UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20212022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-38196
DUPONT DE NEMOURS, INC.
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | | | | |
| Delaware | | 81-1224539 | |
| State or other jurisdiction of incorporation or organization | | (I.R.S. Employer Identification No.) | |
| | | | | | | | | | | | | | | | | | | | |
| 974 Centre Road | Building 730 | Wilmington | Delaware | | 19805 | |
| (Address of Principal Executive Offices) | | (Zip Code) | |
(302) 774-3034
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, par value $0.01 per share | DD | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☑ Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically 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 and post such files).
☑ Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | | | | | | | |
| Large Accelerated Filer | | ☑ | | Accelerated filer | | ¨ |
| Non-accelerated filer | | ¨ | | Smaller reporting company | | ☐ |
| | | | | Emerging growth company | | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☑ No
The registrant had 518,103,842496,788,948 shares of common stock, $0.01 par value, outstanding at November 1, 2021.4, 2022.
DuPont de Nemours, Inc.
QUARTERLY REPORT ON FORM 10-Q
For the quarterly period ended September 30, 20212022
TABLE OF CONTENTS
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Throughout this Quarterly Report on Form 10-Q, except as otherwise noted by the context, the terms "DuPont" or "Company" used herein mean DuPont de Nemours, Inc. and its consolidated subsidiaries. On June 1, 2019, DowDuPont Inc. changed its registered name to DuPont de Nemours, Inc. (“DuPont”) (for certain events prior to June 1, 2019, the Company may be referred to as DowDuPont). Beginning on June 3, 2019, the Company's common stock is traded on the New York Stock Exchange under the ticker symbol "DD."
On April 1, 2019, the Company completed the separation of the materials science business through the spin-off of Dow Inc., (“Dow”) including Dow’s subsidiary The Dow Chemical Company (the “Dow Distribution”). On June 1, 2019, the Company completed the separation of the agriculture business through the spin-off of Corteva, Inc. (“Corteva”) including Corteva’s subsidiary E. I. du Pont de Nemours and Company (“EID”), (the “Corteva Distribution" and together with the Dow Distribution, the “DWDP Distributions”).
On February 1, 2021 the Company completed the divestiture of the Nutrition & Biosciences (“N&B”) business to International Flavors & Fragrance Inc. (“IFF”) in a Reverse Morris Trust transaction (the “N&B Transaction”) that resulted in IFF issuing shares to DuPont stockholders.
The financial position of DuPont as of December 31, 2020 and the results of operations of DuPont for the three and nine months ended September 30, 2021 and 2020 present the historical financial results of N&B as discontinued operations. The cash flows and comprehensive income related to N&B have not been segregated and are included in the interim Consolidated Statements of Cash Flows and interim Consolidated Statements of Comprehensive Income, respectively, for all periods presented. Unless otherwise indicated, the information in the notes to the interim Consolidated Financial Statements refer only to DuPont's continuing operations and do not include discussion of balances or activity of N&B.
On July 1, 2021, DuPont completed the previously announced acquisition of the Laird Performance Materials business, (the “Laird PM Acquisition”).
On November 2, 2021, DuPont announced it has entered into a definitive agreement to acquire Rogers Corporation ("Rogers") for cash, (the “Intended Rogers Acquisition”). The transaction is subject to approval by Rogers shareholders, regulatory approvals and customary closing conditions.
On November 2, 2021, DuPont announced that it has initiated a divestiture process (the “In-Scope M&M Divestiture Process”) related to a substantial portion of its Mobility & Materials segment, (the “In-Scope M&M Businesses”). The outcome of which, including the entry into definitive agreements, is subject to approval of the DuPont Board of Directors.
DuPontTM and all products, unless otherwise noted, denoted with TM, SM or ® are trademarks, service marks or registered trademarks of affiliates of DuPont de Nemours, Inc.
FORWARD-LOOKING STATEMENTS
This communication contains "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "target," and similar expressions and variations or negatives of these words.
Forward-looking statements address matters that are, to varying degrees, uncertain and subject to risks, uncertainties, and assumptions, many of which that are beyond DuPont's control, that could cause actual results to differ materially from those expressed in any forward-looking statements. Forward-looking statements are not guarantees of future results. Some of the important factors that could cause DuPont's actual results to differ materially from those projected in any such forward-looking statements include, but are not limited to: (i) in connection with the Intended Rogers Acquisition, the failure to (x) obtain the necessary approval from Rogers shareholders, regulatory approvals, or anticipated tax treatment, or (y) satisfy any of the other conditions to closing; (ii) the possibility that unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies could impact the value, timing or pursuitCompany may fail to realize the anticipated benefits of the closing of$5 billion share repurchase program announced on November 8, 2022 and that the Intended Rogers Acquisition; (iii) the timing and outcome of the In-Scope M&M Divestiture Process and the risks, costs and abilityprogram may be suspended, discontinued or not completed prior to realize benefits from the pursuit of any disposition of the In-Scope M&M Businesses resulting therefrom; (iv) the ability to achieve expected benefits, synergies and operating efficiencies in connection with the Laird PM Acquisition within the expected time frames or at all or to successfully integrate Laird PM; (v)its termination on June 30, 2024; (ii) ability to achieve anticipated tax treatments in connection with mergers, acquisitions, divestitures, (including in connection with the N&B Transaction, Laird PM
Acquisition or the DWDP Distributions; (vi)majority of its historic Mobility & Materials segment to Celanese completed on November 1, 2022, and DuPont’s pursuit of plans to divest the Delrin® acetal homopolymer business), and other portfolio changes actions and impact of changes in relevant tax and other laws; (vii)(iii) indemnification of certain legacy liabilities of EID in connection with the Corteva Distribution; (viii)liabilities; (iv) risks and costs related to each of the parties respective performance under and the impact of the cost sharing arrangement to share future eligible PFAS costs by and between DuPont, Corteva and The Chemours Company related to future eligible PFAS costs; (ix)Chemours; (v) failure to timely close on anticipated terms (or at all), realize expected benefits and effectively manage and achieve anticipated synergies and operational efficiencies in connection with mergers, acquisitions, divestitures alliances, joint ventures and other portfolio changes, including meeting conditions under the Letter Agreement entered in connection with the Corteva Distribution, related to the transfer of certain levels of assets and businesses; (x) uncertainty as to the long-term value of DuPont common stock; (xi)changes; (vi) risks and uncertainties, including increased costs and the ability to obtain raw materials and meet customer needs, related to operational and supply chain impacts or disruptions, which may result from, among other events, the novel coronavirus (COVID-19)COVID-19 pandemic and actions in response to it, and geo-political and weather related events; (vii) ability to offset increases in cost of inputs, including raw materials, energy and logistics; (viii) risks, including ability to achieve, and costs associated with DuPont’s sustainability strategy including the actual conduct of the company’s activities and results thereof, and the responses thereto (such as voluntarydevelopment, implementation, achievement or continuation of any goal, program, policy or initiative discussed or expected; and in some cases, mandatory quarantines as well as shut downs and other restrictions on travel and commercial, social and other activities) on DuPont’s business, results of operations, access to sources of liquidity and financial condition which depend on highly uncertain and unpredictable future developments, including, but not limited to, the duration and spread of the COVID-19 outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions resume; and (xii)(ix) other risks to DuPont's business, operations; each as further discussed in detail in and results of operations as discussed in DuPont’s most recent annual report on Form 10-K forand subsequent current and periodic reports filed with the year ended December 31, 2020U.S. Securities and its subsequent reports on Form 10-Q and Form 8-K. Exchange Commission. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business or supply chain disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on DuPont’s consolidated financial condition, results of operations, credit rating or liquidity. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. DuPont assumes no obligation to publicly provide revisions or updates to any forward-looking statements whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.
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| PART I - FINANCIAL INFORMATION |
ITEM 1. FINANCIAL STATEMENTS
DuPont de Nemours, Inc.
Consolidated Statements of Operations
| | | Three Months Ended September 30, | Nine Months Ended September 30, | | Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions, except per share amounts (Unaudited) | In millions, except per share amounts (Unaudited) | 2021 | 2020 | 2021 | 2020 | In millions, except per share amounts (Unaudited) | 2022 | 2021 | 2022 | 2021 |
| Net sales | Net sales | $ | 4,271 | | $ | 3,629 | | $ | 12,382 | | $ | 10,588 | | Net sales | $ | 3,317 | | $ | 3,199 | | $ | 9,913 | | $ | 9,320 | |
| Cost of sales | Cost of sales | 2,778 | | 2,417 | | 7,945 | | 7,034 | | Cost of sales | 2,095 | | 2,032 | | 6,354 | | 5,852 | |
| Research and development expenses | Research and development expenses | 152 | | 140 | | 456 | | 466 | | Research and development expenses | 129 | | 137 | | 413 | | 409 | |
| Selling, general and administrative expenses | Selling, general and administrative expenses | 475 | | 403 | | 1,390 | | 1,299 | | Selling, general and administrative expenses | 356 | | 411 | | 1,130 | | 1,201 | |
| Amortization of intangibles | Amortization of intangibles | 196 | | 172 | | 530 | | 527 | | Amortization of intangibles | 146 | | 158 | | 447 | | 410 | |
| Restructuring and asset related charges - net | Restructuring and asset related charges - net | 1 | | 378 | | 13 | | 800 | | Restructuring and asset related charges - net | — | | 1 | | 101 | | 8 | |
| Goodwill impairment charges | — | | 183 | | — | | 3,214 | | |
| | Acquisition, integration and separation costs | Acquisition, integration and separation costs | 29 | | 22 | | 58 | | 161 | | Acquisition, integration and separation costs | 7 | | 29 | | 28 | | 58 | |
| Equity in earnings of nonconsolidated affiliates | Equity in earnings of nonconsolidated affiliates | 25 | | 29 | | 76 | | 170 | | Equity in earnings of nonconsolidated affiliates | 16 | | 22 | | 62 | | 65 | |
| Sundry income (expense) - net | Sundry income (expense) - net | 8 | | 430 | | 170 | | 631 | | Sundry income (expense) - net | 26 | | 1 | | 123 | | 155 | |
| Interest expense | Interest expense | 115 | | 165 | | 390 | | 517 | | Interest expense | 128 | | 115 | | 370 | | 390 | |
| Income (loss) from continuing operations before income taxes | 558 | | 208 | | 1,846 | | (2,629) | | |
| Income from continuing operations before income taxes | | Income from continuing operations before income taxes | 498 | | 339 | | 1,255 | | 1,212 | |
| Provision for income taxes on continuing operations | Provision for income taxes on continuing operations | 125 | | 122 | | 308 | | 224 | | Provision for income taxes on continuing operations | 139 | | 80 | | 299 | | 172 | |
| Income (loss) from continuing operations, net of tax | 433 | | 86 | | 1,538 | | (2,853) | | |
| (Loss) income from discontinued operations, net of tax | (29) | | (158) | | 4,751 | | (300) | | |
| Net income (loss) | 404 | | (72) | | 6,289 | | (3,153) | | |
| Income from continuing operations, net of tax | | Income from continuing operations, net of tax | 359 | | 259 | | 956 | | 1,040 | |
| Income from discontinued operations, net of tax | | Income from discontinued operations, net of tax | 17 | | 145 | | 723 | | 5,249 | |
| Net income | | Net income | 376 | | 404 | | 1,679 | | 6,289 | |
| Net income attributable to noncontrolling interests | Net income attributable to noncontrolling interests | 13 | | 7 | | 26 | | 20 | | Net income attributable to noncontrolling interests | 9 | | 13 | | 37 | | 26 | |
| Net income (loss) available for DuPont common stockholders | $ | 391 | | $ | (79) | | $ | 6,263 | | $ | (3,173) | | |
| Net income available for DuPont common stockholders | | Net income available for DuPont common stockholders | $ | 367 | | $ | 391 | | $ | 1,642 | | $ | 6,263 | |
| | | Per common share data: | Per common share data: | | | Per common share data: | | |
| Earnings (loss) per common share from continuing operations - basic | $ | 0.81 | | $ | 0.11 | | $ | 2.74 | | $ | (3.90) | | |
| (Loss) earnings per common share from discontinued operations - basic | (0.06) | | (0.22) | | 8.61 | | (0.41) | | |
| Earnings (loss) per common share - basic | $ | 0.75 | | $ | (0.11) | | $ | 11.35 | | $ | (4.31) | | |
| Earnings (loss) per common share from continuing operations - diluted | $ | 0.80 | | $ | 0.11 | | $ | 2.73 | | $ | (3.90) | | |
| (Loss) earnings per common share from discontinued operations - diluted | (0.06) | | (0.21) | | 8.59 | | (0.41) | | |
| Earnings (loss) per common share - diluted | $ | 0.75 | | $ | (0.11) | | $ | 11.32 | | $ | (4.31) | | |
| Earnings per common share from continuing operations - basic | | Earnings per common share from continuing operations - basic | $ | 0.69 | | $ | 0.48 | | $ | 1.81 | | $ | 1.86 | |
| Earnings per common share from discontinued operations - basic | | Earnings per common share from discontinued operations - basic | 0.05 | | 0.27 | | 1.44 | | 9.49 | |
| Earnings per common share - basic | | Earnings per common share - basic | $ | 0.73 | | $ | 0.75 | | $ | 3.25 | | $ | 11.35 | |
| Earnings per common share from continuing operations - diluted | | Earnings per common share from continuing operations - diluted | $ | 0.69 | | $ | 0.48 | | $ | 1.80 | | $ | 1.86 | |
| Earnings per common share from discontinued operations - diluted | | Earnings per common share from discontinued operations - diluted | 0.05 | | 0.27 | | 1.44 | | 9.46 | |
| Earnings per common share - diluted | | Earnings per common share - diluted | $ | 0.73 | | $ | 0.75 | | $ | 3.24 | | $ | 11.32 | |
| | Weighted-average common shares outstanding - basic | Weighted-average common shares outstanding - basic | 521.5 | | 734.4 | | 551.7 | | 735.8 | | Weighted-average common shares outstanding - basic | 499.4 | | 521.5 | | 505.6 | | 551.7 | |
| Weighted-average common shares outstanding - diluted | Weighted-average common shares outstanding - diluted | 523.1 | | 734.9 | | 553.1 | | 735.8 | | Weighted-average common shares outstanding - diluted | 500.4 | | 523.1 | | 506.9 | | 553.1 | |
See Notes to the Consolidated Financial Statements.
DuPont de Nemours, Inc.
Consolidated Statements of Comprehensive Income
| | | | | | | | | | | | | | |
| Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions (Unaudited) | 2022 | 2021 | 2022 | 2021 |
| Net income | $ | 376 | | $ | 404 | | $ | 1,679 | | $ | 6,289 | |
| Other comprehensive (loss) income, net of tax | | | | |
| | | | |
| Cumulative translation adjustments | (837) | | (189) | | (1,802) | | (554) | |
| Pension and other post-employment benefit plans | 29 | | 12 | | 21 | | 23 | |
| Derivative instruments | 42 | | 20 | | 109 | | 38 | |
| Split-off of N&B | — | | — | | — | | 258 | |
| | | | |
| Total other comprehensive loss | (766) | | (157) | | (1,672) | | (235) | |
| Comprehensive (loss) income | (390) | | 247 | | 7 | | 6,054 | |
| Comprehensive income attributable to noncontrolling interests, net of tax | 1 | | 12 | | 9 | | 17 | |
| Comprehensive (loss) income attributable to DuPont | $ | (391) | | $ | 235 | | $ | (2) | | $ | 6,037 | |
See Notes to the Consolidated Financial Statements.
DuPont de Nemours, Inc.
Condensed Consolidated Statements of Comprehensive IncomeBalance Sheets
| | | | | | | | | | | | | | |
| Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions (Unaudited) | 2021 | 2020 | 2021 | 2020 |
| Net income (loss) | $ | 404 | | $ | (72) | | $ | 6,289 | | $ | (3,153) | |
| Other comprehensive (loss) income, net of tax | | | | |
| | | | |
| Cumulative translation adjustments | (189) | | 606 | | (554) | | 547 | |
| Pension and other post-employment benefit plans | 12 | | 4 | | 23 | | 9 | |
| Derivative instruments | 20 | | — | | 38 | | — | |
| Split-off of N&B | — | | — | | 258 | | — | |
| | | | |
| Total other comprehensive (loss) income | (157) | | 610 | | (235) | | 556 | |
| Comprehensive income (loss) | 247 | | 538 | | 6,054 | | (2,597) | |
| Comprehensive income attributable to noncontrolling interests, net of tax | 12 | | 11 | | 17 | | 19 | |
| Comprehensive income (loss) attributable to DuPont | $ | 235 | | $ | 527 | | $ | 6,037 | | $ | (2,616) | |
| | | | | | | | |
| In millions, except share amounts (Unaudited) | September 30, 2022 | December 31, 2021 |
| Assets | | |
| Current Assets | | |
| Cash and cash equivalents | $ | 1,785 | | $ | 1,972 | |
| Accounts and notes receivable - net | 2,257 | | 2,159 | |
| Inventories | 2,359 | | 2,086 | |
| Prepaid and other current assets | 216 | | 177 | |
| Assets held for sale | — | | 245 | |
| Assets of discontinued operations | 7,733 | | 7,664 | |
| Total current assets | 14,350 | | 14,303 | |
| Property, plant and equipment - net of accumulated depreciation (September 30, 2022 - $4,227; December 31, 2021 - $4,142) | 5,477 | | 5,753 | |
| Other Assets | | |
| Goodwill | 16,302 | | 16,981 | |
| Other intangible assets | 5,550 | | 6,222 | |
| Restricted cash and cash equivalents | 103 | | 53 | |
| Investments and noncurrent receivables | 779 | | 919 | |
| Deferred income tax assets | 122 | | 116 | |
| Deferred charges and other assets | 1,416 | | 1,360 | |
| Total other assets | 24,272 | | 25,651 | |
| Total Assets | $ | 44,099 | | $ | 45,707 | |
| Liabilities and Equity | | |
| Current Liabilities | | |
| Short-term borrowings | $ | 1,287 | | $ | 150 | |
| Accounts payable | 2,061 | | 2,102 | |
| Income taxes payable | 284 | | 201 | |
| Accrued and other current liabilities | 990 | | 1,040 | |
| Liabilities related to assets held for sale | — | | 25 | |
| Liabilities of discontinued operations | 1,392 | | 1,413 | |
| Total current liabilities | 6,014 | | 4,931 | |
| Long-Term Debt | 10,564 | | 10,632 | |
| Other Noncurrent Liabilities | | |
| Deferred income tax liabilities | 464 | | 1,459 | |
| Pension and other post-employment benefits - noncurrent | 625 | | 762 | |
| Other noncurrent obligations | 929 | | 873 | |
| Total other noncurrent liabilities | 2,018 | | 3,094 | |
| Total Liabilities | 18,596 | | 18,657 | |
| Commitments and contingent liabilities | | |
| Stockholders' Equity | | |
| Common stock (authorized 1,666,666,667 shares of $0.01 par value each; issued 2022: 496,738,067 shares; 2021: 511,792,785 shares) | 5 | | 5 | |
| Additional paid-in capital | 49,199 | | 49,574 | |
| Accumulated deficit | (22,692) | | (23,187) | |
| Accumulated other comprehensive (loss) income | (1,603) | | 41 | |
| Total DuPont stockholders' equity | 24,909 | | 26,433 | |
| Noncontrolling interests | 594 | | 617 | |
| Total equity | 25,503 | | 27,050 | |
| Total Liabilities and Equity | $ | 44,099 | | $ | 45,707 | |
See Notes to the Consolidated Financial Statements.
DuPont de Nemours, Inc.
Condensed Consolidated Balance Sheets
| | | | | | | | |
| In millions, except share amounts (Unaudited) | September 30, 2021 | December 31, 2020 |
| Assets | | |
| Current Assets | | |
| Cash and cash equivalents | $ | 1,670 | | $ | 2,544 | |
| | |
| Accounts and notes receivable - net | 2,908 | | 2,421 | |
| Inventories | 2,844 | | 2,393 | |
| Other current assets | 225 | | 181 | |
| Assets held for sale | 850 | | 810 | |
| Assets of discontinued operations | — | | 20,659 | |
| Total current assets | 8,497 | | 29,008 | |
| Property, plant and equipment - net of accumulated depreciation (September 30, 2021 - $4,599; December 31, 2020 - $4,256) | 6,921 | | 6,867 | |
| Other Assets | | |
| Goodwill | 19,688 | | 18,702 | |
| Other intangible assets | 8,644 | | 8,072 | |
| Restricted cash and cash equivalents | 50 | | 6,206 | |
| Investments and noncurrent receivables | 1,029 | | 1,047 | |
| Deferred income tax assets | 175 | | 190 | |
| Deferred charges and other assets | 1,011 | | 812 | |
| Total other assets | 30,597 | | 35,029 | |
| Total Assets | $ | 46,015 | | $ | 70,904 | |
| Liabilities and Equity | | |
| Current Liabilities | | |
| Accounts payable | $ | 2,538 | | $ | 2,222 | |
| Income taxes payable | 206 | | 169 | |
| Accrued and other current liabilities | 1,335 | | 1,085 | |
| Liabilities related to assets held for sale | 142 | | 140 | |
| Liabilities of discontinued operations | — | | 8,610 | |
| Total current liabilities | 4,221 | | 12,226 | |
| Long-Term Debt | 10,629 | | 15,611 | |
| Other Noncurrent Liabilities | | |
| Deferred income tax liabilities | 2,014 | | 2,053 | |
| Pension and other post-employment benefits - noncurrent | 1,017 | | 1,110 | |
| Other noncurrent obligations | 895 | | 834 | |
| Total other noncurrent liabilities | 3,926 | | 3,997 | |
| Total Liabilities | 18,776 | | 31,834 | |
| Commitments and contingent liabilities | 0 | 0 |
| Stockholders' Equity | | |
| Common stock (authorized 1,666,666,667 shares of $0.01 par value each; issued 2021: 518,103,127 shares; 2020: 734,204,054 shares) | 5 | | 7 | |
| Additional paid-in capital | 49,702 | | 50,039 | |
| Accumulated deficit | (22,892) | | (11,586) | |
| Accumulated other comprehensive (loss) income | (182) | | 44 | |
| Total DuPont stockholders' equity | 26,633 | | 38,504 | |
| Noncontrolling interests | 606 | | 566 | |
| Total equity | 27,239 | | 39,070 | |
| Total Liabilities and Equity | $ | 46,015 | | $ | 70,904 | |
See Notes to the Consolidated Financial Statements.
DuPont de Nemours, Inc.
Consolidated Statements of Cash Flows
| | | Nine Months Ended September 30, | | Nine Months Ended September 30, |
| In millions (Unaudited) | In millions (Unaudited) | 2021 | 2020 | In millions (Unaudited) | 2022 | 2021 |
| Operating Activities | Operating Activities | | | Operating Activities | | |
| Net income (loss) | $ | 6,289 | | $ | (3,153) | | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
| Net income | | Net income | $ | 1,679 | | $ | 6,289 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | Adjustments to reconcile net income to net cash provided by operating activities: | | |
| Depreciation and amortization | Depreciation and amortization | 1,094 | | 2,326 | | Depreciation and amortization | 906 | | 1,094 | |
| Credit for deferred income tax and other tax related items | Credit for deferred income tax and other tax related items | (182) | | (481) | | Credit for deferred income tax and other tax related items | (977) | | (182) | |
| Earnings of nonconsolidated affiliates in excess of dividends received | (41) | | (120) | | |
| Net periodic pension benefit cost | 1 | | 30 | | |
| Pension contributions | (59) | | (77) | | |
| Earnings of nonconsolidated affiliates less than (in excess of) dividends received | | Earnings of nonconsolidated affiliates less than (in excess of) dividends received | 10 | | (41) | |
| Net periodic benefit (credit) cost | | Net periodic benefit (credit) cost | (6) | | 2 | |
| Periodic benefit plan contributions | | Periodic benefit plan contributions | (51) | | (62) | |
| Net gain on sales and split-offs of assets, businesses and investments | Net gain on sales and split-offs of assets, businesses and investments | (5,117) | | (612) | | Net gain on sales and split-offs of assets, businesses and investments | (73) | | (5,117) | |
| Restructuring and asset related charges - net | Restructuring and asset related charges - net | 15 | | 807 | | Restructuring and asset related charges - net | 101 | | 15 | |
| Goodwill impairment charges | — | | 3,214 | | |
| Inventory step-up amortization | Inventory step-up amortization | 12 | | — | | Inventory step-up amortization | — | | 12 | |
| Other net loss | Other net loss | 126 | | 127 | | Other net loss | 39 | | 128 | |
| Changes in assets and liabilities, net of effects of acquired and divested companies: | Changes in assets and liabilities, net of effects of acquired and divested companies: | | | Changes in assets and liabilities, net of effects of acquired and divested companies: | | |
| Accounts and notes receivable | Accounts and notes receivable | (399) | | 133 | | Accounts and notes receivable | (342) | | (399) | |
| Inventories | Inventories | (515) | | 312 | | Inventories | (688) | | (515) | |
| Accounts payable | Accounts payable | 379 | | 43 | | Accounts payable | 194 | | 379 | |
| Other assets and liabilities, net | Other assets and liabilities, net | 57 | | 245 | | Other assets and liabilities, net | (78) | | 57 | |
| Cash provided by operating activities | Cash provided by operating activities | 1,660 | | 2,794 | | Cash provided by operating activities | 714 | | 1,660 | |
| Investing Activities | Investing Activities | | | Investing Activities | | |
| Capital expenditures | Capital expenditures | (707) | | (922) | | Capital expenditures | (558) | | (707) | |
| Proceeds from sales of property and businesses, net of cash divested | Proceeds from sales of property and businesses, net of cash divested | 285 | | 1,008 | | Proceeds from sales of property and businesses, net of cash divested | 364 | | 285 | |
| Acquisitions of property and businesses, net of cash acquired | Acquisitions of property and businesses, net of cash acquired | (2,323) | | (73) | | Acquisitions of property and businesses, net of cash acquired | 5 | | (2,323) | |
| Purchases of investments | Purchases of investments | (2,001) | | (1) | | Purchases of investments | (15) | | (2,001) | |
| Proceeds from sales and maturities of investments | Proceeds from sales and maturities of investments | 2,001 | | 1 | | Proceeds from sales and maturities of investments | 15 | | 2,001 | |
| Other investing activities, net | Other investing activities, net | 18 | | 22 | | Other investing activities, net | 4 | | 18 | |
| Cash (used for) provided by investing activities | (2,727) | | 35 | | |
| Cash used for investing activities | | Cash used for investing activities | (185) | | (2,727) | |
| Financing Activities | Financing Activities | | | Financing Activities | | |
| Changes in short-term notes payable | — | | (1,439) | | |
| Proceeds from issuance of long-term debt | — | | 8,275 | | |
| Changes in short-term borrowings | | Changes in short-term borrowings | 1,137 | | — | |
| Proceeds from credit facility | | Proceeds from credit facility | 600 | | — | |
| Proceeds from issuance of long-term debt transferred to IFF at split-off | Proceeds from issuance of long-term debt transferred to IFF at split-off | 1,250 | | — | | Proceeds from issuance of long-term debt transferred to IFF at split-off | — | | 1,250 | |
| Repayment of credit facility | | Repayment of credit facility | (600) | | — | |
| Payments on long-term debt | Payments on long-term debt | (5,000) | | (29) | | Payments on long-term debt | — | | (5,000) | |
| Purchases of common stock | Purchases of common stock | (1,643) | | (232) | | Purchases of common stock | (1,125) | | (1,643) | |
| Proceeds from issuance of Company stock | Proceeds from issuance of Company stock | 110 | | 34 | | Proceeds from issuance of Company stock | 83 | | 110 | |
| Employee taxes paid for share-based payment arrangements | Employee taxes paid for share-based payment arrangements | (26) | | (14) | | Employee taxes paid for share-based payment arrangements | (25) | | (26) | |
| Distributions to noncontrolling interests | Distributions to noncontrolling interests | (34) | | (48) | | Distributions to noncontrolling interests | (35) | | (34) | |
| Dividends paid to stockholders | Dividends paid to stockholders | (476) | | (662) | | Dividends paid to stockholders | (500) | | (476) | |
| | Cash transferred to IFF at split-off | (100) | | — | | |
| Cash transferred to IFF and subsequent adjustments | | Cash transferred to IFF and subsequent adjustments | (11) | | (100) | |
| Other financing activities, net | Other financing activities, net | (2) | | (55) | | Other financing activities, net | (4) | | (2) | |
| Cash (used for) provided by financing activities | (5,921) | | 5,830 | | |
| Cash used for financing activities | | Cash used for financing activities | (480) | | (5,921) | |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | Effect of exchange rate changes on cash, cash equivalents and restricted cash | (49) | | 4 | | Effect of exchange rate changes on cash, cash equivalents and restricted cash | (191) | | (49) | |
| (Decrease) increase in cash, cash equivalents and restricted cash | (7,037) | | 8,663 | | |
| Decrease in cash, cash equivalents and restricted cash | | Decrease in cash, cash equivalents and restricted cash | (142) | | (7,037) | |
| Cash, cash equivalents and restricted cash from continuing operations, beginning of period | Cash, cash equivalents and restricted cash from continuing operations, beginning of period | 8,767 | | 1,569 | | Cash, cash equivalents and restricted cash from continuing operations, beginning of period | 2,037 | | 8,733 | |
| Cash, cash equivalents and restricted cash from discontinued operations, beginning of period | Cash, cash equivalents and restricted cash from discontinued operations, beginning of period | 8 | | 8 | | Cash, cash equivalents and restricted cash from discontinued operations, beginning of period | 39 | | 42 | |
| Cash, cash equivalents and restricted cash at beginning of period | Cash, cash equivalents and restricted cash at beginning of period | 8,775 | | 1,577 | | Cash, cash equivalents and restricted cash at beginning of period | 2,076 | | 8,775 | |
| Cash, cash equivalents and restricted cash from continuing operations, end of period | Cash, cash equivalents and restricted cash from continuing operations, end of period | 1,738 | | 10,233 | | Cash, cash equivalents and restricted cash from continuing operations, end of period | 1,896 | | 1,700 | |
| Cash, cash equivalents and restricted cash from discontinued operations, end of period | Cash, cash equivalents and restricted cash from discontinued operations, end of period | — | | 7 | | Cash, cash equivalents and restricted cash from discontinued operations, end of period | 38 | | 38 | |
| Cash, cash equivalents and restricted cash at end of period | Cash, cash equivalents and restricted cash at end of period | $ | 1,738 | | $ | 10,240 | | Cash, cash equivalents and restricted cash at end of period | $ | 1,934 | | $ | 1,738 | |
DuPont de Nemours, Inc.
Consolidated Statements of Equity
For the nine months ended September 30, 20212022 and 20202021
| | In millions (Unaudited) | In millions (Unaudited) | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comp Loss | Treasury Stock | Non-controlling Interests | Total Equity | In millions (Unaudited) | Common Stock | Additional Paid-in Capital | Retained Earnings
(Accumulated Deficit) | Accumulated Other Comp Loss | Treasury Stock | Non-controlling Interests | Total Equity |
| Balance at December 31, 2019 | $ | 7 | | $ | 50,796 | | $ | (8,400) | | $ | (1,416) | | $ | — | | $ | 569 | | $ | 41,556 | | |
| Adoption of accounting standards | — | | — | | (3) | | — | | — | | — | | (3) | | |
| Net (loss) income | — | | — | | (3,173) | | — | | — | | 20 | | (3,153) | | |
| Other comprehensive income (loss) | — | | — | | — | | 557 | | — | | (1) | | 556 | | |
| Dividends ($0.90 per common share) | — | | (662) | | — | | — | | — | | — | | (662) | | |
| Common stock issued/sold | — | | 34 | | — | | — | | — | | — | | 34 | | |
| Stock-based compensation | — | | 81 | | — | | — | | — | | — | | 81 | | |
| Contributions from non-controlling interests | — | | — | | — | | — | | — | | 19 | | 19 | | |
| Distributions to non-controlling interests | — | | — | | — | | — | | — | | (48) | | (48) | | |
| Purchases of treasury stock | — | | — | | — | | — | | (232) | | — | | (232) | | |
| Retirement of treasury stock | — | | — | | (232) | | — | | 232 | | — | | — | | |
| Other | — | | (30) | | — | | — | | — | | — | | (30) | | |
| Balance at September 30, 2020 | $ | 7 | | $ | 50,219 | | $ | (11,808) | | $ | (859) | | $ | — | | $ | 559 | | $ | 38,118 | | |
| | Balance at December 31, 2020 | Balance at December 31, 2020 | $ | 7 | | $ | 50,039 | | $ | (11,586) | | $ | 44 | | $ | — | | $ | 566 | | $ | 39,070 | | Balance at December 31, 2020 | $ | 7 | | $ | 50,039 | | $ | (11,586) | | $ | 44 | | $ | — | | $ | 566 | | $ | 39,070 | |
| Net income | Net income | — | | — | | 6,263 | | — | | — | | 26 | | 6,289 | | Net income | — | | — | | 6,263 | | — | | — | | 26 | | 6,289 | |
| Other comprehensive loss | Other comprehensive loss | — | | — | | — | | (226) | | — | | (9) | | (235) | | Other comprehensive loss | — | | — | | — | | (226) | | — | | (9) | | (235) | |
| Dividends ($0.90 per common share) | Dividends ($0.90 per common share) | — | | (476) | | — | | — | | — | | — | | (476) | | Dividends ($0.90 per common share) | — | | (476) | | — | | — | | — | | — | | (476) | |
| Common stock issued/sold | Common stock issued/sold | — | | 110 | | — | | — | | — | | — | | 110 | | Common stock issued/sold | — | | 110 | | — | | — | | — | | — | | 110 | |
| Stock-based compensation | Stock-based compensation | — | | 30 | | — | | — | | — | | — | | 30 | | Stock-based compensation | — | | 30 | | — | | — | | — | | — | | 30 | |
| Contributions from non-controlling interests | Contributions from non-controlling interests | — | | — | | — | | — | | — | | 84 | | 84 | | Contributions from non-controlling interests | — | | — | | — | | — | | — | | 84 | | 84 | |
| Distributions to non-controlling interests | Distributions to non-controlling interests | — | | — | | — | | — | | — | | (34) | | (34) | | Distributions to non-controlling interests | — | | — | | — | | — | | — | | (34) | | (34) | |
| Purchases of treasury stock | Purchases of treasury stock | — | | — | | — | | — | | (1,643) | | — | | (1,643) | | Purchases of treasury stock | — | | — | | — | | — | | (1,643) | | — | | (1,643) | |
| Retirement of treasury stock | Retirement of treasury stock | — | | — | | (1,643) | | — | | 1,643 | | — | | — | | Retirement of treasury stock | — | | — | | (1,643) | | — | | 1,643 | | — | | — | |
| Split-off of N&B | Split-off of N&B | (2) | | — | | (15,926) | | — | | — | | (27) | | (15,955) | | Split-off of N&B | (2) | | — | | (15,926) | | — | | — | | (27) | | (15,955) | |
| Other | Other | — | | (1) | | — | | — | | — | | — | | (1) | | Other | — | | (1) | | — | | — | | — | | — | | (1) | |
| Balance at September 30, 2021 | Balance at September 30, 2021 | $ | 5 | | $ | 49,702 | | $ | (22,892) | | $ | (182) | | $ | — | | $ | 606 | | $ | 27,239 | | Balance at September 30, 2021 | $ | 5 | | $ | 49,702 | | $ | (22,892) | | $ | (182) | | $ | — | | $ | 606 | | $ | 27,239 | |
| | Balance at December 31, 2021 | | Balance at December 31, 2021 | $ | 5 | | $ | 49,574 | | $ | (23,187) | | $ | 41 | | $ | — | | $ | 617 | | $ | 27,050 | |
| Net income | | Net income | — | | — | | 1,642 | | — | | — | | 37 | | 1,679 | |
| Other comprehensive loss | | Other comprehensive loss | — | | — | | — | | (1,644) | | — | | (28) | | (1,672) | |
| Dividends ($0.99 per common share) | | Dividends ($0.99 per common share) | — | | (500) | | — | | — | | — | | — | | (500) | |
| Common stock issued/sold | | Common stock issued/sold | — | | 83 | | — | | — | | — | | — | | 83 | |
| Stock-based compensation | | Stock-based compensation | — | | 42 | | — | | — | | — | | — | | 42 | |
| Contributions from non-controlling interests | | Contributions from non-controlling interests | — | | — | | — | | — | | — | | 2 | | 2 | |
| Distributions to non-controlling interests | | Distributions to non-controlling interests | — | | — | | — | | — | | — | | (35) | | (35) | |
| Purchases of treasury stock | | Purchases of treasury stock | — | | — | | — | | — | | (1,125) | | — | | (1,125) | |
| Retirement of treasury stock | | Retirement of treasury stock | — | | — | | (1,125) | | — | | 1,125 | | — | | — | |
| Other | | Other | — | | — | | (22) | | — | | — | | 1 | | (21) | |
| Balance at September 30, 2022 | | Balance at September 30, 2022 | $ | 5 | | $ | 49,199 | | $ | (22,692) | | $ | (1,603) | | $ | — | | $ | 594 | | $ | 25,503 | |
See Notes to the Consolidated Financial Statements.
DuPont de Nemours, Inc.
Consolidated Statements of Equity
For the three months ended September 30, 20212022 and 20202021
| | In millions (Unaudited) | In millions (Unaudited) | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comp Loss | Treasury Stock | Non-controlling Interests | Total Equity | In millions (Unaudited) | Common Stock | Additional Paid-in Capital | Retained Earnings
(Accumulated Deficit) | Accumulated Other Comp Loss | Treasury Stock | Non-controlling Interests | Total Equity |
| Balance at June 30, 2020 | $ | 7 | | $ | 50,191 | | $ | (11,728) | | $ | (1,465) | | $ | — | | $ | 572 | | $ | 37,577 | | |
| Net (loss) income | — | | — | | (79) | | — | | — | | 7 | | (72) | | |
| Other comprehensive income | — | | — | | — | | 606 | | — | | 4 | | 610 | | |
| Stock-based compensation | — | | 24 | | — | | — | | — | | — | | 24 | | |
| Contributions from non-controlling interests | — | | — | | — | | — | | — | | 14 | | 14 | | |
| Distributions to non-controlling interests | — | | — | | — | | — | | — | | (38) | | (38) | | |
| Other | — | | 4 | | (1) | | — | | — | | — | | 3 | | |
| Balance at September 30, 2020 | $ | 7 | | $ | 50,219 | | $ | (11,808) | | $ | (859) | | $ | — | | $ | 559 | | $ | 38,118 | | |
| | Balance at June 30, 2021 | Balance at June 30, 2021 | $ | 5 | | $ | 49,681 | | $ | (22,783) | | $ | (26) | | $ | — | | $ | 587 | | $ | 27,464 | | Balance at June 30, 2021 | $ | 5 | | $ | 49,681 | | $ | (22,783) | | $ | (26) | | $ | — | | $ | 587 | | $ | 27,464 | |
| Net income | Net income | — | | — | | 391 | | — | | — | | 13 | | 404 | | Net income | — | | — | | 391 | | — | | — | | 13 | | 404 | |
| Other comprehensive loss | Other comprehensive loss | — | | — | | — | | (156) | | — | | (1) | | (157) | | Other comprehensive loss | — | | — | | — | | (156) | | — | | (1) | | (157) | |
| | Common stock issued/sold | Common stock issued/sold | — | | 2 | | — | | — | | — | | — | | 2 | | Common stock issued/sold | — | | 2 | | — | | — | | — | | — | | 2 | |
| Stock-based compensation | Stock-based compensation | — | | 17 | | — | | — | | — | | — | | 17 | | Stock-based compensation | — | | 17 | | — | | — | | — | | — | | 17 | |
| Contributions from non-controlling interests | Contributions from non-controlling interests | — | | — | | — | | — | | — | | 17 | | 17 | | Contributions from non-controlling interests | — | | — | | — | | — | | — | | 17 | | 17 | |
| Distributions to non-controlling interests | Distributions to non-controlling interests | — | | — | | — | | — | | — | | (10) | | (10) | | Distributions to non-controlling interests | — | | — | | — | | — | | — | | (10) | | (10) | |
| Purchases of treasury stock | Purchases of treasury stock | — | | — | | — | | — | | (500) | | — | | (500) | | Purchases of treasury stock | — | | — | | — | | — | | (500) | | — | | (500) | |
| Retirement of treasury stock | Retirement of treasury stock | — | | — | | (500) | | — | | 500 | | — | | — | | Retirement of treasury stock | — | | — | | (500) | | — | | 500 | | — | | — | |
| Other | Other | — | | 2 | | — | | — | | — | | — | | 2 | | Other | — | | 2 | | — | | — | | — | | — | | 2 | |
| Balance at September 30, 2021 | Balance at September 30, 2021 | $ | 5 | | $ | 49,702 | | $ | (22,892) | | $ | (182) | | $ | — | | $ | 606 | | $ | 27,239 | | Balance at September 30, 2021 | $ | 5 | | $ | 49,702 | | $ | (22,892) | | $ | (182) | | $ | — | | $ | 606 | | $ | 27,239 | |
| | Balance at June 30, 2022 | | Balance at June 30, 2022 | $ | 5 | | $ | 49,176 | | $ | (22,808) | | $ | (845) | | $ | — | | $ | 609 | | $ | 26,137 | |
| Net income | | Net income | — | | — | | 367 | | — | | — | | 9 | | 376 | |
| Other comprehensive loss | | Other comprehensive loss | — | | — | | — | | (758) | | — | | (8) | | (766) | |
| | Stock-based compensation | | Stock-based compensation | — | | 23 | | — | | — | | — | | — | | 23 | |
| | Distributions to non-controlling interests | | Distributions to non-controlling interests | — | | — | | — | | — | | — | | (15) | | (15) | |
| Purchases of treasury stock | | Purchases of treasury stock | — | | — | | — | | — | | (250) | | — | | (250) | |
| Retirement of treasury stock | | Retirement of treasury stock | — | | — | | (250) | | — | | 250 | | — | | — | |
| Other | | Other | — | | — | | (1) | | — | | — | | (1) | | (2) | |
| Balance at September 30, 2022 | | Balance at September 30, 2022 | $ | 5 | | $ | 49,199 | | $ | (22,692) | | $ | (1,603) | | $ | — | | $ | 594 | | $ | 25,503 | |
See Notes to the Consolidated Financial Statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial StatementsBasis of Presentation
In these notes, the terms "DuPont" or "Company" used herein mean DuPont de Nemours, Inc. and its consolidated subsidiaries. The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, the interim statements reflect all adjustments (including normal recurring accruals) which are considered necessary for the fair statement of the results for the periods presented. Results from interim periods should not be considered indicative of results for the full year. These interim Consolidated Financial Statements should also be read in conjunction with the audited Consolidated Financial Statements and notes thereto contained in the Company's Current Report on Form 8-K filed on June 3, 2021, collectively referred to as the "Recast 2020 Annual Report," which was filed in order to recast the Company's 2020 Annual Report on Form 10-K to reflect the presentation of the N&B Business as discontinued operations and to reflect the changes in the Company's reportable segments. These interim Consolidated Financial Statements should also be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.2021, collectively referred to as the "2021 Annual Report." The interim Consolidated Financial Statements include the accounts of the Company and all of its subsidiaries in which a controlling interest is maintained.
BasisMobility & Materials
On November 1, 2022 DuPont completed the previously announced divestiture of Presentation
Effective August 31, 2017, pursuantthe majority of the historic Mobility & Materials segment, including the Engineering Polymers business line and select product lines within the Advanced Solutions and Performance Resins business lines (the “M&M Divestiture”). The Company had previously entered into a Transaction Agreement (the "Transaction Agreement") with Celanese Corporation ("Celanese") on February 17, 2022. Refer to Note 4 and Note 24 - Subsequent Events for further information. In addition, on February 18, 2022, the mergerCompany announced it is advancing the process to divest its Delrin® acetal homopolymer (H-POM) business, subject to entry into a definitive agreement and satisfaction of equals transaction contemplated bycustomary closing conditions. The Delrin® divestiture together with the AgreementM&M Divestiture discussed above (the "M&M Divestitures") represent a strategic shift that will have a major impact on DuPont's operations and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017 ("Merger Agreement"), The Dow Chemical Company ("TDCC") and E. I. du Pont de Nemours and Company ("EID") each merged with subsidiaries of DowDuPont Inc. ("DowDuPont") and, as a result, TDCC and EID became subsidiaries of DowDuPont (the "DWDP Merger"). Except as otherwise indicated by the context, the term "TDCC" includes TDCC and its consolidated subsidiaries and "EID" includes EID and its consolidated subsidiaries.results. See Note 4 for more information.
On April 1, 2019,The financial position of DuPont as of September 30, 2022 and December 31, 2021 present the Company completed the separationbusinesses to be divested as part of the materials science business throughM&M Divestiture and the spin-offdivestiture of Dow Inc., (“Dow”Delrin® (the "M&M Businesses") including Dow’s subsidiary TDCC (the “Dow Distribution”). On June 1, 2019,as discontinued operations. The results of operations for the Company completedthree and nine months ended September 30, 2022 and 2021 present the separationfinancial results of the agriculture business throughM&M Businesses as discontinued operations. The cash flows and comprehensive income of the spin-offM&M Businesses have not been segregated and are included in the interim Consolidated Statements of Corteva, Inc. (“Corteva”) including Corteva’s subsidiary EID, (the “Corteva Distribution"Cash Flows and together withinterim Consolidated Statements of Comprehensive Income, respectively, for all periods presented. Unless otherwise indicated, the Dow Distribution,information in the “DWDP Distributions”).notes to the interim Consolidated Financial Statements refer only to DuPont's continuing operations and do not include discussion of balances or activity of the M&M Businesses. See Note 4 to the interim Consolidated Financial Statements for additional information.
FollowingThe Auto Adhesives & Fluids, MultibaseTM and Tedlar® product lines, previously reported within the Corteva Distribution, DuPont holdshistoric Mobility & Materials segment, (the "Retained Businesses") are not included in the specialty products business as continuing operations. On June 1, 2019, DowDuPont changed its registered name from "DowDuPont Inc."scope of the M&M Divestitures. Effective with the signing of the Transaction Agreement, the Retained Businesses were realigned to "DuPont de Nemours, Inc." doing business as "DuPont." Beginning on June 3, 2019, the Company's common stock is traded on the NYSE under the ticker symbol "DD."Corporate & Other. The reporting changes have been retrospectively applied for all periods presented.
N&B Transaction
On February 1, 2021, DuPont completed the separation and distribution of the Nutrition & Biosciences business segment (the "N&B Business"), and the merger of Nutrition & Biosciences, Inc. (“N&B”), a DuPont subsidiary formed to hold the N&B Business, with a subsidiary of International Flavors & Fragrances Inc. ("IFF"). The distribution was effected through an exchange offer (the “Exchange Offer”) and the consummation of the Exchange Offer was followed by the merger of N&B with a wholly owned subsidiary of IFF, with N&B surviving the merger as a wholly owned subsidiary of IFF (the “N&B Merger” and, together with the Exchange Offer, the “N&B Transaction”). See Note 34 for more information.
The financial position of DuPont as of December 31, 2020 and the results of operations of DuPont for the three and nine months ended September 30, 2021 and 2020 present the historical financial results of N&B as discontinued operations. The cash flows and comprehensive income related to N&B have not been segregated and are included in the interim Consolidated Statements of Cash Flows and interim Consolidated Statements of Comprehensive Income, respectively, for all periods presented.the applicable periods. Unless otherwise indicated, the information in the notes to the interim Consolidated Financial Statements refer only to DuPont's continuing operations and do not include discussion of balances or activity of N&B.
2021 Segment Realignment
Immediately following the separation and distribution of the N&B Business, the Company made changes to its management and reporting structure (the “2021 Segment Realignment”) (see Note 23 for additional details). The reporting changes have been retrospectively reflected for all periods presented.
NOTE 2 - RECENT ACCOUNTING GUIDANCE
Accounting Guidance Issued But Not Adopted at September 30, 2022
In October 2021, the FASB issued Accounting Standards Update No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”), which requires contract assets and contract liabilities (i.e., unearned revenue) acquired in a business combination to be recognized and measured in accordance with ASC 606, Revenue from Contracts with Customers. Historically, the Company has recognized contract assets and contract liabilities at the acquisition date based on fair value estimates in accordance with ASC 805, Business Combinations. ASU 2021-08 is effective for interim and annual periods beginning after December 15, 2022 on a prospective basis, with early adoption permitted.
In September 2022, the FASB issued Accounting Standards Update No. 2022-04, "Liabilities-Supplier Finance Programs (Subtopic 405-50)" ("ASU 2022-04") to enhance transparency about the use of supplier finance programs. The new guidance requires that a buyer in a supplier finance program provides additional qualitative and quantitative disclosures about its program including the nature of the program, activity during the period, changes from period to period, and the potential magnitude of the program. The amendments in ASU 2022-04 are effective for fiscal years beginning after December 15, 2022 on a retrospective basis, including interim periods within those fiscal years, except for the amendment on rollforward information which is effective prospectively for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company is currently evaluating the potential impact of ASU 2022-04 to its related disclosures.
NOTE 3 - ACQUISITIONS
Intended Rogers Acquisition
On November 2, 2021, the Company announced that it had entered into a definitive agreement to acquire all the outstanding shares of Rogers Corporation (“Rogers”) for about $5.2 billion (the “Intended Rogers Acquisition”). On November 1, 2022, the Company announced the termination of the agreement, as DuPont and Rogers have been unable to obtain timely clearance from all the required regulators. DuPont paid Rogers a termination fee of $162.5 million in accordance with the agreement on November 2, 2022. Refer to Note 24 - Subsequent Events for additional information.
Laird Performance Materials Acquisition
On July 1, 2021, DuPont completed the acquisition (the "Laird PM Acquisition") of 100% of the ownership interest of Laird Performance Materials (“Laird PM”) from Advent International for aggregate, adjusted cash consideration of approximately $2,404 million. The cash consideration paid included a net upward adjustment of approximately $100 million for acquired cash and net working capital, amongamongst other items. Laird PM is a leader in high-performance electromagnetic shielding and thermal management solutions. Laird PM is being integrated intoreported within the Interconnect Solutions business withinof the Electronics & Industrial segment, in order to enhance the Company's position in advanced electronics applications.segment. The Company accounted for the acquisition in accordance with ASC 805, which requires the assets acquired and liabilities assumed to be recognized on the balance sheet at their fair values as of the acquisition date. There were no material updates to the purchase accounting and the purchase price allocation is considered final. For additional information regarding the acquisition of Laird PM, see Note 3, "Acquisitions," in the 2021 Annual Report.
Acquisition, Integration and Separation Costs
Acquisition, integration and separation costs primarily consist of financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees. For the three and nine months ended September 30, 2022 these costs were primarily related to costs associated with the divestiture of the Biomaterials business unit, the prior year acquisition of Laird PM and the Intended Rogers Acquisition. Comparatively, for the three and nine months ended September 30, 2021 these costs were primarily associated with the execution of activities related to strategic initiatives including the divestiture of the Biomaterials business unit in May 2022, the prior year acquisition of Laird PM and the divestitures of the Clean Technologies and Solamet® business units.
These costs are recorded within "Acquisition, integration and separation costs" within the interim Consolidated Statements of Operations.
| | | | | | | | | | | | | | |
| Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2022 | 2021 | 2022 | 2021 |
| Acquisition, integration and separation costs | $ | 7 | | $ | 29 | | $ | 28 | | $ | 58 | |
NOTE 4 - DIVESTITURES
Mobility & Materials Divestiture
On November 1, 2022 DuPont completed the previously announced divestiture of the majority of the historic Mobility & Materials segment, including the Engineering Polymers business line and select product lines within the Advanced Solutions and Performance Resins business lines (the “M&M Divestiture”). On February 17, 2022, the Company entered into a Transaction Agreement (the "Transaction Agreement") with Celanese Corporation ("Celanese"). Refer to Note 24 - Subsequent Events for additional information. The Company also announced on February 18, 2022 that its Board of Directors approved the divestiture of the Delrin® acetal homopolymer (H-POM) business, subject to entry into a definitive agreement and satisfaction of customary closing conditions. As of September 30, 2022, the Company anticipates a closing date for the sale of Delrin® within a year.
The table below presentsCompany has determined that the provisional fair values allocatedM&M Businesses meet the criteria to be classified as held for sale and that the assets acquiredsale represents a strategic shift that will have a major effect on the Company’s operations and liabilities assumed. The purchase accounting and purchase price allocation for Laird PM are substantially complete. However, the Company continues to refine the preliminary valuation of certain acquired assets and liabilities, including income tax related amounts, which could impact the amount of residual goodwill recorded. The Company will finalize the amounts recognized as it obtains the information necessary to complete the analysis, but no later than one year from the date of the acquisition. Final determination of the fair values may result in further adjustments to the values presented in the following table:
| | | | | |
Laird PM Assets Acquired and Liabilities Assumed on July 1, 2021 |
(in millions) |
Fair Value of Assets Acquired | |
Cash and cash equivalents | $ | 92 | |
Accounts and notes receivable | 93 | |
Inventories | 50 | |
Property, plant, and equipment | 104 | |
Other current assets | 10 | |
Goodwill | 1,219 | |
Other intangible assets | 1,160 | |
Deferred income tax assets | 3 | |
Deferred charges and other assets | 26 | |
Total Assets | $ | 2,757 | |
Fair Value of Liabilities Assumed | |
Accounts payable | $ | 75 | |
Income taxes payable | 10 | |
Accrued and other current liabilities | 46 | |
Deferred income tax liabilities | 184 | |
Pension & other post-employment benefits - noncurrent | 10 | |
Other noncurrent obligations | 28 | |
Total Liabilities | $ | 353 | |
Net Assets (Consideration for Laird PM) | $ | 2,404 | |
results.
The significant fair value adjustments included inresults of operations of the provisional allocation of purchase priceM&M Businesses are discussed below.presented as discontinued operations as summarized below:
| | | | | | | | | | | | | | |
| Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2022 | 2021 | 2022 | 2021 |
| Net sales | $ | 988 | | $ | 1,072 | | $ | 3,100 | | $ | 3,062 | |
| Cost of sales | 771 | | 746 | | 2,357 | | 2,093 | |
| Research and development expenses | 12 | | 15 | | 41 | | 47 | |
| Selling, general and administrative expenses | 25 | | 64 | | 110 | | 189 | |
| Amortization of intangibles | — | | 38 | | 28 | | 120 | |
| Restructuring and asset related charges - net | — | | — | | — | | 5 | |
| Acquisition, integration and separation costs | 135 | | — | | 357 | | — | |
| Equity in (losses) earnings of nonconsolidated affiliates | (5) | | 3 | | (7) | | 11 | |
| Sundry income (expense) - net | 7 | | 7 | | — | | 15 | |
| Income from discontinued operations before income taxes | 47 | | 219 | | 200 | | 634 | |
| Provision for (benefit from) income taxes on discontinued operations | 21 | | 45 | | (607) | | 136 | |
| Income from discontinued operations, net of tax | 26 | | 174 | | 807 | | 498 | |
| Net (loss) income from discontinued operations attributable to noncontrolling interests | (7) | | 4 | | (5) | | 14 | |
| Income from discontinued operations attributable to DuPont stockholders, net of tax | $ | 33 | | $ | 170 | | $ | 812 | | $ | 484 | |
Property, plantThe following table presents depreciation, amortization, and equipment
Property, plant and equipment is comprised of machinery and equipment of $67 million, buildings and building improvements of $18 million, leasehold improvements of $10 million, construction in progress of $5 million and land and land improvements of $4 million. The preliminary estimated fair value was primarily determined using a market approach for land and certain types of equipment, and a replacement cost approach for the remaining depreciable property, plant and equipment. The market approach for certain types of equipment represents a sales comparison that measures the value of an asset through an analysis of sales and offerings of comparable assets. The replacement cost approach used for all other depreciable property, plant and equipment measures the value of an asset by estimating the cost to acquire or construct comparable assets and adjusts for age and conditioncapital expenditures of the asset.discontinued operations related to the M&M Businesses:
| | | | | | | | | | | | | | |
| Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2022 | 2021 | 2022 | 2021 |
| Depreciation and amortization | $ | — | | $ | 70 | | $ | 45 | | $ | 214 | |
Capital expenditures 1 | $ | 22 | | $ | 17 | | $ | 64 | | $ | 41 | |
| | | | |
1.Total capital expenditures are presented on a cash basis.
Goodwill
The excessfollowing table summarizes the major classes of assets and liabilities of the considerationM&M Businesses classified as held for Laird PM over the preliminary net fair value of assets acquiredsale presented as discontinued operations at September 30, 2022 and liabilities assumed resulted in the provisional recognition of $1,219 million of goodwill, which has been assigned to the Electronics & Industrial segment. Goodwill is attributable to Laird PM’s assembled workforce and expected cost synergies to be obtained through procurement efficiencies and the optimization of the combined the Electronics & Industrial segment and Laird PM businesses’ global activities across sales, manufacturing, research & development, and administrative functions.December 31, 2021:
| | | | | | | | |
| In millions | September 30, 2022 | December 31, 2021 |
| Assets | | |
| Cash and cash equivalents | $ | 38 | | $ | 39 | |
| Accounts and notes receivable - net | 624 | | 552 | |
| Inventories | 1,072 | | 776 | |
| Other current assets | 45 | | 59 | |
| Property, plant and equipment - net | 1,193 | | 1,213 | |
| Goodwill | 2,432 | | 2,597 | |
| Other intangible assets | 2,127 | | 2,220 | |
| Investments and noncurrent receivables | 52 | | 62 | |
| Deferred income tax assets | 21 | | 27 | |
| Deferred charges and other assets | 129 | | 119 | |
| Total assets of discontinued operations | $ | 7,733 | | $ | 7,664 | |
| Liabilities | | |
| Accounts payable | $ | 552 | | $ | 510 | |
| Income taxes payable | 41 | | 77 | |
| Accrued and other current liabilities | 137 | | 157 | |
| | |
| Deferred income tax liabilities | 537 | | 515 | |
| Pension and other post employment benefits - noncurrent | 55 | | 90 | |
| Other noncurrent liabilities | 70 | | 64 | |
| Total liabilities of discontinued operations | $ | 1,392 | | $ | 1,413 | |
Other Intangible Assets
Other intangible assets with definite lives include acquired customer-related intangible assets of $840 million, developed technology of $290 million and trademark/tradename of $30 million. Acquired customer-related intangible assets, developed technology, and trademark/tradename have useful lives of 14 years, 8 years, and 3 years, respectively. The preliminary customer-related intangible assets' fair value was determined using the excess earnings method while the preliminary developed technology and trademark/tradename fair values were determined utilizing the relief from royalty method.
Total sales included in the interim Consolidated Statements of Operations for the three and nine months ended September 30, 2021 are $131 million. The Company evaluated the disclosure requirements under ASC 805 and determined Laird PM was not considered a material business combination for purposes of disclosing the earnings of Laird PM since the date of acquisition or
supplemental pro forma information.
NOTE 3 - DIVESTITURES
N&B Transaction
On February 1, 2021, DuPont completed the separation and distribution of the N&B Business, and merger of N&B, a subsidiary DuPont formed to hold the N&B Business, with a subsidiary of IFF. The distribution was effected through an exchange offer where, on the terms and subject to the conditions of the Exchange Offer, eligible participating DuPont stockholders had the option to tender all, some or none of their shares of common stock, par value $0.01 per share, of DuPont (the “DuPont Common Stock”) for a number of shares of common stock, par value $0.01 per share, of N&B (the “N&B Common Stock”) and which resulted in all shares of N&B Common Stock being distributed to DuPont stockholders that participated in the Exchange Offer. The consummation of the Exchange Offer was followed by the merger of N&B with a wholly owned subsidiary of IFF, with N&B surviving the merger as a wholly owned subsidiary of IFF (the “N&B Merger” and, together with the Exchange Offer, the “N&B Transaction”). The N&B Transaction was subject to IFF shareholder approval, customary regulatory approvals, tax authority rulings including a favorable private letter ruling from the U.S. Internal Revenue Service which confirms the N&B Transaction to be free of U.S. federal income tax, and expiration of the public exchange offer. DuPont does not have an ownership interest in IFF as a result of the N&B Transaction.
In the Exchange Offer, DuPont accepted approximately 197.4 million shares of its common stock in exchange for about 141.7 million shares of N&B Common Stock as of the date of the N&B Transaction. As a result, DuPont reduced its common stock outstanding by 197.4 million shares of DuPont Common Stock. In the N&B Merger, each share of N&B Common Stock was automatically converted into the right to receive one share of IFF common stock, par value $0.125 per share, based on the terms of the N&B Merger Agreement.
The results of operations of N&B are presented as discontinued operations as summarized below:
| | | | | | | | | | | |
| Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2020 | 2021 | 2020 |
| Net sales | $ | 1,467 | | $ | 507 | | $ | 4,557 | |
| Cost of sales | 975 | | 354 | | 2,967 | |
| Research and development expenses | 59 | | 21 | | 178 | |
| Selling, general and administrative expenses | 121 | | 47 | | 399 | |
| Amortization of intangibles | 358 | | 38 | | 1,064 | |
| Restructuring and asset related charges - net | 6 | | 1 | | 7 | |
| Integration and separation costs | 105 | | 172 | | 308 | |
| Equity in earnings of nonconsolidated affiliates | 1 | | — | | 2 | |
| Sundry income (expense) - net | — | | 8 | | (4) | |
| Interest expense | 32 | | 13 | | 56 | |
| Loss from discontinued operations before income taxes | (188) | | (131) | | (424) | |
| Benefit from income taxes on discontinued operations | (30) | | (27) | | (124) | |
| Loss from discontinued operations, net of tax | (158) | | (104) | | (300) | |
| Non-taxable gain on split-off | — | | 4,940 | | — | |
| (Loss) Income from discontinued operations attributable to DuPont stockholders, net of tax | $ | (158) | | $ | 4,836 | | $ | (300) | |
| | | | | |
| Nine Months Ended September 30, 2021 |
| In millions |
| Net sales | $ | 507 | |
| Cost of sales | 354 | |
| Research and development expenses | 21 | |
| Selling, general and administrative expenses | 47 | |
| Amortization of intangibles | 38 | |
| Restructuring and asset related charges - net | 1 | |
| Acquisition, integration and separation costs | 172 | |
| Sundry income (expense) - net | 8 | |
| Interest expense | 13 | |
| Loss from discontinued operations before income taxes | (131) | |
| Benefit from income taxes on discontinued operations | (27) | |
| Loss from discontinued operations, net of tax | (104) | |
| Non-taxable gain on split-off | 4,940 | |
| Income from discontinued operations attributable to DuPont stockholders, net of tax | $ | 4,836 | |
The following table presents depreciation, amortization, and capital expenditures of the discontinued operations related to N&B:
| | | | | | | | | | | |
| Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2020 | 2021 | 2020 |
| Depreciation and amortization | $ | 435 | | $ | 63 | | $ | 1,287 | |
| Capital expenditures | $ | 36 | | $ | 27 | | $ | 161 | |
| | | |
The carrying amount of major classes of assets and liabilities that were included in discontinued operations at December 31, 2020 related to N&B consist of the following:
| | | | | |
| Nine Months Ended September 30, 2021 |
| In millions | December 31, 2020 |
Assets | |
AccountsDepreciation and notes receivable - netamortization | $ | 1,13063 | |
Inventories | 1,333 | |
Other current assets | 65 | |
Investments and noncurrent receivables | 36 | |
Property, plant, and equipment - net | 3,118 | |
Goodwill | 11,542 | |
Other intangible assets - net | 3,072 | |
Deferred income tax assets | 44 | |
Deferred charges and other assets | 319 | |
Total assets of discontinued operationsCapital expenditures | $ | 20,65927 | |
Liabilities | |
Short-term borrowings and finance lease obligations | $ | 4 | |
Accounts payable | 742 | |
Income taxes payable | 36 | |
Accrued and other current liabilities | 301 | |
Long-term debt | 6,195 | |
Deferred income tax liabilities | 852 | |
Pension and other post-employment benefits - noncurrent | 238 | |
Other noncurrent obligations | 242 | |
Total liabilities of discontinued operations | $ | 8,610 | |
In connection with the N&B Transaction and in accordance with the terms of the N&B Transaction, Agreements, defined below, prior to consummation of the Exchange Offer and the N&B Merger, DuPont received a one-time cash payment of approximately $7.3 billion, (the "Special Cash Payment"), which is subject to post closing adjustment pursuant to the terms of the N&B Separation & Distribution Agreement. The special cash payment was partially funded by an offering of $6.25 billion of senior unsecured notes (the “N&B Notes Offering”). The net proceeds of approximately $6.2 billion from the N&B Notes Offering were deposited into an escrow account and at December 31, 2020, are reflected as restricted cash in the Company’s interim Condensed Consolidated Balance Sheets. In order to fund the remainder of the Special Cash Payment, on February 1, 2021, N&B borrowed $1.25 billion under a senior unsecured term loan agreement (the "N&B Term Loan"). The obligations and liabilities associated with the N&B Notes Offering and the N&B Term Loan were separated from the Company on February 1, 2021 upon consummation of the N&B Transaction. The obligations and liabilities of $6.2 billion associated with the N&B Notes Offering are classified as "Liabilities of discontinued operations" in the Company's interim Condensed Consolidated Balance Sheets at December 31, 2020.
The Company recognized a non-taxable gain of approximately $4,940 million on the N&B Transaction. The gain is recorded in "(Loss) Income"Income from discontinued operations, net of tax" in the Company's interim Consolidated Statements of Operations for the nine months ended September 30, 2021.
N&B Transaction Agreements
In connection with the N&B Transaction, effective December 15, 2019, the Company, as previously discussed, entered into the following agreements:
•A N&B Separation and Distribution Agreement, subsequently amended and joined by NeptuneN&B Merger Sub II Inc., a subsidiary of IFF on January 22, 2021, and as amended further on February 1, 2021 (as amended, the “N&B Separation and Distribution Agreement”) with N&B and IFF, which, among other things, governs the separation of the N&B Business from DuPont and certain other post-closing obligations between DuPontAgreement, and N&B related thereto;
•An Agreement and Plan of Merger, (the “N&B Merger Agreement”) with N&B, IFF and Neptune Merger Sub I Inc., governing the N&B Merger and related matters; and
•An Employee Matters Agreement, subsequently amended on January 22, 2021, (as amended, the “N&B Employee Matters Agreement Agreement”), with N&B and IFF, which, among other things, allocates among the parties the pre- and post-closing liabilities in respect of the current and former employees of the N&B Business (including liabilities in respect of employee compensation and benefit plans).
Agreement. In connection with the closing of the N&B Transaction, and effective February 1, 2021, the Company entered into the following agreements:
•DuPont, N&B and certain of their subsidiaries entered into an Intellectual Property Cross-License Agreement (the “N&B IP Cross-License Agreement”). The IP Cross-License Agreement sets forth the terms and conditions under which the applicable parties may use in their respective businesses certain know-how (including trade secrets), copyrights, design rights, software, and patents, allocated to another party pursuant to the N&B Separation and Distribution Agreement and pursuant to which N&B may use certain standards retained by DuPont. All licenses under the IP Cross-License Agreement are non-exclusive, worldwide, and royalty-free; and
•DuPont, N&B and IFF entered into a Tax Matters Agreement (the “N&B Tax Matters Agreement”), which governs the parties’ rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, the preservation of the expected tax-free status of the transactions contemplated by the N&B Separation and Distribution Agreement, and other matters regarding taxes. See Note 7 for additional information on the N&B Tax Matters Agreement.
Other Discontinued Operations Activity
The Company recorded a lossincome from discontinued operations, net of tax of $5$17 million and $71$145 million for the three months ended September 30, 2022 and 2021, respectively, and $723 million and $5,249 million for the nine months ended September 30, 2022 and 2021, respectively.
Discontinued operations activity consists of the following:
| | | | | | | | | | | | | | |
| Income from discontinued operations, net of tax | Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2022 | 2021 | 2022 | 2021 |
| M&M Divestitures | $ | 26 | | $ | 174 | | $ | 807 | | $ | 498 | |
| N&B Transaction | — | | (12) | | — | | 4,836 | |
Other 1 | (9) | | (17) | | (84) | | (85) | |
| Income from discontinued operations, net of tax | $ | 17 | | $ | 145 | | $ | 723 | | $ | 5,249 | |
1.Primarily related to the binding Memorandum of Understanding (“MOU”) between Chemours, Corteva, EIDE. I. du Pont de Nemours and a settlement agreement between Chemours, CortevaCompany ("EID") and DuPont and Delaware's Attorney General.the Company. For additional information on these matters, refer to Note 15. The Company also recorded a loss from discontinued operations, net of tax of $12 million and $14 million for the three and nine months ended September 30, 2021, predominately related to certain charges associated with the amended and restated Tax Matters Agreement under the DWDP Distributions.16.
Biomaterials
In October 2020,May 2022, the Company entered into a definitive agreement to sellcompleted the sale of its Biomaterials business unit, which includesincluded the Company's equity method investment in DuPont Tate & Lyle Bio Products. TheProducts, to the Huafon Group. Total consideration received related to the sale was approximately $240 million. For the nine months ended September 30, 2022, a pre-tax gain of the Biomaterials business unit is subject to regulatory approval and customary closing conditions and is expected to close within one year. In January 2021, the Company entered into a definitive agreement to sell its Clean Technologies business, which is expected to close$26 million ($21 million net of tax) was recorded in "Sundry income (expense) - net" in the fourth quarterCompany's interim Consolidated Statements of 2021. These divestitures are expected to generate in aggregate pre-tax cash proceeds of about $750 million. The Company also signed a non-binding letter in March 2021 with the intent to sell Chestnut Run labs, a portion of the Company's Chestnut Run campus. This transaction is expected to close within one year.
The assets and liabilities associated with the Biomaterials and Clean Technologies businesses, as well as Chestnut Run labs, remain classified as held for sale at September 30, 2021.Operations. The results of operations of the Biomaterials and Clean Technologies businessesbusiness unit are reported in Corporate.Corporate & Other.
The following table summarizes the carrying value of the major assets and liabilities of the Biomaterials and Clean Technologies business units and Chestnut Run labsunit reflected as of September 30, 2021 (collectively, the “Heldheld for Sale Disposal Group”) and the Biomaterials and Clean Technologies business units as ofsale at December 31, 2020:2021:
| | | | | |
| In millions | December 31, 2021 |
| Assets | |
| Accounts and notes receivable - net | $ | 27 | |
| Inventories | 48 | |
| Investments and noncurrent receivables | 158 | |
| Property, plant and equipment - net | 12 | |
| Assets held for sale | $ | 245 | |
| Liabilities | |
| Accounts payable | $ | 21 | |
| Accrued and other current liabilities | 3 | |
| Other noncurrent obligations | 1 | |
| Liabilities related to assets held for sale | $ | 25 | |
| | | | | | | | |
| In millions | September 30, 2021 | December 31, 2020 |
| Assets | | |
| Accounts and notes receivable - net | $ | 62 | | $ | 63 | |
| Inventories | 79 | | 75 | |
| Other current assets | 37 | | 35 | |
| Investments and noncurrent receivables | 158 | | 164 | |
| Property, plant and equipment - net | 76 | | 34 | |
| Goodwill | 267 | | 267 | |
| Other intangible assets | 168 | | 168 | |
| Deferred charges and other assets | 3 | | 4 | |
| Assets held for sale | $ | 850 | | $ | 810 | |
| Liabilities | | |
| Accounts payable | $ | 57 | | $ | 40 | |
| Income taxes payable | 2 | | 1 | |
| Accrued and other current liabilities | 37 | | 50 | |
| Deferred income tax liabilities | 29 | | 30 | |
| Pension and other post-employment benefits - noncurrent | — | | 1 | |
| Other noncurrent obligations | 17 | | 18 | |
| Liabilities related to assets held for sale | $ | 142 | | $ | 140 | |
In connection with the held for sale classification, the Held for Sale Disposal Group was measured at fair value less estimated cost to sell. As a result, the Company recorded a $25 million pre-tax goodwill impairment charge during the third quarter of 2020 which is reflected in “Goodwill impairment charges” in the Company’s interim Consolidated Statements of Operations for the three and nine months ended September 30, 2020.
Sale of Solamet®
On June 30, 2021, the Company completed the sale of its Solamet® business unit, which is part of Corporate. Total consideration received related to the sale of the business is approximately $190 million, of which $47 million was received in the third quarter. For the nine months ended September 30, 2021, a pre-tax gain of $140 million ($105 million net of tax) was recorded in "Sundry income (expense) - net" in the Company's interim Consolidated Statements of Operations.
Sale of TCS/HSC Disposal Group
In the third quarter of 2020, the Company completed the sale of its trichlorosilane business (“TCS Business”) along with its equity ownership interest in DC HSC Holdings LLC and Hemlock Semiconductor L.L.C. (the "HSC Group,” and together with the TCS Business, the “TCS/HSC Disposal Group” and the sale of the TCS/HSC Disposal Group, the “TCS/HSC Disposal”) to the HSC Group, both of which were part of the former Non-Core segment. In connection with the TCS/HSC Disposal, the Company received $550 million in cash at closing, subject to certain claw-back provisions. The Company also received approximately $58 million in the third quarter of 2021, which was recorded in "Cash and cash equivalents" in the Company's interim Condensed Consolidated Balance Sheets, and will receive an additional $117 million in equal installments over the course of the next two years associated with the settlement of an existing supply agreement dispute with the HSC Group. The TCS/HSC Disposal resulted in a net pre-tax gain of $393 million ($232 million net of tax), including the settlement of the supply agreement dispute and after allocation of goodwill to the TCS Business. The net pre-tax benefit is recorded in “Sundry income (expense) – net” in the Company’s interim Consolidated Statements of Operations for the three and nine months ended September 30, 2020.
Sale of Compound Semiconductor Solutions
In the first quarter of 2020, the Company completed the sale of its Compound Semiconductor Solutions business unit, a part of the Electronics & Industrial segment, to SK Siltron. The proceeds received in the first quarter of 2020 related to the sale of the business were approximately $420 million. For the nine months ended September 30, 2020, a pre-tax gain of $197 million ($102 million net of tax) was recorded in "Sundry income (expense) - net" in the Company's interim Consolidated Statements of Operations.
Acquisition, Integration and Separation Costs
Acquisition, integration and separation costs primarily consist of financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees. For the three and nine months ended September 30, 2021, these costs were primarily associated with the execution of activities related to strategic initiatives including the acquisition of Laird PM, the planned divestiture of the Held for Sale Disposal Group and the completed divestiture of the Solamet® business unit. For the three and nine months ended September 30, 2020, these costs were primarily associated with the execution of activities related to the post-DWDP Merger integration and the DWDP Distributions.
These costs are recorded within "Acquisition, integration and separation costs" within the interim Consolidated Statements of Operations.
| | | | | | | | | | | | | | |
| Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2021 | 2020 | 2021 | 2020 |
| Acquisition, integration and separation costs | $ | 29 | | $ | 22 | | $ | 58 | | $ | 161 | |
NOTE 45 - REVENUE
Revenue Recognition
Products
Substantially all of DuPont's revenue is derived from product sales. Product sales consist of sales of DuPont's products to supply manufacturers and distributors. DuPont considers purchase orders, which in some cases are governed by master supply agreements, to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year.
Disaggregation of Revenue
The Company disaggregates its revenue from contracts with customers by segment and business or major product line and geographic region, as the Company believes it best depicts the nature, amount, timing and uncertainty of its revenue and cash flows.
| | | | | | | | | | | | | | |
| Net Trade Revenue by Segment and Business or Major Product Line | Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2022 | 2021 | 2022 | 2021 |
| Industrial Solutions | $ | 496 | | $ | 474 | | $ | 1,499 | | $ | 1,412 | |
| Interconnect Solutions | 446 | | 489 | | 1,371 | | 1,158 | |
| Semiconductor Technologies | 569 | | 504 | | 1,704 | | 1,517 | |
| Electronics & Industrial | $ | 1,511 | | $ | 1,467 | | $ | 4,574 | | $ | 4,087 | |
| Safety Solutions | $ | 684 | | $ | 646 | | $ | 2,001 | | $ | 1,933 | |
| Shelter Solutions | 476 | | 414 | | 1,385 | | 1,193 | |
| Water Solutions | 374 | | 337 | | 1,074 | | 1,011 | |
| Water & Protection | $ | 1,534 | | $ | 1,397 | | $ | 4,460 | | $ | 4,137 | |
Retained Businesses 1 | $ | 272 | | $ | 226 | | $ | 804 | | $ | 721 | |
Other 2 | — | | 109 | | 75 | | 375 | |
Corporate & Other | $ | 272 | | $ | 335 | | $ | 879 | | $ | 1,096 | |
| Total | $ | 3,317 | | $ | 3,199 | | $ | 9,913 | | $ | 9,320 | |
On February 1, 2021, the Company realigned2. Net sales reflected in Other include activity of previously divested businesses including Biomaterials, Clean Technologies and renamed certain businesses as part of the 2021 Segment Realignment resulting in changes to its management and reporting structure (see Note 23 for additional details)Solamet®. In conjunction with the 2021 Segment Realignment, DuPont made the following changes to its major product lines:
•Within Electronics & Industrial (formerly known as Electronics & Imaging) realigned product lines to include businesses formerly in Transportation & Industrial and renamed the Image Solutions product lines as Industrial Solutions;
•Renamed Safety & Construction as Water & Protection;
•Realigned certain businesses from the former Non-Core segment and renamed product lines within Mobility & Materials (formerly known as Transportation & Industrial) as Advanced Solutions, Engineering Polymers, and Performance Resins.
| | | | | | | | | | | | | | |
| Net Trade Revenue by Segment and Business or Major Product Line | Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2021 | 2020 | 2021 | 2020 |
| Industrial Solutions | $ | 474 | | $ | 398 | | $ | 1,412 | | $ | 1,189 | |
| Interconnect Solutions | 489 | | 370 | | 1,158 | | 910 | |
| Semiconductor Technologies | 504 | | 445 | | 1,517 | | 1,340 | |
| Electronics & Industrial | $ | 1,467 | | $ | 1,213 | | $ | 4,087 | | $ | 3,439 | |
| Safety Solutions | $ | 646 | | $ | 534 | | $ | 1,933 | | $ | 1,746 | |
| Shelter Solutions | 414 | | 387 | | 1,193 | | 1,051 | |
| Water Solutions | 337 | | 328 | | 1,011 | | 972 | |
| Water & Protection | $ | 1,397 | | $ | 1,249 | | $ | 4,137 | | $ | 3,769 | |
| Advanced Solutions | $ | 382 | | $ | 303 | | $ | 1,155 | | $ | 858 | |
| Engineering Polymers | 611 | | 460 | | 1,665 | | 1,339 | |
| Performance Resins | 305 | | 233 | | 963 | | 680 | |
| Mobility & Materials | $ | 1,298 | | $ | 996 | | $ | 3,783 | | $ | 2,877 | |
Corporate 1 | $ | 109 | | $ | 171 | | 375 | | 503 | |
| Total | $ | 4,271 | | $ | 3,629 | | $ | 12,382 | | $ | 10,588 | |
1. Corporate net sales reflect activity of to be divested and previously divested businesses.
| | Net Trade Revenue by Geographic Region | Net Trade Revenue by Geographic Region | Three Months Ended September 30, | Nine Months Ended September 30, | Net Trade Revenue by Geographic Region | Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | In millions | 2021 | 2020 | 2021 | 2020 | In millions | 2022 | 2021 | 2022 | 2021 |
| U.S. & Canada | U.S. & Canada | $ | 1,208 | | $ | 1,068 | | $ | 3,414 | | $ | 3,177 | | U.S. & Canada | $ | 1,149 | | $ | 1,011 | | $ | 3,293 | | $ | 2,875 | |
EMEA 1 | EMEA 1 | 831 | | 650 | | 2,475 | | 2,038 | | EMEA 1 | 523 | | 562 | | 1,665 | | 1,672 | |
| Asia Pacific | Asia Pacific | 2,080 | | 1,776 | | 6,046 | | 4,998 | | Asia Pacific | 1,524 | | 1,529 | | 4,622 | | 4,490 | |
| Latin America | Latin America | 152 | | 135 | | 447 | | 375 | | Latin America | 121 | | 97 | | 333 | | 283 | |
| Total | Total | $ | 4,271 | | $ | 3,629 | | $ | 12,382 | | $ | 10,588 | | Total | $ | 3,317 | | $ | 3,199 | | $ | 9,913 | | $ | 9,320 | |
1.Europe, Middle East and Africa.
Contract Balances
From time to time, the Company enters into arrangements in which it receives payments from customers based upon contractual billing schedules. The Company records accounts receivables when the right to consideration becomes unconditional. Contract liabilities primarily reflect deferred revenue from advance payment for product that the Company has received from customers. The Company classifies deferred revenue as current or noncurrent based on the timing of when the Company expects to recognize revenue.
Revenue recognized in the first nine months of 20212022 and 20202021 from amounts included in contract liabilities at the beginning of the period was insignificant.
| | Contract Balances | Contract Balances | September 30, 2021 | December 31, 2020 | Contract Balances | September 30, 2022 | December 31, 2021 |
| In millions | In millions | In millions |
Accounts and notes receivable - trade 1 | Accounts and notes receivable - trade 1 | $ | 2,301 | | $ | 1,911 | | Accounts and notes receivable - trade 1 | $ | 1,712 | | $ | 1,643 | |
| Deferred revenue - current 2 | $ | 34 | | $ | 16 | | |
Deferred revenue - noncurrent 3 | $ | — | | $ | 21 | | |
Deferred revenue - current 2, 3 | | Deferred revenue - current 2, 3 | $ | 16 | | $ | 25 | |
|
1.Included in "Accounts and notes receivable - net" in the interim Condensed Consolidated Balance Sheets.
2.Included in "Accrued and other current liabilities" in the interim Condensed Consolidated Balance Sheets.
3.Included in "Other noncurrent obligations"Noncurrent deferred revenue balances in the interim Condensed Consolidated Balance Sheets.
NOTE 56 - RESTRUCTURING AND ASSET RELATED CHARGES - NET
Charges for restructuring programs and asset related charges, which includesinclude asset impairments and other net charges, were $1 millionzero and $13$101 million for the three and nine months ended September 30, 20212022 and $378$1 million and $800$8 million for the three and nine months ended September 30, 2020.2021. These charges were recorded in "Restructuring and asset related charges - net" in the interim Consolidated Statements of Operations. The total liability related to restructuring programs was $38$21 million at September 30, 20212022 and $96$43 million at December 31, 2020,2021, recorded in "Accrued and other current liabilities" in the interim Condensed Consolidated Balance Sheets. Restructuring activity consists of the following programs:
2021 Restructuring Actions
In October 2021, the Company approved targeted restructuring actions to capture near-term cost reductions (the "2021 Restructuring Actions"). The Company recorded pre-tax restructuring charges of $55 million inception-to-date, consisting of severance and related benefit costs of $33 million and asset related charges of $22 million.
Total liabilities related to the 2021 Restructuring Actions were $17 million at September 30, 2022 and $25 million at December 31, 2021 and recorded in "Accrued and other current liabilities" in the Condensed Consolidated Balance Sheets. Actions related to the 2021 Restructuring Program are substantially complete.
2020 Restructuring Program
In the first quarter of 2020, the Company approved restructuring actions designed to capture near-term cost reductions and to further simplify certain organizational structures in anticipation of the N&B Transaction (the "2020 Restructuring Program"). The Company recorded pre-tax restructuring charges of $181$159 million inception-to-date, consisting of severance and related benefit costs of $129$107 million and asset related charges of $52 million.
The following tables summarize the charges related to the 2020 Restructuring Program:
| | | | | | | | | | | | | | |
| Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2021 | 2020 | 2021 | 2020 |
| Severance and related benefit costs | $ | 1 | | $ | 4 | | $ | 11 | | $ | 99 | |
| Asset related charges | — | | 4 | | 2 | | 28 | |
| Total restructuring and asset related charges - net | $ | 1 | | $ | 8 | | $ | 13 | | $ | 127 | |
| | | | | | | | | | | | | | | |
| 2020 Restructuring Program Charges by Segment | Three Months Ended September 30, | Nine Months Ended September 30, | |
| In millions | 2021 | 2020 | 2021 | 2020 | |
| Electronics & Industrial | $ | — | | $ | 1 | | $ | 2 | | $ | 5 | | |
| Water & Protection | — | | 2 | | — | | 24 | | |
| Mobility & Materials | — | | — | | 6 | | 21 | | |
Corporate | 1 | | 5 | | 5 | | 77 | | |
| Total | $ | 1 | | $ | 8 | | $ | 13 | | $ | 127 | | |
The following table summarizes the activities related to the 2020 Restructuring Program:
| | | | | | | | | | | | | |
| 2020 Restructuring Program | Severance and Related Benefit Costs | Asset Related Charges | Total | | |
| In millions |
| Reserve balance at December 31, 2020 | $ | 62 | | $ | — | | $ | 62 | | | |
| Year-to-date restructuring charges | 11 | | 2 | | 13 | | | |
| Charges against the reserve | — | | (2) | | (2) | | | |
| Cash payments | (48) | | — | | (48) | | | |
| Reserve balance at September 30, 2021 | $ | 25 | | $ | — | | $ | 25 | | | |
Total liabilities related to the 2020 Restructuring Program were $25$2 million at September 30, 20212022 and $62$11 million at December 31, 2020, respectively,2021 and recorded in "Accrued and other current liabilities" in the interim Condensed Consolidated Balance Sheets. TheActions related to the 2020 Restructuring Program is consideredare substantially complete.
2019 Restructuring ProgramEquity Method Investment Impairment Related Charges
During the second quarter of 2019 and inIn connection with the ongoing integration activities, DuPont approved restructuring actions to simplify and optimize certain organizational structures following the completion of the DWDP Distributions (the "2019 Restructuring Program"). The Company has recorded pre-tax restructuring charges of $126 million inception-to-date, consisting of severance and related benefit costs of $99 million and asset related charges of $27 million.
Total liabilities related to the 2019 Restructuring Program were $5 million at September 30, 2021 and $14 million at December 31, 2020, respectively, and recordedM&M Divestitures described in "Accrued and other current liabilities"Note 4, in the interimfirst quarter of 2022 a portion of an equity method investment was reclassified to “Assets of discontinued operations” within the Condensed Consolidated Balance Sheets.Sheet. The 2019 Restructuring Program is considered substantially complete.
DowDuPont Cost Synergy Program
In September and November 2017, the Company approved post-merger restructuring actions under the DowDuPont Cost Synergy Program (the "Synergy Program"), which was designed to integrate and optimize the organization following the DWDP Merger and in preparation for the DWDP Distributions. The Company has recorded pre-tax restructuring charges attributable to the continuing operations of DuPont of $345 million inception-to-date, consisting of severance and related benefit costs of $137 million, asset related charges of $159 million and contract termination charges of $49 million.
Total liabilities related to the Synergy Program were $8 million at September 30, 2021 and $20 million at December 31, 2020, respectively, and recorded in "Accrued and other current liabilities" in the interim Condensed Consolidated Balance Sheets. The Synergy Program is considered substantially complete.
Other Restructuring Actions
In October 2021, the Company approved targeted restructuring actions to capture near term cost reductions. The Company expects to incur costs of up to $75 million primarily related to the payment of severance and related benefits and asset related charges, the majority of which are expected to be incurred in the fourth quarter of 2021.
Asset Impairments
In the third quarter of 2020, the TCS/HSC Disposal, as well as further softening conditions in the aerospace markets, gave rise to fair value indicators and, thus,reclassification served as a triggering eventsevent requiring the Company to perform an impairment analysis on the retained portion of the equity method investment held within “Investments and noncurrent receivables” on the Condensed Consolidated Balance Sheet. The fair value of the retained equity method investment was estimated using a recoverability assessment relateddiscounted cash flow model (a form of the income approach). The Company's assumptions in estimating fair value utilize Level 3 inputs and include, but are not limited to, asset groups within its Photovoltaicprojected revenue, gross margins, EBITDA margins, the weighted average costs of capital, and Advanced Materials (“PVAM”) business unit.terminal growth rates. The Company first performed a long-lived asset impairment test and determined that, based on undiscounted cash flows, the carrying amount of certain long-lived assets was not recoverable. Accordingly, the Company estimated the fair value of these assets using both an income approachthe retained equity method investment was below the carrying value and a market approach utilizing Level 3 unobservable inputs.had no expectation the fair value would recover in the short-term due to the current economic environment. As a result, management concluded the Company recognized a pre-taximpairment was other-than-temporary and, in March 2022, recorded an impairment charge of $318$94 million ($242 million net of tax) in the Mobility and Materials segment recorded within “Restructuring and asset related charges - net” in the interim Consolidated Statements of Operations for the three and nine months ended September 30, 2020 with the charge impacting definite-lived intangible assets and property, plant, and equipment.
Additionally, the Company recorded a pre-tax asset impairment charge of $52 million ($39 million net of tax) in the third quarter of 2020 related to indefinite-lived intangible assets reflected in Corporate which were deemed no longer recoverable as a result of the Held for Sale Disposal Group classification (refer to Note 3 for additional information). The charge was recorded within “Restructuring and asset related charges – net” in the interim Consolidated Statements of Operations for the three and nine months ended September 30, 2020.
In the second quarter of 2020, the Company recorded a $21 million pre-tax impairment charge related to indefinite-lived intangible assets within the Mobility & Materials segment. This charge was recorded within “Restructuring and asset related charges - net” in the interim Consolidated Statements of Operations for the nine months ended September 30, 2020. See Note 132022 related to the Electronics & Industrial segment. No impairment was required to be recorded for further discussion.the portion of the equity method investment included within “Assets of discontinued operations.”
2022 Restructuring Program
In October 2022, subsequent to quarter end, the Company approved targeted restructuring actions to capture near-term cost reductions and to further simplify certain organizational structures following the M&M Divestitures (the "2022 Restructuring Program"). The Company reviews and evaluates its long-lived assets for impairment when events and changes in circumstances indicate that the related carrying amountexpects to incur costs of such assets may not be recoverable and may exceed their fair value. For purposes of determining impairment, assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.
In the first quarter of 2020, expectations of proceedsup to $125 million, primarily related to certain potential divestitures within Corporate gave rise to fair value indicators and, thus, triggering events requiring the Company to perform a recoverability assessment related to its Biomaterials business unit. The Company performed a long-lived asset impairment test and determined that, based on undiscounted cash flows, the carrying amountpayment of certain long-lived assets was not recoverable. Accordingly, the Company estimated the fair value of these assets using a market approach utilizing Level 3 unobservable inputs. As a result, the Company recognized a $270 million pre-tax impairment charge recorded within “Restructuringseverance and asset related charges - net”charges. Restructuring costs will begin in the interim Consolidated Statementsfourth quarter of Operation for2022 and are expected to be substantially complete by the nine months ended September 30, 2020 with the charge impacting definite-lived intangible assets and property, plant, and equipment.
NOTE 67 - SUPPLEMENTARY INFORMATION
| | Sundry Income (Expense) - Net | Sundry Income (Expense) - Net | Three Months Ended September 30, | Nine Months Ended September 30, | | Sundry Income (Expense) - Net | Three Months Ended September 30, | Nine Months Ended September 30, | |
| In millions | In millions | 2021 | 2020 | 2021 | 2020 | | In millions | 2022 | 2021 | 2022 | 2021 | |
| Non-operating pension and other post-employment benefit (OPEB) credits | $ | 14 | | $ | 4 | | $ | 39 | | $ | 23 | | | |
| Non-operating pension and other post-employment benefit ("OPEB") credits | | Non-operating pension and other post-employment benefit ("OPEB") credits | $ | 7 | | $ | 9 | | $ | 20 | | $ | 22 | | |
| Interest income | Interest income | — | | 4 | | 4 | | 8 | | | Interest income | 5 | | 1 | | 8 | | 10 | | |
Net gain on divestiture and sales of other assets and investments 1,2,3 | 8 | | 418 | | 175 | | 611 | | | |
Foreign exchange losses, net | (19) | | (6) | | (36) | | (27) | | | |
Net gain on divestiture and sales of other assets and investments 1, 2 | | Net gain on divestiture and sales of other assets and investments 1, 2 | 6 | | 8 | | 75 | | 175 | | |
Foreign exchange gains (losses), net | | Foreign exchange gains (losses), net | 5 | | (19) | | 9 | | (35) | | |
| Miscellaneous income (expenses) - net 4 | 5 | | 10 | | (12) | | 16 | | | |
Miscellaneous income (expenses) - net 3 | | Miscellaneous income (expenses) - net 3 | 3 | | 2 | | 11 | | (17) | | |
| Sundry income (expense) - net | Sundry income (expense) - net | $ | 8 | | $ | 430 | | $ | 170 | | $ | 631 | | | Sundry income (expense) - net | $ | 26 | | $ | 1 | | $ | 123 | | $ | 155 | | |
1. The nine months ended September 30, 2022 primarily reflects income of $26 million related to the gain on sale of the Biomaterials business unit and $37 million related to the sale of a land use right within the Water & Protection segment.
2. The nine months ended September 30, 2021 primarily reflects income of $140 million related to the gain on sale of assets within Corporate & Other and income of $28 million related to the gain on sale of assets within the Electronics & Industrial segment. The nine months ended September 30, 2020 includes income of $197 million related to the gain on sale of the Compound Semiconductor Solutions business unit within the Electronics & Industrial segment.
2. The three and nine months ended September 30, 2020 includes a net benefit of $393 million related to the TCS/HSC Disposal, including the settlement of a supply agreement dispute, within Corporate. Refer to Note 3 for further information.
3. The three and nine months ended September 30, 2020 includes income of $30 million related to milestone achievement of a prior year sale of assets within the Electronics & Industrial segment.
4. The nine months ended September 30, 2021 includes an impairment charge of approximately $15 million recorded in the first quarter of 2021, related to Chestnut Run labs, which is part of the Held for Sale Disposal Group.an asset sale.
Cash, Cash Equivalents and Restricted Cash
At December 31, 2020, the Company had approximately $6.2 billion recorded within non-current “Restricted cash and cash equivalents” in the interim Condensed Consolidated Balance Sheet. The restricted cash relates to net proceeds received from an offering of $6.25 billion of senior unsecured notes (the "N&B Notes Offering") associated with the N&B transaction. On February 1, 2021 this amount was released from escrow as part of the N&B Transaction and is no longer restricted. The liability from the N&B Notes Offering was classified as "Liabilities of discontinued operations" in the Company's interim Condensed Consolidated Balance Sheet as of December 31, 2020. See Note 3 for further discussion of the Company's divestiture of the N&B business.
In connection with the cost sharing arrangement entered into as part of the MOU, the Company is contractually obligated to make deposits into an escrow accountaccount to address potential future PFAS costs. At September 30, 2022 and December 31, 2021, the Company had restricted cash attributable to the cost sharing arrangement of $103 million and $53 million in$50 million includedcluded within non-current “Restricted cash and cash equivalents” in the interim Condensed Consolidated Balance Sheets.Sheets, the majority of which is attributable to the MOU cost sharing arrangement. Additional information regarding the MOU and the escrow account can be found in Note 1516 to the interim Consolidated Financial Statements..
Accrued and Other Current Liabilities
"Accrued and other current liabilities" in the interim Condensed Consolidated Balance Sheets were $1,335$990 million at September 30, 20212022 and $1,085$1,040 million at December 31, 2020.2021. Accrued payroll, which is a component of "Accrued and other current liabilities," was $480$326 million at September 30, 2022 and $436 million at December 31, 2021. No other component of "Accrued and other current liabilities" was more than 5 percent of total current liabilities at September 30, 20212022 and no component was more than 5 percent of total current liabilities at December 31, 2020.
NOTE 78 - INCOME TAXES
Each year the Company files hundreds of tax returns in the various national, state and local income taxing jurisdictions in which it operates. These tax returns are subject to examination and possible challenge by the tax authorities. Positions challenged by the tax authorities may be settled or appealed by the Company. As a result, there is an uncertainty in income taxes recognized in the Company’s financial statements in accordance with accounting for income taxes and accounting for uncertainty in income taxes. The ultimate resolution of such uncertainties is not expected to have a material impact on the Company's results of operations.
The Company's effective tax rate fluctuates based on, among other factors, where income is earned and the level of income relative to tax attributes. The effective tax rate on continuing operations for the third quarter of 20212022 was 22.427.9 percent, compared with an effective tax rate of 58.723.6 percent for the third quarter of 2020.2021. The effective tax rate differential for the third quarter of 20202022 was principallydriven by the resultcumulative impact of a non-tax-deductible goodwill impairment chargecurrency fluctuation and a non-tax-deductible goodwill allocation in connection with the TCS/HSC Disposal impacting Corporate.
geographic mix of earnings. For the first nine months of 2021,2022, the effective tax rate on continuing operations was 16.723.8 percent, compared with (8.5)14.2 percent for the first nine months of 2020.2021. The effective tax rate for the first nine months of 2021 was principally the result of a $59 million tax benefit related to the step-up in tax basis in the goodwill of the Company’sCompany's European regional headquarters legal entity. The effective tax rate for the first nine months of 2020 was principally the result of a non-tax-deductible goodwill impairment charge impacting Corporate in the first and third quarter and a non-tax-deductible goodwill impairment charge impacting the Mobility & Materials and Industrial Solutions reporting units in the second quarter, coupled with an allocation of non-tax-deductible goodwill related to the TCS/HSC Disposal.
In connection with the integration of Laird PM, the Company completed certain internal restructurings that were determined to be tax free under the applicable sections of the Internal Revenue Code. If the aforementioned transactions were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then the Company could be subject to significant tax liability.
Certain internal distributions and reorganizations that occurred during 2021 and 2020 in preparation for the N&B Transaction and the external distribution in 2021 qualified as tax-free transactions under the applicable sections of the Internal Revenue Code. If the aforementioned transactions were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then the Company could be subject to significant tax liability. In connection with the closing of the N&B Transaction, DuPont, N&B and IFF entered into the N&B Tax Matters Agreement. Under the N&B Tax Matters Agreement, the Company would generally be allocated such liability and not be indemnified, unless certain non-qualifying actions are undertaken by N&B or IFF. To the extent that the Company is responsible for any such liability, there could be a material adverse impact on the Company's business, financial condition, results of operations and cash flows in future reporting periods.
For periods between the DWDP Merger and the DWDP Distributions, DuPont's consolidated federal income tax group and consolidated tax return included the Dow and Corteva entities. Generally, the consolidated tax liabilityAs a result of the DuPont U.S.M&M Businesses meeting the held for sale criteria in the first quarter of 2022, the Company recorded a net tax groupexpense of $12 million and a net tax benefit of $655 million for each year was apportioned among the membersthree and nine months ended September 30, 2022, respectively, in connection with certain internal restructuring and some of which relied upon legal entity valuations. These restructurings involve legal entities that hold M&M Businesses and are expected to be conveyed to Celanese as part of the consolidated groupM&M Divestiture and legal entities that are expected to remain with DuPont. The aforementioned net tax benefit is included in accordance with“Income from discontinued operations, net of tax” in the termsinterim Consolidated Statements of Operations. See Note 4 for additional information on the amended and restated Tax Matters Agreement, between DuPont, Corteva and Dow, effective as of April 1, 2019 (the “Amended and Restated DWDP Tax Matters Agreement”). DuPont, Corteva and Dow intend that to the extent Federal and/or State corporate income tax liabilities are reduced through the utilization of tax attributes of the other, settlement of any receivable and payable generated from the use of the other party’s sub-group attributes will be in accordance with the Amended and Restated DWDP Tax Matters Agreement.M&M Divestitures.
NOTE 89 - EARNINGS PER SHARE CALCULATIONS
The following tables provide earnings per share calculations for the three and nine months ended September 30, 20212022 and 2020:2021:
| | | | | | | | | | | | | | |
| Net Income for Earnings Per Share Calculations - Basic & Diluted | Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2021 | 2020 | 2021 | 2020 |
| Income (loss) from continuing operations, net of tax | $ | 433 | | $ | 86 | | $ | 1,538 | | $ | (2,853) | |
| Net income from continuing operations attributable to noncontrolling interests | 13 | | 7 | | $ | 26 | | $ | 20 | |
| | | | |
| | | | |
| Income (loss) from continuing operations attributable to common stockholders | $ | 420 | | $ | 79 | | $ | 1,512 | | $ | (2,873) | |
| | | | |
| | | | |
| (Loss) income from discontinued operations attributable to common stockholders | (29) | | (158) | | $ | 4,751 | | $ | (300) | |
| Net income (loss) attributable to common stockholders | $ | 391 | | $ | (79) | | $ | 6,263 | | $ | (3,173) | |
| | | | | | | | | | | | | | |
| Net Income for Earnings Per Share Calculations - Basic & Diluted | Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2022 | 2021 | 2022 | 2021 |
| Income from continuing operations, net of tax | $ | 359 | | $ | 259 | | $ | 956 | | $ | 1,040 | |
| Net income from continuing operations attributable to noncontrolling interests | 16 | | 9 | | 42 | | 12 | |
| | | | |
| | | | |
| Income from continuing operations attributable to common stockholders | $ | 343 | | $ | 250 | | $ | 914 | | $ | 1,028 | |
| | | | |
| | | | |
| Income from discontinued operations, net of tax | 17 | | 145 | | 723 | | 5,249 | |
| Net income from discontinued operations attributable to noncontrolling interests | (7) | | 4 | | (5) | | 14 | |
| Income from discontinued operations attributable to common stockholders | 24 | | 141 | | 728 | | 5,235 | |
| Net income attributable to common stockholders | $ | 367 | | $ | 391 | | $ | 1,642 | | $ | 6,263 | |
| | | | | | | | | | | | | | |
| Earnings Per Share Calculations - Basic | Three Months Ended September 30, | Nine Months Ended September 30, |
| Dollars per share | 2021 | 2020 | 2021 | 2020 |
| | |
| | | | |
| Earnings (loss) from continuing operations attributable to common stockholders | $ | 0.81 | | $ | 0.11 | | $ | 2.74 | | $ | (3.90) | |
| (Loss) earnings from discontinued operations, net of tax | (0.06) | | (0.22) | | 8.61 | | (0.41) | |
Earnings (loss) attributable to common stockholders 2 | $ | 0.75 | | $ | (0.11) | | $ | 11.35 | | $ | (4.31) | |
| | | | | | | | | | | | | | |
| Earnings Per Share Calculations - Basic | Three Months Ended September 30, | Nine Months Ended September 30, |
| Dollars per share | 2022 | 2021 | 2022 | 2021 |
| | | |
| | | | |
| Earnings from continuing operations attributable to common stockholders | $ | 0.69 | | $ | 0.48 | | $ | 1.81 | | $ | 1.86 | |
| Earnings from discontinued operations, net of tax | 0.05 | | 0.27 | | 1.44 | | 9.49 | |
Earnings attributable to common stockholders 1 | $ | 0.73 | | $ | 0.75 | | $ | 3.25 | | $ | 11.35 | |
| | | | | | | | | | | | | | |
| Earnings Per Share Calculations - Diluted | Three Months Ended September 30, | Nine Months Ended September 30, |
| Dollars per share | 2021 | 2020 | 2021 | 2020 |
| Earnings (loss) from continuing operations attributable to common stockholders | $ | 0.80 | | $ | 0.11 | | $ | 2.73 | | $ | (3.90) | |
| (Loss) earnings from discontinued operations, net of tax | (0.06) | | (0.21) | | 8.59 | | (0.41) | |
Earnings (loss) attributable to common stockholders 2 | $ | 0.75 | | $ | (0.11) | | $ | 11.32 | | $ | (4.31) | |
| | | | | | | | | | | | | | |
| Earnings Per Share Calculations - Diluted | Three Months Ended September 30, | Nine Months Ended September 30, |
| Dollars per share | 2022 | 2021 | 2022 | 2021 |
| Earnings from continuing operations attributable to common stockholders | $ | 0.69 | | $ | 0.48 | | $ | 1.80 | | $ | 1.86 | |
| Earnings from discontinued operations, net of tax | 0.05 | | 0.27 | | 1.44 | | 9.46 | |
Earnings attributable to common stockholders 1 | $ | 0.73 | | $ | 0.75 | | $ | 3.24 | | $ | 11.32 | |
| Share Count Information | Share Count Information | Three Months Ended September 30, | Nine Months Ended September 30, | Share Count Information | Three Months Ended September 30, | Nine Months Ended September 30, |
| Shares in millions | Shares in millions | 2021 | 2020 | 2021 | 2020 | Shares in millions | 2022 | 2021 | 2022 | 2021 |
| Weighted-average common shares - basic | Weighted-average common shares - basic | 521.5 | | 734.4 | | 551.7 | | 735.8 | | Weighted-average common shares - basic | 499.4 | | 521.5 | | 505.6 | | 551.7 | |
| Plus dilutive effect of equity compensation plans | Plus dilutive effect of equity compensation plans | 1.6 | | 0.5 | | 1.4 | | — | | Plus dilutive effect of equity compensation plans | 1.0 | | 1.6 | | 1.3 | | 1.4 | |
| | Weighted-average common shares - diluted | Weighted-average common shares - diluted | 523.1 | | 734.9 | | 553.1 | | 735.8 | | Weighted-average common shares - diluted | 500.4 | | 523.1 | | 506.9 | | 553.1 | |
Stock options and restricted stock units excluded from EPS calculations 1 | 2.4 | | 5.5 | | 2.7 | | 6.3 | | |
Stock options, restricted stock units, and performance-based restricted stock units excluded from EPS calculations 2 | | Stock options, restricted stock units, and performance-based restricted stock units excluded from EPS calculations 2 | 4.4 | | 2.4 | | 3.0 | | 2.7 | |
1.These outstanding options to purchase shares of common stock, restricted stock, and performance stock units were excluded from the calculation of diluted earnings per share because the effect of including them would have been antidilutive.
2.Earnings per share amounts are computed independently for income from continuing operations, income from discontinued operations and net income attributable to common stockholders. As a result, the per share amounts from continuing operations and discontinued operations may not equal the total per share amounts for net income attributable to common stockholders.
NOTE 910 - ACCOUNTS AND NOTES RECEIVABLE - NET
| | In millions | In millions | September 30, 2021 | December 31, 2020 | In millions | September 30, 2022 | December 31, 2021 |
Accounts receivable – trade 1 | Accounts receivable – trade 1 | $ | 2,237 | | $ | 1,850 | | Accounts receivable – trade 1 | $ | 1,691 | | $ | 1,612 | |
| Notes receivable – trade | 64 | | 61 | | |
| Other 2 | Other 2 | 607 | | 510 | | Other 2 | 566 | | 547 | |
| Total accounts and notes receivable - net | Total accounts and notes receivable - net | $ | 2,908 | | $ | 2,421 | | Total accounts and notes receivable - net | $ | 2,257 | | $ | 2,159 | |
1.Accounts receivable – trade is net of allowances of $33$38 million at September 30, 20212022 and $32$28 million at December 31, 2020.2021. Allowances are equal to the estimated uncollectible amounts and current expected credit loss. That estimate is based on historical collection experience, current economic and market conditions, and review of the current status of customers' accounts.
2.Other includes receivables in relation to value added tax, indemnification assets, and general sales tax and other taxes.taxes, and other receivables. No individual group represents more than ten percent of total receivables.
NOTE 1011 - INVENTORIES
| | | | | | | | |
| Inventories | September 30, 2021 | December 31, 2020 |
| In millions |
Finished goods 1 | $ | 1,670 | | $ | 1,447 | |
Work in process 1 | 528 | | 454 | |
Raw materials 1 | 492 | | 368 | |
| Supplies | 154 | | 124 | |
| Total inventories | $ | 2,844 | | $ | 2,393 | |
1.The prior year amounts have been recast for a reclassification between inventory captions, consistent with current year presentation. | | | | | | | | |
| In millions | September 30, 2022 | December 31, 2021 |
| Finished goods | $ | 1,334 | | $ | 1,201 | |
| Work in process | 519 | | 446 | |
| Raw materials | 392 | | 323 | |
| Supplies | 114 | | 116 | |
| Total inventories | $ | 2,359 | | $ | 2,086 | |
NOTE 1112 - PROPERTY, PLANT, AND EQUIPMENT
| | | Estimated Useful Lives (Years) | September 30, 2021 | | December 31, 2020 | | Estimated Useful Lives (Years) | September 30, 2022 | | December 31, 2021 |
| In millions | In millions | December 31, 2020 | Estimated Useful Lives (Years) |
| Land and land improvements | Land and land improvements | 1 | - | 25 | $ | 617 | | $ | 682 | | 1 | - | 25 | $ | 394 | | | $ | 440 | |
| Buildings | Buildings | 1 | - | 50 | 2,146 | | | 2,031 | | Buildings | 1 | - | 50 | 1,904 | | | 1,954 | |
| Machinery, equipment, and other | Machinery, equipment, and other | 1 | - | 25 | 7,543 | | | 7,182 | | Machinery, equipment, and other | 1 | - | 25 | 6,462 | | | 6,467 | |
| Construction in progress | Construction in progress | | | 1,214 | | | 1,228 | | Construction in progress | | | 944 | | | 1,034 | |
| Total property, plant and equipment | Total property, plant and equipment | | | $ | 11,520 | | | $ | 11,123 | | Total property, plant and equipment | | | $ | 9,704 | | | $ | 9,895 | |
| Total accumulated depreciation | Total accumulated depreciation | | | $ | 4,599 | | | $ | 4,256 | | Total accumulated depreciation | | | $ | 4,227 | | | $ | 4,142 | |
| Total property, plant and equipment - net | Total property, plant and equipment - net | | | $ | 6,921 | | | $ | 6,867 | | Total property, plant and equipment - net | | | $ | 5,477 | | | $ | 5,753 | |
| | | Three Months Ended September 30, | Nine Months Ended September 30, | | Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | In millions | 2021 | 2020 | 2021 | 2020 | In millions | 2022 | 2021 | 2022 | 2021 |
| Depreciation expense | Depreciation expense | $ | 174 | | $ | 173 | | $ | 501 | | $ | 513 | | Depreciation expense | $ | 137 | | $ | 142 | | $ | 414 | | $ | 407 | |
NOTE 1213 - NONCONSOLIDATED AFFILIATES
The Company's investments in companies accounted for using the equity method ("nonconsolidated affiliates") are recorded in "Investments and noncurrent receivables" in the interim Condensed Consolidated Balance Sheets.
The Company's net investment in nonconsolidated affiliates at September 30, 2022 and December 31, 2021 is shown in$733 million and $817 million, respectively. In the following table:
| | | | | | | | |
| Investments in Nonconsolidated Affiliates | September 30, 2021 | December 31, 2020 |
| In millions |
| Investments and noncurrent receivables | $ | 926 | | $ | 889 | |
| Accrued and other current liabilities | (64) | | (71) | |
| Net investment in nonconsolidated affiliates | $ | 862 | | $ | 818 | |
The Company maintained an ownership interest in 14six nonconsolidated affiliates at September 30, 2021.2022.
Sales to nonconsolidated affiliates represented less than 2 percent of total net sales for the three months ended September 30, 2021 and 2020 and less than 2 percent and 3 percent of total net sales for the nine months ended September 30, 20212022 and 2020, respectively. Sales to nonconsolidated affiliates for the nine months ended September 30, 2020 were primarily related to the sale of trichlorosilane, a raw material used in the production of polycrystalline silicon, to the HSC Group, prior to the TCS/Hemlock Disposal in the third quarter of 2020. Sales of this raw material to the HSC Group are reflected in Corporate.2021. Purchases from nonconsolidated affiliates represented less than 43 percent of “Cost of sales” for the three and nine months ended September 30, 20212022 and less than 34 percent for the three and nine months ended September 30, 2020.2021.
NOTE 1314 - GOODWILL AND OTHER INTANGIBLE ASSETS
The changes in the carrying amounts of goodwill during the nine months ended September 30, 20212022 were as follows:
| | | | | | | | | | | | | | |
| Electronics & Industrial | Water & Protection | Mobility & Materials | Total |
| In millions |
| Balance at December 31, 2020 | $ | 8,458 | | $ | 6,969 | | $ | 3,275 | | $ | 18,702 | |
Goodwill recognized for Laird PM Acquisition 1 | 1,219 | | — | | — | | 1,219 | |
| Currency Translation Adjustment | (66) | | (108) | | (67) | | (241) | |
| Other | — | | — | | 8 | | 8 | |
| Balance at September 30, 2021 | $ | 9,611 | | $ | 6,861 | | $ | 3,216 | | $ | 19,688 | |
1.On July 1, 2021, DuPont completed the acquisition of Laird PM. Final determination of the goodwill value assigned may result in adjustments to the preliminary value recorded. See Note 2for additional information. | | | | | | | | | | | | | | |
| In millions | Electronics & Industrial | Water & Protection | Corporate & Other | Total |
| Balance at December 31, 2021 | $ | 9,583 | | $ | 6,801 | | $ | 597 | | $ | 16,981 | |
| | | | |
| Currency Translation Adjustment | (337) | | (326) | | (16) | | (679) | |
| | | | |
| Balance at September 30, 2022 | $ | 9,246 | | $ | 6,475 | | $ | 581 | | $ | 16,302 | |
The Company tests goodwill for impairment annually during the fourth quarter, as of October 1, or more frequently when events or changes in circumstances indicate that fair value is below carrying value. As a result
During the first quarter of 2022, in conjunction with the announcement of the M&M Divestitures, the Company realigned the Retained Businesses, previously within the historic Mobility & Materials segment, to Corporate & Other (the "2022 Realignment"). The announcement of the M&M Divestitures and 2022 Realignment served as triggering events requiring the Company to perform impairment analyses related acquisition methodto goodwill carried by the impacted reporting units as of accountingMarch 1, 2022. Goodwill impairment analyses were performed for reporting units impacted in connection with the DWDP Merger, EID’s assetshistoric Mobility & Materials segment prior to the realignment, and liabilitiesno impairments were measured atidentified. As part of the 2022 Realignment, the Company assessed and re-defined certain reporting units effective March 1, 2022, including a reallocation of goodwill on a relative fair value resulting in increasesbasis, as applicable, to the Company’s goodwillnewly identified reporting units and other intangible assets.M&M Divestitures disposal groups. Goodwill impairment analyses were performed for the new reporting units reported within Corporate & Other and no impairments were identified. The fair value valuation increased the risk that declines in financial projections, including changes to key assumptions, could have a material, negative impact on the fair value of the Company’s reporting units and assets,the M&M Divestitures disposal groups were estimated using a combination of a discounted cash flow model and/or market approach. The Company's assumptions in estimating fair value include, but are not limited to, projected revenue, gross margins, EBITDA margins, the weighted average costs of capital, the terminal growth rates, and therefore could result in an impairment.derived multiples from comparable market transactions.
TheDuring the first quarter of 2021, in conjunction with the closing of the N&B Transaction, the Company changed its management and reporting structure (the “2021 Segment RealignmentRealignment”), which served as a triggering event requiring the Company to perform an impairment analysis related to goodwill carried by itscertain reporting units as of February 1, 2021, prior to the realignment. As part of the 2021 Segment Realignment, the Company assessed and re-defined certain reporting units effective February 1, 2021, including reallocation of goodwill on a relative fair value basis, as applicable, to new reporting units identified.impacted. Goodwill impairment analyses were then performed for the new reporting units identified in the Electronics & Industrialimpacted and Mobility & Materials segments impacted by the 2021 Segment Realignment. Nono impairments were identified asidentified. The fair value of each reporting unit tested was estimated using a resultcombination of a discounted cash flow model and market approach. The Company's assumptions in estimating fair value include, but are not limited to, projected revenue, gross margins, EBITDA margins, the analyses described above.weighted average costs of capital, the terminal growth rates, and derived multiples from comparable market transactions.
InThe Company's analyses used the third quarterdiscounted cash flow model (a form of 2020,the income approach) utilizing 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 tax rates. 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, subjective and actual results may differ materially from the Company’s estimates. If the Company’s ongoing estimates of future cash flows are not met, the Company recorded pre-tax, non-cash goodwillmay have to record additional impairment charges of $183 million, impacting Corporate, which is reflected in "Goodwill impairment charges" in the interim Consolidated Statements of Operations for the three and nine months ended September 30, 2020.
In the second quarter of 2020,future periods. As referenced, the Company recorded pre-tax, non-cash goodwill impairment chargesalso uses a form of $2,498 million, impacting its Mobility & Materialsthe market approach. As such, the Company believes the current assumptions and Industrial Solutions reporting units, which is reflected in "Goodwill impairment charges" in the interim Consolidated Statements of Operations for the nine months ended September 30, 2020.estimates utilized are both reasonable and appropriate.
In the first quarter of 2020, the Company recorded pre-tax, non-cash goodwill impairment charges of $533 million, impacting Corporate, which is reflected in "Goodwill impairment charges" in the interim Consolidated Statements of Operations for the nine months ended September 30, 2020.
Other Intangible Assets
The gross carrying amounts and accumulated amortization of other intangible assets by major class are as follows:
| | | September 30, 2021 | December 31, 2020 | | September 30, 2022 | December 31, 2021 |
| In millions | In millions | Gross
Carrying
Amount | Accum Amort | Net | Gross Carrying Amount | Accum Amort | Net | In millions | Gross Carrying Amount | Accum Amort | Net | Gross Carrying Amount | Accum Amort | Net |
| Intangible assets with finite lives: | Intangible assets with finite lives: | | | Intangible assets with finite lives: | | |
Developed technology 1 | $ | 3,051 | | $ | (1,287) | | $ | 1,764 | | $ | 2,844 | | $ | (1,220) | | $ | 1,624 | | |
Trademarks/tradenames 1 | 1,125 | | (483) | | 642 | | 1,095 | | (440) | | 655 | | |
Customer-related 1 | 7,800 | | (2,639) | | 5,161 | | 7,075 | | (2,361) | | 4,714 | | |
| Developed technology | | Developed technology | $ | 2,331 | | $ | (1,241) | | $ | 1,090 | | $ | 2,374 | | $ | (1,124) | | $ | 1,250 | |
| Trademarks/tradenames | | Trademarks/tradenames | 1,114 | | (542) | | 572 | | 1,125 | | (500) | | 625 | |
| Customer-related | | Customer-related | 5,416 | | (2,366) | | 3,050 | | 5,806 | | (2,296) | | 3,510 | |
| Other | Other | 131 | | (83) | | 48 | | 131 | | (81) | | 50 | | Other | 105 | | (71) | | 34 | | 113 | | (80) | | 33 | |
| Total other intangible assets with finite lives | Total other intangible assets with finite lives | $ | 12,107 | | $ | (4,492) | | $ | 7,615 | | $ | 11,145 | | $ | (4,102) | | $ | 7,043 | | Total other intangible assets with finite lives | $ | 8,966 | | $ | (4,220) | | $ | 4,746 | | $ | 9,418 | | $ | (4,000) | | $ | 5,418 | |
| Intangible assets with indefinite lives: | Intangible assets with indefinite lives: | | | Intangible assets with indefinite lives: | | |
| Trademarks/tradenames | Trademarks/tradenames | 1,029 | | — | | 1,029 | | 1,029 | | — | | 1,029 | | Trademarks/tradenames | 804 | | — | | 804 | | 804 | | — | | 804 | |
| Total other intangible assets | 1,029 | | — | | 1,029 | | 1,029 | | — | | 1,029 | | |
| Total other intangible assets with indefinite lives | | Total other intangible assets with indefinite lives | 804 | | — | | 804 | | 804 | | — | | 804 | |
| Total | Total | $ | 13,136 | | $ | (4,492) | | $ | 8,644 | | $ | 12,174 | | $ | (4,102) | | $ | 8,072 | | Total | $ | 9,770 | | $ | (4,220) | | $ | 5,550 | | $ | 10,222 | | $ | (4,000) | | $ | 6,222 | |
1.
As part of the Laird PM Acquisition,2022 Realignment, the Company acquired customer-relatedreallocated its intangible assets with indefinite lives to align with the new segment structure. This served as a triggering event requiring the Company to perform an impairment analysis related to intangible assets with indefinite lives carried by its historic Mobility & Materials segment as of $840 million, developed technologyMarch 1, 2022, prior to the realignment. Subsequent to the realignment, impairment analyses were then performed for the intangible assets with indefinite lives reported in Corporate & Other. No impairments were identified as a result of $290 million and trademark/tradename of $30 million. See Note 2 for additional information.the analyses described above.
As part of the 2021 Segment Realignment, the Company reallocated its intangible assets with indefinite lives to align with the new segment structure. This served as a triggering event requiring the Company to perform an impairment analysis related to intangible assets with indefinite lives carried by its existing Electronics & Imaging and Transportation & Industrial segments as of February 1, 2021, prior to the realignment. Subsequent to the realignment, the Company realigned intangible assets with indefinite lives as applicable to align the intangible assets with indefinite lives with the new segment structure. Impairment analyses were then performed for the intangible assets with indefinite lives carried by the Electronics & Industrial and Mobility & Materials segments.segments after the realignment. No impairments were identified as a result of the analyses described above.
In the third quarter of 2020, the Company recorded a pre-tax asset impairment charge of $52 million ($39 million net of tax) related to indefinite-lived intangible assets within Corporate which were deemed no longer recoverable as a result of an impairment test performed related to the Held For Sale Disposal Group classification (see Note 3 for additional information). The charge was recorded within “Restructuring and asset related charges – net” in the interim Consolidated Statements of Operations for the three and nine months ended September 30, 2020.
In the first quarter and third quarter of 2020, the Company recorded non-cash impairment charges related to definite-lived intangible assets impacting Corporate reflected within “Restructuring and asset related charges - net” in the interim Consolidated Statements of Operations for the three and nine months ended September 30, 2020. See Note 5 for further discussion.
In the second quarter of 2020, the Company performed quantitative testing on indefinite-lived intangible assets attributable to the Mobility & Materials segment, for which the Company determined that the fair value of certain tradenames had declined. As a result of the testing, the Company recorded a pre-tax, non-cash indefinite-lived intangible asset impairment charge of $21 million ($16 million after tax), which is reflected in "Restructuring and asset related charges - net," in the interim Consolidated Statements of Operations for the nine months ended September 30, 2020. The remaining net book value of the tradenames attributable to the Mobility & Materials segment at September 30, 2020 was approximately $289 million, which represents fair value.
The following table provides the net carrying value of other intangible assets by segment:
| | | | | | | | |
| Net Intangibles by Segment | September 30, 2021 | December 31, 2020 |
| In millions |
Electronics & Industrial 1 | $ | 3,527 | | $ | 2,611 | |
| Water & Protection | 2,733 | | 2,920 | |
| Mobility & Materials | 2,384 | | 2,541 | |
| Total | $ | 8,644 | | $ | 8,072 | |
1.Includes intangible assets acquired as part of the Laird PM Acquisition. See Note 2for additional information. | | | | | | | | |
| Net Intangibles by Segment | September 30, 2022 | December 31, 2021 |
| In millions |
| Electronics & Industrial | $ | 3,000 | | $ | 3,429 | |
| Water & Protection | 2,456 | | 2,686 | |
| Corporate & Other | 94 | | 107 | |
| Total | $ | 5,550 | | $ | 6,222 | |
Total estimated amortization expense for the remainder of 20212022 and the five succeeding fiscal years is as follows:
| | Estimated Amortization Expense | Estimated Amortization Expense | | Estimated Amortization Expense | |
| In millions | In millions | | In millions | |
| Remainder of 2021 | $ | 174 | | |
| 2022 | $ | 676 | | |
| Remainder of 2022 | | Remainder of 2022 | $ | 139 | |
| 2023 | 2023 | $ | 652 | | 2023 | $ | 567 | |
| 2024 | 2024 | $ | 622 | | 2024 | $ | 539 | |
| 2025 | 2025 | $ | 572 | | 2025 | $ | 498 | |
| 2026 | 2026 | $ | 554 | | 2026 | $ | 471 | |
| 2027 | | 2027 | $ | 424 | |
NOTE 1415 - SHORT-TERM BORROWINGS, LONG-TERM DEBT AND AVAILABLE CREDIT FACILITIES
The Company's short-term borrowings consist of commercial paper. At September 30, 2022 and December 31, 2021, the Company's short-term borrowings were $1,287 million and $150 million, respectively. The increase in short-term borrowing is due to cash flow needs related to the M&M Divestiture as well as normal operating needs. The weighted-average interest rate on commercial paper was 3.19 percent at September 30, 2022 and 0.34 percent at December 31, 2021.
The following table summarizes the Company's finance lease obligations and long-term debt:
| | Long-Term Debt | Long-Term Debt | September 30, 2021 | December 31, 2020 | Long-Term Debt | September 30, 2022 | December 31, 2021 |
| In millions | In millions | Amount | Weighted Average Rate | Amount | Weighted Average Rate | In millions | Amount | Weighted Average Rate | Amount | Weighted Average Rate |
Promissory notes and debentures 1: | | | |
Final maturity 2023 2 | $ | 2,800 | | 3.89 | % | $ | 4,800 | | 3.18 | % | |
Promissory notes and debentures 1 | | Promissory notes and debentures 1 | | |
| Final maturity 2023 | | Final maturity 2023 | $ | 2,800 | | 4.18 | % | $ | 2,800 | | 3.89 | % |
| Final maturity 2025 | Final maturity 2025 | 1,850 | | 4.49 | % | 1,850 | | 4.49 | % | Final maturity 2025 | 1,850 | | 4.49 | % | 1,850 | | 4.49 | % |
| Final maturity 2026 and thereafter | 6,050 | | 5.13 | % | 6,050 | | 5.13 | % | |
Final maturity 2026 and thereafter 2 | | Final maturity 2026 and thereafter 2 | 5,975 | | 5.20 | % | 6,050 | | 5.13 | % |
| Other facilities: | Other facilities: | | | Other facilities: | | |
| Term loan due 2022 | — | | — | % | 3,000 | | 1.25 | % | |
| Finance lease obligations | Finance lease obligations | 2 | | | 2 | | | Finance lease obligations | 2 | | | 2 | | |
| Less: Unamortized debt discount and issuance costs | Less: Unamortized debt discount and issuance costs | 72 | | | 90 | | | Less: Unamortized debt discount and issuance costs | 63 | | | 70 | | |
Less: Long-term debt due within one year | 1 | | | 1 | | | |
| | Total | Total | $ | 10,629 | | | $ | 15,611 | | | Total | $ | 10,564 | | | $ | 10,632 | | |
1. Represents senior unsecured notes (the "2018 Senior Notes"), which are senior unsecured obligations of the Company. See Note 24 for additional information.
2. The year ended December 31, 2020 includes $2 billionIncludes fair value hedging adjustment of $75 million related to the May 2020 Notes.Company's interest rate swap agreements. See Note 21 for additional information.
Principal Payments of long-term debt for the remainder of 20212022 and the five succeeding fiscal years are as follows:
| | Maturities of Long-Term Debt for Next Five Years at September 30, 2021 | Total | |
| Maturities of Long-Term Debt for Next Five Years at September 30, 2022 | | Maturities of Long-Term Debt for Next Five Years at September 30, 2022 | Total |
| In millions | In millions | Total | In millions |
| Remainder of 2021 | |
| 2022 | $ | — | | |
| Remainder of 2022 | | Remainder of 2022 | $ | — | |
| 2023 | 2023 | $ | 2,800 | | 2023 | $ | 2,800 | |
| 2024 | 2024 | $ | — | | 2024 | $ | — | |
| 2025 | 2025 | $ | 1,850 | | 2025 | $ | 1,850 | |
| 2026 | 2026 | $ | — | | 2026 | $ | — | |
| 2027 | | 2027 | $ | — | |
The estimated fair value of the Company's long-term borrowings was determined using Level 2 inputs within the fair value hierarchy, as described in Note 22. Based on quoted market prices for the same or similar issues, or on current rates offered to the Company for debt of the same remaining maturities, the fair value of the Company's long-term borrowings, not including long-term debt due within one year, was $12,830 million$10.21 billion and $18,336 million$12.60 billion at September 30, 20212022 and December 31, 2020,2021, respectively.
Available Committed Credit Facilities
The following table summarizes the Company's credit facilities:
| | Committed and Available Credit Facilities at September 30, 2021 | | | |
| Committed and Available Credit Facilities at September 30, 2022 | | Committed and Available Credit Facilities at September 30, 2022 | | |
| In millions | In millions | Effective Date | Committed Credit | Credit Available | Maturity Date | Interest | In millions | Effective Date | Committed Credit | Credit Available | Maturity Date | Interest |
Revolving Credit Facility, Five-year | Revolving Credit Facility, Five-year | May 2019 | $ | 3,000 | | $ | 2,977 | | May 2024 | Floating Rate | Revolving Credit Facility, Five-year | April 2022 | $ | 2,500 | | $ | 2,488 | | April 2027 | Floating Rate |
| 364-day Revolving Credit Facility | 364-day Revolving Credit Facility | April 2021 | 1,000 | | 1,000 | | April 2022 | Floating Rate | 364-day Revolving Credit Facility | April 2022 | 1,000 | | 1,000 | | April 2023 | Floating Rate |
| Total Committed and Available Credit Facilities | Total Committed and Available Credit Facilities | | $ | 4,000 | | $ | 3,977 | | | | Total Committed and Available Credit Facilities | | $ | 3,500 | | $ | 3,488 | | | |
N&B TransactionIn July 2022, the Company drew down $600 million under the 364-day Revolving Credit Facility in order to facilitate certain intercompany internal restructuring steps related to the M&M Divestiture. The Company repaid the borrowing in September 2022.
As part
Intended Rogers Acquisition
In connection with the Intended Rogers Acquisition, on November 22, 2021, the Company entered into a two-year senior unsecured committed term loan agreement in the amount of $5.2 billion. In October 2022, the facility was amended to extend the lending commitments (as amended the "Amended 2021 Term Loan Facility"). On November 1, 2022, the M&M Divestiture closed and therefore based on the terms of the N&B Transaction, the Company received a Special Cash Payment of approximately $7.3 billion. The Special Cash Payment was partially funded by the N&B Notes Offering, which was completed on September 16, 2020. In order to fund the remainder of the Special Cash Payment, immediately prior to the consummation of the N&B Transaction, N&B borrowed $1.25 billion under the N&BAmended 2021 Term Loan Facility the commitment was terminated. Refer to Note 24 - Subsequent Events for additional information on February 1, 2021. The obligations and liabilities associated with the N&B Notes Offering and the N&B Term Loan were separated from the Company on February 1, 2021 upon consummation of the N&B Transaction. See Note 3for more information.Intended Rogers Acquisition.
May 2020 Debt Offering
On May 1, 2020, the Company completed an underwritten public offering of senior unsecured notes (the “May 2020 Notes”) in the aggregate principal amount of $2 billion of 2.169 percent fixed rate Notes due May 1, 2023 (the “May 2020 Debt Offering”). The consummation of the N&B Transaction triggered the special mandatory redemption feature of the May 2020 Debt Offering. The Company redeemed the May 2020 Notes on May 13, 2021 and funded the redemption with proceeds from the Special Cash Payment.
Term Loan Facilities
On February 1, 2021, the Company terminated its fully drawn $3 billion term loan facilities in the aggregate principle amount of $3 billion (the "Term Loan Facilities").facilities. The termination triggered the repayment of the aggregate outstanding principal amount of $3 billion, plus accrued and unpaid interest through and including January 31, 2021. The Company funded the repayment with proceeds from the Special Cash Payment.
Revolving Credit Facilities
On April 12, 2022, the Company entered into a new $2.5 billion five-year revolving credit facility (the "2022 Five-Year Revolving Credit Facility"). The 2022 Five-Year Revolving Credit Facility is generally expected to remain undrawn and serve as a backstop to the Company's commercial paper and letter of credit issuance. On April 12, 2022, the Company entered into an updated $1 billion 364-day revolving credit facility (the "2022 $1B Revolving Credit Facility").
Uncommitted Credit Facilities and Outstanding Letters of Credit
Unused bank credit lines on uncommitted credit facilities were $828approximately $810 million at September 30, 2021.2022. These lines are available to support short-term liquidity needs and general corporate purposes including letters of credit. Outstanding letters of credit were $164approximately $107 million at September 30, 2021.2022. These letters of credit support commitments made in the ordinary course of business.
Debt Covenants and Default Provisions
The Company's indenture covenants include customary limitations on liens, sale and leaseback transactions, and mergers and consolidations, subject to certain limitations. The 2018 Senior Notes also contain customary default provisions. The 2021 Term Loan Facility, the Five-Year Revolving Credit Facility and the 20212022 $1B Revolving Credit Facility contain a financial covenant requiring that the ratio of Total Indebtedness to Total Capitalization for the Company and its consolidated subsidiaries not exceed 0.60. At September 30, 2021,2022, the Company was in compliance with this financial covenant. There were no material changes to the debt covenants and default provisions at September 30, 2021.
NOTE 1516 - COMMITMENTS AND CONTINGENT LIABILITIES
Litigation, Environmental Matters, and Indemnifications
The Company and certain subsidiaries are involved in various lawsuits, claims and environmental actions that have arisen in the normal course of business with respect to product liability, patent infringement, governmental regulation, contract and commercial litigation, as well as possible obligations to investigate and mitigate the effects on the environment of the disposal or release of certain substances at various sites. In addition, in connection with divestitures and the related transactions, the Company from time to time has indemnified and has been indemnified by third parties against certain liabilities that may arise in connection with, among other things, business activities prior to the completion of the respective transactions. The term of these indemnifications, which typically pertain to environmental, tax and product liabilities, is generally indefinite. The Company records liabilities for ongoing and indemnification matters when the information available indicates that it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated.
As of September 30, 2021,2022, the Company has recorded indemnification assets of $56$18 million within "Accounts and notes receivable - net" and $239$229 million within "Deferred charges and other assets" and indemnification liabilities of $177$122 million within "Accrued and other current liabilities" and $189$221 million within "Other noncurrent obligations" within the interim Condensed Consolidated Balance Sheets.
The Company’s accruals discussed below for indemnification liabilities related to the binding Memorandum of Understanding (“MOU”) between Chemours, Corteva, EID and the Company and to the DWDPDowDuPont ("DWDP") Separation and Distribution Agreement and the Letter Agreement between the Company and Corteva (together the “Agreements”), are included in the balances above.
PFAS Stray Liabilities: Future Eligible PFAS Costs
On July 1, 2015, EID, a Corteva subsidiary since June 1, 2019, completed the separation of EID’s Performance Chemicals segment through the spin-off of Chemours to holders of EID common stock (the “Chemours Separation”). On June 1, 2019, the Company completed the separation of its agriculture business through the spin-off of Corteva, Inc. (“Corteva”), including Corteva’s subsidiary EID.
On January 22, 2021, the Company, Corteva, EID and Chemours entered into the MOU pursuant to which the parties have agreed to release certain claims that had been raised by Chemours including any claims arising out of or resulting from the process and manner in which EID structured or conducted the Chemours Separation, and any other claims that challenge the Chemours Separation or the assumption of Chemours Liabilities (as defined in the Chemours Separation Agreement) by Chemours and the allocation thereof, subject in each case to certain exceptions set forth in the MOU. In connection with the MOU, the confidential arbitration process regarding certain claims by Chemours was terminated in February 2021. The parties have further agreed not to bring any future, additional claims regarding the Chemours Separation Agreement or the MOU outside of arbitration.
Pursuant to the MOU, the parties have agreed to share certain costs associated with potential future liabilities related to alleged historical releases of certain PFAS (per- or polyfluoroalkyl substances, which include perfluorooctanoic acids and its ammonium salts (“PFOA”)) out of pre-July 1, 2015 conduct (“eligible PFAS costs”) until the earlier to occur of (i) December 31, 2040, (ii) the day on which the aggregate amount of Qualified Spend, as defined in the MOU, is equal to $4 billion or (iii) a termination in accordance with the terms of the MOU. PFAS refers to per- or polyfluoroalkyl substances, which include perfluorooctanoic acids and its ammonium salts (“PFOA”).
The parties have agreed that, during the term of this sharing arrangement, Qualified Spend up to $4 billion will be borne 50 percent by Chemours and 50 percent, up to a cap of $2 billion, by the Company and Corteva. The Company and Corteva will split their 50 percent of Qualified Spend in accordance with the Agreements. After the term of this arrangement, Chemours’ indemnification obligations under the Chemours Separation Agreement would continue unchanged, subject in each case to certain exceptions set forth in the MOU.
In order to support and manage any potential future eligible PFAS costs, the parties also agreed to establish an escrow account. The MOU provides that (1) no later than each of September 30, 2021 and September 30, 2022, Chemours shall deposit $100 million into an escrow account and DuPont and Corteva shall together deposit $100 million in the aggregate into an escrow account and (2) no later than September 30 of each subsequent year through and including 2028, Chemours shall deposit $50 million into an escrow account and DuPont and Corteva shall together deposit $50 million in the aggregate into an escrow account. Subject to the terms and conditions set forth in the MOU, each party may be permitted to defer funding in any year (excluding 2021). Additionally, if on December 31, 2028, the balance of the escrow account (including interest) is less than $700 million, Chemours will make 50 percent of the deposits and DuPont and Corteva together will make 50 percent of the deposits necessary to restore the balance of the escrow account to $700 million. Such payments will be made in a series of
consecutive annual equal installments commencing on September 30, 2029 pursuant to the escrow account replenishment terms as set forth in the MOU. As ofAt September 30, 2022 and December 31, 2021, the initialDuPont's escrow deposit was completed by all parties in accordance with the MOU. DuPont'sdeposits of $100 million and $50 million, deposit into the escrow account isrespectively, are reflected in "Restricted cash and cash equivalents" on the Condensed Consolidated Balance Sheet.
The parties have agreed to cooperate in good faith to enter into additional agreements reflecting the terms set forth in the MOU. Under the Agreements, Divested Operations and Businesses ("DDOB") liabilities of EID not allocated to or retained by Corteva or the Company are categorized as relating to either (i) PFAS Stray Liabilities, if they arise out of actions related to or resulting from the development, testing, manufacture or sale of PFAS; or (ii) Non-PFAS Stray Liabilities, (and together with PFAS Stray Liabilities, the “EID Stray Liabilities”).
The Agreements provide that the Company and Corteva will each bear specified amounts plus an additional $200 million of Indemnifiable Losses, described below, in relation to certain EID Stray Liabilities. The Agreements further provide that the Company and Corteva will each bear 50 percent, $150 million each, of the first $300 million of total Indemnifiable Losses related to PFAS Stray Liabilities. When the companies meet their respective $150 million threshold, Indemnifiable Losses related to PFAS Stray Liabilities will be borne 71 percent by DuPont and 29 percent by Corteva.
Indemnifiable Losses up to $150 million incurred for PFAS Stray Liabilities are credited against each company’s $200 million threshold.
Whenever Corteva or DuPont meets its $200 million threshold, the other would generally bear all Non-PFAS Stray Liabilities until meeting its $200 million threshold. Thereafter, DuPont will bear 71 percent and Corteva will bear 29 percent of Indemnifiable Losses related to Non-PFAS Stray Liabilities.
Indemnifiable Losses, as defined in the DWDP Separation and Distribution Agreement, include, among other things, attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense of EID Stray Liabilities.
In connection with the MOU and the Agreements, the Company has recognized the following indemnification liabilities related to eligible PFAS costs:
| | Indemnified Liabilities Related to the MOU | Indemnified Liabilities Related to the MOU | Indemnified Liabilities Related to the MOU |
| In millions | In millions | September 30, 2021 | December 31, 2020 | Balance Sheet Classification | In millions | Sept 30, 2022 | Dec 31, 2021 | Balance Sheet Classification |
| Current indemnified liabilities | Current indemnified liabilities | $ | 43 | | $ | 12 | | Accrued and other current liabilities | Current indemnified liabilities | $ | 55 | | $ | 37 | | Accrued and other current liabilities |
| Long-term indemnified liabilities | Long-term indemnified liabilities | $ | 92 | | $ | 46 | | Other noncurrent obligations | Long-term indemnified liabilities | $ | 129 | | $ | 89 | | Other noncurrent obligations |
Total indemnified liabilities accrued under the MOU 1, 2 | Total indemnified liabilities accrued under the MOU 1, 2 | $ | 135 | | $ | 58 | | | Total indemnified liabilities accrued under the MOU 1, 2 | $ | 184 | | $ | 126 | | |
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1.As of September 30, 2022 and December 31, 2021, total indemnified liabilities accrued include $108$168 million and $112 million, respectively, related to Chemours environmental remediation activities at their site in Fayetteville, North Carolina under the Consent Order between Chemours and the North Carolina Department of Environmental Quality.Quality (the "NC DEQ").
2.Excludes liabilities of $27 million recognized by the Company as of December 31, 2020 related to the settlement of the Ohio MDL, discussed below.
In addition to the above, as of September 30,December 31, 2021, the Company hashad recognized a liability of $12.5 million related to the settlement agreement between Chemours, Corteva and DuPont and Delaware's Attorney General, discussed below.
Future charges if any, associated with the MOU would be recognized over the term of the agreement as a component of income from discontinued operations to the extent liabilities become probable and estimable.
In 2004, EID settled a West Virginia state court class action, Leach v. DuPont,E. I. du Pont de Nemours and Company, which alleged that PFOA from EID’s former Washington Works facility had contaminated area drinking water supplies and affected the health of area residents. Members of the Leach class have standing to pursue personal injury claims for just six health conditions that an expert panel appointed under the Leach settlement reported in 2012 had a “probable 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. In 2017, Chemours and EID each paid $335 million to settle the multi-district litigation in the U.S. District Court for the Southern District of Ohio (“Ohio MDL”), thereby resolving claims of about 3,550 plaintiffs alleging injury from exposure to PFOA in drinking water. The 2017 settlement did not resolve claims of Leach class members who did not have claims in the Ohio MDL or whose claims are based on diseases first diagnosed after February 11, 2017. Since the 2017 settlement about 100 additional cases alleging personal injury, including kidney and testicular cancer claims, had beenwere filed or noticed and were pending in the Ohio MDL.
On January 21, 2021, EID and Chemours entered into settlement agreements with plaintiffs’ counsel representing the Ohio MDL plaintiffs providing for a settlement of cases and claims in the Ohio MDL, except as noted below (the “Settlement”). The total settlement amount iswas $83 million in cash with each of the Company and EID contributing $27 million and Chemours contributing $29 million. At June 30, 2021 the Company had paid in full its $27 million contribution. The Settlement was entered into solely by way of compromise and settlement and is not in any way an admission of liability or fault by the Company, Corteva, EID or Chemours. In connection with the Settlement, in April 2021 the plaintiffs filed a motion to terminate
the Ohio MDL. The case captioned “Abbott“Abbott v. E. I. du Pont de Nemours and Company”Company” is a personal injury action that is not included in the Settlement of the Ohio MDL. DuPont was not named party in the Leach case or the Ohio MDL and is presently pending appeal.not a named party in the Abbott case.
In the Abbott case, the jury returned a verdict in March 2020 against EID, awarding $50 million in compensatory damages to the plaintiff and his wife, who claimed that exposure to PFOA in drinking water caused him to develop testicular cancer. In March 2021, the trial judge entered an order denying EID’s post-trial motions for a reduction in the verdict amount for Mr. Abbott but reduced Mrs. Abbott’s verdict for lossAs of consortium from $10 million to $250,000, reducing the total verdict to $40.25 million. EID has appealed the verdict. The plaintiffs also sought but were not awarded punitive damages.
In addition to the actions described above,September 30, 2022, there are severalvarious cases alleging damages due to natural resources, the environment, water, and/or property as well as various other allegations. DuPont and CortevaPFAS which are named in most of the actions discussed below. Such actions often include additional claims based on allegations that the transfer by EID of certain PFAS liabilities to Chemours prior to the Chemours Separation resulted in a fraudulent conveyance or voidable transaction. With the exception of the fraudulent conveyance claims, which are excluded from the MOU, legal fees, expenses, costs, and any potential liabilities for eligible PFAS costs presented by the following matters will be shared as defined in the MOU between Chemours, EID, Corteva and DuPont.
Beginning in April 2019, several dozen lawsuits alleging water contamination from the use of PFAS-containing aqueous firefighting foams (“AFFF”) were filed against EID and Chemours, in addition to 3M and other AFFF manufacturers. The majority of these lawsuits were consolidated in a multi-district litigation docket in federal court in South Carolina (the “SC MDL”). Since May 2017,then, the SC MDL has grown and contains approximately 3,130 cases. Most of the actions in the SC MDL name DuPont as a numberdefendant due to the fraudulent transfer claims related to the Chemours Separation and the DowDuPont separations. Generally, the SC MDL contains multiple types of lawsuits including, but not limited to, approximately 2,840 personal injury cases, state attorneys general natural resource damages cases, and water provider contamination cases. Three of the water provider contamination cases have filedbeen selected by the court as bellwether cases. The court has encouraged all parties to discuss resolution of the water provider category of cases. Consistent with the court’s instruction and under the mutual obligations of the MOU, Chemours, Corteva/EID and DuPont, together, are engaged with plaintiffs’ counsel on these cases. DuPont has never made or sold AFFF, perfluorooctanesulfonic acid ("PFOS") or PFOS containing products.
There are also state attorneys general lawsuits against DuPont, Corteva, EID, Chemours, and others, claimingoutside of the SC MDL. These also claim environmental contamination by certain PFAS compounds. Such actions are currently pending in New Hampshire, New Jersey, North Carolina, Ohio and Vermont. In the second quarter 2021, the Michigan action was transferred to the SC MDL, discussed below.compounds but distinct from AFFF. Generally, the states raise common law tort claims and seek economic impact damages for alleged harm to natural resources, punitive damages, present and future costs to cleanup contamination from certain PFAS compounds, and to abate the alleged nuisance. Most of these actions include fraudulent transfer claims related to the Chemours Separation and the DowDuPont separations.
In July 2021, Chemours, Corteva (for itself and EID) and DuPont reached a resolution with the State of Delaware that avoids litigation and addresses potential Natural Resources Damages (“NRD”)natural resources damages from known historical and current releases by the companies in or affecting Delaware. The resolution releases these potential state NRD claims arising from the environmental impacts of various chemicals, including PFAS, across all current and historical locations. Consistent with the MOU, Chemours will bear 50 percent or $25 million of the $50 million settlement and Corteva and DuPont will each bear $12.5 million. The Company paid its portion of the settlement in January 2022. The settlement also calls for a potential Supplemental Payment to Delaware up to a total of $25 million funded 50 percent by Chemours and 50 percent by Corteva and DuPont, jointly, under certain circumstances which are not deemed probable.
Several additional lawsuits have been filed by residents, local water districts, and private water companies against EID, Chemours, Corteva, DuPont and others in New York, New Jersey, and California generally alleging contamination of water systems due to the release of PFAS compounds. These suits seek compensatory and punitive damages, as well as present and future costs to clean up the alleged contamination. This includes a putative class action filed in the Northern District of New York on behalf of all individuals who, as of December 1, 2015, are or were owners of real property located in the Village of Hoosick Falls, New York and who obtain their drinking water from a privately owned well which has allegedly been contaminated by PFAS. The plaintiffs seek compensatory and punitive damages as well as medical monitoring. The certification of the class is currently pending before the court.
Additionally, there are several actions that have been filed in New Jersey against EID and Chemours on behalf of residents who allege personal injuries due to exposure to PFAS in their drinking water. These lawsuits generally seek compensatory and punitive damages stemming from those alleged injuries and medical monitoring.
In April 2021, Chemours, CortevaDuPont de Nemours (Nederland) B.V., and DuPont and certain of their respectivethe Dutch entities of Chemours and Corteva, received a civil summons filed before the Court of Rotterdam, the Netherlands, on behalf of four municipalities neighboring the Chemours Dordrecht facility. The municipalities are seeking liability declarations relating to the Dordrecht site’s current and historical PFAS operations and emissions.
BeginningIn addition to the above matters, the Company is a named party in April 2019, several dozen lawsuits involving water contamination arising from the use of PFAS-containing aqueous firefighting foams (“AFFF”) were filed against EID, Chemours, 3M andvarious other AFFF manufacturers and in different parts of the country. Most were consolidated in multi-district litigation docket in federal district court in South Carolina (the “SC MDL”). Many of those cases also name DuPont as a defendant. Those actions largely seek remediation of the alleged PFAS contamination in and around military bases and airports as well as medical monitoring of affected residents. The first 10 bellwether cases have been selected by the court, all of which are water district contamination cases.
As of September 30, 2021, approximately 1,600 personal injury cases have been filed directly in the SC MDL and assertlegal matters that make claims on behalf of individual firefighters and others who allege that exposurerelated to PFAS, in firefighting foam caused them to develop cancer, including kidneyfor which the costs of litigation and testicular cancer, or other injuries. DuPont has been named as a defendant in most of these personal injury AFFF cases. DuPont is seekingfuture liabilities, if any, are eligible PFAS costs under the dismissal of DowDuPontMOU and DuPont from these actions. EID andIndemnification Losses under the Company have never made or sold AFFF, perfluorooctanesulfonic acid ("PFOS") or PFOS containing products.
Additionally, a caseAgreements. These matters include lawsuits filed by a former firefighter is pendingwater districts and private water companies in the Southern DistrictNew Jersey and California generally alleging contamination of Ohio seeking certification of a nationwide class of individuals who have detectable levels of PFAS in their blood serum. The suit was filed against 3M and several other defendants in addition to Chemours and EID. The complaint specifically seeks, among other things, the creation of a “PFAS Science Panel” to study the effects of PFAS, but expressly states that the class does not seek compensatory damages for personal injuries. In February 2020, the court denied the defendants' motion to transfer this case to the SC MDL. The decision of whether to certify the class is currently pending before the court.water systems.
There are several actions pending in federal court against EID and Chemours, relatingcases that make claims related to discharges of PFCs, including GenX, into the Cape Fear River. GenX is a polymerization processing aid and a replacement for PFOA introduced by EID which Chemours continues to manufacture at its Fayetteville Works facility in Bladen County, North Carolina. One of these actions is a consolidated putative class actionPFAS that asserts claims for damages and other relief on behalf of putative classes of property owners and residents in areas near or who draw drinking water from the Cape Fear River. Another action is a consolidated action brought by various North Carolina water authorities, including the Cape Fear Public Utility Authority and Brunswick County, that seek actual and punitive damages as well as injunctive relief. In addition, an action is pending in North Carolina state court on behalf of about 200 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.
Additionally, there are lawsuitshave been filed in North Carolina state court against Chemours and Corteva/EID Cortevain which the Company is not a named party, but for which the costs of litigation and DuPont seeking damages for alleged personal injuries to more than 100 individuals due to alleged exposure to PFOAfuture liabilities, if any, are or may be eligible PFAS costs under the MOU and GenX originating fromIndemnification Losses under the Fayetteville Works plant. These lawsuits also include fraudulent transfer allegations related to the Chemours Separation.Agreements.
While Management believes it has appropriately estimated the liability associated with eligible PFAS matters and Indemnifiable Losses as of the date of this report, it is reasonably possible that the Company could incur additional eligible PFAS costs and Indemnifiable Losses in excess of the amounts accrued. These additional costs could have a significant effect on the Company’s financial condition and/or cash flows in the period in which they occur; however, costs qualifying as Qualified Spend are limited by the terms of the MOU.
Other Litigation Matters
In addition to the matters described above, the Company is party to claims and lawsuits arising out of the normal course of business with respect to product liability, patent infringement, governmental regulation, contract and commercial litigation, and other actions. Certain of these actions may purport to be class actions and seek damages in very large amounts. As of September 30, 2021,2022, the Company has liabilities of $18$23 million associated with these other litigation matters. It is the opinion of the Company’s management that the possibility is remote that the aggregate of all such other claims and lawsuits will have a material adverse impact on the results of operations, financial condition and cash flows of the Company. In accordance with its accounting policy for litigation matters, the Company will expense litigation defense costs as incurred, which could be significant to the Company’s financial condition and/or cash flows in the period.
Environmental Matters
Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on current law and existing technologies. At September 30, 2021,2022, the Company had accrued obligations of $210$260 million for probable environmental remediation and restoration costs. These obligations are included in "Accrued and other current liabilities" and "Other noncurrent obligations" in the interim Condensed Consolidated Balance Sheets. 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 for handling site remediation and restoration.
In June of 2022, the EPA announced updated health advisories for various PFAS compounds in drinking water. Chemours received notice from the NC DEQ that its obligations under the Consent Order could be enlarged as a result of EPA’s announcement. In the second quarter of 2022, the Company recorded an incremental liability related to its indemnification obligations under the MOU. The increase primarily relates to incremental costs associated with activities at Chemours' site in Fayetteville, North Carolina under the Consent Order with the NC DEQ.
The accrued environmental obligations includesinclude the following:
| | Environmental Accrued Obligations | Environmental Accrued Obligations | Environmental Accrued Obligations |
| In millions | In millions | September 30, 2021 | December 31, 2020 | Potential exposure above the amount accrued 1 | In millions | Sept 30, 2022 | Dec 31, 2021 | Potential exposure above the amount accrued 1 |
| Environmental remediation liabilities not subject to indemnity | Environmental remediation liabilities not subject to indemnity | $ | 45 | | $ | 36 | | $ | 91 | | Environmental remediation liabilities not subject to indemnity | $ | 39 | | $ | 43 | | $ | 105 | |
| | Environmental remediation indemnified liabilities: | Environmental remediation indemnified liabilities: | | | Environmental remediation indemnified liabilities: | | |
Indemnifications related to Dow and Corteva 2 | Indemnifications related to Dow and Corteva 2 | 45 | | 44 | | 66 | | Indemnifications related to Dow and Corteva 2 | 48 | | 46 | | 63 | |
MOU related obligations (discussed above) 3 | MOU related obligations (discussed above) 3 | 120 | | 56 | | 59 | | MOU related obligations (discussed above) 3 | 172 | | 116 | | 84 | |
| Other Environmental Indemnifications | | Other Environmental Indemnifications | 1 | | — | | 2 | |
| Total environmental related liabilities | Total environmental related liabilities | $ | 210 | | $ | 136 | | $ | 216 | | Total environmental related liabilities | $ | 260 | | $ | 205 | | $ | 254 | |
1.The environmental accrual as of September 30, 2021 represents management’s best estimate of the costs for remediation and restoration with respect to environmental matters, although it is reasonably possible that the ultimate cost with respect to these particular matters could range above the amount accrued.
2.Pursuant to the DWDP Separation and Distribution Agreement, the Company is required to indemnify Dow and Corteva for certain Non-PFAS clean-up responsibilities and associated remediation costs.
3.The MOU related obligations are included ininclude the Indemnified Liabilities Related toCompany's estimate of its liability under the MOU presented above.
Guarantees
Obligations for Equity Affiliates & Others
The Company has directly guaranteed various debt obligations under agreements with third parties related to equity affiliates and customers. At September 30, 2021 and December 31, 2020, the Company had directly guaranteed $178 million and $189 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. The Company would be required to perform on these guarantees in the event of default by the guaranteed party.
The Company assesses the payment/performance risk by assigning default ratesremediation activities 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.
In certain cases, the Company has recourse to assets held as collateral, as well as personal guarantees from customers. At September 30, 2021, no collateral was held by the Company.
The following table provides a summary of the final expiration year and maximum future payments for each type of guarantee:
| | | | | | | | |
| Guarantees at September 30, 2021 | Final Expiration Year | Maximum Future Payments |
| In millions |
Obligations for customers 1: | | |
| Bank borrowings | 2021 | $ | 15 | |
Obligations for non-consolidated affiliates 2: | | |
| Bank borrowings | 2021 | $ | 163 | |
| Total guarantees | | $ | 178 | |
1. Existing guarantees for select customers, as part of contractual agreements. The terms of the guarantees are equivalent to the terms of the customer loans that are primarily made to finance customer invoices. At September 30, 2021, all maximum future payments had terms less than a year.
2. Existing guarantees for non-consolidated affiliates' liquidity needs in normal operations.
NOTE 1617 - OPERATING LEASES
The lease cost for operating leases were as follows:
| | | Three Months Ended September 30, | Nine Months Ended September 30, | | | Three Months Ended September 30, | Nine Months Ended September 30, | |
| In millions | In millions | 2021 | 2020 | 2021 | 2020 | | In millions | 2022 | 2021 | 2022 | 2021 | |
| Operating lease costs | Operating lease costs | $ | 30 | | $ | 36 | | $ | 88 | | $ | 100 | | | Operating lease costs | $ | 27 | | $ | 27 | | $ | 82 | | $ | 80 | | |
Operating cash flows from operating leases, excluding those related to the M&M Divestitures, were $88$82 million and $101$80 million for the nine months ended September 30, 20212022 and 2020,2021, respectively.
Operating lease right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. New operating lease assets and liabilities entered into during the nine months ended September 30, 2022 and 2021 and 2020 were $92$75 million and $101$64 million, respectively. Supplemental balance sheet information related to leases was as follows:
| | In millions | In millions | September 30, 2021 | December 31, 2020 | In millions | September 30, 2022 | December 31, 2021 |
| Operating Leases | Operating Leases | | | Operating Leases | | |
Operating lease right-of-use assets 1 | Operating lease right-of-use assets 1 | $ | 423 | | $ | 423 | | Operating lease right-of-use assets 1 | $ | 386 | | $ | 422 | |
Current operating lease liabilities 2 | Current operating lease liabilities 2 | 99 | | 117 | | Current operating lease liabilities 2 | 84 | | 92 | |
Noncurrent operating lease liabilities 3 | Noncurrent operating lease liabilities 3 | 331 | | 308 | | Noncurrent operating lease liabilities 3 | 301 | | 337 | |
| Total operating lease liabilities | Total operating lease liabilities | $ | 430 | | $ | 425 | | Total operating lease liabilities | $ | 385 | | $ | 429 | |
1.Included in "Deferred charges and other assets" in the interim Condensed Consolidated Balance Sheet.
2.Included in "Accrued and other current liabilities" in the interim Condensed Consolidated Balance Sheet.
3.Included in "Other noncurrent obligations" in the interim Condensed Consolidated Balance Sheet.
Operating lease right-of-use ("ROU") assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide the lessor’s implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments.
| | Lease Term and Discount Rate for Operating Leases | Lease Term and Discount Rate for Operating Leases | September 30, 2021 | December 31, 2020 | Lease Term and Discount Rate for Operating Leases | September 30, 2022 | December 31, 2021 |
| Weighted-average remaining lease term (years) | Weighted-average remaining lease term (years) | 7.54 | 5.83 | Weighted-average remaining lease term (years) | 8.07 | 8.50 |
| Weighted average discount rate | Weighted average discount rate | 1.99 | % | 2.26 | % | Weighted average discount rate | 2.33 | % | 2.01 | % |
Maturities of lease liabilities were as follows:
| | Maturity of Lease Liabilities at September 30, 2021 | Operating Leases | |
| Maturity of Lease Liabilities at September 30, 2022 | | Maturity of Lease Liabilities at September 30, 2022 | Operating Leases |
| In millions | In millions | Operating Leases | In millions |
| Remainder of 2021 | |
| 2022 | 103 | | |
| Remainder of 2022 | | Remainder of 2022 | $ | 25 | |
| 2023 | 2023 | 81 | | 2023 | 89 | |
| 2024 | 2024 | 64 | | 2024 | 75 | |
| 2025 | 2025 | 43 | | 2025 | 53 | |
| 2026 and thereafter | 150 | | |
| 2026 | | 2026 | 36 | |
| 2027 and thereafter | | 2027 and thereafter | 153 | |
| Total lease payments | Total lease payments | $ | 470 | | Total lease payments | $ | 431 | |
| Less: Interest | Less: Interest | 40 | | Less: Interest | 46 | |
| Present value of lease liabilities | Present value of lease liabilities | $ | 430 | | Present value of lease liabilities | $ | 385 | |
The Company has leases in which it is the lessor, with the largest being a result of the N&B transaction. In connection with the N&B Transaction, DuPont entered into leasing agreements with IFF, whereby DuPont is leasing certain properties, including office spaces and R&D laboratories to IFF. These leases are classified as operating leases and lessor income and related expenses are not significant to the Company's interim Condensed Consolidated Balance Sheet or interim Consolidated Statement of Operations.
NOTE 1718 - STOCKHOLDERS' EQUITY
As partShare Repurchase Program
In February 2022, the Company's Board of Directors authorized a $1.0 billion share buyback program which expires on March 31, 2023, (the "2022 Share Buyback Program"). During the Exchange Offer from the N&B Transaction,third quarter, the Company acceptedrepurchased and retired approximately 197.44.3 million shares for $250 million under this program. As of its common stock in exchange for about 142September 30, 2022, the Company repurchased and retired a total of 11.9 million shares of N&B Common Stock. As a result,for $750 million under the Company reduced its common stock outstanding by 197.4 million shares of DuPont Common Stock as of February 1, 2021.2022 Share Buyback Program. Refer to Note 24 - Subsequent Events for additional information on the share repurchase programs.
In the first quarter of 2021, the Company's Board of Directors authorized a $1.5 billion share buyback program, which expired on June 30, 2022 ("2021 Share RepurchaseBuyback Program"). At the expiry of the 2021 Share Buyback Program, the Company had repurchased and retired a total of 19.6 million shares for $1.5 billion.
On June 1, 2019, the Company's Board of Directors approved a $2 billion share buyback program ("2019 Share Buyback Program"), which expired on June 1, 2021. At the expiry of the 2019 Share Buyback Program, the Company had repurchased and retired a total of 29.9 million shares at a cost of $2 billion.
In the first quarter of 2021, the Company's Board of Directors authorized a new $1.5 billion share buyback program, which expires on June 30, 2022 ("2021 Share Buyback Program"). During the third quarter, the Company repurchased and retired 6.6 million shares for $500 million under this program. As of September 30, 2021, the Company had repurchased and retired a total of 8.1 million shares for $625 million under the 2021 Share Buyback Program.
Accumulated Other Comprehensive Loss
The following table summarizes the activity related to each component of accumulated other comprehensive loss ("AOCL") for the nine months ended September 30, 20212022 and 2020:2021:
| | Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss | | Cumulative Translation Adj | Pension and OPEB | Derivative Instruments | Total | Accumulated Other Comprehensive Loss | | Cumulative Translation Adj | Pension and OPEB | Derivative Instruments | Total |
| In millions | In millions | Cumulative Translation Adj | Cumulative Translation Adj | Pension and OPEB |
| 2020 | | | |
| Balance at January 1, 2020 | | $ | (1,070) | | $ | (345) | | $ | (1) | | $ | (1,416) | | |
| Other comprehensive income (loss) before reclassifications | | 548 | | (9) | | — | | 539 | | |
| Amounts reclassified from accumulated other comprehensive loss | | ��� | | 18 | | — | | 18 | | |
| Net other comprehensive income | | $ | 548 | | $ | 9 | | $ | — | | $ | 557 | | |
| Balance at September 30, 2020 | | $ | (522) | | $ | (336) | | $ | (1) | | $ | (859) | | |
| 2021 | 2021 | | | | 2021 | | | |
| Balance at January 1, 2021 | Balance at January 1, 2021 | | $ | 470 | | $ | (425) | | $ | (1) | | $ | 44 | | Balance at January 1, 2021 | | $ | 470 | | $ | (425) | | $ | (1) | | $ | 44 | |
| Other comprehensive (loss) income before reclassifications | Other comprehensive (loss) income before reclassifications | | (545) | | 20 | | 38 | | (487) | | Other comprehensive (loss) income before reclassifications | | (545) | | 20 | | 38 | | (487) | |
| Amounts reclassified from accumulated other comprehensive loss | Amounts reclassified from accumulated other comprehensive loss | | — | | 3 | | — | | 3 | | Amounts reclassified from accumulated other comprehensive loss | | — | | 3 | | — | | 3 | |
| Split-off of N&B reclassification adjustment | Split-off of N&B reclassification adjustment | | 184 | | 73 | | 1 | | 258 | | Split-off of N&B reclassification adjustment | | 184 | | 73 | | 1 | | 258 | |
| Net other comprehensive (loss) income | Net other comprehensive (loss) income | | $ | (361) | | $ | 96 | | $ | 39 | | $ | (226) | | Net other comprehensive (loss) income | | $ | (361) | | $ | 96 | | $ | 39 | | $ | (226) | |
| Balance at September 30, 2021 | Balance at September 30, 2021 | | $ | 109 | | $ | (329) | | $ | 38 | | $ | (182) | | Balance at September 30, 2021 | | $ | 109 | | $ | (329) | | $ | 38 | | $ | (182) | |
| 2022 | | 2022 | | | |
| Balance at January 1, 2022 | | Balance at January 1, 2022 | | $ | (88) | | $ | 73 | | $ | 56 | | $ | 41 | |
| Other comprehensive (loss) income before reclassifications | | Other comprehensive (loss) income before reclassifications | | (1,774) | | 24 | | 109 | | (1,641) | |
| Amounts reclassified from accumulated other comprehensive loss | | Amounts reclassified from accumulated other comprehensive loss | | — | | (3) | | — | | (3) | |
| Net other comprehensive (loss) income | | Net other comprehensive (loss) income | | $ | (1,774) | | $ | 21 | | $ | 109 | | $ | (1,644) | |
| Balance at September 30, 2022 | | Balance at September 30, 2022 | | $ | (1,862) | | $ | 94 | | $ | 165 | | $ | (1,603) | |
The tax effects on the net activity related to each component of other comprehensive (loss) income (loss) were not significant for the three and nine months ended September 30, 20212022 and 2020.2021.
A summary of the reclassifications out of AOCL for the three and nine months ended September 30, 20212022 and 20202021 is provided as follows:
| | Reclassifications Out of Accumulated Other Comprehensive Loss | Reclassifications Out of Accumulated Other Comprehensive Loss | Three Months Ended September 30, | Nine Months Ended September 30, | Income Classification | Reclassifications Out of Accumulated Other Comprehensive Loss | Three Months Ended September 30, | Nine Months Ended September 30, | Income Classification |
| In millions | In millions | 2021 | 2020 | 2021 | 2020 | In millions | 2022 | 2021 | 2022 | 2021 |
| | Cumulative translation adjustments | Cumulative translation adjustments | $ | — | | $ | — | | $ | 184 | | $ | — | | See (1) below | Cumulative translation adjustments | $ | — | | $ | — | | $ | — | | $ | 184 | | See (1) below |
| Pension and other post-employment benefit plans | Pension and other post-employment benefit plans | $ | 2 | | $ | 7 | | $ | 110 | | $ | 15 | | See (1) below | Pension and other post-employment benefit plans | $ | (2) | | $ | 2 | | $ | (4) | | $ | 110 | | See (1) below |
| Tax (benefit) expense | (5) | | 2 | | (34) | | 3 | | See (1) below | |
| Tax expense (benefit) | | Tax expense (benefit) | — | | (5) | | 1 | | (34) | | See (1) below |
| After tax | After tax | $ | (3) | | $ | 9 | | $ | 76 | | $ | 18 | | | After tax | $ | (2) | | $ | (3) | | $ | (3) | | $ | 76 | | |
| Derivative instruments | Derivative instruments | $ | — | | $ | — | | $ | 1 | | $ | — | | See (1) below | Derivative instruments | $ | — | | $ | — | | $ | — | | $ | 1 | | See (1) below |
| Total reclassifications for the period, after tax | Total reclassifications for the period, after tax | $ | (3) | | $ | 9 | | $ | 261 | | $ | 18 | | | Total reclassifications for the period, after tax | $ | (2) | | $ | (3) | | $ | (3) | | $ | 261 | | |
1. The activity for the three and nine months ended September 30, 2022 is classified within the "Sundry income (expense) - net". The activity for the three and nine months ended September 30, 2021 is classified almost entirely within "Income (loss) from discontinued operations, net of tax" as part of the N&B Transaction, with a portion classified within and "Sundry income (expense) - net" as part of continuing operations. The activity for the three months ended September 30, 2021 and the three and nine months ended September 30, 2020 is classified within the "Sundry income (expense) - net" and "Provision"(Benefit from) provision for income taxes on continuing operations" lines.as part of continuing operations.
NOTE 18 - NONCONTROLLING INTERESTS
Ownership interests in the Company's subsidiaries held by parties other than the Company are presented separately from the Company's equity in the interim Condensed Consolidated Balance Sheets as "Noncontrolling interests." The amounts of consolidated net income attributable to the Company and the noncontrolling interests are both presented on the face of the interim Consolidated Statements of Operations.
The following table summarizes the activity for equity attributable to noncontrolling interests for the three and nine months ended September 30, 2021 and 2020:
| | | | | | | | | | | | | | |
| Noncontrolling Interests | Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | 2021 | 2020 | 2021 | 2020 |
| Balance at beginning of period | $ | 587 | | $ | 572 | | $ | 566 | | $ | 569 | |
| Net income attributable to noncontrolling interests | 13 | | 7 | | 26 | | 20 | |
| Contributions from noncontrolling interests | 17 | | 14 | | 84 | | 19 | |
| Distributions to noncontrolling interests | (10) | | (38) | | (34) | | (48) | |
| Cumulative translation adjustments | (1) | | 4 | | (9) | | (1) | |
| Split-off of N&B | — | | — | | (27) | | — | |
| Balance at end of period | $ | 606 | | $ | 559 | | $ | 606 | | $ | 559 | |
NOTE 19 - PENSION PLANS AND OTHER POST-EMPLOYMENT BENEFITS
A summary of the Company's pension plans and other post-employment benefits can be found in Note 19 to the Consolidated Financial Statements included in the Company’s Recast 20202021 Annual Report.
On February 1, 2021, the Company's net underfunded balance was reduced by $232 million after certain assets and obligations were separated from the Company to N&B plans effective as part of the N&B Transaction.
The following sets forth the components of the Company's net periodic benefit (credit) cost for defined benefit pension plans:plans and other post-employment benefits:
| | Net Periodic Benefit (Credit) Cost for All Plans | Net Periodic Benefit (Credit) Cost for All Plans | Three Months Ended September 30, | Nine Months Ended September 30, | Net Periodic Benefit (Credit) Cost for All Plans | Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | In millions | 2021 | 2020 | 2021 | 2020 | In millions | 2022 | 2021 | 2022 | 2021 |
| Defined Benefit Pension Plans: | | | |
Service cost 1 | Service cost 1 | $ | 13 | | $ | 20 | | $ | 42 | | $ | 55 | | Service cost 1 | $ | 9 | | $ | 13 | | $ | 32 | | $ | 42 | |
Interest cost 2 | Interest cost 2 | 11 | | 14 | | 32 | | 42 | | Interest cost 2 | 14 | | 11 | | 41 | | 32 | |
Expected return on plan assets 3 | Expected return on plan assets 3 | (26) | | (28) | | (80) | | (82) | | Expected return on plan assets 3 | (24) | | (26) | | (76) | | (80) | |
Amortization of prior service credit 4 | Amortization of prior service credit 4 | (2) | | (1) | | (4) | | (4) | | Amortization of prior service credit 4 | (1) | | (2) | | (4) | | (4) | |
Amortization of net loss 5 | 3 | | 3 | | 9 | | 11 | | |
Amortization of unrecognized net loss 5 | | Amortization of unrecognized net loss 5 | 1 | | 3 | | 2 | | 10 | |
Curtailment/settlement 6 | Curtailment/settlement 6 | (1) | | 6 | | 2 | | 8 | | Curtailment/settlement 6 | (2) | | (1) | | (1) | | 2 | |
| Net periodic benefit cost - total | $ | (2) | | $ | 14 | | $ | 1 | | $ | 30 | | |
| Less: Net periodic benefit cost - discontinued operations | — | | 4 | | 1 | | 11 | | |
| Net periodic benefit (credit) cost - total | | Net periodic benefit (credit) cost - total | $ | (3) | | $ | (2) | | $ | (6) | | $ | 2 | |
| Less: Net periodic benefit credit - discontinued operations | | Less: Net periodic benefit credit - discontinued operations | (2) | | (2) | | (7) | | (4) | |
| Net periodic benefit cost - continuing operations | Net periodic benefit cost - continuing operations | $ | (2) | | $ | 10 | | $ | — | | $ | 19 | | Net periodic benefit cost - continuing operations | $ | (1) | | $ | — | | $ | 1 | | $ | 6 | |
|
1. The service cost from continuing operations was $13$6 million and $40$21 million for the three and nine months ended September 30, 2022, respectively, compared with $9 million and $28 million for the three and nine months ended September 30, 2021, respectively, compared with $15respectively.
2. The interest cost from continuing operations was $13 million and $43$37 million for the three and nine months ended September 30, 2020, respectively.
2. The interest cost from continuing operations was $112022, respectively, compared with $10 million and $32$29 million for the three and nine months ended September 30, 2021, respectively, compared with $14 million and $39 million for the three and nine months ended September 30, 2020, respectively.
3. The expected return on plan assets from continuing operations was $26$19 million and $79$57 million for the three and nine months ended September 30, 2021,2022, respectively, compared with $26$19 million and $75$59 million for the three and nine months ended September 30, 2020, respectively.2021.
4. The amortization of prior service credit from continuing operations was zero and $2 million for the three and nine months ended September 30, 2022, respectively, compared with a gain of $2 million and $4 million for the three and nine months ended September 30, 2021, respectively, compared with a gain of $1 million and $4 million for the three and nine months ended September 30, 2020, respectively.
5. The amortization of unrecognized net loss from continuing operations was $1 million and $3 million or the three and nine months ended September 30, 2022, respectively, compared with a net loss of $3 million and $9$10 million for the three and nine months ended September 30, 2021, respectively, compared with a net loss ofrespectively.
6. The curtailment and settlement gain from continuing operations was $2 million and $8$1 million for the three and nine months ended September 30, 2020, respectively.
6. The curtailment and settlement from continuing operations was2022, respectively, a creditgain of $1 million for the three months ended September 30, 2021, and a costloss of $2 million for the three and nine months ended September 30, 2021, respectively, compared with costs of $6 million and $8 million for both the three and nine months ended September 30, 2020, respectively.
Activity related to other post-employment benefits was considered immaterial for both the current and comparative periods. The continuing operations portion of the net periodic benefit (credit) cost, other than the service cost component, is included in "Sundry income (expense) - net" in the interim Consolidated Statements of Operations.
DuPont expects to make additional contributions in the aggregate of approximately $46$35 million by year-end 2021.2022.
NOTE 20 - STOCK-BASED COMPENSATION
A summary of the Company's stock-based compensation plans can be found in Note 20 to the Consolidated Financial Statements included in the Company's Recast 20202021 Annual Report.
In the second quarter of 2020, the stockholders of DuPont approved the DuPont 2020 Equity and Incentive Plan (the "2020 Plan") which allows the Company to grant options, share appreciation rights, restricted shares, restricted stock units ("RSUs"), share bonuses, other share-based awards, cash awards, or aany combination of the foregoing. Under the 2020 Plan, a maximum of 1817 million shares of common stock are available for award as of September 30, 2021. In June of 2019, DuPont adopted the DuPont Omnibus Incentive Plan ("DuPont OIP") which provides for equity-based and cash incentive awards to certain employees, directors, independent contractors and consultants in the form of stock options, RSUs and performance-based restricted stock units ("PSUs"). Under the DuPont OIP, a maximum of 1 million shares of common stock are available for award as of September 30, 2021.2022.
DuPont recognized share-based compensation expense in continuing operations of $17$20 million and $21$15 million for the three months ended September 30, 20212022 and 2020,2021, respectively, and $55$58 million and $81$49 million for the nine months ended September 30, 20212022 and 2020,2021, respectively. The income tax benefits related to stock-based compensation arrangements were $3$4 million and $4$3 million for the three months ended September 30, 20212022 and 2020,2021, respectively, and $11$12 million and $16$10 million for the nine months ended September 30, 20212022 and 2020,2021, respectively.
In the first quarter of 2021,2022, the Company granted 0.60.7 million RSUs, 0.60.5 million stock options and 0.40.3 million PSUs.performance-based stock units ("PSUs"). The weighted-average fair values per share associated with the grants were $72.88$75.12 per RSU, $16.92$17.41 per stock option and $78.23$81.55 per PSU. The stock options had a weighted-average exercise price per share of $72.98.$75.05. There was minimal activity in the second quarterand third quarters of 2021. In the third quarter of 2021, the Company granted 0.3 million RSUs with a weighted-average fair value per share of $71.42 per RSU. There was minimal stock option and PSU activity.
2022.
Effect of the N&B Transaction on Equity Awards
At the time of the N&B Transaction, outstanding, unvested share-based compensation awards that were denominated in DuPont common stock and held by N&B employees were terminated and reissued as equity awards issued under the IFF stock plan.
NOTE 21 - FINANCIAL INSTRUMENTS
The following table summarizes the fair value of financial instruments at September 30, 20212022 and December 31, 2020:2021:
| | Fair Value of Financial Instruments | Fair Value of Financial Instruments | September 30, 2021 | December 31, 2020 | Fair Value of Financial Instruments | September 30, 2022 | December 31, 2021 |
| In millions | In millions | Cost | Gain | Loss | Fair Value | Cost | Gain | Loss | Fair Value | In millions | Cost | Gain | Loss | Fair Value | Cost | Gain | Loss | Fair Value |
Cash equivalents | Cash equivalents | $ | 469 | | $ | — | | $ | — | | $ | 469 | | $ | 1,105 | | $ | — | | $ | — | | $ | 1,105 | | Cash equivalents | $ | 427 | | $ | — | | $ | — | | $ | 427 | | $ | 841 | | $ | — | | $ | — | | $ | 841 | |
Restricted cash equivalents 1 | Restricted cash equivalents 1 | $ | 68 | | $ | — | | $ | — | | $ | 68 | | $ | 6,223 | | $ | — | | $ | — | | $ | 6,223 | | Restricted cash equivalents 1 | $ | 111 | | $ | — | | $ | — | | $ | 111 | | $ | 65 | | $ | — | | $ | — | | $ | 65 | |
| | Total cash equivalents and restricted cash equivalents | $ | 537 | | $ | — | | $ | — | | $ | 537 | | $ | 7,328 | | $ | — | | $ | — | | $ | 7,328 | | |
| Total cash and restricted cash equivalents | | Total cash and restricted cash equivalents | $ | 538 | | $ | — | | $ | — | | $ | 538 | | $ | 906 | | $ | — | | $ | — | | $ | 906 | |
| Long-term debt including debt due within one year | Long-term debt including debt due within one year | $ | (10,630) | | $ | — | | $ | (2,201) | | $ | (12,831) | | $ | (15,612) | | $ | — | | $ | (2,725) | | $ | (18,337) | | Long-term debt including debt due within one year | $ | (10,639) | | $ | 497 | | $ | (64) | | $ | (10,206) | | $ | (10,632) | | $ | — | | $ | (1,963) | | $ | (12,595) | |
| Derivatives relating to: | Derivatives relating to: | | | Derivatives relating to: | | |
Net investment hedge 2 | Net investment hedge 2 | — | | 51 | | — | | 51 | | — | | — | | — | | — | | Net investment hedge 2 | — | | 211 | | — | | 211 | | — | | 74 | | — | | 74 | |
Foreign currency 3,4 | — | | — | | (14) | | (14) | | — | | 4 | | (13) | | (9) | | |
Foreign currency 3, 4 | | Foreign currency 3, 4 | — | | 39 | | (50) | | (11) | | — | | 5 | | (10) | | (5) | |
Interest rate swap agreements 5 | | Interest rate swap agreements 5 | — | | — | | (75) | | (75) | | — | | — | | — | | — | |
| Total derivatives | Total derivatives | $ | — | | $ | 51 | | $ | (14) | | $ | 37 | | $ | — | | $ | 4 | | $ | (13) | | $ | (9) | | Total derivatives | $ | — | | $ | 250 | | $ | (125) | | $ | 125 | | $ | — | | $ | 79 | | $ | (10) | | $ | 69 | |
1.At September 30, 20212022 there was $18$8 million of restricted cash classified as "Other"Prepaid and other current assets" and $50$103 million classified as "Restricted cash and cash equivalents" in the interim Condensed Consolidated Balance Sheets. At December 31, 20202021 there was $25$12 million of restricted cash classified as "Other"Prepaid and other current assets" and $6.2 billion$53 million classified as "Restricted cash and cash equivalents" in the interim Condensed Consolidated Balance Sheet. See Note 7 for more information on restricted cash.
2.Classified as "Deferred charges and other assets" in the interim Condensed Consolidated Balance Sheets.
3.Classified as "Other"Prepaid and other current assets" and "Accrued and other current liabilities" in the interim Condensed Consolidated Balance Sheets.
4.Presented net of cash collateral where master netting arrangements allow.
5.Classified as "Other noncurrent obligations" in the Condensed Consolidated Balance Sheets.
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 interest rate and commodity price risks. The Company has established a variety of derivative programs to be utilized for financial risk management. These programs reflect varying levels of exposure coverage and time horizons based on an assessment of risk.
Derivative programs have procedures and controls and are approved by the Corporate Financial Risk Management Committee, consistent with the Company's financial risk management policies and guidelines. Derivative instruments used are forwards, options, futures and swaps.
The Company's financial risk management procedures also address counterparty credit approval, limits and routine exposure monitoring and reporting. The counterparties to these contractual arrangements are major financial institutions and major commodity exchanges. The Company is exposed to credit loss in the event of 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 monitored and reported to management.
The notional amounts of the Company's derivative instruments were as follows:
| | Notional Amounts | Notional Amounts | September 30, 2021 | December 31, 2020 | Notional Amounts | September 30, 2022 | December 31, 2021 |
| In millions | In millions | In millions |
| Derivatives designated as hedging instruments: | Derivatives designated as hedging instruments: | | | Derivatives designated as hedging instruments: | | |
| Net investment hedge | Net investment hedge | $ | 1,000 | | $ | — | | Net investment hedge | $ | 1,000 | | $ | 1,000 | |
| Interest rate swap agreements | | Interest rate swap agreements | $ | 1,000 | | $ | — | |
| Derivatives not designated as hedging instruments: | Derivatives not designated as hedging instruments: | | | Derivatives not designated as hedging instruments: | | |
Foreign currency contracts 1 | Foreign currency contracts 1 | $ | (1,280) | | $ | (304) | | Foreign currency contracts 1 | $ | (407) | | $ | (625) | |
|
1.Presented net of contracts bought and sold.
Derivatives Designated in Hedging Relationships
Net Foreign Investment Hedge
In the second quarter of 2021, the Company entered into a fixed-for-fixed cross currency swaps with an aggregate notional amount totaling $1 billion to hedge the variability of exchange rate impacts between the U.S. Dollardollar and Euro.euro. Under the terms of the cross-currency swap agreement, the Company notionally exchanged $1 billion at an interest rate of 4.73% for €819 million at a weighted average interest rate of 3.26%. The cross-currency swap is designated as a net investment hedge and expires on November 15, 2028.
The Company has made an accounting policy election to account for the net investment hedge using the spot method. The Company has also elected to amortize the excluded components in interest expense in the related quarterly accounting period that such interest is accrued. The cross-currency swap is marked to market at each reporting date and any unrealized gains or losses are included in unrealized currency translation adjustments within AOCL, net of amounts associated with excluded components which are recognized in interest expense in the interim Consolidated Statements of Operations.
Interest Rate Swap Agreements
In the second quarter of 2022, the Company entered into fixed-to-floating interest rate swap agreements with an aggregate notional principal amount totaling $1 billion to hedge changes in the fair value of the Company’s long-term debt due to interest rate change movements. These swaps converted $1 billion of the Company’s $1.65 billion principal amount of fixed rate notes due 2038 into floating rate debt for the portion of their terms through 2032 with an interest rate based on the Secured Overnight Financing Rate ("SOFR"). Under the terms of the agreements, the Company agrees to exchange, at specified intervals, fixed for floating interest amounts based on the agreed upon notional principal amount. The interest rate swaps are designated as fair value hedges and expire on November 15, 2032.
The interest rate swaps are carried at fair value. Fair value hedge accounting has been applied and thus, changes in the fair value of these swaps and changes in the fair value of the related hedged portion of long-term debt will be presented and will net to zero in Sundry income (expense) – net in the interim Consolidated Statements of Operations.
Derivatives not Designated in Hedging Relationships
Foreign Currency Contracts
The Company routinely uses forward 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 foreign currency-denominated monetary assets and liabilities intends to achieve a minimal earnings impact, after taxes. The Company may use foreign currency exchange contracts to offset a portion of the Company's exposure to certain foreign currency-denominated revenues so that gains and losses on the contracts offset changes in the USD value of the related foreign currency-denominated revenues.
Effect of Derivative Instruments
Foreign currency derivatives not designated as hedges are used to offset foreign exchange gains or losses resulting from the underlying exposures of foreign currency-denominated assets and liabilities. The amount charged on a pre-tax basis related to foreign currency derivatives not designated as a hedge, which was included in “Sundry income (expense) - net” in the interim Consolidated Statements of Operations, was a loss of $24 million and $11 million for the three months ended September 30, 2022 and 2021, andrespectively. There was a loss of $73 million and $38 million for the nine months ended September 30, 2021. There was a $3 million loss for the three months ended September 30, 20202022 and a $1 million gain for the nine months ended September 30, 2020.2021, respectively. The income statement effects of other derivatives were immaterial.
NOTE 22 - FAIR VALUE MEASUREMENTS
Fair Value Measurements on a Recurring Basis
The following tables summarize the basis used to measure certain assets and liabilities at fair value on a recurring basis:
| | | | | | | |
Basis of Fair Value Measurements on a Recurring Basis at September 30, 20212022 | Significant Other Observable Inputs
(Level 2) | | |
| In millions |
| Assets at fair value: | | | |
Cash equivalents and restricted cash equivalents 1 | $ | 537538 | | | |
| | | |
Derivatives relating to: 2 | | | |
| Net investment hedge | 51211 | | | |
Foreign currency contracts 3 | 780 | | | |
| Total assets at fair value | $ | 595829 | | | |
| Liabilities at fair value: | | | |
Long-term debt including debt due within one year 4 | $ | 12,83110,206 | | | |
Derivatives relating to: 2 | | | |
| | | |
Net investment hedgeInterest rate swap agreements | —75 | | | |
Foreign currency contracts 3 | 2191 | | | |
| Total liabilities at fair value | $ | 12,85210,372 | | | |
1. Treasury bills, time deposits, and money market funds included in "Cash and cash equivalents" and money market funds included in "Other"Prepaid and other current assets" in the interim Condensed Consolidated Balance Sheets and held at amortized cost, which approximates fair value.
2. See Note 21 for the classification of derivatives in the interim Condensed Consolidated Balance Sheets.
3. Asset and liability derivatives subject to an enforceable master netting arrangement with the same counterparty are presented on a net basis in the interim Condensed Consolidated Balance Sheets. The offsetting counterparty and cash collateral netting amounts for foreign currency contracts were $7$41 million for both assets and liabilities as of September 30, 2022.
4. Fair value is based on quoted market prices for the same or similar issues, or on current rates offered to the company for debt of the same remaining maturities and terms. Fair value includes fair value hedging adjustments related to the Company's interest rate swap agreements.
| | | | | |
| Basis of Fair Value Measurements on a Recurring Basis at December 31, 2021 | Significant Other Observable Inputs
(Level 2) |
| In millions |
| Assets at fair value: | |
Cash equivalents and restricted cash equivalents 1 | $ | 906 | |
| |
Derivatives relating to: 2 | |
| Net investment hedge | 74 | |
Foreign currency contracts 3 | 11 | |
| Total assets at fair value | $ | 991 | |
| Liabilities at fair value: | |
Long-term debt including debt due within one year 4 | $ | 12,595 | |
Derivatives relating to: 2 | |
Foreign currency contracts 3 | 16 | |
| Total liabilities at fair value | $ | 12,611 | |
1. Treasury bills, time deposits, and money market funds included in "Cash and cash equivalents" and money market funds included in "Prepaid and other current assets" in the Condensed Consolidated Balance Sheets and held at amortized cost, which approximates fair value.
2. See Note 21 for the classification of derivatives in the Condensed Consolidated Balance Sheets.
3. Asset and liability derivatives subject to an enforceable master netting arrangement with the same counterparty are presented on a net basis in the Condensed Consolidated Balance Sheets. The offsetting counterparty and cash collateral netting amounts were $6 million for both assets and liabilities as of December 31, 2021.
4. Fair value is based on quoted market prices for the same or similar issues, or on current rates offered to the company for debt of the same remaining maturities and terms.
| | | | | |
Basis of Fair Value Measurements on a Recurring Basis at December 31, 2020 | Significant Other Observable Inputs
(Level 2) |
In millions |
Assets at fair value: | |
Cash equivalents and restricted cash equivalents 1
| $ | 7,328 | |
| |
Derivatives relating to: 2
| |
Foreign currency contracts 3
| 13 | |
Total assets at fair value | $ | 7,341 | |
Liabilities at fair value: | |
Long-term debt including debt due within one year 4
| $ | 18,337 | |
Derivatives relating to: 2
| |
Foreign currency contracts 3
| 22 | |
Total liabilities at fair value | $ | 18,359 | |
1. Treasury bills, time deposits, and money market funds included in "Cash and cash equivalents" and money market funds included in "Other current assets" in the interim Condensed Consolidated Balance Sheets and held at amortized cost, which approximates fair value.
2. See Note 21 for the classification of derivatives in the interim Condensed Consolidated Balance Sheets.
3. Asset and liability derivatives subject to an enforceable master netting arrangement with the same counterparty are presented on a net basis in the interim Condensed Consolidated Balance Sheets. The offsetting counterparty and cash collateral netting amounts were $9 million for both assets and liabilities as of December 31, 2020.
4. Fair value is based on quoted market prices for the same or similar issues, or on current rates offered to the company for debt of the same remaining maturities and terms.
2020 Fair Value Measurements on a Nonrecurring Basis
DuringIn the thirdfirst quarter of 2020,2022, the Company recorded an other-than-temporary impairment, charges related to indefinite-lived intangible assets and long-lived assets within Corporate and the Mobility & Materials segment. These impairment analyses were performed usingclassified as Level 3 inputs within the fair value hierarchy. See Notes 3 and 5 for further discussion.
During the second quarter of 2020, the Company recorded impairment charges related to indefinite-lived assets within the Mobility & Materials segment.measurements, on an equity method investment. See Note 56 for further discussion of these fair value measurements.
During the first quarter of 2020, the Company recorded impairment charges related to long-lived assets within Corporate. See Note 5 for further discussion of this fair value measurement.
NOTE 23 - SEGMENTS AND GEOGRAPHIC REGIONS
Effective February 2022, the revenues and certain expenses of the M&M Businesses are classified as discontinued operations in the current and historical periods. In addition, the Retained Businesses previously reported in the historic Mobility & Materials segment are reported in Corporate & Other. These reporting changes have been retrospectively applied for all periods presented.
The historic Mobility & Material segment costs that are classified as discontinued operations include only direct operating expenses incurred by the M&M Businesses which the Company will cease to incur upon the close of the M&M Divestitures. Indirect costs, such as those related to corporate and shared service functions previously allocated to the M&M Businesses, do not meet the criteria for discontinued operations and remain reported within continuing operations. A portion of these indirect costs include costs related to activities the Company will continue to undertake post-closing of the M&M Divestiture, and for which it will be reimbursed (“Future Reimbursable Indirect Costs”). Future Reimbursable Indirect Costs are reported within continuing operations but are excluded from operating EBITDA as defined below. The remaining portion of these indirect costs is not subject to future reimbursement (“Stranded Costs”). Stranded Costs are reported within continuing operations in Corporate & Other and are included within Operating EBITDA.
The Company's measure of profit/loss for segment reporting purposes is Operating EBITDA as this is the manner in which the Company's chief operating decision maker ("CODM") assesses performance and allocates resources. The Company defines Operating EBITDA as earnings (i.e., “Income from continuing operations before income taxes") before interest, depreciation, amortization, non-operating pension / OPEB benefits / charges, and foreign exchange gains / losses, excluding Future Reimbursable Indirect Costs, and adjusted for significant items. Reconciliations of these measures are provided on the following pages.
Effective February 1, 2021, in conjunction with the closing of the N&B Transaction, the Company completed the 2021 Segment Realignment resulting in a change to its management and reporting structure. These changes resulted in the following:
•Realignment of certain businesses from Transportation & Industrial to Electronics & Imaging;
•Dissolution of the Non-Core segment with the businesses to be divested and previously divested reflected in Corporate;
•Realignment of the remaining Non-Core businesses to Transportation & Industrial.
In addition, the following name changes occurred:
•Electronics & Imaging was renamed Electronics & Industrial;
•Transportation & Industrial was renamed Mobility & Materials;
•Safety & Construction was renamed Water & Protection.
The reporting changes have been retrospectively reflected in the segment results for all periods presented.
| | Segment Information | Segment Information | Elect. & Industrial | Water & Protection | Mobility & Materials | Corporate 1 | Total | Segment Information | Electronics. & Industrial | Water & Protection | Corporate & Other 1 | Total |
| In millions | In millions | In millions |
| Three months ended September 30, 2021 | | | |
| Three Months Ended September 30, 2022 | | Three Months Ended September 30, 2022 | | |
| Net sales | Net sales | $ | 1,467 | | $ | 1,397 | | $ | 1,298 | | $ | 109 | | $ | 4,271 | | Net sales | $ | 1,511 | | $ | 1,534 | | $ | 272 | | $ | 3,317 | |
Operating EBITDA 2 | Operating EBITDA 2 | $ | 475 | | $ | 353 | | $ | 280 | | $ | (21) | | $ | 1,087 | | Operating EBITDA 2 | $ | 473 | | $ | 382 | | $ | 1 | | $ | 856 | |
| Equity in earnings of nonconsolidated affiliates | Equity in earnings of nonconsolidated affiliates | $ | 13 | | $ | 7 | | $ | 3 | | $ | 2 | | $ | 25 | | Equity in earnings of nonconsolidated affiliates | $ | 7 | | $ | 9 | | $ | — | | $ | 16 | |
| Three months ended September 30, 2020 | | | |
| Three Months Ended September 30, 2021 | | Three Months Ended September 30, 2021 | | |
| Net sales | Net sales | $ | 1,213 | | $ | 1,249 | | $ | 996 | | $ | 171 | | $ | 3,629 | | Net sales | $ | 1,467 | | $ | 1,397 | | $ | 335 | | $ | 3,199 | |
Operating EBITDA 2 | Operating EBITDA 2 | $ | 421 | | $ | 314 | | $ | 160 | | $ | 11 | | $ | 906 | | Operating EBITDA 2 | $ | 475 | | $ | 353 | | $ | (11) | | $ | 817 | |
| Equity in earnings of nonconsolidated affiliates | Equity in earnings of nonconsolidated affiliates | $ | 8 | | $ | 7 | | $ | 5 | | $ | 9 | | $ | 29 | | Equity in earnings of nonconsolidated affiliates | $ | 13 | | $ | 7 | | $ | 2 | | $ | 22 | |
| Nine months ended September 30, 2021 | | | |
| Nine Months Ended September 30, 2022 | | Nine Months Ended September 30, 2022 | | |
| Net sales | Net sales | $ | 4,087 | | $ | 4,137 | | $ | 3,783 | | $ | 375 | | $ | 12,382 | | Net sales | $ | 4,574 | | $ | 4,460 | | $ | 879 | | $ | 9,913 | |
Operating EBITDA 2 | Operating EBITDA 2 | $ | 1,335 | | $ | 1,060 | | $ | 852 | | $ | (50) | | $ | 3,197 | | Operating EBITDA 2 | $ | 1,429 | | $ | 1,071 | | $ | 3 | | $ | 2,503 | |
| Equity in earnings of nonconsolidated affiliates | Equity in earnings of nonconsolidated affiliates | $ | 32 | | $ | 27 | | $ | 11 | | $ | 6 | | $ | 76 | | Equity in earnings of nonconsolidated affiliates | $ | 26 | | $ | 31 | | $ | 5 | | $ | 62 | |
| Nine months ended September 30, 2020 | | | |
| Nine Months Ended September 30, 2021 | | Nine Months Ended September 30, 2021 | | |
| Net sales | Net sales | $ | 3,439 | | $ | 3,769 | | $ | 2,877 | | $ | 503 | | $ | 10,588 | | Net sales | $ | 4,087 | | $ | 4,137 | | $ | 1,096 | | $ | 9,320 | |
Operating EBITDA 2 | Operating EBITDA 2 | $ | 1,084 | | $ | 1,010 | | $ | 352 | | $ | 62 | | $ | 2,508 | | Operating EBITDA 2 | $ | 1,335 | | $ | 1,060 | | $ | 5 | | $ | 2,400 | |
| Equity in earnings of nonconsolidated affiliates | Equity in earnings of nonconsolidated affiliates | $ | 27 | | $ | 19 | | $ | 13 | | $ | 111 | | $ | 170 | | Equity in earnings of nonconsolidated affiliates | $ | 32 | | $ | 27 | | $ | 6 | | $ | 65 | |
1.Corporate & Other includes activityactivities of to be divestedthe Retained Businesses and previously divested businesses.businesses including Biomaterials, Clean Technologies and Solamet®.
2.A reconciliation of "Income (loss) from continuing operations, net of tax" to Operating EBITDA is provided below.
| | Reconciliation of "Income (loss) from continuing operations, net of tax" to Operating EBITDA for the Three Months Ended September 30, 2021 and 2020 | Three Months Ended September 30, | |
| Reconciliation of "Income (loss) from continuing operations, net of tax" to Operating EBITDA for the Three Months Ended September 30, 2022 and 2021 | | Reconciliation of "Income (loss) from continuing operations, net of tax" to Operating EBITDA for the Three Months Ended September 30, 2022 and 2021 | Three Months Ended September 30, |
| In millions | In millions | 2021 | 2020 | In millions | 2022 | 2021 |
| Income from continuing operations, net of tax | Income from continuing operations, net of tax | $ | 433 | | $ | 86 | | Income from continuing operations, net of tax | $ | 359 | | $ | 259 | |
| + | + | Provision for income taxes on continuing operations | 125 | | 122 | | + | Provision for income taxes on continuing operations | 139 | | 80 | |
| Income from continuing operations before income taxes | Income from continuing operations before income taxes | $ | 558 | | $ | 208 | | Income from continuing operations before income taxes | $ | 498 | | $ | 339 | |
| + | + | Depreciation and amortization | 370 | | 345 | | + | Depreciation and amortization | 283 | | 300 | |
| - | - | Interest income 1 | — | | 4 | | - | Interest income 1 | 5 | | 1 | |
| + | + | Interest expense | 115 | | 165 | | + | Interest expense | 127 | | 115 | |
| - | - | Non-operating pension/OPEB benefit 1 | 14 | | 4 | | - | Non-operating pension/OPEB benefit 1 | 7 | | 9 | |
| - | - | Foreign exchange losses, net 1 | (19) | | (6) | | - | Foreign exchange gains (losses), net 1 | 5 | | (19) | |
| + | | + | Future reimbursable indirect costs | 14 | | 15 | |
| - | - | Significant items | (39) | | (190) | | - | Significant items | 49 | | (39) | |
| Operating EBITDA | Operating EBITDA | $ | 1,087 | | $ | 906 | | Operating EBITDA | $ | 856 | | $ | 817 | |
1.Included in "Sundry income (expense) - net."
| | | | | | | | | | | |
| Reconciliation of "Income (loss) from continuing operations, net of tax" to Operating EBITDA for the Nine Months Ended September 30, 2021 and 2020 | Nine Months Ended September 30, |
| In millions | 2021 | 2020 |
| Income (Loss) from continuing operations, net of tax | $ | 1,538 | | $ | (2,853) | |
| + | Provision for income taxes on continuing operations | 308 | | 224 | |
| Income (Loss) from continuing operations before income taxes | $ | 1,846 | | $ | (2,629) | |
| + | Depreciation and amortization | 1,031 | | 1,039 | |
| - | Interest income 1 | 4 | | 8 | |
| + | Interest expense | 390 | | 517 | |
| - | Non-operating pension/OPEB benefit 1 | 39 | | 23 | |
| - | Foreign exchange losses, net 1 | (36) | | (27) | |
| - | Significant items | 63 | | (3,585) | |
| Operating EBITDA | $ | 3,197 | | $ | 2,508 | |
| | | | | | | | | | | |
| Reconciliation of "Income (loss) from continuing operations, net of tax" to Operating EBITDA for the Nine Months Ended September 30, 2022 and 2021 | Nine Months Ended September 30, |
| In millions | 2022 | 2021 |
| Income from continuing operations, net of tax | $ | 956 | | $ | 1,040 | |
| + | Provision for income taxes on continuing operations | 299 | | 172 | |
| Income from continuing operations before income taxes | $ | 1,255 | | $ | 1,212 | |
| + | Depreciation and amortization | 861 | | 817 | |
| - | Interest income 1 | 8 | | 10 | |
| + | Interest expense | 365 | | 390 | |
| - | Non-operating pension/OPEB benefit 1 | 20 | | 22 | |
| - | Foreign exchange gains (losses), net 1 | 9 | | (35) | |
| + | Future reimbursable indirect costs | 45 | | 46 | |
| - | Significant items | (14) | | 68 | |
| Operating EBITDA | $ | 2,503 | | $ | 2,400 | |
1.Included in "Sundry income (expense) - net."
The following tables summarize the pre-tax impact of significant items by segment that are excluded from Operating EBITDA above:
| | | | | | | | | | | | | | | | | |
| Significant Items by Segment for the Three Months Ended September 30, 2021 | Elect. & Industrial | Water & Protection | Mobility & Materials | Corporate | Total |
| In millions |
Acquisition, integration and separation costs 1 | $ | — | | $ | — | | $ | — | | $ | (29) | | $ | (29) | |
Restructuring and asset related charges - net 2 | — | | — | | (1) | | — | | (1) | |
Merger-related inventory step-up amortization 3 | (12) | | — | | — | | — | | (12) | |
Gain on divestiture 4 | — | | — | | — | | 3 | | 3 | |
| Total | $ | (12) | | $ | — | | $ | (1) | | $ | (26) | | $ | (39) | |
| | | | | | | | | | | | | | |
| Significant Items by Segment for the Three Months Ended September 30, 2022 | Electronics & Industrial | Water & Protection | Corporate & Other | Total |
| In millions |
Acquisition, integration and separation costs 1 | $ | — | | $ | — | | $ | (7) | | $ | (7) | |
Gain on divestiture 2 | — | | — | | 5 | | 5 | |
Intended Rogers Acquisition financing fees 3 | — | | — | | (1) | | (1) | |
Employee Retention Credit 4 | 20 | | 20 | | 12 | | 52 | |
| Total | $ | 20 | | $ | 20 | | $ | 9 | | $ | 49 | |
1. Acquisition, integration and separation costs related to strategic initiatives including the sale of the Biomaterials business unit, the acquisition of Laird PM and the planned divestitureIntended Rogers Acquisition.
2. Reflected in "Sundry income (expense) - net."
3. Includes acquisition costs associated with the Intended Rogers Acquisition related to the financing agreements, specifically the structuring fees and the amortization of the Held for Sale Disposal Groupcommitment fees reflected in "Interest Expense."
4. 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”) reflected in "Cost of sales," "Research and development expenses" and "Selling, general and administrative expenses."
| | | | | | | | | | | | | | |
| Significant Items by Segment for the Three Months Ended September 30, 2021 | Electronics & Industrial | Water & Protection | Corporate & Other | Total |
| In millions |
Acquisition, integration and separation costs 1 | $ | — | | $ | — | | $ | (29) | | $ | (29) | |
Restructuring and asset related charges - net 2 | — | | — | | (1) | | (1) | |
Gain on divestiture 3 | — | | — | | 3 | | 3 | |
Inventory step-up amortization 4 | (12) | | — | | — | | (12) | |
| Total | $ | (12) | | $ | — | | $ | (27) | | $ | (39) | |
1. Acquisition, integration and separation costs related to strategic initiatives, which primarily includes the acquisition of Laird PM and the divestituresale of the Solamet®, Biomaterials, and Clean Technologies business unit.units.
2. Includes Board approved restructuring plans and asset related charges. See Note 56 for additional information.
3. Reflected in "Sundry income (expense) - net."
4. Includes the amortization of the fair value step-up in Laird PM's inventories as a result of the acquisition.
| | | | | | | | | | | | | | |
| Significant Items by Segment for the Nine Months Ended September 30, 2022 | Electronics & Industrial | Water & Protection | Corporate & Other | Total |
| In millions |
Acquisition, integration and separation costs 1 | $ | — | | $ | — | | $ | (28) | | $ | (28) | |
Restructuring and asset related charges - net 2 | (1) | | (3) | | (3) | | (7) | |
Asset impairment charges 3 | (94) | | — | | — | | (94) | |
Gain on divestiture 4 | — | | 37 | | 31 | | 68 | |
Intended Rogers Acquisition financing fees 5 | — | | — | | (5) | | (5) | |
Employee Retention Credit 6 | 20 | | 20 | | 12 | | 52 | |
| Total | $ | (75) | | $ | 54 | | $ | 7 | | $ | (14) | |
1. Acquisition, integration and separation costs related to strategic initiatives including the sale of the Biomaterials business unit, the acquisition of Laird PM and the Intended Rogers Acquisition.
2. Includes restructuring actions and asset related charges. See Note 6 for additional information.
3. Relates to an impairment of an equity method investment. See Note 6 for additional information.
4. Reflected in "Sundry income (expense) - net."
5. Includes acquisition costs associated with the Intended Rogers Acquisition related to the financing agreements, specifically the structuring fees and the amortization of the commitment fees reflected in "Interest Expense."
6. 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”) reflected in "Cost of sales," "Research and development expenses" and "Selling, general and administrative expenses."
| | Significant Items by Segment for the Three Months Ended September 30, 2020 | Elect. & Industrial | Water & Protection | Mobility & Materials | Corporate | Total | |
| Significant Items by Segment for the Nine Months Ended September 30, 2021 | | Significant Items by Segment for the Nine Months Ended September 30, 2021 | Electronics & Industrial | Water & Protection | Corporate & Other | Total |
| In millions | In millions | Elect. & Industrial | Water & Protection | Mobility & Materials | Corporate | Total | In millions |
Acquisition, integration and separation costs 1 | Acquisition, integration and separation costs 1 | Acquisition, integration and separation costs 1 | $ | — | | $ | — | | $ | (58) | | $ | (58) | |
Restructuring and asset related charges - net 2 | Restructuring and asset related charges - net 2 | (1) | | (2) | | — | | (5) | | (8) | | Restructuring and asset related charges - net 2 | (2) | | — | | (6) | | (8) | |
Goodwill impairment charges 3 | — | | — | | — | | (183) | | (183) | | |
Asset impairment charges 4 | — | | — | | (318) | | (52) | | (370) | | |
Gain on divestiture 5 | — | | — | | — | | 393 | | 393 | | |
Gain on divestiture 3 | | Gain on divestiture 3 | 2 | | — | | 144 | | 146 | |
Inventory step-up amortization 4 | | Inventory step-up amortization 4 | (12) | | — | | — | | (12) | |
| Total | Total | $ | (1) | | $ | (2) | | $ | (318) | | $ | 131 | | $ | (190) | | Total | $ | (12) | | $ | — | | $ | 80 | | $ | 68 | |
1. Acquisition,1.Acquisition, integration and separation costs related to strategic initiatives, which primarily includes the post-DWDP Merger integrationacquisition of Laird PM and the DWDP Distributions.sale of the Solamet®, Biomaterials, and Clean Technologies business units.
2. Includes Board approved restructuring plans and asset related charges. See Note 56 for additional information.
3. See Note 13 for additional information.
4. See Note 5 for additional information.
5. Reflected in "Sundry income (expense) - net." See Note 3 for additional information.
| | | | | | | | | | | | | | | | | |
| Significant Items by Segment for the Nine Months Ended September 30, 2021 | Elect. & Industrial | Water & Protection | Mobility & Materials | Corporate | Total |
| In millions |
Acquisition, integration and separation costs 1 | $ | — | | $ | — | | $ | — | | $ | (58) | | $ | (58) | |
Restructuring and asset related charges - net 2 | (2) | | — | | (7) | | (4) | | (13) | |
Merger-related inventory step-up amortization 3 | (12) | | — | | — | | — | | (12) | |
Gain on divestiture 4 | 2 | | — | | — | | 144 | | 146 | |
| Total | $ | (12) | | $ | — | | $ | (7) | | $ | 82 | | $ | 63 | |
1. Acquisition, integration and separation cost related to strategic initiatives including the acquisition of Laird PM, the planned divestiture of the Held for Sale Disposal Group and the divestiture of the Solamet® business unit.
2. Includes Board approved restructuring plans and asset related charges. See Note 5 for additional information.
3.4. Includes the amortization of the fair value step-up in Laird PM's inventories as a result of the acquisition.
4. Reflected in "Sundry income (expense) - net." See Note 3 for additional information.
| | | | | | | | | | | | | | | | | |
| Significant Items by Segment for the Nine Months Ended September 30, 2020 | Elect. & Industrial | Water & Protection | Mobility & Materials | Corporate | Total |
| In millions |
Acquisition, integration and separation costs 1 | $ | — | | $ | — | | $ | — | | $ | (161) | | $ | (161) | |
Restructuring and asset related charges - net 2 | (2) | | (15) | | (15) | | (107) | | (139) | |
Goodwill impairment charges 3 | (834) | | — | | (1,664) | | (716) | | (3,214) | |
Asset impairment charges 4 | — | | — | | (339) | | (322) | | (661) | |
Gain on divestiture 5 | 197 | | — | | — | | 393 | | 590 | |
| Total | $ | (639) | | $ | (15) | | $ | (2,018) | | $ | (913) | | $ | (3,585) | |
1. Acquisition, integration and separation costs related to the post-DWDP Merger integration and the DWDP Distributions.
2. Includes Board approved restructuring plans and asset related charges. See Note 5 for additional information.
3. See Note 13 for additional information.
4. See Note 5 for additional information.
5. Reflected in "Sundry income (expense) - net." See Note 3 for additional information.
NOTE 24 - SUBSEQUENT EVENTS
Closing of the M&M Divestiture and the Use of Proceeds
On November 1, 2022, DuPont completed the divestiture of the majority of its historic Mobility & Materials segment, including the Engineering Polymers business line and select product lines within the Advanced Solutions and Performance Resins business lines (the “M&M Business”), to Celanese for a purchase price of $11.0 billion in cash. Preliminary cash received, as adjusted for preliminary and other adjustments, was $11.0 billion including approximately $0.5 billion of cash transferred with the M&M Business for which DuPont was reimbursed.
Use of Net Proceeds
On November 7, 2022, DuPont’s Board of Directors approved a new share repurchase program authorizing the repurchase and retirement of up to $5 billion of common stock. The new repurchase authorization of up to $5 billion is in addition to the $250 million remaining under the Company’s existing share repurchase program which was approved in February 2022. The Company intends to enter accelerated share repurchase agreements (the “ASR Agreements”) imminently, for the repurchase of an aggregate of approximately $3.25 billion of common stock with $250 million of such repurchases under the existing program and the remaining $3 billion under the new program. Any additional repurchases under the new share repurchase program will be made from time to time on the open market at prevailing market prices or in privately negotiated transactions off the market, which may include additional accelerated share repurchase agreements. The timing and number of shares to be repurchased will depend on factors such as the share price, economic and market conditions, and corporate and regulatory requirements. The new repurchase program terminates on June 30, 2024, unless extended or shortened by the Board of Directors.
The Company is in the process of notifying holders of the 2018 Senior Notes of the Company's intent to exercise its right to redeem fixed-rate long term debt of $2.5 billion due 2023 in full together with unpaid interest. The Company expects to complete the redemption by the end of 2022 with proceeds from the M&M Transaction.
Intended Rogers Corporation Acquisition
On November 2, 2021,1, 2022, the Company announced that it had entered into a definitivethe termination of the previously announced agreement to acquire all the outstanding shares of Rogers Corporation, (“Rogers”) for about $5.2 billion (the “Intendedas DuPont and Rogers Acquisition”). The acquisition is expectedhave been unable to closeobtain timely clearance from all the required regulators. DuPont paid Rogers a termination fee of $162.5 million in accordance with the agreement on November 2, 2022, which will be recognized as a charge in the secondfourth quarter of 2022 and, when complete, is expected to broaden the Company’s presence in the electronic materials market. Rogers is complementary and aligned strategically with the Company’s existing Electronics & Industrial business. The completion of the acquisition is subject to approval by Rogers shareholders, regulatory approvals and other customary closing conditions.
DuPont entered into a Bridge Commitment Letter (the “Bridge Letter”) in an aggregate principal amount of $5.2 billion to secure committed financing for the Intended Rogers Acquisition. The Company intends to replace the Bridge Letter with other sources of financing prior to the closing of the Intended Rogers Acquisition.2022.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s discussion and analysis of financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, the interim Consolidated Financial Statements and related notes to enhance the understanding of the Company’s operations and present business environment. Components of management’s discussion and analysis of financial condition and results of operations include:
•Recent DevelopmentsOverview
•Result of Operations
•Segment Results
•Changes in Financial Condition
Overview
OVERVIEW
DuPont is a global innovation leader with technology-based materials and solutions that help transform industries and everyday life by applying diverse science and expertise to help customers advance their best ideas and deliver essential innovations in key markets including electronics, transportation, building and construction, healthcare and worker safety.
As of September 30, 2021,2022, the Company has $4.3$2.0 billion of working capital and approximately $1.7$1.8 billion in cash and cash equivalents. The Company expects its cash and cash equivalents, cash generated from operations, and ability to access the debt capital markets to provide sufficient liquidity and financial flexibility to meet the liquidity requirements associated with its continuing operations. The Company continually assesses its liquidity position, including possible sources of incremental liquidity, in light of the current economic environment, capital market conditions and Company performance.
Outlined below are recent developments and material historical transactions impacting this Quarterly Report on Form 10-Q.
Mobility & Materials Divestitures
On FebruaryNovember 1, 2021,2022 DuPont completed the separation and distributionpreviously announced divestiture of the Nutritionmajority of the historic Mobility & BiosciencesMaterials segment, including the Engineering Polymers business segmentline and select product lines within the Advanced Solutions and Performance Resins business lines (the "N&B Business"), and the merger of Nutrition & Biosciences, Inc. (“N&B”), a DuPont subsidiary formed to hold the N&B Business, with a subsidiary of International Flavors & Fragrances Inc. ("IFF"“M&M Divestiture”). On February 17, 2022, the Company entered into a Transaction Agreement (the "Transaction Agreement") with Celanese Corporation ("Celanese"). Refer to Note 24 - Subsequent Events for further information. The distribution was effected through an exchange offerCompany also announced on February 18, 2022 that its Board of Directors approved of the divestiture of the Delrin® acetal homopolymer (H-POM) business (the “Exchange Offer”"Delrin® Divestiture") where, on the terms and, subject to the conditionsentry into a definitive agreement and satisfaction of the Exchange Offer, eligible participating DuPont stockholders had the option to tender all, some or none of their shares of common stock, par value $0.01 per share, of DuPont (the “DuPont Common Stock”) for a number of shares of common stock, par value $0.01 per share, of N&B (the “N&B Common Stock”) and which resulted in all shares of N&B Common Stock being distributed to DuPont stockholders that participated in the Exchange Offer.closing conditions. The consummation of the Exchange Offer was followed by the merger of N&B with a wholly owned subsidiary of IFF, with N&B surviving the merger as a wholly owned subsidiary of IFF (the “N&B Merger” and,Delrin® Divestiture together with the Exchange Offer, the “N&B Transaction”M&M Divestiture discussed above (the "M&M Divestitures"). In connection with represent a strategic shift that will have a major impact on DuPont's operations and in accordance with the terms of the N&B Transaction, prior to consummation of the Exchange Offer and the N&B Merger, DuPont received a one-time cash payment of approximately $7.3 billion, (the "Special Cash Payment"), which is subject to post-closing adjustment pursuant to the terms of the N&B Separation and Distribution Agreement. The company used a portion of the proceeds to retire its $3 billion term loan facilities on February 1, 2021 and used the proceeds to fund the redemption, in accordance with their terms, of the $2 billion May 2020 Notes issuance.results.
On July 1, 2021, the Company completed the acquisition of Laird Performance Materials ("Laird PM") from Advent International. The Company paid for the acquisition from existing cash balances. See discussion below and within “Liquidity and Capital Resources” for more information.
DWDP Merger and DWDP Distributions
Effective August 31, 2017, pursuant to the merger of equals transaction contemplated by the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017 ("Merger Agreement"), The Dow Chemical Company ("TDCC") and E. I. du Pont de Nemours and Company ("EID") each merged with subsidiaries of DowDuPont Inc. ("DowDuPont") and, as a result, TDCC and EID became subsidiaries of DowDuPont (the "DWDP Merger").
DowDuPont completed a series of internal reorganizations and realignment steps in order to separate into three, independent, publicly traded companies - one for each of its agriculture, materials science and specialty products businesses. DowDuPont formed two wholly owned subsidiaries: Dow Inc. ("Dow", formerly known as Dow Holdings Inc.), to serve as a holding company for its materials science business, and Corteva, Inc. ("Corteva"), to serve as a holding company for its agriculture business.
On April 1, 2019, the Company completed the separation of the materials science business through the spin-off of Dow Inc., including Dow’s subsidiary TDCC (the “Dow Distribution”). On June 1, 2019, the Company completed the separation of the agriculture business through the spin-off of Corteva including Corteva’s subsidiary EID, (the “Corteva Distribution" and together with the Dow Distribution, the “DWDP Distributions”).
Following the Corteva Distribution, the Company holds the specialty products business as continuing operations. On June 1, 2019, DowDuPont changed its registered name from "DowDuPont Inc." to "DuPont de Nemours, Inc." doing business as "DuPont" (the "Company"). Beginning on June 3, 2019, the Company's common stock is traded on the NYSE under the ticker symbol "DD."
N&B Transaction
The financial position of DuPont as of September 30, 2022 and December 31, 20202021 present the businesses to be divested as part of the M&M Divestiture and theDelrin® Divestiture (the "M&M Businesses") as assets and liabilities held for sale, presented as discontinued operations. The results of operations of DuPont for the three and nine months ended September 30, 20212022 and 20202021 present the historical financial results of N&Bthe M&M Businesses as discontinued operations. The cash flows and comprehensive income related to N&Bof the M&M Businesses have not been segregated and are included in the interim Consolidated Statements of Cash Flows and interim Consolidated Statements of Comprehensive Income, respectively, for all periods presented. Unless otherwise indicated, the information in the notes to the interim Consolidated Financial Statements refer only to DuPont's continuing operations and do not include discussion of balances or activity of the M&M Businesses. See Note 4 to the interim Consolidated Financial Statements for additional information.
The Auto Adhesives & Fluids, MultibaseTM and Tedlar® product lines, previously reported within the historic Mobility & Materials segment, (the "Retained Businesses") are not included in the scope of the M&M Divestitures. Effective with the signing of the Transaction Agreement, the Retained Businesses were realigned to Corporate & Other. The reporting changes have been retrospectively applied for all periods presented.
Recent Developments
Macroeconomic Conditions
Certain macroeconomic factors, including the inflationary cost environment and supply chain disruptions, along with the novel coronavirus (“COVID-19”) and its variants, continue to adversely impact the global economy, including certain suppliers of the Company’s key raw materials. As a result of COVID-19, the Company qualified for a tax credit of payroll taxes under the Employee Retention Credit (“ERC”) pursuant to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act as enhanced by the Consolidated Appropriations Act and American Rescue Plan Act. In the third quarter of 2022, the Company recorded approximately $59 million of benefit to the ERC for full year 2020 and Q1 2021 payroll taxes previously paid. The benefit was recorded as an offset to the Cost of Sales, Research and Development Expenses ("R&D") and Selling, General and Administrative Expenses ("SG&A"), with a portion, approximately $7 million, of the benefit relating to discontinued operations. The Company anticipates receiving a refund of the credit in 2023.
Within the third quarter of 2022, while end-market demand remained strong, the Company experienced rising costs of raw materials, logistic and energy due to inflationary pressures, rising interest rates and foreign currency impacts, particularly in EMEA. At this time, the Company is not able to predict the extent to which these macroeconomic events may impact its consolidated results of operations or financial condition. In addition, the Company is assessing the recently announced US regulations covering the export of semiconductor materials into China and is monitoring developments to determine the potential impact of these regulations to the Semiconductor business.
The Inflation Reduction Act of 2022 ("IRA") was signed into law on August 16, 2022. The IRA introduces a new 15% corporate minimum tax, based on adjusted financial statement income of certain large corporations. Applicable corporations would be allowed to claim a credit for the minimum tax paid against regular tax in future years. While this tax law change does not have an immediate effect, the Company will continue to evaluate its impact as further information becomes available. The Inflation Reduction Act also includes an excise tax that would impose a 1% surcharge on stock repurchases, effective January 1, 2023.
Russia, Belarus, Ukraine
With respect to the war in the Ukraine, the Company’s business and operational environment is impacted by, among other things, responsive governmental actions including sanctions imposed by the U.S. and other governments. In the second quarter of 2022, the Company exited substantially all business operations in Russia, the net sales from which are less than one percent of DuPont’s consolidated net sales in 2021. The Company does not have operations in the Ukraine. DuPont has experienced supply chain challenges and increased logistics, raw material and energy costs due in part to the negative impact on the global economy from the ongoing war in Ukraine. The extent to which the conflict may continue to impact DuPont in future periods will depend on future developments, including the severity and duration of the conflict, its impact on regional and global economic conditions, and the extent of supply chain disruptions. DuPont will continue to monitor the conflict and assess the related sanctions and other effects and may take further actions if necessary.
Dividends
On June 30, 2022, the Company announced that its Board declared a third quarter dividend of $0.33 per share paid on September 15, 2022, to shareholders of record on July 29, 2022.
On October 19, 2022, the Company announced that its Board declared a fourth quarter dividend of $0.33 per share payable on December 15, 2022, to shareholders of record on November 30, 2022.
Laird Acquisition
On July 1, 2021, the Company completed the acquisition of Laird Performance Materials ("Laird PM") from Advent International. The Company paid for the acquisition from existing cash balances. See Note 3 to the interim Consolidated Financial Statements and “Liquidity and Capital Resources” for more information.
N&B Transaction
On February 1, 2021, the Company completed the divestiture of the Nutrition & Biosciences (“N&B”) business to International Flavors & Fragrance Inc. (“IFF”). The distribution was effected through an exchange offer (the “Exchange Offer”) and the consummation of the Exchange Offer was followed by the merger of N&B with a wholly owned subsidiary of IFF, with N&B surviving the merger as a wholly owned subsidiary of IFF (the “N&B Merger” and, together with the Exchange Offer, the “N&B Transaction”).
The results of operations of DuPont for the three and nine months ended September 30, 2021 present the historical financial results of N&B as discontinued operations. The cash flows and comprehensive income related to N&B have not been segregated and are included in the interim Consolidated Statements of Cash Flows and interim Consolidated Statements of Comprehensive Income, respectively, for the applicable periods. Unless otherwise indicated, the information in the notes to the interim Consolidated Financial Statements refer only to DuPont's continuing operations and do not include discussion of balances or activity of N&B. See Note 34 to the interim Consolidated Financial Statements for additional information on the N&B Transaction.
2021 Segment Realignment
Immediately following the separation and distribution of the N&B Business, the Company made changes to its management and reporting structure (the “2021 Segment Realignment”) (see Note 23 for additional details). The reporting changes have been retrospectively reflected for all periods presented.
RECENT DEVELOPMENTS
Intended Rogers Acquisition
On November 2, 2021, the Company announced that it had entered into a definitive agreement to acquire all the outstanding shares of Rogers Corporation (“Rogers���) for about $5.2 billion (the “Intended Rogers Acquisition”). The acquisition is expected to close in the second quarter of 2022 and, when complete, is expected to broaden the Company’s presence in the electronic materials market. Rogers is highly complementary and aligned strategically with the Company’s existing Electronics & Industrial segment. The completion of the acquisition is subject to approval by Rogers shareholders, regulatory approvals and other customary closing conditions.
Mobility & Materials Segment Intended Divestiture
On November 2, 2021 the Company announced that it has initiated a divestiture process related to a substantial portion of the Mobility & Materials segment, which predominantly includes the Engineering Polymers and Performance Resins lines of business (the “In-Scope M&M Businesses”). The outcome of which, including the entry into definitive agreements, is subject to approval of the DuPont Board of Directors. The scope of the intended divestiture excludes certain product lines including Auto Adhesives and MultibaseTM. The divestiture of the In-Scope M&M Businesses may include a full or partial separation of the businesses from the Company.The Mobility & Materials segment will remain in its current management and reporting structure while these strategic alternatives are considered.
Laird Performance Materials
On July 1, 2021, DuPont completed the acquisition of Laird PM from Advent International (“Laird PM Acquisition”) for cash consideration of $2,404 million, which reflects adjustments, primarily for acquired cash and net working capital. See Note 2 to the interim Consolidated Financial Statements for additional information.
Dividends
On June 17, 2021, the Board of Directors declared a third quarter dividend of $0.30 per share, paid on September 15, 2021, to shareholders of record on July 30, 2021.
On October 14, 2021, the Company announced that its Board of Directors declared a fourth quarter dividend of $0.30 per share payable on December 15, 2021, to shareholders of record on November 30, 2021.
RESULTS OF OPERATIONS
| | Summary of Sales Results | Summary of Sales Results | Three Months Ended September 30, | Nine Months Ended September 30, | Summary of Sales Results | Three Months Ended September 30, | Nine Months Ended September 30, |
| In millions | In millions | 2021 | 2020 | 2021 | 2020 | In millions | 2022 | 2021 | 2022 | 2021 |
| Net sales | Net sales | $ | 4,271 | | $ | 3,629 | | $ | 12,382 | | $ | 10,588 | | Net sales | $ | 3,317 | | $ | 3,199 | | $ | 9,913 | | $ | 9,320 | |
|
The following table summarizes sales variances by segment and geographic region from the prior year:
| | Sales Variances by Segment and Geographic Region | Sales Variances by Segment and Geographic Region | Sales Variances by Segment and Geographic Region |
| Percentage change from prior year | Percentage change from prior year | Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2021 | Percentage change from prior year | Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 |
| Local Price & Product Mix | Currency | Volume | Portfolio & Other | Total | Local Price & Product Mix | Currency | Volume | Portfolio & Other | Total | Local Price & Product Mix | Currency | Volume | Portfolio & Other | Total | Local Price & Product Mix | Currency | Volume | Portfolio & Other | Total |
| Electronics & Industrial | Electronics & Industrial | — | % | 1 | % | 9 | % | 11 | % | 21 | % | — | % | 2 | % | 13 | % | 4 | % | 19 | % | Electronics & Industrial | 3 | % | (4) | % | 4 | % | — | % | 3 | % | 2 | % | (3) | % | 6 | % | 7 | % | 12 | % |
| Water & Protection | Water & Protection | 2 | | 1 | | 9 | | — | | 12 | | 1 | | 2 | | 7 | | — | | 10 | | Water & Protection | 13 | | (5) | | 2 | | — | | 10 | | 12 | | (3) | | (1) | | — | | 8 | |
| Mobility & Materials | 16 | | 2 | | 12 | | — | | 30 | | 9 | | 3 | | 19 | | — | | 31 | | |
| Corporate | 3 | | 1 | | 9 | | (49) | | (36) | | 3 | | 2 | | 2 | | (32) | | (25) | | |
Corporate & Other 1 | | Corporate & Other 1 | 10 | | (4) | | 5 | | (30) | | (19) | | 10 | | (3) | | — | | (27) | | (20) | |
| Total | Total | 6 | % | 1 | % | 10 | % | 1 | % | 18 | % | 3 | % | 2 | % | 12 | % | — | % | 17 | % | Total | 8 | % | (4) | % | 3 | % | (3) | % | 4 | % | 7 | % | (3) | % | 2 | % | — | % | 6 | % |
| U.S. & Canada | U.S. & Canada | 5 | % | — | % | 8 | % | — | % | 13 | % | 2 | % | — | % | 8 | % | (3) | % | 7 | % | U.S. & Canada | 12 | % | — | % | 7 | % | (5) | % | 14 | % | 12 | % | — | % | 5 | % | (2) | % | 15 | % |
EMEA 1 | 5 | | 2 | | 18 | | 3 | | 28 | | — | | 6 | | 14 | | 1 | | 21 | | |
EMEA 2 | | EMEA 2 | 9 | | (10) | | (3) | | (4) | | (8) | | 9 | | (8) | | (1) | | (1) | | (1) | |
| Asia Pacific | Asia Pacific | 6 | | 2 | | 8 | | 1 | | 17 | | 4 | | 2 | | 14 | | 1 | | 21 | | Asia Pacific | 5 | | (5) | | 2 | | (2) | | — | | 3 | | (3) | | 2 | | 1 | | 3 | |
| Latin America | Latin America | 3 | | 2 | | 6 | | 2 | | 13 | | 3 | | (1) | | 16 | | 1 | | 19 | | Latin America | 12 | | — | | 15 | | (2) | | 25 | | 9 | | — | | 8 | | 1 | | 18 | |
| Total | Total | 6 | % | 1 | % | 10 | % | 1 | % | 18 | % | 3 | % | 2 | % | 12 | % | — | % | 17 | % | Total | 8 | % | (4) | % | 3 | % | (3) | % | 4 | % | 7 | % | (3) | % | 2 | % | — | % | 6 | % |
1.Corporate & Other includes activities of the Retained Businesses and previously divested businesses Biomaterials, Clean Technologies and Solamet®.
2.Europe, Middle East and Africa.
The Company reported net sales for the three months ended September 30, 20212022 of $4.3$3.3 billion, up 184 percent from $3.6$3.2 billion for the three months ended September 30, 2020,2021, due to a 10 percent increase in volume, a 6an 8 percent increase in local price and product mix, a 1 percent favorable currency impact and a 13 percent increase in volume, partially offset by a 3 percent decrease in portfolio actions. Volumeactions and a 4 percent unfavorable currency impact. Local price and product mix increased across all operating segments, Mobilityincluding within Water & MaterialsProtection (up 1213 percent), Electronics & Industrial (up 93 percent) and Corporate & Other (up 10 percent). Local price and product mix increased across all regions. Volume also increased across each segment with Electronics & Industrial (up 4 percent), and Water & Protection (up 92 percent) and Corporate & Other (up 5 percent). Volume increased across all regions. Local pricePortfolio and other changes declined 3 percent driven by Corporate & Other (down 30 percent) due to the sale of the Biomaterials and Clean Technologies businesses. Currency was up 6down 4 percent compared with the same period last year, primarily driven by Mobility & Materials (up 16the weakening of the euro against the U.S. dollar in EMEA (down 10 percent). Currency was up 1 percent compared with the same period last year, driven primarily by EMEA (up 2 percent), Latin America (up 2 percent) and Asia Pacific currencies (up 2 percent). Portfolio and other changes contributed a 1 percent growth as the addition of Laird PM in Electronics & Industrial (up 11 percent) offset the decline within Corporate (down 49 percent) due to the sale of businesses previously held in non-core.
Net sales for the nine months ended September 30, 20212022 were $12.4$9.9 billion, up 176 percent from $10.6$9.3 billion for the nine months ended September 30, 2020,2021, due to a 12 percent increase in volume, a 37 percent increase in local price and product mix, a 2 percent favorableincrease in volume, partially offset by a 3 percent unfavorable currency impact,impact. Local price and portfolio remained flat. Volumeproduct mix increased across all operating segments, the most notable volume increases were in Mobilityincluding within Water & MaterialsProtection (up 1912 percent), Electronics & Industrial (up 132 percent) and WaterCorporate & ProtectionOther (up 710 percent). Volume grew across all geographic regions. Local price and product mix was up 3 percent with the same period last year. Local price increased across all regions except EMEA (flat). Currencyregions. Volume increase was up 2 percent compared with the same period last year, driven primarily by EMEAElectronics & Industrial (up 6 percent), partially offset by Water & Protection (down 1 percent), and Asia Pacific currencies (up 2 percent).Corporate & Other was flat. Portfolio and other in total was flat, ashowever, the addition of Laird PM in Electronics & Industrial (up 47 percent) was offset the declineby declines within Corporate & Other (down 3227 percent) due to the sale of businesses previously heldthe Biomaterials, Clean Technologies and Solamet® businesses. Currency was down 3 percent compared with the same period last year, primarily driven by the weakening of the euro against the U.S. dollar in non-core.EMEA (down 8 percent).
Cost of Sales
Cost of sales was $2.8$2.1 billion for the three months ended September 30, 2021,2022, up from $2.4$2.0 billion for the three months ended September 30, 2020.2021. Cost of sales increased for the three months ended September 30, 20212022 primarily due to increased sales volume, higher raw materials costs and higher logistics and energy costs, primarily related to freight. The increase was partially offset by a payroll tax credit recognized under the absenceERC of approximately $60 million of charges in the prior year associated with temporarily idling several manufacturing plants to align supply with demand due to COVID-19.CARES Act.
Cost of sales as a percentage of net sales for the three months ended September 30, 20212022 was 6563 percent compared with 6764 percent for the three months ended September 30, 2020.2021.
For the nine months ended September 30, 2021,2022, cost of sales was $7.9$6.4 billion, up from $7.0$5.9 billion for the nine months ended September 30, 2020.2021. Cost of sales increased for the nine months ended September 30, 20212022 primarily due toincreased sales volume, currency impacts, and higher raw materials and higher logistics and energy costs, partially offset by approximately $210 milliona payroll tax credit recognized under the ERC of charges in the prior year associated with temporarily idling several manufacturing plants to align supply with demand due to COVID-19.CARES Act.
Cost of sales as a percentage of net sales for the nine months ended September 30, 20212022 was 64 percent compared with 6663 percent for the nine months ended September 30, 2020.2021.
Research and Development Expenses ("R&D")
R&D expenses totaled $152$129 million in the third quarter of 2021, up2022, down from $140$137 million in the third quarter of 2020.2021. This slight decrease was due to a payroll tax credit recognized under the ERC of the CARES Act. R&D as a percentage of net sales was consistent period over period at 4 percent for the three months ended September 30, 20212022 and 2020. The increase for the three months ended September 30, 2021 as compared with the same period of the prior year was primarily due to incremental costs from the Laird PM Acquisition and higher personnel related expenses.2021.
For the first nine months of 2021,2022, R&D expenses totaled $456$413 million downup from $466$409 million in the first nine months of 2020.2021. R&D as a percentage of net sales was consistent period over period at 4 percent for the nine months ended September 30, 20212022 and 2020. The decrease for the nine months ended September 30, 2021 as compared with the same period of the prior year was primarily due to productivity actions.2021.
Selling, General and Administrative Expenses ("SG&A")
SG&A expenses were $475$356 million in the third quarter of 2021, up2022, down from $403$411 million in the third quarter of 2020.2021. SG&A as a percentage of net sales was 11 percent and 13 percent for the three months ended September 30, 2022 and 2021, and 2020.respectively. The increasedecline for the three months ended September 30, 20212022 as compared with the same period of the prior year was primarily due to incremental costs from the Laird PM Acquisition, currency fluctuations, and higherlower personnel related expenses.expenses and a payroll tax credit recognized under the ERC of the CARES Act.
For the first nine months of 2021,2022, SG&A expenses totaled $1,390$1,130 million, updown from $1,299$1,201 million in the first nine months of 2020.2021. SG&A as a percentage of net sales was 11 percent and 1213 percent for the nine months ended September 30, 20212022 and 2020,2021, respectively. The increasedecline for the nine months ended September 30, 20212022 as compared with the same period of the prior year was primarily due to incremental costs from highercurrency fluctuations, lower personnel related expenses currency fluctuations, and a payroll tax credit recognized under the Laird PM Acquisition.ERC of the CARES Act.
Amortization of Intangibles
Amortization of intangibles was $196$146 million in the third quarter of 2021, up2022, down from $172$158 million in the third quarter of 2020.2021. The increasedecrease for the three months ended September 30, 20212022 as compared with the same period of the prior year was primarily due to currency fluctuations.
In the first nine months of 2022, amortization of intangibles was $447 million, up from $410 million in the same period of the prior year. The increase for the nine months ended September 30, 2022 as compared with the same period of the prior year was primarily due to the amortization of the intangible assets acquired in the July 1, 2021 Laird PM Acquisition.
In the first nine months of 2021, amortization of intangibles was $530 million, up from $527 million in the same period of the prior year. The slight increase in the amortization of intangibles for the nine months ended September 30, 2021 compared with the same period of the prior year is primarily due to the amortization of the intangible assets acquired in the Laird PM Acquisition, partially offset by lower amortization due to the sale of the trichlorosilane business ("TCS Business") in the third quarter of 2020, as well as the classification of the Biomaterials and Clean Technologies business units as held for sale in the third quarter of 2020. See Note 13 to the Consolidated Financial Statements for additional information on intangible assets.acquisition.
Restructuring and Asset Related Charges - Net
Restructuring and asset related charges - net were zero in the third quarter of 2022, down from $1 million in the third quarter of 2021, down from $378 million in the third quarter of 2020.2021. The activity in the third quarter of 2021 is related to the 2020 Restructuring Program. The activity in the third quarter of 2020 included asset impairment charges of $318 million related to long-lived assets in the Mobility & Materials segment, $52 million related to indefinite-lived intangible assets in Corporate, and a $8 million charge related to the 2020 Restructuring Program.
In the first nine months of 2021,2022, restructuring and asset related charges - net were $13$101 million, downup from $800$8 million in the same period last year. The activity for the nine months of 2022 includes a $94 million impairment charge related to an equity method investment. The activity for the nine months of 2021 is primarily related to the 2020 Restructuring Program. The charges in the same period of 2020 included the asset impairment charges described above, asset impairment charges in Corporate of $270 million related to long-lived assets, a $21 million impairment charge related to indefinite-lived intangible assets in the Mobility & Materials segment, a $127 million charge related to the 2020 Restructuring Program, a $5 million charge related to the 2019 Restructuring Program and a $7 million charge related to the DowDuPont Cost Synergy Program.
See Note 5 to the interim Consolidated Financial Statements for additional information.
Goodwill Impairment Charges
There were no goodwill related impairments for the three and nine months ended September 30, 2021. For the three months ended September 30, 2020, the goodwill impairment charges were $183 million related to a business reported in Corporate. For the nine months ended September 30, 2020, the goodwill impairment charges were $3,214 million related to a business reported in Corporate and the Mobility & Materials and Industrial Solutions reporting units. See Note 136 to the interim Consolidated Financial Statements for additional information.
Acquisition, Integration and Separation Costs
Acquisition, integration and separation costs were $7 million in the third quarter of 2022, down from $29 million in the third quarter of 2021. In the first nine months of 2022, acquisition, integration and separation costs were $28 million, down from $58 million in the same period of the prior year. Acquisition, integration and separation costs primarily consist of financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees. For the three and nine months ended September 30, 2022 these costs were primarily related to the divestiture of the Biomaterials business unit, the 2021 acquisition of Laird PM and the Intended Rogers Acquisition. Comparatively, for the three and nine months ended September 30, 2021 these costs were primarily associated with the execution of activities related to strategic initiatives including the acquisition of Laird PM and the planned divestituredivestitures of the Held for Sale Disposal GroupBiomaterials, Clean Technologies and the completed divestiture of the Solamet® business unit. Forunits. See Note 3 to the three and nine months ended September 30, 2020, theseinterim Consolidated Financial Statements for additional information.
Separation costs were primarily associated with the executionM&M Divestitures are reported within "Income from discontinued operations, net of activities relatedtax" in the interim Consolidated Statements of Operations. See Note 4 to the post-DWDP Merger integration and the DWDP Distributions. These costs were $29 million in the third quarter of 2021, up from $22 million in the third quarter of 2020. The increase is related to the execution of these strategic initiatives in 2021. In the first nine months of 2021, acquisition, integration and separation costs were $58 million, down from $161 million in the same period last year. The decline was primarily related to the timing of the post-DWDP Merger integration activities and the DWDP Distributions.interim Consolidated Financial Statements for additional information.
Equity in Earnings of Nonconsolidated Affiliates
The Company's share of the earnings of nonconsolidated affiliates was $25$16 million in the third quarter of 2021,2022, down from $29$22 million in the third quarter of 2020.2021. In the first nine months of 2021,2022, the Company's share of the earnings of nonconsolidated affiliates was $76$62 million, down from $170$65 million in the first nine months of 2020.2021. The decrease for the three and nine months ended September 30, 2021 and 2020 is primarily due to lower equity earnings across the sale of DC HSC Holdings LLC and Hemlock Semiconductor L.L.C. (the "HSC Group")portfolio in the third quarter of 2020.2022.
Sundry Income (Expense) - Net
Sundry income (expense) - net includes a variety of income and expense items such as foreign currency exchange gains or losses, interest income, dividends from investments, gains and losses on sales of investments and assets, non-operating pension and other post-employment benefit plan credits or costs, and certain litigation matters. Sundry income (expense) - net in the third quarter of 20212022 was income of $8$26 million compared with income of $430$1 million in the third quarter of 2020.2021. The third quarter of 2022 primarily included income related to non-operating pension and other post-employment benefit credits of $7 million, interest income of $5 million, a $6 million adjustment to gain on prior divestitures and foreign currency exchange gains of $5 million. The third quarter of 2021 primarily included benefits related to non-operating pension and other post-employment benefit credits of $14$9 million, and adjustments to previous gains on divestiture and sales of other assets of $8 million, partially offset by foreign currency exchange losses of $19 million. The third quarter of 2020 included a net pre-tax benefit of $393 million related to the sale of the disposal group consisting of the TCS Business and the HSC Group ("TCS/HSC Disposal") which includes the settlement of a supply agreement dispute.
In the first nine months of 2021,2022, sundry income (expense) - net was income of $170$123 million compared with income of $631$155 million. The first nine months of 2022 primarily included benefits related to income related to non-operating pension and other post-employment benefit credits of $20 million, miscellaneous income of $11 million, foreign currency exchange gains of $9 million and net gain on the sale of the Biomaterials division of $26 million and $37 million related to the sale of a land use right within the Water & Protection segment. The first nine months of 2021 included benefits related to the sale of assets within Corporate & Other and the Electronics & Industrial segment of $140 million and $28 million, respectively, and income related to non-operating pension and other post-employment benefit credits of $39$22 million, partially offset by miscellaneous expenses of $12$17 million and foreign currency exchange losses of $36 million. The first nine months of 2020 included a net benefit of $393 million related to the TCS/HSC Disposal, benefits related to the sale of the Compound Semiconductor Solutions business unit of $197 million, income related to non-operating pension and other post-employment benefit credits of $23 million and miscellaneous income of $16 million, partially offset by foreign currency exchange losses of $27$35 million.
Interest Expense
Interest expense was $115$128 million and $165$115 million for the three months ended September 30, 20212022 and 2020,2021, respectively. Interest expense was $390$370 million and $517$390 million for the nine months ended September 30, 2022 and 2021, and 2020, respectively.
The decreaseincrease in interest expense for the three months ended September 30, 20212022 compared to the three months ended September 30, 2020same period of the prior year primarily relates to increased commercial paper borrowing and intra-quarter borrowing on the maturity of the November 2020 Notes which were repaid in November 2020, the redemption of the May 2020 Notes in May 2021, and the early repayment of the $3.0 billion Term Loan Facilities in February 2021.
364-day Revolving Credit Facility. The decrease for thein interest expense nine months ended September 30, 20212022 compared to the nine months ended September 30, 2020same period of the prior year primarily relates to the maturity ofreduction in long-term debt following the November 2020 Notes,N&B Transaction, specifically the early repayment of the $3.0 billion Term Loan Facilities in February 2021 and absencethe redemption of commercial paper borrowings.the May 2020 Notes completed in May 2021. Refer to Note 1415 to the interim Consolidated Financial Statements for additional information.
Provision for Income Taxes on Continuing Operations
The Company's effective tax rate fluctuates based on, among other factors, where income is earned and the level of income relative to tax attribute. The effective tax rate on continuing operations for the third quarter of 20212022 was 22.427.9 percent, compared with an effective tax rate of 58.723.6 percent for the third quarter of 2020.2021. The effective tax rate differential for the third quarter of 2022 was driven by the cumulative impact of currency fluctuation and the geographic mix of earnings. The effective tax rate differential for the second quarter of 2021 included a $12 million tax benefit relating to the impact of changes in tax law enacted during the quarter. For the first nine months of 2022, the effective tax rate on continuing operations was 23.8 percent, compared with 14.2 percent for the first nine months of 2021. The effective tax rate for the third quarter of 2020 was principally the result of a non-tax-deductible goodwill impairment charge and a non-tax-deductible goodwill allocation in connection with the TCS/HSC Disposal impacting Corporate.
For the first nine months of 2021, the effective tax rate on continuing operations was 16.7 percent, compared with (8.5) percent for the first nine months of 2020. The effective tax rate for the first nine months of 2021 was principally the result of a $59 million tax benefit related to the step-up in tax basis in the goodwill of the Company’sCompany's European regional headquarters legal entity. The effective tax rate for the first nine months of 2020 was principally the result of a non-tax-deductible goodwill impairment charge impacting Corporate in the first and third quarter and a non-tax-deductible goodwill impairment charge impacting the Mobility & Materials and Industrial Solutions reporting units in the second quarter, coupled with an allocation of non-tax-deductible goodwill related to the TCS/HSC Disposal.
SEGMENT RESULTS
53Effective February 2022, the revenues and certain expenses of the M&M Businesses were classified as discontinued operations in the current and historical periods. The Auto Adhesives & Fluids, MultibaseTM and Tedlar® product lines within the historic Mobility & Materials segment (the "Retained Businesses") are not in the scope of the M&M Divestitures. Effective with the signing of the Transaction Agreement, the Retained Businesses were realigned to Corporate & Other. The reporting changes have been retrospectively reflected for all periods presented.
The Mobility & Material Businesses costs that are classified as discontinued operations include only direct operating expenses incurred by the M&M Businesses which the Company will cease to incur upon the close of the M&M Divestitures. Indirect costs, such as those related to corporate and shared service functions previously allocated to the M&M Businesses, do not meet the criteria for discontinued operations and remain reported within continuing operations. A portion of these indirect costs include costs related to activities the Company will continue to undertake post-closing of the M&M Divestiture, and for which it will be reimbursed (“Future Reimbursable Indirect Costs”). Future Reimbursable Indirect Costs are reported within continuing operations but are excluded from operating EBITDA as defined below. The remaining portion of these indirect costs are not subject to future reimbursement (“Stranded Costs”). Stranded Costs are reported within continuing operations in Corporate & Other and are included within Operating EBITDA.
SEGMENT RESULTS
The Company's measure of profit/loss for segment reporting purposes is Operating EBITDA as this is the manner in which the Company's chief operating decision maker ("CODM") assesses performance and allocates resources. The Company defines Operating EBITDA as earnings (i.e., “Income from continuing operations before income taxes") before interest, depreciation, amortization, non-operating pension / OPEB benefits / charges, and foreign exchange gains / losses, excluding Future Reimbursable Indirect Costs, and adjusted for significant items. Reconciliations of these measures can be found in Note 23 to the interim Consolidated Financial Statements.
Effective February 1, 2021, DuPont changed its management and reporting structure. The reporting changes have been retrospectively reflected in the following discussion of segment results for all periods presented. See Note 23 to the interim Consolidated Financial Statements for additional information.
ELECTRONICS & INDUSTRIAL
The Electronics & Industrial segment is a leading global supplier of differentiated materials and systems for a broad range of consumer electronics including mobile devices, television monitors, personal computers and electronics used in a variety of industries. The segment is a leading provider of materials and solutions for the fabrication and packaging of semiconductors and integrated circuits and provides innovative solutions for thermal management and electromagnetic shielding as well as metallization processes for metal finishing, decorative, and industrial applications. Electronics & Industrial is a leading provider of platemaking systems and photopolymer plates for the packaging graphics industry, digital printing inks and cutting-edge materials for the manufacturing of displays for organic light emitting diode ("OLED").diode. In addition, the segment produces innovative engineering polymer solutions, high performance parts, medical silicones and specialty lubricants.
| | Electronics & Industrial | Electronics & Industrial | Three Months Ended | Nine Months Ended | Electronics & Industrial | Three Months Ended | Nine Months Ended |
| In millions | In millions | September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | In millions | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 |
| Net sales | Net sales | $ | 1,467 | | $ | 1,213 | | $ | 4,087 | | $ | 3,439 | | Net sales | $ | 1,511 | | $ | 1,467 | | $ | 4,574 | | $ | 4,087 | |
| Operating EBITDA | Operating EBITDA | $ | 475 | | $ | 421 | | $ | 1,335 | | $ | 1,084 | | Operating EBITDA | $ | 473 | | $ | 475 | | $ | 1,429 | | $ | 1,335 | |
| Equity earnings | Equity earnings | $ | 13 | | $ | 8 | | $ | 32 | | $ | 27 | | Equity earnings | $ | 7 | | $ | 13 | | $ | 26 | | $ | 32 | |
| | Electronics & Industrial | Electronics & Industrial | Three Months Ended | Nine Months Ended | Electronics & Industrial | Three Months Ended | Nine Months Ended |
| Percentage change from prior year | Percentage change from prior year | September 30, 2021 | September 30, 2021 | Percentage change from prior year | September 30, 2022 | September 30, 2022 |
| Change in Net Sales from Prior Period due to: | Change in Net Sales from Prior Period due to: | | | Change in Net Sales from Prior Period due to: | | |
| Local price & product mix | Local price & product mix | — | % | — | % | Local price & product mix | 3 | % | 2 | % |
| Currency | Currency | 1 | | 2 | | Currency | (4) | | (3) | |
| Volume | Volume | 9 | | 13 | | Volume | 4 | | 6 | |
| Portfolio & other | Portfolio & other | 11 | | 4 | | Portfolio & other | — | | 7 | |
| Total | Total | 21 | % | 19 | % | Total | 3 | % | 12 | % |
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Electronics & Industrial net sales were $1,511 million for the three months ended September 30, 2022, up 3 percent from $1,467 million for the three months ended September 30, 2021, up 212021. Net sales increased due to a 4 percent from $1,213increase in volume and a 3 percent increase in local price, partially offset by 4 percent unfavorable currency impact. Volume growth was led by Semiconductor Technologies which was driven by continued transition to more advanced node technologies and high performance computing, including cloud and data centers. Volume gains in Industrial Solutions were driven by growth in electronics applications, healthcare and aerospace markets. Within Interconnect Solutions, volume gains in industrial-end markets and for applications requiring electromagnetic shieldingg and thermal management were more than offset by declines in smartphones, consumer electronics and automotive markets.
Operating EBITDA was $473 million for the three months ended September 30, 2020.2022, which remained flat compared with $475 million for the three months ended September 30, 2021. Volume growth and price gains were offset by higher raw materials logistic and energy costs and lower equity earnings.
Electronics & Industrial net sales were $4,574 million for the nine months ended September 30, 2022, up 12 percent from $4,087 million for the nine months ended September 30, 2021. Net sales increased due to a 117 percent increase in portfolio, increase, a 96 percent increase in volume and a 12 percent favorableincrease in local price, partially offset by 3 percent unfavorable currency impact. Local price and product mix were flat. The portfolio impact reflects the July 1, 2021 acquisition of Laird PM. Volume growth was led by Industrial Solutions reflecting broad-based demand most notably in consumer electronics, healthcare and industrial markets. Continued strength in Semiconductor Technologies which was driven by ongoing digital transformation accelerated by on-going transition to more advanced node technologies, and growth in high performance computing and 5G communications. Within Industrial Solutions, volume gains were driven by higher demand in healthcare and industrial-end markets as well as continued strength in electronics applications. Within Interconnect Solutions, volume declined due to a shiftgains driven by Laird acquisition and higher demand in demand for material contentindustrial films, were more than offset by weakness in next-generationconsumer electronics, smartphones, to the first half of the year and supply chain constraints within the automotive market. The global semiconductor chip shortage is expected to continue in the fourth quarter.automotive.
Operating EBITDA was $475$1,429 million for the threenine months ended September 30, 2022, up 7 percent compared with $1,335 million for the nine months ended September 30, 2021 up 13 percent compared with $421 million for the three months ended September 30, 2020. Operating EBITDA increased due todriven by strong volume growth and price gains, the acquisition of Laird PM, and strong volume growth, partially offset by higher raw materials and logistics costs and the absence of income in 2020 related to a previous asset sale.higher plant start up costs.
Electronics & Industrial net sales were $4,087 million for the nine months ended September 30, 2021, up 19 percent from $3,439 million for the nine months ended September 30, 2020. Net sales increased due to a 13 percent increase in volume, a 4 percent increase due to portfolio actions, and a 2 percent favorable currency impact. Local price and product mix were flat. Volume growth was driven by Industrial Solutions due to increased demand most notably in the consumer electronics and the healthcare markets. Continued volume growth in Semiconductor Technologies was led by new technology ramps at advanced nodes within logic and foundry and growth in high performance computing and 5G communications. Within Interconnect Solutions, volume growth was driven by broad based electronics demand and recovery in industrial applications. The portfolio impact reflects the July 1, 2021 acquisition of Laird PM within Interconnect Solutions.
Operating EBITDA was $1,335 million for the nine months ended September 30, 2021, up 23 percent compared with $1,084 million for the nine months ended September 30, 2020 driven by strong volume growth and the acquisition of Laird PM. The nine months ended September 30, 2021 and 2020 include income of $28 million and $30 million, respectively, related to the sale of assets.
WATER & PROTECTION
The Water & Protection segment is a leading provider of engineered products and integrated systems for a number of industries including worker safety, water purification and separation, aerospace, energy, medical packaging and building materials. The segment satisfies the growing global needs of businesses, governments, and consumers for solutions that make life safer, healthier, and better. By uniting market-driven science with the strength of highly regarded brands, the segment strives to bring new products and solutions to solve customers' needs faster, better and more cost effectively.
| | Water & Protection | Water & Protection | Three Months Ended | Nine Months Ended | Water & Protection | Three Months Ended | Nine Months Ended |
| In millions | In millions | September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | In millions | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 |
| Net sales | Net sales | $ | 1,397 | | $ | 1,249 | | $ | 4,137 | | $ | 3,769 | | Net sales | $ | 1,534 | | $ | 1,397 | | $ | 4,460 | | $ | 4,137 | |
| Operating EBITDA | Operating EBITDA | $ | 353 | | $ | 314 | | $ | 1,060 | | $ | 1,010 | | Operating EBITDA | $ | 382 | | $ | 353 | | $ | 1,071 | | $ | 1,060 | |
| Equity earnings | Equity earnings | $ | 7 | | $ | 7 | | $ | 27 | | $ | 19 | | Equity earnings | $ | 9 | | $ | 7 | | $ | 31 | | $ | 27 | |
| | Water & Protection | Water & Protection | Three Months Ended | Nine Months Ended | Water & Protection | Three Months Ended | Nine Months Ended |
| Percentage change from prior year | Percentage change from prior year | September 30, 2021 | September 30, 2021 | Percentage change from prior year | September 30, 2022 | September 30, 2022 |
| Change in Net Sales from Prior Period due to: | Change in Net Sales from Prior Period due to: | | | Change in Net Sales from Prior Period due to: | | |
| Local price & product mix | Local price & product mix | 2 | % | 1 | % | Local price & product mix | 13 | % | 12 | % |
| Currency | Currency | 1 | | 2 | | Currency | (5) | | (3) | |
| Volume | Volume | 9 | | 7 | | Volume | 2 | | (1) | |
| Portfolio & other | Portfolio & other | — | | — | | Portfolio & other | — | | — | |
| Total | Total | 12 | % | 10 | % | Total | 10 | % | 8 | % |
Water & Protection net sales were $1,534 million for the three months ended September 30, 2022, up 10 percent from $1,397 million for the three months ended September 30, 2021, up 122021. Net sales increased due to a 13 percent from $1,249increase in local price and a 2 percent increase in volume, partially offset by a 5 percent unfavorable currency impact. Local price & product mix gains were driven by broad-based actions across all lines of business to offset continued cost inflation, led by Shelter Solutions and Safety Solutions. Volume growth was driven by strong global demand across all technologies within Water Solutions.
Operating EBITDA was $382 million for the three months ended September 30, 2020. Net sales increased due to a 92022, up 8 percent increase in volume, a 2 percent increase in local price, and a 1 percent favorable currency impact. Portfolio remained flat. Strong volume gains were led by Safety Solutions as continued recovery in industrial end-markets resulted in significant improvement in aramid fibers. Shelter Solution saw strong demand in residential construction, do-it-yourself applications and continued recovery in commercial construction. Volume growth in Water Solutions was driven by ion exchange resins.
Operating EBITDA wascompared with $353 million for the three months ended September 30, 2021 up 12 percent compared with $314 million for the three months ended September 30, 2020 asdriven by volume increases and pricing gains and the absence of costs associated with temporarily idling several manufacturing facilities during the COVID-19 pandemic were partiallywhich together more than offset by higher raw material, logistics and logistics costs.energy costs, changes in product mix and unfavorable currency impacts.
Water & Protection net sales were $4,460 million for the nine months ended September 30, 2022, up 8 percent from $4,137 million for the nine months ended September 30, 2021, up 102021. Net sales increased due to a 12 percent from $3,769increase in local price, partially offset by a 3 percent unfavorable currency impact and a 1 percent decrease in volume. Demand in Shelter Solutions residential commercial construction markets as well as increased demand for water technologies within Water Solutions were offset by volume declines in Safety Solutions. Within Water & Protection pricing actions throughout the segment were driven by Shelter Solutions and Safety Solutions.
Operating EBITDA was $1,071 million for the nine months ended September 30, 2020 driven by a 7 percent increase in volume, a 2 percent favorable currency impact, and a2022, up 1 percent increase in local price. Portfolio was flat. Volume growth across the segment was driven by recovery of end markets following the COVID-19 pandemic. Volume gains were led by Safety Solutions due to the continued recovery in end-markets for aramid fibers. Within Shelter Solutions, volume growth was driven by the ongoing recovery of non-residential markets and continued demand in residential construction and do-it-yourself applications.
Operating EBITDA wascompared with $1,060 million for the nine months ended September 30, 2021 up 5 percent compared with $1,010 million for the nine months ended September 30, 2020 as volume gains and the absence of costs associated with temporarily idling several manufacturing facilitiespricing actions were partially offset by higher raw material, logistics and logistics costs.
MOBILITYCorporate & MATERIALSOther
TheCorporate & Other includes sales and activity of the Retained Businesses including the Auto Adhesives & Fluids, MultibaseTM and Tedlar® product lines, previously reported in the historic Mobility & Materials segment provides high-performance engineering resins and adhesives to engineers and designers in the transportation, electronics, industrial and consumer end-markets to enable systems solutions for demanding applications and environments. The segment delivers a broad range of polymer-based high-performance materials in its product portfolio, including elastomers and thermoplastic and thermoset engineering polymers which are used by customers to fabricate components for mechanical, chemical and electrical systems. In addition, the segment supplies key materials for the manufacturing of photovoltaic cells and panels, including backsheet materials and silicone encapsulates and adhesives. The segment provides specialty pastes and films used in consumer electronics, automotive, and aerospace markets. Mobility & Materials is a global leader of advanced materials that provides technologies that differentiate customers’ products with improved performance characteristics enabling the transition to hybrid-electric-connected vehicles and high speed high frequency connectivity.
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| Mobility & Materials | Three Months Ended | Nine Months Ended |
| In millions | September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 |
| Net sales | $ | 1,298 | | $ | 996 | | $ | 3,783 | | $ | 2,877 | |
| Operating EBITDA | $ | 280 | | $ | 160 | | $ | 852 | | $ | 352 | |
| Equity earnings | $ | 3 | | $ | 5 | | $ | 11 | | $ | 13 | |
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| Mobility & Materials | Three Months Ended | Nine Months Ended |
| Percentage change from prior year | September 30, 2021 | September 30, 2021 |
| Change in Net Sales from Prior Period due to: | | |
| Local price & product mix | 16 | % | 9 | % |
| Currency | 2 | | 3 | |
| Volume | 12 | | 19 | |
| Portfolio & other | — | | — | |
| Total | 30 | % | 31 | % |
Mobility & Materials net sales were $1,298 million for the three months ended September 30, 2021, up 30 percent from $996 million for the three months ended September 30, 2020. Net sales increased due to a 16 percent increase in local price, a 12 percent increase in volume, and a 2 percent favorable currency impact. The local price increase reflects actions taken to offset higher raw material costs and higher metals pricing. Volume growth across the segment was driven by the continued recovery of key industrial end markets following the COVID-19 pandemic, most notably the recovery of the global automotive market. The global semiconductor chip shortage is expected to continue in the fourth quarter.
Operating EBITDA was $280 million for the three months ended September 30, 2021, compared with $160 million for the nine months ended September 30, 2020. The increase was driven by higher volumes, pricing gains, and the absence of charges recorded in the prior year associated with temporarily idling several manufacturing facilities during the COVID-19 pandemic.
Mobility & Materials net sales were $3,783 million for the nine months ended September 30, 2021, up 31 percent from $2,877 million for the nine months ended September 30, 2020. Net sales increased due to a 19 percent increase in volume, a 9 percent increase in local price and a 3 percent favorable currency impact. Volume growth was attributablesegment. Related to the continued recoveryM&M Divestitures, Corporate & Other includes Stranded Costs and Future Reimbursable Indirect Costs. The results of key end markets, primarilyCorporate & Other include the global automotive market. The local price increase reflects actions taken to offset higher raw material costssales and higher metals pricing.
Operating EBITDA was $852 million foractivity of previously divested businesses including the nine months ended September 30, 2021, compared with $352 million for the nine months ended September 30, 2020 driven by higher volumes, pricing gains,operations of Biomaterials, Clean Technologies, and the absence of $160 million of charges recorded in the prior year associated with temporarily idling several manufacturing facilities, as referenced above.
Solamet® business units. Corporate
Corporate & Other also includes certain enterprise and governance activities including non-allocated corporate overhead costs and support functions, leveraged services, non-business aligned litigation expenses and other costs not absorbed by reportable segments. The
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| Corporate & Other | Three Months Ended | Nine Months Ended |
| In millions | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 |
| Net sales | $ | 272 | | $ | 335 | | $ | 879 | | $ | 1,096 | |
| Operating EBITDA | $ | 1 | | $ | (11) | | $ | 3 | | $ | 5 | |
| Equity earnings | $ | — | | $ | 2 | | $ | 5 | | $ | 6 | |
Corporate & Other net sales were $272 million for the three months ended September 30, 2022, down from $335 million for the three months ended September 30, 2021. Net sales primarily decreased due to the divestitures of the Biomaterials business in May 2022 and activitythe Clean Technologies business in December 2021.
Corporate & Other net sales were $879 million for the nine months ended September 30, 2022, down from $1,096 million for the nine months ended September 30, 2021. Net sales primarily decreased due to the divestitures of to be divested and previously divested businesses including the operations of Biomaterials, Clean Technologies and Solamet® business units, and the TCS Business along with its equity ownership interest in DC HSC Holdings LLC and Hemlock Semiconductor L.L.C. (the "HSC Group”) historically includedbusinesses, partially offset by an increase in the Non-Core segment are reflected as Corporate activity.net sales of the Retained Businesses.
CHANGES IN FINANCIAL CONDITION
Liquidity & Capital Resources
Information related to the Company's liquidity and capital resources can be found in the Company's Current2021 Annual Report, on Form 8-K filed on June 3, 2021, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources. Discussion below provides the updates to this information for the nine months ended September 30, 2021.2022.
The Company continually reviews its sources of liquidity and debt portfolio and may make adjustments to one or both to ensure adequate liquidity and increase the Company’s optionality and financing efficiency as it relates to financing cost and balancing terms/maturities. The Company’s primary source of incremental liquidity is cash flows from operating activities. Management expects the generation of cash from operations and the ability to access the debt capital markets and other sources of liquidity will continue to provide sufficient liquidity and financial flexibility to meet the Company’s and its subsidiaries' obligations as they come due.
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| In millions | September 30, 2021 | December 31, 2020 |
| Cash and cash equivalents | $ | 1,670 | | $ | 2,544 | |
Total debt 1 | $ | 10,630 | | $ | 15,612 | |
1.Includes the current portion of long-term debt that is within the "Accrued and other current liabilities" line in the interim Condensed Consolidated Balance Sheets. | | | | | | | | |
| In millions | September 30, 2022 | December 31, 2021 |
| Cash and cash equivalents | $ | 1,785 | | $ | 1,972 | |
| Total debt | $ | 11,851 | | $ | 10,782 | |
The Company's cash and cash equivalents at September 30, 20212022 and December 31, 20202021 were $1.7$1.8 billion and $2.5$2.0 billion, respectively, of which $1.4$1.5 billion at September 30, 20212022 and $1.8$1.4 billion at December 31, 20202021 were held by subsidiaries in foreign countries, including United States territories. The decreaseincrease in cash and cash equivalents held by subsidiaries in foreign countries is due to operating cash flows during the period partly offset by repatriation activities necessary for completing the acquisition of Laird PM.activities. For each of its foreign subsidiaries, the Company makes an assertion regarding the amount of earnings intended for permanent reinvestment, with the balance available to be repatriated to the United States. The decrease in cash and cash equivalents was primarily due to the completion of the Laird PM Acquisition.
Total debt at September 30, 20212022 and December 31, 20202021 was $10.6$11.9 billion and $15.6$10.8 billion, respectively. The decreaseincrease was primarily due to the termination and repayment of the Company's $3 billion Term Loan Facilitiesincrease in the first quarter of 2021, and the redemption of the May 2020 Notes in the second quarter of 2021, described further below, in accordance with special mandatory redemption feature.commercial paper issuances.
As of September 30, 2021,2022, the Company is contractually obligated to make future cash payments of $10,700 million$10.7 billion and $6,183 million$5.7 billion associated with principal and interest, respectively, on debt obligations assuming held to maturity. Related to the principal balance, the majority of itall payments will be due subsequent to September 30,December 31, 2022. Related to interest, $503$514 million will be due in the next twelve months and the remainder will be due subsequent to September 30, 2023. On November 8, 2022, the Company announced its intent to redeem $2.5 billion of 2018 Senior Notes by the end of 2022. Refer to Note 24 - Subsequent Events for additional information.
Revolving Credit Facilities
On April 12, 2022, the Company entered into a new $2.5 billion five-year revolving credit facility (the "Five-Year Revolving Credit Facility"). As of the effectiveness of the Five-Year Revolving Credit Facility, the Company's prior $3 billion five-year revolving credit facility entered in May 2019 was terminated. All material conditions and covenants in the Five-Year Revolving Credit Facility are consistent with those of the prior, terminated credit facility. The decrease in debtFive-Year Revolving Credit Facility is generally expected to remain undrawn and interest obligations since December 31, 2020 is mostly dueserve as a backstop to the terminationCompany’s commercial paper and repaymentletter of credit issuance.
On April 12, 2022, the Company entered into an updated $1.0 billion 364-day revolving credit facility (the “2022 $1B Revolving Credit Facility") as the $1.0 billion 364-day revolving credit facility entered in April 2021 (the “2021 $1B Revolving Credit Facility") had an expiration date in mid-April. As of the $3 billion Term Loan Facilities and the redemptioneffectiveness of the May 2020 Notes.2022 $1B Revolving Credit Facility, the 2021 $1B Revolving Credit Facility was terminated. The 2022 $1B Revolving Credit facility may be used for general corporate purposes.
In July 2022, the Company drew down $600 million under the 364-day Revolving Credit Facility in order to facilitate certain intercompany internal restructuring steps related to the M&M Divestiture. The Company repaid the borrowing in September 2022.
Special Cash Payment
In connection with and in accordance with the terms of the N&B Transaction, prior to consummation of the Exchange Offer and the N&B Merger, DuPont received a one-time cash payment of approximately $7.3 billion, (the "Special Cash Payment"), which is subject to post-closing adjustment pursuant to the terms of the N&B Separation and Distribution Agreement. The Company utilized the Special Cash Payment to repay the $3 billion Term Loan Facilities and used a portion of the Special Cash Payment to redeem the May 2020 Notes, as discussed below.
Term Loan and Revolving Credit Facilities
In November 2018, the Company entered into a term loan agreement that establishes two term loan facilities in the aggregate principal amount of $3 billion, (the “Term Loan Facilities”) as well as a five-year $3 billion revolving credit facility (the “Five-Year Revolving Credit Facility”). Effective May 2, 2019, the Company fully drew the two Term Loan Facilities in the aggregate principal amount of $3.0 billion and the Five-Year Revolving Credit Facility became effective and available. The Five-Year Revolving Credit Facility is generally expected to remain undrawn, and serve as a backstop to the Company’s commercial paper and letter of credit issuance.
Term Loan Facilities
On February 1, 2021, the Company terminated its fully drawn $3 billion Term Loan Facilities.term loan facilities. The termination triggered the repayment of the aggregate outstanding principal amount of $3 billion, plus accrued and unpaid interest through and including January 31, 2021. The Company funded the repayment with proceeds from the Special Cash Payment.
On April 15, 2021, the Company entered into an updated $1.0 billion 364-day revolving credit facility (the “2021 $1B Revolving Credit Facility") as the $1.0 billion 364-day revolving credit facility entered in April 2020 (the “2020 $1B Revolving Credit Facility") expired mid-April. As of the effectiveness of the 2021 $1B Revolving Credit Facility, the 2020 $1B Revolving Credit Facility was terminated. The $1B Revolving Credit facility may be used for general corporate purposes.
May 2020 Debt Offering
On May 1, 2020, the Company completed an underwritten public offering of senior unsecured notes (the “May 2020 Notes”) in the aggregate principal amount of $2 billion of 2.169 percent fixed rate Notes due May 1, 2023 (the “May 2020 Debt Offering”). Upon consummation of the N&B Transaction, the special mandatory redemption feature of the May 2020 Debt Offering was triggered, requiring the Company to redeem all of the May 2020 Notes at a redemption price equal to 100% of the aggregate principal amount of the May 2020 Notes plus accrued and unpaid interest. The Company redeemed the May 2020 Notes on May 13, 2021 and funded the redemption with proceeds from the Special Cash Payment.
Laird Performance Materials
On July 1, 2021, the Company completed the acquisition of Laird PM from Advent International for aggregate consideration of $2.4 billion, which reflects adjustments, including for acquired cash and net working capital. The acquisition is part of the Interconnect Solutions business within the Electronics & Industrial segment. The Company paid for the acquisition from existing cash balances.
Intended Rogers Acquisition
OnIn connection with the Intended Rogers Acquisition, on November 2,22, 2021, the Company announced that it had entered into a definitivetwo-year senior unsecured committed term loan agreement to acquire allin the outstanding sharesamount of Rogers for about $5.2 billion. The acquisition is expectedIn October 2022, the facility was amended to close inextend the second quarter oflending commitment (as amended the "Amended 2021 Term Loan Facility"). On November 1, 2022, the M&M Divestiture closed and when complete, is expected to broadentherefore based on the Company’s presence in the electronic materials market. Rogers is highly complementary and aligned strategically with the Company’s existing Electronics & Industrial segment. The completionterms of the acquisition is subjectAmended 2021 Term Loan Facility the commitment was terminated. Refer to Rogers shareholder approval, regulatory approvals and other customary closing conditions.Note 24 - Subsequent Events for additional information.
The CompanyAmended 2021 Term Loan Facility, the Five-Year Revolving Credit Facility, the 2022 $1B Revolving Credit Facilities and the revolving credit facilities entered into in 2022 contain a Bridge Letter in an aggregate principal amountfinancial covenant, typical for companies with similar credit ratings, requiring that the ratio of $5.2 billionTotal Indebtedness to secure committed financingTotal Capitalization for the Intended Rogers Acquisition. The Company intends to replaceand its consolidated subsidiaries not exceed 0.60. At September 30, 2022, the Bridge LetterCompany was in compliance with other sources of financing prior to the closing of the Intended Rogers Acquisition.this financial covenant.
Credit Ratings
The Company's credit ratings impact its access to the debt capital markets and cost of capital. The Company remains committed to maintaining a strong financial position andwith a balanced financial policy focused on maintaining a strong investment-grade rating.rating and driving shareholder value and remuneration. At October 29, 2021,November 4, 2022, DuPont's credit ratings were as follows:
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| Credit Ratings | Long-Term Rating | Short-Term Rating | Outlook |
| Standard & Poor’s | BBB+ | A-2 | Stable |
| Moody’s Investors Service | Baa1 | P-2 | StableNegative |
| Fitch Ratings | BBB+ | F-2 | Stable |
The Company's indenture covenants related to its 2018 Senior Notes contain certaininclude customary limitations on the Company’s ability to incur liens, sale and enter into sale lease-backleaseback transactions, and mergers and consolidations, as well assubject to certain limitations. The senior unsecured notes (the "2018 Senior Notes") also contain customary events of default.default provisions. The Amended 2021 Term Loan Facility, the Five-Year Revolving Credit Facility, and the 20212022 $1B Revolving Credit Facilities and the revolving credit facilities entered into in 2022 contain a financial covenant, typical for companies with similar credit ratings, requiring that the ratio of Total Indebtedness to Total Capitalization for the Company and its consolidated subsidiaries not exceed 0.60. At September 30, 2021,2022, the Company was in compliance with this financial covenant.
Summary of Cash Flows
The Company’s cash flows from operating, investing and financing activities, as reflected in the interim Consolidated Statements of Cash Flows, are summarized in the following table. The cash flows related to N&B and the M&M Divestitures have not been segregated and are included in the interim Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021, and 2020.as applicable.
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| Cash Flow Summary | Nine Months Ended |
| In millions | September 30, 2021 | September 30, 2020 |
| Cash provided by (used for): | | |
| Operating activities | $ | 1,660 | | $ | 2,794 | |
| Investing activities | $ | (2,727) | | $ | 35 | |
| Financing activities | $ | (5,921) | | $ | 5,830 | |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | $ | (49) | | $ | 4 | |
| Cash, cash equivalents and restricted cash reclassified as discontinued operations | $ | — | | $ | 7 | |
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| Cash Flow Summary | Nine Months Ended |
| In millions | September 30, 2022 | September 30, 2021 |
| Cash provided by (used for): | | |
| Operating activities | $ | 714 | | $ | 1,660 | |
| Investing activities | $ | (185) | | $ | (2,727) | |
| Financing activities | $ | (480) | | $ | (5,921) | |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | $ | (191) | | $ | (49) | |
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Cash Flows from Operating Activities
In the first nine months of 2021,2022, cash provided by operating activities was $1,660$714 million, compared with $2,794$1,660 million in the same period last year. The decrease in cash provided by operating activities was primarily due to an increase in the use of cash forrelated to net working capital. Activitycapital and an increase in the credit for deferred income tax and other tax related to the N&B business is included in all nine months of the comparative period and the first month of 2021.items.
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Net Working Capital 1 | September 30, 2021 | December 31, 2020 |
| In millions (except ratio) |
| Current assets | $ | 8,497 | | $ | 8,349 | |
| Current liabilities | 4,221 | | 3,616 | |
| Net working capital | $ | 4,276 | | $ | 4,733 | |
| Current ratio | 2.01:1 | 2.31:1 |
The table below reflects net working capital on a continuing operations basis:
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Net Working Capital 1 | September 30, 2022 | December 31, 2021 |
| In millions (except ratio) |
| Current assets | $ | 6,617 | | $ | 6,639 | |
| Current liabilities | 4,622 | | 3,518 | |
| Net working capital | $ | 1,995 | | $ | 3,121 | |
| Current ratio | 1.43:1 | 1.89:1 |
1.Net working capital ashas been presented excludesto exclude the assets and liabilities related to the N&B Transaction.M&M Divestitures. The assets and liabilities related to the N&B TransactionM&M Divestitures are presented as assets of discontinued operations and liabilities of discontinued operations, respectively, in the Condensed Consolidated Balance Sheets for the year ended December 31, 2020.respectively.
Cash Flows from Investing Activities
In the first nine months of 2021,2022, cash used for investing activities was $2,727$185 million, compared an inflow ofwith cash fromused for investing activities of $35$2,727 million in the first nine months of 2020. The increase2021.The decrease in cash usedusage was primarily attributable to the acquisition of Laird PM on July 1, as well as a decrease in proceeds from salescapital expenditures and a decrease in the acquisition of property and businesses, (netnet of cash dividend), offset by lower capital expenditures. Activity related to the N&B business is included in all nine months of the comparative period and the first month of 2021.divested.
Cash Flows from Financing Activities
In the first nine months of 2021,2022, cash used for financing activities was $5,921$480 million compared with cash provided byused for financing activities of $5,830$5,921 million in the same period last year. The primary driver of the increasedecrease in cash used was an increasefor financing activities is primarily attributable to the absence of long-term debt reduction in payments on long-term debt,the current period compared to the prior year period, which included the $2 billion redemption of the May 2020 Notes and repayment of the $3 billion term loan, as well as a decrease in proceeds from long-term debt issuances, and an increase in share purchasesrepurchases of common stock partially offset by proceeds from issuances of long-term debt transferred to IFF at split-off. Activity related toversus the N&B business is included in all nine months of the comparative period and the first month of 2021.prior year period.
Dividends
On February 18, 2021,June 30, 2022, the Company announced that its Board of Directors declared a firstthird quarter dividend of $0.30$0.33 per share paidpayable on MarchSeptember 15, 2021,2022, to shareholders of record on March 1, 2021.July 29, 2022.
On April 28, 2021,21, 2022, the Board of Directors declared a second quarter dividend of $0.30$0.33 per share, which was paid on June 15, 2021,2022, to shareholders of record on May 28, 2021.31, 2022.
On June 17, 2021,February 7, 2022, the Board of Directors declared a thirdfirst quarter 2022 dividend of $0.30$0.33 per share, paid on SeptemberMarch 15, 2021,2022, to shareholders of record on July 30, 2021.February 28, 2022.
On October 14, 2021,19, 2022, the Company announced that its Board declared a fourth quarter dividend of $0.30$0.33 per share payable on December 15, 2021,2022, to shareholders of record on November 30, 2021.2022.
Share Buyback Programs
In February 2022, the Company's Board of Directors authorized $1.0 billion share buyback program which expires on March 31, 2023, (the "2022 Share Buyback Program"). During the third quarter, the Company repurchased and retired 4.3 million shares for $250 million under this program. As of September 30, 2022, the Company repurchased and retired a total of 11.9 million shares for $750.0 million under the 2022 Share Buyback Program. Refer to Note 24 - Subsequent Events for additional information on the share repurchase programs.
In the first quarter of 2021, the Company's Board of Directors authorized a $1.5 billion share buyback program, which expired on June 30, 2022 ("2021 Share Buyback Program"). At the expiry of the 2021 Share Buyback Program, the Company had repurchased and retired a total of 19.6 million shares for $1.5 billion.
On June 1, 2019, the Company's Board of Directors authorized a $2$2.0 billion share buyback program, which expired on June 1, 2021 ("2019 Share Buyback Program"). At the expiry of the 2019 Share Buyback Program, the Company had completed the 2019 Share Buyback Program having repurchased and retired a total cost of 29.9 million shares at a cost of $2$2.0 billion.
In the first quarter of 2021, the Company's Board of Directors authorized a new $1.5 billion share buyback program, which expires on June 30, 2022 ("2021 Share Buyback Program"). As of September 30, 2021, the Company has repurchased and retired a total of 8.1 million shares for $625 million under the 2021 Share Buyback Program.
See Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, for additional information.
Pension and Other Post-Employment Plans
DuPont expects to make additional contributions in the aggregate of approximately $46$35 million by year-end 20212022 to pension and other post-employment benefit plans. Any such contribution could be funded by existing cash balances and/or cash from other available sources of liquidity.
Restructuring
In October 2021, the Company approved targeted restructuring actions to capture near term cost reductions (the "2021 Restructuring Actions"). As a result of these actions, the Company has recorded pre-tax restructuring charges of $55 million inception to date, comprised of $33 million of severance and related benefit costs and $22 million of asset related charges. At September 30, 2022, total liabilities related to the 2021 Restructuring Actions were $17 million for severance and related benefits. Actions related to the 2021 Restructuring Program are substantially complete.
In March 2020, the Company approved restructuring actions designed to capture near-term cost reductions and to further simplify certain organizational structures in anticipation of the N&B Transaction (the "2020 Restructuring Program"). As a result of these actions, the Company recorded pre-tax restructuring charges of $181$159 million inception-to-date, consisting of severance and related benefit costs of $129$107 million and asset related charges of $52 million. Actions associated with the 2020 Restructuring Program are considered substantially complete. Future cash payments related to the 2020 Restructuring Program are anticipated to be $25$2 million primarily related to the payment of severance and related benefits.
In June 2019, DuPontSubsequent to the period end, in October 2022, the Company approved targeted restructuring actions to simplify and optimize certain organizational structures following the completion of the DWDP Distributions (the "2019 Restructuring Program"). As a result of these actions, thecapture near term cost reductions. The Company has recorded pre-tax restructuring charges of $126 million inception-to-date, consisting of severance and related benefitexpects to incur costs of $99up to $125 million and assetprimarily related charges of $27 million. Actions associated with the 2019 Restructuring Program are considered substantially complete. Future cash payments related to the 2019 Restructuring Program are anticipated to be $5 million and relate to the payment of severance and related benefits.
In September and November 2017, the Company approved post-merger restructuring actions under the DowDuPont Cost Synergy Program (the "Synergy Program"), adopted by the DowDuPont Board of Directors. The Synergy Program was designed to integrate and optimize the organization following the DWDP Merger and in preparation for the DWDP Distributions whereby the Company has recorded pre-tax restructuring charges attributable to the continuing operations of DuPont of $345 million inception-to-date, consisting of severance and related benefit costs of $137 million, asset related charges, which will begin in the fourth quarter of $159 million2022 and contract termination charges of $49 million. Actions associated with the Synergy Program, including employee separations, are considered substantially complete. Future cash payments related to the Synergy Program are anticipatedexpected to be $8 million and relate tosubstantially complete by the paymentend of severance and related benefits.2023.
See Note 56 to the interim Consolidated Financial Statements for more information on the Company's restructuring programs.
Off-balance Sheet Arrangements
Guarantees arise in the ordinary course of business from relationships with customers and nonconsolidated affiliates when the Company undertakes an obligation to guarantee the performance of others if specific triggering events occur. At September 30, 2021 and December 31, 2020, the Company had directly guaranteed $178 million and $189 million, respectively, of such obligations. Additional information related to the guarantees of the Subsidiaries can be found in the “Guarantees” section of Note 15 to the interim Consolidated Financial Statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See Note 21 to the interim Consolidated Financial Statements. See also Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, of the Company's Current2021 Annual Report on Form 8-K filed on June 3, 202110-K for information on the Company's utilization of financial instruments and an analysis of the sensitivity of these instruments.
ITEM 4. CONTROLS AND PROCEDURES
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 filed 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 SEC. 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 September 30, 2021,2022, 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.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15 that was conducted during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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DuPont de Nemours Inc.
PART II - OTHER INFORMATION |
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiaries are subject to various litigation matters, including, but not limited to, product liability, patent infringement, antitrust claims, and claims for third party property damage or personal injury stemming from alleged environmental torts. Information regarding certain of these matters is set forth below and in Note 1516 to the interim Consolidated Financial Statements.
Litigation
See Note 1516 to the interim Consolidated Financial Statements.
Environmental Proceedings
The Company believes it is remote that the following matters will have a material impact on its financial position, liquidity or results of operations. The description is included per Regulation S-K, Item 103(c) of the Securities Exchange Act of 1934.
Divested Neoprene Facility, La Place, Louisiana - EPA Compliance Inspection
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. Subsequent to this inspection, the U.S. Environmental Protection Agency (“EPA”), the U.S. Department of Justice (“DOJ”), the Louisiana Department of Environmental Quality (“DEQ”), the Company (originally through EID), and Denka began discussions in the spring of 2017 relating to the inspection conclusions and allegations of noncompliance arising under the Clean Air Act, including leak detection and repair. DuPont, Denka, EPA, DOJ and DEQ are continuing these discussions, which include potential settlement options.
New Jersey Directive PFAS
On March 25, 2019, the New Jersey Department of Environmental Protection (“NJDEP”) issued a Directive and Notice to Insurers to a number of companies, including Chemours, DowDuPont, EID, and certain DuPont subsidiaries. NJDEP’s allegations relate to former operations of EID involving poly- and perfluoroalkyl substances, (“PFAS”), including PFOA and PFOA- replacement products. The NJDEP seeks past and future costs of investigating, monitoring, testing, treating, and remediating New Jersey’s drinking water and waste systems, private drinking water wells and natural resources including groundwater, surface water, soil, sediments and biota. The Directive seeks certain information as to future costs and information related to the historic uses of PFAS and replacement chemicals including “information ranging from use and discharge of the chemicals through wastewater treatment plants, air emissions, and sales of products containing the chemicals to current development, manufacture, use and release of newer chemicals in the state.”
ITEM 1A. RISK FACTORS
ThereOther than the risk factor set forth below, there have been no material changes in the Company's risk factors discussed in Part I, Item 1A, Risk Factors, in the Company’s 2021 Annual Report on Form 10-K for the year ended December 31, 2020.2021.
DuPont could incur additional tax liabilities if certain internal transactions undertaken in connection with the completed divestiture of a majority of its historic Mobility & Materials segment to Celanese, and in connection with DuPont’s pursuit of plans to divest the Delrin® acetal homopolymer business (the “Delrin® Business”), fail to qualify for their intended tax treatment.
On November 1, 2022, DuPont and certain of its subsidiaries completed the sale to Celanese of a majority of the Company’s historic Mobility & Materials segment, including the Engineering Polymers business line and select product lines within the Performance Resins and Advanced Solutions business lines (the “M&M Business”) for $11 billion in cash, subject to customary transaction adjustments in accordance with the Transaction Agreement (the “M&M Divestiture”).
On February 18, 2022, DuPont also announced that its Board of Directors approved the divestiture of the Delrin® Business subject to entry into a definitive agreement and satisfaction of customary closing conditions. There can be no assurance as to the outcome, timing or ability to realize expected benefits from the Delrin® Business divestiture process.
Prior to the Closing of the M&M Divestiture, DuPont engaged in certain internal reorganization activities to separate the M&M Business, and in certain cases in connection therewith, the Delrin® Business, into separate subsidiaries and to align the subsidiaries holding the M&M Business for disposition in a tax-efficient manner. DuPont has recognized a tax liability related to the M&M Divestiture. However, if certain internal transactions related to the separation of the M&M Business and/or of the Delrin® Business fail to qualify for their intended tax treatment under U.S. federal, state, local tax and/or foreign tax law, DuPont could incur additional tax liabilities.
DuPont may not realize the anticipated benefits of its share repurchase programs and any failure to repurchase the Company’s common stock after DuPont has announced its intention to do so may negatively impact the Company’s stock price.
On November 7, 2022, DuPont’s Board of Directors approved a new share repurchase program authorizing the repurchase and retirement of up to $5 billion of common stock. This new repurchase authorization is in addition to the $250 million remaining under the Company’s existing share repurchase program which was approved in February 2022. The Company intends to enter accelerated share repurchase agreements ( “ASR Agreements”) imminently, for the repurchase of an aggregate of $3.25 billion of common stock with $250 million of such repurchases under the existing program and the remaining $3 billion under the new program. new repurchase program terminates on June 30, 2024, unless extended or shortened by the Board of Directors.
Under these or any other future share repurchase programs, DuPont may make share repurchases through a variety of methods, including open share market purchases or privately negotiated transactions, including additional ASR agreements in accordance with applicable federal securities laws. The timing and amount of any repurchases, if any, will on factors such as the stock price, economic and market conditions, and corporate and regulatory requirements. Any failure to repurchase shares after the Company has announced its intention to do so may negatively impact DuPont’s reputation, investor confidence and the price of the Company’s common stock.
The existence of these share repurchase programs could cause the price of the Company’s common stock to be higher than it otherwise would be and could potentially reduce the market liquidity for DuPont stock. Although these programs are intended to enhance long-term stockholder value, there is no assurance they will do so because the market price of DuPont common stock may decline below the levels at which we repurchased shares and short-term stock price fluctuations could reduce the effectiveness of the programs.
Repurchasing common stock will reduce the amount of cash DuPont has available to fund working capital, capital expenditures, strategic acquisitions or business opportunities and other general corporate requirements, and the Company may fail to realize the anticipated benefits of these share repurchase programs.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table provides information regarding purchases of the Company’s common stock by the Company during the three months ended September 30, 2021:2022:
| | Issuer Purchases of Equity Securities | Issuer Purchases of Equity Securities | | Total number of shares purchased as part of the Company's publicly announced share repurchase program | Approximate dollar value of shares that may yet be purchased under the Company's publicly announced share repurchase program (In millions) | Issuer Purchases of Equity Securities | | Total number of shares purchased as part of the Company's publicly announced share repurchase program | Approximate dollar value of shares that may yet be purchased under the Company's publicly announced share repurchase program (In millions) |
| Period | Period | Total number of shares purchased | Average price paid per share | Period | Total number of shares purchased | Average price paid per share |
| July | July | 1,600,944 | | $ | 78.08 | | 1,600,944 | | $ | 1,250 | | July | — | | $ | — | | — | | $ | 500 | |
| August | August | 4,137,091 | | 75.29 | | 4,137,091 | | 939 | | August | 2,930,109 | | 60.28 | | 2,930,109 | | 323 | |
| September | September | 858,730 | | 73.97 | | 858,730 | | 875 | | September | 1,317,416 | | 55.70 | | 1,317,416 | | 250 | |
| Third Quarter 2021 | 6,596,765 | | $ | 75.80 | | 6,596,765 | | $ | 875 | | |
| Third Quarter 2022 | | Third Quarter 2022 | 4,247,525 | | $ | 58.86 | | 4,247,525 | | $ | 250 | |
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
| | | | | | | | | | | |
| EXHIBIT NO. | | DESCRIPTION |
| | | Third Amended and Restated Certificate of Incorporation of DuPont de Nemours, Inc. incorporated by reference to Exhibit 3.1 to DuPont de Nemours, Inc.’s Current Report on Form 8-K filed April 30, 2021. |
| | | Sixth Amended and Restated Bylaws of DuPont de Nemours, Inc. incorporated by reference to Exhibit 3.1 to DuPont de Nemours, Inc.’s Current Report on Form 8-K filed October 20, 2022. |
| | | Transaction Agreement by and among DuPont de Nemours, Inc., DuPont E&I Holding, Inc. and Celanese Corporation, dated February 17, 2022**†, incorporated by reference to Exhibit 2.1 to the DuPont de Nemours, Inc. Current Report on Form 8-K filed February 22, 2022. |
| | | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 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 | | XBRL Taxonomy Extension Schema Document. |
| 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | | XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
*Filed herewith
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DuPont de Nemours, Inc. Signatures |
Pursuant to the requirements 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.
DUPONT DE NEMOURS, INC.
Registrant
Date: November 3, 20218, 2022
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| By: | /s/ MICHAEL G. GOSS | | | |
| Name: | Michael G. Goss | | | |
| Title: | Vice President and Controller | | | |
| City: | Wilmington | | | |
| State: | Delaware | | | |