DuPont 2006 Annual Report Download - page 9

ITEM 1A. RISK FACTORS
The company’s operations could be affected by various risks, many of which are beyond its control. Based on
current information, the company believes that the following identifies the most significant risk factors that
could affect its businesses. However, the risks and uncertainties the company faces are not limited to those
discussed below. Additional risks and uncertainties not presently known to the company or that the company
currently believes to be immaterial also could affect its businesses. Past financial performance may not be a
reliable indicator of future performance and historical trends should not be used to anticipate results or trends
in future periods.
Price increases for energy costs and raw materials could have a significant impact on the company’s
ability to sustain and grow earnings.
The company’s manufacturing processes consume significant amounts of energy and raw materials, the costs
of which are subject to worldwide supply and demand as well as other factors beyond the control of the
company. Significant variations in the cost of energy, which primarily reflect market prices for oil and natural
gas and raw materials affect the company’s operating results from period to period. When possible, the
company purchases raw materials through negotiated long-term contracts to minimize the impact of price
fluctuations. The company has taken actions to offset the effects of higher energy and raw material costs
through selling price increases, productivity improvements and cost reduction programs. Success in offsetting
higher raw material costs with price increases is largely influenced by competitive and economic conditions
and could vary significantly depending on the market served. If the company is not able to fully offset the
effects of higher energy and raw material costs, it could have a significant impact on the company’s financial
results.
Failure to develop and market new products could impact the company’s competitive position and have
an adverse effect on the company’s financial results.
The company’s operating results are largely dependent on its ability to renew its pipeline of new products and
services and to bring those products and services to market. This ability could be adversely affected by
difficulties or delays in product development such as the inability to identify viable new products, successfully
complete research and development, obtain relevant regulatory approvals, obtain intellectual property
protection, or gain market acceptance of new products and services. Because of the lengthy development
process, technological challenges and intense competition, there can be no assurance that any of the products
the company is currently developing, or could begin to develop in the future, will achieve substantial
commercial success. Sales of the company’s new products could replace sales of some of its current products,
offsetting the benefit of even a successful product introduction.
The company’s results of operations could be adversely affected by litigation and other commitments
and contingencies.
The company faces risks arising from various unasserted and asserted litigation matters, including, but not
limited to, product liability claims, patent infringement claims and antitrust claims. The company has noted a
nationwide trend in purported class actions against chemical manufacturers generally seeking relief such as
medical monitoring, property damages, off-site remediation and punitive damages arising from alleged
environmental torts without claiming present personal injuries. Various factors or developments can lead to
changes in current estimates of liabilities such as a final adverse judgment, significant settlement or changes
in applicable law. A future adverse ruling or unfavorable development could result in future charges that could
have a material adverse effect on the company. An adverse outcome in any one or more of these matters could
be material to the company’s financial results.
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Part I