KEEP
GROWING.
ANNUAL REPORT 2021
CORTEVA ANNUAL REPORT 2021
DISCIPLINED EXECUTION. ACCELERATED
COMPETITIVE ADVANTAGES.
INNOVATION-DRIVEN VALUE CREATION.
At Corteva, we continue to grow by working closely
with customers around the world to solve today’s
most pressing agriculture challenges, while
innovating and partnering on new and differentiated
solutions designed to create long-term value for our
stakeholders. In 2021, our performance reflected this
focus, as we addressed increased customer demand
within a strong agriculture market – while remaining
disciplined against the backdrop of ongoing
challenges in the broader macroeconomic
environment. Strengthened by the company’s
competitive advantages, we delivered broad-based
sales and earnings growth year over year, with value
returned to shareholders via dividends and share
repurchases. As we look ahead, we expect to unlock
the full potential of our innovation, leveraging our
competitive strengths together with our operational
focus to drive continued growth for the company,
creating value for years to come.
TABLE OF CONTENTS
Financial Highlights ........................................................1
Letter to Shareholders
............................................... 2
...
2021 Achievements
...........................................
................
5
Creating Value Through
Solid Governance
.............................
.................................
6
Driving Competitive Advant
Through Environmental S
antantage
l Sl Sustainability
................... 7
Empowering Employ
the Impact of Ag
loyloyees and Expanding
AgAgriculture
............................................8
0-0-K for the Year Ended December 31,
Form 10-
2021 ( (with selected financial exhibits)
(
11
Sto
StoStockholder Reference Information
FINANC
NCIAL HIGHLIGHTS
Amounts in millions, except for per share amounts
2021
2020
Net Sales
Income from Continuing Operations after Tax
Operating EBITDA1AA
GAAP Earnings per Share
Operating Earnings per Share 1
Dividends Declared per Share
$
$
$
$
$
$
15,655
1,822
2,576
2.44
2.15
0.54
$
$
$
$
$
$
14,217
756
2,087
0.98
1.50
0.52
NET SALES
(dollars in millioillions)
OPERATING EBITDA1,2
(dollars in millions)
SHAREHOLDER REMUNERATION 2021
(dollars in millions)
NET SALES BY SEGMENT 2021
(dollars in millions)
$15,655
$14,217
$13,846
$2,576
$2,0 87
$1,987
’19
’20
’21
’19
’20
’21
~$400
Dividends
$7,253
Crop Protection
$1,350
$15,655
$950
Share
Repurchases
$8,402
Seed
NET SALES BY REGION 2021
(dollars in millions)
REGIONAL SALES BY SEGMENT 2021
(dollars in millions)
$7,536
North America 3
$3,545
Latin America
$3,123
EMEA3
$1,451
Asia Pacific
$2,532
Crop Protection
North
America 3
$7,536
$5,004
Seed
EMEA 3
$3,123
$2,125
Crop Protection
$1,524
Crop Protection
$1,599
Seed
$1,072
Crop Protection
Latin
America
$3,545
$1,420
Seed
Asia
Pacific
$1,451
$379
Seed
$15,655
1. Organic Sales, Operating EPS and Operating EBITDA are non-GAAP measures. See pages 52-54 of the Form 10-K and the Appendix of this document for further discussion. 2. Full year 2019
results are on a pro forma basis and were determined in accordance with Article 11 of Reg S-X, that was in effect prior to recent amendments. 3. North America is defined as U.S. and Canada.
EMEA is defined as Europe, Middle East and Africa.
The information provided herein contains certain estimates and forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended, which are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of
1995, and may be identified by their use of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates,” “outlook,” or other words of similar meaning. All statements that
address expectations or projections about the future, including statements about Corteva’s financial results or outlook; strategy for growth; product development; regulatory approvals; market position;
capital allocation strategy; liquidity; environmental, social and governance (“ESG”) targets; the anticipated benefits of acquisitions, restructuring actions, or cost savings initiatives; and the outcome
of contingencies, such as litigation and environmental matters, are forward-looking statements. Corteva disclaims and does not undertake any obligation to update or revise any forward-looking
statement, except as required by applicable law. A detailed discussion of some of the significant risks and uncertainties which may cause results and events to differ materially from such forward-looking
statements is included in the “Risk Factors” section of Corteva’s Annual Report on Form 10-K, as modified by Current Reports on Form 8-K.
1
CORTEVA ANNUAL REPORT 2021
TO OUR SHAREHOLDERS:
In 2021, Corteva’s global team successfully executed
on our strategic and financial priorities to deliver
value for our shareholders, customers, employees,
and the communities in which we operate.
Our core differentiators – an industry-leading
innovation pipeline, unmatched distribution
capabilities, and supply chain agility – coupled with
our focus on operational excellence and disciplined
capital allocation enabled us to finish the year with
double-digit sales and earnings growth, meaningful
margin expansion, and a solid balance sheet.
Agriculture fundamentals remain attractive with
healthy farmer income levels and resilient customer
demand. At the same time, global macroeconomic
challenges persist. Our priorities for 2022 are
straightforward and reflective of our operating
environment – execute our balanced plan to deliver
above-market growth and margin expansion, which
will enable continued value creation.
STRONG FINANCIAL PERFORMANCE
GENERATES VALUE FOR SHAREHOLDERS
178 bps2
Operating
EBITDA margin 1
expansion and
23%
Operating
EBITDA1AA Growth,
with focused
execution
$2.7B
Cash Flow
from Operations,
combined with
a strong balance
sheet, provides
flexibility
$1.35B
Returned to
Shareholders
in the form
of Dividends
and Share
Repurchases
10%
Net Sales
Growth, with
increases in all
regions and
both segments
9%
Organic1 Sales
Growth reflects
strength of
high-value
technology
pipeline
2
Differentiated Technology Driving
Strong Sales Gains and Sustainable
Margin Expansion
Broad-based net sales and organic 1 growth, with
increases across all segments and geographies,
illustrated the value of Corteva's industry-leading
portfolio and determination of a global team intent
on capturing it.
POWER OF INNOVATION
DRIVES CUSTOMER DEMAND
Corteva is well positioned to deliver on
increasing demand for high-value technologies
through the company’s balanced and diverse
portfolio of technologies that address pressing
customer challenges across a variety of regions
and crops. The Enlist® weed control system
continues to demonstrate its power as a growth
catalyst, providing a proprietary seed solution
through Enlist E3® 3 soybeans, together with its
Enlist One® and Enlist Duo® herbicides. The
company delivered $870 million of total system
sales for Enlist® in 2021 – nearly double 2020
sales. Herbicide sales reached $335 million in
2021 – exceeding the company’s initial target
two years ahead of plans, a testimony to
customer demand. Corteva also expects
demand to build in its Enlist E3® 3 soybeans,
and anticipates market penetration in the
U.S. of approximately 40% in 2022.
In Seed, we strengthened our leadership position
through the company’s price for value strategy,
reflected by pricing execution on the ongoing
strength of our technology. We continued to
optimize yield advantage and leveraged our multi-
channel distribution capabilities across our seed
brands to bring greater choice and value to farmers.
This focus enabled organic1 growth and share gains
in Pioneer® brand corn and soybeans, coupled with
Brevant™ brand corn in the U.S. during the year.
Crop Protection gains in 2021 were driven by
increased penetration of new products including
Enlist®, Arylex™, and Isoclast™ – with sales from new
product launches exceeding $1.4 billion, which
represented a more than 40% increase year over
year. We also continue to have a robust new and
differentiated Crop Protection pipeline, with 220
registration approvals in 66 countries in 2021.
Broadly, our pipeline and the global innovation
capabilities behind it are bolstering the growth we are
delivering across our portfolio, while driving customer
demand for solutions that are locally adapted.
We delivered on our commitment to margin
expansion in the face of industry-wide supply chain
disruptions and persistent cost inflation. Strong
pricing and volume gains on our technology more
than offset market-driven cost headwinds and we
continued to progress cost actions.
Meeting Demand for Sustainable Solutions
Sustainable innovation remains core to our business
model as customers continue to demand improved
outcomes. We are building on germplasm
advantages in seed and technology leadership
positions in green chemistry. Additionally, we are
making important progress in emerging sectors,
such as biologicals – building on the company’s
crop protection strengths and know-how to
develop a robust set of innovative, sustainable
solutions for farmers.
Our proprietary digital technologies are helping to
advance sustainable agriculture across both
segments as an important aspect of our integrated
customer offering. LandVisor™ solution is a primary
example of this integrated solutions approach that
brings together crop protection products and digital
technologies. LandVisor™ solution delivers insights
using remote sensing imagery and data analytics
technology to provide product, timing and rate
recommendations to ranchers and land managers
so they can manage and identify the most impactful
areas to target with Corteva crop protection
applications. Broadly, our digital technologies also
serve as enablers of our Research and Development
(R&D) process and pipeline, which supports the
company’s efforts to develop and launch a broader
range of sustainable solutions for customers globally.
STRENGTHENING SUSTAINABLE
INNOVATION ADVANTAGES
Corteva continues to grow its position in key
market sectors at the forefront of sustainable
agriculture. The company has established and
expanded its biologicals portfolio, which is
focused on developing biostimulants, biocontrol
and pheromone products. Corteva’s focused
investments in biological solutions have built
upon the company’s innovation strengths and
expertise, and have centered on enabling
a robust set of novel and needed technologies
for farmers that include both internally
developed innovation together with multiple,
strategic collaborations and agreements that
help to accelerate the pace of advancements.
An example of this progress includes Utrisha™ N
nutrient efficiency optimizer, the first technology
launch from the biologicals portfolio. Introduced
for the 2022 growing season, Utrisha™ N is
designed to keep farms productive and healthy
by supplying nitrogen throughout the crop
cycle in an effective and controlled way.
Disciplined Capital Strategy Enabling
Growth and Value-Creation Objectives
We executed on our capital allocation strategy
which focuses on disciplined investment in growth
opportunities while delivering capital returns to
shareholders. With a strong balance sheet and
improved free cash flow, we increased returns
to shareholders – including $1.35 billion returned in
2021 through dividends and share repurchases.
We expect to return between $1.0 and $1.5 billion to
shareholders in 2022, while continuing to invest for
long-term growth. These targets further reinforce our
continued commitment to shareholder remuneration.
3
Prioritizing Enterprise Health, Safety,
Diversity and Inclusion
Corteva has proven resilient as the pandemic has
changed the way people work and live. Our priority
from the beginning has focused on protecting the health
and wellbeing of our employees, while preserving supply
chains and supporting farmers to ensure food security.
We also strive to support an agricultural ecosystem that nurtures
the planet, while driving business results. We continue to prioritize
inclusion, diversity and equity, while fostering belonging and embracing
differences within our organization and industry – helping develop an
ample bench of talent, stronger collaboration, and deeper connections with
the communities we serve. This is reflected in the focused progress we continue to
target around our global commitments to inclusion, diversity and equity.
Strong Set-up for Future Earnings Growth
As economies around the world continue to recover, we expect record demand for grain to
keep pressure on ending stock levels which will support commodity prices. We believe growers
will prioritize technology investments to maximize their returns.
While we also recognize that global conditions are likely to remain a challenge, pricing
and productivity remain critical to offset that impact. We are committed to unlocking value
at a faster pace, while continuing to do what Corteva does best – launching innovative
products, forging strong customer relationships, and maintaining focus on execution.
Thank you for your support as Corteva continues to deliver value for all stakeholders,
building a stronger agriculture system for our world.
Gregory R. Page
Non-Executive
Chair of the Board
February 21, 2022
Chuck Magro
Chief Executive Officer
1. Organic sales, Operating EBITDA and Operating
EBITDA Margin are non-GAAP measures. See pages
52-54 of the Form 10-K and the Appendix of this
document for further discussion. 2. Bps is defined as
basis points. 3. The transgenic soybean event in Enlist
E3® soybeans is jointly developed and owned by
Corteva Agriscience and M.S. Technologies, L.L.C.
4
CORTEVA ANNUAL REPORT 2021
2021 ACHIEVEMENTS
Corteva teams around the world leveraged our
world-class capabilities and expertise, while continuing
to collaborate closely with industry, government, and
society to deliver on our strategy and priorities in 2021.
PRODUCT PORTFOLIO
Launches
CONKESTA E3®1 SOYBEANS in Brazil
Launches
UTRISHA™ N NUTRIENT
EFFICIENCY OPTIMIZER
in Europe, U.S. and Canada
Expands access in multiple geographic regions
INNOVATION
Announces 7 COLLABORATIONS
AND AGREEMENTS in 2021 to Advance
Research and Commercialization of
BIOLOGICALS
Receives 220 NEW AND
DIFFERENTIATED CROP
PROTECTION APPROVALS
in 2021 across 66 countries and 27 molecules
Enters
GENOME EDITING
COLLABORATION
to Accelerate Innovation
from CRISPR-Cas9
Intellectual Property
Winner Crop Science
(Agrow) Awards –
BEST NEW
CROP
PROTECTION
PRODUCT OR
TRAIT – Inatreq™
CUSTOMER
Receives
3 MANUFACTURING
LEADERSHIP
AWARDS in 2021
Pioneer® Brand
Celebrates
95 YEARS
as Seed Industry
Leader
FINANCIAL
Announces New $1.5B
SHARE REPURCHASE
PROGRAM
Announces
INCREASE
to Common
Stock Dividend
CORPORATE GOVERNANCE
Second Year: TRENDSETTER STATUS
FOR TRANSPARENCY Wharton’s Zicklin
Center for Political Accountability’s “CPA-Zicklin Index”
Names Chuck Magro
Chief Executive Officer
Names Dave Anderson
EVP, Chief Financial Officer
ENVIRONMENTAL SUSTAINABILITY
Debuts INAUGURAL
SUSTAINABILITY REPORT
and selected ESG INFORMATION
Partner with National
Fish and Wildlife
Foundation to
ADVANCE
BIODIVERSITY
ON UP TO
70,000 ACRES
through grassland
conservation
Creates new
CARBON AND
ECOSYSTEMS
SERVICES
PORTFOLIO
and Expands Corteva
Carbon Initiative
INCLUSION, DIVERSITY AND EQUITY
100% on Human Rights Campaign’s Corporate
Equality Index:
BEST PLACE TO WORK
FOR LGBTQ+ EQUALITY
EMPLOYER
OF CHOICE
by the Human
Resource Director
Magazine in Asia
BEST-OF-THE-BEST
Corporations for Inclusion by
National Business Inclusion
Consortium
1. The transgenic soybean event in Conkesta E3® soybeans is jointly developed and owned by Corteva Agriscience and M.S. Technologies, L.L.C.
5
CORTEVA ANNUAL REPORT 2021
CREATING VALUE THROUGH SOLID GOVERNANCE
Corteva is led by a Board of Directors and industry-
leading management team that are committed to
upholding strong governance standards and
advancing the company’s strategy with a shared
focus on value creation for all stakeholders.
Corteva’s Board of Directors includes experienced
leaders with diverse and relevant experience, led by
an independent Chair. The Board advises on
strategy, oversees risk, and institutes policies and
practices that support long-term value creation
– including oversight of critical areas such as
environmental sustainability and the health, safety,
and security of employees worldwide.
More information on Corteva’s corporate
governance, including Corteva’s corporate
governance guidelines, Board Committee charters,
Director Code of Conduct and Code of Financial
Ethics, is available at corteva.com/investors.
EXECUTIVE LEADERSHIP TEAM ( February 22, 2022)
Chuck Magro
Chief Executive Officer
Dave Anderson
Executive Vice President,
Chief Financial Officer
Meghan Cassidy
Chief Human Resources
and Diversity Officer
Sam Eathington
Senior Vice President,
Chief Technology Officer
Cornel Fuerer
Senior Vice President,
General Counsel
Timothy Glenn
Executive Vice President,
Chief Commercial Officer
BOARD OF DIRECTORS (February 22, 2022)
Gregory R. Page 1,2
Corteva Non-Executive
Chair of the Board,
Retired Chairman and
Chief Executive Officer
of Cargill, Incorporated
Chuck Magro
Chief Executive Officer
of Corteva
Lamberto Andreotti3,4
Former Chairman and
Chief Executive Officer
of Bristol Myers Squibb
Klaus Engel 1,2
Retired Chief Executive
Officer of Evonik
Industries AG
David C. Everitt 2,4
Retired President,
Agricultural and Turf
Division of Deere & Co.
Janet P. Giesselman 2,4
Former Strategic
Planning Consultant,
NH Enterprise
Karen H. Grimes 1,3
Retired Partner, Senior
Managing Director
& Equity Portfolio
Manager, Wellington
Management
Company
Michael O. Johanns 2,4
Retired United States
Senator, Nebraska, and
Former U.S. Secretary
of Agriculture
Rebecca B. Liebert 3,4
Executive Vice President,
PPG Industries, Inc.
Marcos M. Lutz 1,3
Chief Executive Officer,
Ultrapar
Nayaki Nayyar 1,2
Executive Vice President
and Chief Product
Officer at Ivanti
Kerry J. Preete 3,4
Former Executive Vice
President and Chief
Strategy Officer,
Monsanto Company
Patrick J. Ward 1,3
Retired Chief Financial
Officer of Cummins Inc.
BOARD OF DIRECTORS SKILLS, EXPERIENCE & ATTRIBUTES
Science and Innovation
8/13
C-Suite Executive Leadership Experience
12/13
Information Technology/Cybersecurity/Digital/Artificial Intelligence
5/13
Other Public Company Board Service (within last 5 years)
11/13
Government/Regulatory
Agriculture and/or Chemical Industry Experience
10/13
Human Capital/Talent Management
Accounting/Finance/Financial Reporting Expertise
11/13
International/Global Business Experience
Capital Markets Expertise
7/13
Environmental/Sustainability/Corporate Responsibility
8/13
11/13
11/13
10/13
1. Audit Committee of the Board of Directors. 2. Nomination and Governance Committee of the Board of Directors. 3. People and Compensation Committee of the Board of Directors.
4. Sustainability, Safety and Innovation Committee of the Board of Directors.
6
DRIVING COMPETITIVE ADVANTAGE THROUGH
ENVIRONMENTAL SUSTAINABILITY
Corteva employees around the world are the driving
force behind the purposeful steps the company
continues to take across its global portfolio and
footprint to create an agricultural ecosystem where
farmers, society and business can thrive.
BUILDING ON GREEN
CHEMISTRY ADVANTAGES
With more U.S. EPA Green Chemistry
Challenge Awards than any other agriculture
company, Corteva is an industry leader in
innovating, manufacturing, and launching green
chemistry innovation. Our portfolio of green
chemistries includes new Crop Protection
launches with favorable environmental profiles
and those that enable farmers to reduce the
amount of product needed. For example, Arylex,™
which is the first in a completely new class of
chemistry discovered by researchers at Corteva,
and Rinskor™ – a recipient of multiple green
chemistry awards – have been formulated
to be effective at low use rates and in a
range of seasons.
We work through the value chain to increase
consumer choice, innovate solutions that address
pressing agriculture and environmental challenges,
and promote transparency across the global food
system. At the same time, we plan for the future by
working both within our company on product
innovation and with farmers to adopt sustainable
practices while also forging partnerships with
organizations worldwide to accelerate progress
through innovation and collaboration.
STRENGTHENING LEADERSHIP
IN PLANT BREEDING
In 2021, Corteva furthered its efforts to enhance
biodiversity – a foundational component to
strengthen soil health and sustainable land use.
Corteva maintains the largest and most diverse
pool of maize genetics, enabling the company’s
plant breeders to tailor seed products to local
needs and help support genetic diversity.
Corteva is also a leader in the industry with
innovative technologies, such as predictive
analytics and biotechnology, for genetically
modified and gene-edited crops, which
contribute to climate-positive solutions
and a more resilient food system.
7
CORTEVA ANNUAL REPORT 2021
EMPOWERING EMPLOYEES AND EXPANDING
THE IMPACT OF AGRICULTURE
At Corteva, we view Inclusion, Diversity, and Equity
(ID&E) as foundational to achieving our full potential
as a company. Since launching our ID&E goals, we
have continued to establish the building blocks for
driving progress in this priority area. At the same
time, the company collaborates with organizations
around the world that play important roles in the
food value chain.
ADVANCING OUR
COMMITMENTS TO INCLUSION,
DIVERSITY AND EQUITY
As part of our goals, we remain focused on
building an internal culture of belonging and
improving the diversity of our employee base,
while partnering with farmers and other industry
stakeholders to address equity challenges in
agriculture. In 2021, we rolled out ID&E learning
modules internally, implemented our first pay
equity analysis, continued work to include diverse
suppliers and small businesses in our supply base,
and launched efforts to prompt dialogue and
understanding across our industry. Initiatives such
as these contributed to an increase in female
representation within our workforce, and we
will continue to focus on driving progress
against our other representation goals.
8
Corteva engages in global collaborations, such as
those with the U.S. Agency for International Development
(USAID), Agricultural Cooperative Development Inter-
national (ACDI)/Volunteers in Overseas Cooperative
Assistance (VOCA), One Acre Fund, John Deere and
Land O’Lakes, which are focused on increasing the
incomes, productivity, and sustainable farming practices
of smallholder farmers. Broadly, these collaborations
leverage millions in agricultural development funding
to grow the company’s business in emerging markets,
while reducing risk and enriching the lives of smallholder
farmers and their communities. For example, Corteva
collaborated with USAID and ACDI/VOCA in Tanzania
between 2011 and 2021 to increase the productivity
of 600,000 smallholder farmers by 300% on average.
Corteva’s partnerships leverage our significant
innovation advantages, scale and unique expertise
of Corteva’s world-class employees to devise solutions
to pressing agriculture challenges such as food
security, while promoting equity in agriculture.
PARTNERING TO ADVANCE
THE FUTURE OF FARMING
Corteva continues to engage in research
collaborations to maximize the impact of the
company’s innovations on improving agricultural
productivity and sustainability. In the case of gene
editing, Corteva is working with the International
Maize and Wheat Improvement Center (CIMMYT),
Kenya Agricultural and Livestock Research
Organization (KALRO) and USDA Agricultural
Research Service (USDA-ARS), as well as the Bill
& Melinda Gates Foundation, to jointly develop
improved crops using CRISPR technology. This
collaboration leverages the genetics base that
Corteva has in its germplasm, together with the
company’s data science capabilities. There are
multiple projects in sub-Saharan Africa that range
from addressing disease impacting maize
production by utilizing CRISPR technology to
enable climate- and disease-resilient corn varieties
to improving the harvestability, disease tolerance
and shelf life of crops often considered the
“orphan” crops of sub-Saharan Africa.
2021
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
____________________________________________________________________________
Commission File Number 001-38710
Corteva, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or other Jurisdiction of Incorporation or Organization)
82-4979096
(I.R.S. Employer Identification No.)
9330 Zionsville Road,
Indianapolis, Indiana 46268
(Address of Principal Executive Offices) (Zip Code)
(833) 267-8382
(Registrant’s Telephone Number,
including area code)
Commission File Number 1-815
E. I. du Pont de Nemours and Company
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or other Jurisdiction of Incorporation or Organization)
51-0014090
(I.R.S. Employer Identification No.)
9330 Zionsville Road,
Indianapolis, Indiana 46268
(Address of Principal Executive Offices) (Zip Code)
(833) 267-8382
(Registrant’s Telephone Number,
including area code)
Securities registered pursuant to Section 12(b) of the Act for Corteva, Inc.:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
CTVA
New York Stock Exchange
Securities registered pursuant to Section 12(b) of the Act for E. I. du Pont de Nemours and Company:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
$3.50 Series Preferred Stock
$4.50 Series Preferred Stock
CTAPrA
CTAPrB
New York Stock Exchange
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in RuleRR
405 of the Securities Act).
No securities are registered pursuant to Section 12(g) of the Act.
_____________________________________________________
Corteva, Inc.
E. I. du Pont de Nemours and Company
Yes x No o
Yes x No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Corteva, Inc.
E. I. du Pont de Nemours and Company
Yes o No x
Yes o No x
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.
Corteva, Inc.
E. I. du Pont de Nemours and Company
Yes x No o
Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 files).
Corteva, Inc.
E. I. du Pont de Nemours and Company
Yes ý No o
Yes ý No o
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 definition of "large accelerated filer," "accelerated filer," "smaller reporting company," and
"emerging growth company" in Rule 12b-2 of the Exchange Act.
Corteva, Inc.
E. I. du Pont de
Nemours and
Company
Large Accelerated
Filer
Large Accelerated
Filer
x Accelerated Filer o
o Accelerated Filer o
Non-Accelerated
Filer
Non-Accelerated
Filer
o
x
Smaller reporting
company o
Emerging growth
company o
Smaller reporting
company o
Emerging growth
company o
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.
Corteva, Inc.
E. I. du Pont de Nemours and Company
o
o
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public
accounting firm that prepared or issued its audit report.
Corteva, Inc.
E. I. du Pont de Nemours and Company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Corteva, Inc.
E. I. du Pont de Nemours and Company
Yes ý No o
Yes ý No o
Yes o No ý
Yes o No ý
The aggregate market value of voting stock of Corteva, Inc. held by non-affiliates of the registrant (excludes outstanding shares
beneficially owned by directors and officers and treasury shares) as of June 30, 2021 was $32.5 billion.
As of February 3, 2022, 727,021,000 shares of Corteva, Inc's common stock, $0.01 par value, were outstanding.
As of February 3, 2022, all of E. I. du Pont de Nemours and Company’s issued and outstanding common stock, comprised of 200 shares,
$0.30 par value per share, is held by Corteva, Inc.
E.I. du Pont de Nemours and Company meets the conditions set forth in General Instruction I(1)(a), (b) and (d) of Form 10-K (as
modified by a grant of no-action relief dated February 12, 2018) and is therefore filing
this form with reduced disclosure format.
ff
Documents Incorporated by Reference
Information pertaining to certain Items in Part III of this report is incorporated herein by reference to portions of Corteva, Inc.'s
definitive 2022 Annual Meeting Proxy Statement to be filed within 120 days after the end of the year covered by this Annual
Report on Form 10-K, pursuant to Regulation 14A (the Proxy).
CORTEVA, INC.
Form 10-K
Table of Contents
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
[Reserved]
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supple
mentary Data
u
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
ff
Other Informa
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
tion
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Explanatory Note
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Exhibits and Financial Statement Schedules
Item 16.
SIGNATURES
Form 10-K Summary
E. I. du Pont de Nemours and Company Financial Statements and Supplementary Data
1
Page
2
3
13
26
26
27
29
30
31
32
70
71
71
72
72
72
73
75
75
75
75
76
F-93
79
F-83
Explanatory Note
This Annual Report on Form 10-K is a combined report being filed separately by Corteva, Inc. and EID. Corteva, Inc. owns all
of the common equity interests in EID, and EID meets the conditions set forth in General Instruction I(1)(a), (b) and (d) of
Form 10-K and is therefore filing its information within this Form 10-K with the reduced disclosure format. Each of Corteva,
Inc. and EID is filing on its own behalf the information contained in this report that relates to itself, and neither company makes
any representation as to information relating to the other company. Where information or an explanation is provided that is
substantially the same forff
each company, such information or explanation has been combined in this report. Where information
or an explanation is not substantially the same for each company, separate information and explanation has been provided. In
addition, separate consolidated finaff
ncial
statements, are included in this report.
ncial statements for each company, along with notes to the consolidated finaff
The primary differences between Corteva and EID's financial statements relate to EID's Preferred Stock - $4.50 Series and
EID's Preferred Stock - $3.50 Series, a related party loan between EID and Corteva, Inc. and the associated tax deductible
of Corteva. Inc. (See EID's Note 1 - Basis of Presentation to EID's
interest expense forff
Consolidated Financial Statements, for additional information for above items). The separate EID financial statements and
footnotes for areas that differff
from Corteva, are included within this Annual Report on Form 10-K and begin on page F-83.
Footnotes of EID that are identical to that of Corteva are cross-referenced accordingly.
EID, and the capita
rr
al struct
uret
2
Part I
ITEM 1. BUSSINESSSS
Unless otherwise indicated or the context otherwise requires, references in this Annual Report on Form 10-K to:
•
•
•
•
•
•
•
•
•
ont de Nemours and Company and its consolidated subsidiaries or E. I. du Pd
"Corteva" or "the company" refers to Corteva, Inc. and its consolidated subsidiaries (including EID);
"EID" referff s to E. I. du Pd
and Company excluding its consolidated subsidiaries, as the context may indicate;
"DowDuPont" refers to DowDuPont Inc. and its subsidiaries prior to the Separation (as defined below) of Corteva;
"Historical Dow" refers to The Dow Chemical Company and its consolidated subsidiaries prior to the Internal
Reorganization as defined on page 4;
"Historical DuPont" and "Historical EID" refers to EID prior to the Internal Reorganization (as defined on page 4);
"Dow" refers to Dow Inc. after The Dow Distribution (as defined below);
"DuPont" refers to DuPont de Nemours, Inc. after the Separation of Corteva;
"DAS" refers to the agriculturet
"Merger" refers to the all-stock merger of equals strategic combination between Historical Dow and Historical
DuPont.
business of Historical Dow, Dow AgroSciences; and
ont de Nemours
Background
ff
industry and contributing
Corteva is a leading global provider of seed and crop protection solutions focused on the agriculturet
to a healthier, more secure and sustainable food
supply. Corteva was incorporated in Delaware in March 2018 and maintains its
business headquarters in Indianapolis, Indiana. The company is focused on advancing its science-based innovation, which aims
to deliver a wide range of improved products and services to its customers. Corteva has one of the broadest and most productive
new product pipelines in the agriculture industry. The company intends to leverage its rich heritage of scientific achievement to
New products are crucial to
advance its robust innovation pipeline and continue to shape the future of responsible agriculture.
solving farmers’ productivity challenges amid a growing global population while addressing natural
resistance, regulatory
t
changes, safety requirements and competitive dynamics. The company’s investment in technology-based and solution-based
product offerings allows it to meet farmers’ evolving needs while ensuring that its investments generate suffiff cient returnsr
.
Meanwhile, through Corteva’s unique routes to market, the company continues to work face-to-face with farmers around the
world to understand their needs.
t
The company's broad portfolio of agriculture solutions fuels farmff
Geographic Information, to the Consolidated Financial Statements forff
property.
er productivity in approximately 140 countries. See Note 24 -
details on the location of the company's sales and
On June 1, 2019, Corteva, Inc. became an independent, publicly traded company through the completed separation (the
business of DuPont de Nemours, Inc. (formerly known as DowDuPont Inc.) (“DuPont” or
“Separation”) of the agriculturet
"DowDuPont"). The separation was effectuat
ed through a pro rata distribution (the “Corteva Distribution”) of all of the then-
issued and outstanding shares of common stock of Corteva, Inc.
t
As a result of the Internal Reorganization (defined below), on May 31, 2019, EID was contributed to Corteva, Inc. and, as a
result, Corteva, Inc. owns 100% of the outstanding common stock of EID. Prior to March 31, 2019, Corteva, Inc. had engaged
in no business operations and had no assets or liabilities of any kind, other than those incident to its forma
tion.
ff
EID continues to be a reporting company and is deemed to be the predecessor to Corteva, Inc., with the historical results of EID
to be deemed the historical results of Corteva for periods prior to and including May 31, 2019. Shares of EID preferred stock,
$3.50 Series and $4.50 Series, issued and outstanding immediately prior to the Separation remain issued and outstanding and
were unaffected by the Separation.
Internal Reorganizations and Business Separations
Subsequent to the Merger, Historical Dow and EID engaged in a series of internal reorganization and realignment steps to
realign their businesses into three subgroups: agriculture,
materials science and specialty products (collectively, the "Business
Separations”). On April 1, 2019, DowDuPont completed the separation of its materials science business into a separate and
independent public company by way of a distribution of Dow through a pro rata dividend in-kind of all of the then-issued and
outstanding shares of Dow’s common stock, to holders of DowDuPont's common stock, as of the close of business on March
21, 2019 (the “Dow Distribution” and together with the Corteva Distribution, the “Distributions”).
t
3
ITEM 1. BUSINESS, continued
Part I
Prior to the Dow Distribution, Historical Dow conveyed or transferred the assets and liabilities aligned with Historical Dow’s
agriculture business to separate legal entities (“Dow Ag Entities”) and the assets and liabilities associated with its specialty
products business to separate legal entities (the “Dow SP Entities”). On April 1, 2019, Dow Ag Entities and the Dow SP
Entities were transferred and conveyed to DowDuPont.
In furtherance of the Business Separations, EID engaged in a series of internal reorganization and realignment steps (the
“Internal Reorganization” and the "Business Realignment," respectively) to realign its businesses into three subgroups:
agriculture, materials science and specialty products. As part of the Internal Reorganization:
•
•
•
•
the assets and liabilities aligned with EID’s materials science business ("EID ECP"), were transferred or conveyed to
separate legal entities that were ultimately conveyed by DowDuPont to Dow on April 1, 2019;
the assets and liabilities aligned with EID’s specialty products business were transferred or conveyed to separate legal
entities that were ultimately distributed to DowDuPont ("EID Specialty Products Entities") on May 1, 2019;
on May 2, 2019, DowDuPont conveyed Dow Ag Entities to EID and in connection with the foregoing, EID issued
additional shares of its common stock to DowDuPont; and
on May 31, 2019, DowDuPont contributed EID to Corteva, Inc.
On May 6, 2019, the Board of Directors of DowDuPont approved the distribution of all the then issued and outstanding shares
of common stock of Corteva, Inc., then a wholly-owned subsidiary of DowDuPont, to DowDuPont stockholders. On June 1,
2019, DowDuPont completed the Separation. Corteva, Inc.'s common stock began trading on the New York Stock Exchange
under the ticker symbol "CTVA" on June 3, 2019.
As a result of the Business Realignment and the Internal Reorganization discussed above, Corteva owns 100% of the
outstanding common stock of EID. EID is a subsidiary of Corteva, Inc. and continues to be a reporting company, subject to the
requirements of the Securities Exchange Act of 1934, as amended.
Agreements
Separationtt
In connection with the Distributions, DuPont, Corteva, and Dow (together, the “Parties” and each a “Party”) have entered into
certain agreements to effect the separation, provide for the allocation of DowDuPont’s assets, employees, liabilities and
obligations (including its investments, property and employee benefits and tax-related assets and liabilities) among the Parties,
ework for Corteva's relationship with Dow and DuPont following the separations and Distributions.
and provide a framff
Effective April 1, 2019, the Parties entered into the folff
lowing agreements:
•
•
•
•
Separation and Distribution Agreement - Effective April 1, 2019, the Parties entered into an agreement that sets fort
h,
among other things, the agreements among the Parties regarding the principal transactions necessary to effect the
Distributions. It also sets forth other agreements that govern certain aspects of the Parties’ ongoing relationships after
the completion of the Distributions (the "Corteva Separation Agreement").
ff
Tax Matters Agreement - The Parties entered into an agreement effective as of April 1, 2019, as amended on June 1,
2019, that governs their respective 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 and other matters
regarding taxes.
t
Employee Matters Agreement - The Parties entered into an agreement that identifies employees and employee-related
liabilities (and attributablea
assets) to be allocated (either retained, transferred and accepted, or assigned and assumed,
as applicablea
) to the Parties as part of the Distributions and describes when and how the relevant transferff s and
assignments would occur.
Intellectual Property Cross-License Agreement - Effective as of April 1, 2019 Corteva and Dow, and effective June 1,
2019, Corteva and DuPont, entered into Intellectual Property Cross-License Agreements. The Intellectual Property
Cross-License Agreements set forth the terms and conditions under which the applicablea
Parties may use in their
respective businesses, following each of the Distributions, certain know-how (including trade secrets), copyrights, and
software, and certain patents and standards, allocated to another Party pursuant to the Corteva Separation Agreement.
4
ITEM 1. BUSINESS, continued
Part I
•
Letter Agreement - Effective as of June 1, 2019 DuPont and Corteva entered into a Letter Agreement. The Letter
Agreement sets forff
th certain additional terms and conditions related to the Separation, including certain limitations on
each party’s ability to transfer certain businesses and assets to third parties without assigning certain of such party’s
indemnification obligations under the Corteva Separation Agreement to the other party to the transferee of such
businesses and assets or meeting certain other alternative conditions.
Business Segments
The company’s operations are managed through two reportable segments: seed and crop protection. The seed segment develops
and supplies commercial seed combining superior germplasm with advanced traits to produce high yield potential for farmers
around the world. The crop protection segment supplies products to protect crop yields against weeds, insects and disease,
enablia
ng farmers to achieve optimal results. The combination of these leading platforms creates one of the broadest portfolios of
agriculture solutions in the industry. Additional information with respect to business segment results is included in Item 7,
Management’s Discussion and Analysis of Financial Condition and Results of Operations, on page 47 of this report and Note
25 - Segment Information, to the Consolidated Financial Statements.
Seed
The seed segment is a global leader in developing and supplying commercial seed combining advanced germplasm and traits
that produce optimum yield for farms around the world. The company’s seed segment is a leader in many key seed markets,
including North America corn and soybeans, Europe corn and sunflower, as well as Brazil, India, South Africa and Argentina
corn. The company offers trait technologies that improve resistance to weather, disease, insects and herbicides used to control
weeds, and trait technologies that enhance food
and nutritional characteristics. In addition, the company provides digital
solutions that assist farmer decision-making with a view to optimize product selection and, ultimately, help maximize yield and
profitability.
ff
Details on the seed segment’s net sales by majora
follows:
product line and geographic
a
region (based on customer location) are as
2021 Net Sales by
Product Line
Other Oilseeds
Other
Soybean
Corn
2021 Net Sales by
Geographic Region
Asia Pacific
Latin America
Europe,
Middle East
and Africa
("EMEA")
U.S. &
Canada
("North
America")
5
ITEM 1. BUSINESS, continued
Products att
The seed segment’s majoa r brands and technologies, by key product line, are listed below:
nd Brands
Part I
Seed Solutions Brands
Seed Solutions Traits and
Technologies
Other
Pioneer®; Brevant® seeds; Dairyland Seed®; Hoegemeyer®; Nutech®; Seed
;;
; Alforex®; PhytoGen®; Pannar®; VP Maxx®;
Consultants®; AgVenture®
;
HPT®; G2®; Supreme EX®
; XL®; Power Plus®
ENLIST E3® soybeans; ENLIST® cotton; EXZACT™ Precision Technology;
HERCULEX® Insect Protection; Pioneer® brand hybrids with Leptra® insect
protection technology offering protection against above ground pests;
POWERCORE® trait technology family of products; Pioneer® brand
Optimum® AcreMax® family of products offering above and below ground
insect protection; REFUGE ADVANCED® trait technology; SMARTSTAX®
trait technology; NEXERA® canola trait; Omega-9 Oils; Pioneer® brand
Optimum® AQUAmax® hybrids; Pioneer® brand A-Series soybeans; Pioneer®
brand Plenish® high oleic soybeans; ExpressSun® h bi id
ltolerant tr iait;t
herbicide
Pioneer Protector® products for canola, sunflower and sorghum; Pioneer
MAXIMUS® rapeseed hybrids; Qrome® products for corn; Pioneer® brand
canola hybrids with Clearfield® trait; PROPOUND™ advanced canola meal;
Conkesta E3® soybeans; WideStrike® insect protection trait; WideStrike® 3
insect protection trait.
LumiGEN® seed treatments, LUMIDERM®, LUMIVIA® and LUMIALZA™;
GRANULAR®; Granular® Insights™ (e.g. LANDVisor™)
AA
the commercialization of ENLIST™ corn, ENLIST E3®
U.S. federal regulatory authorizations have been obtained forff
soybeans and ENLIST® cotton, including the U.S. Environmental Protection Agency's registration of ENLIST DUO® and
ENLIST ONE® for use with ENLIST™ corn, soybeans and cotton in 34 states. The company has also secured cultivation
authorizations of ENLIST E3® soybeans and ENLIST™ corn in Argentina, Brazil, and North America
In 2020, Corteva signed an agreement with J.G. Boswell Company to purchase the remaining 46.5 percent interest in
PhytoGen® Seed Company, LLC – a joint venturet
between the two companies. With a 100% ownership position in PhytoGen®
Seed Company, LLC, Corteva became the sole owner of the intellectual property, including patents, trademarks, proprietary
germplasm and information, as well as know-how.
In 2020, Corteva announced the launch of Brevant™ seeds in the U.S. for sale exclusively through retail locations in the
Midwest and Eastern Corn Belt starting with 2021 planting. As a global brand, Brevant™ seeds, which was originally launched
ers a greater choice with a high-performance
in Latin America, Canada, and select European countries in 2018, provides farmff
retail solution. Brevant™ provides multiple seed offerings including corn, soybeans, sunflowers and canola.
In connection with the validation of breeding plans and large-scale product development timelines focused on rapidly ramping
up differentiated technology solutions, during the fourth quarter of 2019, the company began accelerating the ramp up ou
f the
Enlist E3TM trait platform in the company’s soybean portfolio mix across all brands, including Pioneer® brands, over the
subsequent five years. During the ramp-up period, the company is expected to significantly reduce the volume of products with
the Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits beginning in 2021, with expected minimal
use of the Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® traits thereafter for the remaining term of the non-exclusive
license with the Monsanto Company. Refer to Prepaid Royalties within the Critical Accounting Estimates section on page 63
for additional information.
In 2019, Corteva received import authorization from China for the Conkesta® soybean insect control trait, which was a
necessary step for commercialization of Conkesta E3® soybeans in Latin America. Conkesta E3® soybeans received regulatory
approvals and was commercialized in the second half of 2021.
In 2019, the company launched Qrome® corn products in U.S. Pioneer® brands. Qrome® products offer growers high yield
potential insect control options to help drive productivity for their operations by combining top-tier genetics and strong
defensive traits. In 2020, Qrome® products were expanded to the U.S. multi-channel and Canada Pioneer® brands.
6
ITEM 1. BUSINESS, continued
Part I
ff d® canola production system in North America from BASF in 2019. The
The company acquired exclusive rights to the Clearfiel
Clearfield® canola trait provides non-genetically modified tolerance to imidazolinone herbicides. Clearfield® canola in the
Pioneer® and Nexera® brands were already highly establia
shed in the market and integrated into the company’s breeding,
production and commercial processes.
In addition, the company creates digital tools that provide both farmers and internal sales resources with platforms to support
agronomic and operational decision-making, particularly in the areas of product selection, targeted crop protection application,
and financial analysis, designed to help maximize yield and profitabila
ity.
on
Distributi
tt
The seed segment has a diverse worldwide network which markets and distributes the company’s brands to customers,
primarily through the company’s multi-channel, multi-brand strategy, which includes four
differentiated channels: Pioneer
agency model, regional brands, retail brands, as well as third parties through licensing and distribution channels.
ff
The Pioneer agency model
is unique to Corteva and represents sales made directly to farmers via independent sales
representatives. Through this agency model, the company interacts directly with farmers at multiple points in the growing
season, from prior to planting all the way through harvest. These regular interactions enable the company to provide the advice
and service farmff
ers need while giving the company real-time insights into the customers’ future ordering decisions. The
company’s regional brands connect to customers through regional brand employees and farmer-dealer networks. Retail brands
provide a one-stop shop for seed and chemistry solutions and may include sales to distributors, agricultural cooperatives, and
dealers. Finally, Corteva out-licenses traits and germplasm to third parties.
aw Materials
Key Re
The key raw materials for seed include corn and soybean seeds. To produce high-quality seeds, the company contracts with
third-party growers globally. Corteva focuses on production close to the customer to provide the seed product, which is suitable
for that region and its weed, insect and disease challenges, weather, soil and other conditions. The company conditions and
packages the seeds using its own plants and third-party contract manufacturers. By striking a balance between owning
production facility assets directly and contracting with third-party growers, the company believes it is best able to maintain
flexibility to react to demand changes unique to each geographya
while minimizing costs. The company seeks to collaborate with
strategic seed growers and share its digital agronomy and product management knowledge with them. The company’s third-
party growers are an important part of its supply chain. Corteva provides them with rigorous training, planning tools and access
to a system that tests and advances products matched to specific geographic needs.
The seed segment's R&D and supply chain groups work seamlessly to select and maintain product characteristics that enhance
the quality of its seed products and solutions. Corteva focuses on customer-driven innovation to deliver superior germplasm and
trait technologies. With its large sets of digitized data and its seed field management solution, the company can manage its fiel
ff d
operations efficiently and draw insights from data quickly and effectively. This allows the company’s supply chain to react
quickly to changing customer needs and provides R&D with tremendous amounts of data to analyze and incorporate into
resource allocation decisions. The company continues to invest in and build capabilities that drive value via data digitization
and analytics that enable it to create an even more responsive and efficient answer to customer needs.
tion
rotPP ectt
Crop Po
The crop protection segment serves the global agricultural input industry with products that protect against weeds, insects and
other pests, and disease, and that improve overall crop health both above and below ground via nitrogen management and seed-
applied technologies. The company offers crop protection solutions that provide farmers the tools they need to improve
productivity and profitability, and help keep fieff
lds free of weeds, insects and diseases. The company is a leader in global
herbicides, insecticides, nitrogen stabila
izers and pasture and range management herbicides.
7
ITEM 1. BUSINESS, continued
Part I
Details on the crop protection segment’s net sales by major product line and geographic
as follows:
a
region (based on customer location) are
2021 Net Sales by
Product Line
Other
Fungicides
Insecticides
2021 Net Sales by
Geographic Region
Asia Pacific
Herbicides
Latin America
North America
EMEA
Products att
The crop protection segment’s majora
nd Brands
brands and technologies, by key product line, are listed below:
Weed Control
Disease Management
Insect and Nematode Management CLOSER™; DELEGATE™; INTREPID®; ISOCLAST™; LANNATE®;
EXALT™; PEXALON™; TRANSFORM™; VYDATE®; OPTIMUM®;
RADIANT™; SENTRICON™; ENTRUST® SC; GF-120™; and TRACER™
APROACH PRIMA®; VESSARYA®; APROACH™, APROACH POWER®;
TALENDO™; TALIUS®; EQUATION PRO®; EQUATION CONTACT®;
ZORVEC™; INATREQ™; CURZATE™; TANOSAA
ACANTO™; and GALILEO®
ARIGO®; ARYLEX®; ENLIST™ weed control system; ENLIST ONE™;
;;
BROADWAY™; RINSKOR™; ZYPAR™; MUSTANG™; GALLANT™;
VERDICT®; LANCET®; KERB™; PIXXARO®; QUELEX™; GALLERY®
;;
;
CENT-7®; SNAPSHOT®
;;
GRANITE®; RAIRR NBOW™; PINDAR® GT; VIPER®
;;
BELKAR®; WIDEMATCH®
DURANGO™; FENCER®; GARLON™; SONIC®; TEXARO®;
KEYSTONE®; PACTO®; LIGATE®; DIMENSION®; TOPSHOT™;
RICER™; LOYANTAA ™; CLASSIC®; REALM® Q; TRIVENCE®;
;;
LONTREL®; GRAZON®; PANZER®
STARANE®; SURESTART®; and TORDON®
QQ
; RESICORE™; SPIDER®;
; PRIMUS®
; TRELLIS®; CITADEL™; CLIPPER™;
; PERFECTMATCH®; CLINCHER™;
; WIDEATTACK®;
®, FONTELIS™;
Nitrogen Management
INSTINCT™; N-LOCK™; N-SERVE® Nitrogen Stabilizer
aw Materials
Key Re
The key raw materials and supplies for crop protection include chlorinated pyridines derivatives, specialty intermediates and
technical grade active ingredients, chlorine, and seed treatments. Typically, the company purchases majora
raw materials through
long-term contracts with multiple suppliers, which sometimes require minimum purchase commitments. Certain important raw
materials are supplied by a fewff majora
its raw materials to remain balanced,
though pricing may be volatile given the current state of the global economy. The company relies on contract manufacturers,
both domestically and internationally, to produce certain inputs or key components forff
its product formulations. These inputs
ates and sells its products. Shifts in customer demand,
are typically sourced close to where the company ultimately formul
ity constraints may, at times, necessitate sourcing from an
reduced local availabila
alternative geography.
ff
a
ity of raw materials, and/or production capac
The company strives to maintain multiple high-quality supply sources for each input.
ers. The company expects the markets forff
u
suppli
a
Corteva’s supply chain strategy will involve managing global supplies of active and intermediate ingredients sourced regionally
nt to meet future
with global best practices and oversight. Corteva’s supply strategy includes a robust and flexible global footpri
ff
8
ITEM 1. BUSINESS, continued
Part I
portfolio growth. The company’s supply chain also provides competitive advantages including reducing time to meet customer
requirements in regions while minimizing costs through the value chain.
Seasonality
Corteva’s sales are generally strongest in the first half of the calendar year, which aligns with the planting and growing season
in the northern hemisphere. The company typically generates about 65 percent of its sales in the first half of the calendar year,
driven by northern hemisphere seed and crop protection sales. The company generates about 35 percent of its sales in the
second half of the calendar year, led by seed sales in the southern hemisphere. The seasonality in sales impacts both the seed
ers, is more
and crop protection segments. The company’s direct distribution channel, where products are shipped to farmff
affected by planting delays than its competitors. Generally speaking, unfavorablea
weather slows the planting season and can
affect the company’s quarterly results and sales mix. Severe unfavorablea
weather, however, can impact overall sales. Accounts
receivable tends to be higher during
the first half of the year, consistent with the peak sales period in the northern hemisphere,
ff
with cash collection focused in the fourt
h quarter.
d
Human Capital Management
Corteva aims to attract the best employees, to retain those employees through offering career development and training
opportunities while also prioritizing their safety and wellness in an inclusive and productive work environment. The company’s
strong employee base of approximately 21,000 employees, along with its commitment to Corteva’s core values, is a key
element to the success of its business.
m
e ComCC posit
Workforc
ion. As of December 31, 2021, the company globally employs approximately 21,000 employees. In order
kk
to address regional specific customer needs within its global business, the company has a geographically diverse employee base
with 48%, 18%, 17%, 13% and 4% located in North America, Latin America, Europe, Asia-Pacific and Africa regions,
respectively.
Approximately 1% of the workforce is unionized in the United States and another 11% participate in work councils and
collective bargaining arrangements outside the United States. In 2021, the company did not experience any work stoppages dued
to strike or lockouts.
Safety. Living safely is one of the company’s core values by which the company manages its business. The company has
implemented safety programs and management practices to promote a culture of safety to protect its employees, as well as the
qualifications and certifications for certain
environment. This includes required trainings for employees, as well as specificff
operational employees.
Diversity. The company has a robust inclusion, diversity, and equity (“ID&E”) vision and strategy, based upon the belief that
embracing diversity and inclusion benefits the company by creating a workforce with a greater variety of skills and perspectives
as a result of their differentiated backgrounds and experiences. Specific ID&E initiatives are identified and tracked to create a
culture of belonging where a diverse population of employees are attracted, retained, and engaged. Management is expected to
support specific diversity initiatives forff
, in order to build a more
a
representative workforce. Critical to creating this environment are company-sponsored employee business resource groups
objectives of both the employee and the company, including community
(“BRGs”) that support and promote certain mutual
engagement and the professional development of employees. The BRGs provide a space where employees can foster
connections within a supportive environment. As of the 2021 year end, the company had eight global BRGs, each led by a
member of the company’s senior leadership: Disabila
ity Awareness Network; Global African Heritage Alliance; Growing Asian
Impact Network; Latin Network; Pride (LGBTQ+); Professional Learning Acceleration Network; Veteran’s Network; and
Women’s Inclusion Network.
s and business, as applicablea
their respective geographie
ff
t
The company is focused on recruitment of diverse candidates and on internal talent development of its diverse leaders so that
they can advance their careers and move into leadership positions within the company. The company monitors its diversity and
inclusion efforts through periodic engagement surveys and other measures. The results of the company’s efforts, along with its
ID&E strategy, are reviewed periodically with the company’s management, and through regular reviews of the company’s
leadership pipelines with the People and Compensation Committee of the Board of Directors.
x
MM
nced Management
Experie
. The company believes its management team has the experience necessary to effectively execute its
strategy and advance its product pipelines and technology. The company's chief executive officer and executive vice presidents
have an average of approximately 26 years of agriculture experience and are supported by an experienced and talented
management team who is dedicated to maintaining and expanding its position as a global force in the agriculturet
industry.
9
ITEM 1. BUSINESS, continued
Part I
t
Intellectual Property
property estate, which includes patents, trade secrets, trademarks and copyrights, in the
Corteva considers its intellectual
aggregate, to constitute a valuable asset of Corteva and actively seeks to secure intellectual
property rights as part of an overall
strategy to protect its investment in innovations and maximize the results of its research and development program. While the
company believes that its intellectual property estate, taken as a whole, provides a competitive advantage in many of its
businesses, no single patent, trademark, license or group of related patents or licenses is in itself essential to the company as a
whole or to any of the company’s segments.
t
t
property. Many of the processes used to make Corteva
Trade secrets are an important element of the company's intellectual
time to time, may be licensed to third parties. Corteva vigilantly protects all of its
products are kept as trade secrets which, fromff
intellectual
property including its trade secrets. When the company discovers that its trade secrets have been unlawfully taken, it
reports the matter to governmental authorities for investigation and potential criminal action, as appropriate. In addition, the
company takes measures to mitigate any potential impact, which may include civil actions seeking redress, restitution and/or
damages based on loss to the company and/or unjust enrichment.
t
radem
arks: Corteva continually appl
Patents & T
and obtains U.S. and foreign patents and has access to a large patent
TT
tt
portfolio, both owned and licensed. Corteva’s rights under these patents and licenses, as well as the products made and sold
under them, are important to the company in the aggregate. The protection afforded by these patents varies based on country,
scope of individual patent coverage, as well as the availability of legal remedies in each country. This significant patent estate
may be leveraged to align with the company’s strategic priorities within and across product lines. At December 31, 2021, the
company owned about 5,600 U.S. patents and about 11,100 active patents outside of the U.S.
ies forff
a
Remaining life of granted patents owned as of December 31, 2021:
Within 5 years
6 to 10 years
11 to 16 years
16 to 20 years
Total
Approximate U.S.
Approximate Other Countries
700
1,700
2,100
1,100
5,600
1,300
4,300
5,100
400
11,100
In addition to its owned patents, the company owns over 5,500 patent applications.
The company also owns or has licensed a substantial number of trade names, trademarks and trademark registrations in the
United States and other countries, including approximately 14,500 registrations and pending trademark applications in a
number of jurisdictions.
In addition, the company holds multiple long-term biotechnology trait licenses from third parties in the normal course of
business. Most corn hybrids and soybean varieties sold to customers contain biotechnology traits licensed from third parties
under these long-term licenses.
Competition
The company competes with producers of seed germplasm, trait developers, and crop protection products on a global basis. The
global market for products within the industry is highly competitive and the company believes competition has and will
continue to intensify. Corteva competes based on germplasm and trait leadership, price, quality and cost competitiveness and
the offering of a holistic solution. The company’s key competitors include BASF, Bayer, FMC and ChemChina, as well as
companies trading in generic crop protection chemicals and regional seed companies.
Environmental Matters
Information related to environmental matters is included in several areas of this report: (1) Environmental Proceedings
beginning on page 28, (2) Management's Discussion and Analysis of Financial Condition and Results of Operations beginning
on pages 61, 66-68 and (3) Note 2 - Summary of Significant Accounting Policies, and Note 18 - Commitments and Contingent
Liabilities, to the Consolidated Financial Statements.
10
ITEM 1. BUSINESS, continued
Part I
Regulatory Considerations
Our seed and crop protection products and operations are subject to certain approval procedures, manufacturing requirements
and environmental protection laws and regulations in the jurisdictions in which we operate. We evaluate and test products
throughout the research and development phases, and each new technology undergoes furthe
studies and
tests to validate that the product can be used effectively and that use of the technology is safe for humans and animals and does
not cause undue harm to the environment when used in accordance with the directions for use.
r rigorous scientificff
ff
The regulatory approval processes and procedures globally are becoming increasingly more complex, which has resulted in
additional testing needs, difficult to predict and longer approva
l timelines, and higher development and maintenance costs. We
continue to invest on an ongoing basis to keep dossiers current, respond to regulators and meet evolving regulatory standards
required by global regulatory frameworks. Failure to comply with these regulations or future regulatory bans and requirements
e. The increase in timelines for regulatory
related to our products and their use may materially impact our financial performanc
approvals may result in the company not achieving its sustainability targets, or its anticipated returns
on research and
development investments.
a
ff
t
ii
e
(“GMOs”)
ion of Genetically Mll
odiMM fii ed Organisms
Regulat
Genetically modified seed products are subject to regulatory approval processes and procedures. For example, in the United
States, the Coordinated Framework for Regulation of Biotechnology governs genetically modified organisms, using existing
U.S. legislation and legal authorities on food, feed and environmental safety. Plant GMOs are regulated by the U.S. Department
of Agriculture’s (the “USDA”) Animal and Plant Health Inspection Service (the “APHIS”) under the Plant Protection Act. The
APHIS assesses the trait to ensure that the trait will not pose a plant pest and is not a noxious weed. GMOs in food are regulated
by the Food and Drug Administration (the “FDA”) under the Federal Food, Drug, and Cosmetic Act (the “FFDCA”). The FDA
ensures that the food is safe for food and feed. Pesticides and microorganisms containing GMOs are regulated by the
Environmental Protection Agency (the “EPA”) pursuant to the Federal Insecticide, Fungicide and Rodenticide Act (the
“FIFRA”)RR
and the Toxic Substances Control Act. The EPA assesses the trait or the stack containing the traits to ensure that
there is no unreasonable adverse effecff
t to the environment.
Other countries also have rigorous approval processes, procedures, and scientific testing requirements forff
the cultivation or
import of genetically modified seed products. In the United States and other countries that have functioning regulatory systems,
a rigorous scientific review is conducted by these agencies to demonstrate that genetically modified products are as safe as
traditionally bred, non-biotech/GMO counterparts for food, feed and the environment. Various countries in EMEA, Latin
America, and Asia have banned GMOs entirely.
e
ion of Crop Protection Productstt
Regulat
Globally, manufacturers of crop protection products, including herbicides, fungicides and insecticides are required to submit an
application/dossier and obtain government regulatory approval prior to selling products in a particular country.rr
In the United
States, the EPA is responsible for registering and overseeing the approval and marketing of pesticides, pursuant to the FIFRA,RR
the FFDCA and the Food Quality Protection Act. Also, the USDA and the FDA monitor levels of pesticide residue that is
allowed on or in crops. Already registered pesticides are required to be re-registered every 15 years to ensure that those
products continue to meet the rigorous safety standards set by the regulators. The EPA reevaluates pesticide tolerances at least
every 10 years, taking into account ecological and human health risks, in addition to cumulative risks as a result of multiple
routes of and sources of exposure.
As of January 2rr
022, before registering any new conventional pesticide active ingredient, the EPA will evaluate the potential
effects on listed species and their designated critical habitats under the Endangered Species Act (the “ESA”). EPA also has
initiated such evaluations for certain other active ingredients in response to existing or threatened litigation. Where the EPA
determines that a pesticide in the registration and re-evaluation processes “may affect” a listed species, the EPA must consult
l, registration, and
with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service. As part of its approva
reevaluation processes, the EPA may impose certain use restrictions on crop protection products under the ESA. Under the
citizen suit provisions, the ESA also includes citizen suit provisions that allow the public to bring suit in court against fede
ral
agencies when they believe a listed species is not being adequately protected by the EPA.
a
ff
The company's European operations are subject to the European chemical regulation REACH (“Registration, Evaluation,
Authorisation, and Restriction of Chemicals”) and the CLP (“Classification, Label
ing, and Packaging of Substances and
Mixtures”). Other jurisdictions also have rigorous approval processes, procedures and scientific testing requirements for the
approval of crop protection products. We continue to monitor legislative and regulatory developments related to pollution and
other environmental health and safetff y matters.
a
tt
European Farm to Fork Strategy
In October 2021, a majority of the European Parliament adopted the Farm to Fork Strategy setting forth the European Union’s
plans to increase organic farming. As part of this strategy, the E.U. Commission has set aggressive 2030 targets to reduce by
50% the use and risk of chemical pesticides and the use of more hazardous pesticides by 50%. Additionally, as part of this
strategy, the E.U. Commission is targeting having 25% of the European Union’s agricultural land under organic farff ming by
11
ITEM 1. BUSINESS, continued
Part I
ling and develop a food
2030. The E.U. Commission is also expected to propose mandatory front-of-pack nutrition label
label
ling framework covering the nutritional, climate, environmental and social aspects of food products. While the company
a
has a growing product portfolio supportive to organic agriculture, the implementation of this strategy may decrease the size of
the market for its products within the European Union.
a
ff
ff
Available Information
The company's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to
those reports are accessible on Corteva's website at http://investors.corteva.com by clicking on the section labeled "Financial
Information", then on "SEC Filings." These reports are made available, without charge, as soon as is reasonably practicablea
after the company files or furnishes them electronically with the Securities and Exchange Commission. No portion of the
company's website mentioned in this report, or the materials contained on it, have been made part of this annual report on Form
10-K or incorporated herein by reference, unless such incorporation is specifically mentioned herein.
12
ITEM 1A. RISK FACTORS
Risks Relatedtt
to our Industrytt
Part I
The successful development and commercialization of Corteva's pipeline products will be necessary for Corteva's
growth.
Corteva uses advanced breeding technologies to produce hybrids and varieties with superior performance in farmff
lds and
uses biotechnology to introduce traits that enhance specific characteristics of its crops. Corteva also uses advanced analytics,
software tools, mobile communications and new planting and monitoring equipment to provide agronomic recommendations to
growers. Additionally, Corteva conducts research into biological and chemical products to protect farmers’ crops from pests
and diseases and enhance plant productivity.
ers’ fieff
t
ity to market under regulatory frameworks, competition, inabila
New product concepts may be abaa ndoned for many reasons, including greater anticipated development costs, technical
ity to
difficulties, lack of efficff acy, regulatory obstacles or inabila
prove the original concept, lack of demand and the need to divert focus, from time to time, to other initiatives with perceived
opportunities for better returns.
The processes of active ingredient development or discovery, breeding, biotechnology trait
discovery and development and trait integration are lengthy, and a very small percentage of the chemicals, genes and
germplasm Corteva tests is selected for commercialization. Furthermore, the length of time and the risk associated with the
breeding and biotech pipelines are interlinked because both are required as a package for commercial success in markets where
biotech traits are approved for growers. For example, the commercial transition to the company’s Enlist E3™ and Conkesta
E3® soybean technologies, which are packaged with its Enlist One® and Enlist Duo® herbicides, is expected to take the
company several years to complete. In countries where biotech traits are not approved forff widespread use, Corteva’s seed sales
depend on the quality of its germplasm. While initial commercialization efforts have been promising, there are no guarantees
that anticipated levels of product acceptability within Corteva's markets will be achieved or that higher quality products will not
be developed by Corteva's competitors in the futff ure.
t
Speed in discovering, developing, protecting and responding to new technologies, including new technology-based distribution
channels that could facff
ilitate Corteva’s ability to engage with customers and end users, and bringing related products to market
is a significant competitive advantage. Commercial success frequently depends on being the first company to the market, and
many of Corteva’s competitors are also making considerable investments in similar new biotechnology products, improved
germplasm products, biological and chemical products and agronomic recommendation products.
Corteva may not be able to obtain or maintain the necessary regulatory approvals for some of its products, including its
seed and crop protection products, which could restrict its ability to sell those products in some markets.
Regulatory and legislative requirements affect the development, manufacture and distribution of Corteva’s products, including
the testing and planting of seeds containing Corteva’s biotechnology traits and the import of crops grown from those seeds, and
non-compliance can harm Corteva’s sales and profitability.
Seed products incorporating biotechnology derived traits and crop protection products must be extensively tested for safety,
efficacy and environmental impact before they can be registered forff
production, use, sale or commercialization in a given
market. In certain jurisdictions, Corteva must periodically renew its approvals for both biotechnology and crop protection
products, which typically require Corteva to demonstrate compliance with then-current standards which generally are more
stringent since the prior registration. The regulatory approvals process is lengthy, costly, complex and in some markets
unpredictable, with requirements that can vary by product, technology, industry and country. The regulatory approvals process
for products that incorporate novel modes of action or new technologies can be particularly unpredictable and uncertain due to
the then-current state of regulatory guidelines and objectives, as well as governmental policy considerations and non-
governmental organization and other stakeholder considerations. The uncertainty and increased length of regulatory approvals
may reduce Corteva’s returnt
ity, or
sustainability metrics.
on its research and development investments, and impede its abila
ity to meet sales, profitabila
a crop protection product not approved in the
Furthermore, the detection of biotechnology traits or chemical residues fromff
country in which Corteva sells or cultivates its product, or in a country to which Corteva imports its product, may affect
Corteva’s ability to supply its products or export its products, or even result in crop destruction, product recalls or trade
disruption, which could result in lawsuits and termination of licenses related to biotechnology traits and raw material supply
agreements. Delays in obtaining regulatory approvals to import, including those related to the importation of crops grown from
13
ITEM 1A. RISK FACTORS, continued
Part I
seeds containing certain traits or treated with specific chemicals, may influence the rate of adoption of new products in globally
traded crops.
Additionally, the regulatory environment may be impacted by the activities of non-governmental organizations and special
interest groups and stakeholder reaction to actual or perceived impacts of new and existing technology, products or processes
on safety, health and the environment. Obtaining and maintaining regulatory approvals requires submitting a significant amount
of information and data, which may require participation from technology providers. Regulatory standards and trial procedures
are continuously changing. In addition, Corteva has seen an increase in recent years in the number of lawsuits filed by those
who identify themselves as public or environmental interest groups seeking to invalidate pesticide product registrations and/or
challenge the way federal or state governmental entities apply the rules and regulations governing pesticide produce use. The
pace of change together with the lack of regulatory harmony could result in unintended noncompliance. Responding to these
al expenditures or require changes in
changes and meeting existing and new requirements may involve significant costs or capita
ls could have
business practice that could result in reduced profitability. The failure to receive necessary permits or approva
near- and long-term effecff
ts on Corteva’s ability to produce and sell some current and future
products.
a
ff
The degree of public understanding and acceptance or perceived public acceptance of Corteva’s biotechnology and
other agricultural products and technologies can affect Corteva’s sales and results of operations by affecting planting
approvals, regulatory requirements and customer purchase decisions.
Concerns and claims regarding the safe use of seeds with biotechnology traits and crop protection products in general, their
potential impact on health and the environment, and the perceived impacts of biotechnology on health and the environment,
reflect a growing trend in societal demands for increasing levels of product safety and environmental protection. These include
concerns and claims that increased use of crop protection products, drift, inversion, volatilization and the use of biotechnology
traits meant to reduce the resistance of weeds or pests to control by crop protection products, could increase or accelerate such
resistance and otherwise negatively impact health and the environment. These and other concerns could manifest themselves in
stockholder proposals, preferred purchasing, delays or failures in obtaining or retaining regulatory approvals, delayed product
launches, lack of market acceptance, product discontinuation, continued pressure for and adoption of more stringent regulatory
intervention and litigation, termination of raw material supply agreements and legal claims. These and other concerns could also
influence public perceptions, the viabila
ity or continued sales of certain of Corteva’s products, Corteva’s reputation and the cost
to comply with regulations. As a result, such concerns could have a material adverse effect Corteva’s business, results of
operations, financial condition and cash flows.
ff
Changes in agricultural and related policies of governments and international organizations may prove unfavorable.
ers, which may inhibit the growth in these
In many markets there are various pressures to reduce government subsidies to farmff
markets of products used in agriculture.
In addition, government programs that create incentives for farmers may be modified or
discontinued. However, it is difficult to predict accurately whether, and if so when, such changes will occur. Corteva expects
that the policies of governments and international organizations will continue to affect the planting choices made by growers as
well as the income available to growers to purchase products used in agriculture and, accordingly, the operating results of the
agriculture industry.
t
Corteva participates in an industry that is highly competitive and has undergone consolidation, which could increase
competitive pressures.
Corteva currently facff es significant competition in the markets in which it operates. In most segments of the market, the number
of products available to the grower is steadily increasing as new products are introduced. At the same time, certain products are
coming off patent and are thus available to generic manufacturers for production and commercialization. Additionally, data
analytic tools and web-based new direct purchase models offer increased transparency and comparabila
ity, which creates price
pressures. Corteva cannot predict the pricing or promotional actions of its competitors. Aggressive marketing or pricing by
Corteva’s competitors could adversely affect Corteva’s business, results of operations and financial conditions. As a result,
Corteva continues to face significant competitive challenges.
Corteva’s business may be materially affected by competition from manufacturers of generic products.
Competition from manufacturers of generic products is a challenge for Corteva’s branded products around the world, and the
property rights can have a significant adverse effect on Corteva’s revenues. The date at which
loss or expiration of intellectual
t
14
ITEM 1A. RISK FACTORS, continued
Part I
generic competition commences may be different from the date that the patent or regulatory exclusivity expires. However, upon
the loss or expiration of patent protection for one of Corteva’s products or of a product that Corteva licenses, or upon the “at-
risk” launch (despite pending patent infringement litigation against the generic product) by a generic manufacturer of a generic
version of one of Corteva’s patented products or of a product that Corteva licenses, Corteva can lose a major portion of
revenues for that product, which can have a material adverse effect on Corteva’s business.
The costs of complying with evolving regulatory requirements could negatively impact Corteva’s business, results of
operations and financial condition. Actual or alleged violations of environmental laws or permit requirements could
result in restrictions or prohibitions on plant operations, substantial civil or criminal sanctions, as well as the assessment
of strict liability and/or joint and several liability.
Corteva is subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution,
protection of the environment, waste water discharges, the generation, storage, handling, transportation, treatment, disposal and
remediation of hazardous substances and waste materials and the use of genetically modified seeds and crop protection active
ingredients by growers.
Environmental and health and safety laws, regulations and standards expose Corteva to the risk of substantial costs and
liabilities, including liabilities associated with Corteva’s business and the discontinued and divested businesses and operations
businesses like Corteva’s, soil and groundwater contamination has occurred in the past at certain sites
of EID. As is typical forff
and may be identified at other sites in the future
. Disposal of waste from Corteva’s business at off-site locations also exposes it
to potential remediation costs. Consistent with past practice, Corteva is continuing to monitor, investigate and remediate soil
and groundwater contamination at several of these sites.
ff
al expenditures relating to environmental, health or safety matters are subject
Costs and capita
to evolving regulatory
requirements and depend on the timing of the promulgation and enforcement of specific standards which impose the
requirements. Moreover, changes in environmental regulations, including those related to climate change, could inhibit or
interrupt Corteva’s operations, or require modifications to its facff
ilities in the future. Accordingly, environmental, health or
safety regulatory matters could result in significant unanticipated costs or liabilities, which may be materially higher than
Corteva’s accruals.
Climate change and unpredictable seasonal and weather factors could impact Corteva’s sales and earnings.
The agriculturet
period to period.
industry is subject to seasonal and weather factors, which can vary unpredictably fromff
Weather factors can affect the presence of disease and pests on a regional basis and, accordingly, can positively or adversely
affect the demand for crop protection products, including the mix of products used or the level of returns.
The weather also can
affeff ct the quality, volume and cost of seed produced forff
sale as well as demand and product mix. Seed yields can be higher or
lower than planned, which could lead to higher inventory and related write-offs. Climate change may increase the frequency or
heat waves, droughts and other events that could affect the quality, volume
intensity of extreme weather such as storms, floods,
and cost of seed produced forff
sale as well as demand and product mix. Climate change may also affect the availability and
suitabila
shifts in the average growing season and types of crops produced.
land and contribute to unpredictablea
ity of arablea
ff
t
Corteva’s business is subject to various competition and antitrust, rules and regulations around the world, and as the
size of its business grows, scrutiny of its business by legislators and regulators in these areas may intensify.
ff
On July 9, 2021, President Biden issued an executive order promoting competition in the American economy. The order
r examination and efforts by U.S. regulatory agencies to avoid market concentrations for agricultural inputs,
encouraged furthe
s. The executive order also directs the U.S. Secretary of Agriculture to take
that could challenge the survival of family farmff
action to ensure that the intellectual property system, while still incentivizing innovation, does not also unnecessarily reduce
competition in seed and other agricultural input markets beyond what is reasonably contemplated by the U.S. Patent Act and
propose strategies forff
property, antitrust, and other relevant laws. While the
ultimate impact of the executive order will depend on the actions ultimately resulting from the U.S. regulatory authorities,
actions taken by such authorities may increase the regulation and regulatory costs associated with the agriculturet
industry in the
future and restrict the company from pursuing certain growth opportunities, including mergers and acquisitions.
addressing those concerns across intellectual
t
Scrutiny from regulators in the U.S. and abroad may intensify as Corteva’s business presence grows. This scrutiny and related
investigations, even when not resulting in an enforcement action, may result in damage to a company’s reputation, significant
15
ITEM 1A. RISK FACTORS, continued
Part I
defense expense, as well as become a distraction to management. Antitrust and competition enforcement actions may result in
regulators imposing fines, penalties, or restrictions on a company’s business practices in a manner that may significantly impact
its results of operations.
Corteva’s sales to its customers may be adversely affected should a company successfully establish an intermediary
platform for the sale of Corteva’s products or otherwise position itself between Corteva and its customers.
Corteva services customers primarily through the Pioneer direct sales channel in key agricultural geographie
s, including the
ch with strong retail channels, including distributors, agricultural
a
United States. In addition, Corteva supplements this approa
cooperatives and dealers, and with digital solutions that assist farmer decision-making with a view to optimize their product
selection and maximize their yield and profitability. While Corteva expects the indirect channels and its digital platform will
extend its reach and increase exposure of its products to other potential customers, including smaller farmff
ers or farmers in less
in this regard. If a competitor were to successfully
concentrated areas, there can be no assurance that Corteva will be successfulff
establia
sh an intermediary platform for distribution of Corteva’s products, especially with respect to Corteva’s digital platform, it
may disrupt Corteva’s distribution model and inhibit Corteva’s ability to provide a complete go-to-market strategy covering the
direct, dealer and retail channels. In such a circumstance, Corteva’s sales may be adversely affecff
ted.
a
ii
Risks
Relatedtt
to Our Operations
Corteva is dependent on its relationships or contracts with third parties with respect to certain of its raw materials or
licenses and commercialization.
Corteva is dependent on third parties in the research, development and commercialization of its products and enters into
transactions including, but not limited to, supply agreements and licensing agreements in connection with Corteva’s business.
The majoa rity of Corteva’s corn hybrids and soybean varieties sold to customers contain biotechnology traits that Corteva
licenses from third parties under long-term licenses. If Corteva loses its rights under such licenses, it could negatively impact
Corteva’s ability to obtain future licenses on competitive terms, commercialize new products and generate sales fromff
existing
products. To maintain such licenses, Corteva may elect to out-license its technology, including germplasm. There can be no
guarantee that such out-licensing will not ultimately strengthen Corteva’s competition thereby adversely impacting Corteva’s
results of operations.
While Corteva relies heavily on third parties forff multiple aspects of its business and commercialization activities, Corteva does
not control many aspects of such third parties’ activities. Third parties may not complete activities on schedule or in accordance
with Corteva’s expectations. Failure by one or more of these third parties to meet their contractual or other obligations to
Corteva or to comply with applicable laws or regulations, or any disruption in the relationship between Corteva and one or
more of these third parties could delay or prevent the development, approval or commercialization of Corteva’s products and
could also result in non-compliance or reputational harm, all with potential negative implications for Corteva’s business.
In addition, Corteva’s agreements with third parties may obligate it to meet certain contractual
or other obligations to third
parties. For example, Corteva may be obligated to meet certain thresholds or abide by certain boundary conditions. If Corteva
were to fail to meet such obligations to the third parties, its relationship with such third parties may be disrupted. Such a
disruption could negatively impact certain of Corteva’s licenses on which it depends, could cause reputational harm, and could
negatively affect Corteva’s business, results of operations and financial condition.
t
Corteva’s business, results of operations and financial condition could be adversely affected by industrial espionage and
other disruptions to its supply chain, information technology or network systems.
Business and/or supply chain disruptions, plant and/or power outages and information technology system and/or network
disruptions, regardless of cause including acts of sabotage, employee error or other actions, geo-political activity, militaryr
conflict, local epidemics or pandemics, weather events and natural
disasters could seriously harm Corteva’s operations as well
t
as the operations of its customers and suppliers. For example, a pandemic in locations where Corteva has significant operations,
sales, or key suppliers could have a material adverse effect on Corteva’s results of operations. In addition, terrorist attacks and
t
natural
disasters have increased stakeholder concerns about the security and safety of chemical production and distribution.
Business and/or supply chain disruptions may also be caused by security breaches, which could include, forff
ransomware attacks and attacks on information technology and infrastructuret
by hackers, viruses, breaches dued
example,
to employee
16
ITEM 1A. RISK FACTORS, continued
Part I
error or actions or other disruptions. Corteva and/or its suppliers may fail
tively prevent, detect and recover from these
or other security breaches and, as a consequence, such breaches could result in misuse of Corteva’s assets, business disruptions,
loss of property including trade secrets and confidential business information, legal claims or proceedings, reporting errors,
processing inefficiencies, negative media attention, loss of sales and interference with regulatory and data privacy compliance.
to effecff
ff
Like most majora
corporations, Corteva is the target of industrial espionage, including cyber-attacks, from time to time. Corteva
has determined that these incidents have resulted, and could result in the future, in unauthorized parties gaining access to certain
confidential business information. However, to date, Corteva has not experienced any material finaff
ncial impact, changes in the
competitive environment or impact on business operations from these events. Although management does not believe that
Corteva has experienced any material
including
cybersecurity incidents, there can be no assurance that Corteva will not suffer such losses in the future.
losses to date related to industrial espionage and security breaches,
Corteva actively manages the risks within its control that could lead to business disruptions and security breaches. As these
threats continue to evolve, particularly around cybersecurity, Corteva may be required to expend significant resources to
enhance its control environment, processes, practices and other protective measures. Despite these efforts, such events could
also have a material adverse effect on Corteva’s business, financial condition, results of operations and reputation. Additionally,
any losses fromff
such an event may be excluded from, or in excess of the coverages provided by Corteva's insurance policies.
Volatility in Corteva’s input costs, which include raw materials and production costs, could have a significant impact on
Corteva’s business, results of operations and financial condition.
Corteva’s input costs are variable based on the costs associated with production or with raw materials Corteva uses. For
example, Corteva’s production costs vary, especially on a seasonal basis where changes in weather influence supply and
demand. In addition, Corteva’s manufacturing processes consume significant amounts of raw materials, the costs of which are
subject to worldwide supply and demand as well as other facff
tors beyond Corteva’s control. Corteva refers to these costs
collectively as input costs. Significant variations in input costs affect Corteva’s operating results fromff
period to period.
When possible, Corteva purchases raw materials through negotiated long-term contracts to minimize the impact of price
fluctuations. Corteva also enters into over-the-counter and exchange traded derivative commodity instruments to hedge its
tuations on certain raw material purchases. In addition, Corteva takes actions to offset the effects of higher
exposure to price flucff
input costs through selling price increases, productivity improvements and cost reduction programs. Success in offsetting higher
input costs with price increases is largely influenced by competitive and economic conditions and could vary significantly
depending on the market served. If Corteva is not able to full
y offset the effects of higher input costs, it could have a significant
impact on its financial results.
ff
Corteva’s liquidity, business, results of operations and financial condition could be impaired if it is unable to raise
capital through the capital markets or short-term debt borrowings.
al markets or through short-term debt borrowings could have a
Any limitation on Corteva’s ability to raise money in the capita
al markets and/or borrow short-
substantial negative effect on Corteva’s liquidity. Corteva’s ability to affordablya
term debt in amounts adequate to finance its activities could be impaired as a result of a variety of facff
tors, including factors that
are not specific to Corteva, such as a severe disruption of the financial markets and, in the case of debt securities or borrowings,
ions. Due to the seasonality of Corteva’s business and the credit programs Corteva may offer its customers,
t
interest rate fluff ctuat
net working capita
al investment and corresponding debt levels will flucff
tuate over the course of the year.
access the capita
Corteva regularly extends credit to its customers to enablea
of the growing season. The customer receivables may be used as collateral forff
adverse effect upon
amount of customer receivables Corteva owns, may materially impact Corteva’s access to capita
them to purchase seeds or crop protection products at the beginning
short-term financing programs. Any material
Corteva’s ability to own or sell such customer receivables, including seasonal factors that may impact the
al.
u
sh programs that provide financing for select customers
ons to establia
Corteva has additional agreements with financial instituti
of Corteva’s seed and crop protection products in the United States, Latin America, Europe and Asia. The programs are
renewed on an annual basis. In most cases, Corteva guarantees the extension of such credit to such customers. If Corteva is
unable to renew these agreements or access the debt markets to support customer finaff
ncing, Corteva’s sales may be negatively
impacted, which could result in increased borrowing needs to fund working capita
al.
t
17
ITEM 1A. RISK FACTORS, continued
Part I
Corteva’s earnings, operations and business, among other things, will impact its credit ratings, costs and availability of
financing. There can be no assurance that Corteva or EID will maintain its current or prospective credit ratings. A decrease in
the ratings assigned to Corteva or EID by the ratings agencies may negatively impact Corteva’s liquidity, access to the debt
capita
al markets and increase Corteva’s cost of borrowing and the financing of its seasonal working capita
al.
Corteva’s customers may be unable to pay their debts to Corteva, which could adversely affect Corteva’s results.
ff
ing programs with credit terms generally less than one year fromff
Corteva offers its customers financ
invoicing in alignment with
the growing season. Due to these credit practices as well as the seasonality of Corteva’s operations, Corteva may need to issue
short-term debt at certain times of the year to fundff
requirements. Corteva’s customers may be exposed to a variety
of conditions that could adversely affect their abia lity to pay their debts. For example, customers in economies experiencing an
economic downturn or in a region experiencing adverse growing conditions may be unable to repay their obligations to
Corteva, which could adversely affect Corteva’s results.
its cash flowff
Increases in pension and other post-employment benefit plan funding obligations may adversely affect Corteva’s results
of operations, liquidity or financial condition.
Through Corteva's ownership of EID, Corteva maintains EID defined benefit pension and other post-employment benefit plans.
For some of these plans, including EID’s principal U.S. pension plan, Corteva continues as sponsor for the entire plan
regardless of whether participants, including retirees, are or were associated with EID’s agriculturet
business. Corteva uses many
assumptions in calculating its expected future payment obligations under these plans. Significant adverse changes in credit or
market conditions could result in actual rates of returns
on pension investments being lower than assumed. In addition, expected
future payment obligations may be adversely impacted by changes in assumptions regarding participants, including retirees. In
mately $60 million to its pension plans other than the principal U.S. pension plan,
2022, Corteva expects to contribute approxi
and about $140 million for its other post-employm
2022, Corteva may
m
make potential discretionary contributions to the principal U.S. pension plan. Corteva, furthermore, may be required to make
significant contributions to its pension plans in the future, which could adversely affect Corteva’s results of operations, liquidity
and financial condition.
ent benefit ("OPEB") plans. While not anticipated forff
a
t
Corteva’s business, results of operations and financial condition could be adversely affected by environmental, litigation
and other commitments and contingencies.
As a result of Corteva’s operations, including past operations and those related to divested businesses and discontinued
operations of EID, Corteva incurs environmental operating costs for pollution abatement activities including waste collection
and disposal, installation and maintenance of air pollution controls and wastewater treatment, emissions testing and monitoring
and obtaining permits. Corteva also incurs environmental operating costs related to environmental related research and
development activities including environmental fieff
ld and treatment studies as well as toxicity and degradation testing to
evaluate the environmental impact of products and raw materials. In addition, Corteva maintains and periodically reviews and
adjusts its accruals for probable environmental remediation and restoration costs.
Corteva expects to continue to incur environmental operating costs since it will operate global manufacturing, product handling
and distribution facilities that are subject to a broad array of environmental laws and regulations. These rules are subject to
its
change by the implementing governmental agency, which Corteva monitors closely. Corteva’s policy requires that
operations fully meet or exceed legal and regulatory requirements. In addition, Corteva expects to continue certain voluntary
programs, and could consider additional voluntary actions, to reduce air emissions, minimize the generation of hazardous waste,
decrease the volume of water use and discharges, increase the efficiency of energy use and reduce the generation of persistent,
bioaccumulative and toxic materials. Costs to comply with complex environmental laws and regulations, as well as internal
voluntary programs and goals, are significant and Corteva expects these costs will continue to be significant for the foreseeable
future. Over the long term, such expenditures
are subject to considerable uncertainty and could flucff
tuate significantly.
t
environmental matters when it is probable that a liabia lity has been incurred and the amount can be
Corteva accrues forff
ion and cost from site to site, it is difficult to develop
reasonably estimated. As remediation activities vary substantially in durat
tors, including the
precise estimates of future
complexity of the geology, the naturet
and extent of contamination, the type of remedy, the outcome of discussions with
regulatory agencies and other Potentially Responsible Parties (“PRPs”) at multi-party sites and the number of, and financial
d
site remediation costs. Corteva expects to base such estimates on several facff
ff
18
ITEM 1A. RISK FACTORS, continued
Part I
ity of, other PRPs. Considerable uncertainty exists with respect to environmental remediation costs and, under adverse
viabila
changes in circumstances, the potential liability may be materially higher than Corteva’s accruals.
t
Corteva faces risks arising from various unasserted and asserted litigation matters arising out of the normal course of its current
and former business operations, including intellectual
property, commercial, product liability, environmental and antitrust
lawsuits. Corteva has noted a trend in public and private suits being filed on behalf of states, counties, cities and utilities
alleging harm to the general public and the environment, including waterways and watersheds. Claims alleging harm to the
public and the environment may be brought against Corteva, notwithstanding years of scientific evidence and regulatory
determinations supporting the safety of crop protection products. The litigation involving Monsanto’s Roundup® non-selective
glyphosate containing weedkiller products has resulted in negative publicity and sentiment and may lead to similar suits with
respect to glyphosate-containing products and/or other establia
shed crop protection products. Claims and allegations that
Corteva’s products or products that Corteva manufactures or markets on behalf of third parties are not safe could result in
litigation, damage to Corteva’s reputation and have a material adverse effect on Corteva’s business. It is not possible to predict
the outcome of these various proceedings and any potential impact on Corteva. An adverse outcome in any one or more of these
matters may result in losses not fully covered by Corteva's insurance policies, and could be material to Corteva's financial
results. Various factors or developments can lead to changes in current estimates of liabia lities. Such factors and developments
adverse judgment, significant
may include, but are not limited to, additional data, safetyff
settlement or changes in applicable law. A future
development could result in future charges that
could have a material adverse effect on Corteva.
or risk assessments, as well as a final
adverse ruling or unfavorablea
ff
ff
a
, forff
cablea
The company, pursuant to the respective Separation Agreements, is entitled to cost sharing and indemnification from
Chemours, Dow and DuPont, as appli
certain litigation, environmental, workers’ compensation and other liabia lities
related to its historical operations. In connection with the recognition of liabilities related to these matters, Corteva records an
indemnification asset when recovery is deemed probable. These estimates of recovery are subject to various factors and
developments that could result in differences from future estimates or the actual recovery. As of December 31, 2021, the
indemnification assets pursuant to the Chemours Separation Agreement and the Corteva Separation Agreement are in aggregate
$72 million within accounts and notes receivable - net and $254 million within other assets in the company’s Consolidated
Balance Sheet. Any failure by, or inabila
ity to pay, these liabilities in line with the indemnification provisions of the Separation
Agreements may have a material adverse effecff
t on Corteva and its financial condition and results of operations.
In the ordinary course of business, Corteva may make certain commitments, including representations, warranties and
indemnities relating to current and past operations, including those related to divested businesses and issue guarantees of third-
party obligations. If Corteva were required to make payments as a result, they could exceed the amounts accrued, thereby
adversely affecff
ting Corteva’s financial condition and results of operations.
Corteva’s operations outside the United States are subject to risks and restrictions, which could negatively affect
Corteva’s business, results of operations and financial condition.
Corteva’s operations outside the United States are subject to risks and restrictions, including fluctuations in foreign-currency
exchange rates; inflation; exchange and price control regulations; corruption risks; competitive restrictions; changes in local
political or economic conditions; import and trade restrictions; import or export licensing requirements and trade policy; and
other potentially detrimental domestic and foreign governmental practices or policies affecting U.S. companies doing business
abroad. In addition, Corteva’s international operations are sometimes in countries with unstable governments, economic or
fiscal challenges, military or political conflicts, local epidemics or pandemics, significant levels of crime and organized crime,
or developing legal systems. This may increase the risk to the company's employees, subcontractors or other parties, and to
other liabia lities, such as property loss or damage to the company's products, and may affect Corteva's ability to safely operate
in, or import into, or receive raw materials fromff
these countries.
Additionally, Corteva’s ability to export its products and its sales outside the United States has been, and may continue to be
adversely affected by significant changes in trade, tax or other policies, including the risk that other countries may retaliate
through the imposition of their own trade restrictions and/or increased tariffs in response to substantial changes to U.S. trade
and tax policies.
Although Corteva has operations throughout the world, Corteva’s sales outside the United States in 2021 were principally to
customers in Brazil, Eurozone countries, and Canada. Further, Corteva’s largest currency exposures are the Brazilian Real,
Swiss franc, European Euro ("EUR"), and Canadian dollar. Inflation, market uncertainty or an economic downturn in these
19
ITEM 1A. RISK FACTORS, continued
Part I
geographic
areas could reduce demand for Corteva’s products and result in decreased sales volume, which could have a
a
negative impact on Corteva’s results of operations. In addition, changes in exchange rates may affect Corteva’s results of
operations, financial condition and cash flows in future periods. Corteva actively manages currency exposures that are
associated with net monetary asset positions and committed purchases.
Failure to effectively manage acquisitions, divestitures, alliances, restructurings, cost savings initiatives and other
portfolio actions may not have the results anticipated.
From time to time Corteva evaluates acquisition candidates that may strategically fit Corteva’s business and/or growth
objectives. If Corteva is unable to successfully integrate and develop acquired businesses, Corteva could faiff
l to achieve
anticipated synergies and cost savings, including any expected increases in revenues and operating results, which could have a
material adverse effect on Corteva’s financial results. Corteva continually reviews its portfolio of assets for contributions to its
objectives and alignment with its growth strategy. However, Corteva may not be successful in separating underperforming or
non-strategic assets and gains or losses on the divestiture of, or lost operating income from, such assets may affect Corteva’s
earnings. Moreover, Corteva might incur asset impairment charges related to acquisitions or divestitures that reduce its
earnings. In addition, if the execution of these transactions, initiatives, or portfolio actions is not successful, it could adversely
impact Corteva’s financial condition, cash flows and results of operations.
Sentiment towards climate change and other environmental, social and governance (“ESG”) matters could adversely
affect our stock price, results of operations, and access to capital.
2030 and inclusion, diversity and equity goals forff
Since 2020, Corteva has announced sustainability goals, including adopting its greenhouse gas emission reduction strategy and
targets forff
2026. Execution of these strategies and the achievements of
Corteva’s sustainability goals is subject to risk and uncertainties, many of which are out of its control. Failure to achieve its
sustainability goals within the currently projected costs and expected timeframes could damage Corteva’s reputation, customer
and investor relationships, or its access to financing. Further, given investors' increased focus related to ESG matters, such a
failure could cause stockholders to reduce their ownership holdings, all of which, in turn could adversely affect Corteva’s
business, financial condition, results of operations and cash flows and reduce its stock price.
Global or regional health pandemics or epidemics, including COVID-19, could negatively impact the company's
business, financial condition and results of operations.
t
Corteva's business, financial condition, and results of operations could be negatively impacted by COVID-19 or other
and duration of the current COVID-19 pandemic and future outbreaks is
pandemics or epidemics. The severity, magnitude
uncertain, rapidly changing and difficult to predict. To date, the COVID-19 pandemic has negatively impacted foreign currency
exchange rates, as a result of a generally stronger U.S. dollar relative to other currencies in the countries in which the company
operates, which has adversely affected the company's reported results of operations. These relative differences could widen and
further adversely impact our results of operations and financial condition. Increased market volatility resulting from COVID-19
disruptions has also limited the availability of certain manufacturing inputs. Current and future COVID-19 outbreaks and
resulting illness, travel restrictions and workforce disruptions could impact Corteva's global supply chain, its operations and its
routes to market or those of its suppliers, co-manufacturers,
or customers/distributors. These disruptions or the company's
failure to effectively respond to them could increase product or distribution costs, alter the timing of recognizing manufacturing
costs, or impact the delivery of products to customers.
t
COVID-19 and the related government-imposed restrictions, including stay at home orders, has significantly impacted other
economic activity and markets around the world. Future outbreaks or pandemics could negatively impact the company's
business, financial condition, and results of operations in numerous ways, including but not limited to those outlined below:
•
•
•
Government or regulatory responses to pandemics could negatively impact the company's business. Mandatory
lockdowns or other restrictions on operations in certain countries have temporarily disrupted the company's ability to
operate or distribute its products in these markets. Continuation or expansion of these disruptions could materially
adversely impact the company's operations and results.
Reductd
impairment of the carrying value of goodwill or other indefinite and definite-lived intangible assets.
The instabila
customers’ ability to monetize their crop and potentially impact the collection of the company's customer receivables.
ions to the company’s forecasted profitability and continued global economic decline could trigger potential
products could impact the company's
workforce to harvest agricultural
ity or unavailability of a farmff
t
20
ITEM 1A. RISK FACTORS, continued
Part I
•
•
•
•
ons or uncertainties related to the COVID-19 outbreak for a sustained period of time could result in delays or
Continued commodity cost volatility is expected and the company's commodity hedging activities may not sufficiently
offset this volatility. Depressed commodity prices may increase the insolvency risk of Corteva's customers in the
longer-term, along with reducing the demand forff Corteva's products.
rr
Disrupti
modifications to the company's strategic plans and productivity initiatives.
Increased volatility and pricing in the capita
al and commercial paper markets may re-occur and impact the company's
access to preferred sources of liquidity resulting in higher borrowing costs. The company cannot assure investors that
additional liquidity will be readily available or availablea
Increased market volatility may bring unprecedented market conditions making it difficul
adequately forec
ast customer demand or price its products.
the company to
on favorablea
terms.
t forff
ff
ff
Therefore, the result of the company’s consolidated results of operations in face of the ongoing COVID-19 outbreak, or another
pandemic, and the unprecedented economic conditions which can result therefrom may negatively impact the company's
business operations, financial performance and results of operations in the futff ure.
t
If we are unable to recruit and retain key personnel, our business may be harmed.
Much of Corteva’s future success depends on the continued service, availability and performance of our senior management
and highly-skilled personnel across all levels of the organization. Corteva’s senior management has acquired specialized
knowledge and skills with respect to its business, and the loss of any of these individuals could harm its business, especially if
we are not successful in developing adequate succession plans. Our efforts to attract, develop, integrate and retain highly skilled
employees with appropria
te qualifications may be compounded by difficulties in recruiting, hiring and retaining urgently
needed specialized employees at a regional level where there may be significant competition between employers. If we are
unable to continue to successfully attract, retain, and develop key personnel, our business may be harmed.
a
ii
Risks
Relatedtt
to Our Inteltt
lell ctual Property
ng Corteva’s intellectual property rights, or defendff
Enforci
ff
could materially affect Corteva’s business, results of operations and financial condition.
ing against intellectual property claims asserted by others,
ff
Intellectual property rights, including patents, plant variety protection, trade secrets, confidential information, trademarks, trade
names and other forms
of trade dress, are important to Corteva’s business. Corteva endeavors to protect its intellectual property
rights in jurisdictions in which its products are produced or used and in jurisdictions into which its products are imported.
property in key jurisdictions. Further, changes in
However, Corteva may be unable to obtain protection for its intellectual
government policies and regulations, including changes made in reaction to pressure from non-governmental organizations, or
the public generally, could impact the extent of intellectual property protection afforded by such jurisdictions.
t
property.
Corteva has designed and implemented internal controls to restrict use of, access to and distribution of its intellectual
Despite these precautions, Corteva’s intellectual property is vulnerable to infringement, misappropriation and other
unauthorized access, including through employee or licensee error or actions, theft and cybersecurity incidents, and other
security breaches. When unauthorized access and use or counterfeit products are discovered, Corteva reports such situations to
governmental authorities for investigation, as appropriate, and takes measures to mitigate any potential impact. Protecting
t to detect and biotechnology
intellectual
can be self-replicating.
property related to biotechnology is particularly challenging because theft is difficul
ff
t
t
Competitors are increasingly challenging intellectual property positions and the outcomes can be highly uncertain. Third parties
may claim Corteva’s products violate their intellectual property rights. Defending such claims, even those without merit, could
be time-consuming and expensive. In addition, any such claim could result in Corteva’s having to enter into license agreements,
develop non-infringing products or engage in litigation that could be costly. If challenges are resolved adversely, it could
negatively impact Corteva’s ability to obtain licenses on competitive terms, develop and commercialize new products and
generate sales from existing products.
In addition, because of the rapid pace of technological change, the confidentiality of patent applications in some jurisdictions
and/or the uncertainty in predicting the outcome of complex proceedings relating to ownership and the scope of patents relating
to certain emerging technologies, competitors may be issued patents related to Corteva’s business unexpectedly. These patents
could reduce the value of Corteva’s commercial or pipeline products or, to the extent they cover key technologies on which
21
ITEM 1A. RISK FACTORS, continued
Part I
Corteva has relied, require Corteva to seek to obtain licenses (and Corteva cannot ensure it would be able to obtain such a
license on acceptablea
terms) or cease using the technology, no matter how valuablea
to Corteva’s business.
Legislation and jurisprudence on patent protection is evolving and changes in laws could affect Corteva’s ability to obtain or
maintain patent protection for, and otherwise enforce Corteva’s patents related to, its productd
s.
Corteva’s business may be adversely affected by the availability of counterfeit products.
a
tors, including, but not limited to, the following: the widespread use of the Internet, which has greatly facff
ed as to its identity and source. A counterfeit
A counterfeit product is one that has been deliberately and fraudulently mislabel
Corteva product, therefore, is one manufactured by someone other than Corteva, but which appears to be the same as an
authentic Corteva product. The prevalence of counterfeit products is a significant and growing industry-wide issue due to a
variety of facff
ilitated
the ease by which counterfeit products can be advertised, purchased and delivered to individual consumers; the availability of
sophisticated technology that makes it easier for counterfeiters to make counterfeit products; and the relatively modest risk of
penalties facff ed by counterfeiters compared to the large profits that can be earned by them fromff
the sale of counterfeit products.
Further, laws against counterfeiting vary greatly fromff
country to country, and the enforcement of existing laws varies greatly
from jurisdiction to jurisdiction. For example, in some countries, counterfeiting is not a crime; in others, it may result in only
minimal sanctions. In addition, those involved in the distribution of counterfeit products use complex transport routes to evade
customs controls by disguising the true source of their products.
counterfeiting organizations. Counterfeit products pose a risk
Corteva’s global reputation makes its products prime targets forff
to consumer health and safety because of the conditions under which they are manufactured (often in unregulated, unlicensed,
uninspected and unsanitary sites) as well as the lack of regulation of their contents. Failure to mitigate the threat of counterfeit
products, which is exacerbated by the complexity of the supply chain, could adversely impact Corteva’s business by, among
other things, causing the loss of consumer confidence in Corteva’s name and in the integrity of its products, potentially
resulting in lost sales and an increased threat of litigation.
ff
t forff
Corteva undertakes significant efforts to counteract the threats associated with counterfeit products, including, among other
things, working with regulatory authorities and multinational coalitions to combat the counterfeiting of products and supporting
efforts by law enforcement authorities to prosecute counterfeiters; assessing new and existing technologies to seek to make it
counterfeiters to copy Corteva’s products and easier for consumers to distinguish authentic from counterfeit
more difficul
products; working diligently to raise public awareness about the dangers of counterfeit products; working collaborat
ively with
wholesalers, customs offices and law enforcement agencies to increase inspection coverage, monitor distribution channels and
improve surveillance of distributors; and working with other members of an international trade association of agrochemical
companies to promote initiatives to combat counterfeiting activity. No assurance can be given, however, that Corteva’s efforts
and the efforts of others will be entirely successful, and the presence of counterfeit products may continue to increase.
a
Restrictions under the intellectual property cross-license agreements limit Corteva’s ability to develop and
commercialize certain products and services and/or prosecute, maintain and enforce certain intellectual property.
The company is dependent to a certain extent on DuPont and Dow to maintain and enforce certain of the intellectual property
licensed under the Intellectual Property Cross-License Agreements. For example, DuPont and Dow are responsible for filing,
prosecuting and maintaining (at their respective discretion) patents on trade secrets and know-how that they each respectively
license to Corteva. They also have the first right to enforce their respective trade secrets and know-how licensed to Corteva. If
DuPont or Dow, as applicablea
ls to fulfill its obligations or chooses to not enforce the licensed patents, trade secrets or
know-how under the Intellectual Property Cross-License Agreements, the company may not be able to prevent competitors
from making, using and selling competitive products and services.
, faiff
In addition, Corteva’s use of the intellectual property licensed to it under the Intellectual Property Cross-License Agreements is
restricted to certain fields, which could limit Corteva’s ability to develop and commercialize certain products and services. For
lds of use that the company may decide to
example, the licenses granted to Corteva under the agreement will not extend to all fieff
enter into in the future. These restrictions may make it more difficult, time consuming and/or expensive for Corteva to develop
and commercialize certain new products and services, or may result in certain of its products or services being later to market
than those of its competitors.
22
ITEM 1A. RISK FACTORS, continued
Risks Relatedtt
to The Separation
Part I
In connection with the Separation the company has assumed, and agreed to indemnify DuPont and Dow for, certain
liabilities. If the company is required to make payments pursuant to these indemnities, the company may need to divert
cash to meet those obligations and its financial results could be negatively impacted. In addition, DuPont and Dow will
indemnify Corteva for certain liabilities. These indemnities may not be sufficient to insure the company against the full
amount of liabilities it incurs, and DuPont and/or Dow, and/or their historical separated businesses, may not be able to
satisfy their indemnification obligations in the future.
a
Pursuant to the Separation Agreement, the Employee Matters Agreement and the Tax Matters Agreement with DuPont and
amounts, which may
Dow, the company agreed to assume, and indemnify DuPont and Dow for, certain liabilities for uncapped
include, among other items, associated defense costs, settlement amounts and judgments, as discussed furthe
r in Note 18 -
ff
Commitments and Contingent Liabilities, to the Consolidated Financial Statements and Part I - Item 3 - Legal Proceedings.
Payments pursuant to these indemnities may be significant and could negatively impact the company’s business, particularly
indemnities relating to certain litigation for Historical DuPont operations or its actions that could impact the tax-free naturet
of
the Corteva Distribution. Third parties could also seek to hold the company responsible forff
any of the liabilities allocated to
DuPont and Dow, including those related to DowDuPont’s specialty products and/or materials science businesses, respectively,
and those related to discontinued and/or divested businesses and operations of Historical Dow, which have been allocated to
Dow. DuPont and/or Dow, as applicable, will agree to indemnify Corteva for such liabilities, but such indemnities may not be
sufficient to protect the company against the full amount of such liabilities. In addition, DuPont and/or Dow, as applicablea
, may
y satisfy their indemnification obligations with respect to the liabilities the company incurs. Even if the
not be able to full
company ultimately succeeds in recovering from DuPont and/or Dow, as applicablea
, any amounts for which the company is
held liabla e, the company may be temporarily required to bear these losses itself. Each of these risks could negatively affect the
company’s business, financial condition, results of operations and cash flows.
ff
Additionally, the company generally has assumed and is responsible for the payment of its share of (i) certain liabilities of
DowDuPont relating to, arising out of or resulting from certain general corporate matters of DowDuPont, (ii) certain liabilities
of Historical DuPont relating to, arising out of or resulting from general corporate matters of Historical DuPont and
discontinued and/or divested businesses and operations of Historical DuPont, including its spin-off of Chemours, and (iii)
certain separation expenses not otherwise allocated to DuPont or Dow (or allocated specifically to Corteva) pursuant to the
Corteva Separation Agreement, and third parties could seek to hold Corteva responsible for DuPont’s or Dow’s share of any
such liabilities. For more information, see Note 18 - Commitments and Contingent Liabilities, to the Consolidated Financial
Statements and Part I - Item 3 - Legal Proceedings. DuPont and/or Dow, as applicablea
, will indemnify Corteva for their share of
any such liabilities; however, such indemnities may not be sufficient to protect Corteva against the full amount of such
liabilities, and/or DuPont and/or Dow may not be able to full
y satisfy their respective indemnification obligations. In addition,
even if the company ultimately succeeds in recovering from DuPont and/or Dow any amounts for which the company is held
liable in excess of its agreed share, the company may be temporarily required to bear these losses itself and may not be able to
fully insure itself to cover these risks. Each of these risks could materially affect the company’s business, financial condition,
results of operations and cash flows.
ff
The Separation and related transactions may expose Corteva to potential liabilities arising out of state and federal
fraudulent conveyance laws
Although the company received a solvency opinion from an investment bank confirming that the company and DuPont were
each adequately capita
alized following the Distribution, the Separation could be challenged under various state and federal
fraudulent conveyance laws. In connection with fraudulent conveyances or transfers are generally defined to include transfers
made or obligations incurred with the actual intent to hinder, delay or defraud current or future creditors or transfers made or
obligations incurred forff
less than reasonably equivalent value when the debtor was insolvent, or that rendered the debtor
insolvent, inadequately capitalized or unable to pay its debts as they become due. Any unpaid creditor could claim that DuPont
did not receive fair consideration or reasonably equivalent value in the Separation and Corteva Distribution, and that the
Separation and Corteva Distribution left DuPont insolvent or with unreasonably small capital or that DuPont intended or
believed it would incur debts beyond its abia lity to pay such debts as they matured. Additionally, under its indemnity provisions
its liabia lities increased as a result of a court concluding that Historical
of the Separation Agreement, the company could findff
DuPont, Historical Dow or DowDuPont executed a fraudul
and spin-offs of any
one of their historical operations, including Chemours. If a court were to agree with such a plaintiff, then such court could void
ent transfer or impose substantial liabia lities on Corteva, which could materially
the Separation and Distribution as a fraudul
ent conveyance in connection with divestitures
ff
ff
t
23
ITEM 1A. RISK FACTORS, continued
Part I
adversely affect its finff ancial condition and results of operations. Among other things, the court could returnt
some of Corteva’s
assets or shares of Corteva common stock to DuPont, provide DuPont with a claim for money damages against Corteva in an
amount equal to the difference
between the consideration received by DuPont and the fair market value of Corteva at the time
of the Corteva Distribution, or require Corteva to fund liabilities of other companies involved in the Internal Reorganization and
Business Realignment for the benefit of creditors.
ff
ct to review under state corporate Distribution statutet
al) or (ii) if there is no such surplus, out of its net profits forff
The Distribution is also subjeu
ion
Law (the “DGCL”), a corporation may only pay dividends to its stockholders either (i) out of its surplus (net assets minus
the fiscal year in which the dividend is declared and/or the
capita
preceding fiscal year. Although the Distribution was made out of DowDuPont’s surplus and the company received an opinion
that DowDuPont has adequate surplus under Delaware law to declare the dividend of Corteva common stock in connection with
the Corteva Distribution, there can be no assurance that a court will not later determine that some or all of the Corteva
Distribution was unlawful.
s. Under the Delaware General Corporat
r
If the Corteva Distribution, together with certain related transactions, were to fail to qualify for non-recognition
treatment
tax and
indemnification liability and stockholders receiving Corteva common stock in the Corteva Distribution could be subject
to significaff
then the company could be subject
income tax purposes,
nt tax liability.
to significant
for U.S.
federal
DowDuPont received an IRS Tax RuliRR ng and tax opinion that, among other things, the Corteva Distribution and certain related
transactions will qualify as a tax-free transaction under Section 355 and Section 368(a)(1)(D) of the Internal Revenue Code (the
"Code). The IRS Ruling and tax opinion relied on certain facts, assumptim ons, and undertakings, and certain representations from
DowDuPont and Corteva, regarding the past and future conduct of both respective businesses and other matters. Despite the tax
opinion and the IRS Ruling, the IRS could determine on audit that the Distribution or certain related transactions should be
treated as a taxable transaction if it determines that any of these facts, assumptions, representations or undertakings are not
other reasons, including if the IRS were to disagree
correct or have been violated, or that the Distribution should be taxable forff
with the conclusions of the tax opinion.
If the Corteva Distribution ultimately is determined to be taxable, then a stockholder of DuPont that received shares of Corteva
common stock would be treated as having received a distribution of property in an amount equal to the fair market value of
such shares (including any fractional shares sold on behalf of such stockholder) on the distribution date and could incur
ities. Such distribution would be taxable to such stockholder as a dividend to the extent of DuPont’s
significant income tax liabila
current and accumulated earnings and profits, which would include any earnings and profits attributablea
to the gain recognized
to certain internal transactions
by DuPont on the taxable distribution and could include earnings and profits attributablea
preceding the Corteva Distribution. Any amount that exceeded DuPont’s earnings and profits would be treated first as a non-
taxable returnt
al to the extent of such stockholder’s tax basis in its shares of DuPont stock with any remaining amount
being taxed as a gain on the DuPont stock. In the event the Distribution is ultimately determined to be taxable, DuPont would
recognize corporate level taxable gain on the Distribution in an amount equal to the excess, if any, of the fair market value of
Corteva common stock distributed to DuPont stockholders on the distribution date over DuPont’s tax basis in such stock. In
addition, if certain related transactions fail to qualify for tax-free treatment under U.S. federal, state, local tax and/or foreign tax
law, Corteva and DuPont could incur significant tax liabila
ities under U.S. federal, state, local and/or foreign tax law.
of capita
Generally, taxes resulting from the failure of the Separation and Distributions to qualify for non-recognition treatment for U.S.
federal income tax purposes would be imposed on DuPont or DuPont stockholders. Under the Tax Matters Agreement that the
company entered into with DuPont and Dow, subject to the exceptions described below, the company is generally obligated to
indemnify DuPont against such taxes imposed on DuPont. However, if the Distributions fail to qualify for non-recognition
of the Merger and the
treatment for U.S. federal income tax purposes for certain reasons relating to the overall structuret
Distributions, then under the Tax Matters Agreement, DuPont and Dow would share the tax liabila
such failure
in accordance with their relative equity values on the first full
trading day following the Dow Distribution. The company and
DuPont would share any liabilities of DuPont described in the preceding sentence in accordance with its relative equity values
trading day following the Corteva Distribution. Furthermore, under the terms of the Tax Matters Agreement, the
on the first full
company also generally will be responsible for any taxes imposed on DuPont or Dow that arise from the failure of the Corteva
Distribution to qualify as tax-free for U.S. federal income tax purposes within the meaning of Section 355 of the Code or the
failure of certain related transactions to qualify for tax-free treatment, to the extent such failure to qualify is attributable to
actions, events or transactions relating to its, or its affiliates’, stock, assets or business, or any breach of its representations made
in any representation letter provided to its counsel in connection with the tax opinion. DuPont and Dow will be separately
ity resulting fromff
ff
ff
24
ITEM 1A. RISK FACTORS, continued
Part I
any taxes imposed on Corteva that arise from the failure of the Corteva Distribution to qualify as tax-free forff
responsible forff
eral income tax purposes within the meaning of Section 355 of the Code or the failure of certain related transactions to
U.S. fedff
qualify for tax-free treatment, to the extent such faiff
to actions, events or transactions relating to
lure to qualify is attributablea
such company’s or its affiliates’ stock, assets or business, or any breach of such company’s representations made in connection
with the IRS Ruling or in the representation letter provided to counsel in connection with the tax opinion. Events triggering an
indemnification obligation under the tax matters agreement include events occurring after the Corteva Distribution that cause
DuPont to recognize a gain under Section 355(e) of the Code, as discussed furthe
r below. Such tax amounts could be
significant. To the extent that the company is responsible forff
any liability under the tax matters agreement, there could be a
material adverse impact on Corteva’s business, financial condition, results of operations and cash flows in future reporting
periods.
ff
The IRS may assert that the Merger causes the Distributions and other related transactions to be taxable to DuPont, in
which case the company could be subject to significff ant indemnification liability.
Even if the Distributions otherwise constitutet
s a tax-free transaction to stockholders under Section 355 of the Code, DuPont
may be required to recognize corporate level tax on the Distributions and certain related transactions under Section 355(e) of
the Code if, as a result of the Merger or other transactions considered part of a plan with the Distributions, there is a 50 percent
or greater change of ownership in DuPont or Corteva. In connection with the Merger, DowDuPont received a private letter
ruling from the IRS regarding the proper time, manner and methodology for measuring common ownership in the stock of
DowDuPont, Historical DuPont and Historical Dow for purposes of determining whether there has been a 50 percent or greater
change of ownership under Section 355(e) of the Code as a result of the Merger. The tax opinion relied on the continued
validity of the private letter ruling, as well as certain factual representations from DowDuPont as to the extent of common
ownership in the stock of Historical DuPont and Historical Dow immediately prior to the Merger. Based on the representations
made by DowDuPont as to the common ownership in the stock of Historical DuPont and Historical Dow immediately prior to
the Merger and assuming the continued validity of the IRS Ruling, the tax opinion concluded that there was not a 50 percent or
greater change of ownership in DowDuPont, Historical DuPont or Historical Dow for purposes of Section 355(e) as a result of
the Merger. Notwithstanding the tax opinion and the IRS Ruling, the IRS could determine that the Distributions or a related
transaction should nevertheless be treated as a taxable transaction to DuPont if it determines that any of the facts, assumptions,
representations or undertakings of DowDuPont is not correct or that the Distributions should be taxable forff
other reasons,
including if the IRS were to disagree with the conclusions in the tax opinion that are not covered by the private letter ruling. If
DuPont is required to recognize corporate level tax on either of the Distributions and certain related transactions under Section
355(e) of the Code, then under the Tax Matters Agreement, the company may be required to indemnify DuPont and/or Dow for
all or a portion of such taxes, which could be a material amount, if such taxes were the result of either direct or indirect transfers
of Corteva common stock or certain reasons relating to the overall structure of the Merger and the Distributions.
The company is subject to continuing contingent tax-related liabilities of DowDuPont following the Distribution.
There are several significant areas where the liabilities of DowDuPont may become Corteva’s obligations either in whole or in
part. For example, under the Code and the related rules and regulations, each corporation that was a member of DowDuPont’s
consolidated tax reporting group during any taxable period or portion of any taxable period ending on or before the effective
time of the Distribution is jointly and severally liabla e forff
the U.S. federal income tax liability of the entire consolidated tax
reporting group for such taxable period. Additionally, to the extent that any subsidiary of Corteva was included in the
consolidated tax reporting group of either Historical DuPont or Historical Dow for any taxable period or portion of any taxable
the U.S. federal
period ending on or before the effective date of the Merger, such subsidiary is jointly and severally liabla e forff
income tax liabila
, forff
such taxable period. In connection with the Distributions, on April 1, 2019, the company entered into the Tax Matters
prior period consolidated taxes among Corteva, DuPont
Agreement with DuPont and Dow that allocates the responsibility forff
and Dow. If DuPont or Dow were unable to pay any prior period taxes for which it is responsible, however, the company could
be required to pay the entire amount of such taxes, and such amounts could be significant. Other provisions of federal, state,
local, or forei
sh similar liabia lity for other matters, including laws governing tax-qualified pension plans, as
well as other contingent liabilities.
ity of the entire consolidated tax reporting group of Historical DuPont or Historical Dow, as applicablea
gn law may establia
ff
25
Part I
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTI SES
The company moved its headquarters from Wilmington, Delaware to Indianapolis, Indiana effective Februarr
ry 8, 2022. It also
its seed business. Its manufacturing, processing, marketing and
maintains a global business center in Johnston, Iowa, forff
research and development facilities, as well as regional purchasing offices and distribution centers, are located throughout the
world. The company has 92 manufacturing
lowing geographic regions:
sites in the folff
t
North America1
EMEA2
Latin America
Asia Pacificff
Total
1.
2.
North America consists of U.S. & Canada.
Europe, Middle East, and Africa ("EMEA").
Number of Sites
Seed
Total
Crop
6
4
7
4
21
42
15
10
4
71
48
19
17
8
92
a
The company's principal sites include facilities which, in the opinion of management, are suitable and adequate forff
have sufficient capac
expansion to increase its Spinosyns fermentation capac
owned by the company; however, certain properties are leased. No title examination of the properties has been made forff
purpose of this report and certain properties are shared with other tenants under long-term leases.
their use and
the company's current needs and expected near-term growth. In 2019, the company announced an
ity (refer to page 56 for further discussion). Properties are primarily
the
ity forff
a
26
Part I
ITEM 3. LEGAL PROCEEDINGS
The company is subject to various legal proceedings, including, but not limited to, product liability, intellectual property,
antitrust, commercial, property damage, personal injury, environmental and regulatory matters arising out of the normal course
of its current businesses or legacy EID businesses unrelated to Corteva’s current businesses but allocated to Corteva as part of
the Separation of Corteva from DuPont. Information regarding certain of these matters is set forth below and in Note 18 -
Commitments and Contingent Liabilities, to the Consolidated Financial Statements. Even when the Company believes liabilities
are not expected to be material or the probability of loss or an adverse unappealable finaff
l judgment is remote, the Company
may consider settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best
interest of the Company, including avoidance of futff uret
distraction and litigation defense cost, and its shareholders.
ff
Litigation related to Corteva’s current businesses
Canadian Competition Bureau Formal Inquiry
On January 30, 2020, the Canadian Competition Bureau (the “Bureau”) filed a court order for the company to produce records
l inquiry under civil sections of Canada’s competition laws. The inquiry is in response to
and information as part of a forma
allegations by the Farmers Business Network ("FBN") that Corteva and other seeds and crop protection manufacturers and
wholesalers unilaterally or in coordination refused, restricted and/or impaired supply of products to FBN in western Canada.
This inquiry follows an informal request for information from the Bureau pursuant to which the company voluntarily provided
documents and engaged in discussions with the Bureau outlining how its conduct was and continues to be compliant with
Canadian competition laws. In February 2022, the Commissioner of the Bureau notified Corteva that the Bureau had
discontinued the inquiry. The Bureau made no finaff
l determination with respect to Corteva’s conduct, thereby retaining
discretion to investigate or to take enforcement action in the future. Corteva believes the likelihood of material liabia lity is
remote.
ii
on Investigation
Federal Trade Commissi
On May 26, 2020, Corteva received a subpoena from the Federal Trade Commission (“FTC”) directing it to submit documents
pertaining to its crop protection products generally, as well as business plans, rebate programs, offers, pricing and marketing
materials specifically related to its acetochlor, oxamyl, rimsulfuron and other related products in order to determine whether
Corteva engaged in unfair methods of competition through anticompetitive conduct. Corteva has cooperated with the FTC’s
u
subpoena
, and continues to believe the likelihood of material liability is remote.
ww
Lawsuits
Chlorpyrifosff
As of December 31, 2021, there were pending personal injury and remediation lawsuits filed against the former Dow
Agrosciences LLC in California alleging injuries related to exposure to, or contamination by, chlorpyrifos, the active ingredient
in Lorsban®, an insecticide used by commercial farms forff
crops. Corteva ended its production of
field fruit
Lorsban® in 2020. Further information with respect to these proceedings is set forth under “Chlorpyrifos Lawsuits” in Note 18
– Commitments and Contingent Liabilities, to the Consolidated Financial Statements.
, nut and vegetablea
r
Litigation related to legacy EID businesses unrelated to Corteva’s current businesses
As discussed below and in Note 18 - Commitments and Contingent Liabilities, to the Consolidated Financial Statements,
certain of the environmental proceedings and litigation allocated to Corteva as part of the Separation fromff
DuPont relate to the
legacy EID businesses, including their use of PFOA, which, for purposes of this report, means collectively perfluorooctanoic
acid and its salts, including the ammonium salt and does not distinguish between the two forms, and PFAS, which means per-
including PFOA, PFOS (perfluorooctanesulfonic acid), GenX and other perfluorinated
and polyfluoroalkyl substances,
chemicals and compounds ("PFCs"). Management believes that it is reasonably possible that EID could incur liabilities related
to PFOA in excess of amounts accrued. However, any such losses are not estimablea
at this time due to various reasons,
including, among others, that the underlying matters are in their early stages and have significant factual issues to be resolved.
On January 22, 2021, Chemours, DuPont, Corteva and EID entered into a binding memorandum of understanding containing a
settlement to resolve legal disputes related to Chemours' responsibility forff
ities allocated to it,
and to establish a cost sharing arrangement and escrow account to be used to support and manage potential future legacy PFAS
liabilities arising out of pre-July 1, 2015 conduct (the “MOU”). See Note 18 - Commitments and Contingent Liabilities, to the
Consolidated Financial Statements for furff
litigation and environmental liabila
ther discussion.
27
ITEM 3. LEGAL PROCEEDINGS, continued
Part I
Environmental Proceedings
The company believes it is remote that the folff
ncial position, liquidity or
results of operations. The matters below involve the potential for $1 million or more in monetary fines and are included per
Item 103(3)(c)(iii) of Regulation S-K of the Securities Exchange Act of 1934, as amended.
lowing matters will have a material impact on its finaff
Related to Corteva’s current businesses
a Porte, Texas - CroCC p Po
rotection - Release Incident Investigations
La Porte Plant, Lt
n at EID's La Porte, Texas, facility. The release occurred at the
On November 15, 2014, there was a release of methyl mercaptaa
site’s crop protection unit resulting in four employee fatff alities inside the unit. The Chemical Safety Board (“CSB”) issued its
final report on June 18, 2019, which included recommendations related to the emergency response program at La Porte.
Corteva responded to the CSB on September 30, 2019 outlining the actions it has taken to date to address the recommendations
for the site and providing its plan to address the CSB’s remaining recommendations. After the conclusion of the CSB
investigation, criminal U.S. Environmental Protection Agency ("EPA") and the Department of Justice ("DOJ") investigations
related to the incident continued.
On January 8, 2021, EID and the facility's former unit operations leader were indicted by the DOJ on two felony and one
misdemeanor charges of violations of the Clean Air Act related to the release. On January 18, 2022, the U.S. District Court of
the Southern District of Texas dismissed the felony charge for failing to implement a safety practice. The maximum statutory
penalties per charge are $500,000, or twice the gross gain or loss derived from the incident, as well as up to three years of
probation and related ongoing reporting obligations. The company intends to move to dismiss the remaining charges and the
trial is currently scheduled for October 2022.
Related to legacy
e
EID businesses unrelated to Corteva’s current businesses
s
TT
- EPAEE Multimedia Inspec
Sabine Plant, Orange, Texas
In June 2012, EID began discussions with the EPA and the DOJ related to a multimedia inspection that the EPA conducted at
the Sabine facility in March 2009 and December 2015. The discussions involve the management of materials in the facility's
wastewater treatment system, hazardous waste management, flare and air emissions, including leak detection and repair. A finaff
l
by the federal court in January 2022, pursuant to which EID agreed to pay a civil penalty of $3.1
consent decree was approved
million and attorney’s fees to the State of Texas. Under the Separation Agreement, Corteva and DuPont will share liabilities
under the decree proportionally on the basis of 29% and 71%, respectively.
tion
a
ff
Divested Neoprene Facility,tt La Place, Louisiana - EPAEE
In 2016, the EPA conducted a focused
compliance investigation at the Denka Performance Elastomer LLC (“Denka”) neoprene
manufacturing facility in La Place, Louisiana. EID sold the neoprene business, including this manufacturing facility, to Denka
in the fourth quarter of 2015. In the spring of 2017, the EPA, the DOJ, the Louisiana Department of Environmental Quality,
EID and Denka began discussions relating to the inspection conclusions and allegations of noncompliance arising under the
Clean Air Act, including leak detection and repair. These discussions, which include potential settlement options, continue.
Under the Separation Agreement, DuPont is defending and indemnifying the company in this matter.
Compliance Inspec
tion
II
Directive PFASFF
New JerJJ seyrr
On March 25, 2019, the New Jersey Department of Environmental Protection (“NJDEP”) issued a Statewide PFAS Directive to
several companies,
including Chemours, DuPont, and EID. The Directive seeks information relating to the use and
environmental release of PFAS and PFAS-replacement chemicals at and from two former EID sites in New Jersey, Chambers
Works and Parlin, and a funding
source for costs related to the NJDEP’s investigation of PFAS issues and PFAS testing and
remediation.
ff
Lakes
Directive Pomptonm
New JerJJ seyrr
On March 27, 2019, the NJDEP issued to Chemours and EID a Natural Resource Damages Directive relating to chemical
contamination (non-PFAS) at and around EID’s former Pompton Lakes facility in New Jersey. The Directive alleges that this
contamination has harmed the natural
resources of New Jersey. It seeks $125,000 as reimbursement for the cost of preparing a
natural
resource damages assessment, which the State will use to determine the extent of such damage and the amount it expects
t
to seek to restore the affected natural resources to their pre-damage state.
t
28
ITEM 3. LEGAL PROCEEDINGS, continued
Part I
Natural Resource Damage Cases
Since May 2017, several municipal water districts and state attorneys general have filed lawsuits against EID, Corteva,
Chemours, 3M, and others, claiming contamination of public water systems by PFCs, including but not limited to PFOA. These
resources, punitive
actions with the municipalities and states seeking economic impact damages forff
damages, present and future costs to cleanup PFOA contamination and the abatement of alleged nuisance with filtration
systems. Further information with respect to these proceedings is set forth under "Other PFOA Matters" in Note 18 -
Commitments and Contingent Liabilities, to the Consolidated Financial Statements.
alleged harm to natural
t
asesCC
Netherlands Municipality Ctt
In April 2021, four municipalities in the Netherlands filed complaints alleging contamination of land and groundwater resulting
from the emission of PFOA and GenX by Corteva, DuPont and Chemours. Further information with respect to these
proceedings is set forth under "Other PFOA Matters" in Note 18 - Commitments and Contingent Liabilities, to the Consolidated
Financial Statements.
t
elaware
he State of Do
Settlement with t
On July 13, 2021, Chemours, DuPont, EID and Corteva entered into a settlement agreement with the State of Delaware
y resolve claims alleged against the companies regarding
reflecting the companies’ and the State’s agreement to settle and full
their historical Delaware operations, manufacturing, use and disposal of all chemical compounds, including PFAS. Further
information with respect to this settlement is set forth under "Other PFOA Matters" in Note 18 - Commitments and Contingent
Liabilities, to the Consolidated Financial Statements.
ff
e
nt of Environment and Energy, AltEn FaciFF lity
Nebraska Departme
The Environmental Protection Agency (“EPA”) and the Nebraska Department of the Environmental and Energy (“NDEE”) are
pursuing investigations, response and removal actions, litigation and enforcement action related to an ethanol plant located near
Mead, Nebraska and owned and operated by AltEn LLC (“AltEn”). The agencies have alleged violations under the Resource
AltEn’s lack of compliance with the
Conservation and Recovery Act (“RCRA”)RR
terms and conditions of its operating permits and other regulatory requirements. Corteva is one of six seed companies, who
were customers of AltEn, participating in the NDEE’s Voluntary Cleanup Program to address certain interim remediation needs
at the site.
l and state laws stemming fromff
and other federa
ff
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
29
Part II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market for Registrant's Common Equity and Related Stockholder Matters
The company's common stock is listed on the New York Stock Exchange, Inc. (symbol: CTVA). The number of record holders
of common stock was approxi
mately 76,000 at January 31, 2022.
a
During 2021 and 2020, the company paid four
information for each quarter during 2021 and 2020.
ff
quarterly dividends on its common stock. See the below tablea
for dividend
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Total
2021
2020
$
$
$
$
$
0.14 $
0.14 $
0.13 $
0.13 $
0.54 $
0.13
0.13
0.13
0.13
0.52
See Part III, Item 11. Executive Compensation for information relating to the company’s equity compensation plans.
Issuer Purchases of Equity Securities
The following tablea
months ended December 31, 2021:
summarizes information with respect to the company's purchase of its common stock during the three
Total Number of
Shares Purchased
Average Price Paid
per Share
Total Number of Shares
Purchased as Part of
the Company's Publicly
Announced Share
Buyback Program1
Approximate Value of
Shares that May Yet Be
Purchased Under the
Program1
(Dollars in millions)
1,461,297 $
1,484,410
42.91
46.68
1,461,297 $
1,484,410
1,387
1,318
Month
October 2021
November 2021
1,250
December 2021
Fourth quarter 2021
1,250
1 On August 5, 2021, Corteva, Inc. announced that its Board of Directors authorized a $1.5 billion share repurchase program to
purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date. The timing, price and volume of
purchases will be based on market conditions, relevant securities laws and other facff
1,458,668
4,404,375 $
1,458,668
4,404,375 $
46.62
45.41
tors.
30
ITEM 5. MARKET FOR REGISTRANRR
T'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES, continued
Part II
Stock Performance Graph
The following graph illustrates the cumulative total returt n t
o Corteva stockholders following the completion of the Separation
and beginning as of the closing price of its first NYSE listing date, June 3, 2019. The Chart compares the cumulative total
returnt
of Corteva’ s common stock with the S&P 500 Stock Index and the S&P 500 Chemicals Index.
r
Stock Performance Graph
220
200
180
160
140
120
100
80
06/03/2019
12/31/2019
12/31/2020
12/31/2021
Corteva
S&P 500 Index
S&P 500 Chemicals Index
Corteva
S&P 500 Index
S&P 500 Chemicals Index
6/3/2019
12/31/2019
12/31/2020
12/31/2021
$
100 $
100
100
120 $
119
112
161 $
141
129
198
181
160
The chart depicts a hypothetical $100 investment in each of the Corteva common stock, the S&P 500 Index and the S&P 500
Chemicals Index as of the closing price on June 3, 2019 and illustrates the value of each investment over time (assuming the
reinvestment of dividends) until December 31, 2021.
ITEM 6. [RESERVED]
.
Not applicablea
31
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS
CAUTIONARY STATEMENTS ABOUT FORWARD-LOOKING STATEMENTS
This report contains certain estimates and forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, which are intended to be
covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act
of 1995, and may be identified by their use of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,”
“projects,” “estimates,” “outlook,” or other words of similar meaning. All statements that address expectations or projections
Corteva’s financial results or outlook; strategy for growth; product development;
about the future, including statements about
regulatory approvals; market position; capita
al allocation strategy; liquidity; environmental, social and governance (“ESG”)
targets;
the anticipated benefits of acquisitions, restructuring actions, or cost savings initiatives; and the outcome of
contingencies, such as litigation and environmental matters, are forward-looking statements.
a
ff
Forward-looking statements and other estimates are based on certain assumptions and expectations of future events which may
not be accurate or realized. Forward-looking statements and other estimates also involve risks and uncertainties, many of which
are beyond Corteva’s control. While the list of factors presented below is considered representative, no such list should be
tors may present significant additional
considered to be a complete statement of all potential risks and uncertainties. Unlisted facff
obstacles to the realization of forward-looki
ng statements. Consequences of material differences in results as compared with
those anticipated in the forward-looking statements could include, among other things, business disruption, operational
problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on
Corteva’s business, results of operations and financial condition. Some of the important factors that could cause Corteva’s
actual results to differ materially from those projected in any such forward-looking statements include: (i) failure to successfully
develop and commercialize Corteva’s pipeline; (ii) failure to obtain or maintain the necessary regulatory approvals for some of
Corteva’s products; (iii) effecff
t of the degree of public understanding and acceptance or perceived public acceptance of
Corteva’s biotechnology and other agricultural products; (iv) effect of changes in agricultural and related policies of
governments and international organizations; (v) effect of competition and consolidation in Corteva’s industry; (vi) effect of
competition from manufacturers of generic products; (vii) costs of complying with evolving regulatory requirements and the
effect of actual or alleged violations of environmental laws or permit requirements; (viii) effect of climate change and
unpredictable seasonal and weather factors; (ix) failure to comply with competition and antitrust laws; (x) competitor’s
establa ishment of an intermediary platform for distribution of Corteva's products; (xi) impact of Corteva's dependence on third
parties with respect to certain of its raw materials or licenses and commercialization; (xii) effect of industrial espionage and
other disruptions to Corteva’s supply chain, information technology or network systems; (xiii) effect of volatility in Corteva’s
input costs; (xiv) failure to raise capita
to Corteva;
(xv) failure of Corteva’s customers to pay their debts to Corteva, including customer financing programs; (xvi) increases in
pension and other post-employm
obligations; (xvii) risks related to environmental litigation and the
indemnification obligations of legacy EID liabilities in connection with the separation of Corteva; (xviii) risks related to
Corteva’s global operations; (xix) failure to effectively manage acquisitions, divestitures,
alliances, restructurings, cost savings
initiatives, and other portfolio actions; (xx) capita
al markets sentiment towards ESG matters; (xxi) risks related to COVID-19;
(xxii) Corteva’s ability to recruit and retain key personnel; (xxiii) Corteva’s intellectual property rights or defend against
intellectual
property claims asserted by others; (xxiv) effect of counterfeit products; (xxv) Corteva’s dependence on intellectual
property cross-license agreements; and (xxvi) other risks related to the Separation from DowDuPont.
al markets or short-term borrowings on terms acceptablea
ent benefit plan funding
al through the capita
m
ff
t
t
t
Additionally, there may be other risks and uncertainties that Corteva is unable to currently identify or that Corteva does not
currently expect to have a material impact on its business. Where, in any forward-looking statement or other estimate, an
expectation or belief as to future
results or events is expressed, such expectation or belief is based on the current plans and
expectations of Corteva’s management and expressed in good faith and believed to have a reasonable basis, but there can be no
assurance that the expectation or belief will result or be achieved or accomplished. Corteva disclaims and does not undertake
any obligation to update or revise any forward-looking statement, except as required by applicable law. A detailed discussion of
some of the significant risks and uncertainties which may cause results and events to differ materially fromff
such forward-
looking statements is included in the section titled “Risk Factors” (Part I, Item 1A of this Form 10-K).
ff
32
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Overview
Referff
to pages 3 - 5 forff
a discussion of the DowDuPont Merger, the Internal Reorganizations, and the Business Separations.
CC
) C"
ommon
Control Combination
Basis of Presentation
Dow AgroSciences ("DAS"DD
The transfer or conveyance of DAS to Corteva was treated as a transfer of entities under common control. As such, the
company recorded the assets, liabilities, and equity of DAS on its balance sheet at their historical basis. Transfers of businesses
between entities under common control requires the financial statements to be presented as if the transaction had occurred at the
point at which common control first existed (the "Merger Effectiveness Time," or August 31, 2017 at 11:59 pm ET). As a
result, the accompanying Consolidated Financial Statements and Notes thereto include the results of DAS as of the Merger
Effectiveness Time. See Note 1 - Background and Basis of Presentation and Note 4 - Common Control Business Combination,
to the Consolidated Financial Statements for additional information.
alty Ptt
roducts Entities
SS
CP and EID SII
peci
Divestiture of EID EII
The transfer of EID ECP and EID Specialty Products Entities meets the criteria for discontinued operations and as such, results
of operations are presented as discontinued operations and have been excluded from continuing operations for all periods
presented. The comprehensive income (loss), stockholder's equity and cash flows related to EID ECP and EID Specialty
Products Entities, respectively, have not been segregated and are included in the Consolidated Statements of Comprehensive
Income (Loss), Consolidated Statements of Equity and Consolidated Statements of Cash Flows, respectively, for 2019.
Amounts related to EID ECP and EID Specialty Products Entities are consistently included or excluded fromff
the Notes to the
ial statement line item. See Note 5 - Divestitures and Other
Consolidated Financial Statements based on the respective financ
Transactions, to the Consolidated Financial Statements for additional information.
ff
Items Affecting Comparability of Financial Results
In addition to the Analysis of Operations discussion based on GAAP as reported results, the following includes a supplemental
Analysis of Operations discussion reflecting unaudited pro forma financial information, prepared in accordance with Article 11
of Regulation S-X that was in effect prior to recent amendments. This unaudited pro forma financial informat
ion, for the year
ended December 31, 2019 assumes the Merger, the debt retirement transactions related to paying off or retiring portions of
EID’s existing debt liabilities (as discussed in Note 17 - Long-Term Debt and Available Credit Facilities, to the Consolidated
Financial Statements), and the separation and distribution to DowDuPont stockholders of all the outstanding shares of Corteva
common stock as if they had been consummated on January 1, 2016. For additional information, see the Supplemental
Unaudited Pro Forma Combined Financial Information in this section.
ff
33
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Overview
The folff
lowing is a summary of results fromff
continuing operations for the year ended December 31, 2021:
•
•
•
•
•
The company reported net sales of $15,655 million, an increase of 10 percent versus the year ended December 31,
2020, reflecting a 5 percent increase in volume, a 4 percent increase in price, and a 1 percent favorable impact fromff
currency. Volume and price gains were driven by continued penetration of new products, continued focus
on the
company's price for value strategy and pricing for higher raw material and logistical costs.
ff
Cost of goods sold ("COGS") totaled $9,220 million, up from $8,507 million for the year ended December 31, 2020,
primarily driven by increased volumes, higher input costs, freight and logistics, which are primarily market-driven, and
unfavorablea
currency, partially offset by ongoing cost and productivity actions.
Restructuring and asset related charges - net were $289 million, a decrease from $335 million for the year ended
December 31, 2020. The year ended December 31, 2021 primarily included $167 million related to severance and
related benefit costs, asset related charges, and contract termination charges associated with 2021 Restructuring
Activities and $125 million of non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2
Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits.
Income fromff
ended December 31, 2020.
continuing operations after income taxes was $1,822 million, as compared to $756 million for the year
Operating EBITDA was $2,576 million, up from $2,087 million for the year ended December 31, 2020, driven by
strong price execution and volume gains in all regions and both segments.
In addition to the financial highlights above
31, 2021:
a
, the following events occurred during or subsequent to the year ended December
•
•
The company returned
previously announced share repurchase programs and through common stock dividends.
approximately $1.3 billion to shareholders during the year ended December 31, 2021 under its
t
On July 21, 2021, the company's Board of Directors approved an increase in the common stock dividend of $0.13 per
share to $0.14 per share.
Priorities
The company believes the following priorities will enable it to create significant value for its customers while delivering strong
financial returns
to its shareholders over the mid-term:
t
•
•
Deliver sales and earnings
growth by continuing to leverage an industry-leading innovation pipeline to introduce new
proprietary seed traits and crop protection formulations that anticipate and meet evolving customer needs and utilizing
a comprehensive multi-channel, multi-brand strategy to align brands and capaa bila
ities across different sales channels.
ii
Drive actiott ns to expand margins through pricing for high value technology and new products and operational
excellence, which includes integrating its operations and continuing to drive operating efficiencies and creating a
strong culture based on accountabila
ity.
• Generate cash flow growth reflectingtt
appropriate across the cycle.
operating discipline of working capita
al, including net working capita
al turns
• Deploy capitaltt
in a balanced and disciplined way investing in high returnt
organic and inorganic growth opportunities
as well as providing attractive returns
t
to shareholders via dividends and share repurchases.
34
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Analysis of Operations
tt
Global Economic Conditions
On March 11, 2020, the World Health Organization (“WHO”) declared the novel coronavirus disease (“COVID-19”) a
pandemic. The global health crisis caused by COVID-19 and the related government actions and stay at home orders have
negatively impacted economic activity and increased political instability across the globe. Since the crisis began, Corteva has
engaged its global Integrated Health Services Pandemic & Infectious Disease Team to take actions and implement guidelines
and protocols in response to the COVID-19 pandemic.
a
As COVID-19 becomes more contained, a rebound in economic activity has occurred, although varying regionally depending
on government policies and regulations and the rate, pace, and effectiveness of the containment efforts deployed by various
national, state, and local governments, vaccination rates, and the ability of COVD-19 variants to overcome containment efforts,
available vaccines, and medical treatments. These varying levels of recovery have created a misalignment of supply and
transportation and logistic services, energy, raw materials and other inputs, which have been exasperated in
demand for labor,
certain regions by one-time events, including extreme weather events. Corteva will continue to actively monitor the situat
ion
r actions altering its business operations that it determines are in the best interests of its stakeholders, or as
and may take furthe
required by federal, state, or local authorities. These alterations or modifications may impact the company's business, including
the effects on its customers, employees, and prospects, or on its finaff
ncial results through at least 2022. With the ongoing
volatility in global markets, the company will continue to monitor various factors that could impact earnings and cash flows of
the business, including, but not limited to the inflation of, or unavailability of raw material inputs and transportation and
logistics services, currency fluctuations, expectations of future planted area (as influenced by consumer demand, ethanol
markets and government policies and regulations), trade and purchasing of commodities globally and relative commodity
prices.
ff
t
2021 Restructuringii Actions
During the first quarter of 2021, Corteva approved restructuring actions designed to right-size and optimize footprint and
organizational structuret
according to the business needs in each region with the focus on driving continued cost improvement
and productivity. During the year ended December 31, 2021, the company recorded net pre-tax restructuring charges of
approximately $167 million, comprised of $74 million of severance and related benefit costs, $45 million of asset related
charges, $6 million of asset retirement obligations and $42 million of costs related to contract terminations (contract
terminations includes early lease terminations). The company does not anticipate any additional material charges from the 2021
Restrucrr
turing Activities as actions associated with this charge are substantially complete.
Future cash payments related to this charge are anticipated to be approximately $70 million, primarily related to the payment of
severance and related benefits, asset retirement obligations, and costs related to contract terminations.
The 2021 Restructuring Actions are expected to contribute to the company’s ongoing cost and productivity improvement efforts
rate basis by 2023. See Note 7 - Restructuring and Asset
through achieving an estimated $70 million of savings on a runr
Related Charges - Net, to the Consolidated Financial Statements, for additional information.
ff
Share Buyback Planll
On August 5, 2021, Corteva, Inc. announced that its Board of Directors authorized a $1.5 billion share repurchase program to
purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date ("2021 Share Buyback Plan").
The timing, price and volume of purchases will be based on market conditions, relevant securities laws and other facff
tors. In
connection with the 2021 Share Buyback Plan, the company repurchased and retired 5,572,000 shares during the year ended
December 31, 2021 in the open market for a total cost of $250 million.
On June 26, 2019, Corteva, Inc. announced that its Board of Directors authorized a $1 billion share repurchase program to
purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date ("2019 Share Buyback Plan").
The company completed the 2019 Share Buyback Plan during the third quarter of 2021. In connection with the 2019 Share
Buyback Plan, the company repurchased and retired 15,378,000 shares, 8,503,000 shares, and 824,000 shares during the years
ended December 31, 2021, 2020, and 2019, respectively, in the open market for a total cost of $700 million, $275 million, and
$25 million, respectively.
35
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Part II
PP
ity Ptt
rogram
roPP ductivtt
Execute to Win Pii
During the first quarter of 2020, Corteva approved restructuring actions designed to improve productivity through optimizing
certain operational and organizational structures
primarily related to the Execute to Win Productivity Program. The company
recorded net pre-tax restructuring charges of $185 million from inception-to-date under the Execute to Win Productivity
Program, consisting of $124 million of asset related charges and $61 million of severance and related benefit costs. Actions
associated with the Execute to Win Productivity Program were substantially complete by the end of 2020.
t
ontPP
Cost Synergy Program
DowDuPww
In September and November 2017, DowDuPont and EID approved post-merger restructuring actions under the DowDuPont
Cost Synergy Program (the “Synergy Program”), adopted at the time by the DowDuPont Board of Directors. The Synergy
Program was designed to integrate and optimize the organization following the Merger and in preparation for the Business
Separations. The company recorded net pre-tax restructuring charges of $833 million from inception-to-date under the Synergy
Program, consisting of severance and related benefit costs of $316 million, contract termination costs of $190 million, and
asset-related charges of $327 million. Actions associated with the Synergy Program, including employee separations, were
substantially complete in 2019.
The company included cumulative savings associated with these actions within its cost synergy commitment of approximately
$1.2 billion through 2021. See Note 7 - Restructuring and Asset Related Charges - Net, to the Consolidated Financial
Statements, for additional information.
36
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATRR IONS, continued
Part II
Net Sales
(In millions)
Net Sales
For the Year Ended December 31,
2020
2019
2021
$
15,655 $
14,217 $
13,846
2021 versus 2020
Net sales were $15,655 million for the year ended December 31, 2021, compared to $14,217 million for the year ended
December 31, 2020. Volume increased 5 percent versus the year-ago period with increases in all regions, led by Latin America.
The volume increases were primarily driven by strong demand, the continued penetration of new and differentiated products
and increased planted area. Price increased 4 percent versus prior year, driven by a continued focus
on the company's price forff
value strategy and pricing for higher raw material and logistical costs.
ff
2020 versus 2019
Net sales were $14,217 million for the year ended December 31, 2020, compared to $13,846 million for the year ended
December 31, 2019. Volume increased 5 percent versus the year-ago period, primarily driven by sales of new and differentiated
products globally and across both segments. Price grew 3 percent on a full
-year basis, with higher prices in all regions, led by
Latin America partly to offset currency. Currency represented a headwind of 5 percent, led by the impact of the Brazilian Real.
ff
(In millions)
Worldwide
North America
EMEA
Latin America
Asia Pacific
(in millions)
North America
EMEA
Latin America
Asia Pacificff
Total
(in millions)
North America
EMEA
Latin America
Asia Pacificff
Total
2021
For the Year Ended December 31,
2020
2019
Net Sales
% of Net
Sales
Net Sales
% of Net
Sales
Net Sales
% of Net
Sales
$
15,655
100 % $
14,217
100 % $
13,846
100 %
7,536
3,123
3,545
1,451
48 %
20 %
23 %
9 %
7,168
2,842
2,805
1,402
50 %
20 %
20 %
10 %
6,929
2,740
2,889
1,288
50 %
20 %
21 %
9 %
Year Ended December 31,
2021 vs. 2020
Net Sales Change
Percent Change Due To:
Price &
Portfolio /
$
%
Product Mix
Volume
Currency
Other
368
281
740
49
1,438
5 %
10 %
26 %
3 %
10 %
2 %
3 %
10 %
2 %
4 %
2 %
3 %
17 %
1 %
5 %
1 %
4 %
(1)%
2 %
1 %
— %
— %
— %
(2)%
— %
Year Ended December 31,
2020 vs. 2019
Percent Change Due To:
Net Sales Change
Price &
Portfolio /
$
%
Product Mix
Volume
Currency
Other
239
102
(84)
114
371
3 %
4 %
(3)%
9 %
3 %
1 %
2 %
7 %
2 %
3 %
3 %
6 %
10 %
11 %
5 %
(1)%
(4)%
(20)%
(3)%
(5)%
— %
— %
— %
(1)%
— %
$
$
$
$
37
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Part II
COGS
(In millions)
COGS
(In millions)
Pro Forma COGS
For the Year Ended December 31,
2020
2019
2021
$
9,220 $
8,507 $
8,575
For the Year Ended
December 31, 2019
$
8,386
2021 versus 2020
COGS was $9,220 million (59 percent of net sales) for the year ended December 31, 2021 compared to $8,507 million (60
the year ended December 31, 2020. The increase was primarily driven by increased volumes in both
percent of net sales) forff
seed and crop protection, higher input costs, frei
currency,
partially offset by ongoing cost and productivity actions. The market driven trends are expected to continue as global supply
chains and logistics remain constrained across industries.
ght and logistics, which are primarily market-driven, and unfavorablea
ff
2020 versus 2019
the year ended December 31, 2020 compared to $8,575 million (62
COGS was $8,507 million (60 percent of net sales) forff
percent of net sales) forff
the year ended December 31, 2019. The decrease was primarily driven by currency benefits, lack of
inventory step-up in 2020 as compared to $272 million recognized in 2019, and ongoing cost and productivity actions. The
decrease was partially offset by increased volumes, higher input costs in both seed and crop protection and higher royalties in
seed. Amortization of inventory step-up was 2 percent of net sales for the year ended December 31, 2019.
COGS was $8,507 million (60 percent of net sales) on an as reported basis forff
the year ended December 31, 2020 compared to
$8,386 million (61 percent of net sales) on a pro forma basis for the year ended December 31, 2019. The increase was driven by
increased volumes, higher input costs in both seed and crop protection and higher royalties in seed, partially offset by the above
noted currency benefits and ongoing cost and productivity actions.
Research and Development Expense ("R&D")
(In millions)
R&
D
For the Year Ended December 31,
2020
2019
2021
$
1,187 $
1,142 $
1,147
2021 versus 2020
R&D expense was $1,187 million (8 percent of net sales) for the year ended December 31, 2021 and $1,142 million (8 percent
of net sales) for the year ended December 31, 2020. The increase was primarily driven by increases in contract labor,
compensation and unfavorablea
currency, partially offset by ongoing cost and productivity actions.
variable
a
2020 versus 2019
R&D expense was $1,142 million (8 percent of net sales) forff
of net sales) forff
and productivity actions, partially offset by increased investments to support new products in crop protection.
the year ended December 31, 2020 and $1,147 million (8 percent
the year ended December 31, 2019. The decrease was primarily driven by currency benefits and ongoing cost
38
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Selling, General and Administrative Expenses ("SG&A")
Part II
(In millions)
SG&
A
(In millions)
Pro Forma SG&
A
For the Year Ended December 31,
2020
2019
2021
$
3,209 $
3,043 $
3,065
For the Year Ended
December 31, 2019
$
3,068
2021 versus 2020
SG&A was $3,209 million (20 percent of net sales) for the year ended December 31, 2021 and $3,043 million (21 percent of
net sales) for the year ended December 31, 2020. The increase was driven primarily by increases in commission expense,
employee related benefit costs, salaries and wages, variable compensation, enterprise resource planning ("ERP") costs and
currency, partially offset by a decrease in bad debt expense and ongoing cost and productivity actions.
unfavorablea
2020 versus 2019
the year ended December 31, 2020 and $3,065 million (22 percent of
SG&A was $3,043 million (21 percent of net sales) forff
net sales) forff
the year ended December 31, 2019. The decrease was primarily driven by currency benefits and ongoing cost and
productivity actions taken to curtail spending, partially offset by higher commissions and selling expenses due to higher
volumes, higher ERP costs and higher product launch costs.
Amortization of Intangibles
(In millions)
Amortization of Intangibles
For the Year Ended December 31,
2020
2019
2021
$
722 $
682 $
475
2021 versus 2020
Intangible asset amortization was $722 million for the year ended December 31, 2021 and $682 million for the year ended
December 31, 2020. The increase was primarily driven by the full year impact of the trade name asset, which changed from an
indefinite lived intangible asset to definite lived with a useful life of 25 years in the fourth quarter of 2020. See Note 15 -
Goodwill and Other Intangible Assets, to the Consolidated Financial Statements, for additional information for the above
items.
2020 versus 2019
Intangible asset amortization was $682 million for the year ended December 31, 2020 and $475 million for the year ended
December 31, 2019. The increase was primarily driven by the full year impact of germplasm assets, which changed from an
indefinite lived intangible asset to a definite lived with a useful life of 25 years in the fourth quarter of 2019. The remaining
increase in amortization expense is primarily due to amortization of the trade name asset that was changed fromff
an indefinite
lived intangible asset to definite lived in the fourth quarter of 2020.
39
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
Part II
OPERATIRR
ONS, continued
Restructuring and Asset Related Charges - Net
(In millions)
For the Year Ended December 31,
2020
2019
2021
Restructuring and Asset Related Charges - Net
$
289 $
335 $
222
2021
Restructuring and asset related charges - net were $289 million for the year ended December 31, 2021, which was primarily
comprised of a $167 million net charge related to the 2021 Restructuring Actions and $125 million of restructuring and asset
related charges - net from non-cash accelerated prepaid royalty amortization expense related to the Roundup Ready 2 Yield®
and Roundup Ready 2 Xtend® herbicide tolerance traits. The $167 million net charge associated with the 2021 Restructuring
Actions was comprised of $74 million of severance and related benefit costs, $45 million of asset related charges, $6 million of
asset retirement obligations and $42 million of costs related to contract terminations (contract terminations includes early lease
terminations).
2020
Restructuring and asset related charges - net were $335 million for the year ended December 31, 2020, which was comprised of
a $176 million net charge related to the Execute to Win Productivity Program and $159 million of restructuring and asset
related charges - net from non-cash accelerated prepaid royalty amortization expense related to the Roundup Ready 2 Yield®
and Roundup Ready 2 Xtend® herbicide tolerance traits. The $176 million net charge associated with the Execute to Win
Productivity Program was comprised of $113 million of asset related charges and $63 million of severance and related benefit
costs.
2019
Restructuring and asset related charges - net were $222 million for the year ended December 31, 2019, which was comprised of
$144 million of asset related charges (discussed in the "Asset Impairment" section, below) and a $92 million net charge related
to the Synergy Program, offset by a net benefit of $14 million related to the DowDuPont Agriculturet
Division Restructuring
Program. The $92 million net charge associated with the Synergy Program was comprised of $69 million of contract
termination charges and $30 million of asset related charges, partially offset by a $7 million benefit on the reduction of
severance and related benefit costs. The $14 million net benefit associated with the DowDuPont Agriculturet
Division
Restructuring Program included a $17 million benefit on the reduction of severance and related benefit costs, partially offset by
$3 million of asset related charges.
Asset Impairment
p
For the year ended December 31, 2019, the company recognized a $144 million pre-tax ($110 million after-tax) non-cash
impairment charge in restructuring and asset related charges - net in the company's Consolidated Statements of Operations
and Asset Related Charges - Net, and Note
related to certain IPR&D assets within the seed segment. See Note 7 - Restructuring
23 - Fair Value Measurements, to the Consolidated Financial Statements for additional information.
t
40
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
Part II
OPERATIRR
ONS, continued
Integration and Separation Costs
(In millions)
For the Year Ended December 31,
2020
2019
2021
Integration and Separation Costs
$
— $
— $
744
(In millions)
Pro Forma Integration and Separation Costs
For the Year Ended
December 31, 2019
$
632
Integration and separation costs were $744 million for the year ended December 31, 2019. These costs consisted primarily of
financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees associated with
the preparation and execution of activities related to the Business Separations and the integration of EID’s Pioneer and Crop
Protection businesses with DAS. Pro forma integration and separation costs were $632 million for the year ended December 31,
2019. These costs were primarily driven by finaff
ncial advisory, information technology, legal, accounting, consulting, and other
professional advisory fees associated with the preparation and execution of activities related to the Business Separations and the
integration of EID’s Pioneer and Crop Protection businesses with DAS.
Other Income - Net
(In millions)
Other Income - Net
For the Year Ended December 31,
2020
2019
2021
$
1,348 $
212 $
215
2021 versus 2020
Other income - net was income of $1,348 million for the year ended December 31, 2021 and income of $212 million for the
year ended December 31, 2020. The increase was primarily driven by an increase in non-operating pension and other post-
employment benefit credits, driven by the 2020 OPEB Plan Amendments, a decrease in net exchange losses, and the Employee
Retention Credit pursuant to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act as enhanced by the
Consolidated Appropriations Act (“CAA”) and American Rescue Plan Act (“ARPA”). The increases are partially offset by the
2021 officer indemnification payment and a charge related to a contract termination with a third-party service provider. See
Note 9 - Supplementary Information, to the Consolidated Financial Statements for additional information.
2020 versus 2019
Other income - net was income of $212 million for the year ended December 31, 2020 and income of $215 million for the year
ended December 31, 2019. The increase in non-operating pension and other post-employm
ent benefit credits was offset by
higher net exchange losses as well as net losses on sales of businesses and other assets for the year ended December 31, 2020,
compared to net gains in 2019 and a change in miscellaneous income. Other income - net for the year ended December 31, 2020
includes a $(53) million loss on the expected sale of the La Porte site. See Note 9 - Supplem
entary Information, to the
Consolidated Financial Statements for additional information.
m
u
The company routinely uses forward exchange contracts to offset its net exposures, by currency denominated monetary assets
and liabilities of its operations. The objective of this program is to maintain an approxi
mately balanced position in foreign
currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes. The net pre-tax exchange gains and
losses are recorded in other income - net and the related tax impact is recorded in provision for (benefit from) income taxes on
continuing operations in the Consolidated Statement of Operations. See Note 9 - Supplementary Information,
to the
Consolidated Financial Statements for additional information.
a
41
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Part II
Interest Expense
(In millions)
Interest Expense
(In millions)
e
Pro Forma Interest Expens
For the Year Ended December 31,
2021
2020
2019
$
30 $
45 $
136
For the Year Ended
December 31, 2019
$
91
2021 versus 2020
Interest expense was $30 million and $45 million for the years ended December 31, 2021 and 2020, respectively. The change
was primarily driven by lower average short-term borrowings and lower interest rates, partially offset by higher average long-
term borrowings.
2020 versus 2019
Interest expense was $45 million and $136 million for the years ended December 31, 2020 and 2019, respectively. The change
was primarily driven by lower average debt balances as a result of the redemption/repayment transactions in the second quarter
of 2019 related to paying off or retiring portions of EID’s existing debt liabilities (refer to Note 17 - Long-Term Debt and
Availabla e Credit Facilities, to the Consolidated Financial Statements) and lower average interest rates.
Provision for (Benefit from)
ff
Income Taxes on Continuing Operations
(In millions)
Provision for (Benefit from) Income Taxes on Continuing
Operations
$
Effective Tax Rate
For the Year Ended December 31,
2020
2019
2021
524
$
22.3 %
(81)
$
(12.0)%
(46)
14.6 %
(In millions)
Pro Forma Provision for (Benefit from) Income Taxes on Continuing Operations
Pro Forma Effecff
tive Tax Rate
For the Year Ended
December 31, 2019
1
$
3.7 %
2021
For the year ended December 31, 2021, the company’s effective tax rate of 22.3 percent on pre-tax income from continuing
impacted by the tax impact of certain net exchange losses recognized on the re-
operations of 2,346 million was unfavorablya
measurement of the net monetary asset positions which were not deductible in their local jurisdictions, the tax impact of income
from pension and other post employment benefits, and a $23 million charge associated with repatriation of cash held outside of
the U.S. These items were partially offset by the impacts of favorablea
geographic mix of earnings and a $(57) million benefit
related to U.S. tax credits for increasing research activities.
2020
For the year ended December 31, 2020, the company’s effective tax rate of (12.0) percent on pre-tax income from continuing
impacted by a $(182) million tax benefit associated with the recognition of an elective
operations of $675 million was favorablya
and AHV Financing (“Swiss Tax Reform”), a
cantonal component of the recent enactment of the Federal Act on Tax Reformff
to accrual adjustment associated with an elective change in accounting method for
$(51) million tax benefit related to a returnt
the 2019 tax year impact of The Act's foreign tax provisions, a $(14) million tax benefit related to a returnt
to accrual adjustment
to reflect a change in estimate on the impact of a tax law enactment in a forei
gn jurisdiction, as well as an additional $(14)
ff
associated with changes in accruals for certain prior year tax positions in various other jurisdictions.
million of net tax benefitsff
These benefits were partially offset by the impacts of unfavorablea
geographic mix of earnings, the tax impact of certain net
exchange losses recognized on the re-measurement of the net monetary asset positions which were not deductible in their local
jurisdictions, and a $19 million tax charge associated with a state tax valuation allowance in the U.S. based on a change in
judgment about the realizabila
ity of a deferre
d tax asset.
ff
42
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Part II
2019
For the year ended December 31, 2019, the company’s effective tax rate of 14.6 percent on pre-tax loss from continuing
operations of $(316) million was unfavorablya
impacted by a tax charge of $146 million related to the U.S. state blended tax rate
changes associated with the Business Separations and a tax charge of $35 million related to application of foreign tax
provisions. Other net unfavorablea
effective tax rate impacts included those related to the Argentine peso devaluation,
integration and separation costs, non-tax-deductible amortization of the fair value step-up in inventories as a result of the
Merger, the tax impact of certain net exchange losses recognized on the re-measurement of the net monetary asset positions
impacts were
which were not deductible in their local jurisdictions, as well as geographic
partially offset by a tax benefit of $(102) million related to an internal legal entity restructuring associated with the Business
Separations, tax benefits of $(38) million associated with the enactment of the Federal Act on Tax Reform and AHV Financing
(“Swiss Tax Reform”), a $(34) million tax benefit associated with the release of a valuation allowance recorded against the net
deferred tax asset position of a legal entity in Switzerland, as well as $(19) million of tax benefits associated with changes in
accruals for certain prior year tax positions and reductions in the company’s unrecognized tax benefits dued
to the closure of
various tax statutt es of limitations.
mix of earnings. Those unfavorablea
a
For the year ended December 31, 2019, the company’s effective tax rate was 3.7 percent on pro forma pre-tax income from
continuing operations of $27 million. The pro forma pre-tax income from continuing operations excludes pre-tax charges of
$205 million, $45 million and $93 million primarily related to the removal of amortization of the fair value-step-up of
inventories as a result of the Merger, removal of interest expense related to paying off or retiring portions of EID’s existing debt
liabilities (as discussed in Note 17 - Long-Term Debt and Available Credit Facilities, to the Consolidated Financial Statements),
to the Separation, respectively. The pro forma provision for income taxes on
and removal of expenses directly attributablea
continuing operations excludes net tax benefitsff
of $(36) million, $(10) million and $(1) million related to the above items,
respectively.
(Loss) Income from Discontinued Operations After Tax
(In millions)
(Loss) Income from Discontinued Operations After Income Taxes
For the Year Ended December 31,
2020
2019
2021
$
(53) $
(55) $
(671)
2021 versus 2020
(Loss) income from discontinued operations after income taxes was $(53) million for the year ended December 31, 2021 and
$(55) million for the year ended December 31, 2020. The year ended December 31, 2021 primarily reflects charges relating to
PFAS environmental remediation activities at the Chemours Fayetteville Works facility and the settlement with the State of
Delaware for PFAS related natural
resource damage claims. See Note 18 - Commitments and Contingent Liabilities, to the
Consolidated Financial Statements, for further discussion. See below for discussion of discontinued operations for the year
ended December 31, 2020.
t
2020 versus 2019
(Loss) income from discontinued operations after income taxes was $(55) million for the year ended December 31, 2020 and
$(671) million for the year ended December 31, 2019. The year ended December 31, 2020 primarily reflects an after-tax charge
of $(65) million as a result of the MOU, and the settlement of approximately 95 matters, as well as unfiled matters remaining in
the Ohio MDL. See Note 18 - Commitments and Contingent Liabilities, to the Consolidated Financial Statements, for further
discussion. The year ended December 31, 2019 reflects the financial results recognized for the EID Specialty Entities of $(859)
million, which includes a non-cash goodwill impairment charge of $(1,102) million and impairment charge relating to equity
method investment of $(63) million, partially offset by changes in accruals for certain prior tax positions relating to the
Divested Ag Business of $80 million, adjustments of certain unrecognized tax benefits forff
prior
positions taken on items fromff
years from previously divested businesses of $89 million and the finff ancial results recognized for EID ECP of $19 million.
EID Analysis of Operations
As discussed in Note 1 - Basis of Presentation, to the EID Consolidated Financial Statements, EID is a subsidiary of Corteva,
Inc. and continues to be a reporting company, subject to the requirements of the Exchange Act. The below relates to EID only
and is presented to provide an Analysis of Operations, only for the differe
nces between EID and Corteva, Inc.
ff
43
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Interest Expense
2021 versus 2020
EID’s interest expense was $80 million for the year ended December 31, 2021 and $145 million for the year ended December
31, 2020. The change was primarily driven by the items noted on page 42, under the header “Interest Expense – 2021 versus
2020,” and by lower interest expense incurred on the related party loan between EID and Corteva, Inc. See Note 2 - Related
Party Transactions, to the EID Consolidated Financial Statements for further information.
2020 versus 2019
EID’s interest expense was $145 million for the year ended December 31, 2020 and $242 million for the year ended December
31, 2019. The change was primarily driven by the items noted on page 42, under the header "Interest Expense - 2020 versus
2019," and by lower interest expense incurred on the related party loan between EID and Corteva, Inc. See Note 2 - Related
Party Transactions, to the EID Consolidated Financial Statements for further information.
ff
Income Taxes
Provision for (Benefit from)
2021
For the year ended December 31, 2021, EID had an effective tax rate of 22.2 percent on pre-tax income from continuing
operations of $2,296 million, driven by the items noted on page 42, under the header “Provision for Income Taxes - 2021” and
a tax benefit related to the interest expense incurred on the related party loan between EID and Corteva, Inc. See Note 3 -
Income Taxes, to the EID Consolidated Financial Statements for further information.
2020
For the year ended December 31, 2020, EID had an effective tax rate of (18.3) percent on pre-tax income from continuing
operations of $575 million, driven by the items noted on page 42, under the header “Provision for Income Taxes - 2020” and a
tax benefit related to the interest expense incurred on the related party loan between EID and Corteva, Inc. See Note 3 - Income
Taxes, to the EID Consolidated Financial Statements for further information.
2019
For the year ended December 31, 2019, EID had an effective tax rate of 16.8 percent on pre-tax loss from continuing operations
of $(422) million, driven by the items noted on page 43, under the header "Provision for Income Taxes - 2019" and a tax benefit
related to the interest expense incurred on a related party loan between EID and Corteva, Inc. See Note 3 - Income Taxes, to the
EID Consolidated Financial Statements for further information.
Corporate Outlook - 2022
Global demand for agricultural products continues to be strong with an expected record demand for grain and oilseeds. The
company anticipates total U.S. corn and soybean planted area to be flaff
t, with a modest shift towards soybeans.
The company expects net sales to be in the range of $16.7 billion and $17.0 billion, driven by new product sales and continued
focus on the company’s price forff
value strategy, partially offset by currency headwinds.
The company expects Operating EBITDA to be in the range of $2.8 billion and $3.0 billion with new product sales, pricing and
ongoing cost savings actions offsetting the expected increased input costs. Operating Earnings Per Share is expected to be in the
range of $2.30 and $2.50 per share. Refer to furt
her discussion of Non-GAAP metrics on pages 52 - 54.
ff
rd-looking non-GAAP financial measures to its most comparablea
The above outlook does not contemplate any extreme weather events, operational disruptions, significant changes in customers'
global economic conditions.
demand or ability to pay, or further acceleration of currency and inflation impacts resulting fromff
Corteva is not able to reconcile its forff warr
U.S. GAAP financial
measures, as it is unable to predict with reasonable certainty items outside of the company’s control, such as Significant Items,
without unreasonable effort (refer to page 53 for Significant Items recorded in the years ended December 31, 2021, 2020 and
mately $1 billion lower, as a result of the 2020
2019). However, the company expects non-operating benefits to be approxi
OPEB Plan Amendments, an increase in the discount rates, and a change in the expected long-term rate of returnt
on plan assets.
Refer to the company's discussion on Long-term Employee Benefits on page 65. Additionally, beginning January 1, 2020, the
company recognizes non-cash accelerated prepaid royalty amortization expense as a restructuring and asset related charge. For
further discussion of accelerated prepaid royalty amortization refer to the Company's Critical Accounting Estimates forff Prepaid
Royalties on page 63.
a
44
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Supplemental Unaudited Pro Forma Financial Information
The supplemental unaudited pro forma statements of operations (the "unaudited pro forma statements of operations") for
Corteva for the year ended December 31, 2019 gives effect to the Merger, the debt retirement transactions related to paying off
or retiring portions of EID’s existing debt liabilities (as discussed in Note 17 - Long-Term Debt and Available Credit Facilities,
to the Consolidated Financial Statements), and the separation and distribution to DowDuPont stockholders of all
the
outstanding shares of Corteva common stock as if they had been consummated on January 1, 2016.
all periods prior to the Business Realignment and Internal Reorganization
For the periods presented below, Corteva’s results forff
consist of the combined results of operations for Historical EID and DAS, and Corteva’s results for all periods after the
Business Realignment and Internal Reorganization represent the consolidated balances of the company. The unaudited pro
forma statements of operations below were prepared in accordance with Article 11 of Regulation S-X that was in effect prior to
recent amendments, and events that are not expected to have a continuing impact on the combined results (e.g., amortization of
inventory step-up costs) are excluded. One-time transaction-related costs incurred prior to, or concurrent with, the closing of the
Merger, the debt redemptim ons/repayments, and the Corteva Distribution are not included in the unaudited pro forma combined
statements of operations through March 31, 2019. The unaudited pro forma combined statements of operations do not reflect
restructuring or integration activities or other costs, that were not already reflected in GAAP results, following the separation
and distribution transactions that may be incurred to achieve cost or growth synergies of Corteva. As no assurance can be made
that these costs will be incurred or the growth synergies will be achieved, no adjust
d ment has been made.
The unaudited pro forma statements of operations have been presented for informational purposes only and are not necessarily
indicative of what Corteva’s results of operations actually would have been had the above transactions been completed on
January 1, 2016. In addition, the unaudited pro forma statements of operations do not purport to project the future operating
results of the company. The unaudited pro forma statements of operations were based on and should be read in conjunction with
the audited Consolidated Financial Statements and Notes contained within this Annual Report on Form 10-K.
45
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Unaudited Pro Forma Statement of Operations
For the Year Ended December 31, 2019
Corteva (As
Reported -
GAAP)
Merger 1
Debt
Retirement 2
Separations
Related 3
Pro Forma
(In millions, except per share amounts)
Net sales
Cost of goods sold
Research and development expense
Selling, general and administrative expenses
Amortization of intangibles
Restructuring and asset related charges - net
Integration and separation costs
Other income - net
Loss on early extinguishment of debt
Interest expense
Income (loss) from continuing operations before
income taxes
Provision for (benefit fromff
continuing operations
) income taxes on
Income (loss) from continuing operations after income
taxes
Net income (loss) fromff
attributablea
to noncontrolling interests
continuing operations
$
13,846 $
8,575
— $
(205)
— $
—
— $
16
1,147
3,065
475
222
744
215
13
136
(316)
(46)
(270)
13
—
—
—
—
—
—
—
—
205
36
169
—
—
—
—
—
—
—
—
(45)
45
10
35
—
—
3
—
—
(112)
—
—
—
93
1
92
—
Net income (loss) attributablea
to Corteva
$
(283) $
169 $
35 $
92 $
13,846
8,386
1,147
3,068
475
222
632
215
13
91
27
1
26
13
13
Per share common data
Earnings (loss) per share of common stock fromff
continuing operations - basic
d
Earnings (loss) per share of common stock from continuing operations - dilute
Weighted-average common shares outstanding - basic
Weighted-average common shares outstanding - diluted
$
$
0.02
0.02
749.5
749.5
1. Represents the removal of amortization of EID’s agriculture business’ inventory step-up recognized in connection with
to the Merger and will not have a continuing
the Merger, as the incremental amortization is directly attributablea
impact.
2. Represents removal of interest expense related to the debt redemptions/repayments.
3. Adjustments directly attributablea
to the separations and distributions of Corteva, Inc. include the following: removal of
Telone® Soil Fumigant business (“Telone®”) results (as Telone® did not transfer to Corteva as part of the common
the distribution agreement entered into between Corteva and Dow that
control combination of DAS); impact fromff
allows for Corteva to become the exclusive distributor of Telone® products forff Dow; elimination of one-time
transaction costs directly attributablea
to the Corteva Distribution; the impact of certain manufacturing, leasing and
supply agreements entered into in connection with the Corteva Distribution; and the related tax impacts of these items.
46
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Recent Accounting Pronouncements
See Note 3 - Recent Accounting Guidance, to the Consolidated Financial Statements for a description of recent accounting
pronouncements.
Segment Reviews
The company operates in two reportable segments: seed and crop protection. The company’s seed segment is a global leader in
developing and supplying advanced germplasm and traits that produce optimum yield for farms around the world. The segment
offers trait technologies that improve resistance to weather, disease, insects and herbicides used to control weeds, and trait
technologies that enhance food and nutritional characteristics, and also provides digital solutions that assist farmer decision-
making with a view to optimize product selection and, ultimately, help maximize yield and profitability. The segment competes
in a wide variety of agricultural markets. The crop protection segment serves the global agricultural input industry with
products that protect against weeds, insects and other pests, and disease, and that improve overall crop health both above and
below ground via nitrogen management and seed-appli
is a leader in global herbicides,
insecticides, nitrogen stabila
izers and pasture and range management herbicides.
ed technologies. The segment
a
Summarized below are comments on individual segment net sales and segment operating EBITDA for the years ended
December 31, 2021, 2020 and 2019. For the year ended December 31, 2019, segment operating EBITDA is calculated on a pro
forma basis, as this is the manner in which the chief operating decision maker ("CODM") assesses performance and allocates
resources. Pro forma adjustments used in the calculation of pro forma segment operating EBITDA were determined in
accordance with Article 11 of Regulation S-X that was in effect prior to recent amendments. For the year ended December 31,
2019, these adjustments give effect to the Merger, the debt retirement transactions related to paying off or retiring portions of
EID’s existing debt liabilities (as discussed in Note 17 - Long-Term Debt and Available Credit Facilities, to the Consolidated
Financial Statements), and the separation and distribution to DowDuPont stockholders of all the outstanding shares of Corteva
common stock as if they had been consummated on January 1, 2016 (refer to supplemental unaudited pro forma financial
statements on page 45). The company defines segment operating EBITDA as earnings (loss) (i.e., income (loss) from
continuing operations before income taxes) before interest, depreciation, amortization, corporate expenses, non-operating
benefits (costs), foreign exchange gains (losses), and net unrealized gain or loss from mark-to-market activity forff
certain
foreign currency derivative instruments that do not qualify for hedge accounting, excluding the impact of significant items.
Non-operating benefits (costs) consists of non-operating pension and OPEB benefit (costs), tax indemnification adjustments,
environmental
remediation and legal costs associated with legacy EID businesses and sites, and the 2021 officer
indemnification payment. Tax indemnification adjustments relate to changes in indemnification balances, as a result of the
application of the terms of the Tax Matters Agreement, between Corteva and Dow and/or DuPont that are recorded by the
company as pre-tax income or expense. See Note 25 - Segment Information, to the Consolidated Financial Statements forff
details related to significant pre-tax benefits (costs) excluded fromff
segment operating EBITDA. All references to prices are
based on local price unless otherwise specified.
A reconciliation of segment operating EBITDA to income (loss) from continuing operations after income taxes for the years
ended December 31, 2021, 2020 and 2019 is included in Note 25 - Segment Information, to the Consolidated Financial
Statements.
47
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
Part II
OPERATRR IONS, continued
Seed
In millions
Net sales
Segment operating EBITDA
For the Year Ended December 31,
2021
2020
20191
$
$
8,402 $
1,512 $
7,756 $
1,208 $
7,590
1,040
1.
The year ended December 31, 2019 is presented on a Pro Forma Basis, prepared in accordance with Article 11 of Regulation S-X that was in effect prior
to recent amendments.
Seed
In millions
North America
EMEA
Latin America
Asia Pacific
Total
Seed
In millions
Corn
Soybeans
Other oilseeds
Other
Total
Seed
In millions
North America
EMEA
Latin America
Asia Pacific
Total
Seed
In millions
Corn
Soybeans
Other oilseeds
Other
Total
$
$
$
$
$
$
$
$
2021 vs. 2020
Percent Change Due To:
Net Sales Change
Price &
Portfolio /
$
%
Product Mix
Volume
Currency
Other
209
131
303
3
646
4 %
9 %
27 %
1 %
8 %
1 %
5 %
16 %
2 %
4 %
2 %
1 %
14 %
(2)%
4 %
1 %
3 %
(3)%
1 %
— %
— %
— %
— %
— %
— %
2021 vs. 2020
Percent Change Due To:
Net Sales Change
Price &
Portfolio /
$
%
Product Mix
Volume
Currency
Other
436
123
133
(46)
646
8 %
9 %
21 %
(9)%
8 %
5 %
— %
5 %
(2)%
4 %
3 %
7 %
14 %
(8)%
4 %
— %
2 %
2 %
1 %
— %
— %
— %
— %
— %
— %
2020 vs. 2019
Percent Change Due To:
Net Sales Change
Price &
Portfolio /
$
%
Product Mix
Volume
Currency
Other
71
90
(13)
18
166
2 %
7 %
(1)%
5 %
2 %
— %
4 %
4 %
4 %
1 %
2 %
8 %
13 %
6 %
5 %
— %
(5)%
(18)%
(5)%
(4)%
— %
— %
— %
— %
— %
2020 vs. 2019
Percent Change Due To:
Net Sales Change
Price &
Portfolio /
$
%
Product Mix
Volume
Currency
Other
2 %
2 %
— %
3 %
1 %
4 %
4 %
8 %
5 %
5 %
(5)%
(2)%
(4)%
(3)%
(4)%
— %
— %
— %
— %
— %
56
58
26
26
166
1 %
4 %
4 %
5 %
2 %
48
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Seed
Seed net sales were $8,402 million in 2021, up 8 percent from $7,756 million in 2020. The increase was driven by a 4 percent
increase in price and a 4 percent increase in volume. Local price gains were driven by strong adoption of new Seed technology,
ercent globally. These gains were partially offset
including price execution in Latin America and EMEA, with corn price up 5 p
by competitive pricing pressure in North America soybeans, where price was down 2 percent. The increase in volume was
driven by strong demand for corn in Brazil, coupled with higher soybean and corn sales in North America.
u
Seed operating EBITDA was $1,512 million in 2021, up 25 percent from $1,208 million in 2020. Continued price execution,
volume gains, ongoing cost and productivity actions, lower royalties, and lower bad debt expense more than offset higher input
costs, higher frei
ght and warehousing costs, and higher variable compensation costs.
ff
Seed net sales were $7,756 million in 2020, up 2 percent from $7,590 million in 2019. The increase was driven by a 5 percent
currency. Volume
increase in volume and 1 percent increase in price, partially offset by a 4 percent unfavorablea
growth was driven by the recovery of soybean planted area in North America and strong summer and Safrinha sales in Brazil.
Global corn price grew 2 percent year over year, primarily driven by continued penetration from products such as Qrome® and
PowerCore ULTRARR TM. North America soybean price increased 2 percent versus the year-ago period due to superior product
performance and strong execution. Unfavorablea
currency impacts were led by the Brazilian Real.
impact fromff
Seed operating EBITDA was $1,208 million in 2020, up 16 percent from pro forma operating EBITDA of $1,040 million in
2019. Favorable mix, volume gains and ongoing cost and productivity actions more than offset the unfavorablea
impact of
currency, higher input costs and higher royalties.
49
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
Part II
OPERATRR IONS, continued
Crop Protection
In millions
Net sales
Segment operating EBITDA
For the Year Ended December 31,
2021
2020
20191
$
$
7,253 $
1,202 $
6,461 $
1,004 $
6,256
1,066
1. The year ended December 31, 2019 is presented on a Pro Forma Basis, prepared in accordance with Article 11 of Regulation S-X that was in effect prior
to recent amendments.
Crop Protection
2021 vs. 2020
Percent Change Due To:
In millions
North America
EMEA
Latin America
Asia Pacific
Total
Crop Protection
In millions
Herbicides
Insecticides
Fungicides
Other
Total
Crop Protection
In millions
North America
EMEA
Latin America
Asia Pacific
Total
Crop Protection
In millions
Herbicides
Insecticides
Fungicides
Other1
Total
$
$
$
$
$
$
$
$
Net Sales Change
Price &
Portfolio /
$
%
Product Mix
Volume
Currency
Other
159
150
437
46
792
7 %
11 %
26 %
4 %
12 %
6 %
2 %
7 %
1 %
5 %
— %
4 %
19 %
3 %
6 %
1 %
5 %
— %
3 %
2 %
— %
— %
— %
(3)%
(1)%
2021 vs. 2020
Percent Change Due To:
Net Sales Change
Price &
Portfolio /
$
%
Product Mix
Volume
Currency
Other
535
(34)
278
13
792
16 %
(2)%
27 %
3 %
12 %
7 %
2 %
4 %
(8)%
5 %
7 %
(5)%
22 %
11 %
6 %
2 %
1 %
3 %
— %
2 %
— %
— %
(2)%
— %
(1)%
2020 vs. 2019
Percent Change Due To:
Net Sales Change
Price &
Portfolio /
$
%
Product Mix
Volume
Currency
Other
168
12
(71)
96
205
8 %
1 %
(4)%
10 %
3 %
3 %
1 %
9 %
1 %
4 %
5 %
3 %
8 %
13 %
7 %
— %
(2)%
(21)%
(2)%
(7)%
— %
(1)%
— %
(2)%
(1)%
2020 vs. 2019
Percent Change Due To:
Net Sales Change
Price &
Portfolio /
$
%
Product Mix
Volume
Currency
Other
1 %
5 %
5 %
24 %
4 %
7 %
9 %
5 %
1 %
7 %
(5)%
(7)%
(12)%
(7)%
(7)%
(1)%
— %
(2)%
— %
(1)%
74
112
(40)
59
205
2 %
7 %
(4)%
18 %
3 %
50
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Crop Protection
Crop protection net sales were $7,253 million in 2021, up 12 percent from $6,461 million in 2020. The increase was due to a 6
currency, partially offset by a 1
percent increase in volume, a 5 percent increase in price and a 2 percent favorable impact fromff
percent unfavorablea
portfolio impact.
Volume gains were led by continued penetration of new products globally, with combined sales of over $1.4 billion in 2021, up
nearly $450 million compared to the prior-year period, led by EnlistTM and ArylexTM herbicides and IsoclastTM insecticide.
These volume gains were partially offset by an approxi
the company's decision to phase out
select low-margin products.
mate $275 million impact fromff
a
The increase in price was primarily driven by gains in North America and Latin America, including pricing for higher raw
material and logistical costs. Favorable currency impacts were primarily from the Euro. The portfolio impact was driven by a
divestituret
in Asia Pacific.
Crop protection operating EBITDA was $1,202 million in 2021, up 20 percent from $1,004 million from 2020. Pricing
execution, continued penetration of new products, ongoing cost and productivity actions, and a favora
currency
impact fromff
more than offset higher input costs, including raw material and logistical costs, and higher variable compensation costs.
blea
ff
Crop protection net sales were $6,461 million in 2020, up from $6,256 million in 2019. Sales gains were driven by a 7 percent
currency and a 1
increase in volume and a 4 percent increase in price, which was partially offset by a 7 percent impact fromff
percent impact fromff
portfolio.
The increase in volume was driven by continued penetration of new products globally, with combined sales of $1 billion in
2020, up $265 million compared to the prior-year period, led by EnlistTM, ArylexTM, and RinskorTM herbicides and IsoclastTM
insecticide. Local price growth was driven by increases in Latin America to offset currency, coupled with favorablea
mix
new product launches. Unfavorable currency impacts were led by the Brazilian Real. The Company has
globally fromff
recognized approximately $150 million in pricing to offset the weakening Brazilian Real forff
the full year. The portfolio impact
was driven by divestitures in Asia Pacific and North America.
Crop Protection operating EBITDA was $1,004 million in 2020, down from pro forma segment operating EBITDA of $1,066
million in 2019. Favorable mix, ongoing cost and productivity actions, together with volume gains, were more than offset by
the negative impact of currency, increased investment to fund growth and higher input costs. Currency net of pricing was a $70
million headwind, inclusive of $150 million in pricing actions.
51
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Part II
Non-GAAP Financial Measures
The company presents certain financial measures that do not conform to U.S. GAAP and are considered non-GAAP measures.
These measures include Operating EBITDA and operating earnings (loss) per share. Management uses these measures
planning and forecasting, including allocating resources and evaluating incentive compensation. Management
internally forff
believes that these non-GAAP measures best reflect
the ongoing performance of the company during the periods presented and
provide more relevant and meaningful information to investors as they provide insight with respect to ongoing operating results
of the company and a more useful comparison of year over year results. These non-GAAP measures supplement the company's
U.S. GAAP disclosures and should not be viewed as an alternative to U.S. GAAP measures of performance. Furthermore, such
non-GAAP measures may not be consistent with similar measures provided or used by other companies. Reconciliations for
these non-GAAP measures to U.S. GAAP are provided below. For the year ended December 31, 2019, information is on a pro
forma basis and these non-GAAP measures are being reconciled to a pro forma GAAP financial measure prepared and
presented in accordance with Article 11 of Regulation S-X that was in effect prior to recent amendments, which are reconciled
to the GAAP reported figure
s. See Article 11 Pro Forma Combined Statements of Operations on page 46.
ff
ff
Operating EBITDA is defined as earnings (loss) (i.e., income (loss) from continuing operations before income taxes) before
interest, depreciation, amortization, non-operating benefits (costs), foreign exchange gains (losses), and net unrealized gain or
loss from mark-to-market activity forff
certain foreign currency derivative instruments that do not qualify for hedge accounting,
excluding the impact of significant items. Effective January 1, 2021, on a prospective basis, the company excludes fromff
segment operating EBITDA net unrealized gain or loss from mark-to-market activity forff
certain foreign currency derivative
instruments that do not qualify for hedge accounting. Non-operating benefits (costs) consists of non-operating pension and
OPEB benefits (costs), tax indemnification adjustments, environmental remediation and legal costs associated with legacy EID
businesses and sites, and the 2021 officer indemnification payment. Tax indemnification adjustments relate to changes in
indemnification balances, as a result of the application of the terms of the Tax Matters Agreement, between Corteva and Dow
and/or DuPont that are recorded by the company as pre-tax income or expense. Operating earnings (loss) per share is defined as
"earnings (loss) per common share from continuing operations - diluted" excluding the after-tax impact of significant items, the
after-tax impact of non-operating benefits (costs), the after-tax impact of amortization expense associated with intangible assets
existing as of the Separation fromff
DowDuPont, and the after-tax impact of net unrealized gain or loss from mark-to-market
certain foreign currency derivative instruments that do not qualify for hedge accounting. Although amortization of
activity forff
these non-GAAP measures, management believes it is important for investors
the company's intangible assets is excluded fromff
to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past
y amortized. Any future acquisitions may
acquisitions will recur in future periods until such intangible assets have been full
result in amortization of additional intangible assets. Net unrealized gain or loss from mark-to-market activity forff
certain
foreign currency derivative instruments that do not qualify for hedge accounting represents the non-cash net gain (loss) fromff
gn currency derivative contracts. Upon settlement, which is within the same
changes in fair value of certain undesignated forei
calendar year of execution of the contract, the realized gain (loss) fromff
r value of the non-qualified foreign
currency derivative contracts will be reported in the relevant non-GAAP financial measures, allowing quarterly results to reflect
the economic effects of the foreign currency derivative contracts without the resulting unrealized mark to fair value volatility.
the changes in faiff
ff
ff
52
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Reconciliation of Income (Loss) from Continuing Operations after Income Taxes to Operating EBITDA
Part II
Year Ended December 31,
2020
As Reported
2019
Pro Forma
2021
e
As Repor
(In millions)
Income (loss) from continuing operations after income taxes
Provision for (benefit fromff
Income (loss) from continuing operations before
) income taxes on continuing operations
ff
income taxes
Depreciation and amortization
Interest income
Interest expense
Exchange (gains) losses
Non-operating (benefits) costs
Mark-to-market (gains) losses on certain foreign currency contracts not
designated as hedges1
Significant items (benefit) charge
Operating EBITDA (Non-GAAP)
$
$
ted
1,822 $
524
2,346
1,243
(77)
30
54
(1,256)
—
236
2,576 $
756 $
(81)
675
1,177
(56)
45
174
(316)
26
1
27
1,000
(59)
91
66
(129)
388
2,087 $
991
1,987
1.
Effective January 1, 2021, on a prospective basis, the company excludes net unrealized gains or losses from mark-to-market activity
for certain foreign currency derivative instruments that do not qualify for hedge accounting. There were no unrealized mark-to-
market (gains) losses for the years ended December 31, 2020 and 2019.
Significant Items
(In millions)
Integration and separation costs
Restructuring and asset related charges - net
Equity securities mark-to-market gain
Loss on divestiture
Amortization of inventory step-up
Argentina currency devaluation
Loss on early extinguishment of debt
Employee Retention Credit
Contract termination
Total pretax significant items (benefit)ff
charge
Total tax (benefit) charge impact of significant items1
Tax only significant item (benefit) charge2
Total significant items (benefit) charge, net of tax
1.
Year Ended December 31,
2020
As Reported
ted
2019
Pro Forma
2021
e
As Repor
$
$
— $
289
(47)
—
—
—
—
(60)
54
236
(51)
(9)
176 $
— $
335
—
53
—
—
—
—
—
388
(86)
(192)
110 $
632
222
—
24
67
33
13
—
—
991
(135)
(72)
784
2.
The tax benefit impact of significant items for the year ended December 31, 2019 includes a net tax charge of $35 million related to
application of foreign tax provisions, a net tax charge of $146 million related to U.S. state blended tax rate changes associated with the
Internal Reorganizations, and a net tax benefit of $(102) million related to an internal legal entity restructuring associated with the
Internal Reorganizations. Unless specifically addressed above, the income tax effect on significant items was calculated based upon the
enacted tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.
The tax only significant item benefit for the year ended December 31, 2021 reflects a net benefit for the impact of changes in valuation
allowances recorded against the net deferred tax asset positions of two legal entities in Brazil of $(57) million and $44 million, as well as
an adjustment related to the impacts of Swiss Tax Reform of $4 million. The tax only significant item benefit for the year ended
December 31, 2020 reflects the impacts of the recognition of an elective cantonal component of the recent enactment of the Federal Act
on Tax Reform and AHV Financing ("Swiss Tax Reform") ($(182) million benefit) and a benefit due to an elective change in accounting
method that alters the 2019 impact of the business separation on foreign tax provisions ($(29) million benefit), partially offset by a state
tax valuation allowance in the U.S. based on a change in judgment about the realizability of a deferff
rer d tax asset ($19 million charge).
The tax only significant item benefit for the year ended December 31, 2019 reflects the impacts of Swiss Tax Reform ($(38) million
53
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATRR IONS, continued
benefit) and the release of a tax valuation allowance recorded against the net deferred tax asset position of a Swiss legal entity ($(34)
million benefit).
Reconciliation of Income (Loss) from Continuing Operations Attributable to Corteva and Earnings (Loss) Per Share of
Common Stock froff m Continuing Operations - Diluted to Operating Earnings (Loss) and Operating Earnings (Loss) Per
Share
(In millions)
Income (loss) from continuing operations attributable to Corteva
Less: Non-operating benefits (costs), after tax
Less: Amortization of intangibles (existing as of Separation), after tax
Less: Mark-to-market gains (losses) on certain foreign currency contracts not
designated as hedges1
Less: Significant items benefit (charge), afteff
Operating Earnings (Loss) (Non-GAAP)
r tax
continuing operations -
Earnings (loss) per share of common stock fromff
diluted
Less: Non-operating benefits (costs), after tax
Less: Amortization of intangibles (existing as of Separation), after tax
Less: Mark-to-market gains (losses) on certain foreign currency contracts not
designated as hedges, after tax1
Less: Significant items benefit (charge), afteff
Operating Earnings (Loss) Per Share (Non-GAAP)
Diluted Shares Outstanding (in millions)
r tax
$
$
$
$
Year Ended December 31,
2020
As Reported
ted
2019
Pro Forma
2021
e
As Repor
1,812 $
955
(562)
—
(176)
1,595 $
736 $
237
(518)
13
100
(376)
(110)
1,127 $
(784)
1,073
Year Ended December 31,
2020
As Reported
ted
2019
Pro Forma
2021
e
As Repor
2.44 $
1.29
(0.76)
—
(0.24)
2.15 $
741.6
0.98 $
0.32
(0.69)
(0.15)
1.50 $
751.2
0.02
0.13
(0.50)
(1.04)
1.43
749.5
1.
Effective January 1, 2021, on a prospective basis, the company excludes net unrealized gain or loss from mark-to-market activity
for certain foreign currency derivative instruments that do not qualify for hedge accounting. There were no unrealized mark-to-
market (gains) losses for the years ended December 31, 2020 and 2019.
Liquidity & Capital Resources
The company continually reviews its sources of liquidity and debt portfolio and occasionally may make adjustmd
both to ensure adequate liquidity.
ents to one or
(Dollars in millions)
Cash, cash equivalents and marketable securities
Total debt
December 31, 2021 December 31, 2020
3,795
$
1,105
$
4,545 $
1,117 $
The company's cash, cash equivalents and marketable securities at December 31, 2021 and December 31, 2020 were $4.5
billion, and $3.8 billion respectively. Total debt at December 31, 2021 and 2020 was $1.1 billion, respectively. See further
information under Note 17 - Long-Term Debt and Available Credit Facilities, to the Consolidated Financial Statements.
54
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
The company's credit ratings impact its access to the debt capita
al markets and cost of capital. The company remains committed
to a strong financial position and strong investment-grade rating. The company's long-term and short-term credit ratings
assigned to EID are as follows:
Standard & Poor's1
Moody’s Investors Service
Fitch Ratings1
1.
Long-term
Short-term
A-
A3
A
A-2
P-2
F1
Outlook
Stablea
Stablea
Stable
In addition, Corteva, Inc. has been assigned a long-term issuer credit rating of A- with Stable outlook by Standard & Poor's and an Issuer Default Rating
of A with Stable outlook by Fitch Ratings.
ity to generate cash fromff
operations and access to capita
al markets and commercial paper markets
The company believes its abila
will be adequate to meet anticipated cash requirements to fundff
al, capital
spending, dividend payments, share repurchases and pension obligations. Corteva's strong financial position, liquidity and credit
ratings will provide access as needed to capita
al needs.
The company's liquidity needs can be met through a variety of sources, including cash provided by operating activities,
commercial paper, syndicated credit lines, bilateral credit lines, long-term debt markets, bank financing and committed
receivable repurchase facilities. Corteva considers the borrowing costs and lending terms when selecting the source to fund its
operations and working capita
its operations, including seasonal working capita
al markets and commercial paper markets to fundff
seasonal working capita
al needs.
The company had access to approximately $6.4 billion in committed and uncommitted unused credit lines at December 31,
2021 and 2020, respectively. These facilities provide support to meet the company’s short-term liquidity needs and for general
corporate purposes which may include funding of discretionary and non-discretionary contributions to certain benefit plans,
severance payments, repayment and refinancing of debt, working capita
al, capital expenditures, repurchases and redemptions of
securities and funding Corteva's costs and expenses.
On January 22, 2021, Chemours, DuPont, Corteva and EID entered into a binding memorandum of understanding containing a
settlement to resolve legal disputes originating from the Delaware Litigation and Pending Arbitration, and to establia
sh a cost
sharing arrangement and escrow account to be used to support and manage potential future legacy per- and polyfluoroalkyl
substances (“PFAS”) liabilities arising out of pre-July 1, 2015 conduct (the “MOU”). The MOU replaces the 2017 amendment
to the Chemours Separation Agreement. According to the terms of the cost sharing arrangement within the MOU, Corteva and
DuPont together, on one hand, and Chemours, on the other hand, agreed to a 50-50 split of certain qualified expenses related to
PFAS liabilities incurred over a term not to exceed twenty years or $4 billion of qualified spend and escrow account
contributions in the aggregate. DuPont’s and Corteva’s 50% share under the MOU will be limited to $2 billion, including
qualified expenses and escrow contributions (see below for discussion of escrow contributions). These expenses and escrow
account contributions will be subjeu
ct to the existing Letter Agreement, under which DuPont and Corteva will each bear 50% of
the first $300 million (up to $150 million each), and thereafter DuPont bears 71% and Corteva bears the remaining 29%.
In order to support and manage any potential future PFAS liabilities, the parties have also agreed to establia
sh 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). Over this period, Chemours will deposit a total of $500 million in the account and DuPont and Corteva
will deposit an additional $500 million pursuant to the terms of the Letter Agreement. Additionally, if on December 31, 2028,
the balance of the escrow account (including interest) is less than $700 million, Chemours will make 50% of the deposits and
DuPont and Corteva together will make 50% 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. During 2021, the company contributed is initial
deposit into the MOU Escrow Account, which is classified as noncurrent restricted cash equivalents and is included in other
assets in the Consolidated Balance Sheets. Refer to Note 18 - Commitments and Contingent Liabilities, to the Consolidated
Financial Statements for further details on the MOU and Letter Agreement.
ff
55
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
In November 2018, EID entered into a $3.0 billion five-year revolving credit facility and a $3.0 billion three-year revolving
credit facility (the “Revolving Credit Facilities”). The 2018 Revolving Credit Facilities became effective May 2019. Corteva,
Inc. became a party at the time of the Corteva Distribution. In May 2021, the company entered into an amendment that
extended the maturity date of the 3-year revolving credit facility from May 2022 to May 2023. Other than the change in
ility. The Revolving Credit Facilities may serve
maturity date, there were no material modifications to the terms of the credit facff
as a substitutet
general corporate purposes
al needs. The Revolving Credit Facilities contain customary
including, but not limited to, the funding of seasonal working capita
companies with
representations and warranties, affirmative and negative covenants and events of default that are typical forff
similar credit ratings. The Revolving Credit Facilities also contain a finaff
ncial covenant requiring that the ratio of total
indebtedness to total capita
alization forff Corteva and its consolidated subsidiaries not exceed 0.60. At December 31, 2021 the
company was in compliance with these covenants.
to the company's commercial paper program, and can be used, from time to time, forff
In March 2020, the company drew down $500 million under the three-year revolving credit facility to finance its short term
liquidity needs as a result of the volatility and increased borrowing costs of commercial paper resulting fromff
the unstable
market conditions caused by the COVID-19 pandemic, and repaid that borrowing in full in June 2020.
In May 2020, EID issued $500 million of 1.70 percent Senior Notes due 2025 and $500 million of 2.30 percent Senior Notes
due 2030 (the May 2020 Debt Offering). The proceeds of this offering are intended to be used for general corporate purposes.
The company's indenture covenants include customary limitations on liens, sale and leaseback transactions, and mergers and
consolidations affecting manufacturing plants, mineral producing properties or research facilities located in the U.S. and the
consolidated subsidiaries owning such plants, properties and facilities subject to certain limitations. The outstanding long-term
debt also contains customary default provisions.
al needs based in part on providing financing to its customers. Working
al is funded through multiple methods including cash, commercial paper, a receivable repurchase facility, the Revolving
The company has meaningful seasonal working capita
capita
Credit Facilities, and factoring.
o $1 billion (the "2021
In February 2021, the company entered into a committed receivable repurchase facility of up t
Repurchase Facility") which expired in December 2021. Under the 2021 Repurchase Facility, Corteva sold a portfolio of
available and eligible outstanding customer notes receivables to participating institutions and simultaneously agreed to
repurchase at a future
date.
u
ff
In February 2022, the company entered into a new committed receivable repurchase facility of up tu
o $500 million (the "2022
Repurchase Facility") which expires in December 2022. See further discussion of the 2022 Repurchase Facility in Note 26 -
Subsequent Events, to the Consolidated Financial Statements.
ons to sell its trade receivables under both recourse
The company has factoring agreements with third-party finaff
and non-recourse agreements in exchange for cash proceeds in an effort to reduce its receivables risk. For arrangements that
s in the event of customer default.
include an element of recourse, the company provides a guarantee of the trade receivablea
ff
Refer to Note 12 - Accounts and Notes Receivable - Net, to the Consolidated Financial Statements for more informa
ncial instituti
tion.
t
The company also organizes agreements with third-party financial instituti
ons who directly provide financing for select
customers of its seed and crop protection products in each region. Terms of the third-party loans are less than a year and
programs are renewed on an annual basis. In some cases, the company guarantees a portion of the extension of such credit to
such customers. Refer to Note 18 - Commitments and Contingent Liabilities, to the Consolidated Financial Statements, for
more information on the company’s guarantees.
tt
on
xpansi
Capacity Ett
EE
During 2021, the company's Board of Directors authorized a $113 million increase in the capita
$260 million in total) for the previously announced expansion of Spinosyns fermentation capac
capac
a
requirements impacm ting materials, labor
ity is staged to come online over the next several years. Higher capital investment is primarily dued
and engineering costs.
a
a
a
l investment (approximately
ity. The 30 percent increase in
to updated design
56
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Part II
Debt Redemptions/Re//
payme
entstt
On March 22, 2019, EID issued notices of redemption in full of all of its outstanding notes (the “Make Whole Notes”) listed in
the tablea
below:
(in millions)
4.625% Notes due 2020
3.625% Notes due 2021
4.250% Notes due 2021
2.800% Notes due 2023
6.500% Debentures
t
due 2028
5.600% Senior Notes dued
2036
4.900% Notes due 2041
4.150% Notes due 2043
Total
Amount
474
296
163
381
57
42
48
69
1,530
$
$
th in the respective Make
The Make Whole Notes were redeemed on April 22, 2019 at the make-whole redemption prices set forff
Whole Notes. On and after the date of redemption, the Make Whole Notes were no longer deemed outstanding, interest on the
Make Whole Notes ceased to accrue and all rights of the holders of the Make Whole Notes were terminated. For further
information on the Make Whole Notes, see Note 17 - Long-Term Debt and Available Credit Facilities, to the Consolidated
Financial Statements.
In March 2016, EID entered into a credit agreement that provides forff
ility in the
aggregate principal amount of $4.5 billion (as amended, from time to time, the "Term Loan Facility") under which EID could
make up to seven term loan borrowings and amounts repaid or prepaid were not available forff
subsequent borrowings. On May
2, 2019, EID terminated its Term Loan Facility and repaid the aggregate outstanding principal amount of $3 billion plus
accrued and unpaid interest through and including May 1, 2019. For further information on the termination of the Term Loan
Facility, see Note 17 - Long-Term Debt and Available Credit Facilities, to the Consolidated Financial Statements.
a three-year, senior unsecured term loan facff
In connection with the repayment of the Make Whole Notes and the Term Loan Facility, EID paid a total of $4.6 billion in the
second quarter 2019, which included breakage fees and accrued and unpaid interest on the Make Whole Notes and Term Loan
Facility. The repayment of the Make Whole Notes and Term Loan Facility was funded with cash from operations and a
contribution from DowDuPont.
On May 7, 2019, DowDuPont publicly announced the record date in connection with the Corteva Distribution. In connection
with such announcement, EID was required to redeem $1.25 billion aggregate principal amount of 2.200% Notes due 2020 and
$750 million aggregate principal amount of Floating Rate Notes due 2020 (collectively, the Special Mandatory Redemption or
“SMR Notes”) setting forth the date of redemption of the SMR Notes. The date of redemption was May 17, 2019 and EID paid
a total of $2.0 billion, which included accrued and unpaid interest on the SMR Notes. The company funded the payment with a
contribution from DowDuPont. Following the redemption, the SMR Notes are no longer outstanding and no longer bear interest
and all rights of the holders of the SMR Notes have terminated.
ff
The company's cash, cash equivalents and marketable securities at December 31, 2021 and December 31, 2020 are $4.5 billion
and $3.8 billion, respectively, of which $2.9 billion and $3.1 billion at December 31, 2021 and 2020, respectively, was held by
gn countries, including United States territories. Upon actual repatriation, such earnings could be subject to
subsidiaries in forei
gn currency movements.
withholding taxes, foreign and/or U.S. state income taxes, and taxes resulting fromff
foreign
The cash held by forei
investments. At December 31, 2021, management believed that sufficient liquidity is availablea
in the U.S. with global operating
cash flows, borrowing capac
existing committed credit facilities, and access to capital markets and commercial paper
markets.
gn subsidiaries is generally used to finance the subsidiaries' operational activities and future
the impact of forei
ity fromff
a
ff
ff
ff
57
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
(Dollars in millions)
For the Year Ended December 31,
2021
2020
2019
Cash provided by (used for)
ff
operating activities
$
2,727 $
2,064 $
1,070
ff
Cash provided by (used for)
million for the year ended December 31, 2020. The increase in cash provided by (used for)
increase in net income, and improvement in working capita
accounts payable.
the year ended December 31, 2021 was $2,727 million compared to $2,064
operating activities was driven by an
al primarily driven by higher customer prepayments and higher
operating activities forff
ff
Cash provided by (used for) operating activities forff
the year ended December 31, 2020 was $2,064 million compared to $1,070
million for the year ended December 31, 2019. The increase in cash provided by (used for) operating activities was driven by an
increase in net income, including a decrease in integration and separation costs, and improvement in working capita
al, partially
offset by the absence of the net impact of cash earnings from EID ECP and EID Specialty Products entities, as a result of the
Internal Reorganizations and Business Realignments in 2019.
(Dollars in millions)
2021
2020
2019
Cash provided by (used for)
ff
investing activities
$
(362) $
(674) $
(904)
For the Year Ended December 31,
Cash provided by (used for)
investing activities was $(362) million for the year ended December 31, 2021 compared to $(674)
million for the year ended December 31, 2020. The change was primarily due to lower purchases of investments and proceeds
.
of marketable securities, partially offset by higher capital expenditures
ff
t
Cash provided by (used for) investing activities was $(674) million for the year ended December 31, 2020 compared to $(904)
al expenditures driven by the
million for the year ended December 31, 2019. The change was primarily due to lower capita
Internal Reorganizations and Business Realignments in 2019, partially offset by higher net purchases of investments and lower
proceeds from sales of property, businesses, and consolidated companies.
t
Capital expenditures
totaled $573 million, $475 million, and $1,163 million for the years ended December 31, 2021, 2020 and
2019, respectively. The year ended December 31, 2019 includes capital expenditures of $497 million, related to the EID
Specialty Products and EID ECP (i.e., ethylene copolymers business, excluding its ethylene acrylic elastomers business)
a
Entities. The company expects 2022 capital expenditures to be approxim
ately $645 million.
(Dollars in millions)
For the Year Ended December 31,
2021
2020
2019
Cash provided by (used for)
ff
financing activities
$
(1,266) $
303 $
(2,929)
Cash provided by (used for)
financing activities was $(1,266) million for the year ended December 31, 2021 compared to $303
million for the year ended December 31, 2020. The change was primarily due to lower borrowings and higher repurchases of
Corteva common stock.
ff
ff
financing activities was $303 million for the year ended December 31, 2020 compared to $(2,929)
Cash provided by (used for)
million for the year ended December 31, 2019. The change was primarily due to lower payments on long-term debt, dued
to the
2019 debt retirement transactions related to paying off or retiring portions of EID’s existing debt liabilities (using a portion of
the contributions from DowDuPont), lower net payment on borrowings (less than 90 days), the May 2020 Debt Offering, and
the absence of distributions to DowDuPont (which in 2019 were used primarily to fund a portion of DowDuPont’s dividend
payments). This was partially offset by dividends to Corteva stockholders, repurchases of Corteva common stock and payments
for the acquisition of noncontrolling interests. In addition, during the year ended December 31, 2019 there was a transfer of
cash to DowDuPont as part of the Internal Reorganizations.
58
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
During 2021, the company's Board of Directors authorized and paid quarterly dividends on its common stock of $0.13, $0.13,
quarters, respectively.
$0.14, and $0.14 in the first, second, third and fourth
ff
On August 5, 2021, the company's Board of Directors authorized a $1.5 billion share repurchase program to purchase Corteva,
Inc.'s common stock, par value $0.01 per share, without an expiration date (“2021 Share Buyback Plan”). In connection with
the 2021 Share Buyback Plan, the company repurchased and retired 5,572,000 shares during the year ended December 31, 2021
in the open market for a total cost of $250 million.
On June 26, 2019, the company's Board of Directors authorized a $1 billion share repurchase program to purchase Corteva,
Inc.'s common stock, par value $0.01 per share, without an expiration date ("2019 Share BuyBack Plan"). The company
completed the 2019 Share Buyback Plan during
the third quarter of 2021. In connection with the 2019 Share Buyback Plan, the
company repurchased and retired 15,378,000 shares, 8,503,000 shares, and 824,000 shares during the years ended December
31, 2021, 2020, and 2019, respectively, in the open market for a total cost of $700 million, $275 million, and $25 million,
respectively. See Note 19 - Stockholders' Equity, to the Consolidated Financial Statements, for additional information related to
the share buyback plans.
d
EID Liquidity Discussion
As discussed in Note 1 - Basis of Presentation, to the EID Consolidated Financial Statements, EID is a subsidiary of Corteva,
Inc. and continues to be a reporting company, subject to the requirements of the Exchange Act. The below relates to EID only
and is presented to provide a Liquidity discussion, only for the differe
nces between EID and Corteva, Inc.
ff
ff
Cash provided by (used for)
EID’s cash provided by (used for) operating activities forff
the year ended December 31, 2021 was $2,689 million compared to
$1,986 million for the year ended December 31, 2020. The change was primarily driven by the items noted on page 58, under
the header "Cash provided by (used for) operating activities."
operating activities
EID’s cash provided by (used for) operating activities forff
the year ended December 31, 2020 was $1,986 million compared to
$996 million for the year ended December 31, 2019. The change was primarily driven by the items noted on page 58, under the
header "Cash provided by (used for) operating activities."
ff
Cash provided by (used for)
EID’s cash provided by (used for) financing activities was $(1,228) million for the year ended December 31, 2021 compared to
$381 million for the year ended December 31, 2020. The change was primarily driven by lower proceeds from issuance of long-
term debt partially offset by lower payments on long-term debt on related party debt.
financing activities
EID’s cash provided by (used for) financing activities was $381 million for the year ended December 31, 2020 compared to
$(2,855) million for the year ended December 31, 2019. The change was dued
to lower payments on long-term debt due to the
2019 debt retirement transactions related to paying off or retiring portions of EID's existing debt liabilities (using a portion of
the contributions from DowDuPont and proceeds from related party debt), lower net payment on borrowings (less than 90
days), the May 2020 Debt Offering, and the absence of distributions to DowDuPont (which in 2019 were used primarily to fund
a portion of DowDuPont's dividend payments). This activity was partially offset by lower proceeds from related party debt and
the acquisition of noncontrolling interests. In addition, during 2019
higher payments on related party debt, and payments forff
there was a transfer of cash to DowDuPont as part of the Internal Reorganizations.
See Note 2 - Related Party Transactions, to the EID Consolidated Financial Statements forff
party loan between EID and Corteva, Inc.
further information on the related
Critical Accounting Estimates
The company's significant accounting policies are more fully described in Note 2 - Summary of Significant Accounting
Policies, to the Consolidated Financial Statements. Management believes that the application of these policies on a consistent
information about the
basis enables the company to provide the users of the financial statements with useful and reliablea
company's operating results and financial condition.
The preparation of the Consolidated Financial Statements in conformity with generally accepted accounting principles
("GAAP") in the United States of America requires management to make estimates and assumptim ons that affect the reported
59
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATRR IONS, continued
amounts, including, but not limited to, receivable and inventory valuations, impairment of tangible and intangible assets, long-
term employee benefit obligations, income taxes, environmental matters and litigation. Management's estimates are based on
historical experience, facff
ts and circumstances available at the time and various other assumptim ons that are believed to be
te. Management believes that the
reasonable. The company reviews these matters and reflects changes in estimates as appropria
following represent some of the more critical judgment areas in the application of the company's accounting policies which
could have a material effect on the company's financial position, liquidity or results of operations.
a
EE
ent Benefitff stt
Pension Plans and Other Post Employm
Accounting for employee benefit plans involves numerous assumptim ons and estimates. Discount rate and expected long-term
rate of returnt
on plan assets are two critical assumptim ons in measuring the cost and benefit obligation of the company's pension
and OPEB plans. Management reviews these two key assumptim ons when plans are re-measured. These and other assumptim ons
are updated periodically to reflect the actual experience and expectations on a plan specific basis as appropriate. As permitted
the assumptions are accumulated on a plan by plan basis and to the extent that such
by GAAP, actual results that differ fromff
differences exceed 10 percent of the greater of the plan's benefitff obligation or the applicablea
plan assets, the excess is amortized
over the average remaining service period of active employees or the average remaining life expectancy of plan participants if
all or almost all of a plan’s participants are inactive.
Substantially all of the company's benefit obligation for pensions and OPEB are attributablea
to the benefit plans in the U.S. In
the U.S., the single equivalent discount rate is developed by matching the expected cash flowff
of the benefit plans to a yield
curve constructed from a portfolio of high quality fixeff
d-income instruments provided by the plans' actuaries as of the
ch by
measurement date. The company measures the service and interest cost components utilizing a full
applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected
cash flows. For non-U.S. benefit plans, historically the company utilized prevailing long-term high quality corporate bond
indices to determine the discount rate, applicablea
to each country, at the measurement date. The weighted average discount rates
used in developing the 2022 net periodic pension and OPEB costs are expected to be 2.82 percent and 2.59 percent,
respectively.
yield curve approa
a
ff
the company establia
shes strategic asset allocation percentage targets and appropriate benchmarks for
Within the U.S.,
and risk. Strategic asset allocations in other
significant asset classes with the aim of achieving a prudent balance between returnt
ity studies are
countries are selected in accordance with the laws and practices of those countries. Where appropriate, asset-liabila
on plan assets in the U.S. is based upon historical real
also taken into consideration. The expected long-term rate of returnt
(net of inflation) for the asset classes covered by the investment policy, expected performance, and projections of
returns
t
to plan participants. In determining the
inflation and interest rates over the long-term period during which benefits are payablea
2021 net periodic pension cost in the U.S., 5.75 percent of expected long-term rate of returnt
on plan assets assumptim on was
used. After re-evaluating the current strategic asset allocation and recent market conditions, the company lowered the expected
on plan assets assumptim on to 4.50 percent to be used in determining the 2022 net periodic pension cost
long-term rate of returnt
in the U.S. Consistent with prior years, the expected long-term rate of returnt
on plan assets in the U.S. reflects the asset
allocation of the plan and the effect of the company's active management of the plan's assets.
In determining annual expense for the principal U.S. pension plan, the company uses a market-related value of assets rather
than its fair value. Accordingly, there may be a lag in recognition of changes in market valuation. As a result, changes in the fair
value of assets are not immediately reflected in the company's calculation of net periodic pension cost. For the years ended
over 36 months,
December 31, 2021 and 2020, the market-related value of assets is calculated by averaging market returnsr
however, as a result of the Merger, the market-related value of assets was calculated by averaging market returnsr
from
September 1, 2017 through the year ended December 31, 2019.
The following tablea
shows the market-related value and fair value of plan assets for the principal U.S. pension plan:
(Dollars in billions)
Market-related value of assets
Fair value of plan assets
December 31, 2021 December 31, 2020 December 31, 2019
$
17.2 $
17.5
16.3 $
17.5
16.4
16.6
For plans other than the principal U.S. pension plan, pension expense is determined using the faiff
r value of assets.
60
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Part II
lowing tablea
The folff
with respect to the company's pension and OPEB plans, based on assets and liabia lities at December 31, 2021:
highlights the potential impact on the company's pre-tax earnings due to changes in certain key assumptions
Pre-tax Earnings Benefit (Charge)
(Dollars in millions)
Discount rate
Expected rate of returnt
on plan assets
1/4 Percentage
Point
Increase
1/4 Percentage
Point
Decrease
$
(33) $
42
36
(42)
Additional information with respect to pension and OPEB expenses, liabilities and assumptions is discussed under "Long-term
Employee Benefits" beginning on page 65 and in Note 20 - Pension Plans and Other Post Employment Benefits, to the
Consolidated Financial Statements.
d
ion and cost from site to site, it is difficult to develop precise estimates of future
Environmental Matters
Accruals for environmental matters are recorded when it is probable that a liabia lity has been incurred and the amount of the
liability can be reasonably estimated. At December 31, 2021, the company had accrued obligations of $452 million for probable
environmental remediation and restoration costs, including $68 million for the remediation of Superfund sites. As remediation
activities vary substantially in durat
site
remediation costs. The company's estimates are based on a number of facff
tors, including the complexity of the geology, the
and extent of contamination, the type of remedy, the outcome of discussions with regulatory agencies and other
naturet
ity of other PRPs. Therefore,
Potentially Responsible Parties ("PRPs") at multi-party sites and the number of and financial viabila
considerable uncertainty exists with respect
to environmental remediation and costs, and, under adverse changes in
circumstances, it is reasonably possible that the ultimate cost with respect to these particular matters could range up to $592
million above that amount. Consequently, it is reasonably possible that environmental remediation and restoration costs in
excess of amounts accrued could have a material impact on the company’s results of operations, financial condition and cash
flows. It is the opinion of the company’s management, however, that the possibility is remote that costs in excess of the range
disclosed will have a material impact on the company’s results of operations, financial condition or cash flows. For further
discussion, see Environmental Matters in Management’s Discussion and Analysis of Financial Condition and Results of
Operations and Note 18 - Commitments and Contingent Liabilities, to the Consolidated Financial Statements.
ff
Legal Contingencies
The company's results of operations could be affected by significant litigation adverse to the company, including product
liability claims, patent infringement and antitrust claims, and claims for third-party property damage or personal injury
stemming from alleged environmental torts. The company records accruals for legal matters when the information available
indicates that it is probable that a liabia lity has been incurred and the amount of the loss can be reasonably estimated.
Management makes adjustments to these accruals to reflect the impact and statust
of negotiations, settlements, rulings, advice of
counsel and other information and events that may pertain to a particular matter. Predicting the outcome of claims and lawsuits
and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially fromff
estimates. In making determinations of likely outcomes of litigation matters, management considers many factors. These factors
include, but are not limited to, the naturet
of specific claims including unasserted claims, the company's experience with similar
types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of resolving the
judgment is required in
matter through alternative dispute resolution mechanisms, and the matter's current status. Considerablea
determining whether to establia
sh a litigation accrual when an adverse judgment is rendered against the company in a court
proceeding. In such situations, the company will not recognize a loss if, based upon a thorough review of all relevant facts and
information, management believes that it is probable that the pending judgment will be successfully overturned
on appeal. A
detailed discussion of significant litigation matters is contained in Note 18 - Commitments and Contingent Liabilities, to the
Consolidated Financial Statements.
t
Indemnificff ation Assets
The company has entered into various agreements where the company is indemnified for certain liabilities by DuPont, Dow,
and Chemours. The term of this indemnification is generally indefinite and includes defense costs and expenses, as well as
monetary and non-monetary settlements and judgments. In connection with the recognition of liabia lities related to these matters,
the company records an indemnification asset when recovery is deemed probable. In assessing the probability of recovery, the
company considers the contractual
rights under the separation agreements and any potential credit risk. Future events, such as
potential disputes related to recovery as well as the solvency of DuPont, Dow, and / or Chemours, could cause the
indemnification assets to have a lower value than anticipated and recorded. The company evaluates the recovery of the
t
61
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
indemnification assets recorded when events or changes in circumstances indicate the carrying values may not be fully
recoverablea
s and Other Transactions and Note 18 - Commitments and Contingent Liabilities, to the
Consolidated Financial Statements, for additional information related to indemnifications.
. See Note 5 - Divestituret
Income TaxTT es
The breadth of the company's operations and the global complexity of tax regulations require assessments of uncertainties and
judgments in estimating taxes the company will ultimately pay. The final taxes paid are dependent upon many factors, including
negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation and resolution of disputes arising from
federal, state and international tax audits in the normal course of business. The resolution of these uncertainties may result in
adjustments to the company's tax assets and tax liabia lities. It is reasonably possible that changes to the company’s global
unrecognized tax benefits could be significant; however, due to the uncertainty regarding the timing of completion of audits and
possible outcomes, a current estimate of the range of increases or decreases that may occur within the next twelve months
cannot be made.
ff
and magnitude
Deferred income taxes result from difference
s between the financial and tax basis of the company's assets and liabilities and are
adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred
tax assets when it is more likely than not that a tax benefit will not be realized. Significant judgment is required in evaluating
the need forff
of appropriate valuation allowances against deferred tax assets. The realization of these assets is
dependent on generating future taxable income, as well as successful implementation of various tax planning strategies. For
example, changes in facts and circumstances that alter the probability that the company will realize deferred tax assets could
result in recording a valuation allowance, thereby reducing the deferred tax asset and generating a deferred tax expense in the
relevant period. In some situations, these changes could be material. See Note 10 - Income Taxes, to the Consolidated Financial
Statements forff
additional information.
t
At December 31, 2021, the company had a net deferred tax liabia lity balance of $782 million, inclusive of a valuation allowance
of $366 million. Realization of deferred tax assets is expected to occur over an extended period of time. As a result, changes in
taxable income, and tax planning strategies could result in adjustments to deferred
tax laws, assumptim ons with respect to future
tax assets. See Note 10 - Income Taxes, to the Consolidated Financial Statements forff
red
tax liabila
additional details related to the deferff
ity balance.
ff
Valuation of Assets and Impairment Considerations
The assets and liabilities of acquired businesses are measured at their estimated faiff
r values at the dates of acquisition. The
excess of the purchase price over the estimated fair value of the net assets acquired, including identified intangibles, is recorded
as goodwill. The determination and allocation of fair value to the assets acquired and liabilities assumed is based on various
assumptim ons and valuation methodologies requiring considerable management
including estimates based on
historical information, current market data and future expectations. The principal assumptim ons utilized in the company's
valuation methodologies include revenue growth rates, operating margin estimates, royalty rates, and discount rates. Although
the estimates are deemed reasonable by management based on information available at the dates of acquisition, those estimates
are inherently uncertain.
judgment,
Assessment of the potential impairment of goodwill, other intangible assets, property, plant and equipment, investments in
nonconsolidated affiliates, and other assets is an integral part of the company's normal ongoing review of operations. Testing
for potential impairment of these assets is significantly dependent on numerous assumptim ons and reflects management's best
estimates at a particular point in time. The dynamic economic environment in which the company's segments operate, and key
economic and business assumptim ons with respect to projected selling prices, market growth and inflation rates, can significantly
actual results.
affect the outcome of impairment tests. Estimates based on these assumptim ons may differ significantly fromff
Changes in facff
tors and assumptim ons used in assessing potential impairments can have a significant impact on the existence and
magnitude
of impairments, as well as the time in which such impairments are recognized. In addition, the company continually
t
reviews its portfolio of assets to ensure they are achieving their greatest potential and are aligned with the company's growth
strategy. Strategic decisions involving a particular group of assets may trigger an assessment of the recoverabila
ity of the related
assets. Such an assessment could result in impairment losses.
The company performs its annual goodwill impairment assessment during the fourth quarter at the reporting unit level which is
defined as the operating segment or one level below the operating segment. One level below the operating segment, or
and regularly reviewed by segment management.
component, is a business in which discrete financial information is availablea
62
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
The company aggregates certain components into reporting units based on economic similarities. The company’s reporting
units include seed, crop protection and digital.
For purposes of the annual goodwill impairment test, the company has the option to first perform qualitative testing to
determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative
factors assessed at the company level include, but are not limited to, GDP growth rates, long-term commodity prices, equity and
credit market activity, discount rates, foreign exchange rates, and overall financial performance. Qualitative factors assessed at
competitive environments,
the reporting unit level include, but are not limited to, changes in industry and market structure,
planned capac
e of the reporting
ff
unit. If the company chooses not to complete a qualitative assessment for a given reporting unit or if the initial assessment
indicates that it is more likely than not that the carrying
value of a reporting unit exceeds its estimated fair value, additional
quantitative testing is required.
ity and new product launches, cost factors such as raw material prices, and financial performanc
a
rr
t
If additional quantitative testing is required, the reporting unit’s fair value is compared with its carrying amount, and an
amount exceeds the reporting unit’s fair value,
impairment charge, if any, is recognized for the amount by which the carrying
r values for each of the
limited to the amount of goodwill associated with the reporting unit. The company determines faiff
reporting units using a discounted cash flow model (a form of the income approa
ch), utilizing Level 3 unobservable inputs, or
the market approach.
a
rr
a
ch, fair value is determined based on the present value of estimated future
Under the income approa
cash flows, discounted at an
appropriate risk-adjusted rate. The company’s significant assumptim ons in these analyses include future cash flow projections,
weighted average cost of capita
al, the terminal growth rate and the tax rate. The company’s estimates of future cash flows are
based on current regulatory and economic climates, recent operating results, and planned business strategy and includes an
estimate of long-term future growth rates based on its most recent views of the long-term outlook for each reporting unit.
those assumed in the company’s forecasts. The company derives its discount rates using a capital
Actual results may differ fromff
asset pricing model and analyzes published rates for industries relevant to its reporting units to estimate the cost of equity
financing. The company uses discount rates that are commensurate with the risks and uncertainty inherent in the respective
reporting units and in its internally developed forec
asts. Discount rates used in the company’s valuations ranged from 9.25
percent to 16.5 percent. Under the market approach, the company uses metrics of publicly traded companies or historically
completed transactions for comparam
companies.
blea
ff
ff
Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of
factors including actual operating results. It is reasonably possible that the judgments and estimates described above could
change in future periods. The company believes the current assumptim ons and estimates utilized are both reasonable and
appropriate. Based on the goodwill impairment analyses performed
in the fourth quarter 2021, the company concluded the fair
value of each of the reporting units exceeded their respective carrying values by more than 20 percent, and no goodwill
impairment charge was necessary.
ff
Prepaid Royalties
The company’s seed segment currently has certain third-party biotechnology trait license agreements, which require up-front
and variable payments subject to the licensor meeting certain conditions. These payments are reflecff
ted as other current assets
and other assets and are amortized to cost of goods sold as seeds containing the respective trait technology are utilized over the
term of the license. The rate of royalty amortization expense recognized is based on the company’s strategic plans which
include various assumptim ons and estimates including product portfolio, market dynamics, farmer preferences, growth rates and
projected planted acres. Changes in facff
tors and assumptim ons included in the strategic plans, including potential changes to the
product portfolio in favor of internally developed biotechnology, could impact the rate of recognition of the relevant prepaid
royalty.
At December 31, 2021, the balance of prepaid royalties reflected in other current assets and other assets was $303 million and
$256 million, respectively. The majoa rity of the balance of prepaid royalties relates to the company’s wholly owned subsidiary,
Pioneer Hi-Bred International, Inc.’s (“Pioneer”) non-exclusive license in the United States and Canada for the Monsanto
Company's Genuity® Roundup Ready 2 Yield® glyphosate tolerance trait and Roundup Ready 2 Xtend® glyphosate and
dicamba tolerance trait for soybeans (“Roundup Ready 2 License Agreement”). The prepaid royalty asset relates to a series of
up-front, fixed and variablea
royalty payments to utilize the traits in Pioneer’s soybean product mix. The company’s historical
expectation has been that the technology licensed under the Roundup Ready 2 License Agreement would be used as the primary
herbicide tolerance trait platform in the Pioneer® brand soybean through the term of the agreement. DAS and MS Technologies,
63
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, continued
L.L.C. jointly developed and own the Enlist E3TM herbicide tolerance trait forff
soybeans which provides tolerance to 2, 4-D
choline in Enlist Duo® and Enlist One® herbicides, as well as glyphosate and glufosinate herbicides. In connection with the
validation of breeding plans and large-scale product development timelines, during the fourth quarter of 2019, the company
f the Enlist E3TM trait platform in the company’s soybean portfolio mix across all brands, including
accelerated the ramp up ou
Pioneer® brands, over the subsequent five years. During the ramp-up period, the company is expected to significantly reduce
the volume of products with the Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits beginning in
2021, with expected minimal use of the trait platform thereafter for the remainder of the Roundup Ready 2 License Agreement
(the “Transition Plan”). The rate of royalty expense is therefore expected to significantly increase through higher amortization
of the prepaid royalty as fewff
er seeds containing the respective trait are expected to be utilized.
In connection with the departure fromff
these traits in the company's product portfolio, beginning January 1, 2020 the company
presents and discloses the accelerated prepaid royalty amortization expense as a component of restructuring and asset related
charges - net in the Consolidated Statement of Operations. The accelerated prepaid royalty amortization expense represents the
difference between the rate of amortization based on the revised number of units expected to contain the Roundup Ready 2
Yield® and Roundup Ready 2 Xtend® trait technology and the per unit cash rate per the Roundup Ready 2 License Agreement.
For the year ended December 31, 2021, the company recognized $125 million in restructuring and asset related charges - net in
the Consolidated Statement of Operations from non-cash accelerated prepaid royalty amortization expense. The expected non-
cash accelerated prepaid royalty amortization expense estimated for 2022 is approximately $102 million, aggregating to
approximately $235 million over the next 3 years.
Further changes in factors and assumptim ons associated with usage of the trait platform licensed under the Roundup Ready 2
License Agreement, including the Transition Plan, could furthe
r impact the rate of recognition of the prepaid royalty and
statement of operations presentation of the accelerated prepaid royalty amortization expense.
ff
Off-Balance Sheet Arrangements
Certain Guarantee Contractstt
Information with respect to the company's guarantees is included in Note 18 - Commitments and Contingent Liabilities, to the
Consolidated Financial Statements. Historically,
the company has not made significant payments to satisfy guarantee
obligations; however, the company believes it has the financial resources to satisfy these guarantees.
i
ons
Contractual Obligati
Our principal commitments consist of long-term debt, operating and finance lease obligations and environmental remediation
r discussion on long-term debt and operating and finance lease obligations in Note 17 - Long-Term
obligations. Refer to furthe
Debt and Available Credit Facilities and Note 16 – Leases, to the Consolidated Financial Statements, respectively. Refer to
discussion on environmental remediation obligations on page 68 of this report.
ff
Information related to the company's other significant contractual obligations are summarized in the following tabla e:
(Dollars in millions)
Expected cumulative cash requirements for interest payments
through maturity
Purchase obligations1
License agreements2, 3
Other liabilities2, 4
Total 5
Total at
December 31, 2021
2022
2023 and
beyond
Payments Due In
$
$
138 $
1,363
307
285
20 $
741
121
53
118
622
186
232
2,093 $
935 $
1,158
1.
2.
3.
4.
5.
Represents enforceable and legally binding agreements in excess of $1 million to purchase goods or services that specify fixed or minimum quantities;
fixed, minimum or variable price provisions; and the approximate timing of the agreement.
Included in the Consolidated Financial Statements.
Represents undiscounted remaining payments under Pioneer license agreements ($305 million on a discounted basis).
Includes liabilities related to employee-related benefits other than pension and other post employment benefits, asset retirement obligations and other
noncurrent liabilities.
Due to uncertainty regarding the completion of tax audits and possible outcomes, the timing of certain payments of obligations related to unrecognized tax
benefits cannot be made and have been excluded from the table above. See Note 10 - Income Taxes, to the Consolidated Financial Statements for
additional detail.
64
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
Part II
The company expects to meet its contractual
resources to satisfy t
ff
t
he contractual obligations that arise in the ordinary course of business.
obligations through its normal sources of liquidity and believes it has the financial
Long-term Employee Benefits
The company has various obligations to its employees and retirees. The company maintains retirement-related programs in
many countries that have a long-term impact on the company's earnings and cash flows. These plans are typically defined
benefit pension plans, as well as medical, dental and life insurance benefits forff
pensioners and survivors and disability benefits
for employees ("other post employment benefits" or "OPEB"). Substantially all of the company's worldwide benefit obligation
for pensions and essentially all of the company's worldwide OPEB obligations are attributablea
to the U.S. benefit plans.
Pension coverage for employees of the company's non-U.S. consolidated subsidiaries is provided, to the extent deemed
appropriate, through separate plans. The company regularly explores alternative solutions to meet its global pension obligations
in the most cost effective manner possible as demographics, life expectancy and country-specific pension funding rules change.
Where permitted by appl
icable law, the company reserves the right to change, modify or discontinue its plans that provide
pension, medical, dental, life insurance and disability benefits.
a
Benefits under defined benefit pension plans are based primarily on years of service and employees' pay near retirement. In
November 2016, the company announced changes to the U.S. pension and OPEB plans. The company froze the pay and service
amounts used to calculate pension benefits forff
active employees who participate in the U.S. pension plans on November 30,
2018, resulting in the participants no longer accruing additional benefits. In addition to the changes to the U.S. pension plans,
OPEB eligible employees who were under the age of 50 as of November 30, 2018 will not receive post-retirement medical,
dental and life insurance benefits. The majoa rity of employees hired in the U.S. on or after January 1, 2007 are not eligible to
participate in the pension and post-retirement medical, dental and life insurance plans, but receive benefits in the defined
contribution plans.
ff
In September 2021, the company transferred approximately $250 million of certain benefit obligations and related assets
associated with the principal U.S. pension plan to an insurance company through the purchase of nonparticipating group
.
annuity contracts. The company may consider additional annuity purchases in the future
ff
In December 2020, the company amended its retiree medical, dental and life i
ff nsurance plans resulting in the company no longer
providing retiree dental and life insurance benefits effective January 1, 2022 and Corteva’s portion of the cost of non-Medicare
retiree medical coverage no longer being adjusted for cost increases, which capped
the Corteva cost at the level as of December
31, 2021 ("2020 OPEB Plan Amendments"). As a result of these changes, the company recorded a $(939) million decrease in
OPEB benefit obligations as of December 31, 2020 with a corresponding prior service benefit within other comprehensive
income (loss) for the year ended December 31, 2020. During 2021, a substantial amount of the prior service benefit within other
comprehensive income (loss) in 2020 was recognized in other income - net in the Consolidated Statement of Operations.
a
shed to comply with applicable laws and regulations. The actuarial
Pension benefits are paid primarily fromff
assumptions and procedures utilized are reviewed periodically by the plans' actuar
ies to provide reasonable assurance that there
will be adequate funds for the payment of benefits. The company did not make contributions to the principal U.S. pension plan
for the years ended December 31, 2021, 2020 or 2019.
trust funds establia
t
Funding for each pension plan other than the principal U.S. pension plan is governed by the rules of the sovereign country in
which it operates. Thus, there is not necessarily a direct correlation between pension funding and pension expense. In general,
tends to moderate subsequent funding needs. The company contributed $8
however, improvements in plans' funded statust
million, $9 million, and $39 million to its funded
the years ended
pension plans other than the principal U.S. pension plan forff
December 31, 2021, 2020 and 2019, respectively.
ff
U.S. pension benefits that exceed feder
al limitations are covered by separate unfunded plans and these benefits are paid to
pensioners and survivors from operating cash flows. The company's remaining pension plans with no plan assets are paid fromff
operating cash flows. The company made benefit payments of $41 million, $53 million, and $82 million to its unfunded plans
for the years ended December 31, 2021, 2020 and 2019, respectively.
ff
operating cash flows. Pre-tax cash
The company's OPEB plans are unfunded and the cost of the approved claims is paid fromff
requirements to cover actuat
l net claims costs and related administrative expenses were $198 million, $207 million, and $202
million for the years ended December 31, 2021, 2020 and 2019, respectively. Changes in cash requirements reflect the net
65
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
impact of per capita
and deductibles.
a health care cost, demographic changes, plan amendments and changes in participant premiums, co-pays
mately $60 million to its pension plans other than the principal U.S. pension
In 2022, the company expects to contribute approxi
plan and approximately $140 million to its OPEB plans. The company does not anticipate making contributions to its principal
U.S. pension plan in 2022.
a
The company's income can be significantly affected by pension and defined contribution benefits as well as OPEB costs. The
following tabla e summarizes the extent to which the company's income (loss) from continuing operations before income taxes
ted by pre-tax charges related to long-term employee benefits:
for the years ended December 31, 2021, 2020 and 2019 was affecff
(Dollars in millions)
For the Year Ended December 31,
2021
2020
2019
Net periodic benefit (credit) cost - pension and OPEB
Defined contributions1
Long-term employee benefit plan (credit) charges - continuing operations
$
$
(1,292) $
125
(1,167) $
(340) $
127
(213) $
(163)
115
(48)
1.
The year ended December 31, 2021 includes a charge of $33 million for the company contributions to be paid in 2022, which was included in
accrued and other current liabilities in the Consolidated Balance Sheet.
The above (credit) charges for pension and OPEB are determined as of the beginning of each period. Long-term employee
benefit plan credits were $(1,167) million and $(213) million for the years ended December 31, 2021 and 2020, respectively.
The change is due to the 2020 OPEB Plan Amendments and lower discount rates. See "Pension Plans and Other Post
Employment Benefits" under the Critical Accounting Estimates section beginning on page 60 of this report for additional
information on determining annual expense.
For 2022, long-term employee benefits credit is expected to decrease by about $1 billion. The decrease is mainly dued
2020 OPEB Plan Amendments, an increase in the discount rates, and a change in the expected long-term rate of returnt
assets from 5.75 percent to 4.50 percent.
to the
on plan
Environmental Matters
The company operates global manufacturing, product handling and distribution facilities that are subject to a broad array of
environmental laws and regulations. Such rules are subject to change by the implementing governmental agency, and the
company monitors these changes closely. Company policy requires that all operations fully meet or exceed legal and regulatory
requirements. In addition, the company implements voluntary programs to reduce air emissions, minimize the generation of
hazardous waste, decrease the volume of water use and discharges, increase the efficiency of energy use and reduce the
generation of persistent, bioaccumulative and toxic materials. Management has noted a global upward
trend in the amount and
complexity of proposed chemicals regulation. The costs to comply with complex environmental laws and regulations, as well as
internal voluntary programs and goals, are significant and will continue to be significant for the foreff
seeablea
future.
u
Pre-tax environmental expenses charged to income (loss) from continuing operations before income taxes are summarized
below:
(Dollars in millions)
Environmental operating costs
Environmental remediation costs1
For the Year Ended December 31,
2020
2019
2021
$
144 $
46
138 $
63
136
29
165
1. Environmental remediation costs include costs that are subject to the $200 million threshold and sharing arrangements as discussed in Note 18 -
190 $
201 $
$
Commitments and Contingent Liabilities, to the Consolidated Financial Statements, under the header Corteva Separation Agreement.
Environmental Operating Costs
As a result of its operations, the company incurs costs forff
pollution abatement activities including waste collection and disposal,
installation and maintenance of air pollution controls and wastewater treatment, emissions testing and monitoring, and obtaining
permits. The company also incurs costs related to environmental related research and development activities including
66
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
environmental field and treatment studies as well as toxicity and degradation testing to evaluate the environmental impact of
products and raw materials.
About 85 percent of total pre-tax environmental operating costs charged to income (loss) from continuing operations for the
year ended December 31, 2021 resulted from operations in the U.S. Based on existing facts and circumstances, management
does not believe that year-over-year changes, if any, in environmental operating costs charged to current operations will have a
in the near term are
material impact on the company's financial position, liquidity or results of operations. Annual expenditures
years. Longer term,
not expected to vary significantly from the range of such expenditures
expenditures
are subject to considerable uncertainty and may fluctuate significantly.
experienced in the past fewff
t
t
t
Remediation Accrual
Changes in the remediation accrual
r
balance are summarized below:
(Dollars in millions)
Balance at December 31, 2019
Remediation payments
Net increase in remediation accrual
Net change, indemnification 2
Balance at December 31, 2020
r
Remediation payments
Net increase in remediation accrual
Net change, indemnification 2
Balance at December 31, 2021
r
1
1
$
$
$
336
(57)
63
(13)
329
(35)
46
112
452
1. Excludes indemnified remediation obligations.
2. Represents the net change in indemnified remediation obligations based on activity as well as the removal from EID's accrued remediation liabilities of
obligations that have been fully transferred to Chemours and DuPont. Pursuant to the Chemours Separation Agreement and subsequent MOU, and the
Corteva Separation Agreement, as discussed in Note 5 - Divestitures and Other Transactions, and Note 18 - Commitments and Contingent Liabilities, to
the Consolidated Financial Statements, EID is indemnified by Chemours and DuPont for certain environmental matters.
Considerablea
uncertainty exists with respect to environmental remediation costs and, under adverse changes in circumstances,
the potential liability may range up to $592 million above the amount accrued as of December 31, 2021. However, based on
existing facts and circumstances, management does not believe that any loss, in excess of amounts accrued, related to
remediation activities at any individual site will have a material impact on the financial position, liquidity or results of
operations of the company.
67
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
a
The above
noted $452 million accrued obligations includes the following:
Part II
(In millions)
Environmental Remediation Stray Liabilities
Chemours related obligations - subject to indemnity1,2
Other discontinued or divested businesses obligations1
Environmental remediation liabilities primarily related to DuPont -
subject to indemnity fromff
DuPont2
Environmental remediation liabilities not subject to indemnity
Indemnification liabilities related to the MOU4
Total
As of December 31, 2021
Indemnification
Asset
Accrual
balance3,5
Potential exposure
above amount
accrued3
$
$
159 $
15
159 $
75
37
—
37
82
9
220 $
99
452 $
262
187
66
49
28
592
1. Represents liabilities that are subject to the $200 million threshold and sharing arrangements as discussed in Note 18 - Commitments and Contingent
Liabilities, to the Consolidated Financial Statements, under the header "Corteva Separation Agreement."
2. The company has recorded an indemnification asset related to these accruals, including $40 million related to the Superfund sites.
3. Accrual balance represents management’s best estimate of the costs of remediation and restoration, although it is reasonably possible that the potential
exposure, as indicated, could range above the amounts accrued, as there are inherent uncertainties in these estimates. Accrual balance includes $68 million
for remediation of Superfund sites. Amounts do not include possible impacts from the remediation elements of the EPAs October 2021 PFAS Strategic
Roadmap (as applicable) or possible revisions to Chemours’ Consent Order with the North Carolina Department of Environmental Quality, as any
possible impacts, to the extent such items would be reimbursable under the MOU, are not yet determinable.
4. Represents liabilities that are subject to the $150 million threshold and sharing agreements as discussed in Note 18 - Commitments and Contingent
Liabilities, to the Consolidated Financial Statements, under the header "Chemours/ Performance Chemicals."
Included accrued obligations of $133 million due in the next twelve months with the remainder being due subsequent to 2022.
5.
As of December 31, 2021, the company has been notified of potential liability under the Comprehensive Environmental
Response, Compensation and Liability Act ("Superfund") or similar state laws at about 500 sites around the U.S., including
approximately 130 sites forff which the company does not believe it has liability based on current information. Active
remediation is under way at approximately 70 of the 500 sites. In addition, the company has resolved its liability at
approximately 210 sites, either by completing remedial actions with other PRPs or by participating in "de minimis buyouts"
with other PRPs whose waste, like the company's, represented only a small fracff
tion of the total waste present at a site. There
were no new notices in 2021 or 2020.
Environmental Capital Expex nditures
Capital expenditures
the company’s internal
environmental goals, were approximately $9 million for the year ended December 31, 2021. The company currently estimates
expenditures
for environmental projects, either required by law or necessary to meet
for environmental-related capital projects to be approxim
ately $9 million in 2022.
a
t
t
Climate Change
The company believes that climate change is an important global environmental concern that presents risks and opportunities.
The Board of Directors maintains oversight of these risks and opportunities. Management regularly assesses and manages
climate-related issues. Across its business, individuals who are responsible for climate-related initiatives may have annual
performance goals tied to the delivery of projects related to these initiatives.
Continuing political and social attention to climate change and its impacts has resulted in regulatory and market-based
approaches to limit greenhouse gas emissions. The company believes there is a way forward for sustainable climate change
mitigation that both enablea
for the vast
majoa rity of the world’s population who depend on agriculture for their livelihoods.
ers to meet the demands of a growing population and secures the economic future
s farmff
ff
Extreme and volatile weather due to climate change may have an adverse impact on our customers’ ability to use the company's
products, potentially reducing sales volumes, revenues and margins. The company continuously evaluates opportunities for
68
Part II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIRR
ONS, continued
existing and new product and service offerings to meet the anticipated demands of climate-smart agriculture and mitigate the
impact of extreme and volatile weather. The company integrates processes forff
identifying, assessing and managing climate-
related risk into its overall risk management.
The company completed a non-financial materiality assessment and identified short-, medium- and long-term climate-related
risks and opportunities. The results of this assessment are integrated into the company's businesses, strategy and financial
planning and are presented in the 14 ten-year sustainability goals that were set in 2020. For each goal, the company establia
shed
t
key performance indicators and criteria to achieve the goals, which are provided on the company's website at: https://
www.corteva.com/sustainability.html. The information contained on the company’s website is not part of, nor incorporated by
reference into, this Annual Report on Form 10-K or the company’s other SEC filff ings.
As demonstrated by the goals, Corteva is working to shrink its role in the emission of greenhouse gasses while enabling a more
resilient agriculture value chain. Corteva has an establia
shed climate strategy, including appropriate Scopes 1, 2 and 3
greenhouse gas reduction targets. The company is seeking ways to reduce its impact and providing tools and incentives forff
customers to do the same. Corteva champions climate positive agriculture, utilizing carbon storage and other means to remove
more carbon from the atmosphere than it emits without sacrificing farmer productivity or ongoing profitability.
The company is committed to engaging with multiple stakeholders and partners around the globe who have innovative and
actionable ideas to help safeguard the health and well-being of the planet and its people. By doing more to address climate
change today, the company is fortifying its abia lity to grow food, grow progress and build a sustainable industry that will help
humanity thrive for generations to come.
69
Part II
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ncial market risks relating to fluctuations in foreign currency exchange
The company’s global operations are exposed to finaff
shed a variety of programs including the use of derivative
rates, commodity prices, and interest rates. The company has establia
instruments and other finaff
ncial instruments to manage the exposure to financial market risks as to minimize volatility of
financial results. In the ordinary course of business, the company enters into derivative instruments to hedge its exposure to
foreign currency and commodity price risks under establia
shed procedures and controls. For additional information on these
derivatives and related exposures, see Note 22 - Financial Instruments, to the Consolidated Financial Statements. Decisions
regarding whether or not to hedge a given commitment are made on a case-by-case basis, taking into consideration the amount
and duration of the exposure, market volatility and economic trends. Foreign currency exchange contracts may be used, from
time to time, to manage near-term foreign currency cash requirements.
Foreign Currency Exchange Rate Risks
The company has significant international operations resulting in a large number of currency transactions that result fromff
international sales, purchases, investments and borrowings. The primary currencies for which the company has an exchange
rate exposure are the Brazilian Real, Swiss franc
, Canadian dollar and European Euro ("EUR"). The company uses foreign
exchange contracts to offset its net exposures, by currency, related to the foreign currency denominated monetary assets and
liabilities of its operations. The company also uses foreign currency exchange contracts to offset a portion of the company's
exposure to certain forecasted transactions, investment in foreign subsidiaries, as well as the translation of forei
gn currency-
ff
denominated earnings and uses commodity contracts to offset risks associated with forei
gn currency devaluation in certain
countries. In addition to the contracts disclosed in Note 22 - Financial Instruments, to the Consolidated Financial Statements,
from time to time, the company will enter into forei
gn currency exchange contracts to establish with certainty the U.S. dollar
("USD") amount of future firm commitments denominated in a foreff
ign currency.
ff
ff
ff
Certain foreign entities of the company held USD denominated marketable securities, mainly U.S. government securities, at
December 31, 2020. The USD/EUR was the primary foreign exchange exposure for these nonfunctional currency denominated
marketable securities. These debt securities were classified as availablea
-for-sale marketable securities and as such, fluctuations
in foreign exchange were recorded in accumulated other comprehensive income (loss) within the Consolidated Statements of
Equity. These fluctuations were subsequently reclassified fromff
accumulated other comprehensive income (loss) to earnings
during 2021, which was the period in which the marketable securities were sold. At December 31, 2021, the company no longer
held these USD denominated marketablea
securities.
The following tablea
r values of outstanding foreign currency contracts at December 31, 2021 and 2020, and the
effect on fair values of a hypothetical adverse change in the foreign exchange rates that existed at December 31, 2021 and 2020.
The sensitivities forff
foreign currency contracts are based on a 10 percent adverse change in foreign exchange rates.
illustrates the faiff
(Dollars in millions)
Foreign currency contracts
Marketable securities
Fair Value
(Liability)/Asset
Fair Value
Sensitivity
2021
2020
2021
2020
$
$
44 $
— $
(80) $
226 $
(211) $
— $
(388)
(36)
Since the company's risk management programs are highly effective, the potential loss in value for each risk management
would be largely offset by changes in the value of the underlying exposure.
portfolio described above
a
Concentration of Credit Risk
The company maintains cash and cash equivalents, marketable securities, derivatives and certain other finaff
with various financial instituti
t
ons. These financial instituti
company has a policy to limit the dollar amount of credit exposure with any one instituti
ons are generally highly rated and geographic
on.
a
t
t
ncial instruments
ally dispersed and the
As part of the company's financial risk management processes, it continuously evaluates the relative credit standing of all of the
financial instituti
shed limits. The company has not
t
sustained credit losses fromff
ons that service Corteva and monitors actual exposures versus establia
instruments held at financial instituti
ons.
t
The company's sales are not materially dependent on any single customer. Credit risk associated with its receivables balance is
representative of the geographic
, industry and customer diversity associated with the company's global product lines.
a
70
Part II
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK, continued
The company also maintains strong credit controls in evaluating and granting customer credit. As a result, it may require that
customers provide some type of financial guarantee in certain circumstances. Length of terms for customer credit varies by
region.
ITEM 8. FIN CANCIAL SSTATEMEN STS AND SSUPPLEMENTARY DATA
The financial statements and supplementary data required by this Item are included herein, commencing on page F-1 of this
report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
71
Part II
ITEM 9A. CONTROLS AND PROCEDURES
Corteva, Inc.
a)
Evaluation of Disclosure Controls and Procedures
The company maintains a system of disclosure controls and procedures to give reasonable assurance that information
required to be disclosed in the company's reports filff ed or submitted under the Securities Exchange Act of 1934
("Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the rules and
forms of the Securities and Exchange Commission. These controls and procedures also give reasonable assurance that
information required to be disclosed in such reports is accumulated and communicated to management to allow timely
decisions regarding required disclosures.
As of December 31, 2021, the company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"),
together with management, conducted an evaluation of the effectiveness of the company's disclosure controls and
procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the CEO and CFO
concluded that these disclosure controls and procedures are effective.
b)
Changes in Internal Control over Financial Reporting
There have been no changes in the company's internal control over financial reporting that occurred during the quarter
ted, or are reasonably likely to materially affect, the company's
ended December 31, 2021 that have materially affecff
internal control over financial reporting.
E. I. du Pont de Nemours and Company
a)
Evaluation of Disclosure Controls and Procedures
EID maintains a system of disclosure controls and procedures to give reasonable assurance that information required to
be disclosed in EID's reports filff ed or submitted under the Securities Exchange Act of 1934 ("Exchange Act") is recorded,
processed, summarized and reported within the time periods specified in the rules and forms of the Securities and
Exchange Commission. These controls and procedures also give reasonable assurance that information required to be
disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required
disclosures.
As of December 31, 2021, EID's CEO and CFO, together with management, conducted an evaluation of the effectiveness
of EID's disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on
that evaluation, the CEO and CFO concluded that these disclosure controls and procedures are effecff
tive.
b)
Changes in Internal Control over Financial Reporting
There have been no changes in EID's internal control over financial reporting that occurred during the quarter ended
ted, or are reasonably likely to materially affect, EID's internal control over
December 31, 2021 that have materially affecff
financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
72
Part III
ITEM 10. DIRECCTO SORS, EX CECUTIVE OF CFICE SRS AND COCORPORATRR
GE GOVERNA CNCE
Information with respect to this Item is incorporated herein by reference to the Proxy, including information within the sections
entitled, "Election of Directors," "Corporat
e Governance," and "Delinquent Section 16(a) Reports".
r
hThe compa yny hhas dadoptedd a C dode of
com ypany's w beb isite at www.corteva.com byby lcliickingking on "Investors" a dnd hthen "Corporate Governance."
waiiver from,
iwillll bbe postedd on thhe com ypany's w beb isite at hthe abbove
rovision of hthe c dode
inci lal Ethihics forff
iits CEO, CFO,
dand Cont
dadddress.
anyy p
iFina
i i
ll
roller hthat m yay bbe accessed fd fromff
hthe
yAny am dendments to, or
a
ff
Executive Officers of the Registrant
Each of the executive officers became officers of the company in May 2019 with the exception of Mr. Charles Magro, Mr.
David Anderson, and Dr. Sam Eathington who became an executive officer in November 2021, April 2021 and January 2021,
respectively.
agro,
Charles V. MVV
age 52, is the Chief Executive Officer of Corteva. Prior to joining Corteva on November 1, 2021, he served
MM
as President and chief executive officer of Nutrien Ltd. ("Nutrien") from the company’s launch in 2018 until April 2021. From
2014 to 2018, Mr. Magro served as President and chief executive officer of Agrium Inc., which merged with Potash
Corporation of Saskatchewan to create Nutrien. As President and CEO of Nutrien, Mr. Magro led more than 27,000 employees
to achieve best-in-class engagement, top safety performance and exceptional business results. He also led the company through
numerous M&A transactions, expanding globally and restructuring the industry. Prior to this role, he held a variety of other key
leadership positions with the company, including Chief Operating Officer, Chief Risk Officer, Executive Vice President of
Corporate Development, and Vice President of Manufacff
turing. He joined Agrium in 2009 following a productive career with
NOVA Chemicals. Since 2018, Mr. Magro has served on the Canada Pension Plan Investment Board and will continue to serve
on the board through March 2022. Previously, he served as Vice Chairman of the International Fertilizer Association and past
the World Economic Forum’s Food
Chair and Board Member of The Fertilizer Institute. He also served as a Board Steward forff
Systems Initiative, providing strategic leadership to build inclusive, sustainable, efficient, and healthy global food
systems, as
well as on the Boards of the International Plant Nutrition Institute, Nutrients forff
Life Foundation, the Business Council of
Canada, and the Business Council of Alberta. Ingredion Inc., a global provider of ingredient solutions to the food and beverage
manufacturing industry, elected Mr. Magro to its board of directors effective May 1, 2022.
ff
David J. AJJ
nderson, age 72, is Executive Vice President and Chief Financial Officer of Corteva. Mr. Anderson is an experienced
Chief Financial Officer, with a career spanning a number of diverse global companies across a range of industries. Prior to
joining Corteva in April 2021, Mr. Anderson was interim chief finaff
ncial officer at Criteo S.A., which he joined after serving as
chief financial officer and chief operating officer at Nielsen Holdings plc. He previously served as executive vice president and
chief financial officer of Alexion Pharmaceuticals, which he joined following his tenure of more than a decade as the chief
financial officer for Honeywell. Prior to that, Mr. Anderson was the chief finaff
ncial officer for ITT, Inc., Newport News
Shipbuilding Inc., and RJR Nabisco, Inc. Mr. Anderson is currently a Board member of American Electric Power and
previously a Board member of Cardinal Health.
Rajan Gajaria, age 54, is Executive Vice President, Business Platforms of Corteva. Mr. Gajaria previously served as vice
president, global crop protection business platform, of DowDuPont Inc. Prior to this, he served as Vice President, Latin
America and North America, forff Dow AgroSciences since 2015. He was selected to lead Dow AgroSciences’ Latin America
and Asia Pacific geographies in 2012 after being named marketing director for the company’s U.S. business in 2009. Mr.
Gajaria advanced through leadership roles at Dow AgroSciences in corporate strategy, marketing, and e-business before serving
as global supply chain director. He joined Dow AgroSciences’ Indian joint venturet
partner in Mumbai in 1993, where he served
in sales and marketing roles as well as in human resources before moving to the company’s global headquarters in Indianapolis,
Indiana. Effecff
tive February 18, 2022, Mr. Gajaria will retire from the company.
Timothytt
P. Glenn, age 55, is Executive Vice President, Chief Commercial Officer of Corteva. Mr. Glenn previously served as
Vice President, Global Seed Business Platform of DowDuPont Inc. Prior to this, he served as President, DuPont Crop
Protection since 2015, and from 2014 to 2015 served as vice president, integrated operations and commercial effectiveness for
DuPont Pioneer. He previously held other leadership positions at DuPont Pioneer, including regional business director, Latin
America and Canada, after rejoining DuPont Pioneer in 2006 as director, North America Marketing. In 1997, he joined Dow
AgroSciences as corn product manager, Mycogen Seeds, and served in sales and business leadership roles in the crop protection
and seeds businesses of Dow AgroSciences. He first joined Pioneer Hi-Bred International, Inc. in 1991, and held a variety of
marketing roles in seed markets around the world.
73
Part III
Meghan Cassidy, age 46, is Senior Vice President, Chief Human Resources and Diversity Officer of Corteva. In February 2021,
Ms. Cassidy became Chief Diversity Officer in addition to her human resources dutid
es at Corteva. Prior to joining Corteva, Ms.
Cassidy served as the head of human resources of the agriculturet
division of DowDuPont Inc. since September 2017. Prior to
this, Ms. Cassidy was director, global talent management and leadership development for DuPont since 2015. From 2011 to
2015, she served as chief human resources officer for Sunoco Logistics after joining Sunoco in 2010 as director, corporate
human resources. Ms. Cassidy’s early career was spent at Aramark, where she held progressive human resources roles before
serving as vice president, executive development and corporate human resources.
tt
on, age 53, joined Corteva in November 2020 and became Senior Vice President, Chief Technology Officer of
Dr. Sam Eathingt
Corteva in January 2021, where he is responsible for leading the company’s global research and development organization,
building and expanding its industry-leading pipeline, and sustainability. A recognized leader in agricultural innovation, Dr.
Eathington most recently served as chief science officer of The Climate Corporat
ion (part of the crop science division of Bayer
AG) from December 2015 until April 2020. Prior to assuming that role, Dr. Eathington spent 19 years with Monsanto
Corporat
ion, rising through the ranks in quantitative traits and molecular breeding to become vice president, global plant
r
breeding beginning in February 2011.
rr
Cornel B. Fuerer, age 55, is Senior Vice President, General Counsel and Secretary of Corteva, where he is responsible for legal,
compliance, enterprise risk management, and government affairs. Mr. Fuerer previously served as general counsel of the
agriculture division of DowDuPont Inc. since June 2018 and prior to that served as associate general counsel supporting the
agriculture division of DowDuPont after the Merger in September 2017. From 2013 to 2017, he served as associate general
counsel of DuPont with responsibility forff
of DuPont’s agriculture business and from 2012 to 2013 he served as
the corporate secretary of DuPont. From 2007 to 2012, Mr. Fuerer served as the vice president, general counsel and company
between DuPont and Bunge. After joining DuPont in 1995 as an attorney in
secretary of Solae, a foodff
Geneva, Switzerland, he served in various legal roles around the world until his appointment at Solae in 2007.
ingredients joint venturet
the legal affairs
ff
Brian Titus, age 49, is Vice President, Controller and Principal Accounting Officer of Corteva. Mr. Titus previously served as
2019. Prior to this,
the controller and principal accounting officer of the agriculturet
he was general auditor of DuPont since August 2015 and previously served as the director of corporate accounting from 2014 to
2015 and global finaff
nce leader of DuPont Crop Protection from 2013 to 2014. Prior to joining DuPont’s corporate accounting
group in 2010, he spent 14 years in public accounting, primarily with PricewaterhouseCoopers LLP, providing audit and
transactional support services.
division of DowDuPont Inc. since February
rr
74
Part III
ITEM 11. EXECUTIVE COMPENSATION
Information related to executive compensation and the company's equity compensation plans is contained in the definitive
Proxy Statement for the 2022 Annual Meeting of Stockholders of Corteva, Inc. and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information with respect to beneficial ownership of Corteva, Inc. common stock by each director, executive officer, and all
directors and executive officers of the Company as a group is contained in the definitive Proxy Statement for the 2022 Annual
Meeting of Stockholders of Corteva, Inc. and is incorporated herein by reference.
Information relating to any person who beneficially owns in excess of 5 percent of the total outstanding shares of Corteva, Inc.
common stock is contained in the definitive Proxy Statement for the 2022 Annual Meeting of Stockholders of Corteva, Inc. and
is incorporated herein by reference.
Information with respect to compensation plans under which equity securities are authorized for issuance is contained in the
definitive Proxy Statement for the 2022 Annual Meeting of Stockholders of Corteva, Inc. and is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACT
RR
IONS, AND DIRECTOR INDEPENDENCE
Information with respect to this Item is incorporated herein by reference to the definitive Proxy Statement for the 2022 Annual
Meeting of Stockholders of Corteva, Inc., including information within the sections entitled, "Certain Relationships and Related
Transactions", and "Director Independence."
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information with respect to this Item is incorporated herein by reference to the definitive Proxy Statement for the 2022 Annual
Meetings of Stockholders of Corteva, Inc., including information within the section entitled, “Ratification of Independent
Registered Public Accounting Firm.”
75
Part IV
ITEM 15. EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
(a)
Financial Statements, Financial Statement Schedules and Exhibits:
1.
2.
3.
4.
Corteva Financial Statements (See the Index to the Consolidated Financial Statements on page F-1 of this
report).
Corteva Financial Statement Schedule (presented below)
EID Financial Statements (Starting on page F-79 of this report).
EID Financial Statement Schedule (presented below)
Schedule II—Valuation and Qualifying Accounts (EID and Corteva, Inc.)
(Dollars in millions)
Accounts Receivable—Allowance forff Doubtful Receivables
Balance at beginning of period
Additions charged to expenses1
Deductions from reserves1,2
Balance at end of period
Deferred Tax Assets—Valuation Allowance
Balance at beginning of period
Additions charged to expenses
Deductions from reserves3
Balance at end of period
1.
For the Year Ended December 31,
2020
2019
2021
$
$
$
$
208 $
6
(4)
210 $
453 $
97
(184)
366 $
174 $
52
(18)
208 $
457 $
56
(60)
453 $
127
69
(22)
174
669
20
(232)
457
Classifications in the changes in the allowance for doubtful receivables for the period ended December 31, 2020 have been adjusted from
their previous presentation. Adjustments did not impact the amount of the provision or the allowance for doubtful receivables recorded in
the Consolidated Statements of Operations or the Consolidated Balance Sheets.
Deductions include write-offs, recoveries collected and currency translation adjustments.
Deductions include currency translation adjustments.
2.
3.
Financial Statement Schedules listed under the Securities and Exchange Commission ("SEC") rulerr
s but not included in this
report are omitted because they are not applicable or the required information is shown in the Consolidated Financial
Statements or notes thereto.
76
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES, continued
3.
Exhibits
Part IV
The following list of exhibits includes both exhibits submitted with this Form 10-K as filed with the SEC and those
incorporated by reference to other filings:
Exhibit
Number
Description
2.1
3.1
3.2
3.3
3.4
4.1
4.2
10.1*
10.2*
10.3*
10.4*
10.5
10.6
10.7*
10.8
10.9
10.10
10.11
10.12
10.13
Separation and Distribution Agreement by and among DuPont Inc., Dow Inc. and Corteva, Inc. (incorporated by reference to Exhibit
No. 2.1 to Amendment 3 to Corteva’s Registration Statement on Form 10 (Commission file number 001-38710), filed on April 16,
2019).
Amended and Restated Certificate of Incorporation of Corteva, Inc. (incorporated by reference to Exhibit No. 3.1 to Corteva’s Current
Report on Form 8-K (Commission file number 001-38710), filed on June 3, 2019.
Amended and Restated Bylaws of Corteva, Inc. (incorporated by reference to Exhibit No. 3.1 to Corteva’s Current Report on Form 8-K
(Commission file number 001-38710), filed on October 10, 2019.
Amended and Restated Certificate of Incorporation of E.I. du Pdd
to E. I. du Pont de Nemours and Company’s Current Report on Form 8-K (Commission file number 1-815) dated September 1, 2017).
ont de Nemours and Company (incorporated by reference to Exhibit 3.1
Amended and Restated Bylaws of E.I. du Pont de Nemours and Company (incorporated by reference to Exhibit 3.2 to E. I. du Pont de
Nemours and Company's Current Report on Form 8-K (Commission file number 1-815) dated September 1, 2017).
Description of Corteva, Inc. registered securities (i
10-K (
(Commission filfile
i
001-38710) fil dfiled February
(incorporated byby
d
February 14,
number
b
)
i
2020).
)
freference ffrom hibi
Exhibit 4.1 to hthe
Company’s
y
Annual Report on Form
l
Description of E. I. du Pont de Nemours and Company registered securities (i
Company’s
d
001-38710) fil dfiled February
Annual Report on Form 10-K (
(incorporated byby
February 14,
(Commission filfile
i
number
b
y
)
l
i
freference ffrom
2020).
)
Exhibit 4.2 to hthe
hibi
Amended and Restated Tax Matters Agreement, effective as of June 1, 2019 by and among DowDuPont Inc., Corteva, Inc. and Dow
Inc. (incorporated by reference to Exhibit 10.3 of Corteva’s Current Report on Form 8-K (Commission file number 001-38710) filed on
June 3, 2019).
Employee Matters Agreement by and among DowDuPont Inc., Corteva, Inc. and Dow Inc. (incorporated by reference to Exhibit No.
10.2 to Amendment 3 to Corteva’s Registration Statement on Form 10 (Commission file number 001-38710), filed on April 16, 2019).
SpecCo/AgCo Intellectual Property Cross-License Agreement, effective as of June 1, 2019, by and among DowDuPont Inc., Corteva,
Inc. and the other parties identified therein (incorporated by reference to Exhibit 10.1 to Corteva’s Current Report on Form 8-K
(Commission file number 001-38710), filed on June 3, 2019).
Intellectual Property Cross-License Agreement by and between Corteva, Inc. and Dow Inc. (incorporated by reference to Exhibit No.
10.4 to Amendment 3 to Corteva’s Registration Statement on Form 10 (Commission file number 001-38710), filed on April 16, 2019).
Corteva, Inc. 2019 Omnibus Incentive Plan. (incorporated by reference to Exhibit No. 10.5 to Corteva’s Registration Statement on
Form 10 (Commission file number 001-38710), filed on May 6, 2019).
Fondation de Prevoyance en Faveur du Personnel de DuPont de Nemours International SÁRL. (incorporated by reference to Exhibit
No. 10.6 to Corteva’s Registration Statement on Form 10 (Commission file number 001-38710), filed on May 6, 2019).
Separation Agreement by and between E. I. du Pont de Nemours and Company and The Chemours Company (incorporated by reference
to Exhibit 2.1 to E. I. du Pont de Nemours and Company's Current Report on Form 8-K (Commission file number 1-815) dated July 8,
2015).
Amendment No. 1 to Separation Agreement by and between E. I. du Pont de Nemours and Company and The Chemours Company,
dated August 24, 2017 (incorporated by reference to Exhibit 2.1 to E. I. du Pont de Nemours and Company's Current Report on Form 8-
K (Commission file number 1-815) dated August 25, 2017).
Tax Matters Agreement by and between E. I. du Pont de Nemours and Company and The Chemours Company (incorporated by
reference to Exhibit 2.2 to E. I. du Pont de Nemours and Company's Current Report on Form 8-K (Commission file number 1-815)
dated July 8, 2015).
The E. I. du Pont de Nemours and Company Management Deferred Compensation Plan, incorporated by reference to Exhibit 4.3 to
DowDuPont Inc. Registration Statement on Form S-8 (Commission file number 333-220324) filed September 1, 2017.
The E. I. du Pont de Nemours and Company Stock Accumulation and Deferred Compensation Plan for Directors, (incorporated by
reference to Exhibit 4.4 to DowDuPont Inc. Registration Statement on Form S-8 (Commission file number 333-220324) filed
September 1, 2017.)
E. I. du Pont de Nemours and Company's Pension Restoration Plan, as last amended effective June 29, 2015 (incorporated by reference
to Exhibit 10.3 to E. I. du Pont de Nemours and Company’s Quarterly Report on Form 10-Q (Commission file number 1-815) for the
period ended June 30, 2015).
E. I. du Pont de Nemours and Company’s Rules for Lump Sum Payments, as last amended effective May 15, 2014 (incorporated by
reference to Exhibit 10.4 to E. I. du Pont de Nemours and Company’s Quarterly Report on Form 10-Q (Commission file number 1-815)
for the period ended June 30, 2015).
77
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES, continued
Part IV
10.14
10.15
10.16
10.17
10.18
10.19 *
10.20 *
10.21
10.22
10.23
10.24
10.25
10.26
21
23.1
23.2
31.1
31.2
32.1
32.2
E. I. du Pont de Nemours and Company’s Retirement Savings Restoration Plan, as last amended effective May 15, 2014. (incorporated
by reference to Exhibit 10.08 to E. I. du Pont de Nemours and Company’s Quarterly Report on Form 10-Q (Commission file number
1-815) for the period ended June 30, 2014).
E. I. du Pont de Nemours and Company’s Retirement Income Plan for Directors, as last amended January 2011 (incorporated by
reference to Exhibit 10.9 to E. I. du Pont de Nemours and Company’s Quarterly Report on Form 10-Q (Commission file number 1-815)
for the period ended March 31, 2012).
Letter Agreement between Charles Victor Magro and Corteva, Inc., dated October 25, 2021 (incorporated by reference to Exhibit 10.1
to Corteva’s Current Report on Form 8-K (Commission file number 001-38710), filed on October 28, 2021).
Letter Agreement between James C. Collins, Jr. and Corteva, Inc., dated June 21, 2021 (incorporated by reference to Exhibit 10.1 to
Corteva’s Current Report on Form 8-K (Commission file number 001-38710), filed on June 23, 2021).
Corteva, Inc. Severance Plan (incorporated by reference to Exhibit 10.2 to Corteva’s Current Report on Form 8-K (Commission file
number 001-38710), filed on October 28, 2021).
Letter Agreement effective as of June 1, 2019 by and between DowDuPont Inc. and Corteva, Inc. (incorporated by reference to Exhibit
10.2 to Corteva's Current Report on Form 8-K (Commission file number 001-38710) filed June 3, 2019)
Memorandum of Understanding, dated January 22, 2021, by and among The Chemours Company, Corteva, Inc., E. I. du Pont de
Nemours and Company and DuPont de Nemours, Inc. (incorporated by reference from the Form 8-K (Commission file number
001-38710) filed January 22, 2021)
Form of Award Terms for Options granted under the Corteva, Inc. 2019 Omnibus Incentive Plan for U.S. grantees (incorporated by
reference from Exhibit 10.3 to the Company’s Quarterly Report Form 10-Q (Commission file number 001-38710) filed May 7, 2020).
Form of Award Terms for Performance Stock Units granted under the Corteva, Inc. 2019 Omnibus Incentive Plan for U.S. grantees
(incorporated by reference from Exhibit 10.4 to the Company’s Quarterly Report Form 10-Q (Commission file number 001-38710)
filed May 7, 2020).
Form of Award Terms for Restricted Stock Units granted under the Corteva, Inc. 2019 Omnibus Incentive Plan for U.S. grantees
(incorporated by reference from Exhibit 10.5 to the Company’s Quarterly Report Form 10-Q (Commission file number 001-38710)
filed May 7, 2020).
p
Form of Special CFO RSU Agreement (incorporated by reference from Exhibit 10.1 to Corteva’s Current Report on Form 8-K
(Commission
pp
6, 2021).
April
file number 001-38710)
((
filed
gg
gg
Agreement dated March 18, 2021, among Corteva, Inc., Starboard Value LP and certain of its affiliates. (incorporated by reference from
Exhibit
,
g
on Form 8-K (Commission
10.1 to Corteva’s Current Report
file number 001-38710) filed March 1
pp
9, 2021).
((
p
Corteva, Inc. Global Omnibus Employee Stock Purchase Plan (incorporated by reference from Exhibit 4.3 to Corteva’s Registration
Statement on Form S-8 (Commission
number 333-249887), filed
pp
November
2020).
yy
file
yy
5,
((
Subsidiaries of the Registrant.
Consent of Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP - Corteva, Inc.
Consent of Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP - E. I. du Pd
ont de Nemours and Company.
Rule 13a-14(a)/15d-14(a) Certification of the company’s and EID’s Principal Executive Officer.
Rule 13a-14(a)/15d-14(a) Certification of the company’s and EID’s Principal Financial Officer.
Section 1350 Certification of the company’s and EID’s Principal Executive Officer. The information contained in this Exhibit shall not
be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the
registrant under the Securities Act of 1933, as amended.
Section 1350 Certification of the company’s and EID’s Principal Financial Officer. The information contained in this Exhibit shall not
be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the
registrant under the Securities Act of 1933, as amended.
101.INS
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded
within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File – The Cover Page XBRL tags are embedded within the Inline XBRL document (included in Exhibit
101.INS)
`
78
Corteva
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
February 10, 2022
Corteva, Inc.
By:
/s/ Brian Titust
Brian Titust
Vice President, Controller
(Principal Accounting Offiff cer)
_____________________________________________
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant in the capacities and on the dates indicated:
79
Signature
Title(s)
Date
/s/ Charles V. Magro
Charles V. Magro
/s/ Gregory R. Page
Gregory R. Page
/s/ Lamberto Andreotti
Lamberto Andreotti
/s/ David C. Everitt
David C. Everitt
/s/ Klaus Engel
Klaus Engel
/s/ Michael O. Johanns
Michael O. Johanns
/s/ Janet P. Giesselman
Janet P. Giesselman
/s/ Karen H. Grimes
Karen H. Grimes
/s/ Rebecca B. Liebert
Rebecca B. Liebert
/s/ Marcos M. Lutz
Marcos M. Lutz
/s/ Nayaki Nayyar
Nayaki Nayyar
/s/ Kerry J. Preete
Kerry J. Preete
/s/ Patrick J. Ward
Patrick J. Ward
/s/ David J. Anderson
David J. Anderson
Chief Executive Officer
ff
(Principal Executive Offiff cer)
and Director
rr
Februar
y 1rr
0, 2022
Non-Executive Chairman of the Board of
Directors and Director
rr
Februar
y 1rr
0, 2022
February 10, 2022
February 10, 2022
February 10, 2022
February 10, 2022
February 10, 2022
February 10, 2022
February 10, 2022
February 10, 2022
rr
Februar
y 1rr
0, 2022
rr
Februar
y 1rr
0, 2022
rr
Februar
y 1rr
0, 2022
rr
February
10, 2022
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
80
E. I. du Pont de Nemours and Company
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
February 10, 2022
E. I. DU PONT DE NEMOURS ANDAA
COMPANY
By:
/s/ Brian Titust
Brian Titust
Vice President, Controller
(Principal Accounting Offiff cer)
_____________________________________________
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant in the capacities and on the dates indicated:
Signature
Title(s)
Date
/s/ Charles V. Magro
Charles V. Magro
/s/ David J. Anderson
David J. Anderson
Februarr
ry 10, 2022
February 10, 2022
Chief Executive Officer
ff
(Principal Executive Officer)
and Director
Executive Vice President,
Chief Financial Officer and Director
(Principal Financial Officer)
81
[THIS PAGE INTENTIONALLY LEFT BLANK]
Corteva, Inc.
Index to the Consolidated Financial Statements
Management's Reports on Responsibility for Financial Statements and Internal Control over
Financial Reporting
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Financial Statements:
Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, 2020, and
2019
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Cash Flows forff
Consolidated Statements of Equity for the years ended December 31, 2021, 2020, and 2019
the years ended December 31, 2021, 2020, and 2019
Notes to the Consolidated Financial Statements
Page(s)
F-2
F-3
F-5
F-6
F-7
F-8
F-10
F-11
F-1
Management's Reports on Responsibility for Financial Statements and
Internal Control over Financial Reporting
Management's Report on Responsibility for Financial Statements
the Consolidated Financial Statements and the other finff ancial information contained in this
Management is responsible forff
Annual Report on Form 10-K. The financial statements have been prepared in accordance with generally accepted accounting
principles in the United States of America ("GAAP") and are considered by management to present fairly the company's
financial position, results of operations and cash flows. The financial statements include some amounts that are based on
management's best estimates and judgments. The financial statements have been audited by the company's independent
registered public accounting firm, PricewaterhouseCoopers LLP. The purpose of their audit is to express an opinion as to
whether the Consolidated Financial Statements included in this Annual Report on Form 10-K present fairly, in all material
respects, the company's financial position, results of operations and cash flows in conformity with GAAP. Their report is
presented on the folff
lowing pages.
Management's Report on Internal Control over Financial Reporting
establia
Management is responsible forff
shing and maintaining an adequate system of internal control over financial reporting as
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The company's internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with GAAP. The company's internal control over
financial reporting includes those policies and procedures that:
i.
ii.
iii.
pertain to the maintenance of records that, in reasonable detail, accurately and faiff
dispositions of the assets of the company;
rly reflect the transactions and
provide reasonable assurance that
statements in accordance with generally accepted accounting principles and that receipts and expenditures
company are being made only in accordance with authorization of management and directors of the company; and
transactions are recorded as necessary to permit preparation of financial
of the
t
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or
disposition of the company's assets that could have a material effect on the financial statements.
Internal control over financial reporting has certain inherent limitations which may not prevent or detect misstatements. In
addition, changes in conditions and business practices may cause variation in the effectiveness of internal controls.
Management assessed the effectiveness of the company's internal control over financial reporting as of December 31, 2021,
based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal
work (2013). Based on its assessment and those criteria, management concluded that the company
Control-Integrated Frame
maintained effecff
ncial reporting as of December 31, 2021.
tive internal control over finaff
FF
PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of the company's
internal control over financial reporting as of December 31, 2021, as stated in their report, which is presented on the following
pages.
Charles V. Magro
Chief Executive Offiff cer and Director
David J. Anderson
Executive Vice President and
Chief Financial Officer
February 10, 2022
F-2
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of Corteva, Inc.
Opinions on the Finanii
cialii Statett ments and Intertt nal
rr
Control over Financ
ii
ee
ial Reporti
ngii
We have audited the accompanying consolidated balance sheets of Corteva, Inc. and its subsidiaries (the “Company”) as of
December 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive income (loss), equity and
each of the three years in the period ended December 31, 2021, including the related notes and schedule of
cash flows forff
each of the three years in the period ended December 31, 2021 appearing under Item
valuation and qualifying accounts forff
ncial statements”). We also have audited the Company's internal control
15(a) (collectively referred to as the “consolidated finaff
Framework
e
over financial reporting as of December 31, 2021, based on criteria established in Internal Control - InteII
grated
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
present fairly, in all material respects, the financial
In our opinion, the consolidated finaff
ncial statements referrer d to above
for each of the
position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows
three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2021, based on criteria established in Internal Control - InteII
Framework (2013)
e
grated
issued by the COSO.
a
ff
Basis for Opinions
The Company's management is responsible for these consolidated finaff
ncial statements, forff maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated finaff
ncial statements are free of material misstatement,
to error or fraud, and whether effective internal control over financial reporting was maintained in all material
whether dued
respects.
ncial statements included performing procedures to assess the risks of material misstatement
Our audits of the consolidated finaff
of the consolidated finaff
ncial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated finaff
ncial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definitiontt
and Limi
taii
ii
tions of Internal
tt
tt
Control
over FinFF ancial Reportingii
ity of finaff
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliabila
ncial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and faiff
rly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures
of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
t
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
F-3
Criticaii
l Auditdd Mattersrr
ncial
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated finaff
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Goodwill (Se((
e
ed Reporti
ng Unit) Impairme
m
nt Assessment
ncial statements, the Company’s consolidated goodwill balance was
As described in Notes 2 and 15 to the consolidated finaff
$10.1 billion as of December 31, 2021, and the goodwill associated with the seed reporting unit was $5.4 billion. Management
tests goodwill for impairment at the reporting unit level at least annually, or more frequently when events or changes in
circumstances indicate it is more likely than not that the fair value of a reporting unit has declined below its carrying value.
Management performs an annual goodwill impairment test in the fourth quarter. If management chooses not to complete a
qualitative assessment for a given reporting unit or if the initial assessment indicates that it is more likely than not that the
carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is required. Management
performed quantitative testing on its seed reporting unit and determined that no goodwill impairment existed in 2021.
r value for the seed reporting unit using a discounted cash flow model. Management’s significant
Management determined faiff
al, the terminal growth
assumptim ons in this analysis included future cash flow projections, the weighted average cost of capita
rate, and the tax rate.
The principal considerations for our determination that performing procedures relating to the seed reporting unit goodwill
impairment assessment is a critical audit matter are (i) the significant judgment by management when developing the fair value
of the seed reporting unit; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and
evaluating management’s significant assumptim ons related to projected revenue, the weighted average cost of capita
al, and the
terminal value; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated finaff
ncial statements. These procedures included testing the effectiveness of controls relating to
management’s goodwill impairment assessment, including controls over the valuation of the seed reporting unit. These
procedures also included, among others, (i) testing management’s process for developing the fair value estimate; (ii) evaluating
model; (iii) testing the completeness, accuracy, and relevance of underlying
the appropriateness of the discounted cash flowff
model; and (iv) evaluating the reasonableness of significant assumptim ons used by
data used in the discounted cash flowff
management related to projected revenue,
al, and the terminal value. Evaluating
management’s assumptim ons related to projected revenue and the terminal value involved evaluating whether the assumptim ons
used by management were reasonable considering (i) the current and past performance of the reporting unit; (ii) the consistency
with external market and industry data; and (iii) whether the assumptim ons were consistent with evidence obtained in other areas
of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s
discounted cash flow model and the weighted average cost of capita
the weighted average cost of capita
al and terminal value assumptim ons.
/s/PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 10, 2022
We have served as the Company’s or its predecessor’s auditor since 1946.
F-4
Corteva, Inc.
Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF OPERATRR IONS
(In millions, except per share amounts)
Net sales
Cost of goods sold
Research and development expense
Selling, general and administrative expenses
Amortization of intangibles
Restructuring and asset related charges - net
Integration and separation costs
Other income - net
Loss on early extinguishment of debt
Interest expense
Income (loss) from continuing operations before income taxes
Provision for (benefit fromff
operations
) income taxes on continuing
Income (loss) from continuing operations after income taxes
(Loss) income from discontinued operations after income
taxes
Net income (loss)
Net income (loss) attributablea
to noncontrolling interests
Net income (loss) attributablea
Basic earnings (loss) per share of common stock:
to Corteva
Basic earnings (loss) per share of common stock from
continuing operations
Basic earnings (loss) per share of common stock from
discontinued operations
Basic earnings (loss) per share of common stock
Diluted earnings (loss) per share of common stock:
Diluted earnings (loss) per share of common stock from
continuing operations
Diluted earnings (loss) per share of common stock from
discontinued operations
Diluted earnings (loss) per share of common stock
$
$
$
$
$
$
For the Year Ended December 31,
2020
2021
2019
15,655 $
9,220
1,187
3,209
722
289
—
1,348
—
30
2,346
524
1,822
(53)
1,769
10
1,759 $
14,217 $
8,507
1,142
3,043
682
335
—
212
—
45
675
(81)
756
(55)
701
20
681 $
2.46 $
0.98 $
(0.07)
2.39 $
(0.07)
0.91 $
2.44 $
0.98 $
(0.07)
2.37 $
(0.07)
0.91 $
13,846
8,575
1,147
3,065
475
222
744
215
13
136
(316)
(46)
(270)
(671)
(941)
18
(959)
(0.38)
(0.90)
(1.28)
(0.38)
(0.90)
(1.28)
See Notes to the Consolidated Financial Statements beginning on page F-11.
F-5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Corteva, Inc.
Consolidated Financial Statements
(In millions)
Net income (loss)
Other comprehensive income (loss) - net of tax:
Cumulative translation adjustments
Adjustments to pension benefit plans
Adjustments to other benefit plans
Unrealized gain (loss) on investments
Derivative instruments
Total other comprehensive income (loss)
Comprehensive income (loss)
Comprehensive income (loss) attributablea
noncontrolling interests - net of tax
Comprehensive income (loss) attributablea
to
to Corteva
For the Year Ended December 31,
2020
2019
2021
$
1,769 $
701 $
(941)
(573)
1,037
(621)
10
139
(8)
1,761
(26)
(186)
671
(10)
(69)
380
1,081
$
10
1,751 $
20
1,061 $
(274)
(718)
(160)
—
28
(1,124)
(2,065)
18
(2,083)
See Notes to the Consolidated Financial Statements beginning on page F-11.
F-6
Corteva, Inc.
Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share amounts)
Assets
Current assets
Cash and cash equivalents
Marketable securities
Accounts and notes receivable - net
Inventories
Other current assets
Total current assets
Investment in nonconsolidated affiliates
Property, plant and equipment
Less: Accumulated depreciation
Net property, plant and equipment
Goodwill
Other intangible assets
Deferred income taxes
Other assets
Total Assets
Liabilities and Equity
Current liabilities
Short-term borrowings and finance lease obligations
Accounts payable
Income taxes payable
Deferred revenue
Accrued and other current liabilities
Total current liabilities
Long-term debt
Other noncurrent liabilities
Deferred income tax liabilities
Pension and other post employment benefits - noncurrent
Other noncurrent obligations
Total noncurrent liabilities
Commitments and contingent liabilities
Stockholders’ equity
Common stock, $0.01 par value; 1,666,667,000 shares authorized;
issued at December 31, 2021 - 726,527,000 and December 31, 2020 - 743,458,000
Additional paid-in capital
Retained earnings (accumulated deficit)
Accumulated other comprehensive income (loss)
Total Corteva stockholders’ equity
Noncontrolling interests
Total equity
Total Liabilities and Equity
December 31, 2021
December 31, 2020
$
$
$
$
4,459 $
86
4,811
5,180
1,010
15,546
76
8,364
4,035
4,329
10,107
10,044
438
1,804
42,344 $
17 $
4,126
146
3,201
2,068
9,558
1,100
1,220
3,124
1,719
7,163
7
27,751
524
(2,898)
25,384
239
25,623
42,344 $
3,526
269
4,926
4,882
1,165
14,768
66
8,253
3,857
4,396
10,269
10,747
464
1,939
42,649
3
3,615
123
2,662
2,145
8,548
1,102
893
5,176
1,867
9,038
7
27,707
—
(2,890)
24,824
239
25,063
42,649
See Notes to the Consolidated Financial Statements beginning on page F-11.
F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS
Corteva, Inc.
Consolidated Financial Statements
(In millions)
Operating activities
Net income (loss)
Adjustments to reconcile net income (loss) to cash provided by (used for) operating
activities:
Depreciation and amortization
Provision for (benefit from) deferred income tax
Net periodic pension and OPEB benefit, net
Pension and OPEB contributions
Net (gain) loss on sales of property, businesses, consolidated companies, and
investments
Restructuring and asset related charges - net
Amortization of inventory step-up
Goodwill impairment charge
Loss on early extinguishment of debt
Other net loss
Changes in assets and liabilities, net
Accounts and notes receivable
Inventories
Accounts payable
Deferred revenue
Other assets and liabilities
Cash provided by (used for) operating activities
Investing activities
Capital expenditures
Proceeds from sales of property, businesses, and consolidated companies - net of
cash divested
Acquisitions of businesses - net of cash acquired
Investments in and loans to nonconsolidated affiliates
Proceeds from sale of ownership interest in nonconsolidated affiliates
Purchases of investments
Proceeds from sales and maturities of investments
Other investing activities, net
Cash provided by (used for) investing activities
Financing activities
Net change in borrowings (less than 90 days)
Proceeds from debt
Payments on debt
Repurchase of common stock
Proceeds from exercise of stock options
Dividends paid to stockholders
Payment for acquisition of subsidiary's interest from the noncontrolling interest
Distributions to DowDuPont
Cash transferred to DowDuPont at Internal Reorganizations
Contributions from Dow and DowDuPont
Debt extinguishment costs
Other financing activities, net
Cash provided by (used for) financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
equivalents
F-8
For the Year Ended December 31,
2020
20191
2021
$
1,769 $
701 $
(941)
1,243
174
(1,292)
(247)
(21)
289
—
—
—
156
(113)
(422)
524
574
93
2,727
1,177
(330)
(340)
(269)
3
335
—
—
—
290
187
104
(118)
71
253
2,064
1,599
(477)
(177)
(323)
(142)
339
272
1,102
13
246
(361)
74
149
632
(935)
1,070
(573)
(475)
(1,163)
75
—
(4)
—
(204)
345
(1)
(362)
13
419
(421)
(950)
100
(397)
—
—
—
—
—
(30)
(1,266)
(136)
83
—
(1)
—
(995)
721
(7)
(674)
—
2,439
(1,441)
(275)
56
(388)
(60)
—
—
—
—
(28)
303
7
249
(10)
(10)
21
(138)
160
(13)
(904)
(1,868)
1,001
(6,804)
(25)
47
(194)
—
(317)
(2,053)
7,396
(79)
(33)
(2,929)
(88)
Corteva, Inc.
Consolidated Financial Statements
(In millions)
Increase (decrease) on cash, cash equivalents and restricted cash equivalents
Cash, cash equivalents and restricted cash equivalents at beginning of period
Cash, cash equivalents and restricted cash equivalents at end of period2
Supplemental cash flow information
Cash paid during the period for
Interest, net of amounts capitalized
Income taxes
$
$
For the Year Ended December 31,
2020
20191
2021
963
3,873
4,836 $
1,700
2,173
3,873 $
(2,851)
5,024
2,173
30 $
341
36 $
229
263
234
1.The cash flows for the year ended December 31, 2019 includes cash flows of EID's ECP and Specialty Products Entities.
2. See page F-30 for reconciliation of cash and cash equivalents and restricted cash equivalents presented in the Consolidated Balance Sheets to total cash, cash
equivalents and restricted cash equivalents presented in the Consolidated Statements of Cash Flows.
See Notes to the Consolidated Financial Statements beginning on page F-11.
F-9
CONSOLIDATED STATEMENTS OF EQUITY
Corteva, Inc.
Consolidated Financial Statements
, 2019
(In millions)
Balance at January 1rr
Net income (loss)
Other comprehensive income (loss)
Common dividends ($0.26 per share)
Distributions to Dow and DowDuPont
Issuance of DowDuPont stock
Issuance of Corteva stock
Share-based compensation
Common Stock Repurchase
Contributions from Dow and DowDuPont
Impact of Internal Reorganizations
Reclassification of Divisional Equity to
Additional Paid-in Capital
Other - net
Balance at December 31, 2019
Net income (loss)
Other comprehensive income (loss)
Share-based compensation
Common dividends ($0.52 per share)
Repurchase of common stock
Issuance of Corteva stock
Acquisition of a noncontrolling interest in
consolidated subsidiaries
Other - net
Balance at December 31, 2020
Net income (loss)
Other comprehensive income (loss)
Share-based compensation
Common dividends ($0.54 per share)
Repurchase of common stock
Issuance of Corteva stock
Other - net
Balance at December 31, 2021
Additional
Paid-in
Capital
"APIC"
Common
Stock
$
— $
— $
Divisional
Equity
78,020 $
(641)
(97)
8
41
(25)
7
28,070
$
7 $
27,997 $
(317)
39
62
7,396
(56,479)
(28,077)
(3)
— $
Retained
Earnings
(Accum
Deficit)
Accumulated
Other Comp
Income
(Loss)
Non-
controlling
Interests
— $
(3,360) $
(318)
(97)
(1,124)
493 $
18
1,214
(231)
(3,270) $
380
(10)
(425) $
681
(1)
(194)
(59)
$
(2)
— $
1,759
(2,890) $
(8)
(3)
(300)
(932)
$
7 $
60
(194)
(216)
56
(37)
41
27,707
59
(97)
(18)
100
$
7 $
27,751
$
524 $
(2,898) $
Total Equity
75,153
(941)
(1,124)
(194)
(317)
39
8
103
(25)
7,396
(55,496)
(34)
246 $
20
(15)
(12)
239 $
10
(10)
239 $
—
(47)
24,555
701
380
59
(388)
(275)
56
(52)
27
25,063
1,769
(8)
56
(397)
(950)
100
(10)
25,623
See Notes to the Consolidated Financial Statements beginning on page F-11.
F-10
Corteva, Inc.
Notes to the Consolidated Financial Statements
Table of Contents
Note
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Background and Basis of Presentation
Summary of Significant Accounting Policies
Recent Accounting Guidance
Common Control Business Combination
Divestitures and Other Transactions
Revenue
Restructuring and Asset Related Charges - Net
Related Party Transactions
Supplementary Information
Income Taxes
Earnings Per Share of Common Stock
Accounts and Notes Receivabla e - Net
Inventories
Property, Plant and Equipment
Goodwill and Other Intangible Assets
Leases
Long-Term Debt and Available Credit Facilities
Commitments and Contingent Liabilities
Stockholders' Equity
Pension Plans and Other Post Employment Benefits
Stock-Based Compensation
Financial Instruments
Fair Value Measurements
a
Geographic
Information
Segment Information
Subsequent Events
Page
F-12
F-14
F-19
F-19
F-20
F-24
F-26
F-28
F-29
F-31
F-35
F-36
F-37
F-37
F-38
F-40
F-42
F-44
F-51
F-54
F-63
F-65
F-71
F-73
F-74
F-78
F-11
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 1 - BACKGROUND AND BASIS OF PRESENTATION
Corteva, Inc. is a leading global provider of seed and crop protection solutions focused on the agriculturet
industry. The
company intends to leverage its rich heritage of scientific achievement to advance its robust innovation pipeline and continue to
shapea
er productivity
around the globe. Corteva has two reportablea
segments: seed and crop protection. See Note 25 - Segment Information, to the
Consolidated Financial Statements, for additional information on the company's reportablea
the future of responsible agriculture. The company's broad portfolio of agriculture solutions fuels farmff
segments.
Throughout these financial statements, except as otherwise noted by the context, the terms "Corteva" or "company" used herein
mean Corteva, Inc. and its consolidated subsidiaries (including EID) and the term “EID” used herein means E. I. du Pont de
ont de Nemours and Company excluding its consolidated
Nemours and Company and its consolidated subsidiaries or E. I. du Pd
subsidiaries, as the context may indicate. Additionally, on June 1, 2019, DowDuPont Inc. changed its registered name to
DuPont de Nemours, Inc. (“DuPont”), for certain events prior to, or on, June 1, 2019, DuPont may be referredr
to as
DowDuPont.
Principles of Consolidation and Basis of Presentation
On June 1, 2019, Corteva, Inc. became an independent, publicly traded company through the completed separation (the
business of DuPont de Nemours, Inc. (formerly known as DowDuPont Inc.) (“DowDuPont” or
“Separation”) of the agriculturet
“DuPont”). The separation was effectuat
ed through a pro rata distribution (the “Corteva Distribution”) of all of the then-issued
and outstanding shares of common stock, par value $0.01 per share, of Corteva, Inc., which was then a wholly-owned
subsidiary of DowDuPont, to holders of record of DowDuPont common stock as of the close of business on May 24, 2019.
t
Previously, DowDuPont was forff med on December 9, 2015, to effect an all-stock merger of equals strategic combination
between The Dow Chemical Company ("Historical Dow") and EID. On August 31, 2017 at 11:59 pm ET (the “Merger
Effect
iveness Time”) pursuant to the Agreement and Plan of Merger, dated as of December 11, 2015, as amended March 31,
ff
2017 (the "Merger Agreement"), Historical Dow and EID each merged with wholly-owned subsidiaries of DowDuPont and
became subsidiaries of DowDuPont (the “Merger”). Prior to the Merger, DowDuPont did not conduct any business activities
other than those required forff
ion and matters contemplated by the Merger Agreement.
its format
ff
Subsequent to the Merger, Historical Dow and EID engaged in a series of internal reorganization and realignment steps to
realign their businesses into three subgroups: agriculture,
materials science and specialty products through a series of tax-
efficient transactions (collectively, the "Business Separations”). Effective as of 5:00 pm ET on April 1, 2019, DowDuPont
completed the separation of its materials science business into a separate and independent public company by way of a
distribution of Dow Inc. (“Dow”) through a pro rata dividend in-kind of all of the then-issued and outstanding shares of Dow’s
common stock, par value $0.01 per share, to holders of DowDuPont's common stock, as of the close of business on March 21,
2019 (the “Dow Distribution” and together with the Corteva Distribution, the “Distributions”).
t
Prior to the Dow Distribution, Historical Dow conveyed or transferred the assets and liabilities aligned with Historical Dow’s
agriculture business to separate legal entities (“Dow Ag Entities”) and the assets and liabilities associated with its specialty
products business to separate legal entities (the “Dow SP Entities”). On April 1, 2019, Dow Ag Entities and the Dow SP
Entities were transferred and conveyed to DowDuPont.
In furtherance of the Business Separations, EID engaged in a series of internal reorganization and realignment steps (the
“Internal Reorganization” and the "Business Realignment," respectively) to realign its businesses into three subgroups:
agriculture, materials science and specialty products. As part of the Internal Reorganization:
•
•
•
•
the assets and liabilities aligned with EID’s materials science business (“EID ECP”) were transferred or conveyed
to separate legal entities that were ultimately conveyed by DowDuPont to Dow on April 1, 2019;
the assets and liabilities aligned with EID’s specialty products business were transferred or conveyed to separate
legal entities (“EID Specialty Products Entities”) that were ultimately distributed to DowDuPont on May 1, 2019;
on May 2, 2019, DowDuPont conveyed Dow Ag Entities to EID and in connection with the foregoing, EID issued
additional shares of its Common Stock to DowDuPont; and
on May 31, 2019, DowDuPont contributed EID to Corteva, Inc.
On May 6, 2019, the Board of Directors of DowDuPont approved the distribution of all the then issued and outstanding shares
of common stock of Corteva, Inc., then a wholly-owned subsidiary of DowDuPont, to DowDuPont stockholders. On June 1,
F-12
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
2019, DowDuPont completed the Separation. Each DowDuPont stockholder received one share of Corteva common stock forff
every three shares of DowDuPont common stock held at the close of business on May 24, 2019, the record date of distribution.
Corteva, Inc.'s common stock began trading the "regular way" under the ticker symbol "CTVA" on June 3, 2019, the first
business day after June 1, 2019. Upon becoming an independent company, the capita
of Corteva consisted
of 748,815,000 authorized shares of common stock (par value of $0.01 per share), which represents the number of common
shares issued on June 3, 2019. Information related to the Corteva Distribution and its effect on the company's financial
statements is discussed throughout these Notes to the Consolidated Financial Statements.
r
al struct
uret
As a result of the Business Realignment and the Internal Reorganization discussed above, Corteva owns 100% of the
outstanding common stock of EID. EID is a subsidiary of Corteva, Inc. and continues to be a reporting company, subject to the
requirements of the Securities Exchange Act of 1934, as amended.
CC
on
DAS Common Control Business Combinati
The transfer or conveyance of DAS to Corteva was treated as a transfer of entities under common control. As such, the
company recorded the assets, liabilities, and equity of DAS on its balance sheet at their historical basis. Transfers of businesses
between entities under common control requires the financial statements to be presented as if the transaction had occurred at the
point at which common control first existed (the Merger Effectiveness Time). As a result, the accompanying Consolidated
Financial Statements and Notes thereto include the results of DAS as of the Merger Effectiveness Time. See Note 4 - Common
Control Business Combination, to the Consolidated Financial Statements, for additional information.
For periods prior to the Corteva Distribution, the combined results of operations and assets and liabilities of EID and DAS were
derived from the Consolidated Financial Statements and accounting records of EID as well as the carve-out financial statements
of DAS. The DAS carve-out financial statements reflect the historical results of operations, financial position, and cash flows of
Historical Dow's Agricultural Sciences Business and include allocations of certain expenses for services from Historical Dow,
including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources,
ethics and compliance, shared services, employee benefits and incentives, insurance, and stock-based compensation. These
expenses were allocated on the basis of direct usage when identifiablea
, with the remainder allocated under the basis of
headcount or other measures.
The company's Consolidated Balance Sheets for all periods presented consist of Corteva, Inc. and its consolidated subsidiaries.
The company's Consolidated Statements of Operations (the "Consolidated Statements of Operations") for all periods prior to the
Corteva Distribution consist of the combined results of operations for Historical EID and DAS. The Consolidated Statements of
Operations for all periods after the Corteva Distribution represent the consolidated balances of the company. Intercompany
balances and transactions with Historical EID and DAS have been eliminated.
During the first quarter 2020, the company recorded an increase of $40 million to APIC relating to net assets recorded as
transferred as part of the 2019 Internal Reorganizations that were retained.
alty Ptt
roducts Entities
SS
CP and EID SII
peci
Divestiture of EID EII
The transfer of EID ECP and EID Specialty Products Entities meets the criteria for discontinued operations and as such, results
of operations are presented as discontinued operations and have been excluded from continuing operations for all periods
presented. The comprehensive income (loss), stockholder's equity and cash flows related to EID ECP and EID Specialty
Products Entities have not been segregated and are included in the Consolidated Statements of Comprehensive Income (Loss),
Consolidated Statements of Equity and Consolidated Statements of Cash Flows, respectively, for 2019. Amounts related to EID
ECP and EID Specialty Products Entities are consistently included or excluded fromff
the Notes to the Consolidated Financial
Statements based on the respective finff ancial statement line item. See Note 5 - Divestitures and Other Transactions, to the
Consolidated Financial Statements, for additional information.
Certain reclassifications of prior year's data have been made to conform to current year's presentation.
Since 2018, Argentina has been considered a hyper-inflaff
tionary economy under U.S. GAAP and therefore the U.S. Dollar
(“USD”) is the functional currency for our related subsidiaries. Argentina contributes approximately 5 percent to both the
ssets and translate our financial statements utilizing the
company's annual Sales and EBITDA. We remeasure net monetary arr
official Argentine Peso (“Peso”) to USD exchange rate. The ability to draw down Peso cash balances is limited at this time due
to government restrictions and market availability of U.S. Dollars. The devaluation of the Peso relative to the USD over the last
several years has resulted in the recognition of exchange losses (refer to Note 9 – Supplementary Information, to the
r 10 percent deterioration in the official Peso to USD
Consolidated Financial Statements). As of December 31, 2021, a furthe
ff
F-13
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
exchange rate would reduce the USD value of our net monetary assets and negatively impact pre-tax earnings by approximately
$15 million. We will continue to assess the implications to our operations and financial reporting.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Consolidated Financial Statements include the accounts of the company and subsidiaries in which a controlling interest is
maintained. For those consolidated subsidiaries in which the company's ownership is less than 100 percent, the outside
stockholders' interests are shown as noncontrolling interests. Investments in affiliates over which the company has the ability to
exercise significant influence but does not have a controlling interest are accounted for under the equity method.
under the equity method of accounting that are variable
The company is also involved with certain joint ventures
interest entities ("VIEs"). The company is not the primary beneficiary, as the naturet
of the company's involvement with the
VIEs does not provide it the power to direct the VIEs significant activities. Future events may require these VIEs to be
consolidated if the company becomes the primary beneficiary. At December 31, 2021 and 2020, the maximum exposure to loss
related to the nonconsolidated VIEs is not considered material to the Consolidated Financial Statements.
accounted forff
t
Use of Estimates in Financial Statement Preparation
The preparation of financial statements in accordance with U.S. GAAP requires the use of estimates and assumptim ons that affect
the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting period. The company’s consolidated
financial statements include amounts that are based on management’s best estimates and judgments. Actual results could differ
from those estimates.
Cash and Cash Equivalents
Cash equivalents represent investments with maturiti
plus accrued interest.
t
es of three months or less from time of purchase. They are carried at cost
Restricted Cash Equivalents
Restricted cash equivalents primarily consist of trust assets and contributions to the MOU Escrow Account of $377 million and
$347 million as of December 31, 2021 and 2020, respectively. The trust assets are classified as current and the contributions to
the MOU Escrow Account are classified as noncurrent and included within other current assets and other assets, respectively, in
the Consolidated Balance Sheets. See Note 9 - Supplementary Information, to the Consolidated Financial Statements, for
further information.
Marketable Securities
Marketable securities represent investments in fixeff
ncial instruments with maturities greater than three
d and floating rate finaff
months and up to twelve months at time of purchase. Investments classified as held-to-maturity are recorded at amortized cost.
The carrying value approximates faiff
of the investments. Investments classified as debt
-for-sale are carried at estimated fair value with unrealized gains and losses recorded as a component
securities that are availablea
of accumulated other comprehensive income (loss) or current period earnings if an allowance forff
credit losses has been
establa ished. The cost of investments sold is determined by specific identification.
r value due to the short-term naturet
Fair Value Measurements
Under the accounting guidance for fair value measurements and disclosures, a faiff
shed that
prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted
identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable
quoted prices in active markets forff
inputs (Level 3 measurements). A finaff
r value hierarchy is based on the lowest level of any
input that is significant to the fair value measurement.
ncial instrument's level within the faiff
r value hierarchy was establia
F-14
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
The company uses the following valuation techniques to measure faiff
r value for its assets and liabia lities:
Level 1
– Quoted market prices in active markets forff
identical assets or liabilities;
Level 2
–
Significant other observable inputs (e.g. quoted prices for similar items in active markets, quoted prices
for identical or similar items in markets that are not active, inputs other than quoted prices that are
observable such as interest rate and yield curves, and market-corroborated inputs);
Level 3
– Unobservable inputs forff
the asset or liabia lity, which are valued based on management's estimates of
assumptim ons that market participants would use in pricing the asset or liabila
ity.
Foreign Currency Translation
The company's worldwide operations utilize the U.S. dollar ("USD") or a related foreign currency as the functional currency,
where applicable. The company identifies its separate and distinct foreign entities and groups the foreign entities into two
categories: 1) extension of the parent or foreign subsidiaries operating in a hyper-inflationary environment (USD functional
currency) and 2) self-contained (related foreign functional currency). If a forei
gn entity does not align with either category,
factors are evaluated and a judgment is made to determine the functional currency.
ff
gn currency-denominated asset and liability amounts are
For foreign entities where the USD is the functional currency, all forei
re-measured into USD at end-of-period exchange rates, except for inventories, prepaid expenses, property, plant and equipment,
goodwill and other intangible assets, which are re-measured at historical rates. Foreign currency income and expenses are re-
measured at average exchange rates in effect during each month, except for expenses related to balance sheet amounts re-
measured at historical exchange rates. Exchange gains and losses arising from re-measurement of foreign currency-
denominated monetary assets and liabilities are included in income in the period in which they occur.
ff
For foreign entities where a related foreign currency is the functional currency, assets and liabilities denominated in the related
foreign currencies are translated into USD at end-of-period exchange rates and the resultant translation adjustments are
reported, net of their related tax effects, as a component of accumulated other comprehensive income (loss) in equity. Assets
and liabilities denominated in other than the functional currency are re-measured into the functional currency prior to translation
into USD and the resultant exchange gains or losses are included in income in the period in which they occur. Income and
expenses are translated into USD at average exchange rates in effect during each month.
The company changes the functional currency of its separate and distinct foreign entities only when significant changes in
economic facff
ts and circumstances indicate clearly that the functional currency has changed.
Inventories
The company's inventories are valued at the lower of cost or net realizable value. Elements of cost in inventories include raw
materials, direct labor
and manufacturing overhead. Stores and supplies are valued at cost or net realizable value, whichever is
lower; cost is generally determined by the average cost method.
a
As of December 31, 2021 and December 31, 2020, approximately 60% and 40% of the company's inventories were accounted
for under the first-in, first-out ("FIFO") and average cost methods, respectively. Inventories accounted for under the FIFO
method are primarily comprised of products with shorter shelf lives such as seeds. See Note 13 - Inventories, to the
Consolidated Financial Statements, for further information.
The company establia
demand and market conditions.
shes an obsolescence reserve for inventory based upon quality considerations and assumptim ons about future
Property, Plant and Equipment
Property, plant and equipment are carried at cost less accumulated depreciation. In connection with the Merger, the fair value of
property, plant and equipment was determined using a market approach and a replacement cost approach. Depreciation is based
on the estimated service lives of depreciable assets and is calculated using the straight-line method. Fully depreciated assets are
retained in property and accumulated depreciation accounts until they are removed from service. When assets are surrendered,
retired, sold, or otherwise disposed of, their gross carrying values and related accumulated depreciation are removed from the
Consolidated Balance Sheets and included in determining gain or loss on such disposals.
F-15
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Goodwill and Other Intangible Assets
r value of net
The company records goodwill when the purchase price of a business acquisition exceeds the estimated faiff
identified tangible and intangible assets acquired. Goodwill is tested forff
impairment at the reporting unit level at least annually,
or more frequently when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than
not declined below its carrying value. The company performs an annual goodwill impairment test in the fourth quarter.
When testing goodwill for impairment, the company has the option to first perform qualitative testing to determine whether it is
more likely than not that the fair value of a reporting unit is less than its carrying value. If the company chooses not to complete
a qualitative assessment for a given reporting unit or if the initial assessment indicates that it is more likely than not that the
carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is required. If additional
quantitative testing is required, the reporting unit's fair value is compared with its carrying amount, and an impairment charge,
if any, is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, limited to the amount
r values for each of the reporting units using a
of goodwill associated with the reporting unit. The company determines faiff
discounted cash flow model (a form of the income approa
ch, fair value is
cash flows, discounted at an appropriate risk-adjusted rate. The
determined based on the present value of estimated future
company's significant assumptim ons in this analysis included future cash flow projections, weighted average cost of capita
al, the
terminal growth rate, and the tax rate. Under the market approach, the company uses metrics of publicly traded companies or
historically completed transactions for comparablea
companies. See Note 15 - Goodwill and Other Intangible Assets, to the
Consolidated Financial Statements, for further information on goodwill.
ch) or the market approach. Under the income approa
a
a
ff
Indefinite-lived intangible assets are tested for impairment at least annually; however, these tests are performed more frequently
when events or changes in circumstances indicate that the asset may be impaired. Impairment exists when carrying value
exceeds fair value. The company performs an impairment assessment using the relief from royalty method (a form of the
income approach) using Level 3 inputs within the fair value hierarchy. The significant assumptim ons used in the calculation
included projected revenue, the royalty rate, the discount rate, and the terminal growth rate. These significant assumptim ons
involve management judgment and estimates relating to future operating performance and economic conditions that may differ
from actual cash flows.
Definite-lived intangible assets are amortized over their estimated useful lives, generally on a straight-line basis for periods
ranging primarily from 2 years to 25 years. The company continually evaluates the reasonableness of the useful lives of these
assets. Once these assets are fully amortized, they are removed from the Consolidated Balance Sheets.
Leases
The company determines whether an arrangement is a lease at the inception of the arrangement based on the terms and
conditions in the contract. A contract contains a lease if there is an identified asset and the company has the right to control the
asset. Operating lease right-of-use ("ROU") assets are included in other assets on the company’s Consolidated Balance Sheets.
Operating lease liabilities are included in accrued and other current liabilities and other noncurrent obligations on the
company’s Consolidated Balance Sheets. Finance lease assets are included in property, plant and equipment on the company’s
Consolidated Balance Sheets. Finance lease liabilities are included in short-term borrowings and finance lease obligations and
long-term debt on the company’s Consolidated Balance Sheets.
Operating lease ROU assets represent the company’s right to use an underlying asset forff
the lease term and lease liabilities
represent the company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities
are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the
the
company’s leases do not provide the lessor's implicit rate,
commencement date in determining the present value of lease payments. Lease terms include options to extend the lease when
it is reasonably certain those options will be exercised. Leases with an initial term of 12 months or less are not recorded on the
balance sheet. The company recognizes lease expense for these leases on a straight-line basis over the lease term.
the company uses its incremental borrowing rate at
as a single lease component
The company has lease agreements with lease and non-lease components, which are accounted forff
for all asset classes. In the Consolidated Statements of Operations, lease expense for operating leases is recognized on a
straight-line basis over the lease term. For finance leases, interest expense is recognized on the lease liability and the ROU asset
is amortized over the lease term. See Note 16 - Leases, to the Consolidated Financial Statements, for further information.
Impairment of Long-Lived Assets
The company evaluates the carrying value of long-lived assets to be held and used when events or changes in circumstances
. The carrying value of a long-lived asset group is considered impaired when
indicate the carrying value may not be recoverablea
and are less than its carrying value. In that
the total projected undiscounted cash flows from the assets are separately identifiablea
event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. The
F-16
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
company's fair value methodology is an estimate of fair market value which is made based on prices of similar assets or other
valuation methodologies including present value techniques. Long-lived assets to be disposed of by sale, if material, are
classified as held forff
sale and reported at the lower of carrying amount or fair value less cost to sell, and depreciation is ceased.
Long-lived assets to be disposed of other than by sale are classified as held and used until they are disposed of and reported at
the lower of carrying amount or fair value. Depreciation is recognized over the remaining useful life of the assets.
Derivative Instruments
Derivative instruments are reported in the Consolidated Balance Sheets at their faiff
r values. The company utilizes derivatives to
manage exposures to foreign currency exchange rates and commodity prices. Changes in the fair values of derivative
instruments that are not designated as hedges are recorded in current period earnings. For derivative instruments designated as
cash flow hedges, the gain (loss) is reported in accumulated other comprehensive income (loss) until it is cleared to earnings
during the same period in which the hedged item affects earnings. For derivative instruments designated as net investment
hedges, the gain (loss) is reported within accumulated other comprehensive income (loss) until the subsidiary is divested.
commitment or an anticipated transaction is terminated prior to the
In the event that a derivative designated as a hedge of a firmff
maturation of the hedged transaction, the net gain or loss in accumulated other comprehensive income (loss) generally remains
in accumulated other comprehensive income (loss) until the item that was hedged affects earnings. If a hedged transaction
matures, or is sold, extinguished, or terminated prior to the maturity of a derivative designated as a hedge of such transaction,
gains or losses associated with the derivative through the date the transaction maturet
d are included in the measurement of the
trading purposes. Derivatives designated as hedges of anticipated
hedged transaction and the derivative is reclassified as forff
transactions are reclassified as forff
trading purposes if the anticipated transaction is no longer probable.
The company included forei
gn currency exchange contract settlements within cash flows from operating activities, regardless of
hedge accounting qualification. See Note 22 - Financial Instruments, to the Consolidated Financial Statements, for additional
discussion regarding the company's objectives and strategies forff
derivative instruments.
ff
Environmental Matters
Accruals for environmental matters are recorded when it is probable that a liabia lity has been incurred and the amount of the
liability can be reasonably estimated. These accruals are adjusted periodically as assessment and remediation efforts progress or
as additional technical or legal information becomes available. Accruals
ities are included in the
Consolidated Balance Sheets in accrued and other current liabilities and other noncurrent obligations at undiscounted amounts.
ities are recorded when it is probable that a
Accruals for related insurance or other third-party recoveries forff
recovery will be realized and are included in the Consolidated Balance Sheets as accounts and notes receivablea
for environmental liabila
environmental liabila
- net.
rr
Environmental costs are capita
alized if the costs extend the life of the property, increase its capacity, and/odd r mitigate or prevent
contamination from future operations. Environmental costs are also capitalized in recognition of legal asset retirement
the acquisition, construction and/or normal operation of a long-lived asset. Costs related to
obligations resulting fromff
environmental contamination treatment and cleanup are charged to expense. Estimated future
incremental operations,
maintenance and management costs directly related to remediation are accrued when such costs are probable and reasonably
estimable.
ff
Revenue Recognition
The company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects
the consideration which the company expects to receive in exchange for those goods or services. To determine revenue
recognition for the arrangements that the company determines are within the scope of FASB ASU No. 2014-09, Revenue from
Contracts with Customers (Topic 606), the company performs the following five steps: (1) identify the contract(s) with a
customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the
transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity s
atisfies a
performance obligation. See Note 6 - Revenue, to the Consolidated Financial Statements, for additional information on revenue
recognition.
t
Prepaid Royalties
The company currently has certain third-party biotechnology trait license agreements, which require up-front
and variable
ted as other current assets and other
payments subject to the licensor meeting certain conditions. These payments are reflecff
assets and are amortized to cost of goods sold as seeds containing the respective trait technology are utilized over the life of the
license. The rate of royalty amortization expense recognized is based on the company’s strategic plans which include various
assumptions and estimates including product portfolio, market dynamics, farmer preferences, growth rates and projected
planted acres. Changes in factors and assumptim ons included in the strategic plans, including potential changes to the product
portfolio in favff or of internally developed biotechnology, could impact the rate of recognition of the relevant prepaid royalty.
u
F-17
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
At December 31, 2021, the balance of prepaid royalties reflected in other current assets and other assets was $303 million and
$256 million, respectively. The majoa rity of the balance of prepaid royalties relates to the company’s wholly owned subsidiary,
Pioneer Hi-Bred International, Inc.’s (“Pioneer”) non-exclusive license in the United States and Canada for the Monsanto
Company's Genuity® Roundup Ready 2 Yield® glyphosate tolerance trait and Roundup Ready 2 Xtend® glyphosate and
dicamba tolerance trait forff
soybeans (“Roundup Ready 2 License Agreement”). Each of these licensed technologies are now
trademarks of the Bayer Group, which acquired the Monsanto Company in 2018. The prepaid royalty asset relates to a series of
up-front, fixed and variable royalty payments to utilize the traits in Pioneer’s soybean product mix.The company’s historical
expectation has been that the technology licensed under the Roundup Ready 2 License Agreement would be used as the primary
herbicide tolerance trait platform in the Pioneer® brand soybean through the term of the agreement. DAS and MS Technologies,
L.L.C. jointly developed and own the Enlist E3TM herbicide tolerance trait forff
soybeans which provides tolerance to 2, 4-D
choline in Enlist Duo® and Enlist One® herbicides, as well as glyphosate and glufosinate herbicides. In connection with the
validation of breeding plans and large-scale product development timelines, during the fourth quarter of 2019, the company
f the Enlist E3TM trait platform in the company’s soybean portfolio mix across all brands, including
accelerated the ramp up ou
Pioneer® brands, over the subsequent five years. During the ramp-up period, the company is expected to significantly reduce
the volume of products with the Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits beginning in
2021, with expected minimal use of the trait platform thereafter for the remainder of the Roundup Ready 2 License Agreement
(the “Transition Plan”). The rate of royalty expense has therefore increased significantly through higher amortization of the
prepaid royalty as fewff
er seeds containing the respective trait are expected to be utilized.
In connection with the departure fromff
these traits, beginning January 1, 2020 the company presents and discloses the non-cash
accelerated prepaid royalty amortization expense as a component of restructuring and asset related charges - net, in the
Consolidated Statement of Operations. The accelerated prepaid royalty amortization expense represents the difference between
the rate of amortization based on the revised number of units expected to contain the Roundup Ready 2 Yield® and Roundup
Ready 2 Xtend® trait technology and the variablea
cash rate per the Roundup Ready 2 License Agreement.
Further changes in factors and assumptim ons associated with usage of the trait platform licensed under the Roundup Ready 2
License Agreement, including the Transition Plan, could furthe
r impact the rate of recognition of the prepaid royalty and
Consolidated Statement of Operations presentation of the accelerated prepaid royalty amortization expense.
ff
Cost of Goods Sold
Cost of goods sold primarily includes the cost of manufacture and delivery, ingredients or raw materials, direct salaries, wages
al projects, royalties and other operational expenses. No
and benefits and overhead, non-capita
amortization of intangibles is included within cost of goods sold.
alizable costs associated with capita
Research and Development
Research and development costs are expensed as incurred. Research and development expense includes costs (primarily
consisting of employee costs, materials, contract services, research agreements, and other external spend) relating to the
discovery and development of new products.
Selling, General and Administrative Expenses
Selling, general and administrative expenses primarily include selling and marketing expenses, commissions, functional costs,
and business management expenses.
Integration and Separation Costs
Integration and separation costs includes costs incurred to prepare for and close the Merger, post-Merger integration expenses,
and costs incurred to prepare for the Business Separations. These costs primarily consist of finaff
ncial advisory, information
technology, legal, accounting, consulting and other professional advisory fees associated with preparation and execution of
these activities.
Litigation and Other Contingencies
Accruals for legal matters and other contingencies are recorded when it is probable that a liabia lity has been incurredr
and the
amount of the liability can be reasonably estimated. Legal costs, such as outside counsel fees and expenses, are charged to
expense in the period incurred.
Severance Costs
Severance benefits are provided to employees under the company's ongoing benefit arrangements. Severance costs are accrued
when management commits to a plan of termination and it becomes probable that employees will be entitled to benefits at
amounts that can be reasonably estimated.
F-18
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Insurance/Self-Insurance
The company self-insures certain risks where permitted by law or regulation, including workers' compensation, vehicle liabia lity
and employee related benefits. Liabilities associated with these risks are estimated in part by considering historical claims
rial assumptions. For other risks, the company uses a combination of insurance
experience, demographic facff
and self-insurance, reflecting comprehensive reviews of relevant risks. A receivable forff
an insurance recovery is generally
.
recognized when the loss has occurred and collection is considered probablea
tors and other actuat
Income Taxes
The company accounts forff
income taxes using the asset and liability method. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases
of assets and liabilities using enacted tax rates. The effect of a change in tax rates on deferred tax assets or liabilities is
recognized in income in the period that includes the enactment date.
The company recognizes the financial statement effect
s of an uncertain income tax position when it is more likely than not,
based on the technical merits, that the position will be sustained upon examination. The current portion of uncertain income tax
positions is included in income taxes payablea
or income tax receivable, and the long-term portion is included in other
noncurrent obligations or other noncurrent assets in the Consolidated Balance Sheets.
ff
Income tax related penalties are included in the provision for (benefit from) income taxes in the Consolidated Statements of
Operations. Interest accrued related to unrecognized tax benefits is included within the provision for (benefit from) income
taxes from continuing operations in the Consolidated Statements of Operations.
Earnings per Common Share
The calculation of earnings per common share is based on the weighted-average number of the company’s common shares
outstanding for the applicablea
period. The calculation of diluted earnings per common share reflects the effect of all potential
common shares that were outstanding during the respective periods, unless the effecff
t of doing so is antidilutive.
NOTE 3 - RECENT ACCOUNTING GUIDANCE
Recently Adopted Accounting Guidance
In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which provides certain optional
expedients that allow derivative instruments impacted by changes in the interest rate used for margining, discounting or contract
he amendments in this Update are effective immediately for all entities
price alignment to qualify for certain optional relief. Tff
and may be appl
the beginning of any interim period that includes March 12, 2020 or
ied retrospectively as of any date fromff
prospectively to new modifications subsequent to the issuance of this Update. The adoption of ASU 2021-01 did not have a
material impact on the company’s financial position, results of operation or cash flows.
a
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,
which is part of the FASB’s Simplification Initiative to identify, evaluate, and improve areas of U.S. GAAP for which cost and
complexity can be reduced, while maintaining or improving the usefulness of the information provided to users of financial
statements. This ASU amends ASC 740, Income Taxes, by removing certain exceptions to the general principles, and clarifying
and amending current guidance. The new standard is effective for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2020. The company adopted this guidance on January 1, 2021 and it did not have a material
impact on the company’s financial position, results of operation or cash flows.
Accounting Guidance Issued But Not Adopted as of December 31, 2021
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities
about Government Assistance, which requires business entities to disclose transactions with a governmental entity for which a
grant or contribution accounting model is used in recognizing and measuring such transactions. This standard is effective for
fiscal years beginning after December 15, 2021, and early adoption is permitted. The company is currently evaluating the
impact of adopting this guidance.
NOTE 4 - COMMON CONTROL BUSINESS COMBINATIONS
DAS Common Control Combination
Based on an evaluation of the provisions of ASC 805 (Business Combinations), Corteva and DAS represented entities under
common control, as both shared DowDuPont as their parent company. As a result, the assets, liabilities and operations of
F-19
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Corteva and DAS were combined at their historical carryinrr
g amounts, and periods prior to the Internal Reorganizations are
adjusted as if Corteva and DAS had been combined since the Merger Effectiveness Time, when the entities were first under
common control. Accordingly,
the accompanying Consolidated Financial Statements and Notes thereto were
retrospectively revised to include the transferred net assets and results of operations of DAS beginning on September 1, 2017.
Refer to Note 1 - Background and Basis of Presentation, for additional information on the common control combination.
in 2019,
Intercompany balances and transactions with Historical EID and DAS have been eliminated.
NOTE 5 - DIVESTITURES AND OTHER TRANSACTIONS
Separation Agreements
In connection with the Distributions, DuPont, Corteva, and Dow (together, the “Parties” and each a “Party”) entered into certain
agreements to effect the separation, provide for the allocation of DowDuPont’s assets, employees, liabilities and obligations
(including its investments, property and employee benefits and tax-related assets and liabilities) among the Parties, and provide
ework for Corteva's relationship with Dow and DuPont following the separations and Distributions (collectively, the
a framff
"Separation Agreements"). Effective April 1, 2019, the Parties entered into the following agreements referred to herein as: the
Separation and Distribution Agreement (the “Corteva Separation Agreement”); the Tax Matters Agreement; the Employee
Matters Agreement; and the Intellectual Property Cross-License Agreement.
Effective June 1, 2019, in connection with the Corteva Distribution, Corteva and DuPont entered into the following agreements:
the Intellectual Property Cross-License Agreement (the “Corteva-DuPont IP Cross-License Agreement”); the Letter Agreement;
and the Amended and Restated Tax Matters Agreement.
DuPontPP
Pursuant to the Separation Agreements, DuPont and Corteva indemnifies the other against certain litigation, environmental, tax,
workers' compensation and other liabia lities that arose prior to the Corteva Distribution. The term of this indemnification is
generally indefinite and includes defense costs and expenses, as well as monetary and non-monetary settlements and judgments.
In connection with the recognition of liabilities related to these matters, the company records an indemnification asset when
recovery is deemed probable. At December 31, 2021, the indemnification assets are $25 million within accounts and notes
receivable - net and $75 million within other assets in the Consolidated Balance Sheet. At December 31, 2021,
the
indemnification liabilities are $75 million within other noncurrent obligations in the Consolidated Balance Sheet.
Dow
Pursuant to the Separation Agreements, Dow and Corteva indemnifies the other against certain litigation, environmental, tax
and other liabia lities that arose prior to the Corteva Distribution. The term of this indemnification is generally indefinite and
includes defense costs and expenses, as well as monetary and non-monetary settlements and judgments. In connection with the
recognition of liabilities related to these matters, the company records an indemnification asset when recovery is deemed
probable. At December 31, 2021, the indemnification liabilities are $20 million within accrued and other current liabilities and
$42 million within other noncurrent obligations in the Consolidated Balance Sheet.
F-20
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
EID ECP Divestiture
As discussed in Note 1 - Background and Basis of Presentation, on April 1, 2019, EID completed the transfer of the entities and
related assets and liabia lities of EID ECP to DowDuPont.
As a result, the financial results of EID ECP are reflected as discontinued operations, as summarized below:
(In millions)
Net sales
d
Cost of goods sol
Research and development expense
Selling, general and administrative expenses
Amortization of intangibles
Restructuring and asset related charges - net
Integration and separation costs
Other income - net
(Loss) income from discontinued operations before income taxes
Provision for (benefit fromff
) income taxes on discontinued operations
(Loss) income from discontinued operations after income taxes
For the Year Ended
December 31, 2019
$
$
362
2
59
4
9
23
2
44
2
23
4
19
The following tablea
operations related to EID ECP:
presents the depreciation, amortization of intangibles, and capita
al expenditures of the discontinued
(In millions)
Depreciation
s
Amortization of intangible
Capita
al expenditures
t
For the Year Ended
December 31, 2019
$
28
3
2
16
F-21
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
EID Specialty Products Divestiture
As discussed in Note 1 - Background and Basis of Presentation, on May 1, 2019, the company completed the transfer of the
entities and related assets and liabilities of the EID Specialty Products Entities to DowDuPont.
As a result, the financial results of the EID Specialty Products Entities are reflected as discontinued operations, as summarized
below:
(In millions)
Net sales
Cost of goods sold
Research and development expense
Selling, general and administrative expenses
Amortization of intangibles
Restructuring and asset related charges - net
Integration and separation costs
Goodwill impairment
Other income - net
(Loss) income from discontinued operations before income taxes
Provision for (benefit fromff
) income taxes on discontinued operations
(Loss) income from discontinued operations after income taxes
For the Year Ended
December 31, 2019
$
$
5,030
3,352
204
573
267
115
253
1,102
57
(779)
80
(859)
II
nt
EID Specialty Products Itt mpairme
As a result of the Merger and related acquisition method of accounting, Historical DuPont'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 any 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.
As a result of the Internal Reorganization, in the second quarter of 2019, EID assessed the recoverabila
ity of the goodwill within
transportation and advanced polymers,
the electronics and communications, protection solutions, nutrition and health,
packaging and specialty plastics, industrial biosciences, and clean technologies reporting units, and the overall carrying value of
the net assets in the disposal group that was distributed to DowDuPont on May 1, 2019. As a result of this analysis, the
company determined that the fair value of certain reporting units related to the EID specialty products businesses were below
carrying value resulting in pre-tax, non-cash goodwill impairment charges totaling $1,102 million reflected in (loss) income
from discontinued operations after income taxes. Revised finaff
ncial projections reflect unfavorablea market conditions, driven by
slowed demand in the biomaterials business unit, coupled with challenging conditions in U.S. bioethanol markets. These
revised financial projections resulted in a reduction in the long-term forecasts of sales and profitability as compared to prior
projections.
F-22
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
a
models (a formff
of the income approa
using discounted cash flowff
The company’s analyses above
ch) utilized Level 3
unobservable inputs. The company’s significant assumptions in these analyses include, but are not limited to, future cash flow
projections, the weighted average cost of capital, the terminal growth rate, and the tax rate. The company’s estimates of future
cash flows are based on current regulatory and economic climates, recent operating results, and planned business strategies.
These estimates could be negatively affected by changes in federal, state, or local regulations or economic downturns. Future
cash flow estimates are, by their nature,
the company’s estimates. The
of the market approach (utilizes Level 3 unobservable inputs), which is derived from metrics of
company also used a formff
publicly traded companies or historically completed transactions of comparablea
businesses. The selection of comparablea
businesses is based on the markets in which the reporting units operate giving consideration to risk profiles, size, geography,
and diversity of products and services. As such, the company believes the current assumptim ons and estimates utilized are both
reasonable and appropriate.
subjective and actual results may differ materially fromff
a
a
t
In addition, the company performed an impairment analysis related to the equity method investments held by the EID specialty
products businesses, as of May 1, 2019. The company applied the net asset value method under the cost approach to determine
the fair value of the equity method investments in the EID specialty products businesses. Based on updated projections, the
company determined the fair value of an equity method investment was below the carrying value and had no expectation the
fair value would recover in the short-term due to the current economic environment. As a result, management concluded the
impairment was other-than-temporary and recorded an impairment charge of $63 million, reflected in (loss) income from
discontinued operations after income taxes. Additionally, this impairment is reflected within restructuring and asset related
charges - net in the year ended December 31, 2019, within the table above.
a
The following tablea
operations related to the EID Specialty Products Entities:
presents the depreciation, amortization of intangibles, and capita
al expenditures of the discontinued
(In millions)
Depreciation
Amortization of intangibles
Capita
al expenditures
t
For the Year Ended
December 31,
2019
$
281
267
481
Merger Remedy - Divested Ag Business
As a condition of the regulatory approval forff
the Merger, including by the European Commission, EID was required to divest
(the “Divested Ag Business”) certain assets related to its crop protection business and research and development ("R&D")
organization, specifically EID’s Cereal Broadleaf Herbicr
ides and Chewing Insecticides portfolios, including Rynaxypyr®,
Cyazypyr® and Indoxacarb as well as the crop protection R&D pipeline and organization, excluding seed treatment,
nematicides, and late-stage R&D programs. On March 31, 2017, EID and FMC Corporation (“FMC”) entered into a definitive
agreement (the "FMC Transaction Agreement"), and on November 1, 2017 FMC acquired the Divested Ag Business. As a
result of the agreement, EID entered into favora
contracts with FMC of $495 million, which were recorded as intangible
assets recognized at the faiff
r value of off-market contracts.
blea
ff
For the year ended December 31, 2019, the company recorded income from discontinued operations after income taxes related
to the Divested Ag Business of $80 million related to changes in accrual
certain prior year tax positions.
s forff
rr
Other Discontinued Operations Activity
For the year ended December 31, 2020, the company recorded income from discontinued operations after income taxes of
$10 million related to the adjustment of certain prior year tax positions for previously divested businesses. For the year ended
December 31, 2019, the company recorded income from discontinued operations after income taxes of $89 million related to
prior years from previously divested
the adjustment of certain unrecognized tax benefits forff
businesses.
positions taken on items fromff
F-23
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 6 - REVENUE
Revenue Recognition
Productstt
Substantially all of Corteva's revenue is derived from product sales. Product sales consist of sales of Corteva's products to
farmers, distributors, and manufacturers. Corteva 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 performanc
e obligations is equal to or less than one year. However, the
company has some long-term contracts which can span multiple years.
ff
Revenue from product sales is recognized when the customer obtains control of the company's product, which occurs at a point
in time according to shipping terms. Payment terms are generally less than one year fromff
invoicing. The company elected the
practical expedient and does not adjust the promised amount of consideration for the effects of a significant financing
component when the company expects it will be one year or less between when a customer obtains control of the company's
product and when payment is due. When the company performs shipping and handling activities after the transfer of control to
the customer (e.g., when control transfers prior to or at shipment), these are considered fulfillment activities, and accordingly,
the costs are accrued when the related revenue is recognized. Taxes collected fromff
customers relating to product sales and
remitted to governmental authorities are excluded fromff
revenues. In addition, the company elected the practical expedient to
expense any costs to obtain contracts as incurred, as the amortization period for these costs would have been one year or less.
The transaction price includes estimates of variable consideration, such as rights of return,
rebates, and discounts, that are
reductions in revenue. All estimates are based on the company's historical experience, anticipated performance, and the
company's best judgment at the time the estimate is made. Estimates of variable consideration included in the transaction price
primarily utilize the expected value method based on historical experience. These estimates are reassessed each reporting period
and are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized
will not occur upon resolution of uncertainty associated with the variable consideration. The majoa rity of contracts have a single
performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as quantity times
price per unit. For contracts with multiple performance obligations, the company allocates the transaction price to each
performance obligation based on the relative standalone selling price. The standalone selling price is the observablea
price which
depicts the price as if sold to a similar customer in similar circumstances.
t
Licenses of Intellectual Property
Corteva enters into licensing arrangements with customers under which it licenses its intellectual property. Revenue from the
property licenses is derived from sales-based royalties. Revenue for licensing agreements that contain
majori
a
sales-based royalties is recognized at the later of (i) when the subsequent sale occurs or (ii) when the performanc
e obligation to
which some or all of the royalty has been allocated is satisfied.
ty of intellectual
ff
t
Remaining Performance Obligations
Remaining performance obligations represent the transaction price allocated to unsatisfied or partially unsatisfied performance
obligations. The company applies the practical expedient to disclose the transaction price allocated to remaining performance
obligations for only those contracts with an original duration of one year or more. The transaction price allocated to remaining
performance obligations with an original durati
on of more than one year related to material rights granted to customers for
contract renewal options were $123 million and $115 million at December 31, 2021 and December 31, 2020, respectively. The
company expects revenue to be recognized for the remaining performance obligations evenly over the period of 1 year to 6
years.
d
Contract Balances
ities primarily reflect deferred revenue from prepayments under contracts with customers where the company
Contract liabila
receives advance payments for products to be delivered in future periods. Corteva classifies deferred revenue as current or
noncurrent based on the timing of when the company expects to recognize revenue. Contract assets primarily include amounts
related to conditional rights to consideration for completed performance not yet invoiced. Accounts receivable are recorded
when the right to consideration becomes unconditional.
F-24
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Contract Balances
(In millions)
Accounts and notes receivable - trade1
Contract assets - current2
Contract assets - noncurrent3
Deferred revenue - current
Deferred revenue - noncurrent4
1.
2.
3.
4.
Included in accounts and notes receivable - net in the Consolidated Balance Sheets.
Included in other current assets in the Consolidated Balance Sheets.
Included in other assets in the Consolidated Balance Sheets.
Included in other noncurrent obligations in the Consolidated Balance Sheets.
December 31, 2021 December 31, 2020
$
$
$
$
$
3,561 $
24 $
58 $
3,201 $
120 $
3,917
22
54
2,662
116
Revenue recognized during the year ended December 31, 2021, December 31, 2020, and December 31, 2019 from amounts
included in deferred revenue at the beginning of the period was $2,613 million, $2,540 million, and $2,146 million,
respectively.
Disaggregation of Revenue
Corteva's operations are classified into two reportable segments: Seed and Crop Protection. The company disaggregates its
revenue by majora
amount and timing of
product line and geographic
its revenue and cash flows. Net sales by majora
region, as the company believes it best depicts the nature,
product line are included below:
a
t
(In millions)
Corn
Soybean
Other oilseeds
Other
Seed
Herbicides
Insecticides
Fungicides
Other
Crop Protection
Total
$
For the Year Ended December 31,
2020
2021
2019
5,618 $
1,568
752
464
8,402
3,815
1,730
1,310
398
7,253
5,182 $
1,445
619
510
7,756
3,280
1,764
1,032
385
6,461
5,126
1,387
593
484
7,590
3,206
1,652
1,072
326
6,256
$
15,655 $
14,217 $
13,846
F-25
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Sales are attributed to geographic
below:
a
regions based on customer location. Net sales by geographic region and segment are included
Seed
(In millions)
North America1
EMEA2
Latin America
Asia Pacificff
Total
Crop Protection
(In millions)
North America1
EMEA2
Latin America
Asia Pacificff
Total
For the Year Ended December 31,
2020
2019
2021
5,004 $
1,599
1,420
379
8,402 $
4,795 $
1,468
1,117
376
7,756 $
For the Year Ended December 31,
2020
2019
2021
2,532 $
1,524
2,125
1,072
7,253 $
2,373 $
1,374
1,688
1,026
6,461 $
4,724
1,378
1,130
358
7,590
2,205
1,362
1,759
930
6,256
$
$
$
$
1. Represents U.S. & Canada.
2. Europe, Middle East, and Africa ("EMEA").
Refer to Note 24 - Geographic Information, for the breakout of consolidated net sales by geographic area.
NOTE 7 - RESTRUCTURING AND ASSET RELATED CHARGES - NET
2021 Restructuring Actions
During the first quarter of 2021, Corteva approved restructuring actions designed to right-size and optimize its foot
t
pri
organizational structuret
and productivity. The company recorded net pre-tax restructuring
disclosed in the tablea
Actions as actions associated with this charge are substantially complete.
nt and
according to the business needs in each region with the focus on driving continued cost improvement
charges in 2021 under the 2021 Restructuring Actions, as
s below. The company does not anticipate any additional material charges from the 2021 Restructuring
ff
t
The charges related to the 2021 Restructuring Actions related to the segments, as well as corporate expenses, were as follows:
(In millions)
Seed
Crop Protection
Corporate expenses
Total
The following tablea
2021:
For the Year Ended
December 31, 2021
31
$
55
81
167
$
is a summary of charges incurred related to 2021 Restructuring Actions for the year ended December 31,
(In millions)
Severance and related benefit costs
Asset related charges
Contract termination charges
Total restructuring and asset charges - net
For the Year Ended
December 31, 2021
$
$
74
51
42
167
F-26
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
A reconciliation of the December 31, 2020 to the December 31, 2021 liability balances related to the 2021 Restruct
t
uring
Actions is summarized below:
rr
(In millions)
Balance at December 31, 2020
Charges to income fromff
continuing operations
Payments
Asset write-offs
Balance at December 31, 2021
$
$
Severance and Related
Benefit Costs
Asset Related1dd
Contract
Termination2
Total
— $
74
(22)
—
52 $
— $
51
—
(51)
— $
— $
42
(30)
—
12 $
—
167
(52)
(51)
64
In addition, the company has a liability recorded for asset retirement obligations of $6 million as of December 31, 2021.
1.
2. The liability for contract terminations includes lease obligations. The cash impact of these obligations will be substantially complete by the end of 2022.
Execute to Win Productivity Program
During the first quarter of 2020, Corteva approved restructuring actions designed to improve productivity through optimizing
certain operational and organizational structures
primarily related to the Execute to Win Productivity Program. The company
recorded net pre-tax restructuring charges of $185 million inception-to-date under the Execute to Win Productivity Program,
consisting of $124 million of asset related charges and $61 million of severance and related benefit costs. Actions associated
with the Execute to Win Productivity Program were substantially complete by the end of 2020.
t
The Execute to Win Productivity Program charges related to the segments, as well as corporate expenses, were as follows:
(In millions)
Seed
Crop Protection
Corporate expenses
Total
For the Year Ended December 31,
2021
2020
$
$
— $
11
(2)
9 $
15
98
63
176
The below is a summary of charges incurred related to the Execute to Win Productivity Program for the year ended December
31, 2020:
(In millions)
Severance and related benefit costs - net
Asset related charges
Total restructuring and asset related charges - net
For the Year Ended December 31,
2021
2020
$
$
(2) $
11
9 $
63
113
176
A reconciliation of the December 31, 2020 to the December 31, 2021 liability balances related to the Execute to Win
Productivity Program is summarized below:
(In millions)
Balance at December 31, 2020
Charges to income fromff
31, 2021
s
Payment
continuing operations for the year ended December
Asset write-offs
Balance at December 31, 2021
Severance and
Related Benefitff
(Credits) Costs Asset Related1d
53 $
$
3 $
Total
(2)
27)
(
—
24 $
11
(3)
(11)
— $
$
56
9
(30)
(11)
24
1.
In addition, the company has a liability recorded forff
2021.
asset retirement obligations of $13 million as of December 31,
F-27
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
DowDuPont Cost Synergy Program
In September and November 2017, DowDuPont and EID approved post-merger restructuring actions under the DowDuPont
Cost Synergy Program (the “Synergy Program”), adopted at the time by the DowDuPont Board of Directors. The Synergy
Program was designed to integrate and optimize the organization following the Merger and in preparation for the Business
Separations. The company recorded net pre-tax restructuring charges of $833 million inception-to-date under the Synergy
Program, consisting of severance and related benefit costs of $316 million, contract termination costs of $190 million, and asset
including employee separations, were
related charges of $327 million. Actions associated with the Synergy Program,
substantially complete by the end of 2019.
The Synergy Program net charges (benefits) related to the segments, as well as corporate expenses, were as follows:
(In millions)
Seed
Crop Protection
Corporate expenses
Total
For the Year Ended December 31,
2021
2020
2019
$
$
(8) $
(3)
(1)
(12) $
(9) $
11
(2)
— $
The below is a summary of net charges (benefits) incurred related to the Synergy Program forff
2021, 2020 and 2019:
the years ended December 31,
(In millions)
Severance and related benefit (credits) costs - net
Contract termination charges
Asset related charges
Total restructuring and asset related charges - net
For the Year Ended December 31,
2021
2020
2019
$
$
(1) $
(3)
(8)
(12) $
(2) $
—
2
— $
66
27
(1)
92
(7)
6
3
9
0
92
Other Asset Related Charges
For the years ended December 31, 2021 and 2020, the company recognized $125 million and $159 million, respectively, in
restructuring and asset related charges - net in the Consolidated Statements of Operations, from non-cash accelerated prepaid
royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits.
Asset Impairment
During the year ended December 31, 2019, the company recognized non-cash impairment charges of $144 million pre-tax
($110 million after-tax) in restructuring and asset related charges - net in the company's Consolidated Statements of Operations
related to certain in-process research and development ("IPR&D") assets within the seed segment. Referff
to Note 15 - Goodwill
and Other Intangible Assets, and Note 23 - Fair Value Measurements, for further information.
NOTE 8 - RELATED PARTY TRANSACTIONS
Services Provided by and to Historical Dow and its affiliates
Following the Merger and prior to the Dow Distribution, Corteva reported transactions with Historical Dow and its affiliates as
related party transactions.
Transactions with DowDuPont
In 2019 DowDuPont contributed cash to Corteva to fund portions of the company's debt redemption/repayment transactions.
See Note 17 - Long-Term Debt and Available Credit Facilities, to the Consolidated Financial Statements, for additional
information.
on
In February 2019, the DowDuPont Board declared first quarter dividends per share of DowDuPont common stock payablea
March 15, 2019. EID declared and paid distributions to DowDuPont of about $317 million for the year ended December 31,
2019 to fund a portion of DowDuPont’s dividend payments.
F-28
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 9 - SUPPLEMENTARY INFORMATION
Other Income - Net
(In millions)
Interest income
Equity in earnings (losses) of affiliates - net
Net gain (loss) on sales of businesses and other assets1
Net exchange gains (losses)2
Non-operating pension and other post employment benefit credit (costs)3
Miscellaneous income (expenses) - net4
For the Year Ended December 31,
2021
2020
2019
$
77 $
14
21
(54)
1,318
(28)
56 $
—
(2)
(174)
368
(36)
Other income - net
$
1,348 $
212 $
59
(9)
64
(99)
191
9
215
1.
2.
3.
The year ended December 31, 2021 includes a gain of $19 million relating to the sale of a business in Asia Pacific in the crop protection segment. The
year ended December 31, 2020 includes a loss of $(53) million and a gain of $27 million relating to the expected sale of the La Porte site, for which the
company signed an agreement in 2020, and the sale of a business in Asia Pacific in the crop protection segment, respectively.
Includes net pre-tax exchange gains (losses) of $(67) million, $(82) million and $(51) million associated with the devaluation of the Argentine peso for the
years ended December 31, 2021, 2020 and 2019, respectively.
Includes non-service related components of net periodic benefit credits (costs) (interest cost, expected long-term rate of return on plan assets, amortization
of unrecognized gain (loss), amortization of prior service benefit and settlement gain (loss)).
4. Miscellaneous income (expenses) - net, includes losses from sale of receivables, tax indemnification adjustments related to changes in indemnification
balances as a result of the application of the terms of the Tax Matters Agreement between Corteva and Dow and/or DuPont, and other items. The year
ended December 31, 2021 also includes the Employee Retention Credit of $60 million pursuant to the Coronavirus Aid, Relief, and Economic Security
(“CARES”) Act as enhanced by the Consolidated Appropriations Act (“CAA”) and American Rescue Plan Act (“ARPA”), a gain froff m the remeasurement
of an equity investment of $47 million, a charge related to a contract termination with a third-party service provider of $(54) million and the 2021 officer
indemnification payment.
F-29
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
lowing tablea
The folff
summarizes the impacts of the company's foreign currency hedging program on the company's results of
operations. The company routinely uses foreign currency exchange contracts to offset its net exposures, by currency, related to
the foreign currency-denominated monetary assets and liabilities. The objective of this program is to maintain an approxi
mately
balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes on net
monetary asset positions. The hedging program gains (losses) are largely taxable (tax deductible) in the United States (U.S.),
whereas the offsetting exchange gains (losses) on the remeasurement of the net monetary asset positions are often not taxable
(tax deductible) in their local jurisdictions. The net pre-tax exchange gains (losses) are recorded in other income - net and the
related tax impact is recorded in provision for (benefit from) income taxes on continuing operations in the Consolidated
Statements of Operations.
a
(In millions)
Subsidiary Monetary Position Gain (Loss)
Pre-tax exchange gain (loss)
Local tax (expenses) benefits
Net after-tax impact from subsidiary exchange gain (loss)
Hedging Program Gain (Loss)
Pre-tax exchange gain (loss)
Tax (expenses) benefits
Net after-tax impact from hedging program exchange gain (loss)
Total Exchange Gain (Loss)
Pre-tax exchange gain (loss)
Tax (expenses) benefits
Net after-tax exchange gain (loss)
For the Year Ended December 31,
2020
2019
2021
$
$
$
$
$
$
(72) $
(30)
(102) $
18 $
(4)
14 $
(54) $
(34)
(88) $
(263) $
34
(229) $
89 $
(21)
68 $
(174) $
13
(161) $
(41)
2
(39)
(58)
13
(45)
(99)
15
(84)
Cash, cash equivalents and restricted cash equivalents
provides a reconciliation of cash and cash equivalents and restricted cash equivalents presented in the
The following tablea
Consolidated Balance Sheets to the total cash, cash equivalents and restricted cash equivalents presented in the Consolidated
Statements of Cash Flows. Corteva classifieff s restricted cash equivalents as current or noncurrent based on the naturet
of the
restrictions, which are included in other current assets and other assets, respectively, in the Consolidated Balance Sheets.
(In millions)
Cash and cash equivalents
Restricted cash equivalents
Total cash, cash equivalents and restricted cash equivalents
December 31, 2021
December 31, 2020
$
$
4,459 $
377
4,836 $
3,526
347
3,873
Restricted cash equivalents primarily relates to (i) a trust funded by EID for cash obligations under certain non-qualified benefit
and deferred compensation plans due to the Merger, which was a change in control event, and is classified as current; and (ii)
contributions to the MOU Escrow Account as further described in Note 18 - Commitments and Contingent Liabilities, to the
Consolidated Financial Statements, which is classifieff d as noncurrent.
Accounts payable
was $4,126 million and $3,615 million at December 31, 2021 and December 31, 2020, respectively.
Accounts payablea
, was $3,023 million and $2,557 million at December 31,
- trade, which is a component of accounts payablea
Accounts payablea
2021 and December 31, 2020, respectively. Accounts payablea
, was $1,103
million and $1,058 million at December 31, 2021 and December 31, 2020, respectively. No other components of accounts
payablea
- other, which is a component of accounts payablea
were more than 5 percent of total current liabilities.
F-30
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 10 - INCOME TAXES
Domestic and foreign components of the income (loss) fromff
(benefit from) current and deferred tax expense (benefit) are shown below:
continuing operations before income taxes and the provision for
Geographic Allocation of Income (Loss) and Provision for (Benefit
from) Income Taxes
(In millions)
Income (loss) from continuing operations before income taxes
Domestic
Foreign
Income (loss) from continuing operations before income taxes
Current tax expense (benefit)
Federal
State and local
Foreign
Total current tax expense (benefit)
Deferred tax expense (benefit)
Federal
State and local
Foreign
Total deferred tax expense (benefit)
Provision for (benefit from) income taxes on continuing operations
Net income (loss) from continuing operations after taxes
For the Year Ended December 31,
2020
2019
2021
$
$
$
$
$
$
$
941 $
1,405
2,346 $
(13) $
6
329
322 $
164 $
55
(17)
202 $
524
1,822 $
(83) $
758
675 $
28 $
9
222
259 $
(116) $
27
(251)
(340) $
(81)
756 $
(1,352)
1,036
(316)
(11)
1
317
307
(392)
156
(117)
(353)
(46)
(270)
The effective income tax rate appli
the statutory U.S. federal income tax rate due to the factors listed in the following tabla e:
cablea
to income (loss) from continuing operations before income taxes was different from
a
Reconciliation to U.S. Statutory Rate
Statutory U.S. federal income tax rate
Effective tax rates on international operations - net 1
Acquisitions, divestitures and ownership restructuring activities 2
U.S. research and development credit
Exchange gains/losses 3
State and local incomes taxes - net
Impact of Swiss Tax Reform4
Excess tax benefits/deficiencies from stock compensation
Tax settlements and expiration of statutet
Other - net
Effective tax rate on income fromff
continuing operations
of limitations
For the Year Ended December 31,
2020
2019
2021
21.0 %
(2.5)
(0.1)
(2.4)
1.9
2.1
0.2
(0.2)
—
2.3
22.3 %
21.0 %
(13.9)
(0.3)
(2.9)
3.5
4.0
(27.0)
1.0
0.4
2.2
(12.0)%
21.0 %
(18.4)
(10.7)
7.0
(1.8)
3.2
11.9
(0.6)
3.9
(0.9)
14.6 %
1.
2.
3.
4.
Includes the effects of local and U.S. taxes related to earnings of non-U.S. subsidiaries, changes in the amount of unrecognized tax benefits associated
with these earnings, losses at non-U.S. subsidiaries without local tax benefits due to valuation allowances, and other permanent differences between tax
and U.S. GAAP results. Includes a tax benefit of $(51) million for the year ended December 31, 2020, related to a returnt
to accrual adjustment associated
with an elective change in accounting method for the 2019 tax year impact of foreign tax provisions.
See Notes 4 - Common Control Business Combination, and Note 5 - Divestitures and Other Transactions, to the Consolidated Financial Statements, for
additional information.
Principally reflects the impact of foreign exchange gains and losses on net monetary assets for which no corresponding tax impact is realized. Further
information about the company's foreign currency hedging program is included in Note 9 - Supplementary Information, and Note 22 - Financial
Instruments, under the heading Foreign Currency Risk.
Reflects tax benefits of $(182) million primarily driven by the recognition of an elective cantonal component of the recent enactment of the Federal Act
on Tax Reform and AHV Financing ("Swiss Tax Reform") for the year ended December 31, 2020. Reflects tax benefits of $(38) million associated with
the enactment of the Federal Act on Tax Reform and AHV Financing ("Swiss Tax Reform"), for the year ended December 31, 2019.
F-31
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Significant components of our net deferred tax asset (liability) were attributable to:
iabilities
Assets
Deferred Tax Balances at December 31,
(In millions)
11
Property11
Tax loss and credit carryforwards2,3
Accrued employee benefits
Other accruals and reserves1
Intangibles
Inventory
Research and development capita
Investments
alization
Unrealized exchange gains/losses
Other – net
Subtotal
Valuation allowances3
Total
Net Deferred Tax Asset (Liability)
tt
Assets
2021
L
— $
$
464
904
309
—
153
224
36
—
105
2,195 $
(366)
1,829 $
(782)
$
$
$
341 $
—
—
—
2,260
—
—
—
10
—
2,611 $
—
2,611 $
$
2020
— $
Liabilities
297
—
—
—
2,418
—
—
—
497
1,415
365
—
127
186
56
2
91
2,739 $
(453)
2,286 $
(429)
—
—
2,715
—
2,715
1.
2.
3.
Prior year classifications in property and other accruals and reserves have been adjusted from their previous presentation. Adjustments did not impact the
amount of the net deferred tax asset (liability) recorded in the Consolidated Balance Sheets.
Primarily related to the realization of recorded tax benefits on tax loss and credit carryforwards from operations in the United States, Brazil, and Spain.
In connection with the company's 2021 internal legal entity restructuring, the company reduced various state net operating loss carryforwards and
corresponding full valuation allowances by $61 million. There was no impact on the statement of operations. During the year ended December 31, 2020,
the company established a $19 million state tax valuation allowance in the U.S. based on a change in judgement about the realizability of a deferred tax
asset.
Details of the company’s operating loss and tax credit carryforwards are shown in the folff
lowing tabla e:
Operating Loss and Tax Credit Carryforwards
(In millions)
Operating loss carryforwards
Expire within 5 years
Expire afteff
r 5 years or indefinite expiration
Total operating loss carryforwards
Tax credit carryforwards
Expire within 5 years
Expire afteff
r 5 years or indefinite expiration
Total tax credit carryforwards
Total Operating Loss and Tax Credit Carryforwards
Defee rred TaxTT Asset
2021
2020
$
$
$
$
$
123 $
210
333 $
14 $
117
131 $
464 $
99
343
442
14
41
55
497
F-32
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
Total Gross Unrecognized Tax Benefits
prior years
prior years
(In millions)
Total unrecognized tax benefits as of beginning of period
Decreases related to positions taken on items fromff
Increases related to positions taken on items fromff
Increases related to positions taken in the current year
Settlement of uncertain tax positions with tax authorities
Impact of Internal Reorganizations
Decreases due to expiration of statutet
Exchange (gain) loss
Total unrecognized tax benefits as of end of period
Total unrecognized tax benefits that, if recognized, would impact the
effective tax rate
Total amount of interest and penalties (benefits) recognized in provision for
(benefit from) income taxes on continuing operations
Total accrual forff
benefits at end of period
interest and penalties associated with unrecognized tax
s of limitations
For the Year Ended December 31,
2019
2020
2021
$
$
$
$
$
395 $
(7)
13
9
(17)
—
(16)
—
377 $
157 $
1 $
11 $
426 $
(14)
5
6
(18)
—
(7)
(3)
395 $
156 $
(2) $
18 $
749
(167)
77
54
(9)
(278)
—
—
426
188
(4)
24
t
in the various national, state and local income taxing jurisdictions in which
Each year the company files hundreds of tax returns
ct to examination and possible challenge by the tax authorities. Positions challenged by
it operates. These tax returns are subjeu
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. It is reasonably possible that changes to the company’s global unrecognized tax benefits could be significant; however,
due to the uncertainty regarding the timing of completion of audits and possible outcomes, a current estimate of the range of
increases or decreases that may occur within the next twelve months cannot be made. As of December 31, 2021, the company
gn taxing authority, partially as a prerequisite to petition the
has made advance deposits of approxi
ff
court related to an open tax examination. These payments are accounted forff
as a prepaid asset, included in other assets in the
Consolidated Balance Sheets.
mately $102 million to a forei
a
Tax years that remain subject to examination for the company’s major tax jurisdictions are shown below:
Tax Years Subject to Examination by Major Tax Jurisdiction at December 31, 2021
Jurisdiction
Argentina
Brazil
Canada
China
France
India
Italy
Switzerland
United States:
Federal income tax
State and local income tax
Earliest
Open YeaYY r
2015
2014
2012
2014
2019
2015
2016
2016
2012
2008
Undistributed earnings of foreign subsidiaries and related companies that are deemed to be indefinitely invested amounted to
non-U.S. subsidiaries are not expected to cause a significant
$3,681 million at December 31, 2021. Distributions of profits fromff
incremental U.S. tax impact in the future; however, those distributions may still be subjeu
ct to certain taxes upon repatriation,
primarily where foreign withholding taxes apply. The company is asserting indefinite reinvestment related to certain
investments in forei
gn subsidiaries. Determination of the amount of unrecognized deferred tax liabia lity related to indefinitely
reinvested profits is not feasible primarily due to our legal entity structuret
and the complexity of U.S. and local tax laws.
ff
For periods between the Merger Effectiveness Time and the Corteva Distribution, Corteva and its subsidiaries were included in
Generally, the consolidated tax liability of the
DowDuPont's consolidated federal income tax group and consolidated tax return.
t
F-33
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
DowDuPont U.S. tax group for each year was apportioned among the members of the consolidated group based on each
member’s separate taxable income. Corteva, DuPont and Dow intend that to the extent Federal and/or State corporate income
tax liabia lities are reduced through the utilization of tax attributes of the other, settlement of any receivable and payablea
generated from the use of the other party’s sub-group attributes will be in accordance with a tax sharing agreement and/or tax
matters agreement. See Note 5 - Divestitures and Other Transactions, to the Consolidated Financial Statements for furff
ther
information related to indemnifications between Corteva, Dow and DuPont.
F-34
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 11 - EARNINGS PER SHARE OF COMMON STOCK
On June 1, 2019, the date of the Corteva Distribution, 748,815,000 shares of the company’s common stock were distributed to
DowDuPont shareholders of record as of May 24, 2019.
The following tablea
s provide earnings per share calculations for the periods indicated below:
Net Income (Loss) for Earnings Per Share Calculations - Basic and
Diluted
(In millions)
Income (loss) from continuing operations after income taxes
Net income (loss) attributable to continuing operations noncontrolling
interests
Income (loss) from continuing operations attributablea
stockholders
to Corteva common
(Loss) income from discontinued operations, net of tax
Net income (loss) attributablea
interests
(Loss) income from discontinued operations attributablea
common stockholders
Net income (loss) attributablea
to common stockholders
to Corteva
to discontinued operations noncontrolling
Earnings (Loss) Per Share Calculations - Basic
(Dollars per share)
Earnings (loss) per share of common stock fromff
(Loss) earnings per share of common stock fromff
continuing operations
discontinued operations
Earnings (loss) per share of common stock
Earnings (Loss) Per Share Calculations - Diluted
(Dollars per share)
Earnings (loss) per share of common stock fromff
(Loss) earnings per share of common stock fromff
continuing operations
discontinued operations
Earnings (loss) per share of common stock
Share Count Information
(Shares in millions)
Weighted-average common shares - basic1
Plus dilutive effecff
Weighted-average common shares - diluted
t of equity compensation plans2
Potential shares of common stock excluded fromff
EPS calculations3
For the Year Ended December 31,
2020
2019
2021
$
1,822 $
756 $
(270)
$
$
$
$
$
10
1,812
(53)
—
(53)
1,759 $
20
736
(55)
—
(55)
681 $
13
(283)
(671)
5
(676)
(959)
For the Year Ended December 31,
2020
2019
2021
2.46 $
(0.07)
2.39 $
0.98 $
(0.07)
0.91 $
(0.38)
(0.90)
(1.28)
For the Year Ended December 31,
2020
2019
2021
2.44 $
(0.07)
2.37 $
0.98 $
(0.07)
0.91 $
(0.38)
(0.90)
(1.28)
For the Year Ended December 31,
2021
2020
2019
735.9
5.7
741.6
2.8
748.7
2.5
751.2
9.4
749.5
—
749.5
14.4
1. Share amounts for all periods prior to the Corteva Distribution were based on 748.8 million shares of Corteva, Inc. common stock distributed to holders of
DowDuPont's common stock on June 1, 2019, plus 0.6 million of additional shares in which accelerated vesting conditions have been met.
2. Diluted earnings (loss) per share considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the
potential common shares would have an anti-dilutive effect.
3. These outstanding potential shares of common stock relating to stock options, restricted stock units and performance-based restricted stock units were
excluded from the calculation of diluted earnings (loss) per share because (i) the effect of including stock options and restricted stock units would have been
anti-dilutive; and (ii) the performance metrics have not yet been achieved forff
the outstanding potential shares relating to performance-based restricted stock
units, which are deemed to be contingently issuable.
F-35
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 12 - ACCOUNTS AND NOTES RECEIVABLE - NET
(In millions)
Accounts receivable – trade1
Notes receivable – trade1,2
Other3
4,926
Total accounts and notes receivabla e - net
1. Accounts receivable – trade and notes receivable – trade are net of allowances of $210 million and $208 million at December 31, 2021 and December 31,
2020, respectively. Allowances are equal to the estimated uncollectible amounts and are based on the expected credit losses and were developed using a
loss-rate method.
3,441 $
4,811 $
1,009
1,250
3,754
163
120
$
$
December 31,
2021
December 31,
2020
2. Notes receivable – trade primarily consists of receivables for deferred payment loan programs for the sale of seed products to customers. These loans have
terms of one year or less and are primarily concentrated in North America. The company maintains a rigid pre-approval process for extending credit to
customers in order to manage overall risk and exposure associated with credit losses. As of December 31, 2021 and 2020, there were no significant
impairments related to current loan agreements.
3. Other includes receivables in relation to indemnification assets, value added tax, general sales tax and other taxes. No individual group represents more
than 10 percent of total receivables. In addition, Other includes amounts due from nonconsolidated affiliates of $104 million and $106 million as of
December 31, 2021 and 2020, respectively.
Accounts and notes receivable are carried at the expected amount to be collected, which approxi
r value. The company
establishes the allowance for doubtful receivables using a loss-rate method where the loss rate is developed using past events,
asts that affect the collectabila
historical experience, current conditions and forec
ity of the financial assets.
mates faiff
a
ff
summarizes changes in the allowance for doubtful receivablea
s forff
the year ended December 31, 2021 and
The following tablea
2020, respectively:
(In millions)
2020
Balance at December 31, 2019
Net provision for credit losses1
Write-offs charged against allowance / other1
Balance at December 31, 2020
2021
Balance at December 31, 2020
Net provision for credit losses
Write-offs charged against allowance / other
Balance at December 31, 2021
$
$
$
$
174
52
(18)
208
208
1
1
210
1. Prior year classifications in the changes in the allowance for doubtful receivables have been adjusted from their previous presentation. Adjustments did not
impact the amount of the provision or the allowance for doubtful receivables recorded in the Consolidated Statements of Operations or the Consolidated
Balance Sheets.
The company enters into various factoring agreements with third-party finaff
ons to sell its trade receivables under
both recourse and non-recourse agreements in exchange for cash proceeds. These financing arrangements result in a transfer of
the company's receivables and risks to the third-party. As these transfers qualify as true sales under the applicablea
accounting
transfer, and the company receives a
guidance, the receivables are derecognized fromff
payment for the receivables fromff
ly agreed upon time period. For arrangements involving an
t
element of recourse, which is typically provided through a guarantee of accounts in the event of customer default, the guarantee
obligation is measured using market data fromff
similar transactions and reported as a current liability in the Consolidated
Balance Sheets.
the Consolidated Balance Sheets uponu
the third-party within a mutual
ncial instituti
t
Trade receivables sold under these agreements were $272 million, $255 million, and $328 million for the years ended
December 31, 2021, 2020 and 2019, respectively. The trade receivablea
s sold that remained outstanding under these agreements
which include an element of recourse as of December 31, 2021 and December 31, 2020 were $166 million and $157 million,
respectively. The net proceeds received were included in cash provided by (used for) operating activities in the Consolidated
F-36
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
ff
Statements of Cash Flows. The difference
s sold and the sum of the cash
received is recorded as a loss on sale of receivables in other income - net in the Consolidated Statements of Operations. The loss
on sale of receivables were $54 million, $55 million, and $44 million for the years ended December 31, 2021, 2020 and 2019,
respectively. See Note 18 - Commitments and Contingent Liabilities, to the Consolidated Financial Statements, for additional
information on the company’s guarantees.
between the carrying amount of the trade receivablea
NOTE 13 - INVENTORIES
(In millions)
Finished products
Semi-finished products
Raw materials and supplies
Total inventories
December 31, 2021
December 31, 2020
$
$
2,497 $
2,076
607
5,180 $
2,584
1,813
485
4,882
As a result of the Merger, a faiff
amortized, as of December 31, 2019. During the year ended December 31, 2019, the company recognized $272 million in cost
of goods sold in the Consolidated Statements of Operations related to the amortization of the step-up.
r value step-up of $2,297 million was recorded for inventories. This fair value step-up was fully
ff
NOTE 14 - PROPERTY, PLANT AND EQUIPMENT
(In millions)
Land and land improvements
Buildings
Machinery and equipment
Construction in progress
Total property, plant and equipment
Accumulated depreciation
Total property, plant and equipment - net
December 31, 2021
December 31, 2020
$
$
420 $
1,487
5,729
728
8,364
(4,035)
4,329 $
451
1,525
5,556
721
8,253
(3,857)
4,396
Buildings, machinery and equipment and land improvements are depreciated over useful lives on a straight-line basis ranging
alizable costs associated with computer software for internal use are amortized on a straight-line basis
from 2 to 25 years. Capita
over 2 to 7 years.
(In millions)
Depreciation expense
For the Year Ended December 31,
2020
2019
2021
$
521 $
495 $
525
F-37
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 15 - GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The following tablea
2021 and 2020, respectively.
summarizes changes in the carryirr ng amount of goodwill by segment for the years ended December 31,
(In millions)
Balance as of December 31, 2019
Currency translation adjustment
Other goodwill adjustments and acquisitions1
Balance as of December 31, 2020
Currency translation adjustment
Other goodwill adjustments and acquisitions2
Balance as of December 31, 2021
Crop Protection
$
4,743 $
Seed
Total
5,486 $
10,229
31
(29)
4,745 $
(73)
—
4,672 $
38
—
5,524 $
(87)
(2)
5,435 $
69
(29)
10,269
(160)
(2)
10,107
$
$
1. Primarily consists of the goodwill included in the sale of businesses in the crop protection segment.
2. Consists of the goodwill included in the sale of a business in the seed segment.
The company tests goodwill for impairment annually (during the fourth quarter), or more frequently when events or changes in
circumstances indicate it is more likely than not that the fair value of a reporting unit has declined below its carrying value. As
mentioned in Note 2 - Summary of Significant Accounting Policies, as a result of the Internal Reorganizations and Business
Realignments, the company changed its reportable segments to seed and crop protection to reflect the manner in which the
company's chief operating decision maker assesses performance and allocates resources. The change in reportable segments
resulted in changes to the company's reporting units forff
goodwill impairment testing to align with the level at which discrete
financial information is availablea
for review by management. The company’s reporting units include seed, crop protection and
digital.
During the second quarter of 2020, the company determined a triggering event had occurred as a result of changes in the
company's long-term projections driven largely by the impacts of the COVID-19 pandemic on the mid-term forecasted cash
ed by
flows of the business, including, but not limited to currency fluctuations, expectations of future planted area (as influenc
consumer demand, ethanol markets and government policies and regulations) and relative commodity prices, which required an
interim impairment assessment for its seed and crop protection reporting units and trade name indefinite lived intangible asset.
Based on the impairment analysis performed
over the company’s trade name indefinite lived intangible asset it was determined
that the fair value approximated the carrying value, and no impairment charge was necessary.
ff
ff
The company performed quantitative testing on all of its reporting units and determined that no goodwill impairments existed in
2021 and 2020. As of December 31, 2021, accumulated impairment losses on goodwill were $4,503 million.
F-38
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Other Intangible Assets
The gross carrying amounts and accumulated amortization of other intangible assets by majoa r class are as follow
ff
s:
(In millions)
December 31, 2021
December 31, 2020
Gross
Accumulated
Amortization
Net
Gross
Accumulated
Amortization
Net
Intangible assets subject to
amortization (Definite-lived):
Germplasm
Customer-related
Developed technology
Trademarks/trade names1
Favorable supply contracts
Other2
Total other intangible assets with finite
lives
Intangible assets not subject to
amortization (Indefinite-lived):
IPR&D
Total other intangible assets
Total
$
6,265 $
1,953
(571) $
(487)
5,694 $
1,466
6,265 $
1,984
1,485
2,012
475
405
(679)
(172)
(396)
(256)
806
1,840
79
149
1,451
2,019
475
405
(317) $
(380)
(525)
(99)
(302)
(239)
5,948
1,604
926
1,920
173
166
12,595
(2,561)
10,034
12,599
(1,862)
10,737
10
10
—
—
10
10
10
10
—
—
10
10
$
12,605 $
(2,561) $
10,044 $
12,609 $
(1,862) $
10,747
1. Beginning on October 1, 2020, the company changed its indefinite life assertion of its trade name asset to definite lived with a useful life of 25 years. This
change is the result of the launch of BrevantTM seed in the retail channel in the U.S. Prior to changing the useful life of the trade name asset, the company
tested the asset for impairment under ASC 350 - Intangibles, Goodwill and Other, concluding the asset was not impaired.
2. Primarily consists of sales and farmer networks, marketing and manufacturing alliances and noncompetition agreements.
rr
During the third quarter of 2019, and in connection with strategic product and portfolio reviews, the company determined that
the fair value of certain intangible assets classified as developed technology, other intangible assets and IPR&D within the seed
segment that primarily relate to heritage DAS intangibles previously acquired fromff
Cooperativa Central de Pesquisa Agrícola's
value due to the company’s focus on advancing more competitive products and
("Coodetec") was less than the carrying
eliminating redundancy and complexity across the breeding programs. For IPR&D and developed technology, the company
concluded these projects were abaa ndoned. For other intangible assets, the company performed an impairment assessment using
the relief fromff
ch) using Level 3 inputs within the fair value hierarchy. The
significant assumptim ons used in the calculation included projected revenue, royalty rates and discount rates. These significant
assumptim ons involve management judgment and estimates relating to future operating performance and economic conditions
that may differ fromff
As a result, the company recorded a pre-tax, non-cash intangible asset impairment
charge of $54 million ($41 million after-tax), which is reflected in restructuring and asset related charges - net, in the company's
Consolidated Statements of Operations for the year ended December 31, 2019.
royalty method (a form of the income approa
actual cash flows.
a
ff
There were no indicators of impairment for the company’s other intangible assets that suggested that the fair value was less than
its carrying value at December 31, 2019, except for IPR&D. As a result of the company’s decision, during the fourth quarter of
f the Enlist E3TM trait platform in the company’s soybean portfolio mix across all brands over
2019, to accelerate the ramp up ou
the subsequent five years with minimal use of the Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® traits thereafter for
the remainder of the Roundup Ready 2 License Agreement, the company determined that certain IPR&D projects associated
with Roundup Ready 2 Xtend® were not recoverablea
and were impaired. These IPR&D projects were either abandoned or tested
for impairment using the relief fromff
ch) using Level 3 inputs within the fair value
royalty method calculation included projected revenue, royalty rates and
hierarchy. The key assumptions used in the relief fromff
discount rates. These key assumptions involve management judgment and estimates relating to future operating performance
and economic conditions that may differ fromff
As a result, the company recorded a pre-tax, non-cash
ff
intangible asset charge of $90 million ($69 million after-tax), which is reflected in restructuring and asset related charges - net,
in the company's Consolidated Statements of Operations for the year ended December 31, 2019.
royalty method (a form of the income approa
actual cash flows.
a
The aggregate pre-tax amortization expense from continuing operations for definite-lived intangible assets was $722 million,
$682 million, and $475 million, for the year ended December 31, 2021, December 31, 2020, and December 31, 2019,
respectively.
F-39
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Total estimated amortization expense for the next five fiscal years is as follows:
(In millions)
2022
2023
2024
2025
2026
NOTE 16 - LEASES
$
$
$
$
$
700
620
606
569
558
The company has operating and finance leases for real estate, transportation, certain machinery and equipment, and information
technology assets. The company’s leases have remaining lease terms of 1 to 50 years. For purposes of calculating operating
lease liabilities, lease terms may be deemed to include options to extend the lease when it is reasonably certain that the
company will exercise that option. Some leasing arrangements require variable payments that are dependent on usage, output,
or may vary for other reasons, such as insurance and tax payments. The variable lease payments are not presented as part of the
initial ROU asset or lease liabia lity.
Certain of the company's leases include residual value guarantees. These residual value guarantees are based on a percentage of
the lessor's asset acquisition price and the amount of such guarantee declines over the course of the lease term. The portion of
residual value guarantees that are probable of payment are included in the related lease liability. At December 31, 2021, the
company has future maximum payments forff
residual value guarantees in operating leases of $193 million with final expirations
through 2028. The company's lease agreements do not contain any material restrictive covenants. The components of lease cost
are as follows:
(In millions)
Operating lease cost
Finance lease cost
Amortization of right-of-use assets
Interest on lease liabilities
Total finance lease cost
Short-term lease cost
Variablea
Total lease cost
lease cost
For the Year Ended December 31,
2021
2020
$
$
158 $
1
—
1
14
8
181 $
197
2
—
2
14
7
220
New leases entered into during the years ended December 31, 2021 and December 31, 2020 were not material, on an individual
basis.
Supplemental cash flowff
information related to leases is as follows:
(In millions)
Cash paid for amounts included in the measurement of lease liabila
ities:
Operating cash outflows from operating leases
Operating cash outflows from finance leases
Financing cash outflows from finance leases
For the Year Ended December 31,
2021
2020
$
$
$
169 $
— $
1 $
202
—
1
F-40
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Supplemental balance sheet information related to leases is as follows:
(In millions)
Operating Leases
Operating lease right-of-use assets1
Current operating lease liabila
Noncurrent operating lease liabilities3
ities2
Total operating lease liabilities
Finance Leases
Property, plant, and equipment, gross
Accumulated depreciation
Property, plant, and equipment, net
Short-term borrowings and finance lease obligations
Long-Term Debt
Total finance lease liabilities
1.
2.
3.
Included in other assets in the Consolidated Balance Sheet.
Included in accrued and other current liabilities in the Consolidated Balance Sheet.
Included in other noncurrent obligations in the Consolidated Balance Sheet.
December 31, 2021
December 31, 2020
$
$
$
$
458 $
121
338
459 $
15 $
(11)
4
1
3
4 $
521
138
391
529
15
(10)
5
1
4
5
The company utilizes the incremental borrowing rate in determining the present value of lease payments unless the implicit rate
is readily determinable.
Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Operating leases
Financing leases
Weighted average discount rate
Operating leases
Financing leases
Maturities of lease liabila
ities are as follows:
Maturity of Lease Liabilities at December 31, 2021
(In millions)
2022
2023
2024
2025
2026
2027 and thereafter
Total lease payments
Less: Interest
Present value of lease liabila
ities
December 31, 2021
December 31, 2020
7.41
3.36
2.75 %
3.29 %
7.71
4.26
3.06 %
3.28 %
Operating
Leases
Financing
Leases
$
$
132 $
94
71
60
49
106
512
53
459 $
1
1
1
1
—
—
4
—
4
F-41
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Maturity of Lease Liabilities at December 31, 2020
(In millions)
2021
2022
2023
2024
2025
2026 and thereafter
Total lease payments
Less: Interest
Present value of lease liabila
ities
Operating
Leases
Financing
Leases
$
$
152 $
114
83
61
51
137
598
69
529 $
1
1
1
1
1
—
5
—
5
NOTE 17 - LONG-TERM DEBT AND AVAILABLE CREDIT FACILITIES
Long-Term Debt
(In millions)
:
Promissory notes and debentures
t
Maturing in 2025
Maturing in 2030
Other loans:
Foreign currency loans, various rates and maturities
Medium-term notes, varying maturities through 2041
Finance lease obligations
Less: Unamortized debt discount and issuance costs
Less: Long-term debt due within one year
December 31, 2021
December 31, 2020
Amount
Weighte
d
i
Average Rate
Amount
Weighte
d
i
Average Rate
1.70 %
2.30 %
— %
500
500
1
107
3
10
1
500
500
1
109
4
11
1
1.70 %
2.30 %
— %
Total
$
1,100
$
1,102
Principal payments of long-term debt are $500 million forff
long-term debt maturing in 2025.
r value of the company's long-term borrowings, was determined using Level 2 inputs within the fair value
The estimated faiff
hierarchy, as described in Note 2 - Summary of Significant Accounting Policies. 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 maturi
ties, the fair value of the
company's long-term borrowings, not including long-term debt due within one year, was $1,120 million and $1,166 million at
December 31, 2021 and 2020, respectively.
t
ff
Debt Offering
In May 2020, EID issued $500 million of 1.70 percent Senior Notes dued
due 2030 (the May 2020 Debt Offering). The proceeds of this offering are intended to be used for general corporate purposes.
2025 and $500 million of 2.30 percent Senior Notes
Available Committed Credit Facilities
The following tablea
summarizes the company's credit facff
ilities:
Committed and Available Credit Facilities at December 31, 2021
(In millions)
Revolving Credit Facility
Revolving Credit Facility
Effeff ctive Date
Committed
Credit
Credit
Available
Maturity Dtt
ate
Interest
May 2019 $
3,000 $
May 2019
3,000
3,000
3,000
6,000
May 2024
Floating Rate
May 2023
Floating Rate
Total Committed and Available Credit Facilities
$
6,000 $
F-42
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Revolving CredCC it Facilities
In November 2018, EID entered into a $3.0 billion, 5 year revolving credit facility and a $3.0 billion, 3-year revolving credit
facility (the "Revolving Credit Facilities”). The Revolving Credit Facilities became effective May 2019. Corteva, Inc. became a
party at the time of the Corteva Distribution. In May 2021, the company entered into an amendment that extended the maturity
May 2022 to May 2023. Other than the change in maturity date, there were no
date of the 3-year revolving credit facility fromff
material modifications to the terms of the credit facff
to the
ility. The Revolving Credit Facilities may serve as a substitutet
general corporate purposes including, but not
company's commercial paper program, and can be used from time to time, forff
al needs. The Revolving Credit Facilities contain customary representations
limited to, the funding of seasonal working capita
and warranties, affirmative and negative covenants and events of default that are typical forff
companies with similar credit
ratings. Additionally, the Revolving Credit Facilities contain a finaff
ncial covenant requiring that the ratio of total indebtedness to
total capita
alization for Corteva and its consolidated subsidiaries not exceed 0.60.
In March 2020, the company drew down $500 million under the $3.0 billion 3-year revolving credit facility as a result of the
volatility and increased borrowing costs of commercial paper resulting fromff
the unstable market conditions caused by the
COVID-19 pandemic and repaid that borrowing in full in June 2020. There were no additional borrowings and the unused
commitments under the 3-year revolving credit facff
ility were $3.0 billion as of December 31, 2021.
Debt Redemptions/Rss epayments
On March 22, 2019, EID issued notices of redemption in full of all of its outstanding notes (the “Make Whole Notes”) listed in
the tablea
below:
(in millions)
4.625% Notes due 2020
3.625% Notes due 2021
2021
4.250% Notes dued
2.800% Notes dued
6.500% Debentures
t
2023
due 2028
5.600% Senior Notes dued
4.900% Notes dued
2041
2036
4.150% Notes dued
Total
2043
Amount
474
296
163
381
57
42
48
69
1,530
$
$
The Make Whole Notes were redeemed on April 22, 2019 at the make-whole redemption prices set forff
th in the respective Make
Whole Notes. On and after the date of redemption, the Make Whole Notes were no longer deemed outstanding, interest on the
Make Whole Notes ceased to accrue and all rights of the holders of the Make Whole Notes were terminated.
In March 2016, EID entered into a credit agreement that provided forff
ility in the
aggregate principal amount of $4.5 billion (as amended, from time to time, the "Term Loan Facility") under which EID could
subsequent borrowings. On May
make up to seven term loan borrowings and amounts repaid or prepaid were not available forff
2, 2019, EID terminated its Term Loan Facility and repaid the aggregate outstanding principal amount of $3 billion plus
accrued and unpaid interest through and including May 1, 2019.
a 3-year, senior unsecured term loan facff
In connection with the repayment of the Make Whole Notes and the Term Loan Facility, EID paid a total of $4.6 billion in the
second quarter 2019, which included breakage fees and accrued and unpaid interest on the Make Whole Notes and Term Loan
Facility. The repayment of the Make Whole Notes and Term Loan Facility was funded with cash from operations and a
contribution from DowDuPont.
On May 7, 2019, DowDuPont publicly announced the record date in connection with the Corteva Distribution. In connection
with such announcement, EID was required to redeem $1.25 billion aggregate principal amount of 2.20% Notes due 2020 and
$750 million aggregate principal amount of Floating Rate Notes due 2020 (collectively, the Special Mandatory Redemption, or
“SMR Notes”) setting forth the date of redemption of the SMR Notes. On May 17, 2019 EID redeemed and paid a total of $2
billion, which included accrued and unpaid interest on the SMR Notes. EID funded the payment with a contribution from
DowDuPont. Following the redemption, the SMR Notes are no longer outstanding and no longer bear interest, and all rights of
the holders of the SMR Notes have terminated.
F-43
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
EID recorded a loss on the early extinguishment of debt of $13 million for the year ended December 31, 2019, related to the
difference between the redemption price and the par value of the Make Whole Notes, the Term Loan Facility, and the SMR
Notes, partially offset by the write-off of unamortized step-up related to the fair value step-up of EID’s debt.
Uncommitted Credit Facilities and Outstanding Letters of Credit
Unused bank credit lines on uncommitted credit facilities were $389 million at December 31, 2021. These lines are available to
short-term liquidity needs and general corporate purposes, including letters of credit. Outstanding letters of credit were
u
support
$127 million at December 31, 2021. These letters of credit support commitments made in the ordinary course of business.
NOTE 18 - COMMITMENTS AND CONTINGENT LIABILITIES
t
Guarantees
Indemnificff ations
In connection with acquisitions and divestitures,
the company has indemnified respective parties against certain liabilities that
may arise in connection with these transactions and business activities prior to the completion of the transactions. The term of
these indemnifications, which typically pertain to environmental, tax and product liabilities, is generally indefinite. In addition,
nted directors and officers to the fullest extent permitted by Delaware law,
the company indemnifies its duly elected or appoi
the company, such as adverse judgments relating to litigation matters.
against liabilities incurred as a result of their activities forff
If the indemnified party were to incur a liabia lity or have a liabila
ity increase as a result of a successful claim, pursuant to the
terms of the indemnification, the company would be required to reimburse the indemnified party. The maximum amount of
potential future payments is generally unlimited. See below for additional
information relating to the indemnification
obligations under the Corteva Separation Agreement and the Chemours Separation Agreement.
a
t
Third Parties
Obligations for Customers and Other
The company has directly guaranteed various debt obligations under agreements with third parties related to customers and
other third parties. At December 31, 2021 and December 31, 2020, the company had directly guaranteed $105 million and
$94 million, respectively, of such obligations. These amounts represent the maximum potential amount of future (undiscounted)
payments that the company could be required to make under the guarantees in the event of default by the guaranteed party. All
of the maximum future payments at December 31, 2021, had terms less than one year. The maximum future payments include
$21 million and $17 million of guarantees related to the various factoring agreements that the company enters into with third-
party finaff
ons to sell its trade receivables at December 31, 2021 and December 31, 2020, respectively. See Note 12
- Accounts and Notes Receivable - Net, to the Consolidated Financial Statements, for additional information.
ncial instituti
t
The maximum future payments also include agreements with lenders to establia
sh programs that provide financing for select
customers. The terms of the guarantees are equivalent to the terms of the customer loans that are primarily made to finance
customer invoices. The total amounts owed from customers to the lenders relating to these agreements was $15 million and $16
million at December 31, 2021 and December 31, 2020, respectively.
The company assesses the payment/ptt erformance risk by assigning default rates based on the duration of the guarantees. These
default rates are assigned based on the external credit rating of the counterparty or through internal credit analysis and historical
default history for counterparties that do not have published credit ratings. For counterparties without an external rating or
available credit history, a cumulative average default rate is used.
Indemnifii cations under Separation Agreements
The company has entered into various agreements where the company is indemnified for certain liabilities. In connection with
the recognition of liabilities related to these matters, the company records an indemnification asset when recovery is deemed
probable. See Note 5 - Divestitures and Other Transactions,
additional
information related to indemnifications between Corteva, DuPont and Dow.
to the Consolidated Financial Statements, forff
Chemours/Performance Chemicals
Pursuant to the Chemours Separation Agreement resulting fromff
f the Perforff mance Chemicals segment froff m
Historical DuPont, Chemours indemnifies the company against certain litigation, environmental, workers' compensation and
other liabia lities that arose prior to the distribution. The term of this indemnification is generally indefinite and includes defense
costs and expenses, as well as monetary and non-monetary settlements and judgments. In connection with the recognition of
liabilities related to these matters, the company records an indemnification asset when recovery is deemed probable.
the 2015 spin-off off
In 2017, the Chemours Separation Agreement was amended to provide for a limited sharing of potential future liabilities related
-year period that began on
to alleged historical releases of perfluorooctanoic acids and its ammonium salts (“PFOA”) forff
a fiveff
F-44
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
July 6, 2017. In addition, in 2017, Chemours and EID settled multi-district litigation in the U.S. District Court for the Southern
District of Ohio (“Ohio MDL”), resolving claims of about 3,550 plaintiffs alleging injury from exposure to PFOA in drinking
water as a result of the historical manufacture or use of PFOA at the Washington Works plant outside Parkersburg, West
Virginia. This plant was previously owned and/or operated by the perforff mance chemicals segment of EID and is now owned
and/or operated by Chemours.
On May 13, 2019, Chemours filed suit in the Delaware Court of Chancery against DuPont, EID, and Corteva, seeking, among
other things, to limit its responsibility for the litigation and environmental liabia lities allocated to and assumed by Chemours
under the Chemours Separation Agreement (the “Delaware Litigation”). On March 30, 2020, the Court of Chancery granted a
motion to dismiss. On December 15, 2020, the Delaware Supreme Court affirmed the judgment of the Court of Chancery.
Meanwhile, a confidential arbitration process regarding the same and other claims has proceeded (the “Pending Arbit
ration”).
r
On January 22, 2021, Chemours, DuPont, Corteva and EID entered into a binding memorandum of understanding containing a
settlement to resolve legal disputes originating from the Delaware Litigation and Pending Arbitration, and to establia
sh a cost
sharing arrangement and escrow account to be used to support and manage potential future legacy per- and polyfluoroalkyl
substances (“PFAS”) liabilities arising out of pre-July 1, 2015 conduct (the “MOU”). The MOU replaces the 2017 amendment
to the Chemours Separation Agreement. According to the terms of the cost sharing arrangement within the MOU, Corteva and
DuPont together, on one hand, and Chemours, on the other hand, agreed to a 50-50 split of certain qualified expenses related to
PFAS liabilities incurred over a term not to exceed twenty years or $4 billion of qualified spend and escrow account
contributions (see below for discussion of escrow account) in the aggregate. DuPont’s and Corteva’s 50% share under the MOU
will be limited to $2 billion, including qualified expenses and escrow contributions. These expenses and escrow account
contributions will be subject to the existing Letter Agreement, under which DuPont and Corteva will each bear 50% of the first
$300 million (up to $150 million each), and thereafter DuPont bears 71% and Corteva bears the remaining 29%.
iin
dand DuPont
dand ma gnage
dorder to support
dand Corteva h l
dand ( )(2) no llater thhan Septembber 30 of ea hch
id
imilllliion iinto an escrow account
imilllliion iinto an escrow account
dand
Subject to hthe terms
ie into an escrow account. Subje
yany yyea (r (excl di
yany pote inti lal future PFAS lili biabilili ities, thhe partiies hhave lalso gagre ded to establiblia
deposit $$100
i
ie into an escrow account
deposit $$50
i
provides thha (t ( )1) no llater thhan eachh of Septe bmber 30, 2021
shalll t goge hthe dr d
hrough
bsubsequent yyear through
shalll t goge hthe dr d
In
(("MOU Escrow Account")). hThe MOU
hChemours hshallll d
ggaggreggat
hChemours hshallll d
ggaggreggat
d fdefer funding
ff
unding
DuPont and Corteva will deposit an additional $500 million pursuant to the terms of the Letter Agreement.
Dece bmber 31, 2028, hthe b lbalance of hthe escrow account (i(inclludingding iintere )st) iis lless hthan $$700
of hthe d
gtogethher
account to $$700
Septe bmber 30, 2029 pursuant to hthe escrow account
iwi hdthdrawalls from hthe MOU Escrow Account ca bn be m dad be before yyear siix, except to f
settllements iin excess of $$125
imilllliion. Sta irti gng
ppartiies’ ggaggreggate q lualifiifi ded spe dnd iin hthat partiic lula yr yea ir i gs greater thhan $$200
hthe MOU Escrow Account ca bn be u dsed to f
hsh an escrow account
dand Septe bmber 30, 2022,
imilllliion iin hthe
eposit $$100
i
ludi gng 2028,
imilllliion iin hthe
iin hthe MOU, ea hch partyy m yay bbe permiittedd to
2021). Over this period, Chemours will deposit a total of $500 million in the account and
lonally,ly, ifif on
iwillll makke 50%
deposits necessa yry to restore hthe b lbalance of thhe escrow
inci gng on
provides thhat no
lyly gagre ded upon hithi drd-partyy
lqualifiifi ded spe dnd ifif hthe
fund
d
iwi hth yyear 11, hthe amounts iin
ypayments wilill bl be m dad ie in a seriies of consec iutive annuall equal il inst lalllments comme
id
iin hthe MOU. hThe MOU
t
lual
fund mut
d
iwi hdthdrawalls can onlynly bbe madde to f
dand iincl di
eposit $$50
i
dand DuPont
ff
condi itions set f
ff
ieni hshment terms as set f
l
repl
ilwilll m kake 50% of hthe d
deposits a dnd DuPont
imilllliion, Chhemours
dand Corteva h l
yany qualilififiedd s
iwith yh year siix,
imilllliion. S huch
imilllliion. B gegi
dand Corteva
ddiAddi iti
ludi gng
inni gng
i
dpend.
fund
d
horth
horth
di
)
i
i
iDuri gng 2021, hthe compa yny cont ibribut ded iit
res itrict ded ca hsh
lvalents a dnd iis iin lcl d duded iin
i
equi
is i ini iti lal d
deposit iinto hthe MOU Escrow Account, whi hhich iis
i
lclas ifsifiiefff dd as noncurrent
hother asset
is in thhe iint
ierim C
onsoliddat ded Ballance Shheets.
li
hChemours Separa ition
After hthe term of hithis arra gngement, Chhemours’ i dindem ifinifica ition bliobliggatiions
dUnder thhe MOU,
gAgreement, w ldould contiinue
dismiss hthe
i
hChemours waiivedd s
Pending
biArbi ratr tion regarding those claims. Additionally, the parties have agreed to resolve the Ohio MDL PFOA personal
nding
injury litigation (as discussed below). The parties are expected to cooperate in good faith to enter into additional agreements
reflecting the terms set fort
subject iin ea hch case to certaiin exceptiions set out iin hthe MOU.
i
rding hthe construct of if its 2015
nged, subje
ipecififiedd cllaiims r gegarding
origi
dunder hthe origi
dand hthe partiies
h in the MOU.
hunchanged,
ransactiion,
spin-off t
lnal 2015
illwill di
ff
f
ff
During the years ended December 31, 2021 and 2020, the company recorded charges of $48 million and $65 million to (loss)
income from discontinued operations after income taxes in the Consolidated Statement of Operations, related to the MOU. The
charges recorded for the year ended December 31, 2021 primarily relate to an increase in the environmental remediation accrual
for Chemours' Fayetteville Works facility forff
estimated costs for on-site surface water and groundwater remediation to address
and abate PFAS discharges arising out of pre-July 1, 2015 conduct. The increase is the result of further detailed engineering and
design work related to Chemours’ environmental remediation activities at the site under the Consent Order between Chemours
and the North Carolina Department of Environmental Quality. The charges recorded for the year ended December 31, 2020
F-45
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
primarily related to the execution of the MOU and the settlement of the Ohio MDL PFOA personal injury litigation (as
discussed below).
g
p
Corteva Separation Agreement
On April 1, 2019, in connection with the Dow Distribution, Corteva, DuPont and Dow entered into the Corteva Separation
Agreement, the Tax Matters Agreement, the Employee Matters Agreement, and certain other agreements (collectively, the
“Corteva Separation Agreements”). The Corteva Separation Agreements allocate among Corteva, DuPont and Dow certain
liabilities and obligations among the parties and provides forff
indemnification obligation among the parties. Under the Corteva
Separation Agreements, DuPont will indemnify Corteva against certain litigation, environmental, workers' compensation and
other liabia lities that arose prior to the Corteva Distribution and (ii) Dow indemnifies Corteva against certain litigation and other
liabilities that relate to the Historical Dow business, but were transferred over as part of the common control combination with
DAS, and Corteva indemnifies DuPont and Dow for certain liabilities. The term of this indemnification is generally indefinite
with exceptions, and includes defense costs and expenses, as well as monetary and non-monetary settlements and judgments.
See Note 1 - Background and Basis of Presentation, and Note 5 - Divestitures and Other Transactions, to the Consolidated
Financial Statements, for additional information relating to the Separation.
Under the Corteva Separation Agreement, certain legacy EID liabilities from discontinued and/or divested operations and
businesses of EID (including Performance Chemicals) (a “stray liabia lity”) were allocated to Corteva or DuPont. For those stray
liabilities allocated to Corteva (which may include a specified amount of liability associated with that liabia lity), Corteva is
responsible for liabilities in an amount up to that specified amount plus an additional $200 million and, for those stray liabilities
allocated to DuPont (which may include a specified amount of liability associated with that liabia lity), DuPont is responsible for
liabilities up to a specified amount plus an additional $200 million. Once each company has met the $200 million threshold,
Corteva and DuPont will share future liabilities proportionally on the basis of 29% and 71%, respectively; provided, however,
PFAS, DuPont will manage such liabilities with Corteva and DuPont sharing the costs on a 50% - 50% basis starting
that forff
from $1 and up to $300 million (with such amount, up to $150 million, to be credited to each company’s $200 million
threshold) and once the $300 million threshold is met, then the companies will share proportionally on the basis of 29% and
71% respectively, subject to a $1 million de minimis requirement. During the second quarter of 2021, the aggregate amount of
.
the Company’s cash spent and liabilities accrued exceeded the stray liability thresholds, including PFAS, noted above
Therefore, liabia lities recognized subsequent to the second quarter of 2021 will be shared at the reduced
.
d rates noted above
a
a
Litigation
g
The company is subject to various legal proceedings, including, but not limited to, product liability, intellectual property,
antitrust, commercial, property damage, personal injury, environmental and regulatory matters arising out of the normal course
of its current businesses or legacy EID businesses unrelated to Corteva’s current businesses but allocated to Corteva as part of
the separation of Corteva from DuPont. It is not possible to predict the outcome of these various proceedings, as considerablea
uncertainty exists. The company records accruals for legal matters when the information available indicates that it is probable
that a liabia lity has been incurred and the amount of the loss can be reasonably estimated. Accruals may reflect the impact and
status of negotiations, settlements, rulings, advice from counsel and other information and events that may pertain to a
particular matter. For the litigation matters discussed below, management believes that it is reasonably possible that the
company could incur liabilities in excess of amounts accrued, the ultimate liability for which could be material to the results of
operations and the cash flows in the period recognized. However, the company is unable to estimate the possible loss beyond
amounts accrued due to various reasons, including, among others, that the underlying matters are either in early stages and/or
have significant factual issues to be resolved. In addition, even when the company believes it has substantial defenses, the
company may consider settlement of matters if it believes it is in the best interest of the company.
ww
Lawsuits
Chlorpyrifosff
As of December 31, 2021, there were pending personal injury lawsuits filed and additional asserted claims against the former
Dow Agrosciences LLC, alleging injuries related to chlorpyrifos exposure, the active ingredient in Lorsban®, an insecticide
crops. Corteva ended its production of Lorsban® in 2020.
r
field fruit
used by commercial farms forff
purchase or use by the general public, and may
Chlorpyrifos products are restricted-use pesticides, which are not available forff
only be sold to, and used by, certified appl
cator's direct supervision. These lawsuits
icators or someone under the certified appli
a
do not relate to Dursban®, a residential type chlorpyrifos product that was authorized for indoor purposes, which was
discontinued over two decades ago prior to the Merger and Corteva’s formation and Separation. Claimants allege personal
injury, including autism, developmental delays and/or decreased neurologic function, resulting from farm worker exposure and
bystander drift and in utero exposure to chlorpyrifos. Certain claimants have also put forth remediation claims due to alleged
property contamination from chlorpyrifos. Discovery is expected to continue through 2022.
, nut and vegetablea
a
F-46
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Litigation related to legacy
e
EID businesses unrelated to Corteva’s current businesses
PFOA, PFOPP
S and Other Related Liabilities
PFAS,FF
For purposes of this report, the term PFOA means collectively perfluff orooctanoic acid and its salts, including the ammonium salt
and does not distinguish between the two forms, and PFAS, including PFOA, PFOS (perfluorooctanesulfonic acid), GenX and
other perfluorinated chemicals and compounds ("PFCs").
EID is a party to various legal proceedings relating to the use of PFOA by its forme
potential liabilities would be subjeu
ct to the cost sharing arrangement under the MOU as long as it remains effective.
r Performance Chemicals segment forff which
ff
Leach Settlement and Ohio MDL Settlement
EID has residual liabilities under its 2004 settlement of a West Virginia state court class action, Leach v. EID, which alleged
that PFOA from EID’s former Washington Works facility had contaminated area drinking water supplies and affected the
health of area residents. The settlement class has about 80,000 members. In addition to relief that was provided to class
members years ago, the settlement requires EID to continue providing PFOA water treatment to six area water districts and
private well users and to fund, through an escrow account, up to $235 million for a medical monitoring program for eligible
class members. As of December 31, 2021, approximately $2 million had been disbursed fromff
the account since its
a
establishment in 2012 and the remaining balance is approxim
ately $1 million.
a
nted under the settlement reported in 2012 had a “probablea
claims for six health conditions (and no others) that an
The Leach settlement permits class members to pursue personal injury
expert panel appoi
link” (as defined in the settlement) with PFOA:
pregnancy-induced hypertension, including preeclampsia; kidney cancer; testicular cancer; thyroid disease; ulcerative colitis;
and diagnosed high cholesterol. After the panel reported its findings, approximately 3,550 personal injury lawsuits were filed in
federal and state courts in Ohio and West Virginia and consolidated in multi-district litigation in the U.S. District Court for the
Southern District of Ohio (“Ohio MDL”). Ohio MDL was settled in early 2017 for $670.7 million in cash, with Chemours and
EID (without indemnification from Chemours) each paying half.
n
j y
Post-MDL Settlement PFOA Personal Injury Claims
The 2017 Ohio MDL settlement did not resolve claims of plaintiffs who did not have claims in the Ohio MDL or whose claims
are based on diseases first diagnosed after February 11, 2017. The first was a consolidated trial of two cases; the first, a kidney
cancer case, which resulted in a hung jury, while the second, Travis and Julie Abbot v. E.I du Pont de Nemours and Company
(the “Abbot Case”), a testicular cancer case, resulted in a jury verdict of $40 million in compensatory damages and $10 million
for loss of consortium. The loss of consortium award was subsequently reduced to $250,000 in accordance with state law
limitations. Following entry of the judgment by the court, EID filed post-trial motions to reduce the verdict, and to appeal the
verdict on the basis of procedural and substantive legal errors made by the trial court. The company believes the merits of the
appeal will be successfulff
in reducing the jury verdict or eliminating its liabila
ity, in whole or part.
m
In January 2021, Chemours, DuPont and Corteva agreed to settle the remaining approximately 95 matters, as well as unfiled
matters, remaining in the Ohio MDL, with the exception of the Abbot case, for $83 million, with Chemours contributing $29
million to the settlement, and DuPont and Corteva contributing $27 million each. The company recorded a liabia lity for its share
of the settlement, with a charge to (loss) income from discontinued operations after income taxes in the Consolidated Statement
of Operations, during the year ended December 31, 2020, and paid $27 million during the year ended December 31, 2021. As
agreed to in the settlement, the plaintiffs' counsel filed a motion to dissolve the MDL.
Other PFOA Matters
EID is a party to other PFOA lawsuits that do not involve claims for personal injury. Defense costs and any future liabilities
that may arise out of these lawsuits are subject to the MOU and the cost sharing arrangement disclosed above. Under the MOU,
fraudulent conveyance claims associated with these matters are not qualified expenses, unless Corteva, Inc. and EID would
prevail on the merits of these claims.
New York. EID is a defendant in about 50 lawsuits, including a putative class action, brought by persons who live in
and around Hoosick Falls, New York. These lawsuits assert claims forff medical monitoring and property damage based
on alleged PFOA releases from manufacturing facilities owned and operated by co-defendants in Hoosick Falls and
allege that EID and 3M supplied some of the materials used at these facilities. EID is also one of more than ten
defendants in a lawsuit brought by the Town of East Hampton, New York alleging PFOA and PFOS contamination of
the town’s well water. Additionally, EID, along with 3M, Chemours and Dyneon, have been named defendants in
complaints filff ed by eleven water districts in Nassau County, New York alleging that the drinking water they provide to
F-47
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
customers is contaminated with PFAS and seeking reimbursement for clean-up costs. The water district complaints
also include allegations of fraudulent transfer.
New Jerseyy. At December 31, 2021, two lawsuits were pending, one brought by a local water utility and the second a
putative class action, against EID alleging that PFOA from EID’s former Chambers Works facility contaminated
drinking water sources. The putative class action was voluntarily dismissed without prejudi
ce by the plaintiff.
e
In late March of 2019, the New Jersey State Attorney General filff ed four lawsuits against EID, Chemours, 3M and
former EID sites in New Jersey (Chambers Works, Pompton
others alleging that operations at and discharges fromff
Lakes, Parlin and Repauno) damaged the State’s natural
resources. Two of these lawsuits (those involving the
t
Chambers Works and Parlin sites) allege contamination from PFAS. The Ridgewood Water District in New Jersey
filed suit in the first quarter 2019 against EID, 3M, Chemours, and Dyneon alleging losses related to the investigation,
remediation and monitoring of polyfluorinated surfactants, including PFOA, in water supplies. DuPont and Corteva
were subsequently added as defendants to these lawsuits. These lawsuits include claims under the New Jersey
Industrial Site Recovery Act (“ISRA”)RR
and for fraudulent conveyance.
Alabama / Others. EID is one of more than thirty defendants in a lawsuit by the Alabama water utility alleging
contamination from PFCs, including PFOA, used by co-defendant carpet manufacturers to make their products more
stain and grease resistant. In addition, the states of Michigan, Mississippi, New Hampshire, South Dakota, and
Vermont recently filed lawsuits against EID, Chemours, 3M and others, claiming, among other things, PFC (including
PFOA) contamination of groundwater and drinking water. The complaints seek reimbursement for past and future
costs to investigate and remediate the alleged contamination and compensation for the loss of value and use of the
state’s natural
resources. Motions to dismiss the Michigan, Vermont and New Hampshire cases have been denied.
t
Ohio. EID is a defendant in three lawsuits: an action by the State of Ohio based on alleged damage to natural
resources, a putative nationwide class action brought on behalf of anyone who has detectable levels of PFAS in their
blood serum, and an action by the City of Dayton claiming losses related to the investigation, remediation and
monitoring of PFAS in water supplies. The trial with respect to the natural
resources lawsuit is scheduled forff April
2023.
t
t
Netherlands. In April 2021, four municipalities in the Netherlands filed complaints alleging contamination of land and
groundwater resulting from the emission of PFOA and GenX by Corteva, DuPont and Chemours. The municipalities
investigation costs, construction
seek to recover costs incurred dued
project delays, depreciation of land, soil remediation, liabilities to contractors, and attorneys’ fees.
to the alleged emissions, including damages forff
ff
Delaware. On July 13, 2021, Chemours, DuPont, EID and Corteva entered into a settlement agreement with the State
y resolve claims alleged against the
of Delaware reflecting the companies' and the State's agreement to settle and full
companies regarding their historical Delaware operations, manufacturing, use and disposal of all chemical compounds,
including PFAS. Under the settlement, the companies will collectively pay $50 million to fund environmental projects,
including sampling and community environmental justice and equity grants, which shall be utilized to fundff
the Natural
Resources and Sustainability Trust (the “NRST Trust”). If the companies, individually or jointly, within 8 years of the
settlement, enter into a proportionally similar agreement to settle or resolve claims of another state forff
PFAS-related
resource damages, for an amount greater than $50 million, the companies shall make a supplemental payment
natural
t
directly to the NRST Trust
(“Supplemental Payment”) in an amount equal to such other states’ recovery in excess of
$50 million. Supplemental Payment(s), if any, will not exceed $25 million in the aggregate. All amounts paid by the
companies under the settlement are subject to the MOU and the Corteva Separation Agreement with Chemours bearing
responsibility forff
50%, or $25 million, of the $50 million payment due to the NRST and DuPont and Corteva each
bearing $12.5 million of the remaining amount, which Corteva paid in January 2022. As of December 31, 2021, an
accrual has been established in relation to this settlement and during the year ended December 31, 2021, the company
recorded a charge of $11 million to (loss) income from discontinued operations after income taxes in the Consolidated
Statement of Operations. Under the settlement, if the state sues other parties and those parties seek contribution from
the companies, the companies will have protection from contribution up to the amounts previously paid under the
settlement agreement. The companies will also receive a credit up tu
o the amount of the payment if the state seeks
t
natural
resource damage claims against the companies outside the scope of the settlement’s release of claims.
r
t
g
q
Aqueous Firefighting Foams.
against 3M and other defendants, including
g
EID and Chemours, and more recently also including Corteva and DuPont, alleging PFOS or PFOA contamination of
the use of aqueous firefighting foams. Most of those cases claim some form of property
soil and groundwater fromff
the loss of use and
damage and seek to recover the costs of responding to this contamination and damages forff
Approximately 2,050 cases have been filedff
F-48
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
enjon yment of property and diminution in value. Most of these cases have been transferred to a multidistrict litigation
proceeding in federal district court in South Carolina. Approximately 1,860 of these cases were fileff d on behalf of
firefighters who allege personal injuries (primarily kidney and testicular cancer) as a result of aqueous firefighting
foams. Approximately 140 of these cases were fileff d by water utility or municipal water districts. Most of these recent
ent conveyance. Discovery for these
cases assert claims that the EID and Chemours separation constituted a fraudul
early 2023.
cases is expected to continue through 2022, with a water district “bellwether” trial expected forff
ff
EID did not make firefighting foams, PFOS, or PFOS products. While EID made surfactants and intermediaries that some
manufacturers used in making foams, which may have contained PFOA as an unintended byproduct or an impurity, EID’s
products were not formulated with PFOA, nor was PFOA an ingredient of these products. EID has never made or sold PFOA as
a commercial product.
y
y,
Fayetteville Works Facility, North Carolina
Prior to the separation of Chemours, EID introduced GenX as a polymerization processing aid and a replacement for PFOA at
the Fayetteville Works faci
lity in Bladen County, North Carolina. The facility is now owned and operated by Chemours, which
ff
continues to manufacturet
and use GenX.
ff
At December 31, 2021, several actions are pending in federal court against Chemours and EID relating to PFC discharges from
the Fayetteville Works faci
lity. One of these is a consolidated putative class action that asserts claims for medical monitoring
and property damage on behalf of putative classes of property owners and residents in areas near or who draw drinking water
Fear River. Another action is a consolidated action brought by various North Carolina water authorities,
from the Capea
l and punitive damages as well as
including the Capea
injun nctive relief. I
ility filff ed a
seek compensatory and punitive damages for their claims of
complaint against Chemours and EID in May 2020. The plaintiffsff
private nuisance, trespass, and negligence allegedly caused by release of PFAS.
n another action over approximately 100 property owners near the Fayetteville Works facff
c Utility Authority and Brunswick County, that seek actuat
Fear Publiu
ff
In addition to the federal court actions, there is an action on behalf of about 100 plaintiffs who own wells and property near the
Fayetteville Works facility. The plaintiffs seek damages for nuisance allegedly caused by releases of certain PFCs from the site.
Generally, site-related expenses related GenX claims are subject to the cost sharing arrangements as defined in the MOU.
F-49
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Environmental
Accruals for environmental matters are recorded when it is probable that a liabia lity has been incurred and the amount of the
liability can be reasonably estimated based on current law and existing technologies. These obligations are included in accrued
and other current liabilities and other noncurrent obligations in the Consolidated Balance Sheet. It is reasonably possible that
environmental remediation and restoration costs in excess of amounts accrued could have a material impact on the company’s
results of operations, financial condition and cash flows. Inherent uncertainties exist in these estimates primarily due to
unknown conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation
technologies forff
handling site remediation and restoration.
For a discussion of the allocation of environmental liabia lities under the Chemours Separation Agreement and the Corteva
Separation Agreement, see the previous discussion on page F-46.
(In millions)
Environmental Remediation Stray Liabilities
Chemours related obligations - subject to indemnity1,2
Other discontinued or divested businesses obligations1
Environmental remediation liabilities primarily related to DuPont -
subject to indemnity fromff
DuPont2
Environmental remediation liabilities not subject to indemnity
As of December 31, 2021
Indemnification
Asset
Accrual
balance3
Potential exposure
above amount
accrued3
$
159 $
159 $
15
37
—
75
37
82
262
187
66
49
Indemnification liabilities related to the MOU4
Total
592
1. Represents liabilities that are subject the $200 million threshold and sharing arrangements as discussed on page F-46, under Corteva Separation
220 $
452 $
99
28
$
9
Agreement.
2. The company has recorded an indemnification asset related to these accruals, including $40 million related to the Superfund sites.
3. Accrual balance represents management’s best estimate of the costs of remediation and restoration, although it is reasonably possible that the potential
exposure, as indicated, could range above the amounts accrued, as there are inherent uncertainties in these estimates. Accrual balance includes $68 million
for remediation of Superfund sites. Amounts do not include possible impacts from the remediation elements of the EPAs October 2021 PFAS Strategic
Roadmap (as applicable) or possible revisions to Chemours’ Consent Order with the North Carolina Department of Environmental Quality, as any
possible impacts, to the extent such items would be reimbursable under the MOU, are not yet determinable.
4. Represents liabilities that are subject to the $150 million threshold and sharing agreements as discussed on page F-44, under the header "Chemours /
Performance Chemicals.
Chambers Works,kk New Jerseye
On January 28, 2022, the State of New Jersey filed a request for a preliminary injunction against EID and Chemours seeking
the establishment of a Remediation Funding Source (“RFS”) in an amount exceeding $900 million for environmental
remediation at EID’s former Chambers Work facility in New Jersey. The RFS primarily relates to non-PFAS remediation,
which is not subject to the MOU. Chemours has accepted indemnity and defense for these matters, while reserving rights and
nd fraudulent transfer matters as alleged under the existing New Jersey natural
declining EID’s demand relating to the ISRA aRR
resource lawsuits discussed on page F-48.
t
F-50
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 19 - STOCKHOLDERS' EQUITY
Common Stock
As discussed in Note 1 - Background and Basis of Presentation, on June 1, 2019, Corteva, Inc.'s common stock was distributed
to DowDuPont stockholders by way of a pro rata distribution. Each DowDuPont stockholder received one share of Corteva,
Inc. common stock for every three shares of DowDuPont common stock held at the close of business on May 24, 2019, the
record date of distribution. Corteva, Inc.'s common stock began trading the "regular way" under the ticker symbol "CTVA" on
June 3, 2019, the first business day after June 1, 2019. The number of Corteva, Inc. common shares issued on June 1, 2019 was
748,815,000 (par value of $0.01 per share). Information related to the Corteva Distribution and its effect on the company's
financial statements are discussed throughout these Notes to the Consolidated Financial Statements.
Set forth below is a reconciliation of common stock share activity forff
the years ended December 31, 2021, 2020, and 2019:
Shares of common stock
Balance June 1, 2019
Issued
Repurchased and retired
Balance December 31, 2019
Issued
Repurchased and retired
Balance December 31, 2020
Issued
Repurchased and retired
Balance December 31, 2021
Issued
748,815,000
586,000
(824,000)
748,577,000
3,384,000
(8,503,000)
743,458,000
4,019,000
(20,950,000)
726,527,000
Share Buyback Plan
On August 5, 2021, Corteva, Inc. announced that its Board of Directors authorized a $1.5 billion share repurchase program to
purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date ("2021 Share Buyback Plan").
tors. In
The timing, price and volume of purchases will be based on market conditions, relevant securities laws and other facff
connection with the 2021 Share Buyback Plan, the company purchased and retired 5,572,000 shares during the year ended
December 31, 2021 in the open market for a total cost of $250 million.
On June 26, 2019, Corteva, Inc. announced that its Board of Directors authorized a $1 billion share repurchase program to
purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date ("2019 Share Buyback Plan").
In connection with the 2019 Share Buyback Plan, the company repurchased and retired 15,378,000 shares, 8,503,000 shares,
and 824,000 shares in the open market for a total cost of $700 million, $275 million, and $25 million during the years ended
December 31, 2021, 2020, and 2019, respectively. Repurchases under the 2019 Share Buyback Plan were completed during
the
third quarter of 2021.
d
Shares repurchased pursuant to Corteva's share buyback plan are immediately retired upon repurchase. Repurchased common
stock is reflected as a reduction of stockholders' equity. The company's accounting policy related to its share repurchases is to
reduce its common stock based on the par value of the shares and to reduce its retained earnings for the excess of the repurchase
price over the par value. When Corteva has an accumulated deficit balance, the excess over the par value is applied to APIC.
When Corteva has retained earnings, the excess is charged entirely to retained earnings.
Noncontrolling Interest
In June 2020, the company completed the acquisition of the remaining 46.5 percent interest in the Phytogen Seed Company,
from J. G. Boswell Company. As the purchase of the remaining interest did not result in a change of control,
LLC joint venturet
between the carrying value of the noncontrolling interest and the consideration paid, net of taxes was recorded
ff
the difference
within equity.
Corteva, Inc. owns 100 percent of the outstanding common shares of EID. However, EID has preferred stock outstanding to
as a noncontrolling interest in Corteva's Consolidated Balance Sheets. Each share of EID
third parties which is accounted forff
F-51
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Preferred Stock - $4.50 Series and EID Preferred Stock - $3.50 Series issued and outstanding at the effective date of the
Corteva Distribution remains issued and outstanding as to EID and was unaffected by the Corteva Distribution.
Below is a summary or
noncontrolling interests in the Corteva Consolidated Balance Sheets.
f the EID Preferred Stock at December 31, 2021 and December 31, 2020 which is classified as
(Shares in thousands)
Authorized
$4.50 Series, callablea
at $120
$3.50 Series, callablea
at $102
Number of Shares
23,000
1,673
700
Other Comprehensive Income (Loss)
The changes and after-tax balances of components comprising accumulated other comprehensive income (loss) are summarized
below:
(In millions)
2019
Balance January 1, 2019
Other comprehensive income (loss) before
reclassifications
Amounts reclassified fromff
accumulated
other comprehensive income (loss)
Net other comprehensive income (loss)
Impact of Internal Reorganizations
Balance December 31, 2019
2020
Other comprehensive income (loss) before
reclassifications
Amounts reclassified fromff
accumulated
other comprehensive income (loss)
Net other comprehensive income (loss)
Balance December 31, 2020
2021
Other comprehensive income (loss) before
reclassifications
Amounts reclassified fromff
accumulated
other comprehensive income (loss)
Cumulative
Translation
Adjustment1
Derivative
Instruments
Pension Benefit
Plans
Other Benefit
Plans
Unrealized Gain
(Loss) on
Investments
Total
$
(2,793) $
(26) $
(620) $
79 $
— $
(3,360)
(274)
—
(274)
16
12
28
(723)
5
(718)
1,123
(1,944) $
—
2 $
91
(1,247) $
(159)
(1)
(160)
—
(81) $
—
—
—
—
— $
(26) $
(81) $
(191) $
670 $
(10) $
—
(26)
(1,970) $
12
(69)
(67) $
5
(186)
(1,433) $
1
671
590 $
—
(10)
(10) $
(1,140)
16
(1,124)
1,214
(3,270)
362
18
380
(2,890)
(573) $
143 $
996 $
25 $
3 $
594
—
(4)
41
(646)
7
(602)
$
$
$
$
(8)
Net other comprehensive income (loss)
Balance December 31, 2021
(2,898)
1. The cumulative translation adjustment losses for the year ended December 31, 2021 was primarily driven by the strengthening of the U.S. Dollar ("USD")
against the European Euro ("EUR"), Swiss franc ("CHF") and Turkish Lira (“TRY”). The cumulative translation adjustment losses for the year ended
December 31, 2020 was primarily driven by the strengthening of the U.S. Dollar ("USD") against the Brazilian Real ("BRL"), partially offset by the
weakening of the U.S. Dollar against the Swiss franc ("CHF") and European Euro ("EUR").
(573)
(2,543) $
1,037
(396) $
(621)
(31) $
139
72 $
10
— $
$
The tax (expense) benefit on the net activity related to each component of other comprehensive income (loss) was as follow
ff
s:
(In millions)
Derivative instruments
Pension benefit plans - net
Other benefit plans - net
(Provision for) benefit from income taxes related to other comprehensive
income (loss) items
F-52
For the Year Ended December 31,
2020
2019
2021
$
$
(41) $
(319)
188
24 $
54
(211)
(172) $
(133) $
(8)
231
52
275
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
A summary of the reclassifications out of accumulated other comprehensive loss is provided as follows:
(In millions)
Derivative Instruments1:
Amortization of pension benefit plans:
Prior service (benefit) cost3,4
Actuarial (gains) losses3,4,5
Settlement (gain) loss3,4,5
Amortization of other benefit plans:
Prior service (benefit) cost3,4
Actuarial (gains) losses3,4
Curtailment (gain) loss
Unrealized (Gain) Loss on Investments4
For the Year Ended December 31,
2021
2020
2019
$
Tax (benefit) expense2
After-tax $
$
Total before tax
Tax (benefit) expense2
After-tax $
$
Total before tax
Tax (benefit) expense2
After-tax $
$
Tax (benefit) expense2
(13) $
9
(4) $
(2) $
55
1
54
(13)
41 $
(922) $
81
(1)
(842)
196
(646) $
7 $
—
18 $
(6)
12 $
(1) $
4
3
6
(1)
5 $
— $
1
—
1
—
1 $
— $
—
13
(1)
12
(1)
2
4
5
—
5
—
(1)
—
(1)
—
(1)
—
—
Total reclassifications for the period, after-tax
1. Reflected in cost of goods sold in the Consolidated Statements of Operations.
2. Reflected in provision for (benefit from) income taxes from continuing operations in the Consolidated Statements of Operations.
3. These accumulated other comprehensive (loss) income components are included in the computation of net periodic benefit (credit) cost of the company's
pension and other benefit plans. See Note 20 - Pension Plans and Other Post Employment Benefits, to the Consolidated Financial Statements, for
additional information.
After-tax $
$
7 $
(602) $
— $
18 $
—
16
4. Reflected in other income - net in the Consolidated Statements of Operations.
5. A portion reflected in (loss) income from discontinued operations after income taxes for the year ended December 31, 2019.
F-53
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 20 - PENSION PLANS AND OTHER POST EMPLOYMENT BENEFITS
The company offers various long-term benefits to its employees. Where permitted by appl
right to change, modify or discontinue the plans.
a
icable law, the company reserves the
Defined Benefit Pension Plans
The company has both funded and unfunded noncontributory defined benefit pension plans covering a majority of the U.S.
employees and employees in a number of other countries. The principal U.S. pension plan is the largest pension plan held by
Corteva. Effective January 1, 2007, a majority of new hires are not eligible to participate in the U.S. defined benefit pension
plans. The company froze the pay and service amounts used to calculate the pension benefits forff
active employees who
participate in these plans on November 30, 2018, resulting in the participants no longer accruing additional benefits.
ral laws and regulations. Pension coverage for
The company's funding policy is consistent with the funding requirements of fede
employees of the company's non-U.S. consolidated subsidiaries is provided, to the extent deemed appropri
ate, through separate
plans. Obligations under such plans are funded by depositing funds with trustees, covered by insurance contracts, or remain
unfunded.
a
ff
The company made total contributions of $49 million, $62 million, and $121 million to its pension plans other than the
principal U.S. pension plan forff
the years ended December 31, 2021, 2020 and 2019, respectively. Corteva expects to contribute
approximately $60 million to its pension plans other than the principal U.S. pension plan in 2022. The company does not
anticipate making contributions to its principal U.S pension plan in 2022.
The weighted-average assumptions used to determine pension plan obligations for all pension plans are summarized in the tablea
below:
Weighted-Average Assumptions used to Determine Benefitff Obligations
December 31, 2021 December 31, 2020
2.44 %
2.54 %
1. The rate of compensation increase excludes U.S. pension plans since the employees who participate in the U.S. pension plans no longer accrue additional
Discount rate
Rate of increase in futuret
compensation levels1
2.82 %
2.55 %
benefits for future service and eligible compensation.
The weighted-average assumptions used to determine net periodic benefit costs for all pension plans are summarized in the
tablea
below:
Weighted-Average Assumptions used to Determine Net Periodic
Benefit Cost
For the Year Ended December 31,
2020
2019
2021
Discount rate
2.44 %
3.19 %
4.19 %
Rate of increase in futuret
Expected long-term rate of returnt
2.84 %
6.24 %
1. The rate of compensation increase excludes U.S. pension plans since the employees who participate in the U.S. pension plans no longer accrue additional
compensation levels1
on plan assets
2.60 %
6.25 %
2.54 %
5.73 %
benefits for future service and eligible compensation.
Other Post Employment Benefits
The company has historically provided medical, dental and life insurance benefits to certain pensioners and survivors. The
ty of U.S. employees hired on or after January 1, 2007, and eligible employees under the age of 50 as of November 30,
a
majori
2018, are not eligible to participate in the post-employment medical, dental and life insurance plans. Substantially all of the cost
and liabilities for these retiree benefit plans are attributablea
to the U.S. benefit plans. The non-Medicare eligible retiree medical
plan is contributory with costs shared between the company and pensioners and survivors. For Medicare eligible pensioners and
survivors, Corteva provides a company-funded Health Reimbursement Arrangement ("HRA").
In December 2020, the company
amended its retiree medical, dental and life insurance plans resulting in the company no longer providing retiree dental and life
insurance benefits effective January 1, 2022 and Corteva’s portion of the cost of non-Medicare retiree medical coverage no
longer being adjusted for cost increases, which capped
the Corteva cost at the level in effect as of December 31, 2021 ("2020
OPEB Plan Amendments"). As a result of these changes, the company recorded a $(939) million decrease in OPEB benefit
the year
obligations as of December 31, 2020 with a corresponding prior service benefit within other comprehensive income forff
ended December 31, 2020. During 2021, a substantial amount of the prior service benefit within other comprehensive income
(loss) in 2020 was recognized in other income - net in the Consolidated Statement of Operations.
RR
a
F-54
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
The company also provides disabila
ity benefit plans are insured in many countries.
However, primarily in the U.S., such plans are generally self-insured. Obligations and expenses for self-insured plans are
reflected in the change in projected benefit obligations tablea
ity benefits to employees. Employee disabila
on page F-56.
operating cash flows. Pre-tax cash
The company's OPEB plans are unfunded and the cost of the approved claims is paid fromff
requirements to cover actuat
l net claims costs and related administrative expenses were $198 million, $207 million, and $202
million for the years ended December 31, 2021, 2020 and 2019, respectively. Changes in cash requirements reflect the net
impact of per capita
a health care costs, demographic changes, plan amendments and changes in participant premiums, co-pays
and deductibles. In 2022, the company expects to contribute approximately $140 million forff
its OPEB plans.
The weighted-average assumptions used to determine benefit obligations for OPEB plans are summarized in the tabla e below:
Weighted-Average Assumptions used to Determine Benefitff Obligations
Discount rate
December 31, 2021 December 31, 2020
2.09 %
2.59 %
The weighted-average assumptions used to determine net periodic benefit costs for the OPEB plans are summarized in the two
tablea
s below:
Weighted-Average Assumptions used to Determine Net Periodic
Benefit Cost
For the Year Ended December 31,
2020
2019
2021
Discount rate
2.09 %
3.07 %
3.93 %
As of December 31, 2021, health care cost trend rates do not impact the benefit obligations for the OPEB plans because of the
2020 OPEB Plan Amendments. For the year ended December 31, 2020 and 2019, the health care cost trend rate was assumed to
be 7.0 percent and 7.2 percent for next year, respectively.
Assumptions
on plan assets by performing a detailed analysis
Within the U.S., the company determines the expected long-term rate of returnt
of key economic and market factors driving historical returns
based on
factors in the current environment. Factors considered include, but are not limited to, inflation, real economic growth, interest
rate yield, interest rate spreads, and other valuation measures and market metrics. The expected long-term rate of returnt
for each
d by the governing body for the plan. The company's
asset class is then weighted based on the strategic asset allocation approve
historical experience with the pension fund asset performance is also considered. For non-U.S. plans, assumptions reflect
economic assumptions applicablea
for each asset class and formulating a projected returnt
to each country.
a
t
ying individual spot rates from a yield curve (based on
In the U.S., Corteva calculates service costs and interest costs by appl
high-quality corporate bond yields) to the separate expected cash flows
components of service cost and interest cost. Service
cost and interest cost for all other plans are determined on the basis of the single equivalent discount rates derived in
determining those plan obligations.
a
ff
The discount rates utilized to measure the pension and other post employment benefit obligations are based on the yield on
high-quality corporate fixed income investments at the measurement date. Future expected actuat
rially determined cash flows
are individually discounted at the spot rates under the Aon AA_Above Median yield curve (based on high-quality corporate
bond yields) to arrive at the plan’s obligations as of the measurement date. For non-U.S. benefit plans, historically the company
to each country, at
utilized prevailing long-term high quality corporate bond indices to determine the discount rate, applicablea
the measurement date.
ff
The company adopts the most recently published mortality tables and mortality improvement scale released by the Society of
Actuaries in measuring its U.S. pension and other post employment benefit obligations. The effect of these adoptions is
amortized into net periodic benefit cost for the years following the adoption.
F-55
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Summarized information on the company's pension and other post employment benefit plans is as follows:
Change in Projected Benefit Obligations, Plan Assets and Funded Status
(In millions)
Change in benefit obligations:
Defie ned Benefie t Pension Plans
For the Year
For the Year
Ended
Ended
December 31,
December 31,
2020
2021
EE
Other Post Employ
For the Year
Ended
December 31,
2021
ment Benefie ts
For the Year
Ended
December 31,
2020
Benefit obligation at beginning of the period
$
21,682 $
21,004
$
1,571 $
2,591
Service cost
Interest cost
Plan participants' contributions
Actuarial (gain) loss
Benefits paid
Plan amendments
Other1
Effect of foreign exchange rates
Benefit obligations at end of the period
Change in plan assets:
Fair value of plan assets at beginning of the period
Actual return on plan assets
Employer contributions
Plan participants' contributions
Benefits paid
Other1
Effect of foreign exchange rates
Fair value of plan assets at end of the period
Funded status
U.S. plan with plan assets
Non-U.S. plans with plan assets
All other plans 2,3
Funded status at end of the period
$
$
$
$
$
25
364
3
(524)
(1,490)
(15)
(240)
(30)
26
559
2
1,659
(1,538)
(3)
—
(27)
19,775 $
21,682
17,835 $
1,685
49
3
(1,490)
(240)
(15)
16,941
2,404
62
2
(1,538)
—
(36)
17,827 $
17,835
(1,471) $
(62)
(415)
(1,948) $
(3,301)
(98)
(448)
(3,847)
$
$
$
$
$
1
21
35
(33)
(233)
—
—
—
1,362 $
— $
—
198
35
(233)
—
—
— $
— $
—
(1,362)
(1,362) $
2
66
34
59
(241)
(939)
—
(1)
1,571
—
—
207
34
(241)
—
—
—
—
—
(1,571)
(1,571)
1. Relates to the transfer of certain benefit obligations and related assets associated with the principal U.S. pension plan to an insurance company through the
purchase of nonparticipating group annuity contracts.
2. As of December 31, 2021 and December 31, 2020, $219 million and $249 million, respectively, of the benefit obligations are supported by funding under the
Trust agreement, defined in the "Trust Assets" section below.
3. Includes pension plans maintained around the world where funding is not customary.
F-56
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Defie ned Benefie t Pension Plans Other Post Employ
EE
ment Benefie ts
(In millions)
Amounts recognized in thet Consolidated Balance Sheets:
Other Assets
Accrued and other current liabilities
Pension and other post employment benefits - noncurrent
Net amount recognized
Pretax amounts recognized in accumulated other
comprehe
nsive income (lo(( ss):
m
tt
Net gain (loss)
Prior service benefit (cost)
Pretax balance in accumulated other comprehensive
income (loss) at end of year
December 31,
2021
December 31,
2020
December 31,
2021
December 31,
2020
$
$
$
$
4 $
(46)
(1,906)
(1,948) $
7 $
(32)
(3,822)
(3,847) $
— $
(144)
(1,218)
(1,362) $
(543) $
27
(1,886) $
14
(50) $
17
(516) $
(1,872) $
(33) $
—
(217)
(1,354)
(1,571)
(163)
939
776
The gain related to the change in pension and OPEB plan benefit obligations for the period ended December 31, 2021 is mainly
due to an increase in discount rates.
The accumulated benefitff obligation for all pensions plans was $19.7 billion and $21.6 billion at December 31, 2021 and 2020,
respectively.
Pension Plans with Projected Benefitff Obligations in Excess of Plan Assets
(In millions)
Projected benefit obligations
Fair value of plan assets
December 31, 2021 December 31, 2020
$
19,519 $
17,567
21,513
17,659
Pension Plans with Accumulated Benefitff Obligations in Excess of Plan Assets
(In millions)
Accumulated benefit obligations
Fair value of plan assets
December 31, 2021 December 31, 2020
$
19,501 $
17,567
21,369
17,550
F-57
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
(In millions)
Defie ned Benefie t Pension Plans
For the Year Ended December 31,
Post Employm
t
Other
For the Year Ended December 31,
ment Benefie ts
Components of net periodic benefit (credit) cost and amounts
recognized in other comprehensive income (loss)
Net Periodic Benefit (Credit) Cost:
Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized loss (gain)
Amortization of prior service (benefit) cost
Curtailment loss (gain)
Settlement loss
Net periodic benefit (credit) cost - Total
Less: Discontinued operations1
Net periodic benefit (credit) cost - continuing operations
Changes in plan assets and benefit obligations recognized in
other comprehensive income (loss):
Net gain (loss)
Amortization of unrecognized (gain) loss
Prior service benefit (cost)
Amortization of prior service (benefit) cost
Curtailment (gain) loss
Settlement loss
Effect of foreign exchange rates
Total benefit (loss) recognized in other comprehensive
income (loss), attributable to Corteva
Total recognized in net periodic benefit (credit) cost and
other comprehensive income (loss)
$
$
$
$
$
$
2021
2020
2019
2021
2020
2019
25 $
364
(915)
55
(2)
—
1
26 $
559
(1,000)
4
(1)
—
3
41
769
(1,078)
3
(1)
(2)
4
$
1 $
21
—
81
(922)
(1)
—
(472) $
—
(409) $
—
$
(264)
(14)
(820) $
—
2 $
66
—
1
—
—
—
69 $
—
(472) $
(409) $
(250)
$
(820) $
69 $
4
84
—
(1)
—
—
—
87
—
87
1,284 $
55
(247) $
4
$
(970)
2
33 $
81
(59) $
1
(211)
(1)
15
(2)
—
1
3
3
(1)
—
3
(2)
1
1
(1)
—
4
5
—
(922)
(1)
—
—
939
—
—
—
1
—
—
—
—
—
1,356 $
(240) $
(949)
1,828 $
169 $
(685)
$
$
(809) $
882 $
(212)
11 $
813 $
(299)
1.
Includes non-service related components of net periodic benefit credit of $(31) million for the year ended December 31, 2019.
Estimated Future Benefit Payments
The estimated future
ff
benefit payments, reflecting expected future
ff
service, as appropria
a
:
te, are presented in the following tablea
Defie ned Benefie t
Pension Plans
Other Post
Employm
$
$
1,459 $
1,409
1,378
1,341
1,305
5,913
12,805 $
ment Benefie ts
144
134
126
118
112
399
1,033
Estimated Future Benefit Payments at December 31, 2021
(In millions)
2022
2023
2024
2025
2026
Years 2027-2031
Total
F-58
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
ff
The strategic asset allocation forff
Plan Assets
this trust
All pension plan assets in the U.S. are invested through a single master trust fund.
fund is approved by the Pension Investment Committee. The general principles guiding U.S. pension asset investment policies
are those embodied in the Employee Retirement Income Security Act of 1974 ("ERISA"). These principles include discharging
the exclusive benefit of plan participants and in accordance with the "prudent expert"
Corteva's investment responsibilities forff
standard and other ERISA rules and regulations. Corteva establia
shes strategic asset allocation percentage targets and
and risk.
appropriate benchmarks for significant asset classes with the aim of achieving a prudent balance between returnt
Strategic asset allocations in other countries are selected in accordance with the laws and practices of those countries. Where
appropriate, asset liabia lity studies are utilized in this process. U.S. plan assets are managed by investment professionals
employed by Corteva. The remaining assets are managed by professional investment firms unrelated to the company. Corteva's
d by
pension investment professionals have discretion to manage the assets within established asset allocation ranges approve
the Pension Investment Committee. Additionally, pension trust funds are permitted to enter into certain contractual
arrangements generally described as "derivatives." Derivatives are primarily used to reduce specific market risks, hedge
currency and adjust portfolio duration and asset allocation in a cost-effective manner.
a
The weighted-average target allocation for plan assets of the company's pension plans is summarized as follows:
Target Allocation for Plan Assets
Asset Categoryrr
U.S. equity securities
Non-U.S. equity securities
Fixed income securities
Hedge funds
Private market securities
Real estate
Cash and cash equivalents
Total
December 31, 2021 December 31, 2020
11 %
11
58
2
8
5
5
100 %
20 %
16
51
2
6
4
1
100 %
U.S. equity investments are primarily large-cap companies. Global equity securities include varying market capita
alization
levels. Global fixed income investments include corporate-issued, government-issued and asset-backed securities. Corporate
debt investments include a range of credit risk and industry diversification. U.S. fixed income investments are weighted heavier
than non-U.S. fixed income securities. Other investments include cash and cash equivalents, hedge funds, real estate and private
market securities such as interests in private equity and venturet
capia tal partnerships.
Fair value calculations may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the
company believes its valuation methods are appropriate and consistent with other market participants, the use of different
methodologies or assumptim ons to determine the fair value of certain financial instruments could result in a different fair value
measurement at the reporting date.
For pension plan assets classified as Level 1 measurements (measured using quoted prices in active markets), total fair value is
either the price of the most recent trade at the time of the market close or the official close price, as defined by the exchange on
which the asset is most actively traded on the last trading day of the period, multiplied by the number of units held without
consideration of transaction costs.
ntly traded in less active markets, fair
For pension plan assets classified as Level 2 measurements, where the security is freque
value is based on the closing price at the end of the period; where the security is less frequently traded, fair value is based on the
price a dealer would pay for the security or similar securities, adjusted for any terms specific to that asset or liabia lity. Market
inputs are obtained fromff
shed and recognized vendors of market data and subjected to tolerance and quality checks.
For derivative assets and liabilities, standard industry models are used to calculate the fair value of the various financial
instruments based on significant observable market inputs, such as foreign exchange rates, commodity prices, swap r
ates,
interest rates and implied volatilities obtained fromff
various market sources.
well-establia
a
ff
F-59
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
For pension plan assets classified as Level 3 measurements, total fair value is based on significant unobservable inputs
managers, or
including assumptions where there is little, if any, market activity forff
investment contract issuers provide valuations of the investment on a monthly or quarterly basis. These valuations are reviewed
for reasonableness based on applicable sector, benchmark and company performance. Adjustments to valuations are made
where appropriate. Where available, audited finaff
ncial statements are obtained and reviewed for the investments as support for
the manager’s investment valuation.
the investment. Investment managers, fund
ff
The tablea
Note 2 - Summary of Significant Accounting Policies:
s below present the fair values of the company's pension assets by level within the fair value hierarchy, as described in
Basis of Fair Value Measurements
For the year ended December 31, 2021
(In millions)
Cash and cash equivalents
U.S. equity securities 1
Non-U.S. equity securities
Debt – government-issued
Debt – corporate-issued
Debt – asset-backed
Private market securities
Real estate
Other
Subtotal
Investments measured at net asset value
Debt - government issued
Debt - corporate issued
U.S. equity securities
Non-U.S. equity securities
Hedge funds
Private market securities
ff
Real estate funds
Total investments measured at net asset value
Other items to reconcile to faiff
s 2
r value of plan assets
Pension trust
Pension trust
rr
rr
receivablea
payables 3
Total
Total
Level 1
Level 2
Level 3
2,543 $
2,400
1,523
3,271
4,591
682
3
26
2,543 $
2,394
1,523
—
—
—
—
—
— $
2
—
3,271
4,589
682
—
—
8
7
15,117 $
—
6,460 $
3
8,547 $
—
4
—
—
2
—
3
26
75
110
37
7
33
34
394
1,822
759
3,086
655
(1,031)
17,827
$
$
$
$
1. The Corteva pension plans directly held $201 million (approximately 1 percent of total plan assets) of Corteva, Inc. common stock at December 31, 2021.
2. Primarily receivables for investments securities sold.
3. Primarily payables for investment securities purchased.
F-60
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Basis of Fair Value Measurements
For the year ended December 31, 2020
(In millions)
Cash and cash equivalents
U.S. equity securities1
Non-U.S. equity securities
Debt – government-issued
Debt – corporate-issued
Debt – asset-backed
Private market securities
Real estate
Other
Subtotal
Investments measured at net asset value
Debt - government issued
Debt - corporate issued
U.S. equity securities
Non-U.S. equity securities
Hedge funds
Private market securities
ff
Real estate funds
Total investments measured at net asset value
Other items to reconcile to faiff
s2
r value of plan assets
Pension trust
Pension trust
r
r
receivablea
payables3
Total
Total
Level 1
Level 2
Level 3
2,616 $
3,905
2,194
3,569
2,579
616
3
28
2,616 $
3,898
2,189
—
—
—
—
—
— $
2
2
3,569
2,576
616
—
—
76
15,586 $
—
8,703 $
3
6,768 $
—
5
3
—
3
—
3
28
73
115
36
7
32
32
391
1,381
590
2,469
214
(434)
17,835
$
$
$
$
1. The Corteva pension plans directly held $165 million (approximately 1 percent of total plan assets) of Corteva, Inc. at December 31, 2020.
2. Primarily receivables for investments securities sold.
3. Primarily payables for investment securities purchased.
F-61
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
lowing tablea
The folff
and 2019:
summarizes the changes in faiff
r value of Level 3 pension plan assets forff
the years ended December 31, 2020
Fair Value Measurement of Level 3 Pension
Plan Assets
(In millions)
Balance at January 1, 2020
Actual returnt
on assets:
U.S. equitytt
securities
Non-U.S.
equity
securities
Debt –
corporate
-issued
Private
marketkk
securities
$
9 $
4 $
4 $
2 $
Real
estate
Other
33 $ — $
Total
52
Relating to assets sold during
December 31, 2020
Relating to assets held at December 31, 2020
the year ended
d
Purchases, sales and settlements, net
Transferff s in or out of Level 3, net
Balance at December 31, 2020
Actual returnt
on assets:
Relating to assets sold during
December 31, 2021
Relating to assets held at December 31, 2021
the year ended
d
Purchases, sales and settlements, net
Balance at December 31, 2021
(25)
21
—
—
(6)
5
—
—
5 $
3 $
1
(3)
1
4 $
(1)
(1)
(1)
— $
(7)
5
—
1
3 $
(5)
6
(2)
2 $
—
1
—
—
(5)
—
—
7
5
—
3 $
—
28 $
61
73 $
—
—
—
3 $
—
(2)
—
26 $
—
(2)
4
75 $
(38)
34
5
62
115
(5)
(2)
2
110
$
$
Trust Assets
EID entered into a trust agreement in 2013 (as amended and restated in 2017) that established and requires EID to fund the
Trust for cash obligations under certain non-qualified benefit and deferred compensation plans upon a change in control event
as defined in the Trust agreement. Under the Trust agreement, the consummation of the Merger was a change in control event.
As a result, in November 2017, EID contributed $571 million to the Trust. At the Separation, Corteva transferred $39 million to
DuPont. During the years ended December 31, 2021 and 2020, $43 million and $65 million, respectively, was distributed to
EID according to the Trust agreement, and at December 31, 2021 and 2020, the balance in the Trust was $304 million and $347
million, respectively. The Trust Assets are classified as current restricted cash equivalents and included within other current
assets in the Consolidated Balance Sheets. See Note 9 - Supplementary Information, to the Consolidated Financial Statements,
for furff
ther information.
Defined Contribution Plans
Corteva provides defined contribution benefits to its employees. The most significant is the U.S. Retirement Savings Plan ("the
Plan"), which covers almost all of the U.S. full-service employees. This Plan includes a non-leveraged Employee Stock
Ownership Plan ("ESOP"). Employees are not required to participate in the ESOP and those who do are free to diversify out of
the ESOP. The purpose of the Plan is to provide retirement savings benefits forff
employees and to provide employees an
opportunity to become stockholders of the company. The Plan is a tax qualified contributory profit sharing plan, with cash or
deferred arrangement and any eligible employee of Corteva may participate. Currently, Corteva contributes 100 percent of the
first 6 percent of the employee's contribution election and also contributes 3 percent of each eligible employee's eligible
compensation regardless of the employee's contribution.
Corteva's contributions to the Plan were $63 million, $94 million, and $142 million for the years ended December 31, 2021,
2020 and 2019, respectively. Corteva's matching contributions vest immediately upon contribution. The 3 percent nonmatching
company contribution vests after employees complete three years of service. In addition, Corteva made contributions to other
defined contribution plans of $29 million, $33 million, and $46 million for the years ended December 31, 2021, 2020 and 2019,
respectively. Included in Corteva's contributions are amounts related to discontinued operations of $73 million for the year
ended December 31, 2019.
F-62
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 21 - STOCK-BASED COMPENSATION
Prior to the Corteva Distribution, Corteva employees held equity awards, including stock options, share appreciation rights
(“SARs”), restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), which were denominated in
DowDuPont common stock and, in some cases, in Dow Inc. common stock, and which had originally been issued under the
DuPont Equity and Incentive Plan ("EIP"), the Dow Chemical Company 2012 Stock Incentive Plan or the Dow Chemical
Company 1988 Award and Option Plan.
As discussed in Note 18 - Commitment and Contingent Liabilities, on April 1, 2019 the company entered into an employee
matters agreement (the "EMA") with DuPont and Dow that identifies employees and employee-related liabia lities (and
) to the
attributablea
Parties as part of the Distributions and describes when and how the relevant transferff s and assignments will occur. With some
exceptions, the EMA provides forff
the equitable adjustment of existing equity incentive compensation awards denominated in
the common stock of DowDuPont to reflect the occurrence of the Distributions.
assets) to be allocated (either retained, transferred and accepted, or assigned and assumed, as applicablea
In connection with the Separation on June 1, 2019, outstanding DowDuPont-denominated stock options, SARs, RSU and PSU
awards were converted into Corteva-denominated awards under the “Employer Method,” or into both DuPont-denominated
awards and Corteva-denominated awards under the “Shareholder Method,” using a formul
a designed to preserve the intrinsic
value of the awards immediately prior to and subsequent to the Corteva Separation. The awards have the same terms and
plans and award agreements prior to the Separation transactions. The conversions of equity
conditions under the applicablea
awards did not have a material impact to the company’s consolidated financial statements.
ff
On June 1, 2019 (“Adoption Date”), in connection with the Separation, the Omnibus Incentive Plan (the "OIP") became
effective. Under the OIP, the company may grant incentive awards, including stock options (both “incentive stock options” and
nonqualified stock options), share appreciation rights, restricted shares, restricted stock units, other share-based awards and
cash awards, to its and its subsidiaries’ eligible employees, non-employee directors, independent contractors and consultants
following the Separation until the tenth anniversary of the Adoption Date, subject to an aggregate limit and annual individual
the grant or settlement of awards is 20 million shares,
limits. Under the OIP, the maximum number of shares reserved forff
excluding shares underlying certain exempt awards, such as the awards converted to Corteva-denominated awards pursuant to
the Separation. At December 31, 2021, approximately 12 million shares were authorized for future grants under the OIP. The
company generally satisfies stock option exercises and the vesting of RSUs and PSUs with newly issued shares of Corteva
common stock, although RSU awards granted under Historical Dow plans in certain countries are settled in cash.
The compensation committee determines the long-term incentive mix, including stock options, RSUs and PSUs and may
authorize new grants annually. The company estimates expected forfeitures.
t
The total stock-based compensation cost included in income (loss) from continuing operations before income taxes within the
Consolidated Statement of Operations was $79 million, $73 million, and $84 million for the years ended December 31, 2021,
2020 and 2019, respectively. The income tax benefits related to stock-based compensation arrangements were $(15) million,
$(15) million, and $(17) million for the years ended December 31, 2021, 2020 and 2019, respectively.
Stock Options
The exercise price of shares subject to option is equal to the market price of the company's stock on the date of grant. All
options vest serially over a period of three years. Stock option awards granted under the OIP between June 2019 and 2020
expire 10 years after the grant date. Stock option awards granted under the EIP (previous plan) between 2014 and 2015
expire seven years after the grant date and options granted between 2016 and May 2019 expire 10 years after the grant date.
Stock option awards granted under the Historical Dow plans subsequent to 2010 expire 10 years after the grant date.
To measure the fair value of the awards on the date of grant, the company used the Black-Scholes option pricing model and the
assumptim ons set forth in the below table. Under the OIP, the weighted-average grant-date faiff
r value of options granted for the
years ended December 31, 2021 and 2020 was $11.77 and $6.06, respectively. Under the EIP, the weighted-average grant-date
fair value of options granted for the years ended December 31, 2019 was $7.29.
F-63
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Weighted-Average Assumptions
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of stock options granted during period
(years)
OIP
For the year ended
December 31, 2021
1.14 %
29.44 %
1.0 %
For the year ended
December 31, 2020
1.67 %
23.14 %
1.3 %
EIP
For the year ended
December 31, 2019
1.55 %
19.80 %
2.4 %
6.0
6.0
6.1
Under the OIP, the company determined the dividend yield by dividing the annualized dividend on Corteva’ s Common Stock
by the option exercise price. A historical daily measurement of volatility is determined based on the expected life off
f the option
granted. For the years ended December 31, 2021 and 2020, the measurement of volatility is based on the average volatility of
eight of Corteva's peer companies. Corteva's peer volatility is based on the historical volatility of each business respectively.
The risk-free interest rate is determined by reference to the yield on an outstanding U.S. Treasury note with a term equal to the
expected life of the option granted. Expected life is determined by utilizing the simplified method for estimating expected term
as referenced under ASC 718 – Share based Payments.
Under the EIP, the company determined the dividend yield by dividing the annualized dividend on DowDuPont's Common
Stock by the option exercise price.
A historical daily measurement of volatility is determined based on the expected life off
f the option granted. For the year ended
December 31, 2019, the measurement of volatility is based on weighted average of the individual peer volatilities of DuPont
and Corteva based on the size of each business respectively. DuPont and Corteva peer volatility are based on a 50/50 blend of
historical volatility and implied volatility. Both volatility measures are based on the average of five peer companies forff DuPont
and eight peer companies for Corteva.
The risk-free interest rate is determined by reference to the yield on an outstanding U.S. Treasury note with a term equal to the
expected life of the option granted. Expected life i
s determined by reference to the company's historical experience.
ff
The following tablea
summarizes stock option activity for year ended December 31, 2021 under the OIP:
Stock Options
For the Year Ended December 31, 2021
Outstanding at January 1, 2021
Granted
Exercised
Forfeited/Expired
Outstanding at December 31, 2021
Exercisable at December 31, 2021
Number of
Shares
(in thousands)
Weighte
d
i
Average
Exerciseii Price
(per share)e
8,998 $
849
(3,206)
(218)
6,423 $
4,739 $
34.21
45.37
32.44
33.39
36.65
36.15
Weighte
d
i
Average
Remaining
tual
Contractt
years)
Term (in((
Aggregate
Intrinsic Value
(in thousands)
5.27 $
50,077
5.69 $
4.76 $
68,219
52,726
The aggregate intrinsic values in the tablea
above represent the total pre-tax intrinsic value (the difference between the closing
stock price on the last trading day of the December 31, 2021 and the exercise price, multiplied by the number of in-the-money
options) that would have been received by the option holders had all option holders exercised their in-the-money options at
period end. Under the OIP, the total intrinsic value of options exercised for the years ended December 31, 2021 and 2020 were
options exercised for the years ended
$43 million, and $21 million, respectively. The company recognized tax benefits fromff
December 31, 2021 and 2020 of $(8) million and $(4) million, respectively.
Under the EIP, the total intrinsic value of options exercised for the year ended December 31, 2019 was $16 million. The
company recognized tax benefits fromff
options exercised for the year ended December 31, 2019 of $(3) million.
As of December 31, 2021, $4 million of total unrecognized pre-tax compensation expense related to nonvested stock options is
expected to be recognized over a weighted-average period of about 1.20 years.
F-64
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Restricted Stock Units and Performance Share Units
RSUs granted under the EIP serially vest over 3 years. RSUs granted under the Historical Dow plans vest after a designated
period, generally 1 year to 3 years. RSUs granted under the OIP serially vest over 3 years. Upon vesting, these RSUs convert
one-for-one to Corteva Common Stock. A retirement-eligible employee retains any granted awards upon retirement provided
the employee has rendered at least six months of service foll
owing the grant date. Additional RSUs are also granted periodically
to key senior management employees. These RSUs generally vest over periods ranging from 3 years to 5 years. The fair value
of all stock-settled RSUs is based upon
the market price of the underlying common stock as of the grant date.
u
ff
The company grants PSUs to senior leadership. In 2021, there were 343,632 PSUs granted. Vesting for PSUs granted in 2021
and 2020 is partially based on the realization of the Company’s improvement of its Returnt
on Invested Capital (“ROIC”) and
e Period. Vesting for PSUs granted in 2019 is partially based on the
Operating Earnings Per Share (EPS) during the Performanc
realization of the Company’s improvement of its Returnt
on Invested Capital (“ROIC”) and Operating EBITDA during the
Performance Period. Performance and payouts are determined independently for each metric. The actual award, delivered in
Corteva Common Stock, can range from zero percent to 200 percent of the original grant. The weighted-average grant date fair
value of the PSUs granted in 2021 of $45.37 was based upon the market price of the underlying common stock as of the grant
date.
ff
ff
Nonvested awards of RSUs and PSUs are shown below.
RSUs & PSUs
Nonvested at January 1, 2021
Granted
Vested
Forfeited
Nonvested at December 31, 2021
For the Year Ended December 31, 2021
Number of Shares
(in thousands)
i
Weighte
d Average Grant
Date Fair Value
(per share)e
5,883 $
1,536 $
(1,583) $
(234) $
5,602 $
31.54
45.30
35.59
32.99
34.11
The total faiff
$49 million, respectively. The weighted-average grant-date faiff
December 31, 2021 and 2020 was $45.30 and $31.15, respectively.
r value of stock units vested under the OIP for the years ended December 31, 2021 and 2020 was $56 million and
r value of stock units granted under the OIP for the years ended
The total faiff
weighted-average grant-date fair value of stock units granted under the EIP for the year ended December 31, 2019 was $52.19.
r value of stock units vested under the EIP during the years ended December 31, 2019 was $79 million. The
As of December 31, 2021, $45 million of total unrecognized pre-tax compensation expense related to RSUs and PSUs is
expected to be recognized over a weighted average period of 1.13 years.
NOTE 22 - FINANCIAL INSTRUMENTS
At December 31, 2021 and 2020, the company had $3,400 million and $2,511 million, respectively, of held-to-maturit
y
securities (primarily time deposits and money market funds) classified as cash equivalents, as these securities had maturities of
three months or less at the time of purchase; and $86 million and $43 million at December 31, 2021 and 2020, respectively, of
securities as these securities had maturities of more
held-to-maturit
than three months to less than one year at the time of purchase. The company’s investments in held-to-maturit
y securities are
held at amortized cost, which approximates faiff
r value. Additionally, at December 31, 2020, the company had $226 million of
available-for-sale securities (see below "Debt Securities" for further discussion). The above noted securities are included in cash
and cash equivalents, marketablea
securities, and other current assets in the Consolidated Balance Sheets.
y securities (primarily time deposits) classified as marketablea
t
t
t
Derivative Instruments
Objectives and Strategies for Holding Derivative Instruments
In the ordinary course of business, the company enters into contractual arrangements (derivatives) to reduce its exposure to
foreign currency and commodity price risks. The company has established a variety of derivative programs to be utilized forff
financial risk management. These programs reflect varying levels of exposure coverage and time horizons based on an
assessment of risk.
F-65
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Derivative programs have procedures and controls and are approved by the Corporat
e Financial Risk Management Committee,
consistent with the company's financial risk management policies and guidelines. Derivative instruments used are forwards,
options, futures and swaps.a
The company has not designated any non-derivatives as hedging instruments.
r
The company's financial risk management procedures also address counterparty credit approval, limits and routine exposure
monitoring and reporting. The counterparties to these contractual
ons and majora
t
loss in the event of
commodity exchanges, and multinational grain exporters. The company is exposed to credit
nonperformance by these counterparties. The company utilizes collateral support annex agreements with certain counterparties
to limit its exposure to credit losses. The company anticipates performance by counterparties to these contracts and therefore no
material loss is expected. Market and counterparty credit risks associated with these instruments are regularly reported to
management.
arrangements are majora
financial instituti
t
The notional amounts of the company's derivative instruments were as follows:
Notional Amounts
(In millions)
i
Derivatives desidd
Foreign currency contracts
Commodity contracts
gnat
ed as hedging instrume
tt
nts:
Derivatives not designated as hedging instrume
tt
nts:
Foreign currency contracts
Commodity contracts
December 31, 2021
December 31, 2020
$
$
$
$
1,252 $
845 $
103 $
4 $
1,164
383
647
—
Foreign Currency Risk
The company's objective in managing exposure to foreign currency fluctuations is to reduce earnings and cash flow volatility
associated with forei
gn subsidiaries against
gn currency rate changes and to mitigate the exposure of certain investments in forei
changes in the Euro/USD exchange rate. Accordingly, the company enters into various contracts that change in value as foreign
exchange rates change to protect the value of its existing foreign currency-denominated assets, liabilities, commitments,
investments and cash flows.
ff
ff
a
The company uses foreign exchange contracts to offset its net exposures, by currency, related to the foreign currency
denominated monetary assets and liabilities of its operations. The primary business objective of this hedging program is to
maintain an approxi
mately balanced position in foreign currencies so that exchange gains and losses resulting from exchange
rate changes, after related tax effects, are minimized. The company also uses foreign currency exchange contracts to offset a
portion of the company's exposure to certain forecasted transactions as well as the translation of forei
gn currency-denominated
earnings. The company also uses commodity contracts to offset risks associated with foreign currency devaluation in certain
countries.
ff
Commodity Price Risk
Commodity price risk management programs serve to reduce exposure to price flucff
tuations on purchases of inventory such as
corn and soybeans. The company enters into over-the-counter and exchange-traded derivative commodity instruments to hedge
commodity exposures.
the commodity price risk associated with agricultural
t
Derivatives Designated as Cash Flow Hedges
Commodity Contractstt
The company enters into over-the-counter and exchange-traded derivative commodity instruments, including options, futures
and swaps,a
to hedge the commodity price risk associated with agriculturet
commodity exposures.
While each risk management program has a different time maturity period, most programs currently do not extend beyond the
next two years. Cash flowff
into earnings during the same period in which the related exposure
impacts earnings. Reclassifications are made sooner if it appears that a forecasted transaction is probable of not occurring.
hedge results are reclassifiedff
F-66
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
The folff
lowing tablea
comprehensive loss:
summarizes the after-tax effecff
t of commodity contract cash flowff
hedges on accumulated other
(In millions)
Beginning balance
Additions and revaluations of derivatives designated as cash flowff
hedges
Clearance of hedge results to earnings
Ending balance
For the Year Ended December 31,
2021
2020
2019
$
$
(16) $
92
(29)
47 $
2 $
(44)
26
(16) $
(26)
16
12
2
At December 31, 2021, an after-tax net gain of $36 million is expected to be reclassified fromff
comprehensive loss into earnings over the next twelve months.
accumulated other
Foreigni Currency Contractt
The company enters into forward contracts to hedge the foreign currency risk associated with forecasted transactions within
certain foreign subsidiaries.
ts
While each risk management program has a different time maturity period, most programs currently do not extend beyond the
next two years. Cash flow hedge results are reclassifiedff
into earnings during the same period in which the related exposure
impacts earnings. Reclassifications are made sooner if it appears that a forecasted transaction is not probable of occurring.
summarizes the after-tax effecff
t of foreff
ign currency cash flowff
hedges on accumulated other comprehensive
s
Additions and revaluations of derivatives designated as cash flow hedge
Clearance of hedges results to earnings
e
Ending balanc
For the Year Ended
December 31, 2021
For the Year Ended
December 31, 2020
$
$
(17) $
4
2
25
32 $
—
(3)
(14)
(17)
The following tablea
loss:
(In millions)
e
Beginning balanc
At December 31, 2021, an after-tax net gain of $32 million is expected to be reclassified fromff
comprehensive loss into earnings over the next twelve months.
accumulated other
Derivatives Designated as Net Investment Hedges
Foreigni Currency Contractt
The company has designated €450 million of forward contracts to exchange EUR as net investment hedges. The purpose of
these forward contracts is to mitigate FX exposure related to a portion of the company’s Euro net investments in certain foreign
subsidiaries against changes in Euro/USD exchange rates. These hedges will expire and be settled in 2023, unless terminated
early at the discretion of the company.
ts
The company elected to appl
a
y the spot method in testing for effectiveness of the hedging relationship.
Derivatives not Designated in Hedging Relationships
Foreigni Currency Contractstt
The company uses foreign exchange contracts to reduce its net exposure, by currency, related to foreign currency-denominated
monetary assets and liabilities of its operations so that exchange gains and losses resulting from exchange rate changes are
minimized. The netting of such exposures precludes the use of hedge accounting; however, the required revaluation of the
forward contracts and the associated forei
gn currency-denominated monetary assets and liabilities intends to achieve a minimal
earnings impact, after taxes. The company also uses foreign currency exchange contracts to offset a portion of the company’s
exposure to the translation of certain foreign currency-denominated earnings so that gains and losses on the contracts offset
changes in the USD value of the related foreign currency-denominated earnings over the relevant aggregate period.
ff
Commodity Contractstt
The company utilizes options, futures and swapsa
commodity price flucff
that are not designated as hedging instruments to reduce exposure to
tuations on purchases of inventory such as corn and soybeans. The company uses forward agreements,
F-67
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
with durations less than one year, to buy and sell USD priced commodities in order to reduce its exposure to currency
devaluation for a portion of its local currency cash balances. Counterparties to the forward sales agreements are multinational
grain exporters and subjeu
ct to the company’s financial risk management procedures.
Fair Value of Derivative Instruments
Asset and liability derivatives subject to an enforceablea master netting arrangement with the same counterparty are presented on
a net basis in the Consolidated Balance Sheets. The presentation of the company's derivative assets and liabilities is as follow
s:
ff
Balance Sheet Location
Gross
December 31, 2021
Counterparty
and Cash
Collateral
Netting1
Net Amounts Included in
the Consolidated Balance
Sheet
37
11
3
51
1
3
2
6
(In millions)
Asset derivatives:
Derivatives designated as
hedging instruments:
Foreign currency contracts
Derivatives not designated as
hedging instruments:
Foreign currency contracts
Commodity contracts
Total asset derivatives
Liability derivatives:
Derivatives designated as
hedging instruments:
Foreign currency contracts
Derivatives not designated as
hedging instruments:
Other current assets
$
37 $
— $
Other current assets
Other current assets
31
3
71 $
$
(20)
—
(20) $
Accruedr
and other current liabilities $
1 $
— $
Foreign currency contracts
Commodity contracts
Accruedr
and other current liabilities
Accrued and other current liabilities
Total liability derivatives
23 $
2
26 $
$
(20)
—
(20) $
F-68
15
—
15
38
57
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Balance Sheet Location
Gross
December 31, 2020
Counterparty
and Cash
Collateral
Netting1
Net Amounts Included in
the Consolidated Balance
Sheet
(In millions)
Asset derivatives:
Derivatives designated as
hedging instruments:
Foreign currency contracts
Derivatives not designated as
hedging instruments:
Other current assets
Foreign currency contracts
Other current assets
Total asset derivatives
$
$
15 $
— $
40
55 $
(40)
(40) $
Liability derivatives:
Derivatives designated as
hedging instruments:
Foreign currency contracts
Derivatives not designated as
hedging instruments:
Foreign currency contracts
Accruedr
and other current liabilities $
38 $
— $
Accrued and other current liabilities
97
(40)
Total liability derivatives
95
1. Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master
netting arrangements between the company and its counterparties and the payable or receivable for cash collateral held or placed with the same
counterparty.
135 $
(40) $
$
Effeff ct of Derivative Instruments
(In millions)
Derivatives designated as hedging instruments:
Net investment hedges:
Foreign currency contracts
Cash flow hedges:
Foreign currency contracts
Commodity contracts
Total derivatives designated as hedging instruments
1. OCI is defined as other comprehensive income (loss).
Amount of Gain (Loss) Recognized in OCI1 - Pre-Tax
For the Year Ended December 31,
2020
2021
2019
$
$
37 $
(45) $
27
129
193 $
(4)
(62)
(111) $
—
—
23
23
F-69
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
(in millions)
Derivatives designated as hedging instruments:
Cash flow hedges:
Foreign currency contracts2
Commodity contracts2
Total derivatives designated as hedging instruments
Derivatives not designated as hedging instruments:
Foreign currency contracts3
Foreign currency contracts2
Commodity contracts2
Total derivatives not designated as hedging instruments
Amount of (Loss) Gain Recognized in Income - Pre-Tax1
For the Year Ended December 31,
2020
2019
2021
$
(29) $
42
13
18
(14)
(18)
(14)
17 $
(35)
(18)
89
14
9
112
—
(13)
(13)
(58)
—
9
(49)
Total derivatives
1.
2. Recorded in cost of goods sold.
3. Gain recognized in other income - net was partially offset by the related gain on the foreign currency-denominated monetary assets and liabilities of the
For cash flow hedges, this represents the portion of the gain (loss) reclassified from accumulated OCI into income during the period.
94 $
(1) $
(62)
$
company's operations. See Note 9 - Supplementary Information, to the Consolidated Financial Statements for additional information.
r value of the availablea
Debt Securities
-for-sale securities as of December 31, 2020 was determined using Level 1 inputs
The estimated faiff
identical assets
within the fair value hierarchy. Level 1 measurements were based on quoted market prices in active markets forff
and liabilities. The availablea
-for-sale securities at of December 31, 2020 are held by certain foreign subsidiaries in which the
USD is not the functional currency. The fluctuations in foreign exchange are recorded in accumulated other comprehensive loss
within the Consolidated Statements of Equity. These fluctuations are subsequently reclassified fromff
accumulated other
comprehensive income (loss) to earnings in the period in which the marketable securities are sold and the gains and losses on
these securities offset a portion of the foreign exchange fluctuations in earnings for the company.
The following tablea
provides the investing results fromff
available-for-sale securities forff
the year ended December 31,2021:
Investing Results
(In millions)
Proceeds from sales of availablea
Gross realized losses
-for-sale securities
For the Year Ended December 31,
2021
$
$
226
(7)
F-70
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 23 - FAIR VALUE MEASUREMENTS
The following tablea
s summarize the basis used to measure certain assets and liabia lities at fair value on a recurring basis:
December 31, 2021
(In millions)
Assets at fair value:
Marketable securities
Derivatives relating to:1
Foreign currency
Equity securities2
Total assets at fair value
Liabilities at fair value:
Derivatives relating to:1
Foreign currency
Total liabilities at fair value
December 31, 2020
(In millions)
Assets at fair value:
Marketable securities
Debt securities:
U.S. treasuries3
Derivatives relating to:1
Foreign currency
Total assets at fair value
Liabilities at fair value:
Derivatives relating to:1
Foreign currency
Signifii cant Other
t
Inputs
Observable
Level 1
Level 2
— $
—
48
48 $
—
— $
86
68
—
154
24
24
t
Signifii cant Other
Inputs
Observable
Level 1
Level 2
— $
226
—
226 $
43
—
55
98
— $
135
$
$
$
$
$
$
Total liabilities at fair value
1.
2. The company's equity securities are included in "other assets" in the Consolidated Balance Sheets.
3. The company's investments in U.S. treasuries, which are primarily available-for-sale, are included in "marketable securities" in the Consolidated Balance
See Note 22 - Financial Instruments, to the Consolidated Financial Statements, for the classification of derivatives in the Consolidated Balance Sheets.
— $
135
$
Sheets.
For assets and liabilities classified as Level 1 measurements (measured using quoted prices in active markets), total fair value is
either the price of the most recent trade at the time of the market close or the official close price, as defined by the exchange on
which the asset is most actively traded on the last trading day of the period, multiplied by the number of units held without
consideration of transaction costs.
For assets and liabilities classified as Level 2 measurements, where the security is frequently traded in less active markets, fair
value is based on the closing price at the end of the period; where the security is less frequently traded, fair value is based on the
price a dealer would pay for the security or similar securities, adjusted for any terms specific to that asset or liabia lity, or by
using observable market data points of similar, more liquid securities to imply the price. For time deposits classified as held-to-
maturity investments and reported at amortized cost, fair value is based on an observable interest rate forff
similar securities.
Market inputs are obtained fromff
shed and recognized vendors of market data and subjected to tolerance and quality
checks.
well-establia
F-71
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
For derivative assets and liabilities, standard industry models are used to calculate the fair value of the various financial
ates and
instruments based on significant observable market inputs, such as foreign exchange rates, commodity prices, swap ra
implied volatilities obtained fromff
shed and recognized
vendors of market data and subjected to tolerance/quality checks.
various market sources. Market inputs are obtained fromff
well-establia
For all other assets and liabilities for which observable inputs are used, fair value is derived through the use of fair value
model or other standard pricing models. See Note 22 - Financial Instruments, to the
models, such as a discounted cash flowff
Consolidated Financial Statements, for further information on the types of instruments used by the company for risk
management.
There were no transfers between Levels 1 and 2 during
d
the years ended December 31, 2021 and 2020.
For assets classified as Level 3 measurements, the fair value is based on significant unobservable inputs including assumptim ons
where there is little, if any, market activity. The fair value of the company’s interests held in trade receivable conduits is
determined by calculating the expected amount of cash to be received using the key input of anticipated credit losses in the
portfolio of receivables sold that have not yet been collected. Given the short-term naturet
of the underlying receivables,
discount rate and prepayments are not factors in determining the fair value of the interests.
Fair Value Measurements on a Nonrecurring Basis
The following tablea
summarizes the basis used to measure certain assets at fair value on a nonrecurring basis:
Basis of Fair Value Measurements on a Nonrecurring Basis
(In millions)
2019
Assets at fair value:
Developed technology
Other intangible assets
IPR&D
Signifii cant Other
Unobservable Inputs
3
(Level 3)
TT
T
otal
Losses
$
$
$
— $
— $
— $
(1)
(6)
(137)
During the third and fourth quarter of 2019, the company recorded impairment charges to developed technology, other
intangible assets, and IPR&D. See Note 7 - Restructuring
and Asset Related Charges - Net, and Note 15 - Goodwill and Other
Intangible Assets, to the Consolidated Financial Statements, for further discussion of these fair value measurements.
t
F-72
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 24 - GEOGRAPRR HIC INFORMATION
Sales are attributed to geographic
on asset location.
a
areas based on customer location; long-lived assets are attributed to geographic
a
areas based
(In millions)
United States
Canada
EMEA
Latin America1
Asia Pacificff
Total
Net Sales
For the Year Ended December 31,
2020
6,782 $
6,510 $
2019
2021
754
3,123
3,545
1,451
658
2,842
2,805
1,402
15,655 $
14,217 $
6,255
674
2,740
2,889
1,288
13,846
$
$
1. Net sales for Brazil for the years ended December 31, 2021, 2020 and 2019 were $2,315 million, $1,724 million and $1,794 million, respectively.
(In millions)
United States
Canada
EMEA
Latin America
Asia Pacific
Total
$
$
2021
Net Property
2020
2019
3,051 $
3,014 $
114
566
468
130
122
601
510
149
4,329 $
4,396 $
3,069
125
566
608
178
4,546
F-73
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 25 - SEGMENT INFORMATION
Corteva’s reportable segments reflects the manner in which its chief operating decision maker ("CODM") allocates resources
and assesses performance, which is at the operating segment level (seed and crop protection). For purposes of allocating
resources to the segments and assessing segment performance, segment operating EBITDA is the primary measure used by
Corteva’s CODM. The company defines segment operating EBITDA as earnings (loss) (i.e., income (loss) from continuing
operations before income taxes) before interest, depreciation, amortization, corporate expenses, non-operating (benefits) costs,
certain foreign currency
foreign exchange gains (losses), and net unrealized gain or loss from mark-to-market activity forff
derivative instruments that do not qualify for hedge accounting, excluding the impact of significant items. Effective January 1,
2021, on a prospective basis, the company excludes fromff
segment operating EBITDA net unrealized gain or loss from mark-to-
market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting. Non-operating
(benefits) costs consists of non-operating pension and other post-employm
ent benefit (OPEB) costs, tax indemnification
adjustments, environmental remediation and legal costs associated with legacy EID businesses and sites, and the 2021 officer
indemnification payment. Tax indemnification adjustments relate to changes in indemnification balances, as a result of the
application of the terms of the Tax Matters Agreement, between Corteva and Dow and/or DuPont that are recorded by the
certain foreign currency
company as pre-tax income or expense. Net unrealized gain or loss from mark-to-market activity forff
changes in fair
derivative instruments that do not qualify for hedge accounting represents the non-cash net gain (loss) fromff
gn currency derivative contracts. Upon settlement, which is within the same calendar year of
value of certain undesignated forei
execution of the contract, the realized gain (loss) fromff
r value of the non-qualified foreign currency derivative
the changes in faiff
contracts will be reported in the respective segment results to reflect the economic effects of the foreign currency derivative
contracts without the resulting unrealized mark to faiff
r value volatility. For the year ended December 31, 2019, segment
operating EBITDA is calculated on a pro forma basis, as this is the manner in which the CODM assesses performance and
allocates resources or expense.
m
ff
Pro forma adjustments used in the calculation of pro forma segment operating EBITDA for the year ended December 31, 2019
were determined in accordance with Article 11 of Regulation S-X that was in effect prior to recent amendments. These
adjustments give effect to the Merger, the debt retirement transactions related to paying off or retiring portions of EID’s
existing debt liabilities (as discussed in Note 17 - Long-Term Debt and Available Credit Facilities, to the Consolidated
Financial Statements), and the separation and distribution to DowDuPont stockholders of all the outstanding shares of Corteva
common stock as if they had been consummated on January 1, 2016.
Corporate Profile
The company conducts its global operations through the folff
lowing reportablea
segments:
Seed
The company’s seed segment is a global leader in developing and supplying advanced germplasm and traits that produce
optimum yield for farms around the world. The segment is a leader in many of the company’s key seed markets, including
North America corn and soybeans, Europe corn and sunflower, as well as Brazil, India, South Africa and Argentina corn. The
segment offers trait technologies that improve resistance to weather, disease, insects and herbicides used to control weeds, and
trait technologies that enhance food
and nutritional characteristics. In addition, the segment provides digital solutions that assist
farmer decision-making with a view to optimize product selection and, ultimately, help maximize yield and profitability.
ff
Crop Protection
The crop protection segment serves the global agricultural input industry with products that protect against weeds, insects and
other pests, and disease, and that improve overall crop health both above and below ground via nitrogen management and seed-
applied technologies. The segment is a leader in global herbicides, insecticides, nitrogen stabilizers and pasturet
and range
management herbicides.
F-74
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
(In millions)
As of and for the Year Ended December 31, 2021
Net sales
Segment operating EBITDA
Depreciation and amortization
Segment assets
Investments in nonconsolidated affilff
iates
Purchases of property, plant and equipment
As of and for the Year Ended December 31, 2020
Net sales
Segment operating EBITDA
Depreciation and amortization
Segment assets
Investments in nonconsolidated affilff
iates
Purchases of property, plant and equipment
As of and for the Year Ended December 31, 2019
Net sales
Pro forma segment operating EBITDA
Depreciation and amortization
Segment assets1
Investments in nonconsolidated affiliates
Purchase of property, plant and equipment
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Seed
Crop Protection
Total
8,402 $
1,512 $
866 $
23,270 $
29 $
237 $
7,756 $
1,208 $
798 $
23,751 $
22 $
225 $
7,590 $
1,040 $
628 $
25,387 $
27 $
373 $
7,253 $
1,202 $
377 $
12,428 $
47 $
336 $
6,461 $
1,004 $
379 $
13,099 $
44 $
250 $
6,256 $
1,066 $
372 $
13,492 $
39 $
293 $
15,655
2,714
1,243
35,698
76
573
14,217
2,212
1,177
36,850
66
475
13,846
2,106
1,000
38,879
66
666
1. On June 1, 2019, as a result of changes in reportable segments, $3,382 million of goodwill was reallocated from the seed reportable segment to the crop
protection reportable segment. This change was not reflected in segment assets prior to June 1, 2019.
Reconciliation to Consolidated Financial Statements
Income (loss) from continuing operations after income taxes to
segment operating EBITDA
(In millions)
Income (loss) from continuing operations after income taxes
Provision for (benefit fromff
Income (loss) from continuing operations before income taxes
) income taxes on continuing operations
$
Depreciation and amortization
Interest income
Interest expense
Exchange (gains) losses - net 1
Non-operating (benefits) costs - net
Mark-to-market (gains) losses on certain foreign currency contracts
not designated as hedges2
Significant items
Pro forma adjustments
Corporate expenses
For the Year Ended December 31,
2020
2019
2021
1,822 $
524
2,346
1,243
(77)
30
54
(1,256)
—
236
756 $
(81)
675
1,177
(56)
45
174
(316)
388
(270)
(46)
(316)
1,000
(59)
136
66
(129)
991
298
138
2,714 $
125
2,212 $
119
2,106
Segment operating EBITDA3
1. Excludes a $(33) million foreign exchange loss for the year ended December 31, 2019 associated with the devaluation of the Argentine peso. See Note 9 -
$
Supplementary Information, to the Consolidated Financial Statements, for additional information.
2. Effective January 1, 2021, on a prospective basis, the company excludes net unrealized gain or loss from mark-to-market activity for certain foreign currency
derivative instruments that do not qualify for hedge accounting. There were no unrealized mark-to-market (gains) losses for the years ended December 31,
2020 and 2019.
3. The year ended December 31, 2019 is presented on a pro forma basis, prepared in accordance with Article 11 of Regulation S-X that was in effect prior to
recent amendments.
F-75
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Segment assets to total assets (in millions)
December 31, 2021
December 31, 2020
Total segment assets
Corporate assets
Total assets
$
$
35,698 $
6,646
42,344 $
36,850
5,799
42,649
Other Items (in millions)
For the Year Ended December 31, 2019
Depreciation and amortization
Purchase of property, plant and equipment
Segment Totals
Adjustments 1
Consolidated Totals
$
$
1,000 $
666 $
599 $
497 $
1,599
1,163
1. See Note 5 - Divestitures and Other Transactions, to the Consolidated Financial Statements, for additional information.
F-76
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
Significant Pre-tax (Charges) Benefits Not Included in Segment Operating EBITDA
The years ended December 31, 2021, 2020 and 2019, respectively, included the following significant pre-tax (charges) benefits
which are excluded from segment operating EBITDA:
(In millions)
Seed
Crop Protection
Corporate
Total
For the Year Ended December 31, 2021
Restructuring and Asset Related Charges - Net 1
Equity securities mark-to-market gain (loss)
Employee Retention Credit
Contract termination
Total
(In millions)
For the Year Ended December 31, 2020
Restructuring and Asset Related Charges - Net 1
Loss on Divestiture 2
Total
(In millions)
For the Year Ended December 31, 20193
Restructuring and Asset Related Charges - Net 1
Integration and Separation Costs 4
Loss on Divestiture 5
Amortization of Inventory Step Up 6
Loss on Early Extinguishment of Debt 7
Argentina Currency Devaluation 8
Total
$
$
$
$
$
$
(152) $
47
37
(30)
(98) $
(59) $
—
23
(24)
(60) $
(78) $
—
—
—
(78) $
Seed
Crop Protection
Corporate
Total
(165) $
—
(165) $
(109) $
(53)
(162) $
(61) $
—
(61) $
Seed
Crop Protection
Corporate
Total
(213) $
(23) $
14 $
—
(24)
(67)
—
—
(304) $
—
—
—
—
—
(23) $
(632)
—
—
(13)
(33)
(664) $
(289)
47
60
(54)
(236)
(335)
(53)
(388)
(222)
(632)
(24)
(67)
(13)
(33)
(991)
1.
2.
3.
4.
5.
6.
7.
8.
Includes Board approved restructuring plans and asset related charges as well as accelerated prepaid amortization. See Note 7 - Restructuring and
Asset Related Charges - Net, to the Consolidated Financial Statements, for additional information.
Includes a loss recorded in other income - net related to the sale of the La Porte site.
The year ended December 31, 2019 is presented on a pro forma basis, prepared in accordance with Article 11 of Regulation S-X that was in effect
prior to recent amendments.
Integration and separation costs include costs incurred to prepare for and close the Merger, post-Merger integration expenses, and costs incurred to
prepare for the Internal Reorganizations. Beginning in the second quarter of 2019, this includes both integration and separation costs.
Includes a loss recorded in other income - net related to DAS's sale of a joint venture related to synergy actions.
Includes a charge related to the amortization of the inventory that was stepped up to fair value in connection with the Merger.
Includes a loss on early extinguishment of debt related to the difference between the redemption price and the par value of the Make Whole Notes and
Term Loan Facility, partially offset by the write-off of unamortized step-up related to the fair value step-up of EID's debt.
Includes a charge included in other income - net associated with remeasuring the company’s Argentine Peso net monetary assets, resulting from an
unexpected August primary election result in Argentina. Throughout the three months ended September 30, 2019, the Argentine Peso dropped
approximately a third of its value against the US dollar and in September of 2019, the country’s central bank announced new restrictions on foreign
currency transactions.
F-77
Corteva, Inc.
Notes to the Consolidated Financial Statements (continued)
NOTE 26 - SUBSEQUENT EVENTS
In February 2022, the company entered into a new committed receivable repurchase facff
o $500 million (the "2022
Repurchase Facility"), which expires in December 2022. Under the 2022 Repurchase Facility, Corteva may sell a portfolio of
available and eligible outstanding customer notes receivables to participating institutions and simultaneously agree to
repurchase at a future
date. The 2022 Repurchase Facility is considered a secured borrowing with the customer notes
receivables inclusive of those that are sold and repurchased, equal to 105 percent of the outstanding amounts borrowed utilized
as collateral. Borrowings under the 2022 Repurchase Facility will have an interest rate equal to the Adjusted Term Secured
Overnight Financing Rate ("SOFR") plus a margin of 0.75 percent.
ility of up tu
ff
F-78
E. I. du Pont de Nemours and Company
Index to the Consolidated Financial Statements
Management's Reports on Responsibility for Financial Statements and Internal Control over
Financial Reporting
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Financial Statements:
Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, 2020, and
2019
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Cash Flows forff
Consolidated Statements of Equity for the years ended December 31, 2021, 2020, and 2019
the years ended December 31, 2021, 2020, and 2019
Notes to the Consolidated Financial Statements
Page(s)
F-80
F-81
F-83
F-84
F-85
F-86
F-88
F-89
F-79
Management's Reports on Responsibility for Financial Statements and
Internal Control over Financial Reporting
Management's Report on Responsibility for Financial Statements
the Consolidated Financial Statements and the other finff ancial information contained in this
Management is responsible forff
Annual Report on Form 10-K. The financial statements have been prepared in accordance with generally accepted accounting
principles in the United States of America ("GAAP") and are considered by management to present fairly EID's financial
position, results of operations and cash flows. The financial statements include some amounts that are based on management's
best estimates and judgments. The financial statements have been audited by EID's independent registered public accounting
firm, PricewaterhouseCoopers LLP. The purpose of their audit is to express an opinion as to whether the Consolidated Financial
Statements included in this Annual Report on Form 10-K present fairly, in all material respects, EID's financial position, results
of operations and cash flows in conformity with GAAP. Their report is presented on the folff
lowing pages.
Management's Report on Internal Control over Financial Reporting
establia
Management is responsible forff
shing and maintaining an adequate system of internal control over financial reporting as
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. EID's internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with GAAP. EID's internal control over financial
reporting includes those policies and procedures that:
i.
ii.
iii.
pertain to the maintenance of records that, in reasonable detail, accurately and faiff
dispositions of the assets of EID;
rly reflect the transactions and
provide reasonable assurance that
statements in accordance with generally accepted accounting principles and that receipts and expenditures
are being made only in accordance with authorization of management and directors of EID; and
transactions are recorded as necessary to permit preparation of financial
of EID
t
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or
disposition of EID's assets that could have a material effect on the financial statements.
Internal control over financial reporting has certain inherent limitations which may not prevent or detect misstatements. In
addition, changes in conditions and business practices may cause variation in the effectiveness of internal controls.
Management assessed the effectiveness of EID's internal control over financial reporting as of December 31, 2021, based on
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-
Integrated
tive
internal control over financial reporting as of December 31, 2021.
Framework (2013). Based on its assessment and those criteria, management concluded that EID maintained effecff
e
PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of EID's internal
ncial reporting as of December 31, 2021, as stated in their report, which is presented on the folff
control over finaff
lowing pages.
Charles V. Magro
Chief Executive Offiff cer and Director
David J. Anderson
Executive Vice President,
Chief Financial Officer and Director
February 10, 2022
F-80
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of E. I. du Pont de Nemours and Company
Opinions on the Finanii
cialii Statett ments and Intertt nal
rr
Control over Financ
ii
ee
ial Reporti
ngii
We have audited the accompanying consolidated balance sheets of E. I. du Pont de Nemours and Company and its subsidiaries
(the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive
each of the three years in the period ended December 31, 2021, including the related
income (loss), equity and cash flows forff
notes and schedule of valuation and qualifying accounts forff
each of the three years in the period ended December 31, 2021
appearing under Item 15(a) (collectively referred to as the “consolidated financial statements”). We also have audited the
Company's internal control over financial reporting as of December 31, 2021, based on criteria establia
-
e
Integrate
tt
ework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
shed in Internal Control
d FramFF
red to above present fairly, in all material respects, the financial
In our opinion, the consolidated financial statements referff
position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows
for each of the
three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
eworkrr (2013)
financial reporting as of December 31, 2021, based on criteria establia
issued by the COSO.
shed in Internal Control
e
- InteII
grate
d FramFF
ff
tt
s
Basis for Opinion
ii
The Company's management is responsible forff
these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated finaff
ncial statements are freff e of material misstatement,
whether dued
to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
ncial statements included performing procedures to assess the risks of material misstatement
Our audits of the consolidated finaff
of the consolidated finaff
ncial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
ncial statements. Our audit of internal
management, as well as evaluating the overall presentation of the consolidated finaff
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definitiontt
and Limi
taii
ii
tions of Internal
tt
tt
Control
over FinFF ancial Reportingii
ity of finaff
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
ncial reporting and the preparation of financial statements for external purposes in accordance with generally
reliabila
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and faiff
rly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
of the company are being made only in accordance with authorizations of management and directors of the
expenditures
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
t
F-81
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
ff
Criticatt
l Auditdd Matters
tt
ncial
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated finaff
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Goodwill (Se((
e
ed Reporti
ng Unit) Impairme
m
nt Assessment
As described in Notes 2 and 15 to the Corteva, Inc. consolidated financial statements, the Company’s consolidated goodwill
balance was $10.1 billion as of December 31, 2021, and the goodwill associated with the seed reporting unit was $5.4 billion.
Management tests goodwill for impairment at the reporting unit level at least annually, or more frequently when events or
changes in circumstances indicate it is more likely than not that the fair value of a reporting unit has declined below its carrying
value. Management performs an annual goodwill impairment test in the fourth quarter. If management chooses not to complete
a qualitative assessment for a given reporting unit or if the initial assessment indicates that it is more likely than not that the
carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is required. Management
performed quantitative testing on its seed reporting unit and determined that no goodwill impairment existed in 2021.
r value for the seed reporting unit using a discounted cash flow model. Management’s significant
Management determined faiff
al, the terminal growth
assumptim ons in this analysis included future cash flow projections, the weighted average cost of capita
rate, and the tax rate.
The principal considerations for our determination that performing procedures relating to the seed reporting unit goodwill
impairment assessment is a critical audit matter are (i) the significant judgment by management when developing the fair value
of the seed reporting unit; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and
evaluating management’s significant assumptim ons related to projected revenue, the weighted average cost of capita
al, and the
terminal value; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated finaff
ncial statements. These procedures included testing the effectiveness of controls relating to
management’s goodwill impairment assessment, including controls over the valuation of the seed reporting unit. These
procedures also included, among others, (i) testing management’s process for developing the fair value estimate; (ii) evaluating
model; (iii) testing the completeness, accuracy, and relevance of underlying
the appropriateness of the discounted cash flowff
model; and (iv) evaluating the reasonableness of significant assumptim ons used by
data used in the discounted cash flowff
management related to projected revenue,
al, and the terminal value. Evaluating
management’s assumptim ons related to projected revenue and the terminal value involved evaluating whether the assumptim ons
used by management were reasonable considering (i) the current and past performance of the reporting unit; (ii) the consistency
with external market and industry data; and (iii) whether the assumptim ons were consistent with evidence obtained in other areas
of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s
discounted cash flow model and the weighted average cost of capita
the weighted average cost of capita
al and terminal value assumptim ons.
/s/PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 10, 2022
We have served as the Company’s auditor since 1946.
F-82
E. I. du Pont de Nemours and Company
Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF OPERATRR IONS
(In millions, except per share amounts)
Net sales
$
Cost of goods sold
Research and development expense
Selling, general and administrative expenses
Amortization of intangibles
Restructuring and asset related charges - net
Integration and separation costs
Other income - net
Loss on early extinguishment of debt
Interest expense
Income (loss) from continuing operations before income
taxes
Provision for (Benefit from) income taxes on continuing
operations
Income (loss) from continuing operations after income taxes
Loss (income) fromff
income taxes
Net income (loss)
discontinued operations after
Net income (loss) attributablea
to noncontrolling interests
Net income (loss) attributablea
and Company
to E. I. du Pont de Nemours
For the Year Ended December 31,
2020
2019
2021
15,655 $
9,220
1,187
3,209
722
289
—
1,348
—
80
2,296
512
1,784
(53)
1,731
—
14,217 $
8,507
1,142
3,043
682
335
—
212
—
145
575
(105)
680
(55)
625
10
13,846
8,575
1,147
3,065
475
222
744
215
13
242
(422)
(71)
(351)
(671)
(1,022)
8
(1,030)
$
1,731 $
615 $
See Notes to the Consolidated Financial Statements beginning on page F-89.
F-83
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
E. I. du Pont de Nemours and Company
Consolidated Financial Statements
(In millions)
Net income (loss)
Other comprehensive income (loss) - net of tax:
Cumulative translation adjustments
Adjustments to pension benefit plans
Adjustments to other benefit plans
Unrealized gain (loss) on investments
Derivative instruments
Total other comprehensive income (loss)
Comprehensive income (loss)
Comprehensive income (loss) attributablea
noncontrolling interests - net of tax
to
Comprehensive income (loss) attributable to E. I. du Pd
Nemours and Company
ont de
$
For the Year Ended December 31,
2020
2019
2021
$
1,731 $
625 $
(1,022)
(573)
1,037
(621)
10
139
(8)
1,723
—
(26)
(186)
671
(10)
(69)
380
1,005
10
(274)
(718)
(160)
—
28
(1,124)
(2,146)
8
1,723 $
995 $
(2,154)
See Notes to the Consolidated Financial Statements beginning on page F-89.
F-84
CONSOLIDATED BALANCE SHEETS
E. I. du Pont de Nemours and Company
Consolidated Financial Statements
(In millions, except share and per share amounts)
December 31, 2021
December 31, 2020
Assets
Current assets
Cash and cash equivalents
Marketable securities
Accounts and notes receivable - net
Inventories
Other current assets
Total current assets
Investment in nonconsolidated affiliates
Property, plant and equipment
Less: Accumulated depreciation
Net property, plant and equipment
Goodwill
Other intangible assets
Deferred income taxes
Other assets
Total Assets
Liabilities and Equity
Current liabilities
Short-term borrowings and finance lease obligations
Accounts payable
Income taxes payable
Deferred Revenue
Accrued and other current liabilities
Total current liabilities
Long-term debt
Long-term debt - Related party
Other noncurrent liabilities
Deferred income tax liabilities
Pension and other post employment benefits - noncurrent
Other noncurrent obligations
Total noncurrent liabilities
Commitments and contingent liabilities
Stockholders’ equity
Preferred stock, without par value – cumulative; 23,000,000 shares authorized;
issued at December 31, 2021, December 31, 2020:
$4.50 Series – 1,673,000 shares (callable at $120)
$3.50 Series – 700,000 shares (callable at $102)
Common stock, $0.30 par value; 1,800,000,000 shares authorized; 200
issued at December 31, 2021 and December 31, 2020
Additional paid-in capital
Retained earnings (accumulated deficit)
Accumulated other comprehensive income (loss)
Total E. I. du Pont de Nemours and Company stockholders’ equity
Noncontrolling interests
Total equity
Total Liabilities and Equity
$
$
$
$
4,459 $
86
4,811
5,180
1,010
15,546
76
8,364
4,035
4,329
10,107
10,044
438
1,804
42,344 $
17 $
4,126
146
3,201
2,070
9,560
1,100
2,162
1,220
3,124
1,719
9,325
169
70
—
24,196
1,922
(2,898)
23,459
—
23,459
42,344 $
3,526
269
4,926
4,882
1,165
14,768
66
8,253
3,857
4,396
10,269
10,747
464
1,939
42,649
3
3,615
123
2,662
2,148
8,551
1,102
3,459
893
5,176
1,867
12,497
169
70
—
24,049
203
(2,890)
21,601
—
21,601
42,649
See Notes to the Consolidated Financial Statements beginning on page F-89.
F-85
CONSOLIDATED STATEMENTS OF CASH FLOWS
E. I. du Pont de Nemours and Company
Consolidated Financial Statements
For the Year Ended December 31,
2020
2021
20191
$
1,731 $
625 $
(1,022)
(In millions)
Operating activities
Net income (loss)
Adjustments to reconcile net income (loss) to cash provided by (used for)
operating activities:
Depreciation and amortization
Provision for (benefit from) deferred income tax
Net periodic pension and OPEB benefit, net
Pension and OPEB contributions
Net (gain) loss on sales of property, businesses, consolidated companies,
and investments
Restructuring and asset related charges - net
Amortization of inventory step-up
Goodwill impairment charge
Loss on early extinguishment of debt
Other net loss
Changes in assets and liabilities, net
Accounts and notes receivable
Inventories
Accounts payable
Deferred Revenue
Other assets and liabilities
Cash provided by (used for) operating activities
Investing activities
Capital expenditures
Proceeds from sales of property, businesses, and consolidated companies -
net of cash divested
Acquisitions of businesses - net of cash acquired
Investments in and loans to nonconsolidated affiliates
Proceeds from sale of ownership interest in nonconsolidated affiliates
Purchases of investments
Proceeds from sales and maturities of investments
Other investing activities, net
Cash provided by (used for) investing activities
Financing activities
Net change in borrowings (less than 90 days)
Proceeds from related party debt
Payments on related party debt
Proceeds from debt
Payments on debt
Proceeds from exercise of stock options
Payment for acquisition of subsidiary's interest from the noncontrolling
interest
Distributions to DowDuPont
Cash transferred to DowDuPont at Internal Reorganization
Contributions from Dow and DowDuPont
Debt extinguishment costs
Other financing activities, net
Cash provided by (used for) financing activities
1,243
174
(1,292)
(247)
(21)
289
—
—
—
156
(113)
(422)
524
574
93
2,689
(573)
75
—
(4)
—
(204)
345
(1)
(362)
13
52
(1,349)
419
(421)
100
—
—
—
—
—
(42)
(1,228)
1,177
(330)
(340)
(269)
3
335
—
—
—
290
187
104
(118)
71
251
1,986
(475)
83
—
(1)
—
(995)
721
(7)
(674)
—
103
(665)
2,439
(1,441)
56
(60)
—
—
—
—
(51)
381
1,599
(477)
(177)
(323)
(142)
339
272
1,102
13
246
(361)
74
149
632
(928)
996
(1,163)
249
(10)
(10)
21
(138)
160
(13)
(904)
(1,868)
4,240
(219)
1,001
(6,804)
47
—
(317)
(2,053)
3,255
(79)
(58)
(2,855)
(88)
(2,851)
5,024
2,173
Effect of exchange rate changes on cash, cash equivalents and restricted cash
equivalents
Increase (decrease) in cash, cash equivalents and restricted cash equivalents
Cash, cash equivalents and restricted cash equivalents at beginning of period
Cash, cash equivalents and restricted cash equivalents at end of period
$
(136)
963
3,873
4,836 $
7
1,700
2,173
3,873 $
F-86
E. I. du Pont de Nemours and Company
Consolidated Financial Statements
(In millions)
Supplemental cash flow information
Cash paid during the period for
Interest, net of amounts capitalized2
Income taxes
For the Year Ended December 31,
2020
2021
20191
$
30 $
341
36 $
229
263
234
1.
.The cash flows for the year ended December 31, 2019 includes cash flows of EID's ECP and Specialty Products Entities.
2. Reflects interest, net of amounts capitalized, paid to external parties. For information associated with interest paid on related party debt refer to EID's
Note 2 - Related Party Transactions, of the EID Consolidated Financial Statements.
See Notes to the Consolidated Financial Statements beginning on page F-89.
F-87
CONSOLIDATED STATEMENTS OF EQUITY
E. I. du Pont de Nemours and Company
Consolidated Financial Statements
Preferred
Stock
Common
Stock
Additional
Paid-in
Capital
"APIC"
Divisional
Equity
Retained
Earnings
(Accum Deficit)
Accumulated
Other Comp
Income
(Loss)
Non-
controlling
Interests
Total
Equity
$
— $
— $
— $
78,259 $
— $
(3,360) $
254 $ 75,153
(640)
(390)
(1,124)
8
(1,022)
(1,124)
(In millions)
Balance at January 1, 2019
Net (loss) income
Other comprehensive income (loss)
Preferred dividends ($4.50 Series - $4.50 per
share, $3.50 Series - $3.50 per share)
Distributions to DowDuPont
Contributions from DowDuPont
Issuance of DowDuPont stock
Issuance of Corteva stock
Share-based compensation
Impact of Internal Reorganizations
Reclassification of Divisional Equity to Additional
Paid-in Capital
239
23,936
(24,175)
Other - net
(25)
Balance at December 31, 2019
$
239 $
— $
23,958
(2)
$
Net income (loss)
Other comprehensive income (loss)
Issuance of Corteva Stock
Preferred dividends ($4.50 Series - $4.50 per
share, $3.50 Series - $3.50 per share)
Share-based compensation
Acquisition of noncontrolling interest in
consolidated subsidiaries
Other - net
56
(5)
60
(37)
17
(2)
8
41
(2)
(317)
3,255
39
62
(56,479)
(6)
(10)
(317)
3,255
39
8
103
1,214
(231)
(55,496)
(10)
(24)
—
(61)
(406) $
(3,270) $
7 $ 20,528
380
615
(5)
(1)
10
(15)
(2)
625
380
56
(10)
59
(52)
15
Balance at December 31, 2020
$
239 $
— $
24,049
$
203 $
(2,890) $
— $ 21,601
Net income (loss)
Other comprehensive income (loss)
Issuance of Corteva Stock
Preferred dividends ($4.50 Series - $4.50 per
share, $3.50 Series - $3.50 per share)
Share-based compensation
Other - net
100
59
(12)
(8)
1,731
(10)
(3)
1
1,731
(8)
100
(10)
56
(11)
Balance at December 31, 2021
$
239 $
— $
24,196
$
1,922 $
(2,898) $
— $ 23,459
See Notes to the Consolidated Financial Statements beginning on page F-89.
F-88
E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements
Table of Contents
Note
1
2
3
4
Basis of Presentation
Related Party Transactions
Income Taxes
Segment Information
Page
F-90
F-91
F-91
F-93
F-89
E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
NOTE 1 - BASIS OF PRESENTATION
As a result of the Business Realignment and the Internal Reorganization, Corteva, Inc. owns 100% of the outstanding common
stock of EID. EID is a subsidiary of Corteva, Inc. and continues to be a reporting company, subject to the requirements of the
Exchange Act. The primary differences between Corteva, Inc. and EID are outlined below:
•
•
•
Stock - EID has preferred stock outstanding to third parties which is accounted for as a noncontrolling
ff
Preferred
interest at the Corteva, Inc. level. Each share of EID Preferred Stock - $4.50 Series and EID Preferred Stock -
$3.50 Series issued and outstanding at the effective date of the Corteva Distribution remains issued and outstanding as
to EID and was unaffected by the Corteva Distribution.
Related Party Loan - EID engaged in a series of debt redemptions during the second quarter of 2019 that were
partially funded
Corteva, Inc. This was eliminated in consolidation at the Corteva,
Inc. level but remains on EID's financial statements at the standalone level (including the associated interest).
Capital Structure - At December 31, 2021, Corteva, Inc.'s capita
common stock, par value $0.01 per share.
consists of 726,527,000 issued shares of
through an intercompany loan fromff
al structuret
ff
The accompanying footnotes relate to EID only, and not to Corteva, Inc., and are presented to show differences between EID
and Corteva, Inc.
For the footnotes listed below, refer to the footnotes from the Corteva 10-K:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
to page F-29 of the Corteva, Inc. Consolidated Financial Statements
Note 1 - Background and Basis of Presentation - refer to page F-12 of the Corteva, Inc. Consolidated Financial
Statements
Note 2 - Summary of Significant Accounting Policies - refer to page F-14 of the Corteva, Inc. Consolidated Financial
Statements
Note 3 - Recent Accounting Guidance - refer to page F-19 of the Corteva, Inc. Consolidated Financial Statements
Note 4 - Common Control Business Combination - refer to page F-19 of the Corteva, Inc. Consolidated Financial
Statements
Note 5 - Divestitures and Other Transactions - refer to page F-20 of the Corteva, Inc. Consolidated Financial
Statements
Note 6 - Revenue - referff
to page F-24 of the Corteva, Inc. Consolidated Financial Statements
Note 7 - Restructuring and Asset Related Charges - Net - refer to page F-26 of the Corteva, Inc. Consolidated
Financial Statements
Note 8 - Related Party Transactions - Differences exist between Corteva, Inc. and EID; refer to EID Note 2 - Related
Party Transactions, of the EID Consolidated Financial Statements, below
Note 9 - Supplementary Information - referff
Note 10 - Income Taxes - Differences exist between Corteva, Inc. and EID; refer to EID Note 3 - Income Taxes, of the
EID Consolidated Financial Statements, below
Note 11 - Earnings Per Share of Common Stock - Not applicablea
Note 12 - Accounts and Notes Receivablea
Statements
Note 13 - Inventories - refer to page F-37 of the Corteva, Inc. Consolidated Financial Statements
Note 14 - Property, Plant and Equipment - referff
Note 15 - Goodwill and Other Intangible Assets - refer to page F-38 of the Corteva, Inc. Consolidated Financial
Statements
Note 16 - Leases - refer to page F-40 of the Corteva, Inc. Consolidated Financial Statements
Note 17 - Long-Term Debt and Available Credit Facilities - refer to page F-42 of the Corteva, Inc. Consolidated
Financial Statements. In addition, EID has a related party loan payablea
to Corteva, Inc.; refer to EID Note 2 - Related
Party Transactions, of the EID Consolidated Financial Statements, below
Note 18 - Commitments and Contingent Liabilities - referff
Statements
Note 19 - Stockholders' Equity - refer to page F-51 of the Corteva, Inc. Consolidated Financial Statements
Note 20 - Pension Plans and Other Post Employment Benefits - refer to page F-54 of the Corteva, Inc. Consolidated
Financial Statements
Note 21 - Stock-Based Compensation - refer to page F-63 of the Corteva, Inc. Consolidated Financial Statements
Note 22 - Financial Instruments - refer to page F-65 of the Corteva, Inc. Consolidated Financial Statements
Note 23 - Fair Value Measurements - refer to page F-71 of the Corteva, Inc. Consolidated Financial Statements
Note 24 - Geographic Information - referff
Note 25 - Segment Information - Differences exist between Corteva, Inc. and EID; refer to EID Note 4 - Segment
Informat
to page F-37 of the Corteva, Inc. Consolidated Financial Statements
to page F-73 of the Corteva, Inc. Consolidated Financial Statements
to page F-36 of the Corteva, Inc. Consolidated Financial
to page F-44 of the Corteva, Inc. Consolidated Financial
ion, of the EID Consolidated Financial Statements, below
- Net - referff
for EID
ff
F-90
E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
•
Note 26 - Subsequent Events - Refers to page F-78 of the Corteva, Inc. Consolidated Financial Statements
NOTE 2 - RELATED PARTY TRANSACTIONS
Refer to page F-28 of the Corteva, Inc. Consolidated Financial Statements forff
Historical Dow and DowDuPont.
discussion of related party transactions with
Transactions with Corteva
In the second quarter of 2019, EID entered into a related party revolving loan fromff
ty date in 2024.
As of December 31, 2021 and December 31, 2020, the outstanding related party loan balance was $2,162 million and $3,459
r value), with interest rates of 1.67% and 1.62%, respectively, and is reflected as
million respectively (which approximates faiff
long-term debt - related party on EID's Consolidated Balance Sheet. Additionally, EID has incurredr
tax deductible interest
expense of $50 million and $100 million and paid interest of $51 million and $105 million for the years ended December 31,
2021 and 2020, respectively, associated with the related party loan to Corteva, Inc.
Corteva, Inc., with a maturi
t
As of December 31, 2021, EID had payablea
s to Corteva, Inc. of $27 million and $117 million included in accrued and other
current liabilities and other noncurrent obligations, respectively, and $92 million included in both accrued and other current
liabilities and other noncurrent obligations, respectively, at December 31, 2020, in the Consolidated Balance Sheet, related to
Corteva's indemnification liabilities to Dow and DuPont per the Separation Agreements (refer to page F-20 of the Corteva, Inc.
Consolidated Financial Statements for further details of the Separation Agreements).
NOTE 3 - INCOME TAXES
Refer to page F-31 of the Corteva, Inc. Consolidated Financial Statements forff
Corteva, Inc. and EID.
discussion of tax items that do not differ between
For the Year Ended December 31,
2020
2019
2021
$
$
$
$
$
$
$
892 $
1,404
2,296 $
(23) $
4
329
310 $
164 $
55
(17)
202 $
512
1,784 $
(183) $
758
575 $
8 $
5
222
235 $
(116) $
27
(251)
(340) $
(105)
680 $
(1,458)
1,036
(422)
(11)
1
317
307
(417)
156
(117)
(378)
(71)
(351)
Geographic Allocation of Income (Loss) and Provision for (Benefit
from) Income Taxes
(In millions)
Income (loss) from continuing operations before income taxes
Domestic
Foreign
Income (loss) from continuing operations before income taxes
Current tax expense (benefit)
Federal
State and local
Foreign
Total current tax expense (benefit)
Deferred tax (benefit) expense
Federal
State and local
Foreign
Total deferred tax expense (benefit)
Provision for (benefit from) income taxes on continuing operations
Net income (loss) from continuing operations
F-91
E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
Reconciliation to U.S. Statutory Rate
Statutory U.S. federal income tax rate
Effective tax rates on international operations - net 1
Acquisitions, divestitures and ownership restructuring activities 2
U.S. research and development credit
Exchange gains/losses 3
State and local income taxes - net
Impact of Swiss Tax Reform 4
Excess tax benefits/deficiencies from stock compensation
Tax settlements and expiration of statutet
Other - net
Effective tax rate
of limitations
For the Year Ended December 31,
2020
2019
2021
21.0 %
(2.6)
(0.1)
(2.5)
1.9
2.2
0.2
(0.2)
—
2.3
22.2 %
21.0 %
(16.4)
(0.3)
(3.4)
4.1
4.2
(31.7)
1.2
0.4
2.6
(18.3)%
21.0 %
(13.8)
(8.0)
5.2
(1.3)
3.0
8.9
(0.5)
2.9
(0.6)
16.8 %
1.
2.
3.
4.
Includes the effects of local and U.S. taxes related to earnings of non-U.S. subsidiaries, changes in the amount of unrecognized tax benefits associated
with these earnings, losses at non-U.S. subsidiaries without local tax benefits due to valuation allowances, and other permanent differences between tax
and U.S. GAAP results. Includes a tax benefit of $(51) million for the year ended December 31, 2020, related to a returnt
to accrual adjustment associated
with an elective change in accounting method that alters the 2019 impact of foreign tax provisions.
See Notes 4 - Common Control Business Combination, and Note 5 - Divestitures and Other Transactions, of the Corteva, Inc. Consolidated Financial
Statements for additional information.
Principally reflects the impact of foreign exchange gains and losses on net monetary assets for which no corresponding tax impact is realized. Further
information about the company's foreign currency hedging program is included in Note 9 - Supplementary Information, and Note 22 - Financial
Instruments, of the Corteva, Inc. Consolidated Financial Statements under the heading Foreign Currency Risk.
Reflects tax benefits of $(182) million primarily driven by the recognition of an elective cantonal component of the recent enactment of the Federal Act
on Tax Reform and AHV Financing ("Swiss Tax Reform") for the year ended December 31, 2020. Reflects tax benefits of $(38) million associated with
the enactment of the Federal Act on Tax Reform and AHV Financing ("Swiss Tax Reform"), for the year ended December 31, 2019.
F-92
E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
NOTE 4 - SEGMENT INFORMATION
There are no differences in reporting structure or segments between Corteva, Inc. and EID. In addition, there are no differences
between Corteva, Inc. and EID segment net sales, segment operating EBITDA or pro forma segment operating EBITDA,
segment assets, or significant items by segment; refer to page F-74 of the Corteva, Inc. Consolidated Financial Statements forff
s below reconcile
background information on the segments as well as further details regarding segment metrics. The tablea
income (loss) from continuing operations after income taxes to segment operating EBITDA, as difference
s exist between
Corteva, Inc. and EID.
ff
Reconciliation to Consolidated Financial Statements
Income (loss) from continuing operations after income taxes to
segment operating EBITDA
(In millions)
Income (loss) from continuing operations after income taxes
Provision for (benefit fromff
Income (loss) from continuing operations before income taxes
) income taxes on continuing operations
$
Depreciation and amortization
Interest income
Interest expense
Exchange losses - net1
Non-operating (benefits) costs - net
Mark-to-market (gains) losses on certain foreign currency contracts not
designated as hedges2
Significant items
Pro forma adjustments
Corporate expenses
For the Year Ended December 31,
2021
2020
2019
1,784 $
512
2,296
1,243
(77)
80
54
(1,256)
—
236
680 $
(105)
575
1,177
(56)
145
174
(316)
388
138
2,714 $
125
2,212 $
(351)
(71)
(422)
1,000
(59)
242
66
(129)
991
298
119
2,106
Segment operating EBITDA3
1. Excludes a $(33) million foreign exchange loss for the year ended December 31, 2019 associated with the devaluation of the Argentine peso. See Note 9 -
$
Supplementary Information, of the Corteva, Inc. Consolidated Financial Statements for additional information.
2. Effective January 1, 2021, on a prospective basis, the company excludes net unrealized gain or loss from mark-to-market activity for certain foreign currency
derivative instruments that do not qualify for hedge accounting. There were no unrealized mark-to-market (gains) losses for the years ended December 31,
2020 and 2019.
3. The year ended December 31, 2019 is presented on a pro forma basis, prepared in accordance with Article 11 of Regulation S-X that was in effect prior to
recent amendments.
ITEM 16. FORM 10-K SUMMARY
.
Not applicablea
F-93
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APPENDIX
Regulation G (Non-GAAP Financial Measures)
This report includes information that does not conform to U.S. GAAP and are considered non-GAAP measures. These measures may include organic sales,
organic growth (including by segment and region), operating EBITDA, operating EBITDA margin, and operating earnings per share. Management uses
these measures internally for planning and forecasting, including allocating resources and evaluating incentive compensation. Management believes that
these non-GAAP measures best reflect the ongoing performance of the Company during the periods presented and provide more relevant and
meaningful information to investors as they provide insight with respect to ongoing operating results of the Company and a more useful comparison of
year over year results. These non-GAAP measures supplement the Company’s U.S. GAAP disclosures and should not be viewed as an alternative to U.S.
GAAP measures of performance. Furthermore, such non-GAAP measures may not be consistent with similar measures provided or used by other
companies. Reconciliations for these non-GAAP measures to U.S. GAAP are provided below or on pages 52-54 of the 2021 Annual Report on Form 10-K.
Organic sales is defined as price and volume and excludes currency and portfolio impacts. Operating EBITDA is defined as earnings (loss) (i.e., income (loss)
from continuing operations before income taxes) before interest, depreciation, amortization, non-operating benefits (costs), foreign exchange gains
(losses), and net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge
accounting, excluding the impact of significant items. Non-operating benefits (costs) consists of non-operating pension and other post-employment
benefit (OPEB) benefits (costs), tax indemnification adjustments, environmental remediation and legal costs associated with legacy businesses and sites of
Historical DuPont and the 2021 officer indemnification payment. Tax indemnification adjustments relate to changes in indemnification balances, as a result
of the application of the terms of the Tax Matters Agreement, between Corteva and Dow and/or DuPont that are recorded by the Company as pre-tax
income or expense. Operating earnings (loss) per share are defined as “Earnings (loss) per common share from continuing operations – diluted” excluding
the after-tax impact of significant items, the after tax impact of non-operating benefits (costs), the after-tax impact of amortization expense associated
with intangible assets existing as of the Separation from DowDuPont, and the after-tax impact of net unrealized gain or loss from mark-to-market activity
for certain foreign currency derivative instruments that do not qualify for hedge accounting. Although amortization of the Company’s intangible assets is
excluded from these non-GAAP measures, management believes it is important for investors to understand that such intangible assets contribute to
revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully
amortized. Any future acquisitions may result in amortization of additional intangible assets. Net unrealized gain or loss from mark-to-market activity for
certain foreign currency derivative instruments that do not qualify for hedge accounting represents the non-cash net gain (loss) from changes in fair value
of certain undesignated foreign currency derivative contracts. Upon settlement, which is within the same calendar year of execution of the contract, the
net gain (loss) from the changes in fair value of the non-qualified foreign currency derivative contracts will be reported in relevant non-GAAP financial
measures, allowing quarterly results to reflect the economic effects of the foreign currency derivative contracts without the resulting unrealized mark to fair
value volatility.
APPENDIX
Price, Volume, Currency Analysis
Region
Twelve Months Ended December 31, 2021 vs.
Twelve Months Ended December 31, 2020
Net Sales Change
(GAAP)
Organic Change
(Non-GAAP) 1
$ (millions)
North America2
$
EMEA 3
Latin America
Asia Pacific
Rest of World
Total
$
368
281
740
49
1,070
1,438
%
5%
10%
26%
3%
15%
10%
$ (millions)
$
307
168
%
4%
6%
767
27%
43
3%
978
14%
$
1,285
9%
Percent Change Due To:
Price &
Product Mix
Volume Currency
Portfolio
/ Other
2%
3%
10%
2%
6%
4%
2%
3%
17%
1%
8%
5%
1%
4%
(1)%
2%
2%
1%
—%
—%
—%
(2)%
(1)%
—%
Seed
Twelve Months Ended December 31, 2021 vs.
Twelve Months Ended December 31, 2020
Net Sales Change
(GAAP)
Organic Change
(Non-GAAP) 1
$ (millions)
209
131
%
4%
9%
303
27%
3
437
646
1%
15%
8%
North America 2
$
EMEA3
Latin America
Asia Pacific
Rest of World
Total
$
Crop Protection
$ (millions)
164
86
%
3%
6%
336
30%
(1)
421
585
-%
14%
8%
Twelve Months Ended December 31, 2021 vs.
Twelve Months Ended December 31, 2020
Net Sales Change
(GAAP)
Organic Change
(Non-GAAP) 1
$ (millions)
North America 2
$
EMEA 3
Latin America
Asia Pacific
Rest of World
159
150
437
46
633
%
7%
11%
26%
4%
15%
Total
$
792
12%
$
$ (millions)
%
6%
6%
26%
4%
14%
11%
143
82
431
44
557
700
$
$
$
Percent Change Due To:
Price &
Product Mix
Volume Currency
Portfolio
/ Other
1%
5%
16%
2%
9%
4%
2%
1%
14%
(2)%
5%
4%
1%
3%
(3)%
1%
1%
—%
—%
—%
—%
—%
—%
—%
Percent Change Due To:
Price &
Product Mix
Volume Currency
Portfolio
/ Other
6%
2%
7%
1%
4%
5%
—%
4%
19%
3%
10%
6%
1%
5%
—%
3%
2%
2%
—%
—%
—%
(3)%
(1)%
(1)%
1. Organic sales is defined as price and volume, excluding currency and portfolio impacts. 2. North America is defined as the U.S. and Canada.
3. EMEA is defined as Europe, Middle East, and Africa.
APPENDIX
Non-GAAP Calculation of Corteva Operating EBITDA / EBITDA Margin
Twelve Months Ended December 31
2021
2020
As Reported
Margin %
As Reported
Margin %
In millions
Income (loss) from continuing operations, net of tax (GAAP)
Provision for (benefit from) income taxes on continuing operations
Income (loss) from continuing operations before income taxes (GAAP)
$
$
+ Depreciation and Amortization
- Interest income
+ Interest expense
+ / - Exchange (gains) losses, net
+ / - Non-operating (benefits) costs
+ / - Mark-to-market (gains) losses on certain foreign currency contracts
not designated as hedges1
+ / - Significant items (benefit) charge
1,822
524
2,346
1,243
(77)
30
54
(1,256)
–
236
11.6% $
3.3%
15.0% $
7.9%
-0.5%
0.2%
0.3%
-8.0%
0.0%
1.5%
756
(81)
675
1,177
(56)
45
174
(316)
388
Corteva Operating EBITDA / EBITDA Margin (Non-GAAP) 2,3
$
2,576
16.5% $
2,087
5.3%
-0.6%
4.7%
8.3%
-0.4%
0.3%
1.2%
-2.2%
2.7%
14.7%
1. Effective January 1, 2021, on a prospective basis, the company excludes net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments
that do not qualify for hedge accounting. There were no unrealized mark-to-market gain or loss for the year ended December 31, 2020.
2. Corteva Operating EBITDA is defined as earnings (loss) (i.e., income (loss) from continuing operations before income taxes) before interest, depreciation, amortization, non-operating
benefits (costs), foreign exchange gains (losses), and net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for
hedge accounting, excluding the impact of significant items. Non-operating benefits (costs) consists of non-operating pension and other post-employment benefit (OPEB) benefits
(costs), tax indemnification adjustments, environmental remediation and legal costs associated with Historical DuPont businesses and sites and the 2021 officer indemnification
payment. Tax indemnification adjustments relate to changes in indemnification balances, as a result of the application of the terms of the Tax Matters Agreement, between Corteva
and Dow and/or DuPont that are recorded by the company as pre-tax income or expense.
3. The EBITDA margin percentages are determined by dividing amounts in the table above for the twelve months ended December 31, 2021 and 2020 by net sales of $15,655 million and
$14,217 million, respectively. Margin percentages may not foot, due to rounding.
[THIS PAGE INTENTIONALLY LEFT BLANK]K]
General Information
WEBSITE: corteva.com/investors
PHONE:
+1 (302) 485-3000
Transfer Agent and Stockholder Services
Computershare
PO BOX 505000
Louisville, KY 40233-5000, USA
PHONE:
+1 (833) 388-2882 (Toll-Free in the U.S. and Canada)
+1 (781) 575-3120 (Outside of U.S. and Canada)
+1 (800) 231-5469 (Hearing Impaired)
WEBSITE: computershare.com/investor
EMAIL:
shareholder@computershare.com
For more information on Stockholder Services, please contact
Corteva’s transfer agent or visit the Stockholder Services page on
Corteva’s Investor Relations website at corteva.com/investors
Corteva, Inc.
Indianapolis, IN 46268, U.S.A.
Investor Relations
corteva.com/investors
™ ® Trademarks of Corteva Agriscience and its affiliated companies.
© 2022 Corteva
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