SEC Filing | Corteva Agriscience

View:

Download DOC

Download PDF

Download XLS

Download XBRL

Document

Table of Contents

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, 2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-38710

Corteva, Inc.

(Exact Name of Registrant as Specified in Its Charter)



Delaware					82-4979096
(State or other Jurisdiction of Incorporation or Organization)				(I.R.S. Employer Identification No.)
974 Centre Road,	Wilmington,	Delaware	19805	(302)	485-3000
(Address of Principal Executive Offices) (Zip Code)				(Registrant’s Telephone Number, including area code)

Commission File Number 1-815

E. I. du Pont de Nemours and Company

(Exact Name of Registrant as Specified in Its Charter)



Delaware					51-0014090
(State or other Jurisdiction of Incorporation or Organization)				(I.R.S. Employer Identification No.)
974 Centre Road,	Wilmington,	Delaware	19805	(302)	485-3000
(Address of Principal Executive Offices) (Zip Code)				(Registrant’s Telephone Number, including area code)

Securities registered pursuant to Section 12(b) of the Act for Corteva, Inc.:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	CTVA	New York Stock Exchange

Securities registered pursuant to Section 12(b) of the Act for E. I. du Pont de Nemours and Company:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
$3.50 Series Preferred Stock	CTAPrA	New York Stock Exchange
$4.50 Series Preferred Stock	CTAPrB	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.

Corteva, Inc. Yes x No o

E. I. du Pont de Nemours and Company Yes x No o

Table of Contents

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 such files.)

Corteva, Inc. Yes x No o

E. I. du Pont de Nemours and Company Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Corteva, Inc.	Large Accelerated Filer	x	Accelerated Filer o	Non-Accelerated Filer	o	Smaller reporting company o	Emerging growth company o

E. I. du Pont de Nemours and Company	Large Accelerated Filer	o	Accelerated Filer o	Non-Accelerated Filer	x	Smaller reporting company o	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Corteva, Inc. ☐

E. I. du Pont de Nemours and Company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Corteva, Inc. Yes ☐ No x

E. I. du Pont de Nemours and Company Yes ☐ No x

Corteva, Inc. had 748,400,792 shares of common stock, par value $0.01 per share, outstanding at October 24, 2019.

E. I. du Pont de Nemours and Company had 200 shares of common stock, par value $0.30 per share, outstanding at October 24, 2019, all of which are held by Corteva, Inc.

E. I. du Pont de Nemours and Company meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q (as modified by a grant of no-action relief dated February 12, 2018) and is therefore filing this form with reduced disclosure format.

Table of Contents

CORTEVA, INC.

E. I. DU PONT DE NEMOURS AND COMPANY

Table of Contents



		Page
Part I	Financial Information

Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Cash Flows	6
	Consolidated Statements of Equity	7
	Notes to the Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	58
	Cautionary Statements About Forward-Looking Statements	58
	Recent Developments	59
	Note on Financial Presentation	62
	Overview	63
	Selected Financial Data	64
	Results of Operations	65
	Recent Accounting Pronouncements	72
	Segment Reviews	73
	Liquidity & Capital Resources	76
	Critical Accounting Estimates	79
	Contractual Obligations	80

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	80
Item 4.	Controls and Procedures	81

Part II	Other Information

Item 1.	Legal Proceedings	82
Item 1A.	Risk Factors	83
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	93
Item 5.	Other Information	93
Item 6.	Exhibits	94
Exhibit Index		94
Signature		95
Consolidated Financial Statements of E.I. du Pont de Nemours and Company (Unaudited)		96

Table of Contents

Explanatory Note

Throughout this Quarterly Report on Form 10-Q, except as otherwise noted by the context, the terms "Corteva" or "company" used herein mean Corteva, Inc. and its consolidated subsidiaries (including EID) and the term “EID” used herein means E. I. du Pont de Nemours and Company and its consolidated subsidiaries or E. I. du Pont de Nemours and Company excluding its consolidated subsidiaries, as the context may indicate. Additionally, on June 1, 2019, DowDuPont Inc. changed its registered name to DuPont de Nemours, Inc. (“DuPont”), for certain events prior to, or on, June 1, 2019, DuPont may be 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 "CTVA".

This Quarterly Report on Form 10-Q is a combined report being filed separately by Corteva, Inc. and EID. Corteva, Inc. owns all of the common equity interests in EID. The information in this Quarterly Report on Form 10-Q is equally applicable to Corteva, Inc. and EID, except where otherwise indicated.

The separate EID financial statements and footnotes for areas that differ from Corteva, are included within this Quarterly Report on Form 10-Q and begin on page 96. Footnotes of EID that are identical to that of Corteva are cross-referenced accordingly.

Background

On June 1, 2019, Corteva, Inc. became an independent, publicly traded company through the previously announced separation (the “Separation”) of the agriculture business of DowDuPont Inc. ("DowDuPont"). The separation was effectuated through a pro rata distribution of all of the then-issued and outstanding shares of common stock, par value $0.01 per share, of Corteva, Inc., which was then a wholly-owned subsidiary of DowDuPont, to holders of record of DowDuPont common stock as of the close of business on May 24, 2019. In connection with the Separation, DowDuPont Inc. changed its name to DuPont de Nemours, Inc.

Previously, DowDuPont was formed on December 9, 2015, to effect an all-stock merger of equals strategic combination between The Dow Chemical Company ("Historical Dow") and EID. On August 31, 2017 at 11:59 pm ET, Historical Dow and EID each merged with wholly-owned subsidiaries of DowDuPont and became subsidiaries of DowDuPont. Subsequent to the merger, Historical Dow and EID engaged in a series of internal reorganization and realignment steps to realign their businesses into three divisions: agriculture, materials science and specialty products. As a result of the Internal Reorganization (defined in Note 1 - Background and Basis of Presentation, to the interim Consolidated Financial Statements), on May 31, 2019, EID was contributed to Corteva, Inc. and, as a result, Corteva, Inc. owns 100% of the outstanding common stock of EID. Prior to March 31, 2019, Corteva, Inc. had engaged in no business operations and had no assets or liabilities of any kind, other than those incident to its formation.

EID continues to be a reporting company and is deemed to be the predecessor to Corteva, Inc., with the historical results of EID to be deemed the historical results of Corteva for periods prior to and including May 31, 2019. Shares of EID preferred stock, $3.50 Series and $4.50 Series, issued and outstanding immediately prior to the Separation remain issued and outstanding and were unaffected by the Separation.

Table of Contents

PART I. FINANCIAL INFORMATION


Item 1.	CONSOLIDATED FINANCIAL STATEMENTS

Corteva, Inc.

Consolidated Statements of Operations (Unaudited)



(In millions, except per share amounts)	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net sales	$	1,911		$	1,947		$	10,863		$	11,472
Cost of goods sold	1,349			1,485			6,607			7,924
Research and development expense	289			325			857			1,010
Selling, general and administrative expenses	646			633			2,318			2,347
Amortization of intangibles	100			88			314			284
Restructuring and asset related charges - net	46			235			167			466
Integration and separation costs	152			253			694			697
Goodwill impairment charge	—			4,503			—			4,503
Other income - net	59			7			90			118
Loss on early extinguishment of debt	—			—			13			—
Interest expense	19			82			112			251
Loss from continuing operations before income taxes	(631		)	(5,650		)	(129		)	(5,892		)
(Benefit from) provision for income taxes on continuing operations	(104		)	(8		)	99			(187		)
Loss from continuing operations after income taxes	(527		)	(5,642		)	(228		)	(5,705		)
Income (loss) from discontinued operations after income taxes	22			526			(695		)	1,200
Net loss	(505		)	(5,116		)	(923		)	(4,505		)
Net (loss) income attributable to noncontrolling interests	(11		)	5			15			29
Net loss attributable to Corteva	$	(494	)	$	(5,121	)	$	(938	)	$	(4,534	)
Basic loss per share of common stock:
Basic loss per share of common stock from continuing operations	$	(0.69	)	$	(7.54	)	$	(0.32	)	$	(7.64	)
Basic earnings (loss) per share of common stock from discontinued operations	0.03			0.71			(0.93		)	1.59
Basic loss per share of common stock	$	(0.66	)	$	(6.83	)	$	(1.25	)	$	(6.05	)
Diluted loss per share of common stock:
Diluted loss per share of common stock from continuing operations	$	(0.69	)	$	(7.54	)	$	(0.32	)	$	(7.64	)
Diluted earnings (loss) per share of common stock from discontinued operations	0.03			0.71			(0.93		)	1.59
Diluted loss per share of common stock	$	(0.66	)	$	(6.83	)	$	(1.25	)	$	(6.05	)

See Notes to the Consolidated Financial Statements beginning on page 9.

Table of Contents

Corteva, Inc.

Consolidated Statements of Comprehensive Loss (Unaudited)



(In millions)	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net loss	$	(505	)	$	(5,116	)	$	(923	)	$	(4,505	)
Other comprehensive loss - net of tax:
Cumulative translation adjustments	(297		)	(88		)	(471		)	(1,099		)
Adjustments to pension benefit plans	5			5			13			13
Adjustments to other benefit plans	—			—			(86		)	—
Derivative instruments	—			(3		)	23			(8		)
Total other comprehensive loss	(292		)	(86		)	(521		)	(1,094		)
Comprehensive loss	(797		)	(5,202		)	(1,444		)	(5,599		)
Comprehensive (loss) income attributable to noncontrolling interests - net of tax	(11		)	5			15			29
Comprehensive loss attributable to Corteva	$	(786	)	$	(5,207	)	$	(1,459	)	$	(5,628	)

See Notes to the Consolidated Financial Statements beginning on page 9.

Table of Contents

Corteva, Inc.

Condensed Consolidated Balance Sheets (Unaudited)



(In millions, except share amounts)	September 30, 2019			December 31, 2018			September 30, 2018
Assets
Current assets
Cash and cash equivalents	$	1,980		$	2,270		$	1,657
Marketable securities	117			5			142
Accounts and notes receivable - net	6,574			5,260			6,547
Inventories	4,403			5,310			4,898
Other current assets	1,043			1,038			1,041
Assets of discontinued operations - current	—			9,089			9,055
Total current assets	14,117			22,972			23,340
Investment in nonconsolidated affiliates	70			138			144
Property, plant and equipment - net of accumulated depreciation (September 30, 2019 - $3,186; December 31, 2018 - $2,796; September 30, 2018 - $2,694)	4,503			4,544			4,384
Goodwill	10,168			10,193			10,203
Other intangible assets	11,667			12,055			12,138
Deferred income taxes	270			304			366
Other assets	2,440			1,932			1,888
Assets of discontinued operations - non-current	—			56,545			57,185
Total Assets	$	43,235		$	108,683		$	109,648
Liabilities and Equity
Current liabilities
Short-term borrowings and finance lease obligations	$	3,604		$	2,154		$	4,371
Accounts payable	3,014			3,798			3,642
Income taxes payable	126			186			224
Accrued and other current liabilities	2,249			4,005			2,117
Liabilities of discontinued operations - current	—			3,167			2,888
Total current liabilities	8,993			13,310			13,242
Long-Term Debt	116			5,784			10,215
Other Noncurrent Liabilities
Deferred income tax liabilities	1,328			1,480			1,594
Pension and other post employment benefits - noncurrent	5,405			5,677			5,267
Other noncurrent obligations	2,132			1,795			1,799
Liabilities of discontinued operations - non-current	—			5,484			5,532
Total noncurrent liabilities	8,981			20,220			24,407
Commitments and contingent liabilities
Stockholders’ equity
Common stock, $0.01 par value; 1,666,666,667 shares authorized; issued at September 30, 2019 - 748,390,000	7			—			—
Additional paid-in capital	28,072			—			—
Divisional equity	—			78,020			73,767
Accumulated deficit	(397		)	—			—
Accumulated other comprehensive loss	(2,667		)	(3,360		)	(2,271		)
Total Corteva stockholders’ equity	25,015			74,660			71,496
Noncontrolling interests	246			493			503
Total equity	25,261			75,153			71,999
Total Liabilities and Equity	$	43,235		$	108,683		$	109,648

See Notes to the Consolidated Financial Statements beginning on page 9.

Table of Contents

Corteva, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)