UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 10-K



   X          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                    For the fiscal year ended August 31, 1997

                                       OR

              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                        For the transition period from to

                         Commission File Number : 0-7908

                       PIONEER HI-BRED INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

                                      Iowa
         (State or other jurisdiction of incorporation or organization)

                                   42-0470520
                      (I.R.S. Employer Identification No.)

                700 Capital Square, 400 Locust, Des Moines,  Iowa 50309 (Address
                 of principal executive offices)

                                 (515) 248-4800
              (Registrant's telephone number, including area code)

             Securities registered pursuant to Section 12(b) of the Act:


         Title of each class           Name of each exchange on which registered
   Common Stock ($1.00 par value                New York Stock Exchange


<PAGE>



             Securities registered pursuant to Section 12(g) of the Act:

                                 Title of class
                                      NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                                    Yes        X            No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
Registrant as of November 4, 1997, was  $5,973,301,219.  As of November 4, 1997,
65,756,873  shares of the  Registrant's  Common  Stock,  $1.00 par  value,  were
outstanding.  As of November 4, 1997,  there are also  164,445.86  shares of the
Registrant's Series A Convertible Preferred Stock outstanding to E.I. du Pont de
Nemours and Company (DuPont) which are convertible into 16,444,586 shares of the
Registrant's  Common Stock upon transfer of beneficial  ownership of such shares
of Preferred Stock to a person not a member of a DuPont group (generally defined
as an affiliate of DuPont) and under certain other limited circumstances.



<PAGE>


                       DOCUMENTS INCORPORATED BY REFERENCE


1.   Registrant  incorporates  by  reference  portions  of the  Pioneer  Hi-Bred
     International,  Inc. Annual  Shareholders' Report for the year ended August
     31, 1997. (Items 1, 2, and 3 of Part I, Items 5, 6, 7, and 8 of Part II.)

2.   Registrant  incorporates  by  reference  portions  of the  Pioneer  Hi-Bred
     International,  Inc. Proxy Statement for the annual meeting of shareholders
     on January 27, 1998. (Items 10, 11, 12 and 13 of Part III).

                                     PART I

ITEM    1.    BUSINESS

              The  description  of business  contained  in the Annual  Report to
              Shareholders  for the year ended  August 31, 1997 is  incorporated
              herein by reference.

ITEM    2.    PROPERTIES

              The  description  of properties  contained in the Annual Report to
              Shareholders  for the year ended  August 31, 1997 is  incorporated
              herein by reference.

ITEM    3.    LEGAL PROCEEDINGS

              The description of legal  proceedings  contained within footnote 6
              in the Annual Report to Shareholders for the year ended August 31,
              1997 is incorporated herein by reference.

ITEM    4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

              None

                                     PART II

ITEM 5.       MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
              MATTERS

              Market Price Of And  Dividends On The  Registrant's  Common Equity
              And  Related  Stockholder  Matters:  Market  information  for  the
              Registrant's  Common  Stock  contained  in the  Annual  Report  to
              Shareholders  for the year ended  August 31, 1997 is  incorporated
              herein by reference.

              Sales of  Unregistered   Securities:  Pursuant  to the  Investment
              Agreement,  E.I. du Pont de Nemours and Company (DuPont) purchased
              directly  from Pioneer Hi-Bred International, Inc. (the "Company")
              a new   Series  A  Convertible  Preferred  Stock  (the  "Preferred
              Stock")   which  represents  an economic  ownership in the Company
              approximately  equal  to 20% of the Company's  outstanding  shares
              before  giving  effect to the issuance and  approximately  16 2/3%
              after  giving effect to the issuance at a Common Stock  equivalent
              price of  $104 per share and $1.71 billion in the  aggregate.  The
              Preferred  Stock was exempt from  registration  under Section 4(2)
              of  Securities   Act of 1933  because  it was  issued in a private
              placement   to an  institutional  accredited  investor.  After the
              direct   issuance of Preferred  Stock to DuPont,  the Company then
              launched   and   completed  a    self-tender   offer  to  purchase
              approximately   16.4  million  of its Common  Stock,  par value $1
              ("Common  Stock") from its  Shareholders.  After  giving effect to
              the  self-tender  offer,  DuPont  had  approximately  a 20% Common
              Stock equivalent equity interest in the Company.

<PAGE>


              Shares of  Preferred Stock  are  convertible  (on the basis of 100
              shares  of  Common   Stock   per   share   of   Preferred   Stock)
              automatically  upon the transfer of  beneficial  ownership of such
              shares  of  Preferred  Stock to a person  not a member of a DuPont
              Group, as defined in the Investment  Agreement,  and under certain
              other limited circumstances.


ITEM    6.    SELECTED FINANCIAL DATA

              Selected   financial  data  contained  in  the  Annual  Report  to
              Shareholders  for the year ended  August 31, 1997 is  incorporated
              herein by reference.

ITEM    7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

              Management's  discussion  and analysis of financial  condition and
              results  of   operations   contained  in  the  Annual   Report  to
              Shareholders  for the year ended  August 31, 1997 is  incorporated
              herein by reference.

ITEM    8.    CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

              The consolidated financial statements of the Registrant,  together
              with the report  thereon of KPMG Peat Marwick LLP contained in the
              Annual Report to  Shareholders  for the year ended August 31, 1997
              are incorporated herein by reference.

ITEM    9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
              FINANCIAL DISCLOSURE

              None

                                    PART III

ITEM   10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

              Reference is made to registrant's definitive proxy statement to be
              filed with the Commission  pursuant to Regulation  14(a) not later
              than December 10, 1997; and the information responsive to the item
              is incorporated herein by reference.

ITEM   11.    EXECUTIVE COMPENSATION

              Reference is made to registrant's definitive proxy statement to be
              filed with the Commission  pursuant to Regulation  14(a) not later
              than December 10, 1997; and the information responsive to the item
              is incorporated herein by reference.

ITEM   12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

              Reference is made to registrant's definitive proxy statement to be
              filed with the Commission  pursuant to Regulation  14(a) not later
              than December 10, 1997; and the information responsive to the item
              is incorporated herein by reference.


<PAGE>


ITEM    13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

              Reference is made to registrant's definitive proxy statement to be
              filed with the Commission  pursuant to Regulation  14(a) not later
              than December 10, 1997; and the information responsive to the item
              is incorporated herein by reference.

                                     PART IV

ITEM    14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

              (a) 1. Financial Statements

                     The consolidated financial statements of Pioneer Hi-Bred
                     International, Inc. and subsidiaries filed are listed on 
                     page 6.

              (a) 2. Financial Statement Schedules

                     The  financial  statement schedules of Pioneer Hi-Bred
                     International,  Inc. and subsidiaries filed are listed on
                     page 6.

              (a) 3. Exhibits

                     The exhibits to the Annual Report of Pioneer Hi-Bred
                     International, Inc. filed are listed on page 9.

              (b)    Reports on Form 8-K

                     On August 8, 1997,  the Company  filed a report on Form 8-K
                     reporting under Item 5, that Pioneer Hi-Bred International,
                     Inc.  entered  into a Research  Alliance  Agreement,  Joint
                     Venture Formation Agreement,  and Investment Agreement with
                     E. I du Pont de Nemours and Company.  Related exhibits were
                     included under Item 7 of the report.


<PAGE>


                              FINANCIAL STATEMENTS
                                       AND
                          FINANCIAL STATEMENT SCHEDULES
                                       OF
                       PIONEER HI-BRED INTERNATIONAL, INC.
                    FOR THE FISCAL YEAR ENDED AUGUST 31, 1997


                                      INDEX

Financial Statements

The   following   consolidated   financial   statements   of   Pioneer   Hi-Bred
International,  Inc. and  subsidiaries are incorporated by reference in Part II,
Item 8:

Independent Auditors' Report
Consolidated Balance Sheets - August 31, 1997 and 1996
Consolidated  Statements of Income - years ended August 31, 1997,  1996 and 1995
Consolidated  Statements of Shareholders'  Equity - years ended August 31, 1997,
1996 and 1995  Consolidated  Statements  of Cash Flows - years ended  August 31,
1997, 1996 and 1995 Notes to Consolidated Financial Statements





Financial Statement Schedules

The following financial  statement  schedules of Pioneer Hi-Bred  International,
Inc. and subsidiaries are submitted in response to Part IV, Item 14:

Independent Auditors' Report......................................       7

Schedule II - Valuation and Qualifying Accounts...................       8

Exhibits to Annual Report on Form 10-K............................       9

All other financial statement  schedules have been omitted as not required,  not
applicable, or because all the data are included in the financial statements.


<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Shareholders
Pioneer Hi-Bred International, Inc.:

Under date of October 3 1997, we reported on the consolidated  balance sheets of
Pioneer Hi-Bred  International,  Inc. and subsidiaries as of August 31, 1997 and
1996, and the related consolidated  statements of income,  shareholders' equity,
and cash flows for each of the years in the  three-year  period ended August 31,
1997, as contained in the 1997 annual report to shareholders. These consolidated
financial statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1997.  In connection  with our audits of
the aforementioned  consolidated financial statements,  we also have audited the
related 1997,  1996 and 1995  financial  statement  schedule II. This  financial
statement  schedule  is the  responsibility  of the  Company's  management.  Our
responsibility  is to express an opinion on this  financial  statement  schedule
based on our audits.

In our opinion,  such financial statement schedule,  when considered in relation
to the  basic  consolidated  financial  statements  taken as a  whole,  presents
fairly, in all material respects, the information set forth therein.

KPMG Peat Marwick LLP

Des Moines, Iowa
October 3, 1997


<PAGE>
<TABLE>
<CAPTION>


                       PIONEER HI-BRED INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                  SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
                                  (In millions)

Column A                                    Column B          Column C          Column D         Column E
--------                                    --------          --------          --------         --------

                                                              Additions
                                            Balance At        Charged To                         Balance
                                            Beginning         Costs And         Deductions       At End
Description                                 Of Period         Expenses          (Recoveries)*    Of Period

Allowance for Doubtful Accounts:

<S>               <C> <C>                   <C>               <C>               <C>              <C>
Year ended August 31, 1997..............    $      23         $       6         $      6         $      23
                                             --------          --------          -------          --------

Year ended August 31, 1996..............    $      19         $       5         $      1         $      23
                                             --------          --------          -------          --------

Year ended August 31, 1995..............    $      21         $       2         $      4         $      19
                                             --------          --------          -------          --------






*Represents accounts charged off as uncollectible, net of recoveries of bad debts.
</TABLE>



<PAGE>

<TABLE>
<CAPTION>

                                                       INDEX

                                      Exhibits to Annual Report on Form 10-K
                                            Year Ended August 31, 1997
                                        PIONEER HI-BRED INTERNATIONAL, INC.

                                                                                                     Page
<S>                                                                                                 <C>
Exhibit 3.1--Articles of Incorporation.........................................................      11-32
Exhibit 3.2--By-Laws  .........................................................................      33-46

Exhibit 4.1--Articles of Incorporation.........................................................      11-32
Exhibit 4.2--By-Laws  .........................................................................      33-46
Exhibit 4.3--Rights Agreement (Note 1).........................................................         10
Exhibit 4.4--Specimen of Company's Common Stock Certificate (Note 2)...........................         10

Exhibit 10--Material Contracts
             Executive Compensation Plans
             .1  Stock Option Plan (Note 3)....................................................         10
             .2  Deferred Compensation Plan (Note 4)...........................................         10
             .3  Annual Deferred Compensation Plan (Note 5)....................................         10
             .4  Supplemental Executive Retirement Plan (Note 6)...............................         10
             .5  Restricted Stock Plan - Performance Based (Note 7)............................         10
             .6  Management Reward Program - Performance Based (Note 8)........................         10
             .7  Directors' Restricted Stock Plan..............................................      47-52
             Other Material Contracts
             .8  Investment Agreement dated August 6, 1997 between the Company and E.I. du
                 Pont de Nemours and Company (Note 9)..........................................         10
             .9  Formation Agreement dated August 6, 1997 between the Company and E.I. du
                 Pont de Nemours and Company (Note 10).........................................         10
             .10 Research Alliance Agreement dated August 6, 1997 between the Company and
                 E.I. du Pont de Nemours and Company (Note 11).................................         10
             .11 Preferred Seed Support Agreement dated August 6, 1997 between the Company
                 and E.I. du Pont de Nemours and Company (Note 12).............................         10

Exhibit 11--Statement re:  Computation of earnings per share...................................         53

Exhibit 13--Annual Report to Shareholders for the fiscal year ended August 31, 1997
             .1 Description of the Company's business..........................................      54-58
             .2 Selected financial data........................................................         59
             .3 Consolidated net sales and operating income (loss) by product..................         60
             .4 Management's discussion and analysis of financial condition and results.......
                 of operations.................................................................      61-71
             .5 Consolidated financial statements of the Registrant, together with
                 Independent Auditors' Report thereon..........................................      72-92
             .6 Research and product development...............................................         93
             .7 Description of properties......................................................      93-94
             .8 Market for the Registrant's common stock.......................................         94

Exhibit 21--Subsidiaries of Registrant.........................................................      95-97

Exhibit 23--Consents of experts and counsel....................................................         98

Exhibit 27--Financial data schedule............................................................        101

See Notes for Exhibits to Annual Report on Form 10-K

</TABLE>

<PAGE>


                                                  INDEX


                Notes for Exhibits to Annual Report on Form 10-K
                           Year Ended August 31, 1997
                       PIONEER HI-BRED INTERNATIONAL, INC.


Note      1. Incorporated herein by reference to Exhibit 1 of the Company's Form
          8-A/A-1,  filed March 14, 1995,  and Exhibit 1 of the  Company's  Form
          8-A/A-2, filed August 28, 1997.

Note      2.  Incorporated  herein by reference to Exhibit 4.5 of the  Company's
          Form S-8 Registration Statement, filed July 26, 1996.

Note      3.  Incorporated  herein by reference to Exhibit 4.1 of the  Company's
          Form S-8 Registration Statement, filed July 26, 1996.

Note      4.  Incorporated  herein by reference to Exhibit 10.2 of the Company's
          1993 Annual Report on Form 10K, filed November 29, 1993.

Note      5.  Incorporated  herein by reference to Exhibit 10.3 of the Company's
          1993 Annual Report on Form 10-K, filed November 29, 1993.

Note      6.  Incorporated  herein by reference to Exhibit 10.5 of the Company's
          1996 Annual Report on Form 10-K, filed November 25, 1996.

Note      7.  Incorporated  herein by reference to Exhibit 10.6 of the Company's
          1996 Annual Report on Form 10-K, filed November 25, 1996.

Note      8.  Incorporated  herein by reference to Exhibit 10.7 of the Company's
          1996 annual Report on form 10-K, filed November 25, 1996.

Note      9. Incorporated herein by reference to Exhibit 1 of the Company's Form
          8-K filed August 8, 1997.

Note      10.  Incorporated  herein by reference to Exhibit c(1)of the Company's
          Schedule 13e-4 filed September 25, 1997.

Note      11.  Incorporated herein by reference to Exhibit c(2) of the Company's
          Schedule 13e-4 filed September 25, 1997.

Note      12.  Incorporated herein by reference to Exhibit c(4) of the Company's
          Schedule 13e-4 filed September 25, 1997.





<PAGE>


                           THIRD RESTATED AND AMENDED
                            ARTICLES OF INCORPORATION
                     OF PIONEER HI-BRED INTERNATIONAL, INC.



TO THE SECRETARY OF STATE OF THE STATE OF IOWA:

      Pursuant  to the  provisions  of  Section  490.1007  of the Iowa  Business
Corporation Act, Chapter 490, Code of Iowa, the undersigned  Corporation  adopts
the following Third Restated and Amended Articles of Incorporation

                                    ARTICLE I

      The name of the corporation shall be PIONEER HI-BRED INTERNATIONAL,  INC.,
and its  principal  place of business  shall be in the City of Des Moines,  Polk
County, Iowa.

                                   ARTICLE II

      The duration of the Corporation's existence hereunder is perpetual.

                                   ARTICLE III

      The purpose or purposes for which the  Corporation  is organized are: This
Corporation  shall  have  unlimited  power to engage in and to do any lawful act
concerning any or all lawful businesses for which  corporations may be organized
under Chapter 490 of the Code of Iowa.

                                   ARTICLE IV

      A. The aggregate  amount of authorized  capital stock of this  Corporation
shall be  $150,000,000  divided into (i) 150,000,000  shares,  consisting of one
class  designated  as common and having a par value of One  Dollar  ($1.00)  per
share, and (ii) 10,000,000 shares,  consisting of one class designated as serial
preferred without par value.

      B. 1. Each  outstanding  share of common  stock  shall  entitle the holder
thereof to five votes on each matter properly submitted to the holders of shares
of common stock for their vote, consent, waiver, release or other action; except
that no holder  shall be  entitled  to  exercise  more than one vote on any such
matter in respect of any share of common  stock with  respect to which there has
been a  change  in  beneficial  ownership  during  the  thirty-six  (36)  months
immediately  preceding  the  date  on  which  a  determination  is  made  of the
shareholders who are entitled to take any such action.

              2. A change in  beneficial  ownership of an  outstanding  share of
common stock shall be deemed to have  occurred  whenever a change  occurs in any
person or group of persons who,  directly or  indirectly,  through any contract,
arrangement,  understanding,  relationship or otherwise has or shares (i) voting
power,  which includes the power to vote, or to direct the voting of such share;
(ii)  investment  power,  which  includes  the power to direct the sale or other
disposition of such share;  (iii) the right to receive or retain the proceeds of
any sale or other  disposition  of such share;  or (iv) the right to receive any
distributions, including cash dividends, in respect of such share.

                     a.    In the  absence  of proof  to the  contrary  provided
in  accordance  with the  procedures  referred  to in  subparagraph  (4) of this
paragraph B, a change in beneficial  ownership  shall be deemed to have occurred
whenever a share of common stock is  transferred  of record into the name of any
other person.


<PAGE>


                     b. In the case of a share of common stock held of record in
the name of a corporation,  general  partnership,  limited  partnership,  voting
trustee,  bank, trust  company, broker, nominee  or clearing  agency, or  in any
other name except a natural person, if it has not been established  pursuant  to
such procedures  that  there  has  been no  change in the person o r persons who
direct the exercise of the rights  referred to in clauses  2(i) through 2(iv) of
this paragraph with respect to  such  share of common stock during the period of
thirty-six months  immediately  preceding the date on which  a determination  is
made of the shareholders who are  entitled t  take any action (or since November
14, 1985 for any period  ending on or before  November 14, 1988),  then a chang
in beneficial  ownership  shall be deemed to have occurred during such period.

                     c. In the case of a share of common stock held of record in
the name of any  person  as trustee,  agent,  guardian  or  custodian  under the
Uniform  Gifts to Minors Act as  in  effect in any state, a change in beneficial
ownership shall be  deemed to have occurred   whenever  there is a change in th
beneficiary  of  such trust,  the  principal of  such  agent,  the  ward of such
guardian or  th  minor  for  whom  such  custodian is acting or in such trustee,
agent, guardian or custodian.

              3.  Notwithstanding  anything in this paragraph B to the contrary,
no change in beneficial  ownership  shall be deemed to have occurred solely as a
result of:

                     a.    any event that occurred prior to November 14, 1985 or
pursuant to the terms of any  contract  (other than a contract  for the purchase
and sale of shares of common stock contemplating  prompt settlement),  including
contracts providing for options,rights of first refusal and similar arrangements
in  existence  on such date to which any  holder of shares of common  stock is a
party;
                     b.    any transfer of any  interest in shares of common
stock pursuant to a bequest or  inheritance,  by operation of law upon the death
of any  individual,  or by any other transfer  without  valuable  consideration,
including  a gift  that  is  made in good  faith  and  not  for the  purpose  of
circumventing this Article IV;

                     c.    any change in the beneficiary of any trust,  or any
distribution  of a share of common  stock  from  trust,  by reason of the birth,
death,  marriage or divorce of any natural  person,  the adoption of any natural
person  prior  to age  18 or the  passage  of a  given  period  of  time  or the
attainment  by  any  natural  person  of a  specific  age,  or the  creation  or
termination of any guardianship or custodial arrangement;

                     d.    any  appointment  of a successor  trustee,  agent,
guardian or  custodian  with  respect to a share of common stock if neither such
successor  has nor its  predecessor  had the power to vote or to dispose of such
share of common stock without further instructions from others, whose identities
remain unchanged;

                     e.    any change in the person to whom  dividends or other
distributions  in respect to a share of common  stock  are to be paid  pursuant
to the  issuance  or  modification  of a  revocable dividend payment order; or

                     f. except as provided in subparagraph (5) of this paragraph
B, any issuance of
a share of common stock by the Corporation or any transfer by the Corporation of
a share of common stock held in treasury,  (i.e., the person acquiring the share
shall be deemed on the date of issuance or transfer by the  Corporation  to have
continuously  beneficially owned such share for thirty-six (36) months),  unless
otherwise  determined by the Board of Directors at the time of authorizing  such
issuance or transfer.

              4. For purposes of this paragraph B, all determinations concerning
changes in  beneficial  ownership,  or the absence of any such change,  shall be
made  by  the  Corporation.  Written  procedures  designed  to  facilitate  such
determinations  shall be established by the Corporation and refined from time to
time. Such procedures shall provide, among other things,

<PAGE>


the manner of proof of facts that will be accepted and the frequency  with which
such proof may be required to be renewed. The Corporation and any transfer agent
shall be entitled to rely on all information  concerning beneficial ownership of
the common  stock  coming to their  attention  from any source and in any manner
reasonably  deemed by them to be reliable,  but neither the  Corporation nor any
transfer  agent  shall  be  charged  with any  other  knowledge  concerning  the
beneficial ownership of the common stock.

              5. In the event of any stock split or stock  dividend with respect
to the common stock, each share of common stock acquired by reason of such split
or dividend shall be deemed to have been  beneficially  owned by the same person
continuously  from the same date as that on which  beneficial  ownership  of the
share of common  stock,  with  respect to which  such share of common  stock was
distributed, was acquired.

              6. Each share of common stock,  whether at any particular time the
holder thereof is entitled to exercise five votes for one, shall be identical to
all other shares of common stock in all other respects,  and together all of the
common shares shall constitute a single class of shares of the Corporation.

              7.  Notwithstanding  any  provision  in  this  paragraph  B to the
contrary,  if at any time the common stock will be  ineligible  for inclusion on
the National  Market System of the National  Association of Securities  Dealers,
Inc.  Automated  Quotation  System (or such other  similar  automated  quotation
system as may  exist at the  time) so long as some but not all  shares of common
stock have five  votes per share,  then,  upon a  determination  by the Board of
Directors  that the  provisions  of this  paragraph  B no longer are in the best
interests  of  the  shareholders,  and  without  any  shareholder  action,  each
outstanding  share of common stock shall entitle the holder  thereof to one vote
on each matter properly submitted  thereafter to the holders of common stock for
their vote, consent, waiver, release or other action.

      C. The preferences, voting rights, if any, limitations and relative rights
of the serial preferred stock are as follows:

              1. The holders of the preferred stock shall be entitled to receive
dividends  when and as declared by the Board of  Directors at such rate as shall
be fixed by  resolution of the Board of Directors as hereafter  provided,  which
dividends  shall be cumulative,  before any dividends shall be paid or set apart
for payment on the common stock.  The holders of the preferred  stock shall have
no rights to share in any dividend or  distribution  of profits or assets of the
Corporation, whether in the form of cash, stock dividend or otherwise, except to
the extent  specifically  provided herein or in said resolutions of the Board of
Directors.

              2. In the event of any  liquidation,  dissolution or winding up of
the Corporation, the holders of the preferred stock shall be entitled to be paid
such  amounts  as shall be fixed by  resolution  of the Board of  Directors,  as
hereafter  provided,  before any amount shall be paid on the common stock. After
the payment to the holders of the  preferred  stock of all such amounts to which
they are entitled  pursuant to said  resolutions of the Board of Directors,  the
remaining  assets and funds of the Corporation  shall be divided and paid to the
holders  of  common  stock.  Neither  the  consolidation  nor the  merger of the
Corporation  with  or  into  any  other  corporation  or  corporations,   nor  a
reorganization  of the  Corporation  alone,  nor  the  sale or  transfer  by the
Corporation  of  all  or any  part  of  its  assets,  shall  be  deemed  to be a
liquidation,  dissolution  or winding up of the  Corporation  for the purpose of
this subparagraph (2).

              3. The preferred  stock shall be subject to redemption in whole or
in part at such price and at such time and place and in such manner as the Board
of Directors shall determine.

              4.  Each  share  of  preferred  stock  shall be  entitled  to such
privileges of  conversion,  if any, as are provided and declared by the Board of
Directors at such time as the issue of which it is a part is  established by the
Board of Directors.


<PAGE>


              5. The preferred  stock may be issued from time to time in series.
Authority is hereby expressly granted to the Board of Directors to authorize one
or more series of preferred  stock and to fix the number of shares to constitute
such series and  distinctive  designations  thereof  and,  with  respect to each
series of preferred stock, to fix by resolution or resolutions providing for the
issuance of such series such  variations in respect thereof as may be determined
by the Board of Directors.  All shares of every series of preferred  stock shall
be alike in every  particular,  and all  series  of  preferred  stock  hereafter
created  shall rank equally and be identical in all  respects,  except as to the
following  rights and  preferences  which may  constitute  variations as between
different series of preferred stock:

                     a.     The rate of the dividend on the shares of such
series;

                     b. The price at, and the terms and conditions upon which
shares may be redeemed;

                     c. The amount payable upon shares in the event of
involuntary liquidation;

                     d. The amount payable upon shares in the event of voluntary
liquidation;

                     e. Sinking fund  provisions  for the redemption or purchase
of shares;

                     f.  The  terms  and  conditions  on  which  shares  may  be
converted, if the shares of
any series are issued with the privilege of conversion; and

                     g. Voting rights, if any.

      D. The holder of any share of such common or serial  preferred stock shall
have no preemptive rights to acquire any additional shares of the Corporation or
to acquire any treasury stock of the Corporation.

                                    ARTICLE V

      A. The  number  of  directors  of the  Corporation  shall be not less than
twelve (12) and not greater than sixteen (16),  and,  effective as of the annual
meeting of  shareholders  in 1982, the Board of Directors  shall be divided into
three classes, designated Class I, Class II and Class III. Such classes shall be
as nearly equal in number as possible.  The term of directors of one class shall
extend  to each  annual  meeting  of  shareholders  and in all  cases as to each
director,  until his successor shall be elected and shall qualify,  or until his
earlier  resignation,  removal  from  office,  death or  incapacity.  Additional
directorships  resulting  from an  increase  in  number  of  directors  shall be
apportioned among the classes as equally as possible. The initial term of office
of directors of Class I shall extend to the annual  meeting of  shareholders  in
1983,  that of Class II shall extend to the annual  meeting in 1984, and that of
Class III shall  extend to the annual  meeting  in 1985,  and in all cases as to
each director  until his  successor  shall be elected and shall qualify or until
his earlier  resignation,  removal from  office,  death or  incapacity.  At each
annual meeting of  shareholders,  the number of directors equal to the number of
directors of the class whose term  extends to the time of such meeting  shall be
elected to hold office until the third succeeding annual meeting of shareholders
after their  election.  The Board of Directors  may, upon a majority vote of its
members,  increase or  decrease  the number of  directors  within the limits set
forth above. Vacancies in the Board of Directors or new directorships created by
an increase in the number of directors  shall be filled by majority  vote of the
remaining  members  of  the  Board  and  the  person  filling  such  vacancy  or
newly-created  directorship  shall serve out the  remainder  of the term for the
vacated directorship or, in the case of a new directorship,  the term designated
for the class of directors of which that directorship is a part.


<PAGE>


      B. The shareholders may at any time at a meeting expressly called for that
purpose  remove  any or all of the  directors,  only  for  cause,  by a vote  of
two-thirds of the shares then entitled to vote at an election of directors.  For
purposes of this Article, removal "for cause" shall mean that the director to be
removed has been convicted of a felony by a court of competent  jurisdiction and
such  conviction is no longer subject to direct appeal,  or that the director to
be removed has been  adjudged to be liable for  negligence  or misconduct in the
performance of his duty to the Corporation by a court of competent  jurisdiction
and such adjudication is no longer subject to direct appeal.

      C. This  Article V may not be  amended,  altered or  repealed  without the
approval  of  two-thirds  of the  shares  entitled  to  vote  at the  time  such
amendment, alteration or repeal is proposed.

                                   ARTICLE VI

      The Board of Directors of this Corporation shall have the power to adopt a
corporate seal which shall be the corporate seal of this Corporation.

                                   ARTICLE VII

      The private property of the shareholders of this Corporation  shall at all
times be exempt from  liability of corporate  debts of any kind and this Article
shall not be amended or repealed.

                                  ARTICLE VIII

      In  the  event  that  any   shareholder   shall  become  indebted  to  the
Corporation,  the Corporation shall have a lien upon any shares of stock in this
Corporation owned by such shareholder for the full amount of such indebtedness.

                                   ARTICLE IX

      Stock in this Corporation shall be transferred only by assignment upon the
books of the Corporation, subject to and in accordance with such restrictions as
may be provided in the by-laws of this Corporation.

                                    ARTICLE X

      To the fullest extent  permitted by the Iowa Business  Corporation  Act as
the same now exists or may hereafter be amended,  a director of the  Corporation
shall not be liable to the Corporation or its stock-holders for monetary damages
for breach of fiduciary duty as a director.  Any repeal or  modification of this
ARTICLE  X by  the  stockholders  of  the  Corporation  only  shall  be  applied
prospectively,  to the extent that such repeal or modification would, if applied
retrospectively,  adversely affect any limitation on the personal liability of a
director  of the  Corporation  existing  immediately  prior  to such  repeal  or
modification.

      The above Third  Restated  and Amended  Articles of  Incorporation  do not
contain an amendment  requiring the approval of the Corporation's  shareholders,
and  were  unanimously  adopted  by the  Corporation's  Board  of  Directors  on
September 9, 1996.

Dated this 15th day of January, 1997.


                        PIONEER HI-BRED INTERNATIONAL, INC.
SEAL
                              /s/ Jerry L. Chicoine
                              By: Jerry L. Chicoine
                           Title: Senior Vice President, CFO & Secretary

<PAGE>















STATE OF IOWA, COUNTY OF POLK:SS

      On this 15th day of January,  1997,  before me, a notary public in and for
the State of Iowa,  personally  appeared  Jerry L.  Chicoine,  to me  personally
known,  who being by me duly sworn do say that he is the Senior Vice  President,
CFO and Secretary, respectively of said corporation, that the corporate seal has
been affixed to this document and that said Third Restated and Amended  Articles
of  Incorporation  were signed on behalf of said corporation by authority of its
Board of Directors and the said Jerry L. Chicoine  acknowledges the execution of
said  instrument  to be the  voluntary  act and deed of said  corporation  by it
voluntarily executed.

                                          /s/ Susan E. Griggs
                                     By:  Susan E. Griggs
                                          Notary Public in and for the State of
                                          Iowa

<PAGE>


                          Form of Articles of Amendment
                                     of the
              Third Restated and Amended Articles of Incorporation
                     of Pioneer Hi-Bred International, Inc.



              To the Secretary of State of the State of Iowa:

                           Pursuant to the provisions of Section 490.1006 of the
              Iowa Business Corporation Act, the undersigned  corporation hereby
              amends its Third  Restated and Amended  Articles of  Incorporation
              (the "Articles of Incorporation"),  and for that purpose,  submits
              the following statement:

                      1.    The name of the  corporation  is  Pioneer  Hi-Bred
                            International,  Inc.  (the Corporation).

                      2.   On December  13,  1996,  the  Corporation  adopted an
                           amendment to its Articles of Incorporation,  the text
                           of which is attached hereto as Exhibit A.

                      3.   The  amendment  was  duly  adopted  by the  board  of
                           directors   without    shareholder    approval,    as
                           shareholder  approval  is not  required  pursuant  to
                           Section 490.602 of the Iowa Business Corporation Act.

              Dated:  February 3, 1997


                                      Pioneer Hi-Bred International, Inc.



                                   By:          /s/ Charles S. Johnson
                                       Name:    Charles S. Johnson
                                       Title    Chairman, President and CEO










<PAGE>


                                    Exhibit A





                       DESIGNATION, PREFERENCES AND RIGHTS
                        OF SERIES A JUNIOR PARTICIPATING
                                 PREFERRED STOCK
                                       OF
                       PIONEER HI-BRED INTERNATIONAL, INC.


                  1.       Designation and Amount.

                           (a)      There shall be a series of Preferred Stock
of the  Corporation  created out of the  authorized  but unissued  shares of the
capital  stock of the  Corporation,  which series shall be  designated  Series A
Junior Participating  Preferred Stock (the "Participating  Preferred Stock"), to
consist of one hundred and fifty thousand (150,000) shares, without par value.

                           (b)      Subject of paragraph 4(e)  of this
designation, the number of shares of said series may at any time or from time to
time be increased or  decreased by the Board of Directors  notwithstanding  that
shares of such series may be outstanding at such time of increase or decrease.

                  2.       Dividend Rate.

                           (a)      The  holders  of   shares  of  Participating
Preferred  Stock shall be entitled to receive,  when,  as and if declared by the
Board of Directors  out of funds legally  available  for the purpose,  quarterly
dividends payable in cash on the first day of each November,  February,  May and
August in each year  (each such date being  referred  to herein as a  "Quarterly
Dividend Payment  Date"),commencing on the first Quarterly Dividend Payment Date
after the first  issuance  of a share or  fraction  of a share of  Participating
Preferred  Stock,  in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $230.00 or (b) 1,000 times the  aggregate per share amount of
all cash  dividends and 1,000 times the  aggregate per share amount  (payable in
kind) of all  non-cash  dividends or other  distributions  other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding  shares of
Common Stock (by  reclassification or otherwise),  declared on the Common Stock,
par value of One Dollar  ($1.00)  per share,  of the  Corporation  (the  "Common
Stock") since the immediately  preceding  Quarterly  Dividend  Payment Date, or,
with  respect to the first  Quarterly  Dividend  Payment  Date,  since the first
issuance of any share or fraction of a share of Participating Preferred Stock.

                           (b)      On or after the first issuance  of any share
or fractional  share of  Participating  Preferred  Stock,  no dividend on Common
Stock shall be declared unless concurrently therewith a dividend or distribution
is declared on the  Participating  Preferred  Stock as provided in paragraph (a)
above;  and the  declaration  of any such  dividend on the Common Stock shall be
expressly  conditioned  upon  payment  or  declaration  of and  provision  for a
dividend on the Participating Preferred Stock as above provided. In the event no
dividend or distribution shall have been declared on the Common Stock during the
period  between any  Quarterly  Dividend  Payment  Date and the next  subsequent
Quarterly  Dividend  Payment  Date,  a  dividend  of  $230.00  per  share on the
Participating  Preferred Stock shall  nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.



<PAGE>


                           (c)      Dividends  shall   begin  to accrue   and be
cumulative  on  outstanding  shares of  Participating  Preferred  Stock from the
Quarterly  Dividend Payment Date next preceding the date of issue of such shares
of  Participating  Preferred  Stock,  unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in which
case  dividends  on such shares  shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record  date for the  determination  of holders of shares of
Participating  Preferred  Stock  entitled  to receive a quarterly  dividend  and
before such  Quarterly  Dividend  Payment  Date,  in either of which events such
dividends shall begin to accrue and be cumulative  from such Quarterly  Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. The Board of
Directors  may fix a record date for the  determination  of holders of shares of
Participating  Preferred  Stock  entitled  to  receive  payment  of  a  dividend
distribution  declared  thereon,  which record date shall b no more than 30 days
prior to the date fixed for the payment thereof.

                  3.  Dissolution,  Liquidation  and Winding Up. In the event of
any  voluntary  or  involuntary  dissolution,  liquidation  or winding up of the
affairs of the Corporation  (hereinafter  referred to as a  "Liquidation"),  the
holders of  Participating  Preferred  Stock shall receive at least $1,000.00 per
share,  plus an amount equal to accrued and unpaid  dividends and  distributions
thereon, whether or not declared, to the date of such payment, provided that the
holders of shares of Participating  Preferred Stock shall be entitled to receive
at least an aggregate amount per share equal to 1,000 times the aggregate amount
to be  distributed  per share to  holders of Common  Stock  (the  "Participating
Preferred Liquidation Preference").

                  4.  Voting  Rights.  The  holders  of shares of  Participating
Preferred Stock shall have the following voting rights:

                           (a)      Each share of  Participating  Preferred Stoc
shall entitle the holder  thereof to five thousand  (5,000) votes on all matters
submitted  to a vote of the  stockholders  of the  Corporation,  except  that no
holder of Participating  Preferred Stock shall be entitled to exercise more than
one  thousand  (1,000)  votes on any such  matter  in  respect  of any  share of
Participating  Preferred  Stock if such  holder  would  have  been  entitled  to
exercise  no more than one vote on any such  matter in  respect  of any share of
Common  Stock under  Article  IV.B of the  Articles of  Incorporation,  had such
shares of Participating Preferred Stock been shares of Common Stock.

                           (b)      Except as  otherwise  provided  herein,  or
by law, the Articles of  Incorporation  or the By-laws of the  Corporation,  the
holders of shares of Participating  Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.

                           (c)      If   and   whenever    dividends    on   the
participating  Preferred  Stock  shall be in  arrears  in an amount  equal to si
quarterly  dividend  payments,  then  and  in  such  event  the  holders  of the
Participating  Preferred  Stock,  voting  separately as a class  (subject to the
provisions  of  subparagraph  (d)  below),  shall be entitled at the next annual
meeting  of  the  stockholders  or at any  special  meeting  to  elect  two  (2)
directors.  Each share of Participating Preferred Stock shall be entitled to one
vote, and holders of fractional shares shall have the right to a fractiona vote.
Upon  election,   such  directors  shall  become  additional  directors  of  the
Corporation  and the  authorized  number of directors of the  Corporation  shall
thereupon be automatically increased by such number of directors.  Such right of
the holders of Participating Preferred Stock to elect directors may be exercised
until all dividends in default on the  Participating  Preferred Stock shall have
been paid in full, and dividends for the current  dividend  period  declared and
funds  therefor  set  apart,  and when so paid and set  apart,  the right of the
holders of Participating Preferred Stock to elect such number of directors shall
cease, the term of such directors shall thereupon terminate,  and the authorized
number of directors of the Corporation  shall thereupon  return to the number of
authorized  directors  otherwise  in  effect,  but  subject  always  to the same
provisions for the vesting of such special voting rights in the case of any such
future dividend default or defaults. The fact that

<PAGE>

dividends  have been paid and set apart as  required by the  preceding  sentence
shall be  evidenced by a  certificate  executed by the  President  and the chief
financial  officer of the  Corporation  and delivered to the Board of Directors.
The directors so elected by holders of Participating Preferred Stock shall serve
until the  certificate  described  in the  preceding  sentence  shall  have been
delivered to the Board of Directors or until their  respective  successors shall
be elected or appointed and qualify.

                  At any time  when  such  special  voting  rights  have been so
vested in the holders of the Participating Preferred Stock, the Secretary of the
Corporation may, and upon the written request of the holders of record of 10% or
more  of  the  number  of  shares  of the  Participating  Preferred  Stock  then
outstanding  addressed  to  such  Secretary  at  the  principal  office  of  the
Corporation in the State of Iowa,  shall,  call a special meeting of the holders
of the  Participating  Preferred  Stock for the election of the  directors to be
elected by them as hereinabove  provided, to be held in the case of such written
request  within forty (40) days after  delivery of such  request,  and in either
case to be held at the  place  and upon the  notice  provided  by law and in the
By-laws  of the  Corporation  for  the  holding  of  meetings  of  stockholders;
provided,  however,  that the  Secretary  shall not be  required  to call such a
special  meeting (i) if any such request is received  less than ninety (90) days
before  the date  fixed  for the next  ensuing  annual  or  special  meeting  of
stockholders or (ii) if at the time any such request is received, the holders of
Participating Preferred Stock are not entitled to elect such directors by reason
of the occurrence of an event  specified in the third  sentence of  subparagraph
(d) below.

                           (d)      if,   at   any   time   when  the holders of
Participating  Preferred Stock are entitled to elect  directors  pursuant to the
foregoing  provisions  of  this  paragraph  4,  the  holders  of any one or more
additional  series of Preferred  Stock are entitled to elect directors by reason
of any default or event specified in the Articles of Incorporation, as in effect
at the time of the designation for such series,  and if the terms for such other
additional  series so permit,  the voting  rights of the two or more series then
entitled  to vote shall be combined  (with each series  having a number of votes
proportional to the aggregate liquidation preference of its outstanding shares).
In such case, the holders of Participating Preferred Stock and of all such other
series then entitled so to vote, voting as a class,  shall elect such directors.
If the holders of any such other series have elected such directors prior to the
happening  of the  default or event  permitting  the  holders  of  Participating
Preferred  Stock to elect  directors,  or prior  to a  written  request  for the
holding of a special  meeting being received by the Secretary of the Corporation
from  the  holders  of not  less  than 10% of the  then  outstanding  shares  of
Participating Preferred Stock, then such directors so previously elected will be
deemed to have been  elected by and on behalf of the  holders  of  Participating
Preferred Stock as well as such other series,  without prejudice to the right of
the  holders of  Participating  Preferred  Stock to vote for  directors  if such
previously  elected directors shall resign,  cease to serve or fail to stand for
reelection  while the holders of  Participatin g Preferred Stock are entitled to
vote. If the holders of any such other series are entitled to elect in excess of
two (2) directors,  the  Participating  Preferred Stock shall not participate in
the  election of more than two (2) such  directors,  and those  directors  whose
terms first expire shall be deemed to be the directors elected by the holders of
Participating Preferred Stock; provided that, if at the expiration of such terms
the  holders  of  Participating  Preferred  Stock  are  entitled  to vote in the
election of directors  pursuant to the  provisions of this paragraph 4, then the
Secretary  of the  Corporation  shall call a meeting  (which  meeting may be the
annual meeting or special  meeting of  stockholders  referred to in subparagraph
(c)) of holders of  Participating  Preferred  Stock for the  purpose of electing
replacement directors (in accordance with the provisions of this paragraph 4) to
be held on or prior to the time of expiration of the expiring  terms referred to
above.

                           (e)      Except  as  otherwise   set  forth herein or
required by law, the Articles of Incorporation or the By-laws of the Corporation
holders of Participating  Preferred Stock shall have no special voting rights an
their consent  shall not be required  (except to the extent they are entitled to
vote with  holders of Common  Stock as set forth  herein)  for the taking of any
corporate  action.   No  consent  of  the  holders  of  outstanding   shares  of
Participating Preferred Stock at any time outstanding shall be required in order
to permit the Board of  Directors  to:  (i)  increase  the number of  authorized
shares of Participating Preferred Stock or to decrease such number to a

<PAGE>


number  not below the sum of the  number  of shares of  Participating  Preferred
Stock then  outstanding and the number of shares with respect to which there are
outstanding rights to purchase; or (ii) to issue Preferred Stock which is senior
to the  Participating  Preferred Stock,  junior to the  Participating  Preferred
Stock or on a parity with the Participating Preferred Stock.

                  5.  Redemption.  The shares of  Participating  Preferred Stock
shall not be redeemable.

                  6. Conversion Rights. The Participating Preferred Stock is not
convertible into Common Stock or any other security of the Corporation.




<PAGE>





                              Articles of Amendment
                                     of the
              Third Restated and Amended Articles of Incorporation
                                       of
                       Pioneer Hi-Bred International, Inc.




To the Secretary of State
   of the State of Iowa

         Pursuant to the  provisions  of Section  490.1006 of the Iowa  Business
Corporation  Act, the undersigned  corporation  hereby amends its Third Restated
and Amended Articles of Incorporation (the "Articles of Incorporation"), and for
that purpose, submits the following statement:

     1.   The name of the corporation is Pioneer Hi-Bred International, Inc.
          (the "Corporation").

     2.  On August 5, 1997 the  Corporation  adopted an  amendment  to its Third
         Restated and Amended  Articles of  Incorporation,  the text of which is
         attached hereto as Exhibit A.

     3.  The  amendment  was  duly  adopted  by the  Board of  Directors  of the
         Corporation without shareholder  approval,  as shareholder  approval is
         not  required   pursuant  to  Section  490.602  of  the  Iowa  Business
         Corporation Act.

Dated:  September 9th, 1997.

                                            PIONEER HI-BRED INTERNATIONAL, INC.



                                            By:  /s/ John D. James
                                                 John D. James
                                                 Senior Vice President



<PAGE>


                                    Exhibit A


                    CERTIFICATE OF THE DESIGNATIONS, POWERS,
                    PREFERENCES AND RELATIVE, PARTICIPATING,
                OPTIONAL OR OTHER RIGHTS, AND THE QUALIFICATIONS,
                     LIMITATIONS OR RESTRICTIONS THEREOF, OF

                      SERIES A CONVERTIBLE PREFERRED STOCK

                                       OF

                       PIONEER HI-BRED INTERNATIONAL, INC.

Pioneer Hi-Bred  International,  Inc., an Iowa corporation (the  "Corporation"),
does hereby certify that the Board of Directors of the Corporation  duly adopted
the following resolution, at a meeting duly convened and held on August 5, 1997,
in  respect  of a series of  Preferred  Stock of the  Corporation,  pursuant  to
authority   conferred   upon  the  Board  by  Article  IV  of  the  Articles  of
Incorporation  of the  Corporation  and in  accordance  with  Section 602 of the
Business Corporation Act of the State of Iowa:

BE IT  RESOLVED,  that  the  issuance  of a  series  of  Preferred  Stock of the
Corporation  is  hereby  authorized,   and  the  designation,   amount,  powers,
preferences and relative,  participating,  optional and other special rights and
qualifications,  limitations  and  restrictions  thereof,  of the shares of such
series of Preferred Stock of the Corporation, are hereby fixed as follows:

1. Designation;  Class and Amount; Certain Definitions.  The series of Preferred
Stock, the issuance of which is hereby authorized, shall comprise 200,000 shares
the distinctive  serial  designation of which shall be "Preferred Stock,  Series
A", which is sometimes  herein  referred to as "Series A  Convertible  Preferred
Stock". Each share of Series A Convertible Preferred Stock shall be identical in
all respects with all other shares of Series A Convertible  Preferred Stock. The
number of shares of Series A Convertible  Preferred Stock which are purchased or
otherwise  acquired by the  Corporation  or converted into Common Stock shall be
canceled  and  shall  revert  to  authorized  but  unissued  shares  of Series A
Convertible Preferred Stock undesignated as to series. The Corporation shall not
issue, sell or otherwise transfer shares of Series A Convertible Preferred Stock
to any Person other than the members of the Investor Group.  Certain capitalized
terms used herein have the meanings specified therefor in Section 10 below.

2. Dividends.  (a) Except as set forth in the Investment Agreement,  each Holder
of shares of Series A Convertible  Preferred  Stock shall  participate  with the
holders of Common Stock in all Dividends,  when, as and if declared by the Board
and paid or distributed by the  Corporation on or in respect of the Common Stock
on a share for share basis and in like tenor and forms as the  Dividend  paid on
the Common Stock as if all shares of Series A Convertible  Preferred  Stock were
converted into the number of shares of Common Stock (whether or not the Series A
Convertible  Preferred  Stock is then so  convertible)  calculated in accordance
with Section 6 below,  immediately  prior to the record date for such  Dividend.
Except as set forth above,  holders of shares of Series A Convertible  Preferred
Stock  shall not be  entitled  to receive  any  dividends.  Except to the extent
payable in respect of dividends paid on the Common Stock, no interest, or sum of
money in lieu of interest,  shall be payable in respect of any dividend  payment
or payments on shares of Series A Convertible Preferred Stock.


<PAGE>


(b)  Dividends on the Series A  Convertible  Preferred  Stock in respect of each
Dividend  shall be  payable,  when and if  declared  by the Board of  Directors,
concurrently  with each date of payment  (each such date,  a  "Dividend  Payment
Date") by the Corporation of Dividends on the Common Stock. Dividends payable in
cash  shall  be paid by wire  transfer  in  immediately  available  funds to the
accounts  designated by the respective  Holders in written  notices given to the
Corporation  at least two  Business  Days prior to the  payment  date or by such
other means as may be agreed to by the Corporation and the respective Holders.

(c) The  Corporation  will cause written notice of each Dividend on the Series A
Convertible Preferred Stock to be given to each Holder within five Business Days
after it is determined by the Board of Directors.

3. Voting Rights. (a) Except as otherwise provided herein or as required by law,
the Holders of Series A Convertible Preferred Stock shall not be entitled to any
Vote.

(b) At any  meeting  called  for the  purpose of voting on (or acting by written
consent  with  respect  to) any matter to be voted upon by the holders of Common
Stock of the  Corporation,  the  holders  of  shares  of  Series  A  Convertible
Preferred Stock and the holders of shares of Common Stock shall vote together as
one  class  on all  matters  so  submitted  to a  vote  of  stockholders  of the
Corporation.  At any such  meeting  or in  connection  with any such  action  by
written consent, each share of Series A Convertible Preferred Stock shall carry,
as of the record date  applicable  to such vote,  a number of votes equal to the
Per Share Vote Amount as calculated by the Corporation for such meeting.

(c)  In  accordance  with  Section  6.2(b)  of  the  Investment  Agreement,  the
Corporation  will cause written notice of any vote as to which holders of Common
Stock  are  entitled  to vote as a  separate  class or  voting  group  under the
Articles  of  Incorporation  or Iowa Law (a "Class  Vote"),  to be given to each
Holder at least 15 Business Days prior to such Class Vote.

4.  Liquidation  Preference.  In the  event  of  any  voluntary  or  involuntary
liquidation,  dissolution or winding up of the affairs of the  Corporation,  the
Holders of shares of Series A Convertible Preferred Stock then outstanding shall
be entitled,  for each share of Series A Convertible Preferred Stock, to be paid
out  of  the  assets  of  the  Corporation  available  for  distribution  to its
stockholders  the amount of cash or other  property that would be payable on the
number of shares of Common Stock then issuable upon  conversion of such share of
Series A Convertible  Preferred  Stock (whether or not then  convertible)  (such
amount payable being adjusted  appropriately  to reflect any stock split,  stock
dividend,  reverse stock split, or any transaction  with comparable  effect upon
the Common  Stock)  (the  "Liquidation  Preference").  This  entitlement  of the
Holders of shares of Series A Convertible  Preferred  Stock, to the extent equal
to $.01  for each  share  of  Series A  Convertible  Preferred  Stock,  shall be
satisfied before any similar payment shall be made or any assets  distributed to
the  holders of the  Common  Stock or any other  security  junior in rank to the
Series A  Convertible  Preferred  Stock as to  distribution  of assets upon such
dissolution,  liquidation  or winding up and  otherwise  shall be satisfied on a
pari passu  basis with the  holders  of the Common  Stock.  If the assets of the
Corporation are not sufficient to pay in full the liquidation  payments  payable
to all  of the  Holders  of the  outstanding  shares  of  Series  A  Convertible
Preferred Stock, then the Holders of all such shares shall share ratably in such
distribution of assets in accordance  with the  liquidation  preference to which
they are entitled. For the purposes of this section, neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration)  of all or  substantially  all of the  property  or assets of the
Corporation nor the  consolidation or merger of the Corporation with one or more
other corporations  shall be deemed to be a liquidation,  dissolution or winding
up, voluntary or involuntary,  unless such voluntary sale, conveyance,  exchange
or  transfer  shall be in  connection  with a  dissolution  or winding up of the
business of the Corporation.


<PAGE>


5. Restrictions on Transfer.  The shares of Series A Convertible Preferred Stock
are  subject  to the  provisions  of the  Investment  Agreement  (including  the
provisions thereof restricting transfer of such stock).

6. Conversion. (a) (i) Concurrently with the transfer of Beneficial Ownership of
any share of Series A Convertible  Preferred  Stock to any Person other than the
Investor or another member of the Investor  Group or Other  Investor  Affiliate,
such share of Series A  Convertible  Preferred  Stock shall convert into [100]**
fully-paid and  non-assessable  shares of Common Stock (as adjusted  pursuant to
Section 6(c)), in accordance with the procedures  provided in clause (b) of this
Section

                  (ii) At any time (x) at the direction of the Corporation,  but
only if the Corporation  intends to recommend approval of a Voting Amendment (as
defined in the Investment Agreement),  and (y) at the direction of the Investor,
following the approval and effectiveness of a Voting Amendment, shares of Series
A Convertible  Preferred Stock shall be mandatorily  convertible into fully-paid
and  non-assessable  shares  of  Common  Stock,  with  each  share  of  Series A
Convertible  Preferred  Stock being converted into [100]* shares of Common Stock
(as adjusted pursuant to Section 6(c)).

                  (iii) The Investor  shall have the right,  in accordance  with
Section  8.8 of the  Investment  Agreement,  at any time that the  Investor  may
exercise the Optional Conversion Right (as defined in the Investment  Agreement)
in accordance  with the  Investment  Agreement,  to cause all shares of Series A
Convertible  Preferred Stock to be converted into fully-paid and  non-assessable
shares of Common Stock, with each share of Series A Convertible  Preferred Stock
being  converted  into [100]*  shares of Common Stock (as  adjusted  pursuant to
Section 6(c)).

                  (iv) At any time that all  outstanding  shares of Common Stock
(or whatever  security  received upon  conversion or exchange  thereof) have the
same vote per share, if any, without any time phase voting, all shares of Series
A  Convertible   Preferred  Stock  shall  be  convertible  into  fully-paid  and
non-assessable  shares  of  Common  Stock,  with  each  such  share of  Series A
Convertible  Preferred  Stock being converted into [100]* shares of Common Stock
(as adjusted pursuant to Section 6(c)).

                  (v) Except as set forth in this  Section  6(a),  the shares of
Series A Convertible  Preferred  Stock are not  convertible at the option of the
Holder thereof.

(b) (i) Any Holder of shares of Series A Convertible  Preferred  Stock  required
(or in the case of clauses (iii) or (iv) above requesting) to convert any or all
such shares into Common Stock shall surrender the certificate(s) evidencing such
shares of Series A  Convertible  Preferred  Stock of the Holder at the office of
the  transfer  agent  appointed  for  the  purpose  of  such  conversion  by the
Corporation.  Such  surrendered  certificate(s),  if the  Corporation  shall  so
require,  shall be duly endorsed to the  Corporation or in blank, or accompanied
by proper instruments of transfer to the Corporation or in blank.

                  (ii) The Corporation shall, within one Business Day after such
surrender of certificates  evidencing  shares of Series A Convertible  Preferred
Stock  accompanied by written notice and in compliance with any other conditions
contained herein, issue and deliver, or cause to be issued and delivered, to the
Person(s) for whose account such  certificate(s)  evidencing  shares of Series A
Convertible  Preferred Stock were so  surrendered,  or to the nominee(s) of such
Person(s),  certificates  representing the number of full shares of Common Stock
----------
* Number of shares of  Common  Stock each share is convertible  into  is subject
to  adjustment   prior  to  Closing   in the  event of a  stock   split,  stock
combination  or  similar  adjustment  in the  number of  shares of Common  Stock
outstanding.
<PAGE>


to  which  such  Person  shall  be  entitled  pursuant  to  the  then-applicable
conversion  rate. Such conversion  shall be deemed to have been made on the date
of  such  surrender  of  the  certificate(s)   evidencing  shares  of  Series  A
Convertible Preferred Stock to be converted (the "Surrender Date") and the 
Person(s)  entitled to receive the Common Stock  deliverable  upon conversion of
such Series A Convertible  Preferred  Stock shall be treated for all purposes as
the  record  holder(s)  of such  Common  Stock  on  such  date  and  thereafter.
Conversion of Series A Convertible  Preferred Stock may otherwise be achieved in
accordance with such procedures as the Corporation and a majority of the Holders
may agree.

                  (iii) In the  event  that  fewer  than all  shares of Series A
Convertible  Preferred Stock represented by a surrendered  certificate are to be
converted  hereunder,  a new  certificate  shall be issued at the  Corporation's
expense  representing the shares of Series A Convertible  Preferred Stock not so
converted.

                  (iv) In connection with the conversion of any shares of Series
A Convertible  Preferred  Stock, no fractions of shares of Common Stock shall be
issued,  but in lieu  thereof the  Corporation  shall pay a cash  adjustment  in
respect  of such  fractional  interest  in an  amount  equal to such  fractional
interest multiplied by the Market Price (as defined in the Investment Agreement)
per  share  of  Common  Stock  on the day on  which  such  shares  of  Series  A
Convertible Preferred Stock are deemed to have been converted.

(c) The conversion rate shall be adjusted from time to time as follows:

                  (i) In case the Corporation shall, at any time or from time to
time  while  any of the  shares  of  Series A  Convertible  Preferred  Stock are
outstanding,  (A) subdivide or reclassify its outstanding shares of Common Stock
into a larger  number of shares,  or (B) combine or reclassify  its  outstanding
shares of Common Stock into a smaller number of shares,  the conversion  rate in
effect  immediately prior to such action shall be adjusted so that the Holder of
any shares of Series A Convertible  Preferred Stock  thereafter  surrendered for
conversion  shall be entitled  to receive  the number of shares of Common  Stock
which such Holder would have owned or have been entitled to receive  immediately
following  such action had such shares of Series A Convertible  Preferred  Stock
been converted  immediately  prior thereto.  An adjustment made pursuant to this
Section 6(c)(i) shall become effective  immediately  after the close of business
on the effective date of a subdivision,  reclassification or combination. If, as
a result of an adjustment made pursuant to this Section  6(c)(i),  the Holder of
any shares of Series A Convertible  Preferred Stock  thereafter  surrendered for
conversion  shall  become  entitled to receive  shares of two or more classes of
capital  stock  of the  Corporation,  the  Board  of  Directors  shall  make  an
appropriate  allocation of the adjusted  conversion rate between or among shares
of such classes of capital  stock in  accordance  with the  entitlements  of the
Common Stock  underlying the Series A Convertible  Preferred Stock in connection
with such adjustment.

                  (ii)  Whenever  an  adjustment  in  the  conversion   rate  is
required,  the Corporation shall forthwith place on file with its Transfer Agent
a statement signed by its Chief Executive Officer,  Chief Financial Officer or a
Vice President and by its Secretary, Assistant Secretary, Treasurer or Assistant
Treasurer,  stating the adjusted  conversion rate determined as provided herein.
Such  statements  shall set forth in  reasonable  detail  such facts as shall be
necessary to show the reason and the manner of computing such adjustment.

(d) (i) The Corporation shall at all times reserve and keep available, free from
preemptive  rights,  out of its  authorized and unissued  stock,  such number of
shares of its Common  Stock as shall from time to time be  sufficient  to effect
the conversion of all shares of Series A Convertible  Preferred  Stock from time
to time  outstanding,  solely for the purpose of effecting such conversion.  The
Corporation  shall,  from time to time, in accordance with the laws of the State
of Iowa, increase the authorized number of shares of Common Stock if at any time

<PAGE>
the  number of shares of  authorized  and  unissued  Common  Stock  shall not be
sufficient to permit the conversion of all the then outstanding shares of Series
A Convertible Preferred Stock.

                  (ii) The  Corporation  will pay any and all stamp and transfer
taxes that may be payable in respect of the  issuance  or  delivery of shares of
Common Stock upon  conversion of shares of Series A Convertible  Preferred Stock
pursuant hereto. The Corporation shall not, however,  be required to pay any tax
which may be payable in respect of any  transfer  involved in the  issuance  and
delivery of shares of Common Stock in a name other than that in which the shares
of Series A Convertible Preferred Stock so converted were registered and no such
issuance or delivery shall be made unless and until the person  requesting  such
issuance  has  paid  to  the  Corporation  the  amount  of any  such  tax or has
established to the satisfaction of the Corporation that such tax has been paid.

(e) In case of (i) any  reclassification  or  change  of  outstanding  shares of
Common Stock (other than a change in par value or from par value to no par value
or  from  no  par  value  to par  value,  or as a  result  of a  subdivision  or
combination) or (ii) any  consolidation or merger of the Corporation with one or
more  other  corporations  (other  than a  consolidation  or merger in which the
Corporation  is the  continuing  corporation  and which  does not  result in any
reclassification  or change of outstanding  shares of Common Stock issuable upon
conversion  of  Series A  Convertible  Preferred  Stock)  or  (iii)  any sale or
conveyance to another corporation or other entity of all or substantially all of
the  property  of the  Corporation,  then  the  Corporation,  or such  successor
corporation  or  other  entity,  as the  case  may be,  shall  make  appropriate
provision  so that the  holder of each share of Series A  Convertible  Preferred
Stock then outstanding  shall have the right to convert such share into the kind
and amount of shares of stock or other  securities and property  receivable upon
such consolidation,  merger, sale,  reclassification,  change or conveyance by a
holder of the number of shares of Common  Stock into which such shares of Series
A Convertible  Preferred  Stock might have been converted  immediately  prior to
such  consolidation,  merger,  sale,  reclassification,  change  or  conveyance,
subject to adjustment which shall be as nearly  equivalent as may be practicable
to the adjustments  provided for in Section 6(c). If the holders of Common Stock
are entitled to elect the  consideration  payable  pursuant  any  consolidation,
merger,  sale,  conveyance or other  transaction  or event set forth above,  the
Holders also shall be entitled to elect between such forms of consideration. The
provisions of this paragraph shall apply similarly to successive consolidations,
mergers, sales, conveyances or other transactions or events.

(f)  Whenever  the  number of shares of Common  Stock  into  which each share of
Series A Convertible  Preferred  Stock is convertible is adjusted as provided in
this Section 6, the  Corporation  shall promptly mail to the Holders a notice in
accordance  with  Section 8 below  stating  that the  number of shares of Common
Stock  into  which  the  shares  of  Series A  Convertible  Preferred  Stock are
convertible  has been  adjusted  and  setting  forth the new number of shares of
Common Stock (or describing the new stock,  securities,  cash or other property)
into which each share of Series A Convertible Preferred Stock is convertible, as
a result of such  adjustment,  a brief  statement  of the facts  requiring  such
adjustment  and  the  computation  thereof,  and  when  such  adjustment  became
effective.

7. Limited  Priority.  The Series A Convertible  Preferred  Stock shall,  to the
extent of the  Liquidation  Preference set forth in Section 4, be senior in rank
as to distribution of assets upon any liquidation,  dissolution or winding up of
the  affairs of the  Corporation,  to the Common  Stock,  or any class of equity
securities  of the  Corporation  which by its terms are  junior to the  Series A
Convertible  Preferred  Stock,  unless  the  Holders  of 66 2/3  percent  of the
outstanding  shares of the Series A Convertible  Preferred Stock shall otherwise
consent.

8. Notices.  The  Corporation  shall provide notice to each Holder of any action
taken  or  proposed  to be taken or any  determination  made by the  Corporation
and/or the Holder under the terms of this Certificate of Designations. Notice of
any such action or  determination  by the Corporation  and/or the Holder and all

<PAGE>
other  notices and other  communications  provided  for in this  Certificate  of
Designations shall be delivered by facsimile and by reputable overnight courier,

(a)   If to the Company, to:

Pioneer Hi-Bred International, Inc,
700 Capital Square
Des Moines, Iowa  50309
Attention:  General Counsel
Telephone:  515-248-4800
Telecopier:  515-248-4844

with a copy to:

Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Facsimile:  (212) 859-4000
Attn.:  Stephen Fraidin

or such other address as the Corporation shall have furnished to the Holders in
writing,

(b) if to a Holder, to the address and facsimile number of such Holder listed on
the Stock Books of the Corporation.

9. Definitions. Certain capitalized terms are used herein as defined below:

"Affiliate" of a Person has the meaning set forth in Rule 12b-2 under the
Exchange Act.

"Articles of  Incorporation"  means the Third  Restated and Amended  Articles of
Incorporation of the Corporation, as amended from time to time.

"Beneficially  Owned" with respect to any  securities  means having  "beneficial
ownership" of such  securities (as  determined  pursuant to Rule 13d-3 under the
Exchange Act, as in effect on the date hereof,  without limitation by the 60-day
provision in paragraph (d)(1)(i) thereof).  The terms "Beneficial Ownership" and
"Beneficial Owner" have correlative meanings.

"Board" means the Board of Directors of the Corporation.

"Business  Day" means any day other than a Saturday,  Sunday,  or a day on which
banking  institutions in the State of Iowa are authorized or obligated by law or
executive order to close.

"Certificate of Designations"  means this  Certificate of Designations,  Powers,
Preferences  and  Relative,  Participating,  Optional or other  Rights,  and the
Qualifications,  Limitations  or  Restrictions  Thereof,  creating  the Series A
Convertible Preferred Stock.

"Common Stock" means the Common Stock, par value $1.00 per share, of the
Corporation.

"Common  Voting Power"  means,  in respect of any record date for any meeting of
stockholders  (or action by written  consent in lieu of a meeting) the aggregate
Votes  represented  by all then  outstanding  Voting  Securities  other than the
Series A  Convertible  Preferred  Stock as determined by the Board in accordance
with the  procedures  set forth in the  Articles of  Incorporation  based on the
actual Votes  entitled to be voted at such meeting  (excluding any estimation of
any kind,  including as to who would have been  entitled to 5 Votes per share if
such shareholders had taken the requisite steps to obtain such Vote).

"Dividend"  means any  dividend or  distribution  on or in respect of the Common
Stock of the Corporation,  whether in cash, additional shares of Common Stock or
other property.


<PAGE>


"Exchange  Act" means the Securities  Exchange Act of 1934, as amended,  and the
regulations promulgated thereunder.

"Holder"  means a holder of record of a share or shares of Series A  Convertible
Preferred Stock.

"Investment Agreement" means the Agreement,  dated as of August 6, 1997, between
the Investor and the Corporation, as amended and/or restated from time to time.

"Investor" means E.I. du Pont de Nemours and Company.

"Investor Group" shall have the meaning set forth in the Investment Agreement.

"Investor Group Total Ownership  Percentage" means, with respect to the Investor
Group  calculated  at a  particular  point in time,  the ratio,  expressed  as a
percentage, of (a) the total number of shares of Common Stock Beneficially Owned
by the  Investor  Group and  issuable  upon  conversion  of (whether or not then
convertible),  or otherwise  constituting the economic equivalent of, all Common
Securities (as defined in the Investment  Agreement)  Beneficially  Owned by the
Investor  Group,  over (b) the total  number of  shares  of  Common  Stock  then
outstanding  and the number of shares of Common Stock  issuable upon  conversion
(whether or not then  convertible)  of, or otherwise  constituting  the economic
equivalent  of, all  outstanding  Common  Securities;  provided that in no event
shall the Investor Group Total  Ownership  Percentage of all Holders of Series A
Convertible Preferred Stock be greater than 20%.

"Iowa Law" shall mean the Business Corporation Act of the State of Iowa.

"Liquidation Preference" has the meaning specified in Section 4 above.

"Other Investor Affiliate" shall have the meaning set forth in the Investment
Agreement.

"Per Share Vote  Amount"  means in respect of any record date for any meeting of
stockholders  (or action by written consent in lieu of a meeting) that number of
Votes per share of Series A Convertible  Preferred  Stock equal to (x) the Total
Preferred Vote Amount as of such record date amount divided by (y) the number of
shares of Series A Convertible  Preferred  Stock  outstanding  as of such record
date.

"Person" means any individual,  corporation, company, association,  partnership,
joint venture, limited liability company, trust or unincorporated  organization,
group  (within the meaning of Rule 13d-5 under the Exchange Act) or a government
or any agency or political subdivision thereof.

"Series A Convertible  Preferred  Stock" has the meaning  specified in Section 1
above.

"Stock Books" means the stock transfer books of the Corporation  relating to its
Common Stock and Preferred Stock.

"Subsidiary"  means, as to any Person,  any other Person more than fifty percent
(50%) of the shares of the voting stock or other  voting  interests of which are
owned or  controlled,  or the ability to select or elect more than fifty percent
(50%) of the directors or similar managers is held,  directly or indirectly,  by
such first Person or one or more of its Subsidiaries or by such first Person and
one or more of its  Subsidiaries.  A Subsidiary  that is directly or  indirectly
wholly-owned by another Person except for directors'  qualifying shares shall be
deemed wholly-owned for purposes of this Agreement.

"Surrender Date" has the meaning specified in Section 6 above.


<PAGE>



"13D  Group"  shall  mean any  group  of  Persons  who,  with  respect  to those
acquiring,  holding,  voting or disposing of Voting Securities  would,  assuming
ownership of the requisite  percentage  thereof, be required under Section 13(d)
of the Exchange Act and the rules and regulations thereunder to file a statement
on Schedule 13D with the Securities and Exchange Commission as a "person" within
the meaning of Section  13(d)(3) of the Exchange Act, or who would be considered
a "person" for purposes of Section 13(g)(3) of the Exchange Act.

"Total  Preferred  Vote  Amount"  means,  in respect of the record  date for any
meeting (or action by written  consent in lieu of a meeting) of  shareholders of
the Corporation to vote on any matter, an aggregate number of Votes equal to (a)
the Common Voting Power as of such record date multiplied by (b) a fraction, the
numerator of which is the Investor Group Total Ownership  Percentage  (expressed
as a fraction  carried to two  decimal  places) as of such  record  date and the
denominator of which is 1.00 minus the Investor Group Total Ownership Percentage
(expressed as a fraction  carried to two decimal places) as of such record date;
provided that in no event shall the Total  Preferred Vote Amount be greater than
20% of Total Voting Power.

"Total  Voting  Power"  means in respect of any record  date for any  meeting of
stockholders  (or action by written  consent in lieu of a meeting) the aggregate
Votes represented by all then outstanding Voting Securities as determined by the
Board  in  accordance   with  the  procedures  set  forth  in  the  Articles  of
Incorporation  based on the actual  Votes  entitled to be voted at such  meeting
(excluding  any  estimation  of any kind,  including  as to who would  have been
entitled to 5 Votes per share if such shareholders had taken the requisite steps
to obtain such Vote).

"Votes"  shall mean,  at any time,  with respect to any Voting  Securities,  the
total  number of votes that would be  entitled to be cast by the holders of such
Voting  Securities  generally  (by the  terms  of such  Voting  Securities,  the
Articles of  Incorporation  or any certificate of  designations  for such Voting
Securities)  in a meeting  for the  election  of  directors  held at such  time,
including the votes that would be able to be cast by holders of shares of Series
A Convertible Preferred Stock in accordance with the procedures set forth in the
Articles of  Incorporation  based on the actual  number of Votes  entitled to be
voted at such meeting (excluding any estimation of any kind, including as to who
would have been entitled to 5 Votes per share if such shareholders had taken the
requisite steps to obtain such Vote).
<PAGE>

"Voting  Securities"  means the shares of Common Stock, the Series A Convertible
Preferred  Stock and any other  securities of the  Corporation  entitled to vote
generally for the election of directors, and any securities (other than employee
stock options) which are convertible  into, or exercisable or exchangeable  for,
Voting Securities.

IN WITNESS  WHEREOF,  Pioneer  Hi-Bred  International,  Inc.,  has  caused  this
Certificate to be made under the seal of the Corporation and signed and attested
by the undersigned officers of the Corporation this 9th day of September, 1997.

                       PIONEER HI-BRED INTERNATIONAL, INC.


                                  By:          /s/ John D. James
                                      Name:    John D. James
                                      Title:   Senior Vice President

(Corporate Seal)

Attest:

By:          /s/ Jerry L, Chicoine
    Name:    Jerry L. Chicoine
   Title:    Senior Vice President and CFO









<PAGE>











                           ARTICLES OF CORRECTION FOR
                       PIONEER HI-BRED INTERNATIONAL, INC.

TO:  SECRETARY OF STATE OF THE STATE OF IOWA:

         Pursuant  to ss.  490.124 of the Iowa  Business  Corporation  Act,  the
undersigned corporation adopts the following Articles of Correction:

         1.        The name of the corporation is Pioneer Hi-Bred International,
                   Inc.

         2.        A description of the document to be corrected is as follows:

                  Articles of Amendment of the Third  Restated and Amended
                  Articles of  Incorporation of Pioneer  Hi-Bred  International,
                  Inc. in the form of the  Certificate  of  Designations
                  attached as Exhibit A thereto.

         3.       The  document to be  corrected  was filed by the  Secretary of
                  State on September 10, 1997.

         4.       The  incorrect  statements in the document to be corrected are
                  contained in  paragraphs  (i),  (iii) and (iv) of Section 6(a)
                  thereof and in the case of each such  paragraph  the incorrect
                  item is the  reference to "[100]*"  appearing  therein and the
                  footnote referred to by each such reference.

         5.       The document was incorrect  because it should have read as set
                  forth  below in  paragraph  6 and  because  the  corresponding
                  footnote should in each case have been deleted.

         6.       The following is the correct  statement and it should  replace
                  the  incorrect  statement in the case of each of the foregoing
                  paragraphs: "100," and there should be no footnote.

Dated this 16th day of September, 1997.

                       PIONEER HI-BRED INTERNATIONAL, INC.


                              By:      /s/ Jerry Chicoine
                                       Jerry Chicoine,
                                       Senior Vice President
                                       and Chief Financial Officer




<PAGE>



                           RESTATED AND AMENDED BYLAWS

                                       OF

                       PIONEER HI-BRED INTERNATIONAL, INC.


                                   ARTICLE I.

                                PRINCIPAL OFFICE

      The principal  office of the  Corporation  shall be located at 700 Capital
Square,  400  Locust  Street in the City of Des  Moines,  in the County of Polk,
State of Iowa.

                                   ARTICLE II.

                            MEETINGS OF SHAREHOLDERS

      SECTION 1. Annual Meeting. The annual meeting of the shareholders shall be
held on the fourth Tuesday of January of each year, beginning with the year 1988
at the hour of 2:00 P.M.  for the  purpose  of  electing  directors  and for the
transaction  of such other  business as may come before the  meeting;  PROVIDED,
HOWEVER, that the President may in any year designate an earlier date as the day
of the  annual  meeting  that year.  If the day fixed for the annual  meeting as
herein provided shall be a legal holiday,  and a different day is not designated
by the  President,  such meeting shall be held on the next  succeeding  business
day. If the election of directors shall not be held on the day designated herein
for any annual meeting or any adjournment  thereof, the Board of Directors shall
cause  the  election  to be  held  at a  meeting  of the  shareholders  as  soon
thereafter as conveniently may be held.

         SECTION 2. Special Meetings. Special meetings of shareholders,  for any
purpose or purposes, unless otherwise prescribed by statute or by the Article of
Incorporation,  may be  called  by the  President  and  shall be  called  by the
President  or  Secretary at the request in writing of a majority of the Board of
Directors,  or at the request in writing of  shareholders of at least 50% of all
of the votes  entitled to be cast on any issue  proposed to be considered at the
proposed  special  meeting.  Such request shall state the purpose or purposes of
the  proposed  meeting.  Business  transacted  at  any  special  meeting  of the
shareholders shall be limited to the purposes stated in the notice. Such request
by  shareholders  shall be signed,  dated,  and  delivered to the  corporation's
Secretary  in one or more  written  demands.  Any  request  by  shareholders  or
otherwise shall state the purpose or purposes of the proposed meeting.  Business
transacted at any special  meeting of the  shareholders  shall be limited to the
purposes stated in the notice.

      SECTION 3. Place of Meeting.  The Board of Directors or the  President may
designate any place, either within or without the State of Iowa, as the place of
meeting for any annual meeting or for any special meeting called by the Board of
Directors.  A waiver of notice  signed by all  shareholders  may  designate  any
place,  either within or without the State of Iowa, as the place for the holding
of such meeting. If no designation is made, or if a special meeting be otherwise
called,  the place of meeting shall be the registered  office of the Corporation
in the State of Iowa.

      SECTION 4.  Notice of  Meetings.  Written or printed  notice  stating  the
place, day and hour of the meeting,  and in the case of a special  meeting,  the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10) or more than  sixty  (60)  days  before  the date of the  meeting,
either  personally or by mail, by or at the direction of the  President,  or the
Secretary, or the officer or persons calling the meeting, to each shareholder of
record entitled to vote at such meeting.  If mailed, such notice shall be deemed
to be delivered when deposited in

<PAGE>


the United  States  mail,  addressed  to the  shareholder  at his  address as it
appears on the records of the Corporation, with postage thereon prepaid.

      SECTION 5.  Closing of Transfer  Books or Fixing of Record  Date.  For the
purpose  of  determining  shareholders  entitled  to notice of or to vote at any
meeting of  shareholders,  or  shareholders  entitled to receive  payment of any
dividend,  or in order to make a  determination  of  shareholders  for any other
proper  purpose,  the Board of Directors of the Corporation may provide that the
stock transfer books shall be closed for a stated period,  but not to exceed, in
any case, seventy (70) days. If the stock transfer books shall be closed for the
purpose  of  determining  shareholders  entitled  to  notice  of or to vote at a
meeting of  shareholders,  such books shall be closed for at least ten (10) days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
(70) days and, for a meeting of shareholders, not less than ten (10) days, prior
to the date on which the  particular  action,  requiring such  determination  of
shareholders, is to be taken. If the transfer books are not closed and no record
date is fixed for the determination of shareholders  entitled to notice of or to
vote at a meeting of shareholders,  or shareholders  entitled to receive payment
of a dividend,  the date on which notice of the meeting is mailed or the date on
which the  resolution  of the Board of  Directors  declaring  such  dividend  is
adopted,  as the case may be, shall be the record date for such determination of
shareholders.  When a  determination  of  shareholders  entitled  to vote at any
meeting  of  shareholders  has  been  made as  provided  in this  section,  such
determination shall apply to any adjournment thereof.

      SECTION  6.  Voting  Lists.  The  officer  or agent  having  charge of the
transfer books for shares of the Corporation  shall make, at least ten (10) days
before  each  meeting  of  shareholders,  a  complete  list of the  shareholders
entitled to vote at such  meeting,  arranged  in  alphabetical  order,  with the
address of and the number of shares held by each,  which  list,  for a period of
ten (10) days  prior to such  meeting,  shall be subject  to  inspection  by any
shareholder  at any time during usual  business  hours.  Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any shareholder  during the whole time of the meeting.  The
original  share  ledger or transfer  book,  or a duplicate  thereof kept in this
State, shall be prima facie evidence as to who are the shareholders  entitled to
examine such list or share ledger or transfer  book or to vote at any meeting of
shareholders.

      SECTION 7.  Quorum.  The  holders of a  majority  of the stock  issued and
outstanding  and entitled to vote thereat,  present in person or  represented by
proxy,  shall  constitute a quorum at all meetings of the  shareholders  for the
transaction  of business as otherwise  provided by statute or by the Articles of
Incorporation.  If, however,  such quorum shall not be present or represented at
any meeting of the shareholders, a majority of the shareholders entitled to vote
thereat,  present in person or represented by proxy, shall have power to adjourn
the meeting from time to time,  without  notice other than  announcement  at the
meeting,  until a quorum  shall be present  or  represented.  At such  adjourned
meeting, at which a quorum shall be present or represented,  any business may be
transacted  which  might  have been  transacted  at the  meeting  as  originally
noticed.  When a quorum is present at any meeting,  the vote of the holders of a
majority of the stock having  voting power present in person or  represented  by
proxy shall decide any question brought before such meeting, unless the question
is one upon which by express  provision  of the  statutes or of the  Articles of
Incorporation  a  different  vote is  required,  in  which  case,  such  express
provision shall govern and control the decision of such question.

      SECTION  8.  Proxies.  Each  shareholder  shall  at every  meeting  of the
shareholders  be  entitled  to that  number  of  votes as is  determined  by the
Corporation in accordance  with Article IV of the Articles of  Incorporation  of
the  Corporation,  as presently in effect or as may be amended  hereafter,  upon
each matter  submitted to vote of the  shareholders  to be voted in person or by
proxy  executed  in  writing  by  said  shareholder  or by his  duly  authorized
attorney-in-fact,  for each share of the capital  stock having voting power held
by such shareholder. Such proxy shall be filed

<PAGE>


with the Secretary of the Corporation  before or at the time of the meeting.  No
proxy  shall be valid after  eleven (11) months from the date of its  execution,
unless otherwise provided in the proxy.

      SECTION 9.  Voting of Shares by Certain  Holders.  Shares  standing in the
name of another Corporation,  domestic or foreign, may be voted by such officer,
agent,  or proxy as the Bylaws of such  Corporation  may  prescribe,  or, in the
absence of such  provision,  as the Board of Directors of such  Corporation  may
determine.

      Shares  standing  in the name of a deceased  person,  a minor,  ward or an
incompetent person, may be voted by his administrator, executor, court appointed
guardian or conservator, either in person or by proxy without a transfer of such
shares into the name of such administrator,  executor,  court appointed guardian
or  conservator.  Shares  standing  in the name of a trustee may be voted by him
either in person or by proxy.

      Shares standing in the name of the receiver may be voted by such receiver,
and  shares  held by or under the  control  of a  receiver  may be voted by such
receiver  without the  transfer  thereof  into his name if authority to do so be
contained  in an  appropriate  order of the  court by which  such  receiver  was
appointed.

      A  shareholder  whose  shares are  pledged  shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee,  and
thereafter the pledgee shall be entitled to vote the shares so transferred.

      Shares of its own stock belonging to this Corporation  shall not be voted,
directly or  indirectly,  at any meeting and shall not be counted in determining
the total number of outstanding  shares at any time, but shares of its own stock
held by it in a  fiduciary  capacity  may be  voted  and  shall  be  counted  in
determining the total number of outstanding shares at any given time.

      SECTION 10.  Inspectors.  At any meeting of shareholders,  the chairman of
the meeting may, or upon the request of any  shareholder,  shall  appoint one or
more persons as inspectors for such meeting. Such inspectors shall ascertain and
report  the  number of shares  represented  at the  meeting,  based  upon  their
determination of the validity and effect of proxies;  count all votes and report
the  results;  and do such other acts as are proper to conduct the  election and
voting with impartiality and fairness to all the shareholders. Each report of an
inspector  shall be in writing  and  signed by him or by a  majority  of them if
there be more than one inspector  acting at such meeting.  If there is more than
one inspector, the report of the majority shall be the report of the inspectors.
The report of the inspector or inspectors on the number of shares represented at
the meeting and the results of the voting shall be prima facie evidence thereof.

      SECTION 11.  Informal  Action by  Shareholders.  Any action required to be
taken at a meeting of the  shareholders,  or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting if a consent in
writing,  setting  forth  the  action  so  taken,  shall  be  signed  by all the
shareholders entitled to vote with respect to the subject matter thereof.

      SECTION 12.  Voting by Ballot.  Voting on any  question or in any election
may be viva voce unless the  presiding  officer  shall order or any  shareholder
shall demand that voting be by ballot.

      SECTION 13. Shareholder  Business Proposals.  At any annual meeting of the
Corporation's shareholders,  only such business shall be conducted as shall have
been  properly  brought  before the meeting.  To be properly  brought  before an
annual meeting,  business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors,  (b)
otherwise  properly  brought  before the meeting by or at the  direction  of the
Board of Directors,  or (c) otherwise  properly  brought before the meeting by a
shareholder.  Business  may be properly  brought  before an annual  meeting by a
shareholder only if written

<PAGE>


notice of the  shareholder's  intent to propose  such  business  has been given,
either by  personal  delivery or by United  States  mail,  first  class  postage
prepaid,  to the  Secretary  of the  Corporation  no later than  ninety  days in
advance of such annual meeting, provided that in the event that less than ninety
days' notice or prior public  disclosure  of the date of such annual  meeting is
given or made to shareholders,  the shareholder's  submission shall be timely if
received  by the  Secretary  of the  Corporation  not  later  than the  close of
business on the tenth day  following the day on which such notice of the date of
the meeting  was mailed or such  public  disclosure  was made  (whichever  first
occurs). Each notice of new business must set forth: (i) the name and address of
the shareholder who intends to raise the new business; (ii) the business desired
to be brought forth at the meeting and the reasons for conducting  such business
at the  meeting;  (iii) a  representation  that the  shareholder  is a holder of
record  of  stock of the  Corporation  entitled  to vote  with  respect  to such
business  and intends to appear in person or by proxy at the meeting to move the
consideration of such business; (iv) such shareholder's  beneficial ownership of
the  Corporation's  voting stock;  and (v) such  shareholder's  interest in such
business.  The  chairman of the meeting  may refuse to  acknowledge  a motion to
consider any business  that he determines  was not made in  compliance  with the
foregoing procedures.

      An adjourned  meeting,  if notice of the adjourned meeting is not required
to be given to shareholders, shall be regarded as a continuation of the original
meeting,  and any notice of new business  must meet the  foregoing  requirements
based  upon the date on which  notice  or public  disclosure  of the date of the
original  meeting was given or made. In the event of an adjourned  meeting where
notice of the  adjourned  meeting is required to be given to  shareholders,  any
notice of new  business  made by a  shareholder  with  respect to the  adjourned
meeting must meet the foregoing requirements based upon the date on which notice
or public disclosure of the date of the adjourned meeting was given or made.

      No  action  may be  taken  by the  Board  of  Directors  (whether  through
amendment  of the  Bylaws or  otherwise)  to  amend,  alter,  change or  repeal,
directly or  indirectly,  the  provisions of this Article II,  Section 13 of the
Bylaws,  unless  two-thirds of the  directors  (based on the number of directors
then authorized,  regardless of whether there are any vacancies) shall concur in
such action.

                                  ARTICLE III.

                               BOARD OF DIRECTORS

      SECTION 1. General  Powers.  The  business and affairs of the  Corporation
shall be managed by its Board of Directors which may exercise all such powers of
the  Corporation and do all such lawful acts and things as are not by statute or
by the Articles of  Incorporation  or by these Bylaws directed or required to be
exercised or done by the shareholders.

      SECTION 2.  Number,  Tenure and  Qualifications.  The number of  directors
which  shall  constitute  the whole Board  shall be such  number,  not less than
twelve (12) nor more than sixteen (16),  as may be determined  from time to time
by vote of a majority of the entire Board of Directors.  The directors  shall be
divided  into three (3) classes each of which shall be as nearly equal in number
as possible except as provided in Section 3 of this Article. The directors shall
be elected at an annual  meeting of the  shareholders,  and shall hold an office
for a term of the lesser of (a) three (3) years or (b) until the end of the term
for the Class of Directors to which such Director has been elected and until his
successor is elected and qualified. A Director need not be a shareholder of this
Corporation.

      SECTION 3. Vacancies.  Any vacancy occurring in the Board of Directors and
any  directorship  to be  filled  by  reason  of an  increase  in the  number of
directors,  may be filled by the affirmative vote of a majority of the remaining
directors  though  less than a quorum of the Board of  Directors.  Any  director
elected to fill a vacancy  created  other than by reason of an  increase  in the
number  of  directors  shall be  elected  for the  unexpired  term of his or her
predecessor in office.

<PAGE>


      No  action  may be  taken  by the  Board  of  Directors  (whether  through
amendment  of the  Bylaws or  otherwise)  to  amend,  alter,  change or  repeal,
directly or  indirectly,  the  provisions of this Article III,  Section 3 of the
Bylaws,  unless  two-thirds of the  directors  (based on the number of directors
then authorized,  regardless of whether there are any vacancies) shall concur in
such action.

      SECTION 4. Regular  Meetings.  A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw,  immediately  after,  and at
the same place as, the annual  meeting of  shareholders.  The Board of Directors
may provide,  by  resolution,  the time and place,  either within or without the
State of Iowa,  for the holding of  additional  regular  meetings  without other
notice than such resolution.

      SECTION 5. Special  Meetings.  Special  Meetings of the Board of Directors
may be called by or at the request of the  President or any two  directors.  The
person or persons  authorized to call special meetings of the Board of Directors
may fix any place,  either within or without the State of Iowa, as the place for
the holding of such meeting.

      SECTION 6.  Notice.  Notice shall be given at least 24 hours in advance of
the time set for such  meeting and may be given by  telephone  or  telegram.  If
notice  be given by  telegram,  such  notice  shall  deem to be  delivered  when
delivered to the telegraph  company.  Any director may waive notice of a meeting
by  written  waiver,  executed  either  before or after  the time  stated in the
notice.  Attendance  at a meeting  shall  constitute  a waiver of notice of such
meeting, except where a director attends such meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or convened.

      SECTION 7.  Quorum.  A majority of the number of  directors  currently  in
office shall  constitute a quorum for  transaction of business at any meeting of
the Board of Directors, provided, that if less than a majority of such number of
directors are present at said meeting,  a majority of the directors  present may
adjourn the meeting from time to time without further notice.

      SECTION 8.  Manner of Acting.  The act of the  majority  of the  directors
present at a meeting at which a quorum is present  shall be the act of the Board
of Directors,  except as may be otherwise  specifically provided by statute, the
Articles of Incorporation or these Bylaws.  Members of the Board of Directors or
any committee  designated by such board,  may  participate  in a meeting of such
board or committee by conference telephone or similar  communications  equipment
by means of which all persons  participating in the meeting can hear each other,
and  participation  in a meeting  pursuant to this  provision  shall  constitute
presence in person at such meeting.

      SECTION 9. Informal Action. Unless specifically prohibited by statute, the
Articles of Incorporation or these Bylaws,  any action required to be taken at a
meeting of the Board of  Directors,  or any other action which may be taken at a
meeting of the Board of  Directors  or of any  committee  thereof,  may be taken
without a meeting if a consent in  writing,  setting  forth the action so taken,
shall be signed  by all the  directors  entitled  to vote  with  respect  to the
subject matter  thereof,  or by all the members of such committee and filed with
the minutes of  proceedings  of the Board or  committee  as the case may be. Any
such consent  signed by all the  Directors or all the members of such  committee
shall have the same effect as a unanimous vote, and may be stated as such in any
document filed with the Secretary of State, or issued for any other reason.

      SECTION 10. Compensation. The Directors may be paid for their expenses, if
any, of attendance at such meeting of the Board of Directors,  and may be paid a
fixed sum for attendance at each meeting of the Board of Directors,  or a stated
salary or fee as such director. No such payment shall preclude any director from
serving  the  Corporation  in any  other  capacity  and  receiving  compensation
therefor.  Members  of  special  or  standing  committees  may be  allowed  like
compensation for attending committee meetings.


<PAGE>


      SECTION 11.  Presumption of Assent.  A Director of the  Corporation who is
present at a meeting of the Board of Directors at which action on any  corporate
matter is taken shall be presumed to have  assented to the action  taken  unless
his  dissent  shall be entered in the  minutes of the meeting or unless he shall
file his written  dissent to such action with the person acting as the Secretary
of the meeting before the  adjournment  thereof or shall forward such dissent by
registered  mail to the  Secretary  of the  Corporation  immediately  after  the
adjournment  of the meeting.  Such right to dissent shall not apply to directors
who voted in favor of such action.

      SECTION 12. Removal of Directors.  The  shareholders  may at any time at a
meeting  expressly  called for that purpose  remove any or all of the directors,
for cause,  by a vote of  two-thirds  of the shares then  entitled to vote at an
election of directors.  For the purposes of this Section 12, removal "for cause"
shall mean that the  director to be removed has been  convicted of a felony by a
court of competent  jurisdiction  and such  conviction  is no longer  subject to
direct appeal, or that the director to be removed has been adjudged to be liable
for negligence or misconduct in the  performance of his duty to the  Corporation
by a court of competent  jurisdiction and such adjudication is no longer subject
to direct  appeal.  Any  vacancy in the Board of  Directors  resulting  from the
removal of a director shall be filled by majority vote of the remaining  members
of the Board of Directors.

      SECTION  13.  Committees  of  Directors.  The Board of  Directors  may, by
resolution  passed by a majority  of the whole  board,  designate  an  executive
committee and/or one or more other committees,  each committee to consist of two
or more of the Directors of the  Corporation,  which,  to the extent provided in
the resolution, shall have and may exercise the powers of the Board of Directors
in the  management  of the  business  and  affairs  of the  Corporation  and may
authorize  the seal of the  Corporation  to be affixed  to all papers  which may
require it. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of Directors.

      The Compensation Committee shall consist of no less than three and no more
than eight directors who are not at the time of their election  employees of the
Corporation  or  otherwise  entitled  to  participate  in  any  compensation  or
incentive plan  administered  by the Committee,  except to the extent  otherwise
determined  by  a  majority  of  the  directors  who  are  not  members  of  the
Compensation Committee.  The Compensation Committee shall be responsible for all
executive   compensation  programs  of  the  Corporation,   including,   without
limitation,  stock incentive plans and shall evaluate and recommend to the Board
of Directors  compensation for executive officers.  It shall review summaries of
current  compensation  paid all other officers,  and shall  periodically  report
changes in the compensation plans for all officers and employees to the Board of
Directors.  It shall receive and review such reports of compensation and benefit
plan  administration  from the Corporation's  management as it may require.  The
Compensation  Committee shall also review, and make recommendations  concerning,
management structure and succession planning,  management retirement policy, and
officer  supervision  and training to assure the full  development of management
potential and an orderly succession of management.

      The  Nominating  Committee  shall  consist of not less than three nor more
than nine directors and shall be responsible for  establishing  criteria for the
election  of  directors,  reviewing  management's  evaluation  of  any  officers
proposed  for   nomination  to  the  Board  of  Directors,   and  reviewing  the
qualifications  of, and when  appropriate  interviewing,  candidates  who may be
proposed for  nomination to the Board of  Directors,  including  those  nominees
recommended by shareholders. The Committee shall be responsible for recommending
to the Board of Directors,  not less than 120 days prior to each annual  meeting
of the shareholders,  a slate of directors to be elected for the following year.
The Committee shall also perform such other duties in connection with the search
for qualified directors and the selection, election, or termination of directors
as the Board of Directors may request.

      The Audit  Committee  shall  consist  of not less than three nor more than
nine directors, a majority of whom shall be independent directors. The Committee
shall have general oversight

<PAGE>


responsibility  with  respect  to  the  Corporation's  financial  reporting.  In
performing   its   oversight   responsibility,    the   Committee   shall   make
recommendations  to the Board of Directors as to the  selection,  retention,  or
change  in the  independent  accountants  of the  Corporation,  review  with the
independent  accountants  the  scope  of their  examination  and  other  matters
(relating to both audit and  non-audit  activities),  and review  generally  the
internal  auditing  procedures of the  Corporation.  In addition,  the Committee
shall  review   corporate   policies   relating  to  compliance  with  laws  and
regulations,  ethics,  and conflicts,  and  (consistent  with the NASDAQ listing
requirement)   it  shall  conduct  a  review  of  all  material   related  party
transactions on an ongoing basis. In undertaking the foregoing responsibilities,
the Audit Committee shall have  unrestricted  access,  if necessary,  to company
personnel and documents and shall be provided with the resources and  assistance
necessary to discharge its  responsibilities,  including  periodic  reports from
management  assessing  the impact of  regulation,  accounting,  and reporting or
other significant  matters that may affect the Corporation.  The Committee shall
have  authority  to appoint and dismiss the  Corporation's  director of internal
audit. The duties and responsibilities of the Audit Committee shall be set forth
in further  detail in a charter  developed by the  Committee,  provided that the
duties and  responsibilities  set forth therein  shall be  consistent  with this
Section 13 and any resolution passed by a majority of the Directors  relating to
the responsibilities of the Committee.

      In  addition,  the  Board of  Directors  may,  by  resolution  passed by a
majority of the Directors,  designate an executive  committee and/or one or more
other  committees,  each committee to consist of two or more of the Directors of
the Corporation, which, to the extent provided in the resolution, shall have and
may  exercise  the powers of the Board of  Directors  in the  management  of the
business and affairs of the Corporation. Such committee or committees shall have
such name or names as may be determined from time to time by resolution  adopted
by the Board of Directors.

      SECTION 14.  Committee  Minutes.  Each  committee  shall keep  regular
minutes of its  meetings and report the same to the Board of Directors when
required.

      SECTION 15. Shareholder Nomination of Director Candidates.  Subject to the
rights of holders of any class or series of stock having a  preference  over the
Common Stock as to dividends or upon  liquidation,  nominations for the election
of directors  may be made by the Board of Directors or a committee  appointed by
the Board of Directors or by any shareholder entitled to vote in the election of
directors  generally.  However, any shareholder entitled to vote in the election
of  directors  generally  may  nominate  one or more  persons  for  election  as
directors at a meeting only if written  notice of such  shareholder's  intent to
make such nomination or nominations has been given,  either by personal delivery
or by United States mail,  postage prepaid,  to the Secretary of the Corporation
not later than (i) with  respect to an election to be held at an annual  meeting
of  shareholders,  ninety days prior to the anniversary date of the records date
set for the immediately preceding annual meeting of shareholders,  and (ii) with
respect to an election to be held at a special meeting of  shareholders  for the
election of directors, the close of business on the tenth day following the date
on which notice of such meeting is first given to shareholders. Each such notice
shall set forth: (a) the name and address of the shareholder who intends to make
the  nomination   and  of  the  person  or  persons  to  be  nominated;   (b)  a
representation  that the  shareholder  is a  holder  of  record  of stock of the
Corporation  entitled to vote at such meeting and intends to appear in person or
by proxy at the  meeting to  nominate  the person or  persons  specified  in the
notice;  (c) a description of all  arrangements  or  understandings  between the
shareholder and each nominee and any other person or persons (naming such person
or persons)  pursuant to which the nomination or  nominations  are to be made by
the shareholder;  (d) such other information  regarding each nominee proposed by
such  shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange  Commission,  had the
nominee been nominated,  or intended to be nominated, by the Board of Directors;
and (e) the consent of each nominee to serve as a director of the Corporation if
so elected.  The presiding  officer at the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedures.


<PAGE>


      No  action  may be  taken  by the  Board  of  Directors  (whether  through
amendment  of the  Bylaws or  otherwise)  to  amend,  alter,  change or  repeal,
directly or indirectly,  the  provisions of this Article III,  Section 15 of the
Bylaws,  unless  two-thirds of the  directors  (based on the number of directors
then authorized,  regardless of whether there are any vacancies) shall concur in
such action.

                                   ARTICLE IV.

                                    OFFICERS

      SECTION 1. Number.  The officers of the Corporation  shall be a President,
Vice  President,  Secretary  and a Treasurer.  The Board of  Directors  may also
choose  additional  Vice  Presidents and one or more Assistant  Secretaries  and
Assistant  Treasurers.  Any two or more  offices may be held by the same person,
except that the offices of President and Secretary shall not be held by the same
person.

      SECTION 2.  Election and Term of Office.  The officers of the  Corporation
shall be elected  annually by the Board of Directors at the first meeting of the
Board of  Directors  held after each  annual  meeting  of  shareholders.  If the
election of officers  shall not be held at such meeting,  such election shall be
held as soon thereafter as  conveniently  may be. Each officer shall hold office
until his successor  shall have been duly elected or until his death or until he
shall resign or shall have been removed in the manner herein provided.  Election
or  appointment  of an  officer  or agent  shall not of itself  create  contract
rights.

      SECTION 3. Other  Officers.  The Board of Directors may appoint such other
officers and agents,  as it shall deem  necessary,  who shall hold their offices
for such terms and shall  exercise  such powers and perform such duties as shall
be determined from time to time by the Board.

      SECTION 4. Removal. Any officer or agent elected or appointed by the Board
of Directors may be removed from office by the affirmative vote of a majority of
the  Board  of  Directors  at any  meeting  whenever  in its  judgment  the best
interests of the Corporation would be served thereby,  but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.

      SECTION  5.  Vacancies.   A  vacancy  in  any  office  because  of  death,
resignation,   removal, disqualification  or otherwise,  and  new offices may be
filled by the Board of  Directors,  at any meeting thereof for the unexpired
portion of the term.

      SECTION 6.  President.  The  President  shall be the  principal  executive
officer of the Corporation  and shall, in general,  supervise and control all of
the business and affairs of the Corporation.  Unless  otherwise  provided by the
Board,  he shall  preside at all meetings of the  shareholders  and the Board of
Directors.  He may sign,  with the Secretary or any other proper  officer of the
Corporation  thereunto  authorized by the Board of Directors,  certificates  for
shares of the Corporation,  any deeds,  mortgages,  bonds,  contracts,  or other
instruments  which the Board of Directors has authorized to be executed,  except
in cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these Bylaws to some other  officer or agent of the
Corporation, or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the Board of Directors from time to time.

      SECTION 7. Vice  President.  In the  absence of the  President,  or in the
event of his inability or refusal to act, the Vice President,  or if there shall
be more than one, the Vice  Presidents,  in the order determined by the Board of
Directors,  shall perform the duties of the President, and when so acting, shall
have all powers of and be subject to all  restrictions  upon the President.  Any
Vice  President  may  sign,  with  the  Secretary  or  an  Assistant  Secretary,
certificates for shares of the Corporation;  and shall perform such other duties
as from time to time may be assigned to him by the  President or by the Board of
Directors.

      SECTION 8. Secretary.  The Secretary shall: (1) attend all meetings of the
Board of  Directors  and all  meetings  of the  shareholders  and record all the
proceedings of the meetings of the  Corporation and of the Board of Directors in
a book to be kept for  that  purpose  and  shall  perform  like  duties  for the
standing  committees  when required;  (2) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; (3) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such holder;  (4) have general  charge of the stock transfer
books of the  Corporation;  (5)  perform  all duties  incident  to the office of
Secretary  and such other  duties as from time to time may be assigned to him by
the  President  or by the  Board  of  Directors;  and (6)  have  custody  of the
corporate  seal of the  Corporation  and have authority to affix the same to any
instrument  requiring  it  and  when  so  affixed,  it may  be  attested  by his
signature.  The  Board of  Directors  may give  general  authority  to any other
officer to affix the seal of the  Corporation  and to attest the affixing by his
signature.

      SECTION 9. Assistant Secretary.  The Assistant Secretary,  or, if there be
more than one, the Assistant  Secretaries,  in the order determined by the Board
of Directors, shall, in the absence or disability of the Secretary,  perform the
duties and exercise  the powers of the  Secretary  and shall  perform such other
duties and have such  other  powers as the Board of  Directors  may from time to
time prescribe.

      SECTION 10. Treasurer. The Treasurer shall: (1) have charge and custody of
and be responsible for all funds and securities of the Corporation;  (2) receive
and give receipts for monies due and payable to the Corporation  from any source
whatsoever, and deposit all moneys and other valuable effects in the name and to
the  credit  of  the  Corporation  in  such  banks,  trust  companies  or  other
depositories as shall be designated by the Board of Directors;  (3) disburse the
funds of the  Corporation  as may be ordered by the Board of  Directors,  taking
proper vouchers for such  disbursements;  (4) keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation;  (5) render to
the President and the Board of Directors,  at its regular meetings,  or when the
Board of Directors so requires,  an account of all his transactions as Treasurer
and of the  financial  condition  of the  Corporation;  and (6)  perform all the
duties incident to the office of Treasurer and such other duties as from time to
time may be assigned to him by the  President or by the Board of  Directors.  If
required by the Board of Directors, give a bond in such sum and with such surety
or sureties as the Board of Directors may determine for the faithful performance
of the duties of his office and for the restoration to the Corporation,  in case
of his death,  resignation,  retirement  or removal from  office,  of all books,
papers, vouchers, money and other property of whatever kind in his possession or
under his control belonging to the Corporation.

      SECTION 11.  Assistant  Treasurer.  The Assistant  Treasurer,  or if there
shall be more than one, the Assistant Treasurers, in the order determined by the
Board of  Directors,  shall,  in the  absence or  disability  of the  Treasurer,
perform the duties and exercise the powers of the  Treasurer  and shall  perform
such other duties and have such other powers as the Board of Directors  may from
time to time prescribe.

      SECTION 12.  Salaries.  The salaries of the  officers  shall be fixed from
time to time by the Board of Directors  and no officer  shall be prevented  from
receiving  such  salary by reason of the fact that he is also a director  of the
Corporation.


<PAGE>



                                   ARTICLE V.

                           CONTRACTS, LOANS AND CHECKS

      SECTION 1. Contracts.  The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the  Corporation,  and such authority
may be general or confined to specific instances.

      SECTION 2. Loans.  No loans shall be  contracted  on behalf of the
Corporation  and no evidences of indebtedness shall be issued in its name unless
authorized  by a resolution  of the Board of  Directors.  Such authority  may be
general or confined to specific instances.

      SECTION 3. Checks,  Drafts,  Etc.  All checks,  drafts or other orders for
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation,  shall be signed by such officer or officers,  agent or agents,
of the  Corporation  and in such manner as shall from time to time be determined
by resolution of the Board of Directors.

                                   ARTICLE VI.

                                 INDEMNIFICATION

      SECTION 1.  Indemnification.  The Corporation shall indemnify every person
who is or was a party or involved (as a witness or otherwise)or is threatened to
be made a party or involved (as a witness or otherwise)  (hereafter  Indemnitee)
in any threatened,  pending or completed  action,  suit, or proceeding,  whether
civil,  criminal,  administrative,  or  investigative,  formal or informal,  and
whether or not by or in the right of the  Corporation or otherwise  (hereafter a
"Proceeding"),  by reason of the fact that he is or was a director,  officer, or
employee of the  Corporation,  or while a  director,  officer or employee of the
Corporation,  is or was  serving  at the  request  of the  Corporation  (or such
service  was  approved  by the  Corporate  Management  Committee  (committee  of
Executive  Officers  selected by the  President) or successor  committees)  as a
director,  officer,  partner,  trustee,  employee or agent of another foreign or
domestic corporation,  partnership, joint venture, trust, employee benefit plan,
or other  enterprise,  or by reason of any action  alleged to have been taken or
not taken by him while acting in any such capacity,  against expenses (including
counsel  fees  and  expenses  when  incurred)  (hereafter  "Expenses")  and  all
liability and loss, including judgment,  fine,  (including excise taxes assessed
with respect to an employee  benefit plan), and penalties and amounts paid or to
be paid in  settlement  (whether  with or  without  court  approval)  (hereafter
"Liabilities"),  actually incurred by him in connection with such Proceeding, to
the  fullest  extent  permitted  by law as the same exists or may  hereafter  be
amended  (but, in the case of any such  amendment,  only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said  law  permitted  the  Corporation  to  provide  prior  to such  amendment).
Notwithstanding anything in this Article to the contrary, except with respect to
a proceeding to enforce  rights to  indemnification  or  advancement of expenses
under  this  Article,   the  Corporation  shall  provide   indemnification   and
advancement of Expenses under this Article to persons seeking indemnification in
connection  with a proceeding  initiated by such person only if such  proceeding
was authorized by the Board of Directors.

      SECTION 2. Advancement of Expenses. The right to indemnification conferred
in this  Article  shall  include  the  right to be paid by the  Corporation  the
Expenses  incurred in  connection  with the  proceeding  in advance of the final
disposition  thereof  promptly  after  receipt by the  Corporation  of a request
therefor stating in reasonable detail the Expenses incurred,  provided, however,
that to the extent  required by law, the payment of such  Expenses in advance of
the final  disposition of a proceeding shall be made only upon the Corporation's
receipt of an  undertaking  by or on behalf of such person to repay such amounts
if it shall  ultimately be determined  that he is not entitled to be indemnified
under this Article or otherwise (this  undertaking  need not be secured and must
be accepted without reference to the ability to repay).


<PAGE>


      SECTION  3.  Determination.  Any  indemnification,  under  these  Articles
(unless  ordered  by  court  or as  otherwise  provided  in  Section  2 for  the
advancement of expenses) shall be made by the  Corporation  upon a determination
that the  indemnification  of the  Indemnitee  is  proper  in the  circumstances
because he has met the applicable standard of conduct.  Such determination shall
be made (1) by the board of directors by majority vote of a quorum consisting of
directors not at the time parties to the  Proceeding,  (2) if a quorum cannot be
obtained,  by a majority  vote of a committee  duly  designated  by the board of
directors,  in which  designation  directors  who are parties  may  participate,
consisting  solely  of two or more  directors  not at the  time  parties  to the
proceeding,  (3) by special legal counsel  selected by the board of directors by
vote as set forth in clause  "(1) or (2)" of this  Section 3, if a quorum of the
board of  directors  cannot be obtained  and a committee  cannot be  designated,
selected by majority  vote of the full board of  directors,  in which  selection
directors  who are  parties may  participate,  or (4) by the  shareholders,  but
shares  owned by or voted  under the  control of  directors  who are at the time
parties to the proceeding shall not be voted on the determination.

      SECTION 4.  Partial  Indemnification.  If a person is entitled  under this
Article  to  indemnification  by  the  Corporation  for  some  or a  portion  of
Liabilities and Expenses but not, however, for all of the total amounts thereof,
the Corporation shall nevertheless indemnify such person for the portion thereof
to which he is entitled.

      SECTION  5.  Specific  Limitations  On  Indemnification.   Notwithstanding
anything in these Bylaws to the contrary, the Corporation shall not be obligated
to make any payment under this Article for  indemnification  for Liabilities and
Expenses  in  connection  with  Proceedings  settled  without the consent of the
Corporation, which consent, however, shall not be unreasonably withheld.

      SECTION  6.   Payment   and  Factual   Determinations.   If  a  claim  for
indemnification  or  advancement  of expenses  under this Article is not paid in
full by the  Corporation  within sixty (60) days after a written  claim has been
received by the  Corporation,  the claimant may, at any time  thereafter,  bring
suit  against the  Corporation  to recover the unpaid  amount of the claim.  The
claimant  shall also be entitled to be paid the  expenses  of  prosecuting  such
claim to the  extent  he is  successful  in whole  or in part on the  merits  or
otherwise in establishing his right to  indemnification or to the advancement of
expenses.

      SECTION 7. Other Rights. The right to indemnification, including the right
to the advancement of expenses, conferred in this Article shall not be exclusive
of any other rights to which a person seeking  indemnification or advancement of
expenses hereunder may be entitled under any Articles of Incorporation,  Bylaws,
agreement,  vote  of  shareholders  or  directors,  or  otherwise.   Subject  to
applicable law, to the extent that any rights to  indemnification or advancement
of expenses  of such person  under any such  Articles of  Incorporation,  Bylaw,
agreement,  vote of shareholders or directors, or otherwise, are broader or more
favorable to such person, the broader or more favorable rights shall control.

      The  Corporation  shall  have the  express  authority  to enter  into such
agreements as the Board of Directors deems  appropriate for the  indemnification
of,  including  the  advancement  of expenses to,  present or future  directors,
officers,  employees  and agents of the  Corporation  in  connection  with their
service  to,  or  status  with,  the  Corporation  or  any  other   corporation,
partnership,  joint venture,  trust or other enterprise,  including any employee
benefit plan, for whom such person is serving at the request of the Corporation.

      SECTION 8. Trust.  The  Corporation  may create a fund of any nature which
may, but need not, be under the control of a trustee,  or otherwise to secure or
insure in any manner its indemnification  obligations,  including its obligation
to advance  expenses,  whether  arising  under or  pursuant  to this  Article or
otherwise.


<PAGE>


      SECTION 9. Insurance.  The corporation may purchase and maintain insurance
on behalf of an individual who is or was a director, officer, employee, or agent
of the corporation,  or who, while a director,  officer employee or agent of the
corporation,  is or was serving at the request of the corporation as a director,
officer,  partner,  trustee,  employee  or agent of another  foreign or domestic
corporation,  partnership, joint venture, trust, employee benefit plan, or other
enterprise, against liability asserted against or incurred by that individual in
that capacity or arising from the  individual's  status as a director,  officer,
employee, or agent, whether or not the corporation would have power to indemnify
that individual against the same liability.

      SECTION 10. Contract. The right to indemnification, including the right to
advancement  of  expenses  provided  herein,  shall be a contract  right,  shall
continue as to a person who has ceased to be a director,  officer,  employee, or
to serve in any other of the capacities  described in Section 1, and shall inure
to  the  benefit  of  the  heirs,   personal   representatives,   executors  and
administrators of such person.  Notwithstanding  any amendment,  alteration,  or
repeal of this Article or any of its provisions or the adoption of any provision
inconsistent  with the Article or any of its  provisions,  any person,  shall be
entitled to indemnification, including the right to the advancement of expenses,
in  accordance  with the  provisions  hereof with respect to any action taken or
omitted  prior to such  amendment,  alteration,  or repeal or  adoption  of such
inconsistent provision, except to the extent such amendment, alteration, repeal,
or   inconsistent   provision   provides   broader   rights   with   respect  to
indemnification, including the advancement of expenses, than the Corporation was
permitted to provide prior to the amendment, alteration, repeal, or the adoption
of such inconsistent provision or to the extent otherwise prescribed by law.

      SECTION 11.  Subrogation.  In the event of any payment under this Article,
the Corporation  shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and take
all  action  necessary  to  secure  such  rights,  including  execution  of such
documents as are  necessary to enable the  Corporation  to bring suit to enforce
such rights.

      SECTION 12. Notice of  Proceedings.  Indemnitee  agrees promptly to notify
the  Corporation  in  writing  upon being  served  with any  summons,  citation,
subpoena, complaint,  indictment,  information or other document relating to any
Proceeding or matter which may be subject to  indemnification  or advancement of
Expenses  covered  hereunder,   but  Indemnitee's  omission  to  so  notify  the
Corporation  shall not relieve the  Corporation  from any liability which it may
have to Indemnitee under this Article unless such omission materially prejudices
the rights of the Corporation  (including  without  limitation,  the Corporation
having lost  significant  substantive  or procedural  rights with respect to the
defense of any  Proceeding).  If such  omission  does  materially  prejudice the
rights of the  Corporation,  the  Corporation  shall be relieved from  liability
under this Article only to the extent of such prejudice;  but such omission will
not relieve the  Corporation  from any liability which it may have to Indemnitee
otherwise than under this Article.

      SECTION  13.  Defense of  Claims.  The  Corporation  will be  entitled  to
participate  at its own expense in any  Proceeding  of which it has notice.  The
Corporation  jointly with any other indemnifying party similarly notified of any
Proceeding  will be entitled to assume the defense of Indemnitee  therein,  with
counsel reasonably satisfactory to Indemnitee. After notice from the Corporation
to  Indemnitee  of its  election  to assume  the  defense of  Indemnitee  in any
Proceeding,  the Corporation will not be liable to Indemnitee under this Article
for any Expenses  subsequently  incurred by Indemnitee  in  connection  with the
defense thereof,  except as otherwise provided below.  Indemnitee shall have the
right to employ its own counsel in any such Proceeding but the fees and expenses
of such counsel  incurred after notice from the Corporation of its assumption of
the  defense  thereof  shall be at the  expense of  Indemnitee  unless:  (i) the
employment of counsel by Indemnitee has been authorized by the  Corporation;  or
(ii) the  Corporation  shall not in fact have  employed  counsel to or cannot in
good faith without  conflict assume the defense of Indemnitee in such Proceeding
or such counsel has not in fact assumed such defense;  in each of which case the
fees and expenses of Indemnitee's counsel shall be advanced by the Corporation.


<PAGE>


      SECTION 14. Other  Entities.  The board of directors may by resolution
provide for indemnification to officers, directors, or employees of other
entities not otherwise provided  indemnification herein as it determines
appropriate.

      SECTION 15. Employee  Benefit Plans. A director,  officer,  or employee is
considered to be serving an employee benefit plan at the  Corporation's  request
if such person's duties to the Corporation  also imposed duties on, or otherwise
involves  services  by,  that  person to the plan or to the  participants  in or
beneficiaries of the plan.

                                  ARTICLE VII.

                   CERTIFICATES FOR SHARES AND THEIR TRANSFER

      SECTION  1.  Certificates  for  Shares.  Every  holder  of  shares  in the
Corporation  shall be  entitled  to have a  certificate  in such  form as may be
determined by the Board of Directors.  Such certificates  shall be signed by the
President or Vice  President  and by the  Secretary or Assistant  Secretary  and
shall be sealed with the seal of the  Corporation  or a facsimile  thereof.  The
signatures  of the  President or Vice  President  and the Secretary or Assistant
Secretary or other persons signing for the Corporation upon a certificate may be
facsimiles.  If  the  certificate  is  countersigned  by  a  transfer  agent  or
registered  by a  registrar,  the  signatures  of the  person  signing  for such
transfer agent or registrar also may be facsimiles. In case any officer or other
authorized  person who has signed or whose  facsimile  signature  has been place
upon such certificate for the Corporation,  shall have ceased to be such officer
or employee or agent before such certificate is issued,  it may be issued by the
Corporation with the same effect as if he were such officer or employee or agent
at the date of its issue.  All  certificates  for shares shall be  consecutively
numbered  or  otherwise  identified.  The name of the  person to whom the shares
represented  thereby  are  issued,  with the number of shares and date of issue,
shall be entered on the books of the Corporation.  All certificates  surrendered
to the Corporation  for transfer shall be canceled and no new certificate  shall
be issued  until the former  certificate  for a like number of shares shall have
been  surrendered  and  canceled,  except that in case of a lost,  destroyed  or
mutilated  certificate  a new one may be issued  therefor  upon  such  terms and
indemnity to the Corporation as the Board of Directors may prescribe.

      SECTION 2.  Transfer  of Shares.  Transfers  of shares of the  Corporation
shall be made  only on the  books of the  Corporation  by the  holder  of record
thereof or by his legal  representative,  who shall furnish  proper  evidence of
authority  to  transfer,  or by his attorney  thereunto  authorized  by power of
attorney duly executed and filed with the Secretary of the  Corporation,  and on
surrender for  cancellation of the  certificate  for such shares.  The person in
whose  name  shares  stand on the books of the  Corporation  shall be deemed the
owner thereof for all purposes as regards the Corporation.

      SECTION 3. Registered  Shareholder.  The Corporation  shall be entitled to
recognize the exclusive  right of a person  registered on its books as the owner
of shares to  receive  dividends,  and to vote as such  owner,  and shall not be
bound to recognize  any equitable or other claim to, or interest in, such shares
on the part of any other  person,  whether or not it shall have express or other
notice thereof, except as otherwise provided by law.

                                  ARTICLE VIII.

                                   FISCAL YEAR

      SECTION  1.  Fiscal  Year.  This  Corporation  shall operate  on  a fiscal
year  basis  beginning September 1 of each year and ending August 31 of the
following year.


<PAGE>



                                   ARTICLE IX.

                                    DIVIDENDS

      SECTION  1.  Dividends.  The Board of  Directors,  from time to time,  may
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and  conditions  provided  by law and its  Articles of
Incorporation.

                                   ARTICLE X.

                                WAIVER OF NOTICE

      SECTION 1. Waiver of Notice.  Whenever  any notice is required to be given
under the provisions of the statutes or of the Articles of  Incorporation  or of
these  Bylaws,  a waiver  thereof  in  writing,  signed by the person or persons
entitled to said notice,  whether before or after the time stated therein, shall
be deemed equivalent thereto.

                                   ARTICLE XI.

                                   AMENDMENTS

      SECTION 1. Amendments.  Except where otherwise  specifically  noted, these
Bylaws may be altered,  amended or repealed and new Bylaws may be adopted at any
meeting of the Board of Directors of the  Corporation  by a majority vote of the
directors present at the meeting.






<PAGE>



                              AMENDED AND RESTATED
                       PIONEER HI-BRED INTERNATIONAL, INC.
                        DIRECTORS' RESTRICTED STOCK PLAN


SECTION 1.  ESTABLISHMENT AND PURPOSE

         1.1   Establishment.   Pioneer  Hi-Bred   International,   Inc.  hereby
establishes  a stock reward plan for eligible  Directors,  as described  herein,
which  shall be known as the  PIONEER  HI-BRED  INTERNATIONAL,  INC.  DIRECTORS'
RESTRICTED STOCK PLAN (hereinafter called the "Plan").

         1.2  Purpose.  The  purpose of this Plan is to align the  interests  of
Directors with the long-term interest of shareholders  through the ownership and
retention of Company stock.

SECTION 2.  DEFINITIONS

Whenever  used  herein,  the  following  terms shall have the meanings set forth
below:

                  (a)      "Board" means the Board of Directors of Pioneer
Hi-Bred International, Inc.
                  (b) "Change in  Control"  means (i) the  acquisition,  whether
directly,  indirectly,  beneficially  (within  the  meaning of Rule 13d-3 of the
Securities and Exchange Act of 1934, as amended (the "1934 Act")), or of record,
of securities of Pioneer Hi-Bred  International,  Inc. representing  twenty-five
percent  (25%) or more in  number  of the  total of a) the  number  of shares of
common  stock  then  outstanding  and b) the  number of  shares of common  stock
issuable  upon  conversion  (whether or not then  convertible)  or  otherwise of
Series A  Convertible  Preferred  Stock  (or Class B Common  Stock,  if Series A
Convertible  Preferred Stock is converted to such class) by any "person" (within
the  meaning of Sections  13(d) and  14(d)(2)  of the 1934 Act),  including  any
corporation or group of associated persons action in concert, other than (A) the
Company  and/or (B) any  employee  pension  benefit  plan (within the meaning of
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended)
of the Company,  including a trust established pursuant to any such plan or (ii)
the nomination and election of twenty-five  percent (25%) or more of the members
of the Board of Directors of the Company without recommendation of such Board of
Directors.  The  ownership of record of 25% or more in number of the total of a)
the  number of shares of common  stock  then  outstanding  and b) the  number of
shares  of  common  stock  issuable  upon   conversion   (whether  or  not  then
convertible)  or otherwise of Series A Convertible  Preferred  Stock (or Class B
Common  Stock,  if Series A  Convertible  Preferred  Stock is  converted to such
class) of the Company by a person  engaged in the  business of acting as nominee
for  unrelated  beneficial  owners  shall  not in and of  itself  be  deemed  to
constitute a Change in Control.
                  (c) "Committee" means the Compensation  Committee of the Board
or any successor Committee.
                  (d) "Company"  means Pioneer Hi-Bred  International,  Inc., an
                  Iowa corporation. (e) "Fair Market Value" of a share of Common
                  Stock of the Company shall mean the
average of the highest and lowest selling prices.
                  (f)      "Participant" means those Directors eligible under
Section 4.
                  (g)  "Plan"  means the  Pioneer  Hi-Bred  International,  Inc.
Directors' Restricted Stock Plan, as amended from time to time.
                  (h)  "Restricted  Stock"  means the  common  stock,  $1.00 par
value,  of  Pioneer  Hi-Bred  International,  Inc.  which is issued  or  granted
pursuant to the Plan.
                  (i)  "Shares"  means the common  stock,  $1 par value,  of the
Company.


<PAGE>


SECTION 3.  ADMINISTRATION

         3.1  Administration.  The Plan shall be  administered by the Committee.
The Committee shall have authority to make all determinations required under the
Plan,  to interpret  the Plan,  to decide  questions of facts  arising under the
Plan, to formulate rules and regulations  covering the operation of the Plan and
to make all other determinations necessary or desirable in the administration of
the  Plan.  The  decisions  of the  Committee  on any  questions  concerning  or
involving the  interpretation  or  administration of the Plan shall be final and
conclusive.

SECTION 4.  ELIGIBILITY

To be eligible to participate  in the Plan an individual  must be a non-employee
Director of the Company.

SECTION 5.  GRANT

         The Program  shall be operated  according to the  procedures  set forth
below:

                  (a) Eligible Cash  Compensation.  A  Participant  may elect to
defer all or any part of the annual retainer  compensation and regular quarterly
meeting fees otherwise expected to be payable for services to be rendered by the
Participant  for serving on the Board of Directors (the "Board") from January 1,
1997 through  December 31, 1999 (such  payments  collectively  to be referred to
herein as the "Director's Fee") and to receive in lieu thereof Restricted Stock.

                  (b)  Election  to  Participant.   A  Participant  shall  elect
participation  in the Program  pursuant to an  irrevocable  election  before the
services are rendered giving rise to the payment of the Director's Fee.

            (c) Duration of  Restriction.  Subject to the  provisions of Article
III,  the  Restricted  Stock  issued to a  Participant  shall be  subject to the
restrictions of the Program until December 31, 1999.

             (d)  Calculation of Restricted  Stock.  The Restricted  Stock which
shall be issued to a Participant in lieu of payment of a Director's Fee shall be
derived by dividing the amount of the  Participant's  Director's  Fee  otherwise
expected  to be  payable to the  Participant  prior to January 1, 2000 but after
December 31, 1996,  plus an  additional  five percent  (5%),  by the Fair Market
Value of a Share on December  31, 1996;  provided,  however,  for a  Participant
first  elected to the Board after  January 1, 1997,  the Fair Market  Value of a
Share shall be determined on December 31 immediately preceding the Participant's
participation in the Program.  There will be no fractional shares. The number of
shares  granted will be the number of shares derived above rounded up or down to
the nearest whole number.

SECTION 6.  STOCK SUBJECT TO THE PLAN

         6.1 Number.  The total  number of Shares that may be granted  under the
Plan shall not exceed 25,000.  These Shares may consist, in whole or in part, of
authorized but unissued  Shares or Shares  reacquired by the Company,  including
without  limitation,  Shares purchased in the open market,  and not reserved for
any other purpose.


<PAGE>


         6.2 Reacquired  Shares.  If, at any time, Shares issued pursuant to the
Plan  shall  have  been  reacquired  by  the  Company  in  connection  with  the
restrictions  herein imposed on such shares,  such reacquired Shares again shall
become  available  for  issuance  under  the  Plan  at  any  time  prior  to its
termination.

         6.3  Adjustment  in  Capitalization.  In the event of any change in the
outstanding  Shares of the Company by reason of a stock  dividend,  stock split,
recapitalization,  merger, consolidation,  combination, or exchange of shares or
other similar corporate change, the aggregate number and kind of Shares issuable
under  this  Plan  shall  be  appropriately  adjusted  by the  Committee,  whose
determination shall be conclusive.

SECTION 7. SHARES OF RESTRICTED STOCK

         7.1 Grant of Shares of Restricted Stock.  Awards of Restricted Stock to
Participants shall be granted under an irrevocable election by Participants.

         7.2  Transferability.  The  shares of  Restricted  Stock  granted  to a
Participant  may not be  sold,  transferred,  pledged,  assigned,  or  otherwise
alienated or  hypothecated  as long as the shares are subject to  forfeiture  or
other conditions as provided in the Plan.

          7.3     Removal of Restrictions.

          (A)     Vesting of Restricted Stock.
                           (i) Unless  earlier  forfeited,   as to one-third (or
such applicable fraction to reflect deferrals for a period less than 3 years) of
the  shares  of  Restricted   Stock   representative   of  the  annual  retainer
compensation  deferred by the Participant,  the  restrictions  applicable to the
Restricted  Stock issued for the benefit of the Participant  shall lapse and the
Participant  shall  be  entitled  to the  delivery  of a  stock  certificate  or
certificates  on or shortly after  December 31st of each year if  Participant is
then a Director of the Company.

                           (ii) Unless earlier forfeited,  as to one-twelfth (or
such  applicable  fraction to reflect  deferrals  made for a period less than 12
quarterly  meetings) of the shares of  Restricted  Stock  representative  of the
regular   quarterly   meeting  fees  of  the  Director's  Fee  deferred  by  the
Participant,  the restrictions  applicable to the Restricted Stock issued for th
benefit  of the  Participant  shall  lapse  upon  the  occurrence  of a  regular
quarterly  meeting and attendance by the Participant,  and the Participant shall
be entitled to the  delivery of a stock  certificate  or  certificates  for such
shares;  provided,  however,  the Company will not, unless otherwise  requested,
issue  such  certificate(s)   until  December  31st  of  each  year  or  shortly
thereafter.

                           (iii)   Unless   earlier    forfeited,    as   to  a
prorata  number of shares of Restricted  Stock which would  otherwise  vest in a
calendar  year of the  Program  pursuant  to  Section  7.3  (A)(i)  or (ii),  th
restrictions  applicable to the  Restricted  Stock issued for the benefit of the
Participant shall lapse and the Participant shall be entitled to the delivery of
a stock certificate or certificates upon the occurrence of any of the following:

                                     (a)      The date of the Participant's
                                              death or disability;

                                     (b)      The end of the Participant's  term
                                              for  which  elected,  if not  then
                                              re-elected  (except  if  forfeited
                                              under Section 7.3 B(ii);


<PAGE>


                                      (c)      Upon the mandatory  retirement of
the Participant from the Board; or

                                      (d)       Upon the occurrence of a Change
 in Control.

         (B) Forfeiture of Restricted  Stock.  Except as to shares of Restricted
Stock earlier vested,  the Restricted  Stock issued to the Participant  shall be
entirely forfeited if:

                             (i)  The  Participant  resigns  (other  than by
reason of  disability)  or is dismissed for cause from the Board during the
Participant's elected term; or

                             (ii) The  Participant  refuses to stand for an
election  to the Board  after having been nominated by the Board; or

                              (iii) As to one-twelfth  (or such applicable
fraction to reflect deferrals made for a period less than 12 quarterly meetings)
of the shares of Restricted  Stock awarded to a  Participant  representative  of
regular  quarterly  meeting fees  multiplied by the number of regular  quarterly
meetings of the Board  unattended by the Participant  occurring in the preceding
calendar year shall be identified and forfeited on December 31 of each year.

For purposes of Section 7.3 (B)(i) above,  a Participant  shall be considered to
have been  dismissed for cause if, and only if, the  Participant is dismissed on
account  of any  act of  (a)  fraud  or  intentional  misrepresentation,  or (b)
embezzlement,  misappropriation  or conversion of assets or opportunities of the
Company or any direct or indirect majority-owned subsidiary of the Company.

         7.4  Legends  and  Escrow.   In  addition  to  any  other   legends  or
restrictions,  the  Company  specifically  reserves  the  right to place on each
certificate  or  account  representing  shares of  Restricted  Stock a legend as
follows:

                  "The sales or other transfer of shares of stock represented by
         this  certificate  (account),  whether  voluntary,  involuntary,  or by
         operation  of law,  is  subject to the  restrictions  on  transfer  and
         forfeiture  conditions  (which  include  the  satisfaction  of  certain
         service  requirements) set forth in the Pioneer Hi-Bred  International,
         Inc.  Directors'  Restricted  Stock  Plan.  A copy  of  such  plan  and
         agreement  may be  inspected  at the  offices of the  Secretary  of the
         Company."

All  shares of  Restricted  Stock  shall be held by the  Committee  in escrow on
behalf of the Participant awarded such shares, together with a Power of Attorney
executed  by  the  Participant,  in  form  satisfactory  to  the  Committee  and
authorizing  the Company to transfer  such shares as provided in the  Restricted
Stock  Agreement,  until such time as all  restrictions  imposed on such  shares
pursuant to the Plan and the  Restricted  Stock  Agreement  have expired or been
earlier terminated.

         7.5 Waiver at the Committee's  Discretion.  Notwithstanding  the above,
the Committee also may waive all  restrictions on shares of Restricted  Stock at
any time, in its sole  discretion.  The shares  released from such  restrictions
pursuant to this  Section 7.5  thereafter  shall be freely  transferable  by the
Participant, subject to any applicable legal requirements.

         7.6 Voting Rights.  For shares not forfeited,  Participants  shall have
full voting rights with respect to shares of Restricted Stock.


<PAGE>


         7.7 Dividend Rights. For shares not forfeited,  except as the Committee
may otherwise  determine,  Participants shall have full dividend rights with any
such  dividends  being paid  currently.  If all or part of a dividend is paid in
shares of stock,  the dividend shares shall be subject to the same  restrictions
on  transferability as the shares of Restricted Stock that are the basis for the
dividend.

SECTION 8.  AMENDMENT AND TERMINATION

         8.1 Amendment. This Plan may be amended by the Board.

         8.2  Termination.  The Company reserves the right to terminate the Plan
at any time by action of the Board.

         8.3 Existing  Restrictions.  Neither  amendment nor termination of this
Plan shall affect any shares  previously  issued or any restrictions  previously
issued or any  restrictions  previously  imposed on such shares pursuant to this
Plan.

SECTION 9.  WITHHOLDING OF TAXES

         9.1  Withholding  of Taxes  for  Foreign  Directors.  The  Company  may
require,  as a  condition  to any grant  under the Plan or to the release of any
restrictions, security interest or escrow hereunder, that the Participant pay to
the Company, in cash, any federal,  state or local taxes of any kind required by
law to be withheld with respect to any grant,  vesting or delivery of Restricted
Stock.  The Committee,  in its sole discretion,  may permit  Participants to pay
such taxes a) through the withholding of Restricted Stock otherwise  deliverable
to such  Participant  in  connection  with such  vesting or  delivery  or b) the
delivery to the Company of Shares  otherwise  acquired by the  Participant.  The
Restricted  Stock withheld by the Company or Shares  tendered to the Company for
the  satisfaction  of tax  withholding  obligations  under this section shall be
valued in the same  manner as used in  computing  the  withholding  taxes  under
applicable law. The Company,  to the extent  permitted or required by law, shall
have the  right  to  deduct  from any  payment  of any kind  otherwise  due to a
Participant any taxes of any kind required by law to be withheld with respect to
any grant,  vesting or delivery of Restricted Stock under the Plan, or to retain
or sell without notice a sufficient number of the Restricted Stock granted or to
be  granted  to such  Participant  to cover any such  taxes,  provided  that the
Company  shall  not  sell  any  such  Restricted  Stock  if such  sale  would be
considered a sale by such Participant for purposes of Section 16 of the Exchange
Act.

SECTION 10 - MISCELLANEOUS

         10.1 No Contract of Employment. Nothing in this Plan shall be construed
as a contract of Board representation between the Company and any Participant.

         10.2 Severability. If any provision of this Plan is held to be illegal,
invalid, or unenforceable, such illegality, invalidity or unenforceability shall
not affect the remaining  provisions of this Plan, and such  provision  shall be
construed and enforced as if such illegal,  invalid, or unenforceable  provision
had never been inserted.


<PAGE>


         10.3  Governing  Law.  This Plan shall be  governed  by the laws of the
State of Iowa without reference to the principles of conflict of laws therein.

                                        PIONEER HI-BRED INTERNATIONAL, INC.


                                        By:      /s/ Charles S. Johnson
                                                 Charles S. Johnson
                                                 President and CEO


/s/ Jerry L. Chicoine
Jerry L. Chicoine
Secretary



<PAGE>



<TABLE>
<CAPTION>


                                   EXHIBIT 11

                       PIONEER HI-BRED INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                        COMPUTATION OF EARNINGS PER SHARE
                    (In thousands, except per share amounts)

                                                                Years Ended August 31,
                                               1997             1996              1995             1994              1993
Number of shares of common
    stock outstanding at
<S>                                            <C>               <C>              <C>               <C>              <C>   
    beginning of the period.............       82,389            83,487           86,215            89,442           90,274

Weighted average number of
    shares of common stock
    issued during the period............          156                75              128                90              148

Weighted average number of
    shares of common stock
    purchased for the treasury
    during the period...................         (253)             (408)          (1,832)             (884)            (308)
                                            ---------         ---------         --------         ---------         --------

Weighted average number of
    shares of common stock
    outstanding during the
    period..............................       82,292            83,154           84,511            88,648           90,114
                                           ----------         ---------         --------         ---------         --------

Income before cumulative
    effect of changes in
    accounting principles...............   $  242,830        $  222,962       $  182,590        $  212,664        $ 137,453
                                            ---------         ---------        ---------         ---------         --------

Income before cumulative
    effect of changes in
    accounting principles
    per common share....................   $     2.95        $     2.68       $     2.16        $     2.40        $    1.53
                                            ---------         ---------        ---------         ---------         --------

Net income..............................   $  242,830        $  222,962       $  182,590        $  212,664        $ 120,484
                                            ---------           -------        ---------         ---------         --------

Earnings per common share...............   $     2.95        $     2.68       $     2.16        $     2.40        $    1.34
                                            ---------         ---------        ---------         ---------         --------


</TABLE>

The common  stock  equivalents  have not  entered  into the net income per share
computations because they would not have a material dilutive effect.


<PAGE>


THE COMPANY'S BUSINESS

Overview
The  business  of Pioneer  Hi-Bred is the broad  application  of the  science of
genetics.  Pioneer  was  founded  in  1926 to  apply  newly  discovered  genetic
techniques to hybridize corn. Today the Company develops,  produces, and markets
hybrids  of corn, sorghum,  and  sunflowers;  varieties  of soybeans,   alfalfa,
wheat, and canola; and microorganisms useful in crop and livestock production.

Hybrids,  such as corn and sorghum,  are crosses of two or more unrelated inbred
lines that can be reproduced  only by crossing the original  parent lines.  As a
result,  it is not  beneficial  for  customers to plant saved seed,  as the seed
produced will not have the same genetic attributes as the seed planted. Varietal
crops, such as soybeans and wheat,  will reproduce  themselves with little or no
genetic variation.  Customers  frequently plant saved grain from these products,
however,  they are becoming  increasingly  aware of the advantages of purchasing
"new" seed every year.

Pioneer is the industry leader in research and product  development and has been
for  seventy-plus  years. The Company owns what it believes to be the industry's
finest  collection  of crop genetics  (germplasm)  which has been the key to the
success of Pioneer in the past, and will be in the future.  Our  researchers are
well-established  experts in the science of crop  genetics.  They are constantly
focused on improving our germplasm base using the latest in technology.

Integrating new technology is essential to crop genetic improvements. Currently,
Pioneer has more than 1,000 research agreements with third parties  specializing
in technology that can help improve the core germplasm base.  Alliances recently
entered into will allow Pioneer to map the genes that make up our seed products.
Pioneer was the first  commercial seed company to undertake such a project.  The
goal is to determine  which genes, or groups of genes,  control  valuable traits
and eventually have the ability to arrange these genes to work more  efficiently
in our commercial products.

In North  America,  the majority of  Pioneer(R)  brand seed is marketed  through
independent sales  representatives.  In areas outside the traditional Corn Belt,
seed products are often marketed  through  dealers and  distributors  who handle
other agricultural supplies. Pioneer products are marketed outside North America
through  a  network   of   subsidiaries,   joint   ventures,   and   independent
producer-distributors.

Product Summary
The  Company's  principal  products are seed corn and soybean  seed,  which have
accounted  for  approximately  90  percent  of total  worldwide  net  sales  and
substantially  100  percent of  worldwide  operating  income  over the last five
years.  These products are expected to maintain a dominant role in the Company's
results of operations for the foreseeable future.

Hybrid  seed  products  typically  generate  some of the  largest  margins  as a
percentage of sales for the Company.  Seed corn  provides the largest  impact of
all  products,  in terms of dollars,  to the financial  bottom line.  Therefore,
acreage  shifts  from corn to other crops can have a  significant  effect on the
Company's  profitability.  Compared  to  hybrid  seed,  sales and  profits  from
non-hybrid  seed  are  more  heavily  dependent  on  commodity  prices  and  the
competition from farmer-saved seed. As a result,  these margins are narrower and
operations are more subject to year-to-year fluctuations.

Corn: Seed corn, in terms of both sales and profitability, is the Company's most
significant   product.   In  1997,   sales  of  hybrid  seed  corn   represented
approximately 78 percent of total Pioneer worldwide net sales.


<PAGE>


More than 80 percent of the world's  corn is fed to  livestock,  and they are in
many  ways the true end  users for our  products.  The  Company  is  focused  on
developing superior corn hybrids for grain and silage as part of this market.

Grain and oilseed  processors  are also demanding more  customized  traits.  The
Company is actively pursuing  opportunities to provide unique value-added traits
for these customers as well.

Improving   traditional   agronomic  traits  continues  to  be  important.   Our
researchers are working to develop hybrids with superior  harvestable yield, and
create  products that reduce crop losses,  grower input costs,  and risk through
agronomic improvements such as insect, disease, and herbicide resistance.

Each year,  Pioneer  evaluates about 130,000 new experimental seed corn hybrids.
Prior to  commercial  sale,  each  hybrid  passes  through a four- to  five-year
testing  cycle.  During this  period,  the hybrids are tested in a range of soil
types, stresses,  and climatic conditions.  Only hybrids that meet the Company's
highest  standards  make it to  commercial  status.  In the past,  we  typically
introduced  15-20 new  hybrids  each year.  However,  we expect  that  number to
increase in the future. By the time a typical Pioneer(R) brand hybrid is offered
for sale,  it has been  tested at more than 150  locations  and in more than 200
customer fields. This rigorous testing system helps Pioneer consistently develop
reliable,  leading-edge new genetics with a total package of traits that deliver
superior value to our customers.

The Company's  top-selling  seed corn markets  worldwide  are the U.S.,  France,
Canada,  and Italy.  Estimated  acreage  planted  within  these  markets in 1997
totaled 80 million, 8 million, 3 million, and 3 million acres, respectively.

Soybeans: Soybean seed is the Company's second largest product in terms of sales
and  profitability.  Worldwide  soybean revenues  accounted for approximately 12
percent of 1997 total consolidated revenues.

Each year, Pioneer soybean  researchers plant more than 600,000 yield test plots
to measure performance of experimental varieties in many different environments.

Some of the most exciting new products  currently in the soybean  product lineup
are soybeans  resistant to specific  herbicides.  These  soybeans  accounted for
approximately 17 percent of 1997 total soybean sales, and this percentage should
increase in the future.

Developing  products for the  specialty and  identity-preserved  markets is also
important to the soybean research focus. Pioneer researchers are leading the way
in developing  soybean seed with  improved  meal and oil qualities  suitable for
these markets.

Other key  attributes  our  soybean  research  efforts  are  focused  on include
creating  products  with  increased   harvestable  yield  and  yield  stability,
standability, disease and pest resistance, and emergence speed.

The  Company's  top-selling  markets for soybean  seed are the U.S.  and Canada.
Total  estimated  acreage  within  these  markets  for 1997 was 71 million and 3
million acres, respectively.

End Use Focus
Within Pioneer Hi-Bred's overall research emphasis for our products, focusing on
the end use is an area of increasing importance.  In the coming years, end users
such as livestock  feeders,  grain processors,  food processors,  and others are
expected  to demand  specific  qualities  in the  crops  they use as an input in
developing other products. In the future, the commodity grain market is expected
to segment based on these changing demands,  which will  increasingly  influence
seed purchase decisions.


<PAGE>


The Company's  emphasis on end-use markets was  dramatically  strengthened by an
alliance with DuPont, which was completed in early fiscal 1998. In the alliance,
Pioneer  and DuPont will form a broad  research  alliance  and a separate  joint
venture company  designed to speed the discovery and delivery of new crop traits
that benefit end users. A key focus of the research  alliance will be to develop
corn, soybeans, and other oilseeds with traits that will deliver added value for
end users of these products.  The joint venture,  which will be owned equally by
Pioneer and  DuPont,  will work to create and  capture  value for those  quality
traits.  The joint  venture  will not be in the seed  business.  Pioneer will be
the  preferred  worldwide  provider and  marketer of quality  trait seed for the
joint venture.

Product Sourcing
The Company has seed production facilities located throughout the world, in both
the Northern  and  Southern  Hemispheres.  In the  production  of its parent and
commercial seed, the Company generally provides the seed stock,  detasseling and
roguing labor,  and certain other production  inputs.  The balance of the labor,
equipment,  and inputs are supplied by independent growers. The Company believes
the  availability of growers,  parent seed stock,  and other inputs necessary to
produce its commercial seed is adequate for planned production levels.

The principal  risk in the production of seed is the  environment,  with weather
being the single  largest  variant.  Pioneer  lessens this risk by  distributing
production  across many locations  around the world. Due to its global presence,
the  Company  can engage in seed  production  year-round.  To ensure the highest
quality seed is made available,  and to enhance the Company's ability to operate
in a global environment,  Pioneer is actively engaged in ISO 9000 certification.
Pioneer is the first major  agricultural seed company in the world to attain ISO
9000  registration.   The   certification,   established  by  the  International
Organization  for  Standardization,  should allow  Pioneer to move products more
easily from country to country.

Patents, Trademarks, and Technology
Pioneer  maintains  the  ownership  of  and  controls the use of its inbreds and
varieties by means of intellectual  property  rights,  including but not limited
to, the use of patents,  trademarks,  and Plant Variety Protection Certificates.
Within the U.S.,  these rights  essentially  prohibit other parties from making,
using,  selling,  importing,  or exporting  seed produced from those inbreds and
varieties until such protection  expires,  usually well after the useful life of
the inbred or variety.  Outside of the U.S.,  the level of  protection  afforded
varies  from  country  to  country  according  to local  laws and  international
agreements. As of August 31, 1997, Pioneer held 159 U.S. patents and 349 foreign
patents.  The Company currently has over 700 patent applications  pending on new
technologies and products moving toward commercialization.

The Company,  and the industry as a whole, will be increasingly  affected by new
patents, patent positions, and patent lawsuits.  Pioneer has become increasingly
active in its patenting of inbreds,  hybrids,  and other  products and processes
that relate to our business. Pioneer believes that its current patent positions,
technologies, germplasm, and sales force place the Company in a good position to
freely  develop  and  commercialize  the  products  that  will be  necessary  to
effectively compete in the marketplace.

No single patent Pioneer  currently  owns is vitally  important to the Company's
business.  However,  a substantial  number of patents have recently been applied
for, and some granted, in the area of biotechnology by Pioneer and others in the
industry.  These  patents  relate  to  technology  in the  area  of  genetically
engineering insect,  disease,  and herbicide  resistance into crops. If existing
and future  patents in the area of  biotechnology  are upheld,  it is  uncertain
whether  holders of these patents would allow this  technology to be licensed by
others in the  industry,  and at what price.  However,  the Company  will review
carefully all requests for licenses to its  technology  and to grant access when
it is commercially prudent to do so.

The Company's  policy is to vigorously  protect our  intellectual  property from
infringement.


<PAGE>


Seasonality of the Business
Because the seed business is highly seasonal, the Company's interim results will
not necessarily  indicate the results for the full year.  Substantially all seed
sales are made from late second  quarter  through  the end of the third  quarter
(February 1 through May 31) of the fiscal year. Typically,  the Company operates
at a loss during the first and fourth quarters.  Varying climatic conditions can
change the earnings  patterns between quarters by affecting the delivery of seed
and causing a shift in sales between quarters.

Competitive Conditions
The hybrid seed industry is  characterized  by intense  competition and is based
primarily  on product  performance  and price.  The  Company's  objective  is to
produce products that consistently  out-perform the competition and so command a
premium price.  The Company has been  successful  competing on that basis in the
past  and  expects  to  continue  to do so in the  future  through  its  ongoing
investment in research and product development.

The primary  markets for the  Company's  products  are the U.S.  and Canada (the
North American region) and Europe.  Approximately 67 percent of total 1997 sales
were made within North America and 23 percent  within  Europe.  The Company also
has operations in Latin America,  Mexico, Africa, Asia, and the Middle East. Our
goal within  developing  nations is to aid the  development of the existing seed
markets and establish businesses that can grow and prosper.

Pioneer is the industry leader in North American seed corn sales.  The Company's
share of this market in 1997 is estimated to be  approximately  42 percent.  The
next six competitors held an estimated combined market share of approximately 32
percent,  with the closest  competitor  holding  approximately  11 percent.  The
remainder  of the  market  is  divided  among  more than 300  companies  selling
regionally.

The Company also has a leading  seed corn market share in most of the  countries
outside  North  America in which it operates.  Significant  markets in which the
company  operates  include   France,  Italy,  Germany,   Hungary,   Mexico   and
Brazil.  The Company's  market share within these countries  ranges from near 10
percent to more than 60 percent.

Pioneer's  principal  market for soybean seed is North  America.  The  Company's
share  of the 1997  purchased-seed  market  totaled  approximately  18  percent,
highest in the industry.


Research and Product Development
The  Company's  research  and product  development  activities  are  directed at
products with significant  market  potential.  Pioneer believes it possesses the
largest single  proprietary pool of germplasm in the world from which to develop
new hybrid and varietal  seed  products.  The  Company's  seed  research is done
through  classical plant breeding and biotechnology  techniques.  Certain of our
current products require  government  approval before  commercialization.  It is
expected  a  larger  number  of our  future  products  will  also  require  such
government approval.

At August 31, 1997, the Company employed  approximately  940 people who directly
and indirectly engaged in research and product development activities. Of these,
390 scientists  performed  research in the  agricultural  seed area and eight in
microbial  cultures.  Of the 390 scientists  performing research in agricultural
seeds, 65 are employed outside of North America.

<PAGE>
<TABLE>
<CAPTION>


During the three fiscal years ended  August 31, 1997,  the Company  expended the
following amounts on research and product development:

         Years ended August 31,              1997             1996              1995
------------------------------------------------------------------------------------
(in millions)
<S>                                           <C>            <C>              <C>   
Corn.............................             $101           $  90            $   87
Soybeans.........................               14              12                10
Other Products...................               31              34                33
                                            ------             ---               ---
                                              $146            $136             $ 130
                                               ===            ====               ===
</TABLE>

Planned  growth in breeding  projects,  research  collaborations,  and trait and
technology  development  contributed  to the recent  increase  in  research  and
product development costs.

Risk Factors in Our Business
The annual volume of seed sold and related profit can be significantly  affected
by  forces  beyond  the  Company's  control.  Two such  factors  are  government
programs/approvals  and weather.  Government  programs  can affect,  among other
things, crop acreage and commodity prices.  Government  regulatory approvals can
affect the timing of bringing new products to market.  Weather and other factors
can affect  commodity  prices,  product  performance,  the Company's  seed field
yields, and planting decisions by customers which ultimately can impact acreage.

Intellectual property positions are becoming  increasingly  important within the
agricultural  seed industry as genetically  engineered  products become a larger
part of the product  landscape.  At this point in time,  it is uncertain who has
what patent rights within the industry for recent technology advancements.

Operating  as a global  company  exposes  Pioneer  to the risks  resulting  from
currency  fluctuations.  We have policies in place to manage this risk.  Product
performance  against  the  competition  will  continue  to be the key  driver of
long-term  success  for the  Company.  While  we have  been  able in the past to
develop products that on-average consistently out-perform the competition, rapid
change in technology and customer preference may result in competitive  products
that are in greater demand.

General
The  operations  of  Pioneer  are  subject to rules and  regulations  of various
regulatory agencies.  Management believes that the Company is in compliance,  in
all material  respects,  with all  applicable  rules and  regulations,  and that
compliance  has  not  had a  materially  adverse  effect  on its  operations  or
financial condition.

At August 31, 1997, the Company employed approximately 5,000 people worldwide.



<PAGE>
<TABLE>
<CAPTION>


SELECTED FINANCIAL DATA
Consolidated Ten-Year Financial History

         Years Ended August 31,     1997     1996     1995      1994       1993     1992      1991       1990       1989      1988
------------------------------------------------------------------------------------------------------------------------------------
(In millions, except per share and statistical amounts)

Summary Operations: 
<S>                              <C>      <C>       <C>       <C>       <C>       <C>        <C>       <C>        <C>       <C>     
Net Sales....................... $ 1,784  $ 1,721   $ 1,532   $ 1,479   $ 1,343   $ 1,262   $1,125    $   964    $    867  $    759
                                  ======   ======    ======    ======     =====     =====    =====      ======     ======   =======
Gross Profit.................... $   867  $   858   $   760   $   759   $   700   $   640   $  549    $   442    $    391  $    389
                                  ======   ======    ======    ======    ======    ======    ======     ======     ======    ======
Restructuring and Settlements... $    --  $    --   $    --   $    45    $  (54)  $    --   $    --   $    --    $     --  $     --
                                  ======   ======    ======    ======    ======    ======    ======     ======     ======    ======
Income From Continuing
   Operations................... $   243  $   223   $   183   $   213   $   137   $   152   $   104    $    73    $    82   $    84
                                  ======   ======    ======    ======    ======    ======    ======     ======     ======    ======
Net Income...................... $   243  $   223   $   183   $   213   $   120   $   152   $   104    $    73    $    98   $    65
                                  ======   ======    ======    ======    ======    ======    ======      ======     ======   =======

Per Common Share Data:
Income From Continuing
   Operations................... $  2.95  $  2.68   $  2.16   $  2.40   $  1.53  $  1.68    $  1.15    $  0.78    $  0.86    $  0.88
Net Income...................... $  2.95  $  2.68   $  2.16   $  2.40   $  1.34  $  1.68    $  1.15    $  0.78    $  1.03    $  0.68
Growth in Earnings Per Share*...   10.1%    24.1%   (10.0)%     56.9%    (8.9)%    46.1%      47.4%     (9.3)%     (2.3)%      31.3%
Dividends Declared.............. $  0.95  $  0.83   $  0.71   $  0.59    $ 0.50  $  0.40    $  0.39    $  0.39    $  0.36    $  0.35
Shareholders' Equity............ $ 13.96  $ 12.36   $ 10.94   $ 10.22    $ 9.23  $  8.86    $  7.51    $  7.00    $  6.62    $  6.04

Balance Sheet Summary:
Current Assets.................. $   901  $   784   $   770   $   742   $   717  $   703     $  606       538     $   474    $   450
Net Property & Other Assets..... $   702      638       523       511       504      543        480       468         440        414
                                   -----    -----    ------    ------     ------  ------     ------      -----     ------     ------
Total Assets.................... $ 1,603  $ 1,422   $ 1,293    $1,253   $ 1,221  $ 1,216      $1,086    $1,006    $   914   $    864
                                  ======   ======    ======     =====     =====    =====       =====      =====     ======    ======

Current Liabilities............. $   329  $   288   $   280   $   232   $   261  $   286    $   295    $   294    $   221    $   209
Long-Term Debt..................      19       25        18        66        68       74         67         19         17         28
Other Long-Term Liabilities.....     107       91        82        74        67       57         43         44         49         50
                                   -----     ------   -------  -------   -------  -------    -------    -------    -------   -------
Total Liabilities............... $   455  $   404   $   380    $  372   $   396  $   417    $   405    $   357    $   287   $    287
                                  ======   ======     ======    ======   ======    ======     ======     ======     ======    ======

Shareholders' Equity............ $ 1,148  $ 1,018   $   913   $   881   $   825  $   799    $   681    $   649    $   627    $   577
                                  ======   ======    ======    ======    ======   ======     ======     ======     ======     =====
Dividends Declared.............. $    79  $    69   $    60   $    52   $    45  $    36    $    35    $    36    $    34    $    33
Average Shares Outstanding......    82.3     83.2      84.5      88.6      90.1     90.8       90.9       93.5       95.4       95.5

Other Statistics:
Return on Ending Equity*........   21.2%    21.9%     20.0%     24.1%     16.7%    19.0%      15.3%      11.2%      13.1%      14.6%
Return on Net Sales*............   13.6%    13.0%     12.0%     14.4%      0.2%    12.1%       9.3%       7.5%       9.4%      11.1%
Return on Ending Assets*........   15.2%    15.7%     14.2%     17.0%     11.2%    12.5%       9.6%       7.2%       9.0%       9.8%
Gross Profit on Net Sales.......   48.6%    49.9%     49.6%     51.3%     52.1%    50.7%      48.8%      45.8%      45.1%      51.2%
Dividends Declared as a % of
      Net Income................   32.5%    30.9%     32.8%     24.6%     37.4%    23.9%      33.8%      49.7%      34.7%      50.9%
Stock Price at August 31,....... $ 85.69  $ 55.13   $ 43.00   $ 31.25   $ 32.75  $ 26.50    $ 17.42    $ 13.25    $ 14.00    $ 11.75
Market Capitalization at
   August 31, (in millions)....  $7,045$  $ 4,542   $ 3,590   $ 2,694   $ 2,929  $ 2,392    $ 1,579    $ 1,229    $ 1,326    $ 1,122
Number of Employees.............   4,994    4,911     4,924     4,847     4,807    5,016      4,829      4,601      4,026      4,805

*Based on income from continuing operations before cumulative effect of accounting change

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


CONSOLIDATED NET SALES AND OPERATING INCOME (LOSS) BY PRODUCT

                 Years Ended August 31,      1997     %          1996     %       1995      %         1994     %       1993      %
------------------------------------------------------------------------------------------------------------------------------------
(In millions, except per share amounts)

NET SALES:
<S>                                      <C>        <C>      <C>        <C>   <C>         <C>     <C>        <C>    <C>        <C> 
    Corn...............................  $  1,385   77.6     $  1,377   80.0  $  1,227    80.0    $  1,185   80.1   $ 1,077    80.2
    Soybeans...........................       208   11.7          164    9.5       145     9.5         128    8.7       116     8.6
    Other..............................       191   10.7          180   10.5       160    10.5         166   11.2       150    11.2
                                          -------  -----      -------  -----    ------  ------     -------  -----    ------   -----
Total net sales........................  $  1,784  100.0     $  1,721  100.0  $  1,532   100.0    $  1,479  100.0   $ 1,343   100.0
                                          =======  =====      =======  =====   =======   =====     =======  =====    ======   =====

OPERATING INCOME (LOSS):
    Corn...............................  $    402   29.0     $    410   29.8  $    359    29.3    $    383   32.3   $   354    32.9
                                                   =====               =====            ======              =====             =====
    Soybeans...........................        27   13.0           16    9.8         9     6.2           7    5.5         7     6.0
                                                   =====               =====            ======              =====             =====
    Other..............................        11    5.8           (3)  (1.6)      (15)  (9.4)         (21) (12.6)      (24)  (16.0)
                                                   =====                ====            ======              =====             =====
    Restructuring and settlements......        --     --          --      --        --      --          45    3.0       (53)   (3.9)
                                          -------  =====      -------  =====    ------  ======     -------  =====    -------   ====
Product line operating income..........  $    440   24.7     $    423   24.6  $    353    23.0    $    414   28.0   $   284    21.1
Indirect general and administrative
    expense............................       (77)  (4.4)         (76)  (4.4)      (73)   (4.7)        (68)  (4.6)      (59)   (4.4)
                                          -------  -----      -------  -----    ------  ------     -------  -----    ------   -----
Operating income.......................  $    363   20.3     $    347   20.2  $    280    18.3    $    346   23.4   $   225    16.7
Financial income (expense).............        10    0.6            7    0.4        11     0.7           3    0.2        (6)   (0.4)
                                          -------  -----      -------  -----    ------  ------     -------  -----    ------   -----
Income before items shown below........  $    373   20.9     $    354   20.6  $    291    19.0    $    349   23.6   $   219    16.3
Provision for income taxes.............      (127)  (7.1)        (127)  (7.4)     (106)   (6.9)       (134)  (9.1)      (86)   (6.4)
Minority interest and other............        (3)  (0.2)          (4)  (0.2)       (2)   (0.1)         (2)  (0.1)        4     0.3
                                          -------  -----       ------  -----    ------  ------     -------  -----    ------   -----
Income before cumulative effect of
    accounting change..................  $    243   13.6     $    223   13.0  $    183    12.0    $    213   14.4   $   137    10.2
Cumulative effect of accounting
    change, net........................        --     --           --     --        --      --          --     --       (17)   (1.2)
                                          -------  -----      -------  -----    ------  ------     -------  ------   ------   -----

NET INCOME.............................  $    243   13.6     $    223   13.0  $    183    12.0    $    213   14.4   $   120     9.0
                                          =======  =====      =======  =====    ======  ======     =======  =====    ======   =====

Income per common share:
    Income before cumulative effect
      of accounting change.............  $   2.95            $   2.68         $   2.16            $   2.40          $  1.53
    Cumulative effect of accounting
      change, net......................        --                  --               --                  --             (.19)
                                          -------             -------           ------             -------           ------
    Net income.........................  $   2.95            $   2.68         $   2.16            $   2.40          $  1.34
                                          =======             =======          =======             =======           ======

Average shares outstanding.............      82.3               83.2              84.5                88.6              90.1



</TABLE>



<PAGE>


MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

Pioneer  continued its trend of earnings  growth,  once again  achieving  record
financial results in 1997. A recap of key financial data tells the story.

         -    Current year net income after tax totaled $243  million,  or $2.95
              per share,  on sales of $1.784  billion.  After tax income in 1996
              totaled  $223  million,  or $2.68  per  share,  on sales of $1.721
              billion.  The result was per-share  earnings  growth  totaling ten
              percent for the current year.

         -    Return on Ending  Equity (ROE) of 21 percent,  sustained  above
              the targeted level of 20 percent for the fourth consecutive year.

The Company  continues to perform on its primary  financial goals - double-digit
earnings growth over time and maintaining 20 percent ROE.

Historically,  the Company's  growth has primarily been driven by North American
seed corn  operations.  In 1997,  record  sales  and  profits  from our  soybean
business,  improved  profitability from our other product seed lines, and strong
seed corn sales  outside  North  America  were the primary  drivers for improved
current year income.

Fiscal 1997 marked a  significant  transition  for our seed corn product line in
North America.

Our seed corn operations in North America provided  outstanding results in 1997,
generating  record  product  margins  despite a reduction  in units  sold.  When
combined with increased  investments  in corn research and product  development,
North American  operating  income for corn decreased.  Although these additional
costs ultimately  reduced current year corn operating income below 1996 results,
they are a direct investment in our future profitability.

The  reduction  in units sold was  primarily  the  result of a  decrease  in the
Company's  North  American  market  share.  Depending  on final corn acreage and
seeding rates,  market share is estimated to decrease  approximately two points.
This will result in the Company's leading market share in North America to total
approximately  42 percent.  Lower unit sales of older, high-volume  hybrids were
largely  responsible for the market share decrease.  Delayed regulatory approval
of our Bt corn products also contributed to the lower market share results.

Corn acreage rose modestly  above 1996,  positively  impacting the current year.
Operating  results in North America were also affected by a higher  average seed
corn selling price, due in part to an increase in the list price of products and
a shift to higher-priced  products.  Per-unit seed corn costs increased as well,
however,  the result was current  year  per-unit  seed corn  margins  above 1996
levels.

Record North  American  soybean  sales and profits in 1997 played a  significant
role in current year results.  Growth in acreage,  market share, and strong unit
sales of  glyphosate-resistant  products  pushed  current  year  North  American
soybean unit sales and operating results to record levels.

Operating income for other products improved  significantly from a year ago. The
elimination  of prior year losses from the sale of our  vegetable  products line
and  liquidation  of our  specialty  oils  inventory in 1996 not present in 1997
positively  impacted  current year  results.  The balance of our other  products
provided significant improvements in operating income in the current year.

Most  operations  outside North America also generated  good earnings  growth in
1997, primarily due to strong seed corn sales. Our operations in Europe, Mexico,
Asia,  Africa, and the Middle East all posted increases in operating income from
a year ago.  Conversely,  Latin American  operations did not meet  expectations,
resulting from seed corn supply availability, product

<PAGE>


performance,  and reduced corn acreage during the year. In total, seed corn unit
volumes  outside North America  increased from a year ago.  Earnings  growth for
these  regions,  however,  were  dampened by the strong U.S.  dollar  during the
period.

Management  is  optimistic  that 1998 will be  another  good year.  The  Company
believes it is well  positioned to grow North American seed corn market share in
1998 due to the excitement  about the increased value and performance of our new
products. North American seed corn margins should also improve.

The Company introduced 27 new corn hybrids in limited volumes during 1997. These
new  products  have  performed  very  well  in  wide-area  testing,  and are now
performing well in customers' fields. In addition to Bt corn, these new releases
include  high-yielding  conventional  hybrids,  products for the rapidly growing
high-oil market,  hybrids with better disease  resistance,  as well as new white
and waxy corn hybrids for the starch industry.  The Company's ability to quickly
increase  supply of these  products due to  year-round  production  capabilities
should make them widely available in 1998.

Management believes that our new Bt corn products  incorporate the best genetics
available and have stronger  performance  potential  than any competitor Bt corn
product  released  to date.  As a  result,  the  Company  should  be in a better
position to compete for Bt corn market  share in 1998 due to good  placement  of
its current year Bt corn products in the market,  significantly  larger supplies
of these products, and an entire season in which to market them.

Until  recently,  Pioneer has  participated  in the rapidly  growing  market for
high-oil corn in very limited volume.  However,  a recent  agreement with DuPont
will  bring  more  opportunities  to  compete  for  these  acres in 1998 and the
potential to become a significant supplier in this market.

A continued shift by customers to  higher-priced,  higher-value  new products is
expected to increase the average  per-unit North American seed corn sales price.
Per-unit seed corn cost of sales in North America is expected to hold relatively
steady  compared to 1997.  When combined  with the sales price  effect,  margins
should be positively affected in 1998.

Management  believes that strong North American soybean operations will continue
into  1998  as our  soybean  products  continue  to  perform  well  against  the
competition.  The  demand  for  glyphosate-resistant  products  is  expected  to
increase  significantly,  and the  Company  will have  larger  supplies of these
products available for sale in 1998. As a result, sales of  glyphosate-resistant
products are expected to represent a larger  percentage of overall soybean sales
in 1998,  and margins are  expected to improve  because of their  premium  sales
price over our elite varieties.

While operations outside North America are more difficult to predict, management
believes these operations will continue to grow and improve on results of 1997.

As always, uncertainties exist that could affect the Company's expectations, and
fluctuations  in  expected  results  are  likely  as  more  information  becomes
available. Some of the important factors that could cause actual results to vary
significantly  from  management's  expectations  noted in these  forward-looking
statements    include   the    weather,    seed   field    yields,    government
programs/approvals,  commodity  prices,  changes in corn  acreage,  intellectual
property  positions,   product  performance,   customer  preferences,   currency
fluctuations, and costs.



<PAGE>



Year Ended August 31, 1997, Compared to the Year Ended August, 31, 1996

Hybrid Seed Corn
Current year seed corn  operating  income  decreased $8 million,  or two percent
from prior year results.  Operations in North America played a significant  role
in the decrease,  primarily the result of fewer unit sales,  increased  per-unit
net margins,  and higher investments in research and product  development.  Seed
corn operations outside North America provided increased operating income from a
year ago on higher unit sales, however, this was tempered by the stronger U.S.
dollar in the current year.

<TABLE>
<CAPTION>

Corn Net Sales and Product Line Operating Income

                                                   Increase                                        Increase
                             1997                 (Decrease)                  1996                (Decrease)                1995
--------------------------------------------------------------------------------------------------------------------------------
(In millions)

NET SALES:
<S>                        <C>              <C>             <C>            <C>            <C>             <C>          <C>      
    North America........  $     907        $      (1)      (0.1)%         $     908      $     100       12.4   %     $     808
    Europe...............        342                6        1.8  %              336             31       10.2   %           305
    Other regions........        136                3        2.3  %              133             19       16.7   %           114
                            --------         --------                       --------         ------                     --------
Total net sales..........  $   1,385        $       8        0.6  %        $   1,377      $     150       12.2   %     $   1,227
                            ========         ========        =====          ========       ========      ========       ========

OPERATING INCOME:
    North America........  $     266        $     (10)      (3.6)%         $     276      $      20        7.8   %     $     256
    Europe...............        118               18       18.0  %              100             25       33.3   %            75
    Other regions........         18              (16)     (47.1)%                34              6       21.4   %            28
                            --------         --------                       --------         ------                     --------
Total operating income..      $  402     $        (8)    (2.0)     %$ 410        $      51             14.2    % $   359
                               =====      ==========     =====        ===         ========      ===============   ======

UNIT SALES:
 (80,000-kernel units)
    North America........      11.5              (0.6)      (4.6)%              12.1            1.2       11.3   %          10.9
    Europe...............       3.1               0.2        5.4  %              2.9            0.2        7.1   %           2.7
    Other regions........       2.3              (0.1)      (4.7)%               2.4            0.5       22.3   %           1.9
                            -------          --------                       --------         ------                     --------
Total unit sales.........      16.9              (0.5)      (3.0)%              17.4            1.9       12.0   %          15.5
                            =======          ========       =====           ========         ======      ========       ========

ACRES:
North America............      83.3               0.6        0.7  %             82.7            8.5       11.4   %          74.2
                            =======          ========        =====          ========         ======      ========       ========
</TABLE>


The primary drivers affecting North American operations are market share, market
size, and per-unit price and cost.

Seed corn market share in North  America  declined  approximately  two points in
1997,  bringing the  Company's  estimated  leading  share of the North  American
market to  approximately  42  percent.  The Company  introduced  a number of new
products in limited volumes this year which are targeted to replace hybrids that
have been  leading  sellers in recent  years.  Lower  unit sales of these  older
hybrids are largely  responsible  for the  estimated  current  year market share
decrease.

The sale of two key  hybrids,  3394 and 3489,  accounted  for  approximately  23
percent and 28 percent of the Company's 1997 and 1996 North American hybrid seed
corn unit sales.

Delayed  regulatory  approval for our Bt corn products also  contributed  to the
current  year market  share  decline.  Despite  regulatory  approval for Bt corn
products coming late in the selling season,  Pioneer sales  representatives were
able to place Pioneer seed in more than 20 percent of the

<PAGE>


estimated North American Bt corn acres planted in 1997. However, due to the late
start,  the Company was unable to attain its normal  market  presence  for these
products.

Based on information to date,  corn acreage in North America rose modestly above
1996 levels which  positively  affected  operating  income.  Although  operating
results in North America were affected by higher  per-unit seed corn costs,  the
average seed corn selling price also increased.

In 1997,  the average net seed corn selling price per unit to customers in North
America  increased seven percent  resulting from the introduction of several new
elite products,  which were priced at a premium,  and an increase in list prices
across the entire  product line.  However,  during the current year a change was
made to the Company's commission program, which eliminated some ties between the
commission and quantity savings  discount  programs.  Reported  quantity savings
discounts  increased and reported net commission expense decreased  accordingly.
As a result,  reported  net  price for 1997  based on  reported  net sales  only
reflects an increase of approximately  five percent.  Net selling price per unit
to customers, North American seed corn net margin per unit, and net compensation
to sales representatives were essentially unaffected by this program change.

Per-unit seed cost of sales increased  approximately $2.50 in 1997,  principally
due to the prior  year cost of sales  mix.  Fiscal  1996 cost of sales  included
large  quantities of  lower-priced  carryover seed from the 1994 crop year. When
combined  with  the  sales  price  effect,   net  seed  corn  margins  increased
approximately  $2.25 per unit.  Provisions  for inventory  reserves in 1997 were
$1.98 per unit,  compared to $2.22 per unit in 1996. The Company's  policy is to
provide adequate reserves for inventory obsolescence. Approximately nine percent
of North  American unit sales were  reserved in 1997.  We anticipate  more rapid
obsolescence of older products with the increased introduction of new products.

North American  research and product  development  costs for seed corn increased
$11  million,  or 15 percent,  to $86  million.  The  increase was the result of
additional  spending on classical  plant genetic  activities and  investments to
access  technology  that will help expand and improve  the  Company's  germplasm
base.

As a result of  investments  in research  and product  development,  the Pioneer
research program turned out 27 new corn hybrids in limited volumes for the North
American  market in 1997.  First-year  sales of these new hybrids reached nearly
600,000  units,  four  times  more  than  any  previous  group  of  new  product
introductions.  These new hybrids are expected to account for  approximately  40
percent of next year's Pioneer seed corn sales in North America.

Seed corn operating  results outside North America increased $2 million compared
to the prior year.  European  operations (Europe,  CIS, Turkey,  Australia,  and
Japan)  provided the largest  impact,  accounting  for $18 million in additional
operating income.  Strengthening of the U.S. dollar against European  currencies
had a significant  negative impact on current year reported results for European
operations.  Excluding this impact,  the region  reflected an improvement of $32
million over 1996 results.  Additional unit sales in Italy, Southern Europe, and
Central  Europe  were  significant  factors  in the  current  year  increase  in
operating  income.  Market size and market share  increases,  individually or in
concert, played roles in these improvements.

Current year operating income in our Latin American region decreased $23 million
compared to last year.  Supply  availability  and decreased corn acreage reduced
current year operating income in Brazil. Also affecting current year results was
a performance issue related to last season's top selling hybrid in Argentina. As
a result,  operating  income decreased due to reduced unit sales and higher cost
of sales.  New and  improved  products  for the region are in the  pipeline  and
should be widely available in 1998 as a result of production in North America.


<PAGE>


Operating  income in  Mexico  improved  $4  million  from  year-ago  results  as
favorable  weather  conditions and improved  water supply  resulted in increased
unit sales.  Increased  selling price per unit also favorably  impacted  current
year results.

Volume and price increases in several  countries  within Asia,  Africa,  and the
Middle East improved this region's  current year  operating  results $3 million.
Markets  within  this  geography  continue  to expand  and the  Company  is well
positioned to benefit from that growth.

Soybean Seed
Soybean seed is the  Company's  second  largest  product in terms of revenue and
operating income. Current year soybean operating income improved $11 million, or
69 percent,  over year ago results.  The primary  drivers for  operating  income
-market  size,  market  share,  and  price - had  positive  impacts  on  soybean
operations.

North American Soybean Unit Sales (in millions)

                                    1997             1996              1995
                                    ----             ----              ----

                                    13.511           11.345            10.961

North American Soybean Acreage  (in millions)

                                    1997             1996              1995
                                    ----             ----              ----

                                    73.5             66.4              64.6

Estimated North American Soybean Market Share

                                    1997             1996              1995
                                    ----             ----              ----

                                    18.1%            17.2%             17.5%


North America accounts for  approximately  98 percent of worldwide  soybean unit
sales.  Unit sales in North America  increased 19 percent,  or approximately 2.2
million  units,  over 1996 levels as a result of increased  acreage and improved
market share.  Favorable  commodity prices drove an 11 percent increase in acres
planted to soybeans in the current year.  Continued  strong product  performance
and the demand for  glyphosate-resistant  varieties  contributed to market share
gains.

Net margin in North America improved approximately $.60 per unit from a year ago
despite higher commodity costs. An increase in list prices for the current year,
combined with the sales price effect of  glyphosate-resistant  products that are
sold at a premium, more than offset the increase in unit costs.

The demand for  glyphosate-resistant  products  in North  America  was strong in
1997.  The  Company's  current  year unit sales of these  products  totaled  2.3
million units, or approximately 17 percent of total soybean unit sales, compared
to unit sales of less than 100,000 in 1996.


Other Products
Other products'  current year operating  results improved $14 million over those
recorded  a  year  earlier.  Current  year  comparisons  were  affected  by  the
elimination  of prior year losses from the sale of our  vegetable  products line
and  liquidation  of our specialty  oils  inventory in 1996 not present in 1997,
which combined to improve  current-year  operating  results $7 million over 1996
levels.  Operating  income for canola  products in 1997 improved $3 million from
last year's results

<PAGE>


due to increased  acreage and higher market  share.  Microbial  product  results
improved  $2 million  for the year on strong  performance  of premium  inoculant
products.  Annual results for alfalfa,  sorghum,  and  miscellaneous  other seed
products  in total  improved  $5  million  from a year ago,  as well.  Decreased
current  year wheat  sales in North  America,  the  result of  reduced  acreage,
lowered operating income $3 million from 1996 levels.


Other Products Net Sales and Combined Product Line Operating Income (Loss)
<TABLE>
<CAPTION>
                                                   Increase                                     Increase
                                1997               (Decrease)                   1996            (Decrease)                    1995
----------------------------------------------------------------------------------------------------------------------------------
(In millions)

NET SALES:
<S>                              <C>              <C>         <C>                <C>            <C>      <C>                     <C>
    Alfalfa..............  $      45        $      13         40.6%        $      32      $      --         --           $      32
    Sorghum..............         36                5         16.1%               31              5       19.2   %              26
    Wheat................         20               (5)       (20.0)%              25              7       38.9   %              18
    Sunflower............         24                2          9.1%               22              3       15.8   %              19
    Microbial products...         30                2          7.1%               28              1        3.7   %              27
    Developing products..         36               (6)       (14.3)%              42              4       10.5   %              38
                               -----          -------       -------          -------        --------                        ------
Total net sales..........  $     191        $      11          6.1%        $     180      $      20       12.5   %       $     160
                              ======          ========      =======          ========       ========      =====            ========

Total combined
    operating income
    (loss)...............  $      11        $      14                      $      (3)     $      12                      $     (15)
                            ========         ========                       ========       ========                       ========
</TABLE>


These  products  provide the sales  organization  a full line of seed  products,
significantly  aiding in the sale of higher-margin  products.  In addition,  the
opportunity  for some of these  product  lines to  generate  greater  levels  of
operating income in the near term are promising.

Corporate and Other Items
Current year indirect  general and  administrative  expenses,  which totaled $77
million, were similar to those recorded a year earlier.  Increased general costs
and higher legal expenses,  resulting from technology claims and disputes,  were
offset by the one-time effect of adopting FAS116  "Accounting for  Contributions
Made and Contributions Received" during 1996, not present in the current year.

Net financial income increased $3 million from what was recorded a year earlier.
The retirement of the medium-term note program in February 1996, combined with a
lower average level of short-term borrowing in the current year, reduced current
year  interest  expense  $3  million.  A current  year gain from the sale of one
million shares of Mycogen  Corporation  stock  improved net financial  income $7
million, however, this was offset almost entirely by an increase in recorded net
exchange losses, principally due to the strengthening of the U.S. dollar against
European currencies.

The decrease in the  effective tax rate from 36 percent in 1996 to 34 percent in
1997 was primarily  attributable to the Company's  operations outside the United
States. The Company's  effective tax rate will vary based on the mix of earnings
and tax rates from the various  countries in which it operates.  Higher earnings
from our North  American seed business may put upward  pressure on the effective
tax rate in future years.



<PAGE>



Year Ended August 31, 1996, Compared to the Year Ended August, 31, 1995

Hybrid Seed Corn In 1996, seed corn operating  income improved $51 million,  or 
14 percent, over 1995. Operations within North America accounted for $20 million
of the increase. European  operations improved $25 million over 1995, with Latin
America and Asia accounting for virtually all of the remaining improvement.

Higher seed corn unit sales were the  primary  factor  contributing  to the 1996
North  American  improvement,  principally  the result of an  increase in market
size.  Corn acreage in 1996  increased  approximately  11 percent over the prior
year. In 1995,  government programs reduced the number of corn acres planted. In
1996, no government  restrictions  and higher  commodity  prices  encouraged the
planting  of more  corn  acres.  Although  overall  corn  acreage  rose in North
America,  extremely  wet  field  conditions  in the  Ohio  River  Valley  region
prohibited corn acres from reaching our customers' original planting intentions.
Some were forced to switch to soybeans or other crops,  which reduced our margin
opportunities in that region.

In North America,  current year seed corn unit sales increased approximately 1.2
million  units,  or  11  percent,  over  the  previous  year,  the  result  of a
world-class Pioneer sales and supply organization  meeting the changing needs of
customers.  Sales of two key hybrids  accounted for  approximately 28 percent of
the Company's 1996 and 1995 North American seed corn hybrid unit sales.

North American  operating income was also positively  affected by an approximate
one percent increase in the average seed corn selling price per unit. A shift by
customers  to  higher-priced,  better-performing  premium  hybrids  in 1996  was
responsible  for the  increase.  The 1996 list  price for all  hybrids  remained
unchanged from 1995.

Higher corn seeding rates and replant units reduced the Company's 1996 seed corn
market share to approximately 44 percent. Market share declines occurred in some
areas of the Northern Corn Belt after  disappointing  yields there in 1995. They
were partially offset by market share gains in other areas of North America.

Higher seed costs also affected 1996 results. The smaller crop harvested in 1995
compared to 1994 and higher  commodity costs increased the average per-unit cost
of sales approximately  $1.00.  Increased provisions for inventory reserves also
affected 1996 results. Provisions in 1996 were $2.22 per unit, compared to $1.31
per unit in 1995. The increase in 1996 was the result of reserving inventory for
a few particular hybrids and the higher production cost of the 1995 seed crop.

Operations  in the  Company's  European  region and Latin  America also played a
significant role in the increase in 1996 seed corn operating income.

Record unit sales of corn grain hybrids across all of Southern Europe  accounted
for  virtually  the  entire  increase  in  European  operating  income  in 1996.
Increased  market size and market share in Spain and increased  market share and
price in Italy and Greece  were the  significant  factors  contributing  to this
improvement.

Latin American operations  improved,  principally the result of increased market
size in Argentina due to a strong commodity price within the country.

Worldwide research and product development expenses for corn in 1996 totaled $90
million,  a three  percent  increase  over 1995,  as the Company  continued  its
emphasis on developing improved products for customers.  The increase was due to
the expansion of biotechnology projects, research collaborations,  and trait and
technology development.


<PAGE>


Worldwide  fixed  selling and  administrative  expenses for corn  increased  $16
million,  or nine  percent,  from  1995  levels.  The major  components  of this
increase  were a greater  emphasis on the efforts of our  nutrition and industry
markets (NIM) group and higher  incentive  compensation  costs.  Excluding these
items,  fixed  selling and  administrative  expenses  increased one percent over
1995. Variable selling costs (commissions and shipping costs) as a percentage of
sales were comparable between the years.

Soybean Seed
Operations  in North America  accounted for virtually all of the 1996  worldwide
soybean seed  operating  income.  Growth of this product line  continued in 1996
resulting in an increase in operating  income totaling $5 million,  a 44 percent
increase in North American operating income over 1995.

Unit sales in North America for 1996 increased  three  percent,  to 11.3 million
units,  the result of  increased  acreage.  List  prices in 1996  increased  the
average per-unit sales price, however, higher per-unit cost of sales, the result
of higher commodity costs, offset most of the sales price improvement.

Other Products
Other product's  operating  results for 1996 improved $12 million over the prior
year,  primarily  the result of  increased  North  American  wheat  acreage  and
increased North American sorghum acreage and price.

Corporate and Other Items
Indirect  general and  administrative  expenses  increased  $3 million,  or four
percent,  in 1996. Higher incentive  compensation costs were partially offset by
decreases  in  several  expense  categories  resulting  from  active  fixed cost
management.

Translation  gains in Mexico recorded in 1995 not matched by the same or similar
items in 1996  accounted  for  virtually  all of the $4  million  change  in net
financial income.

The effective tax rate of 36 percent for 1996 was  substantially  unchanged from
the 36.5 percent effective tax rate for 1995.


Liquidity and Capital Resources
Due to the  seasonal  nature of the  agricultural  seed  business,  the  Company
generates most of its cash from operations  during the second and third quarters
of the fiscal year.  Cash  generated  during this time is used to pay commercial
paper borrowings and accounts  payable,  which are the Company's primary sources
of credit  during the first and fourth  quarters of the fiscal year.  Any excess
funds available are invested, primarily in short-term commercial paper.

Historically, the Company has financed growth through earnings. Cash provided by
operating activities was $176 million in 1997, compared to $389 million and $140
million in 1996 and 1995, respectively. The effect on cash provided by operating
activities  of building  inventory  levels and  inventory  liquidation  have the
greatest  impact on the Company in any given year.  Excluding this effect,  cash
provided by  operating  activities  was $248  million in 1997,  compared to $346
million and $208 million in 1996 and 1995, respectively.

Most of the Company's financing is done through the issuance of commercial paper
in the U.S.,  backed by  revolving  and seasonal  lines of credit.  In addition,
foreign  lines of credit  and direct  borrowing  agreements  are relied  upon to
support overseas  financing needs.  Short-term debt at August 31, 1997,  totaled
$91 million,  a $78 million increase from 1996 and $33 million higher than 1995.
Additional  current year financing to  international  subsidiaries,  funding for
research  collaborations,  and license agreement payments  contributed to higher
levels of  short-term  borrowings in 1997.  Increased  sales in 1996 allowed for
lower levels of borrowing during that

<PAGE>


period. In 1997,  short-term  borrowings peaked at $250 million compared to $238
and $217 million in 1996 and 1995, respectively.

In 1997, short-term domestic investments peaked at $242 million compared to $234
million and $257 million in 1996 and 1995, respectively.  Short-term investments
are made through a limited number of reputable  institutions after evaluation of
their  investment  procedures  and  credit  quality.  Pioneer  invests  in  only
high-quality,  short-term  securities,  primarily  commercial paper.  Individual
securities must meet credit quality standards,  and the portfolios are monitored
to ensure diversification among issuers.

Fiscal 1997 and 1998 Available Domestic Lines of Credit (in millions)
<TABLE>
<CAPTION>

<S>                                 <C>              <C>               <C>              <C>        
                                    1st Quarter      2nd Quarter       3rd Quarter      4th Quarter

     Revolving                      $    200         $      200        $      200       $      200
     Seasonal                            100                100                --               --
                                     -------         ----------        ----------       ----------
     Total                          $    300         $      300        $      200       $      200
                                     =======          =========         =========        =========
</TABLE>

The  Company  believes  the  domestic  lines  of  credit  available  in 1998 are
sufficient to meet domestic borrowing needs. Revolving line of credit agreements
expire August,  2001. The Company also has a seasonal  revolving credit facility
to meet peak borrowing needs, which expires August, 1998.

At year  end,  cash and cash  equivalents  totaled  $97  million,  down from $99
million at August 31, 1996.  It is the  Company's  policy to  repatriate  excess
funds  outside the U.S.  not  required  for  operating  capital or to fund asset
purchases.

Capital expenditures,  including business and technology investments,  were $151
million in 1997 compared to $164 million in 1996 and $86 million in 1995. Fiscal
1997 and 1996  expenditures  were  higher  than  1995  principally  due to costs
associated  with  expanding   production  capacity  and  additional   technology
acquisitions  and research  collaborations.  Capital  expenditures  for 1998 are
expected to be approximately $160 million to $170 million and are expected to be
funded through earnings.

The quarterly  dividend paid in July of 1997 increased to $.26 per share,  up 13
percent  from the $.23  per-share  dividend  paid the prior four  quarters.  The
Company's  dividend  policy is to  annually  pay out 40 percent  of a  four-year
rolling average of earnings.

Annual Dividend Paid (in millions)

                                    1997             1996              1995
                                    ----             ----              ----

                                    $ 79             $ 69              $ 60

During 1997, the Company  repurchased  369,000 shares of its stock under a Board
authorized  repurchase plan at a total cost of $25 million.  At August 31, 1997,
authorized shares remaining to be purchased under the plan totaled 2.1 million.

Alliance  With DuPont 
In August,  1997,  the Company and E.I. du Pont de Nemours and Coompany (DuPont)
entered into  an agreement  that  creates  one of  the world' s largest  private
agricultural  research  and   development   collaborations.   The agreement  was
finalized in September,  1997.  The companies  also formed a joint  venture that
will market improved quality traits that will  increase the  value of  crops for
livestock  feeders,  grain processors,  and other end  users.  The joint venture
will  not  sell  seed. Pioneer  will  be  the  preferred  worldwide provider and
marketer of  quality trait seed for the joint venture. Contribution  of tangible

<PAGE>


assets or cash to the joint  venture are not expected to  materially  impact the
financial condition or results of operation of the Company in the near future.

DuPont also  acquired a 20 percent  interest in Pioneer  through the purchase of
preferred voting shares for $1.7 billion. Pioneer used a portion of the proceeds
from the DuPont  investment  to  purchase 20 percent of our  outstanding  shares
through a Dutch auction self-tender.  The Company purchased the shares at $92.50
per  share,  and  when  combined  with  all  other  costs  associated  with  the
transaction,  will have  approximately  $180  million  available  for  corporate
purposes.

The  agreement,  among  other  things,  includes  a  standstill  provision  that
prohibits  DuPont from  increasing  its ownership  share in Pioneer for 16 years
without the  consent of  Pioneer.  DuPont also gained two of the 15 seats on the
Pioneer board of directors.

Market Risks
The Company uses  derivative  instruments  to manage risks  associated  with its
grower compensation costs and foreign-currency-based transactions.

The Company uses derivative instruments such as commodity futures and options to
hedge the commodity risk involved in  compensating  growers.  Pioneer  contracts
with  independent  growers to produce the  Company's  finished  seed  inventory.
Contracts  with  growers  generally  allow them to settle  with  Pioneer for the
market  price  of  grain  for a  period  of time  following  harvest.  It is the
Company's  policy to hedge  commodity  risk prior to setting the retail price of
seed.  The hedge  gains or  losses  are  accounted  for as  inventory  costs and
expensed as cost of goods sold when the  associated  crop  inventory is sold. At
August  31,  1997,  the net  unrealized  loss on  these  contracts  for corn and
soybeans  totaled $4  million.  A ten percent  change in the market  price would
impact these net unrealized  losses by  approximately  $4 million.  The contract
volumes at year end depend upon the acreage  contracted  with growers,  the crop
yield,  the percentage  growers have marketed to Pioneer,  and the percentage of
crop hedged by the  Company.  Since  these  positions  are a hedge to  inventory
costs, any change in the cost of these positions is offset by an opposite change
in inventory costs.

The Company uses  derivative  instruments  such as forward  exchange  contracts,
purchased     options,     and     cross     currency     swaps     to     hedge
foreign-currency-denominated  transactions such as exports,  contractual  flows,
and royalty  payments.  While derivative hedge  instruments are subject to price
fluctuations  from exchange and interest  rate  movements,  the Company  expects
these price  changes to generally be offset by changes in the U.S.  dollar value
of foreign sales and cash flows. Therefore, hedging gains and losses are matched
with the costs of the  underlying  exposures  and  accounted  for in  inventory,
sales,  or net financial  costs.  At August 31, 1997, net unrealized  gains from
foreign-currency  hedge  contracts  totaled $4 million.  A ten percent change in
exchange  rates would impact these net  unrealized  gains by  approximately  $24
million.

The Company does not trade in commodity-based or financial  instruments with the
objective of earning financial gain on rate or price  fluctuations,  nor does it
trade in these  instruments  when there are no  underlying  transaction  related
exposures.

Effects of Inflation
Inflation typically is not a major factor in the Company's operations.  The cost
of seed  products  is  largely  influenced  by seed field  yields and  commodity
prices,  which  are not  impacted  by  inflation.  Costs  normally  impacted  by
inflation wages, transportation, and energy - are a relatively small part of the
total operations.


<PAGE>



APPENDIX TO ANNUAL REPORT TO SHAREHOLDERS


The table titled "North  American  Soybean Unit Sales" appears in the Management
Discussion  and Analysis of the Annual Report to  Shareholders  in the form of a
bar graph

The table titled "North  American  Soybean  Acreage"  appears in the  Management
Discussion  and Analysis of the Annual Report to  Shareholders  in the form of a
bar graph

The table titled  "Estimated North American Soybean Market Share" appears in the
Management  Discussion and Analysis of the Annual Report to  Shareholders in the
form of a bar graph

The table  titled  "Fiscal  1997 and 1998  Available  Domestic  Lines of Credit"
appears in the  Management  Discussion  and  Analysis  of the  Annual  Report to
Shareholders in the form of a bar graph

The table titled "Annual  Dividends  Paid" appears in the Management  Discussion
and Analysis of the Annual Report to Shareholders in the form of a bar graph


<PAGE>


INDEPENDENT AUDITORS' REPORT

To the Shareholders
Pioneer Hi-Bred International, Inc.:


We have audited the accompanying  consolidated balance sheets of Pioneer Hi-Bred
International,  Inc. and  subsidiaries  as of August 31, 1997 and 1996,  and the
related consolidated statements of income,  shareholders' equity, and cash flows
for each of the years in the  three-year  period ended  August 31,  1997.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Pioneer  Hi-Bred
International,  Inc. and  subsidiaries  as of August 31, 1997 and 1996,  and the
results  of their  operations  and their cash flows for each of the years in the
three-year  period ended August 31, 1997, in conformity with generally  accepted
accounting principles.

KPMG Peat Marwick LLP


Des Moines, Iowa
October 3, 1997


<PAGE>
<TABLE>
<CAPTION>


CONSOLIDATED STATEMENTS OF INCOME

                                            Years Ended August 31,          1997                 1996                  1995
------------------------------------------------------------------------------------------------------------------------------------
(In millions, except per share amounts)

<S>                                                                    <C>                   <C>                   <C>     
Net sales.........................................................     $   1,784             $  1,721              $  1,532
                                                                        --------              -------               -------

Operating costs and expenses:
     Cost of goods sold...........................................     $     771             $    727              $    642
     Research and product development.............................           146                  136                   130
     Selling......................................................           374                  382                   354
     General and administrative...................................           130                  129                   126
                                                                        --------              -------               -------
                                                                       $   1,421             $  1,374              $  1,252
                                                                        --------              -------               -------

     Operating income.............................................     $     363             $    347              $    280

Investment income.................................................            22                   22                    23
Interest expense..................................................            (8)                 (11)                  (13)
Net exchange and other gains (losses).............................            (4)                  (4)                    1
                                                                         -------              -------               -------

     Income before items below....................................     $     373             $    354              $    291

Provision for income taxes........................................          (127)                (127)                 (106)
Minority interest and other.......................................            (3)                  (4)                   (2)
                                                                        --------              -------               -------

     Net income...................................................     $     243             $    223              $    183
                                                                        ========              =======               =======

Net income per common share.......................................     $    2.95             $   2.68              $   2.16
                                                                        ========              =======               =======

Average shares outstanding........................................          82.3                 83.2                  84.5


See Notes to Consolidated Financial Statements.
</TABLE>


 .


<PAGE>

<TABLE>
<CAPTION>

CONSOLIDATED BALANCE SHEETS

ASSETS                                                     August 31,         1997                    1996
---------------------------------------------------------------------------------------------------------------------------
(In millions)

CURRENT ASSETS
<S>                                                                      <C>                     <C>      
    Cash and cash equivalents........................................    $      97               $      99
    Receivables:
        Trade........................................................          256                     208
        Other........................................................           45                      35
    Inventories......................................................          440                     382
    Deferred income taxes............................................           57                      58
    Other current assets.............................................            6                       2
                                                                          --------                --------


        Total current assets.........................................    $     901               $     784
                                                                          --------                --------


LONG-TERM ASSETS.....................................................    $      93               $      81
                                                                          --------                --------


PROPERTY AND EQUIPMENT
    Land and land improvements.......................................    $      64               $      63
    Buildings........................................................          377                     354
    Machinery and equipment..........................................          539                     512
    Construction in progress.........................................           60                      56
                                                                          --------                --------
                                                                         $   1,040               $     985
    Less accumulated depreciation....................................          495                     475
                                                                          --------                --------
                                                                         $     545               $     510
                                                                          --------                --------


INTANGIBLES..........................................................    $      64               $      47
                                                                          --------                --------

                                                                         $   1,603               $   1,422
                                                                          ========                ========


See Notes to Consolidated Financial Statements.
</TABLE>




<PAGE>
<TABLE>
<CAPTION>


CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS' EQUITY                       August 31,         1997                    1996
---------------------------------------------------------------------------------------------------------------------------
(In millions)

CURRENT LIABILITIES
<S>                                                                      <C>                     <C>      
    Short-term borrowings............................................    $      91               $      13
    Current maturities of long-term debt.............................            6                      12
    Accounts payable, trade..........................................           85                      89
    Accrued compensation.............................................           60                      65
    Income taxes payable.............................................           26                      63
    Other............................................................           61                      46
                                                                          --------                --------

        Total current liabilities....................................    $     329               $     288
                                                                          --------                --------


LONG-TERM DEBT.......................................................    $      19               $      25
                                                                          --------                --------

DEFERRED ITEMS
    Retirement benefits..............................................    $      80               $      68
    Income taxes.....................................................           20                      16
                                                                         ---------               ---------
                                                                         $     100               $      84
                                                                          --------                --------

CONTINGENCIES

MINORITY INTEREST IN SUBSIDIARIES....................................    $       7               $       7
                                                                          --------                --------

SHAREHOLDERS' EQUITY Capital stock:
        Preferred, authorized 10,000,000 shares; issued none.........    $      --               $      --
        Common, $1 par value; authorized 150,000,000 shares;
          issued 1997 - 92,948,963 shares;
          1996 - 92,693,578 shares...................................           93                      93
    Additional paid-in capital.......................................           43                      23
    Retained earnings................................................        1,436                   1,272
    Unrealized gain on available-for-sale securities, net............           19                      11
    Cumulative translation adjustment................................          (26)                     (3)
                                                                          --------                --------
                                                                         $   1,565               $   1,396

    Less:
        Cost of common shares acquired for the treasury, 
           1997 - 10,726,028 shares; 1996 - 10,304,700 shares........         (393)                   (364)
        Unearned compensation........................................          (24)                    (14)
                                                                          --------                --------

                                                                         $   1,148               $   1,018
                                                                          --------                --------

                                                                         $   1,603               $   1,422
                                                                          ========                ========


See Notes to Consolidated Financial Statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


CONSOLIDATED STATEMENTS OF CASH FLOWS

                                            Years Ended August 31,          1997               1996                  1995
------------------------------------------------------------------------------------------------------------------------------------
(In millions)

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                    <C>                <C>                   <C>      
     Net income...................................................     $     243          $     223             $     183
     Noncash items included in net income:
         Depreciation and amortization ...........................            89                 77                    74
         Provision for doubtful accounts..........................             6                  5                     2
         (Gain) loss on disposal of assets........................            (5)                (4)                    1
         Other noncash items, net.................................             7                  1                     6
     Change in assets and liabilities, net:
         Receivables..............................................           (77)               (46)                  (20)
         Inventories..............................................           (72)                43                   (68)
         Accounts payable and accrued expenses....................            (4)                61                   (39)
         Income taxes payable ....................................           (38)                40                    (8)
         Other assets and liabilities.............................            27                (11)                    9
                                                                        --------            -------               -------

         Net cash provided by operating activities................     $     176          $     389             $     140
                                                                        --------           --------              --------

CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from sale of assets.................................     $      29          $      15             $       6
     Capital expenditures.........................................          (127)              (116)                  (86)
     Technology investments.......................................           (24)               (48)                   --
     Other, net...................................................            (7)                 5                    (2)
                                                                        --------            -------               -------

         Net cash used in investing activities....................     $    (129)         $    (144)            $     (82)
                                                                        --------          ---------              --------

CASH FLOWS FROM FINANCING ACTIVITIES
     Net short-term borrowings (payments).........................     $      81          $     (42)            $      45
     Proceeds from long-term borrowings...........................            --                  1                     5
     Principal payments on long-term borrowings...................           (11)               (55)                   (2)
     Purchase of common stock.....................................           (25)               (62)                 (100)
     Cash dividends paid..........................................           (79)               (69)                  (60)
                                                                        --------            -------               -------

         Net cash used in financing activities....................     $     (34)         $    (227)            $    (112)
                                                                        --------           --------              --------

Effect of foreign currency exchange rate
     changes on cash and cash equivalents.........................     $     (15)         $      (3)            $       3
                                                                        --------           --------              --------

         Net increase (decrease) in cash and
         cash equivalents.........................................     $      (2)         $      15             $     (51)
Cash and cash equivalents, beginning..............................            99                 84                   135
                                                                        --------            -------               -------

CASH AND CASH EQUIVALENTS, ENDING.................................     $      97          $      99             $      84
                                                                        ========           ========              ========

SUPPLEMENTAL CASH FLOW INFORMATION
     Cash payments:
         Interest.................................................     $       7          $      14             $      13
         Income taxes ............................................     $     158          $      93             $     117
     Noncash investing and financing activities:
         Technology investments acquired by the issuance
         of long-term debt and the assumption of liabilities......     $      10          $      20             $      --

See Notes to Consolidated Financial Statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                   Years Ended August 31,         1997                1996                1995
------------------------------------------------------------------------------------------------------------------------------------
(In millions)

COMMON STOCK
<S>                                                                          <C>                 <C>                 <C>      
    Balance, beginning...................................................    $      93           $      93           $      93
        Issuance in 1997 of 255,385 common shares for restricted
           stock plan....................................................           --                  --                  --
                                                                              --------            --------            --------
    Balance ending.......................................................    $      93           $      93           $      93
                                                                              --------            --------            --------
ADDITIONAL PAID-IN CAPITAL
    Balance, beginning...................................................    $      23           $      18           $      15
        Common stock issued from treasury for restricted stock
           plan..........................................................           18                   3                   1
        Tax benefits related to restricted stock plan....................            2                   2                   2
                                                                              --------            --------            --------
    Balance, ending......................................................    $      43           $      23           $      18
                                                                              --------            --------            --------

RETAINED EARNINGS
    Balance, beginning...................................................    $   1,272           $   1,118           $     995
        Net income.......................................................          243                 223                 183
        Cash dividends on common stock (1997 - $.95 per share;
          1996 - $.83 per share; 1995 - $.71 per share)..................          (79)                (69)                (60)
                                                                              --------            --------            --------
    Balance, ending......................................................    $   1,436           $   1,272           $   1,118
                                                                              --------            --------            --------

UNREALIZED GAIN ON AVAILABLE-FOR-SALE
    SECURITIES, NET
    Balance, beginning...................................................    $      11           $      --           $      --
        Current unrealized gain..........................................            8                  11                  --
                                                                              --------            --------            --------
    Balance, ending......................................................    $      19           $      11           $      --
                                                                              --------            --------            --------

CUMULATIVE TRANSLATION ADJUSTMENT
    Balance, beginning...................................................    $      (3)          $       1           $      (3)
        Current translation adjustment...................................          (23)                 (4)                  4
                                                                              --------            --------            --------
    Balance, ending......................................................    $     (26)          $      (3)          $       1
                                                                              --------            --------            --------

TREASURY STOCK
    Balance, beginning...................................................    $    (364)          $    (303)          $    (207)
        Purchase of common stock for the treasury (1997 - 369,000........
           shares 1996 -1,148,900; shares; 1995 - 2,844,209
           shares).......................................................          (25)                (62)               (100)
        Common stock issued from (acquired for) the treasury:
               For restricted stock plan (1997 - 17,522 shares;
                  1996 - 130,359 shares; 1995 - 226,088 shares)                      -                   4                   7
               From restricted stock forfeitures and stock used to
                  satisfy withholding taxes (1997 - 69,850 shares;
                  1996 - 79,410 shares; 1995 - 109,539 shares)...........           (4)                 (3)                 (3)
                                                                              --------            --------             -------
    Balance, ending......................................................    $    (393)          $    (364)          $    (303)
                                                                              --------            --------            --------

UNEARNED COMPENSATION
    Balance, beginning...................................................    $     (14)          $     (14)          $     (12)
        Net additions of common stock to restricted stock plan...........          (18)                 (6)                 (8)
        Amortization of unearned compensation............................            8                   6                   6
                                                                              --------            --------            --------
    Balance, ending......................................................    $     (24)          $     (14)          $     (14)
                                                                              --------            --------            --------

TOTAL SHAREHOLDERS' EQUITY AT YEAR END...................................    $   1,148           $   1,018           $     913
                                                                              ========            ========            ========

See Notes to Consolidated Financial Statements.
</TABLE>


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1.       Nature of Business and Significant Accounting Policies

              Nature of business:

                  The Company's business is the broad application of the science
                  of  genetics.  Pioneer  was  founded  in 1926 to  apply  newly
                  discovered  genetic  techniques to hybridize corn.  Today, the
                  Company  develops,  produces,  and  markets  hybrids  of corn,
                  sorghum,  and  sunflowers;  varieties  of  soybeans,  alfalfa,
                  wheat,  and  canola;  and  microorganisms  useful  in crop and
                  livestock   production.   Approximately   90  percent  of  the
                  Company's  total net  sales  are from the sale of hybrid  seed
                  corn and soybean  seed  primarily  within the regions of North
                  America and Europe.

              Consolidation policy:

                  The consolidated  financial statements include the accounts of
                  the  Company  and  all  of  its  subsidiaries.   All  material
                  intercompany balances and transactions have been eliminated in
                  consolidation.

              Use of estimates:

                  The  preparation  of financial  statements in conformity  with
                  generally accepted  accounting  principles requires management
                  to make  estimates  and  assumptions  that  affect the amounts
                  reported in the  financial  statements.  Actual  results could
                  differ from those estimates.

              Cash equivalents:

                  The Company  considers all liquid  investments with a maturity
                  at purchase of three months or less to be cash equivalents.

              Receivables:

                   Receivables  are stated  net of an  allowance  for  doubtful
                   accounts of $23 million at August 31, 1997 and 1996.

              Inventories:

                  Inventories  are  valued  at  the  lower  of  cost  (first-in,
                  first-out   method)  or  market.   Independent   growers   are
                  contracted to produce the Company's  finished seed  inventory.
                  In  accordance  with the  contract,  the  Company  compensates
                  growers  with bushel  equivalents  that can be marketed to the
                  Company  for the  market  price of grain  for a period of time
                  following  harvest.  The Company uses  derivative  instruments
                  such as commodity  futures and options to hedge the  commodity
                  risk  involved in  compensating  growers.  It is the Company's
                  policy to hedge  commodity  risk prior to  setting  the retail
                  price  of  seed.  The  hedge  position  gains  or  losses  are
                  accounted for as inventory costs and expensed as cost of goods
                  sold when the associated crop inventory is sold.

              Property and equipment:

                  Property  and  equipment  is  recorded  at  cost,  net  of  an
                  allowance  for loss on plant  closings  of $4  million  and $9
                  million at August 31, 1997 and 1996, respectively.


<PAGE>



                  Depreciation is computed primarily by the straight-line method
                  over estimated service lives of two to forty years.

                  Long-term assets:

                  Certain long-term assets were classified as available-for-sale
                  securities.  Available for-sale  securities held at August 31,
                  1997, consisted of an equity security with a cost basis of $20
                  million   and   an    unrealized    gain   of   $30   million.
                  Available-for-sale   securities   held  at  August  31,  1996,
                  consisted  of an  equity  security  with a cost  basis  of $30
                  million and an  unrealized  gain of $17 million.  During 1997,
                  the Company sold part of the equity  security for $17 million,
                  resulting in a gain on sale of $7 million.

                  It was not  practicable  to  estimate  the  fair  value of the
                  Company's  other  equity  security  investments.  As a result,
                  these  investments are carried at their original cost basis of
                  approximately $8 million.

              Intangibles:

                  Intangible  assets  are  stated  at  amortized  cost  and  are
                  amortized by the straight-line  method over one-to twenty-year
                  periods,   with  the   weighted-average   amortization  period
                  approximating  eight years for the year ended August 31, 1997.
                  Accumulated  amortization  of $38  million  and $28 million at
                  August  31,  1997 and 1996,  respectively,  have  been  netted
                  against these assets.

              Basis of accounting:

                  Subsidiary  and asset  acquisitions  are  accounted for by the
                  purchase method.

              Translation of foreign currencies and foreign exchange hedging:

                  All assets and  liabilities  in the balance  sheets of foreign
                  subsidiaries whose functional  currency is other than the U.S.
                  dollar are translated at year-end exchange rates.  Translation
                  gains and losses are not  included in  determining  net income
                  but are accumulated as a separate  component of  shareholders'
                  equity.  However, for subsidiaries  considered to be operating
                  in  highly  inflationary   countries  and  for  certain  other
                  subsidiaries,  the U.S. dollar is the functional currency, and
                  translation  gains and losses are included in determining  net
                  income.  Foreign  currency  transaction  gains and  losses are
                  included in determining net income.

                  The Company uses a combination of derivative  instruments such
                  as forward exchange  contracts,  purchased options,  and cross
                  currency  swaps  to  hedge  future  firm  commitments  such as
                  exports,  contractual  flows, and royalties.  While derivative
                  hedge  instruments  are  subject  to price  fluctuations  from
                  exchange  and interest  rate  movements,  these price  changes
                  would  generally be offset by changes in the U.S. dollar value
                  of foreign sales and cash flows. Therefore,  hedging gains and
                  losses on existing foreign-denominated payables or receivables
                  are included in other assets or liabilities and are recognized
                  in  net  exchange   gain  (loss)  in   conjunction   with  the
                  revaluation of the  foreign-currency-denominated  transaction.
                  Unrealized  gains and losses  related to qualifying  hedges of
                  firm  sales  and   purchase   commitments   are  deferred  and
                  recognized  in income when the future sales or  purchases  are
                  recognized,  or  immediately  if the  commitment  is canceled.
                  Option  premiums paid are amortized to income over the life of
                  the contract.



<PAGE>




              Income taxes:

                  Income  taxes are  computed in  accordance  with SFAS No. 109.
                  Deferred   income  taxes  have  been   provided  on  temporary
                  differences in the financial statement and income tax bases of
                  certain assets and liabilities.

                  Deferred   income   taxes  have  not  been   provided  on  the
                  undistributed   earnings   or   the   cumulative   translation
                  adjustment  of the  foreign  subsidiaries  to the  extent  the
                  Company  intends  to  reinvest  such  undistributed   earnings
                  indefinitely  or to repatriate them only to the extent that no
                  additional  income tax  liability is created.  The  cumulative
                  amount  of  the   undistributed  net  income  and  translation
                  adjustment of such subsidiaries is approximately  $161 million
                  at August  31,  1997.  The  Company  files  consolidated  U.S.
                  federal  income tax returns  with its  domestic  subsidiaries;
                  therefore,  no deferred income taxes have been provided on the
                  undistributed earnings of those subsidiaries.

              Pension plans:

                  The Company's  domestic and Canadian  operations  have defined
                  benefit  pension  plans  covering   substantially   all  their
                  employees.  The  plans  provide  benefits  that  are  based on
                  average monthly earnings of the employees.  The funding policy
                  is to  contribute  annually an amount to fund  pension cost as
                  actuarially  determined by an independent  pension  consulting
                  firm.

              Other postretirement benefits:

                  The Company  sponsors a health care plan and a life  insurance
                  plan  which  provide  benefits  to  eligible   retirees.   The
                  Company's contribution is based on age and years of service at
                  retirement.   The   health   insurance   plan   contains   the
                  cost-sharing  features of coinsurance and/or deductibles.  The
                  life insurance plan is paid for by the Company. Benefits under
                  both plans are based on  eligibility  status for  pension  and
                  length of service. Substantially all of the Company's U.S. and
                  Canadian  full-time  employees  may become  eligible for these
                  benefits  upon  reaching  age 55 and  having  worked  for  the
                  Company at least five years.

              Deferred  executive   compensation  and  supplemental   retirement
              benefit plans:

                  The   estimated   liability   for   the   deferred   executive
                  compensation  and  supplemental  retirement  benefit  plans is
                  being  accrued  over the  expected  remaining  years of active
                  employment.

              Restricted stock and stock option plans:

                  The Company  has  restricted  stock plans and a  non-qualified
                  stock  option  plan.  The Company  amortizes  as  compensation
                  expense the cost of stock  acquired for the  restricted  stock
                  plans by the  straight-line  method over three- and  five-year
                  restriction periods. No compensation expense is recorded under
                  the non-qualified stock option plan.

                  In  1997  the  Company  adopted  SFAS  123,   "Accounting  for
                  Stock-Based Compensation," as required for disclosure purposes
                  only.  The  Company  will  continue  applying  the  accounting
                  treatment  prescribed by the provisions of APB Opinion No. 25,
                  "Accounting   for  Stock  Issued  to  Employees."   Pro  forma
                  disclosures   as  if  SFAS  No.  123  were   adopted  for  all
                  stock-based compensation plans have been provided.



<PAGE>



              Other:

               During fiscal 1997,  the  Financial  Accounting  Standards  Board
               issued SFAS No. 128,  "Earnings  Per Share." The adoption of SFAS
               No.  128 is not  expected  to have a  significant  impact  on the
               Company's financial statements.


Note 2.       Inventories

              The composition of inventories is as follows:

                                    August 31,         1997               1996
--------------------------------------------------------------------------------
               (In millions)
              Finished seed...................    $     245           $    209
              Unfinished seed.................          186                163
              Supplies and other..............            9                 10
                                                    --------            -------
                                                  $     440           $    382
                                                    ========            =======


              Unfinished  seed  represents the cost of parent seed,  detasseling
              and roguing labor,  and certain other production costs incurred by
              the Company to produce its seed supply. Much of the balance of the
              labor,  equipment,  and production costs associated with planting,
              growing,  and  harvesting  the  seed is  supplied  by  independent
              growers,  who contract specific acreage for the production of seed
              for the Company.  The  compensation of the independent  growers is
              determined  based upon yield,  contracted  acreage,  and commodity
              prices. The commitment for grower  compensation is accrued as seed
              is delivered to the Company.  Accrued grower  compensation was $13
              million and $11 million at August 31, 1997 and 1996, respectively.

              The Company uses derivative  instruments such as commodity futures
              and options to hedge grower compensation costs. At August 31, 1997
              and 1996,  the  Company  had  futures  contracts  with  brokers on
              notional quantities amounting to 32 million bushels and 17 million
              bushels,  respectively  for corn, and 6 million  bushels each year
              for soybeans.  At August 31, 1997,  unrealized  losses on all open
              contracts were $4 million.


Note 3.       Current Borrowings, Lines of Credit, Long-Term Debt, and 
              Guarantees

              At August 31,  1997,  the  Company  had  domestic  lines of credit
              totaling  $200  million  available  to be used as support  for the
              issuance  of the  Company's  commercial  paper.  Commercial  paper
              outstanding   at  August   31,   1997,   was  $63   million  at  a
              weighted-average  interest  rate  of  5.6  percent.  There  was no
              commercial paper outstanding at August 31, 1996.

              In addition,  the  Company's  foreign  subsidiaries  have lines of
              credit and  direct  borrowing  agreements  totaling  $37  million,
              substantially  all of which are  unsecured.  At August  31,  1997,
              short-term  borrowings  of  $28  million  were  outstanding  under
              foreign subsidiary agreements at a weighted-average  interest rate
              of 13.3 percent. At August 31, 1996,  short-term borrowings of $13
              million   were   outstanding   under   these   agreements   at   a
              weighted-average interest rate of 8.9 percent



<PAGE>



              Long-term debt at August 31, 1997, bears interest at varying rates
              and requires annual  principal  payments  through fiscal 2011. The
              maturities of long-term  debt for the next five fiscal  years,  in
              millions, are as follows: $6, $15, $0.4, $1, and $0.2.

              The Company has guaranteed the repayment of principal and interest
              on certain obligations of Village Court Associates,  an affiliated
              real estate venture.  At August 31, 1997, such guarantees  totaled
              approximately $23 million.


Note 4.       Income Taxes

              The  provision  for income taxes is based on income  before income
              taxes as follows:

<TABLE>
<CAPTION>
                                            Years Ended August 31,          1997               1996                1995
------------------------------------------------------------------------------------------------------------------------------------
              (In millions)


<S>                                                                          <C>                <C>                 <C>      
              United States.......................................     $     308          $     266           $     198
              Foreign.............................................            65                 88                  93
                                                                        --------            -------            --------
                                                                       $     373          $     354           $     291
                                                                        ========           ========            ========

</TABLE>



              The  provision  for  income  taxes is  composed  of the  following
              components:


<TABLE>
<CAPTION>
                                           Years Ended August 31,          1997               1996                1995
------------------------------------------------------------------------------------------------------------------------------------
              (In millions)

              Current:
<S>                                                                          <C>                <C>                 <C>      
                  Federal.........................................     $      80          $      83           $      59
                  State...........................................             9                 11                  10
                  Foreign.........................................            31                 44                  36
                                                                        --------            -------            --------
                                                                       $     120          $     138           $     105
                                                                        --------           --------            --------
              Deferred:
                  Federal.........................................     $       8          $      (9)          $       4
                  State...........................................             1                 (1)                  -
                  Foreign.........................................            (2)                (1)                 (3)
                                                                        --------            -------            --------
                                                                       $       7          $     (11)          $       1
                                                                        --------           --------            --------
                                                                       $     127           $    127           $     106
                                                                        ========           ========             ========
</TABLE>

<PAGE>




<TABLE>
<CAPTION>

              The  tax  effects  of  temporary  differences  that  give  rise to
              significant  portions of the  deferred tax assets and deferred tax
              liabilities at August 31, 1997 and 1996, are presented below:

                                                             August 31,         1997                1996
-------------------------------------------------------------------------------------------------------------------------
              (In millions)

              Deferred tax assets:
<S>                                                                              <C>                 <C>      
                  Allowance for doubtful accounts......................    $       6           $       6
                  Inventories..........................................           29                  33
                  Benefits/compensation................................           40                  35
                  Deferred profit......................................            9                   8
                  Nondeductible reserves...............................            9                   8
                  Net operating loss carryforwards.....................            6                   5
                  Other................................................           11                   7
                                                                            --------            --------
                      Total gross deferred tax asset...................    $     110           $     102
                      Less valuation allowance.........................           (8)                (8)
                                                                           ---------           --------
                      Total deferred tax asset.........................    $     102           $      94
                                                                            --------            --------
              Deferred tax liabilities:
                  Property and equipment...............................    $     (55)          $     (46)
                  Unrealized gain on available-for-sale securities.....          (10)                 (6)
                                                                            ---------           ---------
                      Total deferred tax liability.....................    $     (65)          $     (52)
                                                                            --------            --------
                      Net deferred tax asset...........................    $      37           $      42
                                                                            ========            ========

</TABLE>

              The  net  operating   loss   carryforwards   result  from  various
              international subsidiaries.  The expiration of these net operating
              losses range from 1998 to indefinite.  Utilization of these losses
              is  dependent   upon   earnings   generated   in  the   respective
              subsidiaries.  A  valuation  allowance  for the losses and certain
              other items has been set up where appropriate.

              There was no change in the total valuation  allowance for the year
              ended  August  31,  1997.  The net  change in the total  valuation
              allowance for the year ended August 31, 1996, was a decrease of $3
              million.

              Following is a reconciliation of the statutory U.S. Federal income
              tax rate to the Company's  actual  worldwide  effective income tax
              rate:
<TABLE>
<CAPTION>

                                                     Years Ended August 31,     1997             1996              1995
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                             <C>              <C>               <C>   
              Statutory U.S. Federal income tax rate.......................     35.0 %           35.0 %            35.0 %
              State income taxes, net of Federal income tax benefit........      1.8              1.8               2.4
              Effect of taxes on foreign earnings..........................     (1.5)              --              (0.9)
              Foreign Sales Corporation....................................     (1.4)            (0.5)             (0.7)
              Other........................................................      0.1             (0.3)              0.7
                                                                                ----             ----              ----
                  Actual effective income tax rate.........................     34.0 %           36.0 %            36.5 %


                                                                                =====            ====              ====
</TABLE>




<PAGE>



Note 5.       Pension Plans and Other Postretirement Benefits

              Qualified pension plans:

              The components of pension  expense  relating to qualified  defined
              benefit  pension plans for the years ended August 31, 1997,  1996,
              and 1995, consisted of the following:
<TABLE>
<CAPTION>
                                                                   
                                                                                1997             1996              1995
              (In millions)

                              
<S>                                                                        <C>                 <C>                 <C> 
              Service cost ............................................    $       8           $    7              $  7
              Interest cost on projected benefit obligation ...........           12               11                11
              Actual return on plan assets.............................          (16)             (14)              (12)
              Net amortization and deferral ...........................           (1)              (1)               (1)
                                                                            --------            -----               ---
                  Pension expense .....................................    $       3           $    3              $  5
                                                                            ========            =====               ===

</TABLE>

              The following table sets forth the plans' funded status as of June
              30, 1997 and 1996, respectively:

<TABLE>
<CAPTION>
                                                                                          1997                1996
------------------------------------------------------------------------------------------------------------------------------------
              (In millions)

              Actuarial present value of benefit obligations:
<S>                                                                                   <C>                 <C>      
                  Vested benefit obligation ......................................    $     121           $     101
                                                                                       ========            ========
                  Accumulated benefit obligation..................................    $     129           $     108
                                                                                       ========            ========
              Plan assets at fair value, primarily stocks and bonds...............    $     214           $     179
              Projected benefit obligation........................................          187                 153
                                                                                       --------            --------
              Plan assets in excess of projected benefit obligation ..............    $      27           $      26
              Unrecognized net gain ..............................................          (16)                (11)
              Unrecognized prior service cost.....................................            2                   2
              Unrecognized transition asset, net (recognized over 16 years) ......           (7)                 (8)
                                                                                       --------            --------
                  Pension asset...................................................    $       6           $       9
                                                                                       ========            ========
</TABLE>

              Plan assets  include  common  stock of the Company  totaling  $21
              million and $14 million at June 30, 1997 and 1996, respectively.

              In  determining  the  present  value  of  benefit  obligations,  a
              discount rate of 8 percent was used in 1997 and 1996. The expected
              long-term  rate of return  on plan  assets  was 9 percent  and the
              assumed rate of increase in compensation levels was 6.5 percent in
              both years.

<PAGE>




              Non-qualified pension plans:

              The  components  of  pension  expense  relating  to  non-qualified
              pension plans for the years ended August 31, 1997, 1996, and 1995,
              consisted of the following:
<TABLE>
<CAPTION>

                                                                                1997                1996               1995
------------------------------------------------------------------------------------------------------------------------------------
              (In millions)

<S>                                                                             <C>                 <C>                 <C>     
              Service cost.............................................    $       2           $       1           $      2
              Interest cost on projected benefit obligation............            3                   3                  3
              Net amortization and deferral............................            1                   1                  1
                                                                            --------            --------            -------
                  Pension expense......................................    $       6           $       5           $      6
                                                                            ========            ========            =======

</TABLE>

              The  following  table sets forth the  plans'  funded  status as of
              August 31, 1997 and 1996, respectively:
<TABLE>
<CAPTION>

                                                                                1997                1996
------------------------------------------------------------------------------------------------------------------------
              (In millions)

              Actuarial present value of benefit obligations:
<S>                                                                              <C>                 <C>      
                  Vested benefit obligation............................    $      17           $      16
                                                                            ========            ========
                  Accumulated benefit obligation.......................    $      17           $      16
                                                                            ========            ========

              Plans' assets at fair value..............................    $      --           $      --
              Projected benefit obligation.............................           50                  37
                                                                            --------            --------
              Plans' assets less than projected benefit
                obligation.............................................    $     (50)          $     (37)
              Unrecognized net loss....................................           13                   4
              Unrecognized prior service cost..........................           11                  11
              Unrecognized transition asset, net.......................            1                   1
                                                                            --------            --------
                  Accrued pension liabilities..........................    $     (25)          $     (21)
                                                                            ========            ========
</TABLE>


              In  determining  the  present  value  of  benefit  obligations,  a
              discount rate of 8 percent was used in 1997 and 1996.  The assumed
              rate of increase in compensation levels used was 8 percent in both
              years.

              Other postretirement benefit plans:

              The  components of  postretirement  benefits cost expensed for the
              years ended  August 31,  1997,  1996,  and 1995,  consisted of the
              following:

<TABLE>
<CAPTION>
<S>                                                                                 <C>               <C>              <C> 
                                                                                    1997              1996             1995
------------------------------------------------------------------------------------------------------------------------------------
              (In millions)

                                                                                
              Service cost -- benefits earned during the year..............     $      2         $       2         $      2
              Interest cost on accumulated postretirement benefit
                obligation.................................................            3                 3                2
              Return on assets.............................................           --                --               --
              Net amortization and deferral................................           --                --               --
                                                                                 -------          --------          -------
                  Other postretirement benefits cost.......................     $      5         $       5         $      4

                                                                                 =======          ========          =======
</TABLE>


<PAGE>





              The  following  table sets forth the  plans'  funded  status as of
              August 31, 1997 and 1996, respectively:

<TABLE>
<CAPTION>
<S>                                                                                      <C>                <C> 
                                                                                         1997               1996
----------------------------------------------------------------------------------------------------------------------------------
              (In millions)

              Accumulated postretirement benefit obligation:

              Retirees..........................................................    $     (15)          $    (12)
              Other fully eligible plans' participants..........................          (10)                (8)
              Other active plans' participants..................................          (23)               (20)
                                                                                     ---------           -------
                                                                                    $     (48)          $    (40)
              Plans' assets at fair value.......................................           --                 --
                                                                                     --------            -------
              Accumulated postretirement benefit obligation in excess of
                plans' assets...................................................    $     (48)          $    (40)
              Unrecognized prior service cost...................................           (2)                (1)
              Unrecognized net loss.............................................            7                  1
                                                                                     --------            -------
                  Accrued postretirement benefits cost..........................    $     (43)          $    (40)
                                                                                     =========           =======

</TABLE>

              For 1997 and  1996,  the  discount  rate used in  determining  the
              accumulated  postretirement  benefit obligation was 8 percent. A 9
              percent  annual rate of increase in the per capita cost of covered
              health care  benefits was assumed for 1997.  This rate was assumed
              to  decrease  gradually  to 5.5 percent in year 2004 and remain at
              that level  thereafter.  A  one-percentage-point  increase  in the
              assumed   health  care  cost  trend  rates  would   increase   the
              accumulated  postretirement  benefit  obligation  as of August 31,
              1997, by approximately $8 million and the total of the service and
              interest cost  components of net  postretirement  health care cost
              for the year then ended by approximately $1 million.


Note 6.       Legal Matters

              DeKalb  Genetics  Corporation  ("DeKalb")  has filed five lawsuits
              against Pioneer alleging that  insect-resistant corn products that
              use a Bt  gene,  and  corn  products  resistant  to a  glufosinate
              herbicide, infringe on certain DeKalb patents. After reviewing the
              Company's  intellectual property position,  all of DeKalb's patent
              filings,  and DeKalb's lawsuits,  Pioneer believes DeKalb's claims
              are without merit.  Pioneer has denied  DeKalb's  allegations  and
              raised defenses that, if successful, would render DeKalb's patents
              invalid.  Pioneer  believes that  disposition of the lawsuits will
              not have a materially adverse effect on the consolidated financial
              position and results of  operations  of the Company.  Pioneer also
              does not  expect  delays in the  introductions  of  advanced  corn
              hybrids  with  insect and  herbicide  resistance  because of these
              lawsuits.
<PAGE>



Note 7.       Financial Instruments

              Foreign exchange:

              The Company uses derivative  instruments  such as forward exchange
              contracts,  purchased  options,  and cross currency swaps to hedge
              foreign-currency-denominated   transactions   such   as   exports,
              contractual flows, and royalty payments. In some countries,  these
              derivative  hedge  instruments  are  not  available  or  are  cost
              prohibitive.  The  exposures  in  these  countries  are  addressed
              through managing net asset positions, borrowing in local currency,
              or investing in U.S. dollars.

              While  derivative  hedge  instruments  are subject to risk of loss
              from exchange and interest rate movements, we expect these changes
              would  generally be offset by changes in the U.S.  dollar value of
              foreign sales and/or cash flows.  The Company does not trade these
              instruments  with the objective of earning  financial gains on the
              exchange  rate  price  fluctuations  alone,  nor  does it trade in
              currencies for which there are no underlying  transaction  related
              exposures.

              The notional amounts for contracts in place at August 31, 1997 and
              1996,  are shown in the  following  table in U.S.  dollars.  These
              contracts generally mature in less than one year.
<TABLE>
<CAPTION>

                                                           August 31,         1997               1996
-----------------------------------------------------------------------------------------------------------------------
              (In millions)

<S>                                                                           <C>                 <C>     
              Forwards...............................................    $     229           $     79
              Options purchased......................................           15                 14
              Swaps..................................................           19                 26
                                                                          --------            -------
                                                                         $     263           $    119
                                                                          ========            =======
</TABLE>


              At August 31,  1997,  deferred  unrealized  gains and losses  from
              hedging firm purchase and sale commitments, based on broker quoted
              prices, were $9 million and $5 million, respectively.


              Credit risk:

              The  Company's  financial  instruments  subject to credit risk are
              primarily trade accounts  receivable,  cash and cash  equivalents,
              and foreign currency exchange contracts. The Company is exposed to
              credit risk of nonperformance by  counterparties.  Generally,  the
              Company does not require  collateral or other  security to support
              customer  receivables or foreign currency exchange contracts.  The
              counterparties  to the Company's  derivative hedge instruments are
              major   financial   institutions.   The  Company   evaluates   the
              creditworthiness  of the  counterparties  to these instruments and
              has never experienced,  nor does it anticipate,  nonperformance by
              any of its counterparties.

<PAGE>




              The Company had the following significant  concentrations of trade
              accounts  receivables,  and cash and cash  equivalents  subject to
              credit risk:

                                    August 31,         1997               1996
--------------------------------------------------------------------------------
              (In millions)

              United States...................    $     151           $    141
              Italy...........................    $      69           $     57
              Brazil..........................    $      19           $     19
              Argentina.......................    $      27           $     11
              Central Europe..................    $      16           $      9


              Within  the  U.S.,  the  majority  of the  Company's  business  is
              conducted with  individual farm operators  located  throughout the
              country.  Outside the U.S., the majority of the Company's business
              is  transacted  with  distributors  and  cooperatives,  some being
              government sponsored.

              Fair value:

              The Company estimated the fair value of its financial  instruments
              by  discounting  the expected  future cash flows using the current
              interest  rates  which  would  apply to each  class  of  financial
              instruments,  except  for  foreign  currency  contracts  for which
              quotes from brokers were used.

              The  fair  value  of  cash  equivalents,  receivables,  short-term
              borrowings,   long-term  debt,  and  foreign  currency   contracts
              approximates carrying value at August 31, 1997.


Note 8.       Capital Stock

              Voting rights:

              Generally,  each share of common  stock is  entitled to five votes
              per share if the share has been beneficially owned continuously by
              the same person for a period of 36  consecutive  months  preceding
              the record date for the relevant  shareholders' meeting. All other
              shares are entitled to one vote per share.

              Share repurchase:

              At August 31, 1997,  authorized  shares  remaining to be purchased
              under a Board authorized repurchase plan approximated 2.1 million.

              Restricted stock plans:

              The Company has a restricted  stock plan under which shares of the
              Company's  common  stock are held by the Company for  officers and
              key  employees.  Such stock is subject to an  agreement  requiring
              forfeiture  by  the  employee  in  the  event  of  termination  of
              employment  within five years of the date of grant other than as a
              result of retirement,  death, or disability. The maximum number of
              shares  authorized for grant under this plan is 1,750,000  shares,
              of which 258,472 had been granted as of August 31, 1997.
<PAGE>


              The Company also has a restricted stock plan under which shares of
              the Company's common stock are held for non-employee  directors of
              the Company in lieu of cash  compensation.  The maximum  number of
              shares  authorized  for grant under this plan is 25,000,  of which
              14,306 have been granted as of August 31, 1997.

              Stock option plan:

              During  1996,  the Company  adopted a  non-qualified  stock option
              plan. The plan authorizes options covering three million shares of
              the  Company's  common  stock.   Options  under  the  plan  become
              exercisable  one-third in each of years three, four, and five from
              the date of grant.  The  options  expire  after ten years from the
              date of grant.  Options are forfeited upon termination for reasons
              other than retirement, death, or disability.

              The Company applies APB Opinion No. 25 and related interpretations
              in  accounting  for the fixed stock option plan.  Accordingly,  no
              compensation   cost  has  been   recognized   for  the  plan.  Had
              compensation  cost for the Company's  fixed stock option plan been
              determined  consistent with SFAS No. 123, the Company's net income
              and  earnings  per share would have been  reduced to the pro forma
              amounts as follows:

   
                                  Years Ended August 31, 1997              1996
--------------------------------------------------------------------------------
              (In millions, except per share amounts)

              Net Income as reported                   $  243           $   223
              Pro forma net income                     $  240           $   221
              Earnings per share as reported           $ 2.95           $  2.68
              Pro forma earnings per share             $ 2.92           $  2.65

              The fair value of each option  grant is  estimated  on the date of
              grant  using  the  Black-Scholes  option-pricing  model  with  the
              following weighted-average assumptions used for grants in 1997 and
              1996, respectively: risk-free interest rate of 6.7 percent and 6.4
              percent; expected life of 7.5 years each year; expected volatility
              of 22 percent each year; and dividend yield of 1.4 percent and 1.5
              percent.



<PAGE>




              A summary of the status of the  Company's  fixed stock option plan
              as of August 31, 1997 and 1996, and changes during the years ended
              on those dates is presented below:
<TABLE>
<CAPTION>
                                                        1997                        1996
----------------------------------------------------------------------     --------------------


                                                            Weighted-                  Weighted-
                                                            Average                    Average
                                                            Exercise                   Exercise
                                                Shares      Price          Shares      Price
              Outstanding at beginning
     
<S>                                            <C>          <C>                        <C>      
                of year....................    973,000      $      43            -     $       -
              Granted......................     24,000      $      78      973,000     $      43
                                                ------                     -------
              Outstanding at end of year       997,000      $      44      973,000     $      43
                                               =======       ========      =======      ========

              Options exercisable
              at year end.....................       -                           -

              Weighted-average fair
                value of options
                granted during the year....  $    27.47                   $  14.89
</TABLE>


<TABLE>
<CAPTION>

              The  following  table  summarizes  information  about  fixed stock
              options outstanding at August 31, 1997.


                                        Options Outstanding
                                        Number                Weighted-Average
              Weighted-Average          Outstanding           Remaining
              Exercise Price            at 8/31/97            Contractual Life

<S>                     <C>              <C>                  <C>      
                 $       43              973,000              8.0 years
                 $       78               24,000              9.8 years

              There are no options exercisable at August 31, 1997.
</TABLE>



<PAGE>




Note 9.       Geographic Data

              Certain financial  information  concerning the Company's  domestic
              and foreign operations is as follows:
<TABLE>
<CAPTION>
                                            Years Ended August 31,          1997               1996                1995
------------------------------------------------------------------------------------------------------------------------------------
              (In millions)

              Net sales (by source):
<S>                                                                    <C>                <C>                 <C>      
                  United States...................................     $   1,626          $   1,435           $   1,271
                  Europe..........................................           391                387                 349
                  Other...........................................           240                222                 189
                                                                        --------            -------            --------
                                                                       $   2,257          $   2,044           $   1,809
                  Less intergeographical sales, primarily
                      United States...............................           473                323                 277
                                                                        --------            -------            --------
                                                                       $   1,784          $   1,721           $   1,532
                                                                        ========           ========            ========
              Operating income (by source):
                  United States...................................     $     365          $     334           $     269
                  Europe..........................................            49                 56                  53
                  Other...........................................            26                 33                  31
                                                                        --------            -------            --------
                                                                       $     440          $     423           $     353
                  Indirect general and administrative expense.....           (77)               (76)                (73)
                                                                        --------            -------            --------
                                                                       $     363          $     347           $     280
                                                                        ========           ========            ========

              Identifiable assets at August 31:
                  United States...................................     $     843          $     701           $     736
                  Europe..........................................           228                224                 212
                  Other...........................................           322                244                 210
                                                                        --------            -------            --------
                                                                       $   1,393          $   1,169           $   1,158
                  Corporate.......................................           210                253                 135
                                                                        --------            -------            --------
                                                                       $   1,603          $   1,422           $   1,293
                                                                        ========           ========            ========

              Export sales:
                  Primarily Europe................................     $      18          $      20           $      15
                                                                        ========           ========            ========

</TABLE>

Note 10.      Unaudited Quarterly Financial Data

              Summarized  unaudited  quarterly  financial  data  for  1997 is as
              follows:
<TABLE>
<CAPTION>

              Three Months Ended                     November 30       February 28           May 31           August 31
------------------------------------------------------------------------------------------------------------------------------------
              (In millions, except per share amounts)


<S>                                                      <C>                 <C>                <C>                 <C>      
              Net sales........................    $      90           $     264          $   1,288           $     142
              Gross profit.....................    $      10           $      94          $     735           $      28
              Net income (loss)................    $     (45)          $      (2)         $     332           $     (42)
              Net income (loss) per
                  common share (1).............    $    (.55)          $    (.02)         $    4.04           $    (.51)
              Cash dividends per
                  common share(1)..............    $     .23            $    .23          $     .23           $     .26
</TABLE>

<PAGE>





              Summarized  unaudited  quarterly  financial  data  for  1996 is as
              follows:
<TABLE>
<CAPTION>

              Three Months Ended                     November 30       February 29           May 31           August 31
------------------------------------------------------------------------------------------------------------------------------------
              (In millions, except per share amounts)

<S>                                                      <C>                 <C>              <C>                 <C>      
              Net sales........................    $      92           $     281          $   1,168           $     180
              Gross profit.....................    $       8           $     107          $     691           $      52
              Net income (loss)................    $     (49)          $       4          $     303           $     (35)
              Net income (loss) per
                  common share (1).............    $    (.59)          $     .05          $    3.64           $    (.42)
              Cash dividends per
                  common share (1).............    $     .20           $     .20          $     .20           $     .23
</TABLE>

              (1) As a result  of  rounding,  the  total  of the four  quarters'
              earnings and cash  dividends  per share may not equal the earnings
              and cash dividends per share for the year.


Note 11.       Subsequent Events

               In  September  1997,  the Company and E.I. du Pont de Nemours and
               Company (DuPont) formally completed an agreement that creates one
               of  the  world's  largest  private   agricultural   research  and
               development  collaborations.  The  companies  also formed a joint
               venture that will market improved  quality traits to increase the
               value of crops for livestock feeders, grain processors, and other
               end users. The joint venture will not sell seed.  Pioneer will be
               the  preferred  worldwide  provider and marketer of quality trait
               seed for the joint venture.  Contribution  of tangible  assets or
               cash to the joint venture are not expected to  materially  impact
               the financial condition or results of operation of the Company in
               the near future.

              DuPont also acquired a 20 percent  interest in Pioneer through the
              purchase of preferred voting shares for $1.7 billion. Pioneer used
              a portion of the proceeds  from the DuPont  investment to purchase
              approximately  20 percent of  outstanding  shares  through a Dutch
              auction  self-tender.  The Company  purchased the shares at $92.50
              per share,  and when combined with all other costs associated with
              the transaction,  will have  approximately  $180 million available
              for corporate purposes.

              The agreement, among other things, includes a standstill provision
              that prohibits  DuPont from  increasing its ownership  interest in
              Pioneer for 16 years  without the consent of Pioneer.  DuPont also
              gained two of the 15 seats on the Pioneer board of directors.



<PAGE>


RESEARCH AND PRODUCT DEVELOPMENT

The  Company's  research  and product  development  activities  are  directed at
products with significant  market  potential.  Pioneer believes it possesses the
largest single  proprietary pool of germplasm in the world from which to develop
new hybrid and varietal  seed  products.  The  Company's  seed  research is done
through  classical plant breeding and biotechnology  techniques.  Certain of our
current products require  government  approval before  commercialization.  It is
expected  a  larger  number  of our  future  products  will  also  require  such
government approval.

At August 31, 1997, the Company employed  approximately  940 people who directly
and indirectly engaged in research and product development activities. Of these,
390 scientists  performed  research in the  agricultural  seed area and eight in
microbial  cultures.  Of the 390 scientists  performing research in agricultural
seeds, 65 are employed  outside of North America.  During the three fiscal years
ended August 31, 1997,  the Company  expended the following  amounts on research
and product development:


         Years ended August 31,    1997             1996              1995
--------------------------------------------------------------------------------
(in millions)
Corn....................           $101           $  90            $   87
Soybeans................             14              12                10
Other Products..........             31              34                33
                                 ------             ---               ---
                                 $  146           $ 136              $130
                                    ===             ===               ===

Planned  growth in breeding  projects,  research  collaborations,  and trait and
technology  development  contributed  to the recent  increase  in  research  and
product development costs.

PROPERTIES

Pioneer owns and operates 22 commercial seed corn  conditioning  plants in North
America.  These  plants are  located in Illinois  (4),  Indiana  (4),  Iowa (8),
Michigan (1), Nebraska (2), Texas (1), and Ontario, Canada (2).

Seed corn,  unlike  commercial corn, must be harvested and dried before freezing
temperatures limit germination potential.  Because of this, seed drying capacity
is a critical  factor.  The  dryers at the North  American  plants  have a total
capacity of approximately two million bushels and,  depending on factors such as
seed  moisture  content,  can be filled 11 times before fall weather  presents a
significant freeze risk.

At normal  capacity,  the husking and sorting units at the North American plants
can handle  approximately  55,000 bushels of ear corn per hour. In total,  these
plants have the capacity to condition  approximately 14,000 units per hour. In a
normal year, seed conditioning is completed by early February. These plants have
the  facilities  to store  approximately  10  million  bushels  of bulk seed and
approximately  16 million units of bagged seed corn,  including cold storage for
approximately 7 million units.

In North America,  conditioning  of other  commercial  Pioneer(R)  brand seed is
performed  in 18 plants,  six of which also  condition  corn.  Pioneer also owns
interests  in 28  commercial  production  plants in 20 countries  outside  North
America.  Parent seed is  conditioned  at nine locations in North America and at
nine locations  outside North America.  Seven of these facilities also condition
commercial Pioneer brand seed.

The Company's  plant  breeders  conduct  research at 49 stations in the U.S. and
Canada.  There are 28 stations  which  conduct  research on corn;  four of those
conduct  research  on more than one crop.  There are 21 stations  which  conduct
research on seeds other than corn. Two of these

<PAGE>


stations  conduct  research on more than one crop. In addition to these research
efforts,  Pioneer conducts seed research at 42 locations  throughout the rest of
the world.

In addition  to the  research  stations,  approximately  273,000  square feet of
laboratory,  greenhouse,  and office space  located in  Johnston,  Iowa are also
devoted to plant breeding, biotechnology, and microbial product research.

Additional   production   facilities  for  microbial  products  are  located  at
Company-owned  properties in Johnson,  Iowa and Buxtehude,  Germany. A livestock
nutrition farm, located in Sheldahl, Iowa conducts research for clinical feeding
studies, benefiting both the seed business and microbial products.

Pioneer also owns  approximately  4,900 acres of  agricultural  land in the U.S.
used primarily for research activities. Of this, approximately 800 acres located
in  Johnston,  Iowa  are  under  commercial  and  residential  development.   As
properties are developed, they are either sold or retained as equity projects.

Company  properties,  substantially  all of which are  owned,  were  subject  to
aggregate  encumbrances  of $1 million on August 31, 1997. The Company  believes
that all properties,  including  machinery,  equipment,  and vehicles,  are well
maintained, suitable for their intended uses, and adequately insured.


MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

The  Company's  stock is traded  on the New York  Stock  Exchange.  The range of
closing prices for these shares for the past two years are as follows:
<TABLE>
<CAPTION>

                                                   1997                             1996
                ------------------------------------------------------------------------
<S>                                       <C>            <C>              <C>             <C>    
                Quarter:                  High            Low              High           Low
                First.................    73 1/8          55 1/8           57 3/8         43
                Second................    72 1/8          65 3/8           58 1/4         49 3/4
                Third.................    73              58 3/4           56 5/8         51 3/4
                Fourth................    90              69 5/8           57 1/4         51
</TABLE>


On August 31, 1997, there were  approximately  20,000  registered and beneficial
shareholders of the Company's 82,222,935 outstanding shares. Quarterly dividends
paid for the years ended August 31, 1997 and 1996 are as follows:

                Cash Dividends Per Share       1997                    1996
                ----------------------------------------------------------------
                Quarter:
                First...............     $     .23               $     .20
                Second..............     $     .23               $     .20
                Third...............     $     .23               $     .20
                Fourth..............     $     .26               $     .23


The stock of the Company became publicly traded in 1973 and quarterly  dividends
have been paid  continuously  since that time. It is anticipated  that dividends
will continue to be paid in the future.  The Company's  stock is included in the
Standard & Poors Composite Stock Price Index.



<PAGE>


                                   EXHIBIT 21


                       PIONEER HI-BRED INTERNATIONAL, INC.
                         SUBSIDIARIES OF THE REGISTRANT

The following are all of the subsidiaries of the Registrant, and are included in
its audited  consolidated  financial  statements filed with its Annual Report on
Form 10-K for the fiscal year ended August 31, 1997. Each  subsidiary  listed is
wholly-owned  by  the  Registrant  or  one  of  the  Registrant's  wholly  owned
subsidiaries, except as otherwise indicated.


                                                              Place of
                           Subsidiary                       Incorporation

Subsidiaries of the Registrant:
         The Advantage Corp.                                    USA
         Green Meadows, Ltd.                                    USA
         Hibridos Pioneer de Mexico S.A. de C.V. (1%)           Mexico
         PHI Communications Company, Inc.                       USA
         PHI Financial Services, Inc.                           USA
         PHI Insurance Co.                                      USA
         PHI Insurance Services, Inc.                           USA
         PHI Mexico, S.A. de C.V. (99%)                         Mexico
         PHI Specialty Products                                 USA
         Pioneer Hi-Bred Australia, Pty. Ltd.                   Australia
         Pioneer Hi-Bred FSC Ltd. (0.45%)                       Jamaica
         Pioneer Hi-Bred Limited                                Canada
         Pioneer Hi-Bred Production, Ltd.                       Canada
         Pioneer Hi-Bred Puerto Rico, Inc.                      USA
         Pioneer Overseas Corporation                           USA
         Pioneer Sementes Ltda. (74.39%)                        Brazil
         Pioneer Vegetable Genetics, Inc.                       USA
         Semillas Pioneer Chile Ltda. (99.74%)                  Chile
         Semillas Pioneer, S.A.                                 Spain



<PAGE>


<TABLE>
<CAPTION>
                                   EXHIBIT 21


                         SUBSIDIARIES OF THE REGISTRANT


                                                                                      Place of
                           Subsidiary                                               Incorporation

Subsidiaries of Pioneer Overseas  Corporation,  a wholly owned subsidiary of the
     Registrant:
<S>                                                                                 <C>                 
         Agri-Genetic Realty, Inc. (30%)                                             Philippines
         Grainfield Co., Ltd. (35%)                                                  Thailand
         Hibridos Pioneer de Mexico S.A. de C.V. (96%)                               Mexico
         MISR Pioneer Seeds Company S.A.E. (80.39%)                                  Egypt
         P. T. Pioneer Hibrida Indonesia (80%)                                       Indonesia
         PartAgri SARL (50%)                                                         France
         PHI Genetics (Pty) Limited                                                  South Africa
         PHI Hi-Bred (Pty) Limited                                                   South Africa
         PHI Seeds Proprietary Ltd. (99%)                                            Botswana
         PHI Servicios S.A. de C.V. (99%)                                            Mexico
         Pioneer Argentina, S.A.                                                     Argentina
         Pioneer Semences (99.84%)                                                   France
         Pioneer Genetique S.A.R.L. (99.22%)                                         France
         Pioneer Hi-Bred Agricultural Technologies, Inc.                             Philippines
         Pioneer Hi-Bred Europe, Inc.                                                USA
         Pioneer Hi-Bred FSC Ltd. (99.55%)                                           Jamaica
         Pioneer Hi-Bred Italia S.p.A. (90%)                                         Italy
         Pioneer Hi-Bred Japan Co., Ltd. (52%)                                       Japan
         Pioneer Hi-Bred Korea, Inc.                                                 USA
         Pioneer Hi-Bred Magyarorszag Rt.                                            Hungary
         Pioneer Hi-Bred Northern Europe GmbH                                        Germany
         Pioneer Hi-Bred S.A.R.L.                                                    France
         Pioneer Hi-Breed Seeds Agro S.R.L.                                          Romania
         Pioneer Hi-Bred Seeds, Ethiopia PLC                                         Ethiopia
         Pioneer Hi-Bred Sementes de Portugal, S.A.                                  Portugal
         Pioneer Hi-Bred (Thailand) Co., Ltd.                                        Thailand
         Pioneer Overseas Corporation (Thailand) Ltd.                                Thailand
         Pioneer Overseas Research Corporation                                       USA
         Pioneer Pakistan Seed Limited (80%)                                         Pakistan
         Pioneer Saaten GmbH                                                         Austria
         Pioneer Seed Company (Zimbabwe) (Private) Limited (95%)                     Zimbabwe
         Pioneer Seed Holding Nederland B.V.                                         Netherlands
         Pioneer Seeds, Inc.                                                         USA
         Pioneer Semena Holding GmbH (99%)                                           Austria
         Pioneer Sementes Ltda. (25.61%)                                             Brazil
         Pioneer Sjeme D.o.o. (10%)                                                  Croatia
         Pioneer Tohumculuk A.S. (99.98%)                                            Turkey
         Pioneer Trading Ltd. (51%)                                                  Turks & Caicos
         Semillas Hibridas Pioneer S.A. (75%)                                        Colombia
         Semillas Pioneer Chile Ltda. (0.26%)                                        Chile
         Semillas Pioneer de Venezuela C.A.                                          Venezuela
         SPIC PHI Seeds Inc. (50%)                                                   India
         Ukranian-American Russian Zorya-Nasinnya (33.33%)                           Ukraine

</TABLE>

<PAGE>


                                   EXHIBIT 21


                         SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>


                                                                                  Place of
                           Subsidiary                                           Incorporation

Subsidiaries  of  Green  Meadows,   Ltd.,  a  wholly  owned  subsidiary  of  the
     Registrant:
<S>                                                                                 <C>    
         Green Meadows Development Board                                            USA
         Hibridos Pioneer de Mexico S.A. de C.V. (1%)                               Mexico
         Iowa India Investments Company Ltd.                                        USA
         PHI Mexico, S.A. de C.V. (1%)                                              Mexico
         Village Court, Inc.                                                        USA

Subsidiaries of PHI Insurance Services,  Inc., a wholly-owned  subsidiary of the
     Registrant:
         Hibridos Pioneer de Mexico S.A. de C.V. (1%)                               Mexico
         Pioneer Insurance Services, Inc. - An Insurance Agency                     USA

Subsidiary of Pioneer Hi-Bred Europe, Inc., a wholly owned subsidiary of Pioneer
     Overseas Corporation:
         Pioneer Tohumculuk A.S. (0.01%)                                            Turkey


Subsidiaries of Pioneer Seed Holding  Nederland B.V., a wholly owned  subsidiary
     of Pioneer Overseas Corporation:
         Hellaseed S.A. (51%)                                                       Greece
         Pioneer Hi-Bred Slovakia S.R.O.                                            Slovakia


Subsidiaries  of Pioneer  Seeds,  Inc.,  a wholly  owned  subsidiary  of Pioneer
     Overseas Corporation:
         Hibridos Pioneer de Mexico S.A. de C.V. (1%)                               Mexico
         MISR Pioneer Seed Company S.A.E. (0.01%)                                   Egypt
         P.T. Pioneer Hibrida Indonesia (20%)                                       Indonesia
         PHI Seeds Proprietary Limited (1%)                                         Botswana
         PHI Servicios S.A. de C.V. (1%)                                            Mexico
         Pioneer Semences S.A. (0.08%)                                              France
         Pioneer Genetique S.A.R.L. (0.78%)                                         France
         Pioneer Hi-Bred Italia S.p.A. (10%)                                        Italy
         Pioneer Semena Holding GmbH (1%)                                           Austria
         Pioneer Sjeme D.o.o. (90%)                                                 Croatia
         Pioneer Tohumculuk A.S. (0.01%)                                            Turkey
</TABLE>



<PAGE>


                                   EXHIBIT 23


                         CONSENTS OF EXPERTS AND COUNSEL






                          INDEPENDENT AUDITORS' CONSENT




The Board of Directors
Pioneer Hi-Bred International, Inc.:

We consent to  incorporation  by reference in the  registration  statements  No.
333-08927  and No.  333-18205 on Form S-8 of our reports  dated October 3, 1997,
relating to the  consolidated  balance sheets of Pioneer Hi-Bred  International,
Inc.  and  subsidiaries  as of  August  31,  1997  and  1996,  and  the  related
consolidated  statements  of income,  shareholders'  equity,  and cash flows and
related schedule for each of the years in the three-year period ended August 31,
1997, which reports appear in the August 31, 1997, annual report on Form 10-K of
Pioneer Hi-Bred International, Inc.


                          /s/ KPMG Peat Marwick LLP
                              KPMG Peat Marwick LLP

Des Moines, Iowa
November 21, 1997

<PAGE>





                                   SIGNATURES



Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934, the Registrant has duly caused this report or amendment  thereto to
be signed on its behalf by the undersigned, thereunto duly authorized.

(REGISTRANT)               PIONEER HI-BRED INTERNATIONAL, INC.



Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934, the Registrant has duly caused this report or amendment  thereto to
be signed on its behalf by the undersigned, thereunto duly authorized.

(REGISTRANT)               PIONEER HI-BRED INTERNATIONAL, INC.

<TABLE>
<CAPTION>

<S>                        <C>
                                            /s/ Charles S. Johnson
(NAME AND TITLE)           Charles S. Johnson, Chairman, President and Chief Executive Officer
DATE                       November 21, 1997

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.


                                            /s/ Charles S. Johnson
(NAME AND TITLE)           Charles S. Johnson, Chairman, President and Chief Executive Officer
DATE                       November 21, 1997


                                            /s/ Jerry L. Chicoine
(NAME AND TITLE)           Jerry L. Chicoine, Executive Vice President, Chief Operating Officer,
                           Chief Financial Officer, and Corporate Secretary to the Board
DATE                       November 21, 1997


                                            /s/ Dwight G. Dollison
(NAME AND TITLE)           Dwight G. Dollison, Vice President and Treasurer
DATE                       November 21, 1997


                                            /s/ Brian G. Hart
(NAME AND TITLE)           Brian G. Hart, Vice President and Corporate Controller
DATE                       November 21, 1997


                                            /s/ Nancy Y. Bekavac
(NAME AND TITLE)           Nancy Y. Bekavac, Director
DATE                       November 21, 1997
</TABLE>

<PAGE>


                                            /s/ C. Robert Brenton
(NAME AND TITLE)           C. Robert Brenton, Director
DATE                       November 21, 1997


                                            /s/ Dr. Pedro Cuatrecasas
(NAME AND TITLE)           Dr. Pedro Cuatrecasas, Director
DATE                       November 21, 1997


                                            /s/ Fred S. Hubbell
(NAME AND TITLE)           Fred S. Hubbell, Director
DATE                       November 21, 1997


                                            /s/ Luiz Kaufmann
(NAME AND TITLE)           Luiz Kaufmann, Director
DATE                       November 21, 1997


                                            /s/ Dr. F. Warren McFarlan
(NAME AND TITLE)           Dr. F. Warren McFarlan, Director
DATE                       November 21, 1997


                                            /s/ Dr. Owen J. Newlin
(NAME AND TITLE)           Dr. Owen J. Newlin, Director
DATE                       November 21, 1997


                                            /s/ Thomas N. Urban
(NAME AND TITLE)           Thomas N. Urban, Director
DATE                       November 21, 1997


                                            /s/ Dr. Virginia Walbot
(NAME AND TITLE)           Dr. Virginia Walbot, Director
DATE                       November 21, 1997


                                            /s/ H. Scott Wallace
(NAME AND TITLE)           H. Scott Wallace, Director
DATE                       November 21, 1997


                                            /s/ Fred W. Weitz
(NAME AND TITLE)           Fred W. Weitz, Director
DATE                       November 21, 1997


                                            /s/ Herman H.F. Wijffels
(NAME AND TITLE)           Herman H.F. Wijffels, Director
DATE                       November 21, 1997