Trade receivables in Agriculture & Nutrition are at a low point at year-end and
increase through the selling season to peak at the end of the second quarter.
In general, businesses in the remaining segments are not significantly affected by seasonal factors.
Marketing
With the exception of Pioneer»brand seeds and Solae»soy proteins, most products are marketed primarily
through DuPont’s sales force, although in some regions, more emphasis is placed on sales through distributors.
Pioneer»brand products are aggressively promoted through multiple marketing channels in North America. In
the high corn and soybean concentration markets of the U.S. Corn Belt, products are sold through a
specialized force of independent sales representatives. In more diverse cropping areas, Pioneer»products are
marketed through distributors and crop input retailers. Pioneer»products outside of North America are
marketed through a network of subsidiaries, joint ventures and independent producer-distributors. Solae»
isolated and functional soy proteins are marketed using a combination of outside distributors, joint ventures
and direct sales.
Major Customers
The company’s sales are not materially dependent on a single customer or small group of customers. However,
collectively, Coatings & Color Technologies and Performance Materials have several large customers,
primarily in the automotive original equipment manufacturer (OEM) industry. The company has long-standing
relationships with these customers and they are considered to be important to the segments’ operating results.
Competition
The company competes on a variety of factors such as price, product quality and performance or
specifications, continuity of supply, customer service and breadth of product line, depending on the
characteristics of the particular market involved and the product or service provided.
Major competitors include diversified industrial companies principally based in the U.S., Western Europe,
Japan, China and Korea. In the aggregate, these competitors offer a wide range of products from agricultural,
commodity and specialty chemicals to plastics, fibers and advanced materials. The company also competes in
certain markets with smaller, more specialized firms who offer a narrow range of products or converted
products that functionally compete with the company’s offerings.
Agriculture & Nutrition sells advanced plant genetics through Pioneer, principally for the global production of
corn and soybeans and thus directly competes with other seed and plant biotechnology companies.
Agriculture & Nutrition also provides food safety equipment and soy-based food ingredients in competition
with other major grain and food processors.
Research and Development
The company conducts research in the U.S. at over 30 sites in 14 states at either dedicated research facilities
or manufacturing plants. The highest concentration of research is in the Wilmington, Delaware area at several
large research centers. Among these, the Experimental Station laboratories engage in investigative and applied
research, the Chestnut Run laboratories focus on applications research and the Stine-Haskell Research Center
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Part I