133

                                  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, 1998

                                               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.)


             800 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 October 30, 1998, was  $5,197,915,599.  As of October 30, 1998,
190,533,634  shares of the  Registrant's  Common  Stock,  $1.00 par value,  were
outstanding.  As of October 30, 1998,  there were also 49,333,758  shares of the
Registrant's  Class B common  stock  outstanding  to E.I. du Pont de Nemours and
Company   (DuPont)  which  are  convertible   into  49,333,758   shares  of  the
Registrant's  Common Stock upon transfer of beneficial  ownership of such shares
of Class B common  stock to a person not a member of a DuPont  group  (generally
defined as an affiliate of DuPont).



                                       2
<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, 1998. (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 26, 1999. (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,  1998 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,  1998 is  incorporated
           herein by reference.

ITEM   3.  LEGAL PROCEEDINGS

           The description of legal proceedings  contained within Notes 7 and 13
           to the  Consolidated  Financial  Statements  in the Annual  Report to
           Shareholders  for the year  ended  August  31,  1998 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, 1998 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 $34.67 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. On January 27, 1998 the Preferred Stock


                                       3
<PAGE>



          was converted to 49,333,758 post split shares of Class B common stock.
          Shares  of Class B common  stock  are  convertible  (on the basis of 1
          share of common stock per share of Class B common stock) automatically
          upon the  transfer of  beneficial  ownership of such shares of Class B
          common stock to a person not a member of a DuPont Group, as defined in
          the Investment Agreement.


ITEM   6.  SELECTED FINANCIAL DATA

           Selected   financial   data   contained  in  the  Annual   Report  to
           Shareholders  for the year  ended  August  31,  1998 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,  1998  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, 1998 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, 1998;  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, 1998;  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, 1998;  and the  information  responsive  to the item is
           incorporated herein by reference.

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, 1998;  and the  information  responsive  to the item is
           incorporated herein by reference.



                                       4
<PAGE>




                                     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 Schedule

                  The financial statement schedule 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 6.

           (b)    Reports on Form 8-K

                  None




                                       5
<PAGE>



                              FINANCIAL STATEMENTS
                                       AND
                          FINANCIAL STATEMENT SCHEDULES
                                       OF
                       PIONEER HI-BRED INTERNATIONAL, INC.
                    FOR THE FISCAL YEAR ENDED AUGUST 31, 1998


                                      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, 1998 and 1997
Consolidated  Statements of Income - years ended August 31, 1998, 1997, and 1996
Consolidated  Statements of Shareholders'  Equity - years ended August 31, 1998,
1997,  and 1996  Consolidated  Statements of Cash Flows - years ended August 31,
1998, 1997, and 1996 Notes to Consolidated Financial Statements



<TABLE>
<CAPTION>
                                                                                Page

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:

<S>                                                                              <C>

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

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

Exhibits to Annual Report on Form 10-K......................................      9
</TABLE>

The  financial  statement  schedule  has  been  omitted  as  not  required,  not
applicable, or because all the data are included in the financial statements.



                                       6
<PAGE>



                          INDEPENDENT AUDITORS' REPORT

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

Under date of September 18, 1998, we reported on the consolidated balance sheets
of Pioneer Hi-Bred  International,  Inc. and  subsidiaries as of August 31, 1998
and 1997,  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, 1998, as contained in the 1998 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 1998.  In  connection
with our audits of the aforementioned consolidated financial statements, we also
have audited the related 1998, 1997, and 1996 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
September 18, 1998



                                       7
<PAGE>



                       PIONEER HI-BRED INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                  SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
                                  (In millions)
<TABLE>
<CAPTION>

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, 1998.......   $     23       $     6       $     2        $    27
                                        ----          ----          ----           ----
Year ended August 31, 1997.......   $     23       $     6       $     6        $    23
                                        ----          ----          ----           ----
Year ended August 31, 1996.......   $     19       $     5       $     1        $    23
                                        ----          ----          ----           ----
</TABLE>


Inventory Reserves:

<TABLE>
<CAPTION>

<S>               <C> <C>           <C>            <C>           <C>            <C>    
Year ended August 31, 1998.......   $     55       $    32       $    40        $    47
                                        ----          ----          ----           ----
Year ended August 31, 1997.......   $     55       $    34       $    34        $    55
                                        ----          ----          ----           ----
Year ended August 31, 1996.......   $     50       $    36       $    31        $    55
                                        ----          ----          ----           ----

</TABLE>







*Represents accounts charged off as uncollectible, net of recoveries of bad
 debts.




                                       8
<PAGE>



                                      INDEX

                     Exhibits to Annual Report on Form 10-K
                           Year Ended August 31, 1998
                       PIONEER HI-BRED INTERNATIONAL, INC.
<TABLE>
<CAPTION>

<S>     <C>                                  <C>                                     <C>
Exhibit 3.1--Articles of Incorporation (Note 1)................................      10
Exhibit 3.2--ByLaws (Note 2)...................................................      10

Exhibit 4.1--Articles of Incorporation (Note 1)...............................       10
Exhibit 4.2--ByLaws (Note 2)...................................................      10
Exhibit 4.3--Rights Agreement (Note 3)........................................       10
Exhibit 4.4--Specimen of Company's Common Stock Certificate (Note 4)..........       10

Exhibit 10--Material Contracts
          Executive Compensation Plans
          .1  Amended and Restated Stock Option Plan..........................    11-17
          .2  Amended and Restated Deferred Compensation (Note 5).............       10
          .3  Annual Deferred Compensation Plan (Note 6)......................       10
          .4  Supplemental Executive Retirement Plan..........................    18-40
          .5  Amended and Restated Restricted Stock Plan - Performance Based..    41-48
          .6  Amended and Restated Management Reward Program -
                 Performance Based............................................    49-56
          .7  Amended and Restated Directors' Restricted Stock Plan...........    57-61
          .8  Change in Control Severance Compensation Plan for
                 Management Employees.........................................    62-80
          Other Material Contracts
          .9  Investment Agreement dated August 6, 1997 between the Company 
                 and E.I.du Pont de Nemours and Company (Note 7).............        10
          .10 Formation Agreement dated August 6, 1997 between the Company 
                 and E.I. du  Pont de Nemours and Company (Note 8).............      10
          .11 Research Alliance Agreement dated August 6, 1997 between the 
                 Company and  E.I. du Pont de Nemours and Company (Note 9).....      10
          .12 Preferred Seed Support Agreement dated August 6, 1997 between the
              Company and E.I. du Pont de Nemours and Company (Note 10).......       10


Exhibit 13--Annual Report to Shareholders for the fiscal year ended August 31, 
1998
          .1 Description of the Company's business............................    81-85
          .2 Selected financial data..........................................    86-87
          .3 Consolidated net sales and operating income (loss) by product....       88
          .4 Management's discussion and analysis of financial condition and 
              results of operations...........................................   89-101
          .5 Consolidated financial statements of the Registrant, together with
              Independent Auditors' Report thereon............................  102-126
          .6 Research and product development.................................      126
          .7 Description of properties........................................  126-127
          .8 Market for the Registrant's common stock.........................      127

Exhibit 21--Subsidiaries of Registrant........................................  128-130

Exhibit 23--Consents of experts and counsel...................................      131

Exhibit 27--Financial data schedule...........................................      134
</TABLE>

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



                                       9
<PAGE>



                                      INDEX


                Notes for Exhibits to Annual Report on Form 10-K
                           Year Ended August 31, 1998
                       PIONEER HI-BRED INTERNATIONAL, INC.


Note 1.  Incorporated herein by reference to Exhibit 4.2 of the Company's Form
         S-8, filed September 15, 1998

Note 2.  Incorporated herein by reference to Exhibit 4.3 of the Company's Form 
         S-8, filed September 15, 1998

Note 3.  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 4   Incorporated herein by reference to Exhibit 4.5 of the Company's Form
         S-8 Registration Statement, filed July 26, 1996.

Note 5.  Incorporated herein by reference to Exhibit 10.2 of the Company's 1993
         Annual Report on Form 10-K, filed November 29, 1993.

Note 6.  Incorporated herein by reference to Exhibit 10.3 of the Company's 1993
         Annual Report on Form 10-K, filed November 29, 1993

Note 7.  Incorporated herein by reference to Exhibit 1 of the Company's Form 8-K
         filed August 8, 1997

Note 8.  Incorporated  herein by reference to Exhibit c(1) of the  Company's
         Schedule 13e-4 filed September 25, 1997.

Note 9.  Incorporated herein by reference to Exhibit c(2) of the Company's 
         Schedule 13e-4 filed September 25, 1997

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




                                       10
<PAGE>



                                             AMENDED AND RESTATED
                                      PIONEER HI-BRED INTERNATIONAL, INC.
                                               STOCK OPTION PLAN

1.      Establishment of the Plan.

        a)     The Company  hereby  establishes  the Pioneer  Hi-Bred  
               International,  Inc. Stock Option Plan (the "Plan").

        b)     Purpose.

               The intent of the Plan is to assure that executives and other key
               employees  have a concrete  interest in the long-term  success of
               the Company and to give such employees the long-term  perspective
               required in an industry  which takes  several  years to develop a
               product,  and to align the  interest of such  employees  with the
               long-term interests of shareholders.

2.      Definitions.

          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,  b) the number of shares of common stock
               issuable upon  conversion  (whether or not then  convertible)  or
               otherwise  of Class B Common Stock and c) the number of shares of
               common  stock  issuable  upon  conversion  (whether  or not  then
               convertible)   or   otherwise   constituting   the  common  stock
               equivalent  of any other  class or series of capital  stock which
               votes for or in the election of directors 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 acting
               in  concert,  other  than  (A)  the  Corporation  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  Corporation,  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
               the  Corporation  without   recommendation  of  such  Board.  The
               ownership  of  record of 25% or more in number of the total of a)
               the  number of shares of common  stock then  outstanding,  b) the
               number  of  shares  of  common  stock  issuable  upon  conversion
               (whether or not then  convertible) or otherwise of Class B Common
               Stock and c) the number of shares of common stock  issuable  upon
               conversion   (whether  or  not  then  convertible)  or  otherwise
               constituting  the common stock  equivalent  of any other class or
               series of capital  stock  which  votes for or in the  election of
               directors of the  Corporation 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 of
               Directors of the Company or any successor committee.

        d)     "Company"  means  Pioneer  Hi-Bred  International,  Inc., an Iowa
               Corporation and any division, subsidiary or affiliate thereof.

        e)     "Competition"  shall mean (i) engaging,  directly or  indirectly,
               whether as an employee,  independent contractor,  consultant,  or
               otherwise,  in a business similar to the business of the Company,
               and/or  (ii)  owning,  managing,  operating,  controlling,  being
               employed by or having a financial interest in, or being connected
               in any manner with,  the  ownership,  management,  operation,  or
               conduct  of  any  such  similar  business,   provided  that  mere
               ownership (directly,  indirectly or beneficially) of the stock of
               a corporation representing




                                       11
<PAGE>




               less than five  percent  (5%) of such  corporation's  outstanding
               stock shall not be considered competition.

        f)     "Early Retirement" means retirement of a Participant, who remains
               in the employ of the Company until his retirement on or after age
               fifty-five (55) but prior to age sixty-five (65). Notwithstanding
               the prior sentence,  the Participant must complete five (5) years
               of full time service with the Company before such retirement.

        g)     "Fair  Market  Value" of a share of Common  Stock of the  Company
               shall mean, with respect to the date in question,  either (x) the
               average  of the  highest  and  lowest  officially-quoted  selling
               prices on such  exchange  or (y) the  closing  sale price of such
               stock, as selected by the Committee;  or if the Company's  Common
               Stock is not quoted by  NASDAQ,  traded on such an  exchange,  or
               otherwise traded publicly,  the value determined,  in good faith,
               by the Committee.

        h)     "Normal Retirement" means retirement by a Participant who remains
               in the employ of the Company until age 65 or any time on or after
               the Participant attains age 65.

        i) "Option" means an option granted under this Plan.

        j)     "Participant" means an employee who is eligible to participate in
               this plan under Section 4.

        k)     "Plan" means the Pioneer Hi-Bred International, Inc. Stock Option
               Plan as amended from time to time.

        l)     "Shares" means the Common Stock, $1 par value, of Pioneer Hi-Bred
               International, Inc.

        m)     "Termination  for Cause" means  termination  as determined by the
               Committee,  except  after a Change in Control,  "Termination  for
               Cause" shall mean the  termination of employment of a Participant
               as a direct result of an act or acts of dishonesty,  constituting
               a felony under the laws of the United States or the State of Iowa
               and  resulting or intended to result  directly or  indirectly  in
               gain or personal enrichment at the expense of the Company. An act
               or acts of  dishonesty  constituting  a felony  will be deemed to
               occur  only  if the  act or  acts  constituting  the  felony  are
               established   either  by  (a)  the  specific   admission  of  the
               Participant or (b) a final  nonappealable  judgment of a court of
               competent jurisdiction.

3.      Administration.

        a)     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.

        b)     Delegation  of Authority.  The  Committee  may  delegate,  to the
               extent  allowed by law,  to any officer of the Company its duties
               under the Plan pursuant to such  conditions or limitations as the
               Committee  may  establish,  except  that only the  Committee  may
               select,  and grant  Options to,  Participants  who are subject to
               Section 16 of the Securities Exchange Act of 1934.

4.      Participation.

        Participation  in the Plan shall be limited to  executive  officers  and
        those other key employees of the Company and its  subsidiaries  selected
        by the Committee.




                                       12
<PAGE>




        Directors  who  are  officers  of  the  Company  shall  be  eligible  to
        participate  in the  Plan.  No  director  who is not an  officer  of the
        Company and no member of the Committee  shall be eligible to participate
        in the Plan.

5.      Grants.

        The  Committee may from time to time grant to  Participants  Options for
        such  number of  Shares as the  Committee  shall  determine  in its sole
        discretion (such individuals to whom grants are made being herein called
        "Optionees").  The Options granted shall take such form as the Committee
        shall determine, subject to the following terms and conditions.

        a)     Price. The price per share  deliverable upon the exercise of each
               Option ("exercise price") shall not be less than 100% of the Fair
               Market Value of the Shares on the date the option is granted.

        b)     Exercise.  Options  may be  exercised  in whole  or in part  upon
               payment  of the  exercise  price of the  Shares  to be  acquired.
               Payment  shall  be made  in cash  or,  in the  discretion  of the
               Committee,  in shares previously  acquired by the Participant and
               held by the  Participant for at least six months or a combination
               of cash and such shares of Common Stock. The Fair Market Value of
               shares of Common Stock  tendered on exercise of Options  shall be
               determined on the date of exercise.

        c)     Exercise  Through a Broker.  Options may be exercised in whole or
               in part upon  delivery  (including  by fax) to the  Company of an
               irrevocable   written   notice  of  exercise   with   irrevocable
               instructions to a  broker-dealer  to sell (or margin) some or all
               of the Shares and deliver sale (or margin loan) proceeds directly
               to the Company to pay the exercise price and  withholding  taxes.
               The date on which such notice is received by the Company shall be
               the date of exercise of the option,  provided  that within  three
               business days of the delivery of such notice the funds to pay for
               exercise of the option are  delivered  to the Company by a broker
               acting on behalf of the Optionee  either in  connection  with the
               sale of the shares  underlying  the option or in connection  with
               the making of a margin loan to the Optionee to enable  payment of
               the  exercise  price  of  the  option.  In  connection  with  the
               foregoing,  the  Company  will  provide a copy of the  notice and
               instructions to the aforesaid  broker upon receipt by the Company
               of such  notice and will  deliver to such  broker,  within  three
               business  days of the delivery of such notice to the  Company,  a
               certificate  or   certificates   (as  requested  by  the  broker)
               representing the number of shares underlying the option that have
               been sold by such broker for the Optionee.

        d)     Terms of  Options.  The term  during  which  each  option  may be
               exercised  shall be determined by the Committee,  but in no event
               shall an option be  exercisable  in whole or in part in less than
               one year unless accelerated as set forth herein or, more than ten
               years and one day from the date it is granted.

               All rights to purchase shares pursuant to an option shall, unless
               sooner   terminated,   expire  at  the  date  designated  by  the
               Committee.  The Committee  shall determine the date on which each
               option  shall become  exercisable  and may provide that an option
               shall become exercisable in installments. The shares constituting
               each installment may be purchased in whole or in part at any time
               after  such  installment  becomes  exercisable,  subject  to such
               minimum  exercise  requirement as is designated by the Committee.
               The Committee may  accelerate the time at which any option may be
               exercised in whole or in part. The Optionee shall not be entitled
               to any  voting  rights on any stock  represented  by  outstanding
               Options.

        e)     Termination  of  Employment;  Change in  Control.  If an Optionee
               ceases to be an employee of the Company due to Normal Retirement,
               death  or  total  and  permanent  disability,   a)  each  of  the
               Optionee's  unvested  and  unexpired  Options  shall become fully
               vested,  and  b)  each  of  the  Optionee's  exercisable  Options
               (including  those Options  vested in clause a of this  paragraph)
               shall only remain exercisable for, and shall




                                       13
<PAGE>




               otherwise  terminate  at the end of, a period  of one year or for
               such  other  period  as the  Committee  determines  in  its  sole
               discretion   from  the  date  of   termination   of   employment.
               Notwithstanding  the above,  an Option  shall not be  exercisable
               after its expiration date established pursuant to section 5d.

               If an Optionee  ceases to be an employee of the Company  upon the
               occurrence  of his or her Early  Retirement,  a) the Committee in
               its sole  discretion  may vest all or a portion of the Optionee's
               options, b) each of the Optionee's  exercisable Options vested in
               clause a of this paragraph shall only remain exercisable for, and
               shall otherwise  terminate at the end of, a period  determined by
               the  Committee  in  its  sole  discretion,  and  c)  each  of the
               Optionee's exercisable Options (excluding those Options vested in
               clause a of this paragraph)  shall only remain  exercisable  for,
               and shall otherwise  terminate at the end of a period of one year
               or for such other period as the Committee  determines in its sole
               discretion  after the date of Early  Retirement.  Notwithstanding
               the  above,  an  Option  shall  not  be  exercisable   after  its
               expiration date established pursuant to section 5d.

               If an  Optionee  ceases to be an  employee  of the Company due to
               Termination for Cause (including after a Change in Control), each
               of the  Optionee's  Options  (including  both vested and unvested
               options) shall be forfeited.

               If an Optionee  ceases to be a full time  employee of the Company
               for any reason  other  than  death,  Disability,  Normal or Early
               Retirement or Termination for Cause,  each of the Optionee's then
               exercisable  Options shall only remain exercisable for, and shall
               otherwise  terminate  at the end of, a  period  of 90 days or for
               such  other  period  as the  Committee  determines  in  its  sole
               discretion   after  the  date  of   termination   of  employment.
               Notwithstanding  the above,  an Option  shall not be  exercisable
               after its expiration date established pursuant to section 5d. All
               of Optionee's  Options that were not  exercisable  on the date of
               such termination shall be forfeited.

               Notwithstanding anything to the contrary herein, if a participant
               ceases  to  be a  full  time  employee  of  the  Company  or  any
               subsidiary,  for any reason other than Termination for Cause, the
               Committee at its sole discretion a) may accelerate the vesting of
               any  unvested  Option so that it will  become  fully  vested  and
               exercisable as of the date of such  participant's  termination of
               employment and b) may establish a period for which any exercisble
               Option  (including  those  Options  vested  in  clause  a of this
               paragraph) shall remain  exercisable.  Notwithstanding the above,
               an Option  shall not be  exercisable  after its  expiration  date
               established pursuant to section 5d.

               If there is a Change in Control of the Company,  there will be an
               automatic  acceleration of the vesting of any outstanding  Option
               so that it will  become  fully  vested and  exercisable  upon the
               Change in Control  and except only for  Termination  for Cause or
               engaging  in  Competition,  shall  remain  exercisable  until its
               expiration date established pursuant to section 5d.

        f)     Competition.   Notwithstanding  the  above,  unless  an  Optionee
               receives  written  consent  to do so  from  the  Company,  if the
               Optionee  engages in Competition  each of the Optionee's  Options
               (including both vested and unvested  options) shall be forfeited.
               Such  consent  must  explicitly  refer  to the  Optionee's  stock
               Options to be effective.

        g)     Maximum. The maximum number of shares with respect to which stock
               options  may be granted to any  single  individual  in any period
               covering  five  consecutive  Plan Years shall not exceed  500,000
               shares.

6.      Shares Available for the Plan.

        a) Number.  Subject to  adjustments  as provided in Section 8, the total
        number  of  Shares  that may be issued  pursuant  to the Plan  shall not
        exceed  3,000,000.  These  Shares may consist,  in whole or in part,  of
        authorized but unissued shares or shares reacquired by the Company



                                       14
<PAGE>



        including, without limitation,  Shares purchased in the open market, and
        not reserved for any other purpose.

        b) Reacquired  Shares. If, at any time, any Option expires or terminates
        unexercised or fails to vest, such  unpurchased  Shares shall thereafter
        be available for further grants under the Plan.

7.      Written Agreement.

        Each  employee to whom a grant is made under the Plan shall enter into a
        written  agreement with the Company that shall contain such  provisions,
        consistent with the provisions of the Plan, as may be established by the
        Committee.

8.      Adjustments.

        In the  event of any  change in the  outstanding  shares of stock of the
        Corporation   by   reason   of   a   stock   dividend,    stock   split,
        recapitalization,  merger,  consolidation,  combination,  or exchange of
        shares or other  similar  corporate  change,  the  Committee in its sole
        discretion  shall make such  adjustments as it deems  appropriate in the
        aggregate  number  and kind of shares  issuable  under the Plan,  in the
        number and kind of shares  covered by grants made under the Plan, and in
        the exercise price of outstanding  Options, and such determination shall
        be conclusive.  In the event of any  liquidation,  dissolution,  merger,
        consolidation or other reorganization ("Transaction"), the Options shall
        continue in effect in accordance  with their  respective  terms,  except
        that following a Transaction  each Optionee shall be entitled to receive
        in respect of each Share subject to any outstanding Options, as the case
        may be, upon exercise of any Option,  the same number and kind of stock,
        securities, cash, property, or other consideration that each holder of a
        Share was entitled to receive in the  Transaction in respect of a Share.
        After the Distribution  Date as defined in the Rights Agreement  between
        Pioneer Hi-Bred International Inc. and the First National Bank of Boston
        as  Rights  Agent,  the  Committee  will make  adjustments  to avoid the
        dilutive  impact of the  exercise  of rights or the  exchange  of rights
        pursuant to such agreement.

9.      Withholding of Taxes.

        The Company may  require,  as a condition to any grant under the Plan or
        to the delivery of certificates  for shares issued  hereunder,  that the
        grantee 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, exercise or any delivery of shares or Options. Participants may
        pay  such  taxes  through  a)  the   withholding  of  shares   otherwise
        deliverable to such  Participant in connection  with the exercise of the
        Option,  b) the delivery to the Company of Shares otherwise  acquired by
        the participant,  or c) through the brokerage exercise feature described
        in Section 5(c). The Shares  withheld by the Company or Shares  tendered
        to the Company for  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  (including  salary  or bonus)  otherwise  due to a
        Participant  any federal,  state or local taxes of any kind  required by
        law to be  withheld  with  respect to any  grant,  or vesting of Options
        under the Plan or  delivery  of  shares,  or to  retain or sell  without
        notice  a  sufficient  number  of  the  Shares  to  be  issued  to  such
        Participant to cover any such taxes, provided that the Company shall not
        sell any such  shares if such sale  would be  considered  a sale by such
        Participant for purposes of Section 16 of the Exchange Act.

10.     Listing and Registration.

        If  the  Committee  determines  that  the  listing,   registration,   or
        qualification  upon any  securities  exchange or under any law of shares
        subject to any Option is necessary or desirable as a condition of, or in
        connection with, the granting of same or the issue or purchase of shares
        thereunder,  no such Option may be  exercised in whole or in part unless
        such  listing,  registration  or  qualification  is effected free of any
        conditions not acceptable to the Committee.




                                       15
<PAGE>




11.     Transfer of Employee and Leaves of Absence.

        Transfer  of an  employee  from  the  Company  to a  Subsidiary,  from a
        Subsidiary to the Company,  and from one Subsidiary to another shall not
        be considered a termination of employment.  Nor shall it be considered a
        termination  of  employment if an employee is placed on military or sick
        leave or such other leave of absence  which is  considered as continuing
        intact  the  employment  relationship;  in such a case,  the  employment
        relationship  shall be continued until the date when an employee's right
        to  reemployment  shall no  longer  be  guaranteed  either  by law or by
        contract.

12. Duration of the Plan.

        The date of commencement of the Amended and Restated Plan shall be March
        10, 1998.  The Plan shall continue  until  terminated by the Board.  Any
        Options  granted  prior to  shareholder  approval  may not be  exercised
        until,  and will be void  unless,  shareholder  approval  is obtained as
        required by applicable laws.

13. Amendment and Termination of the Plan.

        a)     Amendment.  This Plan may be amended by the Board,  without  
               shareholder  approval except as otherwise required by the law.

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

        c)     Existing Options.  Neither amendment nor termination of this Plan
               shall affect any outstanding Options.  However,  with the consent
               of the  grantee  affected  thereby,  the  Committee  may amend or
               modify the grant of any  outstanding  Option in any manner to the
               extent that the  Committee  would have had the  authority to make
               such  grant  as  so  modified  or  amended,   including   without
               limitation  to  change  the date or  dates as of which an  option
               becomes exercisable without limitation.

14.     Provisions Applicable Solely to Insiders.

        Persons  subject to Section 16 of the  Securities  and  Exchange  Act of
        1934,  as  amended  ("Section  16") with  respect to  securities  of the
        Company, may have to comply with additional rules imposed by the Company
        to ensure compliance with Section 16.

15.     Miscellaneous

        a)     No  Contract  of  Employment.  Nothing  in  this  Plan  shall  be
               construed as a contract of employment between the Company and any
               Participant. Nothing in this Plan shall be deemed to constitute a
               contract for services between the Company and a Participant,  and
               nothing  contained  in  the  Plan  shall  be  deemed  to  give  a
               Participant  any right to  continue  furnishing  services  to the
               Company or the Company any right to demand such services. Nothing
               in this Plan shall be construed as an elimination of the right of
               the Company to discharge a Participant, with or without cause.

        b)     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.




                                       16
<PAGE>





        c)     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





                                       17
<PAGE>





                       PIONEER HI-BRED INTERNATIONAL, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN


                                    ARTICLE I

                            Amendment and Restatement


        Section 1.1.          Amendment and Restatement.  Pioneer Hi-Bred 
International, Inc. hereby amends and restates the Pioneer Hi-Bred
International, Inc. Supplemental Executive Retirement Plan (the `Plan'). The 
amended and restated Plan shall apply only with respect to Participants who are
employed by the Company or its Subsidiaries on or after the effective date of 
this amendment and restatement.

        Section 1.2.          Effective Date.  The effective date of the amended
and restated Plan is March 10, 1998.

        Section  1.3.  Purpose.  The  purpose of the Plan is to  supplement  the
retirement  benefits provided to selected executive  employees under the Pioneer
Hi-Bred International, Inc., Retirement Plan and to provide equitable retirement
and survivor benefits for key executive employees,  their surviving spouses, and
Beneficiaries.









                                       18
<PAGE>





                                   ARTICLE II

                                   Definitions


        As used in this Plan,  the  following  terms  shall  have the  following
meanings:

        Section  2.1. " Actuarial  Equivalent"  means a benefit  having the same
value as the benefit which such Actuarial Equivalent replaces. The determination
of an Actuarial  Equivalent shall be based on an annual interest rate assumption
of eight percent (8%) and the 1984 Unisex Pension  Mortality Table with the ages
in said table set back one (1) year.

        Section  2.2.  "Base  Income"  means  the  average  of  the  Executive's
Compensation  in the last  full  Fiscal  Year  prior to the  Executive's  Normal
Retirement,  Early  Retirement,  Death, or Disability  determination,  whichever
occurs first, and the three immediately preceding Fiscal Years.

        Section  2.3.  "Beneficiary"  means  the  person or  persons  designated
pursuant to Section 4.10 by a  Participant,  or subsequent to the  Participant's
death, the Participant's  spouse, to receive the benefits under this Plan if the
Participant and the Participant's spouse do not live to receive benefits through
the Term Certain Expiration Date. If such designation is not made, "Beneficiary"
means  the  legal  representative  of the  Participant  or of the  Participant's
spouse, if a spouse survives the Participant.

        Section 2.4.          "Board of Directors" means the Board of Directors 
of Pioneer Hi-Bred International, Inc. or a committee of the Board of Directors
 appointed to administer the Plan.

        Section 2.5.          "Change  in  Control"  means  (a)  the  
acquisition,   whether   directly, indirectly,  beneficially  (within the
meaning of Rule 13d-3 of the Securities  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




                                       19
<PAGE>




outstanding,  b) the number of shares of common stock  issuable upon  conversion
(whether or not then  convertible)  or  otherwise of Class B Common Stock and c)
the number of shares of common stock  issuable upon  conversion  (whether or not
then  convertible) or otherwise  constituting the common stock equivalent of any
other class or series of capital  stock  which  votes for or in the  election of
directors 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 acting
in concert,  other than (I) the Company and/or (II) 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 (b) the  nomination  and election of  twenty-five
percent  (25%) or more of the  members  of the  Board of  Directors  of  Pioneer
Hi-Bred International,  Inc., without recommendation of such Board of Directors.
The  ownership of record of  twenty-five  percent (25%) or more in number of the
total of a) the number of shares of common stock then outstanding, b) the number
of  shares  of  common  stock  issuable  upon  conversion  (whether  or not then
convertible) or otherwise of Class B Common Stock and c) the number of shares of
common stock  issuable  upon  conversion  (whether or not then  convertible)  or
otherwise  constituting the common stock equivalent of any other class or series
of capital  stock which votes for or in the  election  of  directors  of Pioneer
Hi-Bred  International,  Inc. by a person engaged in the business of acting as a
nominee for unrelated  beneficial owners shall not in and of itself be deemed to
constitute a Change in Control.

        Section 2.6 "Company" means Pioneer Hi-Bred International, Inc., an Iowa
corporation, and all wholly-owned subsidiaries of Pioneer Hi-Bred International,
Inc.

        Section  2.7.  "Company   Long-Term   Disability  Plan"  means  a  group
disability plan which is sponsored by the Company or one of its Subsidiaries and
for which premiums are paid by the Company or one of its  Subsidiaries  or which
is funded by the  Company  or one of its  Subsidiaries  without  the  payment of
premiums by the Participant. It does not include a plan or a portion of the plan
for which premiums are paid by the Participant.




                                       20
<PAGE>




     Section  2.8.  "Compensation"  means all amounts  paid or  allocated by the
Company to the  Executive  for services  rendered to the Company,  including any
bonuses,  restricted stock grants and any amounts which the Executive would have
received but for the  Executive's  election to defer the  compensation in return
for the unsecured  promise of the Company to make payments  after  retirement or
other  termination of  employment.  Restricted  stock grants,  bonuses and other
compensation  will be  included as part of  compensation  for the Fiscal Year in
which the service was rendered.  Restricted  Stock will be valued on the date of
grant without regards to  restrictions.  Notwithstanding  the above  definition,
Compensation shall not include:

(a)     Company contributions to any qualified pension or profit-sharing plan.
                  (b)    Director's fees.
                  (c)    Amounts paid as reimbursement for expenses incurred o
                         behalf of the Company.
                  (d)    Amounts includible in the income of the Executive due
                         to personal use of Company automobiles,  aircraft,  or 
                         other facilities or services,  or due to payment of
                         travel expenses for the Executive's spouse.
                  (e)    Incidental  benefits  paid on behalf  of the  Executive
                         such as hospitalization insurance,  health and accident
                         insurance and group life insurance.
                   (f)   Extraordinary   and   nonrecurring   expenses  such  as
                         severance  pay,  lump sum payments made to terminate an
                         employment contract, and relocation expenses, including
                         mortgage interest  differential payments and relocation
                         bonuses.
                   (g)       Dividends paid on restricted stock.
                   [(h)  Stock Options.]


Compensation  shall  include all amounts  contributed  under a salary  reduction
agreement by the  Participant  to a plan  maintained by the Company  pursuant to
Section 401(k) or Section 125 of the Internal Revenue Code of 1986, as amended.




                                       21
<PAGE>




        Section 2.9.  "Competitive  Activities" means (a) engaging,  directly or
indirectly,  whether as an  employee,  independent  contractor,  consultant,  or
otherwise,  in a business  similar to the  business of the  Company,  during the
period of the  Executive's  employment  with the  Company,  and/or  (b)  owning,
managing,  operating,  controlling,  being  employed  by or  having a  financial
interest in, or being  connected in any manner with the  ownership,  management,
operation, or conduct of any such similar business, provided that mere ownership
(directly,   indirectly  or   beneficially)   of  the  stock  of  a  corporation
representing less than five percent (5%) of such corporation's outstanding stock
shall not be considered a Competitive Activity.
        Section 2.10. "Date of Potential Change in Control" means the date as of
which the Board of Directors  determines that a Potential  Change of Control has
occurred under Section 5.2 of Article V.
        Section 2.11.  "Disability"  means  permanent  long-term  disability for
which the Executive  would be entitled to disability  benefits under any Company
Long-Term  Disability  Plan.  Such  determination  shall  be  made  in the  sole
discretion  of the Board of Directors and the decision of the Board of Directors
shall be final.
        Section 2.12. "Disability  Retirement" means retirement of a participant
who has a disability and who has requested  disability  retirement,  and that is
accepted and approved by the Board of Directors in its sole discretion  prior to
a participant reaching age 65.
        Section 2.13. "Early Retirement" means retirement  accepted and approved
by the Board of Directors in its sole discretion prior to a Participant reaching
age  sixty-five  (65) who remains in Full Time  Employment  until age fifty-five
(55), or if later, the date of which the Participant completes five (5) years of
service with the Company.
        Section 2.14.          "Executive" means a key executive employee of th
Company who is designated as such by the Board of Directors under Section 3.1.
       Section 2.15            "Fiscal Year" means the 12 month period beginning
September 1 and ending August 31.




                                       22
<PAGE>





        Section 2.16.  "Full-Time  Employment"  means  employment as a full-time
salaried  employee of the Company or its  Subsidiaries,  including any period of
determined  Disability unless Disability  Retirement is accepted and approved by
the board of directors.

        Section 2.17.        "Integration Benefits" means the sum of
(a)  Social  Security  benefits,   (b)  retirement   benefits  provided  by  any
jurisdiction  outside  the United  States,  whether  coverage  is  mandatory  or
elective,  (c) retirement or survivorship benefits received under any pension or
profit  sharing plan of the Company that  qualifies for treatment  under Section
401 of the Internal Revenue Code of 1986, as amended, but not including benefits
received  under a plan  including  a cash or  deferred  arrangement  (within the
meaning of Section  401(k) of the Internal  Revenue Code of 1986, as amended) or
an employee stock  ownership  plan (within the meaning of Section  4975(e)(7) of
the  Internal  Revenue  Code  of  1986,  as  amended),  and  (d)  retirement  or
survivorship  benefits  received under any pension or profit sharing plan of the
Company  maintained for the benefit of nonresident  alien employees with no U.S.
source income.  For purposes of this Plan,  "Social Security  Benefits" shall be
deemed to be zero until the Participant  first begins  receiving Social Security
benefit  payments.  Thereafter,  Social Security benefits shall equal the actual
amount of Social  Security  benefits  which the  Participant  receives  when the
Participant  first  begins  receiving  benefits.  For  purposes of this Plan,  a
Participant  shall be  deemed  to have  elected  to  receive  any  benefits  the
Participant  is  entitled  to receive  under any  qualified  plan in the form of
15-year certain and life annuity based on the actuarial assumptions contained in
such  qualified  plan,  or, if no actuarial  assumptions  are  contained in such
qualified plan,  based upon the actuarial  assumptions  specified in the Pioneer
Hi-Bred International, Inc. Retirement Plan. The retirement benefits provided by
any  jurisdiction  outside  the  United  States  shall be deemed to be an amount
certified by a consulting firm selected by the Company. Subject to the foregoing
and as set forth in Article IV, the Participant's  Integration Benefits shall be
determined by the  Corporate  Human  Resources  Department as of the date of the
Participant's  Normal  Retirement,   Early  Retirement,   death,  or  Disability
determination  and shall not thereafter be adjusted on account of cost-of-living
adjustments; or otherwise.



                                       23
<PAGE>



        Section 2.18.  "Involuntary  Termination  of  Employment"  means (a) the
termination of employment of a Participant by the Company other than Termination
for Cause,  (b) the  resignation or retirement of a Participant  for Stated Good
Reason,  or (c) in the case of a Participant who is in the Full-Time  Employment
of a domestic  Subsidiary,  either (I) the sale of a substantial  portion of the
assets of the  Subsidiary  within the  meaning of Section  280G of the  Internal
Revenue Code of l986, as amended,  or (II) the acquisition by an unrelated third
party of  ownership  of more than fifty  percent  (50%) of the then  outstanding
stock,  capital, or profits interest of the Subsidiary.  The Board of Directors,
in its sole discretion,  shall determine whether the acquisition by an unrelated
third party of ownership of an interest in a foreign  subsidiary  constitutes an
Involuntary Termination of Employment.
         Section  2.19. "Letter  of  Credit"  means  one  or  more  irrevocable
agreements  issued  to the  Company  by one or more  banks  that on the  date of
delivery of the letter of credit have (a) a minimum  asset size of $200 million,
and (b) a credit  rating of not less than A-2 from Standard & Poor's or P-2 from
Moody's Investor  Services Inc., under which the Minimum Amount is available for
the account of the Company.
        Section 2.20.  "Minimum Amount" means an amount that is no less than one
hundred percent (100%) of the change-in-control  benefits that would be provided
under  Section  4.9  of  this  Plan  if  each   Participant   were  entitled  to
change-in-control benefits on the Date of Potential Change in Control.
        Section 2.21.  "Named Fiduciary" means the Corporate Human Resources 
Department of Pioneer Hi-Bred International, Inc.
        Section 2.22. "Normal  Retirement" means retirement by a Participant who
remains  in the employ of the  Company  until age 65 at any time on or after the
Participant attains age 65.
        Section 2.23.  "Participant" means an Executive who is designated as
eligible to participate in this Plan by the Board of Directors.
        Section 2.24.    "Plan" means the Pioneer Hi-Bred International, Inc. 
Supplemental Executive Retirement Plan, as amended from time to time.
        Section 2.25.  "Potential Change in Control" means:
               (A)    The execution by Pioneer Hi-Bred International,  Inc. of a
                      written agreement which, if consummated,  would constitute
                      a Change in Control.



                                       24
<PAGE>



               (B)  A  public  announcement   (including  any  filing  with  the
                    Securities and Exchange  Commission) 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  firms
                    acting in concert,  other than (I) the  Company  and/or (II)
                    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 such plan,  of an intention to take
                    or consider  taking actions  which,  if  consummated,  would
                    constitute a Change in Control. 

               (C)  The acquisition, whether directly, indirectly,  beneficially
                    (within  the  meaning of Rule 13d-3 of the 1934 Act),  or of
                    record, of securities of Pioneer Hi-Bred International, Inc.
                    representing  fifteen percent (15%) or more in number of the
                    total of a) the  number  of  shares  of  common  stock  then
                    outstanding,  b)  the  number  of  shares  of  common  stock
                    issuable upon conversion  (whether or not then  convertible)
                    or  otherwise  of Class B Common  Stock and c) the number of
                    shares of common stock issuable upon conversion  (whether or
                    not then  convertible) or otherwise  constituting the common
                    stock  equivalent  of any other  class or series of  capital
                    stock which votes for or in the election of directors 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  acting in  concert,  other than (I) the
                    Company and/or (II) an 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. For
                    purposes of this Section 2.25(C), the ownership of record of
                    fifteen  percent  (15%) or more in number of the total of a)
                    the number of shares of common  stock then  outstanding,  b)
                    the  number  of  shares  of  common  stock   issuable   upon
                    conversion (whether or not then convertible) or otherwise of
                    Class B Common  Stock and c) the  number of shares of common
                    stock issuable upon



                                       25
<PAGE>



                      conversion  (whether or not then convertible) or otherwise
                      constituting  the  common  stock  equivalent  of any other
                      class or series of capital stock which votes for or in the
                      election of  directors of Pioneer  Hi-Bred  International,
                      Inc.  by a person  engaged in the  business of acting as a
                      nominee for unrelated  beneficial  owners shall not in and
                      of itself be deemed to  constitute  a Potential  Change in
                      Control.
               (D)    The  occurrence  of any  other  event  that  the  Board of
                      Directors determines is a Potential Change in Control.

        Section 2.26.  "Stated Good Reason" means a written  determination  by a
Participant  that he reasonably and in good faith cannot continue to fulfill the
responsibilities  for which he was employed.  The  Participant's  determinations
will be conclusively presumed to be reasonable and in good faith if, without the
Participant's  express written consent the Company (a) reduces the Participant's
base salary or rate of compensation as in effect immediately prior to the Change
in  Control,  or as the same may have been  increased  thereafter,  (b) fails to
continue any bonus plans in which the  Participant  was entitled to  participate
immediately  prior to the Change in Control,  substantially  in the form then in
effect,  (c) fails to  continue in effect any  benefit or  compensation  plan in
which  the  Participant  is  participating  immediately  prior to the  Change in
Control (or plans providing substantially similar benefits),  (d) assigns to the
Participants   any   duties   inconsistent   with  the   Participant's   duties,
responsibilities  or  status  immediately  prior to the  Change in  Control,  or
changes the Participant's reporting responsibilities,  titles or offices, or (e)
requires the  Participant  to change the location of his lob or office,  so that
the Participant  will be based at a location more than thirty (30) miles distant
by public  highway from the location of his job or office  immediately  prior to
the Change in Control.

        Section 2.27.  "Subsidiary"  means a corporation  in which a majority of
the voting securities outstanding at the time is owned directly or indirectly by
the Company and/or by one or more of its other subsidiaries,  or a non-corporate
entity in which a majority of the capital or profits  interest is owned directly
or indirectly by the Company and/or by one or more of its other subsidiaries.




                                       26
<PAGE>




     Section 2.28. "Target Pre-Retirement Survivor Benefit" means the product of
the  applicable  percentage  multiplied by the  Participant's  Base Income.  For
purposes of the  recomputation,  restricted  stock  grants and  bonuses  will be
included in Compensation for the Fiscal Year in which the services was rendered.
Restricted  stock  will be  valued  on the  date of  grant  without  regards  to
restrictions.

Participant's Age at Date of Death          Applicable Percentage
----------------------------------          -------------------- 
        Less than 50 years                                75%
        50 to less than 55 years                          70%
        55 to less than 60 years                          65%
        60 to less than 65 years                          60%

However,   for  purposes  of  this  definition,   "Base  Income"  shall  be  the
Participant's  Compensation  in the  last  Fiscal  Year  completed  prior to the
Participant's death in which the Participant was not disabled,  subject to bonus
and restricted stock grant  recomputations  substituting a four-year  average of
incentive bonuses paid and restricted stock granted for such Fiscal Year and the
three preceding  Fiscal Years in lieu of the incentive bonus paid and restricted
stock granted in that Fiscal Year.

        Section 2.29.        "Target Retirement Benefit" means the product of 
sixty percent (60%) and the Participant's Base Income.
        Section  2.30.  "Term  Certain  Expiration  Date"  means  the  fifteenth
anniversary of the event,  retirement or death, which causes payment of benefits
under the Plan to commence.
        Section  2.31.   "Termination   for  Cause"  means  the  termination  of
employment of a  Participant  as a direct result of an act or acts of dishonesty
constituting  a felony under the laws of the United  States or the State of Iowa
and  resulting or intended to result  directly or indirectly in gain or personal
enrichment  at  the  expense  of the  Company.  An act  or  acts  of  dishonesty
constituting  a  felony  will  be  deemed  to  occur  only  if the  act or  acts
constituting the felony are established  either by (a) the specific admission of
the Participant,  or (b) a final nonappealable  judgment of a court of competent
jurisdiction.




                                       27
<PAGE>




        Section 2.32.        "Trust" means the Pioneer Hi-Bred International, 
Inc. Supplemental Executive Retirement Plan Trust established under the Pioneer 
Hi-Bred International, Inc. Supplemental
Executive Retirement Plan Trust Agreement.
        Section 2.33.        "Trust Agreement" means the Pioneer Hi-Bred 
International, Inc. Supplemental Executive Retirement Plan Trust Agreement.
        Section 2.34.        "Trustee" means the banking organization named in 
the Trust to hold and administer money and property in accordance with the Trust
 Agreement. 
        Section 2.35. "Trust Fund" means all money and property delivered to the
Trustee  by  the  Company  under  the  Trust  Agreement,   all  investments  and
reinvestments  made  therewith or proceeds  thereof and all earnings and profits
thereon, less all payments and charges authorized under the Trust Agreement.

                                   ARTICLE III

                                  Participation


        Section 3.1.  Participation.  The Board of Directors shall have the sole
discretion,  from time to time, to designate which Executives shall  participate
in this Plan. This designation shall be by resolution of the Board of Directors.

                                               ARTICLE IV

                              Benefits and Distributions


        Section 4.1. Normal Retirement Benefits. If a Participant remains in the
Full-Time  Employment of the Company until age 65, the Participant shall receive
a normal  retirement  benefit.  The amount of the  Participant's  annual  normal
retirement  benefit shall be equal to the Target  Retirement  Benefit reduced by
the Integration  Benefits.  If necessary,  the normal retirement benefit will be
adjusted when the Participant  begins  receiving Social Security  Benefits.  The
Participant's  annual normal  retirement  benefit,  as so  determined,  shall be
divided by twelve (12) to determine the Participant's  monthly normal retirement
benefits.  The Participant's monthly normal retirement benefits shall be paid on
the first day of each month




                                       28
<PAGE>




with  benefit  payments  commencing  on the first  day of the month  immediately
following the month of such Participant's  retirement.  The Participant's normal
retirement   benefits  shall  be  paid  in  the  form  of  an  annuity  for  the
Participant's life.

        Section 4.2. Early Retirement Benefits.  If early retirement is accepted
and approved by the Board of Directors in its sole discretion, a Participant who
is in Full Time  Employment and has reached age fifty-five (55) and has five (5)
years of service will  receive an early  retirement  benefit.  The amount of the
Participant's  early retirement  benefit shall be equal to the Target Retirement
Benefit reduced by the Integration Benefits. If necessary,  the early retirement
benefit will be adjusted when the Participant  begins to receive Social Security
benefits.  The Participant's  annual early retirement benefit, as so determined,
shall be divided by twelve (12) to determine  the  Participant's  monthly  early
retirement benefit. The Participant's monthly early retirement benefits shall be
paid on the first day of each  month with  benefit  payments  commencing  on the
first day of the month  determined  by the Board of  Directors as the date early
retirement benefit payments shall commence.  The Participant's  early retirement
benefits shall be paid in the form of an annuity for the Participant's life.

        Section 4.3.  Disability  Retirement  Benefits.  If the  Participant  so
requests,  and if Disability Retirement is accepted and approved by the Board of
Directors  in its sole  discretion,  a  Participant  who has a  disability  will
receive a disability  retirement  benefit in lieu of any benefits  that might be
paid  under  Section  4.1 or 4.2.  The  amount of the  Participant's  disability
retirement  benefit shall be equal to the Target  Retirement  Benefit reduced by
the  Integration  Benefit and the amount that the Participant is receiving under
any Company Long-Term Disability Plan.

        Prior to being entitled to receive benefits  described under clauses (c)
and (d) of the first  sentence  of  Section  2.17  because  the  Participant  is
receiving  disability  benefits,  there will be no reduction for such  benefits.
After the  Participant is entitled to receive  benefits  described under clauses
(c) and  (d) of the  first  sentence  of  Section  2.17,  disability  retirement
benefits will be recalculated with a reduction for such benefits as described in
Section 2.17.

        If necessary,  the disability  retirement  benefit will be adjusted when
the  Participant  begins to receive Social  Security  Benefits.  It also will be
adjusted  based upon any  adjustment  in the benefits that are payable under any
Company long term disability plan.




                                       29
<PAGE>




        The Participant's annual disability retirement benefit, as so determined
shall  be  divided  by  twelve  (12)  to  determine  the  Participant's  monthly
disability retirement benefits.  The Participant's monthly disability retirement
benefits  shall be paid on the first day of each  month  with  benefit  payments
commencing  on the  first  day of the  month  immediately  following  the  month
Disability  Retirement  is approved.  The  Participant's  disability  retirement
benefits shall be paid in the form of an annuity for the Participant's life.

      Section 4.4.  Post-Retirement Death Benefits.  If a Participant dies after
benefits become payable under Section 4.1, Section 4.2 or Section 4.3 but before
the  Participant  receives  payment of normal,  early or  disability  retirement
benefits for 180 months, the Participant's surviving spouse, or in the event the
Participant's  spouse does not survive him or such spouse dies prior to the Term
Certain  Expiration Date, the  Participant's  Beneficiary,  shall be entitled to
receive a post-retirement  death benefit.  The amount of annual  post-retirement
death benefits shall be equal to the annual benefit  payable to the  Participant
under Section 4.1, 4.2 or 4.3 except as set forth below.  Reductions  for Social
Security benefits and Company Long-Term  Disability Plan payments will no longer
be based upon what was paid to the  Participant  but will be adjusted based upon
the amount of the benefits payable under a Company Long-Term  Disability Plan or
amount of Social  Security  benefits  payable to the  surviving  spouse or other
Beneficiary  because of the  Participant's  death.  If Participant was receiving
disability  retirement  benefits,  and the Participant did not receive  benefits
described  under  clauses  (c) and (d) of the first  sentence  of Section  2.17,
post-retirement death benefits will also be reduced by the payments to surviving
spouse or the Participant's  Beneficiary  received from benefits described under
clauses  (c)  and  (d) of  the  first  sentence  of  Section  2.17.  The  annual
post-retirement death benefit, as so determined, shall be divided by twelve (12)
to  determine  the  monthly   post-retirement   death   benefits.   The  monthly
post-retirement  death  benefits  shall be paid on the first day of each  month,
with  benefit  payments  commencing  on the first  day of the month  immediately
following the month of the  Participant's  death and  continuing  until the Term
Certain  Expiration Date. If the Participant's  spouse survives the Term Certain
Expiration  Date,  the  Participant's  spouse  shall be  entitled  to  receive a
continuing  post-retirement death benefit in an amount equal to two-thirds (2/3)
of the amount of annual post-retirement death benefits that the surviving spouse
was




                                       30
<PAGE>




receiving at the Term Certain Expiration Date. The surviving spouse's continuing
post-retirement  death  benefits shall be paid in the form of an annuity for the
life of the Participant's surviving spouse.

        Section 4.5.  Pre-Retirement  Survivor  Benefits.  If a Participant dies
prior to age 65 but while in  Full-Time  Employment  and if the  Participant  is
survived by the participant's  spouse, the Participant's  spouse shall receive a
pre-retirement  survivor benefit. In the event the Participant's spouse does not
survive him or the  Participant's  spouse  survives  but does not live until the
Term  Certain  Expiration  Date,  the  designated  Beneficiary  shall  receive a
pre-retirement  survivor  benefit.  The  amount  of  the  annual  pre-retirement
survivor benefit payable to the Participant's surviving spouse shall be equal to
the Target  Pre-Retirement  Survivor Benefit reduced by the Integration Benefits
and the  amount  of  benefits  the  surviving  spouse  receives  under a Company
Long-Term  Disability  Plan.  The amount of the annual  pre-retirement  survivor
benefit payable to a Beneficiary other than the  Participant's  surviving spouse
shall be equal to the Target  Pre-Retirement  Survivor  Benefit less Integration
Benefits and the amount of benefits  the  Beneficiary  receives  under a Company
Long-Term  Disability Plan. The annual  pre-retirement  survivor benefit,  as so
determined,   shall  be  divided  by  twelve  (12)  to  determine   the  monthly
pre-retirement  survivor benefit. The monthly  pre-retirement  survivor benefits
shall be paid on the first day of each month,  with benefit payments  commencing
on  the  first  day  of  the  month  immediately  following  the  month  of  the
Participant's  death and continuing until the Term Certain  Expiration Date. For
the purposes of this Section only, the Social Security  Benefits included in the
Integration  Benefits  shall be the  Social  Security  Benefits  payable  to the
Surviving Spouse or other  beneficiary  because of the  Participant's  death. If
necessary,  the benefit  will be adjusted  based upon the amount of the benefits
payable under a Company long term  disability  plan or amount of Social Security
benefits  payable to the  surviving  spouse or other  Beneficiary.  The  monthly
pre-retirement  death benefits for Beneficiaries other than the surviving spouse
should only be paid until the Term Certain Expiration Date.

        Section 4.6. Termination of Employment  Benefits.  Except as provided in
Section 4.9, if a Participant's employment terminates prior to age 65, either by
the Company or by the Participant,  and either with or without cause, no further
amounts  shall be paid under any  provision  of this  Plan,  unless the Board of
Directors,  in its sole  discretion,  shall  provide that  benefits will be paid
regardless of the




                                       31
<PAGE>




Participant's  termination of employment,  provided that death, Early Retirement
Disability  and  Disability  Retirement  shall  not be deemed a  termination  of
employment for purposes of this Section 4.6.
        Section 4.7. Lump Sum Payment.  At any time,  in the sole  discretion of
the Board of  Directors,  the Actuarial  Equivalent  of the future  benefits due
under the Plan on behalf of any  recipient  may be computed and paid in one lump
sum.
        Section 4.8. Prohibition of Competitive  Activities.  Except as provided
in Section 4.9, if a Participant engages in Competitive  Activities,  no further
benefits shall be payable under any provision of this Plan.

        Section 4.9.  Change-in-Control Benefits.

               (a)  Notwithstanding  any other  provision  of this Plan,  in the
event of the Involuntary  Termination of Employment of a Participant within five
(5)  years  following  a  Change  in  Control,  the  Participant  shall  receive
change-in-control  benefits.  Such  change-in-control  benefits shall be paid in
lieu of and not in addition to any other benefits payable under this Plan.
               (b) If, on the date of the Participant's  Involuntary Termination
of Employment,  the sum of the  Participant's age and years of service equals at
least  fifty-five  (55),  the  amount  of  the  Participant's  change-in-control
benefits shall be an amount equal to the lump sum present value,  as of the date
of the  Participant's  Involuntary  Termination  of  Employment,  of the monthly
normal  retirement  benefits that would be payable under this Plan determined as
if the Participant had (i) remained in Full-Time  Employment  until age 65, (ii)
retired on such date, (iii) received monthly normal retirement  benefit payments
for 180 months,  and (iv) Base Income is equal to the average of the Executive's
Compensation in the last full Fiscal Year prior to the  Executive's  Involuntary
Termination and three immediately preceding Fiscal Years. In all other cases, in
the event of the  Involuntary  Termination of Employment of a  Participant,  the
amount of the Participant's  change-in-control benefits shall be an amount equal
to the lump sum present  value as of the date of the  Participant's  Involuntary
Termination of Employment of the monthly early retirement benefits that would be
payable  under this Plan  determined as if the  Participant  had (i) remained in
Full-Time  Employment  until age 55 (or, if later,  the date on which would have
completed five (5) years of service),  (ii) retired on such date, (iii) received
monthly early retirement benefit




                                       32
<PAGE>




payments  for 180  months,  and (iv) Base  Income is equal to the average of the
Executive's  Compensation  in the last full Fiscal Year prior to the Executive's
Involuntary Termination and three immediately preceding Fiscal Years.
                (c) The Participant's  change-in-control  benefits shall be paid
in a lump  sum no  later  than  sixty  (60)  days  following  the  Participant's
Involuntary  Termination of Employment.  In the event of the Participant's death
following the date of the  Participant's  Involuntary  Termination of Employment
but  prior to  payment  of the  change-in-control  benefits,  the  Participant's
change-in-control benefits shall be paid to the Participant's spouse, or, in the
event  the  Participant's   spouse  does  not  survive  him,  the  Participant's
Beneficiary.
               (d) For purposes of determining  the present value of such normal
or early retirement benefits for purposes of this Section 4.9, the interest rate
assumption shall be the rate used by the Pension Benefit Guaranty Corporation to
determine the present value of an immediate  benefit upon plan termination as of
the first day of the month  immediately  preceding the date of the Participant's
Involuntary  Termination  of  Employment.  For the purposes of this Section 4.9,
Social Security Benefits included in the Integration Benefits will be zero.

        Section  4.10.   Designation  of  Beneficiary.   The  Participant,   or,
subsequent to the Participant's  death, the Participant's spouse may designate a
beneficiary  or   beneficiaries,   primary  and   contingent,   to  receive  any
post-retirement death benefits or pre-retirement survivor benefits payable under
this Plan if the Participant and the Participant's spouse do not live to receive
benefits through the Term Certain  Expiration Date. Such designation shall be in
writing,  signed by the Participant or the Participant's spouse, as the case may
be, and delivered to the Corporate Human Resources Department of the Company, to
be effective  when received by the Corporate  Human  Resources  Department.  The
Participant,  or the  Participant's  spouse,  as the case may be, shall have the
right to change such designation,  without the consent of any prior beneficiary,
by  filing a new  designation,  in the same  manner,  with the  Corporate  Human
Resources  Department of the Company. Any such changes shall be deemed to revoke
all prior  designations,  unless a contrary intention is expressly stated in the
change of designation.  In the event such designation is not made, any remaining
payments to be paid under this




                                       33
<PAGE>




Plan  shall be paid to the legal  representative  of the  Participant  or of the
Participant's spouse, if a spouse survives the Participant.

        Section 4.11. Facility of Payment. If the Board of Directors  determines
that a Participant,  his spouse or Beneficiary is unable to care for his affairs
and a legal  representative has not been appointed for such person, the Board of
Directors  may (but shall not be  required  to) direct  that any  payments  made
hereunder shall be made to a spouse,  parent,  child, or other blood relative of
such  person,  or to anyone  found by the Board of  Directors  properly  to have
incurred expense for the support and maintenance of such Participant, his spouse
or  Beneficiary,  so long as, under  applicable law, such payments are permitted
and discharge completely all liabilities of the Company under the Plan.

        Section 4.12.  Taxes.  The Company  shall deduct from any  distributions
under  this Plan the  amount  of any taxes  required  to be  withheld  from such
distribution by any federal, state or local government. The Participants,  their
spouses,  Beneficiaries  and  personal  representatives  shall  bear any and all
federal,  state, local or other taxes imposed on amounts  distributed under this
Plan.

        Section 4.13.  Benefits  Calculations.  If  necessary,  the Company will
calculate  a benefit  based on  estimated  bonus,  restricted  stock  awards and
compensation.  The  estimates  will be  determined  by the  Company  in its sole
discretion.  The  Company  will  recalculate  the  benefits  based on the actual
amounts and will adjust the next  payment so that that  payment and all previous
payments  equal the  amount the  employee  would  have been  entitled  to if the
employee had received his benefits based on the actual amount from the beginning
of the payments. Thereafter, payments will be based on the actual amounts.


                                    ARTICLE V

                               Funding of Benefits


        Section 5.1.  Notification.  Immediately  upon gaining  knowledge that a
Potential  Change in Control  has  occurred  or is likely to occur,  a member or
members of the Board of Directors  shall notify the President of Pioneer Hi-Bred
International,  Inc. The notification  shall be a written  certification of such
member or  members  to the  President  setting  forth the facts  upon which such
knowledge is based.




                                       34
<PAGE>




        Section  5.2.  Meeting of the Board of  Directors.  Upon  receipt of the
notification required by Section 5.1 of this Article V, the President or any two
members of the Board of Directors  shall call a special  meeting of the Board of
Directors to determine  whether a Potential  Change in Control has occurred.  If
the  Board of  Directors  determines  that a  Potential  Change in  Control  has
occurred,  the Board of  Directors  shall  direct the  appropriate  officers  of
Pioneer Hi-Bred  International Inc. to fund the Trust in accordance with Section
5.3 of this Article V.

        Section  5.3.  Funding  the Trust.  On the Date of  potential  Change in
Control,  or as soon  as is  administratively  feasible  following  the  Date of
Potential  Change  in  Control,   Pioneer  Hi-Bred  International,   Inc.  shall
contribute  to the Trust (a) a Letter of Credit in the  Minimum  Amount,  or (b)
cash or property equal in value to the Minimum Amount. In the event that Pioneer
Hi-Bred  International,  Inc. funds the Trust with a Letter of Credit, the Board
of Directors  shall cause the Minimum Amount to be drawn and  contributed to the
Trust upon the  occurrence of a Change in Control,  or earlier in the discretion
of the Board of Directors.

        Section  5.4. The Trust.  The Trust Fund shall be held and  administered
for the sole purpose of  providing  deferred  compensation  to  Participants  in
accordance  with  the  provisions  of this  Plan  and the  Trust  Agreement  and
defraying   reasonable   expenses  of  administration  in  accordance  with  the
provisions  of  the  Trust  Agreement;  provided  that  if (a)  Pioneer  Hi-Bred
International,  Inc. is unable to pay its debts as they mature or as they become
due or (b) Pioneer Hi-Bred International, Inc. files or has filed against it any
proceedings under the bankruptcy laws of the United States or the State of Iowa,
the Trust Fund shall be used to satisfy the claims of the general  creditors  of
Pioneer Hi-Bred International, Inc.


                                   ARTICLE VI

                      Administration and Amendment of Plan


        Section  6.1.  Authority  of  Board  of  Directors.  The  Plan  shall be
administered  by the Board of  Directors.  The  Board of  Directors  shall  have
plenary  authority to select  employees who are eligible to  participate  in the
Plan, to make all determinations required under the Plan, to interpret the Plan,
to decide




                                       35
<PAGE>




all questions of fact 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 decision of the
Board of Directors on any questions  concerning or involving the  interpretation
or administration of the Plan shall be final and conclusive.  While this Plan is
intended  to  supplement  the  benefits   provided  under  the  Pioneer  Hi-Bred
International, Inc. Retirement Plan, in interpreting or administering this Plan,
the Board of Directors  need not consider or be bound by any  interpretation  of
the provisions of the Pioneer Hi-Bred International, Inc.
Retirement Plan or the manner in which such plan is administered.

        Section 6.2. Claim for Benefits. Any claim for benefits shall be made in
writing to the Named Fiduciary.  The claim for benefits shall be reviewed by the
Named Fiduciary and the Board of Directors.  If any part of the claim is denied,
the Named  Fiduciary  shall  provide a written  notice,  within ninety (90) days
after the receipt of the claim by the Named  Fiduciary,  setting forth:  (a) the
specific reasons for the denial; (b) specific reference to the provision of this
Plan or any agreement  entered into between the Participant and the Company upon
which the denial is based;  (c) any additional  information  the claimant should
furnish to perfect  the claim;  and (d) the steps to be taken if a review of the
denial is desired.

        If a claim is denied and a review is desired,  the  Participant  (or the
Participant's Beneficiary,  as the case may be) shall notify the Named Fiduciary
in writing  within sixty (60) days. In requesting a review,  the  Participant or
Beneficiary may review this Plan or any documents  relating to it and submit any
written issues and comments he may feel appropriate.  In its sole discretion the
Board of  Directors  shall then review the claim and provide a written  decision
within sixty (60) days.  This decision shall state the specific  reasons for the
decision and shall include  reference to specific  provisions of the Plan or any
agreement  entered  into  between the  Participant  and the Company on which the
decision is based.

        Section 6.3.  Information Concerning Integration Benefits.

The recipient of benefits  under any provision of this Plan shall be required to
inform  the  Company  of any  amount of  Social  Security  benefits,  retirement
benefits  provided by any  jurisdiction  outside the United  States or any other
amount  which  might  affect  benefits  under this Plan,  to be  received by the
recipient. If




                                       36
<PAGE>




such  information is requested by the Company,  but adequate  information is not
received prior to five (5) days before the payment date of any payment dependent
on the  information  requested,  the benefit  payment  may be  delayed,  without
interest, until ten (10) days after such information is received.
        Section  6.4.  Amendment  and  Termination.  The Plan may at any time be
amended, modified or terminated by the Board of Directors.  Prior to a Change in
Control,  no amendment,  modification or termination shall,  without the written
consent of the affected Participant,  spouse or Beneficiary, reduce the benefits
any such  person was  receiving  under  this  Plan.  In the event of a Change in
Control,  no amendment,  modification or termination shall,  without the written
consent of the affected Participant, spouse, or Beneficiary, reduce the benefits
such  person  was  receiving  or the  benefits  that  would  be  paid  upon  the
Participant's Normal, Early or Disability  Retirement,  death, or termination of
employment,  including  the benefits  that would be paid upon the  Participant's
Involuntary  Termination of a Participant  following a Change in Control,  under
the terms of the Plan immediately prior to the Change in Control.


                                   ARTICLE VII

                                  Miscellaneous


        Section 7.1. No Assignment.  The right of a Participant (or Beneficiary,
as the case may be) to  receive  any  distribution  under the Plan  shall not be
subject in any manner to anticipation,  alienation, sale, transfer,  assignment,
pledge, encumbrance, levy or charge, and any attempt so to anticipate, alienate,
sell, transfer, assign, pledge, encumber, levy or charge the same shall be void;
provided, however, that the right to receive payment is transferable by the laws
of descent and distribution.
        Section  7.2.  Unsecured  Claim.  The right of any  Participant  (or his
Beneficiary or personal  representative)  to receive any distribution  under the
Plan  (directly  from the  Company or through the Trust)  shall be an  unsecured
claim  against the general  assets of the Company,  and neither the Plan nor the
Trust entitle a Participant (or his Beneficiary or personal representative) to a
greater priority than




                                    37
<PAGE>




the Company's general  creditors.  Assets, if any, which may be set aside by the
Company for accounting purposes shall not in any way be held in trust for, or be
subject to, any prior claims by the Participant or his Beneficiary.  The Company
shall have no duty  whatsoever  to purchase any assets for purposes of providing
benefits  under this Plan.  The Company's  promise to pay the benefits  provided
under this Plan shall be a contractual obligation that is not evidenced by notes
or secured in any way.
        Section  7.3.  No Rights in Life  Insurance.  If the  Company  elects to
purchase one or more life insurance  contracts to provide the Company with funds
to make payments under this Plan, the Company shall at all times be the sole and
complete  owner  and  beneficiary  of  such   contracts,   and  shall  have  the
unrestricted right to use all amounts and to exercise all options and privileges
thereunder without the knowledge or consent of the Participant, his Beneficiary,
or any other person, and no Participant,  Beneficiary, or person, other than the
Company,  shall have any right,  title, or interest whatsoever in or to any such
contract.  The Participant shall cooperate with all reasonable  requests made by
the  Company or any  insurance  carrier  selected  by the  Company to  determine
whether the Participant is insurable at standard  rates,  including any requests
made by the Company or such insurance  carrier that the Participant  submit to a
medical examination, or provide other information relevant to a determination of
whether  the  Participant  is  insurable  at  standard   rates,   including  the
Participant's  current health status,  health history of the Participant and any
family  members,  and the  activities  engaged in by the  Participant  including
dangerous or illegal activities.

        Section  7.4. No Contract of  Employment.  Nothing in this Plan shall be
construed as a contract of employment  between the Company and any  Participant.
Nothing  in this Plan shall be deemed to  constitute  a  contract  for  services
between the  Company and the  Participant,  and nothing  contained  in this Plan
shall be  deemed  to give the  Participant  any  right  to  continue  furnishing
services to the Company or the Company any right to demand such services. Except
as  provided  in  Section  4.9,  nothing in this Plan  shall be  construed  as a
limitation  of the right of the Company to discharge  the  Participant,  with or
without cause.




                                       38
<PAGE>




        Section 7.5.Binding Effect. This Plan shall be binding upon the Company,
its  successors  and  assigns,  and  upon  the  Participant,   his  spouse,  his
Beneficiary,  and  their  heirs,  legatees,  executors  and  personal  or  legal
representatives.
        Section 7.6.         Gender; Headings.  Any masculine pronoun shall 
include the feminine and the singular shall include the plural, and vice versa.
The headings in this Plan are for convenience of reference only.

        Section 7.7.  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 provisions shall be construed and enforced as if such illegal,  invalid, or
unenforceable provision had never been inserted herein.

                             Section 7.8.   Governing Law.  This Plan shall be 
governed by the laws of the State of Iowa without reference to the principles of
 conflicts of law therein.

          IN WITNESS  WHEREOF,  the  Company has caused  this  instrument  to be
executed by its duly authorized officers.


                       PIONEER HI-BRED INTERNATIONAL, INC.



                                        By  /s/ Charles S. Johnson
                                                Charles S. Johnson
                                                President
By:      /s/ Jerry Chicoine           
             Jerry Chicoine
             Secretary




                                    39
<PAGE>





TO:     Corporate Human Resources Department
        Pioneer Hi-Bred International, Inc.
        Suite 700, Capital Square
        Des Moines, Iowa  50309

                                           RE:    Beneficiary Designation

Gentlemen:

Pursuant to Section 4.10 of the Pioneer Hi-Bred International, Inc. Supplemental
Executive  Retirement Plan,  effective as amended and restated March 10, 1998, I
hereby  designate  that benefits  payable under certain  Sections of the Plan be
paid to the following person(s) in the indicated proportions (if none indicated,
benefits shall be payable in equal proportion to each person designated):

           (Designated Beneficiaries)                       (Proportion)

           ------------------------                      ----------------
           ------------------------                      ----------------
           ------------------------                      ----------------

If any person is  deceased at the time of any payment to be made under the Plan,
the payment allocable to that person shall be made to the following person(s) in
the indicated proportions (if none indicated, benefits shall be payable in equal
proportion to each person designated):

           (Designated Beneficiaries)                       (Proportion)

           --------------------------                     ----------------
           --------------------------                     ----------------
           --------------------------                     ----------------


Notwithstanding  any provision of the Plan and this designation to the contrary,
in the event that my spouse  survives me,  he/she  [shall]  [shall not] have the
right to revoke any  designation  of  beneficiaries  made  herein and  thereupon
designate the person(s) to receive the benefits described in certain Sections of
the Plan.

This  beneficiary  designation  shall  remain  in full  force  unless  and until
canceled or  superseded  by written  notice  executed by me and delivered to you
before my death.

                                   Very truly,


                                   ------------------------------





                                       40
<PAGE>




                                             AMENDED AND RESTATED

                                      Pioneer Hi-Bred International, Inc.

                                  Restricted Stock Plan -- Performance Based


SECTION 1.  eSTABLISHMENT AND PURPOSE

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

        1.2    Effective  Date.  The  effective  date of the  Amended  and  
Restated  Plan is March  10, 1998.

        1.3 Purpose.  The purpose of this Plan is to align the  interests of key
management  employees 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) "Base Salary" means a Participant's  base annual salary as of
August 31 of the Plan Year without  reduction for  contributions or deferrals to
various plans.
               (b)  "Board"  means the Board of  Directors  of  Pioneer  Hi-Bred
               International,  Inc.  (c)  "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,  b) the number of shares of common stock  issuable upon  conversion
(whether or not then  convertible)  or  otherwise of Class B Common Stock and c)
the number of shares of common stock  issuable upon  conversion  (whether or not
then  convertible) or otherwise  constituting the common stock equivalent of any
other class or series of capital  stock  which  votes for or in the  election of
directors 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 any class of the then outstanding voting securities the
total of a) the number of shares of common stock then outstanding, b) the number
of  shares  of  common  stock  issuable  upon  conversion  (whether  or not then
convertible) or otherwise of Class B Common Stock and c) the number of shares of
common stock  issuable  upon  conversion  (whether or not then  convertible)  or
otherwise  constituting the common stock equivalent of any other class or series
of capital  stock which votes for or in the election of directors 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.
               (d) "CIC  Participant"  means an  employee 1) who would have been
eligible for a grant in respect of the Plan Year prior to the Plan Year in which
the  Change in Control  occurs  regardless  of whether he or she was  terminated
after  the  Plan  Year  but  before  the  grant  or 2) who  but  for  his or her
termination, would have been eligible for a grant in respect of the Plan Year in
which the Change in Control occurred.
               (e) "Committee" means the Compensation  Committee of the Board or
any successor Committee.
               (f) "Company" means Pioneer Hi-Bred International,  Inc., an Iowa
corporation, and any division or subsidiary thereof.




                                       41
<PAGE>




               (g)  "Corporate   Management   Committee"   means  the  Company's
committee of executive  officers  selected by the chief executive officer or any
successor committee.
               (h) "The  Cumulative  Three Years Earnings Per Share" means for a
given Plan Year the sum of the  Earnings Per Share for the Plan Year and the two
previous Plan Years.  Plan year for years prior to the  effective  date shall be
the Company's fiscal year.
               (i)  "Earnings  Per Share" means the after tax earnings per share
of outstanding  stock plus or minus  adjustments to remove the impact of unusual
or nonrecurring events.
               (j) "EPS Growth Percentage" means the percentage that corresponds
to the  Cumulative  Three  Years  Earnings  Per Share for the given Plan Year as
shown on  Attachment  1 or as may be  modified  prior  to the  Plan  Year by the
Compensation Committee.  Minimum is 0% with no maximum.  Interpolation of actual
results is computed between table points. Points beyond 25% are calculated using
the same methodology used in calculating the EPS Growth Percentage on Attachment
1.
               (k) "EPS  Multiplier"  means  the  multiplier  as  calculated  in
               Section 5.2.  (l) "Fair Market  Value" of a share of Common Stock
               of the Company shall mean, with
respect to the date in  question,  either (x) the  average  of the  highest  and
lowest selling  prices or (y) the closing sale price of such stock,  as selected
by the  Committee;  or if the  Company's  Common  Stock is not quoted by NASDAQ,
traded  on  a  national  exchange,  or  otherwise  traded  publicly,  the  value
determined, in good faith, by the Committee.
               (m)  "Involuntary   Termination  of  Employment"  means  (a)  the
termination  of  employment  of a CIC  Participant  by the  Company  other  than
Termination  for Cause,  (b) the  resignation or retirement of a CIC Participant
for Stated Good Reason,  or (c) in the case of a CIC  Participant  who is in the
full-time  employment  of a  domestic  Subsidiary,  either  (I)  the  sale  of a
substantial  portion  of the  assets of the  Subsidiary  within  the  meaning of
Section  280G of the  Internal  Revenue  Code of 1986,  as amended,  or (II) the
acquisition by an unrelated  third party of ownership of more than fifty percent
(50%) of the  then  outstanding  stock,  capital,  or  profits  interest  of the
Subsidiary.  The Board of Directors,  in its sole  discretion,  shall  determine
whether the  acquisition by an unrelated third party of ownership of an interest
in a foreign subsidiary constitutes an Involuntary Termination of Employment.
               (n) "Key  Management  Employee"  means those  employees  eligible
               under  Section 4. (o)  "Operations  Committee"  means the Company
               Committee of officers responsible for
various operations as selected by the chief executive officer or any successor 
committee.
               (p)    "Outstanding  Stock" means the weighted  average daily
stock  outstanding  without
giving effect to the dilutive impact of outstanding options.
               (q)  "Participant  Pay  Band"  means  that Pay Band for which the
Participant is categorized pursuant to Section 5.3.
               (r) "Pay Band Target  Percentage"  means the Reward  targets as a
percent of Base Salary for a Pay Band or portion thereof as set forth in Section
5.4.
               (s) "Participant"  means a Key Management Employee who is awarded
and holds Restricted Stock pursuant to the Plan.
               (t) "Pay Band" means job  evaluation  categories  I - VI. The Pay
Band may be further divided or consolidated as necessary.
               (u)  "Plan"  means  the  Pioneer  Hi-Bred   International,   Inc.
Restricted Stock Plan -- Performance-Based, as amended from time to time.
               (v) "Plan Year" means the 12 month period  beginning  September 1
               and ending  August 31. (w) "Prior to the Plan Year" means  either
               prior to or within the first ninety days
of the Plan Year.
               (x) "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.
               (y)  "Shares"  means  the  common  stock,  $1 par  value,  of the
               Company.  (z) "Stated Good Reason" means a written  determination
               by a CIC Participant that he
reasonably and in good faith cannot continue to fulfill the responsibilities for
which he was employed.  This determination  will be conclusively  presumed to be
reasonable and in good faith if, without the CIC  Participant's  express written
consent,  the Company (a) reduces the CIC  Participant's  base salary or rate of
compensation as in effect immediately prior to the Change in Control,  or as the
same may have been increased  thereafter,  (b) fails to continue any bonus plans
in which the CIC  Participant was entitled to participate  immediately  prior to
the Change in Control,  substantially  in the form then in effect,  (c) fails to
continue in effect any benefit or compensation plan in which the CIC Participant
is participating  immediately prior to the Change in Control (or plans providing
substantially similar benefits), (d) assigns




                                       42
<PAGE>

to the CIC  Participants  any  duties  inconsistent  with the CIC  Participant's
duties,  responsibilities  or status immediately prior to the Change in Control,
or changes the CIC Participant's reporting responsibilities,  titles or offices,
or (e) requires the CIC Participant to change the location of his job or office,
so that the Participant  will be based at a location more than thirty (30) miles
distant by public  highway  from the  location of his job or office  immediately
prior to the Change in Control.
               (aa)  "Subsidiary"  means a corporation  in which the majority of
the voting securities outstanding at the time is owned directly or indirectly by
Pioneer  Hi-Bred  International,  Inc.  and/or  by one  or  more  of  its  other
subsidiaries,  or a  non-corporate  entity in which a majority of the capital or
profits   interest  is  owned   directly  or  indirectly   by  Pioneer   Hi-Bred
International, Inc. and/or one or more of its other subsidiaries.
               (ab)  "Termination for Cause" means the termination of employment
of a CIC  Participant  as a  direct  result  of an act or  acts  of  dishonesty,
constituting  a felony under the laws of the United  States or the State of Iowa
and  resulting or intended to result  directly or indirectly in gain or personal
enrichment  at  the  expense  of the  Company.  An act  or  acts  of  dishonesty
constituting  a  felony  will  be  deemed  to  occur  only  if the  act or  acts
constituting the felony are established  either by (a) the specific admission of
the  Participant  or (b) a final no appealable  judgment of a court of competent
jurisdiction.

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.
        3.2  Delegation of Authority.  The Committee may delegate to any officer
of the  Company  its  duties  under  the Plan  pursuant  to such  conditions  or
limitations as the Committee may  establish,  except that only the Committee may
administer  the Plan for  Participants  who are  subject  to  Section  16 of the
Securities Exchange Act of 1934.

SECTION 4.  ELIGIBILITY

        To be  eligible  to  participate  in the Plan an  individual  must be on
full-time,  regular  status on the  United  States or  Canadian  payroll.  To be
eligible to receive grants, such employee must be eligible as of the last day of
the  Plan  Year and as of the  date of the  grant  except  as set  forth  below.
Employees  who meet the  following  conditions  are also  eligible  to receive a
grant:  1) eligible on the last day of the Plan Year,  2) before the date of the
grant employment  terminates because of normal  retirement,  death, or total and
permanent  disability,  or  employment  terminates  after  early  retirement  is
accepted and approved by the  Committee,  and 3) the employee is not  terminated
for cause as determined by the Committee  prior to the date of the grants.  This
eligibility  exception  does not mean that grants of stock will be  accelerated.
Additionally,  the  employee  must  be  in  one  of  the  Pay  Bands  a) I - III
(inclusive),  b) IV with  recommendation  of the  Corporate  Officer to whom the
employee's business unit reports and approval by the Operations Committee, or c)
(as an exception) with the approval of the Corporate Management Committee. Prior
to the Plan Year, the Committee may adjust which Pay Band an employee must be in
to be eligible. Other employees of the Company or its affiliates approved by the
Committee will also be eligible and entitled to grants including officers not on
the United States or Canadian payroll.

SECTION 5.  GRANT

        5.1 Nature of Goal. Grants will be based upon three-year EPS growth.



                                       43
<PAGE>



        5.2    EPS Multipliers.

        The EPS Multiplier is that multiplier as set forth below, or as approved
by the  Committee  Prior  to the  Plan  Year,  that  corresponds  to EPS  Growth
Percentage.

        EPS Growth Percentage               Multiplier*
        ---------------------               -----------
                0%                          0.00
                1%                          0.08
                2%                          0.17
                3%                          0.25
                4%                          0.33
                5%                          0.42
                6%                          0.50
                7%                          0.58
                8%                          0.67
                9%                          0.75
               10%                          0.83
               11%                          0.92
               12%                          1.00
               13%                          1.00
               14%                          1.00
               15%                          1.25
               16%                          1.40
               17%                          1.55
               18%                          1.70
               19%                          1.85
               20%                          2.00
               21%                          2.05
               22%                          2.10
               23%                          2.15
               24%                          2.20
               25%                          2.25

        *Minimum  is 0% with no  maximum.  Interpolation  of actual  results  is
computed  between  table  points.  Beyond 25% each 1% increase in the EPS Growth
Percentage corresponds to an .05 increase in the multiplier.

        5.3    Pay Band.  Each  employee is assigned or reassigned  to a Pay 
Band.  An  appropriate  Pay Band for an employee is determined by  considering  
job factors such as: 1) impact,  2)  complexity,  3)
knowledge, skills and competencies, and 4) experience.

        5.4 Pay Band Target Percent.  The following table sets forth the targets
as a percent of Base Salary for each respective Pay Band:

               Pay Band             Target
               --------             ------
               CEO                    75%
                      I               60%
                     II               45-50%*
                    III               25-40%*
                     IV               10%

        *The exact Pay Band Target Percent will be determined  prior to the Plan
Year depending upon market data.




                                       44
<PAGE>




        Such Pay Band Target  Percentage may be modified by the Committee  Prior
to the Plan Year. If a Key Management Employee moves from 1 eligible Pay Band or
portion  thereof to another in a Plan Year the Pay Band Target  Percent  will be
adjusted pro rata for the portion of the year in each Pay Band.

        5.5 Grant.  a) Shares of the Restricted  Stock will be granted under the
Plan  equal in value to i) EPS  multiplier,  multiplied  by the Pay Band  Target
Percentage  multiplied by Base Salary, or ii) such lesser value as the Committee
shall determine in its sole discretion.

        b) The shares to be granted will be  determined as of the grant date, or
such other date approved by the  Committee,  based on the Fair Market Value of a
share of Common  Stock the  trading  day before the grant.  Such value  shall be
without  reference to any  restrictions  on  transfer.  Such grants will be made
following the end of the Plan Year.

        c) The calculation in clause i) of Section 5.5(a),  for a Key Management
Employee who was  eligible at the end of the Plan Year but not  eligible  during
some  period of the Plan Year will be  reduced  pro rata for the  portion of the
Plan Year he was not eligible.

        5.6  Maximum.  In no event will the reward be in excess of a maximum set
for each Pay Band as  approved by the  Committee  prior to the Plan Year but any
such reward is subject to the overriding  maximum reward  described below. In no
event will the maximum  value of a reward  (valued at the date of grant  without
regard to restrictions)  to an individual  employee under this Plan exceed three
million dollars for a Plan Year.

SECTION 6.  COMMITTEE CERTIFICATION.

        Before any grant is made the Committee  must certify that the multiplier
level  was in fact  reached  and all  other  material  terms  of the  Plan  were
satisfied.

SECTION 7.  CHANGE IN CONTROL BENEFITS

        7.1 - Benefits. Notwithstanding any other provision of this Plan, in the
event of the Involuntary  Termination of Employment of a CIC Participant  within
three (3) years following a Change in Control, the CIC Participant shall receive
a cash amount  equal to the Change in Control  benefits.  Such Change in Control
benefits  shall be paid in lieu of and not in addition to any other benefits for
the Plan Year under this Plan.

        7.2 - Amount.  The amount of the Change in Control  benefit  shall equal
the amount calculated in clause a(i) of Section 5.5 (with no reduction) prorated
for the portion of the Plan Year before Involuntary Termination of Employment of
a CIC Participant and subject to the maximum set forth in the second sentence of
Section 5.6. In addition, if the Involuntary  Termination of Employment is after
a Plan Year,  but prior to a grant in respect of that Plan Year,  in addition to
the  amount  paid for the Plan  Year in which  the  Involuntary  Termination  of
Employment  occurred,  the CIC participant  shall receive an amount equal to the
calculation  under clause a(i) of Section 5.5 (with no  reduction)  for the Plan
Year prior to the  Involuntary  Termination  subject to the maximum set forth in
the second sentence of Section 5.6.

        7.3 - Amendment & Termination.  No amendment or termination of the Plan,
1 year prior to or after a Change in  Control,  will affect the  payments  under
this Section 7 for  Involuntary  Termination  of Employment  after the Change in
Control.

SECTION 8.  STOCK SUBJECT TO THE PLAN

        8.1 Number.  The total  number of Shares  that may be granted  under the
Plan shall not exceed 1,750,000.  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.

        8.2 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




                                       45
<PAGE>




reacquired  Shares again shall become  available for issuance  under the Plan at
any time prior to its termination.

        8.3  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 9. SHARES OF RESTRICTED STOCK

        9.1 Grant of Shares of Restricted  Stock.  Awards of Restricted Stock to
Participants  shall be granted under a Restricted  Stock  Agreement  between the
Company and the  Participant  which shall provide that the shares subject to any
such award shall be subject to such forfeiture and other  conditions,  including
the  provisions of Section 9.6 hereof,  for such period of time as the Committee
shall designate.

        9.2  Transferability.  Subject to Section 9.7  through  9.9 hereof,  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, and as set forth in the Restricted Stock Agreement  pursuant to which such
shares were granted.

        9.3 Removal of Restrictions.  Except as otherwise provided herein, or as
may be required by applicable  law,  shares of Restricted  Stock covered by each
Restricted Stock Agreement made under this Plan will become freely  transferable
by the Participant upon the expiration of a period of time following the date of
grant as specified in terms of the Restricted Stock Agreement.

        9.4 Other  Restrictions.  The Company may impose such other restrictions
on any shares granted pursuant to this Plan as it may deem advisable, including,
without limitation,  restrictions on the transfer until all amounts owing to the
Company are paid and any withholding  relating to the Restricted Stock have been
paid,  and  restrictions  required  by  the  federal  securities  laws,  by  the
requirements  of any stock exchange upon which such shares or shares of the same
class  are then  listed  and by any state  securities  laws  applicable  to such
shares.

        9.5  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
        employment  service  requirements)  set  forth  in the  Pioneer  Hi-Bred
        International,  Inc. Restricted Stock Plan -- Performance-Based and in a
        Restricted  Stock  Agreement.  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.

        9.6 Termination of Employment.  In the event that,  prior to the removal
of restrictions on shares of Restricted  Stock as contemplated by Section 9.3, a
Participant's  employment with the Company  terminates for any reason other than
normal  retirement,  death,  total and permanent  disability or early retirement
accepted and approved by the  Committee,  then any shares subject to time period
restrictions  or  forfeiture  conditions at the date of such  termination  shall
automatically be forfeited to the Company.  A Participant  shall not forfeit any
rights to Restricted Stock  previously  granted to him, solely because he or she
ceases to qualify as a Key Management Employee.




                                       46
<PAGE>

        9.7 Normal Retirement,  Death or Total,  Permanent  Disability and Early
Retirement. In the event that, prior to the removal of restrictions on shares of
Restricted Stock as contemplated by Section 9.3, a Participant's employment with
the  Company  terminates  because  of  normal  retirement,  death or  total  and
permanent  disability,  any uncompleted  portion of a time period restriction or
forfeiture  conditions,  as set  forth  in the  terms  of the  Restricted  Stock
Agreement,  shall be waived by the Company.  If early retirement is accepted and
approved by the Committee in its sole  discretion any  uncompleted  portion of a
time period  restriction or forfeiture  condition,  as set forth in the terms of
the Restricted Stock Agreement,  shall be waived.  The shares released from such
restrictions   pursuant  to  this  Section  9.7   thereafter   shall  be  freely
transferable by the Participant, subject to any applicable legal requirements.

        9.8 Change in Control.  Upon a Change in Control, all restrictions shall
lapse on shares of Restricted Stock granted under this Plan.

        9.9 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 9.9  thereafter  shall be freely  transferable  by the
Participant, subject to any applicable legal requirements.

        9.10 Voting  Rights.  Participants  shall have full  voting  rights with
respect to shares of Restricted Stock.

        9.11 Dividend Rights.  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.

        9.12 Security Interest in Shares of Restricted Stock. In connection with
the execution of any Restricted Stock Agreement,  the Committee may require that
a  Participant  grants  to the  Company a  security  interest  in the  shares of
Restricted  Stock issued or granted  pursuant to this Plan to secure the payment
of any sums then owing or thereafter coming due to the Company, including income
tax  withholdings,  to the Company by such  Participant.  This security interest
shall  continue  until the shares of Restricted  Stock are no longer held by the
Committee in escrow on behalf of the Participant pursuant to Section 9.5 and are
no longer subject to restrictions pursuant to the Plan.

SECTION 10.  WITHHOLDING OF TAXES

        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.  Participants  may 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 (including  salary or bonus)  otherwise due to a Participant
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 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 11.  SHAREHOLDER APPROVAL

        This Plan will not be effective unless the shareholders approve the Plan
by a majority of the vote in a separate shareholder vote.




                                       47
<PAGE>

SECTION 12.  AMENDMENT AND TERMINATION

        12.1  Amendment.  Except as set forth in Section  7.3,  this Plan may be
amended by the Board without  shareholder  approval except as otherwise required
by the law.  Any such  amendment  will not apply to the Plan Year in which  such
amendment was adopted or earlier Plan Years.

        12.2  Termination.  The Company reserves the right to terminate the Plan
at any time by action of the Board except as set forth in Section  7.3.  After a
Change in Control any termination  will not apply to the Plan Year in which such
termination was adopted or any earlier Plan Year.

        12.3 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 13.  PROVISIONS APPLICABLE SOLELY TO INSIDERS

Persons  subject to Section 16 of the 1934 Act with respect to securities of the
Company , may have to comply  with  additional  rules  imposed by the Company to
ensure compliance with Section 16.

SECTION 14 - MISCELLANEOUS

        14.1 No Contract of Employment.  Nothing in this Plan shall be construed
as a contract of employment between the Company and any Participant.  Nothing in
this Plan shall be deemed to  constitute  a contract  for  services  between the
Company and a Participant,  and nothing contained in the Plan shall be deemed to
give a Participant any right to continue  furnishing  services to the Company or
the  Company any right to demand  such  services.  Nothing in this Plan shall be
construed  as an  elimination  of  the  right  of the  Company  to  discharge  a
Participant, with or without cause.

        14.2 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.

        14.3 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.
Notwithstanding the foregoing,  this Plan shall be administered as to constitute
a plan of performance-based compensation under all applicable federal tax laws.

                       PIONEER HI-BRED INTERNATIONAL, INC.



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


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





                                       48
<PAGE>




                              AMENDED AND RESTATED
                       PIONEER HI-BRED INTERNATIONAL, INC.
                 MANAGEMENT REWARD PROGRAM -- PERFORMANCE-BASED


ARTICLE 1 - ESTABLISHMENT OF THE PLAN

Section 1.1 - Establishment of the Plan

      The Company hereby  establishes the Pioneer Hi-Bred  International,  Inc.,
Management Reward Program -- Performance- Based (the "Plan").

Section 1.2 - Effective Date

      The effective date of the Amended and Restated Plan is March 10, 1998.

Section 1.3 - Purpose

      The Plan is  designed  to focus  management  efforts on the  earnings  and
return on equity of the  company and to reward  results  achieved in relation to
those goals.

ARTICLE 2 - DEFINITIONS

Section 2.1 - Base Salary

      Base Salary means a  Participant's  base annual  salary as of August 31 of
the Plan Year without reduction for contributions or deferrals to various plans.

Section 2.2 - Board

      Board means the Board of Directors of Pioneer Hi-Bred International, Inc.

Section 2.3 - Change in Control

        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,  b) the number of shares of common stock  issuable upon  conversion
(whether or not then  convertible)  or  otherwise of Class B Common Stock and c)
the number of shares of common stock  issuable upon  conversion  (whether or not
then  convertible) or otherwise  constituting the common stock equivalent of any
other class or series of capital  stock  which  votes for or in the  election of
directors 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 acting
in  concert,  other than (A) the  Corporation  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  Corporation,  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 the Corporation
without  recommendation of such Board. The ownership of record of 25% or more in
number of the total of a) the number of shares of common stock then outstanding,
b) the number of shares of common stock issuable upon conversion (whether or not
then  convertible)  or  otherwise  of Class B Common  Stock and c) the number of
shares  of  common  stock  issuable  upon   conversion   (whether  or  not  then
convertible) or otherwise  constituting the common stock equivalent of any other
class or series of capital stock which votes for or in the election of directors
of the  Corporation 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.


                                   49
<PAGE>




Section 2.4 - CIC Participant

      "CIC Participant"  means an employee 1) who would have been eligible for a
reward in respect of the Plan Year prior to the Plan Year in which the Change in
Control  occurs  or 2) who but  for  his or her  termination,  would  have  been
eligible for a reward in respect of the Plan Year in which the Change in Control
occurred.

Section 2.5 - Committee

      Committee means the  Compensation  Committee of the Board or any successor
committee.

Section 2.6 - Company

      Company means Pioneer Hi-Bred International, Inc., an Iowa Corporation and
any division or Subsidiary thereof.

Section 2.7 - Corporate Management Committee

      Corporate  Management Committee means the Company's committee of executive
officers selected by the chief executive officer or any successor committee.

Section 2.8 - Earnings Per Share (EPS)

      Earnings Per Share means the after tax  earnings per share of  outstanding
stock plus or minus  adjustments to remove the impact of unusual or nonrecurring
events.

Section 2.9 - EPS Growth Percentage

      EPS  Growth  Percentage  means  the  percentage  that  corresponds  to the
Earnings Per Share for the given Plan Year as shown on Attachment 1 or as may be
modified  prior to the Plan Year by the  Compensation  Committee.  Minimum is 0%
with no  maximum.  Interpolation  of actual  results is computed  between  table
points.  Points beyond 25% will be determined by the percentage the Earnings Per
Share  exceeds the  Earnings Per Share set forth in the 13% row for the previous
year.

Section 2.10 - EPS Multiplier

      EPS Multiplier means the multiplier as calculated in Section 4.2(a).

Section 2.11 - Involuntary Termination of Employment

      Involuntary  Termination  of  Employment  means  (a)  the  termination  of
employment of a CIC Participant by the Company other than Termination for Cause,
(b) the  resignation or retirement of a CIC  Participant for Stated Good Reason,
or (c) in the case of a CIC Participant who is in the full-time  employment of a
domestic Subsidiary,  either (I) the sale of a substantial portion of the assets
of the  Subsidiary  within the meaning of Section 280G of the  Internal  Revenue
Code of 1986, as amended, or (II) the acquisition by an unrelated third party of
ownership  of more  than  fifty  percent  (50%) of the then  outstanding  stock,
capital,  or  profits  interest  of the  Subsidiary.  The  Board,  in  its  sole
discretion,  shall determine whether the acquisition by an unrelated third party
of ownership of an interest in a foreign  subsidiary  constitutes an Involuntary
Termination of Employment.

Section 2.12 - Outstanding Stock

      Outstanding  Stock means the  weighted  average  daily  stock  outstanding
without giving effect to the dilutive impact of outstanding options.




                                       50
<PAGE>




Section 2.13 - Participants

      Participants means an employee who is eligible to participate in this Plan
under Article 3.

Section 2.14 - Participant Pay Band

      Participant  Pay Band  means  that Pay Band for which the  Participant  is
categorized pursuant to Section 4.4.

Section 2.15 - Pay Band

      Pay Band  means job  evaluation  categories  I - VI.  The Pay Bands may be
further divided or consolidated as necessary.

Section 2.16 - Pay Band Target Percentage

      Pay Band Target  Percentage  means the Reward targets as a percent of Base
Salary for a Pay Band or portion thereof as set forth in Section 4.6.

Section 2.17 - Plan

      Plan means Pioneer Hi-Bred International,  Inc., Management Reward Program
-- Performance-Based, as amended from time to time.

Section 2.18 - Plan Year

      Plan Year  means the 12 month  period  beginning  September  1 and  ending
August 31.

Section 2.19 - Prior to the Plan Year

      Prior to the Plan Year means  either  prior to or within the first 90 days
of the Plan Year.

Section 2.20 - Return on Equity (ROE)

      Return on Equity  (ROE) means net income over ending  shareholders  equity
with adjustments to remove the impact of unusual or nonrecurring events.

Section 2.21 - Reward

      Reward means the reward under this Plan.

Section 2.22 - ROE Modifier

      ROE Modifier means the modifier as calculated in Section 4.2(b).

Section 2.23 - Stated Good Reason

      Stated Good Reason means a written determination by a CIC Participant that
he reasonably and in good faith cannot continue to fulfill the  responsibilities
for  which  he was  employed.  The  CIC  Participant's  determinations  will  be
conclusively  presumed to be  reasonable  and in good faith if,  without the CIC
Participant's   express  written  consent,  the  Company  (a)  reduces  the  CIC
Participant's base salary or rate of compensation as in effect immediately prior
to the Change in Control, or as the same may have been increased thereafter, (b)
fails to continue any bonus plans in which the CIC  Participant  was entitled to
participate  immediately  prior to the Change in Control,  substantially  in the
form then in effect, (c) fails to continue in effect any benefit or compensation
plan in which the CIC  Participant  is  participating  immediately  prior to the
Change in Control  (or plans  providing  substantially  similar  benefits),  (d)
assigns  to  the  CIC  Participants  any  duties   inconsistent   with  the  CIC
Participant's duties, responsibilities or status immediately prior to the Change
in Control, or changes the CIC Participant's reporting responsibilities,




                                       51
<PAGE>




titles or offices, or (e) requires the CIC Participant to change the location of
his job or office,  so that the CIC Participant will be based at a location more
than thirty (30) miles distant by public highway from the location of his job or
office immediately prior to the Change in Control.


Section 2.24 - Subsidiary

      Subsidiary  means a  corporation  in  which  the  majority  of the  voting
securities  outstanding  at the time is owned  directly or indirectly by Pioneer
Hi-Bred International,  Inc. and/or by one or more of its other subsidiaries, or
a non-corporate entity in which a majority of the capital or profits interest is
owned directly or indirectly by Pioneer Hi-Bred  International,  Inc. and/or one
or more of its other subsidiaries.

Section 2.25 - Termination for Cause

      Termination  for Cause shall mean the  termination  of employment of a CIC
Participant as a direct result of an act or acts of  dishonesty,  constituting a
felony under the laws of the United States or the State of Iowa and resulting or
intended to result directly or indirectly in gain or personal  enrichment at the
expense of the Company. An act or acts of dishonesty  constituting a felony will
be  deemed  to  occur  only if the  act or  acts  constituting  the  felony  are
established  either by (a) the specific  admission of the  Participant  or (b) a
final nonappealable judgment of a court of competent jurisdiction.

ARTICLE 3 - ADMINISTRATION

Section 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 3.2 - Delegation of Authority

        The  Committee  may  delegate  to any  officer of the Company its duties
under the Plan pursuant to such  conditions or  limitations as the Committee may
establish,   except  that  only  the  Committee  may  administer  the  plan  for
Participants  who are subject to Section 16 of the  Securities  Exchange  Act of
1934.

ARTICLE 4 - ELIGIBILITY

Section 4.1 - Eligibility

      To be  eligible  to  participate  in the  Plan  an  individual  must be on
full-time,  regular  status on the  United  States or  Canadian  payroll.  To be
entitled to receive a reward  such  employee  must be on such  payroll as of the
last day of the Plan  year.  Additionally,  the  employee  must be in one of the
following Pay Bands:  a)I - IV  (inclusive),  b)V with approval of the corporate
officer to whom the  employee's  business unit  reports,  or c)(as an exception)
with the approval of the Corporate Management Committee.  Prior to the Plan Year
the  Committee  may adjust which pay band an employee must be in to be eligible.
Other employees of the Company or its affiliates  approved by the Committee will
also be eligible and entitled to Rewards  including  officers not on the U.S. or
Canadian payroll.

Section 4.2 - Other Plans

      Participants  are not eligible for profit  sharing or any sales  incentive
program.  Employees  eligible for sales  incentive  programs are not eligible to
participate in the Plan.


                                       52
<PAGE>




ARTICLE 5 - REWARD

Section 5.1 - Nature of Goal

      Rewards will be based upon EPS growth.

Section 5.2 - Multipliers

      a) EPS  Multiplier.  The EPS  Multiplier  is that  multiplier as set forth
below, or as approved by the Committee Prior to the Plan Year, that  corresponds
to EPS Growth Percentage.

      EPS Growth Percentage                        Multiplier*
      ---------------------                        ----------
             0%                                    0.00
             1%                                    0.08
             2%                                    0.17
             3%                                    0.25
             4%                                    0.33
             5%                                    0.42
             6%                                    0.50
             7%                                    0.58
             8%                                    0.67
             9%                                    0.75
            10%                                    0.83
            11%                                    0.92
            12%                                    1.00
            13%                                    1.00
            14%                                    1.00
            15%                                    1.25
            16%                                    1.40
            17%                                    1.55
            18%                                    1.70
            19%                                    1.85
            20%                                    2.00
            21%                                    2.05
            22%                                    2.10
            23%                                    2.15
            24%                                    2.20
            25%                                    2.25

      *Minimum  is 0%  with no  maximum.  Interpolation  of  actual  results  is
computed  between  table  points.  Beyond 25% each 1% increase in the EPS Growth
Percentage corresponds to an .05 increase in the multiplier.

      b) ROE Modifier.  ROE Modifier is that modifier as set forth below,  or as
approved by the Committee Prior to the Plan Year, that  corresponds to Return on
Equity.





                                       53
<PAGE>




             ROE                              Modifier*

   Less Than 16%                               .80
             17%                               .85
             18%                               .90
             19%                               .95
             20%                              1.00
             21%                              1.05
             22%                              1.10
             23%                              1.15
Greater Than 24%                              1.20

      *Minimum  is .80 with a maximum  of 1.20.  Interpolation  of actual 
results is  computed  between table points.

Section 5.3 - Participant Pay Band

      Each employee is assigned or reassigned  to a Pay Band.  An  appropriate  
Pay Band for an employee is determined by  considering  job factors such as:
1) impact,  2) complexity,  3) knowledge,  skill and competencies, and
4) experience.

Section 5.4 - Pay Band Target Percent

      The following table sets forth the targets as a percent of Base Salary for
each respective Pay Band:

                     Pay Band                  Target

                      CEO                      62%
                          I                    47%
                          II                   32-37%*
                          III                  12-27%*
                          IV                   5-12%*
                          V                    2-4%*

      Such Pay Band Target  Percentage may be modified by the Committee Prior to
the Plan Year. If a Key  Management  Employee  moves from 1 eligible Pay Band or
portion  thereof to another in a Plan Year, the Pay Band Target  Percentage will
be adjusted pro rata for the portion of the year in each Pay Band.

      *The exact Pay Band Target  Percent will be  determined  prior to the Plan
Year depending upon market data.
Section 5.5 - Reward 

      a) The  Reward  equals  i) EPS  Multiplier,  multiplied  by ROE  Modifier,
multiplied by Pay Band Target Percentage, multiplied by Base Salary, or ii) such
lesser amount the Committee shall determine in its sole discretion.

        b) The  calculation  in clause i) of  Section  5.5(a),  for an  Eligible
Employee who was  eligible at the end of the Plan Year but not  eligible  during
some  period of the Plan Year will be  reduced  pro rata for the  portion of the
Plan Year he was not eligible.

Section 5.6 - Maximum Reward

      The Reward  received by a  Participant  will in no event exceed $3 million
for a Plan Year.



                                       54
<PAGE>




ARTICLE 6 - COMMITTEE CERTIFICATION

Section 6.1 - Committee Certification

      Before any Reward is paid,  the Committee must certify that the multiplier
and  modifier  levels were in fact reached and all other  material  terms of the
Plan were satisfied.

ARTICLE 7 - PAYMENT

Section 7.1 - Payment

      Participants  will be paid their Reward less all  applicable  withholdings
and deductions within 75 days following the Plan year.

ARTICLE 8 - CHANGE IN CONTROL BENEFITS

Section 8.1 - Benefits

      Notwithstanding  any other  provision  of this  Plan,  in the event of the
Involuntary  Termination  of  Employment of a CIC  Participant  within three (3)
years following a Change in Control, the CIC Participant shall receive Change in
Control  benefits.  Such Change in Control benefits shall be paid in lieu of and
not in addition to any other benefits for that Plan Year under this Plan.

Section 8.2 - Amount

      The  amount of the  Change  in  Control  benefit  shall  equal the  amount
calculated  in clause a(i) of Section 5.5 (with no  reduction)  prorated for the
portion of the Plan Year before Involuntary Termination of Employment of the CIC
Participant.

Section 8.3 - Amendment & Termination

      No  amendment  or  termination  of the Plan  one year  prior to or after a
Change in Control  will affect  payments  under this  Article 8 for  Involuntary
Termination of Employment after a Change in Control.

ARTICLE 9 - SHAREHOLDER APPROVAL

Section 9.1 - Shareholder Approval

      This Plan will not be effective unless the  shareholders  approve the Plan
by a majority of the vote in a separate shareholder vote.

ARTICLE 10 - AMENDMENT AND TERMINATION OF THE PLAN

Section 10.1 - Amendment

      Except as set forth in  Section  8.3 the Plan may be  amended by the Board
without  shareholder  approval  except as  otherwise  required by law.  Any such
amendment will not apply to the Plan Year in which such amendment was adopted or
earlier Plan Years.

Section 10.2 - Termination

      The Company reserves the right to terminate the Plan at any time by action
of the Board;  except as set forth in Section 8.3. After a Change in Control any
termination  will not  apply to the Plan  Year in  which  such  termination  was
adopted or any earlier Plan Year.



                                       55
<PAGE>




ARTICLE 11 - MISCELLANEOUS

Section 11.1 - No Contract of Employment

      Nothing  in this Plan  shall be  construed  as a  contract  of  employment
between the Company and any Participant. Nothing in this Plan shall be deemed to
constitute  a contract  for services  between a Company and a  Participant,  and
nothing contained in the Plan shall be deemed to give a Participant any right to
continue  furnishing  services to the Company or the Company any right to demand
such services.  Nothing in this Plan shall be construed as an elimination of the
right of the Company to discharge a Participant, with or without cause.

Section 11.2 - 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.

Section 11.3 - 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.  Notwithstanding  the
foregoing,  this  Plan  shall  be  administered  as  to  constitute  a  plan  of
performance-based compensation under all applicable federal tax laws.


                       PIONEER HI-BRED INTERNATIONAL, INC.



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



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






                                       56
<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,  Amended and Restated as of March 10, 1998,  (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,  b) the number of shares
               of common stock  issuable  upon  conversion  (whether or not then
               convertible)  or  otherwise  of Class B Common  Stock  and c) the
               number  of  shares  of  common  stock  issuable  upon  conversion
               (whether or not then  convertible) or otherwise  constituting the
               common stock  equivalent  of any other class or series of capital
               stock which  votes for or in the  election  of  directors  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,  b) the  number of shares of common  stock  issuable
               upon conversion (whether or not then convertible) or otherwise of
               Class B Common  Stock and c) the number of shares of common stock
               issuable upon  conversion  (whether or not then  convertible)  or
               otherwise  constituting  the common stock equivalent of any other
               class or  series  of  capital  stock  which  votes  for or in the
               election of directors  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 of
               any successor  Committee.  
          (d)  "Company"  means Pioneer Hi-Bred  International,  Inc.,  an Iowa
               corporation.  
          (e)  "FairMarket  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.

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




                                       57
<PAGE>




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.

        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.



                                       58
<PAGE>




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-thire (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 the 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), 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  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);

                      (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




                                        59
<PAGE>




                    (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.

        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.





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<PAGE>





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.

        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





                                       61
<PAGE>





                       PIONEER HI-BRED INTERNATIONAL, INC.
                                CHANGE IN CONTROL
                           SEVERANCE COMPENSATION PLAN
                            FOR MANAGEMENT EMPLOYEES

                                    ARTICLE I
                              Establishment of Plan

     Section  1.1  Establishment  of Plan.  As of the  Effective  Date,  Pioneer
Hi-Bred International,  Inc. hereby establishes a severance compensation plan to
be known as the "Pioneer Hi-Bred International, Inc. Change in Control Severance
Compensation Plan for Management  Employees" (the "Plan"),  as set forth in this
document.

     Section 1.2 Purpose of Plan.  The purpose of the Plan is to aid the Company
in attracting and retaining the highly  qualified  individuals who are essential
to its  success  and to reduce the  distractions  and other  adverse  effects on
employees' performance which are inherent in a takeover threat.

     Section 1.3 Contractual Right to Benefits.  This Plan establishes and vests
in each Participant a contractual  right to the benefits to which he is entitled
hereunder, enforceable by the Participant against the Company.


                                       62
<PAGE>


                                   ARTICLE II
                          Definitions and Construction

     Section 2.1  Definitions.  Whenever used in the Plan,  the following  terms
shall have the following meanings:

                      (a) "Annual  Compensation" of a Participant means the base
               salary plus  incentive  bonuses  paid by the Company  (whether in
               cash or securities) during a twelve month period as consideration
               for the Participant's  employment  service.  Annual  Compensation
               will include  restricted  stock paid  pursuant to the  restricted
               stock plans of the Company,  phantom  stock paid  pursuant to the
               phantom stock plan of the Company and intended awards (awards for
               certain  Canadian  employees).  The restricted  stock and phantom
               stock will be  included in the period it is granted and valued at
               the grant date without regard to  restrictions.  Intended  awards
               (awards for certain  Canadian  employees) will be included in the
               period the intent is communicated and valued at that date without
               regard to  restrictions.  Annual  Compensation  will not  include
               compensation related to stock options.  Because restricted stock,
               phantom  stock,  intended  awards and  incentive  bonuses are not
               always  granted on the same  dates  each year and to reflect  the
               annual nature of restricted stock, phantom stock grants, intended
               awards,  and  incentive  bonus,  such grants and rewards  will be
               included in a twelve-month period so that there is no doubling up
               of or  elimination  of  grants  and  rewards  for a  twelve-month
               period. Annual Compensation shall include all amounts contributed
               under a salary  reduction  agreement by the Participant to a plan
               maintained by the Company  pursuant to Section  401(k) or Section
               125 of the Internal Revenue Code of 1986, as amended.

                      (b)    "Board of  Directors"  means  the Board of  
               Directors of Pioneer  Hi-Bred International,  Inc. or a committee
               of the Board of Directors  appointed to  administer  the Plan.




                                       63
<PAGE>




                      (c)  "Compensation"  means the  higher  of (a) the  Annual
                Compensation  for the 12 month period  ending on the date of the
                Participant's Involuntary Termination, or (b) the average Annual
                Compensation  for the 36 month period  ending on the date of the
                Change in Control.

                      (d) "Change in Control" means (a) the acquisition, whether
               directly,  indirectly,  beneficially  (within the meaning of Rule
               13d-3 of the  Securities  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,  b) the number of shares of common stock
               issuable upon  conversion  (whether or not then  convertible)  or
               otherwise  of Class B Common Stock and c) the number of shares of
               common  stock  issuable  upon  conversion  (whether  or not  then
               convertible)   or   otherwise   constituting   the  common  stock
               equivalent  of any other  class or series of capital  stock which
               votes for or in the election of directors 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 acting
               in concert,  other than (I) the Company  and/or (II) 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 (b) the nomination  and election of twenty-five  percent
               (25%) or more of the members of the Board of Directors of Pioneer
               Hi-Bred International, Inc., without recommendation of such Board
               of  Directors.  The  ownership of record of  twenty-five  percent
               (25%) or more in number  of the total of a) the  number of shares
               of common  stock  then  outstanding,  b) the  number of shares of
               common  stock  issuable  upon  conversion  (whether  or not  then
               convertible)  or  otherwise  of Class B Common  Stock  and c) the
               number  of  shares  of  common  stock  issuable  upon  conversion
               (whether or not then  convertible) or otherwise  constituting the
               common stock  equivalent  of any other class or series of capital
               stock which votes for or in the  election of directors of Pioneer
               Hi-Bred International, Inc. by a person




                                       64
<PAGE>




               engaged  in the  business  of acting as a nominee  for  unrelated
               beneficial  owners  shall  not in  and of  itself  be  deemed  to
               constitute a Change in Control.

                      (e) "Code"  means the Internal  Revenue  Code of 1986,  as
               amended, and references to Sections of the Code shall include the
               corresponding provisions of any future federal tax law.

                      (f) "Company" means Pioneer Hi-Bred  International,  Inc.,
               an Iowa corporation, and all its Subsidiaries.

                      (g) "Date of Potential  Change in Control"  means the date
               as of which the Board of  Directors  determines  that a Potential
               Change in Control has occurred under Section 5.2 of Article V.

                      (h) "Effective Date" means September 15, 1989.

                      (i) "Employee"  means a common law employee of the Company
               (a) who is in the Full-Time Employment of the Company, (b) on the
               U.S. or Canadian payroll (or an international service employee of
               the Company (i) on the U.S. or Canada  payroll  just prior to the
               time he or she became an  international  service  employee of the
               Company) or (ii) if not on the Company  payroll just prior to the
               time he or she became an international service employee, employed
               in the U.S.  or Canada just prior to the time he or she became an
               international service employee),  ,and (c) who is (i) in pay band
               1 through 3, or (ii) who is eligible for  restricted  stock under
               the  Company's  plan, or (iii) who was in pay grades 9 through 11
               before the switch to pay bands from pay grades in 1995.

                      (j) "Full-Time  Employment"  means  employment  during any
               period of time that an  individual  is  designated  as a regular,
               full-time  employee  of  the  Company.   Any  individual  who  is
               designated as a regular, full-time employee of the Company




                                       65
<PAGE>




                immediately  prior to a Change in Control  shall  continue to be
               treated as a regular,  full-time employee for all purposes of the
               Plan for the remainder of his employment with the Company.

                      (k) "Involuntary  Termination of Employment" means (a) the
               termination  of employment of a Participant  by the Company other
               than  Termination for Cause, (b) the resignation or retirement of
               a  Participant  for Stated Good  Reason,  or (c) in the case of a
               Participant  who is in the  Full-Time  Employment  of a  domestic
               Subsidiary,  either (I) the sale of a substantial  portion of the
               assets of the  Subsidiary  within the meaning of Section  280G of
               the  Internal  Revenue  Code of  1986,  as  amended,  or (II) the
               acquisition by an unrelated third party of ownership of more than
               fifty percent (50%) of the then outstanding  stock,  capital,  or
               profits  interest of the Subsidiary.  The Board of Directors,  in
               its sole discretion,  shall determine  whether the acquisition by
               an unrelated third party of ownership of an interest in a foreign
               subsidiary constitutes an Involuntary Termination of Employment.

                      (l)  "Letter  of  Credit"  means  one or more  irrevocable
               agreements issued to the Company by one or more banks that on the
               date of delivery of the letter of credit have (a) a minimum asset
               size of $200  million,  and (b) a credit  rating of not less than
               A-2 from Standard & Poor's or P-2 from Moody's Investor  Services
               Inc., under which the Minimum Amount is available for the account
               of the Company.

                      (m) "Minimum  Amount" means an amount that is no less than
               one hundred  percent (100%) of the Severance  Benefits that would
               be provided  under  Section 4.2 of this Plan if each  Participant
               were entitled to the Severance  Benefits on the Date of Potential
               Change in Control.

                      (n)   "Participant"   means  an  Employee  who  meets  the
               eligibility requirement of Article III.




                                       66
<PAGE>




                      (o)    "Plan"  means the Pioneer  Hi-Bred  International, 
               Inc.  Change in Contro Severance Compensation Plan for Management
               Employees.

                      (p)  "Potential Change in Control" means:

                          (i)  The  execution  by  Pioneer  Hi-Bred  
                      International,  Inc.  of a  written agreemen  which, if 
                      consummated, would constitute a Change in Control,

                          (ii) A public announcement  (including any filing with
                      the  Securities  and Exchange  Commission) 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  firms  acting in  concert,  other than (I) the
                      Company  and/or (II) 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 such
                      plan, of an intention to take or consider  taking  actions
                      which,  if  consummated,  would  constitute  a  Change  in
                      Control,

                          (iii) The acquisition,  whether directly,  indirectly,
                      beneficially (within the meaning of Rule 13d-3 of the 1934
                      Act),  or of record,  of  securities  of  Pioneer  Hi-Bred
                      International,  Inc. representing fifteen percent (15%) or
                      more in number of the total of a) the  number of shares of
                      common stock then outstanding,  b) the number of shares of
                      common stock issuable upon conversion (whether or not then
                      convertible)  or  otherwise of Class B Common Stock and c)
                      the  number  of  shares  of  common  stock  issuable  upon
                      conversion  (whether or not then convertible) or otherwise
                      constituting  the  common  stock  equivalent  of any other
                      class or series of capital stock which votes for or in the
                      election of directors 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
                      acting in concert, other than (I) the




                                       67
<PAGE>




                      Company  and/or  (II) an  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. For purposes of this Section 2.1 (p) (iii), the
                      ownership  of record of fifteen  percent  (15%) or more in
                      number of the  total of a) the  number of shares of common
                      stock then outstanding,  b) the number of shares of common
                      stock  issuable  upon  conversion  (whether  or  not  then
                      convertible)  or  otherwise of Class B Common Stock and c)
                      the  number  of  shares  of  common  stock  issuable  upon
                      conversion  (whether or not then convertible) or otherwise
                      constituting  the  common  stock  equivalent  of any other
                      class or series of capital stock which votes for or in the
                      election of  directors of Pioneer  Hi-Bred  International,
                      Inc.  by a person  engaged in the  business of acting as a
                      nominee for unrelated  beneficial  owners shall not in and
                      of itself be deemed to  constitute  a Potential  Change in
                      Control.

                          (iv) The  occurrence of any other event that the Board
                      of Directors determines is a potential Change in Control.

                      (q) "Severance  Benefits"  means the benefits  provided in
               Article IV hereof.

                      (r) "Severance Committee" means the Compensation Committee
               of the  Board  of  Directors  or such  other  person  or  persons
               appointed by the Board of Directors to  administer  the Plan.  If
               the Severance Committee is not the Compensation Committee and the
               Board  does not  appoint  a  Severance  Committee,  the  Board of
               Directors shall be the Severance Committee.

                      (s) "Severance Payment" means the cash payment provided in
               Section 4.2 hereof.




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<PAGE>




                    (t) "Stated Good Reason" means a written  determination by a
               Participant  that he reasonably and in good faith cannot continue
               to fulfill the  responsibilities  for which he was employed.  The
               Participant's  determination will be conclusively  presumed to be
               reasonable  and in  good  faith  if,  without  the  Participant's
               express   written   consent,   the   Company   (a)   reduces  the
               Participant's  base salary or rate of  compensation  as in effect
               immediately  prior to the Change in  Control,  or as the same may
               have been increased  thereafter,  (b) fails to continue any bonus
               plans  in which  the  Participant  was  entitled  to  participate
               immediately prior to the Change in Control,  substantially in the
               form then in effect,  (c) fails to continue in effect any benefit
               or compensation  plan in which the  Participant is  participating
               immediately  prior to the Change in Control  (or plans  providing
               substantially  similar benefits),  (d) assigns to the Participant
               any   duties   inconsistent   with  the   Participant's   duties,
               responsibilities  or status  immediately  prior to the  Change in
               Control, or changes the Participant's reporting responsibilities,
               titles or offices,  or (e) requires the Participant to change the
               location of his job or office,  so that the  Participant  will be
               based at a location more than thirty (30) miles distant by public
               highway from the location of his job or office  immediately prior
               to the Change in Control.

                      (u)  "Subsidiary"  means a corporation in which a majority
               of the  voting  securities  outstanding  at  the  time  is  owned
               directly or indirectly  by Pioneer  Hi-Bred  International,  Inc.
               and/or  by  one  or  more  of  its  other   subsidiaries,   or  a
               non-corporate  entity  in  which a  majority  of the  capital  or
               profits  interest  is owned  directly  or  indirectly  by Pioneer
               Hi-Bred  International,  Inc.  and/or by one or more of its other
               subsidiaries.

                      (v)  "Termination  for  Cause"  means the  termination  of
               employment of a Participant  as a direct result of an act or acts
               of dishonesty  constituting a felony under the laws of the United
               States or the State of Iowa and  resulting  or intended to result
               directly  or  indirectly  in gain or personal  enrichment  at the
               expense of the Company. An act or acts of dishonesty constituting
               a felony will be deemed to occur only if the act or acts




                                       69
<PAGE>




               constituting  the  felony  are  established  either  by  (a)  the
               specific   admission   of  the   Participant,   or  (b)  a  final
               nonappealable judgment of a court of competent jurisdiction.

                      (w) "Trust" means the Pioneer Hi-Bred International,  Inc.
               Change in  Control  Severance  Compensation  Plan for  Management
               Employees   Trust   established   under   the   Pioneer   Hi-Bred
               International, Inc. Change in Control Severance Compensation Plan
               for Management Employees Trust Agreement.

                      (x)    "Trust  Agreement"  means the Pioneer  Hi-Bred  
               International,  Inc. Change in Control Severance Compensation 
               Plan for Management Employees Trust Agreement.

                      (y) "Trustee" means the banking  organization named in the
               Trust to hold and  administer  money and  property in  accordance
               with the Trust Agreement.

                      (z) "Trust Fund" means all money and property delivered to
               the  Trustee  by the  Company  under  the  Trust  Agreement,  all
               investments and reinvestments  made therewith or proceeds thereof
               and all  earnings  and profits  thereon,  less all  payments  and
               charges authorized under the Trust Agreement.

        Section 2.2  Applicable  Law. To the extent not preempted by the laws of
the United States,  this Plan shall be governed by the laws of the State of Iowa
without reference to the principles of conflicts of law therein.

        Section 2.3 Gender;  Headings.  Any masculine  pronoun shall include the
feminine and the singular shall include the plural, and vice versa. The headings
in this Plan are for convenience of reference only.




                                       70
<PAGE>




        Section  2.4  Severability.  If a  provision  of this plan shall be held
illegal or invalid,  the illegality or invalidity shall not affect the remaining
parts of the Plan and the Plan shall be construed and enforced as if the illegal
or invalid provision had not been included.

                                   ARTICLE III
                                   Eligibility

        Section 3.1 Participation.  Each Employee who is employed by the Company
on the  Effective  Date shall become a  Participant  as of the  Effective  Date.
Thereafter,  each Employee  shall become a Participant  on the day he becomes an
Employee of the Company.

        Section 3.2 Duration of Participation. A Participant shall cease to be a
Participant in the Plan when he ceases to be an Employee of the Company,  unless
such Participant is then entitled to Severance Benefits as provided in the Plan.
A Participant  entitled to Severance Benefits shall remain a Participant in this
Plan until the full Severance Benefits have been provided to him.


                                   ARTICLE IV
                               Severance Benefits

        Section 4.1 Right to Severance Benefits. In the event of the Involuntary
Termination  of Employment of a Participant  within three (3) years  following a
Change in Control, a Participant shall be entitled to receive from the Company a
Severance  Payment in the amount provided in Section 4.2 and the other Severance
Benefits provided in Sections 4.4 and 4.5.

          The  right  of  any   Participant  (or  his  beneficiary  or  personal
representative)  to receive Severance Benefits under the Plan (directly from the
Company or through the Trust)  shall be an unsecured  claim  against the general
assets of the Company,  and neither the Plan nor the Trust entitle a Participant
(or his  beneficiary or personal  representative)  to greater  priority than the
Company's general creditors. Assets, if




                                       71
<PAGE>




any, which may be set aside by the Company for accounting  purposes shall not in
any way be held in  trust  for,  or be  subject  to,  any  prior  claims  by the
Participant  or his  beneficiary.  The  Company's  promise  to pay the  benefits
provided under the Plan shall be a contractual  obligation that is not evidenced
by notes or secured in any way.

        Section 4.2 Amount of Severance  Payment.  Each Participant  entitled to
Severance  Benefits  under this Plan shall  receive  from the Company a lump sum
cash payment in an amount equal to the Participant's  Compensation multiplied by
three.

        The Severance  Payment  provided by this Section 4.2 shall be reduced by
the value of any severance  benefit  required under the laws of any jurisdiction
outside the United States.

      The Participant shall not be required to mitigate damages or the amount of
his Severance  Payment by seeking other  employment or otherwise,  nor shall the
amount of such payment be reduced by any compensation  earned by the Participant
as a result of employment after his termination of employment by the Company.

        Section 4.3 Time of Severance Payment.  The Severance Payment to which a
Participant  is entitled  shall be paid by the Company to the  Participant  in a
lump sum cash payment not later than ten (10) days after the  termination of the
Participant's  employment.  If a  Participant  shall die  before  the  Severance
Payment  payable to him has been paid in full,  any such unpaid  amount shall be
paid  to  the  Participant's  spouse,  if  living,  otherwise  to  the  personal
representative of the Participant's estate.

        Section 4.4 Life, Health and Dental Insurance. Each Participant entitled
to Severance  Benefits  under the Plan shall  receive  from the Company  health,
dental and life insurance coverage (covering the Participant and his dependents)
which is comparable to the coverage that the  Participant was receiving from the
Company for  himself and his  dependents  immediately  prior to his  Involuntary
Termination of Employment. Such health, dental and life insurance coverage shall
be provided for the twelve  consecutive month period which commences on the date
of the Participant's Involuntary Termination of Employment and the cost of such


                                       72
<PAGE>



coverage shall be paid entirely by the Company. If the Participant shall die 
within such twelve month period,  the Company shall continue  to provide  such
health,  dental and life  insurance coverage to the Participant's dependents for
the remainder of the twelve month period.

        The health and dental insurance coverage provided by the first paragraph
of this  Section  4.4 shall not in any way  reduce or replace  the  continuation
coverage which the Participant and his dependents would otherwise be entitled to
elect under Section 4980B (f) of the Code (the "COBRA  Continuation  Coverage").
Therefore,  solely for  purposes  of  measuring  the period for which such COBRA
Continuation  Coverage  shall be  offered,  the loss of the  health  and  dental
insurance  coverage provided by the first paragraph of this Section 4.4 shall be
treated  as the  qualifying  event.  If for any reason  such COBRA  Continuation
Coverage  cannot be offered for this entire  period,  the Company shall offer to
the  Participant  and his dependents for the remainder of such period health and
dental  insurance  coverage  which is identical  in all other  respects to COBRA
Continuation Coverage.

        Section 4.5 Gross-Up Payment. Regardless if other Severance Benefits are
paid under the Plan, each  Participant  shall receive an additional  amount (the
"Gross-Up  Payment")  if any of the  Severance  Benefits  hereunder or any other
payments or benefits  received or to be received by the Participant  pursuant to
any other  plans,  arrangements  or  agreements  with the  Company  (the  "Other
Benefits")  will be subject to the tax imposed by Section  4999 of the Code (the
"Excise  Tax").  The  Gross-Up  Payment  shall equal an amount such that the net
amount of the combined Severance  Benefits,  Other Benefits and Gross-Up Payment
retained by the Participant,  after deduction of the Excise Tax on the Severance
Benefits and the Other  Benefits  and any  federal,  state and local income tax,
FICA  tax and  Excise  Tax  upon  the  Gross-Up  Payment,  shall be equal to the
combined Severance Benefits and Other Benefits.  For purposes of determining the
amount of the Gross-Up Payment,  the Participant shall be deemed to pay federal,
state and local income tax on the Gross-Up Payment at the highest marginal rate.

        The  Gross-Up  Payment  shall be paid by the Company to the  Participant
upon the earlier of (a) the time at which the Company  withholds  the Excise Tax
from any Severance  Benefits or Other  Benefits of the  Participant,  or (b) ten
(10) days after the Participant notifies the Company in writing that the



                                       73
<PAGE>



Participant  has filed a tax return which takes the position that the Excise Tax
is due and payable on the Severance  Benefits or Other Benefits in reliance upon
a written opinion of the Participant's tax counsel.

        If the Internal  Revenue Service assesses  additional  Excise Tax on the
Severance  Benefits,  Other Benefits or the Gross-Up  Payment,  the Company will
make an additional  Gross-Up Payment to the Participant  within ten (10) days of
such  assessment  such that the net amount of the  additional  Gross-Up  Payment
retained by the  Participant,  after  deduction of the federal,  state and local
income tax, FICA tax and Excise Tax upon the additional Gross-Up Payment,  shall
be equal to the additional  Excise Tax assessed by the Internal  Revenue Service
(including  interest and penalties  thereon).  For purposes of  determining  the
amount of the additional  Gross-Up  Payment,  the Participant shall be deemed to
pay federal,  state and local income tax on the additional  Gross-Up  Payment at
the highest marginal rate.

        If the Participant  shall die before the Gross-Up  Payment or additional
Gross-Up  Payment has been paid in full, any such unpaid amount shall be paid to
the  person or persons  who are  liable  for the Excise Tax which such  Gross-Up
Payment or additional Gross-Up Payment is intended to offset.

        The formula for computing the Gross-Up Payment and a specific example of
the computation of such a Gross-Up  Payment are set forth in Exhibit 4.5 to this
Plan and incorporated herein by reference.

        Section 4.6 No  Assignment.  The right of a  Participant  to receive any
benefits  under the Plan shall not be  subject  in any  manner to  anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, levy or charge, and
any  attempt  to  so  anticipate,  alienate,  sell,  transfer,  assign,  pledge,
encumber, levy or charge the same shall be void.

        Section 4.7 Claim for Benefits.  Any claim for benefits shall be made in
writing to the Severance Committee.  The claim for benefits shall be reviewed by
the  Severance  Committee.  If any part of the claim is  denied,  the  Severance
Committee  shall  provide a written  notice,  within  ninety (90) days after the
receipt of the claim by the Severance Committee, setting forth: (a) the specific
reasons for the denial;  (b) specific  reference  to the  provision of this Plan
upon which the denial is based; (c) any additional




                                       74
<PAGE>




information the claimant should furnish to perfect the claim;  and (d) the steps
to be taken if a review of the denial is desired.

        If a claim is denied and a review is desired,  the  Participant  (or the
Participant's  beneficiary,  as the  case may be)  shall  notify  the  Severance
Committee  in writing  within  sixty  (60) days.  In  requesting  a review,  the
Participant or beneficiary may review this Plan or any documents  relating to it
and submit any written issues and comments he may feel appropriate. The Board of
Directors  shall then  review the claim and  provide a written  decision  within
sixty (60) days. This decision shall state the specific reasons for the decision
and shall  include  reference  to specific  provisions  of the Plan on which the
decision is based.

        Section  4.8  Taxes on  Benefits.  The  Company  shall  deduct  from any
payments  under this Plan the amount of any taxes  required to be withheld  from
such payments by any federal, state or local laws or, if applicable, the laws of
any   jurisdiction   outside  the  United  States.   The   Participants,   their
beneficiaries and personal representatives shall pay any and all federal, state,
local,  foreign or other taxes imposed on Severance Benefits provided under this
Plan.


                                    ARTICLE V
                               Funding of Benefits

        Section 5.1  Notification.  Immediately  upon gaining  knowledge  that a
Potential  Change in Control  has  occurred  or is likely to occur,  a member or
members of the Board of Directors  shall notify the President of Pioneer Hi-Bred
International,  Inc. The notification  shall be a written  certification of such
member or  members  to the  President  setting  forth the facts  upon which such
knowledge is based.

        Section  5.2  Meeting  of the Board of  Directors.  Upon  receipt of the
notification required by Section 5.1 of this Article V, the President or any two
members of the Board of Directors  shall call a special  meeting of the Board of
Directors to determine  whether a Potential  Change in Control has occurred.  If
the  Board of  Directors  determines  that a  Potential  Change in  Control  has
occurred, the Board of Directors shall direct the appropriate officers of




                                       75
<PAGE>



Pioneer Hi-Bred  International,  Inc. to fund the Trust in accordance with 
Section 5.3 of this Article V.

        Section  5.3  Funding  the  Trust.  On the Date of  Potential  Change in
Control,  or as soon  as is  administratively  feasible  following  the  Date of
Potential  Change  in  Control,   Pioneer  Hi-Bred  International,   Inc.  shall
contribute  to the Trust (a) a Letter of Credit in the  Minimum  Amount,  or (b)
cash or property equal in value to the Minimum Amount. In the event that Pioneer
Hi-Bred  International,  Inc. funds the Trust with a Letter of Credit, the Board
of Directors  shall cause the Minimum Amount to be drawn and  contributed to the
Trust upon the  occurrence of a Change in Control,  or earlier in the discretion
of the Board of Directors.

        Section 5.4 The Trust. The Trust Fund shall be held and administered for
the  sole  purpose  of  providing  deferred   compensation  to  Participants  in
accordance  with  the  provisions  of this  Plan  and the  Trust  Agreement  and
defraying   reasonable   expenses  of  administration  in  accordance  with  the
provisions  of  the  Trust  Agreement;  provided  that  if (a)  Pioneer  Hi-Bred
International,  Inc. is unable to pay its debts as they mature or as they become
due or (b) Pioneer Hi-Bred International, Inc. files or has filed against it any
proceedings under the bankruptcy laws of the United States or the State of Iowa,
the Trust Fund shall be used to satisfy the claims of the general  creditors  of
Pioneer Hi-Bred International, Inc.




                                       76
<PAGE>






                                   ARTICLE VI
                     Other Rights and Benefits Not Affected

        Section 6.1 Other Benefits.  Neither the provisions of this Plan nor the
Severance  Benefits  provided for hereunder  shall reduce or replace any amounts
otherwise payable or any health,  dental or life insurance coverage to which the
Participant  is otherwise  entitled,  or in any way  diminish the  Participant's
rights as an Employee of the Company,  whether existing now or hereafter,  under
any benefit, incentive,  retirement, stock option, stock bonus or stock purchase
plan, or any employment agreement or other plan or arrangement.

        Section 6.2 Employment Status.  This Plan does not constitute a contract
of  employment  or impose on the  Participant  or the Company any  obligation to
retain the Participant as an Employee, to change the status of the Participant's
employment,  or to  change  the  Company's  policies  regarding  termination  of
employment.

                                   ARTICLE VII
                              Successor To Company

        Section 7.1 Assumption by Successor. Company shall require any successor
or assignee, whether direct or indirect, by purchase,  merger,  consolidation or
otherwise,  to all or  substantially  all the business or assets of the Company,
expressly  and  unconditionally  to assume  and agree to perform  the  Company's
obligations  under this Plan,  in the same  manner to the same  extent  that the
Company would be required to perform if no such  succession  or  assignment  had
taken place. In such event, the term "Company," as used in this Plan, shall mean
the  Company as  hereinbefore  defined  and any  successor  or  assignee  to the
business  or  assets  which by  reason  hereof  becomes  bound by the  terms and
provisions of this Plan.



                                       77
<PAGE>





                                  ARTICLE VIII
                            Amendment and Termination

        Section 8.1 Amendment and Termination. Prior to a Change in Control, the
Plan may be  terminated  or amended in any  respect by  resolution  adopted by a
majority of the Board of Directors;  provided  that any amendment  which reduces
Severance  Benefits or any  termination of the Plan shall be disregarded for all
purposes if such  amendment or termination is adopted during the one year period
immediately  preceding a Change in Control. In the event of a Change in Control,
the Plan no longer shall be subject to amendment,  substitution,  or termination
in any respect whatsoever,  and the Plan shall continue in full force and effect
until after the Participants who become entitled to Severance Payments hereunder
shall have received such payments in full.

        Section  8.2 Form of  Amendment.  The form of any  proper  amendment  or
termination  of  the  Plan  shall  be a  written  instrument  signed  by a  duly
authorized  officer  or  officers  of  Pioneer  Hi-Bred   International,   Inc.,
certifying  that the amendment or termination  has been approved by the Board of
Directors.  A  proper  amendment  of  the  Plan  automatically  shall  effect  a
corresponding   amendment  to  all  Participants'  rights  hereunder.  A  proper
termination  of  the  Plan  automatically  shall  effect  a  termination  of all
Participants' rights and benefits hereunder.




                                       78
<PAGE>






                                   ARTICLE IX
                             Legal Fees and Expenses

        Section 9.1 Fees and  Expenses.  The  Company  shall pay all legal fees,
costs of  litigation,  and other  expenses  incurred by each  Participant or the
Participant's  beneficiary as a result of the Company's contesting the validity,
enforceability or interpretation of the Plan.

     IN WITNESS  WHEREOF,  Pioneer Hi-Bred  International,  Inc. has caused this
instrument to be executed by its duly authorized officers on this day of 19 .

ATTEST:                                     PIONEER HI-BRED INTERNATIONAL, INC.

By:   /s/ Jerry L. Chicoine                  By:/s/  Charles S. Johnson         
          Jerry L. Chicoine                          Charles S. Johnson
          Secretary                                  President and CEO





                                       79
<PAGE>




                                   EXHIBIT 4.5
                     Formula for Gross-Up Payments under the
                       Pioneer Hi-Bred International, Inc.
                  Change in Control Severance Compensation Plan
                            for Management Employees

                            Gross-Up Payment Formula
                            ------------------------

                                                      .2E
                                                   --------
Formula:                            G       =      (.8 - T)


                                             --------------------


Derived from:  P [ 1 - T] = (E + G) [1 - (T + .20)] + B [1 - T]

                                             --------------------

--------------------

Key:    P = B + E = Parachute payment
        B = Base amount (as defined in I.R.C. section 280G) 
        E = Excess parachute payment (as defined in I.R.C. section 280G)
        G = Gross-up  payment  (amount  that  must be added to the  parachute
            payment  to  offset  the  20%  excise  tax on the  excess  parachute
            payment)
        T = Tax rate (the highest marginal rate of federal,  state, local income
            tax and FICA)

                                     Example
                                     --------

Mr. Smith, who has a base amount of $200,000, receives parachute payments in the
amount of $1,000,000. At the time of the parachute payments the highest marginal
income tax rate (which includes federal,  state, local income tax, and FICA tax)
is 52%. Mr. Smith will have an excise tax liability of $160,000 on the parachute
payments (20% x  ($1,000,000  - $200,000)).  In order to offset this excise tax,
the Company will pay Mr. Smith a  "gross-up"  payment of $571,429,  which is the
amount required to pay the excise tax on the original parachute payment plus the
income  tax and  excise  tax on the  gross-up  payment.  (The  excise tax on the
gross-up  payment is  $114,286  and the income  tax on the  gross-up  payment of
$297,143. Therefore, the net gross-up payment is $160,000 ($571,429 - $114,286 -
$297,143), which is the amount of the excise tax on the parachute payments).




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<PAGE>




THE COMPANY'S BUSINESS

Business

        The  business  of  Pioneer  Hi-Bred  International,  Inc.  is the  broad
application  of the  science of  genetics.  Pioneer was founded in 1926 to apply
then 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.  The Company's
researchers are well-established  experts in the science of crop genetics.  They
are  constantly  focused on  improving  the  germplasm  base using the latest in
technology.

        Integrating  new  technology is essential to crop genetic  improvements.
Currently,  Pioneer  manages more than 2,000  research  agreements.  Over 200 of
these  agreements are  collaborations  with entities  specializing in technology
that can help  improve the core  germplasm  base.  The  remainder  is focused on
building extensive relationships with scientists throughout the world to improve
research in other areas. A series of existing  agreements,  coupled with an ever
growing number of new associations and  collaborations,  have put Pioneer in the
lead on understanding the functions of important genes in crops such as corn and
soybeans.  Pioneer  was the first  commercial  seed  company to  undertake  such
activities.  The  goal  is to  continue  to  develop  that  understanding  while
improving  the  ability  to  incorporate   these  genes  more  efficiently  into
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  89 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  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  1998,  sales  of  hybrid  seed  corn
represented approximately 76 percent of total Pioneer worldwide net sales.

        More  than 80  percent  of the  world's  corn is fed to  livestock.  The
Company is focused on  developing  superior corn hybrids for grain and silage to
address the needs of the livestock market. Grain and oilseed




                                       81
<PAGE>




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

        Improving  traditional  agronomic  traits  continues  to  be  important.
Pioneer  researchers  are working to develop  hybrids with superior  harvestable
yield,  and creating  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.  Prior to 1997, the
Company  typically  introduced 15 to 20 new hybrids each year in North  America.
Pioneer  introduced 37 new hybrids in 1998  compared to 27 in 1997.  The Company
expects to introduce more than 50 new hybrids in fiscal year 1999. 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 delivers 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
1998  totaled  81  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 13 percent of 1998 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  39 percent of 1998 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 on which soybean  research is focused
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 1998 was 73 million and
2 million acres, respectively.


End-Use Focus

        Within Pioneer  Hi-Bred's overall research  emphasis,  the products' 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.

        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  formed 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  is to
develop corn, soybeans,  and other oilseeds with traits that deliver added value
for end users of these  products.  The joint venture,  which is owned equally by
Pioneer and DuPont,  is working to create and  capture  value for those  quality
traits. The joint venture is not in the seed business.  Pioneer is the preferred
worldwide provider and marketer of quality trait seed for the joint venture.




                                       82
<PAGE>

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,  allows 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,  limited  licenses,  trade secrets,
Plant Variety Protection Certificates,  and bag language. 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, 1998, Pioneer held over 250 U.S. patents and over 300 foreign patents
and had over 900 patent  applications  pending on new  technologies and products
moving toward commercialization.

        The Company,  and the industry as a whole, is  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 its  business.  Pioneer  believes  that its  current
intellectual property 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  intellectual  property  Pioneer  currently  owns is  vitally
important  to  the  Company's   business.   However,  a  substantial  number  of
biotechnology  patents have  recently  been applied  for, and some  granted,  to
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 will grant
access when it is commercially prudent to do so.

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


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 in the  Northern  Hemisphere  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.




                                       83
<PAGE>

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 therefore
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 71 percent of total 1998
sales were made within North America and 20 percent within Europe.  Pioneer also
has operations in Latin America,  Mexico, Africa, Asia, the Middle East, and the
Pacific  region.  The  Company's  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 1998 is  estimated  to be  approximately  42
percent.  The next seven competitors held an estimated  combined market share of
approximately 34 percent,  with the closest competitor holding  approximately 11
percent.  The  remainder of the market is divided  among more than 275 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,  Austria,
Mexico,  and Brazil.  The Company's  market share within these countries  ranges
from near 10 percent to more than 60 percent.

        Pioneer  Hi-Bred's  principal  market for soybean seed is North America.
The Company's share of the 1998 purchased-seed  market totaled  approximately 16
percent.


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 the
Company's current products require government approval before commercialization.
It is expected  that a larger  number of future  products will also require such
government approval.

        At August 31, 1998, the Company employed  approximately  1000 people who
directly and indirectly engaged in research and product development  activities.
Of these, 409 scientists  performed  research in the agricultural  seed area and
nine  in  microbial  cultures.  Of the 409  scientists  performing  research  in
agricultural seeds, 91 were employed outside of North America.  During the three
fiscal years ended August 31, 1998, the Company  expended the following  amounts
on research and product development:

                                       84
<PAGE>


        Years ended August 31,       1998         1997          1996
-----------------------------------------------------------------------------
(in millions)
Corn.......................          $110          $101          $ 90
Soybeans...................            14            14            12
Other Products.............            31            31            34
                                      ---           ---           ---
                                     $155          $146          $136
                                      ===           ===           ===

        Planned growth in breeding projects, research collaborations,  and trait
and  technology  development  contributed  to  the  recent  trend  of  increased
expenditures in research and product development.


Risk Factors in the Business

        The annual volume of seed sold and related  profit can be  significantly
affected  by forces  beyond the  Company's  control.  Some of these  factors are
government   programs/approvals,   weather,  and  commodity  prices.  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.  Commodity  prices impact the
Company's pricing opportunities, selling strategies, and collection practices.

        Intellectual  property  positions  are becoming  increasingly  important
within the agricultural seed industry as genetically  engineered products become
a larger part of the product  landscape.  It is likely that no one company  will
own all  patent  rights  within  the  industry  for  certain  recent  technology
advancements.

        The  competitive  landscape in the seed genetics  business  continues to
change as many chemical companies work to transform themselves into higher-value
life  sciences  companies.  The  Company  is unable to predict  what  effect the
consolidations  in the  industry  will have on  pricing  opportunities,  selling
strategies, intellectual property, or earnings.

        Operating as a global  company  exposes  Pioneer to the risks  resulting
from  currency  fluctuations.  Pioneer has policies in place to help manage this
risk.  Product  performance  against the competition will continue to be the key
driver of  long-term  success for the  Company.  While  Pioneer has been able to
develop products that consistently out-perform the competition,  rapid change in
technology and customer  preference  may result in shorter  product life cycles.
Speed to market with new, higher-value, products will be increasingly important.


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,  1998,  the Company  employed  approximately  5,000 people
worldwide.



                                       85
<PAGE>

SELECTED FINANCIAL DATA
Consolidated Eleven-Year Financial History  (Part 1)
<TABLE>
<CAPTION>

        Years Ended August 31,        1998     1997     1996     1995     1994    1993
(In millions, except per share and
   statistical amounts)

Summary Operations
<S>                                 <C>      <C>      <C>      <C>      <C>      <C>   
Net Sales..................         $1,835   $1,784   $1,721   $1,532   $1,479   $1,343
                                     =====    =====    =====    =====    =====    =====
Gross Profit...............         $  890   $  867   $  858   $  760   $  759   $  700
                                     =====    =====    =====    =====    =====    =====
Restructuring and Settlements       $   --   $   --   $   --   $   --   $   45   $  (53)
                                     =====    =====    =====    =====    =====    =====
Income From Continuing
  Operations...............         $  270   $  243   $  223   $  183   $  213   $  137
                                     =====    =====    =====    =====    =====    =====
Net Income.................         $  270   $  243   $  223   $  183   $  213   $  120
                                     =====    =====    =====    =====    =====    =====
Per Common Share Data
Income From Continuing Operations:
  Basic ...................         $ 1.13   $ 0.98   $ 0.89   $ 0.72   $  .80   $   .51
  Diluted..................         $ 1.08   $ 0.98   $ 0.89   $ 0.72   $  .80   $   .51
Net Income:
  Basic....................         $ 1.13   $ 0.98   $ 0.89   $ 0.72   $  .80   $   .45
  Diluted..................         $ 1.08   $ 0.98   $ 0.89   $ 0.72   $  .80   $   .45
Growth in Earnings Per Share*
  Basic....................          15.3%    10.1%    24.1%   (10.0)%   56.9%     (8.9)%
  Diluted..................          10.2%    10.1%    24.1%   (10.0)%   56.9%     (8.9)%
Dividends Declared.........         $ 0.37   $ 0.32   $ 0.28   $ 0.24   $ 0.20      0.17
Shareholders' Equity.......         $ 5.18   $ 4.65   $ 4.12   $ 3.65   $ 3.41      3.07
 
Balance Sheet Summary
Current Assets.............         $1,039   $ 901    $  784   $  770   $  742   $   717
Net Property & Other Assets            678     702       638      523      511       504
                                     -----    ----     -----    -----    -----     -----
Total Assets...............         $1,717   $1,603   $1,422   $1,293   $1,253   $ 1,221
                                     =====    =====    =====    =====    =====     =====
Current Liabilities........         $  345   $  329   $  288   $  280   $  232   $   261
Long-Term Debt.............              5       19       25       18       66        68
Other Long-Term Liabilities            120      107       91       82       74        67
                                     -----    -----    -----    -----    -----     -----
Total Liabilities..........         $  470   $  455   $  404   $  380   $  372   $   396
                                     =====    =====    =====    =====    =====     =====
Shareholders' Equity.......          1,247   $1,148   $1,018   $  913   $  881   $   825
                                     =====    =====    =====    =====    =====     =====
Dividends Declared, common.         $   83   $   79   $   69   $   60   $   52   $    45
Dividends Declared, preferred        $   9   $   --   $   --   $   --   $   --    $   --
Average Shares Outstanding:
  Basic....................          231.5    246.9    249.5    253.5    265.9     270.3
  Diluted..................          250.3    247.5    249.8    253.5    265.9     270.3

Other Statistics
Return on Ending Equity*...          21.7%    21.2%    21.9%    20.0%    24.1%     16.7%
Return on Net Sales*.......          14.7%    13.6%    13.0%    12.0%    14.4%     10.2%
Return on Ending Assets*...          15.7%    15.2%    15.7%    14.2%    17.0%     11.2%
Gross Profit on Net Sales..          48.5%    48.6%    49.9%    49.6%    51.3%     52.1%
Dividends Declared as a % of
     Net Income............          30.7%    32.5%    30.9%    32.8%    24.6%     37.4%
Stock Price at August 31,..         $33.75   $28.56   $18.38   $14.33   $10.42   $10.92
Market Capitalization at
  August 31, (in millions)          $8,111   $7,045   $4,542   $3,590   $2,694   $2,929
Number of Employees........          5,025    4,994    4,911    4,924    4,847    4,807
</TABLE>

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




                                       86
<PAGE>

SELECTED FINANCIAL DATA
Consolidated Eleven-Year Financial History (Part 2)
<TABLE>
<CAPTION>

        Years Ended August 31,                 1992     1991     1990     1989    1988
(In millions, except per share and)
     statistical amounts)
Summary Operations
<S>                                          <C>      <C>      <C>      <C>      <C>   
Net Sales..................                  $1,262   $1,125   $  964   $  867   $  759
                                              =====    =====    =====    =====    =====
Gross Profit...............                  $  640   $  549   $  442   $  391   $  389
                                              =====    =====    =====    =====    =====
Restructuring and Settlements                $   --   $   --   $   --   $   --   $   --
                                              =====    =====    =====    =====    =====
Income From Continuing
  Operations...............                  $  152   $  104   $   73   $   82   $   84
                                              =====    =====    =====    =====    =====
Net Income.................                  $  152   $  104   $   73   $   98   $   65
                                              =====    =====    =====    =====    =====    
Per Common Share Data
Income From Continuing Operations:
  Basic ...................                  $ 0.56   $ 0.38   $ 0.26   $ 0.29   $ 0.29
  Diluted..................                  $ 0.56   $ 0.38   $ 0.26   $ 0.29   $ 0.29
Net Income:
  Basic....................                  $ 0.56   $ 0.38   $ 0.26   $ 0.34   $ 0.23
  Diluted..................                  $ 0.56   $ 0.38   $ 0.26   $ 0.34   $ 0.23
Growth in Earnings Per Share*
  Basic....................                   46.1%    47.4%   (9.3)%   (2.3)%    31.3%
  Diluted..................                   46.1%    47.4%   (9.3)%   (2.3)%    31.3%
Dividends Declared.........                  $ 0.13   $ 0.13   $ 0.13   $ 0.12   $ 0.12
Shareholders' Equity.......                  $ 2.95   $ 2.50   $ 2.33   $ 2.21   $ 2.01

Balance Sheet Summary
Current Assets.............                  $  703   $  606   $  538   $  474   $  450
Net Property & Other Assets                     513      480      468      440      414
                                              -----    -----    -----    -----    -----
Total Assets...............                  $1,216   $1,086   $1,006   $  914   $  864
                                              =====    =====    =====    =====    =====
Current Liabilities........                  $  286   $  295   $  294   $  221   $  209
Long-Term Debt.............                      74       67       19       17       28
Other Long-Term Liabilities                      57       43       44       49       50
                                              -----    -----    -----    -----    -----
Total Liabilities..........                  $  417   $  405   $  357   $  287   $  287
                                              =====    =====    =====    =====    =====
Shareholders' Equity.......                  $  799   $  681   $  649   $  627   $  577
                                              =====    =====    =====    =====    =====
Dividends Declared, common.                  $   36   $   35   $   36   $   34   $   33
Dividends Declared, preferred                $   --   $   --   $   --   $   --   $   --
Average Shares Outstanding:
  Basic....................                   272.4    272.7    280.5    286.2    286.6
  Diluted..................                   272.4    272.7    280.5    286.2    286.6

Other Statistics
Return on Ending Equity*...                   19.0%    15.3%    11.2%    13.1%    14.6%
Return on Net Sales*.......                   12.1%     9.3%     7.5%     9.4%    11.1%
Return on Ending Assets*...                   12.5%     9.6%     7.2%     9.0%     9.8%
Gross Profit on Net Sales..                   50.7%    48.8%    45.8%    45.1%    51.2%
Dividends Declared as a % of
     Net Income............                   23.9%    33.8%    49.7%    34.7%    50.9%
Stock Price at August 31,..                  $ 8.83   $ 5.81   $ 4.42   $ 4.67   $ 3.92
Market Capitalization at
  August 31, (in millions)                   $2,392   $1,579   $1,229   $1,326   $1,122
Number of Employees.......                    5,016    4,829    4,601    4,026    4,805
</TABLE>

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




                                       87
<PAGE>




<TABLE>
<CAPTION>

Consolidated Net Sales and Operating Income (Loss) by Product

          Years Ended August 31,    1998    %       1997     %     1996    %       1995    %     1994     %
--------------------------------------------------------------------------------------------------------------------
(In millions, except per share amounts)

NET SALES
<S>                               <C>      <C>    <C>      <C>  <C>      <C>     <C>     <C>   <C>      <C> 
   Corn.........................  $1,393   75.9   $1,385   77.6 $ 1,377  80.0    $1,227  80.0  $1,185   80.1
   Soybeans.....................     232   12.6      208   11.7     164   9.5       145   9.5     128    8.7
   Other........................     210   11.5      191   10.7     180  10.5       160  10.5     166   11.2
                                   -----   ----    -----  -----   ----- -----     ----- -----   -----  -----
Total net sales.................  $1,835  100.0   $1,784  100.0 $ 1,721 100.0    $1,532 100.0  $1,479  100.0
                                   =====  =====    =====  =====   ===== =====     ===== =====   =====  =====
OPERATING INCOME (LOSS)
   Corn.........................  $  396   28.4   $  402   29.0 $   410  29.8    $  359  29.3  $  383   32.3
                                           ====            ====          ====            ====           ====
   Soybeans.....................      36   15.5       27   13.0      16   9.8         9   6.2       7    5.5
                                           ====            ====          ====            ====           ====
   Other........................      15    7.1       11    5.8      (3) (1.6)      (15) (9.4)    (21) (12.6)
                                           ====            ====          ====            ====           ====
   Restructuring and settlements      --     --       --     --      --    --        --    --      45    3.0
                                   -----   ====    -----   ====   -----  ====     -----  ====   -----   ====
Product line operating income...  $  447   24.4   $  440   24.7 $   423  24.6    $  353  23.0  $  414   28.0
Indirect general and administrative
   expense......................     (88)  (4.9)     (77)  (4.4)    (76) (4.4)      (73) (4.7)    (68)  (4.6)
                                   -----   ----     ----   ----    ----  ----      ----  ----    ----   ----
Operating income................  $  359   19.5   $  363   20.3 $   347  20.2    $  280  18.3  $  346   23.4
Financial income................      48    2.6       10    0.6       7   0.4        11   0.7       3    0.2
                                   -----   ----     ----   ----    ----  ----      ----  ----    ----   ----
Income before items shown below.  $  407   22.1   $  373   20.9 $   354  20.6    $  291  19.0  $  349   23.6
Provision for income taxes......    (134)  (7.3)    (127)  (7.1)   (127) (7.4)     (106  (6.9)   (134)  (9.1)
Minority interest and other.....      (3)  (0.1)      (3)  (0.2)     (4) (0.2)       (2) (0.1)     (2)  (0.1)
                                   -----   ----     ----   ----    ----  ----      ----  ----   -----   ----
NET INCOME......................  $  270   14.7   $  243   13.6 $   223  13.0    $  183  12.0  $  213   14.4
                                   =====   ====     ====   ====    ====  ====      ====  ====    ====   ====


Preferred stock dividend........  $    9          $    -        $    --          $   --        $   --

Net income available to common
   shareholders.................  $  261          $  243        $   223          $  183        $  213

Income per common share
   Basic........................  $ 1.13          $  .98        $   .89          $  .72        $  .80
   Diluted......................  $ 1.08          $  .98        $   .89          $  .72        $  .80

Weighted average shares outstanding
   Basic........................   231.5           246.9          249.5           253.5         265.9
   Diluted......................   250.3           247.5          249.5           253.5         265.9

</TABLE>





                                     88
<PAGE>

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


        Pioneer continued record-setting financial results in 1998. Current year
net income after tax totaled $270 million,  or $1.08 per-diluted share, on sales
of $1.835  billion.  After tax income in 1997  totaled  $243  million,  or $0.98
per-diluted  share,  on sales of $1.784  billion.  The result was a  per-diluted
share earnings growth of 10.2 percent for 1998. Current year earnings produced a
Return on Ending Equity (ROE) of 21.7 percent,  the fifth consecutive year above
the targeted level of 20 percent. This performance enabled the Company to exceed
its  primary  financial  goals:  double-digit  earnings  growth  over  time  and
maintaining an ROE of 20 percent or higher.

        Historically,  the Company's  growth has primarily  been driven by North
American seed corn  operations.  The Company achieved record operating income in
1998 from its North American corn operations, in spite of an unprecedented level
of discounting and promotions by competitors. The Company also maintained its 42
percent share of the North  American corn market and improved  profit margins in
this  aggressive  environment.  In  addition,  record sales and profits from the
Company's soybean business and improved  profitability  from the Company's other
product  lines were  positive  factors  affecting  current year income.  Foreign
currency  devaluations,  on a worldwide  basis,  reduced  current year operating
income approximately $32 million.


Year Ended August 31, 1998, Compared to the Year Ended August 31, 1997


Hybrid Seed Corn

        The  strong  operating  performance  in North  America  was  offset by a
decrease in regions outside North America, which were impacted by local currency
devaluation,  acreage reduction,  and weather.  Current year seed corn operating
income  decreased $6 million,  or 1.5 percent,  from prior year  results.  North
America corn continues to dominate the mix of revenue and  contribution  margin,
generating  approximately  70 percent of  companywide  revenue and 73 percent of
operating income.




                                       89
<PAGE>




Corn Net Sales and Product Line Operating Income
<TABLE>
<CAPTION>

                                         Increase                               Increase
                        1998            (Decrease)              1997           (Decrease)            1996
(In millions)

NET SALES:
<S>                   <C>           <C>           <C>         <C>         <C>          <C>              <C>    
   North America....  $   970       $     63      6.9%        $   907     $    (1)     (0.1)%           $   908
   Europe...........      300            (27)    (8.3)%           327          (1)     (0.3)%               328
   Other regions....      123            (28)   (18.5)%           151          10       7.1 %               141
                         ----           ----     ----           -----        ----      ----               -----
Total net sales.....  $ 1,393       $      8      0.6 %       $ 1,385     $     8       0.6 %           $ 1,377
                        =====           ====     ====           =====        ====      ====               =====
OPERATING INCOME:
   North America....  $   290       $     24      9.0 %       $   266     $   (10)     (3.6)%           $   276
   Europe...........       98            (15)   (13.3)%           113          13      13.0 %               100
   Other regions....        8            (15)   (65.2)%            23         (11)    (32.4)%                34
                        -----           ----    -----            ----         ----     ----                ----
Total operating income $  396       $     (6)    (1.5)%       $   402     $    (8)     (2.0)%           $   410
                        =====           ====    =====            ====         ====     ====                ====
UNIT SALES:
 (80,000-kernel units)
   North America....     12.0            0.5      4.3%           11.5         (0.6)    (4.6)%               12.1
   Europe...........      2.8           (0.1)    (3.4)%           2.9          0.1      3.6 %                2.8
   Other regions....      2.2           (0.3)   (12.0)%           2.5           --          %                2.5
                         ----           ----    -----            ----         ----     -----                ----
Total unit sales....     17.0            0.1      0.6 %          16.9         (0.5)    (3.0)%               17.4
                         ====           ====     ====            ====         ====     ====                 ====
ACRES:
North America.......     84.1            0.8      1.0%           83.3          0.6      0.7 %               82.7
                         ====           ====     ====            ====         ====     ====                 ====
</TABLE>

        The primary  drivers  affecting  North American  operations are per-unit
price and cost,  market share,  and market size.  Seed corn operating  income in
North  America  improved  $24  million,  or 9 percent,  over 1997  results.  The
improved results were primarily due to increased revenue.  Revenue increased $63
million,  or 6.9 percent,  over 1997 as a result of two factors.  An increase in
the average  per-unit  selling  price  accounted  for $25.1 million of the total
increase,  and additional  units sold of 500,000  accounted for $37.7 million of
the total increase.  Higher investments in research and product  development and
product promotion also impacted current year results. In addition,  the stronger
U.S. dollar reduced operating income from Canada approximately $2.3 million.

        Despite  the  competitive  environment  in North  America,  the  average
per-unit net seed corn selling price increased  approximately 3 percent.  During
1998,  this  increase  would have been higher had the  Company  not  implemented
changes to its replant  program.  In previous  years,  seed sold for replant was
discounted  50 percent,  while in 1998 replant seed was provided free of charge.
In addition to the program  change,  adverse weather  resulted in  significantly
higher replanting in 1998. Excluding these two factors, the net selling price of
seed in North  America  increased  approximately  5  percent  as a result of the
introduction of several new premium-priced  elite products and a continued shift
in sales mix to higher-priced premium products.

        Current year per-unit seed corn cost of sales decreased  $0.30,  largely
due to lower inventory  reserves and lower commodity  costs.  When combined with
the sales price effect, net seed corn margins increased  approximately $2.40 per
unit.  Provisions for inventory reserves in 1998 were $1.75 per unit compared to
$1.98 per unit in 1997. The Company's policy is to provide adequate reserves for
inventory  obsolescence.  Approximately  8 percent of North  American unit sales
were reserved in 1998 compared to 9 percent in 1997.

        An  increase  in  North  American  market  size  impacted  current  year
operating results.  Based on information to date, North American market size was
estimated at 84.1 million  acres,  an increase of  approximately  1 percent from
1997.  Based on current year unit sales,  the Company  maintained its 42 percent
share of the North American seed corn market.


                                       90
<PAGE>

        Increased  investments  in research and product  development  and higher
selling  costs  associated  with the  launch of an  unprecedented  number of new
products  reduced  operating  income  approximately  $18  million.  New genetics
account  for more than 40 percent  of current  year unit  sales,  including  2.4
million units of Pioneer hybrids with the YieldGard gene for European Corn Borer
(ECB) resistance.

        Operating  income in Europe,  on a constant  dollar  basis,  increased 2
percent over 1997. In Europe,  seed corn  operations  were challenged in 1998 by
reduced acreage.  In addition,  results reported in U.S. dollars were negatively
impacted by the  strengthening of the U. S. dollar against European  currencies,
reducing 1998 operating income by $ 17 million compared to 1997.  Excluding this
effect,  the region achieved a new record in operating income.  Seed corn market
share  gains in Italy and Spain and higher  per-unit  prices in  Central  Europe
contributed to the increase. These factors more than offset the effect of a 6 to
8 percent reduction in hectares planted to corn.

        The Company achieved record operating income in several countries within
the Africa, Middle East, Asia, and Pacific region. Seed corn operations in South
Africa,  Turkey,  and  Pakistan all  reported  record  results in 1998 driven by
increases  in market  share and per unit  prices.  However,  overall  results of
operations  for  the  region  were  hampered  by  reduced  market  size  and  by
significant  devaluation in the local  currencies in Southeast Asia. Key markets
in Asia and Africa  experienced a 10 to 15 percent  reduction in market size due
to adverse  weather.  The  currency  devaluation  in Southeast  Asia  negatively
impacted 1998 corn operating income by $5 million.

        Latin  American corn  operations  experienced  an operating  loss of $11
million  compared to a $2 million  loss in 1997.  The  Company's  operations  in
Brazil continued to be affected by the market size decrease  reported last year.
In Argentina,  performance  issues with key hybrids noted last year continued to
impact 1998  operations.  As a result,  unit sales and price per unit were lower
than 1997.  New products were  introduced  in 1998 to address these  performance
issues and the  transition to new products in Brazil and Argentina will continue
in the upcoming years.

     Operating  income in Mexico decreased $3 million from 1997. This was due to
drought and currency devaluation. The drought conditions resulted in fewer acres
planted to corn and  decreased  unit sales in 1998.  The  stronger  U. S. dollar
compared to the Mexican peso reduced reported results in 1998 by $2 million.

        North American Seed Corn Unit Sales (in millions)

                             1998           1997          1996

                             12.0           11.5          12.1

        North American Corn Acreage (in millions)

                             1998           1997          1996

                             84.1           83.3          82.7

        Estimated North American Seed Corn Market Share

                             1998           1997          1996

                             42%            42%           44%


SOYBEAN SEED

        Soybean seed is the Company's second largest product in terms of revenue
and  operating  income.  The primary  drivers for  operating  income are premium
product  sales,  market  size,  market  share,  and price.  Current year soybean
operating income in North America improved $7 million, or 26 percent,

                                       91
<PAGE>

over 1997  results to a record $33.7  million.  Record  North  American  soybean
revenues and profits in 1998 were primarily  driven by the increased  demand for
premium-priced  glyphosate-resistant  soybeans with the Roundup Ready gene. Unit
sales of these soybeans more than doubled in the current year.



        North American Soybean Unit Sales (in millions)

                             1998           1997          1996

                             13.464         13.511        11.345

        North American Soybean Acreage  (in millions)

                             1998           1997          1996

                             75.2           73.5          66.4

        Estimated North American Soybean Market Share

                             1998           1997          1996

                             15.8%          18.1%         17.2%


        North  America  unit  sales  account  for  approximately  97  percent of
worldwide  soybean  unit  sales.  Unit sales  included  over 5 million  units of
glyphosate-resistant  products,  compared  to 2.3  million  units in  1997.  The
Company's  current year unit sales of these products  totaled  approximately  39
percent of total soybean unit sales  compared to 17 percent in 1997.  The strong
demand for and available  supply of  glyphosate-resistant  products  limited the
Company's market share.

        Higher commodity prices and additional acres available for planting from
acres coming out of conservation  programs  resulted in additional acres planted
to soybeans in the current  year.  Net margin  improved  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, which are
sold at a premium, more than offset the increase in unit costs.


OTHER PRODUCTS

    Other products current year operating results improved $4 million over those
recorded in 1997. Wheat, sunflower, and canola accounted for most of the change.
Wheat  operating  income  increased  $4  million  over 1997  results.  Sunflower
operations  provided  a  positive  impact  to the  current  year  mainly  due to
operations  in North  America and Europe.  An  increase in  sunflower  operating
income of $4 million is the result of a $10 million increase in sales over 1997.
Operating  income for canola  products in 1998  improved  $2.5 million from 1997
results  primarily due to the increased sales of herbicide  resistant  products.
Operating  results decreased $6 million due to the Company's equity ownership in
Optimum Quality Grains, L.L.C., which began operations in 1998.




                                       92
<PAGE>




Other Products Net Sales and Combined Product Line Operating Income (Loss)

<TABLE>
<CAPTION>

                                        Increase                           Increase
                         1998          (Decrease)             1997        (Decrease)              1996
(In millions)

NET SALES
<S>                   <C>          <C>         <C>        <C>          <C>         <C>          <C>   
   Alfalfa..........  $    46      $     1     2.2 %      $     45     $    13     40.6 %       $   32
   Sorghum..........       36            -      -- %            36           5     16.1 %           31
   Wheat............       24            4    20.0 %            20          (5)   (20.0)%           25
   Sunflower........       34           10    41.7 %            24           2      9.1 %           22
   Microbial products      29           (1)   (3.3)%            30           2      7.1 %           28
   Other product....       41            5    13.9 %            36          (6)   (14.3)%           42
                        -----        -----    ----           -----        ----    -----           ----
Total net sales.....  $   210      $    19     9.9 %      $    191     $    11      6.1 %       $  180
                        =====        =====    ====           =====        ====     ====           ====
Total combined
   operating income
   (loss)...........  $    15      $     4                $     11     $    14                  $   (3)
                        =====        =====                   =====        ====                    ====
</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 future are promising.


Corporate and Other Items

        Current year indirect general and administrative  expenses increased $11
million, or 14 percent, over 1997 levels.  Increased employee compensation costs
and  higher  training  and  development  costs  resulting  from  investments  in
information  systems within North America and Europe were a significant  part of
the current year  increase.  The protection of research  technology  through the
filing of patents and the cost of  litigation  associated  with the ownership of
technology  also  contributed  to this  increase.  The Company  filed 187 patent
applications  in the United  States  through  September  of  calendar  year 1998
compared to 121 and 109 in calendar years 1997 and 1996, respectively.

        Net  financial  income for fiscal 1998  increased $38 million from 1997.
Net exchange  and other gains and losses in the current year were  impacted by a
$20 million gain on the sale of two million shares of Mycogen  Corporation stock
in 1998 compared to a $7 million gain on the sale of one million shares in 1997.
The Mycogen transactions,  net of expenses, increased diluted earnings per share
$.04 and $.01 in 1998 and 1997, respectively.  In addition, net financial income
was impacted by interest  earned on the proceeds from equity  transactions  with
DuPont.

        The  decrease  in the  effective  tax rate from 34 percent in 1997 to 33
percent in 1998 was primarily  attributable to the Company's  operations outside
the United  States and an increase in research tax  incentives.  The decrease in
the effective tax rate between years  increased  earnings per share by $.02. 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.


Alliance with DuPont

               In September 1997, the Company and DuPont  finalized an agreement
that  created one of the  world's  largest  private  agricultural  research  and
development  collaborations.  The companies also formed a joint venture, Optimum
Quality Grains,  L.L.C.,  that markets  improved  quality traits to increase the
value of crops for livestock feeders, grain processors, and other end users. The
joint venture does not sell seed.  Pioneer is the preferred  worldwide  provider
and marketer of quality trait seed for the joint venture.


<

                                       93
<PAGE>




        In connection with the above agreements,  DuPont also acquired an equity
interest in Pioneer  through the purchase of 164,446 shares of preferred  voting
stock for $1.71 billion.  Effective  January 30, 1998,  each preferred share was
converted  into 100 shares of Class B common stock with a stated value of $1 per
share. As required by the agreement, Pioneer used approximately $1.52 billion of
the proceeds from the DuPont investment to purchase  approximately  16.4 million
shares  of the  Company's  outstanding  common  stock  through  a Dutch  auction
self-tender.  The common  shares  reacquired  by the Company were  retired,  but
remain  authorized  and unissued.  The net effect of these equity  transactions,
including associated  transaction costs, was an increase in Class B common stock
of $16.4 million,  a decrease in common stock of $16.4 million,  and an increase
in additional paid-in capital of approximately $170 million, the use of which is
unrestricted.   Immediately  following  the  completion  of  the  Dutch  auction
self-tender, DuPont's equity interest in Pioneer was approximately 20 percent.

        The agreements include,  among other things, a standstill provision that
prohibits  DuPont from  increasing its ownership  interest in the Company for 16
years from the date of the agreement without the consent of the Company.  DuPont
also gained two seats on the Company's Board of Directors.

        These  agreements  with DuPont will bring  additional  opportunities  to
compete  for corn  acres  in 1999  and the  potential  to  become a  significant
supplier in the rapidly growing market for high-oil corn.  Financial results for
the year ended August 31, 1998 were affected by the  completion of the agreement
with DuPont.  Without the DuPont equity  transactions  less cash would have been
available for investment,  short-term borrowings would have been higher, and the
Company would not have paid  preferred  stock  dividends.  Current year results,
excluding the impact from the above equity  transactions,  were income of $257.9
million,  or $1.05  per  diluted  share.  The  following  table  summarizes  the
components  of income per share as  reported  and  excludes  the impact from the
equity transactions with DuPont:
<TABLE>
<CAPTION>

                                                                                 Proforma

                                          As Reported                 Excluding Equity Transactions
                                   ------------------------------     ----------------------------- 
                                             Shares                               Shares
                                  Income     (Denom-    Per-Share     Income      (Denom-   Per-Share
    Year Ended August 31, 1998    (Numerator) inator)   Amount        (Numerator)  inator)  Amount 
    --------------------------    --------------------------------    -------------------------------- 
    (In millions, except
       per share amounts)

    Net income                     $    270                            $  270

    Items resulting from the
    DuPont equity transactions
      Preferred stock dividends          (9)                                -
      Interest benefit from DuPont
        proceeds*                         -                               (12)
                                      -----                               -----
    Basic earnings per share
      Net income attributable to
<S>                                <C>         <C>       <C>           <C>          <C>     <C>    
        common shareholders        $    261    231.5     $  1.13       $  258       244.4   $  1.06
                                                            ===                                ===
    Effect of dilutive securities
      Convertible preferred stock         9     17.7                       --          --
      Stock options                      --      1.1                       --         1.1
                                       ----     ----                     ----        ----
    Diluted earnings per share
    Net income attributable to
        common shareholders        $    270    250.2     $  1.08       $  258       245.5   $  1.05
                                       ====    =====      ======         ====       =====      ====
</TABLE>

*  Based  on the  assumption  that  the  proceeds  generated  by  DuPont  equity
transactions  earned an investment  return during the period on the excess funds
and reduced borrowing costs at the Company's after-tax  investment and borrowing
rates.


                                       94
<PAGE>

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


Hybrid Seed Corn

        August 31, 1997 seed corn operating  income  decreased $8 million,  or 2
percent from 1996 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
1996 on higher unit sales,  however,  this was  tempered  by the  stronger  U.S.
dollar in 1997.

        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 in 1997 which were targeted to replace  hybrids
that had been leading  sellers in recent years.  Lower unit sales of these older
hybrids were largely responsible for the estimated 1997 market share decrease.

        Delayed  regulatory  approval  for  the  Company's  ECB  resistant  corn
products also contributed to the 1997 market share decline.  Despite  regulatory
approval for these  products  coming late in the selling  season,  Pioneer sales
representatives  were able to place  Pioneer seed in more than 20 percent of the
estimated  North American acres planted to ECB resistant corn in 1997.  However,
due to the late  start,  the  Company  was unable to attain  its  normal  market
presence for these products.

        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, respectively.

        Corn  acreage in North  America  during  1997 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 1997 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.  Approximately 9 percent of
North American unit sales were reserved in 1997.

        North  American  research  and product  development  costs for seed corn
increased $11 million in 1997, 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.

                                       95
<PAGE>

        Seed corn operating  results outside North America  increased $2 million
compared  to the prior  year.  European  operations  (Europe,  CIS,  and  Japan)
provided the largest impact,  accounting for $13 million in additional operating
income.  Strengthening  of the U.S.  dollar  against  European  currencies had a
significant  negative impact on 1997 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.

        Operating  income in the Latin  American  region  decreased  $23 million
compared to 1996.  Supply  availability  and decreased corn acreage reduced 1997
operating income in Brazil.  Also affecting 1997 results was a performance issue
related to the previous  year's top selling  hybrids in Argentina.  As a result,
operating income decreased due to reduced unit sales and higher cost of sales.

        Operating  income in Mexico  improved  $4 million  from 1996  results as
favorable  weather  conditions and improved  water supply  resulted in increased
unit  sales.  Increased  selling  price per unit also  favorably  impacted  1997
results.

        Volume and price increases in several countries within Asia, Africa, and
the Middle East improved this region's 1997 operating results $3 million.


Soybean Seed

        Soybean operating income improved $11 million, or 69 percent,  over 1996
results.  The primary drivers for operating income - market size,  market share,
and price - had positive impacts on soybean operations.

        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 1997. 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
1996  despite  higher  commodity  costs.  An  increase  in list prices for 1997,
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  1997 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' 1997 operating  results  improved $14 million over those
recorded a year earlier. Comparisons in 1997 were affected by the elimination of
1996  losses  from  the  sale  of the  Company's  vegetable  products  line  and
liquidation of the specialty  oils inventory in 1996 not present in 1997,  which
combined  to  improve  1997  operating  results  $7  million  over 1996  levels.
Operating income for canola products in 1997 improved $3 million from results in
1996 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 1996.  Decreased 1997 wheat sales in
North  America,  the  result of reduced  acreage,  lowered  operating  income $3
million from 1996 levels.


                                       96
<PAGE>


Corporate and Other Items

        Indirect general and administrative  expenses in 1997, which totaled $77
million,  were similar to those  recorded in 1996.  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 1997.

        Net  financial  income  increased  $3 million  from what was recorded in
1996. The retirement of the medium-term note program in February 1996,  combined
with a lower  average  level  of  short-term  borrowing  in 1997,  reduced  1997
interest expense $3 million.  A gain in 1997 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.


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 $240  million in 1998,  compared to $176
million  and $389  million  in 1997 and 1996,  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 $302 million in 1998,
compared to $248 million and $346 million in 1997 and 1996, 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, 1998,
totaled $76  million,  a $15 million  decrease  from 1997.  In 1998,  short-term
borrowings  peaked at $128 million compared to $250 million in 1997.  Short-term
borrowings  were lower due to the net  proceeds of  approximately  $170  million
resulting from the sale of preferred  shares to DuPont and the subsequent  Dutch
auction self-tender.

        In 1998,  including net proceeds available from equity transactions with
DuPont,  short-term domestic investments peaked at $429 million compared to $242
million in 1997.  The 1998 amount does not include  $1.5 billion of the proceeds
from the DuPont equity transaction used in the Dutch auction  self-tender due to
the  nonrecurring  nature of the  transaction.  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.


                                     97
<PAGE>


Fiscal 1998 and 1999 Available Domestic Lines of Credit (in millions)

                        1st Quarter    2nd Quarter   3rd Quarter   4th Quarter

    Revolving           $   200        $    200      $    200      $     200
    Seasonal                100             100            --             --
                          -----           -----         -----          -----
    Total               $   300        $    300      $    200      $     200
                          =====           =====         =====          =====

        The Company  believes the domestic lines of credit available in 1999 are
sufficient to meet domestic borrowing needs. Revolving line of credit agreements
expire August,  2001.  Pioneer also has a seasonal  revolving credit facility to
meet peak borrowing needs, which expires August, 1999.

        At year end, cash and cash  equivalents  totaled $86 million,  down from
$97 million at August 31, 1997. It is the Company's policy to repatriate  excess
funds  outside the U.S.  not  required  for  operating  capital or to fund asset
purchases.  The growth in trade receivables at August 31, 1998 was primarily due
to increased participation in the Company's credit programs.

        Capital  expenditures,  including  business and technology  investments,
were $128  million in 1998  compared to $151 million in 1997 and $164 million in
1996.  The  Company's  capital   expenditures   primarily   represent  continued
investment  in  production  capacity,  technology  acquisitions,   and  research
collaborations.  Capital  expenditures for 1999 are expected to be approximately
$160 to $170 million and are expected to be funded through earnings.

        The quarterly dividend paid in July of 1998 increased to $.10 per share,
up 15 percent from the $.087  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.

        During 1998, the Company repurchased 6,627,800 shares of its stock under
a Board  authorized  repurchase plan at a total cost of $234 million,  excluding
the Dutch auction self-tender.  At August 31, 1998,  authorized shares remaining
to be purchased  under the plan totaled 4.8 million.  At August 31, 1998,  there
were 240 million shares of common stock and Class B common stock outstanding.


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, 1998 and 1997, net unrealized  losses on these contracts for corn and
soybeans totaled $13 million and $4 million,  respectively.  A 10 percent change
in the market price of the commodity  contracts would impact 1998 net unrealized
losses by approximately $1 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


                                    98
<PAGE>

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, 1998 and 1997, net 
unrealized losses from  foreign-currency hedge contracts  totaled $1 million and
$4 million,  respectively.  A 10 percent change in exchange rates  would  impact
1998  net   unrealized   losses  by approximately $14 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.


Accounting Pronouncements

     The Company  adopted the  provisions  of Statement of Financial  Accounting
Standards (SFAS) No. 128, "Earnings per Share" effective December 31, 1997. SFAS
No. 128 is retroactive to prior years,  however, the adoption did not materially
affect prior years' earnings per share as previously  reported under APB Opinion
No. 15.

     The  Financial  Accounting  Standards  Board  (FASB)  issued  SFAS No. 130,
"Reporting  Comprehensive  Income"; SFAS No. 131, "Disclosures about Segments of
an  Enterprise  and  Related   Information";   and  SFAS  No.  132,  "Employers'
Disclosures About Pensions and Other Postretirement  Benefits." These statements
will require revised and/or additional disclosure requirements but will not have
an effect on the results of operations or financial position of the Company. The
Company will adopt the provisions of SFAS No. 130 in the first quarter of fiscal
1999 and the  provisions  of SFAS No. 131 and SFAS No.  132 for the fiscal  year
ended August 31, 1999.

     In June  1998,  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities."  This  statement is effective  for fiscal
years beginning  after December 15, 1998,  therefore the Company will adopt this
statement for its fiscal year ended August 31, 2000. Due to the recent  issuance
and the  complexity  of the  statement,  the  Company is still in the process of
determining the effect of adopting the statement on the Company's operations and
financial position.


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.


Year 2000

     The Year 2000 issue refers to a flaw in software design that results in (a)
errors when systems  process  dates after  December 31, 1999 or (b) a failure to
recognize 2000 as a leap year.  The Year 2000 issue presents a unique  challenge
to organizations, not because it is technically difficult to resolve, but rather
because  it is so  difficult  to manage.  The  problem  is  pervasive,  existing
throughout  a wide  variety of computing  systems and  hardware  devices  within
organizations  and within their supply chains;  and  corrective  actions must be
taken by a fixed point in time - no later than January 1, 2000.

     Pioneer is well into its Year 2000  remediation  effort,  having begun this
process in 1996.  The Company  expects to see little,  if any,  direct impact on
operations  given  the  nature  of  the  business  and  the  Company's  business
relationships,  the corrective steps taken to date, and the contingency plans to
be put in place  in  1999.  Additionally,  Pioneer  has  long  had a  policy  of
aggressively  investing in and adopting new technologies.  As a result,  many of
the Company's core and end-user systems were developed or delivered in Year 2000
compliant  form,  greatly  reducing the number of  non-compliant  legacy systems
requiring corrective measures. For example, the Company recently implemented SAP
AG's R/3 enterprise  application software in the United States,  Canada,  Italy,
and France.

                                      99
<PAGE>

        Management   has   established  a  committee  to  direct  the  Company's
compliance  activities.  The  committee  meets on a regular  basis  and  reports
quarterly to the Board of Directors.  The committee has segregated the Company's
work on the Year 2000 issue into four phases:  1) inventory,  2) assessment,  3)
remediation, and 4) testing. At August 31, 1998, the committee reported that the
inventory,   assessment,   and  remediation   phases  for  the   core-processing
infrastructure  and  for  core  business  applications  were  90 to  95  percent
complete.  The  remaining  work in these  phases is expected to be  completed by
February 1999.  Integration  testing of core applications and  infrastructure is
scheduled  to begin in February  1999 and is expected to be completed by the end
of September 1999.

        At August 31, 1998,  the Company had  completed an inventory of personal
computer,  office  automation,  laboratory,  production,  and  telecommunication
equipment worldwide.  Inventory of building systems was in progress. Assessments
had been completed for 40 to 50 percent of the components surveyed and should be
completed by the end of 1998. At this point in time, the Company  estimates that
a small percentage of the equipment  inventory will require remediation and that
upgrades or replacements will be completed by the end of June 1999.

        The Company is also in the process of analyzing the Year 2000  readiness
of material third parties  (suppliers).  Replacement  suppliers will be found in
1999 if the Company  determines some suppliers are not likely to be compliant in
time.

        Pioneer  has spent  approximately  $1  million  to date in direct  costs
associated  with  reaching Year 2000  compliance.  Total costs to the Company to
address Year 2000 issues are currently  estimated not to exceed $3 million to $5
million  and consist  primarily  of  consulting  fees for  software  remediation
activities and expected costs to replace noncompliant hardware components. These
costs are expected to be funded through earnings.

        On the basis of research to date, the Company believes that the greatest
potential for disruption lies not in the Company's  internal  systems but rather
in the external systems of the Company's  service  providers.  Pioneer believes,
however,  that in North  America and Europe,  where the Company does most of its
business,  disruptions in these external  systems will be short-lived,  and that
through  contingency  planning  the  Company  can  minimize  the  impact on seed
production and selling activities in the Northern  Hemisphere.  Analysis to date
also  indicates  that the vast majority of the  Company's  supplier and customer
base will  likewise  not be impacted by internal  system  problems.  The Company
believes, however, given the number of supplier options available, that the Year
2000 challenge will not materially  impact the Company's ability to produce seed
products or the ability to sell and  distribute  these products to customers for
planting in the spring of 2000.

        Some of the unique factors of the Year 2000 issue which could impact the
Company's   performance  are  inability  of  third  parties  to  timely  provide
remediation  measures,  impacts  of the  failure  of  businesses  other than the
Company or its immediate  suppliers that would  ultimately have an impact on the
Company,  failure of  governmental  agencies to properly  address their own Year
2000 compliance, or misrepresentations of readiness by suppliers or vendors.


Outlook for 1999 and Beyond

        The Company's prospects for 1999 and beyond are encouraging. The Company
plans to  introduce  over 50 new seed corn  hybrids  in North  America  in 1999,
including  high-oil  products  and several  with the Bt gene for  resistance  to
European  Corn Borer (ECB).  Approximately  70 percent of the units sold in 1999
are expected to be from hybrids  introduced in 1997 or later. List prices of the
Company's  hybrid  corn seed in North  America  will not be  increased  in 1999.
However,  the trend of  customers to purchase  new  higher-priced,  higher-value
products is expected to increase  North  America's  average  per-unit  seed corn
selling  price and  per-unit  margin.  With the  increased  introduction  of new
products, the Company anticipates more rapid obsolescence of older products.

        Low commodity  prices create  financial stress for farmers in the United
States and around the world.  One potential  consequence of low corn prices is a
reduction in acres planted to corn, as farmers

                                      100
<PAGE>

consider  switching to other crops. A reduction in corn acreage would hinder the
Company's ability to grow earnings.  However,  the Company  anticipates that the
1998 fall harvest in North America will  substantiate  continued  strong product
performance, thereby positioning the Company for market share growth in 1999 and
beyond.

        During  1998,  there  was an  unprecedented  level  of  discounting  and
promotions on hybrid seed corn by  competitors.  New alliances,  combined with a
consolidation  of industry  players,  have increased the level of uncertainty in
the industry.  However,  the Company is well positioned against its competitors.
The Company  plans to continue to  aggressively  demonstrate  to  customers  the
financial benefits of the yield advantage of its products.

        The demand for glyphosate-resistant  soybeans is expected to continue to
grow in 1999. The Company expects to have adequate supply  available to meet the
expected  demand.  As a result,  glyphosate-resistant  products  are expected to
represent a larger  percentage of overall soybean sales in 1999, and margins are
expected to improve because of their premium sales price.

        The Company  anticipates  continued  growth in local  currency sales and
operating  profits outside of North America.  Therefore,  if foreign  currencies
start to  stabilize  against the U.S.  dollar  during key selling  seasons,  the
Company would expect growth in its operating income from these operations.

        In 1999,  the Company plans to introduce  ECB resistant  corn hybrids in
limited volumes in several countries outside of North America.  This should help
position  the Company for  continued  growth in sales and margins  within  these
countries in the years to come.

        The  Company  expects  growth  in  fixed  costs  to be led by  increased
investments in research and product  development,  information  management,  and
sales and marketing,  as well as an increase in legal costs. The Company expects
that its worldwide research and product development  investments as a percentage
of sales will  continue  to climb,  as it enhances  its  position as the world's
leading  supplier  of  agricultural  genetics  and as a  leading  integrator  of
technology.  Sales and  marketing  expenses are also expected to increase as the
Company  introduces an  unprecedented  number of new products.  Legal costs will
likely  climb as the Company  continues  to protect and defend its  intellectual
property positions.

        Salary and  benefits  are another  factor that  influences  fixed costs.
Pioneer  Hi-Bred's  commitment  to  the  workforce  and  responsiveness  to  the
competitive  environment  is expected to raise base  compensation  levels faster
than inflation in the next fiscal year.

        In addition, a change in the mix of earnings between the Company's North
American seed business and other worldwide operations may put upward pressure on
the effective tax rate in the future.


Forward-Looking Statement

        This  report  contains   forward-looking   statements  relating  to  the
Company's  operations  that are  based  on  management's  current  expectations,
estimates,  and projections.  Words such as "expects",  "anticipates",  "plans",
"intends",  "projects",  and  similar  expressions  are  used to  identify  such
forward-looking  statements.  These  statements  are not  guarantees  of  future
performance and involve certain risks,  uncertainties,  and assumptions that are
difficult  to predict.  In addition to other  factors  discussed in this report,
some  of  the  important  factors  that  could  cause  actual  results  to  vary
significantly from management's expectations noted in forward-looking statements
include the weather, government programs/approvals, commodity prices, changes in
corn acreage,  intellectual  property positions,  product  performance,  product
returns,  customer  preferences,  currency  fluctuations,  costs,  the Year 2000
issue, and industry consolidations.




                                      101
<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, 1998 and 1997,  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,  1998.  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, 1998 and 1997,  and the
results  of their  operations  and their cash flows for each of the years in the
three-year  period ended August 31, 1998, in conformity with generally  accepted
accounting principles.

KPMG Peat Marwick LLP


Des Moines, Iowa
September 18, 1998

                                      102
<PAGE>

<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF INCOME

                                Years Ended August 31,       1998              1997              1996
-------------------------------------------------------------------------------------------------------------------
(In millions, except per share amounts)

<S>                                                       <C>               <C>               <C>    
Net sales.............................................    $ 1,835           $ 1,784           $ 1,721
                                                            -----             -----             -----
Operating costs and expenses
    Cost of goods sold................................    $   789           $   771           $   727
    Research and product development..................        155               146               136
    Selling...........................................        395               374               382
    General and administrative........................        137               130               129
                                                            -----             -----             -----
                                                          $ 1,476           $ 1,421           $ 1,374
                                                            -----             -----             -----
    Operating income..................................    $   359           $   363           $   347

Investment income.....................................         45                22                22
Interest expense......................................        (13)               (8)              (11)
Net exchange and other gains (losses).................         16           $    (4)               (4)
                                                            -----             -----             -----
    Income before items below.........................    $   407           $   373           $   354

Provision for income taxes............................       (134)             (127)             (127)
Minority interest and other...........................         (3)               (3)               (4)
                                                            -----             -----             -----
    Net income........................................    $   270           $   243           $   223
                                                            =====             =====             =====
     


Preferred stock dividend..............................    $     9           $     -           $     -

Net income available to common shareholders...........    $   261           $   243           $   223

Net income per common share
    Basic.............................................    $  1.13           $   .98           $   .89
    Diluted...........................................    $  1.08           $   .98           $   .89

Average shares outstanding
    Basic.............................................      231.5             246.9             249.5
    Diluted...........................................      250.3             247.5             249.8
</TABLE>

See Notes to Consolidated Financial Statements.



                                      103
<PAGE>

<TABLE>
<CAPTION>


CONSOLIDATED BALANCE SHEETS

ASSETS                                        August 31,       1998                1997
-----------------------------------------------------------------------------------------------------
(In millions)

CURRENT ASSETS
<S>                                                         <C>                 <C>    
   Cash and cash equivalents............................    $    86             $    97
   Receivables
      Trade.............................................        346                 256
      Other.............................................         54                  45
   Inventories..........................................        481                 440
   Deferred income taxes................................         69                  57
   Other current assets.................................          3                   6
                                                              -----               -----

      Total current assets..............................    $ 1,039             $   901
                                                              -----               -----

LONG-TERM ASSETS........................................    $    47             $    93
                                                              -----               -----

PROPERTY AND EQUIPMENT
   Land and land improvements...........................    $    66             $    64
   Buildings............................................        387                 377
   Machinery and equipment..............................        580                 539
   Construction in progress.............................         63                  60
                                                              -----               -----
                                                            $ 1,096             $ 1,040                                       
   Less accumulated depreciation........................        520                 495
                                                              -----               -----
                                                            $   576             $   545        
                                                              -----               -----
INTANGIBLES.............................................    $    55             $    64
                                                              -----               -----
                                                            $ 1,717             $ 1,603
                                                              =====               =====
</TABLE>


See Notes to Consolidated Financial Statements.


                                      104
<PAGE>

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

LIABILITIES AND SHAREHOLDERS' EQUITY          August 31,       1998                1997
---------------------------------------------------------------------------------------
(In millions)

CURRENT LIABILITIES


<S>                                                         <C>                 <C>
   Short-term borrowings................................    $    76             $    91
   Current maturities of long-term debt.................         14                   6
   Accounts payable, trade..............................         81                  85
   Accrued compensation.................................         61                  60
   Income taxes payable.................................         46                  26
   Other................................................         67                  61
                                                              -----               -----
      Total current liabilities.........................    $   345             $   329
                                                              -----               -----

LONG-TERM DEBT..........................................    $     5             $    19
                                                              -----               -----
DEFERRED ITEMS
   Retirement benefits..................................    $    94             $    80
   Income taxes.........................................         19                  20
                                                              -----               -----
                                                            $   113             $   100
                                                              -----               -----
CONTINGENCIES

MINORITY INTEREST IN SUBSIDIARIES.......................    $     7             $     7
                                                              -----               -----
SHAREHOLDERS' EQUITY
   Capital stock
      Preferred, authorized 10,000,000 shares; issued none  $    --             $    --
      Common, $1 par value; authorized 600,000,000 shares;
         issued 1998 - 229,945,014 shares;
         1997 - 278,846,889 shares......................        230                  93
       Class B common, $1 stated value;
         authorized 120,000,000 shares;
         issued 1998 - 49,333,758 shares; 1997 - none...         49                  --
   Additional paid-in capital...........................        246                  43
   Retained earnings....................................      1,428               1,436
   Unrealized (loss) gain on available-for-sale securities       (2)                 19
     net Cumulative translation adjustment............          (44)                (26)
                                                              -----               -----
                                                            $ 1,907             $ 1,565

   Less
      Cost of common shares acquired for the treasury,
         1998 - 38,951,380 shares;
         1997 - 32,178,084 shares.......................       (631)               (393)
      Unearned compensation.............................        (29)                (24)
                                                              -----               -----
                                                            $ 1,247             $ 1,148
                                                              -----               -----
                                                            $ 1,717             $ 1,603
                                                              =====               =====
</TABLE>


See Notes to Consolidated Financial Statements.


                                      105
<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOWS

                                Years Ended August 31,       1998            1997              1996
-----------------------------------------------------------------------------------------------------------------
(In millions)

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                       <C>             <C>               <C>    
    Net income........................................    $   270         $   243           $   223
    Noncash items included in net income
        Depreciation and amortization ................         90              89                77
        Provision for doubtful accounts...............          6               6                 5
        Gain on disposal of assets....................        (24)             (5)               (4)
        Other noncash items, net......................         (5)              7                 1
    Change in assets and liabilities, net
        Receivables...................................       (108)            (77)              (46)
        Inventories...................................        (62)            (72)               43
        Accounts payable and accrued expenses.........          4              (4)               61
        Income taxes payable .........................         20             (38)               40
        Other assets and liabilities..................         49              27               (11)
                                                            -----           -----             -----
        Net cash provided by operating activities.....    $   240         $   176           $   389
                                                            -----           -----             -----
CASH FLOWS FROM INVESTING ACTIVITIES
    Proceeds from sale of assets......................    $    50         $    29           $    15
    Capital expenditures..............................       (119)           (127)             (116)
    Technology investments............................         (9)            (24)              (48)
    Other, net........................................        (12)             (7)                5
                                                            -----           -----             -----
        Net cash used in investing activities.........    $   (90)        $  (129)          $  (144)
                                                            -----           -----             -----
CASH FLOWS FROM FINANCING ACTIVITIES
    Net short-term borrowings (payments)..............    $    (7)        $    81           $   (42)
    Proceeds from long-term borrowings................          1              --                 1
    Principal payments on long-term borrowings........         (6)            (11)              (55)
    Purchase of common stock..........................     (1,756)            (25)              (62)
    Issuance of common and convertible preferred stock      1,706              --                --
    Cash dividends paid...............................        (92)            (79)              (69)
                                                            -----           -----             -----
        Net cash used in financing activities.........    $  (154)        $   (34)          $  (227)
                                                            -----           -----             -----
Effect of foreign currency exchange rate
    changes on cash and cash equivalents..............    $    (7)        $   (15)          $    (3)
                                                            -----           -----             -----
        Net increase (decrease) in cash and
         cash equivalents.............................    $   (11)        $    (2)          $     15
Cash and cash equivalents, beginning..................         97              99                 84
                                                            -----           -----              -----
CASH AND CASH EQUIVALENTS, ENDING.....................    $    86         $    97           $     99
                                                            =====           =====              =====
SUPPLEMENTAL CASH FLOW INFORMATION
    Cash payments
        Interest......................................    $    12         $     7           $     14
        Income taxes..................................    $   129         $   158           $     93
    Noncash investing and financing activities
        Technology investments acquired by the issuance
        of long-term debt and the assumption of 
        liabilities                                       $    --          $   10           $     20
</TABLE>

See Notes to Consolidated Financial Statements.



                                      106
<PAGE>



CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                      Years Ended August 31,       1998            1997              1996
-----------------------------------------------------------------------------------------------------------------------
(In millions)

PREFERRED STOCK
<S>                                                            <C>              <C>               <C>    
   Balance, beginning.......................................   $     --         $    --           $    --
      Issuance of 164,446 shares............................         16              --                --
      Conversion of 164,446 shares to Class B common stock..        (16)             --                --
                                                                  -----           -----             -----
   Balance, ending..........................................   $     --         $    --           $    --
                                                                  -----           -----             -----
COMMON STOCK
   Balance, beginning.......................................   $     93         $    93           $    93
      Issuance for restricted stock plan: (1998 - 496,266 shares;
         1997 - 766,155 shares; 1996 - none)................         --              --                --
      Issuance of 153,296,674 shares in connection with a
         three-for-one stock split effected in the form of a
         200% stock dividend................................        153              --                --
       Repurchase of common stock
         (1998 - 49,398,135 shares; 1997 and 1996 - none)...        (16)             --                --
                                                                  -----           -----             -----
   Balance ending...........................................   $    230         $    93           $    93
                                                                  -----           -----             -----
CLASS B COMMON STOCK
   Balance, beginning.......................................   $     --         $    --           $    --
      Conversion of preferred shares........................         16              --                --
      Issuance of 32,889,172 shares in connection with a
         three-for-one stock split effected in the form of a
         200% stock dividend................................         33              --                --
                                                                  -----           -----             -----
   Balance, ending..........................................   $     49         $    --           $    --
                                                                  -----           -----             -----
ADDITIONAL PAID-IN CAPITAL
   Balance, beginning.......................................   $     43         $    23           $    18
      Common stock issued from treasury for restricted stock plan    --              18                 3
      Common stock issued for restricted stock plan.........         17              --                --
      Issuance of preferred stock...........................      1,690              --                --
      Repurchase of common stock............................     (1,507)             --                --
      Tax benefits related to restricted stock plan.........          3               2                 2
                                                                  -----           -----             -----
   Balance, ending..........................................   $    246         $    43           $    23
                                                                  -----           -----             -----
RETAINED EARNINGS
   Balance, beginning.......................................   $  1,436         $ 1,272           $ 1,118
      Net income............................................        270             243               223
      Cash dividends on common stock (1998 - $.37 per share;
         1997 - $.32 per share; 1996 - $.28 per share)......        (83)            (79)              (69)
      Cash dividends on preferred stock (1998 - $52.00 per share;
         1997 and 1996 - none)..............................         (9)             --                --
      Three-for-one stock split in the form of a 200% stock
         dividend                                                  (186)             --                --
                                                                  -----           -----             -----
   Balance, ending..........................................   $  1,428         $ 1,436           $ 1,272
                                                                  -----           -----             -----
UNREALIZED (LOSS) GAIN ON AVAILABLE-FOR-SALE
   SECURITIES, NET
   Balance, beginning.......................................   $     19         $    11           $    --
      Change in unrealized (loss) gain......................        (21)              8                11
                                                                  -----           -----             -----
   Balance, ending..........................................   $     (2)        $    19           $    11
                                                                  -----           -----             -----
</TABLE>


                                      107
<PAGE>


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY  (continued)
<TABLE>
<CAPTION>

                                      Years Ended August 31,       1998            1997            1996
---------------------------------------------------------------------------------------------------------------------
(In millions)


CUMULATIVE TRANSLATION ADJUSTMENT
<S>                                                            <C>              <C>             <C>    
   Balance, beginning.......................................   $    (26)        $    (3)        $     1
      Current translation adjustment........................        (18)            (23)             (4)
                                                                  -----           -----           -----
   Balance, ending..........................................   $    (44)        $   (26)        $    (3)
                                                                  -----           -----           -----
TREASURY STOCK
   Balance, beginning.......................................   $   (393)        $  (364)        $  (303)
      Purchase of common stock for the treasury
      (1998 - 6,627,800 shares; 1997 - 1,107,000 shares;
      1996 - 3,446,700 shares)..............................   $   (234)        $   (25)            (62)
      Common stock issued from (acquired for) the treasury:
            For restricted stock plan (1998 - none;
               1997 - 52,566 shares; 1996 - 391,077 shares).         --              --               4
            From restricted stock forfeitures and stock used to
               satisfy withholding taxes (1998 - 199,843 shares;
               1997 - 209,550 shares; 1996 - 238,230 shares)         (4)             (4)             (3)
                                                                  -----           -----           -----
   Balance, ending..........................................   $   (631)        $  (393)        $  (364)
                                                                  -----           -----           -----
UNEARNED COMPENSATION
   Balance, beginning.......................................   $    (24)        $   (14)        $   (14)
      Net additions of common stock to restricted stock plan        (17)            (18)             (6)
      Amortization of unearned compensation.................         12               8               6
                                                                  -----           -----           -----
   Balance, ending..........................................   $    (29)        $   (24)        $   (14)
                                                                  -----           -----           -----
TOTAL SHAREHOLDERS' EQUITY AT YEAR END......................   $  1,247         $ 1,148         $ 1,018
                                                                  =====           =====           =====
</TABLE>

See Notes to Consolidated Financial Statements.




                                      108
<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 $27  million  and $23  million  at August  31,  1998 and 1997,
               respectively.

           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 that
               have a high correlation to the underlying  commodity to hedge the
               commodity  risk  involved  in  compensating  growers.   Commodity
               contracts  the Company  enters into meet the  criteria  for hedge
               accounting  and are  accounted  for on this  basis.  The  Company
               regularly  monitors  its  exposures  and ensures  that  commodity
               contract  amounts  do not exceed  the  amounts of the  underlying
               exposures. The Company does not hold or issue commodity contracts
               for trading purposes.

               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. In the
               event of early  settlement  of hedge  contracts,  gains or losses
               through  that date  continue to be  deferred  as a  component  of
               inventory. If the contract ceases

                                      109
<PAGE>

               to meet the specific  criteria for use of hedge  accounting,  any
               deferred  gains  or  losses  through  that  date  continue  to be
               deferred;  gains and  losses  after that date are  recognized  in
               income. Cash flows arising in respect to hedging transactions are
               recognized within the financial  statements under cash flows from
               operating activities.

           Property and equipment:

               Property and  equipment is recorded at cost,  net of an allowance
               for loss on plant closings of $3 million and $4 million at August
               31,  1998  and  1997,  respectively.   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,
               1998,  consisted  of an equity  security  with a cost basis of $8
               million and an unrealized loss of $2 million.  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;  this  security was sold in 1998 for $40 million,
               resulting in a gain on sale of $20 million.

               The Company owns various other equity security  investments which
               are not  publicly  traded.  Therefore,  the  fair  value of these
               investments  is not  readily  available.  The  majority  of these
               investments are due to collaborative  agreements. As a result, it
               is not  practicable  to estimate the fair value of the  Company's
               other equity security investments.  These investments are carried
               at approximately  $1 million,  which is their original cost basis
               net of any applicable valuation allowance.

           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,   1998.   Accumulated
               amortization  of $45  million  and $38 million at August 31, 1998
               and 1997, respectively, has 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 that have a high correlation to the underlying  currency to
               hedge future firm commitments




                                      110
<PAGE>

               such  as  exports,  contractual  flows,  and  royalties.  Foreign
               exchange  contracts the Company enters into meet the criteria for
               hedge accounting and are accounted for on this basis. The Company
               regularly  monitors  its  currency  exposures  and  ensures  that
               currency  contract  amounts  do not  exceed  the  amounts  of the
               underlying exposures.  The Company does not hold or issue foreign
               currency contracts for trading purposes.

               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-dominated  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-dominated   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 cancelled.  Option premiums paid
               are amortized to income over the life of the contract.

           Income taxes:

               Income  taxes  are  computed  in  accordance  with  Statement  of
               Financial  Accounting  Standards (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  taxes  have  not  been  recorded  on  $124  million  in
               undistributed  earnings from foreign  subsidiaries  that have not
               been  subjected  to  taxation in the United  States.  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.  It is not  practicable to estimate the
               income tax liability that would be incurred if such earnings were
               distributed  in  a  manner   subjecting  them  to  United  States
               taxation.  The Company files consolidated U.S. Federal income tax
               returns with its domestic  subsidiaries;  therefore,  no deferred
               income  taxes  have  been   provided  or  are  required  for  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.

                                      111
<PAGE>

           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  Statement of  Financial  Accounting
               Standards   (SFAS)   No.   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  have been
               provided  as if SFAS No.  123 were  adopted  for all  stock-based
               compensation plans.

           Earnings per share:

               Basic  earnings  per share have been  computed  by  dividing  net
               earnings by the  weighted-average  outstanding  common  stock and
               Class B common stock during each of the years presented.  Diluted
               earnings per share have been  calculated by also including in the
               computation  the  effect of  employee  stock  options  granted to
               employees as potential common shares.


Note 2. Alliance with DuPont

               In  September  1997,  the Company and E.I. du Pont de Nemours and
               Company  (DuPont)  executed an agreement  that created one of the
               world's  largest  private  agricultural  research and development
               collaborations.  A joint venture, Optimum Quality Grains, L.L.C.,
               was formed that markets  improved  quality traits to increase the
               value of crops for livestock feeders, grain processors, and other
               end users.  The joint venture does not sell seed.  Pioneer is the
               preferred  worldwide  provider and marketer of quality trait seed
               for the joint venture. The joint venture began operations January
               1,  1998,  and is being  accounted  for on the  equity  method of
               accounting.  The Company's  fifty percent equity  interest in the
               joint venture's  operations for the eight months ended August 31,
               1998,  was a loss of $6 million.  During fiscal 1998, the Company
               loaned the joint  venture $8 million at a variable  interest rate
               with the principal and unpaid interest due at December 31, 2001.

               In connection with the above agreements,  DuPont also acquired an
               equity interest in Pioneer through the purchase of 164,446 shares
               of  convertible   preferred   voting  stock  for  $1.71  billion.
               Effective  January 30, 1998,  each preferred  share was converted
               into 100 shares of Class B common stock with a stated value of $1
               per  share,  or $16.4  million.  As  required  by the  agreement,
               Pioneer used approximately $1.52 billion of the proceeds from the
               DuPont investment to purchase  approximately  16.4 million shares
               of the Company's outstanding common stock through a Dutch auction
               self-tender.  Immediately  following the  completion of the Dutch
               auction  self-tender,  DuPont's  equity  interest  in Pioneer was
               approximately 20 percent.

               The  agreement,   among  other  things,   includes  a  standstill
               provision  that  prohibits  DuPont from  increasing its ownership
               interest in the Company for 16 years from

                                      112
<PAGE>

               the date of the  agreement  without the  consent of the  Company.
               DuPont also gained two seats on the Company's Board of Directors.

Note 3. Inventories

           The composition of inventories is as follows:

<TABLE>
<CAPTION>

                                              August 31,       1998            1997
------------------------------------------------------------------------------------------------
            (In millions)
<S>                                                         <C>             <C>    
           Finished seed................................    $   273         $   245
           Unfinished seed..............................        201             186
           Supplies and other...........................          7               9
                                                              -----           -----
                                                            $   481         $   440
                                                              =====           =====
</TABLE>


           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 at August 31, 1998 and
           1997.

           The Company uses derivative instruments such as commodity futures and
           options to hedge grower  compensation  costs.  At August 31, 1998 and
           1997,  the  Company had futures  contracts  with  brokers on notional
           quantities  amounting to 31 million  bushels and 32 million  bushels,
           respectively   for  corn,  and  8  million  and  6  million  bushels,
           respectively for soybeans.  At August 31, 1998 and 1997,  inventories
           included $13 million and $4 million of unrealized  losses on all open
           contracts, respectively.

Note 4.    Current Borrowings, Lines of Credit, Long-Term Debt, and Guarantees

           At August 31, 1998, 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. There was no commercial paper outstanding
           at August 31, 1998.  Commercial paper outstanding at August 31, 1997,
           was $63 million at a weighted-average interest rate of 5.6 percent.

           In addition,  the Company's foreign subsidiaries have lines of credit
           and direct borrowing agreements totaling $116 million,  substantially
           all of which are unsecured. At August 31, 1998, short-term borrowings
           of $76 million were outstanding under foreign  subsidiary  agreements
           at a  weighted-average  interest rate of 13.7 percent.  At August 31,
           1997,  short-term  borrowings of $28 million were  outstanding  under
           these agreements at a weighted-average interest rate of 13.3 percent.

           Long-term  debt at August 31, 1998,  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: $14.4, $0.6, $1.6, $0.4, and $0.3.

           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, 1998 and 1997, such guarantees totaled
           approximately $23 million.





                                      113
<PAGE>


Note 5.    Income Taxes

           The provision for income taxes is based on income before income taxes
            as follows:
<TABLE>
<CAPTION>

                                Years Ended August 31,       1998            1997             1996
----------------------------------------------------------------------------------------------------------------
           (In millions)


<S>                                                       <C>             <C>             <C>     
           United States..............................    $   331         $   308         $    266
           Foreign....................................         76              65               88
                                                            -----           -----            -----
                                                          $   407         $   373         $    354
                                                            =====           =====            =====
</TABLE>


           The   provision  for  income  taxes  is  composed  of  the  following
components:
<TABLE>
<CAPTION>

                                Years Ended August 31,       1998            1997             1996
-----------------------------------------------------------------------------------------------------------------
           (In millions)

           Current
<S>                                                       <C>             <C>             <C>     
               Federal................................    $    88         $    80         $     83
               State..................................         12               9               11
               Foreign................................         32              31               44
                                                            -----           -----            -----
                                                          $   132         $   120         $    138
                                                            -----           -----            -----
           Deferred
               Federal................................    $    (2)        $     8         $     (9)
               State..................................         --               1               (1)
               Foreign................................          4              (2)              (1)
                                                            -----           -----            -----
                                                          $     2         $     7         $    (11)
                                                            -----           -----            -----
                                                          $   134         $   127         $    127
                                                            =====           =====            ===== 
</TABLE>

                                      114
<PAGE>


           The  tax  effects  of  temporary   differences   that  give  rise  to
           significant  portions of the  deferred  tax assets and  deferred  tax
           liabilities at August 31, 1998 and 1997, are presented below:
<TABLE>
<CAPTION>

                                                                 1998            1997
---------------------------------------------------------------------------------------------------
           (In millions)

           Deferred tax assets
<S>                                                           <C>             <C>    
               Allowance for doubtful accounts............    $     7         $     6
               Inventories................................         22              29
           Benefits/compensation..........................         48              40
           Deferred profit................................         12               9
           Nondeductible reserves.........................          7               9
           Net operating loss carryforwards...............          8               6
               Other......................................         11              11
                                                                -----           -----
               Total gross deferred tax asset.............    $   115         $   110
                  Less valuation allowance................         (4)             (8)
                                                                -----           -----
                  Total deferred tax asset................    $   111         $   102 
                                                                -----           -----
           Deferred tax liabilities
               Property and equipment.....................    $   (61)        $   (55)
               Unrealized gain on available-for-sale securities    --             (10)
                                                                -----           -----
                  Total deferred tax liability............    $   (61)        $   (65)
                                                                -----           -----
                  Net deferred tax asset..................    $    50         $    37
                                                                =====           =====
</TABLE>

           The  net   operating   loss   carryforwards   result   from   various
           international  subsidiaries.  The  expiration  of these net operating
           losses range from 1999 to indefinite.  Utilization of these losses is
           dependent upon earnings generated in the respective  subsidiaries.  A
           valuation  allowance has been established  where  appropriate for the
           losses and certain other items.

           The net change in the total  valuation  allowance  for the year ended
           August 31, 1998, was a decrease of $4 million. There was no change in
           the total valuation allowance for the year ended August 31, 1997.

           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,   1998          1997           1996
----------------------------------------------------------------------------------------------------------------

<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  1.9           1.8            1.8
           Effect of taxes on foreign earnings................   (1.9)         (1.5)            --
           Foreign Sales Corporation..........................   (1.3)         (1.4)          (0.5)
           Other..............................................   (0.7)          0.1           (0.3)
                                                                -----         -----          -----
               Actual effective income tax rate...............   33.0%         34.0%          36.0%
                                                                =====         =====          =====
</TABLE>



                                      115
<PAGE>





Note 6. 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, 1998,  1997, and
           1996, consisted of the following:
<TABLE>
<CAPTION>

                                                                 1998          1997           1996
----------------------------------------------------------------------------------------------------------------
           (In millions)

<S>                                                           <C>           <C>               <C> 
           Service cost ..................................    $    10       $     8       $      7
           Interest cost on projected benefit obligation .         15            12             11
           Actual return on plan assets...................        (48)          (16)           (14)
           Net amortization and deferral .................         27            (1)            (1)
                                                                -----         -----          -----
               Pension expense ...........................    $     4       $     3       $      3
                                                                =====         =====          =====
</TABLE>


           The  following  table sets forth the plans'  funded status as of June
           30, 1998 and 1997, respectively:
<TABLE>
<CAPTION>

                                                                          1998            1997
------------------------------------------------------------------------------------------------------------
           (In millions)

           Actuarial present value of benefit obligations
<S>                                                                    <C>             <C>    
               Vested benefit obligation ..........................    $   151         $   121
                                                                         =====           =====
               Accumulated benefit obligation......................    $   160         $   129
                                                                         =====           =====
           Plan assets at fair value, primarily stocks and bonds...    $   254         $   214
           Projected benefit obligation............................        221             187
                                                                         -----           -----
           Plan assets in excess of projected benefit obligation ..    $    33         $    27
           Unrecognized net gain ..................................        (26)            (16)
           Unrecognized prior service cost.........................          3               2
           Unrecognized transition asset, net (recognized over 16 years)    (5)             (7)
                                                                         -----           -----
               Pension asset.......................................    $     5         $     6
                                                                         =====           =====
</TABLE>

           Plan assets include common stock of the Company  totaling $32 million
           and $21 million at June 30, 1998 and 1997, respectively.

           The  following  actuarial  assumptions  were  used to  determine  the
           present value of benefit  obligations for 1998 and 1997 respectively:
           discount rate of 7 percent and 8 percent,  expected long-term rate of
           return  on plan  assets of 9.5  percent  and 9  percent,  and rate of
           increase in compensation levels of 5.5 percent and 6.5 percent.


                                      116
<PAGE>



           Non-qualified pension plans:

           The components of pension expense relating to  non-qualified  pension
           plans for the years ended August 31, 1998, 1997, and 1996,  consisted
           of the following:
<TABLE>
<CAPTION>

                                                                 1998            1997            1996
-------------------------------------------------------------------------------------------------------------------
           (In millions)

<S>                                                           <C>             <C>             <C>    
           Service cost...................................    $     2         $     2         $     1
           Interest cost on projected benefit obligation..          4               3               3
           Net amortization and deferral..................          1               1               1
                                                                 ----            ----            ----
               Pension expense............................    $     7         $     6         $     5
                                                                 ====            ====            ====
</TABLE>

           The following  table sets forth the plans' funded status as of August
           31, 1998 and 1997, respectively:

<TABLE>
<CAPTION>
                                                                 1998            1997
---------------------------------------------------------------------------------------------------
           (In millions)

           Actuarial present value of benefit obligations
<S>                                                           <C>             <C>    
               Vested benefit obligation..................    $    21         $    17
                                                                 ====            ====
               Accumulated benefit obligation.............    $    21         $    17
                                                                 ====            ====
           Plans' assets at fair value....................    $    --         $    --
           Projected benefit obligation...................         61              50
                                                                 ----            ----
           Plans' assets less than projected benefit .....    $   (61)        $   (50)
           Unrecognized net loss..........................         19              13
           Unrecognized prior service cost................         10              11
           Unrecognized transition asset, net.............          1               1
                                                                 ----            ----
               Accrued pension liabilities................    $   (31)        $   (25)
                                                                 ====            ====
</TABLE>


           In determining the present value of benefit  obligations,  a discount
           rate  of 7  percent  and  8  percent  was  used  in  1998  and  1997,
           respectively.  The assumed  rate of increase in  compensation  levels
           used was 8 percent in both years.



                                      117
<PAGE>

           Other postretirement benefit plans:

           The components of postretirement benefits cost expensed for the years
           ended August 31, 1998, 1997, and 1996, consisted of the following:
<TABLE>
<CAPTION>

                                                                    1998           1997          1996
-------------------------------------------------------------------------------------------------------------------
           (In millions)

<S>                                                              <C>            <C>           <C>    
           Service cost -- benefits earned during the year....   $     2        $     2       $     2
           Interest cost on accumulated postretirement benefit
             obligation.......................................         4              3             3
           Return on assets...................................        --             --            --
           Net amortization and deferral......................        --             --            --
                                                                    ----           ----          ----
               Other postretirement benefits cost.............   $     6        $     5       $     5
                                                                    ====           ====          ====
</TABLE>


           The following  table sets forth the plans' funded status as of August
           31, 1998 and 1997, respectively:
<TABLE>
<CAPTION>

                                                                        1998            1997
----------------------------------------------------------------------------------------------------------
           (In millions)

           Accumulated postretirement benefit obligation
<S>                                                                  <C>             <C>     
           Retirees..............................................    $   (16)        $   (15)
           Other fully eligible plans' participants..............        (12)            (10)
           Other active plans' participants......................        (34)            (23)
                                                                        ----            ----
                                                                     $   (62)        $   (48)
           Plans' assets at fair value...........................         --              --
                                                                        ----            ----
           Accumulated postretirement benefit obligation in excess of
             plans' assets.......................................    $   (62)        $   (48)
           Unrecognized prior service cost.......................         (2)             (2)
           Unrecognized net loss.................................         16               7
                                                                        ----            ----
               Accrued postretirement benefits cost..............    $   (48)        $   (43)
                                                                        ====            ====
</TABLE>


           For  1998  and  1997,  the  discount  rate  used in  determining  the
           accumulated  postretirement  benefit  obligation  was 7 percent and 8
           percent,  respectively. An 8.5 percent annual rate of increase in the
           per capita cost of covered health care benefits was assumed for 1998.
           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,
           1998, by  approximately  $12 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 7.Legal Matters

           Since April, 1996, DeKalb Genetics  Corporation  ("DeKalb") has filed
           five  lawsuits  against  Pioneer.  The  lawsuits  allege  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,
           DeKalb's patent filings,  DeKalb's lawsuits, and conducting extensive
           discovery,  Pioneer  continues  to believe  all  DeKalb's  claims are
           without merit. Pioneer has denied DeKalb's allegations and



                                      118
<PAGE>


           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.

Note 8.    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 hold these  instruments
           with the  objective of earning  financial  gains on the exchange rate
           price  fluctuations  alone,  nor does it enter into derivative  hedge
           instruments  for which there are no  underlying  transaction  related
           exposures.

           The  notional  amounts for  contracts in place at August 31, 1998 and
           1997,  are  shown  in the  following  table  in U.S.  dollars.  These
           contracts generally mature in less than one year.
<TABLE>
<CAPTION>

                                                               1998            1997
-------------------------------------------------------------------------------------------------
           (In millions)

<S>                                                         <C>             <C>    
           Forwards.....................................    $   286         $   229
           Options purchased............................          7              15
           Swaps........................................         --              19
                                                              -----           -----
                                                            $   293         $   263
                                                              =====           =====
</TABLE>


           At August 31, 1998, the Company had deferred  unrealized  gains of $4
           million and losses of $5 million from hedging firm  purchase and sale
           commitments, based on broker quoted prices.


           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.


                                      119
<PAGE>


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


                                              August 31,       1998            1997
-------------------------------------------------------------------------------------------------
           (In millions)

<S>                                                         <C>             <C>    
           United States................................    $   212         $   151
           Italy........................................    $    79         $    69
           Brazil.......................................    $    18         $    19
           Argentina....................................    $    35         $    27
           Central Europe...............................    $    23         $    16
</TABLE>


           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 that 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, 1998.


Note 9. Capital Stock

           Voting rights:

           As a result of equity  transactions  with DuPont,  the Company issued
           convertible preferred stock which was subsequently converted to Class
           B common  stock.  Except  for the  calculation  of votes  per  share,
           shareholder  rights and  preferences are  substantially  the same for
           both  common  stock and Class B common  stock.  Each  share of common
           stock is generally entitled to five votes if it has been beneficially
           owned  continuously by the same holder for a period of 36 months. All
           other shares are  entitled to one vote per share.  Holders of Class B
           common stock are entitled to cast votes equal to their  percentage of
           common stock equivalent  economic  ownership interest in the Company,
           not to exceed 20  percent.  Class B common  stock is  convertible  to
           common stock only upon sale of the Class B common stock by DuPont.

           Stock split:

           On March 10, 1998,  the Board of Directors  approved a  three-for-one
           stock split effected in the form of a 200 percent stock dividend. The
           stock dividend was paid on April 23, 1998, to  shareholders of record
           on March 27, 1998. All share and per share data have been adjusted to
           reflect this stock split.

                                      120
<PAGE>

           Share repurchase:

           At August 31, 1998, authorized shares remaining to be purchased under
           a Board authorized repurchase plan approximated 4.8 million.

           Restricted stock plans:

           The Company  has a  restricted  stock plan under which  shares of the
           Company's  common stock are held by 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 5,250,000 shares, of which 1,257,162 had been granted as
           of August 31, 1998.  There are 1,227,825 shares  outstanding  under a
           previous restricted stock plan.

           The Company  also has a  restricted  stock plan under which shares of
           the Company's common stock are held by non-employee  directors of the
           Company in lieu of cash  compensation.  The maximum  number of shares
           authorized for grant under this plan is 75,000,  of which 42,918 have
           been granted as of August 31, 1998.

           Stock option plan:

           During 1996, the Company adopted a  non-qualified  stock option plan.
           The plan  authorizes  options  covering  nine  million  shares of the
           Company's  common  stock.  All options  outstanding  as of August 31,
           1998, 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:
<TABLE>
<CAPTION>

                                Years Ended August 31,    1998          1997           1996   
           (In millions, except per share amounts)

<S>                                                       <C>           <C>            <C> 
           Net Income as reported.................        $ 270         $  243         $223
           Pro forma net income...................        $ 267         $  240         $221
           Earnings per share as reported.........        $1.08         $ 0.98         $0.89
           Pro forma earnings per share...........        $1.07         $ 0.97         $0.88
</TABLE>

           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 1998, 1997, and 1996,
           respectively:  risk-free  interest rate of 5.7 percent,  6.7 percent,
           and 6.4 percent;  expected life of 7.5 each year; expected volatility
           of 26 percent, 22 percent,  and 22 percent; and dividend yield of 1.4
           percent, 1.4 percent, and 1.5 percent.



                                      121
<PAGE>

           A summary of the status of the  Company's  fixed stock option plan as
           of August 31,  1998,  1997,  and 1996,  and changes  during the years
           ended on those dates is presented below:

<TABLE>
<CAPTION>

                                              1998                   1997                 1996       

                                                 Weighted-              Weighted-               Weighted
                                                 Average                Average                  Average
                                                 Exercise               Exercise                Exercise
<S>                                    <C>       <C>          <C>      <C>          <C>        <C>
                                       Shares    Price        Shares    Price       Shares      Price   
           Outstanding at beginning  
             of year................2,991,000    $    15    2,919,000   $    14           --    $    --
           Granted..................  207,000    $    35       72,000   $    26     2,919,000   $    14
                                    ---------               ---------               ---------
           Outstanding at end of 
               year                 3,198,000    $    16    2,991,000   $    15     2,919,000   $    14
                                    =========     ======    =========    ======     =========      ====
           Options exercisable
            at year end.............       --                      --                      --

           Weighted-average fair
             value of options
             granted during the year   $12.42                   $ 9.16              $    4.96
</TABLE>

           The following table summarizes  information about fixed stock options
           outstanding at August 31, 1998.

                             Options Outstanding                  
                                 Number            Weighted-Average
           Weighted-Average      Outstanding       Remaining
           Exercise Price        at 8/31/98        Contractual Life

              $     14           2,919,000           7.0 years
              $     26              72,000           8.8 years
              $     35             207,000           9.2 years


           On September 14, 1998 the Board of Directors  authorized the issuance
           of 1,055,150  options under this plan. These options have an exercise
           price of $32, the market value of the stock on the date of grant. One
           third of the options  become  exercisable  one year after the date of
           grant,  a second  third  two years  after the date of grant,  and the
           remaining third three years after the date of grant.

           There are no options exercisable at August 31, 1998.


                                      122
<PAGE>


Note 10.       Earnings Per Share

         Both common stock and Class B common stock are included  jointly in all
         reference   to  common   stock.   The   following   tables   provide  a
         reconciliation  of the  numerators  and  denominators  of the basic and
         diluted earnings per share computations for the periods presented:

<TABLE>
<CAPTION>

                                          August 31, 1998                     August 31, 1997       
                                             Shares                               Shares
                                  Income     Denom-     Per-Share     Income      Denom-    Per-Share
    Year Ended                    Numerator   inator    Amount        Numerator    inator   Amount   
    (in millions, except
       per share amounts)

    Basic earnings per share
      Net Income                   $    270                            $    243
      Preferred
        stock dividends                  (9)                                 --

                                      -----                               -----
      Net income attributable to
<S>                                <C>          <C>      <C>           <C>           <C>      <C>    
        common shareholders        $    261     231.5    $  1.13       $    243      246.9    $   .98
                                                           =====                                =====
    Effect of dilutive securities
      Convertible preferred stock         9      17.7                        --         --
      Stock options                      --       1.1                        --        0.6
                                      -----     -----                     -----      -----
    Diluted earnings per share
      Net income attributable to
        common shareholders        $   270      250.3    $  1.08       $    243      247.5    $   .98
                                     =====      =====      =====          =====      =====      =====
</TABLE>


                                          August 31, 1996         
                                             Shares
                                  Income     Denom-     Per-Share
    Year Ended                    Numerator   inator    Amount    
    (in millions, except
       per share amounts)

    Basic earnings per share
      Net Income                   $    223
      Preferred stock dividends          --
                                      -----

      Net income attributable to
        common shareholders        $    223     249.5    $   .89
                                                           =====
    Effect of dilutive securities
      Convertible preferred stock        --        --
      Stock options                      --       0.3
                                      -----     -----
    Diluted earnings per share
        Net income attributable to
        common shareholders        $    223     249.8    $   .89
                                      =====     =====      =====




                                      123
<PAGE>

Note 11.   Geographic Data

           Certain financial  information  concerning the Company's domestic and
           foreign operations is as follows:
<TABLE>
<CAPTION>

                                Years Ended August 31,       1998            1997             1996
----------------------------------------------------------------------------------------------------------------
           (In millions)

           Net sales (by source)
<S>                                                       <C>             <C>             <C>     
               United States..........................    $ 1,818         $ 1,626         $  1,435
               Europe.................................        349             391              387
               Other..................................        250             240              222
                                                            -----           -----            -----
                                                          $ 2,417         $ 2,257         $  2,044
               Less intergeographical sales, primarily
                  United States.......................        582             473              323
                                                            -----           -----            -----
                                                          $ 1,835         $ 1,784         $  1,721
                                                            =====           =====            =====
           Operating income (by source)
               United States..........................    $   355         $   365         $    334
               Europe.................................         53              49               56
               Other..................................         39              26               33
                                                            -----           -----            -----
                                                          $   447         $   440         $    423
               Indirect general and administrative expense    (88)            (77)             (76)
                                                            -----           -----            -----
                                                          $   359         $   363         $    347
                                                            =====           =====            =====
           Identifiable assets at August 31
               United States..........................    $   867         $   843         $    701
               Europe.................................        240             228              224
               Other..................................        369             322              244
                                                            -----           -----            -----
                                                          $ 1,476         $ 1,393         $  1,169
               Corporate..............................        241             210              253
                                                            -----           -----            -----
                                                          $ 1,717         $ 1,603         $  1,422
                                                            =====           =====            =====
           Export sales:
               Primarily Europe.......................    $    18         $    18         $     20
                                                            =====           =====            =====
</TABLE>


                                      124
<PAGE>

Note 12.       Unaudited Quarterly Financial Data

Summarized unaudited quarterly financial data for 1998 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..................    $     79        $   302         $ 1,317         $    137
           Gross profit...............    $     (6)       $   117         $   757         $     22
           Net income (loss)..........    $    (51)       $     4         $   366         $    (49)
           Preferred stock dividend...    $      4        $     5         $    --         $     --
           Net income (loss) available
               to common shareholders.    $    (55)       $    (1)        $   366         $    (49)
           Net income (loss) per
               common share (a)(b)
                  Basic...............    $   (.24)       $   (.01)       $  1.50         $   (.20)
                  Diluted.............    $   (.24)       $   (.01)       $  1.50         $   (.20)
           Cash Dividends per
               common share (b).......    $   .087        $   .087        $  .087         $    .10
</TABLE>

           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)
           Preferred stock dividend...    $    --         $    --         $    --         $     --
           Net income (loss) available
               to common shareholders.    $   (45)        $    (2)        $   332         $    (42)
           Net income (loss) per
               common share
               Basic                      $  (.18)        $   (.01)       $   1.35        $   (.17)
               Diluted                    $  (.18)        $   (.01)       $   1.35        $   (.17)
           Cash dividends per
               common share(b)........    $  .077         $   .077        $   .077        $   .087
</TABLE>


     (a)  Due to the conversion of preferred  stock to Class B common stock late
          in the second quarter,  the total of the four quarters' basic earnings
          per share does not equal the basic earnings per share for the year. As
          the first six months of fiscal 1998 reflect a loss available to common
          shareholders,  the  effect of  convertible  preferred  stock and stock
          options are not included in the  calculation  of diluted  earnings per
          share because their effects are anti-dilutive.  As a result, the total
          of the four  quarters'  diluted  earnings  per share may not equal the
          diluted  earnings per share for the year. 
     (b)  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.


                                      125
<PAGE>

Note 13.   Unaudited Subsequent Event

           On November 10, 1998,  two lawsuits filed by DeKalb (see Note 7) were
           dismissed  with  prejudice.  These  lawsuits  alleged the Company had
           infringed on DeKalb patents by using glufosinate  resistant  products
           in developing corn hybrids.



RESEARCH AND 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 the
Company's current products require government approval before commercialization.
It is expected  that a larger  number of future  products will also require such
government approval.

        At August 31, 1998, the Company employed  approximately  1000 people who
directly and indirectly engaged in research and product development  activities.
Of these, 409 scientists  performed  research in the agricultural  seed area and
nine  in  microbial  cultures.  Of the 409  scientists  performing  research  in
agricultural seeds, 91 were employed outside of North America.  During the three
fiscal years ended August 31, 1998, the Company  expended the following  amounts
on research and product development:


        Years ended August 31,       1998         1997          1996
(in millions)
Corn.......................          $110          $101          $ 90
Soybeans...................            14            14            12
Other Products.............            31            31            34
                                      ---           ---           ---
                                     $155          $146          $136
                                      ===           ===           ===

        Planned growth in breeding projects, research collaborations,  and trait
and  technology  development  contributed  to  the  recent  trend  of  increased
expenditures in research and product development.


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 2 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  60,000 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 19 plants, seven 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


                                      126
<PAGE>

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  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 Johnston, Iowa, and Buxtehude,  Germany. A livestock
nutrition  farm,  located near Sheldahl,  Iowa,  conducts  research for clinical
feeding studies, benefiting both the seed business and microbial products.

        Pioneer also owns approximately  5,300 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, 1998. 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>

                                          1998                       1997      
             <S>                   <C>         <C>         <C>           <C>    
             Quarter               High        Low          High        Low
             First.............    34 3/8      28 13/16     24 3/8     18 3/8
             Second............    35 7/8      32 15/16     24         21 13/16
             Third.............    40 5/16     32 1/2       24 5/16    19 9/16
             Fourth............    41 3/8      31           30         23 3/16
</TABLE>


On August 31, 1998, there were  approximately  36,000  registered and beneficial
shareholders  of  the  Company's  240,327,392   outstanding  shares.   Quarterly
dividends paid for the years ended August 31, 1998 and 1997 are as follows:

             Cash Dividends Per Share               1998                1997
             Quarter
             First...........................    $  .087             $  .077
             Second..........................    $  .087             $  .077
             Third...........................    $  .087             $  .077
             Fourth..........................    $  .10              $  .087


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.


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<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, 1998. 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
        Semillas Pioneer Chile Ltda. (99.74%)                        Chile
        Semillas Pioneer, S.A.                                       Spain
        Optimum Qualty Grains, L.L.C. (50%)                          USA


                                      128
<PAGE>


                                   EXHIBIT 21


                         SUBSIDIARIES OF THE REGISTRANT


                                                                      Place of
                      Subsidiary                                   Incorporation

Subsidiaries of Pioneer Overseas  Corporation,  a wholly owned subsidiary of the
    Registrant:
        Agri-Genetic Realty, Inc. (30%)                           Philippines
        Grainfield Co., Limited (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
        Pioneer Hi-Bred Research R.S.A. (Pty) Ltd.                South Africa
        Pioneer Hi-Bred R.S.A. (Pty) Ltd.                         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. (53.63%                   Japan
        Pioneer Hi-Bred Magyarorszag Rt.                          Hungary
        Piioneer New Zealand, LC                                  USA
        Pioneer Hi-Bred Northern Europe GmbH                      Germany
        Pioneer Hi-Bred S.A.R.L.                                  France
        Pioneer Hi-Bred 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) Limited                        Thailand
        Pioneer Overseas Corporation (Thailand) Ltd.              Thailand
        Pioneer Overseas Research Corporation                     USA
        Pioneer Pakistan Seed Limited (80%)                       Pakistan
        Pioneer Saaten GmbH                                       Austria
        Pioneer Hi-Bred (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. (99.97%)                          Turkey/USA
        Pioneer Trading Ltd. (51%)                                Turks & Caicos
        Semillas Hibridas Pioneer S.A.                            Colombia
        Semillas Pioneer Chile Ltda. (0.26%)                      Chile
        Semillas Pioneer de Venezuela C.A.                        Venezuela
        SPIC PHI Seeds Inc. Ltd. (50%)                            India
        Ukranian-American Russian Zorya-Nasinnya (33.33%)         Ukraine
        Teiling Pioneer Seed Research co. Ltd.                    China




                                      129
<PAGE>

                                   EXHIBIT 21


                         SUBSIDIARIES OF THE REGISTRANT


                                                                   Place of
                      Subsidiary                                 Incorporation

Subsidiaries  of  Green  Meadows,   Ltd.,  a  wholly  owned  
  subsidiary  of  the     Registrant:
        Green Meadows Development Board                              USA
        Hibridos Pioneer de Mexico S.A. de C.V. (1%)                 Mexico
        PHI Mexico, S.A. de C.V. (1%)                                Mexico
        Village Court, Inc.                                          USA
        Pioneer Hi-Bred Sementes de Portugal S.A. (0.01%)            Portugal

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 Slovensko, spol S.R.O.                       Slovakia

Subsidiariy of Pioneer Overseas Research Corporation,  a wholly-owned
 subsidiary of Pioner Overseas Corporation:
        Pioneer Hi-Bred Sementes de Portugal (0.01%)                 Portugal


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


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<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 September 18, 1998,
relating to the  consolidated  balance sheets of Pioneer Hi-Bred  International,
Inc.  and  subsidiaries  as of  August  31,  1998  and  1997,  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,
1998, which reports appear in the August 31, 1998, 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 20, 1998


                                      131
<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.


                             /s/ Charles S. Johnson
(NAME AND TITLE)      Charles S. Johnson, Chairman, President and Chief 
                      Executive Officer
DATE                  November 23, 1998

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, Director
DATE                  November 23, 1998


                              /s/ Jerry L. Chicoine
(NAME AND TITLE)      Jerry L. Chicoine, Executive Vice President, Chief 
                      Operating Officer, Corporate Secretary to the Board, 
                      Director
DATE                  November 23, 1998


                             /s/ Dwight G. Dollison
(NAME AND TITLE)      Dwight G. Dollison, Vice President and Treasurer
DATE                  November 23, 1998


                                /s/ Brian G. Hart
(NAME AND TITLE)      Brian G. Hart, Vice President and Chief Financial Officer
DATE                  November 23, 1998


                              /s/ Nancy Y. Bekavac
(NAME AND TITLE)      Nancy Y. Bekavac, Director
DATE                  November 23, 1998


                              /s/ C. Robert Brenton
(NAME AND TITLE)      C. Robert Brenton, Director
DATE                  November 23, 1998


                                      132
<PAGE>


                               /s/ Fred S. Hubbell
(NAME AND TITLE)      Fred S. Hubbell, Director
DATE                  November 23, 1998


                                /s/ Luiz Kaufmann
(NAME AND TITLE)      Luiz Kaufmann, Director
DATE                  November 23, 1998


                           /s/ Dr. F. Warren McFarlan
(NAME AND TITLE)      Dr. F. Warren McFarlan, Director
DATE                  November 23, 1998


                             /s/ Dr. Owen J. Newlin
(NAME AND TITLE)      Dr. Owen J. Newlin, Director
DATE                  November 23, 1998


                               /s/ Thomas N. Urban
(NAME AND TITLE)      Thomas N. Urban, Director
DATE                  November 23, 1998


                             /s/ Dr. Virginia Walbot
(NAME AND TITLE)      Dr. Virginia Walbot, Director
DATE                  November 23, 1998


                              /s/ H. Scott Wallace
(NAME AND TITLE)      H. Scott Wallace, Director
DATE                  November 23, 1998


                                /s/ Fred W. Weitz
(NAME AND TITLE)      Fred W. Weitz, Director
DATE                  November 23, 1998


                            /s/ Herman H.F. Wijffels
(NAME AND TITLE)      Herman H.F. Wijffels, Director
DATE                  November 23, 1998


                           /s/ Charles O. Holliday,Jr.
NAME AND TITLE)       Charles O. Holliday, Jr., Director
DATE                  November 23, 1998


                               /s/ William F. Kirk
NAME AND TITLE)       William F. Kirk, Director
DATE                  November 23, 1998



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