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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 2021
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file
number: 001-38196
DUPONT DE NEMOURS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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81-1224539 |
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State or other jurisdiction of incorporation or
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(I.R.S. Employer Identification No.) |
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974 Centre Road
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Building 730
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Wilmington
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Delaware
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19805 |
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(Address of Principal Executive Offices)
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(Zip Code)
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(302) 774-3034
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last
Report)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Common Stock, par value $0.01 per share |
DD |
New York Stock Exchange |
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
¨
No
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation
S-T (§232.405
of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post
such files).
☑
Yes
¨
No
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and "emerging growth company" in Rule
12b-2 of the Exchange Act.
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Large Accelerated Filer |
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☑ |
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Accelerated filer |
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¨ |
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Non-accelerated filer |
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¨ |
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Smaller reporting company |
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☐ |
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Emerging growth company |
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☐ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
¨
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act).
☐
Yes
☑
No
The registrant had 523,056,692 shares of common stock, $0.01 par
value, outstanding at August 2, 2021.
DuPont de Nemours, Inc.
QUARTERLY REPORT ON FORM 10-Q
For the quarterly period ended June 30, 2021
TABLE OF CONTENTS
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Item 1. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 4. |
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Item 5. |
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Item 6. |
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Throughout this Quarterly Report on Form 10-Q, except as otherwise
noted by the context, the terms "DuPont" or "Company" used herein
mean DuPont de Nemours, Inc. and its consolidated subsidiaries. On
June 1, 2019, DowDuPont Inc. changed its registered name to DuPont
de Nemours, Inc. (“DuPont”) (for certain events prior to June 1,
2019, the Company may be referred to as DowDuPont). Beginning on
June 3, 2019, the Company's common stock is traded on the New York
Stock Exchange under the ticker symbol "DD."
On April 1, 2019, the Company completed the separation of the
materials science business through the spin-off of Dow Inc.,
(“Dow”) including Dow’s subsidiary The Dow Chemical Company (the
“Dow Distribution”). On June 1, 2019, the Company completed the
separation of the agriculture business through the spin-off of
Corteva, Inc. (“Corteva”) including Corteva’s subsidiary E. I. du
Pont de Nemours and Company (“EID”), (the “Corteva Distribution and
together with the Dow Distribution, the “DWDP
Distributions”).
On February 1, 2021 the Company completed the divestiture of the
Nutrition & Biosciences (“N&B”) business to International
Flavors & Fragrance Inc. (“IFF”) in a Reverse Morris Trust
transaction (the “N&B Transaction”) that resulted in IFF
issuing shares to DuPont stockholders.
The financial position of DuPont as of December 31, 2020 and the
results of operations of DuPont for the three and six months
ended June 30, 2021 and 2020 present the historical financial
results of N&B as discontinued operations. The cash flows and
comprehensive income related to N&B have not been segregated
and are included in the interim Consolidated Statements of Cash
Flows and interim Consolidated Statements of Comprehensive Income,
respectively, for all periods presented. Unless otherwise
indicated, the information in the notes to the interim Consolidated
Financial Statements refer only to DuPont's continuing operations
and do not include discussion of balances or activity of
N&B.
On July 1, 2021, DuPont completed the previously announced
acquisition of the Laird Performance Materials business, (the
“Laird PM Acquisition”).
DuPontTM
and all products, unless otherwise noted, denoted with
TM,
SM
or ® are trademarks, service marks or registered trademarks of
affiliates of DuPont de Nemours, Inc.
FORWARD-LOOKING STATEMENTS
This communication contains "forward-looking statements" within the
meaning of the federal securities laws, including Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In this context,
forward-looking statements often address expected future business
and financial performance and financial condition, and often
contain words such as "expect," "anticipate," "intend," "plan,"
"believe," "seek," "see," "will," "would," "target," and similar
expressions and variations or negatives of these
words.
Forward-looking statements address matters that are, to varying
degrees, uncertain and subject to risks, uncertainties and
assumptions, many of which that are beyond DuPont's control, that
could cause actual results to differ materially from those
expressed in any forward-looking statements. Forward-looking
statements are not guarantees of future results. Some of the
important factors that could cause DuPont's actual results to
differ materially from those projected in any such forward-looking
statements include, but are not limited to the: (i) ability to
achieve expected benefits, synergies and operating efficiencies in
connection with the Laird PM Acquisition within the expected time
frames or at all or to successfully integrate the Laird Performance
Materials business; (ii) ability to achieve anticipated tax
treatments in connection with the N&B Transaction, Laird PM
Acquisition or the DWDP Distributions; (iii) changes in relevant
tax and other laws; (iv) indemnification of certain legacy
liabilities of EID in connection with the Corteva Distribution; (v)
risks and costs related to the performance under and impact of the
cost sharing arrangement by and between DuPont, Corteva and The
Chemours Company related to future eligible PFAS costs; (vi)
failure to effectively manage acquisitions, divestitures,
alliances, joint ventures and other portfolio changes, including
meeting conditions under the Letter Agreement entered in connection
with the Corteva Distribution, related to the transfer of certain
levels of assets and businesses; (vii) uncertainty as to the
long-term value of DuPont common stock; (viii) risks and
uncertainties related to the novel coronavirus (COVID-19) and the
responses thereto (such as voluntary and in some cases, mandatory
quarantines as well as shut downs and other restrictions on travel
and commercial, social and other activities) on DuPont’s business,
results of operations, access to sources of liquidity and financial
condition which depend on highly uncertain and unpredictable future
developments, including, but not limited to, the duration and
spread of the COVID-19 outbreak, its severity, the actions to
contain the virus or treat its impact, and how quickly and to what
extent normal economic and operating conditions resume; and (ix)
other risks to DuPont's business, operations; each as further
discussed in detail in and results of operations as discussed in
DuPont’s annual report on Form 10-K for the year ended December 31,
2020 and its subsequent reports on Form 10-Q and Form 8-K.
Unlisted factors may present significant additional obstacles to
the realization
of forward-looking statements. Consequences of material differences
in results as compared with those anticipated in the
forward-looking statements could include, among other things,
business or supply chain disruption, operational problems,
financial loss, legal liability to third parties and similar risks,
any of which could have a material adverse effect on DuPont’s
consolidated financial condition, results of operations, credit
rating or liquidity. You should not place undue reliance on
forward-looking statements, which speak only as of the date they
are made. DuPont assumes no obligation to publicly provide
revisions or updates to any forward-looking statements whether as a
result of new information, future developments or otherwise, should
circumstances change, except as otherwise required by securities
and other applicable laws.
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PART I - FINANCIAL INFORMATION |
ITEM 1. FINANCIAL STATEMENTS
DuPont de Nemours, Inc.
Consolidated Statements of Operations
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Three Months Ended June 30, |
Six Months Ended June 30, |
|
In millions, except per share amounts (Unaudited) |
2021 |
2020 |
2021 |
2020 |
|
Net sales |
$ |
4,135 |
|
$ |
3,289 |
|
$ |
8,111 |
|
$ |
6,959 |
|
|
Cost of sales |
2,655 |
|
2,298 |
|
5,167 |
|
4,617 |
|
|
Research and development expenses |
148 |
|
153 |
|
304 |
|
326 |
|
|
Selling, general and administrative expenses |
459 |
|
414 |
|
915 |
|
896 |
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Amortization of intangibles |
167 |
|
177 |
|
334 |
|
355 |
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|
Restructuring and asset related charges - net |
10 |
|
24 |
|
12 |
|
422 |
|
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Goodwill impairment charge |
— |
|
2,498 |
|
— |
|
3,031 |
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Integration and separation costs |
23 |
|
16 |
|
29 |
|
139 |
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Equity in earnings of nonconsolidated affiliates |
25 |
|
102 |
|
51 |
|
141 |
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Sundry income (expense) - net |
146 |
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(11) |
|
162 |
|
201 |
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Interest expense |
129 |
|
181 |
|
275 |
|
352 |
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Income (loss) from continuing operations before income
taxes |
715 |
|
(2,381) |
|
1,288 |
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(2,837) |
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Provision for income taxes on continuing operations |
151 |
|
8 |
|
183 |
|
102 |
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Income (loss) from continuing operations, net of tax |
564 |
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(2,389) |
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1,105 |
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(2,939) |
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(Loss) income from discontinued operations, net of tax |
(77) |
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(82) |
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4,780 |
|
(142) |
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Net income (loss) |
487 |
|
(2,471) |
|
5,885 |
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(3,081) |
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Net income attributable to noncontrolling interests |
9 |
|
7 |
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13 |
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13 |
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Net income (loss) available for DuPont common
stockholders |
$ |
478 |
|
$ |
(2,478) |
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$ |
5,872 |
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$ |
(3,094) |
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Per common share data: |
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Earnings (loss) per common share from continuing operations -
basic |
$ |
1.05 |
|
$ |
(3.26) |
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$ |
1.93 |
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$ |
(4.01) |
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(Loss) earnings per common share from discontinued operations -
basic |
(0.15) |
|
(0.11) |
|
8.43 |
|
(0.19) |
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Earnings (loss) per common share - basic |
$ |
0.90 |
|
$ |
(3.37) |
|
$ |
10.36 |
|
$ |
(4.20) |
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Earnings (loss) per common share from continuing operations -
diluted |
$ |
1.04 |
|
$ |
(3.26) |
|
$ |
1.92 |
|
$ |
(4.01) |
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(Loss) earnings per common share from discontinued operations -
diluted |
(0.14) |
|
(0.11) |
|
8.41 |
|
(0.19) |
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Earnings (loss) per common share - diluted |
$ |
0.90 |
|
$ |
(3.37) |
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$ |
10.33 |
|
$ |
(4.20) |
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Weighted-average common shares outstanding - basic |
529.6 |
|
734.3 |
|
567.0 |
|
736.5 |
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|
Weighted-average common shares outstanding - diluted |
531.2 |
|
734.3 |
|
568.5 |
|
736.5 |
|
See Notes to the Consolidated Financial Statements.
DuPont de Nemours, Inc.
Consolidated Statements of Comprehensive Income
|
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Three Months Ended June 30, |
Six Months Ended June 30, |
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In millions (Unaudited) |
2021 |
2020 |
2021 |
2020 |
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Net income (loss) |
$ |
487 |
|
$ |
(2,471) |
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$ |
5,885 |
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$ |
(3,081) |
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Other comprehensive (loss) income, net of tax |
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Cumulative translation adjustments |
119 |
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345 |
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(365) |
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(59) |
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Pension and other post-employment benefit plans |
(1) |
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3 |
|
11 |
|
5 |
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Derivative instruments |
18 |
|
— |
|
18 |
|
— |
|
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Split-off of N&B |
— |
|
— |
|
258 |
|
— |
|
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Total other comprehensive income (loss) |
136 |
|
348 |
|
(78) |
|
(54) |
|
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Comprehensive income (loss) |
623 |
|
(2,123) |
|
5,807 |
|
(3,135) |
|
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Comprehensive income attributable to noncontrolling interests, net
of tax |
8 |
|
10 |
|
5 |
|
8 |
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Comprehensive income (loss) attributable to DuPont |
$ |
615 |
|
$ |
(2,133) |
|
$ |
5,802 |
|
$ |
(3,143) |
|
See Notes to the Consolidated Financial Statements.
DuPont de Nemours, Inc.
Condensed Consolidated Balance Sheets
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In millions, except share amounts (Unaudited) |
June 30, 2021 |
December 31, 2020 |
|
Assets |
|
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|
Current Assets |
|
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|
Cash and cash equivalents
|
$ |
3,962 |
|
$ |
2,544 |
|
|
|
|
|
Accounts and notes receivable - net
|
2,826 |
|
2,421 |
|
|
Inventories
|
2,642 |
|
2,393 |
|
|
Other current assets
|
216 |
|
181 |
|
|
Assets held for sale |
846 |
|
810 |
|
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Assets of discontinued operations |
— |
|
20,659 |
|
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Total current assets
|
10,492 |
|
29,008 |
|
|
Property, plant and equipment - net of accumulated depreciation
(June 30, 2021 - $4,528; December 31, 2020 - $4,256)
|
6,856 |
|
6,867 |
|
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Other Assets |
|
|
|
Goodwill
|
18,565 |
|
18,702 |
|
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Other intangible assets
|
7,707 |
|
8,072 |
|
|
Restricted cash |
— |
|
6,206 |
|
|
Investments and noncurrent receivables |
1,068 |
|
1,047 |
|
|
Deferred income tax assets
|
183 |
|
190 |
|
|
Deferred charges and other assets
|
968 |
|
812 |
|
|
Total other assets
|
28,491 |
|
35,029 |
|
|
Total Assets |
$ |
45,839 |
|
$ |
70,904 |
|
|
Liabilities and Equity |
|
|
|
Current Liabilities |
|
|
|
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|
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Accounts payable
|
$ |
2,349 |
|
$ |
2,222 |
|
|
Income taxes payable
|
236 |
|
169 |
|
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Accrued and other current liabilities
|
1,219 |
|
1,085 |
|
|
Liabilities related to assets held for sale |
136 |
|
140 |
|
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Liabilities of discontinued operations |
— |
|
8,610 |
|
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Total current liabilities
|
3,940 |
|
12,226 |
|
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Long-Term Debt |
10,627 |
|
15,611 |
|
|
Other Noncurrent Liabilities |
|
|
|
Deferred income tax liabilities
|
1,869 |
|
2,053 |
|
|
Pension and other post-employment benefits - noncurrent |
1,045 |
|
1,110 |
|
|
Other noncurrent obligations
|
894 |
|
834 |
|
|
Total other noncurrent liabilities
|
3,808 |
|
3,997 |
|
|
Total Liabilities |
18,375 |
|
31,834 |
|
|
Commitments and contingent liabilities |
|
|
|
Stockholders' Equity |
|
|
|
Common stock (authorized 1,666,666,667 shares of $0.01 par value
each; issued 2021: 524,644,217 shares; 2020: 734,204,054
shares)
|
5 |
|
7 |
|
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Additional paid-in capital
|
49,681 |
|
50,039 |
|
|
Accumulated deficit |
(22,783) |
|
(11,586) |
|
|
Accumulated other comprehensive (loss) income |
(26) |
|
44 |
|
|
Total DuPont stockholders' equity
|
26,877 |
|
38,504 |
|
|
Noncontrolling interests
|
587 |
|
566 |
|
|
Total equity
|
27,464 |
|
39,070 |
|
|
Total Liabilities and Equity |
$ |
45,839 |
|
$ |
70,904 |
|
See Notes to the Consolidated Financial Statements.
DuPont de Nemours, Inc.
Consolidated Statements of Cash Flows
|
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|
|
|
Six Months Ended June 30, |
|
In millions (Unaudited) |
2021 |
2020 |
|
Operating Activities |
|
|
|
Net income (loss) |
$ |
5,885 |
|
$ |
(3,081) |
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
724 |
|
1,546 |
|
|
Credit for deferred income tax and other tax related
items |
(157) |
|
(310) |
|
|
Earnings of nonconsolidated affiliates in excess of dividends
received |
(38) |
|
(103) |
|
|
Net periodic pension benefit cost |
3 |
|
16 |
|
|
Pension contributions |
(45) |
|
(49) |
|
|
Net gain on sales and split-offs of assets, businesses and
investments |
(5,118) |
|
(193) |
|
|
Restructuring and asset related charges - net |
14 |
|
423 |
|
|
Goodwill impairment charge |
— |
|
3,031 |
|
|
Other net loss |
92 |
|
92 |
|
|
Changes in assets and liabilities, net of effects of acquired and
divested companies: |
|
|
|
Accounts and notes receivable |
(346) |
|
111 |
|
|
Inventories |
(337) |
|
(12) |
|
|
Accounts payable |
232 |
|
34 |
|
|
Other assets and liabilities, net |
(91) |
|
15 |
|
|
Cash provided by operating activities |
818 |
|
1,520 |
|
|
Investing Activities |
|
|
|
Capital expenditures |
(499) |
|
(719) |
|
|
Proceeds from sales of property and businesses, net of cash
divested |
172 |
|
427 |
|
|
Acquisitions of property and businesses, net of cash
acquired |
(11) |
|
(73) |
|
|
Purchases of investments |
(2,001) |
|
(1) |
|
|
Proceeds from sales and maturities of investments |
2,001 |
|
1 |
|
|
Other investing activities, net |
9 |
|
17 |
|
|
Cash used for investing activities |
(329) |
|
(348) |
|
|
Financing Activities |
|
|
|
Changes in short-term notes payable |
— |
|
(274) |
|
|
Proceeds from issuance of long-term debt |
— |
|
2,025 |
|
|
Proceeds from issuance of long-term debt transferred to IFF at
split-off |
1,250 |
|
— |
|
|
Payments on long-term debt |
(5,000) |
|
(27) |
|
|
Purchases of common stock |
(1,143) |
|
(232) |
|
|
Proceeds from issuance of Company stock |
108 |
|
34 |
|
|
Employee taxes paid for share-based payment
arrangements |
(25) |
|
(13) |
|
|
Distributions to noncontrolling interests |
(24) |
|
(10) |
|
|
Dividends paid to stockholders |
(319) |
|
(442) |
|
|
|
|
|
Cash transferred to IFF at split-off |
(100) |
|
— |
|
|
Other financing activities, net |
(3) |
|
(11) |
|
|
Cash (used for) provided by financing activities |
(5,256) |
|
1,050 |
|
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
(28) |
|
(30) |
|
|
(Decrease) increase in cash, cash equivalents and restricted
cash |
(4,795) |
|
2,192 |
|
|
Cash, cash equivalents and restricted cash from continuing
operations, beginning of period |
8,767 |
|
1,569 |
|
|
Cash, cash equivalents and restricted cash from discontinued
operations, beginning of period |
8 |
|
8 |
|
|
Cash, cash equivalents and restricted cash at beginning of
period |
8,775 |
|
1,577 |
|
|
Cash, cash equivalents and restricted cash from continuing
operations, end of period |
3,980 |
|
3,762 |
|
|
Cash, cash equivalents and restricted cash from discontinued
operations, end of period |
— |
|
7 |
|
|
Cash, cash equivalents and restricted cash at end of
period |
$ |
3,980 |
|
$ |
3,769 |
|
See
Notes to the Consolidated Financial Statements.
DuPont de Nemours, Inc.
Consolidated Statements of Equity
For the six months ended June 30, 2021 and 2020
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|
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|
|
|
|
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|
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|
|
|
In millions (Unaudited) |
Common Stock |
Additional Paid-in Capital |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comp Loss |
|
Treasury Stock |
Non-controlling Interests |
Total Equity |
|
Balance at December 31, 2019 |
$ |
7 |
|
$ |
50,796 |
|
$ |
(8,400) |
|
$ |
(1,416) |
|
|
$ |
— |
|
$ |
569 |
|
$ |
41,556 |
|
|
Adoption of accounting standards
|
— |
|
— |
|
(3) |
|
— |
|
|
— |
|
— |
|
(3) |
|
|
Net (loss) income |
— |
|
— |
|
(3,094) |
|
— |
|
|
— |
|
13 |
|
(3,081) |
|
|
Other comprehensive loss |
— |
|
— |
|
— |
|
(49) |
|
|
— |
|
(5) |
|
(54) |
|
|
Dividends ($0.90 per common share)
|
— |
|
(662) |
|
— |
|
— |
|
|
— |
|
— |
|
(662) |
|
|
Common stock issued/sold
|
— |
|
34 |
|
— |
|
— |
|
|
— |
|
— |
|
34 |
|
|
Stock-based compensation |
— |
|
57 |
|
— |
|
— |
|
|
— |
|
— |
|
57 |
|
|
Contributions from non-controlling interests |
— |
|
— |
|
— |
|
— |
|
|
— |
|
5 |
|
5 |
|
|
Distributions to non-controlling interests
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
(10) |
|
(10) |
|
|
Purchases of treasury stock
|
— |
|
— |
|
— |
|
— |
|
|
(232) |
|
— |
|
(232) |
|
|
Retirement of treasury stock |
— |
|
— |
|
(232) |
|
— |
|
|
232 |
|
— |
|
— |
|
|
Other
|
— |
|
(34) |
|
1 |
|
— |
|
|
— |
|
— |
|
(33) |
|
|
Balance at June 30, 2020 |
$ |
7 |
|
$ |
50,191 |
|
$ |
(11,728) |
|
$ |
(1,465) |
|
|
$ |
— |
|
$ |
572 |
|
$ |
37,577 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020 |
$ |
7 |
|
$ |
50,039 |
|
$ |
(11,586) |
|
$ |
44 |
|
|
$ |
— |
|
$ |
566 |
|
$ |
39,070 |
|
|
Net income |
— |
|
— |
|
5,872 |
|
— |
|
|
— |
|
13 |
|
5,885 |
|
|
Other comprehensive loss
|
— |
|
— |
|
— |
|
(70) |
|
|
— |
|
(8) |
|
(78) |
|
|
Dividends ($0.90 per common share)
|
— |
|
(476) |
|
— |
|
— |
|
|
— |
|
— |
|
(476) |
|
|
Common stock issued/sold
|
— |
|
108 |
|
— |
|
— |
|
|
— |
|
— |
|
108 |
|
|
Stock-based compensation
|
— |
|
13 |
|
— |
|
— |
|
|
— |
|
— |
|
13 |
|
|
Contributions from non-controlling interests |
— |
|
— |
|
— |
|
— |
|
|
— |
|
67 |
|
67 |
|
|
Distributions to non-controlling interests
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
(24) |
|
(24) |
|
|
Purchases of treasury stock
|
— |
|
— |
|
— |
|
— |
|
|
(1,143) |
|
— |
|
(1,143) |
|
|
Retirement of treasury stock
|
— |
|
— |
|
(1,143) |
|
— |
|
|
1,143 |
|
— |
|
— |
|
|
Split-off of N&B |
(2) |
|
— |
|
(15,926) |
|
— |
|
|
— |
|
(27) |
|
(15,955) |
|
|
Other
|
— |
|
(3) |
|
— |
|
— |
|
|
— |
|
— |
|
(3) |
|
|
Balance at June 30, 2021 |
$ |
5 |
|
$ |
49,681 |
|
$ |
(22,783) |
|
$ |
(26) |
|
|
$ |
— |
|
$ |
587 |
|
$ |
27,464 |
|
See Notes to the Consolidated Financial Statements.
DuPont de Nemours, Inc.
Consolidated Statements of Equity
For the three months ended June 30, 2021 and 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In millions (Unaudited) |
Common Stock |
Additional Paid-in Capital |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comp Loss |
|
Treasury Stock |
Non-controlling Interests |
Total Equity |
|
Balance at March 31, 2020 |
$ |
7 |
|
$ |
50,605 |
|
$ |
(9,251) |
|
$ |
(1,810) |
|
|
$ |
— |
|
$ |
566 |
|
$ |
40,117 |
|
|
Net (loss) income |
— |
|
— |
|
(2,478) |
|
— |
|
|
— |
|
7 |
|
(2,471) |
|
|
Other comprehensive income
|
— |
|
— |
|
— |
|
345 |
|
|
— |
|
3 |
|
348 |
|
|
Dividends ($0.60 per common share)
|
— |
|
(440) |
|
— |
|
— |
|
|
— |
|
— |
|
(440) |
|
|
Common stock issued/sold
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
|
Stock-based compensation |
— |
|
27 |
|
— |
|
— |
|
|
— |
|
— |
|
27 |
|
|
Distributions to non-controlling interests
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
(4) |
|
(4) |
|
|
Purchases of treasury stock
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
|
Retirement of treasury stock |
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
|
Other
|
— |
|
(1) |
|
1 |
|
— |
|
|
— |
|
— |
|
— |
|
|
Balance at June 30, 2020 |
$ |
7 |
|
$ |
50,191 |
|
$ |
(11,728) |
|
$ |
(1,465) |
|
|
$ |
— |
|
$ |
572 |
|
$ |
37,577 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2021 |
$ |
5 |
|
$ |
49,964 |
|
$ |
(22,618) |
|
$ |
(163) |
|
|
$ |
— |
|
$ |
517 |
|
$ |
27,705 |
|
|
Net income |
— |
|
— |
|
478 |
|
— |
|
|
— |
|
9 |
|
487 |
|
|
Other comprehensive loss
|
— |
|
— |
|
— |
|
137 |
|
|
— |
|
(1) |
|
136 |
|
|
Dividends ($0.60 per common share)
|
— |
|
(315) |
|
— |
|
— |
|
|
— |
|
— |
|
(315) |
|
|
Common stock issued/sold
|
— |
|
18 |
|
— |
|
— |
|
|
— |
|
— |
|
18 |
|
|
Stock-based compensation
|
— |
|
17 |
|
— |
|
— |
|
|
— |
|
— |
|
17 |
|
|
Contributions from non-controlling interests |
— |
|
— |
|
— |
|
— |
|
|
— |
|
67 |
|
67 |
|
|
Distributions to non-controlling interests
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
(5) |
|
(5) |
|
|
Purchases of treasury stock
|
— |
|
— |
|
— |
|
— |
|
|
(643) |
|
— |
|
(643) |
|
|
Retirement of treasury stock
|
— |
|
— |
|
(643) |
|
— |
|
|
643 |
|
— |
|
— |
|
|
Other
|
— |
|
(3) |
|
— |
|
— |
|
|
— |
|
— |
|
(3) |
|
|
Balance at June 30, 2021 |
$ |
5 |
|
$ |
49,681 |
|
$ |
(22,783) |
|
$ |
(26) |
|
|
$ |
— |
|
$ |
587 |
|
$ |
27,464 |
|
See Notes to the Consolidated Financial Statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents
|
|
|
|
|
|
|
|
|
|
Note |
|
Page |
|
1 |
|
|
|
2 |
|
|
|
3 |
|
|
|
4 |
|
|
|
5 |
|
|
|
6 |
|
|
|
7 |
|
|
|
8 |
|
|
|
9 |
|
|
|
10 |
|
|
|
11 |
|
|
|
12 |
|
|
|
13 |
|
|
|
14 |
|
|
|
15 |
|
|
|
16 |
|
|
|
17 |
|
|
|
18 |
|
|
|
19 |
|
|
|
20 |
|
|
|
21 |
|
|
|
22 |
|
|
|
23 |
|
|
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The accompanying unaudited interim Consolidated Financial
Statements have been prepared in accordance with generally accepted
accounting principles in the United States of America ("U.S. GAAP")
for interim financial information and the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. In
the opinion of management, the interim statements reflect all
adjustments (including normal recurring accruals) which are
considered necessary for the fair statement of the results for the
periods presented. Results from interim periods should not be
considered indicative of results for the full year. These
interim Consolidated Financial Statements should be read in
conjunction with the audited Consolidated Financial Statements and
notes thereto contained in the Company's Current Report on Form 8-K
filed on June 3, 2021, collectively referred to as the "Recast 2020
Annual Report," which was filed in order to recast the Company's
2020 Annual Report on Form 10-K to reflect the presentation of the
N&B Business as discontinued operations and to reflect the
changes in the Company's reportable segments. These interim
Consolidated Financial Statements should also be read in
conjunction with the Company’s Annual Report on Form 10-K for the
year ended December 31, 2020. The interim Consolidated Financial
Statements include the accounts of the Company and all of its
subsidiaries in which a controlling interest is
maintained.
Basis of Presentation
Effective August 31, 2017, pursuant to the merger of equals
transaction contemplated by the Agreement and Plan of Merger, dated
as of December 11, 2015, as amended on March 31, 2017 ("Merger
Agreement"), The Dow Chemical Company ("TDCC") and E. I. du Pont de
Nemours and Company ("EID") each merged with subsidiaries of
DowDuPont Inc. ("DowDuPont") and, as a result, TDCC and EID became
subsidiaries of DowDuPont (the "DWDP Merger"). Except as otherwise
indicated by the context, the term "TDCC" includes TDCC and its
consolidated subsidiaries and "EID" includes EID and its
consolidated subsidiaries.
On April 1, 2019, the Company completed the separation of the
materials science business through the spin-off of Dow Inc.,
(“Dow”) including Dow’s subsidiary TDCC (the “Dow Distribution”).
On June 1, 2019, the Company completed the separation of the
agriculture business through the spin-off of Corteva, Inc.
(“Corteva”) including Corteva’s subsidiary EID, (the “Corteva
Distribution" and together with the Dow Distribution, the “DWDP
Distributions”).
Following the Corteva Distribution, DuPont holds the specialty
products business as continuing operations. On June 1, 2019,
DowDuPont changed its registered name from "DowDuPont Inc." to
"DuPont de Nemours, Inc." doing business as "DuPont." Beginning on
June 3, 2019, the Company's common stock is traded on the NYSE
under the ticker symbol "DD."
N&B Transaction
On February 1, 2021, DuPont completed the separation and
distribution of the Nutrition & Biosciences business segment
(the "N&B Business"), and merger of Nutrition &
Biosciences, Inc. (“N&B”), a DuPont subsidiary formed to hold
the N&B Business, with a subsidiary of International Flavors
& Fragrances Inc. ("IFF"). The distribution was effected
through an exchange offer (the “Exchange Offer”) and the
consummation of the Exchange Offer was followed by the merger of
N&B with a wholly owned subsidiary of IFF, with N&B
surviving the merger as a wholly owned subsidiary of IFF (the
“N&B Merger” and, together with the Exchange Offer, the
“N&B Transaction”). See Note 2 for more
information.
The financial position of DuPont as of December 31, 2020 and the
results of operations of DuPont for the three and six months
ended June 30, 2021 and 2020 present the historical financial
results of N&B as discontinued operations. The cash flows and
comprehensive income related to N&B have not been segregated
and are included in the interim Consolidated Statements of Cash
Flows and interim Consolidated Statements of Comprehensive Income,
respectively, for all periods presented. Unless otherwise
indicated, the information in the notes to the interim Consolidated
Financial Statements refer only to DuPont's continuing operations
and do not include discussion of balances or activity of
N&B.
2021 Segment Realignment
Immediately following the separation and distribution of the
N&B Business, the Company made changes to its management and
reporting structure (the “2021 Segment Realignment”) (see Note 22
for additional details). The reporting changes have been
retrospectively reflected for all periods presented.
NOTE 2 - ACQUISITIONS AND DIVESTITURES
Laird Performance Materials
On July 1, 2021, DuPont completed the previously announced
acquisition of Laird Performance Materials (“Laird PM”) from Advent
International (“Laird PM Acquisition”). See Note 23 for further
discussion.
N&B Transaction
On February 1, 2021, DuPont completed the separation and
distribution of the N&B Business, and merger of N&B, a
DuPont subsidiary formed to hold the N&B Business, with a
subsidiary of IFF. The distribution was effected through an
exchange offer where, on the terms and subject to the conditions of
the Exchange Offer, eligible participating DuPont stockholders had
the option to tender all, some or none of their shares of common
stock, par value $0.01 per share, of DuPont (the “DuPont Common
Stock”) for a number of shares of common stock, par value $0.01 per
share, of N&B (the “N&B Common Stock”) and which resulted
in all shares of N&B Common Stock being distributed to DuPont
stockholders that participated in the Exchange Offer. The
consummation of the Exchange Offer was followed by the merger of
N&B with a wholly owned subsidiary of IFF, with N&B
surviving the merger as a wholly owned subsidiary of IFF (the
“N&B Merger” and, together with the Exchange Offer, the
“N&B Transaction”). The N&B Transaction was subject to IFF
shareholder approval, customary regulatory approvals, tax authority
rulings including a favorable private letter ruling from the U.S.
Internal Revenue Service which confirms the N&B Transaction to
be free of U.S. federal income tax, and expiration of the public
exchange offer. DuPont does not have an ownership interest in IFF
as a result of the N&B Transaction.
In the Exchange Offer, DuPont accepted approximately
197.4 million shares of its common stock in exchange for about
141.7 million shares of N&B Common Stock as of the date of
the N&B Transaction. As a result, DuPont reduced its common
stock outstanding by 197.4 million shares of DuPont Common
Stock. In the N&B Merger, each share of N&B Common Stock
was automatically converted into the right to receive one share of
IFF common stock, par value $0.125 per share, based on the terms of
the N&B Merger Agreement.
The results of operations of N&B are presented as discontinued
operations as summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
In millions |
2020 |
2021 |
2020 |
|
Net sales |
$ |
1,539 |
|
$ |
507 |
|
$ |
3,090 |
|
|
Cost of sales |
993 |
|
352 |
|
1,992 |
|
|
Research and development expenses |
56 |
|
21 |
|
119 |
|
|
Selling, general and administrative expenses |
127 |
|
46 |
|
278 |
|
|
Amortization of intangibles |
351 |
|
38 |
|
706 |
|
|
Restructuring and asset related charges - net |
(5) |
|
1 |
|
1 |
|
|
Integration and separation costs |
129 |
|
172 |
|
203 |
|
|
Equity in earnings of nonconsolidated affiliates |
1 |
|
— |
|
1 |
|
|
Sundry income (expense) - net |
(3) |
|
8 |
|
(4) |
|
|
Interest expense |
12 |
|
13 |
|
24 |
|
|
Loss from discontinued operations before income taxes |
(126) |
|
(128) |
|
(236) |
|
|
Benefit from income taxes on discontinued operations |
(44) |
|
(26) |
|
(94) |
|
|
Loss from discontinued operations, net of tax |
(82) |
|
(102) |
|
(142) |
|
|
Non-taxable gain on split-off |
— |
|
4,950 |
|
— |
|
|
(Loss) Income from discontinued operations attributable to DuPont
stockholders, net of tax |
$ |
(82) |
|
$ |
4,848 |
|
$ |
(142) |
|
The following table presents depreciation, amortization, and
capital expenditures of the discontinued operations related to
N&B:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
In millions |
2020 |
2021 |
2020 |
|
Depreciation and amortization |
$ |
425 |
|
$ |
63 |
|
$ |
852 |
|
|
Capital expenditures |
$ |
33 |
|
$ |
27 |
|
$ |
125 |
|
|
|
|
|
The carrying amount of major classes of assets and liabilities that
were included in discontinued operations at December 31, 2020
related to N&B consist of the following:
|
|
|
|
|
|
|
In millions |
December 31, 2020 |
|
Assets |
|
|
Accounts and notes receivable - net |
$ |
1,130 |
|
|
Inventories |
1,333 |
|
|
Other current assets |
65 |
|
|
Investments and noncurrent receivables |
36 |
|
|
Property, plant, and equipment - net |
3,118 |
|
|
Goodwill |
11,542 |
|
|
Other intangible assets - net |
3,072 |
|
|
Deferred income tax assets |
44 |
|
|
Deferred charges and other assets |
319 |
|
|
Total assets of discontinued operations |
$ |
20,659 |
|
|
Liabilities |
|
|
Short-term borrowings and finance lease obligations |
$ |
4 |
|
|
Accounts Payable |
742 |
|
|
Income taxes payable |
36 |
|
|
Accrued and other current liabilities |
301 |
|
|
Long-term debt |
6,195 |
|
|
Deferred income tax liabilities |
852 |
|
|
Pension and other post employment benefits - noncurrent |
238 |
|
|
Other noncurrent obligations |
242 |
|
|
Total liabilities of discontinued operations |
$ |
8,610 |
|
In connection with the N&B Transaction and in accordance with
the terms of the N&B Transaction Agreements, defined below,
prior to consummation of the Exchange Offer and the N&B Merger,
DuPont received a one-time cash payment of approximately
$7.3 billion, (the "Special Cash Payment"), which is subject
to post closing adjustment pursuant to the terms of the N&B
Separation & Distribution Agreement. The special cash payment
was partially funded by an offering of $6.25 billion of senior
unsecured notes (the “N&B Notes Offering”). The net proceeds of
approximately $6.2 billion from the N&B Notes Offering
were deposited into an escrow account and at December 31, 2020, are
reflected as restricted cash in the Company’s interim Condensed
Consolidated Balance Sheets. In order to fund the remainder of the
Special Cash Payment, on February 1, 2021, N&B borrowed
$1.25 billion under a senior unsecured term loan agreement
(the "N&B Term Loan"). The obligations and liabilities
associated with the N&B Notes Offering and the N&B Term
Loan were separated from the Company on February 1, 2021 upon
consummation of the N&B Transaction. The obligations and
liabilities of $6.2 billion associated with the N&B Notes
Offering are classified as "Liabilities of discontinued operations"
in the Company's interim Condensed Consolidated Balance Sheets at
December 31, 2020.
The Company recognized a non-taxable gain of approximately $4,950
million on the N&B Transaction. The gain is recorded in "(Loss)
Income from discontinued operations, net of tax" in the Company's
interim Consolidated Statements of Operations for the six months
ended June 30, 2021.
N&B Transaction Agreements
In connection with the N&B Transaction, effective December 15,
2019, the Company, as previously discussed, entered into the
following agreements:
•A
Separation and Distribution Agreement, subsequently amended and
joined by Neptune Merger Sub II Inc., a subsidiary of IFF on
January 22, 2021, and as amended further on February 1, 2021 (as
amended, the “N&B Separation and Distribution Agreement”) with
N&B and IFF, which, among other things, governs the separation
of the N&B Business from DuPont and certain other post-closing
obligations between DuPont and N&B related
thereto;
•An
Agreement and Plan of Merger, (the “N&B Merger Agreement”) with
N&B, IFF and Neptune Merger Sub I Inc., governing the N&B
Merger and related matters; and
•An
Employee Matters Agreement, subsequently amended on January 22,
2021, (as amended, the “N&B Employee Matters Agreement
Agreement”), with N&B and IFF, which, among other things,
allocates among the parties the pre- and post-closing liabilities
in respect of the current and former employees of the N&B
Business (including liabilities in respect of employee compensation
and benefit plans).
In connection with the closing of the N&B Transaction, and
effective February 1, 2021, the Company entered into the following
agreements:
•DuPont,
N&B and certain of their subsidiaries entered into an
Intellectual Property Cross-License Agreement (the “N&B IP
Cross-License Agreement”). The IP Cross-License Agreement sets
forth the terms and conditions under which the applicable parties
may use in their respective businesses certain know-how (including
trade secrets), copyrights, design rights, software, and patents,
allocated to another party pursuant to the N&B Separation and
Distribution Agreement, and pursuant to which N&B may use
certain standards retained by DuPont. All licenses under the IP
Cross-License Agreement are non-exclusive, worldwide, and
royalty-free; and
•DuPont,
N&B and IFF entered into a Tax Matters Agreement (the “N&B
Tax Matters Agreement”), which governs the parties’ rights,
responsibilities and obligations with respect to tax liabilities
and benefits, tax attributes, the preparation and filing of tax
returns, the control of audits and other tax proceedings, the
preservation of the expected tax-free status of the transactions
contemplated by the N&B Separation and Distribution Agreement,
and other matters regarding taxes. See Note 6 for additional
information on the N&B Tax Matters Agreement.
Other Discontinued Operations Activity
The Company recorded a loss from discontinued operations, net of
tax of $63 million and $66 million for the three and six
months ended June 30, 2021 related to the binding Memorandum of
Understanding (“MOU”) between Chemours, Corteva, EID and a
settlement agreement between Chemours, Corteva and DuPont and
Delaware's Attorney General. For additional information on these
matters, refer to Note 14.
Assets Held for Sale
In October 2020, the Company entered into a definitive agreement to
sell its Biomaterials business unit, which includes the Company's
equity method investment in DuPont Tate & Lyle Bio Products.
The sale of the Biomaterials business unit is expected to close
within one year. In January 2021, the Company entered into a
definitive agreement to sell its Clean Technologies business, which
is expected to close in the second half of 2021. These divestitures
are subject to regulatory approval and customary closing conditions
and are expected to generate in aggregate pre-tax cash proceeds of
about $750 million. The Company also signed a non-binding letter of
intent to sell Chestnut Run labs, a portion of the Company's
Chestnut Run campus. This transaction is expected to close within
one year.
The assets and liabilities associated with the Biomaterials and
Clean Technologies businesses met the held for sale criteria at
September 30, 2020, and the assets associated with Chestnut Run
labs met the held for sale criteria at March 31, 2021. These assets
and liabilities remain classified as held for sale at June 30,
2021. The results of operations of the Biomaterials and Clean
Technologies businesses are reported in Corporate.
The following table summarizes the carrying value of the major
assets and liabilities of the Biomaterials and Clean Technologies
business units and Chestnut Run labs as of June 30, 2021
(collectively, the “Held for Sale Disposal Group”) and the
Biomaterials and Clean Technologies business units as of
December 31, 2020:
|
|
|
|
|
|
|
|
|
|
In millions |
June 30, 2021 |
December 31, 2020 |
|
Assets |
|
|
|
Accounts and notes receivable - net |
$ |
57 |
|
$ |
63 |
|
|
Inventories |
69 |
|
75 |
|
|
Other current assets |
38 |
|
35 |
|
|
Investments and noncurrent receivables |
169 |
|
164 |
|
|
Property, plant and equipment - net |
75 |
|
34 |
|
|
Goodwill |
267 |
|
267 |
|
|
Other intangible assets |
168 |
|
168 |
|
|
Deferred charges and other assets |
3 |
|
4 |
|
|
Assets held for sale |
$ |
846 |
|
$ |
810 |
|
|
Liabilities |
|
|
|
Accounts payable |
$ |
52 |
|
$ |
40 |
|
|
Income taxes payable |
1 |
|
1 |
|
|
Accrued and other current liabilities |
37 |
|
50 |
|
|
Deferred income tax liabilities |
29 |
|
30 |
|
|
Pension and other post-employment benefits - noncurrent |
1 |
|
1 |
|
|
Other noncurrent obligations |
16 |
|
18 |
|
|
Liabilities related to assets held
for sale |
$ |
136 |
|
$ |
140 |
|
Sale of Solamet®
On June 30, 2021, the Company completed the sale of its Solamet®
business unit, which is part of Corporate. Total consideration
received related to the sale of the business is approximately $190
million, of which $47 million will be received in the third
quarter. For the three months ended June 30, 2021, a pre-tax gain
of $140 million ($105 million net of tax) was recorded in "Sundry
income (expense) - net" in the Company's interim Consolidated
Statements of Operations.
Sale of Compound Semiconductor Solutions
In the first quarter of 2020, the Company completed the sale of its
Compound Semiconductor Solutions business unit, a part of the
Electronics & Industrial segment, to SK Siltron. The
proceeds received in the first quarter of 2020 related to the sale
of the business were approximately $420 million. For the six months
ended June 30, 2020, a pre-tax gain of $197 million ($102
million net of tax) was recorded in "Sundry income (expense) -
net" in the Company's interim Consolidated Statements of
Operations.
Integration and Separation Costs
Integration and separation costs primarily consist of financial
advisory, information technology, legal, accounting, consulting,
and other professional advisory fees. For the three and six months
ended June 30, 2021, these costs were primarily associated
with the execution of activities related to strategic initiatives
including the planned divestiture of the Held for Sale Disposal
Group and the divestiture of the Solamet® business unit. For the
three and six months ended June 30, 2020, these costs were
primarily associated with the execution of activities related to
the post-DWDP Merger integration and the DWDP
Distributions.
These costs are recorded within "Integration and separation costs"
within the interim Consolidated Statements of
Operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
In millions |
2021 |
2020 |
2021 |
2020 |
|
Integration and separation costs |
$ |
23 |
|
$ |
16 |
|
$ |
29 |
|
$ |
139 |
|
NOTE 3 - REVENUE
Revenue Recognition
Products
Substantially all of DuPont's revenue is derived from product
sales. Product sales consist of sales of DuPont's products to
supply manufacturers and distributors. DuPont considers purchase
orders, which in some cases are governed by master supply
agreements, to be a contract with a customer. Contracts with
customers are considered to be short-term when the time between
order confirmation and satisfaction of the performance obligations
is equal to or less than one year.
Disaggregation of Revenue
The Company disaggregates its revenue from contracts with customers
by segment and business or major product line and geographic
region, as the Company believes it best depicts the nature, amount,
timing and uncertainty of its revenue and cash flows.
On February 1, 2021, the Company realigned and renamed certain
businesses as part of the 2021 Segment Realignment resulting in
changes to its management and reporting structure (see Note 22 for
additional details). In conjunction with the 2021 Segment
Realignment, DuPont made the following changes to its major product
lines:
•Within
Electronics & Industrial (formerly known as Electronics &
Imaging) realigned product lines to include businesses formerly in
Transportation & Industrial and renamed the Image Solutions
product lines as Industrial Solutions;
•Renamed
Safety & Construction as Water & Protection;
•Realigned
certain businesses from the former Non-Core segment and renamed
product lines within Mobility & Materials (formerly known as
Transportation & Industrial) as Advanced Solutions, Engineering
Polymers, and Performance Resins.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Trade Revenue by Segment and Business or Major Product
Line |
Three Months Ended June 30, |
Six Months Ended June 30, |
|
In millions |
2021 |
2020 |
2021 |
2020 |
|
Industrial Solutions |
$ |
480 |
|
$ |
379 |
|
$ |
938 |
|
$ |
791 |
|
|
Interconnect Solutions |
339 |
|
274 |
|
669 |
|
540 |
|
|
Semiconductor Technologies |
501 |
|
458 |
|
1,013 |
|
895 |
|
|
Electronics & Industrial |
$ |
1,320 |
|
$ |
1,111 |
|
$ |
2,620 |
|
$ |
2,226 |
|
|
Safety Solutions |
$ |
650 |
|
$ |
581 |
|
$ |
1,287 |
|
$ |
1,212 |
|
|
Shelter Solutions |
419 |
|
316 |
|
779 |
|
664 |
|
|
Water Solutions |
343 |
|
347 |
|
674 |
|
644 |
|
|
Water & Protection |
$ |
1,412 |
|
$ |
1,244 |
|
$ |
2,740 |
|
$ |
2,520 |
|
|
Advanced Solutions |
$ |
391 |
|
$ |
249 |
|
$ |
773 |
|
$ |
555 |
|
|
Engineering Polymers |
557 |
|
360 |
|
1,054 |
|
879 |
|
|
Performance Resins |
322 |
|
181 |
|
658 |
|
447 |
|
|
Mobility & Materials |
$ |
1,270 |
|
$ |
790 |
|
$ |
2,485 |
|
$ |
1,881 |
|
|
Corporate
1
|
$ |
133 |
|
$ |
144 |
|
266 |
|
332 |
|
|
Total |
$ |
4,135 |
|
$ |
3,289 |
|
$ |
8,111 |
|
$ |
6,959 |
|
1. Corporate net sales reflect activity of to be divested and
previously divested businesses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Trade Revenue by Geographic Region |
Three Months Ended June 30, |
Six Months Ended June 30, |
|
In millions |
2021 |
2020 |
2021 |
2020 |
|
U.S. & Canada |
$ |
1,155 |
|
$ |
957 |
|
$ |
2,206 |
|
$ |
2,109 |
|
|
EMEA
1
|
814 |
|
597 |
|
1,644 |
|
1,388 |
|
|
Asia Pacific |
2,016 |
|
1,641 |
|
3,966 |
|
3,222 |
|
|
Latin America |
150 |
|
94 |
|
295 |
|
240 |
|
|
Total |
$ |
4,135 |
|
$ |
3,289 |
|
$ |
8,111 |
|
$ |
6,959 |
|
1.Europe,
Middle East and Africa.
Contract Balances
From time to time, the Company enters into arrangements in which it
receives payments from customers based upon contractual billing
schedules. The Company records accounts receivables when the right
to consideration becomes unconditional. Contract assets include
amounts related to the Company’s conditional right to consideration
for completed performance obligations not yet invoiced. Contract
liabilities primarily reflect deferred revenue from advance payment
for product that the Company has received from customers. The
Company classifies deferred revenue as current or noncurrent based
on the timing of when the Company expects to recognize
revenue.
Revenue recognized in the first six months of 2021 from amounts
included in contract liabilities at the beginning of the period and
the amount of contract assets reclassified to receivables as a
result of the right to the transaction consideration becoming
unconditional were insignificant.
|
|
|
|
|
|
|
|
|
|
Contract Balances |
June 30, 2021 |
December 31, 2020 |
|
In millions |
|
Accounts and notes receivable - trade
1
|
$ |
2,198 |
|
$ |
1,911 |
|
|
|
|
|
Deferred revenue - current
2
|
$ |
31 |
|
$ |
16 |
|
|
Deferred revenue - noncurrent
3
|
$ |
11 |
|
$ |
21 |
|
1.Included
in "Accounts and notes receivable - net" in the interim Condensed
Consolidated Balance Sheets.
2.Included
in "Accrued and other current liabilities" in the interim Condensed
Consolidated Balance Sheets.
3.Included
in "Other noncurrent obligations" in the interim Condensed
Consolidated Balance Sheets.
NOTE 4 - RESTRUCTURING AND ASSET RELATED CHARGES - NET
Charges for restructuring programs and asset related charges, which
includes asset impairments, were $10 million and $12 million for
the three and six months ended June 30, 2021 and $24 million
and $422 million for the three and six months ended June 30,
2020. These charges were recorded in "Restructuring and asset
related charges - net" in the interim Consolidated Statements of
Operations. The total liability related to restructuring programs
was $48 million at June 30, 2021 and $96 million at
December 31, 2020, recorded in "Accrued and other current
liabilities" in the interim Condensed Consolidated Balance Sheets.
Restructuring activity consists of the following
programs:
2020 Restructuring Program
In the first quarter of 2020, the Company approved restructuring
actions designed to capture near-term cost reductions and to
further simplify certain organizational structures in anticipation
of the N&B Transaction (the "2020 Restructuring Program"). The
Company recorded pre-tax restructuring charges of $180 million
inception-to-date, consisting of severance and related benefit
costs of $128 million and asset related charges of $52
million.
The following tables summarize the charges related to the 2020
Restructuring Program:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
In millions |
2021 |
2020 |
2021 |
2020 |
|
Severance and related benefit costs |
$ |
10 |
|
$ |
5 |
|
$ |
10 |
|
$ |
95 |
|
|
Asset related charges |
— |
|
9 |
|
2 |
|
24 |
|
|
Total restructuring and asset related charges - net |
$ |
10 |
|
$ |
14 |
|
$ |
12 |
|
$ |
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 Restructuring Program Charges (Credits) by Segment |
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
In millions |
2021 |
2020 |
2021 |
2020 |
|
|
Electronics & Industrial |
$ |
2 |
|
$ |
— |
|
$ |
2 |
|
$ |
4 |
|
|
|
Water & Protection |
— |
|
2 |
|
— |
|
22 |
|
|
|
Mobility & Materials |
6 |
|
(3) |
|
6 |
|
21 |
|
|
|
Corporate
|
2 |
|
15 |
|
4 |
|
72 |
|
|
|
Total |
$ |
10 |
|
$ |
14 |
|
$ |
12 |
|
$ |
119 |
|
|
The following table summarizes the activities related to the 2020
Restructuring Program:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 Restructuring Program |
Severance and Related Benefit Costs |
Asset Related Charges |
Total |
|
|
|
In millions |
|
Reserve balance at December 31, 2020 |
$ |
62 |
|
$ |
— |
|
$ |
62 |
|
|
|
|
Year-to-date restructuring charges |
10 |
|
2 |
|
12 |
|
|
|
|
Charges against the reserve |
— |
|
(2) |
|
(2) |
|
|
|
|
Cash payments |
(39) |
|
— |
|
(39) |
|
|
|
|
Reserve balance at June 30, 2021 |
$ |
33 |
|
$ |
— |
|
$ |
33 |
|
|
|
Total liabilities related to the 2020 Restructuring Program
were $33 million at June 30, 2021 and $62 million at
December 31, 2020, respectively, and recorded in "Accrued and
other current liabilities" in the interim Condensed Consolidated
Balance Sheets. The 2020 Restructuring Program is considered
substantially complete.
2019 Restructuring Program
During the second quarter of 2019 and in connection with the
ongoing integration activities, DuPont approved restructuring
actions to simplify and optimize certain organizational structures
following the completion of the DWDP Distributions (the "2019
Restructuring Program"). The Company has recorded pre-tax
restructuring charges of $126 million inception-to-date, consisting
of severance and related benefit costs of $99 million and asset
related charges of $27 million.
Total liabilities related to the 2019 Restructuring Program
were $6 million at June 30, 2021 and
$14 million at December 31, 2020, respectively, and
recorded in "Accrued and other current liabilities" in the interim
Condensed Consolidated Balance Sheets. The 2019 Restructuring
Program is considered substantially complete.
DowDuPont Cost Synergy Program
In September and November 2017, the Company approved post-merger
restructuring actions under the DowDuPont Cost Synergy Program (the
"Synergy Program"), which was designed to integrate and optimize
the organization following the DWDP Merger and in preparation for
the DWDP Distributions. The Company has recorded pre-tax
restructuring charges attributable to the continuing operations of
DuPont of $345 million inception-to-date, consisting of
severance and related benefit costs of $137 million, asset
related charges of $159 million and contract termination
charges of $49 million.
Total liabilities related to the Synergy Program
were $9 million at June 30, 2021 and
$20 million at December 31, 2020, respectively, and
recorded in "Accrued and other current liabilities" in the interim
Condensed Consolidated Balance Sheets. The Synergy
Program is considered substantially complete.
Asset Impairments
In the second quarter of 2020, the Company recorded a $21 million
pre-tax impairment charge related to indefinite-lived intangible
assets within the Mobility & Materials segment. This charge was
recorded within “Restructuring and asset related charges - net” in
the interim Consolidated Statements of Operations for the three and
six months ended June 30, 2020. See Note 12 for further
discussion.
The Company reviews and evaluates its long-lived assets for
impairment when events and changes in circumstances indicate that
the related carrying amount of such assets may not be recoverable
and may exceed their fair value. For purposes of determining
impairment, assets are grouped at the lowest level for which
identifiable cash flows are largely independent of the cash flows
of other groups of assets and liabilities.
In the first quarter of 2020, expectations of proceeds related to
certain potential divestitures within Corporate gave rise to fair
value indicators and, thus, triggering events requiring the Company
to perform a recoverability assessment related to its Biomaterials
business unit. The Company performed a long-lived asset impairment
test and determined that, based on undiscounted cash flows, the
carrying amount of certain long-lived assets was not recoverable.
Accordingly, the Company estimated the fair value of these assets
using a market approach utilizing Level 3 unobservable inputs. As a
result, the Company recognized a $270 million pre-tax
impairment charge recorded within “Restructuring and asset related
charges - net” in the interim Consolidated Statements of Operation
for the six months ended June 30, 2020 with the charge
impacting definite-lived intangible assets and property, plant, and
equipment.
NOTE 5 - SUPPLEMENTARY INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sundry Income (Expense) - Net |
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
In millions |
2021 |
2020 |
2021 |
2020 |
|
|
|
Non-operating pension and other post-employment benefit (OPEB)
credits |
$ |
13 |
|
$ |
8 |
|
$ |
25 |
|
$ |
19 |
|
|
|
|
Interest income |
2 |
|
2 |
|
4 |
|
4 |
|
|
|
|
Net gain (loss) on divestiture and sales of other assets and
investments
1
|
140 |
|
(4) |
|
167 |
|
193 |
|
|
|
|
Foreign exchange losses, net
|
(8) |
|
(18) |
|
(17) |
|
(21) |
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous (expenses) income - net
2
|
(1) |
|
1 |
|
(17) |
|
6 |
|
|
|
|
Sundry income (expense) - net |
$ |
146 |
|
$ |
(11) |
|
$ |
162 |
|
$ |
201 |
|
|
|
1.
The six months ended June 30, 2021 primarily reflects income
of $140 million related to the gain on sale of assets within
the Corporate segment and $24 million related to the gain on sale
of assets within the Electronics & Industrial segment. The six
months ended June 30, 2020 includes income of $197 million
related to the gain on sale of the Compound Semiconductor Solutions
business unit within the Electronics & Industrial
segment.
2. The six months ended June 30, 2021 includes an impairment
charge of approximately $15 million, recorded in the first
quarter of 2021, related to Chestnut Run labs, which is part of the
Held for Sale Disposal Group.
Cash, Cash Equivalents and Restricted Cash
At December 31, 2020, the Company had approximately
$6.2 billion recorded within non-current “Restricted cash” in
the Consolidated Balance Sheet. The restricted cash relates to net
proceeds received from an offering of $6.25 billion of senior
unsecured notes (the "N&B Notes Offering") associated with the
N&B transaction. On February 1, 2021 this amount was released
from escrow as part of the N&B Transaction and is no longer
restricted. The liability from the N&B Notes Offering was
classified as "Liabilities of discontinued operations" in the
Company's interim Condensed Consolidated Balance Sheet as of
December 31, 2020. See Note 2 for further discussion of the
Company's divestiture of the N&B business.
Accrued and Other Current Liabilities
"Accrued and other current liabilities" in the interim Condensed
Consolidated Balance Sheets were $1,219 million at June 30,
2021 and $1,085 million at December 31, 2020. Accrued payroll,
which is a component of "Accrued and other current liabilities,"
was $360 million at June 30, 2021. No other component of
"Accrued and other current liabilities" was more than 5 percent of
total current liabilities at June 30, 2021 and no component
was more than 5 percent of total current liabilities at
December 31, 2020.
NOTE 6 - INCOME TAXES
Each year the Company files hundreds of tax returns in the various
national, state and local income taxing jurisdictions in which it
operates. These tax returns are subject to examination and possible
challenge by the tax authorities. Positions challenged by the tax
authorities may be settled or appealed by the Company. As a result,
there is an uncertainty in income taxes recognized in the Company’s
financial statements in accordance with accounting for income taxes
and accounting for uncertainty in income taxes. The ultimate
resolution of such uncertainties is not expected to have a material
impact on the Company's results of operations.
The Company's effective tax rate fluctuates based on, among other
factors, where income is earned and the level of income relative to
tax attributes. The effective tax rate on continuing operations for
the second quarter of 2021 was 21.1 percent, compared with an
effective tax rate of (0.3) percent for the second quarter of 2020.
For the first six months of 2021, the effective tax rate on
continuing operations was 14.2% percent, compared with (3.6)
percent for the first six months of 2020. The effective tax rate
for the first six months of 2021 was principally the result of a
$59 million tax benefit related to the step-up in tax basis in the
goodwill of the Company’s European regional headquarters legal
entity. The effective tax rate for the second quarter and for the
first six months of 2020 was principally the result of the
non-tax-deductible goodwill impairment charge impacting Corporate.
See Note 12 for more information regarding the goodwill impairment
charge.
Certain internal distributions and reorganizations that occurred in
preparation for the N&B Transaction qualified as tax-free
transactions under the applicable sections of the Internal Revenue
Code. If the aforementioned transactions were to fail to qualify
for non-recognition treatment for U.S. federal income tax purposes,
then the Company could be subject to significant tax liability. In
connection with the closing of the N&B Transaction, DuPont,
N&B and IFF entered into the N&B Tax Matters Agreement.
Under the N&B Tax Matters Agreement, the Company would
generally be allocated such liability and not be indemnified,
unless certain non-qualifying actions are undertaken by N&B or
IFF. To the extent that the Company is responsible for any such
liability, there could be a material adverse impact on the
Company's business, financial condition, results of operations and
cash flows in future reporting periods.
For periods between the DWDP Merger and the DWDP Distributions,
DuPont's consolidated federal income tax group and consolidated tax
return included the Dow and Corteva entities. Generally, the
consolidated tax liability of the DuPont U.S. tax group for each
year was apportioned among the members of the consolidated group in
accordance with the terms of the Amended and Restated DWDP Tax
Matters Agreement. DuPont, Corteva and Dow intend that to the
extent Federal and/or State corporate income tax liabilities are
reduced through the utilization of tax attributes of the other,
settlement of any receivable and payable generated from the use of
the other party’s sub-group attributes will be in accordance with
the Amended and Restated DWDP Tax Matters Agreement.
NOTE 7 - EARNINGS PER SHARE CALCULATIONS
The following tables provide earnings per share calculations for
the three and six months ended June 30, 2021 and
2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income for Earnings Per Share Calculations - Basic &
Diluted |
Three Months Ended June 30, |
Six Months Ended June 30, |
|
In millions |
2021 |
2020 |
2021 |
2020 |
|
Income (loss) from continuing operations, net of tax |
$ |
564 |
|
$ |
(2,389) |
|
$ |
1,105 |
|
$ |
(2,939) |
|
|
Net income from continuing operations attributable to
noncontrolling interests |
9 |
|
7 |
|
$ |
13 |
|
$ |
13 |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to common
stockholders |
$ |
555 |
|
$ |
(2,396) |
|
$ |
1,092 |
|
$ |
(2,952) |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from discontinued operations attributable to common
stockholders |
(77) |
|
(82) |
|
$ |
4,780 |
|
$ |
(142) |
|
|
Net income (loss) attributable to common stockholders |
$ |
478 |
|
$ |
(2,478) |
|
$ |
5,872 |
|
$ |
(3,094) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share Calculations - Basic |
Three Months Ended June 30, |
Six Months Ended June 30, |
|
Dollars per share |
2021 |
2020 |
2021 |
2020 |
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations attributable to common
stockholders |
$ |
1.05 |
|
$ |
(3.26) |
|
$ |
1.93 |
|
$ |
(4.01) |
|
|
(Loss) earnings from discontinued operations, net of
tax |
(0.15) |
|
(0.11) |
|
8.43 |
|
(0.19) |
|
|
Earnings (loss) attributable to common stockholders
2
|
$ |
0.90 |
|
$ |
(3.37) |
|
$ |
10.36 |
|
$ |
(4.20) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share Calculations - Diluted |
Three Months Ended June 30, |
Six Months Ended June 30, |
|
Dollars per share |
2021 |
2020 |
2021 |
2020 |
|
Earnings (loss) from continuing operations attributable to common
stockholders |
$ |
1.04 |
|
$ |
(3.26) |
|
$ |
1.92 |
|
$ |
(4.01) |
|
|
(Loss) earnings from discontinued operations, net of
tax |
(0.14) |
|
(0.11) |
|
8.41 |
|
(0.19) |
|
|
Earnings (loss) attributable to common stockholders
2
|
$ |
0.90 |
|
$ |
(3.37) |
|
$ |
10.33 |
|
$ |
(4.20) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Count Information
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
Shares in millions |
2021 |
2020 |
2021 |
2020 |
|
Weighted-average common shares - basic |
529.6 |
|
734.3 |
|
567.0 |
|
736.5 |
|
|
Plus dilutive effect of equity compensation plans |
1.6 |
|
— |
|
1.5 |
|
— |
|
|
|
|
|
|
|
Weighted-average common shares - diluted |
531.2 |
|
734.3 |
|
568.5 |
|
736.5 |
|
|
Stock options and restricted stock units excluded from EPS
calculations
1
|
2.3 |
|
6.3 |
|
2.4 |
|
6.6 |
|
1.These
outstanding options to purchase shares of common stock, restricted
stock, and performance stock units were excluded from the
calculation of diluted earnings per share because the effect of
including them would have been antidilutive.
2.Earnings
per share amounts are computed independently for income from
continuing operations, income from discontinued operations and net
income attributable to common stockholders. As a result, the per
share amounts from continuing operations and discontinued
operations may not equal the total per share amounts for net income
attributable to common stockholders.
NOTE 8 - ACCOUNTS AND NOTES RECEIVABLE - NET
|
|
|
|
|
|
|
|
|
|
In millions |
June 30, 2021 |
December 31, 2020 |
|
Accounts receivable – trade
1
|
$ |
2,141 |
|
$ |
1,850 |
|
|
Notes receivable – trade |
57 |
|
61 |
|
|
Other
2
|
628 |
|
510 |
|
|
Total accounts and notes receivable - net |
$ |
2,826 |
|
$ |
2,421 |
|
1.Accounts
receivable – trade is net of allowances of $35 million at
June 30, 2021 and $32 million at December 31, 2020. Allowances
are equal to the estimated uncollectible amounts and current
expected credit loss. That estimate is based on historical
collection experience, current economic and market conditions, and
review of the current status of customers' accounts.
2.Other
includes receivables in relation to value added tax, fair value of
derivative instruments, indemnification assets, and general sales
tax and other taxes. No individual group represents more than ten
percent of total receivables.
NOTE 9 - INVENTORIES
|
|
|
|
|
|
|
|
|
|
Inventories |
June 30, 2021 |
December 31, 2020 |
|
In millions |
|
Finished goods |
$ |
1,613 |
|
$ |
1,503 |
|
|
Work in process |
591 |
|
515 |
|
|
Raw materials |
289 |
|
251 |
|
|
Supplies |
149 |
|
124 |
|
|
Total inventories |
$ |
2,642 |
|
$ |
2,393 |
|
NOTE 10 - PROPERTY, PLANT, AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Useful Lives (Years) |
June 30, 2021 |
|
December 31, 2020 |
|
In millions |
|
Land and land improvements |
1 |
- |
25 |
$ |
621 |
|
|
$ |
682 |
|
|
Buildings |
1 |
- |
50 |
2,065 |
|
|
2,031 |
|
|
Machinery, equipment, and other |
1 |
- |
25 |
7,397 |
|
|
7,182 |
|
|
Construction in progress |
|
|
|
1,301 |
|
|
1,228 |
|
|
Total property, plant and equipment |
|
|
|
$ |
11,384 |
|
|
$ |
11,123 |
|
|
Total accumulated depreciation |
|
|
|
$ |
4,528 |
|
|
$ |
4,256 |
|
|
Total property, plant and equipment - net |
|
|
|
$ |
6,856 |
|
|
$ |
6,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
In millions |
2021 |
2020 |
2021 |
2020 |
|
Depreciation expense |
$ |
166 |
|
$ |
172 |
|
$ |
327 |
|
$ |
340 |
|
NOTE 11 - NONCONSOLIDATED AFFILIATES
The Company's investments in companies accounted for using the
equity method ("nonconsolidated affiliates") are recorded in
"Investments and noncurrent receivables" in the interim Condensed
Consolidated Balance Sheets.
The Company's net investment in nonconsolidated affiliates is shown
in the following table:
|
|
|
|
|
|
|
|
|
|
Investments in Nonconsolidated Affiliates |
June 30, 2021 |
December 31, 2020 |
|
In millions |
|
Investments and noncurrent receivables |
$ |
914 |
|
$ |
889 |
|
|
Accrued and other current liabilities |
(65) |
|
(71) |
|
|
Net investment in nonconsolidated affiliates |
$ |
849 |
|
$ |
818 |
|
The Company maintained an ownership interest in 14 nonconsolidated
affiliates at June 30, 2021.
Sales to nonconsolidated affiliates represented less than 2 percent
of total net sales for the three and six months ended June 30, 2021
and less than 3 percent of total net sales for the three and six
months ended June 30, 2020. Sales to nonconsolidated affiliates for
three and six months ended June 30, 2020 were primarily related to
the sale of trichlorosilane, a raw material used in the production
of polycrystalline silicon, to the HSC Group, prior to the
TCS/Hemlock Disposal in the third quarter of 2020. Sales of this
raw material to the HSC Group are reflected in Corporate. Purchases
from nonconsolidated affiliates represented less than 4 percent of
“Cost of sales” for the three and six months ended June 30, 2021
and less than 3 percent for the three and six months ended June 30,
2020.
NOTE 12 - GOODWILL AND OTHER INTANGIBLE ASSETS
The changes in the carrying amounts of goodwill during the six
months ended June 30, 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronics & Industrial |
Water & Protection |
Mobility & Materials |
Total |
|
In millions |
|
Balance at December 31, 2020 |
$ |
8,458 |
|
$ |
6,969 |
|
$ |
3,275 |
|
$ |
18,702 |
|
|
Currency Translation Adjustment
|
(42) |
|
(60) |
|
(43) |
|
(145) |
|
|
Other |
— |
|
— |
|
8 |
|
8 |
|
|
Balance at June 30, 2021 |
$ |
8,416 |
|
$ |
6,909 |
|
$ |
3,240 |
|
$ |
18,565 |
|
The Company tests goodwill for impairment annually during the
fourth quarter as of October 1, or more frequently when events or
changes in circumstances indicate that fair value is below carrying
value. As a result of the related acquisition method of accounting
in connection with the DWDP Merger, EID’s assets and liabilities
were measured at fair value resulting in increases to the Company’s
goodwill and other intangible assets. The fair value valuation
increased the risk that declines in financial projections,
including changes to key assumptions, could have a material,
negative impact on the fair value of the Company’s reporting units
and assets, and therefore could result in an
impairment.
The 2021 Segment Realignment served as a triggering event requiring
the Company to perform an impairment analysis related to goodwill
carried by its reporting units as of February 1, 2021, prior to the
realignment. As part of the 2021 Segment Realignment, the Company
assessed and re-defined certain reporting units effective February
1, 2021, including reallocation of goodwill on a relative fair
value basis, as applicable, to new reporting units identified.
Goodwill impairment analyses were then performed for the new
reporting units identified in the Electronics & Industrial and
Mobility & Materials segments impacted by the 2021 Segment
Realignment. No impairments were identified as a result of the
analyses described above.
In the second quarter of 2020, the Company recorded pre-tax,
non-cash goodwill impairment charges of $2,498 million, impacting
its Mobility & Materials and Industrial Solutions reporting
units, which is reflected in "Goodwill impairment charges" in the
interim Consolidated Statements of Operations for the three and six
months ended June 30, 2020.
In the first quarter of 2020, the Company recorded pre-tax,
non-cash goodwill impairment charges of $533 million, impacting
Corporate, which is reflected in "Goodwill impairment charges" in
the interim Consolidated Statements of Operations for the six
months ended June 30, 2020.
Other Intangible Assets
The gross carrying amounts and accumulated amortization of other
intangible assets by major class are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021 |
December 31, 2020 |
|
In millions |
Gross
Carrying
Amount |
Accum Amort |
Net |
Gross Carrying Amount |
Accum Amort |
Net |
|
Intangible assets with finite lives: |
|
|
|
|
|
|
|
Developed technology |
$ |
2,763 |
|
$ |
(1,230) |
|
$ |
1,533 |
|
$ |
2,844 |
|
$ |
(1,220) |
|
$ |
1,624 |
|
|
Trademarks/tradenames |
1,095 |
|
(466) |
|
629 |
|
1,095 |
|
(440) |
|
655 |
|
|
Customer-related |
7,004 |
|
(2,536) |
|
4,468 |
|
7,075 |
|
(2,361) |
|
4,714 |
|
|
Other |
131 |
|
(83) |
|
48 |
|
131 |
|
(81) |
|
50 |
|
|
Total other intangible assets with finite lives |
$ |
10,993 |
|
$ |
(4,315) |
|
$ |
6,678 |
|
$ |
11,145 |
|
$ |
(4,102) |
|
$ |
7,043 |
|
|
Intangible assets with indefinite lives: |
|
|
|
|
|
|
|
Trademarks/tradenames |
1,029 |
|
— |
|
1,029 |
|
1,029 |
|
— |
|
1,029 |
|
|
Total other intangible assets |
1,029 |
|
— |
|
1,029 |
|
1,029 |
|
— |
|
1,029 |
|
|
Total |
$ |
12,022 |
|
$ |
(4,315) |
|
$ |
7,707 |
|
$ |
12,174 |
|
$ |
(4,102) |
|
$ |
8,072 |
|
As part of the 2021 Segment Realignment, the Company reallocated
its intangible assets with indefinite lives to align with the new
segment structure. This served as a triggering event requiring the
Company to perform an impairment analysis related to intangible
assets with indefinite lives carried by its existing Electronics
& Imaging and Transportation & Industrial segments as of
February 1, 2021, prior to the realignment. Subsequent to the
realignment the Company realigned intangible assets with indefinite
lives as applicable to align the intangible assets with indefinite
lives with the new segment structure. Impairment analyses were then
performed for the intangible assets with indefinite lives carried
by the Electronics & Industrial and Mobility & Materials
segments. No impairments were identified as a result of the
analyses described above.
In the second quarter of 2020, the Company performed quantitative
testing on indefinite-lived intangible assets attributable to the
Mobility & Materials segment, for which the Company determined
that the fair value of certain tradenames had declined. As a result
of the testing, the Company recorded a pre-tax, non-cash
indefinite-lived intangible asset impairment charge of $21 million
($16 million after tax), which is reflected in "Restructuring and
asset related charges - net," in the Consolidated Statements of
Operations for the three and six months ended June 30, 2020. The
remaining net book value of the tradenames attributable to the
Mobility & Materials segment at June 30, 2020 was approximately
$289 million, which represents fair value.
During the first quarter of 2020, the Company recorded non-cash
impairment charges related to definite-lived intangible assets
impacting Corporate. See Note 4 for further
discussion.
The following table provides the net carrying value of other
intangible assets by segment:
|
|
|
|
|
|
|
|
|
|
Net Intangibles by Segment |
June 30, 2021 |
December 31, 2020 |
|
In millions |
|
Electronics & Industrial |
$ |
2,466 |
|
$ |
2,611 |
|
|
Water & Protection |
2,802 |
|
2,920 |
|
|
Mobility & Materials |
2,439 |
|
2,541 |
|
|
Total |
$ |
7,707 |
|
$ |
8,072 |
|
Total estimated amortization expense for the remainder of 2021 and
the five succeeding fiscal years is as follows:
|
|
|
|
|
|
|
Estimated Amortization Expense |
|
|
In millions |
|
|
Remainder of 2021 |
$ |
324 |
|
|
2022 |
$ |
607 |
|
|
2023 |
$ |
582 |
|
|
2024 |
$ |
562 |
|
|
2025 |
$ |
513 |
|
|
2026 |
$ |
495 |
|
NOTE 13 - SHORT-TERM BORROWINGS, LONG-TERM DEBT AND AVAILABLE
CREDIT FACILITIES
The following table summarizes the Company's finance lease
obligations and long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Debt |
June 30, 2021 |
December 31, 2020 |
|
In millions |
Amount |
Weighted Average Rate |
Amount |
Weighted Average Rate |
|
Promissory notes and debentures: |
|
|
|
|
|
Final maturity 2023
1,2
|
$ |
2,800 |
|
3.89 |
% |
$ |
4,800 |
|
3.18 |
% |
|
Final maturity 2025
1
|
1,850 |
|
4.49 |
% |
1,850 |
|
4.49 |
% |
|
Final maturity 2026 and thereafter
1
|
6,050 |
|
5.13 |
% |
6,050 |
|
5.13 |
% |
|
Other facilities: |
|
|
|
|
|
Term loan due 2022 |
— |
|
— |
% |
3,000 |
|
1.25 |
% |
|
Finance lease obligations |
2 |
|
|
2 |
|
|
|
Less: Unamortized debt discount and issuance costs |
74 |
|
|
90 |
|
|
|
Less: Long-term debt due within one year
|
1 |
|
|
1 |
|
|
|
Total |
$ |
10,627 |
|
|
$ |
15,611 |
|
|
1. Represents senior unsecured notes (the "2018 Senior Notes"),
which are senior unsecured obligations of the Company.
2. The year ended December 31, 2020 includes $2 billion
related to the May 2020 Notes.
Principal Payments of long-term debt for the remainder of 2021 and
the five succeeding fiscal years are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturities of Long-Term Debt for Next Five Years at June 30,
2021 |
Total |
|
In millions |
|
Remainder of 2021 |
$ |
— |
|
|
2022 |
$ |
— |
|
|
2023 |
$ |
2,800 |
|
|
2024 |
$ |
— |
|
|
2025 |
$ |
1,850 |
|
|
2026 |
$ |
— |
|
The estimated fair value of the Company's long-term borrowings was
determined using Level 2 inputs within the fair value hierarchy, as
described in Note 21. Based on quoted market prices for the same or
similar issues, or on current rates offered to the Company for debt
of the same remaining maturities, the fair value of the Company's
long-term borrowings, not including long-term debt due within one
year, was $12,965 million and $18,336 million at
June 30, 2021 and December 31, 2020,
respectively.
Available Committed Credit Facilities
The following table summarizes the Company's credit
facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committed and Available Credit Facilities at June 30,
2021 |
|
|
|
In millions |
Effective Date |
Committed Credit |
Credit Available |
Maturity Date |
Interest |
|
Revolving Credit Facility,
Five-year
|
May 2019 |
$ |
3,000 |
|
$ |
2,975 |
|
May 2024 |
Floating Rate |
|
364-day Revolving Credit Facility
|
April 2021 |
1,000 |
|
1,000 |
|
April 2022 |
Floating Rate |
|
Total Committed and Available Credit Facilities |
|
$ |
4,000 |
|
$ |
3,975 |
|
|
|
N&B Transaction
As part of the N&B Transaction, the Company received a Special
Cash Payment of approximately $7.3 billion. The Special Cash
Payment was partially funded by the N&B Notes Offering, which
was completed on September 16, 2020. In order to fund the remainder
of the Special Cash Payment, immediately prior to the consummation
of the N&B Transaction, N&B borrowed $1.25 billion
under the N&B Term Loan on February 1, 2021. The obligations
and liabilities associated with the N&B Notes Offering and the
N&B Term Loan were separated from the Company on February 1,
2021 upon consummation of the N&B Transaction. See Note
2
for more information.
May Debt Offering
On May 1, 2020, the Company completed an underwritten public
offering of senior unsecured notes (the “May 2020 Notes”) in the
aggregate principal amount of $2 billion of 2.169 percent
fixed rate Notes due May 1, 2023 (the “May Debt Offering”). The
consummation of the N&B Transaction triggered the special
mandatory redemption feature of the May Debt Offering. The Company
redeemed the May 2020 Notes on May 13, 2021 and funded the
redemption with proceeds from the Special Cash
Payment.
Term Loan Facilities
On February 1, 2021, the Company terminated its fully drawn term
loan facilities in the aggregate principle amount of $3 billion
(the "Term Loan Facilities"). The termination triggered the
repayment of the aggregate outstanding principal amount of $3
billion, plus accrued and unpaid interest through and including
January 31, 2021. The Company funded the repayment with proceeds
from the Special Cash Payment.
Uncommitted Credit Facilities and Outstanding Letters of
Credit
Unused bank credit lines on uncommitted credit facilities were $781
million at June 30, 2021. These lines are available to support
short-term liquidity needs and general corporate purposes including
letters of credit. Outstanding letters of credit were $133 million
at June 30, 2021. These letters of credit support commitments
made in the ordinary course of business.
Debt Covenants and Default Provisions
The Company's indenture covenants include customary limitations on
liens, sale and leaseback transactions, and mergers and
consolidations, subject to certain limitations. The 2018 Senior
Notes also contain customary default provisions. The Five-Year
Revolving Credit Facility and the 2021 $1B Revolving Credit
Facility contain a financial covenant requiring that the ratio of
Total Indebtedness to Total Capitalization for the Company and its
consolidated subsidiaries not exceed 0.60. At June 30, 2021,
the Company was in compliance with this financial covenant. There
were no material changes to the debt covenants and default
provisions at June 30, 2021.
NOTE 14 - COMMITMENTS AND CONTINGENT LIABILITIES
Litigation, Environmental Matters, and
Indemnifications
The Company and certain subsidiaries are involved in various
lawsuits, claims and environmental actions that have arisen in the
normal course of business with respect to product liability, patent
infringement, governmental regulation, contract and commercial
litigation, as well as possible obligations to investigate and
mitigate the effects on the environment of the disposal or release
of certain substances at various sites. In addition, in connection
with divestitures and the related transactions, the Company from
time to time has indemnified and has been indemnified by third
parties against certain liabilities that may arise in connection
with, among other things, business activities prior to the
completion of the respective transactions. The term of these
indemnifications, which typically pertain to environmental, tax and
product liabilities, is generally indefinite. The Company records
liabilities for ongoing and indemnification matters when the
information available indicates that it is probable that a
liability will be incurred and the amount of the loss can be
reasonably estimated.
As of June 30, 2021, the Company has recorded indemnification
assets of $60 million within "Accounts and notes
receivable - net" and $240 million within "Deferred
charges and other assets" and indemnification liabilities of
$166 million within "Accrued and other current
liabilities" and $190 million within "Other noncurrent
obligations" within the Consolidated Balance Sheets.
The Company’s accruals discussed below for indemnification
liabilities related to the binding Memorandum of Understanding
(“MOU”) between Chemours, Corteva, EID and the Company and to the
DWDP Separation and Distribution Agreement and the Letter Agreement
between the Company and Corteva (together the “Agreements”), are
included in the balances above.
PFAS Stray Liabilities: Future Eligible PFAS Costs
On July 1, 2015, EID, a Corteva subsidiary since June 1, 2019,
completed the separation of EID’s Performance Chemicals segment
through the spin-off of Chemours to holders of EID common stock
(the “Chemours Separation”).
On January 22, 2021, the Company, Corteva, EID and Chemours entered
into the MOU pursuant to which the parties have agreed to release
certain claims that had been raised by Chemours including any
claims arising out of or resulting from the process and manner in
which EID structured or conducted the Chemours Separation, and any
other claims that challenge the Chemours Separation or the
assumption of Chemours Liabilities (as defined in the Chemours
Separation Agreement) by Chemours and the allocation thereof,
subject in each case to certain exceptions set forth in the MOU. In
connection with the MOU, the confidential arbitration process
regarding certain claims by Chemours was terminated in February
2021. The parties have further agreed not to bring any future,
additional claims regarding the Chemours Separation Agreement or
the MOU outside of arbitration.
Pursuant to the MOU, the parties have agreed to share certain costs
associated with potential future liabilities related to alleged
historical releases of certain PFAS (per- or polyfluoroalkyl
substances, which include perfluorooctanoic acids and its ammonium
salts (“PFOA”)) out of pre-July 1, 2015 conduct (“eligible PFAS
costs”) until the earlier to occur of (i) December 31, 2040, (ii)
the day on which the aggregate amount of Qualified Spend, as
defined in the MOU, is equal to $4 billion or (iii) a termination
in accordance with the terms of the MOU.
The parties have agreed that, during the term of this sharing
arrangement, Qualified Spend will be borne 50 percent by Chemours
and 50 percent, up to a cap of $2 billion, by the Company and
Corteva. The Company and Corteva will split their 50 percent of
Qualified Spend in accordance with the Agreements. After the term
of this arrangement, Chemours’ indemnification obligations under
the Chemours Separation Agreement would continue unchanged, subject
in each case to certain exceptions set forth in the
MOU.
In order to support and manage any potential future eligible PFAS
costs, the parties have also agreed to establish an escrow account.
The MOU provides that (1) no later than each of September 30, 2021
and September 30, 2022, Chemours shall deposit $100 million into an
escrow account and DuPont and Corteva shall together deposit $100
million in the aggregate into an escrow account and (2) no later
than September 30 of each subsequent year through and including
2028, Chemours shall deposit $50 million into an escrow account and
DuPont and Corteva shall together deposit $50 million in the
aggregate into an escrow account. Subject to the terms and
conditions set forth in the MOU, each party may be permitted to
defer funding in any year (excluding 2021). Additionally, if on
December 31, 2028, the balance of the escrow account (including
interest) is less than $700 million, Chemours will make 50 percent
of the deposits and DuPont and Corteva together will make 50
percent of the deposits necessary to restore the balance of the
escrow account to $700 million. Such payments will be made in a
series of consecutive annual equal installments commencing on
September 30, 2029 pursuant to the escrow account replenishment
terms as set forth in the MOU.
The parties have agreed to cooperate in good faith to enter into
additional agreements reflecting the terms set forth in the
MOU.
Under the Agreements, Divested Operations and Businesses ("DDOB")
liabilities of EID not allocated to or retained by Corteva or the
Company are categorized as relating to either (i) PFAS Stray
Liabilities, if they arise out of actions related to or resulting
from the development, testing, manufacture or sale of PFAS; or (ii)
Non-PFAS Stray Liabilities, (and together with PFAS Stray
Liabilities, the “EID Stray Liabilities”).
The Agreements provide that the Company and Corteva will each bear
specified amounts plus an additional $200 million of Indemnifiable
Losses, described below, in relation to certain EID Stray
Liabilities. The Agreements further provide that the Company and
Corteva will each bear 50 percent, $150 million each, of the first
$300 million of total Indemnifiable Losses related to PFAS Stray
Liabilities. When the companies meet their respective $150 million
threshold, Indemnifiable Losses related to PFAS Stray Liabilities
will be borne 71 percent by DuPont and 29 percent by Corteva.
Indemnifiable Losses up to $150 million incurred for PFAS Stray
Liabilities are credited against each company’s $200 million
threshold.
Whenever Corteva or DuPont meets its $200 million threshold, the
other would generally bear all Non-PFAS Stray Liabilities until
meeting its $200 million threshold. Thereafter, DuPont will bear 71
percent and Corteva will bear 29 percent of Indemnifiable Losses
related to Non-PFAS Stray Liabilities.
Indemnifiable Losses, as defined in the DWDP Separation and
Distribution Agreement, include, among other things, attorneys’,
accountants’, consultants’ and other professionals’ fees and
expenses incurred in the investigation or defense of EID Stray
Liabilities.
In connection with the MOU and the Agreements, the Company has
recognized the following indemnification liabilities related to
eligible PFAS costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Indemnified Liabilities Related to the MOU |
|
In millions |
Jun 30, 2021 |
Dec 31, 2020 |
Balance Sheet Classification |
|
Current indemnified liabilities |
$ |
36 |
|
$ |
12 |
|
Accrued and other current liabilities
|
|
Long-term indemnified liabilities |
$ |
95 |
|
$ |
46 |
|
Other noncurrent obligations |
|
Total indemnified liabilities accrued under the MOU
1, 2
|
$ |
131 |
|
$ |
58 |
|
|
|
|
|
|
1.As
of June 30, 2021, total indemnified liabilities accrued include
$108 million related to Chemours environmental remediation
activities at their site in Fayetteville, North Carolina under the
Consent Order between Chemours and the North Carolina Department of
Environmental Quality.
2.Excludes
liabilities of $27 million recognized by the Company as of December
31, 2020 related to the settlement of the Ohio MDL, discussed
below.
In addition to the above, as of June 30, 2021, the Company has
recognized a liability of $12.5 million related to the settlement
agreement between Chemours, Corteva and DuPont and Delaware's
Attorney General, discussed below.
Future charges, if any, asso