SEC Filing | Corteva Agriscience

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended June 30, 2021


☐			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

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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

Accelerated Filer o

Non-Accelerated Filer

Smaller reporting company o

Emerging growth company o

E. I. du Pont de Nemours and Company

Large Accelerated Filer

Accelerated Filer o

Non-Accelerated Filer

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 734,185,000 shares of common stock, par value $0.01 per share, outstanding at July 30, 2021.

E. I. du Pont de Nemours and Company had 200 shares of common stock, par value $0.30 per share, outstanding at July 30, 2021, 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.

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CORTEVA, INC.

E. I. DU PONT DE NEMOURS AND COMPANY

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		Page
Explanatory Note
Part I	Financial Information

Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Equity	7
	Notes to the Interim Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
	Cautionary Statements About Forward-Looking Statements	42
	Recent Developments	43
	Overview	44
	Selected Financial Data	46
	Results of Operations	47

	Recent Accounting Pronouncements	51
	Segment Reviews	52
	Non-GAAP Financial Measures	56
	Liquidity & Capital Resources	58

	Contractual Obligations	60

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	60
Item 4.	Controls and Procedures	61

Part II	Other Information

Item 1.	Legal Proceedings	62
Item 1A.	Risk Factors	65
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 5.	Other Information	67
Item 6.	Exhibits	68
Exhibit Index		68
Signature		69
Consolidated Financial Statements of E.I. du Pont de Nemours and Company (Unaudited)		70

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Explanatory Note

Corteva owns 100% of the outstanding common stock of EID (defined below), and EID owns, directly or indirectly, 100% of DAS (defined below). EID is a subsidiary of Corteva, Inc. and continues to be a reporting company, subject to the requirements of the Securities Exchange Act of 1934, as amended.

Unless otherwise indicated or the context otherwise requires, references in this Quarterly Report on Form 10-Q to:

• "Corteva" or "the company" refers to Corteva, Inc. and its consolidated subsidiaries (including EID);

• "EID" refers to 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;

• "DowDuPont" refers to DowDuPont Inc. and its subsidiaries prior to the Separation of Corteva (defined below);

• "Historical Dow" refers to The Dow Chemical Company and its consolidated subsidiaries prior to the Internal Reorganization (defined below);

• "Historical DuPont" refers to EID prior to the Internal Reorganization (defined below);

• "Internal Reorganizations" refers to the series of internal reorganization and realignment steps undertaken by Historical DuPont and Historical Dow to realign its business into three groups: agriculture, materials science and specialty products. These steps include:

1.the April 1, 2019 transfer of the assets and liabilities aligned with EID’s material science businesses including EID’s ethylene and ethylene copolymers business, excluding its ethylene acrylic elastomers business, (“EID ECP”) to DowDuPont, which were ultimately conveyed by DowDuPont to Dow;

2.the May 1, 2019 distribution of EID legal entities containing the assets and liabilities of EID’s specialty products business (the “EID Specialty Products Entities”) to DowDuPont;

3.the May 2, 2019 conveyance of Historical Dow's agriculture business ("Dow Ag Entities") to EID; and

4.the May 31, 2019 contribution of EID to Corteva, Inc. Refer to the company’s Annual Report on Form 10-K for the year ended December 31, 2020 for further information.

• "Dow Distribution" refers to the separation of DowDuPont's materials science business into a separate and independent public company, effective as of 5:00 pm ET on April 1, 2019, by way of a distribution of Dow Inc. through a pro rata dividend in-kind of all of the then-issued and outstanding shares of Dow’s common stock, par value $0.01 per share, to holders of DowDuPont's common stock, as of the close of business on March 21, 2019;

• "Merger” refers to the all-stock merger of equals strategic combination between Historical Dow and Historical DuPont;

• "Merger Effectiveness Time” refers to August 31, 2017 at 11:59 pm ET;

• "Dow" refers to Dow Inc. after the Dow Distribution;

• "DuPont" refers to DuPont de Nemours, Inc. after the Separation of Corteva (on June 1, 2019, DowDuPont Inc. changed its registered name to DuPont de Nemours, Inc.);

• "DAS" refers to the agriculture business of Historical Dow AgroSciences;

• "Separation" or "Separation of Corteva" refers to June 1, 2019, when Corteva, Inc. became an independent, publicly
traded company;

• "Corteva Distribution" refers to the pro rata distribution of all of the then-issued and outstanding shares of Corteva, Inc.'s common stock, par value $0.01 per share, on June 1, 2019, which was then a wholly-owned subsidiary of DowDuPont, to holders of DowDuPont's common stock as of the close of business on May 24, 2019;

• "Distributions" refers to the Dow Distribution and the Corteva Distribution; and

• “Letter Agreement” refers to the Letter Agreement executed by DuPont and Corteva on June 1, 2019, which sets forth certain additional terms and conditions related to the Separation, including certain limitations on each party’s ability to transfer certain businesses and assets to third parties without assigning certain of such party’s indemnification obligations under the Corteva Separation Agreement to the other party to the transferee of such businesses and assets or meeting certain other alternative conditions.

This Quarterly Report on Form 10-Q is a combined report being filed separately by Corteva, Inc. and 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 70. Footnotes of EID that are identical to that of Corteva are cross-referenced accordingly.

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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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net sales	$	5,627	$	5,191	$	9,805	$	9,147
Cost of goods sold	3,010		2,829		5,430		5,098
Research and development expense	293		273		574		553
Selling, general and administrative expenses	998		965		1,731		1,722
Amortization of intangibles	180		176		363		339
Restructuring and asset related charges - net	135		179		235		249
Other income - net	298		89		635		90
Interest expense	7		14		14		24
Income from continuing operations before income taxes	1,302		844		2,093		1,252
Provision for income taxes on continuing operations	284		78		462		205
Income from continuing operations after income taxes	1,018		766		1,631		1,047
(Loss) income from discontinued operations after income taxes	(45)		—		(55)		1
Net income	973		766		1,576		1,048
Net income attributable to noncontrolling interests	3		6		6		16
Net income attributable to Corteva	$	970	$	760	$	1,570	$	1,032
Basic earnings per share of common stock:
Basic earnings per share of common stock from continuing operations	$	1.37	$	1.01	$	2.19	$	1.37
Basic loss per share of common stock from discontinued operations	(0.06)		—		(0.07)		—
Basic earnings per share of common stock	$	1.31	$	1.01	$	2.12	$	1.37
Diluted earnings per share of common stock:
Diluted earnings per share of common stock from continuing operations	$	1.37	$	1.01	$	2.18	$	1.37
Diluted loss per share of common stock from discontinued operations	(0.06)		—		(0.07)		—
Diluted earnings per share of common stock	$	1.31	$	1.01	$	2.11	$	1.37

See Notes to the Interim Consolidated Financial Statements beginning on page 8.

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Corteva, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)


(In millions)	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income	$	973	$	766	$	1,576	$	1,048
Other comprehensive income (loss) - net of tax:
Cumulative translation adjustments	243		97		(160)		(575)
Adjustments to pension benefit plans	8		(6)		16		(6)
Adjustments to other benefit plans	(160)		(1)		(317)		2
Unrealized gain on investments	—		—		10		—
Derivative instruments	31		(2)		96		4
Total other comprehensive income (loss)	122		88		(355)		(575)
Comprehensive income	1,095		854		1,221		473
Comprehensive income attributable to noncontrolling interests - net of tax	3		6		6		16
Comprehensive income attributable to Corteva	$	1,092	$	848	$	1,215	$	457

See Notes to the Interim Consolidated Financial Statements beginning on page 8.

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Corteva, Inc.

Consolidated Balance Sheets (Unaudited)


(In millions, except share amounts)	June 30, 2021		December 31, 2020		June 30, 2020
Assets
Current assets
Cash and cash equivalents	$	2,861	$	3,526	$	2,809
Marketable securities	39		269		60
Accounts and notes receivable - net	6,792		4,926		6,772
Inventories	3,541		4,882		3,589
Other current assets	1,052		1,165		1,192

Total current assets	14,285		14,768		14,422
Investment in nonconsolidated affiliates	68		66		62
Property, plant and equipment	8,343		8,253		7,858
Less: Accumulated depreciation	4,002		3,857		3,565
Net property, plant and equipment	4,341		4,396		4,293
Goodwill	10,207		10,269		10,069
Other intangible assets	10,413		10,747		11,070
Deferred income taxes	442		464		290
Other assets	1,740		1,939		1,974

Total Assets	$	41,496	$	42,649	$	42,180
Liabilities and Equity
Current liabilities
Short-term borrowings and finance lease obligations	$	677	$	3	$	1,529
Accounts payable	3,070		3,615		2,891
Income taxes payable	234		123		369
Deferred revenue	748		2,662		431
Accrued and other current liabilities	2,523		2,145		2,309

Total current liabilities	7,252		8,548		7,529
Long-Term Debt	1,101		1,102		1,102
Other Noncurrent Liabilities
Deferred income tax liabilities	935		893		752
Pension and other post employment benefits - noncurrent	4,767		5,176		6,039
Other noncurrent obligations	1,816		1,867		1,957

Total noncurrent liabilities	8,619		9,038		9,850
Commitments and contingent liabilities
Stockholders’ equity
Common stock, $0.01 par value; 1,666,667,000 shares authorized; issued at June 30, 2021 - 734,421,000; December 31, 2020 - 743,458,000; and June 30, 2020 - 748,485,000	7		7		7
Additional paid-in capital	27,682		27,707		27,891

Retained earnings	941		—		508
Accumulated other comprehensive loss	(3,245)		(2,890)		(3,845)
Total Corteva stockholders’ equity	25,385		24,824		24,561
Noncontrolling interests	240		239		240
Total equity	25,625		25,063		24,801
Total Liabilities and Equity	$	41,496	$	42,649	$	42,180

See Notes to the Interim Consolidated Financial Statements beginning on page 8.

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Corteva, Inc.

Consolidated Statements of Cash Flows (Unaudited)


(In millions)	Six Months Ended June 30,
	2021		2020
Operating activities
Net income	$	1,576	$	1,048
Adjustments to reconcile net income to cash used for operating activities:
Depreciation and amortization	617		583
Provision for (benefit from) deferred income tax	124		(136)
Net periodic pension and OPEB benefit, net	(641)		(168)
Pension and OPEB contributions	(149)		(167)
Net (gain) loss on sales of property, businesses, consolidated companies and investments	(1)		30
Restructuring and asset related charges - net	235		249
Other net loss	143		185
Changes in assets and liabilities, net
Accounts and notes receivable	(1,957)		(1,712)
Inventories	1,334		1,271
Accounts payable	(525)		(717)
Deferred revenue	(1,931)		(2,147)
Other assets and liabilities	532		812
Cash used for operating activities	(643)		(869)
Investing activities
Capital expenditures	(269)		(202)
Proceeds from sales of property, businesses and consolidated companies - net of cash divested	26		18

Investments in and loans to nonconsolidated affiliates	(1)		—

Purchases of investments	(56)		(361)
Proceeds from sales and maturities of investments	285		298
Other investing activities - net	(2)		(5)
Cash used for investing activities	(17)		(252)
Financing activities
Net change in borrowings (less than 90 days)	254		966
Proceeds from debt	419		2,434
Payments on debt	—		(879)
Repurchase of common stock	(550)		(50)
Proceeds from exercise of stock options	66		17
Dividends paid to stockholders	(192)		(194)
Payment for acquisition of subsidiary's interest from the non-controlling interest	—		(60)

Other financing activities	(24)		(20)
Cash (used for) provided by financing activities	(27)		2,214
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(14)		(95)
(Decrease)/increase in cash, cash equivalents and restricted cash	(701)		998
Cash, cash equivalents and restricted cash at beginning of period	3,873		2,173
Cash, cash equivalents and restricted cash at end of period1	$	3,172	$	3,171

1. See page 17 for reconciliation of cash and cash equivalents and restricted cash presented in interim Consolidated Balance Sheets to total cash, cash equivalents and restricted cash presented in the interim Consolidated Statements of Cash Flows.

See Notes to the Interim Consolidated Financial Statements beginning on page 8.

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Corteva, Inc.

Consolidated Statements of Equity (Unaudited)


(In millions, except per share amounts)	Common Stock		Additional Paid-in Capital "APIC"		(Accumulated Deficit) Retained Earnings		Accumulated Other Comp (Loss) Income		Treasury Stock		Non-controlling Interests		Total Equity
2020
Balance at January 1, 2020	$	7	$	27,997	$	(425)	$	(3,270)	$	—	$	246	$	24,555
Net income					272						10